Lost House

We nearly bought a house yesterday.

The timing is not ideal, given the baby’s due in under two months, but the house was ideal in most other ways. Location, style, price. At this point I’d only go through the hassle of moving for the absolutely perfect place, and this might have been it.

But we lost it. Someone else outbid us. Higher offer, more due diligence money, maybe both? We won’t know how much they paid for a month or two. It’s possible they outbid us by $100,000 and we weren’t even close to getting the house.

In fact this was the second time we’ve lost this house. Two weeks ago, when it originally went on market, we put in an offers. The house had been on market for twelve hours and received at least three offers in that time. Ours was $30K over the sticker price. Even so I was confident that wasn’t enough, and it wasn’t.

But this week, the family that originally put in the highest bid backed out. The sellers’ agent contacted our agent for another round of offers. This time, the house wasn’t going on the open market; the sellers’ agent was only soliciting bids from people who bid the first time around. There would be way less competition. I figured we had a shot.

There was one catch: The original buyers backed out due to structural concerns with the house. There are cracks in the bricks along the side. Backing out over cracks seemed dramatic to me. I’m far from a structural engineer but there are lots of brick houses in this area (I grew up in one) and my observation is they tend to have some cracks. Adding new mortar over the cracks is an easy repair.

The house is also 40 years old. That’s a pretty good sign for its longevity (see the Lindy effect). If this were the type of the house to collapse, it probably would’ve done it by now.

That was my thinking, but again I’m not a specialist. I figured it was best to play it cautious, so we resubmitted the same offer with reduced due diligence money. In our state, the seller keep the due diligence if the buyer walks aways before closing. More due diligence is a sign that you’re committed, but also more risk. We offered $5K due diligence in the first round; this time we cut it to $2K.

Maybe that was the problem. Whatever it was, our agent called me mid-afternoon and told me that, yet again, we did not get the house.

Why move anyway? Our current house is fine enough. Beautiful neighborhood, easy proximity to everything we need, family just down the road. But it’s also small and not particularly nice. It’s a starter home. We know we won’t be here for years.

When we bought this place a couple years back, getting a starter home seemed right. I didn’t want a house we’d keep for decades. I’d spent my entire adult life moving somewhere new every couple years and liked the regular upheaval.

But the babies came at us faster than we imagined, and everything about our thinking changed. Now we’re ready for some permanence. We want a place to invest in longterm.

The problem is that you don’t simply buy a house where we live. You have to hunt for one. You have to outcompete everybody else who’s hunting, including the people who are so sick of hunting that they’re offering $100K over asking price, just so they’ll finally get a house.

That’s what I assume is happening here: People who were once like us, modestly offering $20-30K over asking price, get sick of the process and finally offer all the money they have for a house. So what if they’re paying 50 percent more than the same house would’ve sold for two years ago? They just want to end the madness, at any price.

We are not there yet. But I can feel it coming.