ReadyMade: Instructions for everyday life

Welcome to the third installment of the harrowing tale of How We Found Our House:

Nearly two weeks after falling head over heels and rushing to place a bid on the the first house we looked at, we got a call from our buyer’s agent.  Though the owners had accepted our bid, the bank had a counter offer.

Usually you don’t have to sit around and wait for a response for two weeks, usually the seller wants to get on with the process as much as you do. Usually, a counter offer would be a reasonable response to the bid you placed.  Nothing, however, was usual about dealing with a short sale property.  We bid slightly under the listing price for our big pink house, the bank countered with $50,000 above the asking price.  Confused?  So were we.  So was our buyer’s agent.  We all shrugged our shoulders and decided that perhaps they would understand our seriousness if we simply countered with our exact same offer.  We did just that and returned to our waiting game.

In the meantime, two weeks had passed, and we were practically into our summer.  Garth had plans to spend a portion of the summer in China and I had plans to hide deep in my studio while he was gone.  Suddenly, it seemed unlikely that we were going to settle this house issue before he left.  How could the bank be this ridiculous?

We began to try and look at other houses more seriously.  We tried to be more practical– did we really need all that space?  Was a hot tub really necessary?  Could we do without THAT much yard?  Instead, any errand we ran took us past the house.  We drove by at night, in the afternoon, in the early morning.  “There is our house,” we would say.  “We can walk to the grocery store!”   “Biking to that neighborhood will be great!”

As we waited for the response to our counter-counter offer our house-hunting took us to a wide variety of properties.  If you did not already know this, Humboldt County is known for a very specific crop.  The growing of this crop often takes place indoors and if you are a “farmer” as well as a homeowner you probably have an extra building on your property to house your plants.  This is of interest to Garth and I because we were looking for a house with extra space for our studios.  Having “grow space” on the property was a bonus area ready to be transformed into work space (although those spaces generally didn’t stand up to fire codes well).  We looked at several homes with average size out buildings– some had more elaborate set-ups than others.  We also looked at a few memorable homes where the interior of the house was used for growing.  Two of these homes really piqued our DIY interests.

The first grow house that we encountered was a lovely pink house with beautifully maintained landscaping.  The exterior was immaculate.  It boasted nearly as much interior space as our short sale home, was in a more lovely neighborhood, and when we pulled up in front of this house I sighed with relief– what a beautiful home!  When our agent unlocked the door I reversed my original opinion.  I felt like I was standing in the Port Authority bathroom for hobo cats (and likely humans).

We left the front door wide open to air things out while we ventured in to explore.  In the kitchen, there were holes drilled in the ceiling to drain excess water that had gathered between the floors upstairs.  Wiring had been yanked out of walls.  On the back porch, an area had been cut away to expose electrical wiring that hung, oddly spliced together and exposed to the elements.  All of the appliances were missing and appeared to have been violently removed.  I can’t imagined what was staining the carpets.

Despite all of this (as we literally held our noses) we were charmed by the open space in the living room/parlor.  The kitchen was a large, bare (and filthy) blank slate, there was studio potential in the garage and the upstairs was a maze of interestingly shaped rooms.  For a low, low price we might be able to keep our apartment for a few extra months while we ripped out every scrap of carpet and did some major work before we even considered moving in.  The idea was scary and exciting.  We vowed to keep this home on our radar.

In that same day of searching, we encountered another cheap home with wild amounts of space.  Like the first place, some exterior upkeep had been done to lure people inside.  The interior was a mess of water damaged and uneven floors.  Mold was growing along the windows and in the parlor, a slash of blood that had been squirted out of a syringe ran across one of the walls.  It was carpeted with a crazy sort of 1970s take on Victorian with red and acid green crawling across the floor.

Once again, the space had potential.

The doorways had a lovely curve to them and the entire downstairs had a nice open flow to it.  This house especially excited Garth.  I was put off by the fact that the only bathroom was downstairs off the kitchen (and by the blood on the wall).  “No problem,” Garth argued– we can put in another bathroom upstairs in one of those strange closet attic areas.

Hmmm.

While I do believe that Garth and I are capable of a great many things, replumbing a house was not something I had envisioned us doing.  Our buyer’s agent said he got bad vibes upstairs.  I felt like the house could be harboring any number of ghosts.  We moved on.

As we continued to look, it became obvious that the amount of house we could get for our money was nowhere close to the amount of house that our short sale offered.  We viewed all of the old victorians around town that were in our price range.  Most of them had strange additions creating a maze of a house Frankensteined together in precarious ways.  In one house, we actually lost our agent when we stumbled into a back room that had an almost hidden staircase which then opened onto a large bedroom and bathroom.

We began looking in areas where we did not want to live.  During one of these pursuits we were almost sold on a fantastic 1950s space age bachelor pad-style modern home in the middle of nowhere.  It looked like the original people who built this swinging pad were finally moving out– the stereo was still built into the wall, the living room was recessed, the kitchen had a hibachi grill, and all of the furniture seemed made just for the space!  We had to talk ourselves down– it was a terrible location, no one would ever want to come all the way to that house for a party and we would be no where near any services.  We kept up our late night internet searches and visited five properties at a time with our agent.  Nothing seemed as magical as our short sale home.

Just before Garth packed off to China for six weeks, the bank came back with the third counter.  They dropped their price by $10,000.  This was still $40,000 above the listed price, and not a price we were willing to pay– though at this point we were feeling more desperate.  We bumped up our offer to the actual listed price and held our breath.  We investigated options for closing on a house with Garth in another country.  Finally, I put Garth on an airplane to China and resolved to solve our housing crisis in his absence, though I still felt fairly certain that the bank had to realize that selling us the house was in their best interest.

Now it was just me and Michael (our buyer’s agent) looking at houses.  I decided we would look at everything, even properties that seemed like a terrible idea from the onset.

And so began my summer of searching.

I’m sure you’ve all been waiting with bated breath to hear the next chapter in our homeownership tales.  When last I left you Garth and I were on the verge of placing a bid on our first house.

Having looked at only two properties, it might seem a like we were making a snap decision.  As any note-passing (or frantically text messaging) teenager will tell you, sometimes you just know.  For many good reasons, this house just felt like The One.  There also seemed to be the added pressure that the very next day this house could go into foreclosure and be whisked away from our loving, outstretched arms.  We were ready to go and sign some papers.  As we stood on the street expectantly looking at our buyer’s agent he asked us some very logical questions.

Do you already have a letter from your lender?  Which type of loan are you using?  How much money have you been pre-approved to spend?

Uhhhh. . .

Don’t get me wrong, we weren’t going into this completely blind.  Garth had done plenty of necessary research.  He had taken a workshop on California homeowner loans and investigated options that were available to full-time community college teachers.  We had submitted some preliminary papers to a mortgage broker that likes to work with California state employees, but we didn’t realize that a local lender could look better to a seller.  Because I think Garth can more eloquently discuss the finer points of our loan process, I am going to let him eventually fill you in on how this all worked itself out.  We did immediately make an appointment to talk to a lending agent and Michael, our buyer’s agent, said he would make some calls to see if the foreclosure could be pushed back a smidge.

Two days later, on April 21, we were sitting in an office signing a small stack of papers.  I had a sinking, crazy feeling that we were signing our lives away.

Don’t be fooled.  Things didn’t go down quite so easily.  Micheal explained to us that the house we were bidding on was a short sale.  This meant that all the rules that apply to placing a bid on a house that was not on the verge of foreclosure were out the window.  He told us to be prepared for disappointment and possibly a long wait– in spite of the name, a short sale is not a short process to involve yourself in.  No worries, we said, we can wait– this is The One.

For those of you that do not know (we certainly didn’t know such things at the time) a house that is listed as a short sale is when the proceeds from the sale of a property will fall short of the balance owed on a loan.

In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the seller. This negotiation is all done through communication with a bank’s loss mitigation or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower’s financial situation.  (Thanks Wikipedia!)

To us this meant that the home owners would first approve our offer and then we would have to wait for approval from the owner’s lender.  The home owners approved our offer right away.  Now we needed the thumbs up from their lender.  Michael told us that this could mean waiting as long as two weeks to hear back from the lender with approval or a counter offer.  In the meantime, we should probably continue to look at other properties and not assume that the transaction would go through as we were hoping.  As you may have heard, there has been a mortgage crisis going on and while short sales were once few and far between they are now much more common and therefore the lenders have piles of properties in short sale right now.

Okay, no big deal, we could wait.  We were in love.  It was April and we didn’t have to worry about being out of our apartment until August.  Besides, why wouldn’t the bank want to approve our offer?  We would really be helping them out by taking a property off their hands and saving them the expense of going into the foreclosure process that would be more costly than the loss they would suffer from a short sale.  Logic, however, was not what got the lender into this problem in the first place and it would not be on our side in the end.

We did take Micheal’s advice to heart and continued our online property searching.  We made appointments and began to look at a variety of other homes.  After every new property we would climb back into our car and agree whole-heartedly that even though what we had just seen had this or that great quality, it couldn’t hold a candle to our rambling pink house.

And so we looked, but mostly we waited.