Today is another chapter in the Dividend Diplomats mortgage series. Time flies and surprises pop up where you least expect them. I’ve written a lot about my house hunt recently, starting with reasons why my wife and I were not in a hurry to purchase a house all the way to the process of finding the institution that will provide us with the best mortgage. We were always told that lightning strikes and when you find the right house, you need to move quickly. Well, that was the case here and I could not believe how quickly things moved. In all honesty, I’m a little shocked about it all here and I’m still finding myself trying to process what went down. Mostly happy, with some doubts (as always), but her is the story about how my wife and I found our house. I’m going to have a two-part series about this process – one about the purchase and one about some of my emotions/feelings after the offer was accepted. So here is Part 1 of my mini-series!
The aggravating process of finding the house
We’ve visited 20+ houses over the last two months and could not find one that we liked. It sucked. Our intention with buying a house was that we were going to purchase a house in one of our top desired locations and a house that will suit our future family. We didn’t want to buy a starter home and find ourselves in a situation where we had outgrown our place in 5-10 years and had to start this process all over again. Rather, we wanted to buy one house and one house only.
That was the problem we were running into, in our price range. Our pre-approval was for $300k and that was the maximum amount I was looking to spend. In those 20+ houses we visited and the hundreds of other houses we viewed on Zillow or Realtor.com, we were saw two categories: 1. houses that we would grow out of that were updated or 2. houses that we very large/nice but needed a ton of work that would require a lot of money. So the places were either updated and too small or were large enough but were priced so low because they needed too much work. It was a very, very frustrating problem and my wife and I began feeling like this process would take years to find the place we love.
Through all of this searching though, we told ourselves that we needed to be stubborn on the location. The locations we wanted were expensive, and we knew that going into this process. We wanted somewhere that is walk-able to a lot of activities and has great public schools. If we were going to pay taxes, and our county has one of the highest tax rates in Ohio, we wanted to make sure we were going to put ourselves in a position to benefit from all of the public serves. We wanted to be close by to our publicly funded parks and wanted to make sure our kids would learn from a top rated, publicly funded school system. Again, if we had to pay taxes, at least make sure you are getting great services, right?
Because we were stubborn on location, there were really only two areas we were going to consider, and both of those areas came with a premium price range because every other person buying a house wanted those exact same features. Who wouldn’t? We just couldn’t win. Even when we did find a home that we could potentially grow into and was pretty well updated, we missed out on the opportunity because there were multiple offers on the first listing price and houses were selling for $20k over listing price. This market, for these neighborhoods, was insane, and we seemed determined to avoid getting into a bidding war backed by passion and emotion. A recipe for disaster. Our real estate agent showed us listings that were selling for $160-$180 per square foot, and there were even a few outliers that were in the $200 square foot range.
our first home
One night, my wife and I saw a for sale by owner listing that looked like it was a winner. We quickly called our real estate agent to set up a viewing of the property. The property was listed at $269,900, was a deceptive 1,723 square feet, and was in our top location. The family owned the home for 27+ years, raised 6 kids in the house, and were forced to move because of some unfortunate circumstances. The family had all intentions of living in the house; however, the father became ill and the family had to quickly move to a one story house to accommodate his illness. The wife was a former real estate agent, so she quickly put the house up for listing online and tried her hand at selling the house as a for sale by owner transaction. After our viewing, she was getting ready to throw the towel in and hire a listing agent to speed the process up. Once that would have happened, we knew that the property was going to become subject to a bidding war and we could potentially find ourselves in a situation where we were bidding against multiple parties and watching the price shoot up. For comparisons sake, there was a smaller, more updated house nearby that sold for $299k – we did not and were not going to find ourselves in that situation and trust me, we would not have engaged in a bidding war. We would have just walked and moved on to the next house.
The point is, we had a small window to determine if this was the right house for us. For a two-three day window, we had a shot where it was just us. We walked through the house the first day and fell in love with it. The house had three huge bedrooms and the master had a walk in closet. Further, there was an attic that was finished and could be converted to a fourth bedroom if and when our family needs the additional space. There were a few options of where we could build a second full bathroom as well along the main piping, so the addition would not be that costly when the time is needed and we will have a few options on how to functionally add a second full bathroom. We were excited about this, especially considering that our main goal was to have one house for our family. This house may not be fit now for that, but it has the infrastructure to do so one day. It passed a HUGE hurdle that my wife and I were having a hard time clearing.
Second, I mentioned that the family had to expectantly leave the house, right? Well, that was important for a few reasons. Since the family planned on owning the house, they took great care of it and were updating their appliances and property throughout this winter. The house has brand new stainless steel appliances (cost of $5,000+), their furnace and hot water tank were less than two years old, and the roof was less than 10 years old. Plus, the family took great care of the house over the years and you could tell. That was also very important to us. On first glance, the house was covered in wallpaper and carpet, all of which we want to replace soon. Luckily for us, the house has hardwood under the carpet and all we will need to do is re-finish the hardwood versus having new floors installed. The kitchen isn’t an HGTV updated kitchen; however, we are very happy with the size and lay out with the kitchen. So painting the cabinets and walls will go a long way in freshening up the kitchen.
Lastly, the next day we brought our families in to view the house before placing an offer. My mom’s boyfriend is very knowledgeable about houses and used to inspect homes for an insurance company before he retired. So I trust his opinion and wanted to make sure the house had his sign-off before we placed an offer. I told him to go to town reviewing the guts of the house and to voice any possible concern he may have. If he told me that there were major, costly problems, there was no way that I would commit to buying the house. The house was older, so I was slightly concerned. But he left the house with great reviews. No concerns with the foundation, no apparent water damage in the basement, the basement wasn’t musty, no significant electrical problems, and so on. He said some outlets are not GFCI and others will need to be grounded, plus there were a few areas that will need some repairs down the road. But there were not any significant costs looming and in his opinion, the updating in the house was purely cosmetic. After his “inspection” I breathed a sigh of relief and we felt comfortable putting and offer in on the home. I can’t thank him enough for his input and advice on this process.
The Offer
Remember, we had to act quickly before the house would have hit the open market. This was our window to strike. After our inspections, we met with the real estate agent to discuss the right price to offer that would secure a deal. The current asking price was $155 per square foot, which was already on the lower end of the range I mentioned earlier. But that seemed appropriate given some of the cosmetic updating that would have needed to be completed. We decided to make an initial offer of $260,000, or $151 per square foot. This was $9,900 below the listing price. Our realtor also learned that the owners had a full schedule of showing the next day, so she didn’t suggest going any lower because she wanted us to avoid tempting the owners to listen to others and potentially cause a bidding war. I know this could have gone in the other direction as well, but we were comfortable with the $260,000 price point and submitted the offer. In our packet, my wife and I included a one page note talking about how excited we were to raise our family in their home and so on.
Much to our surprise, the off was accepted as is. $260,000. Just like that, in less than 36 hours, my wife and I went from feeling hopeless about our housing search to having an offer accepted. It is crazy to me how fast this process went down. I’m still in shock and my mind is still spinning in 8,000 directions. Pending the home inspection and finalizing everything with the bank, we are going to be first time homeowners. We couldn’t be happier, and trust me, we are ecstatic, but there are some pieces of this process that I am still coming to grips with. And for now, I’ll save that for Part II. Stay Tuned!
What are your thoughts on my purchase? Would you have offered lower? What are the features you would not sacrifice on when you purchased a home?
Bert