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
In a seller’s market, you need to work backwards… Instead of spending a lot of time finding and falling in love with the house you want, you put in offers, sight-unseen, on any and all homes that meet your general criteria. Include a 10-day inspection contingency and a financing contingency.
Only when a seller accepts your initial offer do you actually view (“inspect”) the property. If you don’t love it after your “inspection”, you exercise your contingency and walk away.
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The advice every financer/realtor will give you is:
Even flippers in my area won’t waive an inspection without lowering their offer significantly.
The ones that do are telegraphing what they actually plan on doing: Razing the house, because the property is worth more.
Exactly. Waiving an inspection is the single worst thing you can do while buying a house. Even if you’re a contractor or inspector, having an unbiased third party look at the house without the pressure you’re under can do nothing but positive things for you. Even if you’re waiving repairs or concessions, it gives you a complete picture of what issues exist (and there are always issues, even in new construction), which allows you to paint a realistic picture of what the house will cost you.
NEVER DO. Everyone will try to convince you to waive it, DO NOT. Even my realtor told me I should waive it on my current house and I told her there’s no way I’m buying a house without one an inspection. She was like “Well, I guess we could have one done, but it’d have to be early tomorrow at like 7am…” and I was like “Great, I’ll be there!”
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yup, I learned a lot of the time they’re just lazy and want the easy sale. Make them work for it. It’s their job to sell the house, tell them what you need, in this case an inspection.
I get where you’re coming from, but sight unseen in a sellers market is a terrible idea. I commented above about the details of my experience, but there are so many shitty houses with major problems that are evident the second you walk into them. This approach ties up earnest money and can potentially prevent you from being able to jump on a good house.
Yep. We ran into this issue and we didn’t even do it sight unseen, we were just moving so fast that we got sloppy. It’s hard to continue to be diligent after 30+ failed bids. Ended up with a bid for a house that needed significant and immediate repairs that we couldn’t afford. Ended up walking away and losing our earnest money instead of keeping the house, but we’re much happier for it.
Our budget also continually increased throughout our search. The same houses we were bidding on at the start increased by 50k just in the couple of months spent searching. We only found inventory once we broke into not a starter home budget category. This has resulted in us being pretty house poor to start, but ultimately we plan to stay here for 20+ years so it hasn’t mattered after those lean first few years.
Earnest money is customary, not mandatory. You can tell the seller’s agent you’re open to the inclusion of earnest money in their counter offer. Alternatively, you can specify that the earnest money be held by the buyer’s agent rather than the seller or escrow agent.
Your earnest money also binds the seller. They can’t accept a better offer coming in later while they are under contract with you. I have seen sellers double the buyer’s earnest money so they can accept a significantly higher offer coming in later from another buyer.
In a seller’s market, the buyer needs to get into the negotiation phase as soon as possible. Use inspection contingencies for a cooling-off period.
It probably depends on your area, but where I’m at there are no sale conditions. If you put conditional on home inspection, you just got rejected.
Then you’re paying an extremely high premium to buy in that area. You’re almost certainly trying to buy at the peak of the market in that area.
I would divide the average cost of the house I want by my annual pay, and use that number to go shopping for a job in another area. Even taking a fairly steep pay cut, you’ll have a higher lifestyle elsewhere.
Look at a state whose population has declined, or lagged behind the national average. Generally speaking, those states will likely be in the trough of their housing cycles, and will likely peak when you’re ready to sell.
yeah this is absolutely a nogo for me. They all have deadlines anyway and I live around here so it’s not like it costs me anything to schedule an appointment to see the place or pop over during an open house. Also offers are all accepted at the same time so they’ll just pass if theres a 10 day spiff on it, and in my state you have to sign some formal paperwork to make a deal. This implies a covenant of good faith, so I dont really know the legality of singing and sending out a bunch at once but I suspect it’s dubious(which sucks because they get the option to choose from multiples)
Housing stock in my area is old for the US and these 100 year old homes can range from exactly what you see in the pictures to dangerously obsolete or just bad. The charming woodwork and hardwood floors photograph well and then IRL they areslanted, broken, there’s mysterious smells, and the basement is a disaster zone.
Theres also just the issue of, I’m not trying to fall in love with “the perfect house”. I will make it a home and update, and paint, and replace cabinets and plant gardens, I know I can make it my own. But I also plan on living here and raising a family for the next few years and there dealbreakers. It’s a lot like taking a car for a test drive before buying it. You dont really know how it feels to drive or how enjoyable it is or how comfortable it is, or how the plastics on the dash feel until you actually get inside of it.
But yeah otherwise I will never waive inspection.
That is rarely the case, and the only real reason to wait in a seller’s market.
The “legality” of doing it is explicitly defined in the offer. The offer you made to the seller explicitly includes the right to withdraw from the deal if it doesn’t meet your expectations. That is the express purpose for the contingencies.
There is potentially an ethical issue, if this negotiation strategy is so far out of the norm that it is completely unexpected, unreasonable, and causes some sort of harm to the seller.
But, I would argue that this practice benefits the seller, in that they can actually consider your higher offer, rather than accepting a lower, earlier offer while you’re still waiting for your viewing appointment.
Even if you decide not to move forward, it is typical in a seller’s market to receive numerous “backup” offers; they can proceed with another offer as soon as you back out.
In a seller’s market, and assuming you aren’t introducing unnecessary delays, I wouldn’t call this unethical. It’s simply negotiation.