3 Signs the Home You Want Is Overpriced — and What To Do Next

Earlier this year, more than one-third of homes in New York were sold for more than the list price, according to statistics from Houzeo.com . While the market has cooled since then across the U.S., many homes still list for more than their value .

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But that doesn’t mean you should pay over list price for a house, even if it seems like your dream home. “Paying more than a home is worth can cause ripple effects for potentially decades,” Omer Reiner, owner of FL Cash Home Buyers LLC, previously told GOBankingRates .

But how can you recognize a home is overpriced?

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It’s Selling for Higher Than Market Comps

If you work with a buyer’s real estate agent, they understand how to evaluate market comps, or comparably priced homes in the area, to find out what a home is really worth. Ideally, a seller’s agent also reviewed comps before helping the seller price their property. But comps can change weekly — or even daily, according to Roofshark.com. So it’s important to check these numbers, especially if the house you want has been on the market several weeks or months.

“Looking at comps, or comparable properties that have recently sold in the neighborhood, can help you negotiate,” said Todd Stearn, founder and CEO of TheMoneyManual.com.

While working with a Realtor helps, you can run comps on any property on your own. Use websites like Redfin or Zillow to search recently-sold properties in a specific zip code or school district. Roofstock.com advised comparing homes with similar features to the one you want to buy. For instance, find homes with similar square-footage, the same number of bedrooms and bathrooms, the same size lot and similar in age and architectural style, to the one you’re looking at.

The Condition of the Property

Even if the home appears to be fairly priced based on recent sales in the area, if the property needs a lot of work, you could risk paying too much for it. From structural damage to an outdated kitchen, any work needed will cost money. You can factor these costs into any offer you make to avoid overpaying for the home.

Home Inspection

If you don’t have experience in home contracting, it can be hard to pinpoint flaws in a house that might reduce its selling price. That’s where a reputable home inspection service comes in.

In an article published on the Equity Trust blog , Bill Erickson of National Property Inspections revealed that faulty electrical systems, drywall cracks, mold and worn roofing can be big red flags during a home inspection.

If you see any of these issues, reconsider making an offer on the home, or negotiate a price with the understanding that you’ll have to pay for these costly repairs. You may also negotiate with the seller to fix the problems before closing as part of the contract.

“Especially in today’s hot market, it may be tempting to forgo the inspection,” Erickson wrote. “But in skipping this crucial step in the real estate transaction, you won’t truly know the condition of the property you’re purchasing.”

Once you know what you’re getting into, you can decide whether to walk away or negotiate a lower price.

This article originally appeared on GOBankingRates.com : 3 Signs the Home You Want Is Overpriced — and What To Do Next