By Living Room Realty, May 24, 2019
Most buyers won’t like the idea of offering over asking price on a house. But paying above list price is necessary for a few circumstances.
Below are 7 reasons which suggest this move is essential.
1. The House evidently is underpriced
Many sellers list their home well below fair market value in an effort to spark a bidding war. In that condition, it makes sense for you to offer over asking price in order to outshine other offers.
To know if the house is underpriced you and your agent should assess comps (i.e. recently sold homes in the area). This will help you know about home’s true market value, which will help you in pricing your best offer.
2. Seller’s Market
When demand outpaces the supply of homes for sale it is called a seller’s market, in other words, there are more home buyers than sellers. Knowing key factors can help you find if it is a seller’s market.
Using REALTOR®.com’s Local Market Trends Tool you can find if houses are selling in your neighbourhood in less then 10 days which usually means it is a seller’s market.
3. You know you’re going up against other offers
It is important to ask (or have your real estate agent ask on your behalf) if there are other bids on a property before you make an offer; generally, they will let you know if other offers are on the table so you can act fast.
4. Competing with cash buyers
When home sellers come through a cash offer they inclined towards it for one simple reason that is no doubt you got the coin to close the deal. So, if you know you’re competing against one, making a bid that’s over a home’s list price could persuade the seller to accept your offer.
5. Lack of motivation in the seller
If you find yourself dealing with an unmotivated seller, offering above the home’s list price could make the seller bite. The caveat, of course, if you don’t want to offer so much above asking price to the point where you significantly overpay for the home.
Sometimes the sellers list their home just to test the market and see what seized offer they can get, which is why it is very important to know what the seller’s intention as early as possible. If you find yourself dealing with an unmotivated seller, offering above the home’s list price could make the seller bite.
6. You absolutely love the home and can’t risk losing it
Sometimes you find a house and just can’t take any risk of losing it so offering over asking price can reduce this risk. You can make sure it is a reasonable offer for that house.
7. It is affordable to pay over asking price
If you are making a cash offer you already know what is affordable but in case if you’re obtaining a mortgage, be aware that if you pay way over what a home is really worth, the home still has to pass appraisal in order for your lender to provide you with the loan that you need. Any difference between a home’s appraised value and your contract price would have to come out of your pocket. You will need your real estate agent to help you prepare a winning offer you can afford.
