Voted Most Likely to Become a Realtor

I know a lot of realtors. I know some socially through church or other organized events. I know some through friends of friends. There’s also the realtor that sold me my condo. There are a few who have latched onto me from an open house or one-time viewing of a listing. They keep me on their newsletter mailings in hopes that I will use them. Every once in a while, even I am surprised by a new realtor connection.

When we started seriously looking last spring, we didn’t want to commit to a realtor. I figured I might come across a house where the seller wanted to sell but couldn’t because he owed so much on his home that he couldn’t unload it for market value and maybe if we didn’t have those pesky realtor commissions a deal could be worked out. Or maybe I’d find the house I liked then use one of those discount brokerages that give you part of their commission. After all, I was planning on doing the lion share of the work. I wanted to keep my options open, especially since I was going to be doing the work of searching the MLS for the house we wanted.

Ultimately, we didn’t go that route. It’s hard to see a house without an agent. Not every listing has an open house and agents typically won’t schedule a private show a house unless you are with another agent.

If we said we had an agent, some would get quiet and stop “highlighting the home’s features.” If we said we hadn’t settled on an agent yet, they would pounce on us like a closeted theologian on a cabana boy.

Redfin has this option where you can tour homes with no obligation. Now, there’s no such thing as no obligation but this is probably the next best thing. After a certain number of home viewings, you are expected to commit to an agent. So we signed up and picked a few houses to see one Sunday.

We selected five homes to tour (maximum allowed per tour is six) since there were a lot on my favorites at the time. Of those, the agent could only get us in to see two. No one returned phone calls for two listings and another didn’t match the comps and she wouldn’t show it to us. The biggest surprise was the agent’s name. Layching Quek. I went to high school with a Layching Quek and I wondered if it was her. [While both common Asian names, I recall from high school Layching pointing out that the combination wasn’t that common].

Turns out it was her! She didn’t recognize me, or appear to recognize me so I didn’t out myself. Just played it straightforward. We saw two homes and they did not impress. One was in a new subdivision behind a bus terminal and the thought of people getting lost trying to find it was enough to put us off. Plus it was a short sale, which is anything but. The second was one of those homes in a great neighborhood that would have been worth asking price during the boom. However, the owner had overleveraged his mortgage and put no money into the house, which was quite frankly a dump.

The interesting thing is that after the tours, Redfins sends you an email with the agent’s comments. She said something very positive…about the wrong house! Her comments were clearly about the first house we saw, but she attributed them to a house we didn’t even get to see. I emailed her about it and she said she would correct it, but one year later the comment is still there. I guess we must have been in different curriculums in high school.

Money has never been cheaper to borrow

Now that the election is over and half the county is cheering and the other half jeering, let’s get back to the idea of buying a house. Since interest rates are at historical lows, money has never been cheaper yet simultaneously harder to borrow.

That’s because the interest rates are at historical lows, artificially induced by government interference. However, underwriting requirements have not only gone back to pre-boom criteria, they have actually overcorrected and are even more draconian than ever. It’s one thing to want to see three months of bank statements, it’s another thing to want college transcripts and how deep your fantasy league went into the playoffs.

During the boom years there was this whole pre-qualified versus pre-approved thing. The terms were used interchangeably so I often have to think about it carefully to remember which is which. Pre-qualified simply meant that based on some simple questions and back of the envelope calculations, a mortgage broker gave you a ball park figure of how much home you could buy. Basically if you had a job and a pulse, you could get a loan. Sometimes only one of those was required.

“Pre-approval” means you have met with a loan officer, your credit files have been reviewed and the loan officer believes you can readily qualify for a given loan amount with one or more specific mortgage programs. Based on this information, the lender will provide a pre-approval letter, which shows your borrowing power.

These days especially, Sellers like pre-approved buyers because there’s less risk the deal won’t go through.

So we are doing our best to make sure all our ducks are in a row and have not skeleton’s in their duck ponds. With money being so cheap, it is tempting to buy at the top of our price range. With two condos on our tab, it might be more prudent to rein that temptation in.

Don’t get distracted by Unicorns when House Hunting

Unicorn Criteria:  The unicorn is a legendary imaginary animal from European folklore.  Unicorn Criteriais a set of requirements for a home that are restrictive, picky and almost impossible to find wrapped up in one place.

Finding a house to buy is easy.  There are tons of them on the market.  Finding a house you like to buy is harder.  You have to look at a lot of castles to find your palace.  The first thing you have to do if figure out what is a requirement, what is a nice to have, and what is straight up Unicorn Criteria.

Wanting a Master Bedroom large enough for a king-size bed and furniture is a reasonable requirement.  Same Master Bedroom with a master bath or a walk-in closet is a Nice-to-Have.

Same master bedroom with his/her walk-in closets, a master bath with spa shower and radiant floors in a specific city neighborhood is a lot to ask for unless your pockets are deep; essentially Unicorn Criteria.

Most city houses don’t have these features unless they are brand new construction or total gut rehab, because they weren’t the innovation back when the house was first built.  Think about it, most of the housing stock in Chicago was built centuries ago when only the rich entertained and everyone else simply rode their dinosaur to the stockyards to slaughter animals for those rich parties they weren’t invited.

Many of the hot gentrified neighborhoods today were once middle and lower class worker neighborhoods that didn’t have a lot of the amenities of today.  For instance, indoor plumbing was around but having more than one bathroom per floor was a luxury for the rich.  Spa shower?  Yeah every decade since the 50s has some version of a spa shower but unless it was put in last week, it can be pretty outdated technology.

It’s also a little more difficult to do those searches on the internet because they aren’t “codable”.  Want 3 bedrooms or more?  No problem.  Want 2 baths but willing to settle for 1 full and 1 have (1.5 or 1.1 in Realtor Nomenclature)? How about central air and garage parking.   That’s easy to search, assuming the listing agent filled out the MLS form correctly.

Want rooftop decks?  Vaulted ceilings and skylights?   skylights in the bathroom.  Does your dream kitchen require Shaker cabinets, granite countertops, stainless steel appliances, and a tile backsplash?  How about a double vanity in the master bathroom?

Now you have to look at the pictures or read the listing description.

When I bought my condo in 2003, I wanted:

• Central A/C,
• washer/dryer in the unit
• a real not faux fireplace,
• a separate dining room and
• Dedicated parking.

Most of those are items that many renters lack.  I would have liked stainless steel appliances but that was more of a Nice-to-Have.  Little did I know back then.  There were so many cookie cutter condos being churned out that I wasn’t really asking for a lot.  Unfortunately, it was also a seller’s market.

Today we want a bigger wish list.  We want at least 3 bedrooms, 2 full baths and garage parking.  We also would like a finished basement and/or attic.  If I cannot stand up straight in the basement (I’m 6’2″) than we move on to another house.  We’ve passed on 1.5 bathroom listings and listings without parking or Central A/C.  Most importantly, we don’t want to have to do any major renovations and live under constant construction.  Sure we might update one bathroom or upgrade some appliances in the Kitchen.

What is your Wish List/Unicorn Criteria?  What are you willing to compromise on and what is a deal-breaker?

 

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