The Pursuit: A Bloomingdale Asset, a $1M Trinidad Home and an Arduous Search

• September 27, 2013
• 1 Comment

by Shilpi Paul

Rick Heath’s new home after nine-month search

The constant complaint among DC homebuyers over the last nine months has been that the low housing inventory and high demand has made the hunt for a home very frustrating. That complaint even extends to those that already own a home in DC.

Last Christmas, Rick Heath and his wife Jessica began searching for a home to move into in DC. They liked burgeoning areas, like Bloomingdale, LeDroit Park and Shaw, and were aiming to find a classic, three-story rowhouse with a rentable basement in one of those neighborhoods.

The catch? Heath already owned a classic, three-story rowhouse with a rentable basement in Bloomingdale.

Heath bought that home in 2010, before a job transfer took him to Ohio for a few years. While Bloomingdale was already gaining heat at the time, prices hadn’t yet reach the peaks of 2013 and Heath was able to buy the home at a reasonable price. While working in Ohio, he rented out both units of the house: five twenty-somethings filled the upstairs, and two young women continued to live in the English basement.

While the home checked all the boxes on Heath’s list, he was hesitant to kick out the renters and reclaim it.

“Our tenants have been fantastic and have taken great care of the house. In addition, the amount of cash flow that the property generates trumped moving back in,” Heath told UrbanTurf. “I considered it my nuclear option.”

Within a month of searching, Heath and his wife were under contract on a three-story rowhouse with a basement unit and a carriage house, located across the street from the Howard Theater. As they went through the inspection process, however, they ran into some problems.

“We sent the seller a list of very minor repairs,” said Heath. “They came back saying they wanted to deem the contract null and void.”

Heath’s Bloomingdale home.

Heath and his wife had trouble understanding the reaction, but soon enough, they learned the real reason: the seller had found someone willing to buy the home for $10,000 above Heath’s asking price.

This initial near-miss served as an omen for the next nine months.

In February, the couple went under contract again, this time on, what was at the time, the most expensive home to ever be listed in Trinidad. Unfortunately, they didn’t make it to closing this time either. They were in the process of moving back and switching jobs, which made securing financing a bit more cumbersome than expected. The seller was pushing for a quick close (three weeks or less), but Heath and his wife needed about five weeks to obtain a mortgage. Since the seller had a backup offer in place, both parties agreed to cancel the contract.

From there, they broadened the parameters of their search. They looked in neighborhoods like North Cleveland Park and Shepherd Park, and considered smaller homes without rental units.

Between February and August, Heath and his wife submitted a total of 15 offers. None of them were accepted.

In 75 percent of the situations, they were simply outbid. For the remaining offers, he believes that the sellers chose to go with a buyer with stronger financing, like an all-cash offer or a conventional loan, and with fewer contingencies. By the end of their search, Heath and his wife were eliminating most contingencies from their offers, but they still had no luck going under contract within DC.

After yet another rejection, Heath’s wife suggested they take a look in Montgomery County where she was sure they could find an attractive home that met one of Heath’s bigger requirements: being able to walk to a Metro and commute to work via public transit.

Soon after they expanded their search to Maryland, Heath and his wife walked into a five-bedroom rambler in Garrett Park near the Grosvenor-Strathmore Metro station. They loved the modern renovations, as well as the 1,800-square-foot finished basement. They made an offer in late August and closed on the home last week, completing their home search after nine months.

So, at any point in the process, did Heath ever consider just moving back into his home in Bloomingdale?

In retrospect, that would have made things easier, he said, but the additional rental income was essential to their mortgage application and allowed them to buy a bigger house. Additionally, Heath believes he may have simply skipped a step.

“Once DC residents have school-aged kids, many flee to the suburbs,” believes Heath. “We pre-empted that process. Instead of finding a place that will serve our needs for the next five to seven years, we found a place that will serve our needs for the next 30.”

As for the Bloomingdale home, Heath won’t be parting with it anytime soon.

“The house will be a part of our family for generations,” he said. “We won’t sell it unless we absolutely have to.”

This article originally published at http://dc.urbanturf.com/articles/blog/the_pursuit_a_bloomingdale_asset_and_an_arduous_search/7618

1 Comment

1. Palo said at 9:16 pm on Monday September 30, 2013:
   Are we supposed to feel bad for this guy? It was all about money for him and his calculations and that's what made the process drawn out. From the initial 'cash flow amount' of his original Bloomingdale home, to his 'list of very minor repairs' in a hot market, to 15 underbids/outbids. Welcome to a hot, competitive real estate market.