Does the thought of offering more than asking price to a seller sound counterintuitive? Aren’t buyers supposed to try to make the lowest offer possible?
Not always.
Sometimes, circumstances surrounding the offer may indicate it’s time to offer more than the seller is asking for the home.
Here are times when offering more than asking price is the smart choice:
- There’s a bidding war and many interested buyers looking at the property
- You are competing with buyers who are making cash offers
- The house is very underpriced for the market
- You fall in love with the home and can’t bear the thought of losing it
- Your agent tells you you’re in a sellers’ market
Let’s dive deeper into each of these reasons.
When You’re in a Bidding War
Bidding wars begin when you and every other buyer fall in love with the same house. If you aren’t willing to offer more than the asking price, the property could easily be snatched away before you realize what happened. This is why it’s vital you find out if there are other bids on a property before you make an offer. Once you are armed with information, you then put your best offer forward.
Competing with Cash Offers
Cash is king, and sellers love the certainty all-cash offers bring. A buyer with cash trumps a buyer who needs to get a mortgage. Sellers are always more likely to go with the sure thing because there are no guarantees that lenders will agree to loan the money. In 2017, cash offers made up 29 percent of single-family home and condo sales, according to ATTOM Data Solutions.
The House is Underpriced
When you find a house that’s deliberately underpriced, it might be because the seller is trying to start a bidding war. When this happens, it may make sense for you to make an offer that’s over asking price so that your bid stands out.
It’s Your Dream Home
Sometimes, you walk into a home and instantly fall in love. The thought of not owning that particular house breaks your heart. When this is the case, offering more than asking price is a good strategy to ensure you lock in the home.
You’re in a Seller’s Market
When buyers outnumber the number of available homes for sale–i.e., demand outweighs supply– it’s called a seller’s market. To determine if you are in a seller’s market, do two things: check the number of days homes in the area are on the market, and compare the selling price to list price. When houses sell in fewer than 10 days, and for 10 percent more than their list price, you may be in a seller’s market.
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