Highest Bidder Not Always the Winner

Soon we’re closing a purchase on a home that brought in almost 30 offers within the first week. We priced it according to the local market and the offer we accepted was without the road-blocking contingencies of loan or appraisal.

The risks of accepting a higher offer was explained to the sellers. Although the offer accepted was still well over the list price, we made sure that buyers had enough money in the bank to make up the difference in case the appraisal did not come in at the offer price.

A few years ago I paid $6000 more than the asking price because I WANTED that property! Serious buyers are willing to offer more in order to get what they want. Others refuse to pay more than the appraised value, often times due to lack of additional funds in the bank.

Either way, real estate is an investment. You have to pay to play!

3 thoughts on “Highest Bidder Not Always the Winner”

  1. Nanny74

    There’s no way in heck I would pay more for a home than the appraised value. I’d rather find someplace else to live.

  2. lisa

    I would not pay more than the appraised value for a house either. Even in a hot market! that’s what got is IN the mess everybody is now getting out off.

  3. Actually, paying higher than the appraised value is not necessarily what got us into this mess. When financing is involved, a buyer who pays more than the appraised value must bring additional money into escrow to make up the difference in the loan amount. The reason for this is that a lender generally would not loan any more than 100% of the appraised value.

    What got us into this mess is a result of a number of factors, including lenders who offered loans to borrowers who could not (in reality) afford the payments, buyers knowing they would not be able to afford the payments later on but thought they could refinance, and (yikes!) even real estate agents who didn’t warn their clients against overly-ambitious financing scenarios.

Comments are closed.