List Price Vs.
One misconception that many home buyers have is the accuracy of the "listed" price of a property. In a market with low inventory and competing buyers (the Greater Los Angeles market we are in), prices continue to rise. A commonly used marketing strategy that perpetuates this trend, is to list properties under the known market value. As a seller, this is a wise marketing approach. After all, a home is worth what people (the market) are willing to pay. By receiving competing offers, a seller stands a stronger chance of negotiating better terms, price, and commitment. As a buyer, this might sound misleading and frustrating, but it doesn't have to be! It is about your mindset and knowledge. Paying over the asking price is not overpaying if you understand your comparable properties. Take a careful look at listed price and sold price. You might be surprised. That said, you should not be discouraged or steered away from writing an offer below the list price. The value of a home and your offering price needs to come from you and what you value the house at. The best mindset that I hear from clients is, "If it goes over $X it wasn't the right house for me." No offer is a waste of time to submit, you never know where it could lead.
As a buyer, knowledge is the key element that will allow you to avoid disappointment and look at the right properties that you can and are willing to pay for. Know the market and get a proactive agent in your corner. What does it mean to "know the market?" It's researching what properties have sold for. This might seem like an "of course" moment, but being proactive with this will help you remove some blinders. A seller knows exactly what comparable properties have sold for and so should you. Sound like a lot of work? It doesn't have to be. A good buyers' agent will know the market, preview houses for you, and provide you with comparable properties to help you decide on a property's value.
Matthew Letcher, all rights reserved