Monday, August 11, 2008

Frustrations In Buying a Home (Or, Why Real Estate Sucks, Part 2)

In a previous post, I opined on the difficulties of selling a home today--problems in large part not even directly tied to the burst real estate bubble and current market conditions--but, fortunately, I did close on the sale of my townhome, freeing my wife Beth and I up to pursue the next phase in our house hunt: making the purchase of a home in what most would call a "buyer's market." No problem, right?

Unfortunately, wrong!

Recall from my prior ruminations that my buyer missed his contracted closing date by nearly two months. Since Beth and I don't have a huge amount of cash saved up and needed the proceeds from my townhome sale for our down payment, any offers we'd make would require a "Sale of Home Contingency," which for the non-real estate savvy out there means we'd have to wait for my home sale to close, and should my sale have fallen through, would have had an "out" for any place we'd contracted to buy. Needless to say, sellers do not much like contingencies of that sort, even in today's "buyer's market," because of the uncertainty their sale will be completed in a timely manner or at all with a contingent buyer. Keep that point in mind as we go forward.

Beth and I looked at several homes (special thanks to our agent, Gene Davis, for being so patient and showing us so many places!) in our price range. We found one which needed some TLC but which was otherwise perfect, located reasonably close to my office, with a nice yard for the dogs and a good layout inside for our needs... but it was bank-owned, a victim of the rash of foreclosures accompanying the economic woes and subprime mortgage meltdown, and banks simply will not consider contingent offers--thus, my wife and I couldn't even offer on it due to my buyer's slackness, and it soon went under contract to someone else.

The next home we found also needed a bit of work--chiefly, some upgrades to the appliances, new windows, and a fence for the back yard--and as we were getting encouragement from my buyer's agent that his loan was on track to close "soon," we made an offer with the necessary contingency but briefed the listing agent as to the situation. Still, another offer arrived (amazing, given the home had been on the market for several weeks without a nibble!) and was accepted over ours, at a lower price no less, due to our contingency.

Needless to say, I was at that point quite furious with my negligent buyer, and began exercising legal options to pressure him to pick up his pace (for which I was rebuked by him for "getting emotional" in a "business matter"). Luckily, the other offer on the home we wanted fell through... so we were back in business, if only my buyer would close.

Anxious days passed as my buyer and his mortgage broker and ultimate lender delayed (the most frustrating being the lender requiring a second appraisal be done in-house, which they kept promising to schedule--they eventually did a "drive-by" appraisal, far less valid than the in-depth one already on file!). On the eve of closing, the lender raised property tax appraisal questions that so frustrated the buyer's own settlement attorney that the law firm threatened to resign, as the issue had been addressed several times already.

Worst for us was that the seller for the home we were to buy now informed us he had a new contract, "a done deal except for the signatures," to buy the home from someone else. We urged him to reconsider and wait, as the lender had committed my buyer's funds, and we'd be able to remove the Sale of Home Contingency within days (waiting only for the checks to arrive at the settlement firm's offices). Nope--with no, "Hey, we've gotten another offer, can you remove your contingency first?" notice or other heads-up, the seller had gone with another buyer, and we lost out on the home for the second time. Though not required by law, ethically I believe the seller and his listing agent ought to have given us notice that they'd received a non-contingent offer and given us a chance to respond (had the contract been ratified, the kick-out clause the seller rightfully insisted on would have given us 72 hours).

So, my buyer's delays had now cost us three home purchases. More than a bit depressed, Beth and I came up with a list of around a dozen places to go and see that weekend, with the hopes of finding another home that met our needs. And we did find one that was a better fit than any we'd looked at before. The problem: it was a short-sale property, the drawbacks of which I'll discuss in a future post.

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