From house-hunting horror to homecoming, first-time buyers navigate ‘crazy’ market

Kami and Zach Wessels will be telling this story for a long time.

Maybe, even, for a lifetime.

This week, they sign the final papers to become homeowners for the first time.

And what a trip to the title company it has been.

“It has been crazy,” said Kami, who grew up in Sioux Falls and thought she knew what homebuying would be like.

“I’ve always seen the buying and selling as you put your house on the market for anywhere from two weeks to two months, and you get various people to come in, and you can sit and think about houses you like and stack up 10 showings on one Saturday. That was sort of our expectation – we could go see 10 houses on any given Saturday and see what we liked and didn’t like, and what we quickly realized was that wasn’t how it was this year.”

The Wesselses, who both went to college in Sioux Falls, moved back from Duluth, Minnesota, last year after moving there for Zach’s physical therapy education. They rented an apartment in the spring and started looking for a house about six months later.

“In the winter, a house would come along we were interested in every three to four weeks, and we’d go see it, and you have to move really fast. You’re not really able to weigh the pros and cons,” she said.

Come spring of 2021, the process started to shift. Instead of a house selling immediately, it might go on the market on a Monday, allow five days for offers to come in and look at the offers Friday.

On the plus side, the Wesselses had time to consider their interest in a home. But it was outweighed by the overwhelming number of competitive offers.

“What’s really hard for two people who are first-time homebuyers is almost every offer we put on houses, we weren’t competitive,” she said.

Many buyers waived an appraisal. She and Zach didn’t feel comfortable doing that.

Other buyers offered to cover in cash any gap that was produced by an appraisal.

“So it was really an unfortunate situation for people like me and Zach who are first-time homebuyers and didn’t have the free cash to put an all-cash offer down,” Wessels said.

One house that interested them drew nine offers. The winning buyer waived inspection and appraisal.

“We were so, so bummed,” she said. “It kind of feels a little bit like heartbreak, and that just continued to happen.”

It’s not uncommon, said Jeff Nelson, of 605 Real Estate, who represented the Wesselses with his partner, Karen Bankowski.

“There’s a lot of frustration,” said Nelson, who has been in the industry for 44 years.

“I’ve never seen anything like this. I’ve never seen this before. We had 19 offers on one property. If you don’t have five or six, you’re going, ‘What’s wrong with my house?’”

He even got caught in it himself, buying a house from one of his clients.

“My wife and I liked it, but in my position, I had to put it on the market,” he said.

It was listed at $365,000.

“And by the time we got all done, I paid $403,000,” he said.

The extent to which buyers are going to land their deals can be dangerous, he and Bankowski said. Especially waiving inspection.

“It’s horribly scary,” she said. “In our office, we don’t recommend that. But … that’s their decision.”

At Hegg Realtors, the record for multiple offers is more than two dozen on a house.

“That’s happened for sure, probably multiple times,” broker owner Gregg Gohl said. “We’ve lived through times where houses sat on the market a year without an offer, and you have sellers who are mad … and you have counseling years with the sellers, and now we’ve got a lot of counseling going on with buyers – how in the world can I make six offers and still not have a house – so it’s a different kind of crazy.”

It’s also especially challenging for first-time buyers, he agreed.

“They don’t have the extra cash to make up the appraisal difference … and a lot of them simply can’t compete,” he said. “So it’s the hardest, I think, on those first-time homebuyers who are excited to get their first house and keep losing out.”

The market shift is clear looking at related data.

According to numbers provided by Zillow, the price you can expect to pay for a house in Sioux Falls has gone up between 33 percent and 43 percent in the past five years, depending on the ZIP code.

The increase has been especially pronounced from 2020 to 2021, according to its “Zestimates,” which represent Zillow’s estimate of what each home in a given region would sell for if it were to be listed, calculated with a weighted average of the middle one-third of homes. That helps make sure the most expensive sales don’t skew the numbers, a Zillow representative said.

Here’s what that looks like by ZIP code:

57103
Typical home value May 2020: $165,998.
Typical home value May 2021: $227,036.
Percentage increase 2016-21: 36.8 percent.

57104
Typical home value May 2020: $117,311.
Typical home value May 2021: $167,802.
Percentage increase 2016-21: 43 percent.

57105
Typical home value May 2020: $158,903.
Typical home value May 2021: $218,520.
Percentage increase 2016-21: 37.5 percent.

57106
Typical home value May 2020: $190,305.
Typical home value May 2021: $252,635.
Percentage increase 2016-21: 32.8 percent.

57108
Typical home value May 2020: $255,091.
Typical home value May 2021: $347,983.
Percent increase 2016-21: 36.4 percent.

57110
Typical home value May 2020: $254,617.
Typical home value May 2021: $331,385.
Percent increase 2016-21: 30.2 percent.

What does that mean for buyers? Build it into your budget that you might need to spend more than planned, or scale back your search to reflect how much house you’ll get for your money, the real estate agents said.

“Have your loan ready before you even start looking,” Nelson said. “Be ready to take some time to find the right house.”

So what happened to the Wasseles? Nothing short of a fairy tale ending.

First, the back story. Kami was familiar with one house not far from McKennan Park because she had watched the former homeowner’s dog while in college. Zach had been inside too.

They knew when it eventually would be time to find a house, they wanted one like it.

It sold while they were living in Duluth.

“We were both kind of bummed because we’d hoped it would work out timing-wise for her to sell it to us,” Kami said.

As they started their house hunt and began being rejected, Zach went and knocked on the door.

“He was like, ‘Are you thinking of selling? Me and my wife love this house,'” Kami said.

It turned out, they were considering it. They took his phone number.

But that was it. Months went by.

Then, recently, the owners sent Zach a message on Facebook and said they were listing the house that coming Monday.

“We loved it and put an offer in that day, and they didn’t look at any other offers. They accepted ours,” Kami said. “So we got really, really lucky. They wanted to sell to a family they knew would take good care of it, and it helped to have a personal connection.”

After looking at an estimated 40 houses, the hunt finally was over.

“It’s a beautiful house, really nice,” Nelson said. “So I felt good about it. It was the house they’d always wanted.”

And while the unconventional introduction definitely helped, another similar tactic needs to go away, he added.

The National Association of Realtors recently raised concerns about the practice of buyers sending so-called “love letters” to sellers because it puts sellers in the position of potentially violating the federal Fair Housing Act. That law makes it illegal to discriminate in the sale of housing because of race, color, national origin, religion, sex, familial status and disability.

“So we won’t take letters anymore,” Nelson said. “Don’t send a letter. It won’t be opened. It will be returned. It opens the door for some very, very real Fair Housing issues.”

Gohl agreed.

Realtors hear from sellers comments such as “I want to sell it to a nice family.”

However, “you can’t say that,” he said. “That’s one of the protected classes. I think the intentions (of sending letters) were great, but when you dig into it a little bit and you start worrying about Fair Housing situations and why a seller maybe is choosing one offer over the other, you want it to be for the right reason – for price and closing date – and not because of who is buying the property.”

In recent weeks, the market appears to be loosening up a bit, Gohl and Nelson added.

“I think some buyers have maybe grown weary of the process and have put it on the shelf and are going to wait,” Gohl said. “But if there’s a nice property priced well, there’s still the demand where we’re seeing a bunch of offers.”

Nelson agreed.

“I think we’re seeing houses stay on the market a little bit longer. It’s not like we have to make an offer today,” he said.

“But we’re showing houses at 5 p.m., and I showed five this morning, and by the time I got done, two had already sold. So it kind of depends. The weather is part of it. The dog days of summer slows down every year as people are getting ready to get the kids back to school and finishing vacations. It’s a busy time, so we get a little relief.”

“Relief” definitely captures what the Wasselses are feeling, preparing to officially become owners this week.

“It was kind of a nightmare. It really was. We’re on the other side of it now, but it was really stressful. I’m very glad to be on the other end of it,” Kami said.

“And I hate to be this person; because when we were going through it, everyone would say the right one will come along when it’s meant to come along, and I kept thinking that’s the worst advice. But it’s so true. That’s what happened to me and Zach. The right house came along at the right time, and it all worked out for the best.”