Is Paying Over The Asking Price Holding You Back From Buying?
I know – how is this a relevant topic right now, right?!? With all the alarming headlines about the market being in “terrible” shape (which we hope you are skipping because you’re getting accurate, local market data from your RE/MAX Alliance Agent), ARE there homes still being sold over the asking price? You bet! While some homes seem to linger on the market for months, others are still flying off the shelf in a matter of days.
Many neighborhoods within the Front Range remain competitive. So, buyers seeking to enjoy the Colorado lifestyle they offer face a dilemma: is paying over the asking price for a property a colossal mistake? It is a decision not to be taken lightly, especially with higher interest rates, but let’s consider the potential benefits and costs associated with hesitating.
Read: Wait for Rates To Drop Or Seize The Opportunity?
Firstly, over-asking in 2023 differs from what we saw in 2021 or 2022. Rather than seeing offers at $50,000 to $150,000 over the asking price, it’s a narrower range of $10,000 to $25,000. This far smaller difference may seem significant at first glance, but when you break it down, it could be as small as an extra $50 per month. If you plan to own the home for over a few years, this additional cost can be easily absorbed and should not deter you, particularly if the property is already priced well.
On the other hand, the cost of waiting to purchase can have more severe implications. While it may seem tempting to hold out for a lower interest rate or hope home prices will significantly drop, the reality is that the longer you wait, the more expensive homeownership becomes. Because of such desirable neighborhoods, their prices will continue to climb, especially once interest rates drop, triggering greater demand and boosting their property values. So, you would miss out on that appreciation and pay a higher price.
Your RE/MAX Alliance Agent can help you estimate the time it would take for you to break even (based on the neighborhood’s history of appreciation). For example, paying an extra $25,000 on a $750,000 home (that’s an extra 3%), may only take a few months or a year to recoup the extra amount you paid. So even if you pay slightly over the asking price now, the benefits you’ll gain could outweigh the short-term financial considerations.
To assess a neighborhood and property’s overall value and potential for your lifestyle and financial goals, contact your RE/MAX Alliance Agent. The sooner you start the conversation, the better your chances of securing your dream home (whether it is now or next year).