Educating the Wheelers

While I would certainly not like to be a home-seller in the current Twin Cities’ home market [the last stat I heard was 8 sellers for every buyer], being a buyer isn’t currently a whole lot of fun, either.

I was kind of hoping we’d be in a house by now, but here we are, still crashing at my parents’ house. Our house in Austin sold within 24 hours, for over our asking price, and the proceeds have been sitting in Emigrant, generating interest while waiting to be used for a down payment. [And all of our belonging sit in a PODS storage facility somewhere. Thankfully, the interest does outweigh the PODS monthly storage fee.]

I haven’t been posting because, well, my real name is attached to this. And wouldn’t you google the name of the potential buyer of your property for dirt for negotiating? [And if not, why wouldn’t you?]

But here’s where we currently stand:

We’ve had purchase agreements put in on two houses. One we really, really, really loved. But the sellers didn’t seem to get the memo that the market isn’t what it used to be. They would hardly budge on price — and it really was overpriced — and we very nearly agreed to pay a little too much for the house because it had the highly desirable quality of being less than 4 blocks from my parents’ house. But in the back and forth negotiation with these folks, we felt nickel and dimed the whole way, enough to sour us on the deal. So we walked away. [We actually walked away twice. The first time, they came back to us after a week with a bit of a concession, and we thought they were finally getting realistic … but we quickly were disabused of that notion. And we walked away for good after that.]

The other house … well, it was a great house, too. It was a bit more expensive than the first one, but it was also a better house. We certainly could afford it, but it’d mean we’d be putting less into savings than we’re used to. We’re used to being aggressive savers, and we like it that way. Our feet were starting to feel a little cool, and then when the results of the inspection came back [and particularly after hearing the seller’s response to the problems that came up], they became icy. We wish them luck with another buyer.

We also fired our agent. But that’s a whole other story, one that might be best not being told. Heh. But suffice to say, you really ought to consider refusing to sign an exclusive buyers agreement with your agent, especially if your agent is an unknown quantity. You may be very, very glad you did.

But the real crux of the matter is that most sellers aren’t coming down in price yet, but here we are as buyers, reading the Wall Street Journal, reading the daily paper, watching the news, cruising the interweb, and all signs point to prices further dropping. So. Do you get tired of putting in lowball offers on houses that frankly don’t feel like lowballs, they just feel like an offer that means you won’t spend the first five year underwater on your mortgage? Or do you try to sniff out a seller who “gets it” and has already dropped the price of their home 50k because they come to terms with the fact that that train has already left the station? Or do you get used to living at your parents’ house with your husband and two small kids? [Let’s not even mention the cat and two dogs.]

This story is still developing.

** One thing you find in Minnesota is there are enough lakes that you sure don’t have to be rich to have a “lake house.”

Our Texas house sold in about 24 hours for over our asking price. That’s the good news. [And it is, admittedly, a longer, weirder story than that. Always is, isn’t it? But that’s the major gist of it.]

So here we are in Minnesota, crashing at my parents’ place with our kids and our cat [our dogs are staying with my Aunt, since my folks don’t have a fenced yard].

Buying a house has been much more of a hassle than selling one. I thought that wasn’t supposed to be the case these days. Heh.

Just today we cut off negotiations with the first seller that we’ve been dealing with. They appeared to have not gotten the memo that the Twin Cities housing market is in the tank right now. Eight buyers for every seller, sales volume down by almost 20% over last year, and all that jazz.

So, until we have a place, our down payment sits in Emigrant Direct making 5.15%…

We are essentially packing and moving in two stages this time. First we’re getting all of the clutter and anything we can spare out of the house before it goes on the market [and anything you can’t see, like stuff in drawers]. Then after it sells, we’ll pull out the furniture and the bare bones we left in to live on. Because of the two stage process, we decided to try the PODS approach.

So, right now there’s a POD in the driveway and we’re filling it up with junk. They are going to come take it away the day before we go on the market where it’ll sit in storage. Then once we sell, we’ll get another POD [and possibly bring back the first, if it’s not full. But I think it will be.] Then we will have them transfer those two PODS to MN, where they will sit for about another month while we stay with my parents and buy a house up there.

It seemed like a more straightforward way to go than dealing with loading trucks, bringing to a storage facility, moving stuff from a facility back to a truck, then heading to MN, then putting in a facility, then reloading a truck and bringing it to our new home.

We don’t have the final numbers yet — it’s going to depend on how many PODS/of what size we end up filling — but it didn’t seem to be outrageously more than going the moving truck route, particularly for our situation. Both are plenty expensive for my taste.

When we moved from CA to TX, we had a good experience with Movex, but they use independent contractors to do the actual move, so we may have just gotten the luck of the draw. [Our drivers were a young married couple who were totally cool, and very helpful.]

So far, our PODS experience has been good. But there’s still plenty of time for it to go all to heck.

Clutter is bad enough when you have to look at it, but it’s a killer when you have to pack it all up so you can get your house ready to list.

I think I’ve packed 80 boxes so far. Probably more.

I’ve been arranging sitters to come over and play with/hold the kids while I pack. Owen has decided that these few days would be an excellent time to have a growth spurt and need multiple hour+ long nursing sessions. And then another one. And then another one. But in between those, I’ve been a packing FIEND!

I offhandedly mentioned in an email on a different subject to the HOA mailing list that we were putting the house up for sale on Friday and within an hour I received several emails from people who wanted to know more for their friends and family. [There is a large contingent of folks who grew up in this neighborhood who try to move back in.] I sent back a quick barebones email to the list, even mentioning that we didn’t have the price quite hammered out yet because there have been lots of comps just this week, even, but hey, call my realtor! My realtor reported that she has received several calls already. And this is five days before we list.

We got lucky when we bought this house — this is a high-demand, unique neighborhood. If you want to live in this part of town, you aren’t going to find much else with one acre lots and large amounts of mature trees, plus turnover has always been very, very low. My realtor has looked to see what else is currently available and suspects we’ll get offers quickly.

That sure would be nice. Anybody who peeks around the financial nooks and crannies of the internet has probably noticed that now is generally not the best time to be a seller, house-wise. It seems, at the moment, that Austin is currently dodging that bullet. But I guess we’ll see for sure when we list.

On the upside, where we will be buying — Mpls/St. Paul — looks like it’s in the thick of foreclosure central, and inventory is about twice what it was this time last year. Hopefully this all will work out in our favor.

If you’re a praying type, please keep us in mind.

We got a Very Important Looking mail from our mortgage holder recently and I just love it:

Your Account Has Been Reviewed And We Would Like To Speak With You.

A recent review of your account indicated that your home may be carrying up to $large_number in equity.  This amount is very important because it is the number that can help determine how much cash you may be able to access by refinancing, blah blah, blah blah blah, etc.

It goes on in this vein for the rest of the page, implying that they’re going to do us a favor by letting us take out our equity, and reset our mortage at an interest rate over 2 points higher than what we currently have.

As the movie SuperTroopers once noted, desperation is a stinky cologne.  It couldn’t be that we have such a large equity amount because we’ve been aggressively trying to pay down our mortgage for the last 3 years, could it?  It couldn’t be that with the recent and upcoming spates of ARM adjustments that our mortgage company — who has been on the forefront of exotic and risky mortgages and refis — really wishes that we would stop squeezing their profits on our own mortgage, which is one of their least likely to default, and get back on their cash cow wagon?

 They Would Like To Speak With Us, Indeed.

[updated 3/21: formatting changes - agw] 

Mapgirl has another interesting post lately about HOAs. [She’s had a lot of interesting things lately. Check her out.]

When we were planning on buying here in Austin, we knew where Andrew was going to be working, so one of our big criteria was short commute times. In the areas fairly nearby his office, it’s hard to find a house that doesn’t have a neighborhood HOA. Heck, not too many years ago, our area was the total boondocks, so it’s hard to find a house over 10 years old, even.

I am very much a “don’t tell me what to do” hands-off kind of person, so as you can imagine, I hold most HOA stuff in contempt. It took quite a bit of looking, but we managed to find a house that we loved in a older neighborhood that was a conglomeration of multiple [like, 7 or 8] pre-existing HOAs. There are so many grandfathered provisions and other assorted goofiness because of this that the HOA here is voluntary dues, and has no teeth whatsoever.

So, when we painted our house and fence and added the multilevel deck in the back, etc, we didn’t have to submit plans to an HOA for approval. We don’t get any “helpful tips from the committee” postcards dropped in our mailbox. I know some people really like their HOAs and “keeps the house values up” and all that jazz, but I prefer our freedom. [And our housing value is doing just fine.]

Does it mean that one of my neighbors could start raising 100 fighting roosters in their backyard? Well, possibly. But you’d be amazed how people tend to not do those sorts of things, even without the Threat of HOA hanging over their heads.

My first townhouse purchase [and sale].

This one is a no brainer. I don’t even know where to start listing all the things I did wrong.

I had just gotten my first really BIG raise, the kind of money that someone who is paying 325/month in rent to split an apartment and doesn’t have a car or debt or school loans or pets or anything would even know what to do with.

Well, thank god one of my best friends was a realtor! She set me straight on that one.

“You know what you should do, you should buy a house!”

[Readers should now be wincing then shouting, “Don’t go in there, that’s where the monster is!” and throwing popcorn at the screen. You know what’s coming.]

Where to begin? I had only recently realized that maybe I should try to do something with my money, so I did have some money in a mutual fund [the specifics of which were probably Worst Financial Mistake #3 or #4, but we’ll get to that another day], but not enough for a real down payment. But I did have a father who would be proud that his young daughter was starting to get ahead in life, so he would help. And be paid back over the course of years later.

If you are imagining a printout of MLS listings with one really awesome place at the highest tippy top of my “affordability” and everything else on the list really crappy, you know where this is going.

If you are imagining that I had no idea that the number at the bottom of the good faith estimate was NOT what I’d actually cut a check for every month [Hello, taxes, insurance and association fees!], you know where this is going.

If you are imagining that I was now paying over SIX TIMES my former housing cost per month, you know where this is going.

If you are imagining that I let a now-former friend move into the downstairs bedroom for a couple hundred dollars a month to now make ends meet, and it was the one of the most horrible experience dealing with another human being in close quarters I’ve ever had [Helpful tip from the committee: don’t rent to unemployed jazz musicians. You have been warned], you know where this is going.

If you are imagining that this is in Seattle, and the dotcom bubble is about to burst and I was going to have to sell after owning it for less than two years so I could keep my job while my company merged with one in San Francisco [one of only a small handful out of a company of about 100, I was a lucky one], you know where this is going.

If you are imagining that my good friend massively overpriced my house to sell it, perhaps as a good samaritan because she knew I was in a bad financial way by this point, and then incrementally dropped the price a little here, a little there over the weeks [or was it months?] until it sold, you know where this is going.

If you are imagining me making payments on my house while it’s not selling while I’m paying an insane amount of rent in SF, you know where this is going.

If you are imagining that sitting down to sign the closing papers and seeing what was “leftover” after the sale was a surprise because of a numbers snafu, you know where this is going.

And yet, there’s an upside to this whole big mess. When I got married and it came time for Andrew and I to buy a house, things went very, very differently. I hadn’t yet discovered Searchlight Crusade [and if you’re going to buy a house, you need to spend some time there], but this transaction was a 180 degree turnaround from the first one, that’s for sure.

UPDATE: I want to add that I don’t really blame my friend for much of this debacle, save for treating it like a trip to Macy’s to buy jewelry rather than The Most Important Financial Transaction Of My Life. I didn’t know what I was doing, and I got the expensive lesson that I deserved. But in case you haven’t already learned: do not ever, EVER do business with a friend. The stakes are too high on both fronts. In this case, our friendship survived, but only sort of.

I thought Austin was going to breeze right past the big housing run-up/bubble/”correction” situation that a lot of areas seem to be dealing with right now … but yesterday I called the guy who does all of our remodelling, etc, and asked him about doing a job for us before the new baby comes.

He said that things were dead during the winter — almost 4 months of zero work at all — but now he’s backed up for weeks, almost all of it work for California investors who are snapping up properties here and fixing them up to flip.

This makes me nervous.

Amazingly, Andrew and I have never actually put hard numbers to our retirement goal before last night — it’s always just been “save as much as we can.” He asked me what our goal should be and I thought 2 million. So we crunched the numbers.

We took our current savings [we’re leaving out home equity/mortgage for our calculations, but I’d estimate we’ve got about 100k equity in our house], our current rate of savings, estimated Social Security income [we estimate 0 dollars], and expected annual rate of return [we looked at 4, 5 and 6%]. This puts us at the 2 million mark around 19-24 years, depending on return.

We intentionally chose very conservative numbers because we’d rather be pleasantly surprised by market returns or Social Security than the alternative. This also assumes that we never up our yearly contribution, which I certainly hope/plan to do. On the other hand, it also doesn’t account for possible financial catastrophe such as long term job loss and, uh, our children’s college expenses. Heh. [That’s not entirely true. The plan is to invest/save any future bonuses, stock windfalls and raises, so that does help mitigate the college factor.]

Since Andrew is currently 35 and I am 32, I feel like we’re doing pretty good.

Consumerism Commentary has a post today about large houses. After living in Seattle and the Bay Area for many years, when I first moved to TX with Andrew, I had to wrap my head around the idea of Big Houses.

Our neck of the woods used to be the boonies for many years — where we are specifically is still about 15% boonies, though that is rapidly changing — so almost all of the houses we looked at were built in the last 10 years. Which meant brick McMansions, the official house of Texas. I could have gotten used to it, but I really prefer something a little more homey, so we kept looking. Our agent even quickly surmised, “You won’t even look at a place that doesn’t have a large amount of mature trees, will you?” And it was true.

So we finally stumbled upon one of the rare older, more established neighborhoods and found a house that was still big by my standards — 2100 sq ft, give or take — but was about 1000 sq ft smaller than everything else we were looking at. It also had the advantage of being on an acre instead of piled up on top of its neighbors and being 50-75k cheaper than what we had been looking at. We snapped it up. [We had to outbid some lawyers for it, but that’s another post some day.]

I love our house. The “smallness” occasionally causes problems — there is very little pantry or storage area, so we have to be very creative, and we still are in discussion over which bedrooms will be used for what — but, really, I love our house.