The price a home is listed for isn’t necessarily the price its buyer will pay. That’s especially true when the number of homes for sale is low, as it is now. In short, when there are fewer homes for sale it makes competition among buyers more likely. And when there’s competition, there are bidding wars.
So how common is it these days that a prospective home buyer will have to offer more than the homeowner is asking in an effort to beat offers from other buyers? Well, according to new numbers from one recent analysis, it’s more common than ever before. In fact, in February, 36 percent of the homes sold during the month went for more than their asking price – a record high.
That means, if you’re a home buyer looking at listings and calculating what you can afford, you should also calculate how affordable those homes would be if the price were to go up. The good news, though, is that market conditions are expected to change in the coming months. As more homes are listed for sale this spring and summer, the market will be better balanced and the share of homes sold above their list price should come down. (source)