Overbidding on a house

Chances are, especially in the Amsterdam region, that you have to make an offer above the asking price of the house.

Currently it is almost standard that there is a lot of interest for the same house. Therefore, often you’ll have to overbid on the price to win the bidding. How much should you overbid, and is this a wise thing to do? How do you finance this?


Increasing number of offers are above the asking price

In the current housing market, it is becoming more and more typical that the offer price is higher than the asking price. Calcasa, an independent company that is specialized analyzing and valuating real estate, researched this. They found that 28% of houses sold in The Netherlands were sold above the asking price. Also, this phenomenon is becoming more widespread in the Netherlands in cities such as Groningen, Haarlem, Amstelveen and Amersfoort.

What does overbidding mean for your mortgage?

As of 2018, you can only borrow 100% of the appraisal value. When purchasing a house, there are also purchasing costs which means that your own contribution can increase when overbidding on a home. An example:

In the calculation below, you can see how much the own contribution has to be when the house has an appraisal value of €200.000 and a purchasing price that is €10.000 higher of that appraisal value.

  • Appraisal value: €200.000
  • Purchase price: €210.000
  • Difference appraisal value and purchase price: €10.000
  • Purchasing costs payable by purchaser (6% of purchase price): €12.600

Total own contribution: €22.600

Can others help to bring in more own contribution?

There are different ways to finance the own contribution. You can make a claim on your savings for example or make use of a donation by your family. The advisers at A&H Finance are happy to help you with finding solutions.

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