Talk to me about buying a house

We've been looking for a house for the last couple of months. We keep finding houses we like, make an offer, and get rejected for various reason. Usually it's because there are (not kidding) 17 other offers on the same house, and half of them are all cash. We're *only* able to put down about 10%, which I'd always thought was fairly reasonable, but maybe not so much.

Another bit of info: all the houses we've looked at over the last 4 months, with the exception of TWO, were bank-owned properties. So, they're pretty straight-forward sales and we usually get a response within a couple of days of our offer.  It's usually pretty mechanical, and rarely are there any emotions involved.


Anyway, we finally had a really good day of hunting and had 4 houses in a row that we liked, some more than others.  We made offers on each of them. We didn't get the one we really really liked, and as it turns out, we were only $5k off the highest bid. That's some consolation there.

Another one we really liked is on a slow-track, so it seems, and we may not know anything on it for a couple of weeks. Layout and location, it's almost identical to our #1 pick, so we'd still be quite happy in this house. The only difference was that it needed more work to get it into shape, while the #1 pick was move-in ready.

The third one down the list went to someone who offered a bit more than us, but has mostly cash. OK, I can see how a bank would prefer to deal with someone who is bringing in the full value of the house, rather than having to set up a mortgage.

#4 house, which is still one we liked well-enough to put a bid on, came back as a Yes right away. Yay! But then we checked their counteroffer, and it was a little weird, and the wording was a bit strange, so we had our agent talk to the guy, who gave her some attitude.

Oh, but then they gave us a copy of the home inspection that was done by the previous buyer who backed out at the last minute. We'd known that it has previously been in contract and that a buyer had backed out. That wasn't too worrisome, knowing how the agent was a bit slow and that the market moves pretty quickly. Maybe something else came through for them. Who knows.

At this point, we're still not in contact, but we decide to take a look at the home inspection anyway, and see what it says. Oh... it need a new roof and a new sump pump, and there are some wiring problems in the kitchen. That's not good.

The selling agent calls our agent and asks if we'd like to resubmit our offer, based on what's in the inspection. OK, that's a little strange, but we take that as our opportunity to adjust our number prior to going into contract, rather than negotiate that stuff afterwards. We come back with a number lower than our original offer, but in keeping with the costs to fix what was noted in the inspection.

The guy balks. He says that he has another offer, and that we'd better think long and hard about what our final offer (highest and best, so to speak) will be. 

My thinking is that the guy is full of it. They have ONE other offer. In a market where most houses in this price range and condition are getting 10-15 offers.  He's already been down this road once with another buyer, who backed out. Is he really in a position to screw with us?

My thinking is that we approach our final offer the same way we would have had we gone into contract before seeing the home inspection, and take our original offer and back it down to where it's in line with the repairs that are necessary (not the stuff we already knew we'd have to take care of), and leave it at that.

That way, if we DO get the house after all, at least we don't feel like we've been cheated out of $10k just because the guy was dinking us around.

And if we DON'T get the house, at least we can say that we followed the "rules" and it wasn't because we didn't give the guy a fair offer.

This is pretty much my first direct experience with buying a house. The market now is a little weird, especially where we are. For a while, there were tons of houses on the listings each week. Now it's not as frequent, but I keep hearing that there are still more foreclosures out there, just waiting to hit the market. I'm not so sure.

What would you advise your friends/family to do in this situation? Take the house, at the original offer price and suck it up? Or hang in there, and wait a bit longer?