My wife and I have been house hunting for the last few months. Of course, when I saw house hunting, I mean co-op hunting since houses are too expensive here in NYC. When you purchase a co-op, you do not technically own the apartment, you own shares of a co-op corporation that owns the building. There is a monthly maintenance fees that covers expenses such as heat, hot water, property taxes and staff salaries.
We found a place only one block away from where we currently lived that we liked. We are familiar with the area and like it, and it is in a good school district. Yes, with a baby a good school district always is an important consideration. We are looking at 2 bedroom co-ops which are approximately 900 to 1000 square feet. The co-op was listed at $321,000. We offered $300,000. The seller countered with $315,000. We came back with $305,000. The seller said they would take no less than $315,000.
I created a comparative analysis of the property to determine what a fair price would be. I went on Redfin and looked up similar properties that were sold in the area. There are a few co-ops sold in the last few years which were even in the same building complex, so that is a great comparison. I looked at what the seller paid for the co-op and took into consideration the renovations that were made. Based on that analysis, it seemed that the price was relatively fair. The co-ops in that area which were comparable ranged from $290,000 to $325,000. But, this listing was new to the market and the seller was not anxious to move, unlike other places we saw where the owner had already moved to a new home. We were in no rush to move either. Our one bedroom is getting a little tight, but we’re okay staying there for the time being. A few other reasons why I thought we had time was that it was winter and the weather hasn’t been that great. With the holidays upon us, I figured there wouldn’t be many people rushing to buy a place. So at this point, it was just a staring contest, each of us waiting for the other to blink.
Well, I was right! The seller blinked. The day before Thanksgiving, they said they were willing to drop the price to $310,000. We accepted. During the Thanksgiving weekend, not much was going on, and I didn’t expect anything to go on being that it was the holidays. But a few days into the weekday, I received a call from my realtor telling me that someone had made a higher bid: $316,000. What?! As much as it pained me, we matched that price, even though we could have had it for $315,000. The other buyer raised another $2000. We didn’t want to get into a bidding war, and didn’t come back with an even higher offer. Losing out on the property was a bit disappointing. I started questioning myself for not being more aggressive. Maybe I should have just accepted the seller’s counter-offer. Oh well, nothing we can do now.
We found a co-op listed at $305,000 that we were interested in. The sellers had dropped the price from $325,000 to $315,000 to $305,000. They were desperate to sell. Apparently, they had accepted an offer, the buyer had gotten a mortgage, but the co-op board rejected this buyer. The seller already bought a house in Long Island and didn’t want to have two mortgages. We made an offer of $295,000. The sellers said that $305,000 is the lowest the co-op board would allow so they couldn’t lower the price, but offered to give us $5,000 upon closing. We agreed. The sellers asked for a plethora of financial information from us such as bank statements, credit report, etc to show that we would be able to afford the place and pass the board interview. The board there is strict, and they were already burned by the previous rejection. I don’t like giving all this private financial information out, but that is the nature of co-op boards. After a few days of looking at our financial information, the sellers rejected our offer! According to my realtor, one of the reasons was because my wife had two late payments on her credit card. Yes, my wife was not careful and paid some bills late. It was one for $17 in 2007 and one for $29 in 2011. Really? They rejected our offer just because of that? How strict is this board? Maybe we’re better off not buying it. In anycase, my wife needs to be more careful with paying her bills on time. She might need to automate her bills and use Credit Sesame to monitor her credit.
Mortgage and Real Estate Trends
While I don’t have a crystal ball, it seems like mortgage rates are trending upwards. No, I don’t think it’s a good idea to rush into a mortgage just because I think it will go up, but since we’re ready to buy, I do feel a sense of urgency. I don’t think there is anything wrong with renting, but I think buying will work out better as we’re planning on staying for a while. Another reason is that I have a feeling that the housing market is trending upwards in my area also. Manhattan real estate is expensive, and this has spread to Brooklyn which has a really hot real estate market. I have a feeling that those who are priced out will be looking into Queens pushing the prices up here too.
Does any one have house hunting and negotiation tips? Should I have been more aggressive and accepted the seller’s counter-offer?