Multiple offer scenarios are extremely stressful. The process is saturated with uncertainty and frustration. If you are planning to submit an offer with a pool of others, identifying the right price to get the house is very difficult. You don’t want to overpay, and you definitely don’t want to lose out by a hair.
The thinking process is different if you aren't emotionally attached to the house in question. For this exercise, let's assume you really want this one. This is your baby and you’ll stretch as far as your financial comfort zone allows.
Picture a price in your head that you can see yourself offering. To manage your expectations properly, here are two future hypothetical scenarios you want to avoid as it relates to your offer price:
Scenario #1: You get the house. Your offer wins. How do you feel? Are you excited? If your immediate reaction is “oh darn I overpaid. How do I get out of this”, this means you are very uncomfortable and you should lower your threshold. You need to be be excited, not completely uncomfortable, if you get the house at your number.
Scenario #2: You don’t get the house. 30 days later, you find out that the winning price was $15K higher than your price. Do you think “oh darn, I definitely would have paid that!” This is a sign that you need to go higher.
In conclusion, when competing for a home, it’s best to offer a price that stretches your comfort zone to its limits, but top out at a price where you are completely comfortable losing the house. If you don’t get it, your reaction should be “oh well, I did my best.” If you do get it, you should feel nothing but euphoria.