The problem with overpriced homes....and it's getting worse

This has been a rough week for me when it comes to overpriced properties. One of my buyers called me all excited about a particular property she was interested in. It was a small two bedroom home on almost 2 acres of land. It was also two doors away from her sister's home. I looked up the property and we saw it the next day.

It was a cute house in a nice area, but it was pretty small. And to make matters worse, someone purchased the vacant lot next to it where he was going to build a new home. Not a big deal, right? Well, after looking at the survey, it cut a corner of the driveway off and it made 2 of the 3 car garages inaccessible (for automobiles, that is).

The price of home was listed at $146,900 but when I was looking for comparible homes, I couldn't find many. And the ones that I did find were priced in the $120,000 - $125,000 range. I told the listing agent that my buyer was interested in this property, but I couldn't find any comps to justify the price. I nicely asked her to send me the ones she used when she priced it.

Days went by and I heard nothing. Even after asking two more times, she wouldn't reply. So we made an offer based on the comps that I found and the homeowner didn't even counter-offer. Needless to say, we're now looking at other homes for my buyer to choose from.

But you may be asking "If your buyer liked the home, why wouldn't you make an offer closer to the asking price?" In this particular case, if the comps came in close to the asking price, we probably would have. But they didn't and the listing agent COULDN'T send me any either (I found that out later on).

Here's the reason why comps are so important when pricing a house or putting an offer on a house. It's because it will have to get appraised by the bank and they are the final judge on whether the buyer can purchase the home or not. If a buyer puts an offer of $150,000 on a home that's only worth $120,000, then the bank will not fund the mortgage (unless the home buyer pays for the difference himself...$30,000).

This exact situation happened to me this week. One of my homebuyers put an offer of $123,900 on a home listed for $129,900. We got the deal together and things were moving forward. That is until the bank had the home appraised. The appraisle only came in at $90,000. We then had it appraised agan by a different appraiser and he brought it in at just over $100,000. Still not enough to get the deal done.

Apparently, banks have recently been cracking down on home values because of all the foreclosures happening throught the country. Even though this problem is worse in certain cities, other cities such as Pittsburgh are paying the price.

So now, more than ever, if you're going to put an offer on a home, have your real estate agent do some research to determine if the asking price is close to the market price in the area. Otherwise you may be headed for a disappointing surprise as you get closer to closing.

For more information about home buying a home, visit www.NewlywedHomebuyer.com