It’s estimated that nearly 70% of all homes in the Denver housing market have sold over the asking price, as of May 2022. As discussed before, the housing market price increase is a reality in Colorado real estate because of the high number of buyers, but with the low amount of available housing, it makes this an issue of supply and demand. In such a competitive sellers market with the low amount of inventory, bidding wars for highly attractive homes are not uncommon and some potential home buyers prepare themselves to submit initial offers higher than the listed asking price of the home. While some buyers are uncomfortable to do this, I coach my clients on an individual basis to decide what price is right for them. Below are some tips when it comes to the idea of offering more than the listed asking price:
Be competitive, but not out-of-line
There is no one-size-fits-all advice, and I recommend only going over asking price on a case-by-case basis. For example, if I know a buyer has a hard boundary on price and budget then that may not be feasible for their long-term plans. However, if a buyer is really in love with the home and has wiggle room in their home then we can decide on a price. Usually, putting in a 3-5% over asking price is not uncommon and I recommend a buyer start at that price point. If the offer gets rejected, there is always a chance to submit a higher offer later should the first price point get outbid. Overall, it’s important to be competitive in an offer but not in a way that will be uncomfortable. Increasing the price by 3-5% will likely not increase the monthly payment by very much, should that be a concern to a buyer on a budget.
Ask yourself some hard questions
For buyers who are contemplating submitting an offer which would be over asking, I recommend that they take some time and really think about it. If you’re not sure if you’d like to offer more money you can still do other things to stand out from other offers, aside from offering more money and you should think about that too. Some common questions I like to guide people towards include:
- Is this really the house you and/or your family want to live in?
- How long to you plan to live in this home?
- If you lost this home to a higher bidder, would you truly be upset?
- What is a comfortable price point for you and your family?
- Would the higher price point impact your monthly payment that much?
- What else can you do to help yourself stand out from other offers?
Be prepared to negotiate
In a competitive market, there is often a longer submittal process as the seller and their agent comb through multiple offers. If your offer is competitive, but maybe not the highest one then the seller’s agent may give you the option to submit another offer. If your offer does get accepted, be prepared for negotiations possibly around closing costs and repairs. Once again, in a sellers market then negotiations can go on a bit longer. The good news is that a qualified and trusting agent can help you to make these decisions and navigate this process.
Are you ready to make your new home on a golf course? Are you in the market to buy or sell your home? Call and text me at (720) 323-4176 or email me at [email protected]