Insanity in House Hunting

[Chris Pascale]

Decided to get a quote on a full re-model of my home (paperwork says it was built in 1927, but is actually much older). When it came in at $247,000 we thought, "okay, maybe just buy something that's updated."

Thing 1: We go to some open houses, and homes are getting dozens of offers their first week. Along with low rates, there appears to be an eastbound exodus from New York City.

Thing 2: We view a home that seems decent. My realtor finds out there's only 5 offers, and says to us, "there must be something wrong with the house." We remind her that they listed it as a 5 bedroom, but it's really 3. In the end, we don't make an offer.

Thing 3: We see a nice home listed for $489,000. We offer $513,000, and don't get it. There were 40 bidders.

We have our open house next weekend, and I'm thinking we might just bank the cash and rent. I was house shopping in 2007, and this is pretty much how it was. I was pre-approved for an insane amount of money, and told I could borrow much more than that, homes were getting multiple offers over asking price, and everyone thought there was some kind off housing shortage.

[Abe]

Yeah you don't want to get sucked into a bidding war if you don't have to, especially with overall significant economic uncertainty. I somewhat wished were renting instead of buying, but for various reasons are buying instead. Time will tell if I was wrong!

[KarefulKactus15]

I recently went house hunting.  Made a few offers, everything sold same day above asking with multiple bidders.

I decided this is no time to buy since I'm happy renting.

I'll put my capital to better use elsewhere.

[Laserjet3051]

I shopped in Feb and March and closed in April. It was totally insane even then. As a result i didnt get 100% of everything i wanted in a home but did check off most boxes. Im happy with my purchase and yes, offers were usually accepted the same day as they went on the market. This skewed supply demand relationship will surely buoy prices for the foreseeable future.

[Chris Pascale]

UPDATE

The open house would have been tomorrow, but we accepted a cash offer for the listing price. Around that same time an offer of ours was accepted, too, and for $10,000 under asking (it's a large townhouse, which are not seeming to be spiking up, based on data I've seen).

If all goes well, we should have the money in a couple weeks, and we'll be renting the townhouse as it heads to closing, so perhaps it'll all be done with in October, unless the deals don't go through.

We'll see.

[BikeFanatic]

That was quick, good luck.

[Chris Pascale]

Okay, another update

Last night the sellers of the home I thought I was buying backed out before going to contract. They say they have another buyer, but were very vague, and didn't offer us to counter (we wouldn't have - the place sold in 2004 for $535k and now listed for $530k. At $530k it spent 70 days on the market before we came along).

As such, I see a rental in our future, and a fair deal of looking around this week.

So long as the sale on my end goes through, I'm in my "worst case scenario," which is that I have zero debt and a pile of cash while my wife and I make more than we've ever made before with the flexibility to go wherever we choose.

[Abe]

That’s annoying but wouldn’t sweat it. Interest rates have risen extremely slowly (over years) since the economy pulled out of stagflation in the late 70s/early 80s. This mad dash for buying houses because interest rates are low implies they won’t be next year, but they will.

[Chris Pascale]

That’s annoying but wouldn’t sweat it. Interest rates have risen extremely slowly (over years) since the economy pulled out of stagflation in the late 70s/early 80s. This mad dash for buying houses because interest rates are low implies they won’t be next year, but they will.

So funny you say that. In 2013 a family friend warned me that I needed to get on the ball and buy "because interest rates are going to go up."

He was a high-level guy at a mega bank, and clearly did not have the inside scoop.

We looked at some houses today, and everything just feels so over-priced. I could be totally wrong here, but here's what I'm seeing:

 - Pre-foreclosures in my town are starting to be listed whereas I'd not seen them before
 - Homes previously in contract are back on the market because it turned out the buyers actually couldn't get the loan they'd been pre-approved for
 - People are trying to buy half-million-dollar homes after only seeing them for 10 minutes at an open house
    - Myself included
 - $400,000 homes are going for $450,000 in some cases
 - I saw a home listed as a 5 bedroom that was really 3, and it wasn't a deal breaker; I just thought 'how can I make this work?' What was a deal breaker was that the septic pipes came up in the middle of the backyard

[Abe]

That’s annoying but wouldn’t sweat it. Interest rates have risen extremely slowly (over years) since the economy pulled out of stagflation in the late 70s/early 80s. This mad dash for buying houses because interest rates are low implies they won’t be next year, but they will.

So funny you say that. In 2013 a family friend warned me that I needed to get on the ball and buy "because interest rates are going to go up."

He was a high-level guy at a mega bank, and clearly did not have the inside scoop.

We looked at some houses today, and everything just feels so over-priced. I could be totally wrong here, but here's what I'm seeing:

 - Pre-foreclosures in my town are starting to be listed whereas I'd not seen them before
 - Homes previously in contract are back on the market because it turned out the buyers actually couldn't get the loan they'd been pre-approved for
 - People are trying to buy half-million-dollar homes after only seeing them for 10 minutes at an open house
    - Myself included
 - $400,000 homes are going for $450,000 in some cases
 - I saw a home listed as a 5 bedroom that was really 3, and it wasn't a deal breaker; I just thought 'how can I make this work?' What was a deal breaker was that the septic pipes came up in the middle of the backyard

That sounds like a messy market. I'd stay out of it. We bought a house at slightly below asking without a bidding war (it appraised for higher than asking, and we predicted that so didn't go too low on our bid), had no major issues, and was very close to my work in a good neighborhood. If we couldn't find a house that met all those criteria, our plan was to rent for a year. (I'm moving for a new job in the middle of all this, so have to move. Otherwise would've stayed put).

[MissPeach]

I'm seeing the same in my city - multiple offers within a day or two of going on the market. But at the same time I'm noticing the lower end of the market going faster than the higher end. I decided to put in a little more cash and just jump up a bit to where I got more without all the competition.

[KarefulKactus15]

I read somewhere (don't remember) that the trend among millinials is towards smaller houses.  The articles estimates that more competition for starter to mid range houses but previous mini mansions will fall to as much as 50% original price.   The price range given was around the 1.2 million mark original they estimate to trend more towards 600k.    - we'll see if this holds true.

The comment about increasing price point made me think of it.

[Chris Pascale]

Glad you made a good buy @Abe.

We saw a home listed for $490k last night. It's a flip and looked pretty good off the bat. However, it had no fridge, the garage door is not hooked up to open (even manually), the closets are all unfinished, and there's an in-ground pool that when I inquired about was told "we didn't check the pool, but you're buying the home as-is," so, clearly, the pool's broken.

Like a total asshole I put in an offer of $516k, but thought better of it this AM, and my wife found a 4 bedroom rental.

The market is so tilted, and in the end, I'd rather have the cash than pay it all into someone else's profit margin.

And not only do we have cash, but we also have a lot of flexibility, so if there's an opportunity that would require (or allow for) a move, a down housing market would be to our benefit, but even an up one wouldn't hurt us in most areas.

[Chris Pascale]

AN UPDATE

The frenzy is over, but some people in my town still think everyone is coming from NYC to buy their house for $100k over asking.

The home with the broken pool and no kitchen appliances that I almost offered $516k for is still on the market for $490k.

A property listed for $600k in the most desirable part of my town has an open house every Saturday and Sunday, and isn't getting any offers.

A 1 bedroom apartment is listed for over $300k.

I'm keeping an eye on what sells for what over the next year because none of it makes any sense. Even if interest rates go to 2%, how many people have the income to make payments on a $500k loan with property tax of $1,000/month?

Geo Arb might be in our future, especially if we can tie a promotion into the move.

[bbqbonelesswing]

AN UPDATE

The frenzy is over, but some people in my town still think everyone is coming from NYC to buy their house for $100k over asking.

The home with the broken pool and no kitchen appliances that I almost offered $516k for is still on the market for $490k.

A property listed for $600k in the most desirable part of my town has an open house every Saturday and Sunday, and isn't getting any offers.

A 1 bedroom apartment is listed for over $300k.

I'm keeping an eye on what sells for what over the next year because none of it makes any sense. Even if interest rates go to 2%, how many people have the income to make payments on a $500k loan with property tax of $1,000/month?

Geo Arb might be in our future, especially if we can tie a promotion into the move.

I'm seeing a bit of a slow-down in our area. Houses are on the market longer, and list prices dropping. I think many folks saw the earlier bidding wars going on and are now pricing too high, expecting the run to continue. Maybe the second round of lockdowns will boost prices again, but heading into the winter, I doubt it.

[waltworks]

Things always slow down in winter. The timing of lockdowns/spring selling season was huge this year. If we get the same thing again (which we might) the insanity could well continue.

Then again, I'm batting .000 on my Covid predictions so far (if you look back a bit, you can find my "Covid housing crash" thread, lol!)

-W

[lhamo]

Things are still crazy in Seattle. Several houses near us in the 1.3-1.5 million range have gone to contract in less than a week.   One of them listed too high at 1.7 earlier in the summer, but went to contract within a couple of days when they relisted at 1.5.  Houses in this range are selling pretty close to or just under list price. Properly priced houses in the "more affordable" 700k-1 million range are typically getting bidding wars and selling for 50-100k over list.

But if something is really obviously overpriced, it sits. That is a problem with the sellers having stars in their eyes.

[waltworks]

I'd estimate our neighborhood went up around 40-50% in 6 months. Just insanity. Places that would have sold for $1 million last year go for $1.5 or more now. Friend just listed theirs for $2.25 which would have been $1.3-1.4 at most last year. That might be pushing it, but it's the only house for sale in the entire area, so who knows.

Realtors would walk by and chat me up in the street this summer and try to get me to sign on to "run some comps and see what your house could be worth" or  "just let me know if anyone you know is looking to sell" and such.

The thing that sucks is I don't want to move, so I'll be paying more property taxes, while some of the other families with kids that we want to stay here cash out and move away. And the portion of my NW tied up in the house is just nuts thanks to not being able to qualify for much of a mortgage.

On the other hand all the new super rich people who paid cash for $2+ million houses throw crazy parties where they hire a good band and have an open bar and such. Not that we're going during Covid, of course.

-W

[Chris Pascale]

Found a place and had my offer accepted.

Just got a call from the realtor saying, "they're getting more strict on appraisals."

"I'm sure it'll appraise for what it's worth."

He's worried it'll come in $10,000 under, but that I could pay the difference. What a solution!

No thanks.

"What if," he spit-balled, "we say you bought the furniture for $10,000?"

[The seller doesn't want to move his crap out, and since there no clutter, just furniture, I said he can leave it]

"I don't want the furniture; I'm doing him a favor."

"Do you not have the funds?" he pressed. "The $10,000?""

[the_fixer]

Found a place and had my offer accepted.

Just got a call from the realtor saying, "they're getting more strict on appraisals."

"I'm sure it'll appraise for what it's worth."

He's worried it'll come in $10,000 under, but that I could pay the difference. What a solution!

No thanks.

"What if," he spit-balled, "we say you bought the furniture for $10,000?"

[The seller doesn't want to move his crap out, and since there no clutter, just furniture, I said he can leave it]

"I don't want the furniture; I'm doing him a favor."

"Do you not have the funds?" he pressed. "The $10,000?""

Sounds like you are in the position of power and have the ability to negotiate if it does not appraise.

Our current place came in under and we knew it was worth the price we were offering in the contract but with the appraisal coming in low we were able to talk them down 1/2 of the difference. In our case house prices were going up so fast but data was lagging. We knew several exact houses like ours had just closed earlier that week for more than our contract price so it worked to our advantage.


Sent from my iPhone using Tapatalk

[Paper Chaser]

Found a place and had my offer accepted.

Just got a call from the realtor saying, "they're getting more strict on appraisals."

"I'm sure it'll appraise for what it's worth."

He's worried it'll come in $10,000 under, but that I could pay the difference. What a solution!

No thanks.

"What if," he spit-balled, "we say you bought the furniture for $10,000?"

[The seller doesn't want to move his crap out, and since there no clutter, just furniture, I said he can leave it]

"I don't want the furniture; I'm doing him a favor."

"Do you not have the funds?" he pressed. "The $10,000?""

This sounds like a realtor that's more worried about their commission than anything. If the appraisal comes in $10k below your offer, then you get to negotiate a lower price with the seller. It happens a lot. Usually the seller makes some concession. But the realtor's commission is likely to decrease as a result.

[Chris Pascale]

Agreed @the_fixer and @Paper Chaser

In the end, we said we would pay what it appraises for. Here's to hoping he's right and I save $10k.

[waltworks]

Depends on the market. We sold a condo in a hot market once that didn't appraise, and the buyers tried to get us to lower the price but we told them to pound sand. Then sold to another (cash) buyer immediately.

That's not normal, but many markets aren't particularly normal right now. So I don't know that I would root for a low appraisal.

Your realtor sounds like an idiot.

-W

[Chris Pascale]

Depends on the market. We sold a condo in a hot market once that didn't appraise, and the buyers tried to get us to lower the price but we told them to pound sand. Then sold to another (cash) buyer immediately.

That's not normal, but many markets aren't particularly normal right now. So I don't know that I would root for a low appraisal.

Your realtor sounds like an idiot.

-W

He's the seller's agent, and I intentionally don't have one of my own so that he will favor me because he'll make 2x.

[waltworks]

He's the seller's agent, and I intentionally don't have one of my own so that he will favor me because he'll make 2x.

Depending on the brokerage, that also might not be the case, but good luck.

-W

[Chris Pascale]

He's the seller's agent, and I intentionally don't have one of my own so that he will favor me because he'll make 2x.

Depending on the brokerage, that also might not be the case, but good luck.

-W

In this instance, it's the case. It's also how I got the apartment I'm in.

[clarkfan1979]

Decided to get a quote on a full re-model of my home (paperwork says it was built in 1927, but is actually much older). When it came in at $247,000 we thought, "okay, maybe just buy something that's updated."

Thing 1: We go to some open houses, and homes are getting dozens of offers their first week. Along with low rates, there appears to be an eastbound exodus from New York City.

Thing 2: We view a home that seems decent. My realtor finds out there's only 5 offers, and says to us, "there must be something wrong with the house." We remind her that they listed it as a 5 bedroom, but it's really 3. In the end, we don't make an offer.

Thing 3: We see a nice home listed for $489,000. We offer $513,000, and don't get it. There were 40 bidders.

We have our open house next weekend, and I'm thinking we might just bank the cash and rent. I was house shopping in 2007, and this is pretty much how it was. I was pre-approved for an insane amount of money, and told I could borrow much more than that, homes were getting multiple offers over asking price, and everyone thought there was some kind off housing shortage.

The market was pretty crazy in June - August in Denver because they lost 6 weeks in March/April due to COVID. Some people were afraid to list their house due to COVID, so supply was lower than normal. It was crazy, but the reasons made sense and I wouldn't call it a bubble similar to 2007. The lending practices today are also much more conservative than they were in 2007. You need documentation for your income, otherwise you do not qualify.

[the_fixer]

Depends on the market. We sold a condo in a hot market once that didn't appraise, and the buyers tried to get us to lower the price but we told them to pound sand. Then sold to another (cash) buyer immediately.

That's not normal, but many markets aren't particularly normal right now. So I don't know that I would root for a low appraisal.

Your realtor sounds like an idiot.

-W

He's the seller's agent, and I intentionally don't have one of my own so that he will favor me because he'll make 2x.

I am not sure about your state but a seller’s agent in my state has a contract with the seller and is required to represent the best interest of the seller.

If they are representing both parties equally they would switch to a transaction broker situation where they are supposed to represent both parties equally.

Of course realtors are human and that extra % might be extra incentive for them to get both parties to the closing table but you are still at their mercy and not receiving the same representation.


Sent from my iPhone using Tapatalk