New Purchase

I haven't posted here in eons, but thought I'd add this post to get people updated. We haven't purchased any additional investment properties due to being busy in other ventures at the moment. However, we ARE in the process of purchasing a new personal residence. What is interesting about the purchase of this property is the backdrop of the real estate meltdown that has and still is occurring in this country.

Texas in general and Austin specifically hasn't seen the drops in market value other parts of the country are experiencing. The main reason for this is that our area never experienced the upshot in home values the prior 5-10 years those other areas experienced, either. It's interesting but most people here were shaking their heads at some of the prices in California and Florida during those "boom" years.

Anyway, back to the point of this post ...

My wife and I have been looking for a new personal home since about May of this year. We came across a 4,000sf foreclosure in a nice neighborhood back in late May, but lost out on it. It only needed some cosmetic work and was being sold for $260,000. It's FMV at the time was around $300-310k. We bid $240k, but got outbid at the last minute by someone for $250k. Between then and late September, we lost out on three other homes - a relocation, an inventory home, and another foreclosure.

Then, my wife came across an absolutely stunning home. It was a former model home in a new and still growing neighborhood. It wasn't a foreclosure, but was still owned by a lender. We found out at the time the home had been sitting since Feb/Mar of this year and was originally listed for $345,000. It had gone through a few price drops during that span and was now listed for $279,000. Even with all the upgrades, location, the size, etc., it was still MUCH too high for us. So, we passed.

About two weeks later, my wife noticed they had dropped the price yet again - to $269k. While the price was still about $30,000 more than we wanted, we put an offer in anyway, figuring the worst they could say is "No" (or maybe "H-ll no!"). So we offered $240k for it and included some contingencies. A few days later, our agent notified us they had countered our offer (shock!). They offered $263k and threw out all of our contingencies. We countered at $250k, hoping they just wanted to get rid of it. No dice. They stuck to their guns as did we and the deal fell through.

Not two weeks later, I noticed they dropped the price down again, which I thought was rather quick. It was now listed at $255k, so we figured we'd re-introduce our last bid of $250k. This time they flat our rejected our offer with no counter. The $250,000 price was our absolute limit, regardless, so we didn't submit another offer.

We still kept an eye on the house, hoping with the "bad" season coming upon the market (i.e., the holidays) and such the Seller would lower their price again. We were both thinking this would happen in December at the earliest, and more likely not until January. However, two weeks to the day our last offer was rejected, my wife called me at work to tell me the price of the house had dropped by over $15k!!! I had just looked at the MLS the night before and it still had the old price, so they must have just dropped the price. We immediately notified our agent and submitted an offer for $240,000. A few days later we were told our offer was accepted!!!

Looking back on this deal, it doesn't take a rocket scientist to see the Seller lost a good chunk of change by not taking our earlier offer of $250,000. Not only did they lose $10,000 in the purchase of the home, but also a month's worth of holding costs (I'm guessing at least $1k).

During this time of dealing with the Seller we did a lot of research on the area, including home prices. We figure the original list price of $345,000 was laughable right now - even with a home like this all decked out with upgrades galore. However, as I mentioned earlier, our market hasn't taken a huge hit like most, so a FMV price of $300-$315k is probably more like it for this specific house. Even the builder is selling the same floor plan at a BASE price of $290k.

At the moment we are still waiting on our loan to be approved, so I can't say the house is a done deal. But I just wanted to share how in this climate there are MANY deals to be had for those that are patient and STICK TO THEIR CRITERIA. Don't become a motivated buyer - even if it's for you personal home.