By Candice Cerro • November 04, 2013
So far I’ve given you a step-by-step of preparing to buy a home and searching for the right one, but many first time buyers think that once they’ve found a home to make an offer on, the work is over. When we found our dream home (the disco palace I referenced in my last post) and decided to make an offer, our Realtor really stepped into high gear. She let us know that the house would most likely sell for over the listing price so to be taken seriously we needed to make a realistic offer. Mike and I decided to offer the full listing price and our agent prepared a cover letter describing us to accompany our offer.
Though we weren’t cash buyers like many investors currently in the market, we did have something on our side: we are a young couple who wants to live in the house for many years and eventually raise a family there. For a seller who is emotionally attached to a property, we are the kind of buyers they usually prefer. After our offer was submitted, we were informed they had 10+ offers and would wait to look through them all in a few days. With it very apparent the odds weren’t in our favor, we decided to keep up the home search and make offers on other properties that we found and liked. For those bidding in today’s market, I strongly suggest this approach. While it’s easy to fall in love with a property and be convinced it’s the only one for you, chances are you won’t get it so you must keep looking if up against the clock to move.
In this waiting period we came across another great house a few blocks away. This home was purchased at a foreclosure auction earlier in the year, fully renovated and put back on the market. Every detail was accounted for, but Mike worried the renovation might not be top quality as is sometimes the case with “flips.” We still made an offer on this house, however, as it was very clean and in a great part of town. Again we went with a full-priced bid and though the house was beautiful, we couldn’t get the previous “fixer-upper” out of our heads.
When we finally heard back about the two offers we made, each asked us to counter with our “best and final.” We decided the fully renovated house would go for far more than we were willing to spend, so we focused our efforts on our fixer. My agent wanted us to bid higher than the number we actually selected, but we worried that if the house didn’t appraise for that amount then it wouldn’t work out, so we offered what we thought the house was truly worth. This is happening frequently in today’s market. Buyers will get in bidding wars and offer well over what the house is worth, but the sale will fall apart in escrow if the house doesn’t appraise for as much as they offered because the bank will want someone to come up with the extra money for the loan and in most cases it falls on the buyer.
The day my agent called to tell me we got the property was extremely emotional to say the least. I was stuck in an airport with a weather delay (I spend most of my life in an airport traveling for my next savings segment on TV) and we just found out we lost a dear family member. We found out the seller picked us over offers with more money because we did plan on living in the house and raising a family there just as he had done. Mike and I were dazed for the next few days over the news and on pins and needles waiting for the appraisal to go through. “The appraisal and inspection are the last big hurdles,” I confidently told Mike. I was wrong. The house did appraise at exactly what we offered and the home, thankfully, passed the inspection with flying colors, but the hurdles were FAR from over.
Candice Cerro Candice Cerro is passionate about never paying full price for anything and wants to help as many people as possible achieve the same goal. When she's not not searching for the best deals online, she can found running in half marathons, reading, and spending time with her family.