June has arrived and it’s glorious! The sunshine and warmer weather make living in Oregon wonderful this time of year. October is better, but June is a damn fine month here in Portland: wild roses, blackberry blossoms, and strawberries; birds, squirrels, and bicyclists; outdoor dining, evening strolls, and morning coffee on the porch.
I’ve been in a great mood for the past week, and it’s not just because of the weather. It’s also because, after three months of hard work, Kim and I have sold our country cottage. We’re not sure what the future holds, but for now we’re renting a small place in the Lake Grove neighborhood. It’s fun!
And now that all of that work is finished, I can turn my attention to other things — such as writing about money. To kick things off, here’s the story of what I’ve been up to for the past few months, of how we sold our house in this crazy real-estate market.
When we bought our house in June 2017, I paid $442,000. The previous owners had listed the place at $450,000, but our home inspection revealed a lot of issues, so we asked for concessions. They weren’t willing to move much, dropping the price only $8000. We bought it anyhow.
During the next three years, we did our best to address (nearly) every problem from the inspection report. I spent $157,000 on repairs and upgrades — far more than the $8000 in concessions that the sellers had granted us. Thus, my “cost basis” for the house was $599,000 (and Kim spent an additional $14,000 on the place).
In prepping our home for market, Kim, Andi (our real-estate agent), and I had some long talks about pricing. Andi called our place a “quirky”. She said it was a “unicorn” with very few comparable properties from which to gauge pricing. I realized that even though I’d spent $157,000 on remodeling, I was unlikely to recoup the bulk of that. I thought we should list the place at $550,000. Andi and Kim thought $550,000 was too low.
Ultimately, our listing went live at $580,000 on the evening of Thursday, April 15th.
By noon the next day, we had an offer: $595,000 with the home in AS-IS condition. The catch? The offer expired within 24 hours.
“I think we should take it,” I said.
“No,” said Kim. Andi said the same thing.
“The buyer is trying to prevent you from holding the open house this weekend,” Andi said. “I know it seems tempting, but I think you’ll get additional offers — for more money! — if you let the open house proceed.”
So, that’s what we did.
Kim and I spent Saturday and Sunday driving around northwest Oregon, exploring all of the small towns. We tried to picture ourselves living in each place we visited. Some, we could. Others, we couldn’t. Meanwhile, strangers streamed through our home.
“What’s the news?” we asked Andi on Sunday night.
“Well, feedback is about what we expected,” she said. “People think this is a quirky house. But they also love the yard. I think you’ll have two or three offers by tomorrow evening.”
Sure enough. By Monday at five, we had two offers, both with escalation clauses. (Plus, the first offer asked us to keep him in the loop.) One offer topped out at $620,000. The other topped out at $621,000 (and would have gone as high as $628,500). After some debate, we decided to accept the offer for $620,000.
Then the waiting, uncertainty, and stress kicked into high gear.
SO MUCH WAITING!
When we bought our house, the inspection report had been pretty bad. It almost scared us off — but not quite. We decided we were willing to take on the house as a project. We bought it with the knowledge that there’d be a lot of work to do. We were okay with that. What we weren’t okay with was the fact that the previous owners had clearly tried to hide some problems from us — problems the inspection report failed to find.
As a result, we vowed to take the opposite approach when selling the house. We tried our best to share everything we knew, both the good stuff and the bad. (That includes sharing all of my blog posts and videos on the subject!) Yes, all home-sellers are required to make mandatory disclosures. We did that, but we tried to share more too.
We were pleased to see that the buyers were even more thorough about inspections than we had been. Their well inspection was more comprehensive than ours had been. Their septic inspection was more detailed than ours was. And while we were not present during the actual home inspection — and we never saw a copy of the final report — we were told that the inspector found several other issues that we had been completely unaware of.
“There’s more rot under the house,” Andi said. “It’s not just under the bathroom. There’s rot under another wall. Plus, the inspector feels that your new carport is causing structural issues. It needs to come down.”
“Wow,” I said, my stomach sinking. “I had no idea.” We’d spent a lot of money to build that carport. It had never occurred to me that it might actually be damaging the house itself.
The buyers’ inspections took place during the last week of April. Their inspection deadline was May 4th (Star Wars day!) but because they found so many issues, they asked for an extension to May 7th so that they could have contractors assess the work they’d need to do.
All of this made sense, obviously, and the rational part of me was pleased that the buyers were being so diligent. If they proceeded with the sale, they’d know what they were taking on. But the irrational part of me — the emotional side — was a nervous wreck. It was eighteen days from the time we accepted their offer until the inspection deadline expired. That’a a lot of waiting and a lot of uncertainty! I’m not good with uncertainty.
The day before the inspection deadline ended, we received the buyers’ revised purchase agreement. Based on all of the problems they’d uncovered, they were dropping their offer from $620,000 to $580,000 and they wanted us to cover $13,000 of their closing costs. Their net offer was $567,000.
“They’re asking for $53,000 in concessions,” Andi said. “That’s a lot. You’ll have to decide if it’s too much for you. Remember, the backup offer is still good at $621,000. They’re still interested. But I want you to consider this. At this point, these buyers know more about your house than you do and they still want to buy it. That’s good news.”
We agreed. It was good news. But we also agreed that $53,000 was a lot to give up. Kim and I spent the evening sipping beer at a local pub, trying to decide what to do. Accept the offer in hand? Go to the backup buyer? Something else?
“Here’s the thing,” I said after we’d talked it out for the billionth time. “I originally thought we should ask $550,000. $567,000 is still more than that. And after I heard how lousy the inspection was, I’d decided I could take $565,000. That’s almost exactly what they’re offering now. I know we put a lot of work into this house, and I know that you love it here, but I think we should go through with it.”
“You don’t even want to counter?” Kim asked.
“No,” I said. “I want the buyers to be happy with this deal. I want them to have room to make the repairs they need. We weren’t able to get everything done that we wanted to. Maybe they can.”
In the end, we agreed to the buyers’ terms. It felt like the right thing to do. And we truly do hope that this allows them to finish making repairs on the house so that it’s in great shape for years to come.
Renting Like College Kids
While the process of selling the house caused me consternation, Kim was completely unfazed. “You’re worrying about nothing,” she told me several times. What worried her was finding a temporary place to rent. She was afraid we’d be unable to find a place that’d take all four of our beasts.
I’ll admit: My initial research had me worried too. There were lots of places that would rent to you if you had a dog or two cats, but none of the listings I saw allowed three cats and a pup.
Fortunately, Kim managed to find one listing that seemed perfect: a small (1000-square-foot) home on about a quarter acre in the middle of the city! We visited the place at the end of March, but that was well before we knew what our future held. We weren’t ready to commit. When we re-contacted the landlord at the end of April, she had good news. The place was still available, if we wanted it. We wanted it.
Despite agreeing to terms with the buyers, I still felt stressed about selling the house. In fact, I was so stressed that on Sunday, May 9th, Kim ordered me out. I’m not joking. “I think we’d both be happier if you spent the night over at the rental,” she said. So I did. In fact, I moved over and never moved back.
For one week, Kim and I lived semi-separate lives. She stayed at the house we were selling; I stayed at the rental, spending my nights on the floor in a sleeping bag. During the days, she continued with her normal life. I began to slowly move our stuff to the new place. We ate dinner together, but that was it.
Then, on the weekend of May 15th, Kim and I recruited a friend to help us move all of the big stuff out of the house and over to the rental (and/or storage). Once we had things mostly arranged, we brought the animals over to their new home. They hated it at first, but they love it now.
For the past two weeks, Kim and I have felt like we’re college kids. It’s weird. This house feels like the sort of place where we might have lived when we were in school. Plus, we both know it’s a temporary stop. It’s a transitional home while we decide where we want to live long-term.
But you know what? We like it. Sure, the place is small but it’s homey. The animals have found their groove. The neighbors are nice. We’re once again within walking distance of everything. And it’s liberating to not be responsible for anything.
This very moment, for instance, a repairman is here to fix a leak in the fridge. I told our landlord we had an issue, and she took care of everything else. (“Holy shit,” the repairman said when he got here. “I haven’t seen a model like this in a decade. Maybe longer. This fridge is from the 1960s.”)
And did I mention we have peacocks? For whatever reason, a flock of 30+ peacocks roams this neighborhood. They’ve been here for decades. Our next-door neighbor has lived here for thirty years. She says the peacocks had been around for more than twenty years when she moved in, so they’ve probably been here for fifty years or more. It’s fun. (And very, very noisy. “Kee-yah! Kee-yah! Kee-yah!”)
Despite my fretting and fussing, the sale of our home mostly went by the numbers. The deal closed last Monday, and the proceeds hit my account on Tuesday. Last Friday at noon, we turned the keys over to the buyers. We are no longer homeowners.
Now it’s time to figure out what comes next.
Kim and I still think we want to move to a small town, probably in Oregon or Washington, probably near the water. But more and more, we’re not sure. After three weeks of living in a walkable neighborhood again, I’m reminded of just how much I love this lifestyle. I’m energized and happy when I can walk to accomplish nearly all of my errands. It brings me joy.
“What we really need,” Kim said the other day, “is a newer home in a small town with a large lot that’s still within walking distance of grocery stores and restaurants. Is that too much to ask?” We both laughed because we know that it is too much to ask.
“What we need,” I said, “is to buy Lorelai’s house in Stars Hollow.”
“Yes,” Kim said. She knew exactly what I meant.
While there’s no doubt that I’ve been browsing Zillow obsessively, it’s more to get a feel for what’s out there than with any kind of seriousness. Kim and I need to get some clarity about where we want to live and what we need/want in a home before we begin searching in earnest.
Our first step, I think, is to research a possible mortgage. I’ve purchased my last two homes with cash. I don’t want to do that this time, if we can help it. I want to use leverage, and I want to take advantage of low interest rates. To that end, I’ll be contacting mortgage brokers later this week. We’ll see what sort of home we can actually afford.
And, of course, now that all of the chaos is over, I can resume other aspects of my daily life — such as writing here at Get Rich Slowly. Yay!
For the numbers nerds, here are some final stats.
I paid $442,000 for the house in June 2017. Quicken says that I spent $157,000 on upgrades during the four years we owned it, for a “cost basis” of $599,000.
We sold the house for $580,000 less $13,000 in closing costs, for a net of $567,000. After fees, etc., I received $534,000. From that, I gave Kim back the $14,000 that she had put into the house. So, my net proceeds were $520,000.
That’s a loss of $79,000, which makes me sad.
But look at this math! If we had stayed in the condo in Portland, we’d have continued to pay about $600/month in HOA fees. That’s roughly $29,000 over the past four years. Plus, the entire complex was hit with a special assessment for plumbing repairs. That would have cost us $50,000. Holy cats! So, that’s $79,000 we’d have lost if we’d stayed.
And one final way to look at things: If you divide that $79,000 loss by 47 months, you get $1680. One way to look at it is that I just spent $1680/month to rent a country cottage for a few years. That’s not so bad, is it?