Persona/income details: we make ~$230k/year in a medium-COL Midwestern U.S. city. Looking to spend no more than $550k on our first home.

House details: listed for $450k in a sought-after neighborhood. The house was purchased a couple of years ago for $38k over an asking price of $250k. The current owners have done a ton of great work and it's a beautiful spot, although the basement is unfinished. Finished square footage is 1750.

Houses have been easily going for 30-60k over asking in several areas we've been looking, and it seems as if the list prices are lower than market value either 1) for the seller's agent to say, "I sold the last house for $X over list" or 2) to cause a bit of a bidding frenzy. There isn't much inventory here, just like in other cities.

Our realtor thinks the house will go for at least $500k, and we are thinking of offering $525k to "seal the deal" as best we can (with an inspection contingency of course). We looked at a handful of recent comp sales and the price per sqft is around $325, so even at $525k this house would clock in reasonably at $300.

Is this offer stupid? We aren't in a major rush to find a house (we have until June/July at the latest for closing). The last house we offered $25k over a $440k list and got blown out of the water. Our rationalization is that 1) this is a great neighborhood and will be for the foreseeable future, 2) $525k, even at $75k list, is well within our budget, 3) the list price could be total bullshit for the reasons listed above, and 4) even if when we go to sell this place in 5-7 years we sell it for somewhere in the ballpark of what we paid, we would be fine with that since we view housing more as a necessity vs. an investment – gotta live somewhere.


After offering $70k above asking, inspection contingency, and up to $15k above appraisal, we finished 2nd out of 13 offers. Promising outcome, yet unfortunate as we didn't get it. Thanks, everyone, for all of your advice! The list price doesn't really matter – I think the sellers priced it low intentionally to stir up a baker's dozen's worth of bids.

  • @Aganju, could you elaborate? What is 50% down in Feb? Mar 7, 2021 at 3:00
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    @Aganju - wouldn't fewer listings mean less supply, and higher prices? Mar 7, 2021 at 17:26
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    A house is worth just what you're okay with paying for it. It might be under, it might be over. Realize that you might not be able to sell it for the same price and you're fine.
    – Jonast92
    Mar 11, 2021 at 14:59
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    I cannot comment on how good or bad of a deal this is but i want to add an anecdotal experience. I was recently outbid on a house near a mid size u.s. city by someone who went 20% over asking price and WAVED the inspection. I was stunned.
    – grinch
    Mar 11, 2021 at 15:31
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    My wife and I bought a house in a hot market and hot location. Our 13th offer was accepted. All were well above asking. I recommend just being patient and keeping at it. Your realtor will let you know if you're wasting people's time. (When we were told we got the house, we couldn't even remember which house it was, we had seen so many and made so many offers!) Mar 11, 2021 at 17:08

2 Answers 2


At 2.5% $425K costs $1679/mo

At 2.5% $350K costs $1383/mo

Another way to look at it is that $75K difference is just under $300/mo. $3600/yr. To some people, this is a lot of money. To a couple making $230K, it's not really that much.

I'm not being flippant with your money. Just offering that if the location is right and the house suits you, you can see yourself living there for, say, 10 years, $75K shouldn't make or break the deal.

To put things in perspective, a bank will gladly loan you over $1.2M. You are already being conservative keeping the mortgage under 10% of your monthly income.

  • Yes, if it has only been on the market for a short time "play to win".
    – Mattman944
    Mar 8, 2021 at 2:28
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    If the home doesn't appraise for the additional amount offered, the buyer will need to make the difference up in cash. So it's not really the additional mortgage amount, it is do you have enough capital to make up the difference of the offered price and what the bank believes the home is worth.
    – Caleb
    Mar 8, 2021 at 14:01
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    Yes, OP already said they were ready to spend $550K, so I trusted they had the appropriate down payment. Of course, your point is important. Mar 8, 2021 at 14:07

There is no right price for a house, there is only the right price for you. Unfortunately you won’t know what others are going to offer, so you don’t know whether you are offering more than you need to or less. The best you can do is guess on what others might offer and decide whether that is over or under what you would be willing to pay.

Look at the market for houses, look at what you are actually willing to pay, look at your opportunity to get other houses. Any way you look at it, you are almost certainly going to either pay more than you have to, or not get the house. The question will be how much more than you have to are you comfortable with.

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