Help me I'm having buyer remorse

19 Replies

So I'm signing papers to close the deal, we have the inspection done, earnest money of 1k, and the latest an appraisal.
So the appraisal shows a neighboring home that was sold last month, almost identical, that sold for 405k – The home we are purchasing is in contract for 463k! My first instinct is that I need to turn and run, and that’s what I’ve started to do.
I’m at the mercy of your advice. Is there something I'm missing?

What is the reason your bought the home? are there higher comps then your home ? What is the condition of your home vs the one you are talking about?

Hey there

@Chris Parker

I've been kind of absent lately but I'm an investor in Snohomish if you'd like a second set of eyes on your comps/ valuation by someone familiar with the area. 


Feel free to contact me directly if I can help at all. 

Is this a home you are buying for yourself? Then the comps don't matter except for an appraisal. You presumable paid what you thought was a fair price for the home you were going to live in. The fact that someone in the past got a better deal is just part of life. 

If this is a house for investment then if the numbers work the comps don't directly matter either. Comps are only important to the degree they affect the numbers.

If you haven't signed the closing papers yet, its not too late to just walk away. Sure you would lose your earnest deposit  (1k) , but would be saving quite a bit more than that if you paid too much for the property. 

Hi @Chris Parker

If I was in your shoes, I'd quickly check out the Redfin listing page for this property, which you probably should have done first. :-) Just Google the street address and redfin, and the link will show up.

Down the page, you'll find links to other nearby listed comps, more or less. Then, check them out for details that compare to yours, including age, condition and extra goodies, like shop buildings. 

Especially, compare the locations. Granite Falls homes sell for a lot less than nearby Lake Stevens etc. for essentially the same homes. When you get out into the long-commute hinterlands between Granite Falls and Monroe, the values can be truly exceptional (cheap), at least if you don't have to commute to Seattle. The road infrastructure in the eastern county foothills is terrible; a maze of deadends with few main roads, and the county has no plans to ease access with new through-roads. Instead, the county council is restricting rural growth (unless you're a Master Builder campaign contributor) and channeling it into the western urban county.

Seller situations vary, too: The seller of the low-priced comp home may have had very motivated sellers who accepted a lowball offer. Home prices will always fall into a range, rather than a fixed value. That's what powers BP. 

At the bottom of the RF page, you should also find a handful of nearby comps that sold recently, how far away and the sale price. Same deal.

If you're in the ballpark, or even a little high, and planning to hold for a while, don't forget that Snohomish county is a hot market, on par with nearby Seattle. Year over year appreciation is currently about 8%, down from last month's nearly 12%, partly due to seasonal slowdowns. If you're in the ballpark and appreciation holds at 8%, a year from now this property will be worth $37,000 more. Small comfort, at least. 

Also, count yourself lucky that you've learned a very valuable lesson: Get really familiar with local values before throwing out purchase offers. Like politics, all real estate is local. 

This is one lesson that I'll bet that you don't forget. It could have been a lot worse. :-)

PM me if you have questions.

Go Navy!

Chris

Originally posted by @Jim C. :

If you haven't signed the closing papers yet, its not too late to just walk away. Sure you would lose your earnest deposit  (1k) , but would be saving quite a bit more than that if you paid too much for the property. 

 It's not always that easy.

Who is to say that the seller won't sue. Tying up valuable marketing time then simply not performing on a contract is not something to be taken lightly.

@James Wise - I agree that is not to be taken lightly. But there are always ways out of the contract legally. One way is to get your lender to "unapprove" you prior to closing. This can be done a number of ways. If he's serious about getting out, he should contact a real estate attorney and see his options available to him. 

But there are always ways out of the contract legally

No that is not true. It depends on how the contract is written. If you buy from me there is no contingency for financing or inspections.

Regarding @James Wise comment, again it depends on what is written in the contract. Most contracts are written so that the sellers only recourse is to keep the deposit.

This is why it is important to read and understand the contract fully. There is no "standard" real estate contract. There are widely used contracts, like the ones the local board of Realtors provide. But don't assume the contract you are signing has the same terms as the commonly used one.

Have you considered that maybe the comp sold for a lower price because of its condition, size, or a variety of other reasons/conditions requiring a lower selling price.  There are certain market (like the South) where one house can sell for one price and around the corner is considerable higher.  If the appraisal, comp, etc justify the higher price, and if the property you are closing on appraised for 463k and it's a fair appraisal and you plan to hold it while it appreciates then sell later, you might be worrying unnecessarily.

If you really want to back out of the deal, read the purchase contract to see what you'll lose if you back out RIGHT NOW --- If all you'll give up is your earnest money --- you might want to reconsider the purchase?

Need more info for sure.  That seems like the higher price point for Lake Stevens.  You note that you are an investor, is this an investment property?  Strategy?

This is a lesson I dont think I will forget Chris. I am such a newbie.
So, homes in the area have sold for higher prices per sqft, about 18 dollars, and this comp of 405k is 18 dollars lower, and these homes sold in August of this year. The home I'm set to purchase is right in the middle. I'm thinking thats good... I’ll be renting one side to the seller for $1500 a month for a year, and living in the other side. After a year I stress most about renting the house for enough to get cash flow. Is there a good place to look at what homes are renting for and get a better estimate? I've looked on Zillow and this deal looked great, but I’m finding my faith in Zillow start to wobble. I would check redfin but my computer doesn't work for that website... I'm on my ship.

spend 20 minutes with a good real estate agent zillow has pretty pictures but is always a few weeks behind on comps  Chase has a property calculator check it out ',but a real estate agent would be the best choice 

https://www.chase.com/mortgage/mortgage-resources/...

@Chris Parker Don't trust Zillow. It is a highly overrated information source. 

Did the property appraise at value, the purchase price? If you are renting out both sides for 3000/month these are some tight numbers. Cash flow may be challenging. If you are house hacking, and 60% of your mortgage is covered, well it's cheaper than the alternative. Just a thought

I can't imagine buying a property without having a good idea of market value and market rents. 

Your Realtor should have given you a CMA to determine market value before you made your offer and should have market rent comps.

The big question to me would be what was the appraised value of YOUR property with the $405,000 comp? 

@Chris Parker That sucks having your Net access restricted onboard. Maybe they want you to focus on the mission or something. :-)

I gave up on Zillow because the search functions aren't as good for me as Redfin's. Most of what I'm looking for (TDR credit source land) tends to have been on the market for a year or more, so up-to-the-nanosecond timing doesn't matter for me.

Apartments.com shows a 3 bdrm apartment in Lake Stevens going for $1,400/month and 3 bdrm house for $1,375. But, that's all. http://www.apartments.com/lake-stevens-wa/ That's probably in the ballpark.

Google-ing " Lake Stevens WA duplex for rent " shows up a bunch different rental listing sites. Maybe some of those will get through the ship's filters. 

C