Why Do Sellers Overprice Their Homes? Can I Get Them to Go Down?
Many buyers and sellers are finding it difficult to come up with comparables that support their agreed-upon price, even in cases where there are multiple offers. Here are a few need-to-knows that should inform your thought process around this home.
The assessment is largely irrelevant. There are lots of reasons assessed values can be wildly off of from a home’s fair market value. First among them is that homeowners have a deep, vested interest in depressing their home’s tax assessment: it’s the basis for their property taxes.
So, tax-savvy homeowners jump through all sorts of loops, legitimate and less so, in an effort to get or keep their assessments (and property taxes) low, from failing to report improvements to the property, to submitting aggressive appeals of their assessments using not-so-comparable sales data. And no, an assessment lower than the true fair market value doesn’t necessarily help you if you do buy the property; in many states, tax assessors revise the assessed value to the purchase price when you buy it.
Maybe the list price is fair. What’s more, the definition of a home’s fair market value on any given Sunday is what a qualified buyer would be willing to pay for the property on that day. And, as you already understand, the best way to gauge that is by what similar, nearby homes have sold for as recently as possible. This is where the fact that the home is rural and that very little comparable sales data exists becomes a problem.
This will likely also become a problem for any buyer that attempts to purchase the property with a mortgage; the lender will require an appraiser to provide comparables and/or some other strong argument that supports the purchase price.
Ultimately, only you can decide whether you agree; it might be a good idea to look through any pictures or old listing materials your agent can find about the other home, so you can do your own compare and contrast.
Maybe they’re overpriced. At higher price ranges, it’s more common than elsewhere to see sellers price higher than they believe the place is worth, assuming they’ll need room to negotiate downward to meet a buyer’s demands. And virtually everywhere, at every price range, buyers know that there are simply some sellers that are in the clouds regarding their pricing.
The list price should inform, but not govern, your offer price. This is real estate, remember, so nearly everything is negotiable, especially price. The list price and any information about the seller’s motivation level or priorities that the listing agent will give your agent should definitely factor into your decision-making about how much to offer, if you decide to make an offer. But so should your own good judgment, common sense, personal financial resources and analysis of the relevant local market data, which your agent should happily help you undertake.
Do what you can to make the best offer that takes into account all of these factors; don’t feel forced to overpay for a property because the seller is unrealistic.
Here’s a useful video on How To Make An Offer to Buy a House, and an article on, When It’s Best to Walk Away From An Overpriced Listing.