I just purchased an amazing home for my family and myself and I feel my positive attitude had a lot to do with how smooth the transaction went. The house is perfect for us and it already feels like home just one week after moving in. I wrote an article on the purchase here, which details the house and how the purchase process went. Finding and purchasing the home was not the crazy part of this transaction. The crazy part was selling a house we had lived in four years and how everything came together perfectly.
I was lucky that I did not have to sell my old house in order to purchase the new house. However, I still did not want to pay a mortgage on my old house, while we waited for it to sell. Luckily I didn’t have to wait long, my old house sold on Thursday the 25th, one week after we bought the new house. It was amazing how well things came together and worked out. It was almost a little too amazing because we went from thinking we would have at least a month to move to having less than a week!
This article is a bit of a break from my normal articles about real estate investing which can be found here.
How to get a home ready to sell?
Our old house was not ready to sell, we were not seriously planning on moving and had accordingly not been doing the things needed when selling a house quickly. When we decided to buy the new house, we were a little concerned about all the work needed to get our house ready to show.
We bought our house as a foreclosure in 2009 and it needed some minor cosmetic work. There were some rooms that needed paint, the basement needed some trim painted and caulked. The carpet was actually in decent shape for a foreclosure, so we decided to keep it. Over four years of living in the home, we had painted some rooms, fixed a few things here and there and messed up a lot more things with two-year old twins running around. We figured in order to get top dollar, we would need to put in new carpet, paint the entire interior, put in permanent stairs outside the house (I had used railroad ties and breeze), replace a couple of doors, fix some small holes in the wall and stage the home. Here is a great article on how to repair a home so it will sell for the most money.
It was going to cost some money and take some time to sell the house. We have a very busy family and were getting ready to move, so time was not a luxury we had a lot of. We were going be lucky to have our home in ready to show condition by the time we bought the new house. It is amazing how things work out sometimes. This was one of those times where everything appeared to be too good to be true.
A partnership created to improve my life
The background for us selling a house started way back at the end of last year when I started my self-improvement kick. The reason for the quick sale was not because of my attitude change, but because of a friend’s attitude change. One of my good friends and my old college roommate is a top-level manager at a large IT company. We share a lot of things professionally and personally; I shared with him my new attitude and plans.
Somewhere along the way, we started realizing how the corporate world can trap people into a life of mediocrity. We were taught in college that the best route for a person’s career is to get a degree or two, get a job at a large corporation and slowly move your way up the ladder. My friend went this route and was making not just good money but great money. However, he felt the corporate world was holding him back. As a salaried person, he was working long hours and seeing little of his family.
My friend has a son who just turned four, and he was tired of working his ass off and not spending as much time with his family as he could be. Yes he was making good money, but was the sacrifice worth it? Not only was he working long hours, but his job security was not entirely clear. His company was laying off people and putting a heavier workload on the employees that weren’t laid off. The future options didn’t look great: continue to be a top performer and take on the workload of laid off co-workers or be laid off himself.
He had decided he needed to make a change in his life. He knew I did well in real estate with selling houses, flipping houses and buying rental properties. We started talking more and more about life and work; I decided to take a leap. I asked him if he wanted to work with me and learn the real estate business. I was very hesitant about asking him because I did not want to ruin our friendship by working together. After a lot of consideration, I decided I would be doing him a disservice by not asking. He needed a major life change, and I know how to make money in real estate. I may be able to help him improve his family’s life.
I was very clear when I asked him to work with me, there was no pressure to accept and I would not be offended if he said no. This change would most likely require him to relocate 60 miles, from Denver to Greeley, Colorado. This was a huge change I was asking him to consider, and it would come with an incredibly large pay cut. I would pay him beginning assistant money with an opportunity to make commissions on houses he sold. To my surprise he thought about it only briefly before saying yes.
Over the next few months my friend implemented a lot of the techniques I had been using to change my attitude. He tried to be as positive as possible, use visualizations and other techniques I shared. He said he had four job offers and numerous other opportunities arise seemingly out of the blue. Even with those new opportunities, he decided to stick with the low-pay plan. He worked on getting his real estate license and prepared for a huge life change. He kept his job while he worked on his license because he wanted to buy a house in Greeley. In order to buy a house he would need to have his job for 2 years, and starting a new job right before buying a house would not work.
Selling a house before buying a house
You may already see where this story is going. My friend and his wife had always said they loved our house and when we decided to move, we asked them if they wanted to buy our house. They thought about it, and a few days later said they would consider it! Now I had to come up with a price to offer them. I figured our house was worth around $380,000 in perfect shape, which was not bad considering we paid about $230,000 in 2009.
Since this would be a private sale, the costs would be completely different from selling a house on MLS. My friend would be using me as a Realtor, and I would not have to pay another agent, that saves me $11,400. I also would not be making the repairs needed to make the home in perfect condition which would save another $10,000. We would be saving time if they bought our house because we would not have to get it ready to sell, stage it and wait for buyers saving us at least another $3,000. The things I could not put a value on are the stress and work it would take to get the house ready to sell. I offered him our house at $340,000 and they accepted!
My friend’s house
In order to buy our house, my friend wanted to sell his house first. They did not have the luxury of selling a house to their friends so they did have to get their home ready to sell. We told them what to fix and how to stage their home. They got everything done in three weeks and were ready to list. After working to get their home ready to sell, my friend mentioned that he now realized why we gave him a good deal on our house to avoid getting the house ready to sell. It is a bear to make sure everything is perfect and in show condition.
How to list a house 60 miles away
I went down to Denver to help my friend decide on a price for his home. We looked at comps and decided to list it a little higher than the most similar sold comps because there was almost nothing for sale in his neighborhood. I knew the Denver market was hot, but little did I know how hot! We listed on July 5th (a Friday) at about 6 P.M. and we had a full price cash offer the next morning. We then received another offer with a conventional loan for $5,000 over list! My friend ended up accepting the cash offer to close in two weeks! Our entire timeline just got blown out of the water.
My friend could have risked going with the higher, financed offer, but I had major concerns about the appraisal coming in at value. The most similar comparable I found sold for $282,000 and there were not any other sold comparables above that, similar to my friend’s house. I could see the appraiser having the same problem justifying value and coming in lower than the cash offer in the end.
The cash offer was actually from an investor who was buying multiple houses in the Denver area. Now, I am sure the investor had good reasons for buying the home, but there is no way it would come close to my rental criteria. We have since learned they are asking $2,000 rent for the home and they paid $295,000 for it. Here is a great article on how to get your house ready to sell.
How we coordinated the two house sales
Closing was set on our new home for July 18th and my friend’s house on July 25th. Our plan was to move out the 19th through 22nd, have the house cleaned the 23rd and the carpets cleaned the 24th. My friend had to be out by the morning of the 25th, so we decided to let them move in prior to closing on the 24th. I did this because I know him very well and trust him. I would never let someone move in early that I did not know.
A miracle with a loan
My friend had two weeks until his house closed, and he wanted to try to buy my house the same day. As most people in real estate know, a two-week closing is normally reserved for cash buyers. I had my friend talk to Kathleen Wilson at Cornerstone Mortgage and she said she could get it done in two weeks. I would not have believed her, except that I have worked with her before and she always has done what she said she would do. My friend shopped around with other lenders and none of them could do it in under 30 days. Long story short, she got it done with days to spare! I was impressed.
Closing process on the two properties
My friend’s cash deal went relatively smooth except for some inspection hiccups. The buyers asked for every possible item on the inspection report, plus a few things that were not on the report. When we first received the two offers on his home, we managed to get the cash offer to raise their offer two thousand over list price. To solve the inspection issues, we offered to drop the price back to their original offer and they accepted.
My friend did not do an inspection on our house, but we had the roof inspected and he trusts me as much as I trust him. The appraisal came in at value and everything was going smoothly.
That is how it all ended, very smoothly, at least on the transaction side of things. Moving never goes smoothly and everyone always has about twice as many things as they think they do.
Positive attitude was at play
It’s hard to imagine this entire transaction going any smoother than it did. My friend and I have both become as positive as possible, we write out specific goals, we started a mastermind group, we are visualizing what we want our lives to be like. From the time Jeni (my wife) first saw our new house, we made an offer, won the highest and best, got my house under contract with minimal work, my friend got his house ready to sell, received multiple offers the first day, sold his house, got a loan on our house and bought our house all in 2 months. The whole process was pretty amazing if you ask me, thanks to my coaching I never got stressed out at any point.