6/21/2011

06-21-11 - Houses

Well I put an offer on a house, but it doesn't look like I'll get it. The multiple-offer scenario is very strange, I always thought it was like an actual auction, like I put in an offer, they tell me what the highest other offer is and I get a chance to beat it. Not so. The seller can basically tell you anything they want to manipulate you, which is a real turn off to me and makes me just want to walk away. (in general in life I'm horrible at dealing with interactions and problems with people - my only weapon is to walk away). This seller basically said "you need to offer a lot more" but wouldn't say what the actual other offers were, so are they just trying to trick me into offering too much? Fuck that.

It's difficult keeping focused on the house hunt. We put a ton of time into looking at that house; I think I visited it 5 times to check out the neighbors and neighborhood at different times of day (you have to try to random sample for dogs yapping, children playing drums, retired people doing amateur construction projects, etc.). It's so much work that it's probably +EV for me to actually get a "bad deal" on the house. I think I might be too worried about making a good investment and could make a mistake of investing too much time searching and not getting what I really want.

Anyway, writing down some things that I've been mulling.

Houses are More Stress than Renting

I've heard this from a lot of home owners, and I'm sure it's true, but it's also largely just in your head. For example, home owners stress about the value of their home when the market goes up and down. But you don't have to, you can just not worry about that and just think of your mortgage as rent. It's not actually affecting you in any way day to day. Similarly, home owners stress about doing maintenance and home improvements; they always have a big todo list of stuff to do to the house (fix the squeaky door, find the basement leak, replace the roof shingles, etc.) , but you don't have to do those things. I've lived in a lot of rental houses over the last 15 years, and I have never seen a home owner do maintenance on *any* of them *ever*. Not even things like pruning or gutter cleaning that should be done annually. So clearly houses hold up just fine if you do no maintenace at all. The reason rentals are relaxing is because you see problems with the house any you just think "meh, not my problem". But you could treat the home you own the same way. I'm a total uptight type-A so this is a major trap for me that I have to avoid. This relates to ...

Priorities

It's one of the sad/funny truths of life that most people actively make their own lives worse. Maybe you live in the city in a shitty apartment, or even in a group house, it's uncomfortable, it's noisey, but you hang out with your friends, you're surrounded by the vitality of the city, you're actually very happy. But when you get money, you go buy a comfortable suburban house. Now you're far away from your friends and you don't see them any more, you have to drive everywhere, you spend your time mowing the lawn and watching TV and home improving, you're more comfortable, but your life is actually much worse.

Most people are horrible decision makers when it comes to their own happiness. Humans tend to prioritize elimination of discomfort, and in reality that is not actually important to happiness. (for example, stupid people spend their time buying the newest fancy hiking gear so they can be comfortable if they ever actually go, smart people just don't care and go hiking in the rain anyway, it may be uncomfortable, but afterward you forget the discomfort and have only the happiness).

I think that in general, home buyers over-value the actual house. Whether it's cute, whether it's in good condition, etc. These things don't actually matter that much to your quality of life. Oh no, I don't have cute decorative wood trim in my living room, my life sucks. No, actually these are probably the least important things.

Perhaps the most under-valued thing of all is picking a location near your family and friends. People always think "I don't want to sacrifice picking the ideal house for this because they might move anyway" or "we can still hang out even if I live further away" , but in fact you won't still hang out, and that is a major quality of life loss.

I am susceptible to this as anyone; the problem is you see a charming beautiful house and it fills you with visions of how good your life would be there, but in reality that is just an illusion (it's sort of like marrying a beautiful woman - in the long run, the beauty is not the important thing to quality of life, it's how you get a long, if she's understanding and compassionate and reasonable and fun, etc.)

I've been trying to figure out what actually matters to me. It's something like this (not in order) :


1. Bedroom where you can open the windows and it's not super noisey

2. No neighbor problems ; ideally see as little of the neighbors as possible ; no apartments or home
improvers.

3. Some private space where I can be naked in the sunshine

4. Some garage space where I can work on my car and bikes in peace

5. Sunny land for a garden

6. Walkable to groceries (about 0.5 miles max)

7. Good room for a home office ; has to be reasonably isolated from rest of the house

8. Not intolerable commute to kirkland ; even though I only do it two days a week, it does create a massive
amount of anger

Decision Making

I find making these kind of large extended decisions very difficult. The problem is you sort of go off chasing lines of thought and don't reset.

You start with certain criteria in mind. Then something comes up and it makes you think "okay maybe I should consider more expensive places too", so now you have to consider them and weigh that in too. Then something else comes up and you chase another thread, then you visit one house and it has a nice out-building and you have to weigh that against the original factors.

Your mind is getting more and more cluttered with all these cases and how to weigh them against each other; you no longer have a fresh perspective to think "do I really want this?"

One solution is to give yourself strict rules at the start (X dollar range, Y location range, Z square foot range) and absolutely stick to them, because as you get more and more confused down the line you will be tempted to violate those ranges and you might make a mistake simply because your decision making capacity has got shot.

Value

How do you get good value from a large purchase? (for most people this is just a car or a house)

Well some people can do it by smooth talking or manipulating the seller. I'm never going to succeed at that so let's talk about other ways.

One is to find a desperate seller. Sometimes you just get lucky with your timing and find a seller who needs to move right now and will take a low price. Basically you just go around to lots of sellers and give them low-ball offers, and eventually someone will bite. You can't be too picky about what you get this way, though, because the chance of finding a desperate seller in the house you want is very low. (it's easier with cars than houses since there are lots of identical cars of a given model).

Probably the best way, though, is to find properties where the market's valuation doesn't match your own valuation. Of course that sucks for resale value, but if you just want to maximize the value to you, your best bet is to look for ways that your personal valuation mismatches the market. A few for me :

I hate finished basements, but they count as square footage, so houses with finished basements
are massively overvalued for me.

I super-value some privacy in the yard.

I don't care about square footage of the house that much in particular, so large houses are over-valued
and small houses are under-valued.  A lot of people look at $/sq-ft way too much.

Blah blah blah I'm bored of this topic.

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