Barbara Corcoran finds great deals on houses in hot markets—here's her secret

If you're looking to buy real estate in competitive markets like New York City, San Francisco or Los Angeles, it may seem impossible to get your hands on an attractive, affordable property.

Real estate mogul Barbara Corcoran has some advice: "Shop the overpriced homes," she tells CNBC Make It. It's "the secret to buying in some of the most competitive markets in the U.S."

Here's why looking slightly above your budget might actually work for you: "One in three homes that come on the market are owned by people who think that home is worth so much more and they come on the market overpriced," she says. "And you know what happens? It sits and it sits and nobody makes a bid.

"I like to shop the overpriced market because the sellers are discouraged. They were too foolish to price it properly in the first place and then more apt to take a low bid," rather than let the home continue to languish.

"I know it seems counter-intuitive," says Corcoran, "but I bought every single home I've ever bought by looking 20 percent over my budget, whereas most people were looking within their budget or slightly below."

You can find the overpriced homes by looking at how long the home has been on the market, says Corcoran: "If it's been a long time and it's 20 percent over what you want to spend, chances are that's a home you can get if you put in a bid 20 percent less."

That said, it's still important to stick to your budget, so if you're shopping out of your price range and the sellers don't accept your lower bid, don't be tempted to buy more than you can afford.

As certified financial planner Michelle Brownstein puts it, when buying a home, "the key is to be really firm on the very top end of your budget and refuse to look at anything that's priced above it."

At the end of the day, "it's much better to be able to upgrade your house than it is to realize you bought way more house than you could afford to the point where it's impacting your ability to live other parts of your life."

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