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How We Almost Rushed Into The Completely Wrong House

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Trying To Buy A House From A Difficult Seller
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Welcome to my personal home buying journey. If you have checked out the first three articles in the series, you definitely know by now that the home buying experience was far from smooth for myself and my fiancee. We started out with a new construction condo that had major problems, then a short sale that did not work out (putting it in nice terms), and then a condo where the seller lied about the square footage (thank goodness we got an appraisal before removing contingencies). Today, I'll talk about the impulse decision to make an offer on a place we were not fully interested in. It happened in a state of stress after three difficult offers not working out. Thankfully, the seller did not accept our offer and we were able to move on and are now living in the home of our dreams. However, what if the seller did accept our offer? The purpose of today's article, as always, is to outline our personal experience so you can avoid some of the mistakes and stress we experienced. Also, I must highlight again: These articles are making the home buying experience seem really difficult, but in the end it was completely worth it. There is a very happy ending.

We Were Stressed Out and Not Ready To Place An Offer

As you can imagine, we were really stressed out after the first three offers fell through. It's difficult. It's human nature to get emotionally attached to each house you place an offer on. You start mentally moving in and thinking where all of your furniture will go. You imagine yourself in front of the warm fireplace watching TV. As much as possible, I urge you to block these thought processes during the home buying journey. You worked hard to save up your down payment and you want to make a very wise and sound financial decision. You are much more likely to make a wise investment if you remove emotions from the equation (or at least minimize them as much as possible). I must call out, however, that this was simply not possible for me at the time.

After getting emotionally attached to the first three homes we placed offers on, I just wanted it to be over. I was really stressed out and felt like we had wasted a ton of time. I had stacks and stacks of disclosures in my apartment from all of the thorough due diligence I performed on the first three homes which did not work out. I wanted all the hard work to pay off and was starting to rush things. If you feel this way, my advice to you is to step back and take a break. If you are like me, you will want to live in your first home for quite a while. Moreover, you spent years saving up your down payment. Tell yourself that this is a financial decision and not an emotional one. A great mental trick: Picture all of your hard earned down payment fund disappearing if you make the wrong choice. That should help convince you to step back and think clearly before moving on and placing another offer. At the time, I did not think to play these mental games and actually placed an offer on a property we did not truly want.

We Placed An Offer On A Condo We Did Not Really Want

We found a condo in one of the buildings that we really liked. It was the right size and there was nothing really wrong with it. However, we did not love it. Personally, I don't think it's worth placing an offer on a home that you don't absolutely love. You're going to be living there for a long time and paying a lot of money (both via your down payment and also in your monthly mortgage payment). Not only did we not really love the place, but it also had some problems. It was a disaster inside and required a lot of work. Moreover, it was not discounted in price to reflect these fixes. At the end of the day, we ended up writing an offer that was higher than where we wanted, on a place that we did not particularly like.

Don't Max Out Your Mortgage - Save a Little Money In Your Emergency Fund

We got lucky and the seller did not accept our offer. If he had, we would have been in over our heads. Sure we were pre-approved by our mortgage lender for the amount we offered, but it would have been really difficult. The golden rule of buying your first home: Don't max out on your mortgage. Just because your lender says you qualify, does not mean you should overextend yourself. There are many expenses after you buy your home such as furniture, appliances, fixes, food, clothes, and so much more. Leave a cushion so you can enjoy life and most importantly save a little extra money. Once you own your home, you definitely want to save up an emergency fund. It's exactly like saving up for your down payment, but this time the purpose of saving is so you have a cushion. What if you lose your job? What if you get sick? Your emergency fund is your financial security blanket over the long term. It's only possible to save up a reserve fund if you don't max out your mortgage.

We Were Playing Real Estate Hardball

The seller's agent told our agent that there was already an offer on the property but they were 1 day out of contract because they did not close their contingencies. The seller's agent said he gave those buyers his verbal word, but this opened the door for us to be able to play hardball and get our offer in. Our offer could be accepted by the seller because a verbal word is not concrete in a business of written contracts when they are out of contingency. I don't think there's anything wrong with playing hardball. In an up market, especially here in the San Francisco Bay Area, it's the only way to get a house. However, we're in a down market. Hardball is not necessary to get a place. Moreover, if you're playing hardball the way we were you again get stressed out and let emotions enter the picture when you should be focusing on the concrete financial facts. My closing advice: Don't rush into it. Have faith that the process will work out well. It did for us (as you will see in future articles of this series). Buying a home requires a lot of work and if you stay calm (even if it takes 6 months or more), you will be well rewarded, financially and also through your great lifestyle.

Next installment in my crazy home buying journey? How we tried to buy yet another condo from a difficult seller.

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