Venting and asking for advice in hot market

[MillennialDoc]

My wife and I are in the market for a home in San Antonio, TX. Budget $350k. Cash on hand $496k. Net worth $2.5M.

We have been passively looking at homes online for the past few months and made a trip this past weekend to look at homes with a realtor we trust. After a dizzing amount of showings we found a home we loved.

For reference, homes have been flying off market within hours to a few days in San Antonio with multiple offers.

List price $295k. After much deliberation with our realtor we decided to make the following offer: all cash $315k, covering closing costs, no appraisal, long close (buyers preference) and 1% of the 6% commissions. For reference, the previously highest selling home in the neighborhood sold for $319k (had a pool) 1 month ago. The owners selected a different offer which according to the sellers agent was “a fair amount more and an appraisal waiver.”

We’ve all heard the adage, “cash is king.” How does one decide how much to make on an offer in this ludicrous market? My wife and I could easily have offered more but at what point are you simply overpaying for a home? Our realtor reassured us that we had a strong offer but I think determining the actual market price (what you/someone else is willing to pay) seems near impossible.

What would you have done differently?

[Tim]

Nothing.

[Tangler]

Nothing. There is literally a house on every corner. Patience is the companion of wisdom. Worst case, rent.

[MPMD]

you did everything right.

i was told that an opening offer 10% under listing is standard.

all of that being said, if you are planning to be in this house for awhile* and you have a 2.5M NW i wouldn't be super scared to "high ball" an offer on a house you really wanted. it helps if you are in the mindset that a house is a consumption item.

also keep in mind that a beautiful April (esp after a tougher winter in TX) is working against you as a buyer. if you aren't in a hurry you might be able to leverage some time in your favor.


* if you don't have kids and are planning to have someone with kids look at houses with you. lots of zillow and curb-sexy features become neutral or negative with young kids.

[Notsobad]

We bought in the heated market in 2000. Nothing as crazy as today, though. We made an offer at asking price and then went up 5 k and then sat on it. We got the house, but moved twice since then, so would not have been horrible if we were outbid.

we looked in to a vacation home in March but did not bite. Now the prices are pumped up even higher, but it turns out that the stock market increased by a similar proportion. And we decided not to buy.

dont let the hot market bully you. It might work on me, but fortunately my wife is too smart.

[CordMcNally]

You did everything right. Sometimes it just doesn’t work out. I’ve never really understood the ‘cash is king’ in real estate. I guess you could have a quicker closing without a chance of the buyer’s financing falling through but either way the seller is getting the money.

[Dusn]

If you really want the house, you can include an escalation clause

[MillennialDoc]

Thanks everyone for the suggestions and reassurance.

[MillennialDoc]

If you really want the house, you can include an escalation clause

Unfortunately, in Texas licensed realtors are prohibited from including escalation clauses in offers.

[CordMcNally]

Unfortunately, in Texas licensed realtors are prohibited from including escalation clauses in offers.

Are realtors legally prohibited from making physical threats if a buyer does not accept the offer? I'm not well versed in Texas law but maybe something to look into.

[Peds]

arnt you a med student? didnt convince you on the renting part huh?

otherwise nothing, thats how the game works.

[StarTrekDoc]

Other offer may have been cash too. Really doesn't matter if waivers of financial contingencies are made.

Red hot market. Last local comp 1 month is ancient history is you're talking house lasting a few days

[Eye3md]

This RE market is ridiculous. Luckily, some places are starting to see listings “back on market”, and I assume it’s either because the banks are saying “were not loaning you that much money for that house. It’s not worth that” or people come to the senses and say “this is ridiculous. I’m not paying this much over asking”

[artemis]

I’ve never really understood the ‘cash is king’ in real estate. I guess you could have a quicker closing without a chance of the buyer’s financing falling through....

And that is why cash is king. And "quicker" is a significant understatement of how much faster a cash offer can close.

[MillennialDoc]

arnt you a med student? didnt convince you on the renting part huh?

otherwise nothing, thats how the game works.

Yeah, MS4 about to graduate and heading to a military residency for 5 years. We also looked at a nice apartment (with rent less than military housing allowance) and have that as a backup plan should we decide to forget about this market and just rent.