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Buying a house is so disheartening

Been trying to buy a house because my rent is going up(and it will continue to do so) and a mortgage would be around the same as what my rent will become in a few years anyway so I figure I might as well build equity and have a house for my family.

Thing is the current housing market is nuts. Houses are put on sale with strict deadlines of "accepting all offers due 12pm 5 days from now" creating a false sense of urgency and to top is off the process is super opaque. You dont know what other people are offering so unlike an actual auction you cant start low and hopefully get a good value. Nope it's a black box and the asking price isnt of any help because that was just an advertising tactic to get more people to look at the house.

So you have to do research based on past history of other homes sold in the area of the same type recently and then place a competitive bid based on that. Of course everyone else is also doing that so you have to make your bid "competitive" and give a little more. How much more is hard to say and you only really get the one bid. So 12 pm comes along and the anticipation in your stomach is insane because this could be it you could be a homeowner and you did put in a competitive bid, and then sometime between immediately and just before bed you get a message saying they went with another offer.

ITS SO DAMN FRUSTRATING! Houses that I bid $30,000 over asking price and someone still swooped in and bid even more. And of course since the process is a black box you dont get told what bid beat you out or what the other bids were(dont want the 2nd place bid to decrease their bid in the event the 1st place falls through). You'll find out eventual final sale price a few months from now when everything finishes closing. I imagine the issue is other people got frustrated with the game over the last few months and now if they see a house thats ok they go all in with their max offer instead of a smart offer.

Oh and the market is limited, but somehow out of sheer coincidence after one round of sales is done the realtors manage to find another round of homes to put on the market. I'm convinced the realtors are limiting the supply on purpose and letting homes trickle in because the ACT NOW PUT IN THE BEST OFFER OVER ASKING tactic probably doesnt work as well if there are more than a handful of homes for sale at a time.

Its so frustrating I just want a house to live in and raise my soon to be born child, and Im willing to pay you what you're asking for it! The worst part is the housing market in my area shot up a lot over the years. So these people playing bid wars are making 100k profit AT LEAST for a house they bought just 5 years ago! And then theres the old people who bought the house for pretty much nothing 30+ years ago

Sorry for my long wall of text rant

88 comments

  • In a seller's market, you need to work backwards.. Instead of spending a lot of time finding and falling in love with the house you want, you put in offers, sight-unseen, on any and all homes that meet your general criteria. Include a 10-day inspection contingency and a financing contingency.

    Only when a seller accepts your initial offer do you actually view ("inspect") the property. If you don't love it after your "inspection", you exercise your contingency and walk away.

      • The advice every financer/realtor will give you is:

        If you're asked to waive the inspection, walk away and don't look back. There's always a reason they want you to skip it.

        Even flippers in my area won't waive an inspection without lowering their offer significantly.

      • NEVER DO. Everyone will try to convince you to waive it, DO NOT. Even my realtor told me I should waive it on my current house and I told her there's no way I'm buying a house without one an inspection. She was like "Well, I guess we could have one done, but it'd have to be early tomorrow at like 7am..." and I was like "Great, I'll be there!"

    • I get where you're coming from, but sight unseen in a sellers market is a terrible idea. I commented above about the details of my experience, but there are so many shitty houses with major problems that are evident the second you walk into them. This approach ties up earnest money and can potentially prevent you from being able to jump on a good house.

      • Yep. We ran into this issue and we didn't even do it sight unseen, we were just moving so fast that we got sloppy. It's hard to continue to be diligent after 30+ failed bids. Ended up with a bid for a house that needed significant and immediate repairs that we couldn't afford. Ended up walking away and losing our earnest money instead of keeping the house, but we're much happier for it.

        Our budget also continually increased throughout our search. The same houses we were bidding on at the start increased by 50k just in the couple of months spent searching. We only found inventory once we broke into not a starter home budget category. This has resulted in us being pretty house poor to start, but ultimately we plan to stay here for 20+ years so it hasn't mattered after those lean first few years.

      • Earnest money is customary, not mandatory. You can tell the seller's agent you're open to the inclusion of earnest money in their counter offer. Alternatively, you can specify that the earnest money be held by the buyer's agent rather than the seller or escrow agent.

        Your earnest money also binds the seller. They can't accept a better offer coming in later while they are under contract with you. I have seen sellers double the buyer's earnest money so they can accept a significantly higher offer coming in later from another buyer.

        In a seller's market, the buyer needs to get into the negotiation phase as soon as possible. Use inspection contingencies for a cooling-off period.

    • It probably depends on your area, but where I'm at there are no sale conditions. If you put conditional on home inspection, you just got rejected.

      • Then you're paying an extremely high premium to buy in that area. You're almost certainly trying to buy at the peak of the market in that area.

        I would divide the average cost of the house I want by my annual pay, and use that number to go shopping for a job in another area. Even taking a fairly steep pay cut, you'll have a higher lifestyle elsewhere.

        Look at a state whose population has declined, or lagged behind the national average. Generally speaking, those states will likely be in the trough of their housing cycles, and will likely peak when you're ready to sell.

    • , you put in offers, sight-unseen, on any and all homes that meet your general criteria

      yeah this is absolutely a nogo for me. They all have deadlines anyway and I live around here so it's not like it costs me anything to schedule an appointment to see the place or pop over during an open house. Also offers are all accepted at the same time so they'll just pass if theres a 10 day spiff on it, and in my state you have to sign some formal paperwork to make a deal. This implies a covenant of good faith, so I dont really know the legality of singing and sending out a bunch at once but I suspect it's dubious(which sucks because they get the option to choose from multiples)

      Housing stock in my area is old for the US and these 100 year old homes can range from exactly what you see in the pictures to dangerously obsolete or just bad. The charming woodwork and hardwood floors photograph well and then IRL they areslanted, broken, there's mysterious smells, and the basement is a disaster zone.

      Theres also just the issue of, I'm not trying to fall in love with "the perfect house". I will make it a home and update, and paint, and replace cabinets and plant gardens, I know I can make it my own. But I also plan on living here and raising a family for the next few years and there dealbreakers. It's a lot like taking a car for a test drive before buying it. You dont really know how it feels to drive or how enjoyable it is or how comfortable it is, or how the plastics on the dash feel until you actually get inside of it.

      But yeah otherwise I will never waive inspection.

      • Also offers are all accepted at the same time

        That is rarely the case, and the only real reason to wait in a seller's market.

        and in my state you have to sign some formal paperwork to make a deal. This implies a covenant of good faith, so I dont really know the legality of singing and sending out a bunch at once

        The "legality" of doing it is explicitly defined in the offer. The offer you made to the seller explicitly includes the right to withdraw from the deal if it doesn't meet your expectations. That is the express purpose for the contingencies.

        There is potentially an ethical issue, if this negotiation strategy is so far out of the norm that it is completely unexpected, unreasonable, and causes some sort of harm to the seller.

        But, I would argue that this practice benefits the seller, in that they can actually consider your higher offer, rather than accepting a lower, earlier offer while you're still waiting for your viewing appointment.

        Even if you decide not to move forward, it is typical in a seller's market to receive numerous "backup" offers; they can proceed with another offer as soon as you back out.

        In a seller's market, and assuming you aren't introducing unnecessary delays, I wouldn't call this unethical. It's simply negotiation.

  • Yeah, it's fucking depressing. At least you guys still have reasonably priced houses. House values have tripled here in the last decade. Some areas have doubled just in the last 2 years. Owners are sitting on $700,000.00+ in equity. Rental owners are making an entire average income just because they happened to buy a house before we entered the bizarro timeline. My landlord owns 3 houses, 2 that she's renting. She's getting about $70,000 per year in equity from renters. Her mortgages are under $12,000 per year on each house. It must be nice to be just a few years older, or have become stable in your career just a few years earlier, and get rewarded with two million fucking dollars in make-believe house money. What's even more frustrating is knowing this is an unsustainable bubble that will eventually come crashing down. We've been taking it easy for a few years hoping some sanity would return to the market, but it just keeps going up. So that's a constant fear while looking, that it'll all come crashing down right after we finally buy something, and we'll be left holding the bag while the wealthy go find some other market to plunder.

  • I’m not sure what market you’re in or what your budget is, but the pains that you’re talking about (other than the actual price of the houses) can be mitigated by working with a competent realtor. You want someone who both knows that particular market and also knows how to identify comparable sales. That means knowing the neighborhoods you’re looking at as well as prices and trends.

    I’m not a realtor, but I did buy a house fairly recently in an extremely hot market. People here will bid $300k over asking and waive all contingencies. That’s just the nature of the market right now - at least in some areas.

    Basically, look at the asking price but use something like redfin or zillow to get their estimation of what the selling price of the house will be. The sites will also (try) to show you comparable houses. The sites tend to err on the high side with estimated values, but if you’re not in a market that’s open to bargain hunters it will be close.

    It’s a big step - probably bigger than it should be. I believe that the majority of American families have the majority of their net worth invested in their house.

    Closed bidding is how it’s always worked, though. Generally, the people selling the house will pick the top two or three offers and make a counter-offer or otherwise solicit additional offers. When a market is hot, they can additionally push for a quick closing. As a rule of thumb, you’ll probably spend less for houses that have been on the market for a while, but you can likely expect the same kind of issue when it comes time to sell it. If you buy in a desirable market where houses sell within a few weeks, you’ll again probably see that kind of thing when you sell. Bargain hunting in real estate - waiting for the chance to get a smart offer approved - can lead to you being frozen out - or worse, getting taken for a ride that more informed buyers are staying away from. It can be like buying stocks in that way, except with hundreds of thousands to millions on the line with a single investment.

    Anyway, find a realtor you can trust - possibly through a referral. Ask around at work or something if none of your friends has someone. It makes the process a lot smoother. This depends on the state, but the seller may pay the realtor’s commission, and in any case should be considered part of the cost of buying a house.

  • Same. What a time to be alive. Not to mention what the next generation is going to have to put up with.

  • I’m not sure if this is something that’s helpful, but I do want to give the advice that real estate really isn’t the best way to build wealth If you are very disciplined. Renting can be an even better way of building wealth.

    If you treat housing a service you pay for, buying a house has a higher overall cost if you include mortgage, taxes, insurance, repairs, and etc. Remember, mortgage is the least you'll pay, while rent is the most you'll pay.

    Imagine if your mortgage was 2k/mo, taxes, insurance, and home maintenance is another 500/mo, you can almost certainly find a house to rent for under that cost (let's say 2k/mo for example) unless you live in one of the exceptionally cheap places in the US where the price-to-rent ratio is low <15.

    Now also consider how you most likely needed a 20% down, and most of your payment goes towards interest initially for a mortgage.

    The tricky part is having the financial discipline to put away that extra 500/mo into investments. Mortgage FORCES you to save into an appreciating asset, most people will just blow that extra 500/mo onto other items. It sounds like you already are by maxing out your 401k, and I would also looking into maxing Roth IRA if you can. Home ownership isn't the only path towards wealth, though it is a means by which many people (conscious or not) force themselves into "saving".

88 comments