From Wikipedia: “The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning “death pledge” and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure.”
That’s right — Gwen is getting back into real estate. We had an offer accepted on a house! This is the 4th offer on a property that I’ve had accepted and the rush of endorphins that hit still take me by surprise.
I’m going to go over a brief summary of my history with real estate for any newer readers that weren’t here then, the details on the house we’re buying, and my advice for any potential homebuyers looking for a house in this ridiculous market. Or, how to buy a house in 2021 when the market is turned upside down.
Gwen and Real Estate
Once upon a time, I was a bright-eyed and ambitious young 20 something who wanted to make a lot of money as fast as possible and retire by the time I was 35. One way to make money fast is real estate, so after consulting with some of my favorite FI real estate blogger friends, I dove right in.
I attempted to buy a duplex in one of the cities I lived in, but the deal fell through when the seller couldn’t secure a rental certificate due to some zoning issues. Read more here for a detailed account.
Then I moved to a different town and fell in love with the infamous Dingle House. The Dingle House was a gorgeous Neo-Georgian Revival-style house built in 1910. The numbers worked out beautifully.…. on paper. I bought the house for $82,500 and got $1,100 in rent when the other two units were filled. If I rented out the studio unit instead of living in it, I could’ve gotten an extra $450 for a total of $1,550 a month.
A series of missteps by yours truly quickly turned my profit machine into a mess. I was bad at screening tenants, hired awful contractors, and a new property manager when I moved 6 hours away among many other problems. The house had been neglected for a few decades so it had more problems than I thought when I bought the house. The neighborhood, while not great when I bought in, steadily went downhill during the 18 months I owned the house. So, I dropped the house like a hot potato when I got a chance and sold to get all the drama off my plate.
That experience left such a bad taste in my mouth that I swore I’d never buy a house again. Renting was the way to go!
So, of course, 3 years later, here I am.…. buying a house.
3 years has a way of softening attitudes and giving you clarity as to what went wrong. Buying a fixer-upper, historic house, with no handyman skills was probably a bad idea (understatement of the year). This time, when house hunting, I knew what red flags to look for and didn’t even entertain buying those houses. Secondly, the idea of homeownership appeals to me — real estate investing holds absolutely no appeal for me. I was getting the two ideas conflated then and have since sorted them out.
So, basically, older-and-wiser-Gwen doesn’t want to invest in real estate to retire early and just wants a nice place to live in is the too-long-didn’t-read summary.
Speaking of a nice place to live, let’s move onto the details of the new house!
The New House
I still have to pinch myself at the idea this house will be ours! I am so very happy our hunt brought us this house.
The details are:
- 2 story Tudor style home with 2 car garage
- 2500+ sq ft with finished basement
- centrally located in St Louis in the top school district in the area
- close to the Galleria and easy access to the airport
The list price was $419,000. We thought that was high, so we put in an offer for $405,000 plus closing costs. They countered with $410,000 plus closing costs and we accepted. After much thought, we decided to have the loan be in both our names. We initially put in the offer as a VA loan, but the selling agent didn’t like that so we redid it with a conventional. Since we were doing a conventional loan, we decided we might as well put down the full 20% to avoid PMI. There are some things that need some cosmetic updating with the house, so we hope after the inspection we can get some credits for things like carpets and appliances.
As previously mentioned, the down payment will be coming from my partner. We are working with a lawyer to get a joint tenancy with right to survivorship agreement and to create an agreement with regards to the money invested in the house in case our relationship goes south and we split up. We both don’t think that will happen, but better to be safe than sorry. The same will apply for a prenup.
So far, the house buying process has been as painless as it can be. The inspection checked out with only a few action items and the paperwork turned into the mortgage broker was accepted by the underwriters. We are on track for an on-time closing at the end of March. To avoid a lot of unnecessary stress and anxiety, my partner and I are going to keep our leases through the end of April and not compress everything into the end of March just to get into the house. Nice and easy, especially as our appliances will take 3 full days after delivery to allow for any potential surface Covid-19 viruses to die before we start touching everything.
So, how did we manage to buy our house in this very unusual market?
Mostly luck, it seems.
We started looking at the houses going on the market around the end of November, just to see what was coming on the market and to figure out what style of house we liked. I tend toward ranches and Mr. Gwen tends to 2 story houses. I’m vehemently against split-level or split-entry houses. Mr. Gwen wanted to avoid major fixer-uppers. We started out with a big geographic area and gradually narrowed it down to specific neighborhoods. Once we had a definite idea of the must-haves, we only looked at houses that met that criteria. This was generally akin to torture as what seemed like the perfect house would pop up, but it didn’t have fiber internet so it was automatically ruled out.
Once we got a Realtor and started looking for real, we turned on email alerts for our parameters on Redfin and a St Louis-specific real estate email site. A new house would come on the market and we’d know about it immediately. This gave us some time to see if it had fiber internet and fit our list.
When a house we liked came up or was listed as coming soon, we’d text our Realtor in our group chat for details on when showings started and the disclosure. If it had a clean disclosure, we’d agree on a time to look at it. All in all, we considered 10 houses as possibilities, went to look at 5 of them, offered on 2 of them and had one offer accepted. It was less us being picky about the houses we looked at and more about the fact that nobody is selling their houses despite it being a complete seller’s market. Sure, you can get top dollar for your house, but where are you going to go after you sell?
How to buy a house in 2021
Our first offer was for 105% list price, 1% earnest money, no repairs under $500, and a 30-day close. The house fit our list of what we were looking for, but we didn’t absolutely love the house. I have zero regrets we didn’t get the house, as I had been warned it might take multiple attempts. One coworker offered on 20+ houses before being chosen. We didn’t write a personal letter, but I would strongly recommend doing so.
Be prepared to drop everything and look at a house as soon as you possibly can. Most houses in the St. Louis market in the areas we were looking at were only on the market for 3–4 days before accepting an offer. If a house went on the market and had an open house on the weekend, it was a toss-up if it would still be available by then. Make sure you’re willing to look at the house (in 15 or 30-minute private showing increments due to Covid) and discuss if you want to put in an offer right away. Otherwise, you might not get a chance to have an offer reviewed.
It is absolutely insane that one of the biggest purchases of our lives was made on the back of a 30-minute showing and 15-minute discussion. Nearly half a million dollars on the line and we spent so little time after seeing the house. I’d like to think all the prep we did beforehand helped make the process so efficient but really it’s the market forcing our hands. I’m not happy about it but I feel better after getting the clean inspection report back.
My final piece of advice is to have your inspector, insurance agent, lawyer, and any other professional picked out ahead of time. St. Louis Home Inspection companies really like to charge by the listing price of the house and I would’ve strongly preferred to find someone who didn’t do that, but we didn’t have the time.
Overall, despite the inherent stress born from buying a house in a pandemic, I am very excited to move into our house. Our house! With 5 legal bedrooms and one basement bedroom, we’ll have plenty of space for all our stuff, a roommate, guest rooms, and room to work from home for every resident of the house. We consider this house future proof as we gradually convert rooms to bedrooms for babies. After moving 8 times in the last 5 years, I am very excited at the thought of never moving again. But mostly, I’m excited Mr. Gwen and I will finally be in a great house in an equally great neighborhood, together forever. <3
As always, thanks for reading! Are you trying to buy or sell a house this year? How have things been going for you? Sound off in the comments below!