How to Tell a house is Overpriced?
We are living in a period where the house prices are still rising year on year despite having a stressful last 18 months, either to the COVID-19 pandemic or Ukraine – Russia conflict. Even the price energy crisis did not seem to have slowed down the house prices in the UK. Is it possible that properties have been overpriced? If so, can we tell if a house is overpriced?
At Trusted Surveyors, we pledge to offer free guides to help any homeowner, first-time buyer, or landlord to achieve the best price for their house and/or property or service. Therefore, we have identified a few ways to quickly identify properties that are overpriced.
Here are the main questions you should ask in order to know how to tell a house is overpriced in UK’s current market:
As with any own possessions, we tend to overprice it due to emotional investment. In many cases, the owner will insist on selling his house at a price that is based upon their monetary and sentimental investments rather than on the value they have added to the property. The reverse would be to price a poor condition property with a high-quality finish house on their street.
Always look at the current listings and recently sold properties (similar in type, number of bedrooms, and area) to get a realistic view of your local market.
As a best practice, a valuer will evaluate a property with at least 3 other properties which are within a reasonable, comparable state and area. So, if the property next door is worth just a fraction of the home for sale something is amiss.
This article will cover:
- What is the Condition of Property you Are Looking at?
- Does your Property Price Match the Value of Neighbouring ones?
- How Long your Desired Property Has Been on the Market?
- Probably the Most Important Aspect when Comes to House Prices is its Location
- So, How Do you Know if Your House is Overpriced?
- Are Estate Agent Valuations Accurate?
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As a rule of thumb, the first 30 days on the market is when a property attracts the most interest. If a property has been on a market for more than 60 days or more, the chances are that the house is overpriced.
However, the high-end properties are usually on sale for longer. Also, the current market seems to disturb these statistics as the demand for houses is higher than ever.
Without saying, the location of a property is the main aspect that dictates its price and appeal. Keeping the previous principle, a similar footprint and condition house will be valued differently according to its location.
Are cases when a house is overpriced just because is in a prime location. Common sense dictates that if something is overpriced would not sell. However, this can be seen as an opportunity, especially if a slightly lower offer is accepted in a specific timeframe.
To “dig” a bit deeper, you can ask the estate agent how many viewings the property had in the last 7 days (given the property has been listed for less than 30 days). For example, if the house had 60 online views (like on Zoopla, Rightmove, etc) and the estate agent is saying that the property had no physical views even has been listed last week; that is the first sign that the house has been overpriced.
Other telltale signs that a property is overpriced include: having a lot of views but not any offers put through, other nearby houses are selling quickly, and the house price is quite different from a similar house in your local area.
Another sign that a house is overpriced is when the previous buyer dropped out of the sale because their mortgage provider has valued the property at less than the amount they offered.
In general, the online estate agent valuations are not accurate because a property’s true value is based on what the buyers are willing to pay for it at that very moment and the seller’s subjectivity.
However, a valuable estate agent or valuer can give a more accurate valuation due to their local experience and knowledge. Normally, with a valuation, evidence should be provided with any price suggestion.
Please note that some valuations will be quite off due to the estate agent’s inexperience or if they rely solely on an online calculator without actually assessing the property. Also, some valuations can be inaccurate as the agent is trying to produce a figure that will encourage any party involved to work with them.
If you are worried about a property price, we would recommend getting at least three agents’ valuations or looking for the professional help from a registered valuer. We hope that our guide on “How to tell a house is overpriced?” will be handy on your next house hunt.