The property purchase palooza 😮 🏠

The process of buying a house is quite a game..

After I had accepted my job at Drift and knew I would be in Boston for the foreseeable future, my dad approached me about buying a house instead of renting. At first I was like uhhh what? And he started explaining the numbers to me but I knew nothing about mortgages or even the process of buying a house and why it would be a good investment. I was kinda busy with school and spring break was coming up so I didn’t have time to look up the numbers by myself and process it so after break I talked to him again and he walked me through some back of the napkin math and showed me the benefits of buying and how reselling would work when houses appreciate in value (or the risk of if it depreciates which is much less likely). My parents owned a few condos for investments at the time and my mom is a real estate agent so I knew they knew what they were talking about. My dad really didn’t like the idea of spending so much on Boston rents so he was willing to initially help out with the down payment which I am expected to pay back and let me take over the rest for the sake of making a good investment.

Once I was convinced, I started talking to my mom about the process and she told me that I would need a pre-approval letter before anything starts. This is a letter from the bank that basically says that the bank trusts you to make payments on time and that you will be able to afford your mortgage. She told me to start calling different banks and credit unions and explain my whole situation and inquire about their mortgage rates. There are different options for mortgages; I was looking at a 30 year one (which typically has the lowest monthly payments), and there are options to do fixed or flexible rate, or a fixed rate for a certain amount of time and then it will change. Rates for first time buyers are also typically a bit lower. Since my dad was going to help with downpayment, the rates could also change so I worked on researching and making phone calls to figure out what would be a good option. I got an idea of the rates and how they were pretty low at the time. I just was kinda unsure when I actually had to ask for the letter itself.

Shreya connected me with Tyler, our real estate agent and he started giving me the rundown of what buying a house looks like. He had told me to send him a list of what I wanted in a house/neighborhoods to get the ball rolling.

I then started working on a list of things I want in an apartment as well as talked to my dad about where our budget was. He gave me a range of what he thought would work and I started looking at Zillow/Redfin to get an idea of what the listings looked like and what their prices were like. I started compiling a list of the 2 bed/1–2 bath ones I liked that I would send to Tyler so that he could look at MLS, the real estate portal as well and send me other listings that were more accurate (sometimes Zillow and Redfin are not quite up to date).

A few weeks later when school had ended for me, I started getting more serious with the process as I knew I needed to find something by hopefully mid/end of summer when I would be starting (at the time I thought hopefully not remotely) and wanting to move back. I had learned that the process typically takes 6–8 weeks from the signing of the offers (sort of like an agreement for sale) til the settlement date (when the deed is transferred to you and you officially own the place. You have to go through lots of paperwork (spoiler: atm of writing this part I am about to embark on this process) as well as a house inspection, make sure your mortgage doesn’t fall through (people who are more financially unreliable may face this situation), and eventually a final walkthrough which happens right before settlement.

I told Tyler to send the places when he was available as I was ready to dive deep into the process. He sent a few to get started and based on my feedback started compiling more lists of places. Over a few weeks he sent emails which contained all the 2 bed listings within my price range and he outlined the pros and cons of each place which was super helpful! I liked that even though he knew generally what we were looking for, he still sent everything because it allowed us to make comparisons to other places on the market and gave us the option even if we did not necessarily go with it. There were times we switched between places and changed our minds as well so it was helpful having all the places laid out in front of us.

When looking at properties, there are a few important things we looked at:

  • Num bedrooms (were obviously looking for 2, but 3 could suffice in case I wanted to rent to another person or create it into a bathroom + closet space if there were only one other bathroom)
  • Num bathrooms — 2 had shown to have a higher resale value due to privacy, but we were willing to work with 1 if we absolutely had to, but strongly preferred 2
  • Location — I had been thinking about South Boston as prices were more reasonable there and it was close to downtown! South Boston has locations close to the beach and park and those would probably have a higher resale value
  • Living area — we found the places with 1000+ sq ft seemed like they were going to be more worth it — while that is a lot of space, it would have a better resale value and its not like those were always the more expensive ones.
  • Heat: Gas is cheaper than electric so we tried to opt for that
  • Cooling: AC is preferred, but we started floating ideas around for adding in AC units if the unit was overall cheaper
  • Parking space: would be nice to have, as I could rent it out for $200-$300/mo and offset some of my costs
  • Association fee: could range from $150–370. For reference, my parents pay something around 150 or lower for our single family house, and seeing these prices they were like woah…that much for a condo?! The association fees can cover some or all of the following: water, sewer, master insurance (not entirely sure what this is), exterior maintenance, snow removal, reserve funds, refuse removal. We thought somewhere between 150–250 would be reasonable
  • Taxes: property taxes usually end up being around 8% of the property cost in Boston, so we had estimated roughly 6000 per year, and anything lower was ideal
  • The pictures: Of course the pics of the place are important. We liked the idea of a more open kitchen, non-basement, hardwood floors and a generally more open layout. It is tough sometimes because pictures may not accurately depict places. Many of them had a virtual tour associated which were really nice in terms of being able to better visualize the spaces.

Throughout the process of looking at so many places, I was able to start seeing what properties were valued better than others and how to figure out what was more worth it.

Fairly early on in the process, my dad had found a connection to someone who was actually selling a 2bed/2bath in Southie. This was not through Tyler, rather through a different agent he knew here in Newtown who had a friend selling their place. If we could get the place without the agent, there was a chance we could knock off 2–3% from the price as that is typically the cut the realtor takes. He got pics of the place and showed it to me and started pushing for the place (it had to be done that week if we wanted it before it officially went on the market). I really liked the place as it was well kept and really nice, but it was a lot higher than my budget by the equivalent of $400–500/mo extra.

I started getting stressed that week as the money seemed like it was coming in a bit tight and I was getting confused on how much was ok to save and how much to invest in the property (in hopes that I would make it back). I was also working with Shreya to figure out what her budget was and see how that would affect my budget. I knew one of my priorities was to live with her, so I was getting stressed trying to juggle the practicality of the place and its future worth and looking at other places that were cheaper and probably would fit my budget better and allow me to live with someone I knew would be a good roommate and somewhere we would both be more comfortable with the budgets. I felt the pressure of getting it done that week, and got mad and freaked out over the budget. We found out that the people were pretty unwilling to negotiate as there were similar places that had sold for even higher than their asking price so it would be unlikely that they would be willing to negotiate to something that was slightly more reasonable for me.

After we tossed that place out, I started to realize I needed to keep my cool a bit better. Spoiler again, I got burned a few more times with this and have since developed a better understanding of containing my stressors and not letting them cause me to lash out at innocent bystanders (my parents). We went back to the drawing board and kept looking at places Tyler sent. As I said, I kept freaking out every so often as I was trying to crunch numbers, and then my dad forced me to make an excel document where I was to track various prices, association fees, insurance costs, and taxes and see how the costs would fit my budget. Doing this helped me a lot as I was able to be more objective and figure out numbers that would work. I still freaked out every so often, and that wasn’t right of me as my parents were just trying to help. I did explain what was going through my head:

  • The big numbers are scary and I’m getting used to them
  • I was having a hard time figuring out how much was ok to save
  • It sometimes felt as though my parents changed their minds about things and it confused me more/we had miscommunications, but I bet I also did that
  • There were so many properties being sent over and I didn’t know what we were supposed to do with ones we liked as we didn’t have any plans set in stone to visit them and it felt weird to start making offers without actually seeing the places
  • I was scared I was going to get locked into something which was kind of ridiculous since my parents were helping me every step of the way and are pretty experienced in the process

My parents said they understood my frustrations and stressors and reassured me that these are normal and that they were in fact glad I was stressing rather than taking everything so lightly and just being like yeah it’ll all work out. I was asking valid questions. They knew I was learning and told me that and I’m glad they did as it helped me take a step back and think about what I was thinking. I found that writing out my thoughts and also writing out all the math was extremely helpful and helped me contain everything. They reiterated the importance of learning to deal with stress in adult situations such as these as this is only the first of many, and how it is important to not lash out unnecessarily at those who did nothing. I was kinda glad this was my only main stressor due to the quarantine and I focused on figuring out how I deal with situations, and learned important lessons.

I kept looking through more places, and we had chats with Tyler where we discussed some of the places that we liked. He gave us pros and cons of places, whether their prices had dropped, and we discussed what it would look like to make modifications to the houses if needed (ex. adding AC, adding an extra bathroom). At one point we kind of paused and realized we did not need to be in an absolute rush since prices of houses seemed to be dropping due to the market demand decreasing but also due to people being impacted by COVID-19. Since the prices seemed a bit inflated, we thought it best to wait and keep looking as things pop up, bu not to feel pressured. If we found something that we really loved then we would go for it, as that opportunity may not come around again and we then risk me potentially being pressured later into buying something quickly or signing an unwanted lease. But we were ok with waiting for prices to decrease a bit as well.

Around the second half of May we inquired about a few places from Tyler and saw some really nice ones pop up. A few that he had originally sent us back at the end of April were still around and we started looking at them more seriously as well. We faced the issue of asking about a few places and then hearing a day or two later that they were under agreement and no longer on the market…which gave us an indication that the market might be starting to pick up a bit more. We also were noticing that there were a few properties that had been on the market for a while (like 60–70 days which is a lot in the Boston real estate market) and were wondering if something was wrong with them. Tyler explained that that could be the case with some places, but with others, they were simply just priced too high and are starting to come down now.

The apartment I am now in agreement with was one of the properties that was initially priced too high. The owner had dropped the price about $4k, gotten no hits, and then dropped it $16k and still hadn’t gotten any bites. It was also taken off the market for some time as well because a large amount of days adding up doesn’t look great and concerns people, as it did us. We inquired about it and their agent told us they were going to put it back on the market and he also gave us a price about $15k lower than what is was now listed at and told us that he thought they would sign at that price without negotiation. The price worked for us and we did really like the place. Since we noticed the market was starting to pick up as well, we thought it might be worth making a trip up to Boston to check out the place and a few others before we made an offer.

There were 2 properties we were pretty interested in seeing. The first being the one I discussed above. The selling agent told us that the owners were planning to host an open house that Sunday (it was Tuesday or Wednesday) and so Tyler told us that if we could get up there Friday and if we ended up liking the place we could make an offer that expired that Saturday, which would mean if the sellers accepted it then they would not need to go through process of the open house. If we could get in before the open house this would have a few potential effects for the sellers:

  • No open house would be less work for the sellers
  • No open house means they would settle with us, reliable buyers, who aim to fully go through with them
  • No open house could also mean they may miss out on an opportunity to obtain a buyer who is willing to offer them more
  • Having an open house would mean they could lose us as buyers if we find something else in the meantime which would be unfortunate if the open house does not pan out for them
  • Having an open house could mean they could obtain a buyer who offers them more
  • Having an open house could mean they obtain a different buyer who seems reliable at first, but whose mortgage could eventually fall through, or someone who wants to negotiate more, or someone who eventually backs out

As you can see there are many factors at play here and it’s so hard to predict what is going to happen. We were hoping that if we liked the place enough then we could move forward with them and hopefully save all of us hassle.

We had another property we were eyeing. This one was significantly cheaper than the other. It had 3 bedrooms and 1 bathroom, one of which was significantly larger than the other two, meaning there could be potential to convert part of the largest bedroom space into a bathroom + closet, which would increase the value of the house, and potentially help with my mortgage if I could find a 3rd person to live there. The place unfortunately did not have AC either, but we thought the cost of adding a bathroom and AC could come out to less than or equal to the cost of the other one, so we still wanted to see it. We heard from the selling agent that she already had 2 offers higher than asking price and she didn’t sound very encouraging about us making an offer but we figured we may as well check it out anyways and were willing to make an offer higher as well since we would consider adding a bathroom + AC.

Tyler was able to schedule us 4 showings that Friday, which was ideal for us. Due to the pandemic, we did not want to stay anywhere and ideally wanted to drive to and from Boston in one day and do all the showings. This was our schedule:

  1. The property with 3 bd/1bath that we wanted to add a bathroom + AC. Already had 2 offers above asking price. Looked nice but seemed fairly unlikely
  2. The first property I discussed. 2 bed/2bath, selling agent gave us a price the sellers would settle on that we were happy with as well. Has AC and looked nice. Initially priced too high
  3. A 2 bed/1bath priced similarly as property 2. Didn’t look like it had anything that was super outstanding but didn’t look bad either
  4. A property that was to be put on the market that Saturday for a higher price point than the other three but figured we might as well see it since we were going to be there.

We made it to the first property just a few minutes late. We headed inside with Tyler, and the selling agent did not seem happy with us as she had to get somewhere. She also didn’t seem super excited to show us the property as she knew she had 2 other offers for a higher price. The place was ok, definitely needed some fixing up and there were random cosmetic issues such as a big mark on the kitchen floor due to a structure previous tenants had in there which the agent didn’t seem to address very well. She kept saying things like oh that’ll probably be fixed or oh that isn’t really a big deal. After we were rushed out we debriefed a bit and overall it seemed as though the place could have good value especially with a 3rd tenant, but we wanted to see the others. The lady also very much turned us off with her bad attitude since she was late. She didn’t make us feel as though our time was valued.

The next place was amazing!! It hit all the checkboxes and since it was converted (gutted and redone) 8 years ago, everything was in very good condition. The owners took very good care of it and we were very excited about it and hoped what the agent said about the price was true. If we thought they were going to negotiate we would make an offer for a lower price, but we thought they were really set on that price and so were we.

The other two were ok, not worth explaining everything, but they did not have qualities that made them more worth it than anything else. One of them was a bit too dark and had a very funky layout with very disproportionately sized bedrooms and the other seemed to use too much space for the living room resulting in significantly smaller bedrooms. Property 2 definitely gave us the best value.

Once we were done we were ready to pull the trigger and make an offer for place 2. We stood there on the side of the road like “Ashna are you ready?” and I was like uhhhhh yea i guess 🤷 and everyone was like no you need to give us a definite answer then only Tyler will make the call. I just felt so weird and said lets just think it over on the way to grab my bike from the Parker Hill apartment and then we will call Tyler. I knew I would say yes, it just felt super weird in the moment. Surprise surprise, I called back an hour later and told Tyler to make the offer.

That’s when the fun started.

So I didn’t anticipate any of this happening so fast so I hadn’t officially gotten that pre-approval letter from the bank, which would’ve been ideal since you could need it for making the offer. Tyler has a mortgage lender he typically recommends to people, so we contacted him on the drive back and got that sorted out. Tyler had also put out the offer for the price we had talked to the agent about, no more no less. Now we had to wait and hope they accepted it by 7pm Saturday.

The next morning I got a text from Tyler saying that the counter offer was $15k HIGHER (aka the listing price) with all their furniture included. I told my parents and they were livid. That just literally made no sense. Furniture is not worth that much (1500 is roughly what we calculated) and why did the agent tell us a price if it was just going to go up??

Tyler told the other agent that he would not be able to get us up to that price. He did not make a counter offer, as he wanted them to talk it out and then come back to us before we even made another offer. We knew the people really wanted to sell the place and that’s why we went in on good faith hoping they would be true to that price. We prepared to go up $1.5k more if they wanted to include the furniture. We got a call a few hours later with news! Tyler said they came back down $12k and were willing to take that with all the furniture. We were shocked they came down so much but apparently the other agent talked to them for a while. We knew the furniture was not worth an extra $3k (as they probably would’ve left it anyhow or we could just buy our own for roughly 1500) but it became negligible at that point as it was close enough. We were still pretty salty that they clearly weren’t ready at that exact price, but it was ok. There were some thoughts we had about the situation:

  • The sellers agent played us by telling us a price but then not following through with it
  • The sellers themselves were like “hey since they said that exact amount could we just try for higher anyways”
  • The sellers agent maybe goofed a little bit by promising something that may have not been clearly communicated between the sellers and buyers and that caused us to have to go up

If we had known or were informed that it wasn’t fully set on that price we would’ve obviously gone in lower when we made our offer. All in all the extra $3k would be very negligible in the grand scheme so we accepted. When there were about 15 mins left on our offer we finally got a text saying that they accepted as well!! While we were very excited, my mom made sure to tell me that this is only the first step, and that it could potentially still fall through within the next few weeks as we go thru the inspection and condo docs. Still exciting tho!!

The next step is the attorney review period + home inspection. It lasts about 2 weeks and is when the buyer and seller’s attorneys review the condo docs and make sure everything looks sound. We also have to get an inspection done within a week to make sure the building and condo, HVAC system, water, etc. are sound. If the cost of repairs exceed a certain amount, as per our contract, we can back out.

We already had our mortgage locked in with one of Tyler’s guys but we still wanted to shop around in case we could get any better rates. Once we started talking to the attorney, he wanted some sort of confirmation letter between us and the lender. I asked him what the process would look like if we wanted to switch lenders and he was like that’s not really the best idea, you have a solid group of people working with you etc. We were pretty turned off by his response, as I was just trying to do my do diligence and seek out better alternatives to save myself and my parents some money. We did end up getting the best rate from Tyler’s guy anyways but just the process!

Factors at play

Throughout the negotiation process I was thinking a lot about all the factors that are at play in real estate and it just blew my mind. Some are kind of stated up above but here is a list:

  • Reliable vs. Unreliable buyer: someone’s mortgage can fall through if they no longer can afford their payments. This could happen in the weeks between the offer and the settlement. If this occurs, the seller has to now put their place back on market and seek a new buyer, which delays their process. This also means they have to continue to make their mortgage payments. If they have already bought their new property they may be making 2 mortgage payments! It’s tough because you don’t necessarily know who is going to be reliable or not.
  • Agent ethics: The agents obviously need to make money. This is their profession. However, they should not be scamming their clients; for example pushing for higher prices for the buyer (most chances the buyer doesn’t want to spend unnecessary money) because they will get a higher cut. The seller’s agent is obviously working to help the seller sell at the best possible price. However, when a place is on the market for so long it gets tiring to continue to deal with a place, and could start to turn people off to buying it. It could be in the selling agent’s best interest to push the sellers to settle on something if an offer comes their way in order to be done with that property
  • Seller priorities: Sellers could have enough money to hold them over if they want to make sure they get the highest amount for their property. Some don’t and have the priority to sell asap. It can be hard to determine this and maybe it’s something the agents have to figure out how to convey without being unethical
  • Buyer priorities: Buyers may be in a rush, may want to negotiate, may not want to negotiate (like us) and that can also be difficult to determine

Ok so skip ahead a few weeks. We had our call with the lender, confirmed a rate and were ready to go. We moved past the confusion with the attorney and everything was going smoothly..or so we thought. I casually asked my dad what would happen if we suddenly found a lower rate or the rates dropped in the time between settlement and when we had called the lender. He said I should give the lender a call and just see if we can get it adjusted.

So I gave him a call. I also learned that nothing was going smoothly. In fact, nothing was even going at all. The lender was like oh Ashna it’s good to hear from you how is the process going? To which I was like..shouldn’t you know? And he was confused and claimed that we did not tell him we were going to work with him. This left us dumbfounded as my dad and I distinctly remember being on the phone with him when he gave us a rate and broke down the finances to which we agreed. He claimed that he was confused because we said we were going to shop around and that we never followed back up with him. He said this pretty rudely on the phone which was indicative of his stress due to being swamped with work but we were not about it. We were expecting settlement to be in around 30 days from that day, and he told us that he would need 45 days to make it happen, meaning settlement would have to be pushed back by 2 weeks. We then had to hope the sellers were ok with pushing it back, which luckily they were.

There were several confirmation emails sent and THEN the process was officially started. I made sure to check in with everyone often to make sure things were being moved along. Apparently the mortgage process involves a LOT of paperwork, and many steps. The first round of paperwork is typically just to get initial approvals and then there are times the same things need to be signed or submitted yet again.

As it got closer to the original settlement date (end of July) I received instructions from the lawyer regarding how settlement was going to go down with respect to COVID, as well as payments that needed to be made. The lender had also reached out and asked if we wanted to make it the end of July since he said he could get all the paperwork done (apparently the property did not need an appraisal — which is where someone goes to check the value of the house, and not needing one would save a lot of time). Since my dad had already figured out his days off for the mid-Aug date, we decided to leave it at mid-Aug. Thank god we did.

Fast forward a few more weeks, and I was sending lots of paperwork in to the lender and his assistant. The assistant was my main point of contact and she left for vacation the week before settlement, which is when a lot of things needed to happen but did not notify me. I reached out to her and the email bumped back with the email address of her colleague. I was frustrated to not have even received a heads up or anything, but nonetheless, her colleague helped me out to the best of her ability with various questions I had regarding payments and paperwork.

There was an issue that cropped up where we found out that we would need to purchase a separate flood insurance for the property. I was confused as we were told that the master insurance that covers the building would take care of that. Apparently the sellers never conveyed that there also was a separate flood insurance that they had and the lady needed to get info from the flood insurance which resulted in yet another delay. If we knew this, we could’ve gotten this taken care of without it being an issue, but that’s what happens sometimes I guess.

The Wednesday before settlement (it was scheduled for a Friday), I was getting started on packing and finishing up work when I received a phone call from the lender’s assistant. It went a little like this: “Hi Ashna, I presume you know settlement won’t be happening Friday right?” to which I was taken aback and replied “WHAT no I don’t know???” and immediately checked my email. There it was, a fat email stating in my inbox telling me that settlement was indeed not going to occur that Friday due to some forms not being in. I was very pissed off and was listening to this lady explaining to me that the sellers had not finished signing certain forms which should’ve been done weeks ago. She said they tried to be on top of things, which I was a little skeptical of, as she went on vacation close to the anticipated settlement date, and there really didn’t seem to be much of a sense of urgency from either of those parties.

Frustrated, I called everyone part of the process, the lawyer, the agents, and our mortgage broker asking what could be done. The lawyer suggested that the sellers could give us something called a Usage and Occupancy (U&O) which would allow me to move into the property prior to settlement. This generally poses a risk to the sellers as they would be allowing me to occupy their house uninsured, and liability may fall onto them if something were to happen. Obviously I wasn’t going to do anything; I wanted the process to go as smoothly as possible, and I also wanted a place to stay, so I would be grateful if they did so. Luckily, they came thru and provided that to me so I would be able to move in almost on time. We thought they would allow us to come Friday night so that we would have the whole weekend to unpack, shop, and setup, but they said we could come Saturday. Not the biggest deal, but kind of irksome considering everything that happened. Anyway, we drove up and got settled in.

My settlement was supposed to be a few days later that week and we had noticed one issue when we got up there. They did not leave behind all the furniture that they said they would in our contract. The main furniture was there, but much of the bedroom furniture was missing. As per the contract, they said they would only take one TV and beds, yet they took another TV and bedroom dressers/other furniture. This definitely decreased their $3K value and I was wondering how the settlement would go since I complained about that immediately after noticing things were missing.

The lawyer said that he was not going to be a part of the dispute and said that the furniture issue was to be a separate thing after the settlement, which left me still a little confused as it seemed like it must’ve not been a huge issue for the sellers if that was the case? but I said ok fine lets get the settlement done. A few days later, I headed to the lawyer’s office downtown to sign all the papers! I was the only one there, besides the lawyer and he had me sign a very big stack of papers, many of which I had signed before (this whole process is kind of messy which explained why I had to resign so many of the documents). I had my parents on FaceTime, and was done in about half an hour!

The furniture situation was taken care of after a few weeks, with some frustrating negotiations, but we ended up getting the best deal for it! All in all, it was quite a time consuming process, but definitely very interesting! I have notes on what I am looking for the next time I buy a place, for sure. For now, I’m just going to enjoy this place and my time in it!

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