Thursday, September 03, 2009

The House Hunt Continues

Another week and the house hunt continues. So what's new? Not enough, unfortunately. We have yet to put down another offer on a house after our first and only attempt failed. There were a few interesting developments though:

Limited Supply - I would think that in this kind of market there would be a larger supply of homes for sale. Strangely, in the areas where we are looking only a couple of new houses that broadly fit our needs come on the market every week. Last week I ran across some statistics that showed that the average time houses were spending on the market in Santa Clara County (where we are house hunting) is over 80 days... Maybe people are sitting on houses if they can afford to wait out the buyers market. If that's their strategy, I think they will have to wait for a long time.

More Open Houses - nevertheless, this weekend we went to a couple of open houses. One of them, which looked good on paper - had 5 bedrooms. Of course the listing didn't mention the fact that two of those bedrooms were literally under ground... one of these underground rooms actually had a small window that opened up underneath the deck in the yard... It is really quite amazing to me what crazy layouts some of these houses have. The other house we saw was too small for us, was over 50 years old and looked like it was never remodeled. It also smelled like an ashtray. We ran out of it in about 3 minutes.

Haven't Given Up Yet - remember that house we put an offer on? Well, it still hasn't sold and we asked our agent to go back to speak with the sellers' agent to see if anything could be done. Last night our agent called me back saying that the sellers are willing to reduce their price by $20K below their previous counter-offer, but that this was their best and final offer. They would also expect us to take the house as-is. If we decline and they receive no other offers, supposedly this weekend they will be taking the house off the market.

This is a really excellent house and at the price it's being offered it's probably a good long term buy. The only problem is that this latest offer is STILL about $50K above our budget. We simply can't afford it.

I am entertaining the idea of a final hail Mary. Perhaps I'll ask our agent to try to set up a meeting for me with the sellers' agent. Yes, it's unorthodox, but what do I have to lose? The house has been on the market for nearly 5 months, and has not garnered any offers. Holding the house - which was no doubt an investment property - is only going to generate further losses for the sellers. There is no way that they could rent the place at a price that will cover their financing costs and taxes on the place, plus a rapid increase in prices is really unlikely to happen any time in the next several years. Look at where tech stocks are 9 years after the tech bubble burst...

It's not that I am trying to negotiate hard, we simply cannot do the deal at the price that is being asked, and apparently neither can the sellers. The market is telling the sellers that their asking price is not right, but they are refusing to listen. I think there is a win-win deal to be had here, if the sellers accept the new reality of the market.

Maybe I can get them to see the light on this, but I am not betting on it.

Any advice, ideas and suggestions would be appreciated.

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Carlyle said...

Just remember, patience is a virtue. If you're currently renting and the rent is reasonable (which it should be given the market) you have the luxury of time. Contrary to what your real estate agent might be telling you there's few signs of any home price escalation on the horizon. According to this source;

there's plenty of homeowners in distress in your area. Those foreclosures and a weak economy will continue to be a drag on housing.

In my experience shopping for a house, a mattress and a vehicle rank at the top of the list of unpleasant tasks that have to be done but are no fun.

Hang in there!

Oh, source of my bias towards real estate agents? It's that I'm hearing the same mantra today as I heard at the top of the bubble; "There's never been a better time to buy a house!"

Kim Stiens said...

I likes your strategy. I would go to the people with exactly what you said, but do so in a non-aggressive way; ie, comment that it is an open offer. Give the price you can afford, explain, and ask them to think about whether they are willing to wait. I think that if you put the ball in their court, but make it clear that as long as you're still looking it's an open offer, they might be more receptive?

Good luck, and I hope that the house you love finds you soon!

Anonymous said...

Your idea is an aggressive step. If you do it be mindful of your relationship with your realtor. If not done the right way, she might take offense that you're doing her job or that she's taking a back seat. Just something to keep in mind for a person who will possibly be representing you on other houses too.