On Sunday, we dropped…

On Sunday, we dropped off Kavi at Jarmila's, and went to look at open houses in Oak Park. This was meant to just be a preliminary look at some of the places we've been avidly perusing online, since we're not actually listing our place until next week (the painting is half done! The de-cluttering, ditto! The masonry guy comes today! The handyman comes Friday!), and who knows how long it'll take to sell after that. Average time for condo sales in our area is about six months right now. We have some advantages (in that our place is gorgeous and unusual and there aren't that many three-bedroom condos in our neighborhood), but also some disadvantages (in that it's a high-end unit, and as a result, a lot of potential buyers would need a jumbo loan to buy it, and banks are not so happy to give those out these days). So while our place could get an offer the week it goes up, it could also easily sit for six months, or a year, or more. So our very sensible plan was to wait until it sold before seriously making an offer on an Oak Park house.

Then our sensible plan went (half-way) out the window.

See, we looked at houses. The first one was too small. The second one was workable, and relatively cheap, but would probably start feeling small in a few years when second kid starts wanting his/her own room. The third was the ranch house, and I vetoed it because it's just not the kind of house I like (apologies to those who love ranches, but I'm a multi-story gal, as long as my legs keep working). So far, so good.

Then we decided to just drive by one of the houses we'd really liked, but which didn't have an open house listed. We were very curious about it, because it seemed huge, and we were worried that they'd just extended the house right over their entire backyard. It was lovely from the front; we stopped and sat on the low stone parapet surrounding a massive tree, and admired the many levels of Victorian loveliness. The grey walls, accented with pretty purple trim. The incredible wraparound porch, and the mature shrub garden that screened off the porch, providing privacy. The turret! :-) But we couldn't see the backyard at all from the front, so Kevin suggested driving around to the back alley behind the house.

When we did, we ran into the homeowner, working in his open garage on his daughter's car. Kevin wouldn't have bothered him, but I have no shame -- I told him we loved his house, and had been admiring it online, and he said, "Would you like to take a look?" He said his wife was out, and so it would be particularly easy, since normally she liked to clean for two hours before anyone came to look at the house. Of course we said we'd love to, and he said he'd clean the grease off his hands and meet us in front. So we drove around and parked -- only to see a woman carrying a flat of garden plants walking up the front stairs. Oh, no!

At this point, even I felt a bit embarrassed, but her husband was expecting us, so we were pretty committed. We walked up to her, and started explaining the situation in a stumbling sort of way, while she looked astonished and maybe even a bit harassed. But then he came out, thankfully, and managed to smooth things over and convince her to let us take a look, even though the beds weren't made. And oh, my god.

It's gorgeous. GORGEOUS. You walk in, and it's like stepping back in time. You could be living in a Jane Austen novel. Six bedrooms. A beautiful breakfast room overlooking the porch in back and the very nice backyard (that has not been entirely built over, thank god). Original hundred-year-old stained glass (in nice abstract patterns, as opposed to the original stained glass sailboats in one of the other houses). Four baths. Beautiful dark wood. A terrific kitchen. Central air (rare in old Oak Park homes). A rec room downstairs. A small tandem playroom off one of the bedrooms for Kavi. They raised six children in that house, so it is plenty big enough for us. I might even say too big, except that with both Kevin and I working at home so much (every writer (and mathematician) could use a room of their own...), and with all the guests we have who come and stay for weeks on end, I actually do think we'll make good use of all the rooms. And if we happen to have one left over -- a library? a solarium? :-) Want a virtual tour? Take a look!

There are a few issues, of course. There's only one smallish full bath on the second floor, which is where all the bedrooms are, so we'd be sharing it with the kids. We're thinking that we might instead take the renovated attic, that they currently use as a massive family room, and turn it into our bedroom instead, since there's a bath up there. But we can't remember if that's a full bath or not... And the exterior walls are stucco, which wouldn't have been our first choice -- Kevin's concerned that they might have more maintenance issue than some other options would have had. It's closer to a mile walk to the subway, instead of the half-mile we'd hoped for. And....umm...that might be it. The house is damn close to perfect. And it's not just me saying that -- Kevin loves it too. :-)

It's also super-expensive. They've come down a lot from their original price, but it's still at the very top of our price range. Which is okay, as long as our condo sells quickly. But Kevin helped me run the numbers -- if we bought the dream house right now (with some help from his parents), and then our condo didn't sell right away, it'd cost us $10,000 for every three months it stayed on the market in double mortgages. That adds up really fast, and while we could manage it for as much as a year, if it takes longer to sell, we could be in big trouble.

We're trying to be prudent about this. Instead of rushing into an offer right away to try to lock the house down, we're going ahead with our original plan. We're finishing up the work on the condo, and putting it on the market next week. We're going to actually go and look at the three or four comparable houses in Oak Park, including the Mad Hatter's red house that so many of you liked last week. (Big downside to that place -- right across the street from a middle school. Which, okay, will be convenient eventually, but several years of noisy traffic/kids nuisance beforehand, we worry.) We're going to wait at least a week before doing anything rash. And of course, even if we decide to put in an offer, there's all the inspection issues, especially for a hundred-year-old house.

But gosh. Isn't it pretty?

Would you risk carrying a double mortgage? How do you decide, when you don't know how long it'll take to sell???

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13 thoughts on “On Sunday, we dropped…

  1. You just gave me a big urge to look up victorian houses in my town, but I already have a house (an ugly 80’s box of a house, but mortgage free!)

    I used to live in the attic of a beautiful victorian during university. An attic that was probably triple the size of my 1st floor right now. I miss the skylights and the old wood!

    Sigh!

  2. Don’t do it! It is a lovely house, but there’s so much risk in carrying 2 mortgages, especially with the economy the way it is. My husband’s cousin did this a few years ago…they bought their dream house before their starter home sold. And they are STILL carrying 2 mortgages YEARS later, although they have rented the old house finally (after over a year of it sitting empty). They recently found out that because of a corporate merger they will be moving across the country to a different state…where they will be unable to buy a home until the 2 they already have (or at least 1) sell. It’s so, so risky unless you are absolutely sure that you can carry the cost of both indefinitely. Also, you’ll have to leave significant furniture behind in the condo (or rent other furniture) to keep it “staged” for potential buyers.

  3. No way. I wouldn’t do it. We took out a bridge loan when moved to our second home, so we actually had three mortgages (one for each house, plus the bridge loan). The first home didn’t sell quickly, so we rented it out, and were able to cobble together enough funds to keep up with all three loans for a couple of years, then finally sold it for a nice profit. It worked WELL for us, actually, but that was in a very excellent real estate market, and we sold at the peak. It still took us three months to sell the house. Right now, I just wouldn’t do it. I have a friend in a big city who recently fell in love with a house, and wanted to buy it. She put her house on the market, having been assured by her realtor that the metropolitan area was “protected” from the recession and that she would sell quickly for a high price. Her house did not sell, and they had to let their offer on the new house expire. If they had taken out a new mortgage and bought the house right away, they would be stuck with two mortgages indefinitely.

    I would be very nervous paying $10,000/month in mortgages, even if my income were $20,000. It’s a big liability for such an unstable economy.

  4. What the others said. Also you know how lovely my house was in Oakland, but I could afford it. Now I live in a very modern house, and I don’t find it particularly attractive, but we can afford it. I miss my old house, but you can make any house a home. I love beautiful houses, but I love more feeling financially secure.

    And BTW I sold my house in Oakland for slightly less than the list price of that house. Scary.

  5. $10,000 a month for an undeterminable and potentially lengthy number of months would be enough to give you ulcers and heart attacks as your income/savings vaporize. Don’t trap yourself.

  6. Woops, just saw that it’s $10,000 every three months. But I stand by what I said; I have seen other people go through the double mortgage thing, and it is not pretty.

  7. Oh, I feel for you Mary Anne, because I’m not even geographically, let alone financially, close enough to buy that house and I LOVE it and want to buy it 🙂 It’s absolutely lovely, lovely, lovely.

    But, yeah, what the others said. Don’t trap yourself, not in this market. Scary shit is happening, and that sounds way too risky right now. But HUGS because I would totally be tempting just the way you are 🙂 Good luck!

  8. Just BUY it!!

    Okay. I only said that because everyone was saying not to. But I’m with them. It is a lovely home. I can see why/how you fell in love with it. I’d like to meet the homeowner. She seems really organized and it looks like there was a lot of love in that home.

    In my mind, carrying 2 mortgages for however long increases the cost of the house and therefore decreases the return on investment. As does renting staging furniture. And you said the house is already at the top of your price range.

    It sucks! Lots of things happen with houses these days. A year ago, when we sold our home (at a loss), it took longer for the buyer to secure a mortgage than normal – over one month and they put 20% down, the house was sold below market value and that loan was nothing compared to the potential loan for your current place.

    I hope things work out for you to be in the home of your dreams.

  9. Have you considered making a contingency offer? If the market is slow, they might take it. Then you won’t kick yrself if the condo sells one day after someone else buys the house.

  10. Correction: a couple people here have said “$10,000 a month,” but Mary Anne said $10k every three months. It’s still a lot of money, but not nearly as much. Also, I’m assuming that a significant fraction of that $10k is going toward principal, which means that fraction is not being wasted; it’ll come back when the condo sells, right? (The part that’s interest, though, I guess is no longer tax-deductible when it’s not your primary residence? I’m not sure about that.)

    It’s fascinating to me to see this discussion—it finally gives me some inkling of why banks aren’t giving bridge loans any more and why lenders were so unwilling to consider my plans that would have involved my selling my condo quickly. I think that I must just have a really skewed idea of how long it takes to sell something.

    Even around here, I know that there are places that have been on the market for a year or two before selling—but there are so many other places around here that sell within a month (sometimes within a couple days) that I tend to assume (perhaps unwarrantedly) that the slow-selling places must be (a) in a bad location, (b) listed at too high a price, and/or (c) in really bad condition.

    And since M&K’s place isn’t (as far as I know) in a bad location or in bad condition, I would have expected that they could sell it pretty quickly by simply adjusting the price. If it doesn’t sell at the initial price, drop the price; if it still doesn’t sell, drop the price again; if it still doesn’t sell, take it off the market for a month (people apparently do this all the time) and re-list it at a slightly lower price.

    (Another way to think of it: if it’s costing you $3k/month to hold onto the place, and you think at the current price it’ll take 6 months to sell, then dropping the price by $18k now may be a better idea than waiting.)

    I know there’s never a guarantee that a given place will sell at any price or in any given amount of time. But I guess I’m just a lot more optimistic about this than most of the commenters here, even though I’m normally extremely risk-averse.

    But my impressions of how long it takes to sell may have more to do with the market not being so bad in my area than with any sort of objective reality.

    M, do you have any sense of the average time-on-market for places comparable to yours, in your area? Do you have a sense of the prices of those comps?

    If you haven’t poked around on Zillow, that might be one place to look…. And I think realtors also have access to lots of behind-the-scenes info (like whether a given place has been taken off the market and relisted), but I’m not clear on whether you’re working with a realtor for selling your place.

  11. As gorgeous as that house is, I would be uncomfortable with carrying double mortgages. I like the idea of a contingency offer, based on the selling of the condo. Jed, the only problem with the dropping the price too fast, or taking off and relisting, is that realtors have access to that info, and it implies that there are issues with the property sometimes, if the seller drops too much.

    Mary Ann, if the pipes are already up there, it wouldn’t be too hard to convert a half bath into a full one, assuming you won’t have to knock out too many walls. You should start making a list of things you could do with the house and questions about it…why two washing machines and dryers in the basement, for instance?

    It doesn’t look like they’ve done any wonky ‘upgrades for the sake of upgrading’ though. You might want to look into possibly seeing if you can renovate a closet or take space from another room to put in another bathroom, down the line.

    It is a buyers market, so you do have that advantage. I kept a notebook when house shopping and made notes on each house I saw. I would make a contingency offer on it, low-end. Did you ask them why they were selling?

  12. Simone, great point on cost of staging; hadn’t thought of that element.

    Keyan, I have the impression that contingency offers are very rarely accepted at the moment — there’s just not much incentive for the sellers to take one right now, given how hard it is for most folks to sell their places. We could try it, but probably won’t bother. Have to go look at the other possibles first, in any case.

    Jed, I think the cutting price thing can also work against you. For many of the Oak Park houses, we can see that they listed at X, and have had six price drops in the last year. That actually makes us less inclined to make an offer, because it makes it clear that the place was originally overpriced, and so it seems smart to wait and see if they drop it further. One thing about this place is that they did a bunch of price drops in the first six months, but then stopped dropping the price in January — which makes me think they’re really at their lower limit now.

    Kevin’s researched time on market and comps — that’s where we’re getting the sense of an average of six months to sell our condo. But that’s just very fuzzy — average still means it could sell in one week, or in one year. Both are equally likely/unlikely. We should plan on six months, though — which, given the timing, realistically means that we likely won’t sell this year, and would have to go back on the market next spring.

    The kind of behind-the-scenes info you’re talking about (relisting, etc.) is all publicly available on Redfin, no realtor required.

    Catherine, good point about the conversion, and definitely something to think about. Kevin also noted that we might not be able to actually fit a king-size mattress up the stairs to the attic room, so we’d need to look into that. The washers/dryers are because they had six kids. Lots of laundry! I actually think it makes a lot of sense — they don’t cost that much, and they cut your laundry time in half. I’m glad they’re staying with the place. 🙂

    They’re selling because they’re older and downsizing — they just have one twenty-year-old son at home now, and really don’t need all that space. It’s nice at the holidays when the grandkids come, but the rest of the year, it’s a little silly. So they have no real urgency to sell, which also makes them unlikely to accept a contingency offer.

  13. I’ve moved more times than I care to count. If you are sure you will be staying here no matter what… Buy it! Dreams don’t often come twice.

    If there is any doubt about staying here (job, locale, weather, anything) don’t torture yourself with it.

    Best case, your current condo is high demand in spite of the price and it sells before you are ready to move out. This just happened to a co-worker of mine in a similar neighborhood here two months ago. They had to rent a hotel room and storage unit for a month and a half until they finished closing.

    Worst case, one of you loses your income and you stagger along for a year or so with two notes and end up letting the condo go back to the finance company and declare bankruptcy to avoid most of the judgements against you.

    Bottom line, if you are staying, make the leap. If you are not sure, play it safe. Better to ponder what-could-have-been than to live the how-did-this-happen.

    Just my two-cents.

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