Bob, Home Buyer in Little Egg Harbor, NJ

are most homes over priced?

Asked by Bob, Little Egg Harbor, NJ Mon Apr 19, 2010

i was considering buying a home but it looks like a lot of homes are still way over priced. the only homes that seem truly priced right need a lot of work or are in short sale/ foreclosure. Is this normal? Why would someone list a home at least $50,000 more than what the same style of home in the same neighborhood is priced.
Help I am confused if someone wants to sell their home they should list it so it sells not so it sits on the market for a few years. Maybe this isn't a great time to buy.

Help the community by answering this question:

Answers

11
Hey Bob,

I believe you can narrow down your confusion on list prices down to the fact that you're just not seeing some of the components that go into pricing a house. The short sale/foreclosure band of sales that Don is referring to has never before been so prominently displayed as there are just so many of them on the market now. Every single one of those comes with a hidden price discount that ideally directly relates to the amount of attached deferred maintenance and/or repair issues. This is where most of your confusion comes in. What may look like a perfectly reasonable match between two similar style homes where one appears to be grossly overpriced really hides the fact that the less expensive home has deferred maintenance issues that the other more expensive home does not have. When the waters are this murky, the more factual information you can get about a home, the better a deal you can typically negotiate.

I can imagine that as a buyer you feel truly overwhelmed and that you would rather wait until the dust settles and the real estate market becomes more constant and predictable again. However, I would challenge you that it is in turbulent times that you can also find some of the most wonderful deals. Keep in mind that you are in control. If you do not feel comfortable with a deal or a house, simply walk away. If someone wants to pressure you to do something, push back and ask their reasons behind it. If they can't convince you based on common sense and logic choose not to do it. I wish you the best no matter what you choose to do.

Sincerely,

Jacobus "Jack" Vollenberg
RE Appraiser - Vollenberg Appraisers
Realtor/REO Asset Manager - Bridgewater Realty
Vollenberg@iname.com
Office (908) 968-0336
Cell (973) 590-0142
1 vote Thank Flag Link Mon Apr 19, 2010
Pretty good answres already.

However, recognize that right now there are really two markets: One for conventional sales and another for short sales and foreclosures. There's some overlap, to be sure, but they are different.

Example: Take a community where homes sold for $500,000 3 years ago. You might be able to find a foreclosure or short sale (in "as is condition") for $300,000. However, someone who bought 10 years ago might be trying to sell theirs for $400,000. So, is the $400,000 property overpriced? Well, it's priced more than the short sales and foreclosures. But that doesn't mean it's overpriced.

In the community next to the one I live in, there were two identical homes last month. One was a foreclosure at $475,000. The other was not a foreclosure; it was priced at $595,000. The foreclosure needed some work--maybe $10,000 or so. But otherwise they were pretty much identical. And the foreclosure was really on a much better lot. Today, they're both under contract. Was the one at $595,000 overpriced? Well, the prospective buyers didn't think so. And it'll probably appraise for at least that much. Was the one priced at $475,000 underpriced? Not really. It sat on the market for about 4 months. The other (the non-foreclosure) sold in under 2 months.

Different people want and expect different things. Despite what a lot of Realtors like to parrot, it's not all about the price.

As for your situation, if you see a home you're interested in, have a Realtor run a CMA on it. Then--if you wish--make an offer at or below the CMA. Pay no more than the CMA. In the example above, the CMA probably would have come back at about $600,000 on the non-foreclosure and probably (even adjusting for repairs) about $575,000. There had been other sales right around $600,000.

Now, if the CMA for the nicer house in the community had come back at $525,000, then I'd have advised someone buying it to offer $525,000 or less. Probably a bit less. It's your money and you have to watch out for it. So don't let list prices scare you away if they appear too high. But my point is: Sometimes they're not high.

Hope that helps.
1 vote Thank Flag Link Mon Apr 19, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
There are a lot of reasons why people list their houses for more than they are worth. They may have maxed out their equity a few years ago and now find that they owe more than it's worth. They may be unrealistic and not want to accept that their house is worth less than they paid for it. Maybe they think their house is better than the others in the same neighborhood and should command a higher price. These are situations that we Real Estate Agents deal with every day. In most cases, I'm as confused as you as to why a seller refuses to list their house at a competitive price.

There are a lot of houses that are priced right, especially in LEH, but they don't stay on the market long so you may be missing them. Keep looking at houses that are new on the market and don't procrastinate in checking them out.
1 vote Thank Flag Link Mon Apr 19, 2010
I am trying to sell my home as a Short Sale. I've been trying for the last 2 years. I had a buyer that signed a contract in May 2012 for full asking price, set by the bank. 8 months later in January 2013, we think we're close to closing. The bank asked for a HUD1 statement and his lender information. 2 days later, my attorney was told by the bank that they had upped the asking price by $9,000. The buyer gave up and walked away. He waited 8 months. As for pricing of the home, even though it's in my name, the bank sets the price. My home is being sold "as is", but it had been totally redone when I bought it in 2005. There are holes from 2 TV's that were wall mounted that have to be repaired and 1 hole from a mirror that needs to be spackled. Everything is new in the house except the air handler. The homes that are for sale in the development are priced at least $10,000 lower and are bigger, yet not updated. The bank has done approximately 8 appraisals in the 2 years it's been on the market. This is the 2nd year the house has sat empty during the winter, yet the bank rejects the full asking price offer and raised the price by $9,000. It's not usually the seller that sets the Short Sale price, it's the bank.
0 votes Thank Flag Link Thu Jan 31, 2013
Bob, some homes seem to be overpriced due to the fact that a lot of people owe more on their house that the market will pay at this time.That is why there are so many short sales( short sales refer to a home being sold for less than is owed on the home). The best way to see if the home you are interested in is priced correctly is to ask your agent to run a comparative market analysis(C.M.A.) . This will tell you what the going market price should be. I do C.M.A. for my buyer clients give them the present market price of the home.This gives them a measure of confidence to what to offer on the home.
Web Reference: http://RobertSuarez.net
0 votes Thank Flag Link Thu Apr 22, 2010
Hi Bob
To answer your question ,no most homes are not overpriced but there ares some that are & there always will be in any market. Why? Because some sellers insist on listing it at their "wishful thinking" price & the other reason is that there are still some agents out there that will take a listing at any price just to get a listing. There are plenty of great values out there especially in Ocean County. If you are diligently looking for a home of a certain size & price range in move in condition with certain features & you are not finding it more than likely you need to regroup with your agent & prioritize your " must have" list. If you can't find the right house you may have to consider other towns with a lower price range or pay a little more for the house you like. Broaden your search & you will find it.
0 votes Thank Flag Link Mon Apr 19, 2010
Bob - In the past 40 years ( i have been in real estate since the 60's) there has been no better time. NOW is the time to buy.
Yes some sellers are over priced but BUYERS set the values - always have - always will. Don't let them get you down. Most of the buyers learn the market and know it better.
LEH is got some great deals -who are you working with?
http://www.RealEstateInOceanCounty.info will plug you into the properties that have sold in your area. Pick Ocean MLS not Monmouth.
If your serious and call me
Marc
0 votes Thank Flag Link Mon Apr 19, 2010
You have a great point about pricing, some people price their homes unrealistically. As noted in previous answers, everything is negotiable. Therefore, if you see a home that you feel is overpriced making an offer and negotiating is an option.

Some people do not like to deal with overpriced homes because the seller may not be serious about selling if the house is overpriced.

From an appraisal perspective, The market price of a home is what a qualified buyer is willing to pay. So, if someone is willing to pay a higher price then the home is not overpriced.
0 votes Thank Flag Link Mon Apr 19, 2010
If you like the house, put an offer and be ready to negotiate. But remember, asking price is not that same as a seller net sheet. Be deligent to put closing cost, incentives. origination and discount points, inspection, appraisal and so, on the seller side. Make sure your offer is open for short time (10 days) using the following wording like "Buyer’s irrevocable offer to purchase the Property shall continue to be valid untill..." This way you put some pressure on the seller. The point is, listing price is not everything. Regards
0 votes Thank Flag Link Mon Apr 19, 2010
You have to remember that a few years ago home values were over inflated and almost everybody did a refi cash out of the equity that was available at the time. Home prices are still coming down today but many of the people who need to sell owe more then what the house is worth so there hoping someone can help them out of their situation and they are listing it for as much as they owe even though its not worth it.
Web Reference: http://www.sjrates.com
0 votes Thank Flag Link Mon Apr 19, 2010
Bob
The best person to consult about overpriced homes in a local real estate agent. They will be able to give you specific comparable sales for specific homes, neighborhoods etc.
Good luck on your search
0 votes Thank Flag Link Mon Apr 19, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer