Michael on July 27th, 2009
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My wife and I bid on a house last weekend.

You: Did you get it?

You have to hear the story first.

You: But I’m excited! Did you get the house? Where is it?

# # # #

You might recall that my wife and I have had several discussions about location vs. home.

You: How do you categorize this home?

While the home we bid on had some curb appeal, it was all about location. It is truly in a spectacular location. Great neighborhood. Side street. Excellent schools.  Walkable community. The home itself is dated and small, especially for a family of four. In addition, some significant non-cosmetic updates (like windows and the septic) need to be addressed immediately.

You: Changing the windows sounds like a cosmetic upgrade, no?

Ordinarily, sure. But the big problem with the windows in this home is their age. Since they hadn’t been addressed in a couple of generations, they were surely filled with unabated lead paint. You can arguably get away with that without kids in the house, but I’m planning on taking my kids with me to my next home.

You: I should hope so. Did you get the home?

Wait a minute. We had a second showing of the home last weekend. In the days leading up to the showing, we learned a bid on the home had been verbally accepted (coincidentally, after being on the market for a few months). But because the agreement wasn’t signed and the seller’s didn’t know if or how we’d bid, they wanted us to see the home anyway.

As a result, this was the most intense property viewing we’ve had to date. We knew that if this were a home we wanted to bid on we’d need to do so that day. Because of the verbally accepted offer, there would be no tomorrow for this property – it would be sold. We went through the home with our buyer’s agent trying to notice each of the various advantages and disadvantages of the home.

Then, our time was up. We had to make a decision.

You: So you decided to bid?  I mean that is the title of the blog post.

Yes, sort of.

You: I don’t think you can sort of bid. You either bid or you don’t bid.

Well, we said we were going to bid but we didn’t throw out a number.

You: That’s the most important part of the bid. Without a number anyone can bid. Bid, bid, bid, bid.

This is starting to remind me of that Seinfeld car rental scene discussing the elements of taking a reservation. Because our agent had a busy day ahead of her with other clients, she told the seller’s agent that we would be making an offer, but not until the evening when she would have time for us to reconvene, run comp’s (research similar recent home sales) and come up with a number to offer.

The seller’s agent agreed, noting that our offer would need to be strong.

Over the next several hours we stressed over whether to bid.

You: But you already said you were going to bid.

We were, but then we had time to think about it.

You: So you reconsidered?

Absolutely. This was a major decision. Not only the financial implications, but also the conscious decision to put our family in a small, older home was weighing on us.  At about 6:30 PM, I met our agent at her office. She offered to start pulling up numbers.

I told her she needed to take off her agent hat for a minute and be a psychologist first. She graciously agreed. I then – and I am not making this up – had the most indecisive hour of my life. I simply couldn’t decide whether to make a move on this home. I was trying to reconcile all the pro’s and con’s in my head and I wound up arguing with myself. It wasn’t pretty.  Finally, the agent attempted to put an end to my madness by saying “You have to decide.”

You: So what did you do?

What any man would do in such a situation.

You: Punt?

No. I called my wife.

You: She wasn’t there?

She was getting the kids down to bed and waiting for the babysitter to arrive. (We had planned on going out to dinner that evening.)

You: What did your wife say?

She repeated what she had told me all day. Specifically, that she would be very happy to live in this home, but also that she didn’t need to live there and saw herself as being very content living in a number of other homes.

You: Did that help?

Not really. I told her the vote was one to one between me and myself and that she needed to break the tie. At that point, I put my wife on speaker and our agent got on the line. We spoke for another few minutes and it suddenly became evident where we were, at least emotionally.

You: Emotionally?

You bet.  There are a ton of emotions during the home buying process. I try to stay aware of my feelings, but there’s no denying them.

You: So what were you feeling?

While we were excited about the prospect of living in the home because of its location and charm, we were not overly enthusiastic given the high price, small size, and work required to get it into the shape we’d need. Finally, we came to a conclusion: we would bid on the home but only to the point where we would enthusiastic to have actually purchased the house.

You: Did you get it?

Wait! Once we decided that we would bid, we then needed to decide how much. Our agent suggested we each come up with a number we’d feel comfortable bidding. So I came up with one number, my wife another. The numbers were different, but not dramatically so.

You: Did you average them?

We thought about that for a minute, but decided against it. Instead, we agreed to use the lower of the two numbers.

You: Saving you some money.

And also decreasing the chance of landing the home. Remember, there was already an offer on the home. We were very unlikely to receive a counter-offer. Rather, we were either going to receive a “yes” or a “no.”

You: So why did you use the lower number?

Because the lower number represented the highest one of us was willing to pay. By definition, going above that number would have caused one of us to go out of his/her comfort zone.

Then we signed our name a few dozen times and initialed our names 349 additional times and left the agent’s office. As we walked to dinner, we were nervous. We still weren’t sure we did the right thing. Most of the stress was caused by the speed at which we had to make a decision in this, a buyer’s market.  Then I became at ease.

You: Why? Glass of wine?

Nope. I realized something. Just allowing a few minutes to pass enabled me to appreciate that we had done the right thing.

You: How so?

Our offer was a good offer, but I didn’t characterize it as a particularly “strong” offer. The only way we were likely to get the home is if the seller’s agent had been bluffing. Since I didn’t think she was bluffing, we most likely wouldn’t get the home.That would leave us disappointed.  On the other hand, our bid ensured we would not to have pay the list price.  That was a relief.

If we did get the home, we’d be getting it at a price where we would be excited. The “discount” from list would allow us, from a financial perspective, to comfortably replace the windows and update the septic. Instead of being stressed at the bid price, we’d be enthusiastic.

Ultimately, I was comfortable because I thought we came to the same conclusion in one stressful day that we would have arrived at had we had several days to consider the purchase. I was happy. We had a nice dinner. When we got home, we already had an email from our agent.

You: What did she say?

The sellers were going with the other, stronger, offer.

You: How do you feel?

Just as I thought: relieved and disappointed. But I now know that this home wasn’t meant to be.  The search goes on . . .

Thoughts? How many homes did you bid on before you actually purchased one?  How many did you see?

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