House Hunting: We Offer...and Wait

As I explained in my last post, the market in DC when we were house hunting was extremely competitive. But after finding the perfect house, we were ready to put in our offer.

Another look at the beautiful fron

The house we were ready to make an offer on was priced below our budget, but also below market value.  We suspected the sellers priced it this way hoping for multiple offers and a bidding war.

At the Sunday open house, we learned the sellers were reviewing offers at close of business on Wednesday so we had a little time to contemplate and structure our offer.

After looking at the comparables in the area and talking to our Realtor, we opted for an offer that contained an escalation clause.  We weren't very familiar with such clauses, but as our Realtor explained, this essentially allowed us give our best and highest offer while starting at lower price and working up to the highest if and when better offers were submitted.  In theory, the sellers would be presented with the lowest offer until another offer or counteroffer were given.

Thus, our offer looked something like this:

Starting price: 1.3% over list price

Top Price:  5.3% over list price

Escalating steps of $5k

We also asked for about half of the closing costs to be covered and made the sale contingent on a home inspection.

We submitted our offer and we waited.  The deadline came and went and we were still waiting.  We started to fret.  We knew there were multiple offers, but we expected to hear something.  And then finally, we heard news on Friday.  The sellers decided to extend the date for offers until Saturday.  Definitely not the news we were  hoping for, but there was still hope we would land our dream house.  We were asked to provide our highest and best offers.

We had a few options:  keep our original offer, increase our offer with escalation, increase without escalation, remove our offer altogether. 

We loved the house too much to give up on it, so we reevaluated our finances and how much we were willing to spend.  Instead of focusing on how much we were willing to spend on the house, we considered at what price we would be disappointed to see the house go for to someone else.  Anything over that price we would think the buyer paid too much money.

Eventually, we settled on keeping an escalated offer with a top price that of 6.6% over asking with half the closing costs and contingent on inspection.  While Brian would have increased our top offer even more, I was hesitant because even though the house was beautiful, it needed a lot of work.

The kitchen needed to be gutted.  It also needed appliances.

The bathrooms were all original, but needed some major help.

So, we submitted our top price and waited again.  We were confident in our offer, but we were nervous knowing it would be a multiple offer situation.  Luckily, we didn't have long to wait before we heard the news.

We didn't get it.*  

We found out much later that the house sold for 16% over list price (I know 16% doesn't sound that bad, but in real dollars, it's a lot of money).  We never would have paid that much, but hopefully the new owners are loving their new home!

Unfortunately for us, our house search was back to square one.

Have you ever had to deal with a multiple bidder situation when buying property?  How did it turn out?

*I feel that I kind of led you guys on thinking this was our house, sorry!  We really wanted it, but it wasn't meant to be.  I will be posting about our actual house very, very soon, I promise!