We’ve come to the era of submitting offers well over the asking price and adding a “love note” to tell the sellers how the home fits all your needs and you’re the best purchaser for their home. “Sometimes listing agents intentionally price a home below market value to make it a more compelling offer,” says Philip Kranefuss, head of Real Estate in Colorado with Homie.
If you’ve been following the housing market at all you’re aware of the implied housing shortage and the insane quickness with which homes are hitting the market, and then in the same breath selling well over the asking price. We’ve come to the era of submitting offers well over the asking price and adding a “love note” to tell the sellers how the home fits all your needs and you’re the best purchaser for their home. “Sometimes listing agents intentionally price a home below market value to make it a more compelling offer,” says Philip Kranefuss, head of Real Estate in Colorado with Homie. “This results in a buyer feeding frenzy. And it’s not unheard of in these situations to see the winning bid come in thousands over list price.”
He says offers typically need to exceed at least 1 to 3 percent over list price when there are multiple competing buyers.
The danger with these offers coming in so far over asking is that the home may not appraise at the agreed-upon price. Now you, the buyer must come up with any additional amount to bring to the closing table, usually in addition to the down payment. Many people don’t have this sort of expendable or fluid funding at their disposal and it may mean they’re unable to do any desired upgrades upon purchase.
In short, buyers in today’s market should expect competition. Additionally, they should be prepared to pay above the ticket price for a home they really want — if it’s still within budget.
Getting a seller to accept your offer doesn’t always mean a higher price though. Sometimes you’re able to make an offer better by making a good faith deposit. This lets the seller know you have skin in the game and have less liability in waiting for lenders to agree to additional costs and contingencies.
Other ways to maximize your home buying budget include-
Save for as big of a down payment as you can afford
Avoid opening new lines of credit
Pay down debts as much as possible
Check your free credit reports and clean up any errors, negative accounts, or missed payments you see on those reports and
Lower your debt to income ratio
With historically low mortgage loan rates you’re setting yourself up to save big in the long run. As always, we recommend working with an agent. Agents are a free resource to most buyers and they’re on your side to help your get the best offer to close on the home of your dreams.
If you don’t have one already, please reach out to Southern Tradition Real Estate, 4700 S. Thompson Street, Suite B-101Springdale, AR 72764 (479)-365-2585to find an agent to fit your home buying or selling needs.