We need to rethink the way we looked at the listing price from the past to the present. The home buying process has not changed for years. The seller tries to estimate the market value of the home and marks it up to give themselves some negotiating room. That figure would become the listing price of the house. Buyers would then try to determine how much less than the full price they could offer to get the home. The asking price was generally the beginning of the negotiation. The actual sales price would almost always be lower than the listing price. It was unthinkable to pay more than what the seller was asking. But today is different!
Homes Today Sell More than the Listing Price
The record-low supply of homes for sale coupled with very strong buyer demand is leading to a rise in bidding wars on many homes. Because of this, homes today often sell for more than the list price. In some cases, they sell for a lot more.
According to the Home Buyers and Sellers Generational Trends report released by the National Association of Realtors (NAR), states 45% of buyers paid full price or more.
Change the Way you Look at the Asking Price
In today’s market, you cannot shop for a home with an old-school mentality of refusing to pay full price or more for a house.
Because there is a shortage of homes for sale, they are actually being offered in an auction-like atmosphere in which the highest bidder wins the sale of the home. In an actual auction, the seller of an item agrees to take the highest bid, and many sellers set a reserve price on the item they’re selling. A reserve price is a minimum amount a seller will accept as the winning bid.
When navigating in a competitive housing market, think of the list price of the house as the reserve price at an auction. It’s the minimum the seller will accept in many cases. Today, the asking price is often becoming the floor of the negotiation rather than the ceiling. Therefore, if you really love a home, know that it may ultimately sell for more than the sellers are asking. So, as you’re navigating the homebuying process, make sure you know your budget, know what you can afford, and work with a reliable real estate agent and mortgage broker who can help you make all the right decisions when you buy a home.
How to Make a Competitive Offer
Someone who’s more familiar with the housing market of the past than that of today may think offering more for a home than the listing price is foolish. However, competitive bidding wars are creating an auction-like atmosphere in many real estate transactions. Contact a real estate agent at Wenzel Select Properties so you have the best advice on how to make a competitive offer on a new home.
Our future home at Wenzel Select Properties is located at 4941 Main Street in Downers Grove, Illinois. Our real estate office is in the heart of downtown Downers Grove. We are just minutes away from Interstates 88, 355, 55, 290, and 294. Wenzel Select Properties real estate brokers are available to meet with you 7 days a week – Monday through Sunday. You can call us for an appointment at (630) 430-4790.