If you’re hoping to buy a home, you’ll be happy to hear that the average sale-to-list price has recently dropped below 100% for the first time since March 2021, according to this Money article. In other words, houses aren’t all selling for over asking price anymore, and you can negotiate a lower price than the owner is asking.
That’s welcome news, and a silver lining to buyers who waited (or weren’t able) to buy a house in the recent market frenzy. While mortgage rates are higher, at least now you’re more able to successfully compete for a house, and even negotiate the price.
But keep this in mind: there still aren’t a tremendous amount of listings coming on the market. So, even though you may have less competition, when a house comes on the market and it’s appealing to you, there’s a good chance it’s appealing to other buyers as well. That’s also a sign that it was well-priced, or even lower than buyers would be willing to pay, since price certainly plays a role in what makes a house appealing. And when that happens, there’s a good chance the house will sell for over asking price, despite what data and the news may be telling you.
The trick for you as a buyer is to not get stuck in the mindset that you have to get a house for under asking price, just because that’s what you heard on the news. First of all, that’s based upon national data, which may not even apply locally, or the specific price range you’re in. But, more importantly, offering over the asking price is something you always need to be prepared to do. (At least if you want to get the house you truly want to buy…)
No matter what the market is like, if a seller prices their house appropriately, they have a good chance of creating a bidding war and getting over asking price. The difference is, over the past year and a half, they almost had to try and price their house too high for the market to bid it up even higher. While sellers need to be more thoughtful about their pricing than they have been recently, they can still easily generate enough interest to start a bidding war and get over the asking price for their home.
Believe it or not, it can even happen once the house has been on the market for a while! Maybe it just took a little longer because you and other buyers were taking time to think, and then all decided to make an offer at the same time. It surprises agents as much as buyers when a listing agent tells you there are other offers coming in when the house has been on the market for months, but it happens more often than you’d think. But you’re also likely to find yourself in a bidding war right after an owner reduces to a more appropriate and appealing price. The point is, just because a house doesn’t sell in the first day or two doesn’t mean that it won’t sell for over the asking price.
The good news for you is that your competition may not want to offer over asking. Some buyers never want to offer more than the list price and feel they have to get a house for below the asking price, regardless of the market conditions.
The good news for buyers who want to buy a house for less than list price is that, if that’s what a buyer wants or needs to do, they can always achieve that. There’s always a house you can negotiate down from the asking price. Even in these past few years there were opportunities for buyers to do that.
Now, was it a house you (or anyone else) desperately wanted? Probably not. But, if that’s what drives you and makes you happy, there are likely more opportunities for you to do that now than there were a few months ago. But don’t expect to be able to negotiate the price down on a house that’s priced well and has a lot of interest.
If you’re in the market to buy a house, the good news is that houses aren’t selling for over asking price as often as they were in the past couple years.
That said, a well-priced house that appeals to you is likely to have offers from other buyers as well, which could lead to it selling for higher than the list price.
If it’s a house you want, and the value can be justified, then consider offering more than the list price. (As long as you can handle the payments, as is always the case.)