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You should also be aware that having multiple offers in a market with very little inventory does not always equal market value as during times of little to no inventory buyers sometimes get desperate and offer over listing price because they have made several full price offers that were not accepted.

The definition of market value from Fannie Mae is;

Market value is the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:


• buyer and seller are typically motivated;
• both parties are well informed or well advised, and each acting in what he or she considers his/her own best interest;
• a reasonable time is allowed for exposure in the open market;
• payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
• the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

If the buyer offers above market value they may not be well informed or acting in their best interests. If you were to purchase a home above market value due to a lack of inventory and a month later there are many more homes on the market and you have to sell due to unforeseen circumstances (loss of job, job transfer, etc.) you may not be able to recoup the price you paid for the home.

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