Buying in this market...

My husband and I have been looking for a house for close to 8 months now. It’s an extremely frustrating time to buy. We recently had fallen in love with a home, were paying full ask, had the inspection done and then received a call literally an hour after the inspection that they had received an offer that was higher than listing price. My husband and I refuse to get into bidding wars and overpay for any home so, broken-hearted and all we walked away. Besides the constant bidding wars and the sellers that refuse to stop showing their homes after you both agree upon a price I just feel that maybe we should back off until the market cools down? It makes me sick to keep paying for inspections and then risk losing that money. It’s so unfair how people are today. It’s like sellers want their homes to get into bidding wars. We are looking in desirable areas with great school districts because that is the most important thing to us but like I said, we refuse to overpay for any house. To top it off, I just feel that the prices that some people are listing their homes for are absurd. Some of these homes are so outdated, need some work, etc. would you back off and wait for the market to cool down or just keep trucking along? We feel defeated at this point. We thought this process was going to be exciting but it is far from it....

Buying in this market...

A house is worth what someone will pay for it. If houses are going for over asking, they’re worth it to someone.

We are also looking here and there and yes, prices are insane. Our only saving grace is that our house has also increased in value quite a bit so at least we’re coming out ahead in our own sale. Unfortunately, we are looking at houses that are $300-$400k more than what we will sell our house for and if the prices go up much more we will be priced out of the areas we want. So, we want the market to cool down and heat up at the same time which obviously isn’t possible!

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DH and I stopped looking.
House prices are just insane and so are the taxes.
We went to an appointment for a private showing a day before a scheduled open house, only to not have anyone answer the door. Seller went into contract the day before and the freaking agent didn't have the decency to call to cancel the appointment. So we wasted our time and our agent's time.

We are going back to our original plan to think about moving to South Carolina. We are planning our first trip there this fall just to get a feel for it. Then we'll plan more trips for the different seasons.
My dad has to like it too, as he will be moving with us.

I'm getting closer to retirement, and I don't want to keep working just to pay for a house on Long Island.
I have an apartment to sell, and that will more than pay for a decent sized house in South Carolina.

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Luckystar: This is exactly why I had said that I do not want to overpay for any house because at the end of the day, if we want to sell in a few years to move on we would either have to sell high and buy high again, or sell and hopefully make a little profit so that we could buy low. Overtime, yes market value does go up especially if you keep up & have updated your home but the likelihood of buying at the highest peak of the market and then making a decent profit is low. I look at people that bought at the peak of the market right before the last recession, most of them are still selling their homes for less than or equal to what they bought them for. It’s tough right now. We are looking for our forever home, however, you never know where life may take you so we still want to be smart about it. That’s why we adamantly refuse to get tangled up in these bidding wars right now.

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I actually think that the market is cooling off (as much as it ever will on Long Island)! Mortgage rates are up from a year ago and expected to keep rising through at least the end of the year.

But generally, the LI market is really always "hot." It's a sellers market on LI because inventory is tight, especially in good neighborhoods, so there are more people who want to buy than houses available. It also depends on your price range because low-to mid-range will always be tighter than a higher range.

My advice is to stick with it. How much over asking did the house go for that you just lost after inspection? If you loved the house, I probably would have gone up in price, assuming it was still in your budget. If you loved the house, really wanted it, and were already invested in it, then it wouldn't be overpaying for a house.

It stinks that the sellers kept showing the house after they accepted your bid, but they have every right to. How long did you wait to do the inspection?

FWIW, we recently closed on a house that I think we definitely could have gotten for less money. Plus, we're putting a lot more money into the house. But to us, it's worth it. We love the house, love the neighborhood and want to be there for a long time. So while we may have "overpaid" in some respects, we don't feel like we did. We got the house we wanted. Try to go into it with the same mentality.

Good luck!

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Buying in this market...

I would wait until the market cools or as you look, take note in how fast houses are going etc. I too know I bought low and now houses are going for $100k more if not more where I bought for the same house. We have looked to sell and don’t want to because we don’t want this market to burst and be under water. I don’t think houses will go less then what we paid (or I hope not). I try and be very frugal with buying a house and I felt very strongly of sticking to a certain price and not budging when we looked... took almost 2 years but it worked for us. If you feel comfortable where you are renting and don’t need a larger place right now, I would keep looking, keep tracking the market and houses and if you find a house you love, I would see if you can get something written if you do an inspection and they take a higher offer, you want the seller to refund you (idk if that’s a thing) but we asked or sellers to cancel their open house if they committed to our price and we had the inspection and they did. Good luck!!

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My husband and I looked for 3 YEARS. We went into a bidding war and lost over 3k. The house next door went on the market shortly after and we paid 70k over ask. Didn’t even put an offer. We asked the seller for their take down number and just gave it to them.

Monday 9pm house listed
Tuesday 6pm saw house
Wednesday 9am put in “offer”
Thursday accepted
Saturday inspection

Our offer also stated that we will give them what they want but they cannot show the house to anyone else.

Did we over pay??? YES do we regret it? NO!

Finding your dream home or a home in the exact neighborhood you want is not easy. 20,30,40,50k over a 30 year loan is nothing.

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We looked over the coarse of years and entered the process with a similar mindset. We didn’t want to overpay on a home... and yet were constantly getting beat out by bidding wars and all cash offers (north shore buyers don’t play ) It also seemed like the day a home would come on the market if we didn’t see it immediately, it was gone.

Well, it took time and an education to realize if we wanted to play in the big league we had to up our game. We found ourselves an agent who was an absolute shark. She was serious about helping us find a home and informed us of listings a couple weeks before they even hit the market so we could arrange to see it ASAP. The house we have now, we ended up going into a bidding war with 4 other people. My dad joked that every time I called with an update, I was spending more money. Anyway, within 24 hours it went to highest and best and we got the house by the skin of our teeth (literally within a few thousand dollars). Once the appraisal happened we were pleasantly surprised to see it appraised for much MORE than the price we agreed on, and since then the value of the homes in my community skyrocketed so much that we actually got a deal relative to what much smaller, less updated homes on our block are selling for.

As someone on this thread posted, the value of a home is set by what people are willing to pay for it. We LOVE our house so much and happens to buy in a hot area. You just have to do what works for you. By the time we bought our house, we were extremely well educated on what we wanted and what else was out there. We got the perfect home for us and I’m wishing the same for you. Hang in there,

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I agree with much of what has been posted.

I always tell my clients, a house is much more than a financial investment (assuming a buyer is looking to purchase a primary residence, not an investment property). It's where you live your life, make your home, raise your family.

I think it's a mistake, and short-sighted, to worry about what a market will be if and when you want to sell. I bought my house in mid-2008. Market was coming down from it's peak in 2005/2006, but still high. The sellers wanted a bit more than we thought it was worth, just in terms of looking at comps. But we wanted the house, could well afford the house, and it was perfect for us. So we paid their price and bought it. In 2010/2011, the market was rock bottom and our house was worth less than what we paid. Now, it would be worth at least what we paid, maybe more (and we really haven't done any major renovations or improvements). But we love our house, and we never regret buying it, because this is where we live, entertain, raise our son. I have no idea what the market will be if we ever decide to sell, and granted, we plan to stay long-term, but it's just to hard to predict. If you want to buy a home, you just have to educate yourself on the CURRENT market and go from there.

I also agree that seller's will often continue to show their home until you are in contract (or at least until the home inspection is done), and that is true in any market. In our area, neither party has anything but a good faith verbal agreement to proceed until the contract is signed. Nothing is legally binding until then. So just like the seller is free to consider/take better offers until they sign the contract, you as the buyer are free to change your mind until you sign.

In this market, I actually find it is less common in the "hot areas" that the seller keeps showing because often, they are getting 10-15 offers in the first few days. They get worn out by the sheer volume of showings and they feel they are in a good spot with many back up offers if the first one falls through. But buyer's remorse is quite common in this fast-paced market where a buyer makes a snap decision and often goes in well over asking. I just had a buyer get a house in Wantagh Woods that we were originally outbid on. But we submitted our offer and a week later, I get a call from the listing agent that the first deal fell through. The buyer got cold feet, tried to renegotiate the price, and my buyers were able to swoop in and get it.

As a buyer, if you have an accepted offer, you really have to act fast to get your inspector in (and not nickel and dime on inspection items), and then get your attorney moving with the contract. The sooner you get into contract, the better.

It does sound like the seller of the house you had the first accepted offer on was fair to you in letting your know that a higher offer came in, and giving you the opportunity to come up before moving on to that offer. I find sellers will often not want to rock the boat if they have a good solid buyer for just a couple of thousand dollars. But if another offer comes in that is significantly higher or the first buyers appear to be dragging their feet or overreaching on home inspection items (asking for repairs, credits, etc. is technically renegotiating the terms of the accepted offer), then a seller is more apt to take the second deal.

You definitely shouldn't get "caught up" in bidding wars so that you wind up paying more than you want to or can afford to. However, I tell my buyers that if you refuse to engage in a multiple offer situation, then you are not getting a house in this market. Period. It's really that simple - you have to be in it to win it. It doesn't mean anyone forces you to do what you don't want to, but just that you decide on your top price, come up with your offer strategy, and go for it.

If you could and would pay the price the seller asked you to come up to, then you just have to ask yourself, is it worth it to come up x dollars? Or would I rather lose the house entirely? Only you can answer that. But I do find buyers tend to lose sight of the big picture or want to walk away on principle. But you aren't "showing the seller" anything - they probably have 5 more buyers ready to take that house. You are just losing the house! So you don't want to cut off your nose despite your face, especially if the numbers you are quibbling over are minimal.

I recently had a buyer ready to walk from a condo unit he loved over $5K. I explained that, with his minimum down payment, it's like $165 difference in down payment. And $5K is about $25-30 per month more in the mortgage payment. Put in those terms, he agreed it was silly to lose out on a condo when he could well afford to go up a little.

Do you have a buyer's agent? That is really helpful to navigate this tough market. It is undoubtedly stressful -- often buyers do find it helpful to take a break, even for a few weeks, after losing a house or having a bad experience with an offer. Going back with a clear head and a more positive attitude can make all of the difference. But before you decide to walk away for good, just remember why you wanted to buy a house in the first place and consider that people are successfully buying houses in this market, even if it takes a bit longer. You just have to know the process and be realistic about the fact that in most areas, buyers do not have a lot of negotiating leverage. But that doesn't mean it's not a good time to buy. Rates are still relatively low (despite having gone up a bit) and as I said at the outset, there are many other reasons to buy a home aside from financial investment.

Good luck with you decision!

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Thank you everyone for your replies! Someone posted that it took 3 years before they found their home, this makes me feel better because sometimes I wonder if it’s just us being too picky. It’s definitely a tough market and we know what we want and where we want to live so I guess that’s why it’s been taking us a little longer than usual. In regards to the house that we recently lost due to the bidding war, someone asked how long we waited before we had the inspection.... we moved fast because we know how this market is and we didn’t want to lose the house. So, we had the Engineer in that house within 2 days and that was only because he couldn’t fit us into his schedule the very next day. The day that we saw that house we offered full listing price before we even left, with that, we asked that they please cancel their open house if we gave them full ask. Which of course they didn’t, hence we lost the house an hour after our inspection was complete. It was just a crappy situation. And we are still upset about it so I’m kind of taking a break for now. I need a week or two before I jump back into the game at least.

Buying in this market...

No seller will take a house off the market or cancel open houses with only an accepted offer. So many things can happen before contracts are signed so really why would they. It’s commmon and not market driven.

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Just wanted to mention with interest rates going up and expected to continue increasing it may make sense to slightly "Overpay" as you put it as opposed to waiting too long as your budget will go down as rates go up.
Is someone helping you with comps? I'm curious what you are basing the overpaying idea on.

Buying in this market...

I share your frustration completely. We have been looking for 6 months and lost our on our favorite houses. We are finally in the middle of moving toward a contract right now but this is the 7th house we bid on and it is not even my "dream" house. We wanted to be settled before school began so we needed to pick something in the area we wanted and just go with it. This market has been tough, we had bid $40K over asking on a house we loved, to be outbid by a cash offer $55K over. Its craziness out there. I have found most agents and owners to stand by their word for the most part as far as having accepted offers and being a backup offer. I know we are buying high but we are also selling high so it evens out in a way. Good Luck!

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To answer a few questions, yes we are putting down 20%, using a conventional loan, have no contingencies (nothing to sell) and we already have a “pre-commitment” not just a “pre-approval”. This means that our documents were already reviewed by the underwriters. Our terms are solid at this point. My mortgage guy took this route with us because he said at the end of the day if it’s between us having a pre-commitment and someone else only having a pre-approval the odds that they would choose us is greater.

We are mainly looking in the Shoreham-Wading river area. We really want that school district, plus my sister lives there with her family so we want to be close to them. However, it is such a hot area so we have been slightly venturing out to the neighboring north shore towns but our hearts are really set on Shoreham-Wading river.

Thanks again everyone for all the advice, insight and encouragement!