If you live in a bustling housing market, you’ve heard the horror stories about buying a home right now. Buyers with mortgages are outbid by cash buyers – in some cases, to the tune of hundreds of thousands of dollars.
The overwhelming demand for housing nationwide has made buying a home more of an Olympic sport than a major life decision. Despite these obstacles, I decided to sell my house and buy a new one in one of the most demanded housing markets in my state. It turned out to be a smart move for my bank account, but it didn’t happen without a few hurdles standing in the way.
If you’re thinking about buying a home, you might want to take a few notes on the lessons I’ve learned when buying a home in a booming real estate market.
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1. Unless you can pay cash for a house, you will get a higher bid – and that’s OK
We started looking for a new home to buy right after our home contract was signed, but we didn’t want to be outbid by cash buyers, so we avoided making offers on homes which we knew would had a lot of interest.
It wasn’t the best move. We might have had a chance to win the contracts on these houses, but we’ll never know because we haven’t tried. It would have been smarter for us to just accept that we could be outbid by cash buyers. It is happening all over the country.
So if you’re buying a home in a hot housing market but you’re worried about cash buyers rushing in, don’t be. Find the homes that are right for you and bid when you’re ready. Let fate take care of the rest. Otherwise, you distract yourself from homes that would otherwise have been a good choice.
2. It will be very difficult to find an inspector or an assessor.
Houses aren’t the only things in high demand. Everyone in the real estate industry is in high demand and it can be difficult to convince anyone to participate in your purchase.
Almost all of the inspectors or assessors we contacted were booked for a month or two, or even longer, which did not work with our schedule. This caused us to pay more for rushed appointments, and we had to network to find an inspector willing to push us to the front line.
If we had worked in advance, we could have saved hundreds of dollars in urgent inspection and appraisal costs – and maybe some stress-related headaches, too.
3. It’s easier than you might think to get sucked into paying too much for a house.
We had been conditioned to think that there was a line of buyers for the homes we wanted due to demand and a housing shortage. This has caused us to offer much more than the asking price for a house.
The house had just been listed and was located in a very desirable area. So our feeling was that we had to make a high offer with a 24 hour acceptance window to maximize the chances of it being accepted by the seller. We also wanted to lock it down before the cash buyers arrive.
But it didn’t work out as we expected. The seller wasn’t ready to commit, and our 24 hour lead time turned into a 72 hour lead time for the seller to see if any higher bids would come in. After all, our high bid told them the house was worth a lot more than they’d rated.
Fortunately, no further offers arrived. When the deadline came, the sellers came back to us with the signed contract for a price higher than the asking price. If we had waited a few days, if not a few hours, we might not have offered so much, but we found ourselves paying too much because of the hype.
4. A repairman will not be easy to update at this time.
You might think that buying a renovation is the way to land a deal in today’s housing market and save money, but it won’t be an easy route.
We bought a house in a good neighborhood that could be considered a nicer place to renovate. A lot of work has already been done, but the house needs new flooring to replace the warped laminate, and there are a few walls and closets we want to tear out to maximize the space. Our plan was to knock them out right after we moved in.
Well, it turns out these upgrades won’t be happening anytime soon. We have the money for the floors and the labor, but there is a shortage of materials. All of the flooring we tried to order has been out of stock for months, and we can’t even get the basics like paint we want.
If you anticipate a quick turnaround in your repair project, think again. You will probably be waiting a long time for materials and it will be difficult to find a contractor to take over your project. They are also in short supply.
So, if you go this route, be prepared to live in a house that you don’t particularly like for a while. Problems will annoy you, but there isn’t much you can do about it.
5. The fear of missing out shouldn’t stop you from doing an inspection.
You’ve probably heard or read the news stories about how buyers have to forgo inspections to get contracts on homes in hot market areas. We are in a market with a very low housing stock, but we still insisted on an inspection, and I’m glad we did.
If we had skipped the inspection, we would have been missing out on vital information about our home, like the fact that the boiler is original from the house and is leaking and rusty. This tends to happen with boilers built in the 1970s, so it wasn’t very surprising. But that was something we wanted to sort out by the vendors before we closed.
And the same goes for other DIY related issues before our contract. For example, there are sinks and tubs that are not installed correctly, and all faucets are installed so that the hot water side is cold and the cold side is hot. These are issues that would have arisen after we moved in, but they are also issues the seller should foot the bill for.
We are fortunate that the problems weren’t greater. It is not uncommon for older homes to have lead paint or other safety hazards that need to be addressed, so I will have any home I purchase inspected from now on to make sure that ‘she is sure. And you should too.