Slap some MM sense into me

hoffse · April 2014

So our dream house just went on the market. The owners have been trying to sell it for two years. I spotted it immediately two years ago, and we've been dreaming about it ever since. We think the reason it hasn't sold is because it's a crappy school district. That's not really an issue for us because H is intent on doing Catholic school regardless, but it does make houses move more slowly in that area.

They have dropped the price $100K since first listing it in 2012. It's absolutely at the very top of our (entirely self-imposed) budget. We could literally afford more, but we also want to be able to continue traveling, etc. So we've given ourselves a somewhat arbitrary ceiling that ought to let us continue meeting our other goals. This hits that ceiling.

I'm trying really really hard to sit on this one - it would be best to wait until September because 1) H will start working right after Labor Day, 2) we get his bar results back in September, and 3) we'll have 20% saved by then. So obviously we should wait if we can stand it. Good things come to those who wait, right?

Still: this is literally our dream house. It's in reach. We would buy it and probably not move until we retired. It's not perfect - it will probably need some updating someday because it was built in 1911 - but we think we could live with it as-is while paying down our student loans. Then when money has loosened a bit, take her down to the studs and update the electric, plumbing, etc. and potentially renovate some of the bathrooms at the same time. That's a big project, but probably worth it for the dream house we were able to purchase for a "starter house" price.

It's got a lot more space than we need right now, but we'd never grow out of it. This place has 4 bedrooms, 2 "sitting rooms," a living room, a massive formal dining room with several built-in china cabinets and a butler's pantry, built-in linen closets/wardrobes for each bedroom, a decently updated kitchen, 3 fireplaces, a sleeping porch (it's a Southern thing), covered parking for 3 cars, and an incredible view. And did I mention it's literally less than 10 min from the office? Be still my heart!

Tell me to be patient. Talk some MM sense into me with this. Convince me that this house will still be there in September.

Question just for fun: If your this-is-my-dream-house-and-I-will-never-move-again was in budget.... would you jump early?

formerlyGDaisy09 · April 2014

a few more questions:

how heart broken will you be if someone else buys this house? would you get over it eventually, or would you always be a little peeved that you didn't go for it?

have you been to look at the house to critically assess what you might have to fix?

With an old house like that emergencies are always going to come-up, are you going to be OK throwing money at emergency fixes?

While we're usually MM about most things, when we budget for something and it becomes apparent that "the time is right" we jump on it. we bought our house a little sooner than we were planning to because we literally walked into exactly what we were looking for and couldn't bear the thought of someone else buying the house. Others we liked we were not that attached to...this one I litterally had a mini-breakdown when there was a second couple that had looked at the house 2-3 times.

hoffse · April 2014

I'm trying to be as emotion-less about this as possible... but to be honest it's kind of hard, because it really is a spectacular house. And we really have been following it for about 2 years. It's now at a price-point where I'm concerned it might be bought out from underneath us if we don't jump early.

For the sake of full disclosure we're budgeting to have at least $2k left over per month (using high estimates for some things). So yes I think we'd have some room if an emergency repair came up before we were ready to sink in and update it fully.

My biggest concern with it: it's a Tudor style. Aesthetically, that speaks to both of us, but I know that they can be leaky because of the horizontal beams and woodwork. Water just sort of collects on the beams. That said, it's a style designed for wetter climates, and stucco does breathe, so it may not have the maintenance issues that I'm envisioning. We would probably order an inspection of the exterior/siding specifically to see if water is able to escape (and not just get trapped).

It's also an old house - so it's going to need to have poor insulation, unsealed windows, the works. That's not a killer for us because we're in a warm climate - but it's still something we have to keep track of. As such, we're really only willing to spend up to our limit on an old house if we can find one we want to live in long-term (at which point making those updates ourselves would be worthwhile in a few years). And honestly, after looking casually for two years, this is one of just two we've seen that fit those criteria. Otherwise, we're probably going to end up doing more cookie-cutter newer construction.

Sigh.

vlagrl29 · April 2014

I'm never really good at slapping MM sense into people

Therefore I would say if you love it, don't let it go. Obviously negotiate price with the owners even though they lowered it. If you get it for lower then you could save the difference for upcoming repairs you may have. We love to plan big moments out in our life, but if something comes up for the right price even though it's not the ideal time we go for it.

DH has been dreaming of building a photography studio in "Colombus Park" a cute little neighborhood at the very north of downtown. He now has the possibility of purchasing a lot and 2 are available. He is waiting to hear if the cheaper lot will work out, but both are ideal locations. He has been dreaming of it for years and it's what he wants.

smbenevides1989 · April 2014

I say go for an inspection and check out any last minute details to make sure that this is "the one". If you and your DH both agree to go for it, at least go for it. The worst that could happen is someone else buying the house, but you gave it your chance to have the one thing that you wanted.

If I found the house, I would jump at the chance to buy it. DH and I are looking for our forever home, as long as our jobs don't relocate us.

IAmSherlocked · April 2014

That's so tough!

To be honest, I'm not sure what I would do. It sounds like you're pretty emotionally invested in this house, and if you think you would end up kicking yourself if someone else bought the house, then I would be tempted to go for it, especially if you think that this house could be your forever home. I tend to be the kind of person that thinks that when an opportunity appears you have to snatch it up while you can, especially if it's something that you've already budgeted/are mentally prepared for.

We bought our house earlier than we wanted, but it's turned out well for us. Even though this isn't going to be our forever home, and based on what other homes in our neighborhood are selling for we bought at the right time--the house up the road is similar to ours and sold for nearly $15,000 more than what we bought our house for, and that seems to be the trend right now. Plus our mortgage payment is less than half of what we were paying in rent so it really freed up money each month that we can put aside--to be honest, that was one of the deciding factors for us.

I would talk to some mortgage companies and see what they say. Even if you end up putting less than 20% down, if everything is still within the monthly budget that you've set for yourselves I would seriously consider at least going to see it in person. One thing to keep in mind is if they haven't really done much to the insulation, windows, etc. you're going to be paying a ton in electric/gas each month so factor that in to your budget. Our house isn't even all that old (almost 30 yrs) but because the insulation was so poor and the windows old we were paying a ton just to keep things at a liveable temperature (I actually had to get a space heater for the living room and mostly walked around with a heavy robe on anytime I was on the first floor, lol). We just had new windows installed and I can already feel the difference, but I feel like we've spent so much money fixing up this house in the short time that we've lived here--I would have an easier time parting with that money if I knew this was going to be our forever home, but hopefully it will help resale value in the future.

Also, keep in mind that depending on how they did the stucco make sure to check for termites and to do a termite bond of some kind. Our house is stucco, and our realtor told us that if there is wood behind the stucco facade then moisture can get in there and rot the wood (and it's hard to see it in that situation) and that termites seem to love it as well. If you do decide to go for the house make sure to have at least 2 inspectors take a look at it.

Good luck with whatever you decide!

hoffse · April 2014

Rockymountaingirl, thanks for the head's up on termites. I can almost guarantee that there is wood behind the stucco because of the age of the house (1911). So that gives me pause for sure.

H has not seen the inside of it yet because he's in the throes of exams. So we have to put the brakes on for at least a few more weeks while he's finishing up. Maybe if I cool my heels until then we can discuss it with a little less emotion. I just love it, and he loves the pictures of it. We need to go in and look at it more critically before we decide though.

I do anticipate a lot of money going into the house eventually. That said, we would only buy it if we intended to stay there forever, so I think the maintenance expenses is something I could stomach. Honestly, even if we took it down to the studs one day I think it would cost less than what we've talked about for a second house.

Decisions, decisions.

Xstatic3333 · April 2014

Though PP have had great caveats, I honestly think you should go for it as long as you have enough saved for a conventional mortgage. This is provided inspection goes ok, of course.

Erikan73 · April 2014

Sounds like you've planned things out very well. I would recommend start asking people you know for a good home inspector and research them then. A good home inspector could make or break this for you. Also see if you can find recommendations for a good contractor that you could bring in to look at things to give you an idea of what would be involved in updating the home & the costs of it. Then take that information into consideration. Will the updates you want to do turn this house into the never ending money pit or will they be major. Then once you have all the information from the inspector and contractor, you will have a better idea of the condition of the home & long term costs of it and know if financially this will end up being the right move for you.

IAmSherlocked · April 2014

Yeah, termites are no fun, so I hope there aren't any in your case, especially since it sounds like a super cute house. Having come from a state that is practically a desert I was really worried about termites and asked specifically about them when we were looking at houses. We actually just learned this week that our current house had termites about a year ago. I got a call from the Exterminator company saying that our termite bond (which we had asked the seller to include) was up for renewal and that they wanted $300 to renew it to make sure we didn't get termites again. That gave me pause and was the first I had heard about a termite infestation so I had them email me all their paperwork from the previous owners, and there in black in white it spelled out where the infestation was.

I went back and double checked the dates from the property disclosures and under where it asks about termite damage, the seller marked off "unknown", but then the paperwork from the exterminator was dated less than a week after the disclosure which I find fishy. I don't know about RE law here in GA, but with the company that I work with back in CO the seller is required to disclose that sort of stuff even if they learn about it after the fact. I don't know what sort of recourse we'd have but or if it's even worth pursuing (not likely), but needless to say I am not very happy about it, and even DH has said that if we knew about this before we probably would have not bought this house. So yeah, termites suck!

brij2006 · April 2014

I would have a few questions first.

1. Would you get approved for the mortgage right now with your current amount down and your H still being in school?

2. What percentage DP would you have if you were to purchase it within the next couple of months?

3. Do you have enough in your budget to do unexpected updates/fixes to the house.

4. When were you originally wanting to start looking to purchase a home?

If this is truly the home you would want to purchase within the next year, then I say go for it. The least you can do is give a reasonable offer, have an inspection done, and go from there.

As an owner of a very old victorian, one thing I highly recommend is having a contractor come through and give you a rough estimate on what you would need to update/fix in the near future. Granted our home was "as-is" since it was a foreclosure, but we were very thankful we had someone come through with us and give us a rough estimate as to what we would be spending to do updates and repairs to the home within the next 5-10 years.
Then take that number and double it. I'm not saying that to scare you, but you will want to do some updates often and to your standard since it's a home you can grow into and live in for a long time. We easily spend another mortgage payment each month on updating/fixing things in our home.

ta78 · April 2014

If they just lowered it and you think it will go fast at the new price, I would probably jump on it. It sounds like you are financially ready for it now, given the inspection doesn't have anything major that needs to be repaired right now. And if it does, I would try to have the sellers cover the costs.

Take another tour inside of it and see how you feel.

emily1004 · April 2014

A bad school district will kill your resale value. Even if you plan on staying there forever and sending your kids to private school, what happens if some big firm wants you or H and you have to move because the opportunity is just too big to pass up?

Mom987 · April 2014

I probably would.

would you get the type of loans that removes PMI once 20% is down (not a certain time frame)? If so, that would be within like a year it sounds like.

hoffse · April 2014

Yeah we've got just over 15% right now - we'd be prepared in September with 20% so we aren't that far away. Approval should be no problem. We can afford it on just my income. We're also eligible for a loan that doesn't add PMI, even though we don't have 20% down. It's a special loan for lawyers. Go figure.

We're concerned about resale but only somewhat. I think it was overpriced for the area before they lowered it. Now it's about right, perhaps a bit under market. The school district isn't great, but the neighborhoods in that area are old, established, and full of just really cool old houses. In the last 10 years there's also been a huge surge in restaurants, boutiques, farmers markets, etc. all of which are in walking distance. It's also very close to a hospital so there are a lot of medical professionals who live in that area so they can be within a 10-min commute when they are on call. Houses definitely move slower there, but I've been watching it for a couple years and they do move.

I know that if we put serious money into it we wouldn't get that money back out for a looooong time (if ever). But we won't be doing that for some time anyway, and I really think that major remodels should be done with the understanding that you're doing it because you want to, not because you're sure you'll get that money back out. My parents best friends have a habit of buying, remodeling, and then selling houses - usually every 5 years or so. They've had 12 houses since I've known them (sometimes 2 or 3 at a time). They've lost money on every single one of them because of the renovations. But they love it, so they keep doing it.

Unfortunately, AL is entirely a buyer beware state. As long as they don't outright lie to you, there are no disclosures required (or so my colleagues tell me). So that makes me really wary of the old houses. But I can't lie - I LOVE their charm! I have this thing for crown moulding and built-ins. They don't build them like that anymore!

Well I'm going to be forced to cool my heels for a few weeks anyway. I got super excited when I saw it back on the market today and in our budget. But I'm certainly not going to buy anything without my H looking at it first. So we'll see where things are in a few weeks.

Did I mention that I am definitely NOT a patient person?

MommyLiberty5013 · April 2014

You should watch that movie with Tom Hanks - Money Pit I think it is called.

My one question is that you said your kids would go to private school. With that cost and possible major renos and maintenance issues, is this home still in your budget. I know in PPs you mentioned that you two MAY attain partner positions some day, but not any time soon.

Could you afford this home and private school on one income? On one income as a non-partner?

That would be my major question (aside from inspection results). I think it's wise to budget homes on one income.

vlagrl29 · April 2014

MommyLiberty5013 said:

You should watch that movie with Tom Hanks - Money Pit I think it is called.
My one question is that you said your kids would go to private school. With that cost and possible major renos and maintenance issues, is this home still in your budget. I know in PPs you mentioned that you two MAY attain partner positions some day, but not any time soon.
Could you afford this home and private school on one income? On one income as a non-partner?
That would be my major question (aside from inspection results). I think it's wise to budget homes on one income.

She makes a good point. Sure you may see yourself as always working but what if you don't one day? We have our house solely on 1 income. I had to cut my hours a lot when I was pregnant because I was really sick and house bound for 1 month. Things do come up in life, but I'm sure you guys are prepared.

hoffse · April 2014

If we saved the big renos until our student loans are done, then yes. Private school costs about what the taxes cost to live in good school districts - so we're paying for it either way. It's pretty inexpensive around here. H wants to do Catholic school regardless, so there's some sense in living in the lower tax districts instead of paying the higher taxes AND the private school tuition.

And honestly - I do really love my job. And even having kids I would have an incredibly hard time giving that up. I'll be 2 years away from partner at the earliest we're talking about having kids. My H would likely end up attaining partner the following year. If we push it back or if we have issues, it will be even less time. I have a really hard time envisioning myself not working - I think I would lose my mind.

That said, I think these are good points. It might be best to sit on it and see what's around in September.

Sisugal · April 2014

Go and see it - make your list of what needs to be done - evaluate those costs the if you still are interested --Make an offer.
Your offer should be below asking price WITH a delayed closing (Sept-Oct), acceptable inspection and financing.

brij2006 · April 2014

Sisugal said:

Go and see it - make your list of what needs to be done - evaluate those costs the if you still are interested --Make an offer.
Your offer should be below asking price WITH a delayed closing (Sept-Oct), acceptable inspection and financing.

This is what I would do too. Put in a low offer to compensate for the school district. You can even use that as a bargaining tool. Even though the school district doesn't matter anyways, but for resale it will. Also, since it's been on the market for 2 years, the seller will likely accomodate a later closing date.

I'm also going to agree with you about the older homes. We absolutely love ours and I'm going to have a hard time giving up the built ins and large detailed trim. My heart and style is definitely with older homes, and I would choose remodeling an old home over building a new one any day. Even though we'll likely build in the future.

Good luck. Hopefully your H loves the house just as much as you do!

short+sassy · April 2014

Keeping my fingers crossed for you! It sounds like a great house and, if it were me, I'd scoop it up even if it isn't the best timing. Finding the right house can be incredibly difficult and take a very long time. The fact that you have been following it for two years says a lot.

While termites are definitely something to have checked, it may not be bad news at all. I live in a major port city and there is a HUGE problem with termites out here. I bought a wood house that was also built in 1911. The termite inspection showed a couple, small places that had old termite damage, but nothing that was a concern and nothing that showed a recent infestation.

daisy662 · April 2014

Honestly, the bad school district would be a deal breaker for me even if I planned to put my kids in private school. You have to think about resale. Unforeseen things occur even if you don't plan to move. I would not wait if the perfect house came along, but I hear a lot of red flags about this house based on what you are describing. I think you need to be prepared to sink a lot of money into it. Good luck!

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