Sunday, August 10, 2008

I'm glad I don't have to think of a number reference to go with "ten"

Okay, okay, ten days. That's not so bad. It's just rather alarming to think about the shift in The Plan that went down in those ten days. Here's the scoop:

We've lived in this house for almost three and a half years, renting from a very kind if absentee landlord (I'll call him MT). He bought the house for a steal right after the big tornado that damaged much of East Nashville, lived here for a little while and then moved to a farm south of town and rented this house out. He's definitely not a professional landlord, or someone particularly savvy in the real estate world. But he's very kind, and totally hands-off. Most of the time this works in our favor. He doesn't mind about our menagerie at all (he even suggested we get a dog when we moved in, because the backyard is fenced and we're so close to the park). When the tree fell on the house last year, MT let us choose the color of the replacement siding, which was fun, but also let me be the contact person for the contractors and insurance people, which was maybe not really my job.

But we haven't minded, we've acted like we owned this house the whole time, doing most small repairs ourselves, painting, installing ceiling fans, etc. And the plan has been the whole time to buy this house from MT. Two years ago, when the a/c went out in August, the repair company formally recommended that MT replace the whole system, and he said that he couldn't afford it right then but if we decided to buy the house, we could take the cost of a new HVAC system off the selling price. We've just basically been waiting for some sort of motivator to start the scary process of applying for a home loan, gathering a down payment, negotiating, etc. In the last year we've certainly been guilty of not pointing problems with the house out to MT, because we didn't want him to have to fix them, and also didn't want any repairs to increase the value of the house. We'd rather just wait and fix them ourselves as soon as it was ours. This especially applies to the bathroom floor, which is actively rotting out. The a/c system is having major traumas (the previously mentioned pouring of condensation onto the basement floor), and the hardwoods need refinishing sooner rather than later.

So two weeks ago, MT called and wanted me to know that he is considering a move to the east coast, and wants to sell the house before he leaves. He wanted reassurance that we still wanted to buy, and I very firmly told him YES. I told him we'd start the process of talking to banks, and get back to him. He mentioned that he had a friend who is a realtor, and when it came time to put together contracts she was going to help. I said that was fine. We still didn't talk about price, but Austin and I already had an idea in our minds. We had paid for a private appraisal in March so we would have an idea of what to offer, after taking approx $10k off for the HVAC replacement. It seemed like everyone was on the same page, and we were excited to have a reason to move forward with the home buying process, and also pleased that now MT was motivated to sell, which would hopefully make the whole transaction go quickly with minimal negotiation.

So imagine my surprise when a woman called me a week later (last Thursday the 31st) introducing herself as MT's realtor, and letting me know that she had prepared a private listing on the house, just for the purpose of our purchase. She assured me that there would be no listing on MLS, no sign in the lawn, no lock box on the door. The listing was just for our private transaction. What? Why would we need a listing if we were just going to offer MT our reasonable price, and he would just accept and we'd sign some paper? I tried to remain calm and asked her what price was on the listing. She named a number that was $60k more than our intended offer. WHAAAAT?

I told her the amount that the house had appraised for in March, and she sounded distinctly nonplussed. She asked if MT knew about this, and I told her no, we had just arranged for the appraisal privately so we would know any potential pitfalls in the house, and know a range for a reasonable offer. She quickly pointed out that a private appraisal was not the same thing as a bank appraisal, and I told her we were definitely aware of that. She asked what comparables the appraiser had used to determine the price of the house, and I gave her the range that the 17 comparables he had found determined (it was still approx $20k less than her listing price, at the highest end of the range). She said that there had obviously been new sales in the area, and started listing three bedroom sales. I pointed out to her that the house cannot be technically listed as a three bedroom. The room where we sleep doesn't have a closet or central heat and air vents, and you can only enter it through another bedroom (the room we use for a dressing room). Therefore, not technically a bedroom, it can only be listed as an office or a nursery. She says, "Well, that's debatable." NO. It's not so much debatable as real estate law.

Ugh. So I hung up the phone with her, letting her know that we had appointments at banks the NEXT DAY to talk about financing, and that I would contact her as soon as we knew more. Reported all this drama to Austin and my sisters, and we decided to go ahead with the meetings at the banks, and hope that MT would accept our much lower offer and just decide to move on. It seemed to us that his "friend" the realtor had accepted his request for help and then decided to turn the whole transaction into a commission for her, and maybe MT was just being taken advantage of and would be glad for our offer and that would be that.

But that is definitely the moment that the niggling doubt turned into something in the forefront of our minds. I remembered that night we discovered the water pouring out of the a/c system into the basement, and when I was walking back up the stairs looking at the total decay that is our basement, I thought for just a tiny second, "I don't want to deal with this." And the next day, when I was telling a coworker about the situation, he said, "Don't buy that house."

So we went to the banks, and were told, essentially, "Don't buy that house." Bank #1 told us that we basically were only qualified for an FHA loan, based on today's current market and most lenders not wanting to loan to anyone without solid homeowner history. A conventional loan would involve a big down payment as well as matching amounts of assets that we do not have. And in talking about our house, and all the things we wanted to fix about it, Banker #1 started to think that the house wouldn't pass an FHA inspection. He wanted to encourage us to start looking around the market; he said there were tons of great houses in our price range that don't have the problems that our current home does. He was very pleased with our credit scores and histories, and said we qualified for homes way above our price range.

After that meeting I took Austin to work and went looking for Casey. She wasn't at home, but Dad was there, working on her roof. I sat down with him and told him the whole story, and how I was trying to reconcile all this new information inside my head. The idea of NOT buying our house was brand new, and the thought of suddenly househunting was terrifying. Then my dad did the strangest thing: he gave me fatherly advice. In fact, it wasn't just fatherly advice, it was a very firm fatherly lecture. He said that ever since we'd been talking about buying this house, he thought it was a bad idea. He thinks that it will continue to have problems, and we weren't going to want to deal with them. He said that the amount of renovations we would eventually need to do would be disruptive and make life really hard for a while. He pointed out (extremely incisively) that neither Austin nor I are Home Improvement People, we both work full-time jobs, we have neither the skills nor the interest in renovating a house. He said that there are larger issues with a house that has been built out bit-by-bit that would possibly make it NEVER qualify for FHA financing. He said that if we had our hearts set on it, he would be with us every step of the way, but suggested that we get online and start looking at houses in our price range and see how nice they were and how we would feel about them.

So, whoa. All the sudden we were househunting. We met with Bank #2 and it was the same story as Bank #1. Banker #2 heard our story and laughed at the "listing" price on our current house and talked about how much she loves East Nashville and how many great houses were over here right now. She also told us that we qualified for much more expensive houses than we could afford, which I guess is comforting but also terrifying. She walked us through a Good Faith Estimate, including what we could expect to pay in down payments and closing costs, and it was all very educational. And becoming less scary by the minute.

So we went home and got on Realtracs. We went to Leia and Richie's house, where Richie already had MLS listings pulled up for dozens of homes he liked for us. We drove around Rosebank and Inglewood and Eastwood Neighbors and wrote down addresses and got a little lost. The next day we made lists of houses we'd seen online and drove around trying to find them. Monday we hired a realtor and gave him a list of thirteen houses we had seen and really liked. Thursday we got to look at six of them, mostly in the Inglewood neighborhood, and really really liked one of them. Then yesterday we went and looked at the other five on the list (we'd already eliminated two, one that was a duplex and one with a POOL that already had a contract on it, boooo) and found another house we felt great about in a neighborhood we did NOT feel great about. We started to feel like we had a first, second and third choice. Then we went back to the house from Thursday (on Wayne), and met the current owners, who told us point blank that the price was negotiable. The owner is starting a job in Texas on the 25th of this month, and is extremely motivated to sell. We poked around every corner of the house, took a ton of pictures, and even started talking about where our furniture would go.

So now what? Hopefully C & T are coming over today to look at the places we are interested in, especially the house on Wayne, and give us their opinions about neighborhoods, etc. I'm trying to get Dad to crawl out of his hollow and come up to take a look as well, because I don't think we'd buy a house until he got to kick the proverbial tires, inspect crawl spaces, bang on pipes, etc. But after that? Maybe we're going to put in an offer, possibly as early as this week. We got a crazy idea that since these current owners have to be out soon, and we would have to give 30 days notice on vacating our house, we would have a few weeks to make adjustments (paint and rip up carpet, etc) before we needed to occupy the space. It's an exciting thought, and gets more exciting the more we talk about it. I'll post pictures as soon as we think it's a good idea, and I'll keep you posted, in brief, now that I have the full story out.

Wish us luck!


theblondemule said...

Buying a house is the most stressful thing I've ever had to do, but it was definitely worth it. I have the names of 2 lenders if you need them & 1 really good home inspector, just let me know.

It'll all work out in the end. It takes a lot of patience & a lot of refraining from physical violence, but it's so worth it.

Keep me posted!

Robyn said...

Yo Delaney! I was looking through my favorites and found you site listed.

Thomas and I had the same thing happen to us. We were asked to buy the house we were renting. Everyone we talked to said don't do it. There were major problems and leaks. T3 and I are not fixer-uppers.

We decided not to buy the rental and have been really happy with our house. You will know what to do by listening to your inner voice. I knew this was my house when I walked through the front door. YEAH!!!!