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Author Topic: House Buying  (Read 8735 times)

wadesworld

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House Buying
« on: April 21, 2022, 09:50:00 PM »
My girlfriend and her parents are down in Columbia, MO house hunting for her new job that she will start in August. We just offered $40K over asking price on a house plus agreed to let the owners stay in the house 2 months beyond the closing date and they went with a different offer. We have 3 other houses in mind and plan to make an even more aggressive offer on one tomorrow, but our agent thinks the owners are just trying to set up a bidding war on it (Zestimate is $633K, in a desirable neighborhood, they’re asking $460K so doesn’t make much sense).

We’ll both be first time home owners. Any tips for offers in today’s housing market? Besides putting in a cash offer, as that isn’t an option for us right now (we can put 20% down and are pre approved for more than what we thought we’d need). Our agent definitely thought we made a good offer on the one we didn’t get today.
« Last Edit: April 21, 2022, 09:51:43 PM by wadesworld »
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MU82

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Re: House Buying
« Reply #1 on: April 21, 2022, 10:06:54 PM »
No advice, just saying hang in there and I feel ya.

My daughter and her husband live in Seattle and are going through the exact same thing. I know several people in Charlotte going through it too. It's crazy out there. Good luck, wades!
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MuggsyB

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Re: House Buying
« Reply #2 on: April 21, 2022, 10:11:46 PM »
My girlfriend and her parents are down in Columbia, MO house hunting for her new job that she will start in August. We just offered $40K over asking price on a house plus agreed to let the owners stay in the house 2 months beyond the closing date and they went with a different offer. We have 3 other houses in mind and plan to make an even more aggressive offer on one tomorrow, but our agent thinks the owners are just trying to set up a bidding war on it (Zestimate is $633K, in a desirable neighborhood, they’re asking $460K so doesn’t make much sense).

We’ll both be first time home owners. Any tips for offers in today’s housing market? Besides putting in a cash offer, as that isn’t an option for us right now (we can put 20% down and are pre approved for more than what we thought we’d need). Our agent definitely thought we made a good offer on the one we didn’t get today.

I would consider waiting.  It's completely insane right now.

MU82

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Re: House Buying
« Reply #3 on: April 21, 2022, 10:13:47 PM »
I would consider waiting.  It's completely insane right now.

Typically, as mortgage rates move up, there's a rush of buying for people trying to get in before rates go higher ... and then the market cools some.

But this market is so crazy that it's hard to know what's gonna happen. Eventually the bubble will burst, at least in some parts of the country, but when and where and how "burst-y" it'll be nobody knows.

EDIT: Just stumbled across a new article on this subject, with Zillow predicting home prices won't go up quite as much as earlier forecasts because of quick-rising mortgage rates. And other housing analysts say prices won't even go up nearly as much as Zillow says:

https://finance.yahoo.com/news/home-prices-look-2023-according-205714287.html
« Last Edit: April 21, 2022, 10:21:02 PM by MU82 »
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MuggsyB

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Re: House Buying
« Reply #4 on: April 21, 2022, 10:24:15 PM »
Typically, as mortgage rates move up, there's a rush of buying for people trying to get in before rates go higher ... and then the market cools some.

But this market is so crazy that it's hard to know what's gonna happen. Eventually the bubble will burst, at least in some parts of the country, but when and where and how "burst-y" it'll be nobody knows.

There's no way to predict when it will burst.  My opinion is if you're certain about where you want to live for 10+ years and can afford to buy it will be alright.  At the same time this of course isn't sustainable and it pretty ubiquitous. 


brewcity77

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Re: House Buying
« Reply #5 on: April 21, 2022, 10:41:41 PM »
The Milwaukee market slowed way down from around October to February. Not sure if waiting is an option or if weather impacts Missouri as much, but school being in session and weather being less move friendly slowed things.

We bought in August, going $15k over asking and got it, I think because we waived the inspection and were able to bring 20% cash. But the timing hurt us because we sold our old house when the market slowed and we were stretched too thin to wait until spring not knowing if the market would bounce right back.
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MUeng

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Re: House Buying
« Reply #6 on: April 21, 2022, 10:56:06 PM »
It's risky but you could try inserting an escalation clause in your offer or waiving the inspection. You could also just do a health and safety inspection if you're too uncomfortable with waiving altogether. Crazy market, good luck, try not to let emotion get too involved

forgetful

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Re: House Buying
« Reply #7 on: April 21, 2022, 11:36:47 PM »
I would consider waiting.  It's completely insane right now.

The problem is, a lot of this is driven by hedge funds, and big money investors. They know if they control the market, they set rates and can make a profit.

This is what happened in California, Toronto, and many other places first.

I'm not sure this ends soon. The goal is to control the market to the point that people have to pay absurd rental prices.

Jockey

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Re: House Buying
« Reply #8 on: April 22, 2022, 12:04:27 AM »
The problem is, a lot of this is driven by hedge funds, and big money investors. They know if they control the market, they set rates and can make a profit.

This is what happened in California, Toronto, and many other places first.

I'm not sure this ends soon. The goal is to control the market to the point that people have to pay absurd rental prices.

Over 20% now are bought by investors/ hedge funds.

Just one more instance of the ultra-rich eating America.

MuggsyB

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Re: House Buying
« Reply #9 on: April 22, 2022, 12:12:35 AM »
Over 20% now are bought by investors/ hedge funds.

Just one more instance of the ultra-rich eating America.

In the country or major cities?  I know it's definitely bad.  It seems like there are zoning problems as well in downtown areas. 
« Last Edit: April 22, 2022, 12:25:41 AM by MuggsyB »

rocky_warrior

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Re: House Buying
« Reply #10 on: April 22, 2022, 12:22:19 AM »
Advice?  As I alluded in the retirement thread...buy what you need today, not what you think you need in 5 years.  If you can afford a crappy 1BR 1BA house (in an OK neighborhood), buy it now.  In a few years of paying it off, you can probably buy another house that will suit your needs at that time, and rent out the first at more than more than your mortgage payment.

Don't get trapped into buying too much house today for the unknown future.  Most people move several times - don't throw money at the "forever" house that will only last a few years.
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MuggsyB

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Re: House Buying
« Reply #11 on: April 22, 2022, 12:26:23 AM »
Advice?  As I alluded in the retirement thread...buy what you need today, not what you think you need in 5 years.  If you can afford a crappy 1BR 1BA house (in an OK neighborhood), buy it now.  In a few years of paying it off, you can probably buy another house that will suit your needs at that time, and rent out the first at more than more than your mortgage payment.

Don't get trapped into buying too much house today for the unknown future.  Most people move several times - don't throw money at the "forever" house that will only last a few years.

Excellent advice.

Sultan Sultanberger

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Re: House Buying
« Reply #12 on: April 22, 2022, 04:19:08 AM »
The problem is, a lot of this is driven by hedge funds, and big money investors. They know if they control the market, they set rates and can make a profit.

This is what happened in California, Toronto, and many other places first.

I'm not sure this ends soon. The goal is to control the market to the point that people have to pay absurd rental prices.

What you describing is happening in a few markets but likely not in Columbia, MO. The issues in Wisconsin for instance are due to lack of housing stock and is centered on a few markets. Builders have been doing more renovations than new building because people are sitting at home with cash and finally want to fix up that bathroom or add that sunroom.
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jesmu84

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Re: House Buying
« Reply #13 on: April 22, 2022, 05:02:08 AM »
Recently, freakonomics podcast had 2 tips for current housing searches:

1. Don't use a buyer's agent.
2. Write a letter to the seller describing yourself and your situation/reason for wanting the house.

No idea if either would help you, but worth a shot.

I can imagine paying the ridiculous prices right now. Skipping inspection? No chance I'd ever agree to that

Hards Alumni

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Re: House Buying
« Reply #14 on: April 22, 2022, 06:26:13 AM »
I would consider waiting.  It's completely insane right now.

Inventory is low.  I'm not sure housing prices will go down for the foreseeable future.

Hards Alumni

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Re: House Buying
« Reply #15 on: April 22, 2022, 06:27:58 AM »
My girlfriend and her parents are down in Columbia, MO house hunting for her new job that she will start in August. We just offered $40K over asking price on a house plus agreed to let the owners stay in the house 2 months beyond the closing date and they went with a different offer. We have 3 other houses in mind and plan to make an even more aggressive offer on one tomorrow, but our agent thinks the owners are just trying to set up a bidding war on it (Zestimate is $633K, in a desirable neighborhood, they’re asking $460K so doesn’t make much sense).

We’ll both be first time home owners. Any tips for offers in today’s housing market? Besides putting in a cash offer, as that isn’t an option for us right now (we can put 20% down and are pre approved for more than what we thought we’d need). Our agent definitely thought we made a good offer on the one we didn’t get today.

Welcome to the crap show.  I have two sets of friends who both had similar situations.  Eventually, both found something... but they're both fixer uppers.  And they overpaid. 

There were people in Madison writing (ridiculous) 'love' letters to the sellers telling their story.  Basically, a "Pick us!" essay.  Good luck out there.

dgies9156

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Re: House Buying
« Reply #16 on: April 22, 2022, 07:02:43 AM »
We're closing on our new home Tuesday. We sold our existing home in Indian River County, FL and bought a new "forever" home three miles closer to town. We bid over ask and the only contingency in the contract was an inspection walk-away contingency. We had not sold our home down here yet and ran the risk we would own three homes (a third is in the Chicago suburbs).

Cash offers only mean that you'll produce cash at close They don't care how you get it, as long as you have it at close. Our cash offer included financing (short-term) from Chase. We had no financing contingency but felt confident we could get the money we needed. Maybe it is because I work in finance, but I knew what the banks would lend us and the terms under which they'd lend. Also, we put a massive amount of funds in earnest money (escrow).

My view is absent a market correction, you're going to have to take risk somewhere to get what you want. Make sure you have financing in place before hand. If you're bidding over market, you may need a bigger down payment because the home may not appraise out for what you pay. Review the comps closely (including those used on the tax assessment) and make sure your closing cost estimates are comprehensive. 

Finally, do an amortization of the loan and check on any potential tax benefit. Don't forget the SALT limitations though!
« Last Edit: April 22, 2022, 07:16:18 AM by dgies9156 »

Sultan Sultanberger

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Re: House Buying
« Reply #17 on: April 22, 2022, 07:50:06 AM »
Recently, freakonomics podcast had 2 tips for current housing searches:

1. Don't use a buyer's agent.
2. Write a letter to the seller describing yourself and your situation/reason for wanting the house.

No idea if either would help you, but worth a shot.

I can imagine paying the ridiculous prices right now. Skipping inspection? No chance I'd ever agree to that


If you are moving to an area new to you, I don't know if I agree with #1.
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StillAWarrior

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Re: House Buying
« Reply #18 on: April 22, 2022, 08:30:33 AM »
A couple that I know is combining this thread with the retirement thread. Unfortunately, they have not been good about their retirement planning. At all. So, they're selling their home right now hoping to make a killing. The person they're working with seems to think a bidding war is possible. For their sake, I hope she's right. It's way too little and way too late, but at this point it's what they've got. I feel for the buyers out there right now, but I hope that this couple gets a good price. Because if I was in their shoes right now vis a vis retirement...I'd be terrified. Hell, even if the house sells for well over asking, I'd be terrified, but that's another issue.
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Lighthouse 84

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Re: House Buying
« Reply #19 on: April 22, 2022, 08:41:13 AM »
I would agree it's a crap shoot.  I've got clients making offers with escalation clauses, appraisal gap riders with no ceiling, inspection waivers, open ended closing and possession dates, and still lose the house.  I'm not a fan of an appraisal gap with no ceiling, but people are doing it.  Some are putting in their offers without seeing the house, then getting their offer accepted and turning around and terminating it during attorney review if they don't like it when finally seeing it in person.

Unfortunately, there's no magic answer for getting your offer accepted. 
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wadesworld

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Re: House Buying
« Reply #20 on: April 22, 2022, 08:54:51 AM »
Thanks for all of the information and advice.

We did try for an escalation clause, but the seller's agent said they just wanted best offers by noon so we put ours in.  I think our agent even thought we were offering too much, but we still didn't get the house.  Which is probably good news for us overall.  Our agent seemed to think our offer was plenty good, so if we can put in a similar offer on another house that we like hopefully it will work out better for us.  From the sounds of it, there were only 3 offers on the house, which is much better than some of the stories I've heard about Wauwatosa and some Chicago suburbs.
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NCMUFan

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Re: House Buying
« Reply #21 on: April 22, 2022, 09:21:00 AM »
Is the way to go to find a lot and have a contractor build?

muwarrior69

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Re: House Buying
« Reply #22 on: April 22, 2022, 09:24:12 AM »
A couple that I know is combining this thread with the retirement thread. Unfortunately, they have not been good about their retirement planning. At all. So, they're selling their home right now hoping to make a killing. The person they're working with seems to think a bidding war is possible. For their sake, I hope she's right. It's way too little and way too late, but at this point it's what they've got. I feel for the buyers out there right now, but I hope that this couple gets a good price. Because if I was in their shoes right now vis a vis retirement...I'd be terrified. Hell, even if the house sells for well over asking, I'd be terrified, but that's another issue.

Have you looked at "private sales"? There are folks that need to sell quickly so they go through an "agent" that looks for customers that want to buy quickly as well. These homes are not usually listed and the seller just wants an honest price for their home and some don't want the hassle of a bidding war. I would say just google private sales in your area and you might strike  gold; just a thought.

MUBurrow

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Re: House Buying
« Reply #23 on: April 22, 2022, 09:29:50 AM »
Advice?  As I alluded in the retirement thread...buy what you need today, not what you think you need in 5 years.  If you can afford a crappy 1BR 1BA house (in an OK neighborhood), buy it now.  In a few years of paying it off, you can probably buy another house that will suit your needs at that time, and rent out the first at more than more than your mortgage payment.

Don't get trapped into buying too much house today for the unknown future.  Most people move several times - don't throw money at the "forever" house that will only last a few years.

This is really good advice.  I bought my first house a little earlier than I'd planned about 8 years ago, and spent a lot of time, energy, and some money trying to forecast what this version of me would want.  I'm still in the house and happy enough with it, but not for any of the reasons I would have guessed at the time.  When you start having to leave house "wants" on the cutting room floor in favor of "needs" don't forecast out any further than 3 years.

jficke13

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Re: House Buying
« Reply #24 on: April 22, 2022, 09:30:24 AM »
Recently, freakonomics podcast had 2 tips for current housing searches:

1. Don't use a buyer's agent.
2. Write a letter to the seller describing yourself and your situation/reason for wanting the house.

No idea if either would help you, but worth a shot.

I can imagine paying the ridiculous prices right now. Skipping inspection? No chance I'd ever agree to that

We went through the ringer of homebuying a threeish years ago. Bid more than asking and got outbid on so many houses that I lost count (high teens minimum). We got this whole "write a letter" advice too and while we did it, it makes no dang sense to me. When I'm selling my house I'm taking the highest $, I don't care about you wanting a yard for your puppy to run around in. Do sellers actually take these things into account?