Housing Hunt Update

As you may recall from this post, I got my real estate broker's license back in February, mainly so that we could save on the commission when we buy a place. The house buying/selling season began in earnest in mid March or so, with very few listings during the winter months. Since then, we've been actively looking for a place to purchase. However, while we've usually seen a couple of new listings each week that merit a look, there have been very few places that we've seriously considered putting offers on, and no places that we've really loved. Despite that, we have actually put my broker's license to use and written a couple of offers.

First, in early April, we saw this single family home.



We really liked the fact it had a sun/family room that would have been perfect for Ruby as a playroom. There was also a fairly large yard (by SF standards) with a hot tub. In addition, the kitchen was nicely renovated a few years back. On the downside, the bedrooms and bathrooms were on the smaller side. We knew that it would likely sell quickly and for at least as much as the asking price of 1.399M. While we weren't willing (or able) to bid anywhere close to asking, we decided to put in offer anyways and see what happened. Well, what happened was that they received a total of 9 offers (!!!), and of course, ours (at 1.3M) was by far the lowest. In fact, the "winner" of the house paid significantly over the asking (almost 12%). We knew by the level of interest at the open houses that this place would be popular, but final result definitely surprised us from a quantitative prospective. I guess there's few enough properties in the city in decent neighborhoods, especially single family homes, that someone is always willing to (over)pay.

The second purchase offer we wrote was just in the last week. We first looked at this 3bd/2ba condo more than a month ago.



We thought it was a bit small and definitely overpriced, but really liked the modern layout, amazing kitchen with views, and ample closet space. There was also a shared yard and patio which had been recently renovated by the sellers, which would have worked well for BBQs and for Ruby to run around and play in (however, she's not even close to standing on the own yet, much less running). We decided at that time that we would more seriously consider smaller places like this once we get closer to the end of the season, as we really need to move this year. A month, and many open houses later, we still hadn't found any other places we seriously liked so we decided to look at this condo one more time and see if the sellers were willing to negotiate. This time, at the open house, the listing agent was there by himself, with not another soul in sight, and he made it clear that the sellers were ready to deal.

Shuyi and I debated a little bit about if and how much we should offer. Finally, we ended up offering only 1M for the place, which is significantly under the asking of 1.149M, but a very fair price for a condo of that size (~640/sqft), as well as when considering what the seller paid in 2007, at pretty much the peak of the market in the city (the national peak was about a year earlier). While we would have been okay with paying a little bit more, our main concern was that since we are only about a third of the way into the season, we'd have a pretty good chance of finding a place that would be better if we wait. The only way prevent buyer's remorse would be to get a very good deal. We didn't think there was much chance the seller would take our offer. However, since they weren't getting any other interested buyers, we figured they would definitely counteroffer; the only question was the number in the counteroffer. The sellers ended up only offering 49k off list, at the high end of the range for reasonable counteroffers. The listing agent suggested we counter the counter, but based on the amount, there was no way we could have arrived at a workable number for both parties. Therefore, we ended negotiations right then and there, and the sellers ended up dropping the list price immediately to 1.099 ($1000 under their counteroffer to us!).

So, while our housing search has been mostly frustrating so far, my brokers license may end up proving its usefulness in a more unexpected way. My parents recently decided that they'd like to eventually retire in the bay area, to be close to us and more importantly, Ruby and other future grandkids. Since prices have leveled out and interest rates are very low, they want to buy a house now (and rent it out in the interim) rather than wait until they are actually ready to retire and move. Places in SF or any close suburb are still out of their price range, but the exurbs have gotten much cheaper. Houses in places like Vallejo, where they have decided to buy, have dropped some 65-70% from the peak. Almost every single sale is either a REO (bank-owned foreclosure), or short-sale. Just yesterday, I helped them put in an offer on a 4bd/3ba bank-owned house that's about 2800sf on a 7500sf lot, listed for only $359,900. Why can't places in the city be that cheap! If it goes through, my broker's license will end up making me (or rather, saving my parents) over $11k in commission, for only a few hours of my time. Hmm, perhaps I'm in the wrong business.