"For over 30 years, ABC used this line at the opening of their Wide World of Sports programs. During the introduction, with music blaring, the announcer would say "The Thrill of Victory," while the scene of a car driver opening a bottle of champagne was playing. Then the scene would shift to a video few can forget. A skier going off of a slope and crashing down, rolling hundreds of yards before stopping, while the announcer was saying 'And the Agony of Defeat.' The entire world felt the pain and grimaced at not only the image, but at the idea of such a spectacular failure.
1978 photo from ABS Sports
While this may seem to be a bit overdramatized for real estate, it happens a lot in this market, any market for that fact.
A seller may have a huge victory when they sell their home quickly and for way over the list price, and a buyer may be absolutely defeated after losing so many homes because they just can't make the grade on a bid.
Recently, I had to tell a client they had lost the home they wanted so badly, because they had been outbid. It broke my heart as I could hear their voice breaking through the disappointment. This wasn't the first house lost because of overbidding on a limited amount of homes.
In my area, it is not quite as competitive as others. However, the more 'affordable' homes, say between $125,000 to $300,000, can be very competitive for a couple of reasons.
1) They rarely come available.
2) When they do, many are not in good shape so the ones that have been renovated or updated go very quickly.
3) Most people do not realize they need to be fully 'ready' to buy. This means, they know they want to buy a home but they have not contacted a realtor previously. So a home comes on the market, they reach out to go see it, but before they can get pre-approved, the home has already gone under contract. Or they think they have plenty of money to buy, but they really don't. Down payment, closing costs, and inspections can add up quickly. Or they think they will borrow the money from someone else. That has to be secured and the lender has to have that information in order to work on a pre-approval, so you can't wait until the last minute or you will miss out.
4. You have to MOVE QUICKLY in order to buy in that price range. So you need to move heaven and earth to go see the home, maybe even take off of work. You have to have money in the bank for the Earnest and Option Money, and you have to know that you want to make an offer. There is no time to 'think about it' or 'sleep on it.' It is a very high pressure situation and a lot of money is involved, so you have to be fully prepared mentally and emotionally. Most people aren't.
How do you prepare to buy in this kind of situation?
First of all, be flexible, be flexible, be flexible. If the kitchen is not big with an island today, can it eventually be opened up? You may have to live with it for a few years, but if the rest of the home and property works for you, maybe you can work around it.
Secondly, take all of your 'Must haves' and lay them out in order of importance. But get real with yourself and make sure you know the difference between 'must haves' and 'would like to haves.' If you have 3 kids, you know you have to have at least 3 bedrooms. Believe it or not, there aren't that many homes out there with 4 bedrooms, so you may have to compromise for a few years. Or if having a short drive to work is highly important, then maybe you will have to get a smaller house. Identify the things that are truly important to you.
Third, take all of your 'would love to haves' and toss them out the window. I have seen too many people upset because their desires were impossible in the homes in their price range or even in the location they need. However, if you are open to being flexible, you may be sweetly surprised at what is out there. Then later you may be able to do some work to the home or make some of the changes you want.
Finally, when you are ready to buy and start looking, then realize that it must be a business decision first, and an emotional decision secondly. Then if you don't get the bid, you aren't as disappointed.
Remember, what goes up must come down. If you don't have to move immediately, then be patient. The market will shift and you will be able to find something in your price range. Yes, interest rates are going up a bit, but what is happening is not going to make a huge difference in your payment.
Also, you do not want to be 'upside down' in a house. I have seen that happen several times throughout the years and it is horrible. This is similar to being upside down in your car, where you paid more for it than you could sell it for. Many people have paid over market for their home, with a large mortgage to go with it then the market turns, and now buyers are paying more for their home than they can sell it for. They are stuck in it for many years before it ever turns around.
Many years ago, there were entire subdivisions with abandoned homes because of this. The builders built homes in a hot market, sold them for the high price, the market tanked, and the owners couldn't recoup their losses. They literally walked away, destroying their credit, and losing all of the money they put into the home. There are those in the real estate industry that say this won't happen again. Really? I've seen it happen 2 or 3 times in my adult life being in and around the real estate market. It absolutely can happen again and you do not want it happening to you. So if you don't win that bid on that house because you couldn't go $10-$20 thousand or more over asking, be grateful. It could be saving you from a huge mistake.
But most importantly, you will find a home. We all can get in that mindset that this is the "perfect" home and we will "never" be able to find one as good as this one. That is not true, there will always be another home, another opportunity, and what happens many times, one that is often much better than the one you lost. Just be patient and flexible.
The main thing is not to get trapped. Trapped in the frenzy of trying to buy and feeling like you are missing out if you don't get the house, or houses, you have bid on. Don't get trapped in a bad situation by overpaying for the home. Too many buyers have ended up being miserable because they are stuck in what they thought was their dream home, but because they watch the market go down, realize they owe more than it is worth. Then it ruins their dream.
Be grateful if you are in a situation where you can wait it out. Then you can buy knowing you made a wise financial decision and a true investment.
That is the real thrill of victory!