The real estate market in Maplewood and South Orange is highly competitive right now, especially among the lower-priced starter homes. A low inventory means that buyers will most likely be competing with others for the same home.
One of the tried-and-true strategies of a bidding war is to out-bid everyone else. But should you? You will most likely win the house but that doesn't mean that it is a good decision.
When a buyer makes an offer that exceeds the list price, there is a greater risk that the home will not appraise for the offered amount. If the appraisal comes back lower than the offer, then the buyer may not be able to get the expected mortgage amount. The buyer will have to pay the difference in cash.
Even if the buyer has the extra cash, should he or she pay more for a home than it's worth? Usually overspending on an item is considered a bad investment. If the buyer is transferred for a job or needs to move unexpectedly, he or she will most likely have to sell the home for less than the purchased amount and take a loss.
Nonetheless, no one can put a price on "the perfect house." If a buyer finds his or her dream home and cannot imagine living anywhere else, then bid away! Just remember to consider the consequences before making an offer. No one wants to have buyer's remorse over a home purchase.
For more bidding war strategies, contact Shannon Severin at firstname.lastname@example.org.
Shannon Severin is a Realtor with Keller Williams Mid-town Direct at 181 Maplewood Ave., Maplewood, NJ. If you have any real estate questions, she can be reached at email@example.com or www.homesnearnyc.com.