How we Scored (and Paid for) the Ravenna House
THE RAVENNA HOUSE
Now that you've seen the "before" pictures of The Ravenna House, you're probably wondering how we scored such a gem! Okay, okay so I'm being factitious...you're probably wondering why we wanted such a "dump". Some may even call the house dirty. Old. Neglected. I get it! She's a little run down. But it's what’s inside that counts and this little lady is solid, vintage, and authentic and damn it if you won’t call her beautiful in a few short months. Cause that's what my girl deserves!
What we were talking about? Oh yeah. How we scored this little beauty. Well, I have this nasty habit of checking Redfin first thing every morning for all newly listed pre-1930s homes in the Seattle area. On one rainy Saturday in September, I ran my usual search and up popped The Revenna House. There were only two pictures in the listing and they were of the exterior, which is never a good sign, but the price made me do a double take: $230,000. Yeah, I know...a crazy good deal! I immediately set up a tour for noon that day.
When noon rolled around, we packed up the baby and headed over to Ravenna. The house is small so we walked through it in a matter of minutes. I immediately liked the layout and the coved ceilings in the living room. The back bedrooms and unfinished basement had great space. And there was lots of storage (I know...I was pretty surprised too!). All this was enough for us to put in an offer but not to make my heart swoon. That came after we met the owner.
John was a sweet, 84-year old who loved sharing his house with us. He launched into the story of how his family had owned this house since his birth. In his early years, he remembered walking a few blocks north to the poultry farms that used to occupy the area, which itself is shocking since the area is now 100% urban and many miles away from the nearest farm. In the few minutes we talked, a realization began to grow out of the real connection I felt with this man. We could be the second owners of this home! Baby Wilder could spend his wee years here just as John had. So although the house needed a good deal of work, and despite the fact that we didn't have time to renovate a house (baby took up all the spare time we had), we decided to put in an offer.
But that's where the good news ended. The seller was accepting offers for one week only (read: multiple offers expected) and worse yet, only all-cash offers would be accepted. And we didn't have $230,000.
We went home and talked more about the house. It was such a good deal that we knew we had to try to buy the house. If we could just come up with the sale price in cash, we figured we could close on the property and then seek traditional bank financing, and pay back our initial cash investment. We briefly talked about getting a hard money loan from a bank, but the crazy high interest rates scared us off. So I did the only other thing I could think to do. I called mommy. And Daddy. And anyone else I thought could loan us money.
Over two days, I was able to secure personal loans in the sum of $210,000 from my spendthrift family. They agreed to loan the money at a simple 10% annual interest rate. Coupled with the $75,000 we had in our bank account, we officially had enough money to put in a cash offer! Of course it couldn't be that simple. I had noticed that the old furnace in the basement hadn't been inspected in over a decade. Well it turns out that it hadn't been operational in just as long, which meant that we'd have to upgrade the heating system before we applied for a mortgage. We'd also have to remove the old oil tank from the back yard. All in all, we budgeted $20,000 in the necessary upgrades in order to secure a traditional 30-year mortgage. With $285,000 in cash, we were ready to make an offer. But we still had to decide what the house was worth to us.
So we turned our attention to due diligence. We looked up all the public information on the property including the property report (available on the County Accessor's website), the side sewer card, and permit history; Zilllow value estimates; and comparable recent sales. Then we read the seller disclosure and title report form the seller's agent, completed an inspection; scoped the sewer connection; got bids for removing the abandoned heating-oil tank; and talked to our mortgage broker about financing. We had to be thorough because the property was being sold as-is and we wouldn't be able to ask the seller for any modifications or cash back for repairs. After talking to our real estate agent and weighing the necessary repairs against the condition of the property, we decided to put in an offer for $230,000 with an escalation clause up to $262,000. In order for our offer to be competitive, we waived the financing and inspection contingencies and included a personal letter. The letter had been my idea after meeting the owner, but our agent recommended including our picture on the front stoop of The Ravenna House.
One week after viewing the house, we submitted our offer and waited.
So how did our offer stack up? Well you may be surprised to find out that we weren't the highest offer. We weren't even the second highest offer. In the end there were 11 offers and ours was somewhere in the middle. But the story doesn't end there.
All of the other offers came from contractors or investment companies looking to flip the property and lucky for us, the nostalgic owners wanted the house to go to a family. So they countered our offer at $280,000, which was $6,000 below their highest offer. We chewed on this for 20 minutes or so, but ultimately I wasn't comfortable that we would have enough money left over to complete the renovations the house needed in order to secure bank financing. In the end we really wanted the house, but we weren’t comfortable offering more than $270,000. So I asked our agent to thank the owners for considering us and if there was any way they could accept $270,000 we'd love to be the new owners of their home. I could tell that our agent thought that there was not a snow balls chance in hell that the owners would accept our counter, but she took it to them none the less. And knowing our agent, I'm sure she sold it like a pro. An hour later she called with the good news that we had just bought The Ravenna House. The owners had accepted our offer even though it was $16,000 less than their highest bid. Meaning our letter with the family picture on their front stoop was worth a whopping $16,000. The single most valuable words I've ever written!
Two weeks later, we signed the closing docs and received the keys to The Ravenna House! And that's where the real fun begins...
Next up: Shiny and Perdy: Kitchen Design Ideas
Do you have any funny stories about how you bought or financed your house? I'd love to hear them!