Every tried to buy a home? Then you may be able to relate with our current situation…
When I was working full time one of the biggest stressed of my day was travel time. Not to work but to my mums each morning and afternoon to collect my son. On average it would take between 20-30 minutes in traffic each way. That calculates to approx. 5 hours per week!
We recently welcomed our second son into the world and have decided that before I return to work next year, we need to move closer to my mum. It also so happens that our dream suburb is only 5 minutes away from her house.
We started with the usual initial steps. We enlisted our broker to work out what our budget was and discussed borrowing power. When doing so we talked about using my parents as guarantors as we were only just shy of being able to borrow what we needed to buy in our dream area and don’t want to waste money on mortgage insurance. We calculated what we could comfortably repay per fortnight and then proceeded to check real-estate sites daily to see what was around.
Our weekends became full of home open after home open, aimlessly walking around properties we weren’t interested in just to meet realtors and try to get our heads around what properties were worth. I spent countless hours on the phone to realtors who told me they NEVER sell homes that they don’t put online, only to get a phone call from them later in the week about a property that are selling off the market.
Then the most beautiful property came up, advertised in the 900k’s in our dream area. We quickly added it to our weekend schedule of viewings. We fell in love with the property and eagerly walked around it twice to ensure we couldn’t see any issues. The market moves quickly, and we knew from past experience that we couldn’t rely on being able to see it the next day before it went under offer.
After conversation with the realtors we were informed that the seller actually wanted between 1-1.1mil way more than advertised and certainly out of our budget. After careful research of the area I found many comparable properties going in the 900s and we decided to try our luck.
We put in an offer of in the high 900ks- subject to finance/the sale of our property & building/pest inspection. The first draft contract had so many errors including the address of the property we were buying. I couldn’t help but think the mistake represented that fact that the realtor wasn’t taking us seriously and that we were more of a joke to them.
However, I sent the contract off to another realtor to look over and he wrote a list of amendments. A day later we had a second draft contract that was corrected, and we signed across the dotted line…well we email signed but still it was official.
The next day the phone rang, it was the realtor. She informed us that although we were the first offer there had been two others and they were 50k higher than ours, and not subject to sale. It was like being told you hadn’t got your dream job. I’d already dreamt of myself in the house, we’d talked about where our furniture would go, and what initial renos we would do. I bravely said I understood and tried not to cry and she explained how difficult it would be for us to buy a property with a subject to sale, and how that only works for some sellers who are still trying to find a property to move to themselves.
I put the phone down a promptly rang another realtor to see if she had any new properties coming on the market, anything to distract me from losing out on that dream house. I mustn’t have been the only one because she was so patronising on the phone, “if we were to buy subject to sale than we’d pay for it” our offer would have to be “higher than anyone’s else’s” and basically she wasn’t interested in helping us. Who knew there were so many cash buyers around with an easy $250k saved? We were just plebs looking with no chance basically.
So, what were our options…
- Basically, it was suggested that we sell our house. This would mean we would risk being without a home and would need to put all our belongings in storage and live with my parents indefinitely with two kids under 2.
- Lower our budget, not use my parents as guarantors and consider a bridging loan and mortgage insurance ($12,000) to get our dream home.
- Keep putting offers in subject to sale of our property knowing full well that a cash buyer could come by and trump us if ours didn’t sell quick enough.
For the meantime we’re going to go with option 3. I can’t face not having a house! I don’t want to waste money on mortgage insurance, and surely the right one will come along and if it’s meant to be our offer will be successful.