Common knowledge dictates that if a home doesn't sell, there must be something wrong with it. That's a true statement.
In a market that is moving, there is something wrong with a home that doesn't sell. But contrary to popular belief, it's not always location or condition.
The number one reason why an otherwise attractive home does not sell is the price. Homes that are grossly overpriced often never sell at all.
Why? Because home buyers don't make offers on them.
Why Home Buyers Don't Make Offers on Overpriced Listings They don't want to offend the seller. It goes against human nature to offer substantially less than asking price to a seller. It's insulting to the seller and embarrassing for the buyer. Buyers erroneously believe that the seller knows the home is overpriced. They believe that if a seller would be willing to sell for less,
the seller would simply lower her price.
Buyers also assume that the seller must have turned down low-ball offers from other buyers because surely someone, somewhere along the line,
had offered a reasonable price to the seller. But many times, there are no offers at all.
Finding an Overpriced Listing The easiest way is to ask your Realtor about the average days on the market (DOM) for your area. Multiple listing systems are designed, so it's fairly easy to compute the DOM. Then ask your Realtor to sort through the listings and give you a print-out of every home that has been on the market longer than the average DOM.
If your Realtor is a neighborhood specialist, it is likely she has toured these homes and has intimate knowledge of condition and layout of these homes.
Ask her to share this information with you. You can also ask your Realtor which of the homes she thinks are overpriced as well. You will be amazed to learn that often agents don't tell listing agents whether their listings are overpriced because agents don't want to offend anyone either!
But listing agents aren't infallible. Sometimes they make mistakes when estimating market value prices for a seller. Ultimately, however, remember that it is always the seller's responsibility to select the sales price.
Now, not every home that is overpriced will ultimately sell for less than market value. But many homes that are listed at unrealistic prices are owned by sellers who are motivated and who are willing to listen to reasons why they should sell at a reduced price to you. If you find out that a seller has turned down multiple offers for less money, it might mean that it's just a matter of timing. Eventually, the light bulb will go on, and a seller will say yes. There are overpriced gems hiding among the inventory of homes for sale every day.
Don't just pass them by. You could be passing up an opportunity to buy your dream home.
