When’s the Best Time to Buy a House?

Share

Answer:   When You Don’t Have To!

Setting / Intro

It’s the August 2007 timeframe. We’ve spotted a house that looks like a real good buy. Marieta and the girls want it. I want it too but I don’t want to part with the money and we don’t need the house. I’m perfectly happy living in the company provided house. But, the girls want a house of their own and they tell me so – often. I keep looking at it. The market is slow. The house is sitting unsold for a long time. The agent calls practically begging me to make an offer. The girls want it. Pressure mounts.  What do I do?

First Look

I was impressed. The house presented well. It had nice light blue colored walls; modern kitchen; bathroom and walk-in closet off the main bedroom; two car garage; 3 additional bedrooms although one was very small. And, in the back yard was a nice in-ground cement pool; not very big but elegant. It had a fancy kidney shape and big rocks placed artistically around to top giving it that resort look.

I kept looking at the sales brochure to see if I was reading the price right. Every time I looked down, it said the same thing; $479,000. This seemed like a great price; a great buying price; a bargain. But, for some reason, the house wasn’t selling. I couldn’t figure out why?

I was comparing this house to one that we purchased earlier in the year. The house we purchased was not as presentable and yet we paid $465,000 for it. I was secretly wishing we’d waited and bought this one. It had more features and was more modern and up to date than the one we bought earlier. I was wishing we were more patient and had waited for something like this to come along. Oh, well. I guess we just missed the boat. I left the open viewing and essentially forgot about it.

Another Look

Next week in the paper I noticed the house was still for sale. There was another open house and I invited my wife Marieta along. Big mistake. She loved the place. When we got home she said, “Let’s buy it.” I was not ready for that response. I just wanted to show her what was available on the market and what I thought was a good buy. I didn’t think she’d want to buy it. I should have known better.

Why buy? We were living in a comfortable company provided house in a nice neighborhood. This housing benefit was the equivalent of getting an additional $20,000 a year in my pay. That’s assuming $400 per week rent including utilities; which was about the going rate at the time. Now, the company did offer a benefit if you bought your own house; $11,000 a year. This was also a good deal but I felt it wasn’t as good as taking the company provided house. So, I couldn’t justify from a financial position why we should by a house to live in. I figured as long as I was working for the company, it’s better to take the house.

Somehow I managed to talk my wife and daughters out of getting the house. I argued that it didn’t make any sense financially to do it. They shrugged their shoulders and seemed to forget it after a few days.

Make an Offer!

Then a couple weeks later the agent called the house. “Dave, this is a great house. Why don’t you put in an offer?”

Deep down I wanted the house. Her phone call put it to the front of my mind again. I could hardly believe the house was still on the market. My mind started to work overtime. I started to wonder, “Maybe this is the time to buy. Maybe I should make an offer. Maybe we can get the house at a very favorable price.”

I brought it up again with Marieta. She wasn’t in the mood. “You take me to these houses then you say we can’t buy it. Why do you show me then?”

She was not interested in me getting her hopes up and then dropping them. She already made it clear she wanted the house.

“The agent called and wants me to make an offer. Are you ok for me to make an offer?” I asked for her permission.

“Yes. Make an offer.” She quickly replied.

So, I dialed the agent. “We don’t really need the house but if we can get a good buy we may get it. Is the owner open to offers or are they fixed on their price?” I asked.

“Definitely, they’re open to offers. They want to sell. You make an offer and I’ll present it.” The agent replied.

“Ok, would you put in an offer of $450,000?” I questioned.
“I’ll put it to them right now.” And, then she was off the phone.

The phone rang a short time later. It was the agent, “Your offer is a bit too low. The owners are thinking about renting. They’d rather sell but your offer is too low.”

Ask a Question

So, I tried to think of what to say next. I wanted to keep the dialog going. I was in the hunt for this house. What could I say that would express my desire to raise my offer but not show my hand? Hmmm …

Here’s what I came up with, “How much does the owner want in order to change his mind about renting?”

I liked that question. It told the agent I may be willing to raise my offer, but it also said I didn’t want to pay more than the minimum required to get the owner to sell.

“I don’t know. I’ll have to ask him.” The agent replied.

The next day I got a call from the agent. “If you come in with an offer of $465,000 the owners will take it. Otherwise, they’ll go forward with their plans to rent it out.”

I thought this was great. If we could get this house for $465,000 that would be a good deal for us. But, I didn’t tell the agent that. Instead I said, “Let me talk with my wife about it, then I’ll get back with you.”

Marieta and I discussed the situation. I told her there was only $15,000 standing between us and the house. We offered $450,000 and the owners wanted $465,000 or they were going to rent it. We both agreed; we’ll pay the extra $15,000 and get the house.

Good News and Bad News!

Here’s the good news. We got the house for $465,000.

Now, here’s the bad news. There’s a reason why we got the house for a substantial discount and there’s a reason why the house sat – unsold – for so long. We were now saddled with these issues. Let me explain.

Pool Fencing

The first issue to turn people off from buying the home was the pool fencing; it wasn’t certified. The law requires all pool fencing to meet stringent guidelines. So, we had the choice of either having the owners get it certified or we could accept this responsibility. We chose to take on the responsibility. Here’s why.

If we let the owners fix the fence, they would do the bare bones minimum to meet compliance. It would probably cost them $20 to weld the swinging fence door shut and then a few bucks to move the clothes line back a meter or so. Done.

But, the pool and yard fencing were a disaster. The bottom part of the entire fence was practically all rusted out. Landscaping dirt was piled up against the fence and the dripper system was working overtime to provide just the right conditions to rust big holes in the metal fence. The fence had to go; virtually all of it.

And, if we took on the certification job, we could get support from the government. They would pay up to $4,000 for pool fencing. But, if the fence was already certified, we wouldn’t qualify for this grant. I wanted the fence replaced anyway so, we decided it would be better to take on the fence certification task.

To qualify for this $4,000 pool fencing subsidy, we had to get the fence certified within three months of purchasing the property. So, the clock was ticking.

Ensuite Bathroom

Another big negative for perspective buyers was the ensuite; the bathroom off the master bedroom. It had a combination whirlpool spa and shower. Now both of these features are great but when you combine them they become a negative. You take a shower everyday, but you don’t use the whirlpool spa everyday. But, every morning when you go to shower you have to climb over the whirlpool spa wall to take a shower. It’s not convenient. And prospective buyers balked at having to take on the task of redoing the ensuite. More money out. The agent told me this was a big negative in getting the house sold.

Back Yard Privacy

Next, the back yard had virtually no privacy. A big two story apartment complex borders the property and the neighbors can look straight down into the yard. Again, the agent told us this had been a big stumbling block for prospective buyers.

Landscaping; What Landscaping?

Finally, the landscaping was a mess. Very untidy from years of neglect by the renters. But, you could see it had potential. It just needed a lot of work. The worst area was around the pool. Vegetation seemed to crop up from everywhere. It looked like an overgrown jungle. The pool area is relatively small yet there were at least six palms trees looming over the pool. And mounds of dirt with vegetation spraying out all over.

I knew it all had to go. And, it was going to be a lot of work; a major overhaul to he whole pool area.

These are the major issues that helped us get a good buy on the property. They kept all the other prospective buyers away until we could finally make the decision to buy. I’m glad the house had these negatives; otherwise it would have been scooped up by someone else and probably for a lot more money. And, we wouldn’t have this gem of a property today. We’ve taken care of all these issues and the house today is a joy to live in and will sell or rent for a handy sum.

Renovations Anybody?

Over a one year period we steadily chipped away at each one of these negative issues.

Pool Fencing:

The first project was the pool fencing. This was time critical. We had three months to get it done in order to qualify for the government grant of $4,000. We got cracking.

Getting a quote was the hardest part of the project. I had two people come by and review the project but they wouldn’t give me a quote. They complained it was “too hard.” I called a local fencing company and they told me they couldn’t even look at it for a month or so. I asked around and people kept recommending this one company; the same company that said they were too busy. Then after a week or so of having no luck, I had an idea.

I got in my car and drove to the recommended fencing company. I walked into the office and said to the man in a very polite tone of voice, “I know you guys are busy right now, but I’m wondering if I can get on your calendar – say in a month or so – to get a job done.” I was desperate. I needed this fence put up within three months. I needed someone to tell me they could do it. Doesn’t have to be right now, but at least tell me a time within the next 3 months.

The man looked up at me in a rather pleasant way. He seemed to be pleased with my approach. Apparently, everyone wants things done right now. I wasn’t asking to have a job done. I was simply asking to get on their job list.

“Yeah, that would be fine. The earliest we could get to it is next month. I’ll write it in on the calendar.” The man answered as if telling me in a round about way he appreciated my not wanting it done right now.

Part of the pool fence project was to clear out all the jungle growth. All the pavers around the pool were removed and then the fence team scrapped the area flat. All the dead and dying palm trees were removed; which was all six of them! And, the area around the pool was left flat and level; just perfect for the paver team.

As the fence was being erected, my neighbor approached me and asked if I would consider extending the fence all the way across the back yard. I already had this plan in the works. The bottom portion of the fence in the back yard was rusted terribly as well and needed to be replaced. I’d already received a quote from the fence team. My neighbor offered to tip in half. I was very appreciative.

So, in the end, I got the new pool fencing in place well before the three month deadline. A certifier came by and gave me the necessary pool fence safety paperwork; it all passed after a few minor issues were identified and fixed. Then came the best part; the government deposited $4,000 to our bank account for complying with the pool fencing certification rules within the three month timeframe. I was excited.

Then, my neighbor, chipped in half the cost for the remaining length of fence between our properties. This project was a real bargain.

Pavers around the pool:

The next project to tackle was the area around the pool. It previously had these ugly pavers. I think it was more the workmanship than the pavers, but it just looked bad. So, they were all removed and stacked up in the back yard; to be used for another project later. Then in came the paver team.

When I got the quote I almost fell over; $11,000! But, by the time the project was finished I forgot all about the money; the placed looked immaculate! I may have paid $11,000 but the finished product made our home look like a million bucks! This is a good example of money well spent. The workmanship was excellent and they completed in a timely fashion. They even put up a small shed around the pool pump equipment. This final touch really made a big improvement to the look of the pool area. It went from looking like an overgrown, wild vegetation jungle to looking like a five star resort pool area. It was a real joy to sit out by the pool now.

Ensuite Bathroom

Now, we went on to tackle the ensuite bathroom.

What is an Ensuite Anyway?

By the way, the term ensuite has become synonymous with bathroom; especially the bathroom attached to the master bedroom. But, it really has nothing to do with “bathroom.” In French it means “then, later or in succession.”

It came to mean bathroom when hotels in France started advertising “ensuite rooms” which meant your room came with a private bathroom. The bathroom came “in succession” with the main hotel room; hence the term ensuite. So, technically, when someone says the house has an ensuite, they should really say it has an ensuite bathroom. But, that’s how language evolves; people understand what you mean so why bother blurting out more words than necessary (Like I’m doing here!) When someone says their house has an ensuite, we know what they mean. It has a bathroom attached to the master bedroom.

Tear it Down and Build it Up

This project came off like a charm. It called for ripping out the cumbersome spa bath combination shower and the old style vanity. Then rip up the floor tiles and put in new ones. My renovator team came up with an interesting idea; they ran the floor tiles up the wall to about waist height. This had a surprisingly nice effect; it looked like the bathroom was planned that way from the start. In other words, it didn’t look like it had been renovated!

Then came the slick glass shower stall and new vanity. The whole project took about two weeks. I didn’t get much change back from $10,000 but again, it was worth it. It probably added much more than $10,000 to the value of the home. I remember the agent saying the spa/tub/shower combo was the biggest objection people had to buying the home. We just took away the objection. And, we could now enjoy the benefits and comfort of our new ensuite bathroom! Entering the shower in the morning was no longer an Olympic event. Before the renovation, we had to get a running start and use an aerobic exercise step to leap into the shower. Now, it was just and easy walk; obstacle removed.

Back Yard Privacy:

The other major objection people had to buying the home was the lack of privacy in the back yard. Overlooking our back yard were two story apartments where neighbors could look right down on us. Now, we did have a virtually private large verandah but still when you enter the back yard, it did feel like there were twenty sets of eyeballs glaring at you. This was not really the case, but it felt that way. I could sense it when we were first looking at the property. But, I had a solution.

The answer was simple. Replace the tiny garden shed with a big one. Everyone wants a big shed. I know I do and would you be surprised if I told you my wife Marieta does too? So, a large shed was an easy sell. But, the double benefit would be the privacy factor. A large enough shed would block virtually all the units from seeing into our back yard.

So, I ended up getting a 3 meter by 3 meter shed that extended very high up. When it was finally erected, I was surprised how tall it was – much taller than I thought it was going to be. And, therefore, the new shed provided much more privacy than I expected. All this for about $8,000 including permit and cement slab. I thought it was a very fair price for the benefit it provided. Another objection scratched off the list!

Other Projects

Other projects included the following:
• Back yard lawn and pavers around new shed and side of house area. We hired out the paver work; came out beautiful. But, we took on the small lawn area in the back. Turned the dirt over, racked it out, planted seed. We now have a very nice looking backyard area.

• General yard clean-up and removal of debris. Thinned out the “jungle” growth around the house. Now, house looks tidy and neat.

• Rocked in common town land area in front of house. Originally, this was a disaster area. It made the overall house look awful. It was a wasteland and severely detracted from the house overall appearance. Finally, after a neighbor commented on how ugly this area looked, I decided to take it on as my next project. I hired a landscaper to scrap it flat, then spray the weeds, then lay down plastic, then cover with crushed rock. I paid him $2,000 and have never looked back. Very good money spent as this one little project improved the overall look of our home immensely. Every time I pull into our driveway and look over this neat and tidy area it gives me a great feeling of pride. And, I’ll bet the neighbors were relieved to see me take care of this eyesore.

• Getting reverse cycle air conditioning to the bedrooms. This was a must. The house came with reverse cycle air-conditioning to the main living area and to the master bedroom. No other rooms had it. I felt this was very unfair to my two daughters. Alice Springs can be exceptionally hot in summer and uncomfortably cold in winter. So while Marieta and I enjoyed the comfort of air-conditioning, my girls would either freeze or boil, depending on the season. To fix this situation I hired a local company to install air-conditioning to all the other bedrooms. The house is a much more comfortable place now, especially in the middle of summer and the middle of winter. And, my girls really appreciate this upgrade. By the way we had this done virtually strait away; my daughters didn’t have long to wait before they were in climate controlled bedrooms!

What’s the Lesson Here Anyway?

I think the lesson here for me is three fold. First, buy when you don’t have to. That way you can drive a more favorable bargain. Second, listen to your family. They deserve a nice place to live; a place of their own; a place where the landlord can’t kick them out. And, finally, fix the house up as quickly as you can so you can enjoy the benefits of the upgrades. Why wait until it’s time sell to fix it up? Why let the new owner enjoy all the benefits?

Liability to Asset

Even thought this property doesn’t make us any money – and therefore, according to Robert Kiyosaki, is not an asset – I look at it as an excellent move in my property investment journey.

Purchasing this property gave me more options. It allowed me to sever the link between my JOB and my place of residence. Remember, when I was living in company housing, if I quit my JOB, the first thing I’d have to do is move out of the house! Now, I was no longer “stapled” to the company house. I could quit my JOB and not have to move. This was a big benefit when I finally made the decision to quit the JOB world (Read about that in another article).

Also, it provided our family with a place of our own; a place that was ours. A place we could dress up the way we wanted; a place we could upgrade the way we wanted, when we wanted and how we wanted. Today, it’s a much improved and much more livable home to the one we purchased.

It not only looks a lot better but it has that “I’m loved” feel to it. And prospective renters and buyers will sense this invisible feature and will probably be a lot more willing to pay top dollar for our property. And, when this day comes, our home will make the magical balance sheet transformation from a financial liability over to a financial asset.

Until that day, we’ll enjoy living here!

Tags: , ,
Previous Post

Pick a House; Any House!

Next Post

Buying a house over the internet