Death Pledge R Us

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 4^th 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. 

Concluding Thoughts

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!