We Didn’t Get the House!

If you happen to follow me on Twitter, you know that I put an offer in on a house last week.  It was the first time I’ve actually attempted to buy a rental property and I definitely learned a few lessons.  I keep a constant eye on all the properties in my area to get a sense of the real estate values, but also in hopes that sooner or later I’ll find a deal too good to pass up.  Last week I found one of those deals.

I have been watching a bank owned property a few blocks from me for awhile.  It has NO windows in it but is otherwise in good shape.  It appears that the previous owner took all the windows with them when the bank foreclosed.  Yes.  Bizarre.  Anyway, the bank had been asking $160,000 which was absurd for the house in it’s current condition.  I had been watching it, anticipating that they’d lower the sale price and I thought maybe it would eventually hit a price point that made sense.  I was shocked to see them drop the price to $99,000 last Thursday.

As soon as I saw the price that day, I called my realtor and said, “get me in that house and then I want to make an offer!!”.  By the time I met her there, it was clear I wasn’t the only one that’s been keeping an eye out.  There were two other groups of people there when I showed up and we had to wait our turn in order to walk through the house.  Once we had walked through, we headed straight for my realtor’s office to write up an offer.  I was excited at the idea of getting the house but at the same time figured I wasn’t the only one that would be submitting an offer that day.  (It turns out I was right because, by the next day we found out we were one of 8 offers that had been submitted).  When we wrote the offer up, I made a full price cash offer with no contingencies.  I didn’t even ask for an inspection and added $250 to the offer in case someone else made a full price offer.

We waited over the weekend to find out on Monday that we didn’t get the house.  Hindsight, I think I should have done a few calculations to come up with a higher price that still made sense.  If they had accepted my offer, I would have EASILY been able to put $10,000 towards fixing up the property and flipped it for at least a $40,000 profit.  I also could have kept it and generated a $1200 a month income stream as a rental.  I knew this when I made the offer but I should have realized that if an idiot like me could do that simple math, others could too.  As I look back I realize I probably should have made an offer between 5-10% over the asking price if I had any hope of getting the property.  You can bet I’ll be watching Zillow to see what the final price was so that I have a better idea of what it took to get the property!