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Monday, November 29, 2010
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23 comments:
Buying a house is NOT fun. As if the shopping/offer process wasn't nerve-wracking enough; we had our walk through yesterday and none of the agreed-to work had been done. Their agent claims they did not know the walk through was supposed to be Sunday, but they replied to the email where she specified the date and time so they definitely got it. Supposedly the contractors are supposed to be there today to do the work and we are going to do another walk through this evening. We are supposed to close tomorrow. Oh, and the heat wasn't working when we were there yesterday. I suspect it is because the batteries were dead on the thermostat, but add that to the list of things that need to be done.
Interest rates have shot up since we rate locked, so I don't think we have the option to delay closing at this point without incurring great additional cost. This is very stressful, and not at all fun like they portray it to be on all of those TV shows. I wish we had paid more to rate lock longer and left more overlap time when we paid to break our apartment lease. Not to mention all the utilities I will have to cancel if this doesn't go through.
Very angry right now and just needed to vent. Hopefully everything gets done today, but I don't expect it will. The way I see it our only acceptable option is to make the seller put a large amount of money in escrow until all repairs are completed, but I don't know if he will do that OR if our lender will be okay with that (not an FHA loan which I don't think allows this).
Jeremy,
sorry to hear that. don't have any advice but best wish tomorrow. for all the evils i see in agents, they're all well-trained to make sure deals get closed, so i imagine things will get done without serious delay. you might see some pressure coming from your own agent too so be prepared.
I assume this is probably not good for the local economy/housing market Obama freezes pay on all civilian government employees
I assume that if you get promoted your pay will go up, but still this will keep wages ~3%/year lower than they would have been for federal employees. I wonder if Obama is getting serious with some of the other budget cut proposals.
Jeremy, my sympathies also. You're absolutely right about everything.
I just can't believe the incompetence out there (calling Kevin to add a choice comment)!
The only thing I can suggest, which you've probably also thought about, is making a list for your agent of the out-of-pocket costs you will incur and will expect the seller to cover, if the closing does not occur tomorrow.
HB, many private sector employers have frozen pay or given tiny (e.g., 1%) increases even to top performers for several years, whereas federal workers have been getting scheduled increases all along.
Obviously people who have lost jobs and have been unable to find others are much worse off.
So I think Obama is making the right move, though I agree this is a tiny % of the budget and that other tax increases/cuts are more important.
Ace-
I agree this is probably a good step and that government pay has gone up faster than private sector pay recently. The deficit panel also recommended reducing the number of employees by 10%. I was curious if Obama would consider something like this. I agree the pay freezes probably do not make a huge difference, but I think growth would be much slower in our area if contractor/government jobs start getting eliminated.
I should have commented I don't think major cuts are likely in the near future.
HB
"I was curious if Obama would consider something like this."
Of course he will. He listens to everything the Money people tell him.
It's why he will be a one term president. He asks the sheep and the wolf to agree to a mere single limb for a meal. He can neither please the sheep nor the wolf.
Jeremy
i support your desire for the escrow on repairs.
The Lender will not close if the repairs affect occupancy.
The Lender may dislike the escrow, in which case, you may need to make a side deal. A legal side deal. You lower the price X dollars, and write a contract to pay the Seller $X in return for the completion of certain repairs within 3 days.
Now, do bear in mind the seller is also in the same state.
They want the deal to close, because if you fail to close, the next bid will likely come in at a lower price.
Talk to your agent, sometimes, you can agree to a split on the repairs, where the seller, gives you some credit and you do the repairs.
Cheryl is probably the best expert on this as she has done some several dozen purchases.
Ace,
this house has lots of spaces too :)
While fundamentals such as affordability still matter in places like Arlington, you have to be careful of how you define them. What's important is cost of housing versus what the pool of buyers is willing and able to pay. The median income in Arlington is not a good estimate of the latter.
Most importantly, Arlington is not a closed system. A lot of buyers come from outside of Arlington, and outside the Washington area. The buying power of the potential buyers outside of Arlington contributes to the demand and pushes the prices up, even though their income does not show up in the Arlington median income.
For Arlington move-up buyers, especially those who have been in the area a long time, what they can afford is measured not only by their income, but also by their equity (equity still exists in Arlington). Maybe you can't afford a $600K home on $70K income, but you may be able to afford it on $70K income plus $300K equity from your existing home.
Finally, the median resident is not the median buyer. Not only are there the low-income renters mentioned previously, there are current home-owners who are not in the market for a new home. I've heard many long-term residents who say how they could never afford, or would never pay, the price that their home would cost if they were buying now. Unless prices rise so high that these people decide to sell, leave Arlington, and contribute to available supply, they are irrelevant to demand and aren't really relevant to housing cost.
The pool of buyers from Arlington that is driving the housing prices in Arlington tend to have higher than average income for the County, or have an additional source of funds, or often both. Also, the buying power of the out-of-county buyer is not reflected in the median income. The cost of housing in Arlington has not broken free of the constraints of affordability - it's just that Arlington median income is not a good measure of affordability for the current buying pool.
Though I tend to disagree with Pat's overly bearish view, there are still solid examples that not all is well in the prime Arlington areas. This home falls within the range of homes I had been following for quite a while and I see this one as going no lower than $475k. Though I'd expect something more like $520k.
http://franklymls.com/AR7437531
Happy Schadenfreude Pat!
My $0.02
mytwocents,
two problems IMO with the listing-
1) it's one-level
2) it's practically in Falls Church
the only plus is its approximate to metro.
$.02
Wow. Pretty house, looks like someone tried to catch a falling knife.
if they had sold 6 months earlier they might have surfed the $8K buyers bribe.
bought in 07 for 544, and they are listing for a hair under the purchase price.
Given it's very clean and sat for 74 days, it's probably overpriced 10-20%.
Look, I'd like a market clearing price, no shadow inventory, no zero interest policy, and clean market pricing. Instead ZIRP lets a lot of people who should exit, hang out, hoping for a better tomorrow.
It punishes savers, and with the downside risk the banks are damned if they are going to go long on 30 year mortgages.
why are there so many empty units?
it's not economically sensible nor is it socially useful.
the vacancy rates should be 4% in rentals and 1% in owner occupant.
that it isn't indicates a unstable amrket
Jeremy With the new financial regulations, you are not going to be able to change the sales price of the house without re-submitting your mortgage for lender approval. Although they often turn into nightmares, you can have the settlement agent hold a very strong escrow to cover the cost of repairs. You have good leverage with the seller as they will want to get on with the deal. Please note, however, that if the sellers fail to have the repairs done within the time period specified in the escrow agreement, most settlement companies will not release any escrowed money to you unless the seller agrees to it. When discussing the escrow agreement, be sure to ask the settlement agent what they will do if the seller will not agree to release the funds to you. A better alternative might be to get a good estimate of repairs (your agent should be able to have a contractor at the second walk-through with you to give you a rough estimate). See if your lender will allow a last minute credit toward your closing costs. Second word of caution, make sure you have enough closing costs to use up the credit from the seller for the repairs. As a final word, try your best to get a heating contractor at the house tomorrow to make sure that the problem is just the thermostat. You do not want to be responsible for a vacant house with no heat at this time of year. Good luck.
Jeremy, Did the heat work during your home inspection? If it did, you bought a working heating unit and if it isn't working during your walk thru they have to fix or replace it meaning placing funds into escrow to cover the problem. If they want to close they will put the neccesary funds into an escrow account to pay for everything they agreed too in your contract. At this point they are in breech, not you. Just show up for closing and do your walk thru before you close unless they have already agreed by this time to escrow sufficient funds to cover agreed upon items. If they don't want to play nice, sue them for all the unneccsary expsenses you occur because of their breech. Don't let anybody bluff you, you are in the drivers seat here if you don't get carried away with exagrated cost of repair/replace costs on your list.
Jeremy,
No, buying a house is NOT fun. I wholeheartedly concur.
I am with Arkey on this one.
We found out we had an encumbrance at closing - the selling agent grumbled but forked over $500 at the table to fix it. Some money is better than no money to the agents.
Let us know if things work out.
All,
We feel better about the house after today's walk through. While they did not complete the window repairs we asked for yet, there were 3 contractors there and the owner was there all day getting things done. I stopped by at noon to meet the owner and talk about things, and then again at 6 when he thought they would be done. They weren't yet (I figured as much), but they are coming back early tomorrow morning to finish up and paint before our 4PM closing. We will have our 3rd "final" walk through at 3PM tomorrow just before settlement.
Oh, and the owner has agreed to escrow money for new pool pumps since he still contends that they work and our pool inspector said they don't. We can't fully test them until the pool is opened this spring. I'm hoping the lender is okay with that since it doesn't affect the home's occupancy.
The heat problem was just the thermostat. Whoever designed thermostats that run off of AA batteries is an idiot.
Jeremy, glad to hear that good news. Will send good vibes your way at 4 PM tomorrow.
Maybe after you move in, an electrician can wire the thermostat to your furnace.
MM, that poorly planned house with the unusable garage has been sitting forever. But with the big price drop, it might sell quickly now!
Jeremy
When you close i'll try and not be like Kevin Spacey in this.
http://www.youtube.com/watch?v=GC2TzspJn5A
http://franklymls.com/DC7270603
taxed at 395K, listed 479K.
sells 195K
Whoever designed thermostats that run off of AA batteries is an idiot.
Whoever designed thermostats that run off of AA batteries is a genius.
You can't have your modern digital LCD thermostat and eat it too. In the olden days before double A powered thermostats what we had to live with was a mechanical device powered by a bi-metallic strip, as on the old dial face or lever style thermostats with a glass filled mercury trip switch. How's that for toxic?
We all remember those. No electical power, or the wrong kind of electical power (AC vs. DC) was run to those thermostats. Along came the cheap electronics + green movement + people wanting 10 different heat and cooling zones at a price point below $100 total cost and this is what resulted: A cheap made in China programmable thermostat that interfaces with 20 to 30 year old HVAC units from 50 different manufactuers and it runs off of two AA batteries sold in every Home Depot or Lowe's for under $100. And it works. It just needs two double A batteries to run, and they last for more than 14 months in most cases.
Given the results, I would say double A battery powered LCD thermostats are a marvel of modern engineering and design.
Otherwise, you would have had to rip out the wall to install AC or DC power and another run to the existing HVAC unit. Some of those old HVAC units had scary amounts of AC or DC power running through the walls.
:-)
TN,
I did look that up earlier today and it does make sense after reading that old thermostats were mechanical. People would be stupid today to not hard-wire the thermostat, but I can see the AA versions being useful when replacing an ancient mechanical unit. Either way, somewhere way down on my new to do list is to hard wire in a smart thermostat with no batteries to fail because I forgot to change them before going on vacation (and potentially came home to frozen/burst pipes!).
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