If you’re selling a home would you want it to sell for $100k over asking price?
If you’re buying a home would you be frustrated that everything is selling $100k (or more) over asking price?
These days the emotions of sellers and buyers are all over the place.
Buying & selling has become stressful for many.
But it’s very important to know the difference between asking price vs. fair-market-value.
If a house is worth $1 million dollars, and sellers list it for sale asking $900k but holding back offers until next week, then their strategy is to under-price the home to get many more showings from potential buyers than if they asked the $1 million that it’s actually worth.
With many more showings there is a greater chance (especially when there is no other inventory) for more than one buyer to make an offer on offer day.
But if they get multiple offers and the home sells for a whopping $100k over asking price it still sold for fair market value.
The seller didn’t get a $100k more than they hoped for.
The seller didn’t get a $100k more than it’s worth.
And the buyers don’t have to stress that they paid $100k more than what it’s actually worth.
This strategy has created a lot of mis-perception in the real estate marketplace and a lot of anxiety and emotional volatility for buyers and sellers.
So what’s the moral of the story?
Well, the answer or solution is really quite simple believe it or not.
We’ve all heard the saying “knowledge is power”.
The key is to hire a Realtor who has the data, the experience, and the analytical skills to tell you exactly what a house is worth.
If you’re a seller then you can employ whatever strategy you want.
But you won’t accept an offer unless it’s at least what your home is worth.
Forget about bragging rights and saying you got $100k over asking price.
You want to get at least fair market value.
And if you can get $100k over what it’s really worth (aka fair market value vs. asking price) then you’ve done well and have full bragging rights.
If you’re a buyer then the multiple offer scenario can be stressful.
But it doesn’t mean you can’t make a good deal.
You just need to have a really good Realtor who knows exactly what a home is worth if you’re considering submitting an offer.
If a house is underpriced $200k and your Realtor can prove fair market value is $200k more than asking price, then as long as you can get the house for fair market value, you’ve done well.
There are no ‘deals’ in a market where demand is far greater than supply.
So if you can get it for fair market value then you’ve done well.
And even if you’ve paid a few thousand more than fair market value, chances are if you’re going to be there for at least a few years you will still make a tremendous return on your investment.
But don’t be fooled, or shall I say discouraged, that you’re paying $100k or $200k more than a home is worth.
People often confuse or blur the difference between asking price vs. fair market value.
If you want to know more about pricing strategies, or the process of buying or selling a home I’m always happy to chat.