Monday, April 25, 2016

Delusions of Homeownership

The landscape for home buying at the moment is laughable. Well, you have to laugh or you'd cry. We've seen about 10 homes in the last week... I'm not sure of the exact number, it's a lot, and then combine that with all the homes we've already seen, the lots we've already walked, and the five builders we've met with. I'm losing track.

The builders have been nice. They are straightforward, and they lay out their costs. They've been helpful in understanding what we need to purchase a lot for (if we were to choose to build) to stay within our determined budget. Basically, the only building options put us right at the top end of our budget. The problem here is that while conceptually, we can afford the top end of the budget, emotionally, that top end it makes my stomach curl a little bit with nerves.

The land we have seen has been priced mostly fairly. There was that one lot that, on the surface, was at the right price. We knew we were taking a risk when we offered them a bit less than asking, and they countered with a bit more but still less than asking. However, in the interim period, we walked the lot with a builder who really dug in and surfaced a number of issues with the property that would have made it problematic to build on without a lot of additional money. Given the problems, we let them know we would be interested but couldn't go up in price due to the issues. The owners didn't agree and chose not to sell it to us. Fair enough. We saw recently that they accepted another offer and it's currently under contract. Good for them. I hope they have a lot of money and can build a really nice place.

Houses however... Let me first say that I have no issue paying full price for a house that warrants the price. However, when you overinflate a house price beyond what its worth because the market is "hot," I'm not interested in going further into debt to satisfy some seller's ego. I also feel like we have a pretty good sense of what homes are "actually" worth, and if asking price matches. The idea that the house automatically is worth what its selling for is total garbage, in my opinion (and appraisals back me up on this). This is not 2006. If you think we didn't learn the lessons from the last housing bubble, you are dead wrong.

We know what upgrades and updates sellers have done to a home, and what it will cost if we do them. We know where they took shortcuts and where they put quality effort in. Thanks to websites like Zillow and Realtor, we know how much they paid for the house and how much they are looking to make off of it. We know when they are flipping something, and we know if the flip is worth it.

In sum, we aren't stupid. We are smart, informed consumers, and I for one, have little tolerance any more for hubris and fop.

We put an offer on another house on Thursday after Eric called me when I was literally at the top of the Incline. I raced down Barr Trail, knocking 15 minutes off my average down-hill time and picking up one heck of a runner's high to rush to see this house that had just come on the market. We offered 98% of asking price, which I really thought was a little high, especially since this house was purchased as a flip for 60% less than what they were asking for not much later. The flippers put in new carpet, painted, and added new granite countertops. They may have added or renovated a bathroom in the basement and/or put in back landscaping... those parts I can't tell they were original or part of the flip. They did nothing with the other two bathrooms, which were small, as was the master bedroom closet. The house overall had enough square footage, but the way it was laid out made it feel smaller than it was. The location was what did it for us - we really liked the location, backing to a creek with close-up mountain views.

The flippers' realtor told our realtor that they would be collecting all offers and not making a decision until Sunday. Presumptuous much?

About 10am on Sunday, they countered. We were their only offer. They countered with full price, but they would generously throw us some closing costs. Oh, and we had to respond by 5pm.

Oh, I've got a response for you.

When our realtor told them we needed more time to evaluate their offer, and let them know that in the interim, we had learned that the property was on a flood plain from the county assessor's office (although the house was just outside the boundaries) and that the federal government had deemed the property "high risk" (because we do our due diligence). They denied there was a flood plain concern and told her that they would not guarantee they would hold the offer and would evaluate based on the "activity they received on Sunday."

To our knowledge, they haven't gotten any other offers. We will not be accepting their full price counter, because the house isn't worth that price. So, we lost the house, but I'm not going to have a conversation with my bank in two years with them telling me I'm upside down and potentially (or literally) under water. I feel like we're being told we're being unreasonable, but frankly, I'm not the one unwilling move 2% off an exorbitant profit margin on a flip. Not to mention that the interior of the house was "fine" but not "jump up and down amazing."

Oh, and also... THEY lost US too in this deal. And I hope that smarts. They are stuck with a house on their books for at least a while longer because they got greedy. We wouldn't have made and offer if we weren't serious, and we would have bought the house if they had accepted. They are going to end up eating that 2% anyway, just not to us, but wasting it on their bridge loan interest (note: I have no idea of their finances. Maybe they paid cash. In my head however, they took out loans to flip this place and are losing money daily.) So, Ha!

Let me be clear. I hate every minute of this process. Looking at houses is not fun; it's an exercise in frustration and futility. Another appointment with another builder is a waste of everyone's time. 98% of all the homes we've seen aren't right. We are open to a lot of different things but what is on the market is really turning out to be expensive garbage. We are considering townhouses, ranches, condos, 2-stories, in spots all over town. The "type" doesn't matter to us - the "right fit" in the "right location does." We're willing to do a lot of work and buy a fixer-upper. For the right price, we'll build, or we'll buy a newer home. However, as frustrated, angry, and generally "over it," as I am, as WE are, we are neither desperate or stupid, and will not act as such. We will decide deliberately and fairly, with reason and sanity as guidelines, and will not give in to the "storm is coming" buying-frenzy that is prevailing around here. It would be helpful if other buyers felt and acted in the same manner (side eye to you, everyone else out there in the market.)

Therefore, the hunt continues.

And as for you blow-hards who insist on skyrocketing prices, may I suggest where you put your bill of sale?

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