Buying a home and getting discouraged

Hello

I am sorry if this is a dumb question,this is all new to DH and I

We have been looking for a house for a few months now. Got are pre approval and have been going every weekend and during the week to see houses with our agent

We have now seen 33 houses. Some were good. Most not so good lol. 3 we loved. (3 over a few months)

We figure our max we can pay is 420,000( not including closing etc. We have that aside)

First house we loved cost 450,000. We offered 420 and they came back saying not even close. So that was that

Second house which was perfect. We loved it. It was 400,000. We put the offer in for the asking price. Got a call later that day. No go. They have other people interested and will pay more. It sucked bc we figured offering what they asked we would get it. I later heard it sold for 440!!!!

3rd house cost 458,000. Again put offer in 420,000
Just got the call he is not taking anything less Han asking price

I know these things take a while but I thought there was more wheeling and dealing and not this is the price and that's all I'm taking

Is this just part of the process and we should get use to it Or should we stick to houses at 400,000 only so we can go 20k above asking

Sorry so long.

Re: Buying a home and getting discouraged

I am in the same boat so I can empathize. I have no idea what to tell you because I can't figure it out myself. We have probably seen 30 houses too. It's so frustrating. Everyone keeps saying "don't settle" but I'm not finding anything. It's either the taxes make the house over our head or the house needs A LOT of work and quite frankly I think people are over paying for houses. Good luck. Hope you find something soon

Re: Buying a home and getting discouraged

Thank you!! I hope you find the right one too!

Re: Buying a home and getting discouraged

I love following the RE posts.

I know for many areas right now, especially post-Sandy, there is more demand and less supply.

Even the LIF REAs have indicated that.

I feel for you guys though.

My SIL sold her house in Seaford (not by the water) recently and had two offers and it wasn't even on the market a week.

The lady she went with offered all cash up front. She said she felt bad because the other couple was a young family just starting out and the guy was a 9/11 survivor.

Good luck though. It's a very stressful process that never goes away once you have the house.

Buying a home and getting discouraged

When we were looking we looked at soooo many houses. I would say we looked at over 60 homes, and that is low balling it. We would put offers in on homes we weren't in love with because we were getting tired of the process. All of our offers were accepted, or denied at first then countered, sometimes the seller came back a week later and came down to our offer. After the offers were accepted we never went through with the houses, it just didn't feel right. That happed with about 3 or 4 houses. This was 5 years ago though.
I will say that our max budget was what it was. We bought our house for 15k more. It had everything we wanted, and we couldn't pass it up. In reality 15k isn't going to affect your monthly payment, so if you LOVE a house, see if that extra 50 dollars a month is really going to break the bank. If it is, then you probably should be looking below what your max is right now, because homes cost a lot of money after you buy them too.

Re: Buying a home and getting discouraged

First, I am sorry you are so discouraged! I believe house hunting should be fun and exciting! That's part of the reason I switched my career into real estate, and I love working with buyers. But there are some stresses along the way, inevitably. So !

But a few other things:

1. I don't know if your agent sat you down and counseled you on the state of the market before you started searching, but I usually try to have a sit-down meeting with my buyers BEFORE we start looking. At that meeting, I go over the entire process and try to set expectations appropriately (as well as hear the buyers out on their wants/needs). But today's real estate market has become very competitive and prices have risen and are rising in many areas of Long Island. I know that for many towns, houses that are priced between $350K and $450K are in high demand and flying off the shelves.

So when you make an offer, it's important to know (i) the comps in the area (so you know if the house is priced correctly, dead on market value, or high, or low -- sometimes people actually price their homes a little low with hopes of getting multiple offers!), (ii) the market in the area (how fast are these types of homes selling? will this be a hot house?), and (iii) how your offer will be presented.. you want to make sure your realtor isn't just throwing out a number but painting a desirable picture of you as buyers (and providing all info on your terms, your preapproval, etc. upfront).

Homes are selling for full asking and above in this market. Not every home, but homes that are priced right and in a good area. Inventory was really down for awhile, and there's a pent up demand. So wheeling and dealing may not happen. It all depends on how fair the asking price is to start (and of course, how realistic and motivated the seller is, which you CAN'T control!).

2) Also, I agree with a previous poster about looking at your budget in terms of monthly payment, not price. Now, if you are preapproved for $420K and that's it, then that's it. But if you are preapproved for $450K and are trying to keep it at $420K, is that because you worked out the monthly payment numbers and don't feel comfortable going beyond that? If not, you probably want to do that. I would never advocate financially stretching yourself too thin. I NEVER want anyone to get in over their heads. But you do have to look at the total picture. It's usually roughly $5 per month for every $1K in your mortgage payment (ballpark numbers here). So if you went up to $430K instead of $420K, you would be adding roughly $50/month to your monthly payment. Also, look at the overall picture in that if you are willing to pay $420K for a house with $11K in taxes, if you find a house you love with $9K in taxes, you have a bit more room then. Most mortgage lenders have no problem crunching the numbers for you on a particular house so you can see what the monthly cost will be (including pmi, if that's a factor for you), and make sure it's in your comfort zone. But better to take that approach rather than getting artificially hung up on price as the sole financial factor.

3) It's important to be realistic. If the budget can't change, then you may need to either be more flexible about the location (town, school district, etc.) where you are looking OR be more open minded about the condition of the house, if we are talking about cosmetic improvements (or the size of the house, or upgrades, etc.). The popular advice is "don't settle," and I agree this is a big purchase. But if you've seen 60 houses, then you have a good idea of what your dollar will buy where you are looking to buy. No house is perfect, unless you custom build it yourself with an unlimited budget. So while you should take your time and find "the one," you also have to understand that no one gets everything on their list. (And I sell everything from one bedroom co-ops to $1 million+ homes!) Settling is rushing into a purchase without educating yourself on the market, seeing all of your options, etc. Being realistic is assessing what your options are and then choosing the best one, even if it's not "ideal." When compromising, I always advise my clients to look at things that can be changed (e.g., an ugly bathroom, an unfinished basement) versus things that can't (small yard, busy street, etc.).

Hope this helps a little! Hang in there... I am sure you will find a great house.

Re: Buying a home and getting discouraged

I hear ya! I was in the same position in our house hunt 4 years ago. At the time we were facing a ton of bidding wars. A lot of houses ended up going over asking. We did end up spending a little bit more than we wanted to when we bid on our house because we were just so tired of getting out bid.

Buying a home and getting discouraged

Hang in there. House hunting was one of the most stressful times for me.

We lost a few houses along the way. My advice is don;t look at houses that are over your budget. It sets you up for not getting them. While yes people will negotiate it won't be that much.

Message edited 5/19/2014 9:48:23 AM.

Re: Buying a home and getting discouraged

Thanks everyone!

@christine. She did go over everything and said the area we want the most is a "hot" area so maybe we will look in another area

She went over all the numbers in regards how much extra per month for every 10k etc and going up we could do mortgage per month wise

But it's the 20 percent down that would go up that be so much more.

We have enough so budget 20 percent down on a 420 house and if we go above it,it dips into emergency money

Re: Buying a home and getting discouraged

I wonder if your agent is pulling comps for you before you put an offer in on a house? That's really important so you know if you're in the ballpark of what the house is actually valued at. It obviously can be sold for more, but at least it gives you a starting point for what you should be offering.

Also, in the case of house 2, if you loved it and the sellers didn't accept the $400k offer, did you try to up your offer? Again, your agent should coach you through this. But sometimes if sellers see you come up, they might see your interest level and and least negotiate with you. (Not sure that you would've gone up enough to get the house, but it's a game and you gotta be in it to win it!)

For house #3, if your max is really $420, I'd question why your agent is taking you to see a house at $458k. Assuming it was new to the market, then I'd also assume the house would be sold for pretty close to that, since the market has been really tight recently. On the other hand, if the house has been sitting for a year, then it might make sense.

In general, I'd also say you have to give yourself some wiggle room when making an offer. I think it might be tough to get a house when you go in initially with your best and final offer (ie: when your initial offer is $420k and you have no room for counters). So maybe you're looking at houses priced too high for your budget?

Buying a house can get frustrating, for sure. But it should really be fun. As Christine said, you may want to re-evaluate your budget to see if you actually can go over $420k. Or you may want to look at houses priced lower that might fit more easily into your budget. IMO, I might also re-evaluate your agent and make sure you're getting the support you need from that side, as well.

Re: Buying a home and getting discouraged

Buying a home and getting discouraged

Also if you are dealing with a hot market area your buyer's agent really needs to be on the ball and sending you listings IMMEDIATELY when they come online. Your agent needs to be willing to meet you on short notice to see these properties. If your agent is not willing to do this or is too busy or has other clients, then that's not good for you.

I just bought a house in an extremely hot market out of state. I ended up using an agent that I would say was "newer to the game" and probably didn't have the experience that say some of the more seasoned agents had. I just told her to send me the listings immediately when they come up as I did the majority of the research myself. Since she was more of a rookie agent, she had more flexibility and time as she got me into places on extremely short notice. She went in and saw properties for me first hand immediately when they went on the market because she had the time.

If you are having problems finding a house, then try this advice. Work with an agent in the area you are looking in that works for the LARGEST real estate company that frequently has the most new listings in the area you are looking in. This will give you "insider" access to many of the listings through your agent. I will tell you for fact that agents prefer to work with agents within their own company and these agents are always in cahoots with each other and always prefer to keep sales in house (of course every RE will say otherwise - but I have seen this first hand on MANY deals). So if the majority of the listings in the area you are looking in are with Century 21, then get a Century 21 agent.

Re: Buying a home and getting discouraged

Ave1024 - I think you are unfairly characterizing what I said.

I take the time to try to advise posters on here the way I would advise my own clients. It's sometimes difficult, because I don't have all of the facts about the situation, so I am just offering up some things that the OP may want to consider (and discuss with her agent, mortgage lender, etc.). My approach is to give buyers information, and empower them to make their own decisions. And I think all of my clients who have successfully and happily bought homes through me would agree!

I am not suggesting that she SHOULD increase her budget, and I am definitely not suggesting that she "overpay" for a home. Of course, price matters when it comes to determining fair market value -- and factors into appraisals, building equity, etc.

But in my experience, buyers often get a preapproval from a lender without getting any kind of counseling from the lender. And from the standpoint of determining AFFORDABILITY to the buyer, price is not really the issue. It's monthly payment. So I think any buyer is well-advised to speak to their mortgage lender and say, if I buy a house at x price with y amount of taxes at the interest rate I qualify for (and with any pmi factored in), what would it cost me per month? I think the best approach, especially for a first-time buyer, is to set a monthly budget for mortgage payment (principal, interest, taxes, and insurance), and back into it. So if someone is looking to buy in Island Trees SD where the taxes are around $8K, on average, versus Levittown SD, where the taxes are around $11K on average, then yes, they can go up a bit on price and still stay within their monthly budget. Taxes of course will go up, and that's true wherever you buy. But I am simply making the point that a lot of factors go into the monthly payment, and that should be the guide for affordability, not price. And I stand by this advice.

Sometimes buyers who are preapproved for $500K but say "I want to keep it at $400K" find a dream home for $425K and are pleasantly surprised at what it will cost them per month to own the $425K home and feel they can well afford it. In that case, good for them. If it's not affordable to go to the $425K, or they don't want to go there, or the comps show the house is only worth $350K, then they don't have to buy it! But it helps to know in concrete terms what they are considering, rather than just get hung up on "$400K budget" if that is an arbitrary number they settled on.

I actually think the advice to the OP to "strengthen her position" by increasing her down payment is ill advised. From a seller's standpoint, the down payment isn't all that important, unless they are comparing a 3.5% down buyer with a 20% down buyer or a 20% buyer with a 50% down buyer. But the seller can really care less if the buyer has 10% or 15%... they are more swayed by what's going into their pocket (whether it's coming from the bank or the buyer's cash).

I think for a buyer, waiting and saving would be worth it if you are close to 20% down, and can then avoid any pmi. Or if you have 3.5%, but if you save 5% you can go conventional v. FHA. But otherwise, if a buyer waits a year or two to save, they may find themselves in the same (or worse) position if prices have continued to rise and if it's rates go up a bit. Plus, some people have lifestyle considerations that make it difficult to wait.

Re: Buying a home and getting discouraged

Re: Buying a home and getting discouraged

If the appraisal comes in low the buyer should rethink their offer. Buyers should always have a clause in their contract to not purchase a house above appraisal value.

Re: Buying a home and getting discouraged

Thanks all

To answer some questions yea she went over the comps with us and for the last one the comps were way below the asking price so we figured we had room to budge

For second house we did offer back more after we offered the asking. It was still not enough

Thanks again,looks like we are waiting it out

Buying a home and getting discouraged

No advice, just encouragement! Hang in there and have faith that your house is out there.

We were hunting this time last year and found our house fairly quickly but because we actually looking for a home to remodel. We only put 10% down but the market has changed alot since last spring, my friends who are looking are also having a tough time. GOOD LUCK.

Re: Buying a home and getting discouraged

Re: Buying a home and getting discouraged

I'm sorry you're dealing with this it's so easy to become discouraged.

We saw close to 50 homes when we were looking, lost out on 3 of them - one because we were outbid by an all cash offer above price, another because of contract issues, and another because of another bidding war. When we found the house we're in now, it all just felt right. All the contract stuff went smoothly, we got the price we wanted, etc. so in a way, it was all worth it in the end. It definately didn't feel that way when we were looking!

Re: Buying a home and getting discouraged

Re: Buying a home and getting discouraged

We are in a similar situation as OP - we planned to buy last year but our finances weren't as strong as I would have wanted them to be for the homes I want (mostly north shore nassau)., We have been looking for a 4 bedroom/2 bath for almost a year now - we have seen around 100 homes at Open Houses, and a few by realtor appointment if they really catch our eye. We have not formally made any offers yet because we are waiting for a buyer to make an offer on our current home. We are fortunate not to require the sale of our current house to get into a new one but we simply do not have the budget to carry property taxes on 2 houses for more than 8 months, so our plan is to list on MLS soon (actually waiting for DH to finish power washing our rear deck so the outside pictures can be taken), and once our MLSLI listing goes live, we hope to get interest from potential buyers. Our biggest problem in selling is that our area was hit hard by Sandy and our home now requires flood insurance (it did not when DH bought it in 2004 )

I agree with Ave1024 on the advice above, especially as it concerns monthly payment. I dont think thats really an accurate method of measuring one's affordability for a home. At the end of the day, your Note on the mortgage will still say you owe $ 336,000 on the house - and even if its locked at 4.25% on a 30 year fixed, its still $336K. Assuming $12K/yr taxes and homeowners' ins, thats a good monthly nut of over $ 2,800/month. Not sure if this will help - but even though DH and I were preapproved for up to $600K mortgage, we do not plan to buy a home at that price only because we need to sleep at night knowing that if I lost my job, or if DH lost his, at least ONE income could carry the entire mortgage payment.

We will most likely be in stiff competition w/ other buyers for homes in the $400-550K range, and we have a good downpayment ($200K) ready in our accounts so we may lose out to all cash buyers. Ideally, if we do not buy this year - we will definitiely do so by next year, I already told DH we should be able to have $250K saved up so we will even be in a better position to negotiate on those homes, since we can even make offers on $400K homes and then carry a mortgage of only $150K.

Message edited 5/19/2014 3:11:36 PM.

Re: Buying a home and getting discouraged

I feel your pain. The housing market right now is brutal. If houses are priced right they go fast. We put strong offers on so many houses and were either outbid or the seller went with a more desirable buyer. Do you have 20% to put down? We were using the FHA loan and that's what seemed to be our downfall. In the end we found a house that was for sale by owner. We got lucky because that house was about 100k less than what we were originally looking at so we were able to do 10% down and not use a FHA loan. I know it seems like you'll never find your house but the perfect house for you is out there

Re: Buying a home and getting discouraged

Re: Buying a home and getting discouraged

I just want to say I totally feel your pain. I've been losing hope myself. We've been looking for 2 years, but this past march have started working with a different realtor. We haven't seen anything we love until a few weeks ago. We lost the house to 5k more from another buyer even though we were the better choice. We just couldn't come up anymore. Everything I see is crap and for $425k you'd think you can get something nice. It just sucks!

Re: Buying a home and getting discouraged