House

5 Things We Learned Shopping for a Home in a Tough Market

How to buy a house in a sellers' market.

I actually started this post after our second heartbreaking phone call from our realtor, letting us know that our offer wasn’t accepted on the house that we had already mentally moved into. In retrospect, we were too excited too early for every property, which led to a lot of unnecessary heart ache. And while there’s plenty of advice urging buyers to stay emotionally detached from the process until everything is officially signed off on, it’s virtually impossible to do. After all, a home is likely the biggest purchase of your life and you should be excited about it when you’re committing to a 30-year mortgage!

When we started looking for homes in the spring of 2016, Madison was deep in a sellers’ market with properties priced well over appraised values. It wasn’t a deterrent to buyers who put in offers above asking, especially when they had the cash to make up any difference between the bank appraisal and the offer price. Homes were scooped up the first day of an open house and many houses were purchased sight unseen. To say it was an aggressive market would be an understatement. We toured dozens of houses, increasingly disappointed by what our budget could get us. We had hoped that $250,000 — a quarter of a million dollars! — would mean something nicer than outdated ranches from the 1970s with wood-paneled walls and gold carpet, 1950s houses with kitchens that couldn’t accommodate a dishwasher, and woefully characterless newly built homes in the suburbs. None of these houses were over 1,100 square feet, and most had a dilapidated one-car garage. We finally found a house that we loved. It was in the neighborhood we wanted to be in. It was from the early 1930s with character. It had an adorable backyard. It even had a two-car garage! It was listed at $235,000 and we offered $7,000 over asking. The house only had two bedrooms and one bathroom, and no room for expansion. It was great for us, but not for a family, so we thought we had a decent chance at getting it.

No such luck. That rejection came when we needed to resign our lease for our apartment, halting our house search for a year. (Madison doesn’t really have month-to-month leases, so we were on the hook for a twelve-month commitment with the possibility of subletting if the right house came on the market.) It was really hard for us to take a yearlong break. It’s one thing to need a year to save up for a house. It’s another thing when you have the money and you’ve outgrown your current living situation, but you just can’t find what you’re looking for. Friends and family reassured us that it was okay to wait for the right house and that it would have been worse to settle on something we didn’t love. We agreed, but it didn’t lessen the feeling that we had failed somehow.

Fast forward to spring of 2017 when we reconnected with our realtor to dive back into the house search. Much to our dismay, the real estate market in Madison had gotten even tougher. We increased our budget by $25,000 and started looking again. We had two more rejected offers until our current house came about. It was one that wasn’t actually on the market. One of the people who works at our realtor’s firm knew that the person who owned this house wanted to sell, but didn’t want to put in the effort to get it ready to show. We toured it and it was … a project. The floors were worn, there was stuff everywhere, it had a smell, and half the light bulbs were burnt out so we couldn’t actually see some of the rooms in the place. I wasn’t sold at first, but Dave saw past the owner’s junk and poor choices, and appreciated the house’s bones. It took some convincing before I agreed to put in an offer. On one hand, it was under market value, there were no competing offers, it was an old home built in 1929, there were hardwood floors throughout, original cut glass door knobs, and it was in our ideal area (two blocks down from the house we put an offer on in 2016). On the other hand, it needed work. There was yellowed beige paint everywhere, wood paneling in two bedrooms, and a list of repairs that needed to be done. It seemed overwhelming for our skill set. But we put in an offer anyway. When we received the phone call from our realtor saying that our offer was accepted, I wasn’t excited. In fact, I’m pretty sure my response was “Huh…okay.” (Isn’t that terrible?!) It wasn’t that I was unhappy, necessarily; I was just overwhelmed by the project we decided to take on.

Now that we’re in, of course, I wouldn’t change it for anything. Our house is charming, and everything we do makes it ours. There are more expansive updates to make down the road, but we would have wanted to make changes to just about any house we ended up in. It’s all part of home ownership.

During this process, I kept thinking that we must be learning some sort of life lessons with this distress — or at the very least, real estate lessons! Here are some of our key takeaways to share with first-time home buyers who are in similar situations:

1 – There’s a lot of ugly sh*t out there.
I can’t even tell you how many times I called Dave to the computer to laugh at the latest ugly-house listing on Redfin. I don’t want to be sassy because everyone has their own aesthetic and you grow to live with mediocre things because it’s easy. I totally get it. However, we looked at houses with carpeted bars, orange counters in the bathrooms, and confusing labyrinth-like layouts. When you’re deep in a sellers’ market, these properties are expensive for what they are, but are likely the ones that first-time homeowners can afford. It’s discouraging. Keep your chin up because eventually you’ll find something better. I promise. (You just might have to wait awhile.)

2 – The anxiety of waiting for a call from your realtor is unparalleled.
Oh my goodness. Do you remember back to when you were a teenager and expecting your crush to call? I’m sure you waited by the phone for hours to make sure you intercepted the call before your parents did. It was stressful! And when the phone call wasn’t your crush, you were equal parts annoyed, devastated, and anxious. That’s how it feels to wait up for a phone call for your realtor. And when that phone call meant your offer wasn’t accepted, it’s just as gut-wrenching as when your crush admitted to having the hots for your friend. Basically, the entire thing sucks.

3 – You’ll need to get creative with your offer. 
In a tough market, the seller has the upper hand, which means you may as well just accept the terms of the sale (including the move-in date) as the seller dictates. That aside, a common problem you’ll run into is that offers are being made well over market value. A bank won’t grant you a loan for over asking price, so sellers won’t always take the highest offer brought to the table – unless that offer includes the promise of cash to make up the difference. Talk to your real estate agent about ways to be leverage your money.  Fortunately, we didn’t need to go down that road, but we were planning to make our offer stipulating that if the bank appraisal didn’t come in at offer price, we’d pay up to $5,000 cash to make up the difference. It wasn’t as aggressive as others in this market, but it was comfortable to us.

4 – You can’t always get what you want.
Who knew The Rolling Stones were talking about real estate? Ha! Seriously, this is the biggest thing to learn with buying a house, especially in a hard market. You can have your “House Hunters” wish list, but you’re going to need to compromise. I never thought I’d buy a house with wood paneling, but knowing that the house was in the right location at the right price with a relatively large square footage, I figured it was something that I could live with (painted, of course) in order to snag the items that mattered more.

5 – You might not feel that it’s “the one.”
Everyone told me that we’d “just know” when the house was meant to be. And I certainly had that feeling … for the other three houses we put offers in on. I didn’t think our current house was “the one” and I had tearful conversations with my parents discussing whether or not we should buy this house. I grew up in an old home, so the quirks of a 90-year-old house didn’t bother me, but there was something about it the purchase that made me pause. My parents thought it was a good purchase for us and that we should go for it. Their confidence in our abilities, along with Dave’s parents’ help, has meant the world. I’m not sure I would have been up for this adventure without them.