When Bidding in a Hot Real Estate Market Backfires
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If you have been following me for some time, then you know that we are in the midst of selling our home and buying another one. Our current home has been pending sale since the end of March. We are supposed to close soon, which is a good thing. We have been on the house hunt for two months now and it has been crazy. I wrote about how my decision making process might be holding us back and it really has.
I have had the hardest time pulling the trigger on almost everything. When I do pull it, I still have to fully think through the entire thing before my mind is at ease. Being a defensive pessimist, I have a hard time making a decision, but I have come to the conclusion that I don’t have much time in the current real estate market. On top of that, we have been in many bidding wars and it hasn’t gone so well. You can almost say that it has backfired on us.
Being Conservative in Real Estate
I have to admit that I am a conservative when it comes to real estate, and specifically, home buying. I don’t see it as a bad thing at all. I wish that more people were like me when they are trying to buy a home. I analyze numbers until they start oozing out of my head. I make sure this scenario is covered, then I check it again. I look at the worst case scenario and make sure I can figure it out. Home buying is not my favorite thing to do, but I do understand the numbers pretty well. While being a conservative when buying a home is what you want to be, it is not the case in a hot real estate market.
The area where we are trying to live is on fire right now. People are snatching up homes left and right. I can’t say this is the case where we live, nor is it the case in other areas around the county. This is only true for the select zip codes that we are trying to enter. Location, location, location, right? This area has great schools, great amenities, and is close to many of the bigger employers. It makes sense, but I can say that we were not prepared for how crazy the home market was. Being a conservative in a hot real estate market is a problem.
Being Conservative in a Bidding War
So far, we have been in four real estate bidding wars. It has been ruthless. After I finally came to the realization that the price we were looking at was going to be the spot, I got a little more comfortable with making an offer. Unfortunately, when there is a hot market, everyone else is looking at those same homes. The homes are only on the market for a few days. Sometimes only one day at the most. Sellers know this, so they don’t worry about having to drop their price. If the home is in good condition, then it will be swooped up quickly.
I am not a fan of being in a bidding war. You have no idea what the other buyers are offering, so you have to just go with your best and highest amount. I would rather jump in an auction and throw up my paddle. At least I would know what others are willing to do and I can just move on. With these bidding wars, I have been conservative in my offer increases. I have fully weighed the previous home sales and looked into the price per square foot. I want to make sure that I am not over paying for the home.
I wish others were doing the same. We have reached a point where people are over paying for the homes. We have been outbid on all bidding wars because of my conservative processes. I refuse to pay too much for our next home. I just don’t see the point. I will immediately lose equity when I overpay. No thanks!
Though we both really want to get into a new home, we don’t want to take part of this crazy bidding process. I wish I had enough power to change the way real estate purchases were done, but I doubt that is going to happen. We just have to find a home that will accept our first offer and call it a day. If we can get our offer in early and at full price, then we should be able to stave off other bids. That is going to be our strategy going forward and hopefully it doesn’t backfire on us like all of the other bidding strategies have done.
So, what do you think? Would you keep bidding up in order to score a house in a hot market or would you just move on? What’s your approach to real estate? Are you a conservative like me or do you like to live a little more on the edge?
Photo courtesy of: Pallspera