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With the housing market so hot over the past few years, many buyers are offering above the seller’s asking price. Why would they do that? What can a buyer gain by offering above asking price for a home?
Lots of Competition
In a seller’s market, there are more buyers than there are sellers. This means that there are fewer homes available for sale than all of the buyers need. So, when someone finds a house that they love, chances are that other potential buyers love it as well. This drives up competition, which drives up prices. Even when a seller prices their home at a fair price, some buyers are willing to pay more to get the home of their dreams.
Make Their Offer Stand Out
With all of that competition, it can be hard for interested buyers to make the seller notice their offer. Some people may have already made offers and unless a new buyer can do better, the seller is likely to choose an offer they have on the table already and move forward. This is why some buyers start by offering above the asking price from the beginning. If a buyer knows that a particular area or type of home is in high demand, an above-asking price offer can get a seller’s attention and make them look past offers that they already have.
Don’t Get into a Bidding War
It can be easy for buyers to get carried away trying to get their offer accepted, especially when other potential buyers are making offers alongside. This can evolve into a bidding war, which buyers trying to out bid each other to get the final purchase. If the home is worth that amount and you have it in your budget, feel free to raise your offer. Just beware of getting into a bidding war that is driven by emotional ties to winning rather than the actual value of the home.