"But your bid is 16% below the ask! This is ridiculous, insulting, and you should educate your buyers!"
I tire of hearing this. You can ask anything you want! I'm interested in similar, recently closed comps in the building and then we can work our way through the adjustments for condition, view, light and floor to attempt to arrive at a reasonable value. Some buyers also have to account for the emotional component, or in other words: "How much does this home resonate with you?" Will you truly be heartbroken if you let an extra 3-5% come between you and a new home? I think some cliches have more meaning than others. "Life is short" is one I don't think anyone will argue with-you should enjoy your home. Be reasonable when buying a home and don't stretch yourself beyond your means. However there are a lot of individual factors to account for when determining your housing budget, besides the loan payment.
Now, getting back to what I was saying in the beginning of this post; don't be deterred from making an offer based on the asking price if your research shows that their value is off by 15-20%. That is what you should bid. However be prepared to back up your offer with data. If I am presenting an offer below 10% of the current ask, I will allude to our reasoning in the initial offer. Depending on the response, I will then begin to present our case for price more aggressively. That said, I have no interest in an argument if we can't come to terms. But based on the response of the seller/agent, you can determine a profile of where they are coming from. For instance, do they believe the hype or do they sheepishly defend their position? Perhaps they yell a bit, get hot-headed at the "ridiculousness" of your offer? I'm patient; if I know they are delusional we can wait, many times this past year listing brokers have called me back to ask me if my client and their "ridiculous offer" were still interested. Lol.
Patience is key in this market so be prepared to lose a few along the path. Some buyers have more emotional currency invested in a particular property and are willing to pay a premium to get it. More than likely you will also be faced with the same scenario, your CPA on one shoulder and your inner little kid on the other. But the best case scenario is when you find that property that resonates with you and no one else! That's when the stars align and we can really be happy about the deal we make on both the financial and emotional level. I love when this happens!