Just closed on a house


By swebb   Follow   Thu, 24 Jan 2013, 11:07pm   306 views   2 comments
In Denver CO 80206   Watch (1)   Share   Quote   Permalink   Like   Dislike  

I thought I would share my experience for those who might be interested. This is central Denver.

We have been looking in some form or another for about 2-1/2 years, and finally closed on a house yesterday. We used Redfin and had a good experience with that. The house itself is an 1890 Victorian in a semi-urban neighborhood, a few miles from downtown. It's convenient to where I work (3 miles?) and in a very good school district (we have kids). It suits our needs quite well, and the monthly payment is several hundred $ cheaper per month than our current rent. Vacancy rates in Denver are ~4% right now (extremely tight) and closer to 0-2% in some areas. It does need some updating, particularly in the kitchen, and we will eventually need to reconfigure the upstairs with more bedrooms -- this would be a $major job. Excited about the neighborhood, too. Nice 2 car garage ( less than 10 years old), which is a real bonus in this area. Construction cost for the garage robably in the $20k-$25k range, I'm guessing.

The Denver market has seen a ~12% YOY price increase, mostly due to severely limited supply. This increase mostly happened in the second half of the year, and we were starting to get scared off. We think we got a pretty fair price overall, and perhaps got it under market -- it doesn't seem to have priced in the recent uptick, but it's really hard to say.

We saw the house the second day it was on the market, and had an offer in later that week. We came in about 5% under asking price. We were disappointed when we got the phone call from our realtor -- 5 total offers, 2 full price, one of the full price was a cash offer. Being that this was just the 2nd or 3rd house we considered putting an offer on in over 2 years, we were pretty bummed. A week later we get a phone call from our realtor -- the cash deal fell through, the buyer got cold feet and pulled out after the inspection. Who knows how that really went down.

Evidently the other full price offer (the first full price offer to come in) left the deal fairly pissed off after learning that they got skipped over in favor of the cash offer. Additionally they may not have been well qualified, and for whatever reason the sellers re-engaged with us. We were pleasantly surprised.

Our agent suggested that we put together a full price offer if we wanted the place -- after all, the market had validated the price with 2 full priced offers. I told her that I wanted the sellers to put together a counter. A few reasons:

1. Respect, of sorts. I already put my offer out there, now it's their turn. If they were really doing us a favor by coming back to us first, and expected a full price offer, I may have played ball. But I wanted to at least try to get them to respond to our offer. (Fear works both ways, right?)

2. I wanted to give them an opportunity to come down on the price -- if I come in with a full price offer, there is zero chance that I will get it for lower. If they have to make the counter, they may come down some, even if it's just a nominal amount.

3. I didn't want to play their game again. The first time around I came with the first offer, which then enabled them to drum up multiple offers. I didn't want to do that again -- I wanted an offer in hand that I could then decide how to handle. If I sign it, the bullshit with multiple offers stops right then.

My realtor seemed to genuinely think I was being crazy (or maybe just risky), but whatever. The seller countered at about 3% below asking (my original offer was 5% under ask). I was happy about that.

We did an extremely thorough inspection, and turned up a laundry list of mostly minor to moderate issues. We did test for asbestos, and that was the one thing I asked them to cover -- about $3500 worth of asbestos abatement on the HVAC ductwork. They agreed.

The rest of the deal went smoothly, and we finally closed yesterday afternoon. Relieved, but worn out. Now we have to move, yuck.

FYI we locked in the loan on the 12th of December, and got a 3.25% rate (conventional loan). The rate credit was enough to (mostly) cover the origination fee and underwriting fee (about 1.25% total). The appraisal ($387) and a few other minor fees were not covered. There were $500 or so in other fees (lenders title insurance, closing fee) that we had to pay. Seller paid for the owners title policy, as is customary in CO, as well as 1/2 of title company closing fees ($350 total?). The Redfin rebate along with some buyer paid closing costs essentially covered all of the non-lender fees, prepaid insurance and other escrow funding. Our out of pocket was effectively just the down payment and nothing else. We considered 3.125 and 3.0 rates, but decided that the cash was more valuable than the rate buydown - I agonized about it at the time, but in hindsight it should have been an easy decision.

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  1. Buster


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    1   11:22pm Thu 24 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Congratulations on your new home.

  2. E-man


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    2   12:11am Fri 25 Jan 2013   Share   Quote   Permalink   Like   Dislike  

    Swebb,

    Well played. Congrats. Enjoy your new home. :)

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