Sold! At higher than list price, Part 2
Last week, I wrote about the trend of hot properties selling for higher than the listing price here on Oahu, along with my brother’s experience with the same in the Boston area. After being outbid for a house they fell in love with, he and my sister-in-law have decided to back off a bit from their hunt and try not to put all their emotional eggs in one basket the next time they put in a bid.
While it can be exciting searching for the perfect home, you need to keep your cool emotionally and financially once you find it.
I talked with Chiharu Zeason, vice president at Pacific Access Mortgage, who offered a few pieces of financial advice to buyers when bidding higher than list price.
First, make sure you’re prepared and that you work with a knowledgeable real estate agent, says Zeason. Buyers should get pre-approved for a loan for a higher amount than the property is listed for, but make sure you have sufficient funds to cover the price you’re planning to put in.
In order to curb the possibility of emotions getting the better of you during the bidding, a good mortgage loan officer will counsel buyers.
“We consult with buyers upfront and make sure that they are aware of their limit,” says Zeason. “During the process, we remind them as well.”
Keep in mind though, if you pay much higher than list price for a condo or a single-family home, make sure you’re doing it because it will enrich your overall quality of life; not because you intend to make a profit on the house in the future. While the economy is coming back and Oahu real estate generally holds its value, there’s a chance that when you sell the home, it will only command its appraised value.
“For financing, a loan is based upon a lower than sales price or appraised value,” explains Zeason. “In this trend, both buyers and sellers should be aware of that and if the appraised value comes back lower than the sales price, they should know already how to handle the situation.”
Bottom line: If keep your head in the game while still making your heart happy, you’ll end up with home that’ll suit your needs without leaving your pockets empty.