It’s a big jump from real estate theory to real estate practice…especially in the Bay Area

Housing, Personal finance

Last week, we made our first actual bid on a house, and boy, was it a roller-coaster ride. Up until then, we had been browsing and MLS listings, looking at open houses in the area and not really seeing anything we liked or that was remotely within our price range.

Then we happened across a house in a neighborhood we hadn’t been considering. It was as close to what we were ideally looking for as we had seen, and it didn’t need any obvious changes or upgrades. Believe it or not, that’s rare on the . For readers who are unfamiliar with Bay Area housing, you just have to trust me on this one. It’s been a shock to understand just what sort of housing inventory and pricing there is around here, even in a “down economy”.

The trouble was, a house like this one naturally attracted several interested parties. We toured on a Thursday, over a week before the first scheduled open house tour, and by Saturday, the seller’s agent had already contacted our agent to say that she had people interested in putting in a bid. As complete newbies to buying a house, let alone in the Bay Area, and let alone under sudden pressure, we suddenly found ourselves seeing the house that day a second time and being advised by our agent to bid the asking price for the house at $899K if we truly wanted it and wanted to avoid having them hold an open house (where it would surely attract even more interest and potential bidders).

Again, for non-Bay Area readers, yes, you read that price correctly, for a 3 bed, 2 bath house of ~1600 sq. ft., built in the 30s, and with a lot size of about 6K sq. ft.

While it wasn’t the perfect house — it was in a neighborhood that lots of people liked but a city we hadn’t even been considering and in a not-so-great school district — we decided to go ahead and bid on it at asking.

Then seller’s agent called and said she was leaving town for the long weekend and wouldn’t be back to help her client with offers until Monday night. Believe it or not, just that act changed the course of everything.

Those extra few days gave us time to reconsider the house and whether bidding $899K for it was something we were comfortable with. We also had time to read all the disclosures on the house (nothing set of big alarm bells in our heads, but still, when you’re a first-time home buyer and read about cracks in the foundation, you get a little concerned). By the time our agent came with all the paperwork on Monday to make the official bid, we had gotten cold feet. Luckily, he’s the husband of a former coworker, and he didn’t take our hesitation badly at all. After a lot of discussion, we decided to bid $875K instead and even at that point, we weren’t completely sure about whether it was the choice. Like I said, cold feet.

That night, I found myself swinging the complete opposite direction, convinced that the house was the right one and hoping that our bid wasn’t too low and a counter offer would be made so we’d get a second chance at it. I spent most of the next morning distracted and anxious. By noon though, however, we learned that the seller had accepted another bid for what we guess was around $890K. Ugh.

In retrospect, had the seller’s agent not left town, who knows? Maybe we would have been the high bidder and the seller would have gotten more money for it as well. Funny how some little thing like that can change the outcome of future events.

Nevertheless, the whole experience was a really uncomfortable one for me. I’m not the type of person who does impulse purchases, I don’t buy expensive things or items at full price, and I’m not into brands. Actually, I have a tendency to suffer from analysis paralysis.

The concept of having to put emotion into a purchase this large (i.e. find a house that you love, which means you have to go through a house a few times and picture yourself and your family actually living in it) and plunking down something north of $850K to realistically get what you want is unchartered territory for me. How do you manage to picture yourself living in a place without getting emotionally attached to it and then distance yourself enough to put an objective dollar range on it, and then be comfortable with the possibility of losing it anyway?

Heh. I’m not convinced I’ll be much more prepared if the same situation comes up again in the future. Meanwhile, the housing market seems to be picking up, just to add to the pressure and confusion. A lot of houses that have been on the market for months are suddenly starting to have open houses again, and I see many more listings at $800-900K going into “pending sale” state within a couple of weeks’ time.

The funny thing is, it seems that everyone who’s bought a house in the Bay Area has a similar story of getting emotionally vested in a house only to lose a bid to someone else. Apparently it’s just a normal and very common part of the buying process here.

Now that a week has passed, I’ve finally come to grips with losing that house and having to move on and even the idea that there might actually be another house more suitable for us still out there somewhere. Wish us luck in finding it.


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9 Feedbacks on "It’s a big jump from real estate theory to real estate practice…especially in the Bay Area"

Financial Samurai

Hey there! I didn’t realize you are based in the Bay Area as well. I’m based in San Francisco!

I’ve gone through the multiple bidding process as well in Pacific Heights and in The Marina, and it’s kinda nuts!

Best of luck. There will always be another house to come along.

Financial Samurai

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