While selecting a home that fits your criteria can be demanding, selecting a home that is a good investment requires a little more. There are homes priced well above their actual value. Being able to spot these homes will help to narrow your search and get more bang for your ‘real estate buck’. Here are five red flags to watch out for.
1. Stand-alone home
When the price of a home is much higher than other similar properties in the area, it is conceivably overpriced. You should check out comparable homes in your area and see what they sell for. Location matters when determining the price of a property. Notably, a luxury property in a neighborhood full of single family homes will suffer a drop in value.
2. How long has it been on the market?
It’s a buyer’s market in many markets. Lots of homes are sold within weeks of being listed. Some are sold a few days of being listed. A home that sits on the market for months is likely overpriced.
3. Low number of viewings
If a home has had a low number of scheduled viewings or open houses for a while, it is a sign that buyers believe the house isn’t worth their attention. The home is probably overpriced.
4. If the property has seen significant improvements or customization.
A seller usually mentions the new kitchens, new bathrooms, add-on decks, pools, and other improvements to their home in order to sell quickly - or spike up the list price. As a buyer, you must ask yourself if you really need these updates and if they add value to you as a potential owner.
5. If the price of the house doesn’t match the neighborhood.
If "location is everything" in real estate, it follows that the most desirable neighborhood should have the higher property prices. Busy streets, poor rated schools, demographic areas with low income and limited facilities can lower the value of a home. If you do not mind moving into this kind of area, then the price of your home should be much lower than if you buy the same kind of property in a quiet, affluent town.