Making an offer over the asking price on a house often makes buyers wince.
But let’s face it, paying above list price is just a reality in certain circumstances—at least if you really have any hopes of getting that house!
Is it a good idea? Well, this article from Realtor.com outlines a few reasons why it might be. It’s a good read and I highly recommend it.
Reasons to Offer Over Asking
In many parts of the country we are in what would be considered a “sellers market”, so buyers must adapt. A good rule of thumb: ‘If houses are selling in your neighborhood in less than 10 days, it’s a strong seller’s market’.
Here are a few other reasons you may want to bid more than list price:
- You love the home and want to make sure you get it
- You know there’s a bidding war or lots of competition for the property
- The house is undervalued (comparable sales can help you judge this)
- There are cash bids on the table
How To Decide
With that said, does it really make financial sense to pay more for a home than the asking price?
The answer is…it depends – and you should do the math to make sure.
My friends at The MBS Highway have put together a tool that helps buyers decide if making an offer over the asking price is a good financial decision.
Their “Buy Over Ask” tool takes into account a myriad of factors – from the asking price itself to expected appreciation – even to a break-even point that shows the exact month you should expect your return.
In the example above, by offering $7,500 over the seller’s asking price, a buyer’s break-even point is only one month away…and they can expect appreciation of nearly $100K over the next 5 years. In this case, it looks like paying a bit over asking would be a good idea, indeed.
Find Out If Offering Over Asking Is Right For You
It would be my pleasure to help any potential buyer find out if bidding over list is a good idea.
Reach out to me and I can easily put together a summary just like the one above for you to help determine if making an offer over the asking price is something you should consider!