Strategies for buying house in a seller's market.. (Boston, Worcester: real estate, condo)

[Dm84]

Originally Posted by academica

on this last note: I am not hung up on the list prices. I am looking at properties that list around $400 - $480 and offering around $500- $550. I guess that is realistic as far as the offer price. What DM84 says make sense to me, it is the lack of inventory with powerful cash buyers I guess..

But, the advice given to me, to look at other towns where I can comfortably afford due to less bidding wars- I don't want to do that yet. You see this is the biggest purchase in our lives, and it just doesn't make sense to me to buy in a less desired town while I know I can buy at this price in Melrose or Medford if I am patient enough and maybe luck turns around and for one property I would not be competing against cash heavy buyers.. ? Luckily I am renting with a friendly landlord, and there is no urgency or no timeline for me to buy, I am flexible when to move. Maybe that helps? Can I use that to my advantage here?

By all means if you have the time and flexibility to wait then keep going as long as you're willing to stomach it. The question is how long are you willing to wait? When I was buying there was nothing more frustrating than putting an offer down and having it rejected. Remember the longer you wait, the greater the chances that prices will rise.

Also remember that your landlord may be flexible but your seller may not be and the timeline from offer to close can be tricky if you run into any issues.

[academica]

Originally Posted by Dm84

By all means if you have the time and flexibility to wait then keep going as long as you're willing to stomach it. The question is how long are you willing to wait? When I was buying there was nothing more frustrating than putting an offer down and having it rejected. Remember the longer you wait, the greater the chances that prices will rise.

Also remember that your landlord may be flexible but your seller may not be and the timeline from offer to close can be tricky if you run into any issues.

Oh believe me, I know what you are saying. I guess I still have a bit of room in my stomach for this, and the reason I came here was to see if I can get some advice on what to do differently. It seems like there is no hidden trick here, the 10% down payment is probably killing me, competing with cash heavy buyers.. I knew it, but couldn't help but ask if people know ways to deal with this.

Maybe I offer even 2-3% more than the best offer with better cash? How much more on the final offer price would it take to allure a seller to my offer even if I am putting down less? I am thinking that even if I overpay 3% (that means offering 13% more, instead of my usual 10% over list) the prices will likely rise more than that anyways if I end up buying later..

[Dm84]

Originally Posted by academica

Oh believe me, I know what you are saying. I guess I still have a bit of room in my stomach for this, and the reason I came here was to see if I can get some advice on what to do differently. It seems like there is no hidden trick here, the 10% down payment is probably killing me, competing with cash heavy buyers.. I knew it, but couldn't help but ask if people know ways to deal with this.

Maybe I offer even 2-3% more than the best offer with better cash? How much more on the final offer price would it take to allure a seller to my offer even if I am putting down less? Even if I overpay 3% (that means offering 13% more, instead of my usual 10% over list) the prices will likely rise more than that anyways if I end up buying later..

Unfortunately you're stuck between a rock and a hard place. The seller's agent is supposed to show them all offers. Unfortunately that means they will pick the best offer they see and any all cash offer that isn't completely low ball is going to be better than someone who needs a mortgage. Even if you offer more than asking, if the seller sees an all cash offer for less they'll probably take it because it's a (relatively) simple transaction that can be completed quickly.

This is why I suggested looking elsewhere. There are plenty of places where $500k will get you a house with 10% down. If that's not palatable to you then you should keep doing what you've been doing and hope that it works.

[academica]

Originally Posted by Dm84

Unfortunately you're stuck between a rock and a hard place. The seller's agent is supposed to show them all offers. Unfortunately that means they will pick the best offer they see and any all cash offer that isn't completely low ball is going to be better than someone who needs a mortgage. Even if you offer more than asking, if the seller sees an all cash offer for less they'll probably take it because it's a (relatively) simple transaction that can be completed quickly.

This is why I suggested looking elsewhere. There are plenty of places where $500k will get you a house with 10% down. If that's not palatable to you then you should keep doing what you've been doing and hope that it works.

OK, fair enough I will consider other areas. do you mind telling me if you know a few towns that satisfy the criteria below (in priority order):

1. <1hr door-to-door public transport to Park Street area in downtown
2. Safer neighborhood- low crime
3. Good elementary schools (read: greatschools rating ~7 or up) that is enough for me.
4. Walkscore >60 (walkable for at least some errands, with a nice downtown maybe.. not totally bedroom community)

Just to remind, here is what I was looking for: A SF house with a small yard, or a condo/TH with SF feel (nice shared yard, private deck, etc) 2-3 br 1.5 (or 1) bath, 1000-1500 sqft, budget~ $500 - $550k

The house we would buy should be in a reasonably move-in condition, no fixer uppers.

Thank you in advance for any and all suggestions!..

[Dm84]

Canton might work if you are willing to do commuter rail. "Good schools," a $500k budget, move in ready, and a 1 hour door to door requirement make your options fairly limited, unfortunately.

[mmyk72]

When my now neighbor was buying the place they are in, the seller (my ex-Neighbor) told me that they had to end up with a lower closing price because the appraisal came back lower then the offer. So if I'm selling, I'd be more likely to take a cash offer than another slightly higher offer on a 10% down. Because the 10% down buyer may end up not getting a bank to loan the whole amount needed and I'd either start again with another buyer- thus wasting valuable time and adding to the carrying cost - or have to lower the final price to make the deal work. If someone is selling, I'd think the last thing they need is more headache and surprises.

[alidmc]

How long have you been looking for? This is the hottest time of the year to look for houses. I am familiar with the areas you are looking in and can tell you that quite a few houses that were listed and did not sell in the fall/winter were re-listed in the spring and were under agreement within days.
I also do not think your budget is unrealistic for these areas, I just think things are ridiculous right now.
If you don't have to rush, wait a bit. Nobody likes to move in during winter, but if it gets you a place in a location you really want it will be worth it.

[Partial Observer]

With your budget, you should look into Natick. You could technically get to Park Street Station in exactly one hour by taking the commuter rail to South Station and hopping on the Red Line. I would have given my left arm, right leg, and both testicles to have had $500-550K to spend in Natick when I was house-hunting.

[Ninotchka P]

Drop the Redfin agent. You're not doing yourself any favors, and while it may not make the final difference, why saddle yourself with an agent that other agents prefer not to work with? My personal experience as a prior seller reflects that - my agent did his best to steer from a good Redfin offer to a similar non-Redfin offer.

Houses are deliberately being listed below target price, in some cases far far far below target price, to elicit bidding wars. You should be looking at houses that are listed 10% - 15% below where you want to max out at.

10% down puts you with the majority of buyers, so it's not terrible, but obviously you'll need to be offering at the top of the offer pool. Don't drop the financing/appraisal contigency, no matter what. You can be flexible with the inspection contingency - capping it at $5k is a good idea - you're still covered if anything major gets turned up and in this market you're not going to be negotiating the small stuff anyway.

[Shrewsburried]

Originally Posted by Dm84

My point is, you are finding houses but there simply aren't enough for sale for you to compete against cash buyers or people putting 20% down. There are towns where there is way more inventory in your price range and your offer has a better chance of being accepted.

FWIW My house cost less than $325k 3 br house and I can be downtown in under an hour via commuter rail.

It also goes without saying that life is not fair.

OP might have the same problems in lesser towns. I put 7-8 offers on homes in central MA and southern NH (can't remember the exact number), and was passed over for "better qualified buyers" even with 16% down, no inspection cont., and a commitment letter which was 100-150K higher than my offers from a reputable local Credit Union. All of the properties sold for above asking.

I ended up dabbling in short-sales simply to avoid the herd.