There is an old saying, “Money talks.” If you want to stand out when it is time to make an offer, one tried, and true method is to simply offer more than what they are asking for. It is a tactic that is obvious, and lots of buyers use it successfully every day. If you have discovered a fantastic house in a wonderful neighborhood and it has just gone on the market, you’ll not only be competing against several other motivated buyers but will need to do something to get the seller’s attention. Extra cash is definitely one way to make your offer look much more serious compared to the others.
Before doing this, you should ask yourself some questions. The very first one should be: “Is this truly my dream home, or is it just a nice house?”
There is a difference, and that can be tough to see when you know many other offers are probably being prepared while you are thinking about what to do. Having a great realtor by your side will help make this thought process a little easier. They will not have the emotional investment in the outcome and will be able to objectively talk you through all the relevant factors.
You need to be honest with yourself about how much you want the house. Sometimes a buyer’s competitive spirit will take over, and they don’t realize that they’re spending more than they want for a home. It goes back to the first question. Is this truly your dream house? Or do you just want to win the competition?
While offering above the listing price is a great way to help your offer be accepted, there are also some possible negative outcomes. First and foremost, it could turn out you had no competition and could have purchased the home at the original asking price. If that happens, you could be paying more than what it is really worth. This could become a mess if you need a mortgage, and the appraisal doesn’t justify the loan to the lender.
If you decide to offer over the asking price, determining just how much over can be challenging. It is possible to lose the property with an offer as little as $1 more than yours. And you would have no way of knowing until it is too late.
Unfortunately, there is no magic formula. It would depend on the market and how much you are comfortable buying the home for. Your Realtor can help you come up with a competitive offer, but they also cannot know with 100% certainty what the other offers will be. At the very least, they are the ones who truly understand the market and how quickly you could locate a similar home.
Ultimately, if this is truly your dream home and a place you plan to stay for the rest of your life, it is likely worth doing what is necessary to secure the property. Work with your real estate agent to take a big step back and try to see the bigger picture—and consider that maybe it isn’t just about price. The seller, for example, might want a strong buyer who can close escrow quickly. Your Realtor will have the experience necessary to help you navigate this.