There used to be a time when offering full asking price was never the norm but with housing markets going through the roof and first-time homebuyers losing out on properties, offering full price is now not only the norm but expected, especially in homes that are well priced. But should you ever offer over the asking price?
In several markets across the country, competition is fierce and many first-time homebuyers are getting priced right out of the competition. So how can they compete? Offering over asking price can be risky on several levels but there are some reasons why an inflated offer is actually the best policy. Here are five reasons and times when it’s a good idea to offer over the asking price on a property.
#1. It’s a seller’s market
A seller’s market means there are more homebuyers than sellers and demand is outpacing the supply of homes for sale. Homebuyers may face a tough challenge due to increased competition. This is definitely something that should be discussed with your real estate agent so that you can strategically offer the right amount to beat out your competition. It’s also important to note that buyer’s markets and sellers markets can change from one city to another and even within neighborhoods. Popular neighborhoods may see more of a seller’s market rather than a buyer’s market, another reason to use a real estate agent that is well-versed in the communities in which you are buying.
#2. You are certain the house is underpriced.
Again, another reason to use a well-qualified and experienced agent that understands how homes should be priced. If the home seems too good to be true, there could be underlying issues but if you and your agent are convinced it’s underpriced, an inflated offer may be the kicker to get the deal.
It’s also important to note that some sellers will list their home well below the property’s fair market value in order to spike a bidding war. This may be another reason to offer over the asking price but verify the comparables in the area to make sure you’re not overpaying for the home.
#3. You’re competing with all cash buyers.
If you are financing your home purchase, it might be difficult to come up against a cash buyer. But remember, sellers will receive the money regardless and while all cash might be tempting for sellers, an offer over asking price will generally win out.
#4. You’re not willing to lose the home.
If you absolutely love this home, it only makes sense to do whatever you can to get the home of your dreams. This may also mean coming up with the difference between your asking price and the appraised value, if the property does not appraise for the inflated amount. If you have cash to spare, this is a good way to solidify your offer in the running. I would also strongly suggest you have a home inspection to allow yourself some freedom to get out of the deal just in case something turns up unexpectedly.
#5. The seller isn’t motivated.
Some sellers want to sell their homes as quickly as possible and move on. Others not quite as motivated. Many like to test the market to see if they can get an inflated price so offering over the asking price could make the seller bite. However, you don’t want to significantly overpay for a home that doesn’t hold its value. This is why it’s extremely important to understand the seller’s motivation as you can appeal to them with exactly what they want in their price.
Regardless, you always want to use a qualified and experienced buyer’s agent. Understanding the West Bloomfield, Farmington Hills, or Bloomfield Township real estate market is my specialty. I understand the communities, the micro-markets throughout the neighborhoods, and can help facilitate a transaction and write up a solid offer that will get accepted. Contact me at 248-752-3088 today.
More Tips for Home Buyers
- What to do when you lose the house you really wanted
- 5 Things to look for during the final walkthrough
- How to Learn as much as you can about a neighborhood
- 6 things to know about buying an older home
- 3 things to know about buying a home with a pool
- 5 Major Questions to Ask at the Home Inspection
- 7 Must-Haves for Aging in Place