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Factors Why Buyers Pay More Than The List Price

For the majority of purchasers, paying more than list price for property goes against the grain- or more to be exact, the sense that they are supposed to negotiate in real estate transactions. However, sometimes paying more than the list price might be assured.



If you happen to buy in a seller’s market, you may want to pay more than a home’s listing price. The seller’s market also labeled as the “ hot markets”- have high demand, but a decreased supply. As a result, property prices jump and competition is rigid. You could find your self against bidding wars, and a significant increase in offer may be the only way to stand out and secure the home.

If you will notice that the seller is not that interested to sell- maybe they are testing the market or it is a second or even third property that they are selling- then the extra cash may be their instigator they need to accept your offer. In the sense that your finances are also necessary. No matter how much you want a property, don’t ever offer over a listing price if you can not afford it ( or you are not allowed for a mortgage loan of that size).



If you are entrusting on financing to accept your deal, then highball offers may get you into danger. To get a mortgage- and to identify the size of that loan- you will be needing to get an appraisal of the home for the bank. Remember that the appraiser’s opinion of the property’s worth will be categorized largely on comparable sales. If there are no comparable sales to help your offer price, the property will automatically not appraise, it means that the bank won’t allow you to get a loan for the full amount of your offer. Instead, it will only offer you the property’s appraised value. But, as long as you have contained an appraisal contingency in your sales agreement, you should be able to back out of the deal unharmed. If you will attempt to try without a contingency in place, you will relinquish your earnest money deposit.



In a highly competitive market, some purchasers might employ an escalation clause in their buying offer. An escalation clause may work like this: If a seller is asking $200,000 for his property. The promising purchaser would write an offer that increases the bid accumulatively to defeat out the other purchasers. For example, the clause could say she will going to pay $1,000 and upon the highest competing offer up to a maximum price of $220,000. Some purchasers may think that this is an ingenious strategy, but lesser real estate agents will agree.

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