Earlier this week we heard part of Survival reader Stephen McCamman’s search for a house. By the end of his last post, the house he was eyeing had come on the market at $500,000 — a reduced price from what he’d seen it listed for before.
He called the listing agent, and that’s where we left off. He sent a photo of the house, which is near Mount Helix.
Here was McCamman’s guiding principle, from last time: “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.”
Now, here’s Part II:
The first move I made based on that premise was to align the listing agent’s self-interest with mine. As such, I jettisoned another agent and let the listing agent have both sides of the deal. Because it was a short sale, this move doesn’t have all of the risks associated with a normal sale, but it does have some. For example, I found my own plumber, electrician, etc. to look over the house. What I did guarantee is that the listing agent was going to make sure my offer moved to the front of the line.
Unfortunately, an offer had already been submitted to the bank and the agent had another back up offer behind it. The house again went to sale pending status and I filed this one in the one that got away category. Again, during my daily check of the online listings, it popped back up again and I quickly called the agent. Both offers had fallen through and it was back on the market. This is when I finally scheduled a walk through, told the agent I was serious about purchasing the home, and the rest is history.
The history, though, includes a six-month process of waiting for the owners’ bank to approve the short sale, a resubmission of the offer to the bank due to a tax calculation error, and ultimately going six days over the escrow period due to a complex set of factors.
Why were we willing and able to wait six months for this house? Early in the process, a family member was dying of cancer and we were actually glad that the bank wasn’t acting on our offer. After a while, we were in fact getting anxious, but we were happy where we were renting. Moving an entire household was daunting, and we really knew this was the house that, as I crassly put it to one friend, I was hopefully going to die in — later, rather than sooner, of course. So, we waited and waited. Finally, we closed this month.
Ultimately, the question is: Did I get a good deal on this house? I think the answer is yes. The decline in value of this house from the peak was 38%, which is in the ballpark of the housing decline for this upper tier market segment. The house is one of the least expensive in the neighborhood, surrounded by houses that are currently valued at any where from $750,000 to a million-plus.
In addition, I qualified for the first time home owner credit of $8,000 from Uncle Sam and my wife works out of the home, so her tax deductions will increase due to the more expensive house we live in. In addition, we locked in a rate of 4.875 (percent interest) for the entire loan and only had to put 3% down. Finally, as one agent said, “No one rings the bell at the bottom of the market.” But I’m convinced that I’ve come as close to buying at the bottom as one could given the complexities of finding and purchasing a house.
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 kelly.bennett@voiceofsandiego.org.