Are we seeing a NEW TREND in Real Estate?

Scott Godzyk I am not seeing offers $50,000 over asking, but many of the Buyers I am giving Pre-Approval Letters to are making offers over asking price.  Each and every time I tell them what will happen if the property does not appraise.  They can offer whatever they want, but we will only approve a mortgage up to the appraised value.  Anything over that has to come out of someones pocket.

Hi Scott we've been seeing over list price offers  ($10K  to 30K +) on and off for years now.  Most, if not all will not appraise that high.  Buyer needs to be willing to pay cash over list price and proof they have the funds to do so. I have had quite a few successful transactions like this and all worked out fine.  And you're so right.....you've got to study and know those offers really well.

Good afternoon Scott Godzyk ,

Almost every offer coming in in Austin is way over asking and most all offers have waived the appraisal, not asking for a Home Warranty and a high Option fee. it's getting crazy out there!

You bring up great points Scott Godzyk. For single family homes in South Florida, there have been lines of buyers waiting to make offers over asking price. Thought they had already been educated that they would be required to pay the difference in cash between the appraised value and their offer. What a slimy tactic to have their offer accepted. Do you get appraisals before you take the listing? Like also your imagine this...  Let's include agents that know how to write up a contract and adhere to the timelines, not their own imaginary timelines.

So true on all the necessary points.  I have ha offers coming in well over asking with FHA loans and then asking for exorbitant seller concessions as if that too high price is all that is important.  It still needs to appraise.

Scott- it's interesting reading your post and the comments as well. It does sound kind of wild out there. 

These are things that happen every year and a half or so in and out ebbing and flowing that way. This is OK stuff in my book because everything comes around eventually

Dear Scott,

Too few homes, too many buyers. Tough out there for everyone right now.

Good thing your sellers has an agent who knows what he's doing. I feel sorry for sellers who accept an offer that is incredibly high and it doesn't work out and all the other original buyers have bought other properties. Oops.

I just hope it never gets to the point here that waiving inspections becomes a rule of thumb. I do get calls every so often from FSBO buyers. No inspection, no agent, no lawyer, no nothing. Just buy a house. Then when things start going wrong, they look for help. Sorry folks, you got nothin.   

Wow that is a fascinating trend, something I don't come across. Why would a seller consider offers that aren't very likely to appraise? Personally, if I were the buyers agent, I would recommend a conservative route knowing that so many people are being aggressive without any grounding in reality. I guess at the end of the day it's also about relationships as well- because if I know the listing agent is intent on reviewing offers with a grounded reality then why write offers that aren't. 

About half my deals are all cash- and even those where the buyer is financing, I am always concerned that a low appraisal could kill a deal. That said- the majority of my financing buyers are putting down 30% or more- so a low appraisal doesn't often change things. 

We are in a housing deficit as well. The old appraisal issue always comes up as a reality. And yes, many other factors create a good offer aside from the price. Great post.

Scott,

Waterfront realtor's like myself, are dealing with a little different set of circumstances. Like many other markets, our waterfront inventory is tight. The difference between our situation and what you described, our valuations have increased significantly over the past two years but large numbers of buyer's, are still living in a "time warp" circa 2001 as it relates to pricing. I continuously deal with buyers, who describe in detail, property amenities in  price ranges, which are significantly higher that what they are willing/able to spend. There are no longer lake home properties for sale in the 300K to 500K range on the lake.........the few which do sell, never hit the market. Buyer's need to make sure that have a clear understanding of market conditions as they begin their search for a property.  

The market is absolutely crazy right now. Agree with others that terms are just as important, if not more so than price. High price offers with no chance to appraise and no cash to cover is not good for anyone.

A super-high offer price without the commitment of waiving the appraisal and finance contingency makes the high number worthless. It must also be combined with the buyer's financial ability to take the hit and still commit.

Hi Scott Godzyk .  Great topic! Congrats on the feature.  It's so important that sellers understand beyond the $$ sign and this is why having the right agent IS so important.  We're seeing this trend in our market too and a lot of buyer remorse accompanies it...! 

I always counter back that the price will not change due to a lower appraisal. It's the buyer and seller who determine the sales price, not the appraiser. But I do agree that buyers will try and renegotiate the price due to the appraisal or inspection. It just doesn't work with so many buyers.

"In the end, the most important thing in Real Estate for me is provide GREAT SERVICE." I totally agree!