How to Buy a House as a First-time Buyer in a Hot Market

It took me a lot of research, a lot of luck, and desperation that became my advantage.

Sometimes I get the craziest ideas while on vacation. A capsule hotel was one of the eccentric things that I wanted to experience in Tokyo, but little did I know that being in that claustrophobic space would give me an idea to buy a space of my own. Somehow I wanted a house.

Crazy idea for me at the time. I was a 20-something vagabond who didn’t care if I was sleeping in a sofa, car, or tent as long as I was traveling. But I was changing, perhaps even aging. I wanted a home base to recuperate from my years of aimless wanderings.

But I chose Western Washington state, one of the hottest real estate markets in the country. I had no experience in real estate, not even connections. But I was determined that I should buy one. So I resolved to look for a real estate agent to hire as soon as I got back from Japan.

Hire the right realtor

Seems like, for every house built in America, five realtors sprung up. One only needed a high school diploma or GED to apply to become one. I didn’t know who to hire, so I asked for referrals and good-old Google.

I had a shortlist of realtors. With a little bit of online stalking, I looked for their credentials, recent deals, and reviews. From there, I narrowed it down to a few whom I would interview.

I was prepared with these questions:

• How long have you been in real estate? Because it’s relatively easy to enter the field, you only want serious realtors.
• How many buyers and sellers are you currently representing? Because you don’t want realtors who can’t give you the time and attention you need.
• What do you know about my neighborhood? Because there are many things Google maps can’t tell you, like current developments and recent crimes.
• What is your strategy for winning a deal in a hot market? Because it’s a competitive market, you need a competitive realtor.
• What’s the best way to contact you? Because you need a responsive realtor. Getting an accepted offer is only the beginning of the negotiation.
• Can you give me the names and phone numbers of past clients for a reference check? Because happy past clients can mean happy future clients.

It all came down to this question, Why should I hire you?

You are hiring them. You are the boss. Allow them to make the case that he/she is the right agent for you. There are agents for veterans, agents for high net worth individuals, and agents for first-time homebuyers. Find the one that works best for your background, situation, and experience.

Scrutinizing the agents on my list took time and work, but I felt good about the one I picked. She was a local and knew the area. She had been in the business for a long time and full time. She was responsive by the minute. And she was informative without being condescending, explaining the process of buying real estate, the convoluted paperwork, and the follow-up.

Find the right property

“Everybody loves Edgewater.” My agent said. She had a massive map of our city pasted in a wall of her office. She pointed out which areas I should avoid and the good ones she believed deserved my attention. But Edgewater was the fatty, overpriced cream of the crop that everybody desired.

From that statement alone, I knew I must buy in that neighborhood. Edgewater was like living in Disneyland for adults — sprawling golf courses, running trail through evergreen trees, exclusive access to the Jubilee Beach, manicured sidewalks, plenty of parks, and on a clear day the iconic Mt. Rainer peered from any vantage point. It was a bougie neighborhood, the kind that I only knew existed in movies.

People want things many people want but can’t have. It’s an easy exit strategy should I decide to sell.

An old adage is an adage for a reason: location, location, location.

Pounce once you found the right property

I loved the first house I viewed in Edgewater. It was a red house, but not tacky. Classic single-family home design from the outside with modern, open-space concept living room. It was facing the direction of Mt. Rainier with strategic windows conducive to uplifting, natural lighting. I could see myself living in it.

But, I was apprehensive about whether I should submit an offer or not. It was the first house I ever saw. What if I could find a better one? I wanted to see more before I commit. It took me a few houses to realize that the first one was the one all along. But a week later the house was closed. It was too late. You always remember the house that got away.

I finally realized how cut-throat this market was for buyers. Many houses that pop up in MLS were sold before you could refresh the page. Some were bought before they were even advertised. I had to pounce right away.

The first offer that I submitted was not as good as the red house, but I was willing to settle. It was a bit older and the location was still ideal but not the best. My only consolation was that it was bigger and with a backyard. Yet I was outbid.

Days went by without any house for sale. I was getting worried that it may take weeks or months, if I could even get a house at all. Finally, another house in Edgewater surfaced, only a street away from the red house. I called my agent and asked her if she could get me a viewing within the hour. I got there armed with an offer.

Understand the seller’s motives

These days you could buy a house without knowing your sellers. I didn’t know who they were and where they came from. Were they selling to upgrade? Were they selling to move cities? Were they servicemembers too? Any of this information could help me understand their motives, and thus gain an advantage. But their agent was tightlipped, so my agent couldn’t get me any details besides them wanting to sell.

But there was one thing we knew from MLS: the house was back on the market. They accepted an offer days before and the deal crumbled.

“It could be anything. It doesn't have to mean there’s something bad in the house.” My agent said.

It’s true, but it wasn’t a good sign for would-be buyers seeing a house back on the market. It signaled that something went wrong along the way. I checked the house and there was nothing deal-breaker that I saw. Yet it wasn’t farfetched for me to think that the sellers might be desperate to sell now that the house had that back-in-the-market stigma.

I did a crazy thing to test this notion. I offered $4,000 less than their asking price when nearly all deals happened way above the asking prices.

They accepted. My agent was shocked. She’d never seen it happen, not in Edgewater.

Get a thorough inspection

The inspection was the most suspenseful part of our deal negotiations. Aesthetically the house looked good, sans the minor wear and tear of a used house. But there could be something hidden underneath, some structural fault or invasive mold beyond repair. It’s Western Washington, it rains all the time. The sellers didn’t want this deal to crumble again, and I didn’t want to go back to the depressed party of hopeful buyers. We knew it about each other.

My agent gave me the best inspector in town and paid however much he asked for. I was there in the inspection as it happened. I wanted to know for sure that the guy checked every single corner, plug, and faucet. I knocked on the walls as he did. I climbed into the attic with him. If he brought extra gear, I would’ve been on my knees in the crawlspace too.

His reports came back and it was long as I hoped it would be. A room needed repainting, the garage door had a dent, a sink upstairs was leaking, the water heater wasn’t reaching the ideal temperature, and the roof shingles had signs of curling.

The more fixable faults, the more advantageous for the buyer. Less competition from buyers who only want a perfect dream house. You can also ask the sellers to fix them, or slash the offer price for the cost to fix them. Note the emphasis on fixable. The roof is one of those things that is better replaced than fixed.

“How much is a new roof?” I asked my agent.

“I would budget at least $7,000 for it. But inspectors have to scrutinize the smallest things. You can have a few years left for it.”

I told my agent that the roof was my deal-breaker. I demanded a roof warranty and the leaking sink fixed for good measure. The sellers obliged with a 5-year roof warranty certificate and a plumber to fix the sink.

Keep your eyes on the finish line

Buying a house as a first-time buyer in a hot market is time-consuming, frustrating, and tense. It’s also exhilarating that after the whole debacle, you can now go home to a house that’s yours and build your life in it.

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