5 Reasons to Offer Over Asking Price on a Home
Sometimes, it’s worth it to offer more than the home’s list price when placing an offer on a new home. When buying in a seller’s market, it’s important to remember that a list price is only a number. A higher price may still be a great deal for your dream home in certain circumstances. Here are five reasons when it might make sense to offer more money for a home.
How Much Above Asking Price Should I Offer?
To stand out from competing buyers, you may need to offer a few thousand dollars over asking price. Usually, this will be enough to show your seriousness. It may even be enough to close the deal without further negotiations. Consider offering over asking price in the following instances:
It’s a seller’s market. In competitive markets, a homeowner is likely to receive multiple offers in a matter of only a few days or even hours. Since they are likely to take the highest offer, you may only get a brief opportunity to make your impression. You can tell if a market is hot by looking at listings to see if sales prices are increasing or if homes are selling fast. You should also look to see if most selling prices are approaching or exceeding listing prices. If so, you can expect a lot of competition when you make an offer on your dream home.
The home appears to be underpriced. If you’ve done your research and appear to have found a bargain home that’s noticeably underpriced, don’t get greedy. If you noticed, odds are someone else did too. While you’re trying to score a great deal with the seller, another buyer may swoop in with a higher offer. Unless you find yourself in a buyer’s market, you should seal the deal before better offers start rolling in. You may also want to offer more than asking price to undercut a bargain-hunting buyer who is busy haggling with the seller.
It’s your dream home. If you really love the property and can’t stomach the thought of losing it, you should consider elevating your asking price. If you’ve been searching for months and this is the very first house you actually liked, you shouldn’t risk losing it just to save a thousand dollars. That said, you should always stay within your budget and avoid committing to a mortgage you can’t afford.
You need some leeway. If you are asking the seller for considerations, you may need to sweeten the deal. If you’re a first-time buyer, you may need a longer escrow to arrange financing. If you are asking the seller to carry a second mortgage or pay for some of the closing costs, they may balk unless you offer more than asking price. From a seller’s point of view, it makes a lot more sense to accept an offer from an experienced buyer with a preapproved mortgage and 20% down payment than a first-time buyer trying to get a loan from the Federal Housing Administration, help with closing costs and a 60-day closing period. Why would the seller consider option B unless they stood to make more money on the transaction?
You have to compete with a cash buyer. When a great deal hits the market, investors tend to swoop in quickly. It’s almost impossible to compete with these cash buyers unless you’re willing to pay more. You may be in a position to make a higher offer since you won’t be trying to flip the home for a profit. Just be ready to make your offer quickly and avoid haggling over minor details
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