House Hunting: Fun or Frustrating?
With Nic starting her house hunting journey a bit before me, she sort of set the tone for what I should be prepared to expect: lots of excitement soon followed by lots of let down. Since I knew nothing of such terms like: inventory, market turns, contingency, counters or appraisals, I went into this whole process a bit uneducated.
When my TH and I first moved to Orange County a year ago we had wanted to buy a home right off the bat. But as per usual, I didn't really think about it. To buy a house you need money, the more the better. While loans can be given for little money down, they is always a catch... and in this case, little money down means higher payments and added insurances. While I assumed the role of Naive Nelly conjuring up pictures of my southern style home complete with wrap around porch, it was my TH who was realistic about this whole homeowner thing.
Six months after moving my Aunt B hooked us up with a great realtor from First Team Real Estate whom she knew through her baseball academy. We decided to meet after the holidays and were ready to get things moving. Our little condo, while great, was starting to cramp our style more each day. Our first meeting was all information, which for me was wonderful! Our agents (they work in teams there, get it, first team) sat us down and explained the terms associated with buying a home. For example, right now it is a seller's market which means the seller has control, as opposed to previously when the buyer had a bit more power. Furthermore, the inventory in this current market was low, meaning there weren't many homes for sale. The ones that were for sale were going for over their list price meaning if a home was put on the market at $450,000 the buyers were offering $465,000 to $475,000 or even higher right off the bat. To make matters worse, because the inventory was so low, there was a great deal of competition, meaning each listing had multiple offers which gave even more power to the seller who could then start a bidding war between offers by asking for a counter offer. For example, if we offered $465,000 the seller may come back and ask if we would offer $470,000... which NO we wouldn't. This was quite a change from just a year or two ago when you would offer well below list price and usually get it. Well, not in today's market. These days it is practically like one piece of meat in the jungle for 500 lions and the one with the most cash wins.
Note from Nic: I actually had no idea Em got such amazing information from her realtor up front - I love our realtor but we did not get this kind of detailed info (perhaps I wasn't asking the right questions). It seemed to me we were all realizing what was going on at the same time, but having someone explain all this to me would have been really nice!
After the realtors unloaded all that info about the current market trends we weren't feeling that optimistic about getting our little 1970's built starter home in a nice neighborhood... but they were super positive and assured us they could do it... so we went for it! The first month was pretty fun. We got multiple email blasts each day of homes that just came on the market. If we liked the pictures and details about the house, we would schedule a time to go see it and then decide whether or not we wanted to submit an offer in hopes of being chosen. Well, we never got chosen in the first month, or the one after or the one after that... we came in second a few times, but we were almost always outbid. Someone with an all cash offer or willing to put more money down then our measly 15% (or less in some cases) so we never had an offer be accepted.
Rewind a bit to Nic and her house hunting horrors... after a few months of also putting in multiple offers and never having them accepted she sort of mentally gave up and said, "whatever" to the whole process. For her it was turning into a nightmare full of let downs and squashed dreams. As she tried to warn me, looking for a home can easily become a full time job. I too felt the weight of added pressure as I constantly checked the email blast, tried to work out time to see each house, only to be mildly impressed yet still submit an offer only to be denied and more annoyed of all the wasted time. It was like as soon as a house came on the market, it immediately sold for significantly over the asking price and we never even had a shot! ANNOYING!
N: Well, I wouldn't say that I gave up, as we most certainly did not, but I simply changed my attitude and tried to just believe something would happen sooner or later. The most important part was not to let the disappointment impede on my desire to continue planning our future. We had a baby on the way, and at some point would need to stop looking and prepare for little BK's arrival in our apartment. It was keeping priorities in mind that kept me sane - and hey, we eventually DID get an offer accepted!
So, like I often do, I Abraham Hicks'ed myself and just played the horrible house hunting game but knowing and trusting that it would all work out as it always does. Our realtors said it would, I so hoped it would and therefore tricked myself into completely believing in it no matter how un-fun house hunting was. To make matters worse we had to succumb to "market pressure". All offers were being written removing appraisal contingency which meant we offered a certain price and if the appraisal came in less than what we offered we were stuck. That also meant that whatever our loan was approved for would only reflect the appraisal which for many left them short a few thousands of dollars that they in turn had to make up on their own. SCARY! I mean, yes we could still back out of escrow, but not because the house wasn't worth what we offered, we would have to make up some other excuse... and I do hate being dishonest!
N: Our big problems came into play when our appraisal actually came in lower than our offer, which meant we wouldn't be able to secure a loan for that amount without forking over the extra cash. We didn't have to remove the appraisal contingency in our offer, but it still meant we may not get the house after all. After much nail biting and many patient phone calls and emails between buyer, seller, and both realtors, we finally got a second appraisal to come in where we needed it. PHEW!
Despite shutting down all our spending and becoming envelope budgeters and being able to save quite a bit each month, it just still wasn't enough. We really had to consider other options and maybe not getting to live in an area we loved our an old home we so wanted. There was many a thriving argument and many a sassy comment thrown around between my TH and myself, but at the end of it all and each time we both wanted to give up, we had to remember it was all going to work out... it was all going to work out... it was all going to work out.
While finding your first home is meant to be fun, it is... for about a minute. Then, it becomes HIGHLY frustrating and not fun at all. But there is really nobody to blame, the only thing that should take ownership for making people miserable is the market. But alas, it will all work it... as it always does....
N: I think the most important advice I can give to a future first time home buyer, is learn as much as you can about the market a few months BEFORE you really start looking, as it always changes. We waited around until we felt "ready" but had we known what to expect I think we could've saved ourselves some frustration. It was the shock of hearing over and over "it's a buyer's market" only to find ourselves in a "seller's market" that really did us in. Buying a home is a HUGE financial and emotional undertaking, so it's important to have the appropriate expectations of your experience in order to make it enjoyable. While I doubt anyone gets to experience that classic romantic vision of walking into a clean, bright, spacious house and say (after glancing knowingly at their spouse) "We'll take it!", it also doesn't have to be the nightmare Em and I seemed to have stepped into.
Anyone else house hunting or recently bought a house? We'd love to hear your experiences!