Well folks, as anticipated, bidding wars are back with a vengeance, at least here in San Francisco. With so much tech wealth created in 2023 and 2024, the San Francisco real estate market in 2025 will likely be strong.
If I were a real estate agent, I would never encourage my clients to engage in a bidding war. Winning such a war often leads to what's known as the “winner's curse.” This term signifies paying a price that exceeds what anyone else in the bidding war was willing to pay, putting your finances at greater risk if the real estate market takes a downturn.
Personally, I avoid bidding wars because I know my emotions can cloud my judgment. It's akin to my approach to poker—I refrain from heavy drinking to keep a clear head for rational decision-making. And for those looking for love, take off those beer goggles!
This post delves into the reasons why people enter property bidding wars. I aim to comprehend why potential property owners disregard my advice of searching for homes during the slow winter months. It baffles me why more potential owners wouldn't opt to underbid on a poorly marketed, mispriced, or stagnant listing rather than one that's presented perfectly.
I seek to understand because I may have a blind spot that requires fixing. Let me share some bidding war examples followed by feedback from a real estate agent and three homebuyers on why they engaged in a bidding war.
Why I Currently Care So Much About The Housing Market
I've been closely following the housing market since purchasing my new home on the west side of San Francisco in the fall of 2023. For months, I experienced both a liquidity crunch as well as doubt on whether I had made the right decision to slash my passive income for a nicer house.
As the stock market marched higher after I sold stocks (and bonds) to buy the house, I felt conflicted. On the one hand, I was missing out on stock market gains. On the other hand, my family was enjoying a nicer place to live. The home purchase could turn out to be the biggest or worst financial mistake of my life.
More than 16 months later, I'm relieved to say that buying this house has turned out fine so far. The home withstood heavy rainstorms during the winter without leaks, which is my most concerning house maintenance issue. Meanwhile, housing prices have rebounded since spring 2024 thanks to pent-up demand, a rise in tech stocks, private artificial intelligence company growth, and a continued dearth of inventory.
Here are some examples of homes that sold way above asking. If one of these homes happens to be yours and you want it taken down, feel free to leave a comment or shoot me an e-mail.
Let me first share examples of properties that went through bidding wars and went over ask. Then I'll share from homebuyers why they got into property bidding wars.
Examples Of Property Bidding Wars In San Francisco
1615 Funston Avenue (Inner Sunset/Golden Gate Heights border)) – 2 beds, 1.5 baths, 1,230 sqft, asking $1,495,000, sold for $1,675,000, or $180,000 over asking (12%). Although a small house, it is nicely remodeled inside and out. Paying under $2 million for a remodeled single-family home in San Francisco is what a lot of families want.
220 Magellan Avenue (Forest Hill) – 3 bed, 2.5 bath, 2,455 sqft, asking $2,795,000, sold for $3,125,000, or $330,000 over asking (11.8%). Handsome home on a tree-lined block in the best neighborhood on the west side of San Francisco. The price point between $2 – $3.5 million is common for dual income, mid-career households with children.
68 Madrone Avenue (West Portal) – 3 bed, 3.5 bath, 2,836 sqft, asking $2,495,000, sold for $3,125,000, or $630,000 over asking (25.25%). Although it sold for 25.25% over asking, the price seems reasonable for its size and location.
80 San Pablo Avenue (St. Francis Wood ) – 3 beds, 2.5 baths, 2,190 sqft, asking $2,295,000, sold for $2,500,000, or $205,000 over asking (9%). A quaint house at a reasonable price on a relatively quiet street. St. Francis Wood is one of my favorite neighborhoods with only single-family houses. The only negative is that the neighborhood is bordered by some very busy streets as well as a high-traffic intersecting street.
Several Truly Massive Overbids
120 Lenox Way (West Portal)- 4 beds, 2.5 baths, 2,221 sqft, asking $1.795 million, sold for $2.56 million, or $765,000 over asking (42.6%). The house received 15 offers and is across from a playground and school. Depending on the individual, this can be a good or bad thing. The house is only a block away from the MUNI station, and two blocks away from shops and restaurants.
3782 21st Street (Dolores Heights) – 2 beds, 2.5 baths, 1,844 sqft, asking $2,395,000, sold for $3,225,000, or $830,000 over asking (34.6%). This was truly an amazing sale given how small the house is, as well as the lot size of only 1,410 sqft. Standard lot sizes in San Francisco are 2,500 sqft. It's a charming house for sure. But wow.
150 Santa Paula Avenue (St. Francis Wood) – 5 beds, 3 baths, 3,585 sqft, asking $4,795,000, sold for $5,705,000, or $910,000 over asking (19%). The seller received a preemptive offer only one week after listing, so there was actually no bidding war.
The house sits on a large 8,659 sqft lot, which is extremely rare in San Francisco. For a family with children and dogs, this enclosed yard is special.
The sales price of $5,705,000 blows past Redfin's estimate, which is consistent with most of these recent sales.
240 Santa Paula Avenue (St. Francis Wood) – 3 beds, 2.5 baths, 2,298 sqft, asking $2,695,000, sold for $3,325,000, or $630,000 over asking (23.4%). A unique house that reminds me of homes in Hansel and Gretel. I'm not sure why someone had to pay so much over asking given its regular size. It's also bordering the playground/park, which can be both good and bad, depending on who you ask.
839 Noriega is a wonderful property in Golden Gate Heights, my favorite neighborhood. This 3 bedrooms, two bathrooms, single-family home has ocean views in a quiet area. The home was underpriced, but I thought it would sell for about $1.9 million. However, a huge bidding war ensued and pushed the price to $2.25 million all cash on May 29, 2024. Redfin had the estimate around $1.8 million, and within two weeks after the home sold, Redfin revised its historical estimate value of the home.
Some Impressive Sales Below Asking
If you go up the price curve, you can generally get better deals. Bidding wars are more rare at higher price points simply because fewer people can afford these homes.
565 Ortega Street (Golden Gate Heights) – 5 beds, 3.5 baths, amazing remodel asking $5,950,000, sold for $5,550,000. This was one of the coolest houses I've ever seen due to the design. It felt like a prized work of art with a separate unit and panoramic ocean views. I love this house.
The listing agent didn't list the estimated sqft likely because it would put the house at an all-time high price/sqft based on the asking price. If you can buy a single-family home with a water view, I think you're going to outperform the market for a long time. Golden Gate Heights is one of my favorite areas to buy single-family homes in San Francisco.
This house was a gut remodel that took what seems like over five years. My main concern is fixing custom items and sourcing custom materials when something inevitability breaks.
The previous owner purchased the house for $2,650,00 in July 2016. Notice how the sales price of $5,550,000 completely obliterates the Redfin estimate due to the remodel. Now Redfin's algorithm needs to recalculate other homes in the area.
3846 25th St. (Noe Valley) – 4 beds, 3.5 baths, newly remodeled asking $6,495,000, sold for $6,375,000. Impressive high end remodel and landscaping. These type of remodeled homes used to sell for closer to $4.5-$5 million.
3898 Washington Street (Presidio Heights) – 7 beds, 6 baths, 8,765 sqft, asking $14,950,000, sold for $14,700,000. Handsome home on a corner lot that gets a lot of light. Personally, I'd rather not live on the corner due to more traffic exposure. Presidio Heights is one of the most expensive neighborhoods in all of San Francisco.
Once more, you can observe how the sales price significantly exceeds the Redfin estimate. Redfin will require some time to adjust its pricing algorithm to accurately reflect the rising prices in the neighborhood.
The inaccuracy in housing estimates provided by Zillow and Redfin presents an opportunity for both sellers and buyers. If a buyer can discern that online housing valuation estimates tend to lag behind in a bullish market, they might endeavor to convince a less astute seller to agree to a lower market price.
Feedback From Homebuyers And Real Estate Agents Who Got Into Property Bidding Wars
To understand why people get into property bidding wars, I decided to survey my Twitter followers and newsletter readers. Here is some of their feedback:
Anonymous feedback on getting into a bidding war in 2022:
Two years ago, we bought a small condo in a college town for my daughter to live in while she attends school. I grew up near that town, so I am familiar with and I love the area.
Yes, I perceived it as a bit risky to compete in a bidding war for the condo. However, we heard horror stories about so many college students in that area who struggled to locate suitable housing. We did not want to search and compete for a place every school year.
Also, my daughter is very private and picky and hasn’t done well with roommates. I intend to keep the property for the long term, so I wasn’t as worried about the exact purchase price. We needed the property, since I would have had to pay rent at another place if I didn’t buy it.
There had been a stagnant listing available that winter. However, it needed more work done to it and had original windows and appliances. Also, the stagnant listing did not have a southern orientation and peaceful view.
In the recent past, we had purchased a house with a northern exposure in our city where we reside full time. We have been dissatisfied with how cold and dark our house is during winter months without running the heater a lot. Running the heater doesn’t provide the pleasant warmth of sunlight.
I had decided that I would not purchase a place for family use without a southern exposure. I guess I was willing to pay 8% more to have southern sunlight and not be looking into a neighbor’s place.
In the past two years, I have never regretted entering into and prevailing in a bidding war for my daughter’s peaceful, sunny condo. Also, I knew that if circumstances change, I can easily rent the condo out to college students for a lucrative amount.
Keeping property for the long term requires a big commitment of time and ongoing expenditures. If you have an emotional connection to the property, it helps you weather the downside of long term property ownership like a nightmare tenant situation or a major plumbing issue.
Thank you for your terrific articles!
Jaime Meraz, Realtor based in Phoenix, Arizona
Marcus, 40, buyer in San Francisco, California
Before buying our house, my wife and I resided in a one-bedroom, one-bathroom apartment. But with a baby on the way, we needed more space. Having worked as a software engineer at Tesla for five years, I was fortunate to walk away with approximately $2 million in equity after taxes.
Considering my current salary of $200,000, along with stock options, and my wife's salary of $150,000, we can comfortably put down $500,000 for a $2.5 million house. This means we'd be looking at a monthly mortgage payment of $13,700 at a 7.3% mortgage rate with over $1.5 million in cash and liquid investments left over.
We anticipate a window to refinance to a lower mortgage rate within the next five years. By then, we expect our income to have increased as well.
Janet, 38, buyer in Northern Virginia suburb
During the winter, the housing inventory wasn't particularly appealing, and we were determined to only make a purchase if we stumbled upon something truly exceptional. Then, in March, our dream home appeared—a spacious property with a stunning view. What made it even more appealing was that the sellers had recently renovated the house, sparing us from potential renovation headaches we'd heard about.
With our children aged 8 and 10, and plans to reside in the area for at least a decade, we felt confident in our decision. The schools are excellent, and there are reputable public universities nearby. Even if we may have slightly overspent, our long-term commitment to the house reassured us. Who knows, we might even make it our forever home.
With a combined income of about $280,000, we purchased a $1.2 million home that was listed for $1.1 million in Fairfax County. Admittedly, we deviated from your 30/30/3 home buying rule, but we managed to put down $350,000. Our mortgage is a 6.5%, 30-year fixed rate, amounting to $6,000 per month. However, with a gross monthly income of $23,333, we feel it is affordable.
So far we love the house and have no regrets.
Thoughts On the Property Bidding War Feedback
There are two key takeaways from the homeowners who shared why they engaged in a property bidding war.
1) They can comfortably afford the prices they pay.
There seems to be a misconception that only desperate or financially inexperienced buyers participate in bidding wars, stretching themselves thin. However, it appears that well-educated buyers with strong financial profiles are the ones willing to overbid on homes.
Reflecting on my own experience, I realize I lack the confidence to overbid due to a past setback in 2007 when I ended up paying too much for a condo in Palisades, Lake Tahoe. That experience left a lasting impact, shaping my future decision-making.
2) They all have children.
Every buyer mentioned having children, ranging from those yet to be born to college students. The desire to provide a comfortable home for one's children is a strong motivator. Indeed, I believe the best time to own the nicest house you can afford is when you have the most family members under one roof.
Concerned about the future cost of housing when my children are ready to buy homes in 20-25 years, I've chosen to hedge my bets by investing in at least one rental property per family member. While my primary real estate goal is to generate semi-passive income for retirement, I also aim to provide my children with affordable housing options in the future.
3) They all plan to live in their new houses for a long time.
The longer a property bidding war winner lives in their home, the greater their chances of building equity. It's the same idea with owning stocks.
Currently, the median homeownership duration is about 12 years. If bidding war winners can hold for at least the median duration, they will likely still make a profit when they sell.
Please Still Be Careful About Overbidding On a Property
After going through this exercise, I still hold reservations about engaging in property bidding wars. At heart, I'm a bargain hunter, always on the lookout for value due to mispricing, bad timing, or ineffective marketing. Because real estate transactions heavily rely on people, I believe savvy buyers can exploit inefficiencies to secure a better deal.
I've documented various strategies I've employed to negotiate lower purchase prices, such as delaying escrow, writing heartfelt real estate love letters, making offers with no financing contingencies, and pursuing dual agency routes. All these tactics have proven effective in my 21+ years of real estate investing. Hence, I find it difficult to deviate from my established approach.
However, for those who have emerged victorious in property bidding wars, there's reassurance in the relative efficiency of the real estate market.
Simply underbidding on a property doesn't automatically translate to a better deal; perhaps the property was initially priced too high. Conversely, paying 20% over asking doesn't necessarily equate to overpayment; it may indicate the property was initially underpriced.
There's Always Another Nice Home Waiting To Be Purchased
In the long run, the market will determine the fair price of a home. My concern is that heightened emotions often cloud the judgment of prospective homebuyers. Many envision an idyllic life in their future home, leading them to believe it's worth paying more for perfection.
The reality is, if you miss out on one home, there will always be another equally suitable option for your family. It's essential to acknowledge this and exercise patience. Take your time to analyze home price dynamics to make a more informed purchase decision.
Establish a definitive maximum price you're willing and able to pay, and stick to it, no matter what. Following this advice will minimize the risk of buyer's remorse and safeguard your financial well-being in the process.
Best of luck out there! With a strong economy, pent-up demand, and stocks at all-time highs, I expect bidding wars to continue in 2025 and beyond.
Reader questions
Why do you think buyers are willing to engage in property bidding wars, despite the risk of paying too much? If you've ever won a property bidding war, please share your experience and reasoning to help us understand why. Why not just wait until the 4th quarter to buy given there's less competition and more wiggle room for price adjustments?
Invest In Real Estate More Strategically
Instead of getting into a bidding war, consider investing in passive real estate investments across the country for diversification, passive income, and potentially better returns.
Consider Fundrise, a leading private real estate investment firm with almost $3 billion in assets under management. Fundrise primarily focuses on residential and industrial real estate in the Sunbelt region, where valuations tend to be lower and yields tend to be higher.
Personally, I've allocated $954,000 to private real estate funds, primarily targeting properties in the heartland. With remote work becoming more common, it's reasonable to expect that Americans will increasingly gravitate toward lower-cost areas of the country.
Fundrise is a sponsor of Financial Samurai and Financial Samurai is a $300,000+ investor in Fundrise. Understanding Why People Get Into Property Bidding Wars is a Financial Samurai original post. All rights reserved as everything is written based off firsthand experience and knowledge. To build more wealth, join 60,000+ others and sign up for my free weekly newsletter here.
The Marcus guy is nuts. He and his wife make $245,000 a year after tax and think they can “comfortably pay” $164,000 in mortgages + $32,000 a year in property taxes on that 2.5 million dollar house. So 79% of salary on housing.
Banks of Mom & Dad and a big down payment are everywhere.
I just got a multi-million dollar offer to purchase a home I own where the father is paying cash for it. Hmm, tempting!
I never believed the housing market will crash like I read about online. There is not enough housing on the market that is really a good buy. We built in 1988 and have a huge lot in a great suburb. Everything’s close. Great schools, parks, even a new hospital two miles away. I get a lot of mail and phone calls offering to buy the house. Why would I sell? Where would I go? Just doesn’t make sense. House is worth 4 times what I built it for. Paid off long time ago. Yesterday I got a phone call asking if I wanted to get a firm cash offer for my house. I said NO. He came back with does that mean NO for now or No for Never selling. Jeez. I said I’ll be in this house until I die. Don’t call back again.
I am really confused by the current real estate market. Over and over, many people believe that real estate market will be soft for a while given the economic situation in the US right now. However, since spring of 2024, the market seems to have taken off with bidding wars everywhere. Is it because the stock market is at all time high? Tech workers are making huge money off their stock options?
It seems to be many people are struggling but the housing market is very strong, even rent is going up as well.
That is your take?
The labor market is strong, and there has been plenty of wealth gained since the pandemic began. With pent-up demand and strong, cash, balance sheets, people are getting on with their lives, and buying homes for a better lifestyle.
There’s also a structural shift towards work from home, which means homes are in higher demand.
Where are you looking?
Our most interesting o/bidding experience.
Our 30yr old nephew/godson (Marine ret.) in AZ had gone through a terrible very expensive divorce & had met another woman. She was a real estate agent/broker & together for 3 years they wanted the new build 5bed/3.5bath home they found together. My wife agreed to help finance it ($250k cash), GF had $100k cash BUT she went in $100k over asking ($700k) & she took the balance ($350k) out in hard money @ 10% ???. But the wife was now somewhat ‘committed’ so my wife & the new GF went on title 50:50. Well that relationship lasted just over a year & they split, so she threw it back on the mkt & thank God the mkt was till hot & interest rates were 3%, so it was bid up $50k over asking & we got out unscathed. The Wife promised me NEVER AGAIN !!!
Phew!! Never again indeed! Your wife is a generous woman.
Yeah you can go 10% over asking…. anything more than that and it is a pissing contest or an art auction.. just ego’s and super rich/big loans willing to spend whatever.. bad move financially. The problem is your home is such an emotional issue.. it is a core animal instinct to have a home, so realtors and others take advantage of this..
It depends though as some listings are purposefully listed 10% below fair market value to try and ignite a bidding war to push the final price beyond fair market value.
The worst listing strategy is pricing too high and letting the property sit for months. Then the vultures circle and offer below fair market value, which is the exact strategy I prefer when buying.
Sam – we recently paid 2% over a pre-list price at $1.25M. We live in a HCOL city in Minnesota (yes, that does exist!). Below is what drove us to act.
– We have two small children and have been in search of our forever home. We weren’t going to lose this house over $25k. Long-term that’s immaterial.
– We knew the house and neighborhood inside and out. We actually traded up in our current neighborhood (stars aligned). Given a relocation company was involved, we felt strongly we were getting a $25-$75k discount given we could act quickly.
– We had our budget, and stayed within it. We were close to being “priced out of our city” for the type of home we wanted, but stayed in budget. Otherwise we were chasing a unicorn.
– We had a very, very compelling house love letter.
– We “lost” out on a home priced at $1M weeks prior. That house had 14 offers, with the winner paying over 20% more – all cash. A very competitive market, with slightly less competition for each $250k price point higher.
– People will always pay a premium for quality homes in quality locations. Even more so in cities that have fixed land – there are no more undeveloped lots in our city. People also pay a premium for homes that have layouts that transform with the times.
There is more money out there than people think. Many are all chasing the same thing. Higher interest rates may shake out the fringe buyer / speculative buyers, but asset prices are at near-all time highs. Those sitting on cash are earning 5%+ risk free.
Ultimately we took some of our tech stock gains and moved it into a forever home – which gives us utility and hopefully family memories for years to come!
Your articles and experiences have helped shape how I think of things.
Congrats! And thanks for sharing your experience. Missing out on a previous home in a competitive bidding situation is always tough. But I’m pretty sure this new home you found will feel wonderful, and you’ll be happy you bought this one instead of the last.
Paying 2% over asking isn’t a big deal. It’s just when people starting paying 10%, 20%, and 40% over asking, as I’ve highlighted in these examples in my post where I start getting worried.
“There is more money out there than people think.”
I’ve written and said this more times than I can say since 2009. So true!
My wife and I decided to opt out of bidding wars by buying a tear down/lot value only home in October of 2023 when rates were at a peak and there was no competition. This is in a desirable neighborhood in Houston. It was a treat to simply negotiate with the seller with no other bids whatsoever to muck it up. We paid 8% under asking after a back and forth negotiation. We are now taking our time to build back up in order to build a custom home, making sure to follow your sensible home buying guidelines (particulary the home to NW ratio). It will end up being around 4000 square feet on a lot just under 10,000 square feet. Based on what I’m seeing, that will probably be worth around $1.8M if we do this 2 years out. Here I was thinking that was so much. This article about SF real estate now has me thinking it’s cheap, so thanks!
I’m curious how you got the details of each transaction, like how many offers received. Is that public information?
I asked the agents involved. How is the housing activity in your area?
Curious what you think of the Monterey Heights neighborhood in San Francisco? Would you recommend it?
If you can find a house with ocean views there, then I think it’s worth it. The whole west side of SF is getting more popular.
An older bidding war story. We had a 5 year old daughter that was about to start kindergarden. We wanted our forever house in a particular town and school district. Remote work was now in vogue and moving further out in the exurbs was doable for many. There was very little supply in the market with Thanksgiving and Christmas holidays. Right before mlk weekend hit, a house that checked off all the boxes was listed. The open house was packed. 80+ visitors and I knew it would go well over ask. I bid generously and won.
Since then, house prices have gone up 20% and I entered in before a big run up in prices and locked in a low mortgage. I love my hosue, love the school and winning the house bidding war feels like winning the life lottery.
Thanks for the color! One of the things that I remember, and realize from this post is that if there’s a massive bidding war on a house, you win, when it’s time to sell, you’ll probably have a tremendous amount of demand as well. Because choice homes will always be in high demand.
Every winner over pays. That is the price you pay. Winners either paid, worked, spent more time than absolutely required to be on top.
Which begs the question, are you still a winner if you overpaid? Only time will tell. Thankfully, the longer one owns a property, the greater their chance of making a profit.
We just closed on a home and we paid 4% over list for a few reasons, a lot which you mentioned:
1. We’re more in the median price range (paid $670k) of our city so competition is higher than that in the price ranges you listed.
2. We know the neighborhood. Watched a property sit over the winter that was on a busier street, smaller lot and needed way more work that ultimately sold for $610k. The extra $60k seems like good value for a ‘done’ home on 2x the lot with very little traffic. Once you know an area fairly well, it seems pretty easy to identify good value with limited inventory.
3. Kids in school. Knowing we can keep our starter home allows us to let our preschooler finish the school year. We bought under budget so we can pay our dual mortgage for 2 months and our current home ready to market for renters. We could have waited to probably bought in winter, but I’ll gladly pay $10-20K to not have to fret about listing a rental in winter and pulling my kids out of school during the year.
4. Inventory is still low. Houses that are priced competitively sell for list or above, even in the current rate environment. The homes you can get ‘deals’ on are usually overpriced. If I was looking up market I can see the ability to get better deals for sure, but that’s not realistic for our family. I.e. we can’t affford houses in the $2MM range.
Thank you for your color and perspective! Yes, an extra $60K for a done home on a quieter street is well worth it.
What area are you in?
I was always dumbfounded by the exodus out of premium locations to cheaper locations in other states. Ultimately people want to live in a location that has the best year round weather.
What is the point of moving to a cheap place if the climate sucks most of the year? There is no stronger driver for long term appreciation than being in a location that is comfortable year round and has access to outdoor activities throughout the year.
Those homes that tripled or quadrupled in value over the last 5 years in what were never super desirable locations to begin with are going to see a significant correction as people move back to what we’re always considered premium locations. They call this phenomenon “flight to quality”.
Yes, the fear with housing places like Austin, Dallas, Boise, etc is that there is endless land to build. So the supply will boom, which could ultimately lead to oversupply and a bust.
I’ve tried to focus on buying properties in areas that are harder to build due to a limited amount of land. But the reality is, a lot of households are priced out of expensive big city markets. So it makes sense to relocate to a lower-cost of living area, especially if one can work remote.
I believe in the long-term demographic shift to the heartland/Sunbelt, which is why I have been diversifying into such areas since 2016.
Excellent article Sam. It’s a fascinating time right now to watch the different markets play out, with some areas of the country starting to see more of a normal supply demand balance. I think it is unwise to get in a bidding war if you consider a personal residence to be an “investment” or somewhere you plan to stay in for less than a decade.
Hopefully most of these people are viewing these homes as a place for their family to live life, rather than an investment. In that case I think it is fine to overbid, as long as you can actually afford the home. If looking at this as a long term luxury purchase rather than an investment (which is what I consider a personal residence to be) it makes a little more sense. Either way, those are some impressive overbids in the second section!
What a fascinating and insightful post with all of those examples. Those are some crazy overbids! I love real estate and going to look at open houses. I wanted to be an architect when I was a kid and although that didn’t happen, I love seeing what other architects and designers have done. There are some true gems out there. I don’t think I could be in a bidding war though. It’d be way too stressful for me especially since I have a lot of emotions when it comes to real estate and I wouldn’t be able to sleep well if I felt I had to pay so much to win. I can’t even handle bidding competition on eBay haha.
My wife, daughter, and I moved to The Woodlands, Texas from Southern California in 2022 with the intention of purchasing a home. We rented an apartment and started looking for a house with a cap at $400,000. In the area, this is about the minimum for a 2,000 square foot house. Anything below is a less desirable one-off at 1,500 square feet for around $325,000. This is stifling Texas, not balmy SF, so 1,200 square feet is not something you want to be stuck in all summer.
Our house was listed for $359,000 and our real estate agent suggested we offer $400,000. This seemed right, but we did not want to fight and would rather win right off the bat. After a lifetime of frugality and NOT wasting $10,000 dollars many times, we decided to up our bid to $410,000 to minimize any back and forth bidding war. Our offer was accepted and we closed a month later. Two years on, we are happy with the decision. We may have overpaid at the time, but we got the house we wanted and avoided paying extra months in rent and got a 5.5% rate instead of a 6.5 or 7. The home value has definitely reached $400,000, maybe $410,000 when it’s cooler in the fall and winter.
We moved to Texas to buy, not rent and we pursued the option in front of us, not an illusory “good deal” when there may have been none to be had. Our payment for mortgage/taxes/insurance was within our comfort zone at $410,000, so we were fine with that number and were happy to find a home within 2 months of moving.