Stop losing homes to higher bidders

REThink Real Estate

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Mar. 10, 2011

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So, for example, if the other homes are selling for 107 percent of their asking price and she is seriously interested in buying a home that is listed for $125,000, she would multiply $125,000 by 107 percent and consider an offer price of $133,750.

Yes, that may mean that she goes in with an offer over the asking price, even in a situation where she has been told there are no other offers. But if the recent comparable sales justify that value, and it is within the price range she can afford to pay, that may be necessary to avoid being chronically overbid and secure the home in which to start her family.

Some buyers get hung up on the idea that they are "overpaying" if they make an above-asking offer, but the reality is that the list price is not the actual price of the home -- it's a starting point for upwards or downwards negotiations, depending on the local market dynamics and how the list price was set vis-à-vis the fair market value of the home.

Getting a great deal is not necessarily the same as paying at or below asking; just think -- if the list price is set too high, then offering to pay it isn't a better deal than if you offer above-asking on a place where the list price is set way too low. This is why it's so critical to rely heavily on an analysis of recent comparable sales to drive your offer price, rather than just on the list price or what the listing agent tells you.

Further, no house is a good deal if you don't get it, which may be the learning that your daughter and her fiancé are experiencing. And given that prices have rolled back to 2003 levels in many areas, whatever they pay will undoubtedly be a great deal, from that perspective. Please pass on my advice, along with my best wishes for their house hunt and their marriage.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   
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