Why Some Buyers Are Comfortable Paying More Than You Would Expect On Their Home


Why Some Buyers Are Comfortable Paying More Than You Would Expect On Their Home
By Scott Rogers • July 18, 2023
"Did you see that new listing? It was just listed for $425,000. Looks like a great place. I'm sure there will be tons of interest and probably multiple offers. I can see someone paying up to $440,000 for that house!" "Wait... what!? That house just went to closing, and the buyer paid $465,000 for it. I mean... it was a great house, but $465,000? For that house?" Some buyers are comfortable paying more for their house than you might expect. Why!? [1] Real estate is, often or even most of the time, an appreciating asset. You're not paying more than anyone might expect on a depreciating asset, like a car. Even if you paid more than market value for your home, over time, that market value is likely to catch up to and surpass the price you paid. [2] Their home is not just a financial asset... it's a place that they live, spend time with their family and friends, often providing a sense of community with neighbors, and so much more. Paying more than one might expect for a financial asset alone is different than paying more than one might expect for a place to live and potentially spend most of your waking hours. [3] Especially over a longer time horizon, the purchase price becomes much less consequential. Let's say the house was really worth $440K and the homeowner stays in it for 15 years and prices increase a meager 2% per year. After those 15 years, the house is worth $592K. At that point, I don't think the homeowner (today's buyer) is overly worried about having paid $465K instead of $440K. Now, to be clear, I'm not saying that you should be willing to pay any price for any house, and that it is totally normal, fine, cool, acceptable or hip to pay more than market value. What I am saying is that some buyers are deciding they are willing to pay more than market value for a house in the current market - and I can understand some of the reasons why they choose to do so. Receive Updates by Email Recent Articles: There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell Consider The Cost Of Your Planned Renovations When Planning Your Offer
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 22, 2024 (unless otherwise noted).
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