Knife-Catcher: The Tour, Offer, Tour Meat Grinder

Knife-Catcher: The Tour, Offer, Tour Meat Grinder

[Note: This is part of an ongoing series on Tim’s personal homebuying experience.]

I thought I would continue the Knife-Catcher series by focusing a little more on our specific home selection process. Here are the basic steps we went through when looking for a home:

  1. Look at listings online.
  2. Narrow list, tour homes.
  3. Either:
    • Eliminated all toured homes, back to step 1.
    • Re-tour homes of interest, make an offer.
  4. Get offer response, make counter-offer, etc.
  5. Conclude offer process, back to step 1.

Once we had narrowed down which neighborhoods we wanted to focus our home search on, we basically started scouring every home on the market up to about 20% above our maximum target price (accounting for low-balling a stale, overpriced listing).

As we browsed homes online and decided which ones to tour, we used a shorter version of the criteria that was described in the neighborhood post. Basically, we were looking for homes that had at least 1,000 square feet, two bedrooms, a 5,000 square foot lot, off-street parking for two cars, and a usable basement. If a home lacked one or two of the items on the list, we might still tour it if it was cheap enough.

We had no lower price limit, and even toured one home that was listed at $84,900 (that one basically needed to be completely gutted—among other issues, the overpowering stench of cigarette smoke permeated the whole home). All told, we toured over two dozen homes, spread across seven or eight outings.

Most of the homes we toured were eliminated from consideration almost as soon as we stepped in the door. Those that made it past the first cut usually merited a second tour, then an offer. During the second tour we would usually shoot a walkthrough video to share privately on YouTube with our close friends and family. Here’s a compilation of the opening shots from those videos on the five homes we made offers on:

Here’s a summary what happened with the five homes we eventually made offers on. Most of these required significant work, which we were ready and willing to do ourselves if we could get a good enough deal on the home.

9007 180th St SE, Clearview

9007 180th St SEList Price: $159,900
Days on Market: 363
Offer: $130,000 on 10/16/2010
Mutual: $145,000
Result: Withdrew our offer post inspection.
Status: Sold 05/06/2011 @ $123,000

3431 Oakes Ave, Everett

3431 Oakes AveList price: $189,900
Days on Market: 84
Offer: $180,000 on 12/21/2010
Result: 2nd offer during negotiation resulted in multiple offer sudden death, lost to other buyer.
Status: Sold 02/12/2011 @ $197,000

1808 Lombard Ave, Everett

1808 Lombard AveList price: $130,000
Days on Market: 70
Offer: $100,000 on 02/22/2011
Result: Bank had already accepted another offer (even though the listing was not pending) & rejected ours.
Status: Pending sale fell through, relisted 03/30, sold 05/03/2011 @ $114,000

4504 S 3rd Ave, Everett

4504 S 3rd AveList price: $142,000
Days on Market: 4
Offer: $142,000 on 03/07/2011
Result: Bank sat on offer for a week, then informed us of multiple offer sudden death again.
Status: Sold 04/22/2011 @ $147,000

3601 Wetmore Ave, Everett

3601 Wetmore AveList price: $224,950
Days on Market: 4
Offer: $224,950 on 03/18/2011
Result: Offer accepted same day.
Status: Sold 05/20/2011 @ $224,950

Even when we had extended an offer on a home or were under contract on the first and last homes, we continued our search online, constantly looking for something that might better line up with our needs, comparing to new rentals in the area, and watching sold trends.

All in all, the process was fairly tiring, and isn’t something I’d particularly enjoy doing again any time soon. Fortunately our hunt was focused on attaining actual home ownership rather than some sort of first step on the mytical “equity ladder,” so I don’t think it’s a process I’ll be repeating in the near or mid-term.

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

20 comments:

  1. 1
    Ken M says:

    Good writeup and nice to see your process. My wife and I Just started new jobs in Vancouver WA and are looking for a house.

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  2. 2
    Scotsman says:

    Interesting homes- I really like the uniqueness of the older homes. And the quality is much better than the new stuff, at least for the same or near money. Here’s one we looked at- very well built, full headroom basement could be finished, upper floor could be bumped out in the back. Amazing view, but a bit too far out.

    http://www.redfin.com/WA/Snoqualmie/39827-SE-53rd-St-98065/home/482891

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  3. 3
    WestSeattleDave says:

    I seem to remember discussion by several posters on this blog that multiple offers seldom resulted in a sale price above the list price. And yet two of your five examples had multiple offers and both resulted in a sale price higher than the listing price.

    What gives?

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  4. 4
    Lake Hills Renter says:

    Thanks for sharing this, Tim.

    It’s unclear to me from the post how you handled the multiple offer sudden death. Did you bail once it was brought up, or did you place a new bid? I’m thinking that multiple offer sudden death is a deal breaker for me (I’ve given my best offer already), but that’s hard to say for sure until I’m in that position.

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  5. 5

    RE: WestSeattleDave @ 3 – I don’t remember anyone saying that, but I do remember the idea that multiple offeres didn’t necessarily mean that they were going to go above list. Sellers would love that if it were true.

    Keep in mind that Tim (or anyone outside the transaction) doesn’t likely know the amount of the net offer. It’s possible that there were seller financing concessions on both that resulted in a net price less than list.

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  6. 6
    The Tim says:

    RE: Lake Hills Renter @ 4 – Ahh, good question.

    For 3431 Oakes, although we were this close to getting them to agree to $185k when the other offer came in, we upped our offer to full list price ($190k) for multiple offer sudden death.

    For 4504 S 3rd, we just left our offer unchanged at the list price. I was seriously tempted to submit a lower offer on that one or to just withdraw our offer entirely since they jerked us around by sitting on our offer for a week before responding.

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  7. 7
    Ed says:

    When King County’s FHA Loan Limits drop by $65,000 in October, demand will drop, and prices will follow. Why will the Federal Gov allow this to happen before an election year? Because huge groups of voters in Fly-Over-Country believe people who own $575,000 homes are “filthy rich” – and they don’t want their tax money going to bail them out, anymore. Supporting high FHA Loan Limits makes Obama look like he’s giving tax breaks to the wealthy. Say goodbye to loan limits above 500k before Christmas and above 425k by Christmas 2012. It’s even more severe along Coastal California. A 3 bedroom/2 bath home for $875,000? Sure, why not? But who’s going to buy it when they have to have $375,000 in cash. I’ll tell you…someone who already owns a home they want to get rid of. The same thing that made the prices go up will bring them back down. My prediction….Seattle hits bottom in 2015.

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  8. 8
    Lo Ball Jones says:

    I just went an nosed around for what I’m looking for on Redfin and from what I can see, prices have dropped sharply just in the last 6 months.

    I’m talking about $50,000 drops on $160,000 houses…that’s a lot!!

    But you know what…there’s a great many homes of equivalent value that haven’t taken the plunge yet…meaning, we’re standing at the edge of the cliff!

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  9. 9

    By Lo Ball Jones @ 8:

    I just went an nosed around for what I’m looking for on Redfin and from what I can see, prices have dropped sharply just in the last 6 months.

    I’m talking about $50,000 drops on $160,000 houses…that’s a lot!!

    Drops in list price, or a property selling below list price, is not evidence of a drop in value. It’s just evidence that the property was probably priced too high.

    But if you’re commenting on the low end, I just mentioned to my wife this afternoon that the quality of a house around $200k in Kent is now much lower than it was about six months ago (meaning list prices have gone up from six months ago) and are more on par with what it was like over a year ago. Again though, that’s list prices and a very small part of the market in a small part of King County.

    Defects are common in such houses, like LP and/or other defective siding, Zinsco panels, water damage (interior and exterior), oil heat, or they’re bank owned on septic (not a good combination).

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  10. 10
    Marc says:

    Wow! Tim, I totally forgot how many offers we had to make before you got a winner. That Clearview place was a real doozy. I’m so glad you didn’t buy that one. It had money pit written all over it.

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  11. 11
    SeattleIn5 says:

    Tim, just to say thanks for your very informative blog. We have been following it since we started looking for a home in Seattle and East side areas. The process that you describe in the post is exactly what we have been doing and now we are very close to close the deal.

    Thanks again…

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  12. 12
    Cheap South says:

    “All in all, the process was fairly tiring, and isn’t something I’d particularly enjoy doing again any time soon.”

    Just like with cars, the process of looking around with no intention of buying is fun. But when it comes to decision making…..please, I’d rather sit for a root canal.

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  13. 13
    Cheap South says:

    RE: Scotsman @ 2

    Very nice place. It’s in the sticks (some 30 miles from downtown). But the last sentence will equate significant five figure work. (“Property needs well, plumbing & septic work”).

    It’s “pending” now.

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  14. 14
    ARDELL says:

    RE: Ed @ 7

    I think there should be one national upper limit vs different limits for different areas. Draw a line nationally, given it is national vs local taxes that take the hit. Let the local powers that be or the employers deal with differences from one area to another.

    That sounds right to me.

    Several Universities around the Country deal with “how do they get Professors and Staff to come there.” by dealing with property value issues themselves. It can be done on the local level, and Federal Taxes should help people equally by establishing one final and only FHA – VA standard amount for the entire Country.

    That’s my vote. :)

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  15. 15
    Jonness says:

    By Lo Ball Jones @ 8:

    I’m talking about $50,000 drops on $160,000 houses…that’s a lot!!

    Correct, but good luck getting 90% of the RE agents to admit it. There’s some serious denial occurring out there. Meanwhile, I continue to hold off buying while saving an even bigger down payment and watching the homes I want continue to drop in price.

    But all is not lost. My girlfriend’s mother has been badgering us for years to buy a house. Yesterday, she finally admitted we were smart for holding off. Now she thinks we should wait another year or two. :)

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  16. 16

    RE: Jonness @ 15 – We won’t admit it because it’s not true. As I noted above, a drop in price is not evidence of value. I didn’t even mention the fact that it might be a short sale, and not really available for sale at that price. What matters are actual sales prices.

    Also, in case you’ve missed it here, a lot of buyers have been complaining about the lack of decent inventory at the lower price ranges–stuff they would actually want to buy. I addressed that in my second paragraph of response 9 above. The point is, something selling for $160,000 doesn’t matter if it’s not something that you’d want to buy. And regardless of the number of listings at say $200,000, buyers are not really better off now if those listings are in worse condition than $200,000 listings were six months ago.

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  17. 17
    Jonness says:

    By Kary L. Krismer @ 16:

    RE: Jonness @ 15 – We won’t admit it because it’s not true. As I noted above, a drop in price is not evidence of value. I didn’t even mention the fact that it might be a short sale, and not really available for sale at that price. What matters are actual sales prices.

    IOW, we’ve reached bottom, and you better buy now or be priced out forever. I’ve heard this from you guys who make your living off a commission from selling houses for 4 years and counting. It’s nothing more than a sales pitch to lure in unsuspecting victims so you can increase your bottom line.

    The truth is, we’ve had a very minor amount of seasonal price support this Spring. But house prices fell like crazy all winter and will do so again.

    I say this as an unbiased observer who does not make a profit from my claims. In a nutshell, the housing market is horrific and about to get worse. What you are observing is simply a house of cards built on shadow inventory.

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  18. 18
    Jen says:

    Glad you found a home Tim. We finally have our new home too. We were able to move from a neglected/dangerous neighborhood to a neighborhood we only dreamed of living in….thanks to bank owned purchase and a serious amount of hard work. We sold our old home in May. Yes the sales price was disappointing but it all works out when you consider our new home’s cost. This ended a 6 year odyssey as we attempted many purchases (short sales, bank owned, insane sellers) and even signed closing docs on one home (sale was not legal). So grateful it is all over with! What I gained from this experience is some amazing skills at searching and researching properties as well as owners…thanks to Redfin and KC records. Also thanks to you and all those to are willing to share their knowledge and insight for keeping me sane through it all.

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  19. 19

    By Jonness @ 17:

    By Kary L. Krismer @ 16:
    RE: Jonness @ 15 – We won’t admit it because it’s not true. As I noted above, a drop in price is not evidence of value. I didn’t even mention the fact that it might be a short sale, and not really available for sale at that price. What matters are actual sales prices.

    IOW, we’ve reached bottom, and you better buy now or be priced out forever. I’ve heard this from you guys who make your living off a commission from selling houses for 4 years and counting. It’s nothing more than a sales pitch to lure in unsuspecting victims so you can increase your bottom line.

    Jonnes, don’t do that. I know you’re a smart guy and you know that’s not what I said.

    I said a drop in asking price is not evidence of a drop in value. It’s evidence that the listing was priced too high.

    Also, note that even Tim in the low price properties piece excludes short sales from the lowest price active listings.

    I said absolutely nothing about the trend of real estate prices, so please don’t try to pretend I did when you know I didn’t.

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  20. 20

    […] readers may recall that this house was actually one of the ones I made an offer on during my search, back when it was on the market for a little over $100k. It ended up selling back in May for […]

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