How to Sanity-Check a Home Price Before You Make an Offer
Summary
Before you make an offer, there’s a moment every buyer reaches where the questions start stacking up:
Is this house actually worth the price?
Am I about to overpay?
What if the market shifts right after I buy?
In competitive markets like the Philadelphia suburbs, buyers are often asked to move quickly — sometimes before they feel confident they understand the pricing. That’s where mistakes happen.
This guide walks through a practical, no-hype framework for sanity-checking a home’s price before you commit, so you can make an offer that’s informed, defensible, and aligned with how buyers actually think — not just how listings are marketed.
Table of Contents
Why “Asking Price” Is the Wrong Starting Point
Step One: Understand the Buyer Pool This Home Targets
Step Two: Compare Against Current Alternatives, Not Old Sales
Step Three: Separate Location Value From House Value
Step Four: Evaluate Layout and Livability (Not Just Size)
Step Five: Discount for Risk You’re Quietly Accepting
Step Six: Read Days on Market Correctly
Step Seven: Stress-Test the Price
When a Second Opinion Is Especially Valuable
The Strategic Takeaway
1. Why “Asking Price” Is the Wrong Starting Point
Many buyers begin by asking whether a home is “worth” its asking price. That framing is backwards.
Asking price is not a statement of value. It’s a strategy — sometimes aggressive, sometimes conservative, sometimes aspirational.
What matters is not:
What the seller hopes to get
What the home cost them
What a nearby house sold for last year
What matters is whether the price makes sense relative to what buyers can choose right now.
2. Step One: Understand the Buyer Pool This Home Targets
Every home is priced for a specific buyer pool.
Ask:
Is this an entry-level home for the area?
A move-up family home?
A downsizer product?
A prestige or “statement” home?
If a home is priced for a buyer pool that is:
small
rate-sensitive
or highly selective
…the price needs to be tighter to work.
Mispricing often happens when sellers assume a broader buyer pool than actually exists.
3. Step Two: Compare Against Current Alternatives, Not Old Sales
One of the biggest buyer mistakes is anchoring to closed sales without context.
Closed sales tell you:
What buyers were willing to pay
Under different competition
Under different rate conditions
Instead, sanity-check price by asking:
What else could I buy this month for similar money?
Which home would most buyers choose if forced to pick?
If a listing loses that comparison — even subtly — pricing pressure exists, regardless of past comps.
4. Step Three: Separate Location Value From House Value
Buyers often blend these together. Don’t.
Location value includes:
School district strength
Street quality
Walkability or commute access
Neighborhood reputation
House value includes:
Layout
Condition
Light and orientation
Functional upgrades
A home can deserve a premium for location and still be overpriced if the house itself underperforms.
In places like the Main Line, buyers will pay for location — but only up to the point where the house still works.
5. Step Four: Evaluate Layout and Livability (Not Just Size)
Square footage is a blunt tool. Buyers pay for how a home lives.
Ask:
Does the layout match how people live today?
Are key spaces connected logically?
Are bedrooms usable and well-proportioned?
Is there flexibility for future needs?
A 3,000-square-foot home with great flow often outperforms a 4,000-square-foot home with wasted space.
If a layout forces compromises, that’s a pricing issue — not a personal preference issue.
6. Step Five: Discount for Risk You’re Quietly Accepting
Every home comes with risk. Smart buyers price it in.
Examples:
Deferred maintenance
Aging systems
Flood, drainage, or grading issues
Busy roads or environmental noise
Limited resale flexibility
Sellers often say, “That’s already reflected in the price.”
Sometimes it is. Often it isn’t.
If you’re accepting risk, the price needs to compensate you — otherwise you’re absorbing downside without upside.
7. Step Six: Read Days on Market Correctly
Days on Market (DOM) doesn’t automatically mean “bad deal” or “great deal.” It means the market has already voted once.
Ask:
Did the home launch in a competitive window?
Has the price changed?
What objections might prior buyers have had?
Would those objections matter to you?
A home with low DOM can still be overpriced.
A home with higher DOM can be a strong buy — if you understand why it lingered.
8. Step Seven: Stress-Test the Price
Before offering, run two simple tests:
The Resale Test
If you had to sell in 3–5 years:
Would buyers make the same compromises you are?
Would the price still make sense relative to alternatives?
The Market-Shift Test
If the market softened modestly:
Would this home still stand out?
Or would it immediately face pressure?
If the answer feels uncomfortable, your offer should reflect that discomfort.
9. When a Second Opinion Is Especially Valuable
A second opinion is most useful when:
You’re stretching financially
The home feels unique or hard to comp
The market is shifting
You feel rushed
You can’t articulate why the price works — only that you like the house
Sanity-checking isn’t about killing deals. It’s about making sure the deal you do make still makes sense later.
10. The Strategic Takeaway
Sanity-checking a home price isn’t about finding the “right” number. It’s about understanding the logic behind the number.
Strong offers are grounded in:
Buyer choice sets
Risk awareness
Layout and livability
Market psychology
Buyers who do this well don’t just avoid overpaying — they buy with confidence, even in competitive conditions.
Closing Thought
A good purchase isn’t one that feels exciting in the moment. It’s one that still feels reasonable after the adrenaline fades.
If you can explain why the price works — not just that you like the house — you’re probably making a sound decision.
And if you can’t? That’s usually a sign to slow down, ask better questions, or get a second opinion before you commit.
By Eric Kelley, Philadelphia Suburbs Realtor & Attorney