Earlier this week Amanda and I went under contract for a 1962 ranch in Boulder, less than a mile away from our current home. We’re excited about its potential and also intimidated by the work ahead — it’s like a time capsule, complete with its original intercom system, whole house vacuum, mid-mod hallway sconces, and wooden wall paneling.
Purchase contracts fall though, so until we close in late-April I’ll remain coy about the property. For now, though, I wanted to share five tips that I found especially helpful through the process, for my own benefit next time or for any readers currently shopping.
1. Track drive-by’s and walk-throughs
Since mid-October of last year, Amanda and I drove by and/or walked through fifty-three properties. These tours helped us to narrow our geographic search, develop a good sense of fair market value, find alignment in our preferences, and identify acceptable tradeoffs.
Naturally, I tracked all of these visits in a spreadsheet so that the information was not lost or confused. It had ten columns:
- Status: For sale, Pending, Sold, Off-market
- Decision: In love, Viable, Eh, Hard no
- Date of drive-by
- Date of walk-through
- Most memorable for: “Chicken coup,” “Creepy basement wet bar”
- Asking price
- Purchase price
2. Find a property with a flaw that you can fix
Especially in Boulder, turnkey properties with a modern aesthetic have been prompting bidding wars. We toured multiple properties that showed really well, received multiple offers, and eventually sold for up to 30 percent over the asking price.
Early on our agent Charlie remarked to us, “I’ve always looked for properties with a flaw that I could fix,” and Amanda and I started to live by this rule. Flaws have two effects: they cull the number of prospective buyers, and they create an opportunity to build sweat equity. Examples include unfinished basements, outdated kitchens, and room for a new half-bath.
3. The excitement should last
A month ago Amanda and I toured one property that was well within our budget, nicely updated, and very close to a go-to running path. Leaving the house, I was almost certain that we’d make an offer.
But the excitement faded, with the property’s positives being overridden by concerns about its stair-filled tri-level layout, small lot, and dimly lit garden-level master bedroom and bath. A day later we shared our hesitation with Charlie, who offered us another gem: “The excitement should last.”
In contrast, since touring the soon-to-be-ours new home, we’ve remained fixated by it.
4. Avoid vulnerability to a downturn early on
When I started looking at homes last year, I quickly realized that “upgrading” in Boulder would financially stretch us. Even though we earn more income now than in 2012 when I bought our current home, and even though we have built significant equity in it, Boulder was no more affordable to us.
In trying to figure out how much I should stretch, a very successful client gave me this tip: “Go as far as you can without compromising your ability to weather a downturn early on.” He shared his experience of buying a Bay Area home just before the bursting of the dot com bubble, selling that property two years later because he was relocated and couldn’t afford two house payments, and having to bring a sizable check to the closing because the house was worth less than he had paid. If he’d been able to wait it out for another year or two, he would have at least broken even.
Amanda and I have a 10-year plan for this property, by which time it will likely be worth more than we paid for it. And if there’s an interim correction due to raising interest rates or a war in Europe, we have sufficient reserves still to manage it.
5. Make an offer with which you are comfortable, however it turns out
Based on nearby comp sales and an aggressive fix-and-flip model, I came up with two offer prices about $25k apart that included a reasonable discount for the effort and risk in renovating the property. I could mathematically justify these offers based on the expected after-repair value.
But I knew that another buyer might come to the same numbers and that I’d probably have to throw in more. But how much more? For two days we drove ourselves crazy trying to out-think other buyers. “What if they offer $X52? So we should really offer $X53.”
On my Tuesday morning run with Matt, he gave me the big picture wisdom I needed: “Make an offer that’s right for you, because in a blind auction you’ll never know what other buyers are thinking.” Amanda and I submitted our offer about a half-hour after I got back, selecting a number that felt right to us with some help from Esmerelda.
I didn’t want to have regrets: regrets that we didn’t offer more when we could have, or regrets that we offered more than we could honestly justify.
Good observations and wisdom, Andrew! Marty has been a realtor for almost forty years and his personal goal has always been to steer the deal in a direction that leaves both parties at least satisfied if not ecstatic. Remorse spoils the deal for everyone. Navigating a successful purchase has never been more difficult than in today’s market. Sounds like you did your homework. Hope it ends up being successful.
Did you do an escalation clause? That was a bit of a rude awakening when I realized I’d actually won (over it now).
Hi. I’ll add a few recommendations from our 9-10 month battle with the housing market.
1) Find the right realtor for your needs and personality. If you spend several weeks talking to different realtors to find the best one for you, you won’t be wasting your time. Our realtor spent about two hours with us (Zoom) just chatting and learning who we are and what we were looking for. We were first time buyers and didn’t always know how we felt during the short time you get in an open house, but she knew us well enough to provide useful advice/comments, point out things (good and bad) that we didn’t notice, etc.
2) Put in the time, in consultation with your realtor, to really focus on what you need vs what you want. I grew up on a rural Midwestern farm and my wife is from outback Australia. We both value peace and quiet and space, but we now live in central Massachusetts where they have a very different definition of “rural” than we do. We wanted some land, but we don’t play the lotto and my wife won’t let me try my hand at bank robbing. Our finances put us in a place to buy a decent plot of land, where we could live in our Honda Fit, or a (hopefully) semi-decent house on maybe an acre.
3) Spend some time checking out programs in your state that may help you, especially if you’re a first-time buyer.
4) In the current market, you’re not only competing against other “normal” folks looking for home to live in but also against investors and flippers ready to swoop in with cash offers. It sucks but you’re probably not going to beat them unless you can do the same.
5) Along the same lines, if you’re not showing up with bags of cash you may have to do silly things like waive the inspection, waive the appraisal contingency, offer escalation clauses, and probably wave goodbye to some of the features you really thought you needed to be competitive. It was quickly apparent to us that the price bracket we thought we were shopping in was not our actual price bracket once you factored in the 20% or more over asking price that was sure to be offered by someone else.
6) If you like a house have your realtor make an appointment for you to see it immediately. There may be an open house scheduled for Saturday, but if the property is good it could be gone long before then (we learned this one the hard way).
7) Be prepared for a slog. I kept a spreadsheet much like the one Andrew described. I looked at thousands of online ads. We visited more than 50 properties in person, including several open houses where the line of cars stretched for hundreds of meters down the road. The entire process was demoralizing.
8) Be patient because sometimes weird things happen. On our second or third week of looking at houses we saw a 50-year old ranch, on an acre of land surrounded by trees on three sides. Not too shabby, and my wife really dug it. We made our best offer and didn’t get it. A couple months go by and what do I see on Zillow but the same house. Our realtor checks and it seems like the buyer backed out, so we offer again. And we don’t get it again. Like I said above, demoralizing. A couple more months go by and I get a call from my mom (who was also cruising the websites) who tells me that the house is back on the market again. Our realtor checks and the buyer again fell through for some reason, so we offered for a third time, including waiving inspection, waiving the appraisal contingency, adding an escalation clause that could take our offer up a bit higher than before, etc. And we got it and have been living here for about nine months.
At least it was a happy ending!
How do you deal with the boring crap in society like this, especially after all your adventures? I’ve only done an AT thru, as well as chunks of several other trails all over the US, and I can’t see ever being much more than a minimalist and doing the nomad thing year round. I’m mid 40s, uninterested in getting married, and it seems the trails are the only enjoyable part of life.
I’m financially secure now where I don’t have to work.
Thanks. Got a lot of advice over the years from you.
How do I “deal”?
You make it sound like this was some kind of forced action, like I had no choice but to buy this house — or make other domestic commitments like getting married or adopting a feline fur baby.
I think it’s helpful to look at life in chapters. In my 20’s I was a dirtbag thru-hiker, and had attitudes similar to yours. In my 30’s I purposefully took some some adult-like responsibilities. In 41 now, and so far this decade is a continuation of the last, and I’m okay with that for now.
I didn’t mean it to sound accusatory or judgemental. I’ve had a pretty unconventional life, and the trail seems to be a somewhat last bit of freedom. I decided long ago marriage wasn’t for me, with how badly men get screwed over nowadays. Not saying all end like this, but I know of quite a few cases. Men basically feel like second class citizens nowadays, can barely talk to women without the whole creep and harassment garbage, everything is so woke. I’m very attractive, so I don’t have that issue, but I’ve definitely seen it with other men.
I just find living in society for the most part boring and stressful. I don’t want to give greedy parasite landlords money, and I don’t want to do a mortgage. I hate driving, car maintenance, all the regular hassle.
I’ve always had difficulty adjusting to life after my deployment. I can’t really relate to people anymore. I always hated owning stuff. I don’t honestly even like owning gear, but you pretty much need it.
I haven’t really changed my mind much in 30 years about it. I went to college, and got a highly technical degree, which I don’t use, other than to make my own backpacking gear.
Staying with a friend this winter, but I hope to eventually be able to live on the trails year round. Always been a dream, and I can finally accomplish it. Just seems like with your massive list of trails, you’d be like dreaming of them or hiking all the time, but with the guide stuff, it’s probably taken care of.
Take it easy.