Why Home Buyers Should Consider Bidding Above Asking Price

In today’s competitive real estate market, bidding above the asking price has become a strategic move for many homebuyers. Despite having a drawer full of pre-qualified borrowers ready to purchase a home, 29% of buyers, according to the National Association of Realtors (NAR), are not moving forward with their home purchase because they are getting outbid. This situation is discouraging for both buyers and their realtors. Let’s explore why it might be beneficial to bid above the asking price and how you can help your customers understand this strategy.

Understanding the Market Dynamics

Over a third of homes are selling above the asking price. This trend indicates that offering more than the asking price can be a necessary step to secure your dream home. It’s essential to remove emotions from the equation and look at the numbers mathematically. Emortgages.com utilizes the Bid Over Asking Price tool and can provide clients with accurate, data-driven insights.

Case Study: The Benefits of Bidding Above Asking Price

Consider a real case study where a customer is looking at a home valued at $630,000. The asking price is in line with this value, but they need to bid $15,000 above the asking price to win the home, bringing the total to $645,000. While this might seem like a significant increase, it’s crucial to consider the appreciation forecast.

In this specific market, the forecasted appreciation rate is 4% for the first year. This means that in just 4.9 months, the home’s value would reach $645,000, allowing the buyer to break even quickly. Additionally, with an average annual appreciation rate of 4.28%, the home’s value would increase to $783,000 in five years. This results in a profit of $138,000 for the buyer.

Long-Term Financial Gains

Historical data shows that the average appreciation rate has been around 4.5% for the past 63 years. Therefore, a forecasted rate of 4.28% is realistic and aligns well with historical trends. By bidding above the asking price, buyers can secure their desired home and benefit from significant financial gains in the long term.

Conclusion

In a competitive housing market, bidding above the asking price can make the difference between securing your dream home and continuing the search. By leveraging tools that provide historical and forecasted appreciation data, you can make informed decisions and help clients understand the potential financial benefits. Using this Bid Over Asking Price tool can turn unsuccessful bidders into successful homeowners.

For more insights and strategies on navigating the real estate market, visit eMortgage.com.

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