Home sales in most of the country are mired in a market best characterized as sluggish, bordering on comatose. Although there are some positive indicators, like low interest rates and a gradually improving economy, the housing market is still struggling to recover.
Even so, there are occasionally multiple offers even in slow markets. This occurs when a prime listing comes on the market that has features most buyers want; it's in a good location; it's in good condition; and it's priced at or under market price.
If a competitive listing is priced below market value to stimulate activity and a quick sale, paying over the price probably makes sense if you're not paying over current market value. In some cases, however, a listing in a prime location will attract many offers ending up with a sale price that can't be justified by recent sale activity in the area.
This happened frequently in 2005 and 2006 when appreciation was running rampant i...