Been trying to buy a house because my rent is going up(and it will continue to do so) and a mortgage would be around the same as what my rent will become in a few years anyway so I figure I might as well build equity and have a house for my family.
Thing is the current housing market is nuts. Houses are put on sale with strict deadlines of “accepting all offers due 12pm 5 days from now” creating a false sense of urgency and to top is off the process is super opaque. You dont know what other people are offering so unlike an actual auction you cant start low and hopefully get a good value. Nope it’s a black box and the asking price isnt of any help because that was just an advertising tactic to get more people to look at the house.
So you have to do research based on past history of other homes sold in the area of the same type recently and then place a competitive bid based on that. Of course everyone else is also doing that so you have to make your bid “competitive” and give a little more. How much more is hard to say and you only really get the one bid. So 12 pm comes along and the anticipation in your stomach is insane because this could be it you could be a homeowner and you did put in a competitive bid, and then sometime between immediately and just before bed you get a message saying they went with another offer.
ITS SO DAMN FRUSTRATING! Houses that I bid $30,000 over asking price and someone still swooped in and bid even more. And of course since the process is a black box you dont get told what bid beat you out or what the other bids were(dont want the 2nd place bid to decrease their bid in the event the 1st place falls through). You’ll find out eventual final sale price a few months from now when everything finishes closing. I imagine the issue is other people got frustrated with the game over the last few months and now if they see a house thats ok they go all in with their max offer instead of a smart offer.
Oh and the market is limited, but somehow out of sheer coincidence after one round of sales is done the realtors manage to find another round of homes to put on the market. I’m convinced the realtors are limiting the supply on purpose and letting homes trickle in because the ACT NOW PUT IN THE BEST OFFER OVER ASKING tactic probably doesnt work as well if there are more than a handful of homes for sale at a time.
Its so frustrating I just want a house to live in and raise my soon to be born child, and Im willing to pay you what you’re asking for it! The worst part is the housing market in my area shot up a lot over the years. So these people playing bid wars are making 100k profit AT LEAST for a house they bought just 5 years ago! And then theres the old people who bought the house for pretty much nothing 30+ years ago
Sorry for my long wall of text rant
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Stick to a firm budget, and don’t go over it. We had a firm ceiling of $400k, looked at around 40 houses, and put in 7 offers before ours was accepted. It was listed for $375k, made an offer for $385k with a 24 hour expiration. Appraisal came back at $412k. We closed about 6 months ago, and it took us 7 months of looking at multiple houses every week to get to it. We were also using a VA loan, which turned some sellers off due to the added time for the VA appraisal and potential to either force them to fix things that aren’t an issue for most people, or back out of the contract.
My wife was pregnant at the time (and miscarried two months later), so I get the added pressure of trying to find something NOW. Don’t dig yourself into a hole that you can’t climb out of for thirty years because of that pressure.
We got lucky with this one because the previous owners were going through a nasty divorce. I get the frustration, and it was disheartening as fuck constantly being outbid, especially after you like a house enough to tie yourself to it for decades. Our realtor was great, and knew most of the agents in the area, so he was able to get us some inside info on a few of the houses we looked at. If your agent isn’t being transparent with you, find a different one.
Treat the search as a business transaction. You have a list of criteria, you’re reviewing options within your budget that meet the highest number of your needs. If it doesn’t meet your nonnegotiable criteria, don’t bid. The most important one of those criteria should be that you like the house. Have a checklist to run down in your walkthrough (roof, crawlspace, foundation, visible water damage, age of HVAC and major appliances that will convey, etc), and try to weed out as many major issues as you can before paying for an inspection.
It’s tedious, extremely frustrating, and disheartening. Eventually, you’ll find one. You may have to compromise on some things, and it’s ok to gradually improve the house after you buy it. Just make sure the basics are solid. Also, allocate way more time for painting than you think it’ll take, especially if you’re doing it without help. Everything will take longer than you think, be patient with yourself.
Be stubborn as fuck during this process, and be willing to walk away. I get that you want to get out of a lease (I rented for years, and it sucks compared to owning), but once most sellers are motivated to get shit done once they’re under contact just as much as you are. They don’t want to start the process over again either, especially because if a major issue is uncovered during an inspection, they are legally required to disclose it (my realtor threatened their agent with this fact over some mold in our crawlspace when the seller wanted to walk away instead of fixing it. He told them that he has access to their system and would personally make sure the next offer received a copy of the inspection report and would report the agent if they didn’t disclose it).
Thanks for the kind words and advice! My wife is pregnant as well which was part of why we started later in the season. Our old apartment rent used to be super favorable, but a change in policy caused our landlords to start upping rent to make yet more monies.
We have been setting a firm ceiling for ourselves based on budget as well and going through things. We’ve got an expected hopeful ceiling of 230ish(give or take depending on home) for what we hope to spend and a cap of $250k if the house is super updated(in a tasteful welldone way) and we can expect few repairs in the near future. I can only hope that as august pushes on that we weed out the people desperate to throw too much money down before school starts and that as the season slows sellers will be more willing to give to sell quickly.
Unfortunately the way things are I suspect people are more likely to just wait until next year unless they really gotta move.
Good luck man, hope you find something soon! Inventory will probably drop next month, but like you said, most people aren’t going to move right after school starts, so competition should be lower.
VA loans are so fucking clutch.
Definitely. We still put about 10% down, and could have done 20%, but it would’ve drained our savings and kept us from replacing the roof and some aging appliances. Interest rate was close to market average, slightly below, but definitely put home ownership within reach for us
Shit. We didn’t put anything down. And our rates were pretty good as well.
Mainly put some down to lower the monthly payment/total amount of interest on the loan
I get that. And we had been planning to save up for a deposit, but we were a couple years away from it. But she very quickly caught on to what we could do and jumped at it. At the time she was freshly divorced and remarried, and he ex had tanked her credit and depleted her funds, and I didnt earn much. Our financials have gotten much better, and we both contribute our fair shares to the household. We won’t ever miss a payment or anything. And we live in a semi-rural community, so for what our house is, we are doing very well.
Makes perfect sense. We were fortunate enough to be able to live well below our means at my last duty station and save a lot of money. Glad you’re doing well!
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Its not even firms where Im from. A good chunk of the homes Im looking at were individual owned or occupied, I just think the realtors in the area have a nonaggression treaty to make as much money as possible. Obviously the supply cant be that big to start with if theyre doing this but the way these houses come and go is definitely convenient.
And the percentage of homes for sale is quite small compared to the total number of homes. So if investors are buying even a few percent of the homes, that can still be most of the homes that are for sale.
Realtors get paid when they sell a house, but it’s only 2.5%-3.0% of the sale price. Getting someone to pay an extra 10% on a house nets them an additional 0.25%-0.3%, it’s chump change to them. Selling a one million dollar home for $1.1 million nets them $27,500. Selling 2 one million dollar homes for $900k nets them $45,000.
The realtors in the area Im looking at sure as heck arent representing the 1.1 million dollar homes and 3% out of that 10% or more increase can get you close to or over an extra $1,000.
In addition to that its not even just about a 10% increase it’s about creating a sense of urgency and scarcity and as a result inflating prices above 10%. It’s can’t just be coincidence that the fully renovated modernized variants of the house in an area seem to only pop up once a week after the other one goes off market.
Maybe I’m assigning more credit to them than they deserve, but they do control the rate of listings and even if they arent working together if you see something that you know will be off market by monday afternoon, it’s just good strategy to wait until then to do it.
Of course the supply cant be that big to begin with for this strategy to make sense, but it is a way of making the issue worse.
The investment firms are a big part of the problem, coupled with the fact that anyone who locked in a 30 year mortgage at rates between 2.5-3.0% really, really don’t want to sell and give up that rate.
For another level of frustration, you are also competing with international buyers who may find your local market cheap investments. There are legit overseas organizations that advertises to rich people to buy real estate, they work with equally legit local real estate agents to gain access to these “easy” clients.
You the local resident is disadvantaged as are the local real estate agents. But it’s great for these overseas client. But the end result is what you see, rising housing prices that doesn’t make sense to local residents
Thankfully my rusty area isnt on their radar just yet. There are a lot of investment companies and of course absentee wannabee landlords from NYC/long island who buy up properties around here though.
This is one of the main issues with all new builds in London.
There’s plenty of places going up but they’re all being sold to overseas investors as buy to let and do it keeps making rents exorbitant for locals.
Yeah, it’s fucking depressing. At least you guys still have reasonably priced houses. House values have tripled here in the last decade. Some areas have doubled just in the last 2 years. Owners are sitting on $700,000.00+ in equity. Rental owners are making an entire average income just because they happened to buy a house before we entered the bizarro timeline. My landlord owns 3 houses, 2 that she’s renting. She’s getting about $70,000 per year in equity from renters. Her mortgages are under $12,000 per year on each house. It must be nice to be just a few years older, or have become stable in your career just a few years earlier, and get rewarded with two million fucking dollars in make-believe house money. What’s even more frustrating is knowing this is an unsustainable bubble that will eventually come crashing down. We’ve been taking it easy for a few years hoping some sanity would return to the market, but it just keeps going up. So that’s a constant fear while looking, that it’ll all come crashing down right after we finally buy something, and we’ll be left holding the bag while the wealthy go find some other market to plunder.
Houses that I bid $30,000 over asking price and someone still swooped in and bid even more.
Asking price is such a lie. But also keep in mind that it’s not just about price, it’s also about contingencies. Hyperbole but if I have 2 offers, one is $450k all cash no inspection, and the other is $550k contingent on their cat liking it, I know which I’m going with. That being said DO NOT waive the inspection. Unless you’re a contractor who can handle anything that goes wrong, you don’t want to risk it. You could get a great house, or you could buy a money pit.
It’s crazy, I got my offer accepted because their realtor liked my realtor better than the others. They talked to my realtor on the side, said they had another offer for 4% more than ours but didn’t like the other realtor and if we met it they’d accept with no counter.
Only contingency I offer is inspection and I’d rather spend an eternity looking than risk not having an inspection done. I’m handier than average, but there are some construction/contractor level things that I am just not capable of handling. Thankfully the number of people waiving inspections has dropped quite a bit, but theyre still out there ruining it for the rest of us.
I just went through this over the 3 years of the pandemic. Saw maybe 250 houses. Put bids on at least 8. It’s absolutely insane and I can’t see how it can continue.
Unfortunately covid taught the real estate industry in my historically undervalued area how to game the system. Its hard to complain because even “overpaying” these houses are less than some other regions in the sate, but they definitely know how to make it a frantic process that takes away all power from the people buying.
Im certain theyre drip feeding the supply too in order to make the supply even more limited.
I’m not sure what market you’re in or what your budget is, but the pains that you’re talking about (other than the actual price of the houses) can be mitigated by working with a competent realtor. You want someone who both knows that particular market and also knows how to identify comparable sales. That means knowing the neighborhoods you’re looking at as well as prices and trends.
I’m not a realtor, but I did buy a house fairly recently in an extremely hot market. People here will bid $300k over asking and waive all contingencies. That’s just the nature of the market right now - at least in some areas.
Basically, look at the asking price but use something like redfin or zillow to get their estimation of what the selling price of the house will be. The sites will also (try) to show you comparable houses. The sites tend to err on the high side with estimated values, but if you’re not in a market that’s open to bargain hunters it will be close.
It’s a big step - probably bigger than it should be. I believe that the majority of American families have the majority of their net worth invested in their house.
Closed bidding is how it’s always worked, though. Generally, the people selling the house will pick the top two or three offers and make a counter-offer or otherwise solicit additional offers. When a market is hot, they can additionally push for a quick closing. As a rule of thumb, you’ll probably spend less for houses that have been on the market for a while, but you can likely expect the same kind of issue when it comes time to sell it. If you buy in a desirable market where houses sell within a few weeks, you’ll again probably see that kind of thing when you sell. Bargain hunting in real estate - waiting for the chance to get a smart offer approved - can lead to you being frozen out - or worse, getting taken for a ride that more informed buyers are staying away from. It can be like buying stocks in that way, except with hundreds of thousands to millions on the line with a single investment.
Anyway, find a realtor you can trust - possibly through a referral. Ask around at work or something if none of your friends has someone. It makes the process a lot smoother. This depends on the state, but the seller may pay the realtor’s commission, and in any case should be considered part of the cost of buying a house.
I don’t know where you are looking but this does not represent the majority housing market in the US right now. Demand and prices are cooling off.
I thought the housing market was crazy in 2020, so waited till 2021. I understood what crazy really meant in 2021 but ended up buying a house at the peak of the crazy market in 2021. Or so I thought. It was crazy in 2022, and it’s still crazy in 2023. What the fuck is going on?! At least I managed to buy before the crazy interest rates came by (2.875). I’m making calculations, and at the current mortgage rates, even if I buy a house for 100k less, I would still be paying more per month.
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I hear you, it is a nightmare. I bought my first home earlier this year and ended up moving an hour outside of the city. Paid less than half what I would have paid, don’t have to worry about crime, and everyone is generally more chilled out.
Meanwhile, Biden brags about how great the economy is doing, and his upcoming election opponent is even worse. When the hell is America going to elect someone competent to sit in that chair?
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Been there. Lived in So Cal and knew a guy who bought a house for 200k turn around 6 months later and his neighbor sold (nearly identical house) for $500k. He got lucky and bought in a neighborhood that got “popular”.
My wife and I were DINKs and realized that we would still never afford a house there, so I let them keep their houses, changed careers, and bought a house in a quieter place on the other side of the country (well, moved, rented for a couple years, and then bought). Took a 40% reduction in salary to do it. Still worth it.
Try florida where the mandatory insurance costs as much as the mortgage, plus you still have to replace the roof or they won’t pay anything
