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Should I Offer Over Asking Price on a Home? Know this Beforehand

by | Aug 10, 2021 | Buying

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The 2021 housing market is unlike any other. As mortgage rates dropped, so did inventory of homes to choose from. Not to mention, demand is up and has driven home values up with it. If you’re a buyer, chances are you know first hand how hard it is to purchase a home in this seller’s market. In an effort to compete in this hot market, more and more buyers choose to offer over-asking price to overcome the bidding wars associated with buying a home. 

Understanding the conditions of the market can help buyers decide how much to offer over asking price on a home. Not sure where to start? Trelora’s team of experts created this guide to help buyers make the best offer when the right home hits the market. 

Know Your Budget Before Making an Offer Over Asking Price

In order to be a serious contender for a listed home, it’s essential that you know your budget. Typically, you might think that having a $300,000 budget means you can purchase a house listed for that amount of money. However, in the current market as many as 50% of homes are selling for over list price depending where you are searching for a home. This means a home listed for $300,000 might sell for $320,000, or even higher. 

In this circumstance, you’d be going over budget for the purchase price, and still have to cover closing costs. Thus, it’s incredibly important to know your maximum budget, then choose to bid on homes that you can afford, even if you have to bid over asking price on a home. 

Get Pre Approved

In a highly competitive seller’s market, buyers who are not pre approved will likely not even be considered when bidding on a home with multiple offers. A pre approval requires completing a mortgage application, a check of your credit history and a detailed review of your finances. After providing the necessary documentation, the lender will provide buyers with a letter outlining pre approval up to a specified amount. 

Completing the pre approval process also provides an estimate of the interest rate your loan will come with. Buyers should factor this amount into their budget as well to avoid any surprises. 

Making a Cash Offer 

As we mentioned, sellers have the upper hand in the current market due to the low supply of active listings. Thus, sellers have the power to choose from multiple offers in many cases. Ultimately sellers choose the strongest offer and often this means choosing an all cash offer if it’s an option. Seller’s want to feel assured a deal won’t fall through if a buyer can’t secure financing. 

All cash offers allow buyers to close quicker and with fewer contingencies. It also allows sellers to avoid the stress of wondering if an appraisal will come back lower than the offer price. For these reasons, it’s not uncommon for a seller to accept an all cash offer, even if it is lower than another financed offer. 

Hire an Expert Agent

It’s a real estate agent’s job to help you find a home that is the right fit for you. They should also be an expert on the local market. Ask your agent for comparable homes in the area that have recently sold. You can use these to better understand what you’ll likely have to pay for a nearby or similar home. They can also provide information specific to list-sales-price ratios for these comparable sales. This shows buyers how much a house was listed for, compared to how much it actually sold for. As a result, buyers can better pinpoint what price range they need to be in to ensure their offer is competitive, which may mean making an offer over asking price. 

It’s also important to discuss commission and pay early on. As you may already know, buyers pay nothing for a buyer’s agent services. Instead the buyer’s agent is paid by the seller, typically in the amount of 3% of the home’s sale price. Trelora Real Estate offers a modern take on buying a home, our agents actually split their commission with the buyers they represent. Often, this means buyers can afford more home than they realize by using their commission cash back towards closing costs, or even paying their mortgage for a few months. In this case, it may even allow buyers to offer over asking price on a home. 

Define deal breakers

After you’ve determined your budget, consider what makes a home the right one for you. With that, it’s also important to consider what could be a deal breaker for you when purchasing a home. We suggest asking yourself the following questions: 

  • Does this location work for me?
  • Is this home the right size?
  • Am I in a good school district? Is this home near amenities that are important to me?
  • Can I live without a specific feature? For example, an unfenced yard or no private master bathroom.

Ultimately, ask yourself if the price you’re going to pay for the home is worth its functionality and desirability. Remember, while the market is very competitive, and bidding wars are common, that doesn’t mean you should offer over asking price if the home is not right for you. 

Aside from personal preferences, there are other more obvious deal breakers to consider as well. 

  • Does the home have structural issues?
  • Are appliances outdated?
  • What costly upgrades are necessary in the next 18 months?


When you consider what a deal breaker is to you, you should also decide which contingencies you want to include in your offer. A contingency states that certain conditions much be met in order for the contract to move forward. Appraisal and home inspection are two of the most commonly seen contingencies when making an offer on a home. However, in this market it’s not uncommon for buyers to waive their right to an appraisal and a home inspection in an effort to win the bidding war. This is often in addition to making an offer over asking price on a home. 

How Much Should You Offer Over the Asking Price on a Home?

Avoid Overpaying

There is no perfect formula for finding the perfect offer amount while also not overpaying for a home. However, you can calculate the ratio of selling price to asking price so you ensure your offer is competitive. Once you’re familiar with that number, you can begin to craft a competitive bid and rest a little easier knowing you are not overpaying if you offer over asking price for a home. 

Low Appraisal

An appraisal contingency is one of the most common contingencies in real estate. In a seller’s market it might make sense to waive this contingency in order to make your offer more competitive and increase the likelihood it is accepted. If you decide to waive the appraisal contingency, you need to be prepared for the possibility of a low appraisal. 

A few different things can happen in the event of a low appraisal: 

  • Divert some of your down payment: This could increase your loan-to-value ratio which could ultimately change the conditions of your loan. 
  • Come up with the difference in cash: The buyer pays the difference between their offer price and the appraised value. 
  • Request a second appraisal: Have a second appraisal done by an independent contractor. However, the lender may not always agree to this.  

Get Creative 

If you aren’t able to submit an all cash offer, or waiving contingencies is not for you, there are other ways to make your offer more competitive. Consider offering flexibility with your closing date. Some buyers even offer incentives like paying for professional movers for the seller. Creative options like these can set you apart in addition to making an offer over asking price. 

At the end of the day, whether or not you offer over asking price is up to you. Spend some time defining your budget and what’s most important to you in a home. Enlist the help of an expert real estate agent who has your best interest in mind. Then, get creative to cross the finish line and win your dream home. 

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The information contained in this blog is for general information purposes only, and while believed to be accurate, Trelora assumes no legal responsibility for accuracy. Information provided within should not relied upon as legal advice. Please consult with your local advisors for independent information regarding availability and applicability in your market.