Selling My First House
It was the Spring of 2004 and I was about to graduate from the MBA Program at the University of Washington. I had just landed a job with Mellon Financial (Now Bank of New York Mellon) in their Private Wealth Management group and my wife and I had spotted the next house we wanted to buy.
In order to make the down payment we were targeting (10% of the purchase price)- we needed to sell our current townhouse. We had lived in that townhouse for 2 years and had successfully rented it out for 2 years to a great tenant.
Irregular Appreciation
I used to check for sale flyers in the neighborhood in regards to other units for sale in our subdivision. There were about 200 townhouses in our Bothell complex. It was called Cambridge and built by Polygon Homes in 1999-2000. About 60-70% were two bedrooms and the rest three bedrooms. I noticed that prices had gone up in the four years since we purchased- but very modestly- perhaps only 10% in total in the whole four years. That was below the median for our region- but I was happy that it had at least gone up in value.
Neighborhoods do not appreciate in a uniform fashion year after year. Prices may plateau for a few years, then a couple of houses may sell in succession and you might see prices shoot up 10% within a few months.
For-Sale-By-Owner (FSBO)
The market was fairly hot, not as hot as 2005, but it was strong and we decided to list our house without a realtor. Two realtors would cost an additional 5-6% and that would have wiped out all of our gains since we bought the house. Running “comps” or examining comparable properties to discern value, is fairly easy in a townhouse complex- where there are many townhouses with the exact floorplan and square footage as my unit. Since the units were built within 4-5 years of sale- the amount of upgrades and interior finish work were very similar.
Seller Remorse
Before we received an offer from the open market- we were approached by the father of one of our good friends. He was a career firefighter- but was building his retirement nest egg. In addition to his fireman pension, he wanted to build his rental portfolio of residential real estate. His goal was to collect 5-10 rental homes, hold them for 5-10 years and then trade them in for an apartment. He thought our townhouse would be a great addition to his portfolio. The other convenient thing was- he wanted to keep our existing renter in there- so we didn’t have to move the tenant out and clean the carpets and have vacancy expenses.
A few potential buyers did not like our unit because it was not totally cleaned up- as the tenant was still living inside when it was showing. Consequently, it was not showing as well as it could of if the house was empty, clean, and staged.
It was a good deal for us- as he paid the current market price for the unit and we were able to sell without incurring any realtor expenses. We took the proceeds and used that for our down payment on our new house in Kirkland’s Rose Hill. One year later- 2005 was a roaring market-that unit appreciated another $50k (25%)- I wished I had held on to it for one more year!
Timing Your Sale
Houses do not appreciate in a uniform fashion. Our townhouse basically treaded water for four years and then shot up in year five. I was not too upset, as my new house had also appreciated during that time- but as the old saying goes “What a difference a year makes.”
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