Monday, January 12, 2009

Bargain hunting

AB and I put a lot of credence into what our family advises us with respect to houses. At least on my in laws side - they have a lot of experience both professionally (my MIL is a real estate agent and my FIL is a mortgage lender) and through real estate investments. If there are two people who know the business it is them.

There are typically two different schools of thought in purchasing real estate. One thought is that you buy as much house as you possibly can. You stretch yourself to the max knowing that you will get promotions and eventually your payment won't be so tight. And the people who do this tend to make a fortune in real estate. The other school of thought says that you buy what you need and make sure to live well within your means. Neither method is wrong.

Both methods have merit... with the first you might make a mint on a home, particularly if you can afford to buy during down times. The flip side is that a number of these failed ventures lands us where we are now with the economy. Too many people with mortgages that are too big. With the second method, if you always play it safe you are never going to get the big payoff.

Our family has offered differing perspectives on how to handle house shopping. But one thing everyone agrees on is that right now is the time for bargain shopping.

This last weekend we saw both of these perspectives in action and had to (or still are) making a decision on our path forward.

We viewed nine houses this weekend. Four houses on Friday afternoon/evening and five houses Sunday morning.

We had planned on seeing two or three houses on Friday afternoon and were a little surprised when our agent apologized about adding in one more. No problem, we said, we were anxious to see what she found for us.

It was this fourth house that is an explicit example of the first perspective on home buying.

AB and I have established with our agents our upper limit. That doesn't mean we won't look at houses over that amount, but our agents know that we will not offer anything above that amount and that it has to be one amazing house to even bring us to our knees... I mean to our max point. Our agent told us the story behind this house.

Big long unfamiliar story of "they need to sell". Ok, not a big long unfamiliar story, quite the opposite actually. We hear that a lot. "Seller is motivated" or "bring an offer". She told us that the house was WAY outside our price range, but the listing agent begged her to show it to us and that they will entertain any offer.

A house on the hill in a gated community on a fabulous corner lot with an amazing view. The house was amazingly grand.

But as I walked through, it wasn't my house. Yes, it had everything that I want in a house. But I couldn't see myself in this Barbie dream house.

AB and I actually kicked it around and drove back up to see it on Saturday in the light. It was still amazing. And we were essentially told to make an offer at the high end of our price tag and the house was ours.

It was tempting. Damn tempting. It is still tempting. Because when the economy turns - and we know it will, we could sell it and make some big money. We may not be able to vacation or get out of debt, or take our kids to the movies, for the next couple years, but we would have one amazing house.

The problem was I didn't love it. I still don't love it. It wasn't my house, it was some rich person's house. And gated community? Like there are any kids on a gated community.

Sunday morning the first house we went to helped us exercise perspective two. The first house we looked at was a little over half the price of the Barbie Dream House. And I fell in love with the house. I have even had a hard time not calling it "my house" already. And we haven't even made an offer.

It's a pretty house on an ordinary street. It has a great kitchen and walk in pantry, but it needs work. It needs a new shower upstairs. It needs paint... badly. It screams for new carpets. It needs some love.

I love that house. It IS my house and thinking about all the options is a lot of fun.

And we can still go on vacations... and buy a minivan... and buy land to build a cabin... and pay for our house cleaner...

Now I just have to finish selling my husband on this. He doesn't see himself in that house... yet. He wants something "just a touch more grand, but not the big house grand".

I will work on him. I will succeed. Resistance is futile. (Or we will find something else between now and Friday... you never know.)

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