We offered to buy a home for $128,000 over list — but it wasn’t enough!

Sunday evening, Kim and I made an offer on a house. The Greenwood Place (as we’ll call it) was listed at $649,000. We offered $677,777 escalating to $777,777; no repairs required; and a $50,000 appraisal gap waiver.

Our offer was not accepted.

The Greenwood Place

That’s right: Two months after selling our home — and three months after beginning to search for the next place — Kim and I have waded back into this crazy housing market. We’re not sure how long this process will last (or what the outcome will be) but we’re prepared to be searching for many weeks, if not months.

Both our mortgage broker (Michael S.) and our real-estate agent (Michael K.) tell us we’re doing things exactly right for this market.

  • Kim and I both have credit scores over 800. “Everything looks unbelievably perfect here,” Michael S. told us in June. “That’s amazing. Perfect credit.”
  • We’ve sold our previous house and are currently renting a place while we search for another. This allows us to make offers without home sale contingencies.
  • We’re willing to take calculated risks to increase the strength of our offers, but we’re not willing to compromise our financial health in doing so. “You can borrow $850,000 all day long,” Michael S. told us. “You’d probably have zero difficulty qualifying for $1 million.” We don’t want to borrow a million dollars though because doing so would severely compromise our other goals.

All the same, there aren’t many homes on the market right now. Demand far outpaces supply, which is driving prices up and creating insanely competitive situations. It doesn’t matter whether we’re doing everything right. We’re still going to run into folks who can make cash offers at more than $128,000 over a $649,000 asking price.

Our plan? Be patient. Remain vigilant. We don’t need to buy a home at the moment — and, in fact, perhaps it would be best if we didn’t — but we want to be prepared to pounce if/when we find the right place.

Today, I want to share a bit of our thought process as we attempt to buy a home in 2021.

Where We’re Starting From

Currently, Kim and I are paying $2300 to rent a 1000-square-foot home in a nice, walkable neighborhood on the south side of Portland. We like it. (True story: Two days ago as I was walking the dog, a neighbor stopped me. “Is your name J.D.?” he asked. “I’ve been watching your YouTube videos!” First time somebody has recognized me from my tiny YouTube channel haha.)

This $2300/month rent payment is comfortable for both of us. Kim doesn’t have the extensive retirement savings that I do, but she’s in good shape compared to most people. She can afford $1150 per month for housing. And while she (and I) would love to have a lower housing payment, she’s willing to go as high as $1200 per month.

Our current housing situation leaves me swimming in money. That’s the way it feels, anyhow.

You see, one of the reasons I wanted to move was because I’d managed to cripple my monthly cash flow. I had too much invested in our house. I owned it outright. One-third of my net worth was locked into the home and couldn’t be used for other things — such as buying food.

When we owned the home on Wisteria, my monthly housing expenses were $377 for taxes and insurance. (Kim had no housing expenses. The home was mine.) Based on my non-retirement investments and savings, I had a monthly budget of $2059 to get me to age 59-1/2 (at which time I could access retirement accounts). That $2059/month budget was far below my actual spending, which averaged about $4200/month.

By selling the home and moving into this rental, an amazing thing happened. Even though my monthly housing expenses jumped from $377 to $1150, my after-housing monthly budget increased from $2059 to $7588 — all because I now have a pile of cash in my bank account.

My monthly budget at Wisteria and here

This improved cash flow is 100% because we I no longer have $500,000+ locked up on home equity. It’s in my bank account. Yes, some of it will soon be in home equity once again (we hope) because we’ll use it for a down payment on the next place. But I’ll retain a sizable chunk of that to bridge the gap between today and 25 September 2028, when I turn 59-1/2.

So, today I feel like I’m swimming in money. Instead of running a $2100 monthly budget deficit, I have a $3300 surplus. I am, once again, financially independent.

This is our starting point. As we hunt for homes, I maintain a running spreadsheet that (among other things) tracks my projected monthly budget for each home. In fact, this monthly budget is my number-one consideration in purchasing a home.

Selecting a City

I am fifty-two years old. In the past thirty years, I’ve purchased four homes — and I’m about to buy a fifth. My homebuying habits are almost perfectly aligned with the American average. Homeowners tend to stay in one place for about seven or eight years, on average.

In other ways too, my homebuying habits have been typical. If I’m not careful, for instance, I can get wrapped up in the emotional side of the process.

When my ex-wife and I bought our hundred-year-old farmhouse in 2004, I was 100% motivated by emotion. There was nothing logical about the decision. When Kim and I purchased our most recent home in 2017, we allowed emotion to over-ride logic to our detriment.

This time around, I’m trying to be logical and deliberate. After four years in a house that proved problematic, and in the midst of a housing market that seems to have gone mad, I want to make a smart decision.

So, my full-time “job” for the past couple of months has been house-hunting. I’m not saying that my process is perfect (nor applicable to everyone) but it’s a hell of a lot more logical than any of my past home purchases.

To begin with, Kim and I spent twelve full days during the last three months driving all over western Oregon and western Washington in search of a place to live. We’d frequently devote weekends to driving all over both states (with the dog in our laps), exploring small towns and asking ourselves, “Could we live here?”

We love Portland — despite what some media outlets would have you believe, it has not become a wretched hive of scum and villainy — but the place has grown too big for us. Both of us grew up in small towns. We want a slower-paced lifestyle without all of the chaos of a big city.

While there are several cities that appeal to us, ultimately we’ve decided to move to Corvallis. Corvallis is a town of roughly 60,000 at the base of Oregon’s coastal mountain range. It’s an hour from the Pacific but still very much of the Willamette Valley, the agricultural region where I grew up. It’s home to Oregon State University. It’s the #1 biking town in the state (even ahead of Portland!) and has just enough stuff to do to keep us happy.

After we decided on Corvallis, we made an effort to spend some time there. We’d pack up the dog on Saturday mornings, drive ninety minutes south, then spend a few hours exploring the city. We liked it — a lot. Even so, we were having a tough time getting a feel for the neighborhoods.

Enter our real-estate agent, Michael K. One day it occurred to me that maybe I could “outsource” learning Corvallis neighborhoods. Searching YouTube, I stumbled upon this video of a Realtor narrating a driving tour of the town.

This helped us both so much that we contacted the narrator to ask if he’d take us on as clients. He agreed. For the past two weeks now, we’ve been working together to find a suitable location.

Crunching the Numbers

As you’ve probably heard, there aren’t many houses for sale right now. I don’t have the exact figures, but my memory tells me that the U.S. housing inventory is about half what it typically is. That means pickings are slim. And when you’re searching for a place in a smaller city like Corvallis, pickings are even slimmer.

Still, there are maybe a dozen new listings each week that meet our criteria. Michael K. has set us up with an automated tool that emails us when homes come on the market that match what we’re looking for. Plus, I spend hours each day on Zillow looking at the other homes that come up for sale — just in case, you know?

What sort of filter are we using? Well, we’ve set an upper limit of $800,000 — remember that our mortgage broker told us we could borrow $850,000 “all day long” — and we’re looking for places larger than 1500 square feet on at least one-tenth of an acre. Like I said, I use Zillow to find possible fits that slip through this net.

Of the homes that come to market and make it through our filter, maybe half of them are places we’re actually interested in: the price is acceptable, the house and yard look well-suited for our lifestyle, and so on.

I put all of these matches into a spreadsheet that looks something like this [click for larger view]:

My househunting spreadsheet

As you can see, my spreadsheet only tracks a handful of stats, but those are the stats that are most important to me. I don’t track bedrooms and bathrooms, for instance, because our filter already screens for these. (Plus, I figure square footage is a reasonable proxy for beds and baths.)

Here are the variables that matter most to me when hunting for a house:

  • Price, of course. But price isn’t the only financial consideration, nor the most important. I don’t want to overpay for a place, of course, but I look at the down payment (and eventual equity) as a transfer of assets. I’m not spending $300,000 if I buy a $300,000 house. I’m simply transferring money from cash to real estate. (The money lost to interest, however, is indeed an expense.)
  • Size of the home. Again, this serves as a proxy for other things, such as the number of bedrooms and bathrooms.
  • Lot size. Kim and I like a large yard. We recognize, however, that we’re not going to find an acre of land in the middle of a city. Still, it’s nice to have this number handy.
  • Year the home was built. I want to know when a home was built for a variety of reasons. The building date can give me a rough idea of possible maintenance concerns. Plus, it’s also a good guide for the style and layout of the house.
  • I have three columns of numbers related to the monthly cost of the house. The “Each” column is most important to Kim. This shows her share of the housing payment each month. The “J.D. budget” column is most important to me. The “J.D. budget” number assumes that I’m using my savings to make a 50% down payment, then calculates what my monthly budget would be after my share of the housing payment. (Remember: this number is $7588 in our current rental and it was $2059 at our last house.)
  • Walk Score. I like a walkable neighborhood. Walk Score isn’t perfect for my situation — I don’t care if I’m close to a school — but it’s close enough. My main concern is that I’m within an easy walk of a grocery store. This is a huge deal to me. Walking distance to a park would be good too.
  • Location. In which neighborhood is the house located?
  • Notes. This is a catch-all for info like apparent condition of the home, HOA fees, and so on.

In practice, the most important item in the spreadsheet is the “J.D. budget” column. No joke: I tend to remember all of the other details about the various houses. Given my notoriously poor memory, this is something of a shock.

As you can see, I’ve color-coded everything too. I’m using good ol’ ROYGBIV, with red being the “bad” end of the spectrum and violet being the “good” end. This allows me to glance at the spreadsheet and know, say, that the Grant Circle house gives me an amazing budget but the Clarence house would put me in almost the same financial predicament as the home we just sold. (That Grant Circle house looks perfect on paper, doesn’t it? It’s not. It’s a rental that’s seen some tough love in the past.)

A few other quick notes: Homes listed in bold are homes we’ve viewed in person. Shaded lines represent homes that are under contract, so are no longer available. And that one green line? Well, that’s the home we made an offer on.

Making an Offer

Kim and I have viewed eleven homes now. A couple of these seemed fine in photos but were not good matches in person. Most were average. But one — the Greenwood house — was amazing. it was an almost perfect fit. (Why almost perfect? First of all, price. Second, walkability was marginal.)

We toured the Greenwood house on Saturday afternoon. We loved it. As we drove around Corvallis the rest of the day, we discussed whether or not we should make an offer. “I think it’s going to be out of our price range,” I said. “It’s not going to sell for $649,000. You heard Michael. He called it an ‘atomic potato’. He thinks it’ll go for much, much more.”

“I know,” Kim said. “But don’t you think we’d regret it if we didn’t at least try to make an offer?”

“Yes,” I said. “We’d regret it very much.”

That evening, we met with Michael to go over paperwork. Then I spent most of Sunday running the numbers through other spreadsheets. (What? You thought I had only one?!?)

While I have my personal spreadsheet for tracking properties, the spreadsheet that actually matters most is the one from Michael S., our mortgage broker. This file allows us to make projections using actual numbers such as down payment, property taxes, and current interest rates.

If we alter any one of the variables in the mortgage worksheet, we alter our projected financial obligations. As you can imagine, this can lead to many, many permutations of monthly payments and down payments.

Our mortgage spreadsheet

Generally speaking, Kim and I are planning to do the following: I will make a 50% down payment from the cash I have on hand after selling our last place. She and I will then split the monthly mortgage payment 50/50. This should work for 95% of scenarios we’re exploring.

In order for us to make an offer on Greenwood, however, we had to break away from our standard plan. Our default assumptions would lead me to making a $325,000 down payment on the $649,000 list price, then my monthly budget would be $3803. But we knew that Greenwood wasn’t going to sell for $649,000. It’d sell for something more. (Probably much more.)

Ultimately, we figured we had to offer at least $100,000 over asking. Fortunately, the sellers were allowing escalation clauses, which meant we could offer $750,000+ without risking that we’d overbid anyone else by, say, $30,000.

After much internal debate (and even some external discussion with Kim), I decided I’d be willing to buy this house if I could keep my projected budget at about $3800 per month. This is close enough to my current spending that I felt okay with it. Worst case, I’d find a part-time job to cover the gap, right?

By Sunday evening, I’d come up with an offer amount: $777,7777 with a $250,000 down payment. This would give me my $3800/month budget assuming Kim was willing to pay $1200 per month toward housing (which she was). With at 50% down payment? Well, then my budget would be $900 lower each month. Still better than at the house we just sold, but less than what I want.

Why a goofy number like $777,777? For fun. I’m not joking. Real-estate transactions are deadly dull affairs. I think it’s fun to spice them up with numbers like this. (Plus, we thought it might send a positive signal to the sellers.)

When I bought my condo on the river in 2013, I deliberately offered 4.01% over asking price because it was unit #401. The selling agent later confided that the owners had noticed the number and that it played a small but important role in their decision to sell to me.

The offer we submitted on Sunday night looked like this:

  • We offered a $677,000 starting price — $28,000 over asking. But our offer escalated in increments of $7,777 up to a top price of $777,777. We were offering to beat other offers by $7,777 up to our limit.
  • We agreed to “no repairs”. We’d still perform an inspection, which would allow us to bow out of the deal if we found something catastrophic, but we wouldn’t ask the seller to do any repairs.
  • We included a $50,000 appraisal gap waver. If our offer was accepted at $760,000 but the home appraised at $720,000, I would make up that $40,000 difference with my cash reserves.

The next 36 hours were painful for Kim. She had become emotionally invested in the house. While I was hoping we would win the bidding war — our agent himself wrote one other offer for the house! — I was surprisingly cool and collected about the whole thing.

Moving Forward

Michael K. called on Tuesday morning. He didn’t beat around the bush. “Your offer wasn’t accepted,” he said without preamble (which I appreciated). “I’m a little surprised. You wrote a strong offer.”

Right now, we don’t know how many offers Greenwood received and we don’t know the amount of the winning bid. We won’t know that until the place closes in a few weeks. But we’re dying to know how much more we needed to offer in order to buy the place.

Ultimately, however, we have no regrets. We know that we made the highest offer we possibly could. There was nothing more that we could have done without compromising our other financial goals. We’re at peace with this outcome.

Now, though, it’s back to househunting. We’ve already lined up a couple of home tours for tomorrow afternoon. The places look promising — and one of them is much cheaper than the Greenwood place! I reamin hopeful that we’ll find a nice home in Corvallis with a walkable neighborhood, a yard for our animals, and space for Kim to do yoga and gardening.

Still, a part of me knows we’ve only been at this for two weeks. The folks who bought our house in May had been shopping for ten months. The market is crazy right now, with far more buyers than sellers.

Who knows? Maybe I’ll be writing offer recaps through the winter and into next summer. But I sure hope not!

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There are 56 comments to "We offered to buy a home for $128,000 over list — but it wasn’t enough!".

  1. Teri says 29 July 2021 at 12:53

    When I bought my house four years ago it was a tight market and it took me six months of looking and three offers to finally get one that was accepted. I’m ultimately pleased about what I have and reading this makes me so very happy that I live in Kansas! My monthly house expenses are about a third of your expected expenses for the Greenwood place.
    Good luck on your search and I hope you find a great fit!

    • J.D. says 29 July 2021 at 13:08

      I’ve tried to convince Kim that we could live anywhere in the United States, so we should make our decision based on cost of living. She gets the logic, but she’s not down for it. We love the Pacific Northwest — warts and all. But we’re paying a price for that, right? I’m also trying to show her the eye-popping numbers that come if we buy a $300k or $400k house. She’s more open to that idea, but we just haven’t seen one that works for us yet. We hold out hope, though. If we do see a cheap gem, we’ll act on it very very quickly.

      • Taichi says 02 August 2021 at 22:57

        Dude, you can still easily get a very nice house in $300-400k in Albany, OR, which is only 20 minutes drive from Corvallis. Albany is a nice town with great neighborhoods. You will have much less stress related to money, which in turn puts less strains on relationships and health. Haha, a friend of mine just bought one, and the realtor is Michael K. Please feel free to email me if you want to know more.
        Thanks for sharing your experience! We would be curious to follow your journey. Good luck!

  2. Eileen says 29 July 2021 at 13:19

    Good luck. Would you be better served by living/renting in Corvallis before buying a home?

  3. Eileen says 29 July 2021 at 13:25

    One other thing. 2800 sq feet is a LOT! Lots of room to accumulate things, lots of space to have to clean. We raised 2 kids in a 2100 Sq foot home and I can’t imagine living in something bigger with just 2 people (as we are now).

    • J.D. says 29 July 2021 at 13:36

      Yeah, 2800 square feet is huge. The trailer I gew up in was 63 x 12 — about 750 square feet. The house we just sold was 1475 square feet. I do agree that we needed maybe one more room (so, what, maybe 1700 square feet?) but 2800 square feet feels enormous. That’s another thing that makes this market challenging, especially in Corvallis. A lot of the homes we’re seeing are bigger. Anything smaller is often in rough shape.

      Part of me wonders if it might not make sense for us to buy a lot and build a place. I only started going down that rabbit hole last night, though, so I know zero about it. But here’s a lot in good location for $100k: https://www.zillow.com/homedetails/4196-NW-Canary-Pl-Corvallis-OR-97330/102436579_zpid/ — And here are some modest-sized modern homes that I might like to live in. I just don’t know how much they would cost to build and what kind of hassle they’d be.

      And yes, we’ve considered renting in Corvallis before buying. But that would add a third move to the two we already have planned. Plus, rents are high because school is about to start.

      • J.D. says 29 July 2021 at 16:22

        Look! About 44 minutes ago, this little gem came on the market: https://www.zillow.com/homedetails/675-SW-55th-St-Corvallis-OR-97333/48199309_zpid/ — It’s 972 square feet with three beds, a two-car garage, and a good “blank slate” yard. Cost? $325,000. Not walkable, but VERY close to a main bike route. If Kim were game for it, I’d buy here. (Haven’t asked her yet.) This house has been remodelled recently, although it looks as if the roof and siding may need to be replaced. In any event, if we bought here my budget would be in terrific shape and we could spend time making improvements on the house.

        • Ringo says 29 July 2021 at 19:15

          I wouldn’t buy really close to campus. Undergrads can have a very different take on acceptable noise levels than us middle aged folks.

          • Eileen says 10 August 2021 at 10:58

            I’d also be concerned about the actual “remodel”, if this is primarily in “student housing” type area. But to JD’s comment about this one — it sounds like the same deal as the house he just sold, just with a lower price point. So, not sure why this would be appealing.

        • SeanP says 30 July 2021 at 07:59

          J.D. Long time lurker/reader here. I live in Seattle but have close friends in Corvallis (and I love it there too) and those friends live across the street from the house linked above. The neighborhood is decent. You’re right it’s not super walkable to amenities, but there are walk/bike paths in the area. Both to get to downtown and over to the commercial area over on the highway (highway 20?) that goes to Philomath. I’ve biked downtown in about 10 minutes on bike paths and it’s all flat. I think you might even cross a covered bridge to get to OSU campus if I remember correctly. And…the nice thing about that neighborhood is that you can walk to Bald Hill recreation area in 10 minutes through a Christmas tree farm and quiet neighborhood. (Also, the house is not really that close to the OSU campus to have to worry about loud undergrads.)

      • Eileen says 10 August 2021 at 10:54

        Heh — you can tell I’ve lived in the same home for 24 years because I didn’t think of the actual ‘moving things’ part of it!

    • Financial Samurai says 30 July 2021 at 06:20

      I agree. 2,800 is big for two people, especially if you’ve never lived in anything larger than 2,000 sqft.
      But if you’re talking housing 5 people, it’s a great size. Perhaps adopting is in the future? Could be another great adventure!

  4. Charlotte says 29 July 2021 at 16:04

    You are such a good storyteller! I think at your budget in a small town, building might be a good idea. Check them out http://www.modspdx.com/
    Good luck and keep the updates coming.

  5. Liz says 29 July 2021 at 17:19

    JD, it seems like you are not really factoring in maintenance and improvement in your cost projections, and I have found from personal experience when I bought a house all the extras added up to a lot. But when I rented there were really no extra costs to factor in unless I wanted a new mattress or couch, etc. I’ve followed your blog for a long time and you have tended to see-saw a lot over the years. I have considered investing my nest egg and using the monthly “profits” to pay rent on a nice place, to avoid the burdens of home ownership. I do think this housing market will cool considerably by 2023, when the full effects of inflation and the Democrats policy burdens will cause a recession.

  6. Liz says 29 July 2021 at 17:22

    Also, I have to say that my 1500 sq ft home in Indiana was built brand new a few years ago, and I paid $189K. My taxes and insurance are $2K and $575 a year respectively; feel VERY blessed!!

  7. Financial Samurai says 29 July 2021 at 18:02

    Fun recap! Honestly, I’d just find a great house to rent and keep things simple. Based on your last two home ownership adventures, renting seems best for your overall health.

  8. Ann says 30 July 2021 at 06:12

    We lived in Corvallis a long time ago (we were just out of grad school…. one of our daughters was born there and she is very much an adult now). I have such wonderful memories. I know you’ll find a good house there and make your own memories. Good luck!

  9. Nikki says 30 July 2021 at 06:33

    Corvallis is great! My husband and I have also talked about moving there. Hope you and Kim find what you are looking for soon (and get an offer accepted!).

  10. Scott says 30 July 2021 at 10:34

    Ha! I’ve looked at some of those same houses while doom-scrolling Zillow. I’ve only visited Corvallis for a couple of very quick trips (Pac-12 football), but thought it was a nice little town. One of my key requirements is access to decent mountain-biking, preferably from my door. Good luck.

  11. Jim says 30 July 2021 at 13:15

    Just from a financial perspective, you wish to take advantage of low interest rates. As you say, aside from real expenses it’s just a shift from one asset to another. If you were happy where you were I guess a HELOC would have accomplished the same thing? You didn’t want to stay, but if I’m not missing something, just sayin.

    • Tom Murin says 30 July 2021 at 15:35

      My thoughts exactly. Use the leverage from the historically low rates. The home equity from a large down payment isn’t working for you and the $$ gives flexibility.

  12. Rh says 31 July 2021 at 09:41

    There’s always a trade off in real estate based on price, condition, and location. You typically end up getting 2 out of 3. I have to say, dang, it sounds like real estate is completely all consuming for you right now. I assumed you hadn’t posted in a while because you were just relaxing and enjoying the stress free living situation you are current in. Why the rush to move so soon? If you are set in buying, I would recommend getting something move in ready with no projects that need to be done.

  13. Christy L Stevens says 31 July 2021 at 10:18

    I have lived in Corvallis for about twenty years. This is very much a high context town where who you know is often more important than what you know. Many houses that sell are not even listed with realtors. They sell by word of mouth. You might have just as much success in purchasing a house if you locate a neighborhood you like and leave flyers.

  14. Carol in Mpls says 31 July 2021 at 10:30

    I grew up in a college town, and they tend to have many of the same kind of amenities you’d find in larger cities (cultural events, bookstores, sports, strong community activities,etc.). I think there is almost always an area or neighborhood where many of the faculty live. These are nice, well-kept areas, though some may be too close to the campus/greek houses for you two. In my hometown those are older homes, lots of character, bigger lots, but maybe not what you want to spend time on later in life.
    I would also think about whether this is your “last house” and if it meets the needs you’d have while aging in place. For me, that would be more open spaces, easy to navigate hallways/bathrooms, all one level, including laundry and furnace not in the basement. Maybe building would get you just what you need and want.

  15. Lia says 31 July 2021 at 13:29

    I am wondering if this purchase means you and Kim are effectively pushing your debts/liabilities (30 year mortgage) out until a time when you are older to achieve cashflow today? Do you see any risks to this approach? Do you have any plans or considerations to mitigate these risks? My husband and I have considered similar actions, but it seems riskier than our appetite allows. Let us know your thoughts and rationalizations…!

    • J.D. says 31 July 2021 at 16:36

      Good question, Lia.

      Theoretically, I will have a higher cash flow in retirement. I have higher retirement savings than I do investments in regular, taxable accounts. Plus, Social Security benefits will eventually kick in. Plus, there are other possible sources of income on the far horizon. (These possible sources are just that: possible. For this reason, I never include them in actual calculations. But they ARE possibilities.) The bottom line is that I’m not worried about my retirement cash flow. That could absolutely change, but I don’t think it will.

      • Lia says 01 August 2021 at 20:14

        Thank you for that extra explanation…!

  16. Fred says 01 August 2021 at 05:29

    I sold my house during a sellers market just before the subprime lending mess. I then rented while home prices plunged. Eventually I purchased a nice place at a low price. I played it exactly right.
    This time around I’m not sure how the housing market will evolve. I’d like to sell now, but I worry that prices may not decline while I temporarily rent. Maybe they’ll even go up. Wish I had a crystal ball.
    I always enjoy your content. I see you’ve been busy with other things. I hope you’ll be able to post more going forward.

  17. Robert - Stop Ironing Shirts says 01 August 2021 at 05:45

    JD – Great article and recap.
    One question – Is your mortgage lender looking at your loan as an asset depletion loan or qualifying you based on income? I’m in a similar spot, renting today and starting to look for a home but don’t want to cripple my after tax savings by purchasing a high six figure home in cash. On paper I look like a mostly unemployed bum…

  18. suzanne says 01 August 2021 at 07:13

    I live just outside of Boston. Neighbors house (1600 sq ft 3 bed 2 bath (one of the baths on second floor, one in basement) house from the 1930s, was on the market for $925. Sold for $1.3M cash, no inspection. They had 21 offers, 20 over $1M and a couple for 1.3M. They took the cash offer. Guess cash is king and maybe necessary in your market!

  19. Sheila says 01 August 2021 at 12:01

    Another person who lived in Corvallis. We bought our “forever” home in Corvallis (now live in another state, sadly) on Survista, where it appears you looked at a house. Too bad it sold in the spring by the people who bought it fro. us because it would have been something you might have considered. We were on the even address side of the street. Corvallis was the most expensive place we ever bought a house, although I shouldn’t compare it to the first house we bought for $53,000 in Lake Oswego in 1986. Ah, to still own that place. .
    Good luck with your house hunt. I love Corvallis and go there every year to visit friends.

  20. JanBo says 01 August 2021 at 19:29

    You got me at “ he wrote three other offers”. Did one of his “win”? Hummmmm did he represent you the best he could have?
    We sold our house in 48 hours- with a clause that we could stay for three months- for cash $50,000 over asking. No inspections ( a mistake on their part I feel).
    We have been living for 6 weeks at a Motel 6 with our two dogs waiting for our family builder to get us in our house. This is insanity at its best! Every week it is, “just one more week”.

    • J.D. says 02 August 2021 at 06:36

      Turns out, we misunderstood. Our agent did show the house to multiple folks, but he only wrote one other offer. And I felt like yes, he represented us fine. I get why this could be a concern, though. It hadn’t occurred to me until now that representing multiple buyers could be problematic, but I see how that could be the case. In this instance, I felt like it was all fine (for us anyhow).

  21. Joe says 02 August 2021 at 08:56

    I think you’re crazy. Why not wait for the housing market to cool down a bit. Why jump back into it so quickly? Are you sure owning a home and all the responsibilities that come with it won’t send you back into a stressful state? Why not enjoy life as a carefree renter for a while? I also think you should rent in Corvallis for a while.
    I’m dreaming of the day I could sell this old house and just rent/travel for a few years. Anyway, don’t pay attention to me.
    Good luck with house hunting.

    • Kathy says 05 September 2021 at 22:35

      But what if housing prices continue to rise? I think they will. And rental rates are going up, too, as far as I can see. I believe I would jump back in if I were J.D.

  22. Anne says 02 August 2021 at 09:17

    I quite liked this post as it really shows how you are thinking about every aspect of your future. Our retirement home was paid for in cash, 1100 square feet and just fine for us. In fact we are accumulating more cash each month and can’t even figure out what to spend it on. We are in our 70s and just about done with travel, except for Hawaii each year.
    By the way, IIRC, weren’t you and Kim going to marry? Did that happen and I missed it?

  23. VinTek says 02 August 2021 at 09:35

    I don’t understand this thread at all. When I was young, I was told to “buy low and sell high.” You “sold high” and that’s great. What’s compelling to buy while the market is on an unsustainable upward trend?

  24. rh says 02 August 2021 at 09:52

    Food for thought. Since many houses are purchased with cash in this market, does it make you consider paying cash for your next “dream house”? Also, I recommend you reread your “We sold our house” blog and look at how calm and happy you sounded and the comments agree…even your comment of “Oh, we’re going to relax and enjoy. We’re in no rush.”

  25. Mr. Tako says 02 August 2021 at 13:30

    I’ve been to Corvalis a number of times– It’s a great little town! I can definitely understand why you’d want to move there.
    Too bad the housing supply is so minimal though. At some point home builders will start to build more, but that’s going to take a few years (I think).
    Good luck!

  26. Len says 02 August 2021 at 19:11

    Hey, JD. Could you share more about your budget? Maybe an article….I don’t think we need the specific numbers, but am interested in your withdrawal strategy. Is it simply total amount of cash divided by # of months to 59.5? Or are you using dividends?
    I think another commenter also asked, but what is the plan for paying off, or not paying off, the mortgage once you get to 59.5? Overall really interested in learning more about budgeting strategies from savings, implementing the 4% rule, etc. Thanks!

  27. Treo says 03 August 2021 at 04:28

    Seems like an extra 7 right at the start… $777,7777 versus (presumably, $777,777).
    It is great to sell in this market but a giant pain to buy… I’d wait 1-2 years. The market will crash-correct by 10-30% and sellers will be much more reasonable at that point. It sounds to me like you have a big amount of cash burning a hole in your pocket right now. Think about it and wait.

  28. Jim says 03 August 2021 at 10:54

    JD, are you seeing prices soften a little? I watch several markets and I’m seeing that houses trying to sell for top dollar are starting to drop their prices.

    • J.D. says 03 August 2021 at 13:37

      Yes, it seems to me that prices have softened some. And while there are absolutely 100% bidding wars that occur (see this post!), some homes are selling without multiple offers, which means they’re selling for asking (or close to it). Unlike many folks commenting here, I’m not convinced we’re going to see any kind of crash. Yes, I think prices will decline. But this market isn’t being propped up by the sort of shenanigans that caused the housing bubble 15 years ago. When the decline happens, it’s going to relatively mild, I think. But hey — who knows? We’re all just guessing. 🙂

      • VinTek says 05 August 2021 at 08:25

        It’s not just the last crash. The market (housing, stock, tulips. etc.) has “returned to the mean” throughout history. What you’re saying is “this time it’s different.” Heard that before. Maybe you should re-read The Four Pillars of Investing.

        • J.D. says 05 August 2021 at 10:47

          I’m not saying that “this time is different”. I understand mean reversion — and I think we’ll see it. What I’m saying is that the housing bubble of the 2000s was a result of games and shortcuts. Today’s market is not. Today’s market is a product of basic economics. And yes, when the current economic forces shift — when supply eventually catches up to (then exceeds) demand — prices will drop. But I don’t think we’re going to see a 27% decline this time like we did from 2006 to 2012. I believe the decline will be smaller, maybe on the order of 10% to 15%, then the typical price cycle will resume.

          But again, this is all guesswork, right? And just as we were all taught to “buy low, sell high”, we’ve also learned that market timing is a sucker’s game. I’m not going to try.

          Kim and I want to own a home. Our motivations are not purely mathematical and/or financial. Sure, the numbers play a role, but this decision is mostly motivated by other factors. We are not robots. We are people. While we understand the risks we’re taking by choosing to buy in this market, we find those risks acceptable. You, apparently, do not. So, you should not buy a home. We’re going to.

          • VinTek says 05 August 2021 at 11:58

            Sorry about that. Didn’t intend to sound confrontational. All I’m saying is that when you think that markets will or won’t go down (a little or a lot) for any number of reasons, you’re market timing, whether you think so or not.
            The thing is this: inflation is rising pretty fast and at some point, the Fed will have to tighten the money supply. This often means raising interest rates. When that happens, housing prices tend to go down because because demand goes down. When interest rates go up, that’s where you’ll really start to have an edge over competitive buyers because your credit rating will give you more favorable rates than the next guy.
            My own preference is that I’ll always prefer to pay a lower price for a house and higher interest rates than vice-versa, because I’ll can always refinance but once I pay a high price for a house, I’m locked into that price, for better or for worse.

          • J.D. says 05 August 2021 at 12:18

            Fair enough. Believe it or not, I agree with your assessment entirely. Where we differ is the willingness to buy right now, I think.

            In the Real World, we’ve had an offer accepted on a place and our inspection is tomorrow. If that inspection goes well, I’ll be writing an article about how we got this place and why we think it’s perfect for us. If the inspection doesn’t go well, I’ll be writing another update about how hard it is to find a good house right now.

            Fortunately, we did not get into a bidding war for the place we’re buying. And, in fact, we think we might have managed to get a (relative) bargain. But we’ll see. We’re also nervous that there’s a reason nobody else was interested in this place and that we’ve somehow missed some fatal flaw…

          • Lisa says 05 August 2021 at 14:38

            Congratulations on finding a place! I hope the inspection goes well and the closing process is smooth. OR that any fatal flaw is discovered in the process so you don’t have a bad experience.

            I’m hearing your comment about writing an article on why you think the place is perfect for you as really saying “why we think it’s perfect for us NOW.” Having read your blog from the early early days, I’ve heard great excitement about many of your homes. Maybe not quite “it’s perfect!” but close. For a while, I admit I thought you were all over the place, and then I tuned in to my own life and my own self and realized we evolve and change. That’s not an earth shattering realization but it did kind of sneak up on me. Maybe the core of who we are is set, but needs, wants, goals, physicality, emotions, friends and family, life experience are all in flux over a lifetime. Now I’m really sorry I was hard on you (in my head) and really interested to hear how this buying process goes and also why you think the house is perfect for the the current JD and Kim “life soup.”

            Part of realizing the in flux thing is also appreciating that financial stability and financial independence give people the ability to make choices so they’re not just stuck in suboptimal or unhealthy situations.

            Sorry for the long comment! Glad you’re able to post more often. I enjoy reading what you write so much.

          • Quest says 19 August 2021 at 13:18

            Glad to hear you are in escrow. Foundation (cracked?) and termites (infestation?) …. those two issues are expensive problems, everything else is easily remedial. Check the plumbing and wiring as well as you can. Other than that, sign on the line that is dotted and congrats!

          • Quest says 19 August 2021 at 13:12

            JD, you only live once and regarding the money, ‘you can’t take it with you’. I subscribe to the YOLO school of thought. Sometimes I win, sometimes I lose. Some people are life long renters and there’s nothing wrong with that, but other people like to live in a building that belongs to THEM, with the control that goes along with it. I find renting to be soulless, annoying and inconvenient. As an ambivert, renting doesn’t work for me. I love owning my own mid-century ‘castle’ free and clear and avoiding people when I’m feeling avoidant. Buy the damn house!!!

          • Rh says 19 August 2021 at 15:45

            YOLO doesn’t jive with his whole blog philosophy of Get Rich Slowly.

  29. Julie says 07 August 2021 at 14:23

    I wonder if you’ve not invested enough of one of your most significant resources, time, into determining what it’s like to live in Corvallis before buying. Renting first will lend perspective that can only come from time spent living there.

  30. David @ Filled With Money says 09 August 2021 at 19:40

    I love the $777,777 number. The lucky number! Imagine the real estate market going even more out of control than it already is today… hmm..

  31. JulieH says 11 August 2021 at 11:32

    JD, I don’t know if you read the Moneyist column on Marketwatch, but a lot of the letters are about money problems that arise when relationships go bad. Reading your article made me wonder about the following: 1) If Kim will be contributing to the mortgage, will she share in the home equity as well? If you have an agreement about that, it should probably be formalized. 2) If you are planning to get married, a prenup is probably a good idea, since you will be bringing a lot of your own assets into the marriage. A prenup would protect both of you, and 3) If you are already married, then a postnup agreement might be a good idea, since it sounds like the house purchase will be made from funds that you accumulated before the marriage. I don’t know, but the whole situation seems somewhat complicated, and I think that both you and Kim should have legal protections for any financial agreement you make. If I am off base about all of this, feel free to ignore my comment!

    • J.D. says 11 August 2021 at 15:55

      You are not off base! You are on base! These are conversations that Kim and I need to have. We are in a murky place where we are not married, yet we’re buying this home together and we’re both the beneficiaries of each other’s estates, etc. That said, we have plans to actually get married sometime soon, and a pre-nup is a good idea. For both of us. Plus, it’s a topic I don’t know much about, so it would be good to research it.

  32. Donna Freedman says 12 August 2021 at 19:13

    Holy cow. I hope you find what you guys want and that it’s not too big. All that space needs to be heated, cooled, cleaned, maintained and taxed.
    Good luck. Will I see you guys in Austin?

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