Frustrated first time home buyer - Advice?

Question

Hey all, so wanted to seek some opinions and advice from all. My family and I are first time home buyers in a super hot market. We are looking within 2 sought after school districts and we will not budge from that. Anyhow, houses are selling like hot cakes in our area. We are working with a great realtor who has been in the game for a while and she has even commented how crazy the market is for our price range and our area. Long story short, we have now lost out on 7 home that we have put offers in. 6 of the homes we offered either asking price or a bit above. We are going FHA. We have our down payment, but need assist for closing costs (hence why we are bidding over asking price a lot, so that the seller can still get their NET price). One house we lost out on due to an unethical/questionable legal move by the one listing agent. We have mortgage pre approvals attached to each offer, with earnest money check, and personal letters to seller(s). Homes are going for sale and are under contract within 24 hours. What advice, if any, do you guys have to help with our pursuit? Are listing agents "hiding" some offers to sellers for specific reasons? I feel as though we have made some great offers, but then the house was wiped away from us. We are losing homes to people who are putting down crazy amounts of cash and losing homes to people who are overpaying for a home and willing to cover the cost even if it doesn't appraise for the sale amount. Would a 203k rehab loan be better on some of these light fixer-upper homes that have been on the market for 30+ days that maybe we can put $40k or so into?

Sorry if this is in wrong section! feel free to move to necessary spot! Thanks all!

Sorry if this is in wrong section! feel free to move to necessary spot!  Thanks all!

Jacob Sampson · Answer

The biggest question to me is do you really want to be buying into that type of market?  This will be one of the biggest purchases of your life.  Do you want to make that when you are in an environment where you stand a reasonable risk of losing value over the next 5-10 years?

Tanner Marsey · Answer

Market dictates. Always has and always will. You have a few options.... become more flexible in your choices in regards to a home/area or save up more money so your offers are taken seriously. In a hot market the seller is going to take the highest, most secure offer 99% of the time.  FHA, seller assistance, below asking price are not things that will be entertained in a lot of markets right now.

Donald Robers · Answer

I am not certain of the exact thread; as Alex said above it is more of a perception that an FHA deal is more onerous on the seller.  I purchased my first house with FHA financing but this was in the early 80s when interest rates were 15 -17% and hence buyers were scarce.  I do not recall any major delays or demands upon the seller; certainly they did not have the seller make extensive repairs because I did a lot of work post-purchase.  But that was 40 years ago and the field has changed.

Alex Nelson · Answer

@Scott Anthony

https://www.biggerpockets.com/blog/2015/09/15/6-in...

This article has a few good tips in it on finding off market properties. You can also try driving for dollars where you pick an area you are interested in and drive the streets. Look for neglected houses that have unmowed grass or obvious signs that the owner doesn't care for the property. Write down the address and then search public records for the owner.

Some people have luck in looking for rental listings on craigslist and asking if they would be willing to sell.

It will definitely take more work to find a deal, but you've got a much better change of actually closing if you find it off market.

Alex Nelson · Answer

@Scott Anthony

The issue that you are going to face is that you are in a hot market and asking the seller to agree to jump through many hoops for you. If you put yourself in the sellers shoes, they are likely getting 5-10 offers, possibly more. If you had that many offers, would you not also immediately discard the ones that required a bunch of hoops to jump through and look only at the straight forward, easy to close offers? Also with FHA your requirements on the seller are going to be higher than even that of a conventional mortgage as FHA could have seller required repairs before they will loan on a property.

You are at a big disadvantage in a competitive environment. Have you considered alternative methods of finding a deal that would give you a less competitive environment? Houses on the MLS are like giant bilboards to everyone looking to buy. You may have better luck with an off market home. Given that will take more effort on your end to locate a deal. But once you do find one your chances of closing are greatly increased since there won't be so many offers to compete with.

Kelli Gaul · Answer

It’s so frustrating, but be patient!

It took us 10 months to find our first house. I don’t even know how many offers we put in and we had 3 that got accepted (2 of which fell through). We were pretty close to giving up on the idea that we’d get the property we were looking for in our budget any time soon.

Keep looking and the right house for you will come along! Good luck!

Brandon Carriere · Answer

@Scott Anthony

Sorry to hear about your situation.. That was all too common here for years..  Not so much anymore but still possible.. Unfortunately, there's really nothing you can do other than save up the closing costs so you don't need to request that the seller pay them..  With multiple offers and possible appraisal issues, the sellers will likely never take your offer..  Wish I had better news..  Maybe look for any homes that have been on market for 30+ days and take a shot at one of those, but likely those will be overpriced or garbage..

And I second what Jacob just said..

Harjeet Bhatti · Answer

@Scott Anthony  Due to DPA program no lender will be approve you under HSA program. 203K is good option in this kind of market. You may know already DPA program takes more time to close than conventional lending.

Bruce Lynn · Answer

What market are you in?

FHA might be part of the problem if people are offering over asking or putting down big cash.

I think it would be rare for agents to hide offers?  Why would they do that?  I think people are probably just making stronger offers....more option money, more down, conventional financing...and all kinds of other ways to make their offers stronger.

Might try BBVA or BofA with their new conventional financing with low down, no PMI, and they help with closing costs....not sure if it works in your area.

Ellen McKinley · Answer

Are you writing a personal letter to accompany your offer? I have been on the receiving end of this as a seller, and, if done well, it can be quite compelling. It "humanizes" you, and buying and selling real estate can be very emotional. Sometimes if the money amount is the same, a seller will want to help out a first-time home buyer they feel a connection with, even if it is a little more time and work. This is especially true if they really love their home and want to pass it on to someone who will love it like they did.

Frustrated first time home buyer - Advice?

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