Before this spring, buying a home was not necessarily on my to-do list. I have been a renter since graduating from college, living right across the border of NYC in New Jersey and commuting full time into the city for over 13 years. My general thinking was that I wouldn't tie myself down to a single location and I would be better off to continue to grow my savings instead of investing it in real estate.
Then a once-in-a-century pandemic hit. With my job transitioning to full-time remote, travel plans canceled, and a new world of social distancing, suddenly, owning a piece of land seemed far more appealing.
The landlord of the two-family home where my boyfriend and I were renting was planning to put the property up for sale, so we needed to make a move. We had enough in savings for a down payment and with interest rates at an all-time low, we determined buying was a better move than finding a new rental elsewhere.
Feeling confident in our decision, we began the house hunting process in June. However, there was one small problem: It seemed everyone else had the exact same idea. What followed was a summer filled with open houses with lines stretching around the block and agonizing bidding wars. It was one of the most emotional roller coasters of our lives.
We put offers on five houses during our search. Despite offering above the asking price each time, we were outbid three times and had to walk away from another offer after the inspection. In the end, we found the perfect house for us, but like most things in life, it took making some mistakes along the way to get there.
Here is my best advice for anyone looking to buy in this housing market.
It's become a growing trend in this competitive market for buyers to forgo inspections. Nearly 20% of winning home bids in June waived inspection contingencies, up from 13% a year prior, according to Redfin.
While it can be tempting to skip the inspection to get an advantage in this highly competitive market, I am certainly glad we got one.
After the inspection of the first house that accepted our offer, we realized just how much money would have to go into repairing it. Some issues we knew about, but the inspection uncovered several more, including the potential for asbestos and evidence of termite damage.
Video by Jason Armesto
The biggest problem stemmed from a feature that had been a huge selling point for us: The home's detached garage with an art studio loft above it. Our inspector recommended contacting the town regarding permits for the work done to the garage. But the town had no record of permits for the work, which could have caused problems both with our purchase and our chances of reselling the home years from now.
Between the lack of permits and the costs for other repairs, we decided to walk away from the property. Although it was heartbreaking at the time, the few hundred dollars we paid for the inspection was well worth it: It saved us tens of thousands of dollars, if not more, in the future.
The bidding wars were intense. For most houses, within a few days of the home being listed we were being asked for our best and final offer.
We knew when we started our hunt that we were going to be paying on the high end of home values in this market. But with interest rates so low, we were willing to accept that reality. Even so, we wanted to make sure our final offer was reasonable compared to other homes in the area. We did our research on what homes sold for in the neighborhood over the past few years and did our best to take into account the repairs the house needed.
Video by David Fang
In these over-asking bidding wars, you also have to be careful that your offer doesn't exceed the appraisal price. We did pay over ask on the house we ended up buying, but the place also appraised for more, which made us feel like our strategy had worked. If it had appraised for less than our offer, we would have had to pay the difference in cash in order to still be approved for our mortgage.
We also found that writing a letter was an effective way to stand out among the competition.
Almost half (45%) of homebuyers have made an offer on a home this year sight unseen, according to a June analysis from Redfin. That's up from 28% who did so last year.
While viewing homes in person during the pandemic was stressful, in our experience, it was important, and all necessary precautions were taken. Open houses limited the amount of people who could be inside, hand sanitizer was always provided, and masks were required. In some cases, real estate agents even passed out gloves and booties.
Video by David Fang
We saw dozens of homes over the course of our search and found that pictures can be deceiving. The house we ended up buying felt larger in person than in the pictures, and the layout of the house was far more ideal for our needs than we realized.
We also found it helpful to really explore any neighborhood you think you may be interested in. We had considered putting an offer on one other house. While not far apart in distance from the house we ultimately decided on, the streets felt much different. The one we ended up liking better had wider streets and the homes weren't as close together.
It's hard to get a sense of small but meaningful details like those if you don't see the property in person.
While virtual tours could help answer some of these questions, it is difficult to fully experience the feeling of the house remotely. Some houses just feel more comfortable or feel like they fit your personality better — and when you are making a purchase this large, those are very important factors.
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