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First Offer for a Home

July 30, 2014

We put in our first offer on a house last week!

We struggled for a while on the question of whether or not we should buy a home now, or if we should wait a bit longer.  I did numerous rent vs buy calculations, varying my assumptions.  I read articles speculating whether or not we are in a housing bubble.  I analyzed how much it would matter to us personally if we were indeed in a bubble.  I considered the risk of buying.  I considered the risk of continuing to rent.  I looked at our budget, our savings, and our plans.  We know we’ll be here at least 7 years, and we think that it will be much longer.  We talked, and talked, and talked.

Finally, we decided we did want to buy, if we could find something that worked for us.  We’ve been going to open houses all summer, getting a feel for what we like, what the market is doing, and where we want to live.   T loved this, while I found it a bit tiring.  We watched homes we liked go for WAY more than we wanted to spend.  We heard horror stories of people who’d made 10 offers and were still trying.   We didn’t see anything we wanted to make an offer on.  Most things we liked we knew would sell for too much, or were in areas we weren’t ready to consider yet.

Finally, after months of looking, we found something we loved that we thought we had a chance at.  It is a home I can see us in for at least 10 years, maybe even more.  There is enough space, but not too much.  The neighborhood is perfect for us.  We both really liked it, and decided we’d put in an offer.

I’ll give you a quick explanation of how homes shopping works here, as it seems like it varies a bit.

  • Houses are listed and have 1 – 2 open houses with a specific date set for offers being due, usually Tuesday or Wednesday after the final open house.
  • It is typical for houses get from 4 – 10 offers
  • If you really like a home, you may pay for a pre-inspection and remove the inspection contingency in advance of your offer.
  • Houses nearly always go above list price by 3% – 40%.  The average is closer to 8% or 10%.
  • About 30% of all sales are cash (supposedly).
  • Most decisions are made within 24 hours of the offer date.  Our agents said that if we didn’t hear within the first few hours, we probably didn’t get it.

The offers were due last Tuesday, so we spent Monday evening finalizing everything.  We’d done our own research on the comparable properties and decided what it was worth to us and what it might take to get it.  Our agent speculated that the home may go for another $50k over what we offered, so we didn’t get our hopes too high.  We knew if it went for that much, it wasn’t for us.

By 3 p.m. Tuesday, I started to guess we probably didn’t get it.  At about 5:30 p.m., our agent called and confirmed we didn’t get it.  The winning offer had already removed their inspection contingency and had offered more money.  We were offered the back-up position, and since there was no reason not to, we took it.  But most offers do go through, so we were sad and started to move on.

On Thursday morning, we took off for a 5 day backpacking trip in the Sierra Nevada mountains:

We planned to postpone the trip if our offer was accepted, but with that out of the way, we were excited to escape town for a bit.  We spent 5 days and 4 nights in the mountains, enjoying the alpine lakes, mountain views, and quiet life.

We came back to civilization (and cell service) early Monday afternoon to discover that first offer fell through on Thursday morning, and we had advanced to the primary position!  (At our realtors advice, we had written a “dear sellers” letter and mentioned our love for nature & backpacking – the sellers must have quickly realized we weren’t kidding when we were out of touch for 4 days while we were supposed to be moving forward with inspections!)

So, we might be buying a house soon.  There are still quite a few steps to get through before we are sure this is the home.  The sellers provided a recent inspection, so there shouldn’t be HUGE surprises, but you never know.  Since this is California, we are also getting a geotechnical inspection to make sure the soil is good.  If all goes well, close of escrow will be late August.  Keep your fingers crossed for us!

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9 Comments leave one →
  1. July 30, 2014 2:42 pm

    So exciting! I hope you guys continue to like the place 🙂

    My place…I looked at it because it was close to another one that had just come on the market (mine came on the market the week before) and they were reviewing offers that night. I didn’t want to rush things even though I did like it, so I passed. A couple days later, the seller’s agent said that the offer they had wasn’t very strong and we should bring one too. Mine I think wasn’t as high as the other one, but I was more financially qualified. I got it! And then went on a two week international trip a few days later. It all worked out though, I’m still there two years later, and my boyfriend is moving in soon! My place is such a good deal for the market now and we really like it, so I have a feeling we will stay here for the next 5 years or so. I only put two offers in and got both of them – not everyone has a terrible experience.

    • July 30, 2014 6:39 pm

      I wish we were prepared to buy when you did! I’ll be pretty thrilled if this all works out.

      Inspections went REALLY well, I was terrified that the geotechnical one would turn up problems related to earthquakes.

      Congrats on the move in, that is really fun. 🙂

  2. July 30, 2014 5:53 pm

    1) That photo is unbelievably gorgeous.

    2) Yay! Exciting!

    I really wish real estate auctions would die.

    • July 30, 2014 9:44 pm

      Yes, the sierra nevada mountains are my favorite place in the world (so far). Beautiful.

      I’m excited, but scared. T and I are very risk adverse in general, and this is the least “sure bet” decision we’ve made. But I think housing in this area is not a sure bet either way you go. :/

  3. July 30, 2014 7:38 pm

    Wow!

    • July 30, 2014 9:36 pm

      I agree. 🙂

      I have a guess of your opinion based on the info I have shared (better to wait). If I’m correct, I commend you for your truthful yet tactful comment!

      • July 31, 2014 4:43 am

        IIRC, you have 20% down and can afford monthly payments in the face of potential adversity (plus, isn’t your DH unlikely to want to leave in the next 5 years?). So no negative judgment. If you can afford buying, then it doesn’t really matter if it’s a buyers market or a sellers market in terms of risk. Managing risk is far more important than market timing.

  4. oil_garlic permalink
    July 31, 2014 8:59 am

    Great news! Buying in S.F. and L.A. is always a risk, but if you plan to stay a while, it’s worth it. Plus, I don’t think of owning a home as an investment.

  5. August 1, 2014 5:37 pm

    How exciting! I’m thrilled for you two and a house you loved. It’s good that you did your research and didn’t rush into it.

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