This is a long one. Come back when you have a stiff drink and got some time…..
Even before we left for Australia in December to have our Green Card interview, Freddy and I knew that if we got them, buying a house would be at the top of our list.
Most of you know that housing prices here took a beating, some would say they came down to what they should have been all along, some would say they are below what they are worth…. I cant comment. All’s I knew is that if I ever had a chance to buy a home in SoCal, it was now or ‘never’.
As you know, we were successful in gaining our Green Cards, so we are here for a little while with no pressure to leave every two years like on the work visa we had.
With-in a few days of getting back we started looking for a house.
We did the obvious thing, look on the Internet. That right there was our first mistake. We found a few things out pretty quick about houses listed on the web….. They are really there just to harvest your email and phone number. There is no house for sale at all. Not really. If its on the net, its sold or has problems with it. Simple as that, mind you, it took us about 2-3 weeks to learn this.
So, to buy a house in SoCal, you first need a Realtor. You cant really do it on your own. You might if you have grown up here and have seen it done, or done it before, but for us, we really needed some help. We put the word out and in short order had 4 Realtors lined up to help us find a place.
We never ever heard from two of them after the first 2-3 calls. Two stuck with us a little longer.
One of them showed us two different houses. Both were run down junk. They were just terrible and not even in the area that we were looking for. He kept asking us at each house, ‘On a scale of 1 to 10, how much did you like the house?’ I kept wanting to tell him that we needed a negative scale to answer that question. He got to the point of being quite annoying and so we just ignored his calls as much as we could…..
The last guy was gold. He was a personal friend of the guy in the cube next to me. Whether that made a difference at all, I don’t know. I just am glad that we got hooked up, little did I know how much we would need him!
So. Once you have a Realtor, you can then get signed up to an email list called ‘MSL’. THIS is the key to finding a buying a house in SoCal.
Houses that come up for sale get listed on the email list and you get to look at a photo and a few details, including an address.
We thought it would be like Australia. Wait till you find a house you like and then buy it. Not so.
Buy the time we found a house we looked the look at, thought about it, talked about it with the family, then called the agent to view it, it was gone…….
It very soon got to the point were Freddy and I would pounce on the emails with-in a few minutes of when they came out. Look at any new listings with-in minutes of them getting posted and get on to the agent about it ASAP if you want any chance at all of getting any house.
The goal was to look at it that day. Much latter and it was all over.
At this time we also got both pre-qualified and pre-approved with the bank for a home loan. This means that we are not only able to get loan, but we get it approved so that we do not have any delays in getting the money. Its like being a cash buyer…. Only your not. The bank is still involved…. but, we jumped through the hoops with credit checks, paperwork and a bunch of background checks just the same (in the delusion that it would help).
So, we had the money, so now for the house….. Pounce on the email, call the agent, and look at the house. Don’t think about it. Decided while standing on the driveway. Once you found a place, you put an offer in.
For the end of January that was our lot.
At last at the start of February started to hit our stride. We got our first offer in before it was sold.
The Realtor rang back a few hours latter and said that we missed it, the seller took an offer that was 20 grand less than ours…. huh? Yeah, they took the loss to get cash. Our pre-approved was not worth the paper it was written on. Strike one.
Really it wasn’t. We pounced on one house we saw, and we all really liked it, but we could not even put an offer in on it. The seller was not even accepting first home buyer offers. We were whats called FHA. Federal Housing Administration. We were the scum of the housing market. The worst of the worst. We only had 3.5% deposit in cash. I am very sure that’s why the other three Realtors gave us the slip. They did not want to deal with the likes of us. We really were made to feel like lepers by the sellers.
The other place that being an FHA buyer was a bad thing is if the house needed any sort of repairs…. If it did, they often would reject FHA buyers because those buyers typically did not have the funds to fix the home and so would (in the past) buy a fixer-upper because that’s all they could afford, and then not fix it and things would just go from bad to worse.
So, we had a few false starts, but before long we got another offer in. This time it was a strong offer and it was between us and another couple. They took the other offer because they were native American. Strike two.
Another few days and another house. This time the set up was a little different. It was put on the market and thus listed in the MSL email. No offers were to be put in for a week and then we had 13 days to put an offer in. This was to generate a lot of interest. We liked it, but it needed some tweaking before it would work for us, so it took us until day 9 to decide to put an offer in. The Realtor rang back a few hours latter and said that he was sorry, but they already accepted an offer and the house was off the market.
Yeah, day 9 of their 13 days….. They cant even play by their own rules! Strike three
To say Freddy and I were getting frustrated by this stage is an understatement.
Once more, pounce, call, look, offer. Bam, we are thrown yet again by a cash buyer. Strike four…….. Who has 230 thousand dollars cash???
Let me tell you who…. East Coast buyers. The story is that they have been locked out of the SoCal market for so long due to high prices they are snapping everything up they can.
There is one more sort of buyer that we were fighting against as well, one that’s called ‘conventional’. It also has a story.
A conventional buyer has a 10% deposit. So he has a little more cash. We were getting hammered by these guys too because they can buy the fixer-uppers and are next in line after cash buyers….. Where do these guys come from…..well, grab another beer / coffee / stout or port and settle in to that chair a little more…….
Lets look at what I am told to be your average conventional buyer……. 8 years ago they bought their house for around 250 (say) and over the years it went up in price. So, they cashed in the equity and bought some jet skies and an SUV, and perhaps even an RV….
Then the economy tanked and they lost their job, or had to take a pay cut. Now all of a sudden they can no longer afford their 380 thousand dollar home mortgage…. so they don’t…. They walk out of their home. Leave the keys with the bank, sell the jet skies and the RV, walk down the road and buy a house with their big cash deposit and walk into the same style house in the same neighbourhood in some cases, for around 230 grand.
So yeah, we are ‘bidding’ against the very people that got us into this mess in the first place and often they are getting into a house before we are.
Oh, and I should mention that they usually lived mortgage free for about 8-9 months before walking out??? And no, there is no real penalty for doing this.
So, that then brings us to THE house………..
The Realtor rings us one day, pretty excited, hes just found out about a place that’s a short sale and he can offer it to us before it goes out on the listing…. this means we can put an offer in before anyone else. That’s a pretty good jump start right there.
We go around and look at it. Nice. Small, but nice. Freddy was not real keen. It just did not do it for her. There are a few things that she just did not like much. It was further from work than were we are now to boot. I liked it for the sole reason that it was move in ready. It was in good shape. The guy seemed to be taking care of it, and while it was small and I saw and agreed with what Freddy was saying about it, I was honestly sick of trying to buy and this place seemed to be handed to us on a silver platter.
The one downer was that it was a short sale.
Whats a short sale? Well, the first thing to get clear is that it does NOT mean that the sale of the house will be a quick and painless process. Just the opposite actually.
A short sale is called such because the person in the house is short on his mortgage. In a nut shell, he’s stopped paying it, but kept living in the house. Hes squatting.
Now, we had, prior to this asked about a few houses on the list, and the Realtor had steered us away from them because they were short sales.
Why? Well, mostly because they tend to take a ‘little’ longer and so are for the seasoned buyer, not so much your first home buyer…. .so, you may well ask, why was he showing us this place.
Well, it was a pretty simple three reasons;
1. There were two mortgages on the house, but both are with the same bank and it was the same bank that we were getting our loan through. This, we were told, would mean that the whole thing should take 1-2 months. 3 at the max.
2. First offer in gets preference. This meant that, for once, we had the advantage. This right here is the real power of the Realtor. The fact that he had the ‘in’ and knew about it before it was listed.
3. Our Realtor knew someone who knew something about this house and the short sale process. (To this day I cant quite figure that one out, but it seemed important at the time).
The price was a little high. But again, given how crazy busy I was at work, the fact that it was just a move in and live house, we put an offer in. It was really important for me to have a stress free house experience………
So, we wrote a check for 2500 and waited.
The Realtor advised that we probably should stop looking at the MSL list, we would be in the house before we knew it.
There was a bunch of paper work we had to do with the bank. There was some uncertainty about our immagration status and so there was a bunch of more paper work we had to do in that regard.
Our credit also came under close inspection yet again.
Time went by.
The paper work slowed up.
Time went by.
No one could or would tell us if we got the house or not. It seems that no one person knows enough about the whole thing to say much. Also there are so many checks we have to pass that any one failure could mean the whole thing fails.
There is no one we can ring to see how its going. There is no web site we can get any information off, the Realtor knows nothing and he can not really find out either. The process is a black hole. We were near the event horizon, there was just blackness on the house side.
For me, it was ‘easy’ to wait. I was so busy at work that the time just flys by.
It was harder for Freddy. The kids did not care.
Now and then Freddy would seek a peek at the MSL list and see something that she really liked, but we tried hard not to do anything and just let it slip…. That was probably the hardest part. No one really liked the house except for the one fact that when we did eventually end up with it, we would be able to just move in.
We put the offer in on ‘Day 57’. I was not doing Photoshop, I was not doing Lightroom, I was not using a flash, I was not using Zims flash…. My point? My point is that a lot can change in 197 days. Our needs on a house can change a lot in that amount of time. 7 months……
Take another cup, we are not done yet.
About a month ago, the Realtor rings us with some news. Its not good. The bank has finally sent one of their people out to evaluate the property value. This is standard procedure. The offer I put in was contingent on this evaluation. Turns out, the bank evaluator valued the place at 35k less than the offer I put in (the value the house was listed at).
Sounds like good news right? Well, mostly yes. Except for the fact that the bank then argued with its own evaluator and there would be some delay while they sorted it out amongst themselves….. This could take another 3-6 weeks….. So the Realtor advises that we get back in the market. Why?
The bank is in the poo for around 385k, this is what the guy (who is short) owes. My first offer was 250. It was valued less than that. The bank is well within its rights to say ‘no, we are taking too much of a hit, its off the market, we will put it up for foreclosure’. Which pretty much means it sits empty for another 8+ months while they collect money off the government and then eventually they put it up for auction and get all they can. The other option is that they sell it to us, get some of their money back and just get it off their books.
For some reason we ask the Realtor if we can go and look at the house, he agrees. Its the first time we have seen it empty and its been that way for a few months…. Wow. What a shock. Its a mess. The sprinklers have been off, the garden is bone dry and dead in a big way. The house, compared to what it was, is a mess. There are mystery stains all over the carpet, the walls have been finger painted by Range Rover mechanics (or the like), one of the bedroom doors is missing. The power points are smashed or half missing. The doors on the robes are all stuffed. The place just stunk and there is mouse poo all through the kitchen…..
Move in ready? Not so much.
Our hearts sank. This was not the house we put the offer in.
It really does not suit us in anyway any more. My photography has moved on. Freddy is clear that the lay out just does not work for us.
We want to pull out, but feel pressured about getting back into the market as FHA buyers.
So, the bank is an unknown and since we have no way of finding out, we get back to pounce, call, look.
In about 4 days we find a place. As soon as we walked into the place we loved it. It was big and spacious. 5 bedroom, 3.5 bath, loft, three car garage, its about 4 minutes from work and about 1 minute from Old Town (and about 2 minutes from Zims place). The whole family loves it. We all get excited about different things. Amy loves the walk in robe in her room, Terry loves the loft for a computer room, I love the third garage for a studio, Freddy loves the whole thing.
Its Friday afternoon. Its not a short sale. We put an offer in.
Monday, the Realtor calls us, there are 4 offers, three realistic ones, the seller is calling for ‘best and final’ offers. I ask him whats it going to take, he says he will call us back. I call Freddy, she says get the payment figure for what it will take and get back to her. The Realtor calls back and says that it will take 265. I call the bank and find out the repayments. I call Freddy, she confirms that we can not afford that. So we offer 260. The Realtor submits that and calls back about 20 min latter…….
There were two offers at 260. The third offer was lower than ours. They took the other 260 offer. Why? Because we were FHA and they were conventional.
It was like someone walked up to me with a really big knife and just cut my guts open. Gutted. I just felt gutted. With everything that was going on in my life this really felt like the last straw.
I felt like a total failure. I could not buy the house my family liked. What sort of husband, father and bread winner can not find 5 grand and get the house the whole family loved? What purpose do I have? What good am I? Yeah, it hit hard. Real hard and hit me the worst.
A few more houses came up on the list, but I just could not bring myself to look at them.
Freddy got a little frustrated, but before we could do much, we got the news that the bank had accepted their own lower evaluation and were going ahead with the sale.
We had to resubmit a new offer at the lower amount and pretty much start the process again.
We had our credit checked, I had to get on the phone with the bank and each of our utility company’s, we had to provide our Green Card numbers again. We had to provide pay slips again. This time we also had to get house insurance. Yes, that’s right, we had to get home insurance on a house that we don’t even know if we own it yet or not. Talking to the staff at the AAA (like the RACV), they say it happens all the time, they even have a form for it….. It felt like the whole thing was going to start again and take another 6.5 months.
Thankfully it did not.
We got a call that the documents were at the Escrow office. This is a place were they look at your ID and make sure that its you signing the loan docs. That’s all they do there.
We make the appointment at the Escrow office for Wednesday afternoon the 8th Sept.
Its a simple office with a cheery girl that is going to walk us through the ream of paper that we have to sign each page.
The very first page we have to sign is our closing costs……. When we were looking back in January / February, we would see these same houses come up a month or so apart. We would ask the Realtor what was this about. His reply was often ‘it fell out of Escrow’. Freddy and I could never understand how you get that close to owning a house, only to not have it happen.
Staring at this very first piece of paper it became very clear how things fall out of Escrow.
We were told that our closing costs would be the 3.5% deposit on the house and about 3 grand. For us, that was going to be about 10k all up. The piece of paper in front of me had $15,625 written on it…… Not even close to 10.
I’m guessing that were not the first first home buyers to be shocked like this. No wonder houses fall out of Escrow.
Some of the expenses are four lots of lawyer fees, 2 grand there, then there is 75 bucks for email (!!!!), 45 bucks messenger fees, and on it goes. The salt in the wound was the 100 bucks appraisal fee (this is on top of the 300 we paid for the first one, so yeah, we had to pay 100 bucks for them to argue with themselves!).
I looked at Freddy and said ‘Can we afford this?’. ‘Yes…. but what choice do we have?’ is her reply.
Ok, sign it and move on.
Freddy gets to sign one bit of paper. It says that she is married to me.
The rest, the other 40-50 signatures are all mine…….
I had to sign a form that said the signature on the form was mine.
Another said that I agreed that the bank could contact me about the loan if needed.
Another said that I could not sue the HOA if I found any problems with the house.
Another said that the HOA said that I should have the house inspected by my own inspector.
It was just crazy. I asked the nice Escrow lady about it. She just smiled and said ‘Welcome to SoCal where every one is just sue happy’. Well said.
We drove back to the bank to get the check. Back to the Escrow office. That was that. It was back into the black hole. We even asked the Escrow lady, ‘does this mean we have the house?’ She could not say…….
Friday we get a call from the Realtor that we should get the keys Monday.
Monday we get the call. The only key to the house is in the locked box on the front door, here is the combination help yourself……
That’s it.
7 Months latter, that’s how you buy a house in SoCal. The house you don’t like, but you can sort of afford, and that, even after a whole bunch of work and money spent on the house to get it move in ready, is probably important.
If you made it through that one…. you really are a faithful bald geek blog reader…. I wish I had a prise for you.
Thanks for sticking with me though this. Knowing you are all out there with me means a lot.
