All Forum Posts by: Vivian O.

@Vivian O.

I have read through most of the comments you have gotten and it sounds like you are getting calculus advise when you are in the basic arithmetic stages.

I have to say personally, buying in a hot market, 6 offers isn't that many. In Aurora CO in 2015 when I purchased my first home I had to submit 16 offers before one was accepted. Buying homes is a numbers games, what numbers you need to hit to make it work, what numbers you are going to pay for the home, what numbers you are going to submit before you get a deal under contract. It doesn't cost you anything (besides time and emotional stress) to make an offer. So make those offers, throw as much mud against the wall and see what sticks. If you can go look at homes during the week go do that. Check out a home on Monday and put in the contract you want to have an answer by Tuesday Night. And then on Tuesday look at another and have a contract ready to go when the one on Tuesday night gets rejected. If you are going to be full time (which I assume you are) then just treat it like a numbers game an go from there.

It sounds like you have all your ducks in a row for your offers, pre-approval letter etc. And it sounds like you cannot make your offer any stronger with a higher down-payment or higher purchase price. So you need to play the numbers game. And since this is your first house it is going to be the most emotionally draining purchase, you need a place to live, but stick to your numbers and your goal and eventually something will come along.

When you move on to house 2 or 3, then you can start with the calc lessons. But this is your first house, crawl before you walk.

Do not get discouraged, in a hot market 6 offers isn't anything, and it sounds like you got close once already!

@Vivian O. you are being given some confusing and contradicting advice here. Maybe I can help to put things a bit in perspective.

First, keep in mind that how offers are written and presented is very different in many States. Midwest works much different than Califoria. It's not only the state law, also lending and how offers are presented varies greatly. Some of the things I read here will definitly not fly in MN.

Second, speaking for Wisconsin and probably MN, sellers will always much prefer a conventional loan over FHA or VA! As soon as you are conventional the property does not have to pass the much dreaded FHA inspection. It often results in a repair list for the seller to keep the deal together; listing agents are well aware of this. FHA is always the the last choice for a seller. Is it better to have 20% down, yes, but the most important thing to sellers is that you are conventional. In markets like the Bay Area you need to have over 20% down, because everyone expects (!) the property to not appraise out and the buyer has to be able to close the gap with cash. You see how different local issues are. So, you did the right thing to go with 5% conventional.

Blasting out 20 or 100 offers is something I have never understood. As a listing agent I will catch that in the first 3 seconds looking at it and advise my client accordingly. I am sure it does work in a certain market segements and with the combination of desperate and maybe naive seller, incompetent listing agent and a property with issues. This approach will not work for a quality property, at least not in my market. If I write offers for myself I get about 2 out of 3 accepted. Someone will say now I am offering too much, but comapring my acqiuisitions with solds tells me different. It is a matter of understanding the seller before writing the offer and that takes some work, effort and experience.

Witch leads me to the last point - working with an great agent. I don't enjoy stating this, but everyone knows agents come in many different grades. I know from my own experience when I started working as an investor and long before I got licensed - I had to part ways from quite a few to find someone who was actually competent. A good buyers agent will get deals accepted. Not every single one, but most of it. Here is why - I can tell my clients before we write the offer what the probabability is to get it accepted. Your agent does not know what they are doing if they put you up against 30 other offers with 5% down. They should know there will be at least 5 cash offers and 3 of them will be absurdly high. Anyone who has ever read Sun Tzu knows that is not the way to go into battle. Its a waste of time at best.

The only real practical advise I can give you from afar is to find a really good agent, preferably one that specializes in buyer representation. Ask a broker for who their top performing buyers agents are. You want to work with someone who personally (not team) does over 40 or 50 transactions a year. I am with Keller Williams and you can just call any KW market center and ask to speak with the team leader; they will match you up. Hope this helps, don't get discouraged, it will work out!

Are you buying to invest? Or buying to live there? Two completely different things honestly. I don’t understand what you mean by “running the numbers” on a single family Home you plan to live in. What would be the numbers you are running? The future value of a home that your turn a basement into a bedroom? Just kinda unclear on your goal. Buying as a rental and running the numbers makes complete sense to me, the former doesn’t though. There is no way to know the future value of the home unless you know you’ll be selling within the next few months, which doesn’t seem to be the plan.

Maybe clarify? If you looking for a home to call your own, that’s doesn’t need much work or repairs, your likely to pay market price or more, so this story is likely to continue to play out the same way.

Any chance you can find a duplex to defer the mortgage payment to a certain degree?  The price might be higher but with the rental income, the overall payment might actually be less for you.  

Another option is to find a hard money lender to partner with to make a full-cash offer.  It'll cost you a little more for the hard money up front but as other's have mentioned, you might be able to offer less and get the place with a full-cash offer.  Then after the purchase, you could (re)finance the home and pay the hard money lender off.  There are a number of things that could go wrong here (doesn't fit into the loan specs that you want, the house doesn't appraise at what you need it to appraise at, the hard money lender requires more equity in the deal, etc.) but I'm trying to think outside the box to make your initial offer appear more robust.  

Another option is networking with as many wholesalers as possible at your local real estate networking events (REIA) and try to find something that can pass for an FHA loan or whatever. I've seen a few pretty solid places come through my email that might be able to pass for a conventional or FHA loan. I know some stud and studette wholesalers see houses of all conditions come across their desks. With that said, most of them require quick closes and cash offers, but I think they get long runways every now and then. You may have to pay more (once again) but you might be able to get something without having to claw it out of the competition's hands.

I'm struggling to put my thoughts together on my next idea so I'm hoping that others can fill in the details.  What types of loans can you get (conventional?) where they can wrap the rehab costs into the loan?  This might work in the situation that you buy a fixer-upper duplex, live in half and rehab half.  Then flip to the other half.  I hear of people buying fixer-uppers all the time and getting rehab costs wrapped into the loan.  

At the end of the day, don't over-extend yourself.  I know starter homes in the Twin Cities are getting harder and harder to find.  That also means that it's starting to make sense to rent rather than buy.  Maybe you should rent a primary residence and buy a rental prop in another market.  This could help you offset your current rent.  With your high FICO score, and a W2 income, you'd probably pretty easily qualify for another market where there is a little less competition and better rent to value.    

Okay, enough thoughts for one post.  DM me if you want me to elaborate.

Oh man this can be frustrating...You can try auction websites. I was in a similar situation in the SD market in 2012 searching for a primary home when the market was turning around and everyone was trying to pick up a home. This was before I knew anything about running numbers and at the time was the only shot I had at purchasing a home with quickly rising prices. We were bidding on homes that regularly had 15 offers and one had 43 after being on the market 1 week with a 1 hour showing! We got lucky with a property on gohoming.com (I think hubzu now).

The key for us was that it was not listed in the local MLS so we didn't have all the other locals to compete with. Ad distribution is probably better these days with sites like auction.com but at the time the property was listed for LA county for some reason and we only had to compete with 2 other bidders (it was on zillow in the correct location). The nice thing was that it was ebay style bidding online so we could see the other offers and simply bid 1K at a time up to our limit. We bought the property for $50-75K less than offers we were putting on comparable homes in the area which weren't getting accepted.

There are many quirks with these type of auction websites. Gohoming specifically, required a lot of extra fees and requirements. Over $9K for a "Buyer's Premium" and $200 for a "technology fee", min down payment of 10%, requiring us to use their title company (which was the worst), very restricted property viewing window, sold as-is among other really annoying restrictions. How bad do you want it is the question. Here's a thread on bigger pockets to others using it in the same timeframe who opted to pass on Gohoming. It turned out to be a big win for us.

https://www.biggerpockets.com/forums/48/topics/727...

Like other's have mentioned above, providing a cover letter sometimes help. Offers were being filtered to top 5 or 10 offers and we were able to have opportunities to make best and last after the funneling. Our best and final just didn't cut it in the end with the amount of competition we were up against. Can't be certain but I like to think it helped make it to the next round in some of those situations. Think of it like applying for a job and adding a cover letter to a resume. It may not get you the job but helps get you noticed for the next round.

Good Luck!

@Vivian O.

A lot of people chimed in on this post, including the guru Jay. All these posts talk about how to find and get offer accepted at low 5% down or FHA. However, I believe the most important part of the process is the loan. It would be a shame if you finally find a property and get offer accepted to not obtain a loan.

You never mentioned your fico score other than strong. Also, never mentioned that you have a pre-qualified letter in hand. 

In all the time doing loans as a mortgage banker, I had very few 5% down loans conventional come across my desk. The reason is because they are hard to qualify for. However, many FHA loans.

If you obtained a pre-qualified letter, it would state amount you qualified for and terms.

Terry

@Vivian O. where are you looking and what are you looking for?

That's not uncommon at all. It's been happening for years and could happen for years more. Just keep going and eventually you'll get something.

House was listed for 140k my best and final was 175k and I beat 25 offers. The offer still made sense because we are adding value (Expanding kitchen, adding a bath and a bedroom). Have to get creative, you have young bucks out here that don’t care if they make pennies on their dollar.