How to negotiate a house price on your dream home?

The right way to make an offer on overpriced home is to justify your offer. Overpricing occur in seller’s real estate markets, when demand is higher than supply and reasonably priced houses are none to be seen.

While negotiating is important to be realistic. In a competitive market, you may have less room for negotiation, and you don’t want to risk losing your dream home over a small price difference. Work closely with your real estate agent to develop a negotiation strategy that balances your desire for a good deal with the realities of the market and your specific situation.

  • Comparables – Use recent sales of similar homes in the area to justify a lower price to the seller and agent. Point out how the list price deviates from true market value.
  • Seller motivations – Ask your agent about the seller’s motivations and timeframes, which may reveal flexibility. A job relocation or looming foreclosure can add urgency to sell.
  • Market realities – Cite current market trends like rising inventory or reduced buyer demand that necessitate lower pricing. Use hard data like Days on Market.
  • Offer aggressively – Open with an offer 10-15% below list price, citing comparables. Include data and rationale. Then negotiate from there.
  • Appeal to urgency –  Ask your agent about the seller’s timeline or motivation. Highlighting their urgency to sell can make them more flexible on price.
  • Find defects – Thoroughly inspect the home to uncover defects you can use to negotiate the price down further. Cosmetic issues like dated kitchens also help justify lower offers.
  • Agent recommendations – Lean on your experienced agent’s advice for how much below market value to offer and negotiating tactics.
  • Bridge the gap – If needed, increase your offer slightly each round until you find agreement with the sellers. But stick to your limit.
  • Remain firm – Politely stand your ground on the fair price supported by comps and inspection findings. Don’t overpay.
  • Be ready to walk away – Be willing to disengage if sellers are inflexible, and resume the search for another home. This also signals you’re serious.

If you’re in the market for a new home, you may come across overpriced houses that are out of your budget. However, don’t let a high price tag discourage you from negotiating down and securing a reasonable deal. With the right strategies, you can effectively negotiate down the price of an overpriced house.

In this section, we will explore valuable insights and practical tips how not to put forward higher offer and a good way to make your initial offer accepted.

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George Nicola

George is a seasoned interior designer and property marketing strategist with over 13 years of experience. He specializes in transforming properties into visually stunning spaces, helping clients recognize the potential and beauty in each property. With an impressive international client base of exciting projects throughout Europe and America.

How do you know if home is overpriced?

You can tell a house is overpriced if it is priced significantly higher than comparable sales in the same neighborhood.

For example, if most 3-bedroom, 2-bathroom homes in the area have recently sold for around $300,000, but the house you’re considering is listed at $450,000 without any significant upgrades or unique features, it’s likely overpriced.

Another red flag is when the list price is unrealistic given the home’s size, age, condition, and location.

Let’s say you’re looking at a 1,500 square foot, 30-year-old house in a modest neighborhood, priced at $800,000. Unless it has undergone extensive renovations or boasts a prime location, this price is probably unjustified.

If the price per square foot is much higher than for similar homes on the market, it’s another red sign of overpricing.

For instance, if the average price per square foot in the area is $200, but the house you’re interested in is asking $350 per square foot, it may be overvalued.


Other indicators of an overpriced home include:

  • It’s been sitting on the market for 90 days or more without any offers, while similar homes are selling within 30 days.
  • The sellers have had to reduce the price multiple times, like from $600,000 to $550,000, then to $500,000, and it’s still not selling.
  • Your real estate agent advises you that the home is overpriced by at least 20% based on recent comparable sales.
  • There is little foot traffic during open houses, and online views are low compared to other listings that have been on the market for a similar number of days.
  • The features, upgrades, and condition don’t justify the premium pricing. For example, the house is priced $100,000 higher than others in the neighborhood, but the only differences are a fresh coat of paint and new carpeting.
  • The price is in line with the neighborhood, but homes are selling below list price in the current market. If similar homes are selling for 5-10% below asking, a house priced at the top of the market may be overpriced for current conditions.
  • The sellers give unrealistic answers when you ask why it’s priced so high, such as “We need this amount to buy our next house” or “We spent a lot on remodeling,” rather than providing comps to justify the price.
  • You’ve done a thorough price analysis confirming an overprice versus recent sales. For instance, you found that the house is priced 15% higher than the average of the three most similar homes that sold in the last 60 days.

A good and experienced agent can also help identify overpriced homes even in sellers market and guide you through the negotiation process if you decide to make an offer on one.

Carefully checking comparable active listings and sold prices provides the best market data to recognize overpricing. An experienced agent can also identify overpriced homes

In what market overpriced homes are common?

Any shifting or unique market without adequate data and context can enable sellers and agents to inadvertently overprice properties. The best defense is a data-driven approach.

  • Sellers’ Markets – When demand is high and inventory is low, some sellers get overly ambitious with pricing, overestimating how much the competition will bear.
  • Cooling Markets – Sellers who price based on peak market conditions often are slow to react to cooling trends with lower pricing.
  • Rural Areas – Homes in remote areas with few comparables are more susceptible to overpricing without context.
  • Custom Homes – Sellers may overvalue personalized renovations, finishes and features that buyers don’t necessarily want.
  • Luxury Homes – Million-dollar-plus listings rely more on appraisals. But appraisal gaps can facilitate overpricing.
  • FSBOsFor Sale By Owners lack agent input on pricing. Emotions and aspirations often lead to overpricing.
  • Relocations – Sellers moving into a new market may not grasp localized supply/demand dynamics impacting home value.
  • Inherited Property – Inheritors often attach emotional sentiments to property, inflating perceived value.

Understanding the Overpriced House Market?

Before you can negotiate down an overpriced house, it’s important to understand the current state of the property market. The reality is, many homes are simply too expensive for the average buyer, leading to exorbitant real estate prices and an unaffordable residential property market.

Factors contributing to overpriced houses and expensive properties include a high demand for housing, a shortage of available homes, and an influx of cash buyers. In addition, the cost of buying and maintaining a home has increased significantly, leading to inflated house prices and costly housing options.

As you begin your home buying journey, it’s crucial to recognize the challenges of navigating a high-priced home market.

This understanding will help you avoid the pitfalls of purchasing an overpriced house while empowering you to negotiate a fair price for your dream property.

Is an Expensive house overpriced?

An expensive house is not necessarily overpriced. The term “expensive” is relative and more commonly connected to luxury and depends on various factors such as location, market conditions, and individual perceptions. A house can be considered expensive due to its size, features, location, or amenities, but still be priced appropriately for its market value.

  1. In a high-end neighborhood where the average home price is $1,500,000, a house listed at $1,800,000 with similar features and size to its neighbors might be considered expensive but not necessarily overpriced.
  2. In a modest neighborhood where the average home price is $250,000, a house listed at $400,000 without any significant upgrades or unique features would likely be considered both expensive and overpriced for that specific market.
  3. A luxury mansion listed at $10,000,000 in a prestigious area known for its high-end properties might be expensive, but if it’s priced similarly to other comparable estates in the neighborhood, it may not be overpriced.
  4. A small, outdated house in a low-cost area listed at $300,000, when similar properties are selling for $150,000, would be considered overpriced even though it might not be seen as expensive in the grand scheme of the housing market.

An expensive house can be priced fairly, while a less expensive house can still be overpriced relative to its market.

Researching the Property's Home Price?

Conducting thorough research on the property’s value is crucial when negotiating down an overpriced house. In today’s pricey housing marketovervalued homes are not uncommon. Houses that are overvalued are generally considered to be overpriced, as their current market price exceeds their fair market value based on objective factors and market data. By researching the property’s value, you gain insights into whether the house is truly worth the asking price.

Start by gathering information on comparable properties in the neighborhood. Look for properties that are similar in size, condition, and location. This information will help you evaluate whether the house you’re interested in is overpriced compared to similar properties.

You can also research the property’s history to see if any major repairs or renovations were recently completed. If so, this could justify a higher price point. Alternatively, if the house hasn’t been updated in years, it could be a sign that the asking price is too high.

It’s important to gather evidence to support your negotiation efforts. This could include documentation of recent sales of comparable properties, inspection reports, or estimates for any necessary repairs or upgrades.

Keep in mind that the negotiation process may involve some back and forth between you and the seller.

You should be prepared to make a counteroffer if the seller is not willing to budge on the price, but make sure your offer is supported by your research and evidence.

How to come up with the best offer for over prices house?

For example, let’s say you find a house that seems perfect – great location, amenities, schools, etc. But the list price is $50,000 over your budget. Here are some strategies you could use:

Young couple negotiating an overpriced home in seller's market
Young couple negotiating an overpriced home in seller's market

Do your research to determine the true market value. Look at recent sales of comparable homes in the area to get a sense of what buyers have been paying. You may find the seller’s price is way above market value, giving you room to negotiate.

Make a strong but reasonable counteroffer based on your research. You might offer $40,000 below list price, explaining how the offer aligns with sales of similar homes. Provide examples. Point out any flaws that justify a lower price.

Get preapproved for a loan amount at the top of your budget. This shows the seller you’re serious and have financing ready.

Bring proof of your financial qualifications to strengthen your position.

Being prepared with evidence of market value and serious about buying gives you leverage to negotiate.

But stay realistic – you likely won’t get a full $50k off. Compromise may be around $20k under list. The key is using objective data to support your offer, not just lowballing.

How to make an offer on overpriced house?

When negotiating down an overpriced house, crafting a compelling offer is crucial. Your offer should reflect the property’s true value while presenting a fair and reasonable proposal to the seller.

Here are some savvy strategies to help you create an enticing offer:

  1. Get Pre-Approved: Before making an offer, get pre-approved for a mortgage. This will give you a better idea of what you can afford, and sellers will be more likely to take you seriously.
  2. Research: Use your research on the property’s value to inform your offer. Look at the prices of comparable properties in the same area and take into account any repairs or upgrades needed on the property.
  3. Offer a Fair Price: While you want to negotiate down the price, be sure to offer a fair price that reflects the property’s true value. If you offer too low, sellers may be less willing to negotiate with you.
  4. Include Contingencies: Contingencies give you an out if something goes wrong during the purchase process. Common contingencies include financing and inspection contingencies.
  5. Be Flexible: If you really want the property, be willing to make some concessions. You could offer to close faster or waive certain contingencies to make your offer more appealing.
  6. Consider offering non-price incentives: In some cases, you may be able to make your offer more attractive without increasing the price by offering non-price incentives, such as a flexible closing date, a larger earnest money deposit, or fewer contingencies (if you’re comfortable with the added risk).
  7. Be willing to walk away: If the seller is unwilling to negotiate or accept a fair offer, be prepared to walk away from the deal. It’s better to keep looking than to overpay for a property.

Remember, crafting a compelling offer is about finding the right balance between what you can afford and what the property is worth. By doing your research and staying flexible, you can create an offer that reflects both of these factors and is appealing to the seller.

house price negotiation strategy

To negotiate the best price when buying a house, first research comparable sales to support your offer. Submit an reasonable to offer below asking price, detailing desired repairs and terms.

If rejected, re-strategize; don’t counter immediately. Increase earnest money to show seriousness.

Request credits for repairs, closing costs. Be willing to negotiate into a middle ground. Continued persistence paired with flexibility can lead to an accepted, favorable deal.

Is it ok to make a low offer on a house?

Making a low offer on a house can be okay in certain situations, but there are some caveats to keep in mind:

  • Don’t make an unrealistically low offer that is seen as an insult. Sticking to 5-10% below asking price is often more reasonable.
  • Back up your offer with evidence, such as comparables of similar homes selling for lower prices in the area.
  • Be prepared to negotiate and increase your offer if needed – an extremely lowball first offer leaves little room for discussion.
  • A low offer may turn off some sellers, so be prepared for rejection. But others may counter, allowing a conversation.
  • Consider market conditions – making very low offers in a hot seller’s market is less likely to be accepted.

A “lowball” offer can work depending on your strategy and situation, but avoid extremes.

Do your homework on pricing, make a solid initial offer below asking, and be willing to negotiate up to a fair price for both sides. Just don’t expect drastic reductions.

what is the Process to negotiate a low offer on high house price?

Successfully negotiating down an overpriced house requires a combination of savvy strategies and effective communication. 

Keep in mind that you are not only negotiating on the price of the property, but also on other terms and conditions such as closing date, repairs, and upgrades.

A family negotiates down the price of an overpriced house using savvy strategies in their home buying journey.
A family negotiates down the price of an overpriced house using savvy strategies in their home buying journey.

Here are some valuable tips on navigating the negotiation process:

  • Start with a reasonable offer: Avoid making a lowball offer that may offend the seller. Instead, aim for an offer that reflects the true value of the property, backed up by your research and market analysis.
  • Keep emotions in check: It’s normal to feel emotional during the negotiation process, but avoid letting your emotions get the best of you. Stay calm, confident, and professional, and focus on the facts and data to support your position.
  • Find common ground: Look for areas where both parties can agree, such as a flexible closing date or a repair credit. By finding common ground, you can build rapport with the seller and move closer to reaching a mutually beneficial agreement.
  • Counter offers strategically: When the seller makes a counter offer, take the time to carefully review it and consider your response. Avoid making snap decisions or responding emotionally. Instead, weigh your options and counter with a well-thought-out proposal.
  • Address objections thoughtfully: If the seller raises objections or concerns, take the time to listen thoughtfully and respond in a way that addresses their concerns without compromising your position. By communicating effectively and respectfully, you can build trust and credibility, and ultimately achieve your desired outcome.

Remember, negotiating down an overpriced house requires patience, persistence, and skillful communication.

By mastering these savvy strategies and navigating the negotiation process effectively, you can position yourself for success in securing a favorable deal on your dream home.

Home buyer inspection on overpriced house

For example, a property listed for sale is $100,000 over comparables in the local area. Before agreeing to pay an inflated price, get an independent inspection.

An inspector may uncover issues like a faulty roof, outdated electrical, or structural problems that justify a lower offer. Keep in mind that this is a strategy to do only if you know that this is a possible winner.

Getting multiple home inspectionso n serveral properties quickly would amaount to a sum that might not be sustainable overtime.

Ask for repairs or credits for defects revealed in the inspection report. Use them to negotiate the price down closer to market value. If major issues are found, like a cracked foundation, plumbing leaks, or pest damage, estimate the costs to fix and request that amount off the listing price.

Getting an unbiased inspection before finalizing an overpriced purchase can provide objective leverage in negotiations. But don’t make completely unreasonable demands – focus on big ticket items. Offer to split costs on some repairs. Go in with a spirit of compromise.

What to do if nothing is found on the home inspeciton?

If the inspection on an overpriced home turns up no major defects or needed repairs, here are some things you can still do:

  • Comparables research – Emphasize how recent sales of similar homes in the area show the listing price is above market value. Use this data to counter at a fair price.
  • Appraisal contingency – Make your offer contingent on the home appraising for at least the offer amount. This gives you an out if the appraisal comes under.
  • Home warranty – Ask the seller to purchase a 1-year home warranty covering repairs and replacements. This provides you protection even though inspection was clear.
  • Non-repair concessions – Seek closing cost credits or other incentives from the seller since no big repairs are needed.
  • Walk away – If the seller won’t negotiate significantly from an overpriced amount, be ready to walk away. You have more leverage before committing to a purchase.

The key is still trying to pay market value or negotiate a lower price, even if the inspection is clear. Lean on comparable sales, appraisal contingency, and seeking closing credits as negotiating tools if you lack inspection leverage. Or be willing to walk away and keep looking rather than overpay.

Navigating the Negotiation Process

Successfully negotiating down the price of an overpriced house requires a combination of savvy strategies and effective communication. Here are some proven techniques to help you navigate the negotiation process and secure a favorable deal:

Negotiate with the seller

When initiating negotiations with a seller, it’s important to approach the situation with a clear and level-headed mindset. Be respectful and professional in your communications, but also firm in your position.

Let the seller know that you are serious about buying the property, but that you are also aware of the market value and the current state of the housing market. 

By setting a confident and assertive tone from the outset, you can establish yourself as a strong negotiator.

Address Objections with the seller

Inevitably, the seller may raise objections or counteroffers during the negotiation process. It’s important to address these objections in a respectful and concise manner. Acknowledge their concerns and offer logical and persuasive arguments to support your position.

For example, if the seller is hesitant to accept a lower price, you can point out any necessary repairs or upgrades that may be needed to bring the property up to standard.

Find Common Ground with the seller

In order to secure a favorable deal, it’s important to find common ground with the seller. Be open to compromise and willing to make concessions if necessary. 

For example, you may be able to offer a shorter closing period or agree to take on certain repairs or upgrades yourself. By demonstrating a willingness to work together and find mutually beneficial solutions, you can build trust and rapport with the seller and ultimately secure a better deal.

By following these tips and techniques, you can navigate the negotiation process with confidence and skill, ultimately securing a better deal on your overpriced house purchase.

What percentage below the listing price is considered a fair first offer on a home?

  • 15% below asking may be too aggressive for an initial offer, aim for 5-10% lower.
  • Sellers often come down 5-10% from list price, so offer accordingly.
  • 10% below asking is reasonable for first offer, depending on local market.
  • 5% below is a fair starting point to leave room for negotiation.
  • Reasonable to offer less than asking, just avoid extremes like 50% under.
  • Aim for 5-15% lower than list to start, support with comparables.
  • Offer 90-95% of asking price initially – significant but not insulting.

The key is making a solid but not drastic lowball offer to leave room to negotiate up. Back up offer with market data. And be ready to compromise and increase offer if needed.

Final veredict

As you embark on your home buying journey, negotiating down the price of an overpriced house can be a challenging but rewarding endeavor.

By understanding the market, conducting thorough research, crafting a compelling offer, and navigating the negotiation process effectively, you can position yourself for success.

Empower yourself with valuable insights and practical tips to achieve your goal of purchasing a reasonably priced property. Good luck!


How can I negotiate down the price of an overpriced house?

There are several savvy strategies you can employ to negotiate down the price of an overpriced house.

By understanding the market, researching the property’s value, crafting a compelling offer, and effectively navigating the negotiation process, you can increase your chances of securing a favorable deal.

Why is it important to understand the overpriced house market before negotiating?

Understanding the current state of the overpriced house market provides valuable insights into the challenges of finding affordable residential properties.

By being aware of factors contributing to expensive properties and inflated house prices, you can navigate negotiations more effectively.

How do I research the value of an overpriced house?

Researching the value of an overpriced house involves evaluating comparable properties, gathering evidence, and understanding the dynamics of the local housing market.

By conducting thorough research, you can determine if the house is overvalued and negotiate accordingly.

What should I consider when crafting an offer for an overpriced house?

When crafting an offer for an overpriced house, it’s important to reflect the property’s true value while presenting a fair and reasonable proposal to the seller.

By leveraging market conditions and other factors, you can strengthen your negotiating position and increase the likelihood of a successful outcome.

How can I navigate the negotiation process effectively?

Navigating the negotiation process effectively involves employing savvy strategies and maintaining productive communication with the seller.

By countering offers, addressing objections, and finding common ground, you can work towards securing a favorable deal on the overpriced house.

What is the importance of negotiating down an overpriced house?

Negotiating down the price of an overpriced house is essential to ensure that you’re paying a fair and reasonable amount for the property.

By empowering yourself with valuable insights and practical tips, you can successfully navigate the home buying journey and purchase a reasonably priced house.

How to react if seller's counter offer too high

If the seller counters your offer with a price still too high for the home’s true value, don’t accept it or counter immediately.

Talk you your agent what price negotiation strategy would work. Ask the agent what is reasonable to offer below asking price, on that property compared to their previous experience.

Also, assess if it’s worth pursuing further or walking away. Gather more data like recent sales and appraisal comps to arm yourself.

Consider revising your terms like closing date before countering lower again.

If still rejected, evaluate if boosting earnest money and requesting repair credits could incentivize the seller to meet in the middle.

Don’t bid emotionally – be prepared to walk away if they won’t negotiate reasonably. Persistence paired with patience may still result in an accepted offer at a fair price.

What happens if a house is overvalued

When a home is overpriced and overvalued compared to its true market worth, the most common result is it sitting on the market unsold for an extended period.

Overpriced properties often do not follow the market trends and end up relisted with several agents.

An overvalued listing price prevents buyers whose budgets align with the home’s reasonable value from being able to purchase it. Even with price cuts, overpricing anchors sellers unrealistic expectations too high.

This delays or fully inhibits finding an agreeable middle ground on price and terms between both parties.

Consequently, an overpriced home stays listed without garnering offers, forces the seller to keep reducing the price, or ultimately gets pulled off the market unsold.

Are Overvalued houses overpriced?

Yes, overvalued houses are typically considered overpriced. The terms “overvalued” and “overpriced” are often used interchangeably in the real estate market. When a house is overvalued, it means that its current market price is higher than its intrinsic or fair market value, based on factors such as comparable sales, market conditions, and the property’s features and condition.

Here are a few examples to illustrate the concept of overvalued and overpriced houses:

  1. During a housing bubble, many properties become overvalued as buyers are willing to pay inflated prices due to high demand and speculation. For instance, during the U.S. housing bubble of the mid-2000s, houses that were typically worth $200,000 based on their fundamentals were selling for $400,000 or more, making them both overvalued and overpriced.
  2. A seller might list their house at $500,000 based on their emotional attachment or the amount they’ve invested in upgrades, even though comparable homes in the area are selling for $400,000. In this case, the house would be considered overvalued and overpriced by about $100,000.
  3. In a rapidly appreciating market, a house might be listed at a price that reflects the expected future value rather than the current market value. For example, a house worth $600,000 based on recent sales might be listed at $700,000 in anticipation of further market gains. While not as drastically overpriced as in some other cases, this house would still be considered overvalued.
  4. If a house is appraised at $450,000 but is listed at $550,000 without any justifiable reasons for the premium, it would be considered both overvalued and overpriced by $100,000.