With increasing demand and lower inventory I continue to see multiple offer situations which inevitably leads to the concern of paying over appraised value. Would you do it? Should you do it?
Prices are on the way up on a record pace and driving those prices are buyers willing to pay top dollar for real estate. Some buyers will go as far as giving the seller asking price, above asking price and even above appraised value. This is becoming all to common, but would you do this?
I come across this issue all the time and this is the way I like to present it to my clients. Every client is different so there is not a single solution answer. The biggest factor to determine if you would do this is your the buyer. Can you do this? Do you have the funds to pay the difference between the appraised value and proposed sales price if the lender won’t pay it?
These answers are different for each buyer, especially if they are an investor or going to be using the home as their primary residence. For investors they are more about the figures, getting a good deal and maybe getting a property below market. Also what is their ROI? (Return on investment) Usually paying over appraised value may not always make sense to them, keep in mind they tend to be less emotionally tied to the property.
On the other hand a person who will actually live at the property may have a different mindset. They are willing to pay more since they will enjoy it for many years to come. Maybe they are in a time crunch and have to move. Or there are other factors like schools, location, etc… that make it worth it to that individual to pay the additional funds.
Every scenario is different but you have to evaluate where you stand, can you do it and also be sure to draw a line in the sand as well. Set a limit because the last thing you want to do is have regrets after the sale.
With the heart of a teacher I strive to educate my clients so they can be better informed. I strongly believe an informed consumer makes better decisions and are less likely to be taken advantage of.
Have questions about this or other topics, don not hesitate to contact me.
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Luis Cuevas, Realtor®
RE/MAX Cross Country
1990 Justin Road
Highland Village, Texas 75077
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