Today's Buyers Are Paying Over Asking Prices for Their Homes -- and You May Be Shocked at How Much They're Going Over

Limited housing inventory is forcing buyers to make generous bids on available properties.

Today's housing market is a really challenging one to navigate. The reason? There just aren't a lot of homes to go around. Buyers are being forced to duke it out over existing homes in the form of bidding wars. And often, that means making an offer above a home's asking price.

In a recent survey by Rocket Homes, the median amount buyers paid over asking was $35,000. And in some markets, that's actually not such a hefty premium these days.

Still, there's a danger to paying too much above a home's asking price. And so, if you're in the market for a new home, you'll need to think carefully before putting in an offer.

Go easy with that bid

You may have your heart set on a specific neighborhood and decide that you're willing to bid as high as you have to in order to snag a home there. But overpaying for a home could end up being a big mistake.

For one thing, the more money you offer a seller, the higher a mortgage you'll likely have to take out. Those higher housing payments could wreak havoc on your budget and make it difficult to cover your remaining bills.

Also, if you pay too much for a home, you might face serious losses when the time comes to sell it. Let's imagine you see a home listed for $300,000, but you offer $335,000 to seal the deal. What happens if home values fall back down to more moderate levels in a couple of years just as you're in a position where you need to sell? Suddenly, your home might only be worth $280,000. And if you've paid well more than that, you could be looking at losing money if you can't wait around for your home's value to go back up.

Finally, making too high an offer on a home could compromise your ability to close on a mortgage. Before you can close on a loan, your lender will require the home you're buying to go through a home appraisal. If your home doesn't appraise at a high enough price to cover your higher loan amount, that mortgage could fall through. Or, you may have to come up with a much larger down payment than expected to get that home loan put into place.

Strike a balance

In today's market, you may have no choice but to make an offer on a home that's over a seller's asking price. But that doesn't mean you have to go tens of thousands of dollars above asking.

Talk to a local real estate agent and see what price point makes sense from a bidding perspective. Also, think about how badly you want a given home before making a generous offer on it. It's one thing to pay up for a home that's perfect, but you may want to scale back on a home that's only okay and will need a lot of work once you move in.