A home is one of the biggest investments you’ll ever make. Whether purchasing your first home, a move up home, or even an investment property, price will always be a key consideration. Although there’s often a tendency to go for a bargain, there are good reasons to pay more than the listing value.
These are the unique scenarios where you might want to offer more than the asking price.
1) Staying Competitive in a Seller’s Market
House sale volumes are increasing, which is gradually shifting the market in favor of sellers. With less inventory and more buyers, sellers will have more flexibility to choose the best offers, rather than take the first one that meets their asking price.
Making an offer above the asking price could secure you the deal.
2) The Home is Underpriced
Sellers sometimes intentionally list their homes below the market value, in the hope of igniting a bidding war between prospective buyers. If you don’t want to go through the process of making multiple offers only to see the price balloon beyond your reach, you can make a strong offer above the asking price.
This could convince the seller to avoid a bidding process, and close on your first offer. There’s less stress and uncertainty for all involved.
3) You’re Buying with a Mortgage
Sellers like cash buyers because they know they have the funds to close the deal. There’s less risk on their side and they save both time and agent fees. Of course, sellers also want the best return from their investment, so they will still be willing to accept generous offers from buyers who will be seeking mortgage approval. Adding a premium over the asking price could be the factor that makes your offer stand out.
4) The Seller Doesn’t Seem Motivated
Some sellers simply want to move their homes quickly. Others are reluctant to sell without receiving an extraordinary offer. If you feel the seller isn’t overly motivated to make a quick sale, you could add a little extra on top of their asking price to help get a deal secured.
If you’ve found the home of your dreams that meets all your needs, then this could be the best way to get the transaction moving forward.
How Much Should You Go Over?
There’s no rule when it comes to adding a premium over the asking price. Your agent will help you to determine the real market value of the property, which could guide your offer. Remember that you need to keep things affordable, so think about your mortgage and the long-term implications of paying anything above the list price.
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