I know I’ve been quiet for a while… There are so many things going on right now, it’s quite impossible to find enough time to work on this blog 🙁 Sorry!
I have some news, though. We finally bought a house in the Bay Area! Woohoo! I’ve been waiting for this moment to come for a long time, so I’m hyped about this.
I must have visited at least 40 houses before we finally made an offer on this one. It was our second time making an offer on a house, so I guess we were really lucky to get it- this, or we had quite a steep learning curve. People around here usually make 4 offers before finally “winning” one.
Anyone living around here knows how hard and complicated the whole process is. The real estate market is hot. I mean, it’s sizzling hot. When looking into buying a house, you basically have about 1 week to visit the house and make an offer. Most of the time, you blindly make an offer on a house you’ve seen once or twice (if you’re lucky). No time for a prior inspection, and waving contingencies is strongly encouraged. The listing price is just a starting point, so expect to have to shed anywhere between an extra $25,000 to $250,000 if you decide to make an offer. How much more is up to you (or what you think other people are willing to offer). The first house we “lost”, we offered 107% of the listing price with contingencies. In the end the winner had an all-cash offer and offered a lot more than us. Talk about how to risk more than $1M!
So, what does it take to win an offer on a house in the Bay Area:
- Lots of cash down. I mean, at the very least 20%. 30% is better, but an all cash offer usually wins. We, unfortunately, are not that rich. We need a mortgage and are finalizing it before getting control of the house.
- No contingencies. We “won” our house by waving the contingencies, which in any other kind of market, really isn’t advisable. We are risking it all because having contingencies makes your offer much less attractive to the seller, which means that in a competitive market like this, you don’t get the house.
- Overbidding. Yes, we totally overpaid for the house, and we know it. We were up against 3 other offers (all non-contingent), so the offer price is what made the difference. We even added a couple thousand dollars at the last minute to secure the deal, when we learned that all the other offers were also non-contingent. That’s how hot the market is here.
- A great presentation letter. We had to write an introductory letter to the sellers explaining why we wanted the house. I guess in 99% of cases this doesn’t really weigh in into a seller’s choice about which offer they’ll pick (the contingencies and offer price does it). But when up with a very similar offer, it can be the tipping point in your favour. The fact that we wrote this letter (and explained that I am heavily pregnant) may have helped in making a final decision between us and another offer. Please help the pregnant lady!
- A good real estate agent. Yes, you read well. Our agent went above and beyond to get this deal to work for us, calling and building a great relationship with the listing agent.He kept us well informed on what was going in the decision process on the seller’s side. In the end, this may be what got us the house. We don’t know. But we are eternally grateful to them.
That being said, stay tuned for a picture of our new house. Good luck house hunting!