In today’s competitive market, you may be wondering, “When should I offer more than the asking price on a home?” When it comes to your dream house a great deal doesn’t always come with the lowest price.
Price vs. Payments – When you take out a home loan to buy a house, you’ll probably never come close to paying the actual price. You’re making a comparatively small down payment and then paying interest on the loan until you refinance or sell your home. If you increase your purchase price, of course you will have a slightly higher monthly payment. But adding a few extra thousand dollars to a six figure home loan, will only slightly increase your monthly payment on a low-rate, 30-year loan. The increase in your offer can mean the difference between getting your offer accepted or rejected.
Relative Prices – Our natural tendency to pay as little as possible is not as meaningful for an investment, such as a home, as it is for a consumable. In this case, what you pay now can affect your sales price later. There may be little difference in total earnings if you pay less and sell for less or pay more and sell for more.
Influencing Value – For appraisers, the last sale or “comp” in an area sets the value for similar homes. Whatever you pay helps to establish what your home and comparable properties are considered to be worth.
One Chance – No two homes are ever exactly the same. Even when structure matches, your land, your view, your address and your immediate neighbors will always be different. You truly may have only one chance at just the right house. Industry professionals have all seen buyers lose out on what they really wanted. We don’t want that to happen to you. Nor do we want you to pay more tomorrow for something less than what you could have had today as a result of increasing prices and rates.
Starting the journey to home ownership? Get a mortgage that you can afford – so you can get the house that you want!