The Home-Buying Decision Making Process
While I represent many people in the purchase and sale of real estate, I only see a part of the transaction. That's the part that is done in public. The searching, the negotiation, the inspection, the closing. And while there is plenty of emotion there, I'm not sure that the majority of emotion and turmoil is ever revealed to a Realtor. I believe that happens behind the scenes. As a result, we can't always give the kind of advice and, maybe solace, a client can really appreciate. Often it's been so long since we bought and sold the family residence that we have forgotten the experience. Kind of like that root canal that has faded from memory (good or bad). I hope this offering will assist would-be buyers and sellers, and it might jog the memories of my associates.
My wife and I have decided to buy and sell, in that order. It wasn't the original plan. So this will be a multi-piece article that I hope captures theentire process, behind the scenes. I won't tell you about all the crying that takes place at every stress point in the transaction. After all, my wife says I look ridiculous when I cry!
This first segment is going to cover the decision making process. I'd like to report that the decision 
began with a thoughtful weighing of the pros and cons, consideration of market trends, and a detailed analysis of the finances. Truth be told, like many home purchases, it was more the spawning of a dream, and a bit like the story we learned in grade school; I think I can, I think I can. My wife and I have wanted to move up (only slightly) for some time, and in so doing, get rid of the stairs we have to climb by moving into a single-story. Our current house is great (shown here to the right). We also wanted to add some space between ours and other homes in the neighborhood so we could sing in the garden without punishing the neighbors.
We started dreaming last summer. We'd look at great homes, and then talk ourselves out of it. With the market soft, we would have to make a contingent offer. For those new to buying and selling homes, contingent means that a seller would agree to wait for us to sell our home to close on theirs. That of course runs the risk of another buyer "bumping" us from the home, and us being left with our own home on the market and nowhere to go. (I can remember my father gathering his five children around the unexpected for sale sign in the yard, and with great concern in his eyes, asking us "so where are you going to go now?" Not really, but if you can imagine it, it would have kind of been like that).
So we'd resolve to stay in the current, equity strong home for the next ten years. A week later, my wife would have another home or two to go look at. And we'd start the process all over. Yes, no. Stay, go. It wasn't that we were fickle. It was that we knew what we wanted but knew we couldn't afford it. We were limiting ourselves to what we could afford and so far, what we wanted and what we could afford never crossed paths.
Just a couple weeks ago, we stumbled onto it. The near-perfect house. This might be a good time to mention that I believe there is no such thing as the perfect house. There will always be trade offs. You might think that building a home would allow you to create the perfect house, but I'd argue that when they generally cost 30% more than you planned and take 30% longer to build than you planned, you wind up having to make trade-offs, and what you end up with is a near-perfect home.
So here it was our potential new home. It has a great view of the valley below. Not the 4 bedrooms we were looking for (we both felt we each needed a home office) but man, what a view. We can share an office, after all. And enjoy that view. Of course the kitchen is laid out a little funny. But look at that view! It isn't the water view we always wanted, but this was running a close third.
It's obvious to us that the view started driving the transaction, and of course that desire was (is) pure emotion. There are lots of great things about the house, but its emotion that makes that house the house. But with a reputation to maintain of professionalism and dogged attention to detail, I forced my client to take the time to do a thorough cost-benefit analysis. She took at least five minutes. And of course, the conversation kept coming back to that view! What was a professional real estate advisor to do when faced with such passion and commitment? I wrote up an offer.
Things are slow here (I know, a blinding flash of the obvious) and builders want these homes off their inventories. The original price of the home was $100,000 more than it is today. But considering the circumstances, I put together an offer with a 4-pronged approach:
- It was lower than asking, but only about 2% below. And below market value.
- I found the resources to avoid making my offer contingent
- I offered a quick close.
- I sent a memo to the sales person/builder, explaining that we were doing all we could to scrape the cash together to avoid a contingent offer, explaining that I might be able to close in a mere 2-weeks but definitely before the end of the month. I also explained that I was going to end up with a house to sell in a tough market as a result (share the pain) and I praised him on the great work he had done on the house. The offer was accepted.
I can't over-stress the importance of sending a letter/memo along with most offers.
As I mentioned, we are faced with having to sell our home as soon as the purchase is made. To avoid the barrage of e-mails from my associates advising me to hold on to the rental property, let me explain. We thought about using it as a rental, but instead we'll likely set my son up in a home a little down the road, because this house isn't the right one for him. So we'll convert the cash to investment property again, just not this house.
The walk through with the builder is later today, so photos of the new house next edition. At that time I'll update you on the inspection process we'll go through (it might be a bit more than usual), due to concerns about the homes position on the hill.
Tune in next time!
When you talk real estate, Talk to Top! www.TALKtoTOP.com
Al "Top" Stickland
Riley Jackson Real Estate
