Unnamed Eastern City – A Fine Way To Buy A House

This article on what sensible home buying should be like from ‘House Hunt Victoria’, 12 May 2011 reproduced here with kind permission of ‘HHV’.
No line ups in the rain?… No competing offers from a half a dozen other parties in the driveway?… No cellphone bids from foreign lands?… No 400K over-ask bid?… No shouting?… ‘Conditions’? [what are those? -ed.]…
The respect for the human aspect of the transaction stands out. ‘HHV’ and Froogle Scott share similarities in the way they appreciate homes as  personal artefacts.
[Note: We continue to believe that housing in Canada is an overheated speculative market, more so in Vancouver than anywhere else.]

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Buying: the search and the offer

“We’ve been at it for four long years. This search was very easy. We used a poor facsimile of VREB’s Matrix or PCS system and the MLS® website to find the houses we wanted to view. Our REALTOR® scheduled appointments. We gave her a list of 30 houses we wanted to see, 15 each day for two days. After the first day, we asked her to add 5 houses she thought we should see based on our reaction to what we’d already seen.

Day one was very fast. We’d planned to be at it for around 7-8 hours. We were done in four. Let’s just say we get to “no” very quickly. Mrs HHV came up with some handy acronyms for our listings sheets:

* NWIH = No way in hell
* NATP = Not at this price
* WAO = Worth an offer

At the end of day one we had two WAOs on our list. We repeated the process again the next day, in almost as little time. We found the home we bought around mid-day. We looked at half a dozen more afterwards. By the end of our two-days of looking we had 5 WAOs on our list and one house we thought we really wanted.

We spent the rest of that day doing what we always do when we have a big decision to make. We compared the status quo to the anticipated outcome of the action taken. Action won out. We decided to schedule a second showing and, if it showed as well the second time, make an offer. It showed better the second time.

Here’s an interesting side note: both times we viewed the home, the owners were present. Normally agents advise against this. The mobility of the owners was an issue, so they chose to stay home. We were very glad they were present. They made themselves scarce and weren’t an issue for us. But they were a big part of the gut feel we got while inspecting their home. They were the original owners and their pride showed.

When we went to make the offer our agent showed us what had sold in the neighbourhood over the previous six months. Like many neighbourhoods in Canada, prices were on the downswing. The asking price was below the assessed value, only marginally so. The home had only been on the market a few days. Our agent suggested a price. We suggested another.

The negotiation would have been very simple if the listing agent hadn’t been trying to take the day off. We had a few conditions on the offer: appraisal, inspection, financing and a change to the possession date. Our offered price was 2.6% below the asking price. We felt it was strong. Did it need to be? Given what we knew about the owners I’d say yes, it did. Given what we knew about the market conditions, I’d forgive you for telling me we paid too much.

So why did we choose to present a strong offer? Simple: the product and the people.

The house is immaculate and gives us the perfect opportunity to make it our own at our own pace. It needs nothing to make it livable today, but its old enough to make updating it worthwhile over the next 5 to 10 years. The layout is flexible. We’re a small footprint family right now, but we may not always be. The house meets both those needs.

The lot size was above average for the neighbourhood. But the home built on it was about 90% the size of many of the other houses in the neighbourhood. The price reflected the home size, but not the lot size when we reviewed comparables. We value land. We like houses, but don’t value a big house the way many people who choose to buy big homes on small lots seem to.

This house had one thing I always look for in a home: copper. If you’ve been in a new build in the last 5-7 years you’ll often see an abundance of what’s known in the plumbing world as PEX. We don’t like it and don’t trust the long term viability of it. I’d say 60% of the homes we viewed were plumbed with PEX versus copper. That was enough for us to rule them out, “good bones” and all that. All the major upkeep work had already been done: roof, siding, furnace, hot water heater etc.

This home was well-loved. Enough so that I wanted to know how it was well-loved. That was worth something to us: not leaving a distaste in the process of selling the home for the current owners. We wanted inside knowledge and were willing to pay for it.

Our agent suggested an offer price $5,000 lower than what we suggested.

The owner of the home had already decided his final price. It was $5,000 higher than our offer. When that came back we countered a matched price, but asked for some things around the property we knew the current owner didn’t want to move (another reason why we were thankful they’d been around for the viewings and we’d had a chance to ask them a few questions). We certainly didn’t get $5,000 worth of items, but we did them a service (they don’t have to try to sell the lawnmower, yard tools, gas BBQ, spare fridge etc) and we saved a bit of time/money not having to go out and try to buy all this stuff anyway.

When I attended the home inspection 5 days after having the accepted offer in place, the inspector confirmed our gut feel had been right. No home inspection will ever be “perfect,” but the total “fixes” necessary to this house are priced out under $500. Even better, the owners of the home showed me everything I had wanted to know about the house: how the sprinkler system works, how to maintain the water system, how to shut down the gas and water supplies, how to run the A/C/heatpump unit etc. We exchanged numbers and they’ll be a good knowledge source in the future should anything surprise us.

Much of the time we discuss properties here at HHV, we focus on the financial side of things. We have to in Victoria because the prices dictate us to be excessively prudent to prevent ourselves from getting overwhelmed by the emotional side of buying a home and ending up in a potentially financially ruinous situation. Buying a home is emotional though, you can see that in some of my description above. It’s been a positive experience for us thus far. We’re not in the house yet and we know there will likely be a few initial “moments” when we are, but we’re thankful that the price we paid allowed us to embrace the emotional side of the home buying experience — there’s value in that too.”