It is human nature to not want to pay asking price for a new home. In addition, sellers routinely list their homes for more than they realistically expect to get, knowing they will likely end up negotiating the final price anyway. This leaves buyers in a precarious position. They have to ask themselves if there is ever justification for offering more than the asking price.
In simple terms, there is. Sometimes offering more is the only way to get the house you want. Still, that does not necessarily mean going in high is the wise move. As any experienced real estate broker will tell you, buyers have to consider every little detail before they can realistically decide how much to offer.
Here are five reasons to offer more than the asking price, compliments of CityHome Collective in Salt Lake City, Utah:
1. You’re Up Against Cash
One of the most common reasons for going in high is to compete with an all-cash offer. The challenge you face is that it could take 60 to 90 days to close with a mortgage. A cash buyer can usually close in 30 days or less. It might be that the only way to beat out that buyer is to offer a higher price. You are hoping the seller is willing to wait a little while for more money.
2. You’re Competing with Other Buyers
Next up is a reason that CityHome Collective sees all the time in SLC: competition between multiple buyers. There are just some markets in which homes get multiple offers almost as soon as they are listed. In the hottest of markets, you might have trouble buying any house at all, let alone the one that you really want. You may have no other choice but to go in high just to get something.
3. Supply Is Dwindling
It might be near the end of summer and you are still looking for a home. You are now faced with a housing supply that is quickly dwindling as the annual sales season nears its end. Can you afford to wait until next spring? If not, offering more than asking price could represent your last shot at finding a home. It is not the best situation to be in, but sometimes it happens.
4. It’s Truly Your Dream Home
Very few buyers actually find their dream homes. Such homes are hard to come by. Maybe you began your search with the understanding that you might have to settle for something you can live with. That being the case, finding your legitimate dream home may be sufficient reason to offer more than asking price. It is exactly what you were looking for in every detail, so much so that you are unwilling to lose it to another buyer.
5. You See Hidden Equity
Finally, there are some properties that are underpriced simply because the current owner and his agent do not recognize hidden equity. You might see value in a property, value you can tap into with a minor investment after the purchase. For example, you might be interested in a row house in the middle of an urban area you suspect will be up and coming very shortly. The house might need only minor renovations to make it a hot commodity a year or so down the road.
It can be tough to offer more than asking price on a new home. Rest assured there are justifiable reasons for doing so. You just have to figure out if any of those reasons apply to your circumstances.