For sure, I'm just expanding on why it might be smart not to.
I bought in a buyers market and still opted to put down as much as I could, rather than as much as I was required, so that I could have a better chance to get my 1st favorite pick. I personally wouldn't want to be in the position to settle on my 15th(+) favorite house. There's a lot of people being forced to make a lot of compromises right now -- will they be happy with their decisions years from now?
Depends on where you are in life financially, the market you're in, and whether this is your first purchase.
If you bought recently, you probably had some sense that the market was a bit out of whack, but may have decided it was the right decision for other reasons. That doesn't make most people any less concerned about the future value of their house, particularly if they know they are not buying into their "Forever Home" and will one day need to sell and move elsewhere.
There comes a point where it's just negotiation and gambling. If I don't want to buy your burning house because I think you want too much it's fine for me to wait because I know the price will likely come down. There is always a chance that somebody else will grab it before my trigger point, but that's the gamble.
I take the approach that if the house is for living in, and you're not a contractor or in the business of improving and flipping properties, you shouldn't try to time the housing market. Whatever happens this year, it's going to look like a good decision in 10 years if you can make the payments. Rates are still pretty low, historically and as someone else said, if they drop, you can refinance
You don't buy a house because the price is going to go up. You should look at it as a lifelong investment. The wisest and wealthiest people I know live by one iron rule: You never sell real estate.
If you do make the decision to buy, though, come in as low as possible, lower than you think the seller would take, lower than your agent thinks, and see what happens. The market is softening and you want to get as much value as possible.
We're currently hunting for houses, and lost out on a few listings because we didn't want to overbid. When the sold price was revealed, SO many times we'd think DAMN, we'd prob pay $10-$25K on top of that to get it had we known..
This was not my experience. Our agent walked us through the assumptions under which buying a home would make financial sense (e.g. years in home, projected rate of increase in home prices, etc) and he made it absolutely clear we could lose money depending on timing. Ultimately we decided to buy because we believe LA is a market where demand will outstrip supply for the foreseeable future (and prop 13 while not great policy for society will personally benefit us).
Because you can only sell the house once. So given an appropriate asking price, the first acceptable offer is as good as the next 10. (If your realtor is any good, the price will be close to the true market value anyway, or priced appropriately considering trade-offs, like closing quickly.)
If you can get that offer without the hassle of showing the house to a thousand strangers, and having random people stopping and peeping through your window, then why not?
Another common occurrence is accepting an offer below certain known loan limits. If you know you want to get approx the local limit for a jumbo loan, then accepting a price slightly over that limit comes at the cost of fewer potential buyers, or offers that have to back out because they couldn't get financing approved. So the rational choice might be accepting the lower offer, instead of slightly higher with more hassle/risk.
I have a similar feeling when I look at houses to buy online.
If I see the house was bought for 40%+ less just a few years ago, I refuse to give an offer. Even if the price seemed reasonable and it interests me. I refuse to reward people who bought low and want to flip it for much higher (if it increased reasonably, fine)
If I list my house for $20, then realize it might be too low and raise the asking price to $100k, that doesn’t suddenly mean I’m forced to accept the first offer that comes in.
As someone who is interested in buying a home. This scares me. We have lots of money saved for our down payment, but I don't want to end up in a bidding war with someone who isn't as good financially, and then end up purchasing for more than the house is really worth. Also, cheap money inflates the prices of homes anyway.
Grumble grumble... we will have to stay disciplined and be honest with ourselves as to what the home is truly worth to us.
The flip side, if we had listened to our agent's advice we'd not have (1) landed the house we love (2) sold our prior house.
Particularly, on the sale, we kept hearing "wait, you'll get more offers. wait, you'll get more offers. AirBnB investors are going to love this". No other offers turned up.
Yeah, I'm pretty sure we could have waited it out and gotten other, higher offers. We actually chose to pick one that had a longer closing period (the house we wanted is occupied with people that want their kids to finish the school year), and with a dog and a toddler, the constant viewings were pretty inconvenient, enough so I'm happy at a lower price just to get it over with.
I bought my house in a raging micro bubble in the Bay Area and got the first one I made an offer on. Really just depends how much you care about getting a good deal. I did some math and figured it wasn’t worth the effort.
Bring it on. As a first time buyer, I don't even care about prices going down as much as I care about being able to actually buy a home that I want without feeling like it's a blind gamble.
I want to be able to look at a listing, talk to the realtor, have a scheduled showing, and put in an offer at list price with inspection/appraisal contingencies. You know, like how normal life was forever until the last 5 years.
Better to find the cheapest house that fits your want list regardless of past ownership.
The house I bought doubled for the last owner during his 6 years here. It doubled for me in half of the time since. The past owner wasn't greedy the market moved on its own.
Yes, trades are willing; and when you turn down a bona-fide offer to buy your house for $X, that is very strong evidence that you value your house at more than $X.
That kind of rationality is rarely found in a hot market. You'll essentially be driven to massive overbidding due to the highest bid in the group. In a big enough market with enough demand, you can be sure that high bid will be well beyond a rational amount. Fairness has essentially nothing to do with it.
Once you lose 5-10 bids, you'll either give up on owning a home, move to the country or start upping your bid to suit.
This is false (or at least, is not universally true, and is false pretty frequently). It's costing you some of the future buyer pool, but making it more desireable to another portion of the buyer pool: those who have similar taste to you. Because these are exactly the people who are most likely to like other (non-paint-color) aspects of a house that you also like, this is a positive trade off (unless you anticipate needing to sell on short notice, in which case, yes, be as generic as possible).
Make the house you want to live in. There are enough people that someone else will want to live in it, too, and in the meantime you'll be happier.
I bought in a buyers market and still opted to put down as much as I could, rather than as much as I was required, so that I could have a better chance to get my 1st favorite pick. I personally wouldn't want to be in the position to settle on my 15th(+) favorite house. There's a lot of people being forced to make a lot of compromises right now -- will they be happy with their decisions years from now?
reply