About three years ago, a neighbor built a custom home. Within two years, they divorced and placed their home on the market. My initial thought was that the home had some functional deficiencies and the asking price was too high.
 
Within a couple of months, the home was sold to a young couple.   After verifying the selling price, I thought they paid too much, but if they kept the home for years, it really did not make a difference.   A year later the home was on the market again, with an asking price substantially above the last selling price. 
 
Again, I said to myself that the asking price simply does not make sense. How did they arrive at the asking price? After two real estate companies and a series of price reductions, the real estate signs disappeared and in their place was a notice on the front door. The young couple moved out a couple of weeks ago. The home is now up for auction for non-payment of mortgage.
 
When I see something like this, it saddens me because the couple paid too much for the home initially and secondly may have purchased a home above their means.   Either the young couple’s Buyer Agent did not explain the home’s true value or the couple ignored the advice. 
 
What are the lessons to be learned? First, use a Buyers Agent who knows the market and consider the agent’s advice reference value.   Secondly, only purchase homes within one’s comfortable budget.