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House Hunting

October 7th, 2007 at 09:52 am

Just added a new category, house hunting, since that is currently one of my biggest PF-related projects.

DH & I spent all afternoon yesterday visiting some new developments in the area, just starting to get a feel for the market. We noticed that some builders were offering pretty significant discounts for 30-day closes which means they are hungry to get cash in their pockets. Since we don't need financing (something we of course will not reveal to any seller's agent until an actual offer is made) and can close any time (we do not care if it is 7 days or 3 years from now) this seems to be a moderately good time to be a buyer.

This afternoon we are going to hit one particular city in the greater Austin area and visit as many open houses as we can.

At this moment, we are not looking for a house to buy, just getting a feel for the local real estate market.

We will probably change this strategy several times before we actually purchase, but as of today, this is our buying plan: If we find a house we like, we would be willing to buy it if we could get it for 25% less than current market price. [That is based on our thinking of how much, given the worst case scenario, prices could drop over the next few years.] So, we will need to find a buyer who is in a bit of a hurry to sell for whatever reason. If they won't sell for that price (25% below what we think is fair market price), we'll just move on to the next house. It's not like there is only one good house out there; there are tons and tons and we can be perfectly happy in many of them. We most definitely won't be buying a house because we fall in love with it! We'll be buying a house that we like and can get a great deal on.

The trick for us will be to figure out what that current market price is!

9 Responses to “House Hunting”

  1. JanH Says:

    My daughter had some friends in the Round Rock area and she really seemed to like that one. Good luck!

  2. Ima saver Says:

    Just take your time, you should get a good bargain!

  3. baselle Says:

    Very cool. From what I understand, Texas has an interesting property tax situation, so you'll want to factor that in too.

  4. boomeyers Says:

    What a great place to be in! A buyer in a buyers market, and I don't see it changing any time soon! Have fun looking! A great place to get decorating ideas too!

  5. fern Says:

    If you are house-hunting and don't have a house you have to sell, you are in an EXCELLENT position now vis a vis the market, though i think asking for 25% off what are already severely depressed prices is asking a lot. I don't see why you wouldn't let me them know you don't need financing. That just makes you even more desirable becus they know the risk of your being turned down for financing is not an issue, you won't waste their time and perhaps they will try harder to get you as the buyer.

  6. scfr Says:

    JanH - Yes, Round Rock seems to be a nice city. They were rated the safest city in the USA recently.

    baselle - You're right about the property taxes. We've heard everything from 2.3 to 3% depending on the location, and some places are tax-exempt for property that qualifies as agricultural land.

    fern - The Austin area isn't depressed yet. It never experienced a real estate bubble and has seen slow-steady to moderate growth, and just now seems to be showing signs of slowing, so we think it likely will go down. However, 25% is just our current idea and we'll probably adjust that several times in the coming months.

    Last time we bought a house we actually looked for TWO years before we found what we thought was the right deal; I certainly hope it won't take that long this time (I think we've gotten better at finding deals), but we're willing to wait. This is why we don't use a buyer's agent --- We wouldn't want to subject a real estate agent to us! Smile

  7. starfishy Says:

    Good luck with the house hunting -it sounds like you know what you want!

  8. Katie Says:

    What is the usual percentage of the sale price of a home that a realtor makes as commission?

  9. scfr Says:

    Katie - I think it varies by geographic area, but 6% total commission is pretty standard. It is usually split between the buyer's and seller's agent, with each making around 3%. Some agents are willing to work for less, and sometimes an agent will give you a bit of a break if they handle both sides of the transaction.

    For example, when we sold our previous house, we gave 3% to the buyer's agent and 2% to our selling agent. If our selling agent had found a buyer himself (with no buyer's agent), he would have made 4%. That would have meant 1% less for us but 2% more for him.

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