First time homebuying in this environment...

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Topic Author
B4Xt3r
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First time homebuying in this environment...

Post by B4Xt3r »

Hi all,

I'm seeking some advice as to what do right now with regard to first time homebuyers in this environment. My wife and I (young thirties) have a new daughter that will soon be crawling, our current housing situation is growing cramped. So we want a house...

We have the ability to put 20% down, with a mortgaged amount within 3x gross income of 1 parent. 2nd parent doesn't want to work full time while kid is young, though part time is possible. This would likely only bring in ~20k/year after taxes and daycare. The houses we are interested are 5-6x income of the second parent. We have 6+ months of an efund.

We have some concerns about buying right now though. In our location, houses have appreciated ~20% during the last 1-2 years, which is an entire downpayment of appreciation...we are worried about losing that just as rapidly too. Also market offers are forgoing inspection contingency & often appraisal up to a certain amount. Since we are first time homebuyers, forgoing an inspection contingency seems foolish. We've already had 4 offers at above asking not be selected and are becoming a bit downtrodden over the whole housing situation.

The options as I see them:
  • Wait for 1-2 years and incurring a guaranteed cost of $20-40k/year to rent
  • Make market offers for homes, which probably risks about $50k in potential market value fluctuation and ~$50-100k of buying a house with an issue that an inspection would normally catch.
I'm torn between those options, mostly because of the we don't get to inspect the house issue. Is it possible to learn how to avoid "huge mistakes" with selecting a house? Huge meaning issues with fixing costs of $50k and up (like foundation, termite infestation... etc).
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AerialWombat
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Re: First time homebuying in this environment...

Post by AerialWombat »

I normally purchase a new home and move every year. I am choosing to skip this year due to the multi-offer and inspection-waiving nonsense going on. I refuse to play that game, and encourage others not to, either. Let the market settle out, then take time to find the right house for you.

If you absolutely insist on moving to have more space for your child, then go ahead and move, but continue to rent. Or, recognize the fact that the extra space is a want, not a need, and just make do. :beer
For entertainment purposes only.
jcricket73
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Re: First time homebuying in this environment...

Post by jcricket73 »

Posts like this make me glad my "unintentional market timing" has worked out - in the sense that all 3 times we've bought/sold houses have been neither bubbles nor busts in terms of the housing market. Not because I knew anything special, just how life worked out (when I bought my first place, when we got married, when we had our kids, etc).

First - I don't envy your decision - it's really hard to know what to do. I know a lot of my co-workers who are in the same boat - with plenty of income to buy a place, and fear of prices rising even faster than their incomes, but also fear of "severely over-paying" for something like a house right now, or being constantly "stretched".

I think the question is really hard to answer - most credible sources don't believe we are in anything like a national housing bubble (as we were in 2007/2008). From what I've ready it's a combination of low inventory and coming-out-of-COVID behavioral shifts (along with what looks like a couple years of almost certain economic recovery, at a macro-level). However, no one can tell you whether prices will moderate, go flat, or actually decline somewhat, in the next couple of years.

That said, plenty of people who said "I'm gonna wait it out" in 2007/8 avoided buying at peak (yay), but had a pre-determined notion of what the expected in terms of housing prices to drop backed by some chosen valuation metric, didn't buy at the trough of 2010-2012 either, so now they're in the same boat as you. Now, maybe those folks are happy with long-term renting. It's really not a terrible option all things considered. But just like trying to time the stock market, pretty hard to do with any consistency.

So I'd personally say - if you are positive you're going to stay 7-10+ years in the types of homes you're purchasing and the locations (depends on your jobs, etc) and the house payments aren't terribly more than rent and the house payments won't be a stretch on one income (have to calculate your DTI ratio) - you should go for it, and just accept there will be ups and downs with the house value. Once you hit the 10 year mark even with transaction costs, if you had to sell again, you're probably going to be ok. You won't likely make out like a bandit (hard to imagine continued 10% YoY house price appreciation continuing indefinitely), but you won't be underwater. And in the meantime you've gotten to live in a home you enjoy/fits your family.
tashnewbie
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Re: First time homebuying in this environment...

Post by tashnewbie »

There’s no way I’d forgo the inspection contingency (I’m also a first time homebuyer and for various personal reasons, I’m going to wait until next year to think about restarting my house search).

If you really need/want extra space, rent a bigger place. I know that’s easier said than done in some areas. Good luck.
runninginvestor
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Re: First time homebuying in this environment...

Post by runninginvestor »

tashnewbie wrote: Sun Apr 11, 2021 12:45 pm There’s no way I’d forgo the inspection contingency (I’m also a first time homebuyer and for various personal reasons, I’m going to wait until next year to think about restarting my house search).

If you really need/want extra space, rent a bigger place. I know that’s easier said than done in some areas. Good luck.
Agree with the first. Seasoned homeowners (with plenty of disposable income) can get away with waiving inspections and understanding the risks. First time homeowners should try to do everything in their power to limit risk. The home buying process can be quick, but should never be rushed. It's an expensive purchase, that can become crippling without thorough inspections on the front end.
Flashes1
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Re: First time homebuying in this environment...

Post by Flashes1 »

I wonder if you could bring an inspector with you on housing visits - especially a 2nd visit after you found 3-4 that you really like. While he couldn't do a full inspection like getting up in crawl spaces would there be any value with him visually looking for major problems like water foundation or termite damage - and take a quick peek at the roof?

Just tell any seller realtor that he's your "friend" which is technically not a lie if you like the guy, right? :D

Edit: I just noticed a bunch of new listings popped-up on my town's MLS this week - I wonder if a lot of folks are going to try to take advantage of the hot market conditions?
MOBugeater
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Re: First time homebuying in this environment...

Post by MOBugeater »

My daughter and SIL just sold their starter home in a LCOL city. They had 26 showings and 4 offers the first day and 20 showings with 4 more offers the second.

This is a less than $200 k home. Half the offers were cash and a couple were as is. They didn't even look at those that had a sale contingency, fha or VA loan. Ended up accepting the lowest risk cash offer with no contingencies for a bit over asking price.

I made the comment that I don't know how first time home buyers or those who need a sale contingency can even buy in this market. They would be better off just hanging out for a year to see how things settle down. The good news for my daughter is they contracted for new construction last Summer so they had a nice equity rise on the new home along with the old one.
Scotttheking
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Re: First time homebuying in this environment...

Post by Scotttheking »

Do a preoffer inspection. No written report but you get the input to decide on making an offer. More money unless you win the first house, but protects you from the risk.
quantAndHold
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Re: First time homebuying in this environment...

Post by quantAndHold »

That’s a hard one. Usually I would tell people that if you’re planning on staying in the house for at least a decade, just buy when you find the right place and it will all work out in the end. But I also wouldn’t put myself through the current waiving contingencies and battling it out against six other offers craziness that is going on right now.

One thing I will say is how we bought our last place. We were in that kind of market, and needed a house pretty much right then. We managed to find a place that had been mispriced, so it had been on the market for a few weeks, and hadn’t been sucked into the multiple bid malarkey. We made a fair offer for it, with normal contingencies, and didn’t have to compete with a bunch of other people. If we hadn’t found that place, I think we would have just rented for a year.
Yes, I’m really that pedantic.
NYCaviator
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Re: First time homebuying in this environment...

Post by NYCaviator »

B4Xt3r wrote: Sun Apr 11, 2021 12:27 pm our current housing situation is growing cramped. So we want a house...

[*] Wait for 1-2 years and incurring a guaranteed cost of $20-40k/year to rent
Your first statement is the same thing a large portion of buyers are saying in this market, which is driving up prices and making people do stupid things like paying well over asking and waiving all contingencies. Here in the States we think it's normal or even necessary to need 3,000+ sqft. detached homes for two parents and a couple kids. In Europe, and most other parts of the world, entire families live in small apartments or homes and get along perfectly fine. If it is physically possible to continue renting in your small house/apartment, do it for now. Especially since your kid isn't old enough to have to start worrying about school districts yet.

These "should I buy a house in this market" posts are frequent on here lately and my advice is always, WAIT. Something has to give. When? No one knows. But we do know for certain that this current trend is not sustainable. Whether we are in a bubble that will burst, or a market that will just plateau, it has to happen. The vast majority of people cannot afford $500k+ houses, yet that is what the median price is in many parts of the country. Once things open up and people want to spend on things they enjoyed before the pandemic (travel, concerts, etc.) they'll realize they are married to a mortgage.

In your situation, you sound financially stable and have made good choices as far as home pricing and downpayment, but wait until you find a house you love and get locked into a bidding war. All of a sudden common sense can go out the window and you end up spending way more than you wanted or you do something like waive inspection. Or, you buy a house in this insane market and a couple years from now the bubble bursts or prices correct themselves and you end up in the hole.

I would wait for things to cool. They will, eventually. At that point you can buy a house for what it is actually worth.
rage_phish
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Re: First time homebuying in this environment...

Post by rage_phish »

Why wait?

Just make offers you can afford with contingencies you are comfortable with. Yes you’ll lose out on some but what’s the harm in that?
Topic Author
B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

rage_phish wrote: Sun Apr 11, 2021 3:16 pm Why wait?

Just make offers you can afford with contingencies you are comfortable with. Yes you’ll lose out on some but what’s the harm in that?
I mean, this is a fair statement. It's just at this point we've had multiple offers not be chosen and it feels like we are wasting our time.
Topic Author
B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

MOBugeater wrote: Sun Apr 11, 2021 2:15 pm ...
I made the comment that I don't know how first time home buyers or those who need a sale contingency can even buy in this market. They would be better off just hanging out for a year to see how things settle down....
We don't know how to buy right now, to be honest. It's becoming a bit disheartening.
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B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

Scotttheking wrote: Sun Apr 11, 2021 2:17 pm Do a preoffer inspection. No written report but you get the input to decide on making an offer. More money unless you win the first house, but protects you from the risk.
What is a preoffer inspection?
Topic Author
B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

AerialWombat wrote: Sun Apr 11, 2021 12:34 pm I normally purchase a new home and move every year. I am choosing to skip this year due to the multi-offer and inspection-waiving nonsense going on. I refuse to play that game, and encourage others not to, either. Let the market settle out, then take time to find the right house for you.

If you absolutely insist on moving to have more space for your child, then go ahead and move, but continue to rent. Or, recognize the fact that the extra space is a want, not a need, and just make do. :beer
NYCaviator wrote: Sun Apr 11, 2021 2:34 pm
B4Xt3r wrote: Sun Apr 11, 2021 12:27 pm our current housing situation is growing cramped. So we want a house...

[*] Wait for 1-2 years and incurring a guaranteed cost of $20-40k/year to rent
...Here in the States we think it's normal or even necessary to need 3,000+ sqft. detached homes for two parents and a couple kids. I...

I would wait for things to cool. They will, eventually. At that point you can buy a house for what it is actually worth.
We live in a ~850 square foot apartment with 3 people and two large dogs. It's growing a little comfy, but we don't want 3,000+ sq ft. 2,000 would be nice. It's more about the lost rent at this point, seems financially better to own in the long run.
Topic Author
B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

tashnewbie wrote: Sun Apr 11, 2021 12:45 pm There’s no way I’d forgo the inspection contingency (I’m also a first time homebuyer and for various personal reasons, I’m going to wait until next year to think about restarting my house search).

...
quantAndHold wrote: Sun Apr 11, 2021 2:31 pm ... But I also wouldn’t put myself through the current waiving contingencies and battling it out against six other offers craziness that is going on right now.
...
If one did choose to waive inspections, what are the greater than $30k mistakes that might be missed? Foundation issue? Termite/other pest infestation? Mold?

^If there are only a handful of really bad risks, can I educate myself enough on them in particular to be able to identify them?
Johnny Thinwallet
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Re: First time homebuying in this environment...

Post by Johnny Thinwallet »

B4Xt3r wrote: Mon Apr 12, 2021 6:39 pm
tashnewbie wrote: Sun Apr 11, 2021 12:45 pm There’s no way I’d forgo the inspection contingency (I’m also a first time homebuyer and for various personal reasons, I’m going to wait until next year to think about restarting my house search).

...
quantAndHold wrote: Sun Apr 11, 2021 2:31 pm ... But I also wouldn’t put myself through the current waiving contingencies and battling it out against six other offers craziness that is going on right now.
...
If one did choose to waive inspections, what are the greater than $30k mistakes that might be missed? Foundation issue? Termite/other pest infestation? Mold?

^If there are only a handful of really bad risks, can I educate myself enough on them in particular to be able to identify them?
I wouldn't forgo the inspection contingency unless you had a pile of cash you'd be willing to risk on serious house repairs and/or you had a ton of construction knowledge and skill to identify and repair issues on your own.

There's so many variables here. During our house search we walked away from a house less than 15-years-old due to several $5-10k type issues. I probably would have been willing to tackle one of those issues, but not 4 separate issues in that price range that ultimately turned up. One house did have mold issues that we discovered during a second showing. We asked them to clear the area around their sump pumps. They did so and found mold and said "umm, we can't let you in the house right now." We declined to bid and moved on.

Knowing the neighborhood is also key. But honestly, as a new buyer you're really going blind here. To illustrate what I mean, I can give you a few examples what I'm talking about specific to our neighborhood that's roughly 15-years-old. I know the houses here with 3-tab shingles all have original roofs. The houses with architecture-style shingles have had a replacement roof put on. Every year, there's another string of houses in our neighborhood getting their roof replaced. 3-tab gets ripped off, architecture style gets installed. We'll be one of those houses sometime soon. So if I'd buy another house in my neighborhood that had 3-tab shingles I'd already know walking up the driveway that it had a builder-grade 15-year-old roof on it.

I also now know which streets in our neighborhood are much more prone to basement flooding issues based on the grading here and where the water table is. I didn't know this when buying, but I know now after a few heavy spring storms the last few years and seeing which neighbors are pleading for help with restoration company suggestions. I also know about the new construction area two streets over that had to alter their design plans based on the water table location.

I know there's moderate radon issues in our neighborhood. Most every house that sells in our neighborhood now has radon mitigation installed prior to closing. Very few of the original owner homes here have radon mitigation installed except for the few observant owners who noticed radon mitigation systems going in and figured "I should probably have my basement checked out ..."
Kookaburra
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Re: First time homebuying in this environment...

Post by Kookaburra »

If I were a seller with a house full of major problems and/or undesirable features, I would be looking to unload it right now. Can you imagine the stuff they can get away with given the lack of inspections and common sense?

Mold, dry rot, termites, sinking foundation, next to the freeway, overhead transmission lines. No prob! I’ll see your 500K and raise you 200K :oops:
ShadowHusky
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Re: First time homebuying in this environment...

Post by ShadowHusky »

Do sellers in your area usually provide an inspection report as part of their disclosures? I'm also a first time home buyer, and at least in the Bay Area, every seller has provided an inspection report. My realtor has also been very helpful in sharing his knowledge while we look at houses together. Though he can't make guarantees, he has an eye for noting the condition and age of things in the house as we tour, what has been replaced, what looks worn and original, whether there is any settling, etc.

That said, I've only made one offer so far so... I'm just as uncomfortable as you are with the prices and competition right now.
Topic Author
B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

Kookaburra wrote: Mon Apr 12, 2021 11:43 pm If I were a seller with a house full of major problems and/or undesirable features, I would be looking to unload it right now. Can you imagine the stuff they can get away with given the lack of inspections and common sense?

Mold, dry rot, termites, sinking foundation, next to the freeway, overhead transmission lines. No prob! I’ll see your 500K and raise you 200K :oops:
This is a worry of mine too. I'll bet there are people who are just trying to sell a problem house, and move into something else nearby to unload the problem onto someone else.
Scotttheking
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Re: First time homebuying in this environment...

Post by Scotttheking »

B4Xt3r wrote: Mon Apr 12, 2021 6:33 pm
Scotttheking wrote: Sun Apr 11, 2021 2:17 pm Do a preoffer inspection. No written report but you get the input to decide on making an offer. More money unless you win the first house, but protects you from the risk.
What is a preoffer inspection?
You have an inspection done before you write the offer on the house instead of having an inspection contingency.
Freetime76
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Re: First time homebuying in this environment...

Post by Freetime76 »

Somebody (AerialWombat?) upthread said it - I’m not putting up with shenanigans like bidding wars, waiving contingencies...unless I have a wad of cash...no, actually, not even then. I’m just not. Wait 12 months and see what’s what. It won’t go on forever, and there are so many factors in real estate prices in a given area...you can’t predict with any accuracy.

We’d rent - something else, if the little one is stealing the dogs’ toys - and aim to get on a month-to-month arrangement (I.e. after the original lease expires).

You’re NOT wasting money renting. Landlords pass the cost of ownership onto the renter, plus a (sometimes small) profit for their trouble, so to speak. Own, and YOU pay property tax, homeowners insurance, utilities on a bigger place, plus every nitpicky or gigantic repair that pops up over the years. Think about the roof example; let’s say you have a $25K roof every 25 years. Well, that’s $1K/year, but you don’t “feel” it until the roofer shows up and replaces your ailing roof, charging you the full amount - usually about the time your car blows up, the hot water heater develops a leak, and the dog has to go to the vet for surgery. That’s just the roof. The more established you are, the easier it becomes (planning ahead, savings), but starting out, it always seems to be a stretch until you get in the swing of things.

I love owning our home, and it does sound like you’re ready to go, dogs, kid and all.

To your point: Home ownership does stabilize your living expenses, in the sense that it can be an inflation hedge- you buy once, pay your mortgage, and you have a place to live. Think about the retiring CA residents who bought in to those lovely neighborhoods back in the day. They own the house now free and clear, and their housing cost is a lot less...vs if they’d rented and their rent increased every year. Granted, I am assuming they didn’t suck the equity of their house for a new suv or kitchen or move every 5 years, and didn’t spend every weekend at Home Depot on upgrades :wink: . Yes, I’m over simplifying, but that’s the idea.

One last point, I’d suggest an extra $10K saved dedicated for the move and new house. This will cover repairs (you’ll find something), window blinds, a rug, things for your new home, plus the moving truck rental for example (local move). It’ll save you from charging everything because it hits you all at once and not being able to pay it back.ETA: I used to think 5K, but that seems a little short these days.
mnsportsgeek
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Re: First time homebuying in this environment...

Post by mnsportsgeek »

I wouldn't make a decision that will stretch you or do things like waive inspections. Keep in mind though that while this rabid market may subside, that may not result in lower prices. It may just be 2-3 offers instead of 8-10. You may not need to waive inspections or appraisals, but waiting 1-2 years could see you spending the same or more. Nobody here can predict what the real estate market will do.
elle
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Re: First time homebuying in this environment...

Post by elle »

Would buying put you in the same range payment wise as you are currently (or at a level you are comfortable with)?

Would payments for a home purchase delay a potential second child?

I totally understand the desire to nest and find your home with a little one. If you can do it without it Impacting your plans, then go for it.

Don’t overextended yourself by getting caught up in the frenzy - offer price, terms, inspection, etc perspective. Do it on terms you are comfortable with. Don’t get emotionally invested-it will make you do crazy things. Make sure you have a good $ cushion because a new house will inevitably have unplanned expenses even if you have an inspection.
rage_phish
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Re: First time homebuying in this environment...

Post by rage_phish »

ShadowHusky wrote: Tue Apr 13, 2021 12:28 am Do sellers in your area usually provide an inspection report as part of their disclosures? I'm also a first time home buyer, and at least in the Bay Area, every seller has provided an inspection report. My realtor has also been very helpful in sharing his knowledge while we look at houses together. Though he can't make guarantees, he has an eye for noting the condition and age of things in the house as we tour, what has been replaced, what looks worn and original, whether there is any settling, etc.

That said, I've only made one offer so far so... I'm just as uncomfortable as you are with the prices and competition right now.
Bay Area seller and buyer here

Some houses we looked at had inspections. Some didn’t (the house were in contract with had one from the top inspector in our area)

Our realtor devised us not to provide one (and to let the buyer do their own if they wanted). He didn’t want us opening ourselves up to any liability by being the one providing the inspections. Our buyer didn’t waive inspections but their offer was clear they were buying the house as is but wanted to do an inspection for their own knowledge, which no expectations of us fixing anything
rage_phish
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Re: First time homebuying in this environment...

Post by rage_phish »

Kookaburra wrote: Mon Apr 12, 2021 11:43 pm If I were a seller with a house full of major problems and/or undesirable features, I would be looking to unload it right now. Can you imagine the stuff they can get away with given the lack of inspections and common sense?

Mold, dry rot, termites, sinking foundation, next to the freeway, overhead transmission lines. No prob! I’ll see your 500K and raise you 200K :oops:
My buddy has an absolute lemon of a house, and once he heard how our sale went, I can tell he’s super tempted to do just what you’re talking about
Tingting1013
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Re: First time homebuying in this environment...

Post by Tingting1013 »

Freetime76 wrote: Wed Apr 14, 2021 7:30 am Somebody (AerialWombat?) upthread said it - I’m not putting up with shenanigans like bidding wars, waiving contingencies...unless I have a wad of cash...no, actually, not even then. I’m just not. Wait 12 months and see what’s what. It won’t go on forever, and there are so many factors in real estate prices in a given area...you can’t predict with any accuracy.
The price increases may not go on forever but that doesn’t mean they’ll ever come back down to some level of affordable.

Prices may plateau at some point and then stay there, above your budget. Assuming your income doesn’t increase you would then be permanently priced out. Then what?
rage_phish
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Re: First time homebuying in this environment...

Post by rage_phish »

Tingting1013 wrote: Wed Apr 14, 2021 9:24 am
Freetime76 wrote: Wed Apr 14, 2021 7:30 am Somebody (AerialWombat?) upthread said it - I’m not putting up with shenanigans like bidding wars, waiving contingencies...unless I have a wad of cash...no, actually, not even then. I’m just not. Wait 12 months and see what’s what. It won’t go on forever, and there are so many factors in real estate prices in a given area...you can’t predict with any accuracy.
The price increases may not go on forever but that doesn’t mean they’ll ever come back down to some level of affordable.

Prices may plateau at some point and then stay there, above your budget. Assuming your income doesn’t increase you would then be permanently priced out. Then what?

Pretty sure you’re in the Bay Area as well. That’s exactly why we bought now. We were afraid that while prices may not risk enough for ever, they may rise to a plateau that leaves us priced out
Topic Author
B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

Scotttheking wrote: Wed Apr 14, 2021 1:05 am
B4Xt3r wrote: Mon Apr 12, 2021 6:33 pm
Scotttheking wrote: Sun Apr 11, 2021 2:17 pm Do a preoffer inspection. No written report but you get the input to decide on making an offer. More money unless you win the first house, but protects you from the risk.
What is a preoffer inspection?
You have an inspection done before you write the offer on the house instead of having an inspection contingency.
I'm not sure I can act on this, to be honest. Most homes right now you'll be lucky to walk through for 30 mins. It's often just 15 mins.
Topic Author
B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

elle wrote: Wed Apr 14, 2021 8:53 am Would buying put you in the same range payment wise as you are currently (or at a level you are comfortable with)?

Would payments for a home purchase delay a potential second child?

I totally understand the desire to nest and find your home with a little one. If you can do it without it Impacting your plans, then go for it.

Don’t overextended yourself by getting caught up in the frenzy - offer price, terms, inspection, etc perspective. Do it on terms you are comfortable with. Don’t get emotionally invested-it will make you do crazy things. Make sure you have a good $ cushion because a new house will inevitably have unplanned expenses even if you have an inspection.
Thanks.
Topic Author
B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

rage_phish wrote: Wed Apr 14, 2021 9:20 am
ShadowHusky wrote: Tue Apr 13, 2021 12:28 am Do sellers in your area usually provide an inspection report as part of their disclosures? I'm also a first time home buyer, and at least in the Bay Area, every seller has provided an inspection report. My realtor has also been very helpful in sharing his knowledge while we look at houses together. Though he can't make guarantees, he has an eye for noting the condition and age of things in the house as we tour, what has been replaced, what looks worn and original, whether there is any settling, etc.

That said, I've only made one offer so far so... I'm just as uncomfortable as you are with the prices and competition right now.
Bay Area seller and buyer here

Some houses we looked at had inspections. Some didn’t (the house were in contract with had one from the top inspector in our area)

Our realtor devised us not to provide one (and to let the buyer do their own if they wanted). He didn’t want us opening ourselves up to any liability by being the one providing the inspections. Our buyer didn’t waive inspections but their offer was clear they were buying the house as is but wanted to do an inspection for their own knowledge, which no expectations of us fixing anything
Yeah - we've been trying the "for our knowledge but not negociations" bit, which still leaves us the ability to back out. No luck yet.
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B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

Tingting1013 wrote: Wed Apr 14, 2021 9:24 am
Freetime76 wrote: Wed Apr 14, 2021 7:30 am Somebody (AerialWombat?) upthread said it - I’m not putting up with shenanigans like bidding wars, waiving contingencies...unless I have a wad of cash...no, actually, not even then. I’m just not. Wait 12 months and see what’s what. It won’t go on forever, and there are so many factors in real estate prices in a given area...you can’t predict with any accuracy.
The price increases may not go on forever but that doesn’t mean they’ll ever come back down to some level of affordable.

Prices may plateau at some point and then stay there, above your budget. Assuming your income doesn’t increase you would then be permanently priced out. Then what?
Well, I suppose that I would have to rent until I found a job in a location that can pay me to live there.
rxdawg21
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Re: First time homebuying in this environment...

Post by rxdawg21 »

Even in my neck of the woods (small town) the market is hot with limited options. Friends have been successful only if making offers on houses before they hit the market. It helps to have a good realtor that can get you to these houses pre listing.
bltn
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Re: First time homebuying in this environment...

Post by bltn »

AerialWombat wrote: Sun Apr 11, 2021 12:34 pm I normally purchase a new home and move every year. I am choosing to skip this year due to the multi-offer and inspection-waiving nonsense going on. I refuse to play that game, and encourage others not to, either. Let the market settle out, then take time to find the right house for you.

If you absolutely insist on moving to have more space for your child, then go ahead and move, but continue to rent. Or, recognize the fact that the extra space is a want, not a need, and just make do. :beer
Wow! Interesting sideline to make money. Seems like it would be a lot of trouble. Maybe not after you get some experience with it.
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B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

rxdawg21 wrote: Fri Apr 16, 2021 7:44 am Even in my neck of the woods (small town) the market is hot with limited options. Friends have been successful only if making offers on houses before they hit the market. It helps to have a good realtor that can get you to these houses pre listing.
How does one find such a realtor?

We missed out on another house because we couldn't make an offer in <1 day.
Johnny Thinwallet
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Re: First time homebuying in this environment...

Post by Johnny Thinwallet »

B4Xt3r wrote: Tue Apr 20, 2021 5:41 am
rxdawg21 wrote: Fri Apr 16, 2021 7:44 am Even in my neck of the woods (small town) the market is hot with limited options. Friends have been successful only if making offers on houses before they hit the market. It helps to have a good realtor that can get you to these houses pre listing.
How does one find such a realtor?

We missed out on another house because we couldn't make an offer in <1 day.
It took 3 realtors but we managed to find such a realtor. We eventually settled on a specific subdivision in one neighborhood where we wanted to be. And during our search we noticed that the bulk of listings were all listed by one specific realtor who lived in the neighborhood. So after a bunch of unsuccessful bids, we fired our second realtor (who was useless) and linked up with the realtor who lived in the neighborhood and got many of the listings. We told her exactly what we were looking for, that we wouldn't waste anybody's time looking at houses/areas we didn't want and to let us know when she was getting ready to list a house with our criteria in her neighborhood.

Six weeks later she had a listing coming up meeting our criteria. We got in pre-list, didn't have to deal with a bidding war and actually got the house a bit under list price. No other buyers even got a chance to go through the house as it was "sold before sent."
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dogagility
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Re: First time homebuying in this environment...

Post by dogagility »

Johnny Thinwallet wrote: Tue Apr 20, 2021 6:43 am
B4Xt3r wrote: Tue Apr 20, 2021 5:41 am
rxdawg21 wrote: Fri Apr 16, 2021 7:44 am It helps to have a good realtor that can get you to these houses pre listing.
How does one find such a realtor?
It took 3 realtors but we managed to find such a realtor. We eventually settled on a specific subdivision in one neighborhood where we wanted to be. And during our search we noticed that the bulk of listings were all listed by one specific realtor who lived in the neighborhood.
This.

Our neighborhood is very hot right now. We chose our seller's agent this month for two factors: agent sold many homes in our neighborhood and had the lowest fee. (Agent also lives in our neighborhood.)

Agent already had a buyer in mind before the listing went live. Buyer was chomping on the bit to purchase. We didn't accept any offers until our house was on the market for 2 days.

We likely had a better offer by waiting, but our agent's buyer paid up handsomely.

So... having an insider agent as a buyer might work. It didn't in our case because we wanted to see what the market would bear. At the very least, such as agent might give you more time to consider houses coming onto the market.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
regularguy455
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Re: First time homebuying in this environment...

Post by regularguy455 »

For what it’s worth, I’m about to list my house. These presales arrangements seem like a waste of time and do not benefit the seller. The only way to get the highest offer is to maximize the opportunity for serious buyers to see it and bid.

I plan to show a coming soon on Monday, list it on Friday, and hopefully have an offer by Sunday. This is consistent with how most of the houses have sold in my area. I will likely accept the highest offer with the fewest contingencies.
Last edited by regularguy455 on Tue Apr 20, 2021 7:15 am, edited 1 time in total.
wilked
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Re: First time homebuying in this environment...

Post by wilked »

B4Xt3r wrote: Sun Apr 11, 2021 12:27 pm

The options as I see them:
  • Wait for 1-2 years and incurring a guaranteed cost of $20-40k/year to rent
Framing issue...

Owning a house is not 'free of costs' either. Let's say the home you buy has a $2000 mortage. Almost all of that is interest to the bank (let's say 80% to be overly generous). So $2000*24*0.8 = $38,000 you paid to the bank over those first two years for the privilege of them loaning you the money. That seems to square pretty nicely with the $40K you would instead pay in rent. Over this time you have banked a bit less than $10K in equity.

You will 'burn' money either way. One check goes to a landlord, the other check goes to a bank. Either way that money is lost.

My opinion as someone that has been watching the Boston market closely, if you can wait, I would wait. Supply needs to catch up with demand. That won't happen til at least the fall, and I believe by next spring it will find a healthy equilibrium again. Rent, save aggressively, and focus on a home before school age for the child
rascott
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Re: First time homebuying in this environment...

Post by rascott »

regularguy455 wrote: Tue Apr 20, 2021 7:10 am For what it’s worth, I’m about to list my house. These presales arrangements seem like a waste of time and do not benefit the seller. The only way to get the highest offer is to maximize the opportunity for serious buyers to see it and bid.

I plan to show a coming soon on Monday, list it on Friday, and hopefully have an offer by Sunday. This is consistent with how most of the houses have sold in my area.

Exactly. It benefits the Realtor who can now cash both sides of the commission. Does not benefit the seller in any way to do such a thing. Most smart sellers in hot markets will list it and state that no offers will even be reviewed for 3 days or so.

Obviously helps a buyer if they find a foolish seller this way.
Ollie123
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Re: First time homebuying in this environment...

Post by Ollie123 »

I'm in a VERY similar position right now (albeit not a first-time buyer) and would honestly just rent in your circumstances. We just sold our home and it was a madhouse. We got kicked out for a solid weekend of showings (30 folks in 3 days). 2 offers, one all-cash and one for wayyyyyyy over asking. Potentially more if we had waited. I'm in the slow-moving "semi-rural" part of town where houses sit for months to years.

Keep in mind March/April/May is usually the busiest time of year for housing anyways, so even putting everything else going on aside things should calm down at least a little bit in a few months. No way I would waive inspections - especially as a first time home-buyer, but even as an experienced one in most circumstances. You don't post your financials but unless you have enough cash lying around to cover ~50k in repairs (maybe more) without breaking a sweat, its not worth it. I'm sure you can learn some things, but I would still want someone with experience checking behind me in those circumstances. Can I learn signs of mold? Probably. Can I spot a quality roof patch and know to check for water damage in the attic that might contribute to structural problems a few years down the line? That I'm much less certain about. A lot of what ends up in inspection reports is stupid trivial stuff (broken window seals, wrong screws used in X, etc.) but you are hiring them to make sure foundation, roof, electric/plumbing and heat/ac are not an issue as these are your big ticket items. They're also not something I'd want an amateur evaluating based on a youtube video. Heck, even 5k to replace the AC is not a big concern - you want to make sure you don't have to drop 50k because the foundation was shifting.

I won't claim I can time the market when it comes to housing price. They might go up, they might go down. Whatever happens to price, I'm pretty confident that in the relatively near future you will at least be able to get an inspection and won't have to agree to name your child after the seller's grandmother just to get an offer accepted.
rascott
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Re: First time homebuying in this environment...

Post by rascott »

If you can wait..... I'd probably wait for something approaching a more balanced market. That said.... there's nothing to say this can't continue on for a long while. The supply/ demand imbalance is extreme right now in many/ most areas. Construction costs are through the roof, and that's even if you can find avaliable building spots..... so there's no clear sign in my view that things will get magically better 1-2 years from now.

What I would recommend, if you decide to buy (having been there and done that in your situation) is to just go for as close to your forever home as you can possibly get.... if such a thing exists. By that I mean, don't look for a modest size increase with the thought that you'll just move up again in a few years. We did this.....what you are thinking of... and then after kid #2 we quickly realized we'd want an even larger home for long term. So ended up moving again after only 3 years. Market had trended up considerably so it wasn't an issue..... but if you buy now and prices drop you're gonna feel really stuck.

If you buy a house you'd be fine in for the next 20 years, who cares what prices do in the near term. I can't emphasize this enough. You're a new parent (and are there going to be more kids? )..... you don't know what you don't know. And 2k sq ft even may feel really tight in a few years.
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Re: First time homebuying in this environment...

Post by ponyboy »

People are out of their minds if they pay more than asking. It makes no sense to pay more than what an item is listed for. The next time you're out shopping, why not offer more money for the groceries you buy? Wake up folks. This stuff only exists because people pay more than they should.
rascott
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Re: First time homebuying in this environment...

Post by rascott »

ponyboy wrote: Tue Apr 20, 2021 8:13 am People are out of their minds if they pay more than asking. It makes no sense to pay more than what an item is listed for. The next time you're out shopping, why not offer more money for the groceries you buy? Wake up folks. This stuff only exists because people pay more than they should.
No one house is like another one, they aren't interchangeable products like other consumer purchases, like a new car. As such, pricing them is an imperfect science. There's nothing wrong with pricing something under market price and allow bidding to go up from there. It's market economy 101.
VoiceOfReason
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Re: First time homebuying in this environment...

Post by VoiceOfReason »

ponyboy wrote: Tue Apr 20, 2021 8:13 am People are out of their minds if they pay more than asking. It makes no sense to pay more than what an item is listed for. The next time you're out shopping, why not offer more money for the groceries you buy? Wake up folks. This stuff only exists because people pay more than they should.
Groceries are a commodity, real estate is not. Each property is unique.

The market will always dictate what a house is worth. The list price will not. List it too high, it will sit on the market with “low ball” offers that are actually what the house is worth. List it too low and it will get “bid up” over list. But it’s actually just what the house is worth. The market will always determine the value of the house.

I just recently sold my house. I wanted specific terms (lease back and quick close) so I intentionally listed my house lower than what I thought it would sell for. Consequently I got many offers over list and they all competed to quickly meet my specific terms on $0 lease back and quick close. If I had listed higher I likely do not get as many offers and possibly not the terms I needed.
VoiceOfReason
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Re: First time homebuying in this environment...

Post by VoiceOfReason »

rascott wrote: Tue Apr 20, 2021 7:48 am
If you buy a house you'd be fine in for the next 20 years, who cares what prices do in the near term. I can't emphasize this enough. You're a new parent (and are there going to be more kids? )..... you don't know what you don't know. And 2k sq ft even may feel really tight in a few years.
It’s a mind set. I do not view my home as a financial investment. It’s where I live and raise my family. Others likely disagree.

I could not agree more w the above. You save and make astute financial decisions for these moments. So that you don’t have to stress over a relative small amount of money compared to your lifetime.
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bottlecap
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Re: First time homebuying in this environment...

Post by bottlecap »

I'd likely continue to rent, but there are also likely not any good options for you. In my area, houses have been going for all cash offers, 10 to 15% over asking and ALL contingencies waived. This has accelerated over the last month. Houses that are listed on a Thursday night to remain open for offers through Monday at noon are going under contract Saturday morning. To pull it that quickly says to me the sellers are likely getting even more attractive offers than they expect. And they have to expect a lot at this point.

Whether this caused by a bubble, low inventory, or mass flight from lockdown states is up for speculation. But if it's the first two, I would expect prices will be a little better in the next year or so. I'm not familiar with rent prices, which is your alternative. On the one hand, the short term value of a home you buy is immaterial, but the long term cost of your home payments is not.

Good luck,

JT
fulliautomatix
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Re: First time homebuying in this environment...

Post by fulliautomatix »

We went through the same situation two years ago. We bid multiple houses and lost but we continued attending open houses and studying the local market, neighborhoods etc. Then we decided to rent a larger townhome. One year later, the perfect house came along, the craziness had subsided and we put in a fair offer and moved in.

That said, my personal opinion is that home prices wont decline in MOST parts of the country. It will stay there until inflation and incomes catch up. I dont think we are in a bubble in MOST places.

I suggest you rent a larger place for a year, study the market really well, watch the trends and be prepared to take action a year from one. Or even earlier - if you get a good place at a fair price you can always break the lease and pay some small penalty.
wilked
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Re: First time homebuying in this environment...

Post by wilked »

The above is a good point

Rent and be ready to move when the right house comes available. Assume you will lose 1-2 months of rent when you break your lease; that is simply the cost of doing business. In the long run that is small potatoes in the whole equation. It worked well for us and we only forfeited a few weeks of rent (we helped the landlord on the transition to a new tenant, and I think he made even more monthly rent from the new one)
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B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

Apparently (according to my realtor), the only way to get an inspection contingency is to tie it with a non-refundable deposit I’d say $10k. So you could back out, but would be out that amount. Anyone else seeing that?
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