In order to know when it is good to offer more than list price, you have to become intimately aware of market conditions in the past, present and even into the future. You need to have this information available so that you can make an educated guess about how probably it is that the home you are going to make an offer on is going to appreciate.
If you need to know whether it might be a good time to offer more than list price, you first need to know when you should not offer over list price. You will hear it said over and over in real estate that purchasing a home is a very large investment. As long as you focus on the fact that the home is an investment, you will expect to have a good return on your investment, and you are less likely to make emotional decisions.
Getting emotional about a property in real estate is never a good idea, and it is especially not a good idea when considering whether to offer more than list price. Emotions can lead to mistakes, and mistakes can be very costly in the real estate business.
Therefore, try to be objective, and try to find out as much as you can about the market. Not only that, you should know to high degree of certainty how long you will live in this house. The point is that you are going to pay over list price. If you have to sell in a year or eighteen months, you are not likely to get the price that you paid for the house.
On the other hand, if you are planning to make the house you are planning to buy your home for the long-term, offering more than list price may turn out to be a sound investment. Whether or not it will be a sound investment will be determined by how much research you do about the real estate market in your area.
Do you know the price of comparable homes in the neighborhood at this time? Do you know what comparable homes have sold for during the last six months or so and three or four years back, before the real estate crisis? Do you know whether the area is likely to recover, or whether industry, jobs and businesses have migrated to other areas? If prices in the area are depressed, do you know the reason why they are depressed?
There are many factors that you need to know and take into account before you can decide to make an offer over list price, chief among which is whether you can actually afford the house, and whether you can get approved for a mortgage loan that will cover the price. If you do not know, then those would be good places to start, and then you can try to determine whether you should make an offer over list price. Making a sound offer, even if it is over list price, can bring you a good return, especially if the house is in an area that is likely to recover some of the value it lost during the real estate crisis.
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