Hi friends! I hope that you enjoy reading about our story so far on our house-hunt. Before we bought our ranch, we actually put an offer on another house. Unfortunately, we got into a bidding war and lost – maybe I should say, fortunately? Well, here is the story.
We put down our first offer on 5/5, the fifth day of our house-hunting with Kerry. It was only the end of the second week we started our house purchasing journey. And this is how this offer went down:
7:30 AM – Got up and fed the puppies. Took them out in the yard for some fresh air. They had been home alone for 4 days straight while we were out house hunting. So they were pretty bored. When they were hopping around and looking for troubles, we picked up their poops around the house.
8:30 AM – Loaded the Kong with goodies. Filled up water bottles. Drove out. Forget water bottles.
9:50 AM – Toured the first house. Discussion, decision (not to buy), drove to the next house.
10:30 AM – Toured the second house. The house is on the big side (2200 sqft) but still within our budget. It has a killer deck and a big yard which overlooks a green belt. Slav loved the over-size two-car garage. We wanted to put an offer on it.
11:00 AM – Toured the third house. Nah.
11:30 AM – The fourth.
12:00 PM, Standing in front the fourth house, we discussed the second house again. Decided to put an offer. Kerry, our realtor drove back to office to prepare the offer (there is no time for lunch!), and we went out for lunch (shame on us) to a restaurant Kerry loved (we are so terrible).
12:20 AM – Good-luck-to-us margaritas
13:30 AM – Headed home. Got Kerry’s call during driving and said our offer is ready for review (!)
15:00 PM – Got home. Let the dogs out.
15:15 PM – Totally ignored the puppies (sorry) and went over the 10-page offer with Kerry line-by-line on the phone/computer. This was the time that we signed the contract to hire him to represent us as well. Kerry insisted to put the offer acceptance deadline at 10 pm that night, because he felt that the house would be popular and he wanted to push the seller to decide before more offers coming in. We offered the asking price, and buying it as-is as long as there is no issues concerning health and safety (a common practice here due to the sell’s market)
16:00 PM – Played with puppies in the yard. Picked up more poops. Started waiting.
22:00 PM – Did not hear anything from anyone. Had a hard time falling asleep.
Next morning (5/6)
8:30 AM – Kerry called and said they decided to pass our offer in order to invite more. They are showing houses over the weekend and only accepting offers on Monday. We did not successfully prevent a bidding war from happening. 🙁
It is worth mentioning the bidding wars in Denver’s market. It is very common for a seller to put his house on market during the week, but does not accepting offers for a few days. This builds the suspension on the houses and tells the seller how much traffic the house could get. Then on weekend, usually a Saturday, the seller has an open house, and all offers are taken at Sunday night or Monday morning. This encourages bidding wars among interested buyers, because all the offers come in at the same time, and the seller’s agent can call the best two or three offers and invite further bidding. The perfect offer usually goes beyond asking price, does not ask for any disclosure, waives all the inspections (buy completely “as-is”), gives the most time for seller to move out.
8:30 AM. We initially offered to take the house as the asking price at $300K, but now we were in a bidding war, so we had to adjust our offer accordingly. We offered to pay $1000 more than other offers as long as it is below $320K. That means we would likely be buying the house at $321K.
As I mentioned before, this is really common in Denver now. Some sellers even listed their houses lower than appraisal value on purpose, to invite more traffic and elevate the intensity of the bidding war. Like this house, it is worth probably $310K, but not $321K. The $300K asking price baited us into the bidding war, and we would have been overpaying $10K~15K for the house at the end. I do not like this practice because even though we are looking at houses $30~$50K lower than we can afford, someone might be looking at houses close to the upper limit of their loan. They may win the bidding war, but if the interest rate adjust a little bit between the time of their offer and the time of closing, the bank may not approve the loan at the end, which will hurt their credit and their chances of buying the next house.
16:00 PM: New offer in. 10 PM deadline on the same day.
16:30 PM: Kerry called and said the seller’s realtor called. Our offer was one of the strongest, and others included $320K, letting the sellers live there for free for up to 60 days after closing, or waive inspection (buy completely as-is). Kerry is comfortable with the first two requirements, but he is less comfortable with buying a house completely as-is.
17:30 PM: Kerry called again. He negotiated with the seller’s agent again. With a new promise of 60-day rent-free after closing, our offer became one the two strongest offers. The other offer was the same price, up to $321K, with 60 days-rent free, and completely buy “as-is”. However, the buyers only had $30K down payment, which was a fraction of what we had, so their offer was not as strong as ours. Based on the age of the house, we knew that there would be some water issues and possibly radon overload. Both Kerry and we decided to not buy it “as-is”, and stop the bidding from our end.
20:30 PM – The seller accepted the other offer. We felt OK with the result. It is a good house and we like it. We just did not love it enough to risk “as-is”.
(To be continued…)
This is the 3rd post in our “how we bought our ranch house” series. You can find the rest of the story here:
Week two – Finding a Realtor and Learning What We Want
Week three – Putting Offer on Our Ranch
Week four – Inspection and Negotiation
Week five and six – Convincing the Bank to Buy Our House