I went house hunting last weekend. Not for me. I accompanied my daughter and her fiancé, who are moving from Texas to Colorado after graduating from vet school (insert party hats and noisemakers here) next month.
Even for this seasoned house hunter, the experience was humbling. In over three decades of entering and exiting the housing market, I’ve never seen so many overpriced, underwhelming homes sell above asking price in the time it takes you to say a new paint job. .
Last weekend we visited 12 homes. By the end of the weekend, they were all under contract, including the one the kids had bid on and didn’t get.
Now here is where I have to pause to deeply inhale the smelling salts. On the one house they liked, the one that made their hearts beat a little fast, they made a cash offer of $15,000 above the asking price. (They had both sold their respective homes.) Now, you’d think that would get the seller’s attention. But no. The sales agent texted our agent that literally said the offer “not attractive”.
Doesn’t call? What kind of world is this?
She expected higher offers with a longer return of rent. (Kids have to move out June 1 for my daughter’s job. Seller wants to live in the house for five months at no cost after closing.) The house sold for $100,000 more than asked. You think I’m kidding. I wanted to be.
“Not even a counter-offer?” I asked our agent in disbelief. Nope. Not in today’s market. Sellers receive a dozen offers and choose the one they like best.
And so it is in the murderous world of buying a home. You leave with a wish list and keep lowering your bar. In this case, the kids want a decent kitchen with a counter to accommodate bar stools, a less than 20 minute drive to the vet clinic where my daughter will be working and could fast in an emergency in the snow, a fenced yard for their two dogs, a garage big enough for their truck, a little outdoor attraction, a bit of charm, a pedestrian area. And, while they’re ready to make improvements, they don’t want to add a house renovation on top of two new jobs and a new marriage in a new state.
Yet as we circled the houses for sale, the word that kept coming to mind was a word I hate: settle. Well, if we replace the dated light fixtures, worn carpeting, and laminate countertops from around 1970, we might be able to overlook the fact that the house backs up to the freeway and the basement smells of damp dirt. and has natural light suitable for growing mushrooms and home to a colony of bats.
If you’re looking for a new home, and Lord help you if you are, here’s some tough advice from seasoned estate agents to help buyers break into the sellers’ market.
◼️ Don’t expect a deal. Don’t expect to buy the house well below the asking price or for the buyer to reduce the price to allow for necessary repairs.
◼️ Make your best offer first. Surprisingly, you may not have the chance to bargain. The stories of multiple offers within 24 hours of listing a home are real and happening across the country.
◼️ Come with proof of financing. If you can swing all the money, do it. The best thing is to bring as much money as possible to the table. If you are financing the purchase, have a pre-approval letter from a mortgage lender who has checked your finances and credit.
◼️ Buy houses a little below your budget. This not only leaves you room to offer rather than ask, but also leaves you funds for upgrades, which you’ll likely need to make.
◼️ Get a great agent. At no other time in your life will you probably spend more money in less time than when you buy a house. When you make such a large investment, you want to work with someone who is familiar with the neighborhoods you are looking for, who has a good relationship with other agents, who gets advice on houses that are about to be put on the market, who is a creative negotiator and who can act quickly in your best interest.
◼️ Steel yourself. Keep a cool head when making offers and negotiating to avoid making the wrong financial decision out of desperation and emotions.
◼️ Eliminate contingencies. The more contingencies buyers build into their offers, the more likely sellers are to reject them. After securing financing, passing a home inspection and getting an appraisal are the next big hurdles. While a home inspection is important to buyers, in some markets buyers are willing to tell sellers they’ll forgo all but the biggest issues. Since appraisal prices are generally below market prices, if homes are selling at historic highs, some homes will not be appraised for sale price, which means the loan may not materialize. If buyers can show they have the cash to bridge the gap between the appraisal and the contracted purchase price, that’s a plus.
◼️ Offer more than cash. Find out what matters to sellers besides price. Maybe they want a quick closing, or a flexible moving date, or a rentback period.
Marni Jameson is the author of six books on home and lifestyle, including “What to do with everything you own to leave the legacy you want”.