If you bought a house recently, tell me your story! (Seattle: rent, mortgage)

[CyclingChick]

We lived in Seattle for nearly 10 years when my husband lost his job and we moved out of state. He really wants to move back, but I personally think the housing market is a deal-breaker.

If you've bought a single-family home in the last year or so, how long did it take? How much did you have to compromise on what you wanted? And lastly, did you pay over the asking price?

Thanks!

[homesinseattle]

Home buying is not for the faint of heart these days around here. In central Seattle and Eastside neighborhoods, homes selling for 10-15% over list price with multiple offers are not uncommon. Hiring within the local job market is very strong, interest rates are quite low, many feel this area is a nice place to live, limited supply, all factors that are contributing. If you come from NYC, LA, SFO, Europe or Hawaii, it will feel affordable here. If you are from anywhere else, it will seem expensive.

To succeed, you really need a firm understanding of all the elements of an offer (strength, creativity, rent back, how your lender is perceived and why that matters, elements and timing of an essential pre-inspection, nuances of how your finance contingency is perceived, personal letter, how to compete with a cash offer, the often unmentioned importance of your realtor's reputation and working relationships with other realtors of the listings you make offers on). You need great research, strong earnest money and a decisive manner when it comes to "go" time. Even with all of those things, you have to be prepared to lose and try again. I would say my average client loses at least once before we succeed. Many buyers lose five times, so I'll take one loss . Normal closing time around here from accepted contract to keys is about 4 weeks.

You asked also about compromising what you want. It is wise to consider, sometimes buying things that need a little carpet, paint or a bit of a facelift can help. I have had buyers accept one bathroom with the ability to add one later creatively. Even if the home is less than perfect, you will have competition, but perhaps three other parties offering instead of 12. This is common sense also, the more you move away from the center of town, the more house you get for your money, square footage wise. This also earns you a longer commute. I vote for closer in, less square footage, a place that needs some cosmetic work. With traffic being a real issue here, location affects quality of life.

[Kayela]

We lost 5 times and managed to buy one after ~4 months. We have excellent credit, had a large down payment, a responsive mortgage agent who wrote a strong pre-approval letter (and was willing to tailor it to the seller), and are very decisive and flexible. The whole thing was time-consuming, disheartening, highly stressful, and just plain sucks - that's coming from someone who doesn't make emotional decisions. No matter what you do it seems like there is always someone, with more cash to throw at the deal, willing to go higher than you can. Most of the time we lost out to all cash offers.


While we didn't have to compromise on location, we did have to go to a slightly smaller, cosmetic fixer in order to have enough extra $$ that we would be ok if the price came in so high above asking that we'd need to bring cash to the table (fortunately it didn't, and it only went for 10% over - thank god for dingy flat yellow paint, god awful carpet and funky cooking smells). In the end we compromised on 1 less bathroom than we wanted, and bought a place that needed updating vs completely remodeled. However since we spent significantly less than our upper limit, and are in the neighborhood we want to be in - we're ok with that. Was this our 'dream place'? No, but in ~2 more weeks, after we're done with updating it, it will be. And no, we really, really didn't want to remodel, but anything 'move in ready' had so many bidders and was going for so much over that we were simply not going to be able to compete (and be in the area we wanted).

[robrath]

I went through this mess late last year, mostly hunted around for a few months to see what the market looked like before jumping in.


Month 1: Looked at multiple homes mostly new construction near Mill Creek, prices were ok, tiny lots, builder still had lots available so I decided to keep looking. Went ahead and got a soft prequalification letter from my bank for the top end of that builder's line.


Month 2: Looked at multiple homes now a good mix of new and existing around mid Bothell to south Bothell, and Lake City, Shoreline, and Lynnwood. Noticed prices were higher now more south I get from Mill Creek, so I upped my prequal 150k to stay competitive, made a few offers and lost outright or was placed on backup offer status. However none of my offers were above asking price. I also never proposed any waivers such as inspection. Couldn't waive financing even if I wanted to, I'm not one of the tech $ guys.


Month 3: Looked at Kenmore, Kirkland, Bellevue, upped my prequal another 150k and now made it a firm prequal. Now seriously bidding, made bids continuously for 2 weeks straight, started waiving inspection towards the end and started escalating up to 10% over depending on the house, some of my escalations were as little as 1% over, some were 10% over. I'd say a good 80% of my competition were cash offers. My last offer I waived inspection, escalated ~2% past, wrote a letter to the owners, put down 10% earnest $, and crossed my fingers. I was told later it was me against an all cash offer who also offered 2 weeks closing, but apparently I was close enough to the cash offer that my letter to the owners put me over and they sold to me. I did have to promise I'd close within 4 weeks or waive my earnest $, I cracked that whip with the lender like you wouldn't believe, it helped a lot to be already firm prequalified versus just a soft prequal, saved at least 2 weeks worth of paperwork. Ended up closing in 3 weeks.


Now I'm glad I'm finally done with this mess, good luck to you!

[CyclingChick]

Ugh, this sounds terrible. We are OK with cosmetic fixer but some of things I can't give up are 3 bed, 2 ba, garage and good schools.


We are trying to look at homes with an asking price of 600k or less so we can bid up if necessary, but there's just not much in that range. The job would be in Cap Hill and most of the areas we're looking at are an hour commute already...hubby has a nasty job right now and he's hoping the new one will provide more work/life balance, but a crazy commute might not help the cause.

[homesinseattle]

Cycling chick, take a peek at Shoreline, good schools and doable with your price range.

[noah]

We didn't let that stop us moving back to the PNW, just rented instead. Yes, prices have gone up a lot in just the 6 months since we got here but I wouldn't want to buy in such an unbalanced market where there is only one month of inventory on the market and we are 8 years into an expanding economy.

[CyclingChick]

Noah, I see your point but we've been renting for nearly 5 years now and are anxious to buy (we would've been able to pay a good chuck of mortgage with all the rent we've paid...).

[robrath]

Originally Posted by CyclingChick

....The job would be in Cap Hill .....

From the east side via a Park N' Ride as far out as Woodinville, you will be in the Capital Hill area in about a hour using the bus. I moved from a place of very limited public transportation to here and I'm taking full advantage of it. Bought my Orca card and just ride the bus into downtown, gives me 2 hours out of the day where I'd be sitting in a car doing nothing else to read, listen to music, play on my phone, etc. Not to mention parking downtown costs an arm and a leg if your job doesn't subsidize it. Saves me $ on gas as well.


How big of a house were you looking for? I restricted my search to 1980 and later due to concerns with my young kids and lead paint / asbestos. 600k should get you a decent sized house (~2000 sqft give or take a few hundred) in the Shoreline to Woodinville areas. I've not experienced it but many here say stay away from route 99 if you can.

[noah]

I agree, its not for everyone if you can afford to buy and have that strong desire to do so sometimes you just have to go in that direction, although its highly recommended to wait a year when your moving to a new city so you can really get to know the areas you think you like.

I would say though that the phrase "throwing away your money on rent" that many use (you didn't) is mostly marketing talk coming from the home industry. Happiness aside (which you can't really put aside in reality) from strictly a financial perspective a good case can be made that your better off renting and investing that down payment you would have used on buying a place. With the traditional 30 yr mortgage its more like exchanging the rent payment for an interest payment to the bank until about year 16 of the mortgage when you finally pay more in principal than interest each month. Of course if you had bought 6 years ago in Seattle these guidelines wouldn't apply cause you did very well.

Originally Posted by CyclingChick

Noah, I see your point but we've been renting for nearly 5 years now and are anxious to buy (we would've been able to pay a good chuck of mortgage with all the rent we've paid...).