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?
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.
In some cases, offering more than the asking price can be a safe and secure move that helps you attract a seller's attention. In other cases, you could end up in hot water when it comes to carrying your mortgage. These are some of the circ*mstances in which offering more than the listing price will be beneficial.
The answer is often “no.” Conventional wisdom might suggest that during negotiations, especially in a multiple-offer situation, the buyer who throws the most money at the seller will snag the house. In reality, however, it doesn't always end up that way.
That's significantly higher than in February 2019, when 19% of homes for sale were sold over asking price. In 2023, more than 24% of homes for sale went for over asking price. The average gap between the list price and the final sale price is highest in San Jose, Calif.
Sellers can accept the “best” offer; they can inform all potential purchasers that other offers are “on the table”; they can “counter” one offer while putting the other offers to the side awaiting a decision on the counter-offer; or they can “counter” one offer and reject the others.
You may be wondering, however, when it comes to a competitive housing market, “How much over asking price should I offer?” The answer: You may have to go at least 5 percent to 10 percent over the asking price — especially if you're looking in a hot neighborhood or a city where a lot of people are looking to live.
Introduction: My name is Allyn Kozey, I am a outstanding, colorful, adventurous, encouraging, zealous, tender, helpful person who loves writing and wants to share my knowledge and understanding with you.
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