Some Things Are Meant To Be Hard
Buying a home should NOT be easy and automating it, is ripe for mistakes
It’s a philosophical gap between the youth and experienced. The experienced say, “well, it’s just the way it is. Take your time and don’t rush into it” and the youth say “why can’t it be easier? Let’s just do it and see what happens” There seems to be a huge disparity happening and nowhere do I see it more than the approach of the home buying market.
“Buying a home should be as easy as 1,2,3” LOL, yeah right!
Anything worth doing in life is usually hard and that’s how I feel about the home buying process in 2022. Buying a home in an interest rate hike anticipated market after two years of COVID style work from home and saving rates is a true test of your resolve. It’s not technically “hard” to buy a home but if you want to do it right, you need to be thorough, patient and smart. In a world where quick and simple is the preferred modus operandi, taking your time and understanding every facet of a home before you buy, and not acting on fomo, is what sets the difference between appropriateness and regret.
Let’s look at the home buying from everyone other than the buyers. The incentive structure for everyone involved is to get it done quickly, just buy one anyway, and don’t wait.
The seller wants to close FAST and at HIGHEST price
The buy side broker and selling agent is trying to optimize for speed and conformity
The title agent is trying to close quickly
The mortgage lender is trying to approve you quickly
The media wants you to act and lock in the rate FAST
Zillow and Opendoor want you to BUY NOW or show you what you’re missing.
Your friends and family want you to buy and celebrate your next chapter
Everyone wants you to do it and you’ve been convinced by societal norms that you’re at the right age, and you should do it. With all these interests focused on getting you to transact, it can often feels like a rushed process that you’re getting swept to the sea - at a time when the waves offshore are looking quite choppy.
Nonetheless, we fell for it and followed suit, listening to the pundits talk about how inflation is going to take home prices to the moon, interest rates won’t be this low ever again and the time is now to start building equity in your home.
So we found a home after countless weekends spent driving around to open houses, nights spent surfing Zillow and endless text threads with seller agents. We got blown out on a few competitive bids in Austin before we re-shifted our focus to a way more practical approach - buy in Dallas, close to family and a way more reasonable housing market with the same economic drivers as Austin.
When my mother in law called us mid-day one Tuesday in February, she said, “I found your house, it’s on a creek, Eric will love it.” I didn’t need to see the house, I wanted to be on a creek even if the flood insurance would slowly eat me alive.
We finally put in an offer with an over-ask and then we anxiously played the waiting game as the sellers lurked in the open market hoping for some crazy foreigner to buy all cash. Luckily the landslide offer didn’t come and we were awarded the house.
(By the way, How the over-ask on offers has become sensible in the 2020 - 2022 market is absurd to me. Why have a list price if everyone’s just going to bid it over ask? Just make the ask price higher!)
Anyway, we won the offer and thus kicked off a 28 day sprint to close.
When the lender told us that closing in 28 days would be tough, I didn’t quite understand why and frankly threatened to take our business elsewhere (although it was a bluff because he had the best rate by far). I thought he was playing lazy lender but in complete fairness, even a 28 day process is a hustle on all parties when you consider the number of things that need to happen during a well diligenced closing process. While we were going through the process, Laurelle and I would turn to each other often and say “I can’t believe people waived contingencies and inspections during the pandemic.” There’s no wonder that nearly 31% of people that bought homes that needed some work during the pandemic had buyers remorse. You really don’t know what you’re getting until you put the house under all the tests and kick the tires.
The home buying process felt like a colonoscopy on all fronts. The lender was turning over every stone - asking for account statements on mutual funds that I hadn’t seen in years, knocking on my old employers door, asking me to dig up information on medical bills I had supposedly been delinquent on that had dinged my credit and so much more. It made me realize I needed to consolidate my financials much better! The inspector was ultra thorough, pointing out a host of items that could be landmines in the future - like an HVAC unit that’s about 20 years old, a leak in the pool filter that could eventually lead to some rust and so much more. My eyes sunk in sorrow as I thought about the huge surprises that laid ahead and how every paycheck would go right into the house. All in all, we got through it. and negotiated with the seller to fix a lot of the items that were of concern. Once under contract, no one wants to restart the process and we knew that we had the sellers urgency on our side and we were able to capitalize on asking for more adjustments.
Simultaneous to the closing process we were also working with a litany of contractors to try to plan for the slight improvements to the house ahead of a move in date. I felt like Laurelle was single-handedly running a project management business with how she masterfully collected bids, negotiated bids and managed the trades. I could see the real estate baron in training…
We ultimately closed and it felt like we were on the other side of the endless peckings. During the closing process, everyone really gets their beak wet. The survey, the fees, the inspectors, the insurers - everyone looks to sink their teeth in to the juicy new homebuyers. I’m not knocking it because all of these items do create value in some way but it’s certainly an interesting experience to see how many hands are involved in your transaction process.
This experience shined a light on something for me though that I want to share. What I’ve seen in my industry of real estate technology for the last few years has been: slick user interfaces that simplify, mask and glorify the home buying process. The intent is to use consumerized approaches but leveled up to one of the largest purchases of one’s life, a home. All these companies want to streamline the home buying process, link you up with an untrusted and often inexperienced representative to guide you through the most important process of your personal financial story. It’s often quite obvious how many of them sweep important matters under the rug and downplay the severity of marquee items. It almost feels like they’re treating buyers like your parents treated you when you were younger “shhh, don’t let Eric hear us talk about money.” For users of many of these platforms, they should heed the old adage of, “if it looks too good to be true then there’s usually a catch.”
Buying a home is a big boys and girls game, don’t let the media or even a slick app fool you. When everything is up and to the right then all mistakes and stretched budgets can be overlooked but when things go the other way, the mistakes exacerbate and that stretch house you doubled down on is now underwater with your equity and the world looks a whole lot different. Therefore, the only way we were willing to play this game and give up our renting flexibility was to buy something we knew we’d stay in long term - close to family, good basis, highly desirable location and big enough not to be outgrown. That way, if the storm comes, we can ride it out and now think short term.
I always envisioned living flexibly in a small house, with a big yard and no pool.
Instead
I got a big house, no yard and a pool.
Life man, 🤷🏻♂️