I never thought I'd be writing this - at least not so soon. When I moved to the Bay Area in California to be with my wife, the housing market was super-heated and although I kept mumbling about a bubble, everyone else here was telling me that prices would never go down in Berkeley. Well that has changed in the past 6 months and things may go on sliding for a while but we recently came across a couple of properties in the mid $400,000s and a quick call to a mortgage broker we know, proved that we could, at a pinch, afford one of these. Become a Complete Fool
We looked around for a while and the more we looked, the more prices came down. The first one we settled on was going for $439,000. The house had already been on the market some 70 days and it was by no means a choice piece of real estate so I low-balled it and put in an offer of $380,000. The response from the listing agent was abrupt, snotty and generally rude. "We weren't even in the ball park...blah blah blah..."
Well we looked around some more and a week later, saw the same property going for $429,000. But things were going from bad to worse on other properties and a second house being offered at $449,000 caught our eye. Our realtor suggested offering the going price if we wanted to make a "strong" offer. I told him I didn't - I wanted to make an 'intelligent' offer and promptly offered $399,000. The listing agent rejected the offer but the next week she had reduced the price to $429,000. I stuck to my guns and suddenly the house was pending to another party.
I have to say that this thing had a pest report that was an inch thick with around $50,000 worth of termite and rot work but hey, I'm a contractor. Meanwhile, house number one calls us and says they're reducing to $399,000 for a quick sale and asked if we were interested, which I said we no longer were - I smelled blood on the new property because in California, it's a full disclosure policy. Once the new party had their inspection and faced the amount of work to be done (which sounded like a lot more than it was), I was betting on a drop out. Which they did. The price was reduced further to $399,000 on the second house.
Our offer was actually for $410,000 with a credit back of closing costs for $11,000. At $399,000 the thing was a steal. My hopes were dashed when we heard that three other parties had put in an offer at this price - two of them above ours. Again we waited and were rewarded by being put on the backup list in third position. The next thing I know is I have a counter-offer from the listing agent whereby we pay all the escrow and they don't credit the closing costs. My realtor advises me to accept. I reject it and wait.
Last week both other parties withdrew their bids and we were in first place. I pushed my agent to go for the jugular. They were now down to one offer - mine and had listed for 50 days. I wanted to renegotiate another $10,000 down on the basis of the new mold report. He was adamant we would lose the house and I told him:
"We don't need a house - they need to sell."
We've settled on a $5,000 reduction below our original offer. Escrow officially opened last weekend and our mortgage is locked in - luckily both my wife and I have excellent credit which made up for a lot of other factors (I'm self employed etc, etc).
During the purchase phase our realtor sent me an addendum to sign on Friday night - last Friday and called me up on Saturday to pick it up. It was the official document which would put us in contract. The minute that thing is signed, escrow opens and we had a short 21 day escrow and concurrent, a short week with the fourth of July. I told him I was not signing it till Monday to at least give us the weekend, which made him at first try and talk me out of it. His reasoning was that that is how things were done here in California and that the Listing Agent would be expecting us to sign there and then.
I was dumbfounded. This is after all a four-thousand dollar deal and they wanted our money. He told me to take a deep breath, I told him to take one himself - I was totally at ease - it was him and the listing agent - who I heard from another source was on the verge of a breakdown - who had ceased to breathe.
The point of this story is this:
1) This is a great market to be a buyer in
2) Don't let yourself get pushed around by agents who still act as if the market is hot and are frantic to get the deal sealed.
3) It's worth haggling for every cent
4) You only need ONE house. You can afford to take your time. Sellers are generally under pressure at the moment.
5) Don't be afraid to take the gloves off - it's your money and you have every right to fight for it.
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I never thought I'd be writing this - at least not so soon. When I moved to the Bay Area in California to be with my wife, the housing market was super-heated and although I kept mumbling about a bubble, everyone else here was telling me that prices would never go down in Berkeley. Well that has changed in the past 6 months and things may go on sliding for a while but we recently came across a couple of properties in the mid $400,000s and a quick call to a mortgage broker we know, proved that we could, at a pinch, afford one of these.
Become a Complete Fool