Saturday, February 27

We are buying a house in Northern Virginia

I have not been so active here because we have been busy looking for a house to buy since getting back from Christmas vacation in Finland.

Our goal was to find a house within our budget not too far away from my work. That was a little tricky given that I currently live less than five miles from the office, so every house we looked at was going to result in a longer commute than I have now.

One thing that we learned pretty quickly is that despite all the news on how bad the housing market is, all real estate is local and the local market in Northern Virginia is pretty competitive, especially in the more affordable range. Just how competitive:
  • Many of the houses that we were interested in were on and then off the market within a day. A couple of times we would see a house come on the market and immediately send the details to our agent only for him to come back that there were multiple offers on the property already, sight-unseen.
  • House flippers are still working the market. However, this is not necessarily a bad thing as they are taking a $200,000 - $300,000 dump and turning it into a $350,000 - $450,000 renovated home.
  • Renovated homes don't spend much time on the market.
  • There are many short sale homes on the market. This is a problem given that you have to wait for the bank to accept any offer acceptable to the seller. We tried to avoid short sales and would limit that to only short sales where there was only one lender. This was after considering looking at one home but found out that there were three lenders against the property and it took six months for the first lender to approve the sale.
  • Houses priced over $400,000 are in a different market than those under $400,000. I think this has lots to do with people not being able to borrow whatever the house costs instead of now only being able to borrow what they can afford.
We made two offers on homes, both inside the Capital Beltway. For the first house we offered the asking price and asked for nothing in return. No payment of costs, no fixing anything. There ended up being three offers on the property with the two others offering more than we did. Apparently that house went for around $20,000 over the asking price.

For the second house we took the same strategy of offering the asking price and asking for nothing in return. Again there were multiple offers on the house. However, this time our offer was selected.

Now we are in the middle of going through the motions of buying the house. Our home inspection resulted in a second inspection by a structural engineer. We came up with two issues that will cost about $10,000 - $12,000 to repair. As far as the seller is concerned, they are not interested in doing anything or compensating for anything flat out saying that they would simply go with another offer, because they can.

So, despite all the wheeling and dealing you see on 'Property Virgins' and the other real estate shows, don't think that you are going to experience the same in your search. In the end, we have decided to bite the bullet and purchase this house. Looking at the market here, this house is still a good deal. As a bonus, since making the offer on this place we have yet to see another house come on the market within our price range.
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