Friday, May 4, 2012

Houses: Part Two

Well before we started the process of selling our house privately or more recently through a Realtor, we started following the real estate in the area we are looking to move. It is much like our area in that there are a lot of houses for sale in the low and high ends of the market but not much in-between. It is also like our area in that it is a buyers market out there and there are plenty of deals to be had.

After putting our house up for sale with the 'For Sale By Owner' sign out front, we started occasionally setting up tours through houses on the market to get a feel for what features are available for what price, something essential for getting a good deal. The first house we looked at we fell in love with but unfortunately it was quite a bit over priced we thought. Subsequent tours of houses has shown this to be true but none of the reasonably priced houses that we looked at that day met all of our criteria. The Realtor told us the owner had been trying to sell the house for several years and just hadn't been very flexible on the price which also made us suspect that they weren't in the dealing mood. So we just decided to not make any offers at that time. It was still fall of 2011 and a year away from when my wife would start her job so we weren't in any hurry to have two mortgage payments anyway. A month later the house that we liked but was overpriced was taken off the market.

We continued looking at houses but nothing caught our fancy until a couple months ago when another place came on the market. It was outside of town and situated on about ten acres of land with a very large pond and a large shop with concrete floor. The outside of the house looked in good condition and the pictures of the inside of the house were decent but we have been fooled by them before in prior tours. (i.e. we had looked at houses with excellent pictures of the inside to learn that the house was chopped up, selectively photographed, etc.) We researched the property a bit but weren't in any hurry to deal with two mortgage payments since it seemed that selling our house privately was going to take longer than we hoped. But eventually we gave our house to a Realtor and houses were starting to sell with the arrival of spring and our mood started changing.

Last week, we scheduled a meeting with our bank to discuss loans and figure out what funds were needed should we decide to make an offer on another house before we got ours sold. While in the neighborhood, we called the Realtor of the acreage to arrange a tour. The acreage owner had just signed a contract that very morning. It is now sale pending. We were a little bummed since it had so many nice features, including several like the large pond and a shop that aren't on our list of must haves but it is what it is. We still went to the bank and were pre-approved for a loan so that the next time something comes up, we are able to move with more certainty. We also drove around looking at other possible houses on the market and drove by the first house we had looked at last fall that we were still smitten over. We talked about calling up the owner and seeing if the owner was still interested in selling it and offering to buy it privately to get the price reduced to a more reasonable level. More on that in another post.


R. Sherman said...

We've been looking for awhile. My fear is that we'll move and not be able to sell our home. Part of me just wants to stay put until we see how the housing market does in the next twelve months.

It's still not too late on the 10 acres. The sale may fall through for some reason. You could always put a second contract on the property. The owner might go for it if the first one doesn't work out.


Ed said...

R. Sherman - I have the same fears but I have tempered them knowing that (a) our current house mortgage rate is extremely low and even if it takes us a year to sell it at our current asking price, we would still come out well ahead. (b) I think we could drop the price down to what we paid for it and sell it right away. We won't make money off the deal but we also won't lose money. Of course, my house is situated in the nicer part of a town of 10,000 people which makes it a bit easier to sell even in a down market.

Putting a second contract on the property? Wow, that hadn't occurred to me as being possible. You are full of good information and thus yet another reason why someone should retain a lawyer when purchasing a house. We might consider it depending on what happens tonight.

Vince said...

Surely 10 acres is little more than the front lawn for people awash with land.
Equally, there cannot be but one dwelling on a 10 acre section that you would give the current owner notions of a bidding war. Still I'pose your kid is getting to that age when a pony is in the offing so a bit of acreage would be the thing.
Mind you what I'd be going for is a section that allows for the building of a new dwelling in a delightful aspect where I could hive off the existing house with an acre. Basically have the existing house pay for the new one plus the land.

I read that housing is on the up and up in the USA. Not as lunatic as it was but getting there. And it's only in places with odd patterns like 'Vegas and the S-W generally where palaces were constructed that haven't grown the price. But solid settlements are humming nicely.
It would seem that from peak to bottom the drop was 26%. This being the average from coast to coast. Here in Ireland the drop is 47% so far and we've not hit bottom yet. Some are saying the drop will be 60 to 70%. It's the very same in Italy Spain parts of France where there were migration.

PhilippinesPhil said...

Still not sure if we are going to buy or rent when we come back to the states sometime in the next year. Only reason we are coming back is to give my teenage girls American options with eventual US citizenship. I'm pretty sure that within a few years we'll be looking to come back here. Thoughts on buy or rent?

Ed said...

Vince - 10 acres is still quite a bit compared to the average city lot of .25 acres. The reason land attracts me so much is that despite America being sparsely populated to other countries, we are increasing in population and land will eventually become as scarce and high priced as it is over seas. Just in my lifetime so far, I have seen land prices increase six fold. I expect that is nothing compared to what it will do with what life I have left. My parents have been buying land their whole lives and are preparing it to pass onto our family through the generations. I would like to add to it.

Ed said...

Phil - My thoughts are pretty simple on the subject. If you are just here long enough for citizenship, I say rent. The one exception is if you feel your mental sanity of living in close proximity to other people might be in jeopardy and in that case, you may want to buy a house. I've always felt that if you add up all the expenses of renting versus owning, renting comes out the cheaper option but like I said, it has its drawbacks if you are like me and like a little space around you. I consider the extra cost of owning a house as the premium I pay for the space. People always used to say owning your home was the way to go because owning a home was an investment. With as many people as I have seen who have lost their house or can't sell their house for what they have in them post housing bubble pop, I'm guessing no one is saying that now. If I count all my expenses like upkeep, repairs, insurance, etc., I will loose a small bundle if I get what I want out of my house. The small bundle will still probably be much less than the $48,000 I would have paid in rent over the same period of time but I was lucky and got a deal on my house when I bought it.