Over the past few months our local real estate market in Vancouver Washington has turned into quite a roller coaster ride. Most any home priced a $200,000 or less is receiving multiple offers in the first day or so of being listed. It is not unusual to show up to one of these listings and be forced to wait in line to be able to get in to see the home. The night before last I met my clients at 7:00 pm to view a home. We were there with two other agents and their clients! Can you say "Awkward?!"
With this much buyer pressure on certain price ranges it is vital that buyers know exactly what the value of the home is in the current market. Successful buyers have to be quick to make decisions and have the courage to over bid when the circumstances are right.
The question is, how much does one over bid?
Last week my buyer found the perfect home. It was exactly what he had been looking for and he wasn't afraid to go after it. It was listed at $200,000 and he knew that he would have to pay more than that to get it. After careful examination of the micro market where to home is located, I recommended that he make an offer of $255,000. That was $55,000 more than the asking price.
In counseling him on what he should offer I gave him this advice:
Offer an amount that you will be happy no matter what the outcome. If you get the home you will be a happy that you got a fair deal and bought the home that you wanted. If someone outbids you, you will know that you forced someone to over pay for it and that you would not have been happy paying any more.
Of course, this strategy hinges on the fact that you have a competent real estate agent who can give you very accurate home values and show you what the trends are doing in an area. Making these types of offers without good information can be very dangerous. Over bidding does not mean over paying! It means ignoring the list price and making calculated offers based on the homes actual market value.
I wish this story had a happy ending. Even after offering 27.5% more than the listed price, we didn't win the bid. My client is OK with the outcome. He knows that he wouldn't have paid any more than he offered and that he gave it his best shot. There will be others.
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