House Buying – the Offer


House hunting in the Bay Area is a bit insane. I have written about this in the past, but since today we lifted our contingencies, and in a mere 11 days we will get the keys to our “new” old house, I will write a few posts on the search.

I have already mentioned the coded language in the listings. How certain phrases imply some, uh, unsavory or unsettling aspects of the house or the neighborhood.

I have also mentioned how often by the time a new listing hits Trulia or Zillow, it has had several showings as the MLS listings are on the leading edge.

Pro Tip: yes, you can go hit open houses without an agent, but often you will be late to the bidding party. Get an agent, and get access to their portal. Totally worth it.

It is scary to place an offer. You count your pennies, you check to see what you can scavenge from every account you have, IRA, 401k, brokerage account, even your piggy bank and you make your best guess.

What many people who have never lived here don’t realize is that you must offer over the asking price. The demand is so high, there are so many people who are in the hunt, that the sellers smugly set a price, knowing that they will get more than the asking price.

Yes, there are some neighborhoods where this doesn’t work…

Pro Tip: If Trulia says “moderate” for the crime level, you will want to buy a bulletproof vest.

… and those houses often stay on the market for months. But if the schools are halfway adequate, and the neighborhood is safe, look out. A bidding war is coming.

Case in point: Our agent had an open house two weeks ago. It was a nice house, well tarted up (he admitted that it was almost all cosmetic) and well staged. It was a back house in a cul de sac, and had a pretty large back yard. The house had a pretty large square footage for the neighborhood, but it had an odd layout, that left a fair amount of space awkward to use.

On the market at $688K. He thought they might get $700, or a little more.

The Thursday after the open house weekend, they accepted offers. Over 20 offers, and more than a few over $100K over the asking price. Nearly 14% over asking price. Damn.

We were fortunate. We found a house near that one that we liked. It was a rental for a few years, and the appliances were straight out of the 70’s, so they were a detractor. But the layout was great, and the kitchen, while needing all new appliances, was well laid out, with ample storage, and plenty of space (as a former chef, and someone who still loves to cook, this is a huge plus). A diamond in the rough.

We know that the appliances will get changed before we move in, and the side fences are about 8 years beyond their serviceable life, so we will probably drop $10K in minor changes to make it liveable. But we got it for *only) $15K over asking. Had the owners tarted it up, they could easily have gotten another $25K for it.

Yes, we beat the odds, and won our first house we put an offer on. Our agent was stunned, as that never happens.

Barb has a friend whose co workers have bid on 8 houses in the last two years, and always lost. Bummer.

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By geoffand

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February 2015

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