When my husband, Greg, and I were considering moving to Austin, we knew our home buying experience would be unique. Austin is the fastest growing city in the country, which makes the real estate market hotter than ever. While this would be our third home we’ve purchased, the home buying experience in Austin would be totally different. So I thought I’d share some takeaways and things we learned along the way… because this experience was nothing like we’ve ever experienced before. If you’re currently in the home buying process or even considering moving to Austin and buying a home, this all might be super interesting – read on!
Like most people, our home buying search began with stalking Zillow, Estately, and every other home buying and real estate app to start looking at what was available. From there, we connected with a few real estate agents from referrals to get some first hand local intel. Every agent told us the same thing. This market was unprecedented and unpredictable. There was barely any inventory to go around, and most houses that came to market received multiple offers and going for an average 10% over list price (this estimate was actually quite modest… more on that later). Location has always been our top priority when buying a home, so we narrowed our search to the neighborhoods that would fit our lifestyle best. Which took an already small pool of homes and made it even smaller.
Once we settled with an agent (who is AMAZING – if you need a referral, shoot me an email!), we were full speed ahead. Having an agent who is well connected is always important, but it is KEY in a hot market like Austin. With the scarcity of homes on the MLS, it’s very important to look for off market listings. What does that exactly mean? If you have an agent who is well connected, they typically will have more resources to finding homes that are “coming soon”, or “off market”. Homes that have yet to go live and hit the MLS, or in simple terms, an exclusive look before the general public. Sometimes current owners don’t want to deal with a flurry of open houses, showing after showing, or 40 different offers to comb through. This route is a great angle for your agent to take that can potentially up your chances of finding a home. However we found that even with homes we viewed off market, we still ran into multiple other interested parties and competed against other offers. At this point, we were privy to the fact that when there’s super low inventory, anything will have major interest.
Since we started our search in January (we put in our offer for the home we eventually bought in March), the percentage over ask nearly doubled. Homes that were once going for 10% over ask were now – on average – going for upwards of 20% over ask. Yes, you will likely be over-paying for a home, and that’s a tough pill to swallow. On top of that, most all offers we encountered were to include a full appraisal waiver. So what does this all mean to you?
Instead of just planning to have liquid cash available for your down payment, now you’ll have to come up with whatever difference in the amount that the home appraises for over your loan amount. Say a $500,000 ends up selling for $600,000. And your loan was approved for $500,000. The home appraises at a value of $500,000, so you will have to come up with the difference of $100,000 in cold hard cash… on top of your down payment. YIKES. Our agent put it best: When you’re looking in a market with these kind of numbers, you almost should be looking for less than you can afford or have your loan approved for so that you have the extra cash available to pay the difference in appraisal.
Everyone we’ve spoken to in the Austin real estate world has said this market is wild, and it’s dictating itself. Forget referring to “comps” or having any say as a buyer, the seller holds all the cards. Be prepared to go above and beyond by offering things like an increased option amount or paying for the title. Obviously everyone’s experience will be different, but these were very common things we came across during ours.
Things will be competitive, and you’ll likely lose out on houses or be going up against 10+ offers (we often heard there were upwards of 40 offers on a single house!). You’ll have to be patient. Depending on your timeline, you may have to make some sacrifices on what you’re looking for to buy into the market. You’ll need to be well prepared on the backend with your loan, and be ready to jump. For us, homes typically would come onto market on a Thursday, have showings and open houses that same weekend, with best and final offers due Monday by 5pm. Not much time to think! We tried to see as many homes as you could so that we knew when one was going to be fit, and could jump on presenting an offer.
At the end of the day, your home is still technically an investment. Even when you’re struggling with paying more than you were planning to for a home, like our agent said to us; when you’re in, you’re in. The value of homes in Austin are increasing everyday. So once you get through the home buying experience, you’ll come out on the other side likely already good on your investment. Of course this is all just our personal experience and what we’ve found looking during this time. After going through this Austin home buying experience, we are so lucky and thankful we ended up finding a home in the area we wanted, knowing everything was worth it in the end.
If you’re considering buying a home in Austin, don’t let the current market deter you. It’s totally possible! It’s all about knowing what to expect, being prepared, and most importantly, find a rock star agent. Good luck!
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