Unexpectedly in the housing market--should we buy this house or wait?

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WL2034
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Unexpectedly in the housing market--should we buy this house or wait?

Post by WL2034 »

Hi everyone, hoping to get some sage advice from the Bogleheads. I will outline the situation below, but essentially the question is--should we mobilize now and try to buy this house that just went on the market, or wait until next summer (the initial plan)?

Our situation is as follows:
Family: Spouse and I, 34/34 + 10 month-old. Tentative plan for 1-2 more children in next few years.
Current living situation: ($2200 / mo) Renting 4 br/3 ba townhouse, no yard, otherwise very happy with the rental. Lease runs through July 31, 2018.
Jobs: Gross combined income $500k-600k (close to 50/50 split). Jobs are very stable.
Current liquid savings: $65k in online savings account (planning for home down payment). $450k-500k in taxable brokerage ETF.

Initial plan has been to save up a down payment $100k - $150k by next summer and then find a house as our lease is expiring.

New house just went on the market:
4 br/3 ba, $520k
1. Ideal location for us, 5 min commute from work, safe low traffic street.
2. Last undeveloped lot in a subdivision (most houses built 2006-2010). We actually saw this house as it was being built, but we thought it was already purchased and being built for the owners.
3. Ideal size for us (we think). 4 br/3 ba, ~2300 sq ft, single level. We prefer this to most of the 4 br houses in this area, which are in the 3000-3500 sq ft range.
4. Builder has a good reputation locally for quality and energy efficient houses.
5. Small lot size (~7,000 sq ft). Lots in the neighborhood are small, in general. 10k sq ft lot is large for the area. It's ok for us as we ideally want a small yard for kids to play in. There is a park nearby.
6. Listing price is $520k, which is expensive for the size (around $230/ sq ft). Most of the houses in this subdivision selling recently have been $185-$200 / sq ft. Would probably bid lower than the asking based upon that.

Why we would consider buying it:
1. Best location and new build, will not be able to find a new build in this neighborhood (last available lot).
2. Size and builder
3. Price-- it is one of the smaller and less expensive houses in the neighborhood. Most recent sales have been for larger houses in the $560k-$600k range. It is relatively hard to find a 4 br in this size range, so if we wait we will likely end up with a larger home ~3000 sq ft, in the $600k range.

Why we might continue to wait:
1. Buying now would involve selling taxable funds (not a big deal, have some from recently that have small gains or small losses). Probably only a small tax bill for this.
2. Buying now would involve breaking our lease approx 5-6 months early probably. According to state law we could be responsible for the rent until the rental is filled. The rental market here is pretty good, but I don't know about the winter specifically. We have a $2200 deposit already paid. This part bothers me, as I would hate to be on the hook for ~$12k-$13k of rent, but realistically I doubt it would be that much (we would obviously try to negotiate and give 90+ days notice if possible. I'm not sure how soon this new build would be looking to close (I'm assuming sooner than if the sellers were currently living in it?). This part might be mitigated by the fact that this is probably on the lower end of what we will likely spend if we wait until next summer.
3. Stress of buying / moving over the holidays. Not a big deal, we don't really have plans.
4. Happy where we are currently/ have not been mentally preparing to buy a house this soon. I think if this house went on the market while we were actively house shopping with a realtor, we would very likely put an offer in on it. As it is now, we don't have a realtor, mortgage pre-qualification, etc. We have just been browsing housing websites to get a feel for what is available, and then this house showed up.

If we wait, the options for the summer would be new builds approximately 12-15 minutes from work (commutes are not bad here) -- typically in the $550k-$650k range for 4 br, or an existing home in the aforementioned neighborhood (5 min from work) which is probably a 10 year old house on average. Prices similar to the new builds. So it's not as if this is a one-of-a-kind opportunity, as much as just a great location and new build with a preferable layout for us.

Thanks for any input, and would love to hear about any other considerations we are missing. We have never purchased a house before, so we know relatively little about the process.
chevca
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by chevca »

I see no reason to jump on this house you just found. If you were talking 5 minutes or 1 hours commute differences, or $500k or $900k price differences, then this one might be tough to pass up. But, talking roughly the same price range and maybe 10 minutes added onto the commute, I'd wait until you can get into one of the other new builds. Why try to rush into something you're not quite ready for?

On the other new build area... start talking to them now, if you haven't already. Find out how long they take to build and all. Buying a new build is much easier, in that you say what lot/home you want and go under contract. Assuming all goes okay with the initial steps, financing and all. Which it will be too easy, as you're looking at homes equal to just over one year's salary for you guys. There's no bidding wars and back and forth with other buyers. It's not a quick process though. Unless something fell through on an already done one, or soon to be completed one. If you go start to finish, foundation isn't even in yet, it's typically about 6 months to get the keys.
Frisco Kid
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by Frisco Kid »

I also see no reason to rush and buy now, being able to buy a home for 1x yearly income puts you in an outstanding position. If you are considering new construction do make sure the new home will be completed and ready for move in per your timeline so you don't find yourself needing temporary housing which would mean moving twice.
ClemsonBogle
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by ClemsonBogle »

I would add that you might have leverage on cost vs time on this one.

AKA you could talk to the builder without an agent and negotiate that? 2-3%?

2. this is the slow period for them most people don't buy in holiday season. Maybe they will allow closing in 2-3 months? AKA 90 days and cut the expenses for you?

3. I am not surprised that the small house in the neighborhood is the most per sq foot as the land is the same cost either way and adding some sq footage isn't expensive when building a house aka a bigger house almost always is cheaper per sq foot.
FraggleRock
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buy this house

Post by FraggleRock »

If the house is under construction and won't be completed for months, make an offer.
If the house is under construction, you will be able to choose some finishes. For example, get the kitchen countertop you like. Make an offer.
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jabberwockOG
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by jabberwockOG »

Very few buyers are around during this time of year so builders may be extremely motivated to make a sale. Contact the builder directly, not with an agent, and make a firm offer for the house that is no more than $200 square foot with a closing date in 4 months. If they do not accept immediately verbally tell them your offer is valid for 10 days, unless you have purchased another new home, and that in the meantime you will keep shopping for a new home (in other words make them sweat a little if they don't have any active buyers). Stick to your initial offer - if they don't come down on price then shop elsewhere in a few months. It will likely take a minimum of 2 months to get your home ready for a move in and get a loan in place for closing.
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WL2034
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Re: buy this house

Post by WL2034 »

FraggleRock wrote: Mon Nov 20, 2017 5:34 pm If the house is under construction and won't be completed for months, make an offer.
If the house is under construction, you will be able to choose some finishes. For example, get the kitchen countertop you like. Make an offer.
The house is completed at this time, from what I can tell.
jabberwockOG wrote: Mon Nov 20, 2017 5:56 pm Very few buyers are around during this time of year so builders may be extremely motivated to make a sale. Contact the builder directly, not with an agent, and make a firm offer for the house that is no more than $200 square foot with a closing date in 4 months. If they do not accept immediately verbally tell them your offer is valid for 10 days, unless you have purchased another new home, and that in the meantime you will keep shopping for a new home (in other words make them sweat a little if they don't have any active buyers). Stick to your initial offer - if they don't come down on price then shop elsewhere in a few months. It will likely take a minimum of 2 months to get your home ready for a move in and get a loan in place for closing.
This seems like a pretty good idea-- nothing ventured, nothing gained as they say. The house is already listed by an agent from the builder, does that change anything or would it still be worth contacting he builder directly (not the listing agency)?
Goal33
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by Goal33 »

With your income, I’d just borrow from your taxable via margin the difference between your 65k and 20%. You’ll pay off the margin loan in a few months with given your high income.
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Watty
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by Watty »

For your income and assets the house is not terribly expensive so I don't see it as being much of a financial decision and it is more of a lifestyle choice. With all the pros you listed I think buying the house would be a reasonable choice.

A couple of considerations;

One thing to watch out for is that people often assume that a newly built home will have fewer issues than an existing home. Often there are both big and small issues with a new home that will take awhile to show up and get worked out, if they ever do. Even though it is new and has a warranty you should still have a good home inspection if you buy a new house. If you are buying a house that will be built you can have it inspected several times during the construction when the inspector can see more of the details of the construction,

A brand new home often comes with minimal landscaping and even when it is landscaped the trees and plants may take years to grow to a respectable size.

One advantage of buying in a new subdivision is that the "first owners" tend to make friends and bond more since they tend to be in the same stage of life and are looking to make new friends. Sociologists have written about about how American subdivisions evolve. Over the years my parents bought two new houses and in both subdivisions they made friends that they kept for the rest of their lives.
WL2034 wrote: Mon Nov 20, 2017 2:18 pm Ideal location for us, 5 min commute from work, safe low traffic street.
....
If we wait, the options for the summer would be new builds approximately 12-15 minutes from work (commutes are not bad here)
When people say a commute takes X minutes they usually mean on a good day. It will vary by area but there will also be not so good days, bad days, and occasional terrible days. If you are in an area where you get significant snow that could be a big difference during a snowstorm.

If your area is still growing then the commute may be worse ten years from now too. When I moved into my house I could usually get to work in 30 minutes. By the time I retired 15 years later it was rarely less than 40 minutes and frequently worse than that.

With a five minute commute you could even come home for lunch or drop by a kids school for an event if you wanted to.

When my son was young I typically worked about 30 minutes away and a couple of times I got calls that he was in the emergency room getting stitches, a cast on his arm, he was sick at school and needed to be picked up, or that poison control had been called and ipecac had been given. Fortunately none of these turned out to be serious and my wife was able it handle it but the distance does become more important when you have kids especially if you will both be working.
WL2034 wrote: Mon Nov 20, 2017 2:18 pm 2. Buying now would involve breaking our lease approx 5-6 months early probably. According to state law we could be responsible for the rent until the rental is filled. The rental market here is pretty good, but I don't know about the winter specifically. We have a $2200 deposit already paid. This part bothers me, as I would hate to be on the hook for ~$12k-$13k of rent, but realistically I doubt it would be that much.....
If you wait to buy until next summer you will still have timing problems and the worst case is unlikely. You may also be able to sublease it if you need to.
WL2034 wrote: Mon Nov 20, 2017 2:18 pm 3. Ideal size for us (we think). 4 br/3 ba, ~2300 sq ft, single level. We prefer this to most of the 4 br houses in this area, which are in the 3000-3500 sq ft range.
......
6. Listing price is $520k, which is expensive for the size (around $230/ sq ft). Most of the houses in this subdivision selling recently have been $185-$200 / sq ft. Would probably bid lower than the asking based upon that.
The price per square foot is a pretty useless measure because a lot of the costs don't vary much with the size of the house like;
Lot preparation and utility hookup(which can be a lot).
driveway
garage
kitchen
furnace and AC
water heater
landscaping

For example if you have two identical house designs and you tack on an extra room on the back of one house that increases the square footage by 20% it would not have nearly that effect on the price of the house.
iamlucky13
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by iamlucky13 »

It sounds like a good opportunity, and it definitely sounds like you can afford it. If houses in that size range are rare in the neighborhoods you'd like to live in, with it being the "right size" and close to work, it seems probably worth making an offer, as long as you're taking time to think about it and get a decent sense of what else is available in your area.

Pre-apply for a mortgage (at your primary bank if nothing else) right away. Sellers often want to see a pre-approval letter before accepting an offer. There should be no obligation for a pre-approval.

You may be able to sublet or transfer the lease for your townhome, especially if rents have gone up at all in your area since you signed your lease. I did this a few years ago when I bought - the property manager let us sign a new person onto our agreement and drop ourselves at the same time.

Regardless, trying to buy at the end of a lease can create an urgency you don't need for such a big decision. Fortunately many landlord's allow month-to-month renting after an initial lease expires.

Forget about the holidays. A single year's family plans being tweaked to close a home purchase isn't a big deal, in my opinion. Besides, I handled a lot of the paperwork for closing a short-sale with special financing conditions while away on a long work trip. Buying a new home with a conventional loan shouldn't really be very stressful.

As a first time buyer, an agent might be helpful to have, but their commissions (generally paid by the seller) are based on helping your through the search process as well. You might be able to find one willing to help you simply through offer and closing for a lower commission. That lower fee gets written into the offer, if I remember right, so the seller knows the offered price factors in a reduced commission for the seller to pay.
barnaclebob
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by barnaclebob »

You can go from calling up a realtor out of the blue to having an offer with pre-approval in 2 business days, maybe even just 1 if they know what they are doing.

We were in a similar boat to you except in our case the house was fairly rare given our list of criteria. We weren't expecting to buy for about two years and expecting a search lasting a year or two but when the right house at the right price came up we had to jump early and should hopefully close in about 3 weeks. It sounds like there are plenty of suitable houses for you though so I wouldn't sweat it.
Nowizard
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by Nowizard »

Having moved only about four miles to be closer to work for both of us when our children were small, I would certainly ascribe to the huge advantage of living close to work, particularly with several children. One other question involves schools in this location and whether you plan to have children attend public or private schools nearby. You have a tremendous advantage with excellent income and job stability. Having that, you can focus on greater life/work balance which directly relate to housing and time. Sounds like you have located the area you desire, and the only question is whether to buy now or somewhat later. I would add that you have a significant change coming with another child already, and there will be an adjustment for your current children and some time consuming aspects of making a move. Do you want to strap all of that on at one time? In other words, you seem to have thought this out, and the only issue appears to be timing.

Tim
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Watty
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by Watty »

WL2034 wrote: Mon Nov 20, 2017 2:18 pm approximately 12-15 minutes from work (commutes are not bad here)
One more thought on the commute.

You commute to and from work so you have to double that number. You both work so you have to double that again. Combined that means that a 15 minute commute eats up 60 minutes a day.

Don't underestimate the value of the very short commute.
mouses
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by mouses »

You don't have to move during the holidays if you do get the house. You will still have your rental available until you sublet it.

(Don't you have any IRAs? Did I miss seeing those somewhere?)
doon
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by doon »

WL2034 wrote: Mon Nov 20, 2017 2:18 pm
Our situation is as follows:
Family: Spouse and I, 34/34 + 10 month-old. Tentative plan for 1-2 more children in next few years.
Current living situation: ($2200 / mo) Renting 4 br/3 ba townhouse, no yard, otherwise very happy with the rental. Lease runs through July 31, 2018.
Jobs: Gross combined income $500k-600k (close to 50/50 split). Jobs are very stable.
Current liquid savings: $65k in online savings account (planning for home down payment). $450k-500k in taxable brokerage ETF.

Initial plan has been to save up a down payment $100k - $150k by next summer and then find a house as our lease is expiring.

New house just went on the market:
4 br/3 ba, $520k
1. Ideal location for us, 5 min commute from work, safe low traffic street.
2. Last undeveloped lot in a subdivision (most houses built 2006-2010). We actually saw this house as it was being built, but we thought it was already purchased and being built for the owners.
3. Ideal size for us (we think). 4 br/3 ba, ~2300 sq ft, single level. We prefer this to most of the 4 br houses in this area, which are in the 3000-3500 sq ft range.
4. Builder has a good reputation locally for quality and energy efficient houses.
5. Small lot size (~7,000 sq ft). Lots in the neighborhood are small, in general. 10k sq ft lot is large for the area. It's ok for us as we ideally want a small yard for kids to play in. There is a park nearby.
6. Listing price is $520k, which is expensive for the size (around $230/ sq ft). Most of the houses in this subdivision selling recently have been $185-$200 / sq ft. Would probably bid lower than the asking based upon that.
OP - I won't comment on financials because you can definitely pull it off easily. However you mentioned potentially 3 children in future. If that is the plan then 4 bd/3ba ~ 2300 Sq Ft may get small pretty fast. You may find a need to upgrade it in 4-6 years. Also have you researched school districts and day cares in the location where are looking to buy?

One can obviously be never sure about the future but I would wait for couple more years to re-assess the needs and prefer to buy something that is the only house that you would need till kids are off to college. I hate paying 5-6% of transaction cost in buying and selling houses.

Hope that helps.
"Goal - Win the game before the need to retire"
chevca
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by chevca »

If the OP chooses the done house now, it's highly unlikely moving during the holidays is of any concern. The holidays are upon us. It's not normal to close a home sale in 4 weeks or whatever anyway, and especially around the holidays, I'd guess. Plus, the OP can put in their offer they'd like a closing date of 01/15/18, or something like that. Then they'd close after the holidays, still have the place they're renting, and they could take some time moving from one place to the other. Figure out getting out of the rental after or while that is all happening.

This isn't like buying a car where they get it that day or weekend. :happy And, the OP has some control of parts of it.
chevca
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by chevca »

OP, how long has this already done house been listed? I would imagine it was built for some buyer and the deal fell through. But, if it's a nice place, builder has a good reputation, and all.... what's up? Now, if it just got listed this week that's probably not a concern.
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WL2034
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by WL2034 »

Watty wrote: Tue Nov 21, 2017 9:09 am
One more thought on the commute.

You commute to and from work so you have to double that number. You both work so you have to double that again. Combined that means that a 15 minute commute eats up 60 minutes a day.

Don't underestimate the value of the very short commute.
Yes, this is a reason we would prefer this location. As to your previous point, regarding the age of the subdivision— it would favor the newer developments a bit farther away since there are many newer houses in those areas.
mouses wrote: Tue Nov 21, 2017 10:22 am You don't have to move during the holidays if you do get the house. You will still have your rental available until you sublet it.

(Don't you have any IRAs? Did I miss seeing those somewhere?)
Yes we have IRAs and 401k’s — was just mentioning the taxable since that is where part of the down payment would come from.
chevca wrote: Tue Nov 21, 2017 12:30 pm OP, how long has this already done house been listed? I would imagine it was built for some buyer and the deal fell through. But, if it's a nice place, builder has a good reputation, and all.... what's up? Now, if it just got listed this week that's probably not a concern.


Yes it was listed within the past week. I think it may be listed a bit above market ( listed at > $230 / sq ft — no house has sold for more than $206 / sq ft in the subdivision or any nearby neighborhoods in the past 6 months. Point taken regarding smaller houses being more expensive per sq ft, but some of these houses have been 2500 sq ft and similar. This new house also has the smallest lot size.), but I wouldn’t be surprised if it sold sometime soon.
chevca
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by chevca »

You seem quite concerned about the price per sq ft. Would that bug you to know you paid well above average that way? Basically, is that house worth it to you? If so, make an offer and see what happens.

One doesn't want to live in a house where it bothers them what they paid for it, IMO. That would gnaw at you.
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WL2034
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by WL2034 »

We went to see this house today.

Overall, we liked it. Nice finishes, good size, but not huge. I think, overall, it is about what I was expecting. Very nice neighborhood, relatively small lot, but with a small useable backyard. We are debating whether this is what we want, or if we would prefer to pay more ($650k+) for a larger house with a larger lot. Overall, I doubt that a much larger house is going to add much happiness to my life, as we live in a 2000 sq ft house now, and are happy with it. As we attempt to decide on this, I do have a items that I'm wondering about that came up during the house tour.

1. The backyard looks out onto a vacant commercial lot (this lot is in the back corner of the neighborhood on a cul-de-sac). It is zoned for "light use commercial or employment zone," so it cannot be industrial at all. It could become shops, a medical campus, or other type of business that the city feels does not disrupt nearby residential zones. There must be at least 25 feet of landscaping between the start of a parking lot and the backyard fence of this prospective house. There are multiple other restrictions on the type of business and the height of the buildings based on how close they are to the nearby residential zoned neighborhoods. I suppose my question is, does this affect negatively the property value by virtue of being a vacant lot at the current time? The view from the backyard currently is not attractive (vacant lot, 45-55 mph roads/highway in the background (0.5 - 1 mi in the distance). If it becomes some quiet day time shops, that would be fine. If it becomes a residential alcohol / drug treatment center, it might cause some problems being in the backyard. The privacy fence in the backyard is about 6-7 ft tall. Trees are planted along the fence, but have not grown enough yet to provide much privacy. I suppose a change in landscaping could solve some of this issue if we'd prefer not to see back there.

2. The home builder is a family-run business and one of the family members is also a realtor and listing agent for this house (he also works for the builder). As mentioned previously, we don't have a buyers' agent. So I inquired regarding making an offer without a buyers' agent since we don't have one currently and will wait to buy a house if we don't buy this one. The response was, "I can act as buyer agent and selling agent in this case. I already work for reduced commission when we sell our own homes, so yes, that would reduce the commission paid by not having another agent to pay a 'finder's fee'."

3. Regarding home inspection, the realtor / home builder mentioned that it typically isn't really worth it because "you pay $500 and they probably find a couple things that you would find in the first 3-6 months anyway--and there is a 2 year warranty with the new house, so we will fix it anyway."

Appreciate any thoughts on these items.
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by KlangFool »

WL2034 wrote: Tue Nov 28, 2017 8:09 pm
3. Regarding home inspection, the realtor / home builder mentioned that it typically isn't really worth it because "you pay $500 and they probably find a couple things that you would find in the first 3-6 months anyway--and there is a 2 year warranty with the new house, so we will fix it anyway."

Appreciate any thoughts on these items.
WL2034,

I hope that you will not take the seller's word on the home inspection. It is worth spending the $500.

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WL2034
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by WL2034 »

KlangFool wrote: Tue Nov 28, 2017 8:34 pm

WL2034,

I hope that you will not take the seller's word on the home inspection. It is worth spending the $500.

KlangFool
Yes, do not plan to take their word if we proceed. And thanks for the input. I can now cross “have KlangFool comment on home buying decision” off of my bucket list. :wink: Always enjoy reading your perspective.
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Watty
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by Watty »

WL2034 wrote: Tue Nov 28, 2017 8:09 pm I suppose my question is, does this affect negatively the property value by virtue of being a vacant lot at the current time?
Yes, that is likely why this is the last lot in the subdivision to be developed and why they made it smaller and less expensive than the other houses in the subdivision.

WL2034 wrote: Tue Nov 28, 2017 8:09 pm Appreciate any thoughts on these items.
A few random points;

You mentioned a 25 foot buffer. Compared to your 7,000 square foot lot that could be a lot of square footage and in an ideal situation it could be almost like a bit of green space once the landscaping grows up. If there was house there instead you could be looking right at their house which would not be ideal either with the small lot sizes.

One big question is just how tall a building they can put on that lot. If they put a two story building on the lot there will not be any way to use landscaping to hide it.

Whenever the building is built you will also be living next to a construction zone for six months or more.

Even if it is developed in an OK way the business can change every few years whenever the lease expires.

In addition to possible problems with the business itself there will also be occasional delivery and trash trucks in the back of whatever building goes in there. The trucks will likely have the loud "beep beep" backup warning horn that will be hard to ignore.

If there is a recession then the property might not be developed for ten years so you could be dealing with the bad view for a long time. It is also possible that it could be rezoned for something like a fast food restaurant.

If you buy the house be sure to watch for signs for any development hearings when the business applies for permits or rezoning. In some situations the local laws may also require that they mail nearby landowners notifications about any hearings. Be sure to keep an eye out for these and don't mistake them for junk mail.

My gut feel is that are lots of ways that it could work out just fine but you won't know that until the property next door is actually developed.
barnaclebob
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by barnaclebob »

For new construction there isnt much a home inspector will tell you. You already know the quality of the finishes but nobody knows whats behind the walls. You can probably find a checklist on the internet if you want to.
Topic Author
WL2034
Posts: 493
Joined: Tue May 21, 2013 10:36 pm

Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by WL2034 »

Watty wrote: Tue Nov 28, 2017 10:45 pm
A few random points;

You mentioned a 25 foot buffer. Compared to your 7,000 square foot lot that could be a lot of square footage and in an ideal situation it could be almost like a bit of green space once the landscaping grows up. If there was house there instead you could be looking right at their house which would not be ideal either with the small lot sizes.

One big question is just how tall a building they can put on that lot. If they put a two story building on the lot there will not be any way to use landscaping to hide it.

If any part of the building is within 50 feet of a residential zone, the building maximum height is that of the bordering residential zone. So 2 stories, for this zone. Here is a map of the property. The road is to the far east of the map, so any access to the property would be from the east side of the property (not near the house for sale).

https://image.ibb.co/iRcSpb/IMG_3786.jpg

Whenever the building is built you will also be living next to a construction zone for six months or more.

Even if it is developed in an OK way the business can change every few years whenever the lease expires.

In addition to possible problems with the business itself there will also be occasional delivery and trash trucks in the back of whatever building goes in there. The trucks will likely have the loud "beep beep" backup warning horn that will be hard to ignore.

If there is a recession then the property might not be developed for ten years so you could be dealing with the bad view for a long time. It is also possible that it could be rezoned for something like a fast food restaurant.

If you buy the house be sure to watch for signs for any development hearings when the business applies for permits or rezoning. In some situations the local laws may also require that they mail nearby landowners notifications about any hearings. Be sure to keep an eye out for these and don't mistake them for junk mail.

Yes, rezoning would be a bad thing. The current zoning is the best possible commercial zone (no drive-thrus allowed, no industrial use, etc.). Most of the commercial buildings in the surrounding areas are medical offices, media / technology campus, sit-down cafes / restaurants,
insurance offices, so not noisy neighbors for the most part. The property is currently owned by a media company, which has owned the property but not developed it. The main campus for this company is just across the street from this property.


My gut feel is that are lots of ways that it could work out just fine but you won't know that until the property next door is actually developed.
chevca
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Joined: Wed Jul 26, 2017 11:22 am

Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by chevca »

WL2034 wrote: Tue Nov 28, 2017 8:09 pm We went to see this house today.

Overall, we liked it. Nice finishes, good size, but not huge. I think, overall, it is about what I was expecting. Very nice neighborhood, relatively small lot, but with a small useable backyard. We are debating whether this is what we want, or if we would prefer to pay more ($650k+) for a larger house with a larger lot. Overall, I doubt that a much larger house is going to add much happiness to my life, as we live in a 2000 sq ft house now, and are happy with it. As we attempt to decide on this, I do have a items that I'm wondering about that came up during the house tour.

1. The backyard looks out onto a vacant commercial lot (this lot is in the back corner of the neighborhood on a cul-de-sac). It is zoned for "light use commercial or employment zone," so it cannot be industrial at all. It could become shops, a medical campus, or other type of business that the city feels does not disrupt nearby residential zones. There must be at least 25 feet of landscaping between the start of a parking lot and the backyard fence of this prospective house. There are multiple other restrictions on the type of business and the height of the buildings based on how close they are to the nearby residential zoned neighborhoods. I suppose my question is, does this affect negatively the property value by virtue of being a vacant lot at the current time? The view from the backyard currently is not attractive (vacant lot, 45-55 mph roads/highway in the background (0.5 - 1 mi in the distance). If it becomes some quiet day time shops, that would be fine. If it becomes a residential alcohol / drug treatment center, it might cause some problems being in the backyard. The privacy fence in the backyard is about 6-7 ft tall. Trees are planted along the fence, but have not grown enough yet to provide much privacy. I suppose a change in landscaping could solve some of this issue if we'd prefer not to see back there.
Skip it and go to one of the other new build homes where you can pick your lot and what's around it.

You have mentioned the lot size more than once. That's obviously a concern for you. If you're having to justify the smallish lot size to yourself now, you would only be disappointed after moving in and having to continue to justify it.

The unknown of that commercial land behind.... nope, no way. Would you buy the house if there was a parking lot and two story building just beyond your back yard now?

I speak from DW and I and our not so normal experience buying new build(s) over the last two years. First place we wanted, when we looked and went under contract, backed to a beautiful wooded area... but, it was zoned for commercial use. About a month after we were under contract, they cut about all the trees down behind the lot... there went that view. That whole deal was a mess, they didn't even start on the house for over three months, so we got out of it... lawyer involved and all, ugh!

Then we moved on to our second choice at the time, another new build, and that went great. But it was a tiny lot, <5000 sq. ft. and we justified it as, it's fine, less maintenance, kids can still run around... all of 10 steps. The build and by went great and we loved the house. But, the houses were so close, the lot was tiny, and it backed to a 35 mph road. Again, we loved the house, as in everything under the roof. But, we just couldn't justify the location and lot for long. The road noise was terrible to us and the kids didn't even want to go outside.

Then we found another new build neighborhood a few miles away from that second house with 1/2 acre or more lots and construction was really just beginning. We got to pick our lot and home layout and colors/options and all. We sold the old one and bought one in the new neighborhood. And we love it! It's quiet, we have space, love the house, the kids love going outside! We know what is around us, just neighbors, and there's no unknowns going to come up of what commercial property will be built around us.

Before anyone feels like mentioning how buying and selling so much in a couple years was not wise financially, we know! It wasn't and I am fine with admitting that. But, to finally get to where we are and how happy we are now, it was worth it. Wish we would have just found this place first, but oh well.

Long story short... if you have doubts about this house now, don't buy it. You guys can easily afford to get exactly what you want in one of the other new build neighborhoods. Go that route.
aristotelian
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Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by aristotelian »

You could try a lowball bid, take it or leave it. Either you get it at a great price that makes up for breaking your lease, or you move on to the next place.
Kelmscott
Posts: 57
Joined: Fri Aug 17, 2012 8:02 am

Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by Kelmscott »

I would say no, especially after reading about the commercial land.

Large, busy buildings and noise is one thing, but don't forget about lights -- parking lot lights, security lights, etc. They are bright and relentless -- a real drag when they stream into your house at night.
iamlucky13
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Location: Western Washington

Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by iamlucky13 »

WL2034 wrote: Tue Nov 28, 2017 8:09 pm 2. The home builder is a family-run business and one of the family members is also a realtor and listing agent for this house (he also works for the builder). As mentioned previously, we don't have a buyers' agent. So I inquired regarding making an offer without a buyers' agent since we don't have one currently and will wait to buy a house if we don't buy this one. The response was, "I can act as buyer agent and selling agent in this case. I already work for reduced commission when we sell our own homes, so yes, that would reduce the commission paid by not having another agent to pay a 'finder's fee'."
What he means is that he can handle the paper work on both sides.

He will not be your agent however. He works for the seller.

If you would be comfortable buying a different house on your own without an agent or the assistance of a real estate attorney, that is presumably fine in this case, too. Otherwise, bring in your own.

Some family members got burned on this a couple years ago buying a business property. I don't remember the details, but some work verbally agreed upon to be done by the seller was not done, and they didn't notice it wasn't in the written contract until too late. The contract had been drafted by the seller's agent, who assured them he had no qualms about representing both the seller and the buyer.
Topic Author
WL2034
Posts: 493
Joined: Tue May 21, 2013 10:36 pm

Re: Unexpectedly in the housing market--should we buy this house or wait?

Post by WL2034 »

chevca wrote: Wed Nov 29, 2017 11:47 am
Skip it and go to one of the other new build homes where you can pick your lot and what's around it.

You have mentioned the lot size more than once. That's obviously a concern for you. If you're having to justify the smallish lot size to yourself now, you would only be disappointed after moving in and having to continue to justify it.

The unknown of that commercial land behind.... nope, no way. Would you buy the house if there was a parking lot and two story building just beyond your back yard now?

I speak from DW and I and our not so normal experience buying new build(s) over the last two years. First place we wanted, when we looked and went under contract, backed to a beautiful wooded area... but, it was zoned for commercial use. About a month after we were under contract, they cut about all the trees down behind the lot... there went that view. That whole deal was a mess, they didn't even start on the house for over three months, so we got out of it... lawyer involved and all, ugh!

Then we moved on to our second choice at the time, another new build, and that went great. But it was a tiny lot, <5000 sq. ft. and we justified it as, it's fine, less maintenance, kids can still run around... all of 10 steps. The build and by went great and we loved the house. But, the houses were so close, the lot was tiny, and it backed to a 35 mph road. Again, we loved the house, as in everything under the roof. But, we just couldn't justify the location and lot for long. The road noise was terrible to us and the kids didn't even want to go outside.

Then we found another new build neighborhood a few miles away from that second house with 1/2 acre or more lots and construction was really just beginning. We got to pick our lot and home layout and colors/options and all. We sold the old one and bought one in the new neighborhood. And we love it! It's quiet, we have space, love the house, the kids love going outside! We know what is around us, just neighbors, and there's no unknowns going to come up of what commercial property will be built around us.

Before anyone feels like mentioning how buying and selling so much in a couple years was not wise financially, we know! It wasn't and I am fine with admitting that. But, to finally get to where we are and how happy we are now, it was worth it. Wish we would have just found this place first, but oh well.

Long story short... if you have doubts about this house now, don't buy it. You guys can easily afford to get exactly what you want in one of the other new build neighborhoods. Go that route.
Thanks for the input. And thanks to everyone else for the advice. We are going to pass on this one for many of the reasons previously mentioned. Too much uncertainty with the commercial lot and small yard. It isn’t the ideal situation it needed to be to make sense moving on it when we don’t have any urgency to do so. We will keep looking. Thanks!
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