AGENT SUGGESTS I OVERBID AND SEE IF HOME APPRAISES THEN NEGOTIATE

[Anne Williams]

Hello,

   I'm trying to buy my first home to live in and the market is pretty hot right now in Newark. I was interested in a particular property, but I don't think its worth the cost of what they are selling it for after looking at data, area, comps etc. My agent is advising me to perhaps give them close to asking price or more and if it does not appraise we can renegotiate for a lower price later.  

Is this good advice? Do most sellers usually lower the price if their home does not appraise for the price of the accepted offer?

Is this a clever way to beat out the competition to get a property you want or is this a bad idea?

I would be going into the situation hoping that it will not appraise because I already "know " or assume I over bid.

My realtor claims that if it does appraises to the high offer price, at least I will be reassured that it is worth that price.

I'm just not sure if this is a smart way to go about this, but with bidding wars and low inventory I need to figure out what to do gain a desirable home.

[Ericka G.]

@Anne Williams I don’t know your market but I don’t think this is a good strategy. I’ve bought 10 units at this point, in various markets (nyc, Atlanta, Detroit) and only had 2 appraise for less than the offer price. One was under by a couple of thousand and the seller grudginly came down. The other, which I didn’t buy, appraised for ~$40k less than offer and seller refused to come down. We wanted the property but had to walk away as the gap was too large and sellers were not reasonable. I don’t think you should offer more than you want to pay for a property or more than you think it is worth. Hope isnt a good business strategy...based on my small sample of 10 units, there‘s a ~10% chance that the plan will pan out. My realtor told me the same thing initially “hopefully it will appraise low...” so far that hasn’t really worked out for us