First Offer, Bidding Wars, and Sweat :)

[Alice K.]

Hello All,

This is just a  story of first steps for anyone out there interested in hearing about it from a new person.

One thing to note: This is very time consuming if you're really involved in the process as I was. My partner was the one with the finances, and I was handling the bulk of the process. 

3 nights of 5 hours of sleep from stress. It was nuts, but in the end you feel like you learned something. 

Thanks to the inspiration and advice from BP, and several other podcasts I've been listening to, my partner and I put an offer in for a house. We didn't get it but I look at it as the first step to getting in the right direction and breaking through "the wall".

I spent 1 year+ looking for a place, we finally got up the balls / courage to get on top of it and put in an offer in Washington.

Some tips for new people, my own opinions, that is from a lot of research and this experience:

* It's a hot market and honestly I feel like some places are overpriced and becoming absurd. I feel like a lot of hype from real estate agents is not helping the situation. At least in the more central areas. I live in San Francisco, my partner is in Washington and jeez, the prices are a bit silly in my mind, but so be it. I was like: "We're not even in the Bay, what the heck."

* Unless you want to fight, forget about the low-priced fancy places. We hit a steep bidding war. My partner and I are split, we want a nice place in a good location but at the same time, may want to "house hack" (he renting to his friend for a discount since they've been roommates for 5 yrs+)

* Remember taxes if you're pulling from stocks. My partner has a lot of stocks. When we came up with our down payment offer, we forgot to factor in the heaps and heaps of taxes

* Closing cost-- Rememebr this when thinking about the down. We didn't factor in the heap of money for this. ($10k according to our loan person.) Our real estate agent "didn't know" the closing cost which was a bit absurd. She told us to go to our loan officer, which makes sense but I'm not sure how I feel about that lack of insight and trying to avoid talking about it whatsoever. 

* Get your credit in order first. I was very fortunate to have good credit, but when you buy with another investor, if you're both signing the mortgage loan, they'll use the lowest one (figures). I am hoping very hard we can get his credit fixed in time for the next offer!

* Avoid taking out contingencies. I heard about this everywhere on many podcasts but you know what, if you're not comfortable, screw it. Don't let your agent persuade you otherwise. I took out a lot and you feel naked. Esp if you don't want to lose earnest money (the money you throw the towel in if you change your mind). 

* Pray. I don't know if you're religious, but you know what, I would recommend this. Hahaha. At a certain point, I would just pray the right thing happens. In a bidding war, who even knows what the sellers want. If it's meant to be for you, I feel it will happen if you've done the best you can. After the offer I looked at my bank account and was like "Oh man, this might be wayyyy too much of a down."

But yeah-- thanks to all who have been sharing their stories and tips.

Also! If you're a fellow BP user in Seattle, San Francisco, Spokane, or California would love to connect on your thoughts!

Cheers,

Alice

[Troy Fisher]

Originally posted by @Alice K.:

Hello All,

This is just a  story of first steps for anyone out there interested in hearing about it from a new person.

One thing to note: This is very time consuming if you're really involved in the process as I was. My partner was the one with the finances, and I was handling the bulk of the process. 

3 nights of 5 hours of sleep from stress. It was nuts, but in the end you feel like you learned something. 

Thanks to the inspiration and advice from BP, and several other podcasts I've been listening to, my partner and I put an offer in for a house. We didn't get it but I look at it as the first step to getting in the right direction and breaking through "the wall".

I spent 1 year+ looking for a place, we finally got up the balls / courage to get on top of it and put in an offer in Washington.

Some tips for new people, my own opinions, that is from a lot of research and this experience:

* It's a hot market and honestly I feel like some places are overpriced and becoming absurd. I feel like a lot of hype from real estate agents is not helping the situation. At least in the more central areas. I live in San Francisco, my partner is in Washington and jeez, the prices are a bit silly in my mind, but so be it. I was like: "We're not even in the Bay, what the heck."

* Unless you want to fight, forget about the low-priced fancy places. We hit a steep bidding war. My partner and I are split, we want a nice place in a good location but at the same time, may want to "house hack" (he renting to his friend for a discount since they've been roommates for 5 yrs+)

* Remember taxes if you're pulling from stocks. My partner has a lot of stocks. When we came up with our down payment offer, we forgot to factor in the heaps and heaps of taxes

* Closing cost-- Rememebr this when thinking about the down. We didn't factor in the heap of money for this. ($10k according to our loan person.) Our real estate agent "didn't know" the closing cost which was a bit absurd. She told us to go to our loan officer, which makes sense but I'm not sure how I feel about that lack of insight and trying to avoid talking about it whatsoever. 

* Get your credit in order first. I was very fortunate to have good credit, but when you buy with another investor, if you're both signing the mortgage loan, they'll use the lowest one (figures). I am hoping very hard we can get his credit fixed in time for the next offer!

* Avoid taking out contingencies. I heard about this everywhere on many podcasts but you know what, if you're not comfortable, screw it. Don't let your agent persuade you otherwise. I took out a lot and you feel naked. Esp if you don't want to lose earnest money (the money you throw the towel in if you change your mind). 

* Pray. I don't know if you're religious, but you know what, I would recommend this. Hahaha. At a certain point, I would just pray the right thing happens. In a bidding war, who even knows what the sellers want. If it's meant to be for you, I feel it will happen if you've done the best you can. After the offer I looked at my bank account and was like "Oh man, this might be wayyyy too much of a down."

But yeah-- thanks to all who have been sharing their stories and tips.

Also! If you're a fellow BP user in Seattle, San Francisco, Spokane, or California would love to connect on your thoughts!

Cheers,

Alice

1 - What makes the prices Absurd?  Seattle is becoming more like San Francisco every year.  Our tech community has been here longer, and is more ingrained, and less volatile than San Francisco.  We don't have the high spiraling IPO crowd to make prices run up fast, our prices have been on a slow upward trajectory for more than a decade.  

2 - What's a low-priced fancy place? It seems to me that if you and your "partner" are not on the same page with your investment strategy ( are you buy and hold, house hackers, flippers) then you will be butting heads.  And will have bigger problems down the road as the investment ages.

3 - It strikes me as a flaw in thinking that you didn't calculate, or forgot the cost of money.  Whether it's hard money, proceeds from stock sales, or just FV of money, it's part of being an investor, sometimes we have to quell our emotions and take steps back, or drag our feet a little bit so that we take a look at different aspects of what it takes to do real estate.  

4 - Sounds like you found the wrong Agent.  I would have dropped my agent if they hadn't been able to estimate the closing costs.  Remember this a major investment and you want to have knowledgeable, smart people helping you out.  Kick this realtor to the curb, and find a great realtor, they will save you a lot of time and stress.

5 - Did you know about his credit before applying for the loans?  Has he taken steps to get it fixed?  Credit is a very big factor in getting loans, and this is sticking point for a lot of new investors.

6 - While taking out contingencies may sweeten your offer, it can be dangerous, but there are ways around this that are common.  For instance during the open house schedule an appointment and have your Home Inspector meet you there, it's becoming more and more common for this. 

I think your sharing of some of these key points is great!  And I've been told that often times I come across on these boards as "mean" I like to think of it as being direct, and trying to challenge you to think about what you are doing, for new investors that first transaction is hard and scary, and often takes awhile to pull the trigger.  It seems you stumbled on almost every point that new investors struggle with.  So now that you have been through the process, it sounds to me like you and your partner really need to get together and solve these problems, and move forward.  Remember this is a business, and to be successful you need to have a plan and roadmap.  

@J. Martin hosts some great meetups in San Francisco and Oakland with some fantastic Investors go there!  If your partner is in the Seattle Area, I host a meeting on the East Side every month.  Network, learn, experience, and get back out there and close a deal!