“Don’t wait to buy real estate, buy real estate and wait.”
In Part I of my “Real Estate Bidding Wars” post, I shared my general perspective of our current housing market. In Part II, I want to share with you, some personal experiences in this area, in hopes that it can help whoever is house hunting. I have been looking, with my husband, for a new house since April and since we are not in a hurry, we have the luxury to be picky in this market. I understand many are anxious just to get a house yesterday, but for me it is more than that, I have a lot of boxes to check before I am interested in touring a house and since this is going to be a very big investment, I am taking the time to make an intelligent decision. However, it is hard because you also have to act quickly if you want any chance at any house, if a house comes on the market on a Wednesday usually sellers want to review offers by Friday, if not before. Then you have a few hours to decide if you like the house, if you want to make an offer, how much you should offer and then prepare for all the extra surprises that sellers may demand if there are somehow inclined to take your offer.
In the last 3 months, I have toured 6 houses and put an offer in on two. I would describe the two offers like night and day. When I started this journey with my husband, we did not know how crazy the market was, we heard crazy stories, but I thought people were overreacting. They were not. We placed an offer in on one of the first homes we toured. It was a beautiful home that checked all the boxes, almost new, full of upgrades, great neighborhood. We had two days to place our offer before the seller cut off the buying process. All went smooth, we received a fairly recent inspection from the seller together with disclosures and all the documents regarding special assessments, HOA transfer fees, and even an economic contribution, yeah that’s right, some Homeowners Associations charge a one-time economic contribution of 1% of the final sale price. At least we knew everything about the house before placing our offer, we had the time to go over everything with our realtor and just went for it. Our offer was very generous, unfortunately, someone else was even more generous, so we lost that one. Bummer! It’s OK, it was our first try!
Our second offer was more like Nightmare on Elm Street (the name of the street has been changed to protect the guilty). A house that I saw two years ago came back on the market on Friday before Memorial Day Weekend. I requested a showing that we got the same day at 2:00 p.m. By 3:00 p.m. my husband and I were done touring the house and asked what the deadline for an offer was, our agent said Tuesday, after the long holiday weekend. At 4:15 p.m. I received a message from my agent saying that we had an hour to make any offers. My husband was reluctant, but I convinced him, and we made an offer of 10% over asking. The purchase offer was discussed and prepared in a complete rush, sellers were requesting to stay a few months until they found a new home. We agree to that and told our agent we wanted a lease agreement with fair market rent and deposit. Well, guess what? In this market, in our area we were told it is customary to give free rent to make your offer more attractive! So we did, we offered free rent but requested a deposit. By 8:30 p.m. I got a text from my agent “Sellers accepted the offer, but with few small stipulations.” The small counteroffer included no deposit and no inspections. For us these were problematic as our costs just to own the home, pay tax and HOA was considerable and we did know the home had been bought and sold numerous times in past several years (possibly a red flag).
I cannot tell you how many texts and emails we received from our agent that weekend asking us to counter back so we could close the deal. Our agent told us that the sellers had multiple cash offers but that she was working hard to get us in the house. We had lost all interest at this point and decided to go no further. A week ago, after everything on the home closed, I finally got the chance to see how much the house actually sold for, we had offered asking price plus 10% and free rentback when we lost interest in the deal. The house actually sold for 4% over asking. What does that tell you? Don’t get pressured, ask questions, don’t buy into hype, do your research and trust your gut, I believe there were no other great offers, ours was the best and perhaps the only one at that time. Certainly, the sellers were hiding something by not allowing inspections and refusing to provide full disclosures. It is probably better at this point to buy new from a construction company, but homes are scarce and inventory low.
It has been fun, stressful and very educational and we will keep on searching! Future looks better every day!
Have you bought a house in the last 4 months? If so, I would love to hear your experience.