3 Signs That Real Estate Is Overpriced

The purchase of your first home may represent one of the largest investments you will ever make, which is why many people are careful about not overspending. However, if you aren't careful, you could get excited and put in too high of an offer, impacting your finances for the foreseeable future. Here are three simple signs that the real estate you are considering is overpriced. 

1. The Price Per Square Foot Is High

Before you consider a home, do some calculations to determine the price per square foot. To do this, divide the amount the house is listed for by the total number of square feet. Compare this number to the average in the area, which is typically listed online or available through your real estate agent. 

If your home is much higher per square foot than the average home is selling for in the area, put in an offer that is lower than the asking price, or keep looking until you find a home that is priced better. 

2. The Area Is Undergoing Lots of Changes

When change comes to an area, it can improve home values—or cause the prices to plummet. While new, nice neighborhoods filled with luxury property can be alluring and drive up the cost of homes, zoning changes, big stores, or other large commercial projects could cause numbers to trend downwards. 

If a house is located in a spot that is experiencing a lot of changes, and some of those changes aren't necessarily ones that would make the neighborhood more appealing, it could be overpriced. Talk with your agent about changes the city has made recently, the zoning of the area, and the area's planned projects to find out more. 

3. You Aren't Competing Against Any Offers

When you submit an offer and other people have already submitted theirs, it is a great sign that the home you are interested in is priced well. On the other hand, if your agent talks with the seller's agent and there isn't a lot of activity, the home may be listed too high. Learn as much as you can from your agent and the selling agent to find out as much as possible about who is interested in the home. 

Anytime you are thinking about moving forward with a real estate purchase, think carefully about the cost of the home and whether or not you feel comfortable with the price. Talk with your real estate agent and mortgage broker to carefully consider all of the financial aspects involved with owning the home, and keep your mind open about other properties.