As a home buyer are you interested in purchasing an overpriced home?
So why then as a home seller will you be convinced that your home can be sold at such a price?
There are many determining factors as to whether a house can or cannot be sold. However the main determining factor will always be the price. If one prices the property correctly, then you will start to see a lot of selling activity.
So then, how does a home owner know that he is dealing with an overpriced home? These are 10 common signs that indicate that a home is overpriced.
Sign Number One: Neighbouring homes are listed for sale for a lot less
Well in short, this particular home is the most expensive listing on the market in that particular neighbourhood. Have you seen properties whereby the past transacted price is in the region of let’s say $1000 per square foot and then you come across a particular property which is listed for $1300 per square foot for a unit of the same size?
“I spent $150,000 on this renovation. It is the most beautiful home you can buy in this area.”
“This is the best facing with the best views. Moreover my home as a nice unit number.”
This a common response which homeowners give when asked about why they think they can list their home at such a high price. It gets even worse when they start comparing with what is out there in the market. Homeowner A may be listing his home for 10% above the last transacted price and then homeowner B decides to sell his property. Homeowner B, upon seeing that his home has a nicer renovation (in his own personal opinion) as compared to homeowner A’s home, then prices it another 10% higher. This vicious cycle continues and there will always be a few homeowners that are trying to outdo each other in terms of having the most overpriced home in the neighbourhood. So not forget, we should always be looking at the past transacted prices and these can be found on the various portals for both Housing Development Board (HDB) flats and private properties.
I personally met someone who would want to list his property on the market for an overpriced sum when there was little to no supply at that point in time. The plan did sound rather intelligent at that point. Prices should gravitate higher when there is a demand for something but yet supply is low. However more often than not buyers will just not make the purchase. It would be difficult to purchase a property that is asking for a sum much higher than its valuation as most buyers would require a bank loan. Suffice to say, after all these years, he is still holding firm to his ideals even though he has never gotten close to selling his property.
Sign Number Two: The homeowner appointed the property agent who promised him the highest selling price
Well they say talk is cheap and sad to say not every property agent is totally honest with regards to pricing a property. Homeowners, like most people, like to hear people agreeing with them. To get the listing, the property agent would then promise the owner that he will be able to sell his property for an extremely high price. This would then convince some homeowners to give an exclusive to such a property agent. As a homeowner you do not need someone to agree with you on everything. Hiring a property agent means that you are hiring someone to be your eyes and ears in the property market. He should be honest about how much your property is actually worth and advise you as and when to adjust your pricing. It is important to properly conduct interviews with a few property agents before hiring one. Your background search should be looking at his or her profile (this is rather easy as most property agents have an online presence) and hearing what he or she has to say about how to price your property. You want an intelligent, experienced and committed property agent. Not one who just agrees with you so that you will give him an exclusive.
Sign Number Three: The property is still on sale after a couple of months
The usual marketing channels should be fully utilised. Advertising on popular property portals, Facebook marketing, Google Adwords, co-broking channels and traditional print classifieds. However if your listing is still not getting a healthy number of viewings, then you may want to get concerned. Buyers are not a misinformed bunch of individuals who do not do their homework. In actual fact, home owners and home buyers are perhaps similar in profile. So why then do certain homeowners think that a certain buyer is going to walk into his home and offer 30-40% higher than a similar unit on the market? This is a perplexing question which even defies the smartest quantum physicists in the world. So after a while your amazing property with its beautiful marble flooring and stunning views is not getting any activity. So what is the problem? The answer is that it is priced wrongly.
Sign Number Four: Still no viewings, still no offers
Selling a home requires some work. You need to do a little spring cleaning to ensure that your home looks enticing to a potential buyer. However weekends have passed and your property agent has yet to even arrange a single viewing for your home. You told him that once the buyers started coming to your property, they would salivate profusely after seeing your beautiful Italian marble flooring and designer wardrobes. The truth is that buyers are well informed. They know that if a property is listed for such a high price, the home owner is perhaps thinking of testing the market.
“They can negotiate my asking price.”
By how much? If a property is listed at $1.5 million when its true value is $1.2 million do you think you would eat humble pie and accept any offer almost 20% off from your asking? It would be easier to negotiate with homeowners who have listed at a more reasonable asking than one with an overpriced home.
Sign Number Five: The buyers have “low balled” my asking price
Well if your home is worth $1.2 million and you price it at $1.5 million then technically if someone offers at around $1.2 million then that is a reasonable offer. It may sound derogatory you but that is just the market talking. The home has been on the market for over 3 months and a few seemingly “low ball” offers have come in. The offers are all around the same. Well this may be a way that the market is communicating to you. Home prices are not like stock prices where an exchange gives you instant prices. The property market is more discreet and thus home owners need to listen more intently as to what the market is telling them if they are truly serious about selling their home.
Pricing a property this high may inadvertently invite a low ball offer.
“The seller has been selling for more than 6 months. He may be desperate.”
This is how buyers may think. Thus they throw in an offer to test the homeowners resolve.
Sign Number Six: The only feedback for my home is that it is overpriced!
Well there should be more actually.
“The seller is not serious.”
“This fella is just testing market.”
Then there are the comments that your property agent might not be telling you. Not that he is hiding anything from you. It is really difficult to communicate feedback such as,
“Siao! Who will buy?” (Siao is hokkien for crazy)
“Ask him to wait long long.”
“Maybe need to wait a few more property cycles before this house can be sold at that price.”
The point is that the main feedback you or your property agent is getting has nothing to do with the fact that the house does not have a pleasant facing or that the renovation is not to the buyers’ preference. It is centered on the fact that it is overpriced and thus the buyers do not bother to give any other constructive feedback.
Sign Number Seven: The home has a lot of special features
Every homeowner is proud of their home. Their pride goes higher when it comes to selling their home. Many times homeowners have commented that their flooring cost them a bomb to install and that their cabinets are constructed by a well known carpenter or that their toilet fittings are of top grade and were imported from Europe. The fact of the matter is that not everyone may see the same value that a homeowner places in his renovation. The phrase “one man’s meat is another man’s poison” does hold truth in many cases when it comes to dealing with property. I personally have seen homeowners spend tens of thousands of dollars on their granite flooring and then wanting the buyer to reimburse them for their renovation which was done almost 8 to 10 years ago. The fact of the matter is that extensive renovation is going to impact the valuation of a home positively but not in an extremely large manner. It would not make sense for an extremely well renovated apartment in places like Bishan to cost more than an apartment of the same size and features but with simple renovation in Orchard road. The fact of the matter is that as a homeowner, you should not expect your buyer to reimburse you for renovation you may have done ages ago to your liking.
Sign Number Eight: The property agent’s exclusive has expired
“Hey wait! I thought this home was listed by a lady? Why is it that a male agent is listing it currently?”
Many months ago you saw that home listed by a certain property agent and no one else. Today it is listed by a different agent. What has happened is that the homeowner has given an exclusive of three months to the first agent and when the first agent could not sell the property, he gave it to another agent. There could be a possibility that the first property agent did not do a proper job in getting maximum exposure for the home but more often than not, the property is overpriced and the homeowner is just trying his luck and got a property agent to list his property. Anyway listing a property is of no cost to the homeowner.
Some homeowners go through cycles of different property agents. If they were serious about selling their home they might do better sticking with a property agent with a good track record and who gives good advice.
Sign Number Nine: The property is listed by many property agents and the listing seems to be bumped up many times
Online portals like PropertyGuru are places where most buyers look when it comes to searching for a new home. A property agent pays such portals a certain amount for a year’s subscription and he has fixed number of listings he can place in the portal, namely 50 for a PropertyGuru account. Most property agents do not have that many exclusive listings to post and thus if a homeowner comes along and wants to keep his listing open then some property agents will gladly advertise for him even if his home is overpriced. The fact is that buyers may call and residual deals may occur. This is of little interest to the homeowner despite what many homeowners think. There is no way to monitor what multiple property agents are doing. Some may not be advertising your home with the correct details and others may list your home at a more reasonable price. Many months down the road and the home is still being listed by multiple agents at the same overpriced pricing. The listing has been bumped up so many times that just about everyone in the market knows about this home but yet there are no takers.
Sign Number Ten: Neighbouring homes are actually selling
3 months ago there were 5 units including your home being sold in your development. Today all the other 4 have been sold and yours is the only one left. Only thing is that yours is not really the only one left. There are another 6 new listings in the market and yours is still the most overpriced one. You start to get the feeling that you are tired of selling and start making excuses like,
“It’s ok. I am not in a hurry to sell anyway.”
However selling your property today would allow you to lock in profits and perhaps upgrade to that dream condo or maybe by selling and downgrading you can fully pay off your next home and live debt and perhaps stress free.
One of the most interesting comments I have heard when a home buyer commented about a home that was on the market for more than a year was,
“What is wrong with this house? Is there ghosts inside? Or is it some serious murder happened in the house?”
Just like homeowners that come up with interesting reasons as to why their homes are worth an overpriced amount, buyers are equally funny when it comes to why a home is not selling.
Selling and buying a property can be a rather tedious and long drawn out process. However it can be made much simpler and done very efficiently if it is priced correctly. For this a homeowner needs to do some research on how his home should be priced or he can hire a property agent to better advise him on how to price and market his home effectively.
Yours Sincerely,
Daryl Lum
