In our current local real estate market, characterized by (still) low housing shortages and high demand, asking prices have taken on a new role. Here's why you shouldn't fixate on these numbers.

Asking prices are a marketing tool.

Asking prices are designed to attact potential buyers, but often have little connection to a property's final selling price. They create a starting point which gets buyers interested and helps generate traffic to listings. In our current market, they're often set intentionally low to attract multiple offers and create a bidding war. This is where many buyers get tripped up. They see a home listed at a certain price , fall in love with it, and then feel they're "overpaying" when they need to offer significantly more to be competitive. But here's the truth - in this competitive market, you're not overpaying simply if you offer over asking. You're paying what the market demands.

The concept of "overpaying" is relative.

In a balanced market, paying significantly over asking might indeed mean overpaying. But in a seller's market like ours, the true value of a home is determined by what buyers are willing to pay for it. If multiple buyers are willing to offer a certain amount, that is the home's current market value, regardless of the initial asking price.

How should buyers approach pricing in this market?

First and foremost, ignore the asking price. Instead focus on comparable sales of similar properties in the area. Look at what homes are actually selling for - not what they're listed for. Work closely with your real estate agent to understand true market values and trends.

Consider your own financial situation.

 Consider how much you're comfortable spending . In a competitive market, it's easy to get caught up in bidding wars and exceed your budget. Set a firm maximum price based on your financial capabilities and stick to it. 

Remember a home is worth what a buyer is willing to pay for it. If you love a home and can afford the price it commands in the current market, don't let the fact that you're offering "over asking" deter you. The asking price is just a number used to market the property - it's not a reflection of the home's true value in today's market. By understanding that asking prices are merely marketing tools in our current market, you'll be better equipped to make informed decisions and successfully navigate this competitive environment.