Low, High, List Price: How Much Should You Offer on a House?

These factors will be weighed in comparison with other homes in the neighborhood and surrounding area to determine a property’s value. An agent will look at recently sold homes in the immediate area that are similar to the one they’re listing to get an accurate idea of what buyers are willing to pay in the current market.

The listing agent will help the seller determine an asking price for the home based on current market conditions, adjusted up or down for any unique conditions or features (good or bad).

So, what are market conditions?

Real estate market conditions are typically described as a seller’s market, a buyer’s market, or a balanced market.

In short, a seller’s market is characterized by low inventory and high demand, meaning that there are not enough homes for sale to match the number of willing buyers. This leads to multiple-offer scenarios, bidding wars, and often, homes selling for more than their listing price.

A buyer’s market is the opposite: There are tons of homes for sale, and buyers are spoiled for choice — if one potential home doesn’t work out, no problem because there are plenty more where that came from. In this scenario, real estate prices can fall.

A balanced market falls in between and occurs when buyers can generally find the house they want at a reasonable price, and sellers tend to accept reasonable offers. Prices tend to be stable in a balanced market.

As of August 2024, lowering mortgage rates coupled with increasing inventory may mark an increase in existing-home sales in future months, according to the National Association of Realtors® (NAR).

On a national level, the market remains seller-friendly, with a 4.2-month supply of unsold inventory as of August 2024. A balanced market typically has five to seven months of supply, and anything over that is considered a buyer’s market.

Of course, in real estate, all markets are local. Whether yours is a seller’s market, a balanced market, or a buyer’s market depends on several factors. The current market conditions in your area will help determine whether a home’s asking price is fair.

An experienced agent who is active in the market will know what houses are selling for, what sort of offers people are writing, and what it takes to be competitive.

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  Jason Bragg Real Estate Agent at Leonard Ryden Burr

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I’ve found a house and the price is fair; now what?

Ask your agent for help to assess your next steps. Your agent can find recently sold comparable homes, known as comps for short, and help you decide how much to offer.

“I think you can lean on your agent to let you know,” says Jason Bragg, a top agent in Winston-Salem, North Carolina, who works with 83% more single-family homes than the average area agent.

“An experienced agent who is active in the market will know what houses are selling for, what sort of offers people are writing, and what it takes to be competitive.”

Bottom line? Having good information on the current market value of a home is essential in determining how much you should offer.

Be mindful of seller strategy

During your process of assessing whether the list price is fair and how much to offer, you should also try to get inside the seller’s head: There are reasons why they might have intentionally priced the house too high or too low.

Consider that a house priced lower than its true worth could be a tactic to get attention from more buyers — thus creating a competitive, multiple-offer situation that can drive bidders to get emotional and can sometimes lead to an ultimate sale price much, much higher than that tempting-looking list price.

“We’ve definitely seen sellers listing their house lower than its market value,” says Bragg, citing a home that could be listed for $315,000 but is put on the market at $299,000 as one example.

“Strategic pricing helps to maximize the number of people who see the property, which maximizes interest and can lead to more offers,” Bragg explains. “Sellers can usually negotiate better terms, and the price bids up to where they would have listed it — sometimes even higher.”

Low, high, or list price: How much do you want this house?

Once you’ve determined whether the house is priced right, evaluate your own needs before coming in with your bid. Ask yourself:

Here’s when you might want to make an offer that’s lower or higher than the list price or right at the asking price.

A low offer might be appropriate…

If you’re in a solid buyer’s market, sellers will be more likely to accept your lower offer, and you’re in a good position to make one. Or, you might come in with a low offer if you’re simply ambivalent about the house and would only want to score the keys if you could get them at a steal.

Consider coming in low if you think the home is overpriced as advertised — and you and your agent have the comps to prove it. Or come in low if you’re prepared to go very easy on the contingencies.

You might also come in low if the house has been on the market for a long time. Or you might try a low offer if the sellers have already reduced the price at least once. That said, bidder beware: This approach could backfire. Many sellers have a floor they’re willing to accept, and an offer below that number simply won’t get you anywhere.

An asking-price offer might be appropriate…

If you’re in a balanced market or a seller’s market, you might make a list-price offer. Consider offering the list price if you really like the house, and think — based on those comps — that the asking price is fair.

It might be a good time to make an asking-price offer if the house was recently listed and there’s a lot of interest in it. Even if you come in right at the list price in this scenario, you can sweeten your own offer by being flexible with contingencies.

An over-asking offer might be appropriate…

If you’re in a strong seller’s market, you might need to be prepared to offer more than the list price. This is certainly the case if you think the house is underpriced based on the comps or if the market is very hot.

Thus, coming in with an over-asking offer may be an especially good idea if the house was recently listed and there’s a lot of interest. If you’re offering high, hold fast on contingencies to help make your offer more enticing.

Of course, another perfectly valid reason to make a high offer is when you just really love the house. Or, if for whatever reason — maybe it’s next door to your mom or best friend — you really care about buying this specific home, and you don’t expect a replacement to come along any time soon… or ever.

In cases like this, you’re basing your decision not just on market conditions and potential return on investment but also on your emotions. And that’s OK!

Whatever your motivation, your agent can guide you through the process of making an offer that feels right for you and your needs.

The no.1 rule in making an offer? There are no rules

Buying real estate may be a legal transaction, but it’s still a very human one. Work with an agent you trust, find a home you love, and — regardless of market conditions — make an offer that aligns with your budget and lifestyle above all else.

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