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Should You Ever Bid Over the Asking Price On a Chicago Home?

May 27, 2024 | Industry News

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Bidding battles and homes selling for more than their asking prices have become common in many parts of Chicago. When the inventory is low and demand is high, sellers often price their homes slightly below what they hope to get, sparking bidding wars between potential buyers. So should you ever bid over the asking price if you find a home you love in the Windy City? Here are a few key factors to consider before making an offer in this tricky situation.

 

First, understand why the home is priced as it is. Research comparable homes that have recently sold in the neighborhood to gauge the home's true market value. If similar homes are selling for more than the asking price, the list price is likely to be low also and bidding over makes sense. But if the price seems in line with the market, exceeding it could mean overpaying.

 

Next, decide your absolute maximum offer based on the home's value to you. Consider factors like location, size, amenities, and necessary repairs and updates so that you can determine what you can reasonably afford. Going beyond your limit because of emotion or competition is risky. Maintain perspective on what you can truly spend in your current financial situation.

 

It’s also a good idea to evaluate the seller’s situation and motivation. A highly motivated seller may list their home below market value to spark quick bids. In a hot market, they’ll still get top dollar. If the seller seems to be flexible on price and timeline, starting lower and then increasing your offer during negotiations may work.

 

When it comes to crafting your bid, decide how much over the asking price you’re willing to go. Increments of $5,000-$10,000 give you room to negotiate. Avoid going tens of thousands over unless you absolutely love the home and can afford it. Escalation clauses that automatically raise your offer to beat others are also options that you may want to consider.

 

Most importantly, work with an experienced realtor who is up-to-date with the current local trends in the Chicago market. They can provide objective insights on competitors and bidding strategies, and they can also help you determine whether or not exceeding the list price makes sense for you. Their expertise is invaluable for negotiations.

 

Sometimes bidding over the asking price is necessary to be competitive in today’s housing market. But only do so strategically based on the home’s actual value, your budget, and expert guidance from a local realtor. Avoid emotional knee-jerk bidding to “win at all costs.” Stay disciplined about your limits, and be ready to walk away if bids escalate too high for you. With the right approach, you can still find a home you'll love without overspending. The Chicago real estate market presents challenges; but with smart bidding strategies, you can successfully buy your dream home even when competition is fierce.

 

 

If you’d like to get preapproved for a mortgage, so you know what your options are, please reach out to us. We’re always happy to help.

 
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