Author Topic: Walked away from dream home  (Read 2545 times)

JJH321

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Walked away from dream home
« on: April 09, 2020, 10:20:48 AM »
Hi everyone.. long time reader, firs time poster. I'm not really sure the intent of this post but feel to need to get this off chest/mind.

A few weeks ago, our RE agent showed us a house that we fell in love with. It's a bank-owned property but our agent gave us the impression this bank is different, they will take care of repairs should we find issues during inspection. We rushed to put in an offer because she said there were a lot of interest in the house (she lied). Because we were unfamiliar with the area, we relied on the RE agent to help us with comps. She told us to go a bit above asking.. We went 15K above asking. Then the bank asked for best and final due to multiple offers within 24 hours. Agent think we should go 50K above asking.. at that point, warning bells are going off and we said no, this is a bank-owned property and the recently sold homes that she shared within that price range were homes that are bigger, new construction/renovation and all through private sellers. We opted to just add 2K to our existing offer.

The next day, we get a call that the bank accepted our bid. Instead of feeling happy, we felt... angry? Well, of course the bank will choose us, we're the idiots that went above asking (northern NJ - not a hot hot market). Then the bank disclosed that there were mold in the attic due to a hole in the roof. At this point, we just want to renegotiate and have express such to the agent, but she said she'll email the bank but my guess is she just pushed for them to repair b/c they responded that they will remediate the mold and that roof have already been replaced. We decide to move forward, since interest rates are still low, it's ok if we overpaid a bit for the house we love (by the time we had the signed contract, interest rates were above 4%)

We did the home inspection as soon as the place was de-winterized. At this point we are ready to terminate the contract esp. with economic impact and uncertainties due to COVID-19 but will stay if the house is in tip-top condition with no major issues. We went with the inspector that the agent recommended b/c he was the cheapest and available. We know we'll have trust issues with him but figure there have to be some integrity intact on major issues. WOW - were we ever mistaken!!! It was like the agent was inspectors client!! He missed some issues that even we noticed, but the biggest shocker was when the inspector said NO MAJOR ISSUES. That's when we knew they are working together to get the sale through. There were visible water damage and seepage on throughout the foundation walls and surrounding basement walls with mold growth, crumbling cinder blocks and a recently put up ply-wood that we can't remove and probably hiding the worst of it. So when he said no major issues, we know it's time to walk away.

I felt like I was taken advantage of by a profession that was supposed to help me, and in the process.. lost a home that I really love because I have significantly overpaid for it. If I had known the market rate for that house, if I had known that I would be taking on all the risks, I would have offered less, much less. There were no urgency with the house, showings were not all booked for the week as our agent would have us believe. There were no other offers on the table, so the best and final was unnecessary.
And the kicker? The bank relisted the property for 25K less than the original listing, so about 45K less than we offered!!!

We hope the property is still around when things start to normalize and will give a fair offer based on what we know. If nothing else, at least if we gave their asking, it's still 45K less than we would have paid, but chances are low for the bank to take us seriously for now.

Thank you for letting me ramble.

Duke03

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Re: Walked away from dream home
« Reply #1 on: April 09, 2020, 11:42:14 AM »
Don't beat yourself up!!!  You came out of this dollar and sense wise.  You'll end up finding a house you love even more for way cheaper than you ever dreamed of paying. 

Bettersafe

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Re: Walked away from dream home
« Reply #2 on: April 09, 2020, 12:02:23 PM »
I strongly beleive there is a reason for everything. You probably end up in this house for a lot less or it turns out your true dream house is another one. It still sucks for now though.

srad

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Re: Walked away from dream home
« Reply #3 on: April 09, 2020, 12:28:10 PM »
but chances are low for the bank to take us seriously for now.

A bank will always take a reasonable offer seriously (I work in this industry).  You could even ask less than list price now knowing what you know about the house.  With a different agent of course, its time to punt your current one.  50k over ask was their recommendation? well, I guess they weren't wrong you'd of gotten it at 50k over :)



markbike528CBX

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Re: Walked away from dream home
« Reply #4 on: April 09, 2020, 01:47:43 PM »
For one it doesn't seem to much of a dream home to me.

You, and ONLY you should find and pay for the inspection (inspector) .

I chose one based on a colleagues recommendation to whit: " I use this inspector all the time when I'm buying, but I don't want this inspector anywhere near a house I'm selling."

I'd lowball the next (if any) offer.  Say at least 25-45K less than current asking.

affordablehousing

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Re: Walked away from dream home
« Reply #5 on: April 10, 2020, 11:29:21 AM »
AGENTS SUCK! Don't use one, waste of money. INSPECTORS SUCK! Don't use one, waste of money. If you want to buy a crappy house you should know everything there is to know about what is going wrong and how to fix it. In this uncertain time especially arm yourself with knowledge and only trust yourself.

Otherwise, you can always live in a condo.

NaN

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Re: Walked away from dream home
« Reply #6 on: April 10, 2020, 08:27:10 PM »
You dodged a bullet @JJH321 .


FINate

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Re: Walked away from dream home
« Reply #7 on: April 10, 2020, 10:19:06 PM »
Don't sweat it, and don't get attached to this particular house. Take your time and you'll eventually find the right house. Buying a house isn't something to rush.

First things first: Dump your current agent. Some agents are terrible, others are great. Sorry, sounds like you had a bad one. If you can, get a recommendation from someone you trust in the area. But always keep one thing in the back of your mind: agents on both sides of the transaction only get paid if the deal closes, so take everything they say with a big grain of salt.

Your second order of business is to immerse yourself in the market you're interested in. Learn the neighborhoods, parks, schools, traffic patterns, crime, and so on. Where do people want to live? What does an older 3/2 sell for vs. new construction in the same neighborhood? How much value does off-street parking and/or a garage add? And also, how hot is each area, time on market, under/over asking, and so on. You need to do your homework or you risk both overbidding and missing good deals because you're racked with doubt.

Finally, get an inspection. Like agents, some inspectors are great and some are not. Again, get recommendations from people you know and trust if possible. But don't rely exclusively on an inspection, also check things out for yourself. Inspect the condition of the roof and basement/foundation, age of major mechanical systems (water heater, HVAC), look for water intrusion along ceilings and along windows and around door frames, look for damaged/soft trim and siding, and so on. These are all easy and quick to check. Your inspector should find these plus a lot more. If they miss the easy stuff then you got a dud.

Finally, a note about something someone else mentioned up thread: When selling a house I like to hire a good and detailed inspector before going on market. This, plus a pest inspection, usually ends up running about $1000. But it's worth it, and I want the inspector to do a thorough job because my goal is to disclose as much as possible before people write offers. Two reasons for this. First, ethically and legally, I don't want any unpleasant surprises after a transaction -- it's not worth the trouble. Second, this greatly reduces the amount of contingencies and resulting negotiation. Of course people are encouraged to do their own inspections, but they can't easily put a contingency on something previously disclosed. Don't know if this is common in your area, but if it is, read those reports (and all the others) and disclosures carefully. They can run 100 pages, but just do it.

FatFI2025

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Re: Walked away from dream home
« Reply #8 on: April 12, 2020, 10:17:05 AM »
It sounds like you were smart and your decisions reasonable. A lot of people have this emotional drive to buy a home so they become totally irrational, which thankfully you avoided.

My second house purchase I got taken advantage of because I was in a hurry to buy. It was a flip and I ended up overpaying by $20K-$30K. Inspector didn't go to the roof (townhouse -- too high) and it turns out there was a leak because it was 114 years old. Fortunately for me the sellers filled out on the disclosures that the roof was 0-5 years old, and I had specifically looked for that at closing, so I was able to force them to pay 100% of the costs for the new roof.

Since I'm a buy-and-hold guy, that experience ended up being a minor pain and good lesson (patience, young paduan) that just ended up reducing my ROI slightly.

I think you found that the financial incentives in the real estate business aren't aligned with protecting buyer interest. Make sure your house inspector, which you vet and select, is insured in case they miss something major.

This wasn't your dream home -- it was a nightmare home in disguise. If you had closed and moved in, facing all of these projects, you'd probably come to hate it. IMO this is a great lesson and, due to your rational decision-making, you avoided a lot of financial and emotional pain. You should feel relieved, not disappointed.

Cb1234567

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Re: Walked away from dream home
« Reply #9 on: April 15, 2020, 07:46:57 AM »
I’d qualify that with: your final decision was reasonable. Thank your lucky stars that you didn’t get this “dream home”. You sound new to the process. Read that as “fresh meat” for some realtors.

Wow. Look, don’t beat yourself up, but be sure that you Live And Learn from this one.  You were offered several very valuable lessons in this deal that fell apart!

1. Never ever ever take a realtors advice over your own data and research on the neighborhood, comps, and anything else about the house.

2. Be very aware of the contingencies in your contacts, and do not expect that your realtor will keep track of them for you. In a nutshell: know each and every “out “for you and the seller in your contract.

3.  A good home inspector can be very informative and valuable. Find your own, and if you do use one recommended by a realtor, do not expect the inspector to point out anything that will blow up the deal. Home inspectors that blow up real estate deals by freaking out new buyers do not get callbacks from realtors.

4.   Get the “dream home “crap out of your head. Life changes, and people move often in this country. There is a house on every corner, and there is always another one. If a place is too hard to get into, it was not meant to be. I promise, you will find a better suited property in the future. I speak from experience on this one.

5. Most importantly: at the end of the day, it is your signature and your money. If you sign, the onus and responsibility is 100% on you to you understand what you are doing and what you are signing! Do your homework. Do not rush. Do not go blindly with your agent’s recommendations on pricing. Offer what YOU are willing to pay, and that is IT. Always assume there are hidden issues.

Again, I am totally relieved that you are out of this deal, you were going to hemorrhage cash on this property.

Dicey

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Re: Walked away from dream home
« Reply #10 on: April 15, 2020, 07:53:27 AM »
^^Great advice, every word of it.^^

AM43

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Re: Walked away from dream home
« Reply #11 on: April 23, 2020, 07:38:55 AM »
I’d qualify that with: your final decision was reasonable. Thank your lucky stars that you didn’t get this “dream home”. You sound new to the process. Read that as “fresh meat” for some realtors.

Wow. Look, don’t beat yourself up, but be sure that you Live And Learn from this one.  You were offered several very valuable lessons in this deal that fell apart!

1. Never ever ever take a realtors advice over your own data and research on the neighborhood, comps, and anything else about the house.

2. Be very aware of the contingencies in your contacts, and do not expect that your realtor will keep track of them for you. In a nutshell: know each and every “out “for you and the seller in your contract.

3.  A good home inspector can be very informative and valuable. Find your own, and if you do use one recommended by a realtor, do not expect the inspector to point out anything that will blow up the deal. Home inspectors that blow up real estate deals by freaking out new buyers do not get callbacks from realtors.

4.   Get the “dream home “crap out of your head. Life changes, and people move often in this country. There is a house on every corner, and there is always another one. If a place is too hard to get into, it was not meant to be. I promise, you will find a better suited property in the future. I speak from experience on this one.

5. Most importantly: at the end of the day, it is your signature and your money. If you sign, the onus and responsibility is 100% on you to you understand what you are doing and what you are signing! Do your homework. Do not rush. Do not go blindly with your agent’s recommendations on pricing. Offer what YOU are willing to pay, and that is IT. Always assume there are hidden issues.

Again, I am totally relieved that you are out of this deal, you were going to hemorrhage cash on this property.

^^ THIS
Could not have said it better myself.

J Boogie

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Re: Walked away from dream home
« Reply #12 on: April 23, 2020, 08:41:16 AM »

4.   Get the “dream home “crap out of your head. Life changes, and people move often in this country. There is a house on every corner, and there is always another one. If a place is too hard to get into, it was not meant to be. I promise, you will find a better suited property in the future. I speak from experience on this one.


The only exception would be a case like mine, where your dream home is so dreamy because the purchase price was so low relative to the homes nearby.

I don't want to wake up from my 3 figure* monthly payment dream :)

(It's 3 figures after getting rent from my upstairs tenants. It's a duplex.)

Jeo

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Re: Walked away from dream home
« Reply #13 on: April 24, 2020, 02:05:26 PM »
To add to the excellent points by @Cb1234567 and others:

1. I'd suggest taking this COVID-forced pause from your home search to interview multiple agents and inspectors. Vet them like you would a potential employee (which essentially they will be for a short time). Ask about their experience with deals that didn't go through because of issues uncovered in inspections. Good, experienced agents and inspectors should have loads of stories about deals that they helped kill in their clients' best interest. Ask for client references and call them.

2. If you know or suspect there are issues heading into an inspection, bring a general contractor with you if possible. They'll provide additional perspective and help you estimate the cost and time required for necessary repairs (plus any optional renovation work you might want done).

3. Depending on the repairs needed, it might be better to get a seller credit for the work rather than have the seller take care of it. Sellers tend go the fastest, cheapest route they can find, which might not be what you want and could lead to more issues later.

Having a deal fall through sucks, no doubt about it. I've been under contract six times and cancelled three of those because of issues found during inspections. Not fun. But the money I paid for those three inspections is probably the best money I've ever spent in real estate. For less than $2K total I've avoided easily six figures of unplanned expenses.

I've never looked back on any of those dead deals with regret. As you move forward in your search, I'm sure you'll feel the same about this one.

Blindsquirrel

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Re: Walked away from dream home
« Reply #14 on: April 25, 2020, 04:43:27 PM »
   Can always get another agent and put in another offer. It is no worries and you can save money.

Michael in ABQ

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Re: Walked away from dream home
« Reply #15 on: April 26, 2020, 03:19:24 AM »
A home appraisal will generally cost $350 - $500 depending on the market. An appraiser is truly a disinterested third party, especially in a case like this where you would hire them as a private party. When they work for a bank there are some who will be more inclined to value a property such that the sale closes, a mortgage is made, and the bank hires them again on the next transaction. You were willing to pay $15k over asking price and then added another $2k. You could have hired an appraiser for a fraction and got your own information to go off of. Were the comparable sales the realtor provided you really the best ones? Or did most of them come from the next subdivision over which had a different builder, higher quality homes, is in a better school district, etc. Everyone in a real estate transaction has an agenda - and most generally don't get paid unless the sale closes - the seller, the buyer and seller's agents, the mortgage broker or bank, etc. An appraiser, and in some cases a home inspector, are the disinterested third parties who get paid regardless if the transaction closes. So as long as they're working for you instead of one of those other parties, your interests should be aligned.

Home inspectors are lightly regulated and just like real estate agents, anyone can take a couple of classes and an easy test and hang up a shingle. The one recommended by a realtor will always be suspect. Find your own and ask for a sample of their work. Assume they're going to give you their best work. Is it a few pages of boilerplate narrative and some pictures? Or does it show that they looked carefully at those big ticket items like the roof, foundation, mechanical systems, etc.



I was a commercial real estate appraiser and though I never appraised homes, the concepts are similar and we're all held to the same professional standards.

Car Jack

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Re: Walked away from dream home
« Reply #16 on: April 27, 2020, 06:58:36 AM »
Real estate agents work for the SELLER.  Consider them to be a used car salesman, looking to make a sale over all else.  Constant water in the basement and a hole in the roof and mold all over?  No problem, according to the sales person.  Assume everything they say is a lie.

Never take a real estate agent's recommendation for an inspector.  The inspector is in cahoots with the agent and very likely is sending your agent money for the referral.  They have the same interest as the agent.  To separate your money from you so they get their cut.  Expect the inspector gets a bigger bribe if the house does sell.

You say it's a hot market and people pay over asking.  Great.  Do your own research and if a house isn't worth the money, walk or put in a low offer.  Houses do sell for less.  Sure, hot markets drive prices up.  But don't be the sap who overpays.  I've said it before....my house was overpriced when I put in my offer.  Listed for $380k.  I offered $220k.  Met face to face with the owner.  We paid $226.5k.  I hear people repeat what agents say: "Anything lower than 5% below asking is an insult".  Well, I guess I told the sellers that their mother is a whore and that nobody knows who their father is.

Dicey

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Re: Walked away from dream home
« Reply #17 on: April 27, 2020, 10:16:04 AM »
Real estate agents work for the SELLER.  Consider them to be a used car salesman, looking to make a sale over all else.  Constant water in the basement and a hole in the roof and mold all over?  No problem, according to the sales person.  Assume everything they say is a lie.

Never take a real estate agent's recommendation for an inspector.  The inspector is in cahoots with the agent and very likely is sending your agent money for the referral.  They have the same interest as the agent.  To separate your money from you so they get their cut.  Expect the inspector gets a bigger bribe if the house does sell.

You say it's a hot market and people pay over asking.  Great.  Do your own research and if a house isn't worth the money, walk or put in a low offer.  Houses do sell for less.  Sure, hot markets drive prices up.  But don't be the sap who overpays.  I've said it before....my house was overpriced when I put in my offer.  Listed for $380k.  I offered $220k.  Met face to face with the owner.  We paid $226.5k.  I hear people repeat what agents say: "Anything lower than 5% below asking is an insult".  Well, I guess I told the sellers that their mother is a whore and that nobody knows who their father is.
Congratulations to you on your deal. You obviously do not live in California in a hot real estate market, like the one we've experienced for the last 10+ years. And, yes, we have purchased homes where we offered more than 5% below asking and no one was insulted when they accepted. But we're not so clueless as to go around constantly making super lowball offers in a seller's market.

News flash, Realtors are human beings too. Treating them like they're all despicable trash isn't the way to go through life. Karma's a bitch, you know. I am FIRE, in large part, due to real estate ownership. Specifically, because I had a great Realtor who helped me make smart purchases. You do have a choice and a responsibility to your green soldiers to screen and vet for a good Realtor. They're out there. If you can't find a good one, maybe an attitude adjustment might help clear your vision. Or not, but the choice is yours.

ender

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Re: Walked away from dream home
« Reply #18 on: April 27, 2020, 10:31:48 AM »
This is among other reasons why I tend to think people should interview multiple realtors before choosing a buying agent.

Jeo

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Re: Walked away from dream home
« Reply #19 on: April 27, 2020, 11:40:38 AM »
I am FIRE, in large part, due to real estate ownership. Specifically, because I had a great Realtor who helped me make smart purchases. You do have a choice and a responsibility to your green soldiers to screen and vet for a good Realtor. They're out there.

Same here. I interviewed several realtors before choosing one, and he turned out to be a mentor to me in many ways. He helped me spot issues I wouldn't have noticed myself, steered me away from questionable deals and negotiated with sellers harder than I would have on my own.

It's true that a lot of agents are mediocre (at best). As with most professions, the 80/20 rule applies. With all of the competition from other agents and digital services disrupting their industry, good agents know that they need to bring a lot more to the table than MLS searches, sales tactics and shuffling contracts around for signatures.