Austin Buyers, when trying to win a multiple offer situation on a home in Austin, how much is “too much” to pay? It’s a hard question to answer because it’s both personal and subjective. One buyer’s “too much” may another’s “good deal”. One buyer’s “perfect” floor plan may be another’s “it’s just ok”.
That said, if you’re about to write your 5th offer having lost the last 4 multiple offer situations over the past 2 months, you have to wonder if the 4 buyers who beat you were all fools. Were they? Probably not. They all have a house now, and you don’t.
And when you finally do get your own home under contract, you may have to pay relatively “more” than it would have required to win one of those 4 lost bid efforts a few months earlier. That’s ok though. Losing out on multiple multiple-offer situations is a progressive, education process. Losing out on homes does provide value and context as it toughens your resolve going forward, and makes you smarter and, more importantly, braver. Hopefully you have a good agent keeping you sane too.
But here’s how I look at paying “too much” for a home in Austin. There are two kinds of “too much”. There is “irresponsibly too much“, and “responsibly too much“. Or, boiled down to its essence, “responsible risk” vs “irresponsible risk”.
We all make these decisions in life, not just in housing, but in many areas, whether it’s picking one job opportunity over another, or one college over another. Spending $2,500 to repair the 12-year-old car vs buying a new one. Even who you marry.
Sometimes, you have to pull up your A-Game, check your gut, and make the best decision you can in that moment. But in doing so, you are taking a “risk”. And you don’t get to find out of you were “smart” until later, at some point in the future, once all the data becomes known and the dust settles.
If you’ve tried to buy a house in Austin lately, in an area of high demand and low inventory, such as Southwest Austin, you may have run into some competition. In fact, you most likely have. As of this writing, there are 43 Active listings and 84 Pending listings in SW Austin. I won’t go into a breakdown of what that means statistically, but let’s just call it a Mega-Seller’s-Market and leave it at that.
Other buyers want the same house you want, often the first day it hits the market. A new listing in South Austin 78745 that I showed a buyer a few days ago had a parade of buyers waiting in line when I got there, and more when we left. An offer I wrote today for a SW Austin home that came on the market 3 days ago has multiple offers and we’ll see how ours did tonight or tomorrow. It’s really, really crazy out there.
This type of market changes the way you have to approach your home buying effort in Austin. You are no longer “shopping” for a home, you are competing for a home. You are not a home buyer, you are a contestant. You are not trying to negotiate an acceptable offer with a seller, you are trying to beat your opponent(s), the other buyers, by making a better offer. Suit up, game on. And you’re not able to know what it will take to make your offer “better”, you can mostly only guess, then decide how high you want to jump.
This is disconcerting and frustrating for those unaccustomed to the stress. It can tie you in knots emotionally. It’s too much for some buyers, and they simply bow out of multiple offer situations, not wanting to compete at all. Others get it right away, put on a game face, and bring their A Game to the first offer, crushing the competition and “winning” a home on the first try. Still others, go through several failed offer attempts before they can muster up the fortitude and grit to throw down a wining offer. If you’re one who keeps losing, read How to Win Multiple Offers in Austin for some tips that will help you and your agent increase your chances of coming out on top.
Are we in a Bubble?
I’m not ready to call this a “bubble”, but this marks about 12 months now of very strong demand and shrinking inventory in many areas of Austin. Continue reading