This is a story that goes back to when we were house hunting. It got brought to light because, as you’ll see if you read on, it’s a very small world!
The backstory. In 2007, before my wife and I got married, we knew that we wanted to buy a home to start our marriage and eventually raise our family. The condo that I’d previously held was nice enough but it wasn’t ideal for family living.
The housing market had already started to trend downward, at least here in Michigan. Prices had already slipped on average 10-15%. At the time, I foolishly thought that they had neared or hit bottom, not knowing that the worst was yet to come.
As an aside, I sold my condo in just the nick of time. I sold it for roughly $125,000 and it sold last year (through foreclosure) for $50,000. No other property in this story lost anywhere near that percentage of its value.
I put up the condo for sale, and it sat around not doing much of anything, which was frustrating. A couple of people came through here and there, but the lack of traffic was maddening. The realtor assured me that’s just how it was. So, imagine my surprise when one showing turned into an offer, one that was actually pretty good and that we accepted.
This meant that we needed to find a home. And fast! We knew that the possibility was there that we might need to look for a house, but the way things were moving so slowly, we hadn’t put that much effort into it. We didn’t want to get into a situation where we spent a lot of time finding a house we liked, only to have it not be there if the condo took a long time to sell.
Once we received and accepted the offer on the condo, we kicked it into overdrive. We knew the area where we wanted to be, taking into consideration proximity to our families, school districts, property taxes, the reputation of the city, and such.
We looked at dozens of homes, but really had it narrowed down to three particular houses:
- The house that we bought and live in today
- Another house that we would have likely moved into had our current house not worked out, but I know we wouldn’t have been happy with.
- The one that got away.
This is the story about house number three, the one that got away.
In the midst of going through all of the houses that fit various things we were looking for, we somehow came across a ‘For Sale By Owner’ (FSBO) house. It’s been five and a half years, so I honestly cannot even remember how it came to pass. I’m thinking that maybe our realtor had given us information about another house in the neighborhood and we happened to see the FSBO sign, but I really don’t remember.
In any case, from the outside, the house looked great, so we took it upon ourselves to call the number and arranged for a showing. What we saw, we really liked.
The pros: The house was very well kept up, it had large bedrooms, it had a new roof, and had many decorating features that were current and up to date.
The cons: It was a three bedroom ranch. Ideally, we wanted four bedrooms, but we liked the layout of this house and thought we could make it work. The other con: price.
Our ‘cap’ on a house was $275,000. That assumed that we would have to put some renovations into the house, since many of the homes we saw would need some sort of work, whether that be a new roof, new carpet, or something else that would likely add at least $10,000 to the purchase price of anything that we bought.
I had this limit in place also assuming the price per square foot that we’d likely be paying. This number was assuming we would have bought a house around 2,200 square feet or so.
The house we were looking at was a ranch, and at 1,850 square foot, was big for a ranch, but still smaller square foot wise than many of the other homes we were looking at.
The price and offer. At $299,000, the house was priced at a much higher per square-foot level than any other home we had seen. Now, the house was in great shape and would need no renovations after we moved in, so that $10,000 cost I’d been anticipating would not be in play, but it was still way higher nonetheless.
We decided that we liked the home and wanted to make an offer, so we contacted the owner via e-mail and offered $251,900. We thought this was a fair offer based on the square footage, comparable sales in the area, plus we knew that by selling it themselves, they would be keeping a good portion of the money that would otherwise go to a realtor.
Their response. She reviewed the offer and explained that they had paid $270,000 several years before (which I already knew due to public record), and also explained that by having put in many of the improvements (roof, carpet), that they would be selling it for a loss at anything less than $285,000. She then indicated that was their final offer.
I had been working with our realtor, who although he stood to make nothing on this since it would be handled privately, was still gracious enough to offer his opinion. He agreed that the price we were offering was fair, and that even their counter-offer was over-priced. He also knew how the real estate market was going and did not think the house would hold it’s value.
Still, we countered with one last offer of $259,900. She sent a message thanking me but declining the offer. With no further counter (plus knowing that the counter was our absolute highest price on that house), we knew we were done.
By the time this came to a conclusion, we had already found the house that we live in today. We attempted to play the fact that were looking at this other house as leverage to accept the private sellers offer, but it didn’t really work, largely because she held a belief that her house was ‘better’ and ‘worth’ the difference.
The aftermath. We actually paid more for the house we’re in, but at 2,300 square feet, it was competitively priced from a per square-foot level, plus it also fell into the ‘not needing any work’ category. So, it was worth it, and now that we have our family, we know that the other house would have already seemed tight by now. With two kids, three of the four bedrooms are used, and we like having a spare room. Plus, our yard is over twice as big, we have a three-car garage (the other had two), we have over 20 mature trees on our property, and we live on a lower traffic court.
Even though our house lost value after we moved in, it was to a much smaller percentage than either the condo or ‘The One That Got Away’.
We tracked the history of that house, and what we found was this:
Our offer was in April 2007. They kept it up for sale by owner for a few months afterward. In November 2007, they listed it with a realtor for $279,000. They started dropping the price around $5,000 a pop every month or two until June 2008 when it was down to $240,000 (things had been declining big time by then). It sold in September 2008, almost a year and a half after our offer, for $220,000. Zillow estimates it today at $204,000.
Our New Pre-School Mom. The reason I’m telling this story is because we just got an e-mail that a new kid will be joining the co-op pre-school class for Little Boy Beagle come January. This also showed the name of the mom, and it’s no other than the woman who lived there, and who we did the negotiations with. I’m not sure if she’ll even remember us, but the name has always stuck out in my head. If she did remember us (or if we mention to her who we are), it would be interesting to see her reaction. Had she accepted our final offer, they would have yielded $40,000 more than they ended up getting, and a year and a half sooner. Actually, it would have been more like $50,000 because they ended up having to pay the realtor fees after all.
Obviously it was not our fault that they did not accept our offer and that the market fell so that they had to take that much less, but people are irrational and she could deflect some of the ‘blame’ for that on us. You never know.
What Would Her Story Say? In circumstances like this, I often wonder how she would write this story. Would she regret not taking our offer? Would she feel at any point (then, now, or both) that we’d been low balling her? Or maybe it didn’t matter? Maybe the house that they eventually moved into was purchased at such a significant discount that it offset the lower price they eventually had to take.
Maybe one day we’ll find out.
Readers, do you have any stories about homes and ‘the one that got away’? Looking back, do you regret it not working out or did it end up working to your advantage?Copyright 2014 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.