How We Offered Everything & Still Got Rejected (Buying Your First Home – Part 2)

About a month ago, I began a series of blog posts where I wrote about my experience buying my first home (with my fiance).  If you didn’t read the first post, I encourage you to check it out here:

Buying Your First Home: Are You CRAZY? (Part I – Beginning the Process)

In this part of the series, I’m going to go into the actual home search process, including the offers we made, and how everything actually turned out. If there’s anything I’ve learned throughout this entire process, it’s this:

Nothing goes exactly as planned.

Just when you think you’ve done enough (or more than enough), you realize you’ve fallen short.

While it can be frustrating, I guess this makes it all the more satisfying when everything finally does work out.  You just need to stick with it, even when nothing seems to be going your way.

Now, let’s pick up where we left off…

The Actual Home Search

In the last post, I left off by mentioning that we used Redfin to search for our new home.  Definitely recommend them if they’re in your area.

When it came to the actual home search, the first question we faced was:

When Should I Start Looking?

As a first time home buyer, you’re typically in a more flexible position because you probably don’t have a home that needs to be sold before you can buy a new one.  In our case, we rent an apartment, and our current lease ends August 31st, 2014.

There’s no absolute right time to begin looking, and there are a million factors that play into the decision.  Here are a few of the important ones:

  • How picky are you going to be?
  • How quickly will you (or the seller) be able to close after an offer is accepted?
  • Are there are a lot of properties available in your market that fit your criteria?

We figured we would be a little bit picky, but also knew we would be ready to jump on something if it looked good.  There’s no harm in looking at homes online if you’re not ready to buy, but you have to be ready for the property to disappear quickly if it’s a desirable one.

After spending the first few months of the year browsing properties online, we decided in late March it was time to start physically looking at the places we liked. Given that we were 4+ months away from our apartment lease ending, we basically decided on two things:

  1. If we found a place early on that we liked, we would try to extend closing as far out as possible.  The typical time frame for closing is 30-45 days, so we would push for 60+ days.
  2. We were financially prepared to have 2-3 months of apartment lease/home ownership overlap.

Attending Home Showings – Exciting, Nerve-Racking, and Disappointing (All at Once)

Actively shopping for a new home is probably one of the more exciting things you’ll ever shop for.  What other high ticket item will you spend 15+ hours a day with, for several years (and perhaps the rest of your life)? It’s fun to look, and although there are some “cookie cutter” places, generally no two are exactly alike.

I’m not going to talk about every single place we looked at (I’d estimate that I saw 12-15 places), but I’ll highlight some of the meaningful ones.

Amazing Kitchen, But Nothing Else (2 Bed, 2 Bath, $500,000)

This was literally the first place we looked at, so I remember it well.  Really nice, large kitchen and living room (for a condo).  Unfortunately, that’s where it ended.

The second bedroom was way too small, the outdoor deck was tiny (probably couldn’t even fit a normal sized grill), and all things considered, the price was too high.  Pass.

Fancy Upgrades, but Too Small (2 Bed, 2 Bath, $475,000)

This was an interesting place because we really liked the quality, but it ultimately was too small.  The kitchen had very high end appliances, and there were some other unique features (heated floors in the bathroom, digital temperature control for the shower, tankless water heater, etc.).

This was probably the condo where we decided that, unless we find a 2 bedroom place with an area that could work well as an office (outside of the two bedrooms), we would likely need 3 bedrooms. Pass.

The Dreamy, Nerve-Racking Duplex (2 Bed, 2.5 Bath, $450,000)

When we saw the listing for this one pop up, we knew instantly that we wanted it.  Sure, it was only two bedrooms, but everything else was exactly what we wanted (and more):

Great location, amazing outdoor space (three separate decks), duplex “up” (meaning it’s on the top two floors, vs. the bottom two on a duplex “down”), and had a lot of high quality features.  Reasonable price too (compared to similar units).

We had a feeling this one would be an uphill battle.  The property was listed on a Wednesday, and upon us immediately requesting a showing, we were told they would not be showing it to anyone until the open house on the upcoming Sunday.  Fair enough.

We promptly arrived at the open house a few minutes before it started.  There was a line of people waiting outside! There easily could have been 20 people waiting for it to open.  This was not a good sign for us, if we were to ultimately go for it.

So, we went inside, and proceeded to be impressed as we expected.  Unfortunately, the  “ooh’s” and “ahh’s” by everyone else were nerve-racking.

After confirming we wanted it, we left and immediately called our real estate agent.  This would be our first offer, so it was very exciting.  We made a full price offer ($450,000), knowing full well that the popularity of this property would not allow it to sell below list price.

Waiting for a response after submitting the offer is PAINFUL.  Emotionally.

It was really a mixture of being nervous, impatient, and inexperienced with the process (considering it was our first offer).

The next day (Monday), we received a message from the seller (via our agent):

“There were multiple bids on the property.  Please submit your best and final offer no later than 6:00 PM tonight, and we will have a response tomorrow morning.”

Okay…this was expected.  But where do we go from here?

After thinking about it a bit, we decided that our best offer would be 2% above what they were asking – or $459,000.  We decided $460,000 would be too high, so we drew the line at $459K (although in retrospect – we probably could’ve gone higher).  Furthermore, our agent suggested we write a cover letter with the final offer, to add a personal touch (which we did).

This next bit of waiting was even worse than the first one, because now we actually felt we were in a good position to get it.  Would we get it?

In short…no.  This is the response we received:

“At this point in time, they will be moving forward with another offer.  My clients very much appreciated the offer, as they do understand the time and energy it takes to put it together. Should anything happen with the current one, we will let you know immediately.”

Rejection is never fun, and we were very disappointed…but, time to move on.

(We later found out that it sold for $465,000, which we were happy about, given that it was quite a bit higher than we were willing to pay.)

The Unique Penthouse Condo (2 Bed, 2 Bath, $425,000)

This was another fun one.  From the very start, we were intrigued, despite it being on the lower end of properties we looked at.

There was a lot we liked about it: Very open floor plan, penthouse unit (i.e. top floor), hardwood floors throughout, vaulted ceilings, and a nice deck.  Wouldn’t break the bank (significantly lower price than most other places we looked at).  And although there were only two bedrooms, there was a little area outside of the master bedroom that could easily be used as an office (which effectively made it like a 3 bedroom place, for our purposes).

But it wasn’t all great.  The hardwood floors probably needed to be refinished, and the entire place would need new paint (we weren’t fans of the green walls throughout).  Also, the bathrooms weren’t “updated” and the kitchen was fairly small.  And there was only an outdoor parking space – no garage.

Despite these flaws, we still liked it a lot, if the price was right.  We knew we’d need to put some work into it, and the comparable properties on the market were more in the $400K-$405K range, so they would need to come down on price.

So, we decided to make an offer. We started pretty low, with the hopes of settling in the $400K-$405K range.

Our initial offer was $390K, with a $5K credit to our closing costs (so effectively, the offer was $385K).  We knew this wouldn’t be accepted, but thought it was a good starting point.

They came back to us with a counteroffer of $425K, with a $5K closing credit (effectively, $420K).   They came down $5K, so we decided to come up $5k.  We went back to them with $395K, $5K closing credit (net $390K).

Once again, they had a counteroffer for us: $420K, with a $5K closing credit (net $415K).  They indicated this was the lowest they would go, but we fired back our “best” offer to see if they would budge any further: $410K, with a $5K closing credit (net $405K)

They wouldn’t budge.  We remained $10,000 apart.  Unfortunately, we didn’t feel it was worth any more, so we moved on.  We knew that we could revisit it in a few weeks if it was still available, and at that point, maybe we’d have some more negotiating power.

But we never did revisit it, and it ultimately sold to someone else for $415K.  And in hindsight (you’ll see why below), we’re very happy we didn’t get it.

The Large Duplex with (Nearly) Everything We Wanted (3 Bed, 2.5 Bath, $475,000)

At this point, we’re a little over a month into our search.  We’ve seen a dozen or more properties and we’ve had two offers ultimately rejected.

You’d think at this point desperation might start to kick in, but really, it was more like apathy: We started having low expectations for every situation, and tried our best to not care about the outcome (to hopefully minimize further disappointment).

So, a new property listing popped up.  Seemed to fit all of our criteria, but I was initially on the fence.  I briefly looked at the listing while I was at work, and at first glance, the pictures didn’t look too great – I was skeptical.

However, upon second glance at the listing, I quickly changed my mind.  Examining it closely, I could tell that this wasn’t a bad condo – they were simply bad pictures!  (Note to self for when I sell a property later: Take good pictures.  It makes a huge difference.)

So, we scheduled a showing right away.  And we had a gut feeling that this would be “the one.”

In fact, we had such a strong feeling, that we did something I’m a little ashamed to admit: Prior to even attending the showing, we drafted an e-mail to our agent indicating that we would like to put in a full price offer (but obviously did not yet click send).

Were we insane???

A little bit.  But that’s what house hunting does to you after awhile.

Insanity aside, there was some strategic thinking.  Given how quickly good properties are snatched up on the market, you need to act quickly to even have a shot.

And our showing was at 6:30 PM that evening – if we decided we really wanted the place, we’d need to put an offer into our agent ASAP in order to get it conveyed to the seller that same evening.  Given that there could have been showings earlier that day, we didn’t want to be in a position where we wouldn’t even be in the running.

So, we went to the showing. Everything was pretty much what we expected.

First off, the place looked a lot better than it did in the pictures.  Everything about it was exactly what we wanted:

  • 3 bedrooms, with one on the first floor (which would work perfectly as an office), and the master and second bedroom on the second floor.
  • 2.5 bathrooms – More than we needed, but in addition to the full two bathrooms on the second floor, it’s nice to have a bathroom on the first floor along with the office, living room / dining room, and kitchen.
  • Vaulted ceilings on the second floor
  • Hardwood flooring in all common areas, carpet in the bedrooms
  • Private deck off the master bedroom, large common deck over the garage (but because the building only contains two units, we wouldn’t have to share the deck with many people)
  • Some bonuses too: a fireplace in the master bedroom (unusual, and in addition to the one in the living room), and a very large walk-in closet

The negatives were all things that could be easily remedied:

  • Didn’t like the paint color
  • Hardwood floors could probably be refinished (though not absolutely necessary)
  • Appliances were nice, but somewhat old and worn

When we walked in, we immediately had flashbacks of the open house we went to (where there were lots of people and competition).

There were only two other couples looking (and this wasn’t even an open house), but we were on the defensive.  They appeared to like it a lot, and we immediately felt a feeling of “oh no, here we go again…”

While we were still looking around, I submitted our pre-drafted e-mail via my phone to our agent, indicating that we wanted to make a full price offer.

And just like that, it was in motion.

After about a day of waiting, we were surprised to find…

THE OFFER WAS ACCEPTED!

We thought for sure that we would be competing with other bidders, but after finding out that the seller was looking to sell it quickly because he was relocating across country for work (ASAP), it may have helped that we put our offer in very quickly, ahead of others who may have just been thinking it over, or never got to see it in the first place (recall that we saw it and put our offer in the first day it was available for showing).

More to Come…

This feel like a good place to stop this part of the series.  Next up – in the final installment – I’ll talk about everything that happens after the offer is accepted, and actually include some pictures of our new home.

At this point, there was still a long road ahead, and I’ll explain it all in the next post.

What was your experience like looking at new homes, and successfully (or unsuccessfully) making offers?  I’d love to discuss it in the comments. :)

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8 Responses to “How We Offered Everything & Still Got Rejected (Buying Your First Home – Part 2)”

  1. Hi Eric,
    This is readily a long shot article on how you are buying your first home. Its pretty interesting to know that you are taking this bold step.

    Although the prices or costs of most of these homes are somewhat scary for the budget-minded buyer, they interiors and decors seem to appeal to the conscious.

    Thanks to the images included in this post. I guess it would really be good learning from your experience when making such big decision!

    I upvoted this post in kingged where it was shared for Internet marketers.

    http://kingged.com/offered-rejected-buying-home-part-2/

    [Reply]

    Eric G. Reply:

    Thanks for the comment, Sunday! As far as your point about price – yes, most of these are scary, but it helps to understand the location.

    For these prices (and much less), you can obviously get nicer homes in a lot of different areas. Unfortunately, this particular neighborhood of Chicago is expensive, so much of the price just has to do with location.

    As long as this trend holds steady, however, I would expect to get my money back (and more) when I sell the property one day. (Fingers crossed.)

    [Reply]

  2. Hey Eric – I went through the same process 2 years ago and had a very similar experience. It’s crazy!! Totally hit the nail on the head when you described how emotionally draining the waiting game is after putting in an offer – I got zero sleep.

    Not sure if you’ve closed yet, but get read for tons of ‘junk fees’. I was appalled at all the stupid stuff I had to pay for ($300 for someone to watch me sign docs? Insurance to make sure someone else didn’t screw up?)

    Congrats!

    [Reply]

    Eric G. Reply:

    Hey Shane – thanks, it was a wild ride! We have closed already (a couple weeks ago), and you’re right, there are a ton of fees that seem high or don’t make sense.

    But then when you put a $300 fee in the perspective of the entire purchase, it doesn’t seem like a huge deal. :D

    [Reply]

  3. Where I live, the housing market is pretty hot right now. On my street alone, I can literally see 10 houses with a “For Sale” sign up, and most of those houses have been sold.
    Ryan S. recently posted… Why Gold and Silver Prices are in Long Term Bull Markets

    [Reply]

    Eric G. Reply:

    It sounds as though a lot of areas are improving – still a good time to buy, but I think we’re definitely moving away from the bottom of the housing market. Good sign for the economy I suppose.

    [Reply]

  4. Hey there Eric,

    I like the way you put much effort and research in doing this article and I am glad you attached some image in this article. I do believe to find an ideal for yourself there was a lot of factors to be considered.

    Having a reliable of sources of income is a must major reason.

    Also being what kind of person because for me, I don’t much time to clean the floor so having wooden floor to shine is quite painful for me.

    By the way, thanks for sharing this! :)

    Keep rockin’,

    Amadeuz

    I found this post shared on Kingged.com
    Amadeuz Jacob recently posted… Career and Job success tips

    [Reply]

    Eric G. Reply:

    Thanks for the comment Amaduez! And yes, the hardwood floors can be a pain to clean. ;)

    [Reply]

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