Real estate really is a game. It's a game where the rules are constantly changing, and no two rounds are the same. I've spent well over a year reading up on every aspect of the process, both nationally and locally, and still was regularly surprised by what happened during my own search.
Case in point: about a week after I turned down (or was rejected by) the Mateo Avenue condo, I got a call back from Regina. The sellers were wondering if I would be interested in seller financing. I was fairly familiar with this idea based on my research; the basic idea is that, since I had offered $X and they wanted $X+30k, they would lend me the $30k in a separate loan. There can be some advantages to seller financing - you can get a better rate than from a bigger lender, and you can more easily get approved. I figured that the sellers probably realized that I was the only serious buyer they had encountered, and that they thought I wouldn't go above $X because it was the most I could afford. In reality, I could afford more than their asking price, I just didn't think it was worth that much. I wasn't interested in taking out a $30k loan for an overpriced home.
I told Regina that I wasn't interested in financing, but, if they were willing to drop their price, I'd still be interested in the property. We went through some back-and-forth, and they ended up coming down $20k. That was still $10k over my initial offer. I mulled it over for a while - it was more than I thought it was worth, but it seemed like this might be my last and only chance to get a decent condo that I could afford in the area I wanted. In the end, I decided that I'd go for it.
Rather than put together a new offer, we got back a counter from the sellers with the agreed-upon price. It also came with an "as-is" addendum. I talked with Regina for a while about what this meant - basically, it said that the sellers wouldn't be making any repairs for stuff that had already been disclosed or for "minor" problems found during the inspection. It's intended to acknowledge that this is an older property and that stuff won't be perfect, and that I'm buying it with that understanding. I wanted to make sure that I wouldn't be giving up any rights to ask for repairs or credits for major issues found during inspection. I was safe on this front, so I signed the counter and the addendum, and we entered contract.
Showing posts with label offer. Show all posts
Showing posts with label offer. Show all posts
Friday, November 12, 2010
Friday, October 29, 2010
Wind Up
Back to the home-hunting story:
I let a month go by after the Mateo Avenue condo hit the MLS, and finally put in an official request to tour. Once again Matt took care of me; we had gotten to know each other pretty well by this point, to the degree that we started to reminisce about the first property I'd seen way back in the previous year.
Before the tour, I'd spent some time walking around the neighborhood at different times of the day and different days of the week. I was happy with what I had seen - it isn't as fancy as the streets west of Magnolia, but the area was kept up well, there was a good amount of activity on the streets, and overall I got a good vibe off of it. I wandered farther afield, across the tracks, then back again and around the other streets. My favorite aspect was still the access - it's a good walk to the train station, and even shorter to Safeway, Trader Joe's, and the excellent public library - but I dug the spot itself as well.
We learned that a tenant occupied the unit, and waited while she got the kids and headed out, then moved inside. Yup... definitely a tenant and not the owner. Even though the tour had been scheduled for a few days, the place was pretty messy, with half-eaten pizza (at nine in the morning?) and croissant all over the kitchen. Still, by this point I'd gotten pretty good at zeroing in on the important stuff and ignoring the rest. I'd learned to pay good attention to Matt, too, and picked up on some of his observations as well.
Overall, it was nice - not a dream unit, perhaps, but one that definitely fit everything I'd been looking for, and a lot of stuff that I'd been hoping for. It had two bedrooms, which is almost impossible at my budget in Millbrae. It also had two baths - not very useful to me, but the second would be handy if I ever got a roommate or long-term guests. The kitchen was good - it didn't have a spectacular gas oven like the newer condos I'd seen, but it had plenty of cupboards and counter space, which had been fairly recently renovated. It had a nice big balcony - the view is of the back of a big-box store, which isn't great, but on the plus side there's a lot of privacy (no windows facing me), a lot of sky (no other buildings nearby), and if you look up a bit, nice partial views of the Millbrae hills and San Francisco Airport.
I spent more time this go-around than I had on my open house, and Matt and I chatted a bit. We agreed that the unit was overpriced, but otherwise fine - considering that it was 30 years old, it was in quite good shape.
I kept on pondering everything, and eventually decided to go for it. I'd put in a fair offer for what I thought it was worth, and see what happened. At worst, the sellers would just say "no," and at least I'd know to give up on it. If that happened, I was ready to restart my home search or just resign myself to renting for another five years - like I said in a previous post, I'd taken a full inventory of the Millbrae condo market, and seen that there just isn't much out there.
Once again, I submitted the offer wizard on the website. This time Regina got the ticket. As a side note, the wizard is still a bit mysterious to me. From my early reading on the Redfin web site, I had been under the impression that when you start an offer, you can choose which agent will represent you. That never happened with me, though. I'm guessing that if you had someone who you really wanted to use in particular, you could enter that in the notes field and get them. I now think that by default they just hand out the requests to whoever is available.
Regina was also good - as with Sean, she contacted the listing agent to find out the seller's situation and figure out what the timeline would be like. She also sent me a list of comparable properties along with her analysis of the price. She had a higher price in mind than I did, and with some good reason - her comps included recent condo sales near 280, which I had discounted because of how far away they are, but since most people buy into Millbrae for the school district, it seemed valid to include them. I pointed out another sale that she hadn't included - one which was quite a bit bigger, but sold for noticeably less, and was closer to this property than the other comps. She agreed that that was a good comp. I re-ran my numbers taking all the data into account, and settled on a fair price that was about 7% under the seller's listing price.
There were a couple of odd things about this transaction. One early issue was the disclosures; on previous offers, I had received disclosures early on and been encouraged to review them prior to making an offer. This time around, Regina urged me to put together the offer prior to receiving the disclosures. Again, that seemed strange - if there was anything in there that was a turn-off, then I'd be wasting everyone's time by making an offer; and, from the seller's perspective, it seems like they'd want me to know everything I could up front. If I make an offer for $X, based on all the disclosures, and they accept, then I can't come back later and ask them to take off $Y due to issues that they had disclosed. On the other hand, if I make an offer for $X without any disclosures, then even after they accept, I can ask them to take off $Y to deal with things that they already knew about; this makes it harder for the seller to compare offers, since different buyers will grade issues differently, and they run the risk of accepting an offer that the buyer will end up backing out of altogether later on.
In any case, I did end up getting the disclosures just prior to when we were going to put in the offer, so I did get a chance to read them. This should have been a good clue of how the process would continue. Everyone on the selling side was somewhat removed from the transaction - the listing agent was a part-timer who was helpful but not always quickly responsive; the sellers didn't live in the property; and so on. I think that if they had been a bit more organized, I could have gotten the disclosures sooner and moved forward more quickly.
In any case, the disclosures were fine, far less scary than the Palm one. Bay Area disclosures are fairly long, with a good amount of boilerplate, but still well worth reading. The seller fills out a long list of questions, mainly yes/no with space for explaining negative answers. It covers things like structural defects, neighborhood nuisances, odors, and so on. I learned the details about some recent renovations, which was helpful. The disclosures also include observations from the listing agent as part of their walk-through. In my case, there weren't any bombshells here, just a few fairly minor things that we had noticed during my tour - a missing lock on the balcony door, for example. Nothing seemed like it would seriously ding my offer price, so I gave a thumbs-up, submitted the offer, then crossed my fingers and waited.
I let a month go by after the Mateo Avenue condo hit the MLS, and finally put in an official request to tour. Once again Matt took care of me; we had gotten to know each other pretty well by this point, to the degree that we started to reminisce about the first property I'd seen way back in the previous year.
Before the tour, I'd spent some time walking around the neighborhood at different times of the day and different days of the week. I was happy with what I had seen - it isn't as fancy as the streets west of Magnolia, but the area was kept up well, there was a good amount of activity on the streets, and overall I got a good vibe off of it. I wandered farther afield, across the tracks, then back again and around the other streets. My favorite aspect was still the access - it's a good walk to the train station, and even shorter to Safeway, Trader Joe's, and the excellent public library - but I dug the spot itself as well.
We learned that a tenant occupied the unit, and waited while she got the kids and headed out, then moved inside. Yup... definitely a tenant and not the owner. Even though the tour had been scheduled for a few days, the place was pretty messy, with half-eaten pizza (at nine in the morning?) and croissant all over the kitchen. Still, by this point I'd gotten pretty good at zeroing in on the important stuff and ignoring the rest. I'd learned to pay good attention to Matt, too, and picked up on some of his observations as well.
Overall, it was nice - not a dream unit, perhaps, but one that definitely fit everything I'd been looking for, and a lot of stuff that I'd been hoping for. It had two bedrooms, which is almost impossible at my budget in Millbrae. It also had two baths - not very useful to me, but the second would be handy if I ever got a roommate or long-term guests. The kitchen was good - it didn't have a spectacular gas oven like the newer condos I'd seen, but it had plenty of cupboards and counter space, which had been fairly recently renovated. It had a nice big balcony - the view is of the back of a big-box store, which isn't great, but on the plus side there's a lot of privacy (no windows facing me), a lot of sky (no other buildings nearby), and if you look up a bit, nice partial views of the Millbrae hills and San Francisco Airport.
I spent more time this go-around than I had on my open house, and Matt and I chatted a bit. We agreed that the unit was overpriced, but otherwise fine - considering that it was 30 years old, it was in quite good shape.
I kept on pondering everything, and eventually decided to go for it. I'd put in a fair offer for what I thought it was worth, and see what happened. At worst, the sellers would just say "no," and at least I'd know to give up on it. If that happened, I was ready to restart my home search or just resign myself to renting for another five years - like I said in a previous post, I'd taken a full inventory of the Millbrae condo market, and seen that there just isn't much out there.
Once again, I submitted the offer wizard on the website. This time Regina got the ticket. As a side note, the wizard is still a bit mysterious to me. From my early reading on the Redfin web site, I had been under the impression that when you start an offer, you can choose which agent will represent you. That never happened with me, though. I'm guessing that if you had someone who you really wanted to use in particular, you could enter that in the notes field and get them. I now think that by default they just hand out the requests to whoever is available.
Regina was also good - as with Sean, she contacted the listing agent to find out the seller's situation and figure out what the timeline would be like. She also sent me a list of comparable properties along with her analysis of the price. She had a higher price in mind than I did, and with some good reason - her comps included recent condo sales near 280, which I had discounted because of how far away they are, but since most people buy into Millbrae for the school district, it seemed valid to include them. I pointed out another sale that she hadn't included - one which was quite a bit bigger, but sold for noticeably less, and was closer to this property than the other comps. She agreed that that was a good comp. I re-ran my numbers taking all the data into account, and settled on a fair price that was about 7% under the seller's listing price.
There were a couple of odd things about this transaction. One early issue was the disclosures; on previous offers, I had received disclosures early on and been encouraged to review them prior to making an offer. This time around, Regina urged me to put together the offer prior to receiving the disclosures. Again, that seemed strange - if there was anything in there that was a turn-off, then I'd be wasting everyone's time by making an offer; and, from the seller's perspective, it seems like they'd want me to know everything I could up front. If I make an offer for $X, based on all the disclosures, and they accept, then I can't come back later and ask them to take off $Y due to issues that they had disclosed. On the other hand, if I make an offer for $X without any disclosures, then even after they accept, I can ask them to take off $Y to deal with things that they already knew about; this makes it harder for the seller to compare offers, since different buyers will grade issues differently, and they run the risk of accepting an offer that the buyer will end up backing out of altogether later on.
In any case, I did end up getting the disclosures just prior to when we were going to put in the offer, so I did get a chance to read them. This should have been a good clue of how the process would continue. Everyone on the selling side was somewhat removed from the transaction - the listing agent was a part-timer who was helpful but not always quickly responsive; the sellers didn't live in the property; and so on. I think that if they had been a bit more organized, I could have gotten the disclosures sooner and moved forward more quickly.
In any case, the disclosures were fine, far less scary than the Palm one. Bay Area disclosures are fairly long, with a good amount of boilerplate, but still well worth reading. The seller fills out a long list of questions, mainly yes/no with space for explaining negative answers. It covers things like structural defects, neighborhood nuisances, odors, and so on. I learned the details about some recent renovations, which was helpful. The disclosures also include observations from the listing agent as part of their walk-through. In my case, there weren't any bombshells here, just a few fairly minor things that we had noticed during my tour - a missing lock on the balcony door, for example. Nothing seemed like it would seriously ding my offer price, so I gave a thumbs-up, submitted the offer, then crossed my fingers and waited.
Friday, October 1, 2010
Scared Off
Like I said: far too little happened, then far too much.
I'll skip my description of the remaining units at Palm Avenue. I eventually did decide to start an offer on one of them, a short sale. It seemed perfectly situated - top floor, corner unit, views of the hills and the park - and I thought it would be worth the hefty price and HOA fee, despite the fact that it wasn't in great shape. (It wasn't decrepit or anything, but the doors stuck, and was really cluttered.)
I did the Redfin offer wizard thing. This works pretty well. Because this was a short sale, it wouldn't fit into the normal Redfin model - typically they refund up to 50% of their commission, but it's only 15% for short sales. Their web site says that these deals are handled by special affiliated agents, but in my case it was a Redfin team member, Sean Sullivan. He was extremely nice and helpful, like everyone I met at Redfin. He talked me through the process, got the disclosures, and sent them over.
Well.
I'd been cautiously optimistic before, but after reading the disclosures, I was ready to run away screaming. The seller seems to have been barely conscious while filling it out. Not only were many sections indecipherable, but many were just blatantly wrong. I mean, yeah, I can see why a seller might not want to admit certain things, but why on earth would you say "No" to the question "Is this property a condominium?" when, uh, it's a condominium? Are you trying to fool someone, who things that your single-family house happens to be elevated thirty feet in the air and surrounded by other single-family houses?
I chatted with Sean, and we mutually agreed that it wasn't worth pursuing. In addition to the "haphazard" (to use Sean's wonderfully understated phrase) manner in which the seller had filled out the disclosures, the seller's agent's disclosures also listed some serious stuff that I had overlooked, like mold and some encroachment issues. Sean's basic message was, "If you want to move ahead with this, we can, but personally I'd recommend against it." I agreed, and from that moment on felt confident that Redfin was on my side.
I'll skip my description of the remaining units at Palm Avenue. I eventually did decide to start an offer on one of them, a short sale. It seemed perfectly situated - top floor, corner unit, views of the hills and the park - and I thought it would be worth the hefty price and HOA fee, despite the fact that it wasn't in great shape. (It wasn't decrepit or anything, but the doors stuck, and was really cluttered.)
I did the Redfin offer wizard thing. This works pretty well. Because this was a short sale, it wouldn't fit into the normal Redfin model - typically they refund up to 50% of their commission, but it's only 15% for short sales. Their web site says that these deals are handled by special affiliated agents, but in my case it was a Redfin team member, Sean Sullivan. He was extremely nice and helpful, like everyone I met at Redfin. He talked me through the process, got the disclosures, and sent them over.
Well.
I'd been cautiously optimistic before, but after reading the disclosures, I was ready to run away screaming. The seller seems to have been barely conscious while filling it out. Not only were many sections indecipherable, but many were just blatantly wrong. I mean, yeah, I can see why a seller might not want to admit certain things, but why on earth would you say "No" to the question "Is this property a condominium?" when, uh, it's a condominium? Are you trying to fool someone, who things that your single-family house happens to be elevated thirty feet in the air and surrounded by other single-family houses?
I chatted with Sean, and we mutually agreed that it wasn't worth pursuing. In addition to the "haphazard" (to use Sean's wonderfully understated phrase) manner in which the seller had filled out the disclosures, the seller's agent's disclosures also listed some serious stuff that I had overlooked, like mold and some encroachment issues. Sean's basic message was, "If you want to move ahead with this, we can, but personally I'd recommend against it." I agreed, and from that moment on felt confident that Redfin was on my side.
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