You're faced with a client offering above market value. How do you handle the situation effectively?

To understand a client’s motivations for making an offer over market value, start by having an open conversation about their reasons. Ask questions to uncover if they’re driven by emotional attachment, urgency, or competitive bidding. Explore their long-term goals and what they value most in the property while providing education on the associated risks with purchasing a home over the market value. This insight allows you to address their concerns effectively and ensure their offer aligns with their broader objectives.

The first thing I’d do is make sure the buyer understands the actual market value of the property. You don’t want them overpaying just because they made a high offer—it's about being fair and ensuring they don’t end up with buyer’s remorse. Verifying their funds is important, but it comes after confirming they know what they’re getting into. The goal is to keep the deal solid and make sure both sides are happy with the outcome

When a client offers above market value, it's crucial to verify they have the financial means to support such this offer. This goes beyond checking their funds; consider the implications for their mortgage options. Lenders may be hesitant to finance a property priced significantly above its appraised value, which can complicate securing a loan. Buyers must be prepared to cover the appraisal gap with their own money. Ensuring your client can handle these costs is key to preventing last-minute surprises and ensuring a successful closing.

Verifying a buyer's funds is crucial when a client has made an offer over market value to ensure they can complete the purchase. It confirms that they have the financial capability to cover the higher offer and avoid potential issues during the closing process including if/when the appraised value is less than the contract price (aka the appraisal gap). This verification helps prevent delays or complications that could arise from insufficient funds and provides reassurance to the seller that the offer is genuine and viable.

When working with a buyer client who is offering above market value, you need to understand their viewpoint. They may be scared to lose the property. As a real estate agent it is my job explain local market conditions to my clients and help them understand if offering above market value makes sense. Since I have a background in Econometrics, I enjoy making detailed market analyses that include data like: $/sqft, market time, average sale price for the square footage range. You need to look at the condition and age of the property as well. Personally tools like RPR and Infosparks help me create analyses that I can go through with clients.

I work closely with clients who are determined to pay above the market value for a home. My process involves thoroughly understanding their wants and needs, and then conducting a detailed current market analysis. I present them with the latest market trends to ensure they have a clear understanding of the investment they are making. Keeping my clients informed and confident in their decisions is my top priority.

Making sure the client has all the tools and knowledge before they take a look at a property should arm them with information to make an informed offer. If they are adamant on offering an over priced offer after consulting, do so and deliver.

Fairness to Other Buyers: Avoid creating an unfair advantage for your client over other potential buyers. Market Manipulation: Refrain from practices that could artificially inflate property values.

In a seller's market it would make more sense to give a best or near best offer first. In a buyer's or balanced market, there is more room for negotiation. It is part of a real estate agents job to craft a negotiation plan to get the best price, terms, dates, inclusions, and contingencies for the client. I explain the market conditions to my clients and help them understand if making an above market value offer is a good decision.