Thursday, April 29, 2010

House Drama

So. As we all know, I'm buying a house. Or, well, trying to.

The house was being sold as a short sale, so the process has been a bit more... unconventional... than it otherwise might have been. A) It meant that the time between when I submitted my offer and when it was accepted was extended (though not as much as it might have been, from all reports from others who have bought short-sales or foreclosures). B) It meant that there was basically no room for negotiation after the home inspection, since I was already getting a "great deal" on this house.

Now, I knew what I was getting into with the above, and all of that was fine. Sure a few things came up in the home/pest inspection, but nothing major or that would stop me from buying the house for the price that I offered. I mean, I'm getting a "great deal" and so it all balances out.
But I'm also buying this house with an FHA loan, which means that FHA does their own inspection at the time of appraisal, which can bring up other issues that won't come up in a home inspection. The house appraised just fine, so that hurdle was jumped. But. Something did come up (a structural thing) in their inspection. It's not a huge deal, and, as my realtor has been constantly reminding me, wouldn't have even registered with a conventional loan. But I'm not going with a conventional loan. Why? Because I don't have fucking 30K just hanging out in a savings account. I mean, I'm the sort of person that the FHA loans were MADE to help out. But just because it wouldn't have registered with conventional financing doesn't mean that this isn't an actual issue with the house, either. And it's an actual issue that's going to cost like $1,500 to fix, and the loan is contingent upon this $1500 fix happening.

Now, if this were not a short-sale, I would go back to the seller and say, "Um, this is on you to fix, homeslice. And before the date of the close." But of course, it is a short-sale, and my seller is broke as a joke. The seller is not going to fix this problem prior to next Friday. Now, I'm not going to fix a house I don't own prior to next Friday, either. The solution available from the bank is that I put 1.5 x the cost of the fix (according to an estimate I submit) into escrow, and then once it has been fixed, I get that money back. But I have to do that at the date of the close. So all of a sudden, I am supposed to come up with like $2,300 by next Friday that I hadn't thought I'd need to lay out this month. (I have it, and I could do it, but you know what? $2,300 out of my pocket at close that I'd not expected to pay, with only a week's notice? Fuck. Off.) Sure, I'd get that money back ultimately, but still: fuck. off.

So my only recourse at this point, or at least the only obvious one, would be to go back to the banks involved and trying to get them to cough up the cash, whether by getting them to stick the money in the escrow account or by getting them to take it off the asking price. Which a) they may not do and b) could take weeks even to find out what their decision about doing it would be, thus making whole lots of people unhappy about the delay in closing: my realtor, my realtor's husband (who is the realtor for the seller), the seller, my bank that's doing the mortgage, and the banks who hold the mortgages on the house currently.

But you know who wouldn't care all that much about the delay in closing? Me. I am the person who has the least to lose if the closing is delayed. Sure, it would be annoying, and it would screw up my plans, but it's not like I'm going to be homeless if I have to wait a month to hear about this. Also, it pays for me to wait it out: I can't find another house and have a signed contract by the deadline to get the 8K tax credit, but I can wait it out on this house and still get the 8K tax credit, even though it would piss everybody else off.

Further, I think that it would be stupid for me to just eat the cost of this repair, as seriously: this is an actual structural issue with the house, however much it's not a big deal. It's not my fault that this came up as an issue - I don't even own this house yet. Dude, I can twiddle my thumbs for the next six weeks, and even still buy this house, and it wouldn't hurt me at all. In fact, it could even help me. I'm the strongest player in the mix here.

That said, I, too, would love for all of this to go away. So I presented a compromise option to my realtor to then relay to the seller tonight. It's basically a 50-50 proposition, that would allow for us to close on a week from tomorrow. Now, the seller (as of later tonight) can't do what I proposed, but she's working on a version of what I proposed that I could accept. BUT, what I made very clear is that unless it all works out according to my satisfaction, I shall SO wait on the banks for an answer. Because you know why? It hurts me not at all if I do so.

My realtor gets that, I get that, and I think my realtor has communicated to the seller how I feel about all of this. In other words, depending, I may well own a house a week from tomorrow. Or I may not. It's very hard to know. All I know is that where I am with this right now? LAME. And I am not going to eat the cost of this repair in its entirety just to grease the wheels of this process. NOT my responsibility to do that. NOT. At. All.


PhysioProf said...

Sounds to me like you're taking the exactly correct approach. Fuck all these yabbos if they think they're gonna browbeat you into covering this unexpected repair. They're the ones sitting on an underwater property, not you.

Dana said...

That sounds perfectly logical but I know many people who had to give up on the FHA loan type because the banks and FHA were completely inflexible if that one little fix was not accomplished. Those programs can be great but they are not very user friendly at all. It may all come down to how much you want THIS house. Hopefully the seller will come through.

Notorious Ph.D. said...

I love the fact that you're in such an excellent bargaining position, and can tell people to stick it. Most of us, when dealing with banks, mortgage companies, car dealers, etc., forget that (in most cases) we actually have the power to walk away.

PB-E said...

Your realtor's husband is the seller's realtor??? Yikes! Has this situation led to any unfavorable negotiations?

Another Damned Medievalist said...

currently waiting to see if I can get a signed contract TODAY!!! And we told them the offer (full price, FHA loan) was contingent on accepting in time for me to get the credit. After that, I'm dropping it by $10k. I need the credit, dammit. But like you, I do not have to buy. It's nice to be in the position of strength, isn't it?

Dr. Crazy said...

PB-E, I actually think that the realtor situation has been fine, and in some ways preferable bec. of the short-sale situation (he was very motivated to get the negotiations with the banks done, for example, and it was easy for all parties to be informed about progress in various directions). I never felt like my realtor was concerned about anything other than my interests (well, or my interests and her own interests) and I have felt very much in control of the process. And actually, this morning as I've thought things over more, I'm feeling ok even about this snag issue. We'll see if I maintain this zen-like acceptance, though, as the days go by :)

P said...

I hate to say this, but home ownership is all about expenses unheard of while renting. Enjoy the leverage while you have it. Once you're in, it's all on you :-(

FrauTech said...

From my personal, and somewhat negative, experience, not having the $1500 to fix this "minor structural issue" right now is a problem. It's a you shouldn't be buying a home right now problem. I think it's great you're letting the bank feel the heat, but really the bank's not in a rush either. If they need to they can always forclose and sell to the next sucker. But having a "minor issue" crop up late in the process is a bad sign as is not having a lot of savings to fall back on. You might want to let this go if the bank doesn't play ball, and wait a few years and save a ton of money. I don't think home prices will be shooting up anytime soon or anything. Don't let the dream cloud your logical judgment.

Dr. Crazy said...

Frautech - I see what you're saying, but it actually all worked out fine. I always had the cash to make it go away without any negotiation, but I wasn't *willing* to be the one who sucked the whole thing up. If it weren't a short-sale, me sucking it up wouldn't even have been something anybody would have suggested: this thing would have been on the seller entirely. Because of the short-sale thing, it was less easy to figure out (in that I think people wanted for me to be so in love with the house that I'd just cough up the cash).

And so, what ended up happening was this: it was put on the seller to get more estimates than the initial one, and I negotiated then with the seller for her to give me things that ultimately add up to at least equal if not more than the amount of what the fix costs (the washer/dryer are now thrown in at no cost to me, as is the storage shed in the yard for all the yard-care stuff, along with all the yard-care stuff, minus a lawn mower, which I never really wanted anyway since I plan to pay people to do the cutting of the grass).

In other words, yes, I'll need to bring more money to the close, which I totally had anyway, but my problem - and my anxiety - at the end of last week was less about the money than it was about me feeling like this was the straw that broke the camel's back and that I couldn't just suck it up with no comment. The whole, "but you're getting an 8k tax credit" argument did not persuade me at all.

At any rate, I'm comfortable with the outcome, and I know that this is a good house. The thing that came up would not have come up if it were a conventional loan, and in that regard I'm actually kind of glad for going with an FHA loan - this way, the problem is addressed before it's even a problem, whereas if I'd gone conventional, I wouldn't have even known that it was a problem that could have occurred (it's one of the things that is exempt from a standard home inspection). And the thing that came up was really precautionary (we had an engineer go in and look at it after the FHA inspector, so I'm not just going on the word of my realtor or the word of the seller or even just on the word of the FHA inspector). So now, this potential issue will be dealt with before I actually buy the house, and that's a good thing.

(The problem, by the way, was this: there was evidence of "previous water damage" under the porch, but since this happened, the "ceiling" of the area under the porch has been sealed, and there is no evidence that there is any new or ongoing damage. This didn't come up with the current home-owner because she had a conventional loan. The report from the engineer was that this might never be a problem at all - the porch is level, there are no cracks, there is no evidence that there is any danger to anybody of the porch collapsing or anything - but that putting a steel beam under the porch would ensure that there wouldn't be problems in the future.)