Should I Overpay For A Charlotte, NC. Home Becuase Of Home Shortage?

The question has become more predominant this spring than ever before. Should I overpay for a house because of the shortage of homes on the market to choose from right now. My answer has been and will always be NO. I cannot justify anytime where overpaying for a house is a viable option. Currently we are seeing a sellers’ market and inventory levels are at substantially low levels. Buyers are panicking because they are not use to not having the multiple choices of houses to choose from and sellers are trying to take advantage of it by pricing their homes higher than market value. Now, those homes are going under contract. But the biggest dilemma I am witnessing right now is not that home buyers are willing to over pay for a house; but that they are not appraising. Case in point is i put a home on the market at a fair market value with a slight inflation (3%) to cover the negotiation I expected to have on the house based on recent comparable over the past three months. Within ten days of being on the market I received multiple offers on the house. We asked for Highest and best offers from all interested parties. Every one of the offers was over the list price of the house. Needless to say my seller accepted the one that was the highest (over 10% higher than my asking price) despite my fears of not appraising. Well the buyers lender had the home appraised and it came in under the asking price of the house. My seller did not want to move on the price and the buyer obviously did not want to pay over the appraised value for the house. Despite negotiations at trying to reach a compromise we terminated the contract. There are becoming a lot of homes out there that have buyer financing fell through...which is the home did not appraise. As a realtor representing the buyer; you are playing with their money. They are now out the cost of the appraisal, the home inspection and any other fees and services they had done before finding out the outcome of the appraisal. I picked up a buyer who had been with an agent who had helped him put offers in on three homes. He won all three homes and then terminated all three contracts because the homes did not appraise. He fired his Realtor after losing over $5000 in appraisals, due diligence fees and inspections... between those two examples are just ones of many that I hear of everyday. Realtors fear is that house will not appraise. but on the other hand they are playing with fire in hoping that the seller will lower the price down to the appraised value and the seller has higher expectations on what they expect to get out of the house and usually are not as flexible.... But I am seeing a trend where home prices are starting to come down as sellers are reducing the prices on homes faster and quicker to ensure they do not lose on the spring housing market. but, when you are putting more than 3.5% and not doing a FHA loan; if the appraisal is low the seller may not be as willing to negotiate either and it can and does more often than not back fire on the buyer and they are out the due diligence fee and the appraisal..... So, no you should not be overpaying for a house in this market and if your Realtor is recommending it because of the limited inventory find another Realtor. I have one client that we have looked at numerous homes and decided on five homes we wanted to buy. Each time we could not get the price to a point where I thought the house would appraise ad we walked away...last night one of these sellers’ agents called me and asked if I was still interested and they were willing to accept our last offer. When i went back and looked the house up I noticed it went under contract and then the deal fell through. Found out it was due to the appraisal and our price was just under the appraised value so the seller would accept it; if we were still interested..... So, you can still get the house you want at a fair price. You are not going to be able to steal a house in this market but you also should not be over paying...just give yourself a little more time to look and be patient. A home purchase is the largest single purchase you will make. Dave diCecco Realtor/Broker Coldwell Banker United Cell:704-519-7895 ddicecco@cbunited.com www.davedicecco.com