Well, a lot has been happening in the house search since my last major update:
- We found a house!
- The house was listed for $179k and we offered $160k (due to its condition, time on the market, etc)
- We then waited 4 days to hear back from the sellers! They live out of state, but still – 4 days to respond is ridiculous.
- On day 4 things happened fast – the sellers came back with a counter offer of $170k
- We went back with $163k
- The sellers responded with $165k, which we agreed to and put the house under contract
- We arranged to have a home inspector and two contractors visit the property
- The home inspector gave us the run down of the house (including that he had inspected it in 2010 when it had previously sold). Major findings:
- The house was built with aluminum wiring (current houses are built with copper) and most of the aluminum to copper connections needed to be redone. We had an electrician quote the work at $2500.
- The air conditioning needed to be checked as the differential between the air coming into the unit and being blown out wasn’t as high as it should be. We had an electrician look at the unit and determine it was ok, just in need of a tuneup.
- Lots of other, more minor issues (a couple of shingles needed replacing, cracked window, sprinkler head needed replacing, etc)
- We spent many hours with the contractors (both at the property, and then later over the phone and through email) discussing our vision and options for the property. It was built in the late 60’s and was in need of a thorough updating (floors, paint, master bathroom, etc).
- The first contractor was the husband of one of Mrs Aspiring Blogger’s friends. His quote came out to $73.5k…yowza! That included a $15k line item for a “contractor fee”, which I thought was nuts.
- The second contractor was a friend of our Realtor, and had done lots of work with him. His bid came back at $47k – and no line item for a “contractor fee” – so at least we were moving in the right direction.
- Of course, neither of these bids included contingency fees for budget overruns, which are bound to happen on these types of projects. On top of that, we still had to add in all new appliances, landscaping, gutters, and several other big ticket items. Basically – the costs in their bids were just the beginning of the expenses we would experience with this house.
- After running the numbers we determined we would need to keep our total budget under $215k (including all repair expenses) to have a chance of breaking even when we sold it. Let’s look at how this breaks down:
- Purchase price – $165k
- Remodel costs – $50k (minimum)
- Selling costs – $10k (minimum)
- Total – $225k
- As you can see – even including a pretty conservative number for the budget and assuming only $10k in expenses when we eventually sell it – this house would be a money loser for us. So, what did we decide to do?
- As we were still within our 10 day “option period” we decided to terminate the contract. Even though we had spent $632 so far ($200 option fee and $432 for the home inspection), we determined that we would end up spending a lot more money and be left without much to show for it. On top of that, the more we thought about the house, the less we could see ourselves living there long term. Of course, this is meant to just be a short term solution, but if things work out, then hopefully we’ll be living in the house for years to come – so we want to find somewhere we can see ourselves settling down for a while.
- We’ve decided to expand our search…again. Mainly by increasing our search area and also our budget. While I originally mentioned a $125k home, we’re now willing to spend up to $250-275k range to find what we want. We went and looked at some brand new homes this weekend and (of course) found some amazing ones, but we’ll see where we end up. I’ll keep you updated, but leave me a comment or send me an email if you want a real time house hunt update!