Real Estate’s Game of… “Would you Rather?”

If you have bought, sold, rented, leased, or done any darn thing with real estate you know it is full of “would you rather” questions. The uncertainty as to whether you chose the right set of “rathers” is at the core of buyers remorse, when buyers remorse does occur. Of course, some times the buyers remorse comes when the set of “rathers” you chose prove to not live up to your expectations.

One imminently pertinent “would you rather” question for today’s home buyer is how much extra you are willing to risk paying, verse how little you are willing to risk losing a house over. In other words; would you rather risk paying $5,000-$10,000 more for a house than you needed to in order to win a bid war, or find out later you only missed being the winning bid by $2,000-$5,000?

DC Housing ChoicesThis question arises when buyers sit down to write an offer on the place that has been on the market for less than 24 hours, has offers already in hand, has more coming in, and the buyer needs to determine how much they are willing to offer over asking price. What price are they willing to pay? What price would let them feel good walking away if they are not picked? Well, this can be an endless upward spiral you say? Why, yes, yes it can be.

Though it is my job to inform my clients regarding the fair market value and to help keep things rational when asking prices and subsequent bid wars cease to make sense on paper I, as the agent, become a bit disarmed. Who is to say paying $40,000 over asking price is irrational if 5 other people are willing to do it too? Thus, once I try to set a ceiling of rationality, we are often diminished to the “would you rather?”. ┬áThe winner in bid war has the satisfaction of never actually knowing what any of the offers were. The loser(s) however get to check the records after closing and see just how much they missed by.

All too often bids are missed by a drop in the bucket by comparison to the overall sales price. Therein lies the loop. Just how many drops are you going to add to that bucket before you end up way over your desired budget? In today’s market buyers need to be careful to let their “rather” scales tip before things get out of hand. Yet again, they may have to be willing to push the limit if they ever want to have the winning bid.

Understand the dilemma yet?

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