For generations, the process of buying and selling a home never really changed. Same thing, different day. A homeowner would try (not always successfully) to estimate the market value of their house, then tack on a little extra to give themselves some negotiating room. That figure would become the listing price. On the flip side, buyers would try to determine how much they could offer and still get the home. All this guessing, meant that the listing price was generally the ceiling of the negotiation. The actual sales price would be somewhat lower than what was listed. Paying more than what the seller was asking was downright unthinkable. Say whaaaat?
Today is way different.
Here we are in the present (hello!) and the record-low supply of homes for sale, coupled with very strong buyer demand, is leading to a rise in bidding wars on many homes. Because of this, homes often sell for more than the list price. In some cases, they sell for a whole lot more. According to a leading economist, half (yes, HALF) of homes are being sold above list price. Wowsers!
You may need to change the way you look at the asking price of a home.
What exactly does this mean for home buyers? In this market, you likely can’t shop for a home with the old school approach of negotiating to a lower price.
Due to the low supply of houses for sale, many are being offered in an auction-like atmosphere, in which the highest bidder wins the home. eBay, this is not. In an actual auction, the seller of an item agrees to take the highest bid, and sellers may set a reserve price (the minimum amount a seller will accept as the winning bid) on the item.
Think of the list price of the house as the reserve price at an auction. It’s the minimum the seller will accept in many cases. Today, the asking price is becoming the floor of the negotiation rather than the ceiling. If you have fallen in love with and have your heart set on a home, know that it may ultimately sell for more than the sellers are asking (let’s avoid disappointment, all). So, as you’re navigating the process, make sure you know your budget, know what you can afford, and work with a trusted advisor (hey, hey!) who can help you make all the right moves as you buy a home.
Someone who’s more familiar with the housing market of the past than the present may think it’s foolish to offer more than the listing price. However, frequent and competitive bidding wars are creating an auction-like atmosphere in many real estate transactions. Let’s connect today so you have a trusted real estate professional on your side to provide the best advice on how to make a competitive offer on a home.