Lessons Learned While Buying A House During The Pandemic
We tried, we failed, we succeeded, and we learned along the way
The White Cape is a newsletter that shares the interests, evolution, and changing perspective of my little white cape cod home, and the people (mostly me) inside it.
This week’s things:
Inspired by my favorite podcast, A Thing or Two with Claire and Erica, each week I will share my favorite things that are occupying space in my mind.
Book:
- Olivia is the co-host of one of my favorite podcasts, Bad On Paper, which is what compelled me to pre-order and read (devour) her first novel. SABI (as the BOP folks call it) is about Hazel, a girl who has been living in the shadows of her successful influencer sister, Evie. When Evie suddenly goes missing, Hazel is forced to reevaluate her childhood, her relationship with her mother, and the perspective she has on the industry. It is gripping, insightful, and will certainly make you think.Purchase:
Essie Fiji Nail Polish - I have decided that I am not a nail girl. I do not enjoy getting my nails done, and will avoid it at all costs. I have only gone to the salon for pedicures for the past 10 years, because I hate, hate the way chipped nail polish looks and feels. I see it as a chore, so I’ve decided to just maintain my toes as much as I can, and go from there. I recently picked up Fiji during my latest trip to CVS, and it is the perfect summer pink.
Meal:
Balsamic basil grilled chicken - From one of the best newsletters on Substack, What To Cook When You Don’t Feel Like Cooking, this dish was one of the first that I made myself after learning how to use a grill (finally), and it was a 10/10.
does not miss when it comes to simple, delicious recipes. I pre-ordered her new cookbook of the same name, and can’t wait for it to arrive.
How we bought a house during the pandemic
If the past few years have taught me anything, it’s to expect nothing. That’s what happened to our plans in 2020 when the world shut down and all of our previous expectations were flipped upside down.
My husband and I entered the year expecting it to be the best yet: we would get married, save a bunch of money, and plan to buy a house the following summer. That all changed when our wedding plans became uncertain, the housing market began to turn, and our one-bedroom apartment became way too small for us + our dog all day, every day. We sped up our home buying timeline and decided to jump on the low-rate environment before we became priced out of the neighborhoods we liked.
During the summer of 2020 we hired our incredible realtor, Bic DeCaro, and she and her team worked their magic to help us buy our first home. The process was not simple, and I can only imagine how much harder it’s become for first-time homebuyers, especially in urban areas. But now looking back, it all worked out the way it was supposed to, just how life usually does.
Buying a home with a partner comes with its pros and cons. The pros are mostly financial: dual-income, combined downpayment, more negotiating power. The cons are mostly interpersonal: agreeing on your offer, choosing your ideal home style, choosing your ideal neighborhood, considering two commutes, planning future family changes, etc.
Heading into it, the process was daunting. But we learned along the way and had a unique experience that I hope others can learn from, too.
Step 1: Figure out the basics
Before making any moves toward buying a home, we agreed on the basic parameters:
Where we wanted to live (neighborhood, town, general area, etc.)
How much money we had
Whether we wanted to work with a realtor
Non-negotiable features of the house like number of bedrooms, bathrooms, heating/AC, yard, etc.
Step 2: Understand what is actually affordable
Next came a deep-dive into our financial health. We made a spreadsheet that identified how much money we brought home, how secure we were in receiving a paycheck over the next few years, and how much it would cost to buy a home in our desired neighborhoods.
Before seriously pursuing homes, it was important to understand:
How much money we brought home each month
How much in liquid assets we had (i.e., total amount in savings available for withdrawal)
What dollar amount we could afford for a downpayment
Whether we qualified for first time home buying benefit programs
Step 3: Interview and hire a realtor
My husband and I had our eyes set on home ownership for many years before actually going through the process. We would go to open houses in our area very frequently to get an understanding of what homes looked and felt like at different price points. Because of the level of competitiveness in our area, we learned that we’d need to work with a professional in order to submit a winning offer.
We looked at Zillow realtor reviews and identified about five folks we were interested in working with. We set up quick interview conversations with them to understand how they work, what their personality was like, and how they could help us. After hanging up the phone with our realtor, we immediately knew we wanted to work with her. She set up three showings for us that following weekend and we submitted our first offer right away.
Step 4: Get pre-approved for a loan
As part of our realtor agreement, we agreed to work with their preferred lender. This worked out in our favor because they were extremely responsive, fast to complete all required paperwork, and provided our closing attorneys as well.
We were required to compile and submit a full snapshot of our financial history, which included:
Pay statements from the previous five months
Tax returns from the previous year
Statements from all stocks, investments, and retirement accounts
This information proved our total asset value and informed our lender about how much we could afford. We were pre-approved up to a particular amount, which helped narrow our search a bit more.
Step 5: Showings, showings, showings
Next was the fun part: looking at listings and going to showings. We visited about six houses per week over the course of ten weeks, and submitted one offer each week. After getting beat out a number of times, it became clear that we needed to become more selective in our choices because there was a plethora of buyers submitting offers for the same types of homes at the same time as us.
Looking back, this was both the most stressful and most exciting part of the process. I loved stepping into homes and picturing our family there, envisioning how we would live in each space. It was discouraging, though, when we fell in love with a home and lost in a bidding war to a ridiculously high offer that we couldn’t compete with.
Step 6: Offer, adjust, and offer again
As mentioned, we submitted one offer per week for ten straight weeks. We were submitting good, competitive offers, but were being beat out by families who had cash from a previous home sale that we just couldn’t compete with.
After a number of discouraging weeks, I took a step back to try to see patterns with our offers and what was going wrong. It became clear that we were only submitting offers on the same type of house: Cape Cod style homes in one particular area of Northern Virginia. I finally suggested that we at least look at a few houses in the next town over. The first house we looked at was a charming Cape Cod with an amazing backyard and potential galore. We submitted an offer, had a little bidding war, and won.
Lessons learned along the way
The process was stressful and terrifying but also so, so rewarding. We learned a few good lessons that I hope can be helpful to anyone embarking on first time home buying during this crazy, uncertain time.
Please note: These lessons are completely from our experience and perspective only. We are aware of our privilege throughout the process based on a number of systemic advantages: our race, upbringing, education, income levels, ages, and family structure. Our values and beliefs align with an equitable, fair market with access to clean, safe, sound, and scalable housing opportunities for absolutely everyone.
We didn’t need to put 20% down
After we were pre-approved for our loan, our lender advised us that we would only need to offer a minimum of 5% down to qualify for our loan. If we put down less than 20%, we could opt-in to mortgage insurance, which would be added into our monthly payments until we reached the 20% amount.
We needed to offer significantly over listing price and escalate even more
Listing prices became almost a joke based on how much people were offering. This has caused a ripple effect through the entire market in our area, because now homes that are actually worth one price are being sold for $200-300K over that value. We quickly got comfortable with offering amounts significantly over the listing price, which our realtor helped us navigate.
We needed extra cash for escalation clauses
Buying a home during a seller’s market means each seller was receiving multiple offers at once. It became expected that we would add an escalation clause to our offer up to a certain amount. That way if someone offered the same amount or greater, we could counter up to the predetermined escalation amount.
This was key to ultimately winning our house, because another buyer submitted an offer with an escalation clause that we could counter. However, in order to qualify for our loan, this meant that we needed to pay the difference between our final escalated offer and the valuation of the house. We ended up needing additional cash to close the gap between our offer and the appraisal, which was pulled from that initial down payment amount we had saved.
We needed to waive every contingency there was
Contingencies were not even a thing during our home buying process. Every single competitive offer waived all contingencies and had escalation clauses significantly over the asking price. Our only contingency was that we would need financing, which means we were beat out by cash offers every time there was one. Home inspections, though, were not even a consideration.
We got extremely lucky
Looking back, we are so grateful that we bought our house when we did. We got in right when the market was starting to boom, and now our house is valued way over what we paid. We also took advantage of the low interest rate environment and thankfully have historically low interest on our mortgage. While the neighborhood we ended up in wasn’t what we initially hoped for, it is the most perfect, quaint area full of shops, restaurants, trails, parks, great schools, and our best friends. Finally, our house is everything we could have wanted: charming, full of life, renovated, with room to grow.
While buying our home was a doozy, we absolutely love it and are thankful each day we get to live (and work) in it. I hope others find this helpful as they navigate the seemingly impossible housing market, and I hope this becomes irrelevant soon as we pivot away from impacts of the pandemic and toward a more stable, equitable, and accessible market.
Thank you for being here.
Thank you so much for reading SABI 🩷