The Road to Home Ownership
Jun. 21st, 2011 01:14 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
shavastak...is long, rough, winding, hilly, covered in tacks that blow your tires, and replete with sudden turns into brick walls. The destination still looks like it'll be worth it.
Twice in a row we crashed the car into brick walls and had to begin again from the start. Thankfully, we got out without paying for an inspection the second time; the seller's agent had an HVAC guy stop by and find out that all the copper piping had been removed from the system. We backed out and the seller ended up reducing the price of the house by 7k.
On the third try, we finally found a house that (still) might work. A 3-bedroom 1-bath with problems, but small problems, ones we can handle. The carpets were disgusting - but the bank owner pulled them up and refinished the hardwoods underneath. It has no appliances, but we can handle that, and the bank owner is putting in a stove of our choice for us. The ductwork is nasty, but they're getting it cleaned for us. That was all agreed upon ahead of time.
So we got an inspection and came up with a list of other minor problems that we need to take care of. The foundation is solid, but the floor is a little weak in two places and needs to be reinforced. We can do that. The roof is solid, but needs a new patch of shingles and some flashing in some places. We can't do that, but after a few months we can pay someone who can. There are some outlets that need to be recovered; we can do that. There's a gap in the floor of the attic and not enough insulation; we can fix that. We negotiated with the bank about getting them to do some of them before we moved in, on the assumption that the FHA inspector would flag them. (Things FHA flags MUST be fixed before closing, because otherwise FHA won't lend us the money to buy the house.)
Well, the FHA inspector came in, and he flagged a lot less than we thought he would, which is gad, but he also appraised the house at 10k less than we agreed to pay for it, which is bood.
What do I mean? Well, the fact that the FHA inspector flagged less than we thought he would means the responsibility for fixing the things he didn't flag falls on us and not the bank owner; on the other hand, that means that less work needs to be done before we move in, and it makes the deal more valuable from the owner's point of view. The fact that the FHA inspector appraised the house at 10k less than we agreed to means that FHA won't loan us more than the appraised value - so the owner either has to drop the price or we have to come up with 10k extra...but it might mean that we get the house for 10k less than we planned.
See what I mean about the road to home ownership being messed up?
So here's how things stand so far. The owner agreed to sell the house to us at the appraised value and pay $1000 (instead of $2000) in closing costs, and also the money they were going to give us for repairs goes out the window. The owner is also fixing the electrical outlets, which is like a $100 job if you hire an expensive electrician. There is some moldy junk that needs to be removed from the basement - mostly old boxes and shit like that, and something needs to be done to make the roof look better. These are the FHA-required fixes, so they need to be done before closing, which, if we stick to the current contract, is going to be July 15th.
Now the question is, how much of those fixes can we do and how much will the owner pay for? The issue is that under normal circumstances, because this is a foreclosure, we would not be allowed into the house to do any work on it - which is a bummer for all of us, because we can probably do all that ourselves. On the other hand, the owner obviously wants to minimize costs especially since they are now out about $6000 on the originally agreed purchase price of the house, and they still have to put in the stove and clean the ducts, which they agreed to a long time ago. We're on the borderline of the bank giving up and trying to sell it fix-free to an investor, and it's getting close to crunch time. We're running out of days to do this work on.
Wish us luck. If it works out, we'll be having a giant party near the end of July. If it doesn't, you'll hear my screams of frustration echoing through the ether for weeks to come.
Oh, I almost forgot to put in the part that makes it so worthwhile. The house we live in now costs us $950/month. This place is probably going to cost us about $325/month, including all the insurance and stuff.
Twice in a row we crashed the car into brick walls and had to begin again from the start. Thankfully, we got out without paying for an inspection the second time; the seller's agent had an HVAC guy stop by and find out that all the copper piping had been removed from the system. We backed out and the seller ended up reducing the price of the house by 7k.
On the third try, we finally found a house that (still) might work. A 3-bedroom 1-bath with problems, but small problems, ones we can handle. The carpets were disgusting - but the bank owner pulled them up and refinished the hardwoods underneath. It has no appliances, but we can handle that, and the bank owner is putting in a stove of our choice for us. The ductwork is nasty, but they're getting it cleaned for us. That was all agreed upon ahead of time.
So we got an inspection and came up with a list of other minor problems that we need to take care of. The foundation is solid, but the floor is a little weak in two places and needs to be reinforced. We can do that. The roof is solid, but needs a new patch of shingles and some flashing in some places. We can't do that, but after a few months we can pay someone who can. There are some outlets that need to be recovered; we can do that. There's a gap in the floor of the attic and not enough insulation; we can fix that. We negotiated with the bank about getting them to do some of them before we moved in, on the assumption that the FHA inspector would flag them. (Things FHA flags MUST be fixed before closing, because otherwise FHA won't lend us the money to buy the house.)
Well, the FHA inspector came in, and he flagged a lot less than we thought he would, which is gad, but he also appraised the house at 10k less than we agreed to pay for it, which is bood.
What do I mean? Well, the fact that the FHA inspector flagged less than we thought he would means the responsibility for fixing the things he didn't flag falls on us and not the bank owner; on the other hand, that means that less work needs to be done before we move in, and it makes the deal more valuable from the owner's point of view. The fact that the FHA inspector appraised the house at 10k less than we agreed to means that FHA won't loan us more than the appraised value - so the owner either has to drop the price or we have to come up with 10k extra...but it might mean that we get the house for 10k less than we planned.
See what I mean about the road to home ownership being messed up?
So here's how things stand so far. The owner agreed to sell the house to us at the appraised value and pay $1000 (instead of $2000) in closing costs, and also the money they were going to give us for repairs goes out the window. The owner is also fixing the electrical outlets, which is like a $100 job if you hire an expensive electrician. There is some moldy junk that needs to be removed from the basement - mostly old boxes and shit like that, and something needs to be done to make the roof look better. These are the FHA-required fixes, so they need to be done before closing, which, if we stick to the current contract, is going to be July 15th.
Now the question is, how much of those fixes can we do and how much will the owner pay for? The issue is that under normal circumstances, because this is a foreclosure, we would not be allowed into the house to do any work on it - which is a bummer for all of us, because we can probably do all that ourselves. On the other hand, the owner obviously wants to minimize costs especially since they are now out about $6000 on the originally agreed purchase price of the house, and they still have to put in the stove and clean the ducts, which they agreed to a long time ago. We're on the borderline of the bank giving up and trying to sell it fix-free to an investor, and it's getting close to crunch time. We're running out of days to do this work on.
Wish us luck. If it works out, we'll be having a giant party near the end of July. If it doesn't, you'll hear my screams of frustration echoing through the ether for weeks to come.
Oh, I almost forgot to put in the part that makes it so worthwhile. The house we live in now costs us $950/month. This place is probably going to cost us about $325/month, including all the insurance and stuff.
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
no subject
Date: 2011-06-22 12:12 am (UTC)no subject
Date: 2011-06-22 12:29 pm (UTC)no subject
Date: 2011-06-24 08:42 pm (UTC)All that's left now is for the seller to put in the stove and get the ductwork cleaned, and the FHA inspector needs to go back out there and recheck it to make sure that the stuff he wanted done is done. Then it's closing time! Hopefully! More later!