I added a blog post yesterday about putting your best foot forward when you're in a multiple offer situation. This post is an adjunct to that one.
I opened my email this morning and the first one that popped up had a subject line of "Price Improvement..." and then listed the property address. I thought to myself- How overpriced must a property be in a sizzling hot sellers market like this one to need a price improvement?
The point that I want to make is that no matter what the market is like, your Realtor should show you all similar properties (i.e., colonials, split levels, ranchers, etc.) in the same neighborhood, what they sold for, photos, descriptions, etc. BEFORE writing an offer. After discussing the sales and choosing a couple of properties that are similar, your Realtor should then help you to formulate an offer for the home- based on the level of activity and what has sold. Depending on the number of offers that have already been registered, you'll want to either hold back a bit or get really aggressive with your offer. But don't go in to that process blindly. You need to be informed.
And...contrary to what you may believe, an appraiser may/may not have an issue with the selling price if it's much higher than where it should be. Appraisers are taking in to consideration the sellers market and upward-trending prices, so counting on a lower appraisal to lower the price could be disappointing. Also, the seller is not forced to sell at the lower appraised price and at that point, you're back at the negotiating table with the seller.