Our area here in the South Bay is still experiencing a tight market and causing some homebuyers to feel stressed over the competition they are facing.

Imagine you are one of 17 offers on a home. As a first time buyer, when the seller puts out a multiple counter offer that says “highest and best” – meaning do your best to win this – it’s hard to know how to set your price and how high you should go over the asking price.

Then there’s the matter of appraisals. Will the house appraise for the crazy price you just offered? Know that sellers are on top of that too, and they are being advised to ask for the appraisal contingency to be removed. What that means to a buyer is that if the property doesn’t appraise at the price they offered, they have to make up the difference between what the price is and what the value is.

That can be a lot of cash that most buyers just don’t have, which knocks them out of the race. We as advisors, live through this with our clients, and do a lot of hand holding through the numbers as our buyers go through the decision making process on each offer.

So how much is too much? Should buyers wait until there’s a downturn in the real estate market?

Here is the honest truth. If it’s the right house and you have to pay $20,000 more, that is equal to $120 per month in payment, but should interest rates go up 0.25%, then the payment increase would be $150. So waiting for a lower price could end up costing you.

And if you wait to see what interest rates will be when the market turns down, then how low does it have to get for you to jump back in?

Make decisions on data you know, not wishful thinking. It pays to go fast to win the bid.

Win of the Week: My client beat out five other offers because we were able to make the contingency period short AND offer to pay a late fee if we go over the deadlines. This made the seller see we were confident and made our price more solid than the buyer who had all cash but $20,000 less in price. The other offers were less down payment and worse credit scores anyway, so that was easy!