Buyers offering over list price?

Buyers offering over list price? In recent weeks there have been reports of buyers offering over list price. On the whole, this has not happened in years so the subject is certainly getting attention from realtors and lenders alike. CAUTION TO BUYERS: Be careful if you decide to put in an offer over list price. If your over list price offer gets accepted you may run into issues if your appraisal does not come in equal to or greater than the offer you made. If this ends up being the case, you will be on the hook for the difference. If you do not have the funds to make up the difference then your loan will be denied. The market has not had time to absorb any sharp increases in price so appraisals will remain at levels consistent with comparable recent sales. Example: $200,000 list price, you offer $205,000 and it gets accepted. A week later your appraisal comes back at $200,000. You now owe an additional $5,000 at closing unless the seller is willing to renegotiate. There is a shift occurring in the real estate marketplace that is causing bidding wars but you have to exercise caution and discuss in length with your realtor and lender to understand fully the implications of your offer and possible outcomes. It is still winter and Spring has not sprung. There will soon be a flood of inventory to hit the market, so don't rush. This should make bargaining a little easier from the buyers end. On the other hand, sellers may just want to wait out your offer in hopes that they will have increased traffic and perhaps a higher offer coming down the road. Each situation is unique and it helps to obtain as much info and education on the process as possible before making any moves. Phillyfinance.com is striving to be that resource. If we can help answer any questions please contact us. For more on “buyers offering over list price”, visit www.phillyfinance.com to speak with a licensed mortgage professional.