Episode Transcript
[00:00:00] Speaker A: And I do think patience is key.
I think you as have I have had so many buyers that when they finally got their offer accepted, they're like, oh, thank goodness we waited until this house, this house is truly the best one we want. You know, they're not thinking that on offer number four that they lost out. But if offer number eight gets accepted, I'd be willing to bet that's going to be their favorite house out of all of them.
[00:00:28] Speaker B: Hello and welcome to on youn Block. We're your host, Jefferson.
[00:00:31] Speaker A: Hi, I'm Diane Clement and Pam Beatty with Waterstone Mortgage, Fox Valley.
[00:00:35] Speaker B: Every episode we dig into the questions people are actually asking on Reddit, Quora and everywhere in between. And we bring you honest, no fluff answers from people who live and work in the mortgage industry every day. No sugarcoating, no sales pitch, just real talk about buying a home, owning one, and navigating everything in between. We're based right here in the Fox Valley, so along the way we'll keep things grounded in what's happening across the across northeast Wisconsin. Because real estate isn't one size fits all and where you live matters. At the beginning of every episode, we like to highlight a local small business that's doing great work in our area. Our small business feature today is Appleton Bunthouse. Located out of downtown Appleton, Appleton Bundhouse
[00:01:21] Speaker A: has high quality, made from scratch bundt cakes for any occasion, big and small. I am currently enjoying a German chocolate cake. Very good.
[00:01:33] Speaker B: Yeah. I'm having lemon and it is delicious and moist and tastes like a fresh lemon. I really love it.
[00:01:41] Speaker A: They definitely have a variety of flavors to choose from.
Like I see red velvet in there. Double chocolate chip confetti, another lemon one, maybe a carrot cake one.
Lots of options.
[00:01:55] Speaker B: Based on my first bites, I highly recommend you check out Appleton Bundhouse. Thank you, Appleton Bunthouse.
[00:02:03] Speaker A: Ever wonder why your offer didn't get accepted? Even though you felt like it was a strong offer, you are not alone. And honestly, that's one of the most stressful parts of buying a home right now. Today we're diving into real questions and conversations online from buyers who are asking the same thing. Why did I lose? Or what does it take to win? Some of the things that will get talked about as ways to win your offer definitely fall more under a real estate agent's realm of expertise, but we will be talking from the points or the things we have seen as mortgage lenders.
How do you win in a competitive Nugget High? All me, 26 and my fiance, 27 are trying to buy a single family home in Northern Virginia. We started shopping in December and it is now the end of February. We've put in seven offers and all of them lost. Our most recent offer waived all contingencies and was for $60,000 over asking, $30,000 over our realtor's estimated appraised value. Our offer included 5% down, $15,000 in earnest money and a two week close date. At this point, we don't know what else we can do to be more competitive. Our Realtor said we need to be patient and find a seller with the right motivations. But we're coming up to a point where we'll have to renew our current lease, so we don't have the time to be patient. This all leads to my question. When you bought your first home in a highly competitive market, what did you do to win? Thanks in advance. I mean, there are some interesting strategies in there.
[00:03:50] Speaker B: Yeah, no, and they're, they're exercising some of those strategies. Right. They're working at it. I, I'll tell you this, the more competitive it is and we're getting back into a more competitive market now in the spring here in Wisconsin. But to be prepared to start early. Right. And those are some of the things they maybe did or didn't do because they have seven offers in. Right. But that will tell you that when it's competitive, you do need to start early. And it still can be a lot of work. It's buying a home, shopping for a home can at some point feel like a lot of work because you're, you know, going out looking at these homes, you're finding something, you see enough stuff you don't like, you take the time to write the offers, try to be competitive and, or aggressive depending on what the situation is to get that offer. And then it's, it's very emotionally frustrating. Right. When you, you, because once you, to the point where you put in an offer in, it's, it's not just the money. It's an emotional situation like you can feel yourself owning that home. Right. You see yourself in it. So having, having said that, you do want to be as competitive as you can with your offer right out of the chute. Sometimes I see this often.
Sometimes a person loses the first two or three because they're, they're trying to be, they're just trying to get the best competitive correct, you know, and it's best to listen to your real estate agent who's doing this every day for a living and take their advice because they know what it's going to take or have a good idea at least what it's going to take to get that, that offer in. So they went through seven offers was still. But how many of those were they competitive in or aggressive on, you know, and when they really wanted to? I don't know the answer to that. Maybe they were very. But maybe they weren't.
[00:05:24] Speaker A: Well, we know they were on their, we know they were.
[00:05:27] Speaker B: They're starting to do that, but that's what that market is. And now they realize when they go into the next one what they really need to do. And then they will get one, you know, they will get an accepted offer when as they're being more and more competitive in a given situation, and I
[00:05:39] Speaker A: agree with you, it, it starts to feel very emotional. We have heard the term over the last handful of years, buyer's fatigue. I'm sure we'll hear it again this year and it's a real thing. And sometimes maybe a buyer does take a step back for a month or so when it comes to resigning a lease.
I mean. Yep. Then you're at a decision point there because you'd be locking yourself into a lease for, you know, another 12 months. My advice on that would be if can you go month to month on your lease, can you find a place that will allow you to go month to month?
Probably not the most fun option to consider, but if you still want to seriously look for a home and don't want to be tied into a lease, can you move back in with mom and dad for a bit? What are your options to make sure that you can continue to look for a home?
If you do have to sign yourself back into that 12 month lease, maybe you do take a couple of months break and then you go back out looking for homes, knowing it could take a while to find one.
Also, if you can structure it right, you might not have that first house payment. You maybe not. You might not have to pay rent and a house payment for too many months. You might not have to double up for too many months if the timing is right.
[00:07:04] Speaker B: Yeah, if you pay attention to what you're doing, you can talk to your landlord about, like you said, going month to month. You can talk to him about, well, if I get in a situation where I find a house, will I be able to sublet? You know, I mean, some of those kind of things, there are, there are things to explore. They, it doesn't mean for sure they can happen, but it's absolutely worth exploring. Now, having said that about Getting back to being competitive, you know, it looks like this person, they were willing to do like a two week close, which means they were very well qualified. Qualified probably, and had all their ducks in a row to be able to make that happen. So that's also very important. You'll find out that it can be difficult even to get someone to show you a home if you don't have your pre approval in place and have it with someone local that they trust and know is going to, you know, really stand behind that pre approval.
[00:07:46] Speaker A: I think, yes, you definitely need the pre approval. But this is interesting. And a two week close date, that might work for some sellers. But what about a two month close date? There might be somebody out there who would consider selling their home if you give them time to find their next move. And I'm working with a buyer in that exact situation. This buyer had some flexibility.
He found a home and the seller said, yes, we would sell our home to you, but we need to find our next home first. And they worked together and made that happen. So maybe it's not a two week close. Maybe it's, can you offer some flexibility with a longer close? Is it a older couple who's going to need the time to go through the house they've lived in for 40 years before they downsize?
You know, $15,000 in earnest money asking, you know, over ask price?
You know, those things do work sometimes. You know, one thing that's not mentioned in this one is an appraisal gap.
You know, maybe instead, Instead of going $60,000 over, $60,000 over, maybe you go less over, but offer some certainty with an appraisal gap. I mean, I've seen, we've seen some unique things. I've seen buyers offering to pay sellers closing costs. I've seen buyers offering to pay the full year's taxes.
It is competitive, no?
[00:09:15] Speaker B: And a lot of those things, honestly when you get into them, it's maybe more of a realtor conversation, right? With your realtor that understands and sit down with someone local that really understands and what it takes to get that they do this every day for a living. That's an important step, is to have those conversations with your realtor or, you know, whoever that might be. But local is important.
[00:09:35] Speaker A: And I do think patience is key.
I think you as have I have had so many buyers that when they finally got their offer accepted, they're like, oh, thank goodness we waited until this house, this house is truly the best one we want. You know, they're not thinking that on offer Number four that they lost out. But if offer number eight gets accepted, I'd be willing to bet that's going to be their favorite house out of all of them.
[00:10:02] Speaker B: Hi, we're actually same age and same market as you guys and just landed our under contract.
Happy to share more on the dm, but these are the things that helped us. We've been on the market for eight months now, put seven offers throughout our journey and have very clear boundaries. Never offer free rent back over four weeks. We do not offer without inspection and we aren't willing to put offer with no contingency without seeing the house.
At the beginning we worked with an agent that was trying to get us to offer an arm and a leg in order to get the property such as offering 70,000 above asking or putting offers without seeing the property. Very quickly we realized in our market we need an agent that knows their way enough and can actually get deals before they hit the market or right as they hit the market.
We ended our contract right there and got a new realtor which was the best decision ever. His name is Christian and I'd be happy to connect you with him if you reach out. He was honest, sharp, he negotiated like we never saw before, got us showings first and had the best strategies to get us the houses without overpaying. So tip number one is have a shark of a realtor. Other than that, my most valuable advices would be one. Be willing to see houses even if they are ugly in picture. Some houses aren't as bad as they look, understand the market is tough and give up on things that aren't an absolute necessity. We got under contract on the house for 735,000 but it needs around 40,000 of work. We know this is a lot, but the market is rough. House had a lot of potential and hits are must livable conditions for the most part and big ticket items are all clear. Go to see houses on weekdays, during lunch break or generally evenings. If you wait on weekends always you will have people that will outshop you, have patience and lots of it. We lost our dream house a couple of months ago because the sellers were playing games and being very uncooperative. But we ended up getting something in the end. Happy to share our realtors and lenders, they truly were the best in this market.
[00:11:47] Speaker A: I mean a couple of things. I think it comes back around to making sure you have a solid team around you. You want to have a great local real estate agent. You also want to have a great local lender who works well with that agent making that team. So we can help you put together financing that will be the most competitive for your situation.
I also like what is being said about what are your must haves. I think. And again, you're the real estate agent. I feel like we're kind of diving into some real estate agent topics here. But I know the agent will sit down and be like, okay, what are your non negotiables? What are the things you must have? What are things you would like to have but can live without? And what are things that don't really matter or not of interest to you?
That's some great advice.
Also, be willing to look at ugly houses. There are some houses that maybe just don't photograph well or the quality of those photographs are not good. Go check them out anyways.
[00:12:46] Speaker B: Yeah. I will tell you, we work with some really talented realtors that can see what a house can be with not spending all kinds of crazy money in order to make that improvement in the property. They see the vision of what that house because they see a lot of houses every day. But there are some that honestly are that good at being able to see that and put you in a, in an opportunity to be successful. Even though you might, you might not see that all by yourself without their talent.
[00:13:16] Speaker A: And many of them have lists of preferred vendor partners, contractors, people who can help you so you don't have to be your own Mr. Fix It. They can put you in touch with people who can help you make the small changes that might make all the difference for that house.
[00:13:30] Speaker B: I agree.
[00:13:31] Speaker A: Lastly, again, back to the patience. I think patience is a must right now.
Patience is a must.
Well, the first question is, has your agent asked why you didn't win or or have any closed so you can see what won?
Are there homes that have been on the market for three plus weeks that won't have to be so risky with your offer that you might get for under asking so that you can maintain reasonable contingencies?
For this particular home you mentioned, let me point out your risk.
That is why you may or may not have one. If you're not putting 20% down, there is some real risk that any other offer above what the seller thinks the home can be appraised for is downgraded because the other side knows the house doesn't appraise. Either you back out or they have to reduce the price. Meaning an offer at 30,000 over asking with a higher down payment and at the same no inspection contingency would actually be better than your offer.
[00:14:40] Speaker B: This goes back to the stronger you are, the better offer you can put forward. Right. It doesn't mean that you shouldn't go out and put an offer in. You know what I mean? But there can be stronger offers. That's. That's the bones. And that's a real estate conversation with a realtor in terms of what's the best offer you can put forward. Right. Based on what you have to work with. So, you know, their point is, has your agent asked why you didn't win, or have you close so you can see what won? That's a realist realtor conversation. But they can then work with us to say, what are your options? What do you have to put yourself, your best foot forward, you know, in terms of resources that you're willing to work with. And it becomes, back to the other point, becomes a situation where you have a team, you have a lender and a realtor that are working together so that they can get you in the best opportunity in terms of successfully getting an accepted offer.
[00:15:28] Speaker A: Right? Right. I think, you know, the one takeaway out of this comment is I have heard over and over again, it's not always the highest offer that wins.
[00:15:37] Speaker B: Correct.
[00:15:39] Speaker A: It's not. So you don't have to be the highest offer.
Where else can you get creative? Where else can you use your resources?
And what is your local real estate agent suggesting for a particular property?
[00:15:53] Speaker B: We're closing next week, and the seller picked us over a slightly higher offer because we wrote a letter introducing ourselves and told him how much we loved the house and why. He said he liked us and wanted the house to go with someone who would love it as much as he did.
I did this, too, and the seller sold the house to me, even though my offer, while on the high end, was not the high end.
Just be careful with the letters, guys. My house got about 20 offers, and the buyer's letter was a huge turnoff. Full of religious things. I'm an atheist.
I didn't hold it against them, but I sometimes wonder if they think their letter helped. It did not. We just picked the top offers that seem likely to be owner occupants, then took the one that was submitted the earliest in an attempt to be fair.
[00:16:36] Speaker A: Again, lots of interesting things in those comments.
Definitely two takes on the letter or no letter. And I know even here in northeast Wisconsin, there have been opinions on it.
Some people do them, some people don't. Some agents will present them, some agents won't. I think it goes back to also remembering the seller can pick whatever offer they want.
There's no the seller doesn't have to pick any certain offer or base their decision on any certain one characteristic. It sounds like the one seller was really moved by the letter and so he wanted to sell it to them. I had a buyer one time win because she was going to own or occupy the property, and the first owner felt that she had gotten beat out when she was looking by a lot of investors. So when it was her turn to sell, she wanted to sell to someone else who was going to own or occupy.
Other sellers, you know, such as the seller at the bottom there, they weren't emotionally moved by that letter. They were kind of maybe looking more unemotionally at other price points, other caveats to the offers. I think it just goes to show you maybe have to try a couple of different tactics and a little bit of everything.
[00:18:04] Speaker B: I agree. The more flexible you are and honestly, taking the advice of the experienced agent that you're working with, the real estate agent is, is the best thing I can tell you in those situations, because they probably have. I shouldn't say probably. They may have some insight into the seller's mindset that can be helpful and how to go at making that offer foreign.
[00:18:32] Speaker A: I think the big takeaway from these set of comments and prompts we've just gone through is you need to have your local team assembled before you go out and start looking at homes. You need to have your local lender and you need to have your local real estate agent. They together will act as a team to make sure they put you in the best position possible and to get your offers viewed and accepted. So if you have questions about things you've seen online or you're ready to put a plan together to buy your home, please give us a call at Waterstone Mortgage. We would love to help. And if you found today's information valuable, please subscribe. Wherever you get your podcasts.
