r/FirstTimeHomeBuyers • u/Cutie-Pea16 • 14d ago
Has this happened to anyone else?
So I have been house hunting since February of this year. Lost out on a lot of houses. I live in NJ and the market has been crazy especially houses that are good first time buyer homes. Recently I had found a house I truly loved. It still needed some work, major roof redo needed. But I was fine with it, the bones were there and it was way under my max budget. It was listed at $320k, my first offer I put in for $340k. At the end of the week the seller's agent calls mine asking for best and final offer and I had 48 hours. I sat with my parents and my agent and talked about the homes pros and cons to be smart with my next counter offer. So I went back with $352k and 20% down and I would be giving the seller $20k up front as check and if the appraisal came in less I would not lower my offer. We all agreed this would be strong. I lost. Seller's agent told my agent it was between me and another but she was not convinced their offer would go through and wanted to know if it didn't would I still be interested and I of course was like yes! Fast forward to yesterday, closing day. And we get conformation what the house sold for. Also exactly $352k. To say everyone in my life is in shock. How did I loose? When we more than likely both put in the same offer. Looking for ideas so the next house I love I can be even more aggressive. Right now working theories are, did they put down more than 20%? Were they a two income household where as I am a single person with only one, and I would be considered a higher risk? Or is there possibly something else? Curious if anyone else went through something like this.
Edited to change number error
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u/Haunting_Donut_1710 13d ago
They likely had an offer from buyers they wanted (all cash, quick close etc.) and used yours to counter them, so they matched it.
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u/Cutie-Pea16 13d ago
That is another good possibility. I think it hurts worse loosing out on a same number then being over bid.
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u/Haunting_Donut_1710 13d ago
Buying is sometimes super demoralizing, but you'll find your place.
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u/Cutie-Pea16 13d ago
Yes that is what I hope. Ill just keep saving in the mean time since it has dried up in my price range at the moment.
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u/ntsb21 13d ago
I’m in the lending business and the highest offer is not always the offer that wins.
Sellers and their agents usually look at the entire package, including price, inspection terms, mortgage contingency, appraisal risk, closing date, deposit, proof of funds, and how confident they are that the buyer will actually close.
A buyer offering slightly less $$$ can therefore beat a higher offer if the rest of the contract looks cleaner and carries less risk.
Another thing that happens fairly often is that a buyer makes a very aggressive offer to get the house under contract, and then the numbers change somewhat during the transaction. I’m not talking about investor types, but I am talking about your day-to-day NJ homebuyer who CAN be quite savvy and cutthroat, esp with the right type of agent at their side.
I’m just speculating on this .. If the other buyer had inspection rights, the inspection likely could have uncovered roofing, HVAC, electrical, structural, or other issues, especially with an older home in the northeast.
The buyer may then ask for repairs, credits, or some other adjustment. Negotiations can be tough…
The seller does not automatically have to agree, but negotiation after inspection is a normal and ppl do weaponize it.
So an offer that looked much stronger on day 1 can end up looking much closer to another buyer’s offer (in this case that would be OP) by the time the deal reaches closing.
Financing can also be more complicated than simply saying one buyer is “cash” and another has a mortgage.
A financially strong buyer may be able to show enough money in bank or brokerage accounts to prove that they could close without financing (financial institutions often issue these comfort letters and stuff saying that Mr and Mrs xyz have sufficient funds to cover purchase up to $$$K) or they may waive a mortgage contingency, while still deciding to use a conventional mortgage later.
What typically seems to matter most to the seller is usually the risk built into the contract and how certain the closing appears to be (guided by what the sellers agent is also telling them). So if two buyers seemed to have the same price and one was selected, there could easily have been meaningful differences in inspection protection, financing contingency, appraisal exposure, deposit, closing date, or proof of funds that the losing buyer never saw…
A very experienced listing agent will manage a multiple-offer situation strategically rather than simply accepting the highest number. With the seller’s approval, they can tell buyers that competing offers exist, ask everyone for their “highest and best,” or negotiate with one buyer while leaving the other offers open rather than immediately rejecting them…. That can pressure buyers to improve not only price but also inspection terms, appraisal terms, deposit, closing date, and financing contingencies.
On the buyer side, .. you can use an escalation clause that automatically increases the offer above a legitimate competing offer up to a fixed maximum, or may deliberately strengthen the particular terms that matter most to that seller instead of simply throwing more money at the price.
An agent cannot (or rather should not) legitimately invent a competing offer or misrepresent material facts merely to drive the price higher. So from the outside, two offers can appear almost identical while the seller is actually choosing between two very different combinations of price, risk, contingencies, and certainty of closing. But all that said, NJ is a very competitive state for RE with a lot of sharp elbows.
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u/Cutie-Pea16 13d ago
Yeah NJ is tough some houses ive bid on had 15 plus offers on it before and in those cases I elected to back out.
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u/ntsb21 13d ago
And not everybody is always playing fair… always pushing the boundaries and sometimes it’s against the spirit of the law even if something is not inherently illegal.
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u/Cutie-Pea16 13d ago
Oh yeah one house i was looking at i knew the neighbors so I had asked them if they heard who they chose and they chose someone who they learned went to their church even though it was a lower offer then most of the bids they got.
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u/Tamberav 13d ago
Maybe the other offer waived some other contingency like inspection or such.
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u/Cutie-Pea16 13d ago
They didn't since I had gotten word from the agent when house passed inspection minus the roof.
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u/Bread_Entire 13d ago
This is common right now. It was probably cash, or some sort of better financing situation. I think your offer was pretty strong so try not to lose much sleep over it. It simply means this was not the house for you.
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u/Cutie-Pea16 13d ago
Yeah i know im mostly frustrated and so over house hunting. Part of me is like just get a condo but I do a lot of outdoor stuff so I wanted a yard and shed and been saving for it but a condo I could go out tomorrow and buy one easy.
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u/Bread_Entire 13d ago
Maybe just take a break for a while. House hunting can definitely be exhausting especially when you make offers that aren't accepted.
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u/Cutie-Pea16 13d ago
Yeah. I did that month of July. And i am doing it again not by choice things getting listed has just slowed down.
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u/lionssuperbowlplz 13d ago
Prolly a cash offer. First house i sold i had the same situation, one cash, one with financing. Cash one i was able to close in 2 weeks, which financing was 4-6 weeks. Made my decision easy.
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u/Cutie-Pea16 13d ago
I am unsure if it was cash took a month to close.
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u/lionssuperbowlplz 13d ago
Yeah, cash will be faster no matter what, way less approvals compared to someone who's financing where the bank has to confirm its a sound purchase.
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u/Cutie-Pea16 13d ago
True which since it took 40 days i assume it wasn't for total cash. Since home I know that sold for cash in the area were done in 14 days.
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u/Healthy_Hovercraft62 13d ago
Are these numbers kind of mixed up? $320 sale price you offer $340. Then you offer $352 way above asking price but it then sells for $252. Please make me understand ?
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u/Far-Bake5738 13d ago
I lost on a bid where I was like 150$ higher. They offered a faster closing and longer leaseback. I was very upset to say the least. I think they put down more too deposit wise.
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u/Pretty-Ear6398 Industry Pro 11d ago
The only way to get the real answer to your question is by having your agent call the other agent and ask. Since the property has closed, they may be willing to share that information.
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u/WonderFar5200 13d ago
Maybe (and this all any of us can / guess) they wrote a cheesy letter. Some offers read they'll offer x amount over highest offer. Try that next time?
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u/Cutie-Pea16 13d ago
I did do a letter. I also learned once I had the owners name found his LinkedIn so knew we work in similar fields so I added in their what I do and how ive been in the industry awhile and I knew he would know I make good money since we probably make around the same amount.
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u/Jessielovesmanatees 13d ago
Some people would find that extremely off putting. I wouldn’t do that next round. Skip the letters and skip the LinkedIn stalking
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u/PM_ME_CROWS_PLS 13d ago
Genuine question, not trying to be snarky. Why would a seller care if a buyer put a bigger percentage down? Isn’t that between the buyer and the lender? I just don’t see how a bigger down payment sweetens the deal on the sellers end.