What does it take for a real estate skeptic to buy a house in this market?
A lot, it turns out. But, at least in one case, it wasn’t impossible.
One of our questioners in the Savvy & Sage series a couple of weeks ago was reader SM — aka Stephen McCamman, a “constant reader” of Survival in San Diego. He asked Leonard Baron, our guest host, about a short sale he was thinking of buying near Mount Helix.
It had previously sold for $780,000 in May 2006, and McCamman was about to close on it for $500,000 — a 36 percent decline in value from the peak.
McCamman bought the house and offered to share his experience with the rest of us. Here’s the first part of his tale:
As I write, I am sitting in the office of my new house. A friend astutely asked, “Is this the best house you have ever lived in?” and the answer is unequivocally, Yes. However, the six-month road to this successful purchase was filled by twists and turns of doubt about purchasing in this market, stress and anxiety regarding the short sale process, and strong doses of patience, good luck, and, most importantly, skepticism.
Kelly Bennett asked me to relate what surprised me most about my house hunt. Upon reflection, I can’t say anything surprised me, but only because I went into this process with a skeptical attitude toward the short sale process, mortgage companies, and the real estate industry as a whole (This skepticism emerged via a year long reading of a variety of real estate blogs and discussion lists). At every turn in the process, the assumptions I made were based on the fact that everyone in the deal, including the agents, the lenders, etc. were in it for their own self-interest. While this may seem common-sensical, it is hard to keep this in mind when everyone is all smiles and friendly telephone calls.
I’ll spare you a number of instances where this helped me, but the overriding principle I used was to try check and balance the interests of all parties against one another to ensure a fair process.
The most notable thing about this process was how the internet has revolutionized the real estate industry. Since I knew the general location where I was going to buy, I would look daily on the maps of such websites as Zillow and SDLookup.com. You can get caught up in the drama of the housing market by following the price fluctuations of certain houses, dreaming of owning a house you could never afford (You should check out the La Jolla house that is listed for $32 million!), and eliminating a large number of properties in a split second. In addition, any time I had doubts or questions, I posted in a real estate forum and any number of people were willing to chime in with their advice (This helped me avoid purchasing a house about a year ago – the outcry about the deal was so loud I pulled the plug).
This full immersion into the listings on line led me to the house I just purchased. Over a year ago, this house came on the market for $650,000 – a price I could never afford (It had sold a year before for $780,000). However, the pictures of the house were great and the location was nearby. I looked, dreamed, went to the mortgage calculators online, plugged in the numbers and got smacked with a reality check and moved on. The house went off the market (part of the drama I mentioned before — hmmm, what’s going on? A $130,000 price drop then it goes off the market … things were getting interesting) and it quickly faded from memory.
When it popped back onto the listing sites at $550,000, my interest was piqued, so I drove by the property and took a look. Still outside of my price range, but within reach. It quickly went to sale pending, and again, I moved on, closing another chapter in the ongoing saga of home sales.
It then popped up again online, this time with a $50,000 price reduction. Now it was time to get serious about this and I called the listing agent.
In Part II: What twists and trials McCamman encountered after that phone call, and why he thinks he came as close to buying at the bottom as possible.
If you have questions for McCamman, please leave a comment below (if you’re not reading this in Survival, go there now to comment). Send your own buying or selling or renting experiences to firstname.lastname@example.org.