Why is This Home So Cheap?
So you’re in the market to buy a new home, and you’re opening up your email to see the new properties on the market today. You see something AHH-mazing, much better than any of the homes you’ve been looking at so far. You think, “How is this even in my price range?”
What’s the catch, right? I frequently get texts/emails from my buyer clients being like, “Why is this home so cheap? There must be something wrong, right?”
Probably not. But … maybe. Here’s are some possible explanations to why a home is listed so cheap:
Is it a Short Sale?
Short sale properties are when the lender agrees to accept an offer that is less than the mortgage amount. So, some properties will be listed way below market value (think like, $100k less in some cases) just to attract a lot of eyeballs on the listings. The lender is unlikely to accept something WAY below market value, but the idea is to drum up an offer so the lender can start the short sale process.
Is it Located on a Busy Street?
It could be an issue of location. Suburban homes that are perfectly tucked away in quiet cul-de-sacs are often priced higher than those with a fence hiding the highway in their backyard. Maybe the property is next to a comercial building, or it backs to the train.
My General Rule: If you’d hesistate to live at a place with “location defects” then so do other buyer. The price is then compensated. Because there is some price that buyers are willing to live with a water tower in their backyard, but it’s less.
Have you Checked the Flood Plain Maps?
Chicago suburban homes have flood zones all over, and a good Realtor should be able to tell buyers right away if the home is in a flood plain or not. This affects the home’s price for two reasons:
- Duh: Your home is at risk for flooding during a major storm
- You will be required to get flood insurance if you are getting a mortgage
Flood insurance is a big expense on top of the new buyer’s mortgage payment, so asking a buyer to pay top dollar for a home that has an additional $250/month insurance payment is tough. That, on top of the inevitable fear of flooding. Again, tough.
This is why homes in flood zones are usually quite discounted compared to their comparative neighbors in another part of town.
Does the Home have an Odd or Unique Feature?
Some homes have oddly specific characteristics that are just harder to sell. I’ve seen all kinds of weirdness such as statues in the entryway, waterfall features in the family room, etc.
More commonly, remodeling choices make some homes more difficult to sell. I.E. some people convert their attached garage into an extra family room or bedroom to get more liveable square footage. This 1) loses a garage and 2) makes for an odd transition since that room hardly ever feels seamlessly connected to the rest of the house.
I’ve also seen split level homes where they move the kitchen to the lower level. Probably a very expensive remodel that suited the current family but again, that’s not going to match everyone’s way of living.
Some Sellers Want To Sell Fast:
Sometimes, it’s just a good deal.
Every seller is in a different situation. Typically homes are sold very competitively because the seller wants every penny. But sometimes, time is money to sellers and they just want to move on with their life (literally). Sometimes a “fair” price is good enough for them.
Example: Those who inherit a property may not care as much about squeezing every last penny out of a property they will split 5 ways with their siblings.
If you find a property that seems too good to be true, maybe it is. If you cannot seem to figure out the pricing, feel free to just ask a Realtor (hi!!) they will probably instantly know why a property is priced below your expectation.EMAIL ME (No Pressure!)
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