These days, it seems harder for us to find common ground, especially in the United States. Red states vs. blue states. Which lives matter most. Mask or no mask. To vaccinate or not. It makes me long for the days when some of our fiercest debates were over the Yankees and Red Sox.
Despite our differences, it seems we have found at least one thing to unite us: By my unofficial estimate, I am convinced that EVERY SINGLE AMERICAN has decided to buy a home this year. Seriously, like all of us. Lately, I can hardly have a conversation where the topic doesn’t turn to real estate and the red-hot seller’s market we are enduring.
Did anyone see this coming? Who knew that an economically depressed time for our country would set off a homebuyer frenzy? With the pandemic, there were scores of job losses. Full industries took huge hits or had to pivot to survive. Many Americans weren’t sure about their next paycheck. So, who would have thought this type of uncertainty would have given way to what my realtor calls, “the hottest market she’s seen since 2004 or 2005?”
Low interest rates and even lower inventory have fueled this seller’s market. You also have remote workers being able to work from anywhere. You have people whose homes have become offices/schoolhouses looking for more space. You have people crossing the globe, the country or even their small towns looking for a new place to call home.
For us, it was the insane drop in interest rates that led to our search for an investment property. So, against this backdrop, we began looking for a home.
When we started, we thought buying an investment property would be a simple task. After all, when we purchased our main home, great schools and great neighborhoods were at the top of our list. As an investor, we had a little more flexibility. Who would have thought in a few short desperate months, we would go from stalking toilet paper to staking out houses?
We started out looking for a ranch house. The goal was to find a home to rent to an elderly family member to make it easier for them to age in place. We live on the East Coast in an area where there isn’t a lot of inventory, especially for ranchers. We knew it would take some time.
Here’s a look at what we have been through thus far. Sound familiar?
June 2020 to September 2020
Broke out the whiteboard to create an epic pro-con list. Had to decide among places we would rent, places we would use and rent or places to buy and flip. Also spent months narrowing down cities and states.
Read a crazy story about a home going for $200,000 over asking, with 76 offers, all cash.
October 2020 to December 2020
Spent several months browsing Zillow and other sites. What a rabbit hole we found ourselves in. You can burn hours, days, weeks looking at homes online.
Read a bunch of stories saying New York City was so over. Jerry Seinfeld was not having it.
January 2021
In late January, we received a preapproval letter, which lasts 90 days. As investors, we wanted to reserve as much capital as possible, avoiding any full offers. We also had the audacity to think we would negotiate closing costs as part of any deal. Our realtor tried to hold in her guffaw as we shared this strategy with her. This wasn’t our first rodeo, but it was our first during a seller’s market. Her response should have been a sign of things to come. With our preapproval in hand, we were off and running.
Excited and naïve.
February
Snow. We weren’t able to visit as many houses as we would have liked. Plus, with the pandemic, showings were restricted to one family at a time in many cases, making it harder for us to get appointments. We did a lot of online tours.
I see San Francisco is finally affordable. Homes only going for $100K over asking.
March
Again, ranchers are extremely hard to find. Not a lot of inventory in our area. Drove by dozens of properties, but when I reached out, they were gone. Did virtual tours of dozens more. Gone. Preapproval letter expired, had to get an extension.
Saw a bunch of articles about the mass exodus from California.
Saw a bunch of articles about the mad rush to move to California.
Early April
With new approval letter in hand, this one good until mid-July, we revised our strategy. First, we decided we could go all cash or finance, allowing more flexibility. Second, we expanded our search to townhomes and condos. Got a call one day from our realtor about a rancher. “Come now,” she says. Arrived in eight minutes, but the home had 22 offers and they were not accepting any others. Gone.
Late April
Homes were flying off the market. Couldn’t even get in to see many. Realtor tells me that those open houses on Sundays are a waste of time. Those homes have offers, many over asking, before the realtor unlocks the door and bakes the cookies.
Under Contract. Sold. Sorry, no more offers. Repeat.
Early May
I’m stepping on my realtor’s toes reaching out about listings. Even with this double team, we’re getting nowhere. I’m online until 3 a.m. staring at a screen and then driving by to stalk listings at the crack of dawn. I also have made a list of off-market homes I have fallen in love with and may consider approaching the owners about selling.
Friend sends me link to troubling story about people snatching up homes, sight unseen, without inspections.
Later in May
I have become all too familiar with pocket listings. No luck with those, either. Now, I had to consider the math: What’s the better deal, getting a 2-and-change interest rate over the life of a 15-year loan or paying $40K-$50K above asking? Head hurts.
Caught an item about the mad dash to move to Texas, especially Austin. Austin’s not having it, wants to remain weird, per its slogan.
Really Late May
Stopped drinking the Kool-Aid. I remind myself, this is a seller’s market. What a stupid time to buy. We discuss waiting until it cools off.
Found a bunch of stories declaring: Don’t you DARE come here to Boise, especially if you’re from California
Today
Pinged realtor and cracked open the latest listings.
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