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Strike One?

December 23rd, 2007 at 08:27 pm

Today DH & I threw out a lowball verbal offer on a house we like. We were pretty sure we wouldn't get the house (we didn't), but we finally decided that we had nothing to lose by making the offer. To tell you the truth, I was more than a bit nervous about giving the builder's rep the offer. After giving myself a little pep talk and summoning my courage, I walked in to the sales office and presented the offer in a straightforward and respectful way, and the rep returned the favor by replying in an equally respectful way why the offer wouldn't fly. Smile He filled me in on some recent sales prices in the area. I left the house feeling better informed about the market than I was when I went in.[In case you're wondering where my Prince Charming was all this time, he turned chicken and decided to wait in the car!]

I guess you could call this "strike one" in our house hunt, but I actually feel fine about it because it was such a good learning experience. And it was a good reminder that it never hurts to ask!

We'll just keep looking and know that eventually we'll find a house that we like where the seller is willing to sell for what we are willing to pay. [The last house we bought, it was the fourth house we made an offer on. How long will we keep looking? As long as it takes.]

"Courage and perseverance have a magical talisman, before which difficulties disappear and obstacles vanish into air." - John Quincy Adams

Wild & Wacky Housing Market

December 20th, 2007 at 11:24 am

Housing market ... blah ... blah ... blah!
I'm sure many of you sick to death of hearing about the housing market, right? If so, I understand. However, as I am "on the ground" right now in the market (house hunting), it's on my mind almost constantly, and so I'm gonna keep blogging about it. Sorry.

So much going on since my last update.

1. Went back & looked at the "more than we originally wanted to spend" house that DH was getting dreamy-eyed about. Had a serious talk, and reconfirmed that it is indeed more than we want to spend. It's out of the picture for now.

2. A couple of houses we've been looking at have taken one or two price drops, and still have not sold.

3. We have expanded our search to include not only Austin but also San Antonio and all points in between.

4. A small to mid-size builder whose homes we had looked at and liked stopped all operations last week. Still uncertain whether they will declare bankruptcy or what. They have quite a few homes under construction, some under contract to buyers and some are spec homes. I feel incredibly sorry for those buyers whose homes are sitting there half-finished. What happens in a situation like that? And I feel sorry for the people who live next to half-finished homes when construction ceases; I am guessing that most of them haven't yet figured out what is going on. DH & I had thought we might consider buying a house that was almost finished, but now we are committed to not making an offer until the last nail has been pounded in!

5. We both have a list of our "top 3 houses we have seen so far" and we have 1 house in common. However, we don't feel we have a clear enough grasp of the market yet to make an offer.

6. DH & I have had some disagreements about how far we think the market will fall. But Suze Orman said something on her show about a week ago that we could both agree with: She said that if you could buy a house at 2002 prices, you are getting a good deal. The question for us is how to determine what 2002 prices were. Sales prices are not published here in Texas, and we haven't yet figured out a way to get the hard data we need. Back in good old King County (Seattle), you could find data on what every single home sold for, although you knew there was a bit of fudging because of buyer's bonuses, mortgage point pay-downs, throwing in the appliances, etc, etc. But at least you could get a decent general idea. [Note to Texas Realtors: If you would cease your lobbying against making house prices public record, maybe some of us fence-sitting buyers would climb off the fence and buy that house you are so eager to sell! Since when did non-transparency make a housing market better?]

7. Speaking of realtors ... It boggles my mind when they do not return calls from potential buyers. Two homes we wanted to see, the agents never called back. [In one case I was so interested in the house that I actually called twice.] In a third case, the agents called back 3 days later explaining they had been out of town ... Don't they know how to retrieve their voice mail? [Note to sellers: If your house is priced right and houses in your area are selling while yours is not, take a long hard look at your agent.]

House Hunting = Fun! (HA!)

November 27th, 2007 at 07:22 am

Awhile back I mentioned that I had found a foreclosure house that we would probably be able to get at a greatly discounted price, but that needed to have semi-serious some work done. This house is in a desirable, established neighborhood and has "good bones" but it has some issues that are probably due to the fact that the people were losing their home and just stopped keeping it up.

Took DH to see it ... He looked at it for about 2 minutes and said "NO WAY."

Okey-dokey ... At least now I know that he didn't really mean it when he said he was willing to buy a fixer if it was a great deal!!!

We've been doing TONS of looking together the past week, and I've concluded that, in spite of what he says, he will really only seriously consider a brand new or almost new house that is in great condition. Okay; that's easy; I just automatically rule out any houses over 3-4 years old.

But he has also been showing interest in houses that are significantly higher in price than what we had talked about originally. [Interestingly, my target price that a couple months ago was "way too high" according to DH is now too low according to the same guy! ]

He found one house in particular that he is quite smitten with. I had been in the neighborhood and liked it, and suggested that DH go take a look. There was one house in particular I mentioned he should look at. When DH was on his way home from visiting that neighborhood, he called me. I asked him what he thought of the house and he said ... "Let's talk about it when I get home." All I could think was "Oh-oh!!!" When he got home, he was all sweet, asking if he could pour me a glass of wine, etc. All I could think was "Oh crap! What is he cooking up in that brain of his?" Well, turns out he visited several houses in the neighborhood and fell hard for one that is significantly higher $$ than what we have been looking at.

He took me out to see it, and to tell you the truth, other than being larger than what we would ideally like, it is a perfect house.

So I started crunching numbers. I guess I was hoping the numbers would say that the house wasn't remotely doable for us. Well, it's doable, and doable comfortably, according to the established rules of thumb. Motgage amount isn't a problem, since we'd be paying cash. House price would be no more than 2.5 times our average annual income (and probably more around 2.3 times, if we can get the price we think/hope we can). Property tax payments and upkeep are affordable. We'd still have plenty of cash reserves to keep DH's business running smoothly. We'd still have at least a year of expenses in our EF.

The sticking points for me are that the house would represent a larger percentage of our net worth than what I would like to see (I was shooting for no more than 25% but this house would be about 30% of NW), and we would lose the interest income on the money that would go in to the house. This last one's a biggie.

So, we are grappling with the question that everyone does (or certainly should) when they think about buying a house: What is most important for me when it comes to buying a house?

Since lists help me sort out my thoughts, I made a list of most important features of a purchased house. (If you can think of others, please let me know.):

- The price is cheap = Finances will be very comfortable

- The price can be had for significantly under market (it's a "good deal")

- The house has good investment potential

- The house is brand new or nearly new, in pristine condition

- The house is low-maintenance for an easy lifestlye (think condo as the easiest and go up from there)

- The house is small and/or energy-efficient = good for our planet

- The house is in a good location (safe, nice neighbors, easy to get to where you need to go)

- The house is the sort you would get a lot of pleasure living in = It's what "gorgeous" looks like to you

Both DH and I are struggling to figure out which qualities are must-haves for us. Of course, we'd love a house that is "all of the above" but we are realistic enough to know that at most we can hope to get half of those qualities.

DH reminded me that I am more practical-minded, and that he is more likely to use his 6th sense about these things (makes us a good team, I guess). Fact is, his 6th sense has resulted in some pretty good decisions for us so far. However, I know it would be foolish to make the biggest purchase of your life without really thinking it through first.

So ..... Am I being too cautious/conservative? ..... Is he developing "eyes bigger than his stomach?" ..... Will it take us another 2 years to buy a house? ..... Stay tuned.


October 21st, 2007 at 08:35 pm

Since beginning my househunt, I have run in to just about every type of realtor.

At the high end of the scale are the sharp & courteous (but not overly friendly) professionals who really seem to really know the market. Some are knowledgeable about building techniques, geography, and even interior design.

At the low end are the ones that seem to either ignore me or are distracted by something else, and aren't able to answer basic questions. These tend to be the Mercedes-Benz driving, rhinestone-studded-jeans wearing, French manicure types.

In one instance, a group of FOUR ladies were setting up refreshments at an open house; they were so busy getting ready for "their guests" that they could barely stop to answer the questions of an actual potential buyer that was standing right there. I did fill out the guest registration form, and FIVE days later one of the women called me --- she was not even a realtor but a mortgage broker pushing her services. I tried evading her questions ("No - We don't need help arranging financing" etc) but finally just came out and said we'd be paying cash. She thanked me and said good-bye --- Then, lo and behold, 15 minutes later the agent Emailed me letting me know how pleased she was to have met me --- yea right!!! blech

Well ... anyway ... Today I had a most interesting realtor encounter, like nothing I've ever experienced before. Pretty soon after I walked in to the open house, he was showing me a list of all homes for sale in the area with stats including how long they had been on the market (this is the kind of information I love). He also explained about how different areas around Austin have different types of soil and so construction in some parts is more stable (extremely interesting). He eventually asked "What are you looking for?" (the usual realtor question) and when I replied "a bargain" he paused for a second, kind of stared at me and then asked: "Are time & money on your side?" I replied "Yes" and then he said the words that no agent has ever said to me: "You guys should be looking at short sales and pre-foreclosures" ...BINGO! How did he know that is exactly the kind of thing we are interested in? Very interesting indeed.... Perhaps because he himself was not very polished (a bit of a slob, actually) he knew to look beyoned the fact that I came in wearing a Tshirt, plain tan pants, and no jewelry/makeup/manicure. Or maybe he just got lucky. Or maybe he says that to all the buyers these days. Who knows? We'll see what kind of follow-up he does. I'm still not convinced that I want to work with a realtor, but if I did, it would be someone like that: Someone who gives me hard core information, is trying to help me find a real bargain instead of trying to be my "new best friend," and who really listens to what I say and responds accordingly.

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!

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