Wednesday, May 2, 2012

Houses: Part One

I haven't updated everyone on the housing situation for awhile so I thought I would. I'm also light on posting material right now anyway. As you know, we put our house up for sale last fall without going through a Realtor. There were a couple reasons for this. By cutting out the middleman, i.e. the Realtor, we could charge less for our house since we eliminate any commissions and maximize our return. Another big reason is that I thought it might take longer to sell that way and we weren't in any hurry to sell before this spring. Even then, we weren't in any big need to sell since no matter where we lived, one of us was going to have a 20 mile commute to work, short by commuting standards.

We had lots of interest in our house. I showed it nearly two dozen times and average two or three calls a week of people asking questions. But as April rolled around, we still had not one single offer. Part of the problem was that winter is not a big house buying time and I tried to counteract that affect by telling people that we were negotiable on a closing date. I suspect the biggest reason for the lack of offers was that people just were leery of buying a house privately. I would get questions like who would write the contract up or how do we make an offer privately or even who do we pay. I would tell them my story from buying the place privately and answer the questions but I think people are just comforted with a Realtor being involved, especially since any cost for said Realtor would be shouldered by me. Another significant part of the problem is that we just lacked the right people looking at our house. Selling it privately and advertising with a sign in our front yard and local papers meant we only attracted locals. This group of people had housing accommodations already and weren't in any hurry to buy. We lacked attracting people moving in from parts unknown who had shorter time frames for searching. I did try to publish our house on online sites to capture that market but only a handful of people found it. Most that I queried had never heard of these sites.

So after talking it over with my wife and realizing that prime real estate moving time was upon us, we handed over our house to a local Realtor. This eliminates the discomfort issue of selling privately and their websites are easily found to people from out of town, especially since our area is multiple-listing-area which means one website is used by all area Realtors. The drawback of course is that we have less wiggle room in our price since we have to jack our bottom line up by 6% to cover the Realtor commission. We did this a month ago.

Overall the process has been pretty painless. I like the fact that I don't have to be around when someone is looking at my house and trying to sell it to them. Someone else does that. In fact, all I have to do is make sure it is relatively clean and vacate the premises for a half hour or so. We've had 14 or so showings over the last four weeks and I don't have to answer all the phone calls that the Realtor is undoubtedly receiving. It is pretty relaxing. Still we haven't had an offer yet despite the realtor saying that it won't be on the market very long since we are priced well under what it is worth and what the going market is saying it should go for. We were told we had an imminent offer last week (coincidentally by a coworker who recognized it as my house and stopped by later to ask more questions) but that hasn't yet materialized yet. I have another showing tonight (two nights ago by the time this posts) and they seem to be pretty steady so I'm not too worried yet. Still, it puts the damper on the dreaming of a new place which will be the topic of my next post.


14 comments:

Vince said...

Best of luck.

kymber said...

i, too, wish you the best of luck but i don't think you'll need it. i'm looking forward to your next post - teehee!

your friend,
kymber

R. Sherman said...

Good luck.

Re: Realtors.

We lawyers have a love/hate relationship with them. Of course, they're more interested in the sale than representing the client, IMO. Ninety percent of real estate litigation could be avoided if a lawyer were involved. Yes, we get paid no matter what, but at least you've got a professional writing the contract and making sure you don't do something which will bite you in the future.

Cheers.

Ed said...

Vince & Kymber - Thanks.

R. Sherman - I've never understood how lawyers fit in to the real estate process. When we have made offers on houses in the past (that we didn't end up buying), it has always been on a generic contract through a realtor. By the time the lawyer traditionally gets involved at closing, isn't it too late to be rewriting contracts? We we bought our current house, I ended up combing hundreds of real estate contracts online and writing my own. They all seemed similar in nature but included different clauses depending on what was applicable. The people selling the house had no problems signing it and in the end, it was an excellent experience. But I am also a realist and I know that any contract could have potentially painful holes in them. But compared to the ones we filled out at the realtor's office, the one I wrote last time seems a lot more air tight. I would love to hear from a lawyer such as yourself how much you can get involved after the initial contract through the realtor has been signed? Or perhaps you would recommend using the realtor but always submitting a contract through a lawyer? Actually that makes more sense to me. Would love to hear your opinion on this subject.

Ed said...

Everyone - I should preface my comment above by saying I have taken engineering law classes before. While this doesn't make me a lawyer and I don't pretend to be one, I would say that I may be a little more versed in legalese than the average bear. I in no way am suggesting that people should attempt to write their own contracts when purchasing real estate.

Vince said...

I've been having a think about this,if I found a house that was below the market I'd wonder what was wrong with it.
Would it not be best to set to the average and when an offer comes in below the your asking price that you can do it that way.

As to the need for a lawsmith. It's always best to have a layer between you and the other party.
And frankly you were the very last person I've met online that would have gone a hippy route. Heck, what's next ?, a kaftan, dreadlocks and heaven forbid homeschooling. :-)

Ed said...

Vince - Our house has been priced below assessed value since the beginning and also below the current market value according to the realtor. It is still quite aways above what we paid for it so we have some room to work though it will now shrink with a realtor involved.

As to the lawyer, I have retained lawyers in the past for other matters, just not yet for a house and that may be because I don't understand how they can play a part in the realtor contract process. That is why I'm hopping Mr. Sherman can enlighten me.

PhilippinesPhil said...

lawyers suck no matter where you find them. They suck even more in this country (Phils) where they make everything difficult daunting and convoluted. The bloodsuckers in the US are basically in the protection racket, "use our services so you don't get hurt." Sounds like something Vinny or Pauly would say to the local bar or restaurant owner as they make their "rounds." On my recent trip to Thailand I was struck by how easy everything is due to the lack of lurking litigation. If someone does something dangerous or stupid its on THEM. No business owner has to pay huge to protect themselves against idiotic lawsuits. Sorry Vince, but I'm not a fan of your profession the way its practiced in my home country where it seems the only way to truly be free anymore and do what one wants is to leave and do it elsewhere.

Ed said...

Phil - I think lawyers get a bad rap for frivolous lawsuits. I think lawyers definitely have their place in society and the ones I have had the pleasure of meeting have been very upstanding citizens of society that make significant contributions with their work. But like any profession, we tend to remember the bad apples who are ONLY out to make money.

Ed said...

Phil - I need to restate that first sentence. I think lawyers get a bad rap due to the few who are involved in frivolous lawsuits.

PhilippinesPhil said...

Ed, when it comes to lawyers, lawyering and legal systems (around the world), I definitely have baggage. Yup, lawyers have their place all right... one of them is NOT in the White House by the way...

Ed said...

Phil - I'll definitely agree with you on that last one!

R. Sherman said...

First, I don't know about Iowa law. In Missouri, the contract is what it is after it's signed. That's why a lawyer should write it, to protect the client from failing to put important contingencies in. The biggest problem for a buyer is closing a sale when s/he shouldn't, i.e. because of title defect or something. For a seller, it's making too many representations about the property which can lead to a suit down the road.

Of course, not every situation falls apart, but enough of them do, that it's wise to be proactive early.

Cheers.

Ed said...

R. Sherman - Thanks for the reply. After doing some checking, it sounds like a clause can be added to a Realtor contract (or any contract for that matter) to allow for a period of time for legal review by a lawyer after it has been signed by both parties. Thanks again for your clarification.