Here’s why paying over list price might actually be a wise investment in this real estate market.
Eric Putt of Waterstone Mortgage is with me today to give a little extra insight into this crazy seller’s market we’re seeing. So many buyers are having to pay more than a home’s list price to win against multiple offers, but is that a wise decision?
According to Eric, it is. It’s the reality of a market where there is no inventory and high demand. You need to make your offer stand out, so the message is to let the numbers speak for themselves in your offer.
“Homeowners are the real winners in this market.”
You have to look at what your home is going to be worth in the long term. In 2020, we saw about a 10.4% appreciation rate and should expect to see another 7.5% in 2021. If you bought a $350,000 home two years ago for $360,000, that home will be worth about $376,000 at the end of 2021. You did pay $10,000 over asking, but you already would have made it back and then some in just two years. With appreciation rates like this, homeowners are the real winners.
I feel horrible for all these people having to pay above list price to get a home because the market is so competitive. However, realize that real estate is a long-term investment, and if you can get in now while rates are still relatively low, paying over asking price won’t make much of a difference in the long run.
If you have any questions for us about what’s going on in the real estate and/or mortgage world, don’t hesitate to reach out via phone or email. We look forward to hearing from you soon.
