3 Things to Consider Before Making an Offer on a House
Post-pandemic, the housing market has seen record highs with very little chance of crashing. More than half of the homes on the market are selling over their list price, according to data from Redfin. The current hyper-competitive market is resulting in multiple offers, homes being sold almost as soon as the for sale sign goes up, and buyers offering thousands of dollars over the asking price. In other words, people are doing whatever they can to make their offers stand out to lock down the home of their dreams.
"In this current market, it's not uncommon for buyers to submit offers for $50,000 to $100,000 over asking price, waiving appraisal contingencies, and paying $30,000 to $100,000 above appraisal," says real estate broker Stephanie Williamson. But this might not be the best thing for your money in the long run. "In my opinion, this is a recipe for disaster if you don't run your numbers. In the event the market corrects or there's a downturn, it poses a risk for the owner to become upside down in the loan," says Williamson. While it is not uncommon to pay one to three percent over list price, Williamson suggests talking to your realtor and lender to come up with a number that is best for you, so you're not putting in an offer that's beyond your means.
Although experts say the market is unlikely to crash this year, there are no guarantees about what could happen with the market in the future. Since a home is a big, long-term financial decision, it's important to treat it as such and consider all your options carefully when determining how much to offer—especially if you're a first-time homebuyer.
Here are some expert tips to consider when submitting an offer on a house, and deciding how much over the asking price you should really go.