I get it! I get it! There is just something mental that kicks in and keeps some people from getting comfortable paying full price (or over) even if a house is worth it. Let's face it, nobody's dream is to shell out extra cash for a new home, but forking over the asking price—or even a bit more—doesn't always mean your wallet took one for the team. It's a common misconception that paying the asking price—or above—for a home means you're overpaying.
The reality is that the final sale price of a home is determined by market demand, not just the seller's (or buyers) wishes. Homes priced correctly according to market conditions can definitely attract full-price offers, or even higher, from multiple interested buyers, regardless of it being a seller's or buyer's market.
After all, not all listings or list prices are created equal. I have met buyers that insist on paying #% less than list price no matter how a home is priced. So following that logic they almost seem to be more comfortable negotiating that % off a property that may be a bit overpriced because they are getting it under ask price rather than paying full price for a home that is appropriately priced because the seller "wouldn't budge or there was multiple interest. In the end, isn't it most important that you pay fair value and have a home that is "worth it?"
Now, some buyers play hard to get, refusing to offer the full amount or, heaven forbid, a penny more. This coyness can lead to losing out on love nests time and again. But fear not, for we have unearthed seven less-than-stellar reasons for keeping your wallet closed tighter than a clam when it might just be time to open up:
ONE: "They asked for it" - The belief that sellers should be satisfied with their asking price as the maximum, ignoring the dynamics of supply and demand that might favor a higher sale price especially when there is multiple interested parties. We all seem to recognize that some sellers overprice homes, but then fail to realize that some sellers may intentionally or unintentionally under price (or right price) a home.
TWO: "Bidding wars are for gladiators, not me." - No one straps on armor excited to enter a bidding battle, but if you're swooning over a house and not alone in your affection, it's time to sharpen your sword. Don't see it as a duel to the death but more like a friendly arm wrestle. Avoidance of bidding wars, without recognizing that competing offers are a reality for desirable properties. And, if multiple people are interested, couldn't that be a good indicator that perhaps that particular property is worth it? It's better to present a competitive offer reflective of the home's value to you, rather than holding back due to fear of overpaying.
THREE: "But my crystal ball says prices will drop!" – Forecasting the market's mood swings is as reliable as predicting a cat's next move. Even if prices are on a rollercoaster, a well-loved home may still get hearts racing and offers flying. The assumption that the housing market is set to decline is speculative. Market timing is unpredictable, and a well-priced home can still draw multiple offers even in a downward trending market.
FOUR: "My uncle says offer 10% less" – Taking financial advice from the past is like using a map from the Middle Ages to navigate New York City streets. Times change, and so do market dynamics. Trust me, the market doesn't wear shoulder pads anymore (at least not lately). Adhering to outdated advice, such as a specific percentage below asking to offer, which may not apply in the current market context, can serve as a blinder and prevent you from getting the home you want at or close to market value.
FIVE: "The news said..." – Ah, yes, the 24-hour news cycle, where time fillers become buying "tips." Unless the anchor moonlights as a real estate mogul, take their insights with a grain of salt and a shot of skepticism. Following generic advice from news segments, which may not have the depth of knowledge a real estate professional, can leave you ill-informed. Looking at Naples, the market is highly segmented so even accurate data applied to the wrong segment could be inaccurate of the home you are considering. Right now, we have areas of Naples where homes are sitting, while others are getting multiple offers.
SIX: "But it needs a makeover!" – Spotting a fixer-upper doesn't mean you can lowball based on your last trip to the hardware store. The home may already be priced in consideration of work needed. In other situations, your personal preferences aren't necessarily indicative of a homes value requiring sellers to take less money because you want more money to spend personalizing the property. Deducting the cost of potential renovations from your offer, not considering that the home's as-is value might still command the asking price or more due to buyer interest.
SEVEN: "It's not a deal unless" - Some buyers need to "grab a deal" for sport. I suppose that is ok, but it may mean that buyers end up with a "deal" on a home that isn't ideal! I liken it to the person who will spend $100 on sale items at the store and end up with a bunch of things they didn't need versus the person that paid $100 for something at full price that they could actually need and would use.
Partnering with an experienced agent that is knowledgeable about the market and understanding these factors can help buyers make informed decisions, potentially leading to successful home purchases even if it means offering above the asking price. So, when you're about to enter the home buying arena, armed with your earnest money and a dream, remember: sometimes, paying a bit more doesn't mean losing. It means winning the home that caught your heart, even if it means outbidding the oracle's advice.