Offer Above Asking Price – Why it is Advantageous in the Current Housing Market
If you plan to purchase a home in 2023, you may have observed the intense competition within the housing market. A trusted local lender, Gulfside Mortgage has shared with us exceptional information that you may find useful in your housing decisions. The prevalence of more buyers than sellers has resulted in numerous homes receiving multiple offers and ultimately selling for prices that exceed the initial asking price. According to the National Association of Realtors (NAR), the median sales price of existing homes in July 2023 was $410,200, reflecting a substantial increase of 15.8% compared to the previous year.
Employing a strategy to offer above asking price can greatly enhance your chances of standing out from the competition and having your offer accepted. Here are five compelling reasons why this approach can be a smart decision in today’s market.
1) Inventory levels are currently low.
As previously mentioned, the current housing market is highly competitive, despite the presence of higher interest rates and inflation.
According to the latest report on Existing Home Sales, the inventory of available homes is extremely limited, with less than 1 million homes remaining, some of which are already under contract.
Unfortunately, this inventory shortage is not expected to improve for two main reasons:
Firstly, as inflation trends begin to slow down and interest rates gradually decrease, more individuals will have the financial means to purchase homes.
Secondly, the overall population of the United States is rapidly increasing. This is particularly evident in Florida, where our population consistently follows an upward trajectory.
With each passing day, the number of potential buyers continues to rise, while the availability of homes continues to decline. Consequently, the level of competition will only intensify. To distinguish yourself from other buyers, it is crucial to submit an initial bid that offer above asking price.
2) Prevent engaging in a competitive bidding process.
A bidding war occurs when multiple buyers engage in a competitive process to acquire the same property, progressively increasing their offers until a winner emerges. These bidding wars have the potential to escalate the price of a home and create significant stress and uncertainty for prospective buyers.
By initially offering a purchase price that exceeds the seller’s asking price, you demonstrate your seriousness, motivation, and willingness to pay a premium for their property. This approach may persuade the seller to promptly accept your offer or, at the very least, grant you priority over other potential buyers.
3) Express your fondness for your residence.
In certain instances, sellers can be influenced by more than just financial considerations. Their emotional attachment to their property may drive their desire to sell it to an individual who will truly appreciate and responsibly maintain it.
To offer above asking price, you effectively convey your genuine affection and high regard for their home. This approach has the potential to resonate with the seller on an emotional level, potentially leading them to prioritize your offer over those of other prospective buyers.
4) Provide additional financial compensation to offset a lower appraisal value.
An appraisal is an evaluation conducted by a professional appraiser to determine the estimated value of a home. Lenders typically require an appraisal to ensure that they are not lending more money than the home is actually worth.
However, in a competitive real estate market, appraisals may not keep pace with rapidly increasing prices, resulting in appraised values that are lower than the agreed-upon sale price. This situation can pose a challenge for buyers who are relying on a mortgage, as they may need to provide additional funds to cover the shortfall or negotiate a new agreement with the seller.
To address this potential issue, one strategy is to offer above asking price. This demonstrates to the seller that you are prepared to pay more than the appraised value, if necessary.
5) Providing a competitive edge over cash offers.
Cash offers are offers that do not rely on obtaining financing from a lender. These types of offers are appealing to sellers because they eliminate the risk of financing falling through and expedite the closing process. However, it is important to note that cash offers may not always be the highest and may not accurately reflect the true market value of the property.
To compete with cash offers, one strategy is to offer above asking price. This demonstrates to the seller that you are willing to pay more for the property. However, it is crucial to understand that offering above the asking price may not be the optimal approach for every buyer and every situation. It is advisable to consult with your real estate agent and lender before submitting an offer, ensuring that it aligns with your budget and long-term goals.
Our team at Burson Home Advisors in Sarasota, Florida, is here to provide assistance in navigating the real estate process and developing a customized strategy that suits your needs or the needs of your clients.
Don’t wait to buy. Here’s why.
Despite the presence of higher interest rates and inflation, it is crucial to halt any indecision you may have. The current circumstances make it an opportune moment to purchase property in Sarasota, Florida, and refraining from doing so would be unwise for several compelling reasons:
- Historical data unequivocally demonstrates that housing prices will not undergo a decline but will instead continue to rise. It is futile to hold onto the hope that you will be able to acquire a house you adore at a price lower than the current market rates.
- As previously mentioned, the availability of housing options will not improve, so waiting for a more favorable selection is futile.
- However, it is worth noting that interest rates are expected to improve in the future, providing an opportunity to refinance. Therefore, it is advisable to seize the opportunity to pursue your dream house now, before its price escalates beyond your financial means. You can subsequently take advantage of better interest rates by refinancing at a later point.
Seize the Moment and Make Your Purchase Now!
Now is a great time to take advantage of the opportunity and make a purchase. In a market that heavily favors sellers, it can be a powerful strategy for success to offer a bid higher than the listed price.
If you are finding it challenging to navigate through the complexities of this market, our team at Burson Home Advisors in Sarasota is here to provide the support you need. We’re ready and willing to lend a helping hand.
We specialize in securing the best rates for our clients and empowering them to compete effectively, so they can finally get the home they’ve always dreamed of.