Houses Do Sell For More Than List Price
It might surprise you to know that sometimes homes sell for more than they are listed for and you may be wondering "how could that be?" Well, there are a number of reasons for that so let's just review a couple of them:
- BIDDING WAR: Sometimes a house is listed below value in order to ignite a bidding war. This could be very risky and backfire on a seller but when it works, it usually works well. A bidding war is when a seller receives rapid multiple offers in a short time frame. When this happens, the listing agent will usually notify the buyer's agents that multiple offers have been received and that the seller is calling for buyers to submit their highest and best offers. From that point, the seller will often review the best offer and either accept the offer or begin negotiating with the highest bidder resulting in a sale for higher than the list price. PLEASE NOTE: Calling for highest and best offers is a courtesy and not an obligation. The seller can choose to accept the offer of their choice without giving multiple buyers the opportunity to submit their highest and best offer.
- SELLER CONCESSIONS: A lot of times, no make that "almost always", the buyer will ask the seller to contribute towards the buyer's closing cost and one way that the seller may agree to do that is if the buyer adds the amount of closing cost to the offer price. For example, let's say a house is listed at $100,000. The buyer offers full price for the house, but ask the seller to contribute $5000 towards the buyer's closing cost. The seller counters the offer and says that they will contribute $5000 towards the buyer's closing cost, but the buyer will need to add that amount to the offer price. The end result, the house sells for $105,000 instead of the $100,000 list price.
Let it be known that these are only two ways that a home can sell for more than list price and neither is guaranteed to work. Remember, that no matter how much a buyer offers and no matter how much a seller accepts, the home still has to appraise for at least the contract price. If it doesn't appraise for at least the contract price, that means that the transaction will:
- Either fall through due to the fact that a lender will make NOT a loan on a house for more than it's worth or
- The buyer will need to bring money to the table to make up the difference between the value of the house and the agreed upon sales price, which in the above example, the difference would be $5,000 ($105,000 contract price - $100,000 list price = $5,000 difference). Another example would be if the house appraised for $90,000 and the agreed upon price was $105,000, then if the buyer wanted the house so badly, that they were willing to pay more than it's worth, they would have to bring an extra $15,000 to the closing table. That's a really hard call to make if a buyer is willing to pay more for something than it's worth.
And THAT folks, is how a home may end up selling for more than list price.
If you are a buyer or a seller looking to or thinking about selling your home, look no further than this experience agent. Contact me and I'll be glad to represent you in your sale or purchase.