@sss205 wrote:Hi Everyone,
I'm wondering about the experience here of offering above asking price. I've heard it's the norm now. We found a house we really liked, and our realtor showed us comps that are 5-23% over asking, which is a pretty big spread. She said a potential concern is the house not being appraised for such a high number in the case of the 23% or similar over asking offers.
This has thrown a wrinkle in our plans, where the house we want/budget we set is about $75-100k under our pre-approval, which we thought would give us the room to offer well over asking, especially in an Atlanta real estate market that continues to see prices increasing.
Stats online show something like only 8% of houses not getting appraised for the offer amount, and fewer when appealed. So, one of my questions is, is that really even an issue if we're only looking to offer around 10-15% over asking?
Would it make sense to have something like a low initial above asking offer (5%-ish) and then an escalation clause up to 10%-ish and then a sub-clause saying we would make up the difference in an appraisal if the appraisal falls short, but by a maximum of up to $10k difference? Is that common?
Apologies here in advance as we're pretty new to this.
I lived in ATL for over 15 years. Some of the markets in the metro area and surrounding suburbs have always been competitive. Whether it makes sense to make an offer like that depends heavily on where your dream house is. The two most competitive counties are Gwinnett and Cobb because their public schools are outstanding. That is where the bulk of the "doctors and lawyers" have taken up residence. Areas like Sandy Springs, anything around Piedmont Park, Vinings trendy arts districts, etc. are also going to get snapped up quickly. Chances a low over asking price gets accepted with all those "contingencies" if they have other offers that are higher over their asking without all those scenarios are what you need to evaluate. Your agent is the best one to advise you if this is a good idea because he/she is should be well tuned in to the market you are trying to purchase in.
I recently purchased and thankfully it was before all the crazy hit and only went $3k above asking which was not even 1%. (I got lucky) The biggest discussion I had with my agent and loan broker was about offering over asking. What every you offer you make sure you can make it up in cash if the appraisal doesn't match the offer you made. Out of the 5 homes I made offers on only 1 was my agent truly concerned that the broker had way over priced it to start with (and explained why) and that the appraisal was not going to come in that high and any potential buyer was going to have to have a lot of cash on hand to complete the purchase. That home ended up being a cash sale so appraisal didn't matter in the end. The home I did buy did appraise for the price I offered so I had no issues.
The bottom line is regardless of statistics, guesses, and prayers what ever offer you make needs to be one you can complete and afford. You cannot count on an appraisal coming in the way you want it to or an appeal working. The bank is not going to finance over the appraisal even if you are spending less than the amount you are approved for in the final total.
