Think two seasoned certified financial planners would have an easy time buying a house? Tony and Barbara Matheson would beg to differ.
In fall 2019, these empty nesters found themselves itching to downsize from their large rental in the ultraexpensive San Francisco Bay Area. Hoping to buy a reasonably priced house within walking distance of restaurants and other amenities, they set their sights on Sacramento, CA. Armed with a healthy income, solid credit history, and a deep knowledge of personal finances—plus they’d owned property before—they figured they would sail through the home-buying process.
Six months and three lost bidding wars later, they realized that Sacramento’s real estate market was far more cutthroat than they’d imagined.
In March, the Mathesons finally purchased a three-bedroom, one-bathroom 1926 Tudor on a tree-lined street. With the closing papers signed, they figured they were home-free—but COVID-19 was about to throw another curveball into the picture.
Here Tony shares their story, and his hard-won lessons for aspiring first-time home buyers and others who want to learn what buying real estate is really like today.
Location: Sacramento, CA
House specs: 1,225 square feet, 3 bedrooms, 3 bathrooms
List price: $550,000
Price paid: $580,000
Why did you decide to move?
We’d been living in the Bay Area and were looking to downsize since both of our kids had moved out. We wanted to be near downtown Sacramento, close to restaurants, bars, museums, and coffee shops.
I’d think home buying would be a breeze for two finance pros. How did it go?
I was really surprised by how tough the market was. After five months touring homes, we made an offer on our first house. This house went into a bidding war; we had to raise our bid five times before tapping out.
Next, we fell in love with a second home. This time, we offered the sellers $30,000 over the asking price. The sellers had so many other bids, they never even bothered to counter our offer.
We found a third home, and once again bid over the asking price. But after five tries, we lost out again. It was heartbreaking.
How awful! Why do you think these homes sold to other buyers?
We came prepared with what most consider strong financials for making an offer on a single-family home: great credit scores, a significant down payment, pre-approval for a mortgage. We offered good earnest money and 15-day escrow, didn’t include an appraisal contingency, and probably had a few other bonuses to the seller that I’ve forgotten. So we were doing everything “right.”
What we were finding is that we were up against some other buyers who were making all-cash offers, sometimes $50,000 above the asking price. How does anyone compete with that?
So how did you finally get an offer accepted?
We were extremely fortunate that we had a great real estate agent who was able to find a home that hadn’t been listed yet. We could negotiate one on one with the seller without having to compete against multiple offers.
The sellers had planned to invest $30,000 to $40,000 on home improvements before putting it on the market. We offered to buy the house as is, without the improvements. After going back and forth a few times, the sellers took our offer.
What did you like about this house?
We knew within 5 seconds of walking into the house that this was the one. It was the perfect neighborhood. We were close to everything, within walking distance to plenty of bars and restaurants. The outdoor area is gorgeous. Beautiful trees surround our house, and the house is the perfect size for us.
So once your offer was accepted, what happened next?
The sellers weren’t prepared to move immediately. They needed time to prepare. So we rented the house back to the sellers for a month after closing. We closed on Valentine’s Day, but we didn’t move in until mid-March.
Little did we know what was about to happen.
March is when the coronavirus really hit. What was it like moving during that time?
It was difficult and terrifying in the beginning. We moved in ourselves without hiring movers. Then, after we moved in, it was quite an adjustment. Simple things like calling an electrician or completing other minor home projects were enormously difficult.
Did you make any renovations to your home?
We put $10,000 to $12,000 into the house so far. The major issue after moving in was electricity—it needed to be completely reconfigured. For example, the second bedroom, which became my office, only had two plugs. Between my monitors for work, computers, Peloton, cellphones, and other devices, I needed 12 plugs. We also wanted to put in a tankless water heater for more space, and install a security system.
How did quarantine affect these repairs?
It was horrible. We couldn’t get anyone to come out to do any work for at least three months. For the first month, no one was booking. Then, when we could finally get through, the businesses were overwhelmed with requests.
What was it like when you finally settled in?
It was exhilarating, exciting, and weird. Exhilarating because we got the house we wanted. Exciting because we were beginning a new phase in our lives. And weird because we moved in at the beginning of the pandemic. We wanted to have a housewarming party, but of course, we couldn’t.
What is your advice for aspiring home buyers?
Even if your finances are completely buttoned up, be prepared that buying a house may be a difficult and even painful process.
Emotionally it does get hard. As much as you try not to get attached to a house during the negotiation process, you can’t help it. And there is a competitive drive that kicks in when you are in a bidding war with others. It’s draining.
Still, in the end, knowing that you’ve overcome challenges along the way just makes you more appreciative of the reward at the end. We have a place to call home amidst all this craziness. It’s all worth it.
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