First time homebuying in this environment...

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softmax
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Re: First time homebuying in this environment...

Post by softmax »

In my local (hot) market, usually the seller will provide the inspection report (although it may not be completely trustworthy). You could also schedule your own inspection before the offer review deadline, but sometimes it's hard.

My suggestion is to continue shopping (but not desperately). Waiting doesn't solve the problem if you are certain about buying. As long as you keep your budget <= 3x single income, you will be fine. Many people become too frustrated during the process and keep bumping up the budget. Don't do that.
Miguelito
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Re: First time homebuying in this environment...

Post by Miguelito »

A few general observations from my end:

This level of frenzy is unsustainable. It reminds me of the early/mid 2000's in a few ways:

- Everything sells in days and over asking.
- People waive inspections (not smart at all, especially in older homes).
- People start to overlook things that would normally make a home less desirable, like location at the micro scale: Home is right next to a business, or on busy road, or near tracks or highways, etc. They underestimate the cost of renovations or improvements to house or landscape.
- Basically everyone goes on FOMO/take-my-money mode.

It's silly. Why does this happen?

- Sure, lack of supply is a thing. Supply/demand and all that. But low interest rates are allowing people to borrow silly amounts of money. Great to lock into these rates, but the moment rates go back up just a little, these loan amounts will lower and so will prices.
- Stock market gains are making many people feel rich and willing to go big on their houses. What if there is a dip? We'd still be at near-historic highs but people would stress out about borrowing as much.
- Wait until home value gains are reflected on real estate taxes. That will also put a damper on how much house people will want to buy.
- Just like the supply squeeze is making prices soar, just a little over-supply will make them come down as well.

That said, this market is not that of 2008. This is more real and sustainable, but that's not to say these prices will continue to increase. I can see the market leveling off for several years without really coming down. In effect, in inflationary terms, it would be like prolonged slight decrease.

Just my thoughts.
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dogagility
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Re: First time homebuying in this environment...

Post by dogagility »

B4Xt3r wrote: Tue Apr 20, 2021 11:04 am 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?
It's a better offer (for the seller) than having an inspection contingency but won't beat a no contingency offer.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
Ollie123
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Re: First time homebuying in this environment...

Post by Ollie123 »

B4Xt3r wrote: Tue Apr 20, 2021 11:04 am 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?
We always have this in my area - it is called "due diligence" money (vs. the "earnest deposit" which IS refundable after inspection). In normal times it is $500-$1000 to compensate sellers for taking the home off the market.

I just received a due diligence check for $25,000 this afternoon. Again, in the slow part of town.
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lindsayinsf
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Re: First time homebuying in this environment...

Post by lindsayinsf »

B4Xt3r wrote: Mon Apr 12, 2021 6:33 pm
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.
How long have you been seriously looking and making offers? In the Bay Area it's common for it to take months to a year for an offer to be accepted, or for buyers to make a dozen offers before one is accepted. Frustrating for sure, but hopefully resetting your expectations for what is considered "normal" in your local market can help take the edge off a bit.

What's the worst case scenario? That you are in the same situation and continue to rent...not so bad, right?

Yes the housing market is terrible for buyers in a lot of places, and that's a systemic issue with places not building adequate supply or homeowners fighting new development or whatever reasons that are out of your control. We can try to make the best choices with the options we currently have right now. Longer term we can get involved with pro-housing groups or remember this when we have the option to vote on housing related issues.

In the meantime, finding a supportive group like this bogelhead thread can help. :happy I'll bet you know other buyers in the same position as you who would commiserate with you.

In the Bay Area it's common for buyers to waive inspection contingencies but it's ALSO common for the seller to provide an inspection report up front as part of the disclosures package, which can be viewed by potential buyers before offers are made. A good realtor will have a sense of whether the inspector is reputable or not.

It's also common for housing to be listed 10% or 20% below what they actually expect to receive an offer for. Which doesn't make any sense to me, because buyers know this and everyone automatically adds 10% to 20% to the listing price when searching and ruling out houses. But again, it's a common thing and a good realtor will be able to give an accurate estimate of what they expect the sale price to be.

You might consider talking to a few other realtors.
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B4Xt3r
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Re: First time homebuying in this environment...

Post by B4Xt3r »

We've been searching in earnest for about 4 months now, 5 above-asking offers not accepted so far.

I think it's our insistence on having an inspection contingency at all (evening promising not to negotiate pricing), and not waiving appraisal...it's been disheartening.
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Darth Xanadu
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Re: First time homebuying in this environment...

Post by Darth Xanadu »

B4Xt3r wrote: Mon May 03, 2021 7:24 pm We've been searching in earnest for about 4 months now, 5 above-asking offers not accepted so far.

I think it's our insistence on having an inspection contingency at all (evening promising not to negotiate pricing), and not waiving appraisal...it's been disheartening.
I've been following this thread, as my family and I are also looking for a house (we are in the Boston area). Directly to your point, although we've only made one offer to this point, we have decided against waiving inspection (although we would consider "informational only" inspection). The offer we made revealed some areas of real concern (possible damage to the slab foundation and subflooring). The owner chose not to allow us a more thorough evaluation, so we walked.

You'd better believe I'm not waiving any inspection.
BogleFan510
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Re: First time homebuying in this environment...

Post by BogleFan510 »

Darth Xanadu wrote: Mon May 03, 2021 8:23 pm
B4Xt3r wrote: Mon May 03, 2021 7:24 pm We've been searching in earnest for about 4 months now, 5 above-asking offers not accepted so far.

I think it's our insistence on having an inspection contingency at all (evening promising not to negotiate pricing), and not waiving appraisal...it's been disheartening.
I've been following this thread, as my family and I are also looking for a house (we are in the Boston area). Directly to your point, although we've only made one offer to this point, we have decided against waiving inspection (although we would consider "informational only" inspection). The offer we made revealed some areas of real concern (possible damage to the slab foundation and subflooring). The owner chose not to allow us a more thorough evaluation, so we walked.

You'd better believe I'm not waiving any inspection.
It can be a good strategy, but also consider the flip side. Years ago my sister had a 250k buy offer with inspection contingency on an older home that had maybe 15k of inspection wood repairs 'discovered.' My dad refused to consider keeping the accepted offer and sellers wouldnt budge. My sister took dads advice and went back to renting and ended up paying 400k a few years later for a smaller home in a worse area. That home is now well over a million to buy. Sweating a few thousand in an area with good long term prospects might cost one a chance at the home they really want. Life is short and money is a tool to get what we want. Like with stock prices one should not get too stuck on a price. Once the market moves it may never return. Still sad for the NVDA i sold at 35, but it is 600 now and unlikely to go back. My mental bias about old prices (bought at 12) are meaningless.
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Darth Xanadu
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Re: First time homebuying in this environment...

Post by Darth Xanadu »

BogleFan510 wrote: Mon May 03, 2021 8:42 pm
Darth Xanadu wrote: Mon May 03, 2021 8:23 pm
B4Xt3r wrote: Mon May 03, 2021 7:24 pm We've been searching in earnest for about 4 months now, 5 above-asking offers not accepted so far.

I think it's our insistence on having an inspection contingency at all (evening promising not to negotiate pricing), and not waiving appraisal...it's been disheartening.
I've been following this thread, as my family and I are also looking for a house (we are in the Boston area). Directly to your point, although we've only made one offer to this point, we have decided against waiving inspection (although we would consider "informational only" inspection). The offer we made revealed some areas of real concern (possible damage to the slab foundation and subflooring). The owner chose not to allow us a more thorough evaluation, so we walked.

You'd better believe I'm not waiving any inspection.
It can be a good strategy, but also consider the flip side. Years ago my sister had a 250k buy offer with inspection contingency on an older home that had maybe 15k of inspection wood repairs 'discovered.' My dad refused to consider keeping the accepted offer and sellers wouldnt budge. My sister took dads advice and went back to renting and ended up paying 400k a few years later for a smaller home in a worse area. That home is now well over a million to buy. Sweating a few thousand in an area with good long term prospects might cost one a chance at the home they really want. Life is short and money is a tool to get what we want. Like with stock prices one should not get too stuck on a price. Once the market moves it may never return. Still sad for the NVDA i sold at 35, but it is 600 now and unlikely to go back. My mental bias about old prices (bought at 12) are meaningless.
I don't disagree with your general point, but without an inspection, how does one know if it's a few thousand or $40k? I certainly did not know in my particular case.
BogleFan510
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Re: First time homebuying in this environment...

Post by BogleFan510 »

Darth Xanadu wrote: Mon May 03, 2021 8:46 pm
BogleFan510 wrote: Mon May 03, 2021 8:42 pm
Darth Xanadu wrote: Mon May 03, 2021 8:23 pm
B4Xt3r wrote: Mon May 03, 2021 7:24 pm We've been searching in earnest for about 4 months now, 5 above-asking offers not accepted so far.

I think it's our insistence on having an inspection contingency at all (evening promising not to negotiate pricing), and not waiving appraisal...it's been disheartening.
I've been following this thread, as my family and I are also looking for a house (we are in the Boston area). Directly to your point, although we've only made one offer to this point, we have decided against waiving inspection (although we would consider "informational only" inspection). The offer we made revealed some areas of real concern (possible damage to the slab foundation and subflooring). The owner chose not to allow us a more thorough evaluation, so we walked.

You'd better believe I'm not waiving any inspection.
It can be a good strategy, but also consider the flip side. Years ago my sister had a 250k buy offer with inspection contingency on an older home that had maybe 15k of inspection wood repairs 'discovered.' My dad refused to consider keeping the accepted offer and sellers wouldnt budge. My sister took dads advice and went back to renting and ended up paying 400k a few years later for a smaller home in a worse area. That home is now well over a million to buy. Sweating a few thousand in an area with good long term prospects might cost one a chance at the home they really want. Life is short and money is a tool to get what we want. Like with stock prices one should not get too stuck on a price. Once the market moves it may never return. Still sad for the NVDA i sold at 35, but it is 600 now and unlikely to go back. My mental bias about old prices (bought at 12) are meaningless.
I don't disagree with your general point, but without an inspection, how does one know if it's a few thousand or $40k? I certainly did not know in my particular case.
Agreed, but remember to consider your goals. If looking for a bargain, negotiate tough (we have), if it is a unique home or sellers market consider how much you are willing to put the deal at risk.
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