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Trying to Purchase a Home in COVID-19 - Continually Lose Out, with Offers over Asking Price?

Sugarcubesea

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Hi Everyone,

I have now bid on over 20 homes, all over asking price and still can not get chosen as the winner. People are offering $25K over asking price on a home that will never appraise that high based on comps.

I don't want to put my house on the market as I want to ensure I have a place to move to, as the homes in my sub have all sold within 5 days of listing...


I'm looking for a condo with a pool and amenities
or
a small ranch home (with little to no maintenance) with lake access or lake view

I'm in MI, in the western part of the metro detroit area, any suggestions from my TUG friends?
 
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Conventional loans have risen and actually come with less strict appraisal and property requirements than do FHA, VA or USDA loans.

As higher priced sales goes up, property values go up. this will affect the entire market. Many lenders work with their own appraisers that they know will appraise a property on the high, so to speak, end of the spectrum.

I have several friends looking to buy and a certain house may be there one day and gone the next. Not a good time buy a home however, an excellent time to sell one. ;)
 

Panina

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Are there any new construction you can get? I know the frustration as all the good stuff in Florida was gone in a day. Even here in SC homes a home in my community on my block sold in one day. I think people just are willing to pay more to move on quickly and have a home where they want. Priorities have changed.

I am glad I found new construction but even in the few days I was deciding inventory reduced significantly.
 

bogey21

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It may not be what you are looking for but buying new construction from the builder seems to have a level of certainty...

George
 

easyrider

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When a person has lost out on so many offers it is usually the realtor they are using is not so good or they are not using a realtor at all.

Bill
 

TravelTime

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When a person has lost out on so many offers it is usually the realtor they are using is not so good or they are not using a realtor at all.

Bill
Or he is bidding too low. If he says homes are going for $25K over asking, then he needs to bid more to get one.
 

klpca

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Our market is not your market so ymmv but here is what is happening here. A fixer went on the market and had 28 full price or higher CASH offers. It was priced super low to get everyone into a buying frenzy. It sold for about 20% above asking - to one of the cash offers. (We have friends trying to buy right now so we get all of the juicy details). Cash is king.

1. Are you working with a well connected agent? They can tell you about places before they hit the market so you can get in ahead of other buyers.
2. Could you sell your house with a 30 day or 60 day rent back clause? I suspect that sellers aren't even considering contingent offers right now. They don't really have to when there are multiple non-contingent offers.
3. Consider buying during the holidays. Those are your serious sellers. They need to move or they wouldn't list during that time of year. This would work better for you if you were renting back from your buyers. Sellers love a fast closing - less time for things to go south.
4. When you write the letter that gets included in the offer, make sure that the seller knows how much you love their house. They have an emotional attachment to their home and would like to sell to someone who feels the same (even if you are going to gut it shortly after you move in).
5. Also, time to pare down your contingencies when making your offer. Make it as few as possible.
6. If you really love a place don't lose it over a few thousand $$. When we bought the condo for our daughter to live in we bumped up our offer by $3k, which essentially got clawed back during the HOA financials inspection. (Our two contingencies were inspection and HOA financials - and the HOA is poorly funded. Based upon what we have heard from the HOA meetings I think that we are looking at a special assessment shortly). So in the end we paid less than we offered. You can't negotiate if your offer isn't accepted. The time to be economical is during subsequent negotiations, not on your initial offer. You are offering based upon what you see. You negotiate upon the factual condition once you have had an inspection completed. If everything is as advertised then the offer was fair, as it stands. If there were undisclosed issues, you can account for those in your credit negotiations.

Our friends finally got a house in escrow. They were the first ones to see it on the day that it hit the market, and and the sellers agent and the buyers agent got along well during the initial phone conversation. The sellers agent also liked our friend when he went to look at it. They submitted an offer (of course asking+) the same afternoon that they saw the house. There were two other offers. Our friends think that the agent liking them may have been the tiebreaker when choosing between offers, but who knows.

Good luck in this crazy market!
 
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Brett

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Hi Everyone,

I have now bid on over 20 homes, all over asking price and still can not get chosen as the winner. People are offering $25K over asking price on a home that will never appraise that high based on comps.

I don't want to put my house on the market as I want to ensure I have a place to move to, as the homes in my sub have all sold within 5 days of listing...


I'm looking for a condo with a pool and amenities
or
a small ranch home (with little to no maintenance) with lake access or lake view

I'm in MI, in the western part of the metro detroit area, any suggestions from my TUG friends?
My mother's condo in northern Virginia has been on the market for several months - only one offer
 

WinniWoman

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Wow. I cannot believe you are still at this. Must be so frustrating! If I recall correctly you are selling your house to reduce expenses so that when you finally retire you can move to Florida.

What about moving into a rental? I have no clue what that market is like where you live but maybe that could be an option.

I know an issue with new construction is that, too, is very expensive.
 

Patri

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Same is true in my area. Inventory is at 50%. Homes are going over asking with multiple offers. My son lost out on one they bid on. The caveat is that, at least here, realtors think it is a short term sellers market. By spring they expect many more wary sellers (because of covid) to put their homes on the market. Then it will become a buyers market. I want my son to wait. The houses going today will be hard-pressed to be worth even the same $ in the future.
I doubt it is any realtor's fault. People should not be encouraged to bid more than a house is truly worth in the long haul, or what they can afford.
 

Fredflintstone

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My suggestion is to wait about 12 months. Almost 10 percent of mortgages are in forebearance. Once these extensions are gone, many will not be able to pay the back payments and will be foreclosed on. This means the supply will outstrip the demand and prices will lower.


Sent from my iPad using Tapatalk
 

klpca

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My suggestion is to wait about 12 months. Almost 10 percent of mortgages are in forebearance. Once these extensions are gone, many will not be able to pay the back payments and will be foreclosed on. This means the supply will outstrip the demand and prices will lower.


Sent from my iPad using Tapatalk
Let's hope. The prices in this market are just unbelievable. If you are in it for the long haul you are probably all right. If you are trying to flip something I would be worried.
 

Fredflintstone

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Let's hope. The prices in this market are just unbelievable. If you are in it for the long haul you are probably all right. If you are trying to flip something I would be worried.
I agree. The only question is have is whether increased prices are due to the erosion of the dollar due to unlimited creation? If so, it’s a hedge against inflation and you will benefit over the long haul.


Sent from my iPad using Tapatalk
 

cgeidl

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The prices in our area have gone up slowly and some are not back to the 2008 high. Even so the market is now rising quickly for the first time in years. Large homes which were not popular suddenly are becoming the wanted product especially for,people finding they will be able to,work from home. Techies moving from renting in the city to the suburbs want a gym and video room and are finding the suburbs very desirable especially in the San Francisco Bay Area. I would
our 5 bedroom rental but the 2.25 % interest level provides a large profit.Just looked At the cost of a total cost of a 30: $362000 loan at 2.25% loan to be a bit over $500000. The amount invested in stocks at a 10% return would be 5 1/2 million dollars. Not a bad loan to keep.
 

am1

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I am waiting for sales while watching my income and assets decline.
 

tiel

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Our townhouse sold in 1.5 hours after hitting the market. Full asking price, CASH, no contingencies, no inspections. We accepted immediately. They didn’t even do a walkthrough before settlement. We thought the buyers were crazy, but they just wanted THAT house, and we just wanted it sold so we could move on. Everybody was happy. But the CASH aspect sealed the deal for us.
 

Panina

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My suggestion is to wait about 12 months. Almost 10 percent of mortgages are in forebearance. Once these extensions are gone, many will not be able to pay the back payments and will be foreclosed on. This means the supply will outstrip the demand and prices will lower.


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Taking a mortgage that needs to be factored in too. The rates are so low instead of paying for a house in cash you can do better investing it.
 

Fredflintstone

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Taking a mortgage that needs to be factored in too. The rates are so low instead of paying for a house in cash you can do better investing it.
Yes, I agree for now. However, investments may collapse again. IMO, it’s being propped by the Fed. Once the fed cuts the strings ...



In that case, oh my. However, with possible inflation one of the best things to be in is real estate. As inflation rises, so do home values.

Also, I do believe rates will remain this low for awhile given the deficits. So, there is time to buy.


Sent from my iPad using Tapatalk
 

klpca

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I agree. The only question is have is whether increased prices are due to the erosion of the dollar due to unlimited creation? If so, it’s a hedge against inflation and you will benefit over the long haul.


Sent from my iPad using Tapatalk
In our market it is driven by a housing shortage, especially in the starter home category. Almost all of the new build inventory are either huge, expensive homes on postage stamp lots or high density condos and townhomes. No small single family homes anywhere. So if you are looking for a normal single family you have to look at existing inventory - and that is a fixed amount of inventory.
 

Sugarcubesea

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Are there any new construction you can get? I know the frustration as all the good stuff in Florida was gone in a day. Even here in SC homes a home in my community on my block sold in one day. I think people just are willing to pay more to move on quickly and have a home where they want. Priorities have changed.

I am glad I found new construction but even in the few days I was deciding inventory reduced significantly.
It may not be what you are looking for but buying new construction from the builder seems to have a level of certainty...

George
The only new construction going up anywhere close to where I work is starting at $450K as the base and goes up passed $700K, I'm trying to downsize and purchase a smaller home or condo and save more money for retirement vs paying a mortgage anymore...I just wish there were ranch new contrction going up in MI, everything is large and two story with the bedrooms on the 2nd floor...

I love the house your getting panina, and wish something all on one floor was available in MI
 

Sugarcubesea

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When a person has lost out on so many offers it is usually the realtor they are using is not so good or they are not using a realtor at all.

Bill
I'm using a relator that I have used in the past and he literally text me in the middle of the night when he see's something I will like and schedules a showing before I even see the listing pop....
 

Sugarcubesea

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Our market is not your market so ymmv but here is what is happening here. A fixer went on the market and had 28 full price or higher CASH offers. It was priced super low to get everyone into a buying frenzy. It sold for about 20% above asking - to one of the cash offers. (We have friends trying to buy right now so we get all of the juicy details). Cash is king.

1. Are you working with a well connected agent? They can tell you about places before they hit the market so you can get in ahead of other buyers.
2. Could you sell your house with a 30 day or 60 day rent back clause? I suspect that sellers aren't even considering contingent offers right now. They don't really have to when there are multiple non-contingent offers.
3. Consider buying during the holidays. Those are your serious sellers. They need to move or they wouldn't list during that time of year. This would work better for you if you were renting back from your buyers. Sellers love a fast closing - less time for things to go south.
4. When you write the letter that gets included in the offer, make sure that the seller knows how much you love their house. They have an emotional attachment to their home and would like to sell to someone who feels the same (even if you are going to gut it shortly after you move in).
5. Also, time to pare down your contingencies when making your offer. Make it as few as possible.
6. If you really love a place don't lose it over a few thousand $$. When we bought the condo for our daughter to live in we bumped up our offer by $3k, which essentially got clawed back during the HOA financials inspection. (Our two contingencies were inspection and HOA financials - and the HOA is poorly funded. Based upon what we have heard from the HOA meetings I think that we are looking at a special assessment shortly). So in the end we paid less than we offered. You can't negotiate if your offer isn't accepted. The time to be economical is during subsequent negotiations, not on your initial offer. You are offering based upon what you see. You negotiate upon the factual condition once you have had an inspection completed. If everything is as advertised then the offer was fair, as it stands. If there were undisclosed issues, you can account for those in your credit negotiations.

Our friends finally got a house in escrow. They were the first ones to see it on the day that it hit the market, and and the sellers agent and the buyers agent got along well during the initial phone conversation. The sellers agent also liked our friend when he went to look at it. They submitted an offer (of course asking+) the same afternoon that they saw the house. There were two other offers. Our friends think that the agent liking them may have been the tiebreaker when choosing between offers, but who knows.

Good luck in this crazy market!
That's my problem, I'm losing out to cash offers, because I used my liquid cash to get my current house updated, I don't enough cash on hand to pay 100% cash for the new place, I'm putting like 80% down but need to finance the rest.. I don't want to pull cash out of my investments to purchase a home but maybe I have to...ugh, this is just so frustrating...

Thanks so much for all of your great ideas, I like listing my current home and selling it with a 60 day rent back clause
 

Sugarcubesea

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Sell your home, then rent and get ready to travel....the best time to sell is during a hot sellers market.

There really is no significant reason to OWN these days unless you don't like to travel and want to be tied down somewhere for a long time.
I can't really travel non-stop as I still work and will need to till at least 2026.
 

Sugarcubesea

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Let's hope. The prices in this market are just unbelievable. If you are in it for the long haul you are probably all right. If you are trying to flip something I would be worried.
That is my big concern, if I pay 25K over what the comps are in the area and when I go to sell in 2026 to retire and move to FL, I worry, I will not have enough time to get that money back...
 
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