It’s every seller’s dream to receive an offer on their home that exceeds the listing price—to sell their property for more than they even thought possible.
Buyers, meanwhile, typically enter into any potential transaction with the assumption that there’s some room for negotiation; that they probably won’t end up paying the full asking price.
All of this raises a question: Is there ever a circumstance in which the buyer should make an offer that’s above the list price? The short answer is yes. Sometimes, it may be wise to make an above-list-price offer to ensure that you don’t lose the chance to own the home of your dreams.
When You’re in a Seller’s Market
For example, you may sometimes need to make a generous offer if you’re in a seller’s market… that is, a market where more people are buying than selling.
In a seller’s market, the person who owns the home could potentially have several interested buyers, leaving you with very little leverage. The best way to make sure you get the contract may be going above and beyond in your initial offer.
Your agent can advise you on market conditions, and on whether making a big offer is in your best interests.
Another time when you may need to swing for the fences is when you know for certain that yours is not the only offer on the table.
Again, your real estate agent can be invaluable here, finding out how many parties are currently bidding on the home. In bidding wars, making an offer above list price can sometimes be necessary just to keep your hat in the ring.
You may also find a situation where the home is priced way below where it should be; your agent can compare it to other recently sold properties in the neighborhood to let you know if this is the case.
In these situations, even making an offer above asking price can land you with a good deal, so it’s nothing to fret over. And again, if the house is obviously priced too low, you’re probably not the only one who wants to buy it, so making a big offer can be crucial.
Motivating the Seller
Some sellers really need to move quick, perhaps because they have to relocate for work or for family issues. But some sellers may be willing to take their sweet time; indeed, they may be more interested in “feeling out the market” than in promptly closing a transaction.
If you need to get your seller moving, the best way to light a fire under them may be to make them an offer they can’t refuse.
When Cash is On the Table
All else being equal, most sellers would prefer to work with a cash buyer, simply because they can then avoid all the red tape associated with mortgage lenders.
If you know that you’re going toe-to-toe with a cash offer, you need to do something to tilt things in your favor—and upping your offer is the best way to do so.
These are just a few of the situations in which it can be wise to make a big offer, but that’s never something to do without first consulting your agent. Reach out to Ryan Minges Real Estate for guidance in your next Charlotte-area transaction.