Last night I tried bidding for an item on E-Bay for the first time. I saw the sale price and bid up an increment. But I was outbid right away and so I went up another increment. I was outbid again. I found this mildly annoying and I became a little more determined to win. After about five bids, I received a message that congratulated me. I had the highest bid and the auction would be closing in less than 30 minutes. At that point I thought to myself, "I am offering more than anyone else. Am I paying too much?" On reflection, I don’t think that I have the right personality for buying by auction.
I was committing $275.00 to buy a carpet. Imagine how much more is at stake when you are buying a house.
When you find a property that meets your needs, the first thing that you should do is to ask your agent what would be a fair price to pay for it, what is a deal and how much is too much. At that point, you should also know what money you have and what financing options are available. You can then make an offer knowing both what is affordable and, more to my point, what is good value.
The wrong way to buy is to offer too much and then to ask your lawyer to find ways to abate (reduce) the purchase price after a contract is signed.
Clients frequently retain professionals without an appreciation for the value of the service that they provide. Assessing what is a good price, a fair price and an excessive price is an exercise in judgment. A solid real estate agent has the skill and experience to make that judgment. So ask your agent to walk you through this simple pricing exercise. You will appreciate the skills that your Agent brings to the table and you will probably be happier with the result of your bid for a property.
And by the way, I was outbid in the closing moments of the auction last night. I considered the exercise to be a good and free lesson.