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Making an offer above asking price

I am wondering if it is common practice to offer above asking price. I have looked at a few homes, and two I considered putting a offer on. In both cases my realtor said homes would up sell and reccomended offering 20,000 more on the first one (a short sale)and now suggest 25,000 above asking (a bank owned). I passed on both homes because I just feel uneasy about offering above asking price. Are the days of offering a little less and then meeting in the middle over? If homes are being listed below what seller is willing to accept how is a buyer supposed to find homes in the price range theta are looking for?
  • August 13 2012 - US
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Answers (9)

I wonder what area you are in. But here in Tampa Bay area it's pretty common right now especially with low-priced bank owned properties. 
We get in multiple offers bid almost every time. Of course , it depends what comps are saying. I understand your concern though, some of my buyers used to the fact that they want to negotiate and get it at a lower price, so sometimes it takes for them losing on few deals to understand that's it's normal due to the market condition.
  • August 15 2012
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This is pretty normal in the San Francisco Bay Area. The shortage of inventory and the fact that there are so many potential buyers leads to multiple offers. I wrote one last week where there were 14 offers on a home. The seller would not consider any offers until the home had been on the market for 5 days. We came in third on that one, where we wrote just $20,000 above list price.

Now as Patty points out, even after a sale has been agreed, the home may not appraise. Then some renegotiation may be needed.
  • August 14 2012
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since your agent said the homes would "upsell" - I am sure he or she can back that up with some examples of other homes that have sold over asking.
And.....make sure you find out what the homes ultimately sold for.

It does happen, but it really depends on how competitively/low the home was priced.

Not all - not most -  homes are priced for that kind of response from the market.

Good luck!
  • August 13 2012
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Profile picture for Dunes ..
I'm with Mack on this one..
  • August 13 2012
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Ask your agent to pull up examples of properties that sold significantly over list price. 
  • August 13 2012
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Market value is determined by compiling information on sold properties that are comparable to the property that you would be making an offer on.  Your realtor should be providing you with sold comparables that he or she is using to determine the value so that you can make an offer that is reflective of market value.  If you are in multiple offer situations, you may want to offer a bit more.  However, both you and your realtor should be mindful that your bank will be sending an appraiser out to determine the value of the property.  This appraisal is for the bank's protection but it also protects you from overpaying for a property.

Properties that are being offered as short sales or foreclosures may be offered under market value.  The reason that they are sometimes listed for less is that they may have deferred maintenance or have other issues that would cost the buyer to remediate.

It is really important that you discuss your concerns with your realtor.  Give your realtor an opportunity to explain his or her reasons for the advice that they are giving you.  If you can't have the conversation or are not getting satisfactory answers, then it is time for you to move on.

  • August 13 2012
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Ask your agent to prepare a comparative market analysis on the property, you'll be able to make a better decision.
  • August 13 2012
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The market is very confusing right now.  A lot depends on what part of the country you live in and the price range you are bidding on.  In the Phoenix area homes in the <$300K range are flying off the market and many agents are holding bids for 7-10 days and choosing the highest and best.

It is still possible to negotiate a deal if you are in the $600K+ range.

Add into the equation the short sale issues where many agents under price the listings and it can be confusing.  This is where a good agent earns their money, really researching the market and helping the buyer hit the target.  It is easy to just over bid, but then you run into appraisal issues.  Do your homework and take your best shot.
  • August 13 2012
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Profile picture for craigfial
It all depends on your area.  In South Florida it's common to offer over list price when its obvious the property was listed low to solicit multiple offers.  We recently offered $420,000 for a house listed at $390,000 and still didn't get it.  Knowing the market and values for a particular area and house are important when you need to make a quick decision.  Houses are flying off the market where I am.  Wish I had more inventory.

Good luck!
  • August 13 2012
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