Staying within your budget is key to a successful home search. Owning a home comes with expenses beyond the mortgage, which means maximizing your borrowing power can leave little room to maneuver when other obligations arise.
Still, buyers can end up envying some appealing listings that are just above their target price. While remaining realistic is an asset when home shopping, you shouldn’t be too quick to overlook opportunities that might be overpriced rather than just unaffordable. Before you cast any listing aside as out-of-reach, consider these reasons a negotiation might be productive.
Tired of Waiting
One of the surest signs a home is overpriced is that it hasn’t sold. Most popular real estate websites will include information on how long ago the house was listed for sale. Many also include details on previous attempts to sell. If you’re working with a Realtor, they can likely provide even more information about how the list time compares to other homes in the area and if contracts with previous buyers might have fallen through.
In any case, an owner who has been trying to sell a property for an extended period may be more willing to negotiate. It’s also not uncommon for homes with long marketing times to be passed over because other buyers assume there is a problem with it or that the owner is unreasonable on price. You’re probably not going to buy a home for substantially less than its real value, but a reasonable offer on an overpriced house, at the right time, is always worth a try.
It’s also true that some sellers are relying on bad advice. Their Realtor could be a friend working outside their traditional market. Or the agent may be avoiding a difficult conversation about lowering the asking price.
If it’s clear that the price is well-above the reasonable range, consider providing some evidence with your offer. You can include documentation, such as comparables or a personal letter, that makes your case. More informally, you can ask your representation to have a conversation with their counterpart to gauge the interest in a more realistic offer.
Taking a Shot
No one likes leaving money on the table. An owner may know their home is priced too high and looking to start the negotiation with more leverage. It’s a strategy that can backfire, driving away qualified buyers, but could create an opening for those willing to play the game.
Again, there’s no harm in engaging with a home that appears to be a good fit and should be within your budget. The worst that can happen is you have an offer rejected and move on to other options. Just remember to do your research and know that finding the right home almost always takes time.
Find out what your budget truly is by working with the knowledgeable loan originators at Open Mortgage. Visit OpenMortgage.com for all of our home buying resources or to start your application today.