In the current real estate market, buyers shouldn’t shop for a home with the expectation they’ll be able to negotiate a lower sales price. In a previous markets, buyers tried to determine how much less than the asking price they could offer and still get the home. From there, the buyer and seller typically negotiated and agreed on a revised price somewhere in the middle.
Things are different right now. Today’s housing market is anything but normal. According to the National Association of Realtors (NAR), homes today are:
- Receiving an average of 3.8 offers
- Selling in just 17 days
Homes selling quickly and receiving multiple offers highlights how competitive the housing market is right now. This is due, in large part, to the low supply of homes for sale. Low supply and high demand mean homes often sell for more than the asking price. In some cases, they sell for a lot more.
What does that mean for you? If you’ve found your dream home, you need to be realistic about today’s housing market and how that impacts the offer you’ll make. Offering below or even at a home’s asking price may not cut it. Currently, the asking price is often the floor of the negotiation rather than the ceiling. If you really love a home, it may ultimately sell for more than the sellers are asking. That’s important to keep in mind as craft an offer.
Because of today’s home price appreciation, appraisal gaps – the gap between the price of your contract and the appraisal for the house – are more frequent. When this happens, your lender won’t loan you more than the home’s appraised value, and the seller may ask you to make up the difference out of pocket. Buyers in today’s market need to be prepared for this possibility. Know your budget and know what you can afford.
Bidding wars can mean buyers need to rethink how they look at the asking price of a home. But fear not: I can advise you on the current market and help determine what the market value is on your dream home.