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When Is Owning a Home Too Much?

Posted by Johnine Larsen on February 19, 2016
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When is owning a home too much?

When you pay $50,000 more than it’s worth.

 

When is owning a home too much?

When you give up years of equity.

 

When is owning a home too much?

When you sacrifice your future.

 

Case in point:

A 1,000 sq. ft. house was recently listed at $415,000. Sounds high, right? But the house had a lot going for it: a great neighborhood; a nice, roomy garage; an unfinished basement. It had been remodeled, and I’ll be honest: it was cute. $415,000 cute? In this market, yes. It was listed at a decent price.

One of my clients wanted to look at it, so we went to the open house—along with everyone and their mother. The place was packed with people. Potential buyers coming and going. Agents everywhere.

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The crowd turned the open house into a sort of fever-room. Everyone felt the competition, and people quietly panicked. We’re down to a third of normal inventory in Seattle right now, and houses like that one don’t appear often. The same fear was on everyone’s mind: “How can I win the inevitable bidding war?”

My clients liked the house. After they saw it, they asked me my opinion on how high it could sell for, and how much they should bid above the $415,000 listing price. It could have been listed for $435,000 in this market, and even at that price, it would have drawn a crowd and attracted multiple offers. But now, after the frenzy of the open house, every agent there knew that the offers would escalate past $415,000, past $435,000, and well past the home’s actual value. I told my clients not to offer any more than $475,000. Even that felt uncomfortably high.

The house received 13 offers, and it went for more than $500,000.

 

When is owning a home too much?

When you pay $85,000 over asking.

 

That buyer won the bidding war, but when you pay tens of thousands of dollars more than a house is worth, you lose more than you win. That buyer owns a house—but they also gave away their equity and their future—and is that really a good investment? Isn’t investment about coming out ahead?

I’ve seen market cycles, and after 26 years as a real estate agent, I don’t lose my head when inventory gets low and prices get high. I take pride in helping my clients make good, rational investments. Sometimes that means renting until the market calms down (and it will calm down; real estate works in cycles—it always has, and this time is no different). Sometimes it means remodeling instead of moving to a bigger house. Sometimes it means simply calming down and waiting. Every situation is different.

If you’re worried about the competition in this current market, give me a call. I’ll be happy to talk to you about your options and make some recommendations.

 

When is owning a home too much?

When you give up your future to win a bidding war.

  • Sarah Donaldson
    Sarah Donaldson
    18:44 18 Jul 19
    Darcie was such a joy to work with. She felt like family during the sale of our house and the search for our new home. We may have found our forever home, but if we ever need a Realtor in future, Darcie from Real Estate Gals will be our first call.
    Brian Heagler
    Brian Heagler
    16:55 02 Jun 19
    I have worked with Johnine and her team for 19 years and have always received personal, knowledgeable and professional service and attention! There is never and pressure and they will guide you away from a property when appropriate, which is always appreciated when a market is hot and the tendency is to move quickly. I trust them and have never been let down!
    Anne Slater
    Anne Slater
    18:03 25 May 19
    Johnine Larsen is fabulous! She listened and came up with ways we could get what we wanted in a house and stay within our limited budget. When we found the house we wanted, she moved super fast to get the house inspected and implemented creative ideas to make our offer appealing. And out of 13 offers, we were selected and got our house. I recommend her to anyone buying a home.
    Amy Burdick
    Amy Burdick
    19:13 24 May 19
    Real Estate Gals made sure we found our perfect house! Then, when we were up against other bidders, Johnine worked tirelessly to ensure we were tops! Her extensive real estate experience combined with exceptional character and integrity provided peace of mind throughout the process. She also made sure we received the right value as a seller and got the transaction done quickly and efficiently. Simply stated: there is nobody better to help you find your dream home.
    Bill Hollman
    Bill Hollman
    22:21 19 May 19
    I'd give Real Estate Gals 6 stars if I could. We have used them multiple times, both in selling and buying homes in Seattle and the surrounding area. I can't say enough about the professionalism, knowledge, and patience they bring to the task of buying a new home, or selling your current residence. And they know the Seattle area so well, they'll offer valuable insights into the pros and cons of any location you may be to considering. Look no further, call Johnine at Real Estate Gals. You will be glad you did!
    Beth Guerra
    Beth Guerra
    01:14 18 May 19
    Johnine was a breath of fresh air in the real estate market. She listened intently to our wishes and goals, and was tireless in her search for our perfect house. She is well versed in both Seattle and the surrounding areas. She made sure all the details were taken care of after the inspection, and made the closing process seamless. She even gifted us with a housewarming present. Nearly 7 years later, we still receive holiday cards and well wishes. I highly recommend Real Estate Gals and will look no further in the future.
    Aidan Key
    Aidan Key
    15:44 17 May 19
    Johnine and the Real Estate Gals brilliantly took us through the home buying process two different times. Their willingness to educate (I was new), hear our home hopes, and support us through the process are a few of the reasons that I highly recommend this team. Speaking of a team, I love their collaborative business model - it meant that we--the home buyers--always had a returned phone call and an ability to look at a house on OUR schedule. Truly felt like they place the customer first!
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