I am starting a new project that I’m really excited about and it will be taking up a fair amount of my time. But fear not! I am still eager to share the rest of our home-buying experience and I will still be posting here.

Just wanted to give everyone a heads up in case things slow down a little bit. Once I have more to talk about and show, I’ll make sure to let everyone know.

One hint: it has to do entrepreneurship and all the stuff I’ve been complaining about here for so long.

Carnivals

I participated in a couple of Carnivals this week:

• Personal Finance Isn’t for Everyone was included in the Twenty Something Finances Carnival over at Lifetuner.
• Investing in Real Estate and Raking in Dividends without Taking a Tax Hit was included in the Tax Carnival at the aptly named Don’t Mess With Taxes.

Tags: carnival, entrepreneurship, personal finance, taxes

To celebrate the release of my favorite author’s new book, The Big Short, I wanted to share the interviews 60 minutes aired last night that shed some more light on the stories in his new book. In case you missed my Michael Lewis is awesome post, check out the Vanity Fair excerpt of his book.

Part I:

Watch CBS News Videos Online

Part II:

Watch CBS News Videos Online

An extra segment on Michael Burry:

Watch CBS News Videos Online

Tags: 60 minutes, Michael Lewis, the big short

This is part II of a series on buying our first home. Part I dealt with the initial search for a broker and a property. Today I’ll take a look at the next phase of our search: this is when things started to get serious.

As winter started to fade and the weather got nicer and nicer, M and I decided that one reason we didn’t find anything to buy the year before was because we were dealing with our broker’s assistant instead of himself.

So we emailed him (email was the main communication channel throughout this whole process) that we wanted to go out with him personally and he said no problem.

Here’s how it worked: we told him what we didn’t want to compromise on (two bedrooms, central air, no garden units) and the area we wanted to be in (Lakeview/Lincoln Park). He would pick us up at our place and drive us around to a series of appointments he had made.

The Places

Let me get one thing out of the way first: our broker knows his shit. He’s been doing this for 17 years and he knows the developers, he knows the city, and he is good at what he does. No doubt about it.

The places we looked at all matched our “must have” list, but there was always something funky about them. Sometimes it was a weird floor plan or a cramped living space or a dank-smelling stairway.

But there was always something. This would keep happening at every place we visited until we got home one time and talked about whether or not we were being picky. Were we being stupid? Were we not taking advantage of the down market that Chicago real estate (and all US real estate, really) was going through?

Redfin’s Role

As time passed and we visited more and more places, the quality of units we visited started to fall. Maybe it was us or maybe it was the places, but we felt like we were getting further and further away from what we were looking for.

So we started looking online on our own: and this is where Redfin played a huge role. As soon as we discovered the site, the game changed. We would find properties we liked and we’d email them to our broker. He’d do a quick review of which ones sounded/looked good, and then he’s schedule the appointments, pick us up, and take us out to see them.

This made the whole process MUCH easier. It forced us to pre-screen each place and from that point on each place we saw was our fault if it didn’t meet our needs/wants. For more of a walkthrough on Redfin, check out my write up on Wisebread.

It gave us a jump start and made the whole process fun again. At that point, we had probably seen some 50 properties altogether.

But still we found nothing we’d want to buy—not even close.

Persistence

We went out with our broker time and time again and now that we were seeing pictures and details of the places before we physically visited them, things got better.

We felt like we were moving in the right direction.

In the meantime, the market kept getting worse (or better, depending on which side you were on). Prices and rates kept going down and the first-time home buyer’s credit loomed on the horizon—it would end at the end of the year.

This put even more urgency into our search.

At this point we had seen around 70 places and it just didn’t feel like we were going to find anything, which was an awful feeling. We felt bad about going to this many places without ever coming close to putting in an offer, especially since our broker was used to million-dollar homes and we felt like he was doing us a favor.

But we kept looking: it was addictive to go on Redfin and hunt for new places in new neighborhoods. At this point we were off the high rise idea and had moved on to anything that met our specs, as long as the location was close to the lake and in the neighborhood we wanted.

One bad thing that came of seeing this many places is we got a lot pickier: all of the sudden our list of must haves grew: washer/dryer in the unit, a separate dining area, top floor only, and parking.

After seeing so many different places that included one or the other of these details, we felt said to ourselves “Hey, that would be really nice to have. Let’s add it to the list.”

Which made us even picker and got us feeling like maybe we were being unrealistic. It was a tough time because we were all over the map: our price limits varied (fuzzy math is a powerful thing), our demands for being in certain neighborhoods fluctuated when we saw we could get more for our money further away from the lake, and we felt more and more confused about what we wanted.

We were lost.

But Wait, There’s Hope!

Then one day we got into our broker’s car and drove a block north of where we lived. M and I gave each other a look that said, “Well, we know we love the area.”

We walked up to the third floor (!) and checked out the three-bedroom (!!) place.

This was a place we could live in. This was more like it. Could it be that we had finally found a place we liked enough to put an offer in?

We’ll find out next week on the next episode of Buying a Home.

Image by tukanuk

Tags: broker, buying a home, Real Estate, redfin

This series of posts will look at our ridiculously long home-buying process (that had a happy ending!) in the hopes that people out there can learn a thing or two from what we did right and where we messed up. Today we start with “The Search,” which covers the first year of our home-buying process.

After M and I had lived together for about a year, we started talking about buying a place of our own. We didn’t know anything about the real-estate market at the time (it was booming) or how much we could afford—at that point it was just talk.

But as more and more time passed and the amount we had paid in rent started to climb, the talks got more and more serious. After going over to a friend’s place (which him and his wife owned) and hearing so many great things about the real estate agent he used, M and I decided to call him up.

Looking for a home looked like fun. We would know—we watched every home-buying show under the sun: House Hunters International, My First Place, Property Virgins, Property Ladder, etc.

After watching so many people (our friends and strangers on TV) realizing the “American dream” of owning a home, we figured it was our turn to take the plunge.

Our First Mistake

We weren’t ready. Looking back, it’s painfully obvious. But at the time we thought that if we found something, we would buy it.

Just like that.

The reality is we were in browsing mode. We wanted to see what was out there and test out what we could afford. Which turned out to be: not much.

High Rises

When we moved in together, we chose a high rise because it was by the lake, convenient, and had a pool on the roof. We liked it so much that we started with those set parameters: we told ourselves we wanted to look at high rises near the lake and not too far north (this is in Chicago, by the way).

So we called up my friend’s broker and he had his assistant pick us up and show us some places. Right away there were some problems:

• We didn’t want his assistant, we wanted the main guy since my friend spoke so well of him
• The agent was a friend of my friend’s family, so he had done them a favor by representing him—he typically sells million-dollar homes
• We did not have a million dollars

I think you can see where this is headed.

But we went out around three times with his assistant and looked at high rises near the lake. That we could afford (I ran some rough mortgage calculations). They all sucked. They all needed work. They all made us feel poor and stupid for thinking we could afford a high rise near the lake.

This was not renting—it was a totally different beast.

We only saw one place that encouraged us: it had decent square footage but would need a lot of work. And because the price was low, we could probably afford to do the work it needed. Or so we thought.

Pain in the Assessments

But then we got our rude awakening: a little something called assessments. Typically, these range from $150 to $300/month. For high rises, you’ll see them go from $600 up to $1,300/month.

It’s almost like you’re buying and you still have to pay a rent for the right to live there. Insane!

This was our second mistake: we fell in love with the idea of living in a high rise. It got it stuck in our heads that that’s what we wanted and that’s what we were going to get. We saw the numbers, we could do the math, but we clung dearly to the idea despite what the reality was: we could not afford it.

That first year we probably saw around 20 places and never came close to making an offer. As fall came and the weather started to get cold, we decided to take a break and wait until next year, when we would make a point to go out with the actual broker and not his assistant.

That’s when the real fun would start.

Check out part II here.

Image by MissTurner

Tags: agent, assessments, buying first home, high rises, search