Bid v Ask – Why is paying slightly over the asking price the right idea?
Real Estate is the most important asset one can have. It can be a foundation for an overall strategy of building generational wealth and serve as both a long-term & short-term investment, generally increasing in value over time while generating passive income.
How can we get into the game with property values and rates going up and inventory at record lows? Is it still a good time to buy?
The limited inventory of homes has created a sellers’ market. Buyers are competing against one another driving up the cost of homes creating a scenario where buyers offers’ come in over the asking price. This may not sound like the most ideal ground for a big purchase/investment. However, when the market determines a good or service is limited in supply or scarce, these goods and services increase in value. What does the buyer do in this situation?
As demand for homes continues to rise, so do the values of the homes. When there is an opportunity to purchase your dream home in today’s market experts suggest bidding 1-3% over the listed price for your offer to be heard. That may seem deflating at first, but you may be surprised how quickly you can recoup that cost.
This scenario for example: Orange County, California. The seller paid $800,000 for the home in March of 2019 and is currently listing it at $950,000. We are going to say you need to pay 25,000 over the asking price for a total of $975,000. Using historical averages of property values in the Orange County area we can see that you will recover the additional $25,000 almost immediately with appreciation. Now if we look out 5 years from now maintaining a 7.1% appreciation rate the $975,000 house will be worth 1.3 million.
At Franklin, we weave the knowledge and expertise of our local mortgage professionals together with state-of-the-art technology and the powerful resources to make your home buying experience easy, reliable and fast. I am excited to continue to Cadiz & Lluis expand as they continue to receive high praise at each and every step of the way. Finding a property that matches each and every one of your needs is no simple task. Devon and Brody are efficient, tactical and create a different approach with each transaction in order to do just that. Don’t let the current market pose a threat as the cost of waiting to purchase of home simply does not compare to the value of you owning a home now.
Special Guest Writer: Jackson Polakov I Franklin Loan Center
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