The rest is strategy + execution + relationships

While my last post touched on luck, this is a post dedicated to looking at the three pieces of real estate I love the most: Strategy, Execution, & Relationships. These are the parts over which we have more control. So, let’s dig in. 

The story I want to share is about how I found a house to buy in under a month of searching during the hottest market we’ve seen to date (spring/summer 2021). That might look like luck, but I’d argue it has more to do with the other three. Why?

After an agonizing couple months of decision-making about whether or not to sell my first home, I finally closed on it June 24, 2021.

I wasn’t sure I was going to begin looking right away. I’d just been on the seller’s side and knew about the bidding wars, the offers before the open house, the appraisal guarantees, and that only one buyer wins in each sale. I was really uninterested in participating in that on the buyer’s side. 

So, I started going to Open Houses just to explore how things felt. 

• What did houses in the Ann Arbor/Ypsi area look like?
• What did they feel like? What were the neighborhoods like?
• What amount of square footage did I want this time?
• What is the value of the house compared to the list price?

After a handful of houses, I found one I loved. I didn’t have a strategy yet. I simply loved a house. I didn’t have a pre-approval letter, and I didn’t have a relator. I was just looking and feeling. I called my desired lender that day to go through the pre-approval process and I emailed my realtor friend to get started.

I got the pre-approval letter, and my realtor friend talked me through the details of the house. This particular house was just outside of what felt comfortable to me financially. It was also 3,200 square feet, which felt huge and overwhelming to me. And, there had been a worrying finding in the a previous inspection. But, this strong pull to a house told me what I needed to know. I really wanted to buy. 

Enter strategy. To answer the question of square footage, the open houses were critical. I had to override my comfort and familiarity with the 1,000 square foot starter homes. It’s just me. That’s a perfect size and quite manageable for just me. BUT, my goal was different now than when I first bought. I wanted to find a property that I could both live in and set up as a vacation rental (listing on Airbnb and VRBO). 

I visited homes from 1,000 sq ft up to the aforementioned home that was 3,200 sq ft. I ended up feeling like homes with 1,600 sq ft were as low as I wanted to go, and homes with 2,200 sq ft felt about as big as I wanted to go. That narrowed my search.

I was pretty sure I wanted to buy in the Ypsi area. I had rented there for one year to see how it felt. I fell in love with Ypsi, but I checked out homes in Ann Arbor too, just to be certain. Ypsi’s funkiness, history, charm, grittiness, and slightly lower prices won me over. 

Next up? The number of bedrooms. I decided that the minimum number of bedrooms was 3, but ideally, there would be 4, one for me and three to rent out. 

Now…I’m a cat owner. One of my two cats is very people-friendly, but also displays antics that make him very hard to control. After renting for 3 years in the A2/Ypsi area, he’d caused me enough strife with roommates to make me certain that I wanted my own separate space for the vacation rental; a space solely for me and my cats. (Below is literally the reason I HAD to install a door between the two spaces!)

That meant I needed to find homes that could pretty easily be split into two separate spaces. It could be split down the middle (left & right) or split by floor  (upstairs & downstairs). This proved harder to find. BUT, beautifully, it also narrowed my options for more targeted searches. There just weren’t that many homes that fit this bill. 

My real estate agent, Keri Middaugh, was gold in this process. She put herself in my shoes. She envisioned the vacation rental and cat challenge like I did. She was also so fast that we were often seeing Open Houses the first day they came onto the market. This is the power of having great relationships. 

The last important piece of strategy was this….I told Keri that I was visiting Open Houses for research, but I would not make an offer on any house that had just come onto the market. I didn’t want to participate in the craziness. When it came to making an offer, I’d only make one on houses that had been on the market for at least two weeks (that’s an eternity in this market), and preferably a house that had not had any offers. My goal was to create as much of a buyer’s market for myself as possible. 

Armed with these parameters, we were looking at many multi-family properties. The challenge I saw was that most needed major renovations and hadn’t been well cared for. I was prepared to renovate, but I also knew my renovation budget. 

On Sunday, July 27, I sent Keri a few possible homes. She booked appointments for the next day. (Yes, she’s that fast!). On July 28, we visited 3302 Hillside (2,200 sq ft). My agent and lender connected and by the next day we had made an offer on the house. Our offer was accepted on July 29. One month and 5 days after closing the sale on my last home. 26 days after starting the search. So, why did this work?

Strategy Meets Execution

• This house had been on the market for at least two weeks.
• My agent researched it and found it had no offers (this likely meant they were close to lowering the price or getting nervous) 
• We looked at houses that had sold in this neighborhood over the last year and compared homes with very similar features. We suspected this house was over-priced (understandable in this market).
• This is a somewhat unusual house. It has 3-stories (tri-level). It has no basement, no garage, and no shed. The house has all electric heat. There is no furnace or ductwork. Most people want a basement, a garage, a furnace, and central air. I cared less about these things. Because…
• I was planning for a vacation rental, so having no basement was inconvenient, but unlike having roommates, guests don’t need storage. I much prefer having a garage, but I’d been renting for 3 years, so was used to not having one, and once again, guests don’t use a garage. Electric heat is not ideal, but it’s manageable. And, the tri-level meant one nearly full separate apartment on the first floor with one bedroom and bathroom for me and my cats. AND…by installing a new internal door, a separate space upstairs for guests to stay. What seemed less than perfect for others, was nearly ideal for me. 
• After our assessment of the homes that had recently sold, we discussed putting in an offer $20K under asking. Unusual in this market, but we’d done our research. It paid off. The owner lived out of state. His renters had been out for awhile. The house was on the market longer than he’d expected. He countered at $10K under. We ended up splitting that difference. The whole negotiation process took 24 hours.

There are many different potential strategies to employ when buying a home. There are countless different ways to execute. This story illustrated a few examples of each. And, I simply cannot overstate the importance of quality relationships.