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July 29, 2022

5 Times When It's Okay To Offer Above List Price


Tim Clarke

5 Times When It's Okay To Offer Above List Price

You’ve been looking for a long time now and you’ve finally found a house you can see yourself living in.

There are however, a couple of hurdles you must overcome. You have to make an offer that the seller will accept.

That sounds easy in theory but it’s not easy when the demand dwarfs the supply.

Your offer will have to stand out it’s in multiple offer situation.

This is a crucial moment, and you have a very important decision to make; walk away and search for a house that has less competition or compete. 

In the past, homebuyers would expect to negotiate the price down. There are however times when offering more than the asking price just makes sense.

I know, the thought of paying more than what you think the house is worth at that time could be gut wrenching but in certain circumstances, it is the best move. 

You are Aware of the Competition 

Multiple Offer Situations happen all the time in a Seller’s Market.

Bidding Wars most commonly happen within a week of being listed but sometimes we’ve seen listings that were overlooked for several weeks and then all of a sudden, that listing has multiple offers.

Before make an offer you should ask your agent to contact the listing agent and ask if there are specifically any offers in hand.

The agent should also inquire about any additional terms that the seller would want to see other than the highest price.

Once you find out you're going up against competing offers, make a competitive offer and try to include terms you may think would be important to the seller.

One or More Competing Offers is Cash

If you're getting financed, your offer will state that it is contingent on loan approval.

To a seller, accepting a cash offer is far less risky.

To give yourself the best competitive edge, a higher due diligence and/or a written statement offering to pay the difference from the purchase price and appraisal value in cash may entice the seller to take a risk on you.

You Can't Imagine Losing It

I house purchase is one of the most biggest purchases that most people make.

That decision should be entirely driven by logic but the reality of the matter is, it’s not.

Purchasing a home involves a lot of emotions and if you find a home that you want, it feels right and it checks off all of the boxes, it is definitely not the time to make a lowball offer.

You will be devastated if the seller goes with another buyer and you will have to go through the entire process of looking for another home that excited you as much. 

The House is Clearly Underpriced

In some situations , a listing agent may encourage the seller to purposely underprice the listing to create a bidding war.

If you come across a great house that's clearly below the market value, you are definitely not the only one who noticed.

Competing buyers would definitely make offers and the seller may hold the offers for several days to maximize the results of a multiple offer situation. 

The Seller Isn't Motivated

A seller who is just testing the market or is otherwise in no hurry to sell can be a challenge.

It would be a good idea to have your agent call and get some insight on the seller’s motivation.

You can also check the listing’s DOM or days on market.

If it’s a good house but it’s been on the market longer than competing listings then you may have an unrealistic seller of a seller who's in no rush. In this case, making an aggressive offer above ask may just get the seller’s attention.

Just make sure you're not offering too much.

When you're engaged in the market and that right home comes along, making the right initial offer could mean the difference between getting the house that works for you and losing out.

It would be very remiss of me if I didn’t encourage you to use a skilled agent. There are several loopholes and angles that could be exercised with using the right agent in situations like these.

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