Bidding Wars & Finding the One

You've been looking for a new house for months. You know what you want. You aren't some indecisive slouch. You understand there aren't many homes for sale. Limited inventory they say. You get it. Your agent prepared you to make a strong offer. And you went even stronger. Yes!!! Then you heard the news – the seller decided to go with another offer. Motherfu****!!!!

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Who likes to lose? Raise your hand. Nobody. Humans, well, all species, wouldn't have evolved if winning wasn't a priority. Sure, some of us are more aggressive than others. And there are those people at 4 way stops that don't move because they want the other person to go first. But let's face it – losing, especially when you think you should win, hurts. A lot. And losing out on something so primal that Maslow (who?) himself considered it part of the essential first stage of human needs, well, that just plain sucks.

Bidding wars or the more emotionally sensitive phrased 'Multiple offer situations' have become a reality of the housing market for several years due to continuous years of low housing inventory. For many years, the price of a home was a lofty goal, nothing more than a wishful ceiling a buyer would never need to reach. In a nation of non-negotiable pricing, purchasing a home allowed sellers and buyers to engage in their own modern day Silk Road. A chance to channel the spirits of our haggling elders. Then 100+ years ago somebody figured out it can get a bit too personal when the owner/caretaker/lover of a property needs to justify its value to a buyer/interloper/thief. Realtors were born from the carcasses of these duels.

The trick to winning a bidding war is to disregard market value, and no rational person wants to do that. If a similar property sold for $500,000, then that's what you'll pay. Ok. Fine. Maybe $505,000, but not a penny more. No way. Don't be a chump. Then you hear, months later anyway, that it sold for $546,000. What?? Crazy.

Not crazy when you change the logic. Instead of looking at what it might be worth if you sold it based on today's values, you need to think about your personal budget, and then, only secondary, the potential future value. At 6% interest, an extra $50k costs about $300 more a month. For the one material thing you'll use constantly, and that will mean more to your social emotional health than any other single physical item, is that not worth the cost of a mid priced gym membership? Maybe it's not. Gyms suck and you are already at your maximum budget.

Couldn't you just write a letter saying how much you love the property and include photos of your wonderful family. Think about that? The value of your intentions versus an extra $50k. What would you do?

Perhaps it would help to think about the average property increase of 5% annually. Even a condo might only get 2%, that is then wiped out by inflation. But do the math. If you only own it for 5 years, with minimal value increase, you'll still likely sell it for the 'inflated' price you paid. No underwater coming out pocket gibberish. You're still not convinced?

This is the tough part. For many of us, the psychological handcuffs of pricing make it nearly impossible for us to pay much over an asking price. At some point, the reality of a tight market sets in, and many buyers recognize they have to pay more than they want. But what if they don't? Destined to a life of renting until the landlord sells then repeat, and repeat, then funeral arrangements? Don't be so dour.

Maybe you never even made it to the Game of Homes. You were out of town the only weekend of showings. Or you missed the listing entirely. You would have paid a lot. Really, you would have. But now the home you loved, so so loved, is gone! Some other couple will get to live there happily ever after, and you are still stuck in Ok Zillow purgatory.

The advantage of buying in a large city like Chicago (apologies to all those people living in small real estate markets – you're screwed) is there is always another option. No matter how limited the supply, the sheer volume of people means eventually another matriarch passes and the kids need to sell. Another mid level professional wants to transfer. A hot shot tech bro wants to try out life in Buenos Aires. Families want to move back to their hometowns. The suburban school elixir casts its illusory promises over anxious parents. And another property hits the market. And another. Just a matter of time.

A key to home buying is to think of homes like relationships. Some are hot. Real hot. Dining room table bonking hot. Others don't inspire any bonking. But they have potential. You can see the day that dining room table gets violated. And the new skylight drenched bath. Even the upstairs laundry room you want to build. That will get violated too. But not yet. It will take time. But you see it. And don't forget about the multitudes in between. The ones with perfectly acceptable spaces. Yards that are just big enough. Maybe a bonk out there. Once but never again. These are the places you'll need to curate, clean up, scrub and paint, but leave the layout. They might be a nice long term mate in the end.

If you've had more than a few relationships in your life, you've learned that there is always another one waiting. Whether it be friendship or intimate. The next partner might not have the same rugged jaw, or that ass, oh man, that ass, but they couldn't be more caring. Or that one partner you never thought you'd leave, but in the end, they just couldn't get over their depression, or their inability to earn a decent living. Say hello to the new mate, making nice coin, waking up with a smile everyday. Ok, they are a bit boring. But hey, nobody's perfect! And that is the point. Neither is a home.

You need to find the traits you consider non-negotiable (location, size, light?), and nurture the less desired (small bedrooms, minimal yard, no basement). Once you accept that homes have growth potential, and one that can be fostered with sweat and love, not necessarily pockets, you will begin to see the others. The homes not attracting the Zillow whores. Maybe the pictures aren't good, or the rooms really are a bit small, but you know you love that block, and the kitchen has all the space you ever wanted, and you can finally clear your mind and see the new paint, and the eventual renovation, and all of your artwork, and that little tingle is back. Is it love? The only way to find out is to commit. A good agent will get that offer accepted, especially if the whordes don't take notice, and like any good relationship, your commitment will pay off, and all your friends will wonder, 'when did you know it was the one?'

And when the relationship ends, when you've given it your all, and the home simply can't get it up anymore, its ok to say goodbye. Because you know there is another one out there.