The reigning advice on home purchase is to be rational. Yet, owning a home is mostly an emotional decision. It’s not surprising, therefore, that when it comes to dream homes, buyers are willing to spend a little extra in exchange for having a wish come true. However, that doesn’t mean you should pay the seller the first price that is quoted.
A quick check on whether the home you like is overpriced can help ensure you make a good decision
Check locality prices
A quick way is to compare prices with similar property in the locality. Understand the average price in the area and try being as specific as possible. While small differences may be possible due to difference in builders etc, be especially wary of large or unusual differences.
Compare amenities
When comparing prices, take into account the type of project and amenities offered. Avoid Comparing a luxury project to a budget homes project is like comparing apples and oranges. Take into consideration the ‘extras’ that your builder is offering – are amenities very basic while prices are high in comparison?
Ask a property expert
If you have further doubts, consult a property expert. A professional opinion can help you gain insight into multiple aspects – if your home is overpriced, if the area you’re considering will see good rate of growth, does the investment make sense?
Long sales cycle
When you’re considering a property purchase, find out how long it has been on the market. If a home has been up for sale for a long time, perhaps, the price quoted by the seller is above what is reasonable.
Get a real estate appraiser
You can also enlist the services of a real estate appraiser for a realistic idea of the value of the property in question. Banks usually conduct a valuation as part of the home loan process.
Negotiate
One standard rule when purchasing property is to negotiate prices. Offering a lower amount than what is quoted not only gives you a chance to get a better deal, it lets you gauge the seller’s reaction to see if he’s willing to come down. If he’s willing to reduce by a significant amount, then it could mean that the home was probably overpriced to begin with.
While worrying about small differences in prices is probably futile, it is best to explore reasons behind overstated price before making a choice.
