As promised, I’ll be taking up some space on these pages over the next few weeks to share some of the nitty gritty details of my personal home search. To kick things off, I thought I’d just give you a rough timeline of the whole process. Let me know in the comments on this post what aspects you’re most interested in hearing more about and I’ll tailor the rest of the series based on your feedback.
Summer 2005
- Started thinking about buying our first home.
- Friends who recently purchased referred us to their real estate agent.
- Real estate agent referred us to their preferred mortgage broker.
- Broker recommended various frightening financing options, including a 5-year interest-only adjustable-rate mortgage. When I brought up my concern with this type of financing, his response was something along the lines of “don’t worry, you can just refinance it before the five years is up.”
- Looked at a few properties we could afford without taking out insane financing. This basically included swampland in Monroe and run-down trailers in Lynnwood.
Fall 2005
- Decided to apply my engineering mindset to disassemble the housing market and understand what was making it tick.
- Realized that the market insanity was being driven not by sound underlying economic fundamentals, but essentially by mass hysteria.
- Started Seattle Bubble to share my research with anyone else who might be interested.
- Put serious home search on hold.
2005 – 2009
- Spent lots of time watching the market:
- set up a ton of listing alerts
- watched homes we’re interested in
- spent time in various neighborhoods to narrow search
- blog, blog, blog
Early 2009
- Based on the trajectory of housing bust, started making rough plans to target winter 2009-2010 for an eventual purchase.
- Tax credit passed, totally screws up market dynamics, putting true price correction on hold.
- Purchase delayed until tax credit expires.
February 2010
- First real tour of a home since 2005—bank-owned beater on acreage in south Snohomish County.
- Decided to hold off on making an offer (overpriced).
October 2010
- Made an offer on the REO home on acreage.
- After some negotiation, bank accepted offer.
- Backed out of home after inspection.
Winter 2010-2011
- Made offers on three other bank-owned homes.
- Lost two of three offers in multiple offer sudden death.
- Bank had already accepted an offer on the third home (even though it wasn’t “pending” in the MLS).
Spring 2011
- Toured a short sale its third day on the market.
- Made an offer the next day.
- Sellers accepted offer same day.
- Sellers sent offer package to their bank the following week.
- After some minor back-and-forth with the sellers’ bank, the bank accepted the offer.
- Inspection, financing, appraisal all went through.
- Home sale closed May 20th.
If any of that piques your interest, let me know. I’m planning to get in-depth on various portions of the tale each Friday over the next few weeks.
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By Jonness @ 200:
I hope Tim’s next post on his purchase decision and process leads to a big long discussion on…(drum roll)…his purchase decision and process. :)
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RE: Patrick Killelea @ 97 –
I now use your blog as a part of my daily news read in the morning. You have excellent links to great information.
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RE: Jonness @ 199 –
I looked back to see what I was saying in Jan of 2008
“I feel badly when I correct agents who say real estate always goes up, but really. I’ve even heard consumers say that. Nothing ALWAYS goes up. Why do people say things like that? Do they like kidding themselves?”
Right below it Kary said this in 2008
“I often disagree with Ardell…”
Maybe Kary and I will soon have our Anniversary of his disagreeing with me. He seems to enjoy it.
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RE: jrc @ 95 – I think you need to look at it from the seller’s point of view, since they’re the ones that dictate the starting terms. What are they willing to offer to assist in selling their place?
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who started all this fighting? Someone is to blame but its too late for me to backtrack. I will get to the bottom of this…………..
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By ray pepper @ 80:
Ray, you’ve really sunk to a new low. Emailing me a contest where to win the free dinner I have to be notified by viewing your FB page. Way to rub it in! ;-)
Seriously, I think Tim should let your contest be a guest blog piece here.
(For others, he wants a creative idea what to do with a van, and no, he doesn’t consider another Obama/Bush wrap a creative idea.)
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RE: Kary L. Krismer @ 206 –
Kary, when I was sending that out I thought the exact same thing, that I was getting people to go to a 500 Realty FB page. But, I didn’t want to email (spam) everyone again in a week with the winner…But, anyway I got one response this morning that absolutely cracked me up. Its so sad but true..Check this one out:
“I would suggest something that would benefit all of the unemployed executives in the area.
The van could be painted blue such as the King County Vanpool Vans.
Former Vanpool riders and/or executives could be picked up in rush hour and sit in traffic for a couple of hours
This would bring some routine back into their lives and allow them to become motivated to get back in the work force.
On days that you don’t have but only a few vanpool riders you could fill the empty seats with manequins holding books or laptops.”
terrible…so terrible…but golly it made me laugh…
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RE: jrc @ 66 -
JRC,
Sorry for the delayed response. I’m not sure who the condo buyer Ardell described in comment 157 is or whether they retained us or not. But, to your question on how would we advise a new client who came to us with a home picked out and a pre-determined price, this actually happens fairly frequently although the price in their mind is almost always below the current list price. They typically want to make a very aggressive or at least a fairly aggressive offer. In those cases we absolutely do a CMA and try to come up with a logical and defensible argument for why our clients offer is reasonable (or in the ball park of reasonable). We’ve found that we have much greater success if we can provide some sort of objective rationale for an offer versus an unsupported, unexplained offer far below the list price. The latter just ticks off the agent and seller and are frequently rejected out of hand.
After completing the CMA we’ll advise the client what we think a reasonable offer would be and how we think the seller will react to the client’s pre-determined price. We might advise them to re-consider the offer if it’s really low as we think that offers that are highly likely to offend the seller are counter-productive and just set up the next buyer to come along. And that’s not because we care about offending the seller, rather it’s because the goal is to get the house under contract and not to prove that we’re smarter than the other guys. One shouldn’t forget that the seller and listing agent have egos and pride at stake and that it doesn’t do any good to trample on them. Sometimes you need to coddle them a little to make the bad taste of a low offer palatable. A spoon full of sugar, if you will.
However, each negotiation is unique so no one approach works every time or is best in all situations. You have to be able to adapt to the circumstances and come up with a good approach.
If someone comes to us that wants to offer full list price without any negotiation I will still encourage them to let me do a market analysis and advise them whether the list price is reasonable. Sometimes, as Ardell points out, they don’t care to negotiate and aren’t particularly interested in a CMA. This blows my mind on a personal level because I’m extremely tight and can’t fathom not pushing for a bargain. But, so long as I’ve discussed the possibilities with my client and given them the opportunity to get more thorough pricing information, if they want to move forward at full list price then I will gladly accommodate them. Our clients are adults and I am only their adviser, not their parent.
This is not a very common scenario but I can think of one transaction that came close to it. In that case, our clients didn’t negotiate hard up front but were very thorough on the inspection and did negotiate pretty hard for repairs/credits. They were very well-to-do cash buyers who had owned many homes in the past. They knew what they wanted and for personal reasons that seemed very reasonable (under their particular circumstances), they did not want to bicker over price. Ten or twenty grand here or there just wasn’t important to them.
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By ARDELL @ 3:
You guys should go out to dinner some time with an agreement that you won’t discuss real estate. :)
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RE: Jonness @ 209 – Or use silverware! ;-)
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[...] 210 comments, 06/10: Knife-Catcher: The Tim’s Home Search Timeline [...]
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