My first 60 days - buyer - Bay Area, CA

[Kyle N.]

Hello, I thought I'd share my feedback on my first 60 days as a buyer. I started my real estate journey about 4 months ago, reading books, listening to podcast, and multiple meetups. I've seen lots of progress 

Background

• Status: Renter
• Purchase Location: Bay area California
• Criteria: MFH,  Oakland, Richmond, El Cerrito, South San Francisco
• Goal: House hack

Wins

• Found a lender that has me fully underwritten pre-approval FHA near max and I can close on a property in 17 days.
• Met and made connections with contractors, lenders, flippers, agents.
• Part of an African American real estate investment group and have a small group of real estate friends

Challenges / Learnings 

• - I have no idea how the relationship between the Buyer and Agent is supposed to work. I'm basically a project manager by day and I don't expect everyone to work at the same speed as me. 
• - I'm visiting open houses and discussing homes before my agent can send them to me and I do not have access to MLS.
• - Agents work in specific cities and stick to those areas because of their relationships. Is this a limiting factor for me since the city location is not the biggest factor? My high-level criteria are if I can commute to the SF in a decent neighborhood near a grocery store then another tech worker is willing to do the same. I have other criteria but its all numbers bed/ba and income related.
• - I think the communication between buyer - agent - lender through email is bad when discussing multiple properties. There has to be an APP to handles this - (millennial thoughts haha)

My first offer

I found a SFH with ADU fully updated and permitted. Asking was $700k and I think they had 13 offers. I ran the numbers and the rents worked with me so I placed a bid around $770k conventional waived inspections with a 17 day close. I didn't win and the highest bid was ~$810k. *tear drop goes here*

My next steps

- Cry myself to sleep. Nope. I was out the next day at other open houses.
- stay hungry but patient

For you, is there anything else I should be doing? Am I missing anything?

[Dan H.]

Originally posted by @Kyle N.:

Originally posted by @Katie P.:

@Kyle N.  when you say you "waived inspections" did you also waive appraisal and loan contingencies?M

 My mistake, Yes to Both

 What would you have done in the appraisal came in loser than the negotiated price?  Did you have addition money to bring to the close?  Would you have done so (basically pay more than retail)?  What would you have done in the inspector found a large issue such as significant foundation issues.

I never recommend a newbie waive the standard contingencies unless they are willing to loose their good faith money.  The issue is that the newbie's value could be off or the inspector could find a large issue (I had one inspector find a $30K problem and we found a $45K problem).

Waive of contingencies is best left to those with significant experience and/or that were not planning on using conventional financing.

In addition, the appraisal basically establishes retail price.  The appraisal should be an independent party that has some expertise in determining value (even though I have seen many poor appraisers).  RE investors should strive to purchase below retail and not pay above retail.

Be cautious.  Do not get caught up in the frenzy.

Good luck