Real Estate is a Circus Right Now

[Brian Elfert]

Stuff here goes Pending or Contingent within a day or two of listing. It sure would be nice to be able to find a $200-400K property around here, but that's just not going to happen! Sometimes, there's a property in the mid-300s that needs a ton of work, but those most often get scarfed up in cash deals to flippers. We have seen and bidding on a property at $480K plus escalator, but that sold for $510K which was above our ceiling for that offer based on the property. (would have had to build a building there and the logistics of that would have been "fun" due to the nature of access from the street)

I am pretty much on the edge of the metro area here. For the most part, finding anything under $300,000 is rare. $300k to $400k is about as cheap as it gets. My three acre lot and 1,300 square foot house are worth about $325k.

If someone wants to live closer in then the prices are more like $450,000 and up to live in a decent suburb. I really wish I had waited a couple of years to sell my previous house. I could have netted another $100,000 while prices out where I live now didn't go up that much in the same time.

[Brian Elfert]

I suspect other sellers feel the same way. You could buy with the requirement that the seller purchase a good home warranty policy, one you approve of.

A home warranty isn't going to cover major issues like a collapsing basement, mold in the attic, or other structural issues. I feel like I know about houses than an average homebuyer, but I would still want an inspection. There is a home inspection company here that is very good. I had them inspect my current house and the report was at least 50 pages. I knew the house had major issues, but I wanted to be sure I didn't miss a show stopper issue.

When I sold my previous house the home inspector only found one issue. It was a tiny drip on the sump pump discharge that was easily fixed. Well, he also found the stove didn't work, but the child lock on the stove was on and it was really just fine.

[John Goodin]

Jim, you know this but.... Stay focused. Be patient. This is a financial decision as much as a lifestyle decision.

Real estate is awful here in Austin -- particularly for home buyers in the sub-450K price range. I have inspected one home since the summer that was not multiple offers, sometimes as many as 30, and that one never hit the market. The seller's agent thought he was leaving tons of money on the table for taking just 15K over asking.

Another client listed at 399K and sold for 131K over asking price. From what I have noticed is that many home buyers, particularly first timers, lose a few bids, get stupid, offer crazy money and make up the difference between the appraisal and sales price.

[Clifford McGuire]

We had a similar situation Jim. We have a small farm, and retirement years are approaching. We want to simplify our life, so we want something 'in town'. No more 100 year old farm, well & septic, etc. And we have a daughter with health issues and we need to be close by. We were looking for something with a small apartment over the garage.

Missed out on a lot of properties. Then we got lucky. In October we saw something that checked most of the boxes. While being shown the house, the owner came back. We struck up a conversation with him, and I think that helped. I know there were three other offers and he picked ours. He said the house was being sold "as is". Our inspector found a problem with the radon system that would cost $600 to fix. Nothing else. The owner did pay for it.

Did we overpay somewhat? Yes, but I think we'll get top dollar for our current place. So, it kind of evens out. And prices keep going up. Similar properties are way more than we paid just 5 month ago.

[Jim Becker]

[Around here there are a lot of disclosure requirements when selling a home. If a known problem is "material" and not disclosed it's a reason to void the sale. One requirement I found interesting is that you must disclose if someone died in the home in the past three years (that is, physically in the home).]

Disclosures are pretty much required in the industry. They are available as soon as the property is officially active for sale and we review prior to even doing the fifty cent tour. Not disclosing something important isn't a good idea for sellers for sure. Of course, the only way to catch it is with an inspection. LOL Cash buyers can certainly chose no inspections and no appraisal easily. They "may" be able to get away without inspections if they are financing, but it's unlikely they can do that if they have a mortgage in play. The bottom line...it's a game.

--

We actually chose not to put in an offer on the property we visited yesterday. It was really, really attractive in so many ways, but with honest reflection, it was "too much house" which misses the point of the exercise. But oh, it had a very unusual feature that was perfect for a woodworker...an attached "garage" that you could fit more than six vehicles in that already had a sub-panel and hot and cold running water...no need to build a building.

77Phesant.jpg

[Jim Becker]

My three acre lot and 1,300 square foot house are worth about $325k.

I'd buy that in a second, but around here, 3 acres with that size house would still sell for at least $500K. There's one just down the road with 2 acres, 1500 sq ft and a slightly larger than two car detached garage for $599K down from $649K. And that's an "as is" price...

[Jim Becker]

JFrom what I have noticed is that many home buyers, particularly first timers, lose a few bids, get stupid, offer crazy money and make up the difference between the appraisal and sales price.

That's become a popular method here for some folks...an addendum to the offer that indicates the buyer will cover appraisal deficit. That happened on the in-town property we really wanted two weeks ago...

[Rob Luter]

We have the same situation in Northern Indiana. Low inventory and high demand. A friend is looking for a place and at every showing the seller's agent tells them there are already multiple offers and to bring their best and highest immediately. This is on homes that have been for sale less than a week. They're about to hit the back end of a seasonal lease and need to make something happen really soon. I'm glad I'm not in the market

[Ron Citerone]

For someone downsizing, and not in a hurry, the ability to wait for something that really meets your needs is the way to go. Your problem is a good one to have IMO.

[Jim Becker]

For someone downsizing, and not in a hurry, the ability to wait for something that really meets your needs is the way to go. Your problem is a good one to have IMO.

I agree, Ron. We are trying to be very selective but have also determined that when there's one we like that meets most of our parameters, we have to be aggressive and fast. We already know what our offer will be before we walk in the door for the tour so that if we are in agreement, the response can be immediate. We already have an appointment for this coming Thursday for a property that goes live "that day" which nails our location desires and other factors. It's literally around the corner from the first property we offered and lost to someone bidding way above reasonable. This new opportunity would be a "from scratch" shop build, too. Fortunately, it's starting to get into the season that many folks "traditionally" market their homes as projected closing dates are near or after school lets out for the summer. That may or may not help or make it even more of a circus! LOL Of course, if we find something sooner, that means we can have this place on the market sooner and participate in the feeding frenzy....

[Bruce King]

I read an article the other day about all these new homeowners where many are having buyers remorse. They didn’t figure in all the expenses of foregoing inspections, furnishing, repairing etc. Some didn’t get the help from family that they wanted. So some of these will come back on the market. When we sold our 2nd home 3 years ago, I was acting as the listing agent with a flat fee listing. We got a full price offer from a Navy Captain who I didn’t get to meet. I knew at the time it was overpriced and believe it or not I turned it down. He was getting a VA loan and I thought they would not approve it. We would end up losing several weeks of the selling season. What I did was counter with a 5,000 non refundable deposit and said that if you feel confident I want to also. He denied it. I felt bad in a way but my wife overheard a conversation where he said that he really wanted a house in a certain area. He had been out bid 6 times already and this was 2 years before this market. We checked the tax records a few months later and found out that he found a house where he wanted to be. We did him a favor.

[Mike Henderson]

In today's market if you come in with a VA or FHA loan, the seller will probably not accept the offer. The reason is that the home must be inspected by the FHA (for example) and they often find things that they require to be fixed before they will give the loan (could even be something like a new roof). For the seller, that stretches out the closing and adds cost. So they're rather just accept either a cash offer or one with a conventional loan but not contingent on the appraisal (the buyer will make up with their own funds the difference between the selling price and the appraisal).

I sold a house where I had a higher FHA offer but turned it down because of the problems that can occur with an FHA loan. VA and FHA loans are good when it's a buyer's market but not when it's a seller's market.

Mike

[Jim Matthews]

77Phesant.jpg

That's not a garage, it's a hangar.

*Less* house is good.

[Brian Elfert]

That's not a garage, it's a hangar.

*Less* house is good.

My brother is building a house with a 30'x40' attached four car garage. Since it is 30 feet deep I think I could pull in my minivan with my 6x10 trailer attached and still close the door.

I am planning to build a 48x60 garage to hold my 45 foot motorhome in the next two years. It has nothing to do with competing with my brother. My garage has been in planning since 2014. I bought my house and lot specifically so I could eventually build this garage. I downsized my house size when I moved.

[Jim Becker]

Yes, the garage on that house was "to die for" give my purposes. The whole place was beautiful. I was just too big for two people and you can't just lop-off one end of the thing. LOL