You have spent countless hours researching and touring properties in and around Lexington, South Carolina and you’ve finally found your dream home. The question now is: how much should I offer? What about offering above asking price?
These days, it seems that many homebuyers are offering sellers above asking price. In fact, more than 80% of millennials admitted that they would overbid when buying a home. Still, home sales are down because of high prices and mortgage rates, which deter buyers, and low inventory, which is a good thing for sellers.
If you are wondering if it’s a good idea to offer above asking price, consider working with the Lafayette Team with EXP Realty. We are knowledgeable and successful in the world of real estate and specialize in working with first-time homebuyers and sellers in the Lexington and Lake Murray area.
There are several good and bad reasons to offer above asking price on a property. The best way to determine what is right for you is by considering your situation and doing the research so that you can understand the advantages and disadvantages.
5 Good Reasons to Offer Above Asking Price
Below, we’ll look at 5 good reasons you may want to consider offering above asking price on a home in or near Lexington:
Market Favors Overbidding
We are currently in a seller’s market, which favors overbidding. Many times, sellers accept bids for a limited amount of time to spur competition and encourage potential buyers to offer above asking price. If you underbid, your offer will likely be rejected. However, market conditions may vary based on the current economy and the location of the property.
Property is Undervalued
In some cases, a seller may want to spur a bidding war or make a quick sale. In these situations, they may list the property under its market value. If you believe a property is undervalued, overbidding may work in your favor because even when you overbid, you could still pay less than the actual market value of the property.
Ideal Investment Property
If you are interested in the property as an investment and you don’t want to lose it, ask yourself if it meets your requirements. Think about all of the factors related to the property including repairs and maintenance. If the property ticks off all of the boxes, it may be reasonable to offer above asking price.
You are Losing Bidding Wars
If you find that you are losing most or all of your bids, the market may be more competitive than you thought. Therefore, you may want to consider upping your game and start offering above asking price.
You’re Not New to the Game
If you are purchasing your first investment property, you don’t want to put all of your eggs in one basket. However, if you are a homeowner or already have other properties, it is easier to determine how much you can overbid because you understand the risks.
5 Bad Reasons to Offer Above Asking Price
Below, we’ll go over 5 bad reasons to offer above asking price on a home in or near Lexington:
You Have the Money
Just because you can overbid doesn’t mean you should. When you are looking for a home or investment property, find one that is worth the cost, and never overbid just because you can.
You Have a Pre-Approval
Just because you have a pre-approval doesn’t mean that you can afford to spend that much. You should never plan to bid at your maximum because there are costs besides the mortgage to consider, including utilities, taxes, insurance, repairs/maintenance, and more. If you can’t afford these costs, you may not want to offer above asking price on a property.
You Are Competitive
Before you start looking for a property, determine what your maximum price is when bidding on a property and don’t let your emotions take over. By putting a threshold in place, you can ensure that the property remains a good investment.
You Are Attached
Sometimes, buyers tour a property and fall in love with it. If you have a connection that isn’t reality-based, take some time to re-evaluate your attachment to it. A property may not need to check off every box, but you shouldn’t fall in love with it at first sight.
You Are Tired of Looking
If you have looked at a lot of properties and haven’t found the right one, you may feel fatigued. This may cause you to be tempted to bid on the next one you see. However, this can often lead to poor decisions. Instead, you should give yourself some time to step back and relax and then go back to looking.
If you find yourself property hunting in or near Lexington or Lake Murray, South Carolina, contact the Lafayette Team with EXP Realty. We specialize in first-time home buyers and sellers. We can help you find your dream home and know when it’s a good idea to offer above asking price on a property.