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December 1, 2009

Dispatches from the home-buying front: Part II

Ellicott City resident Peter Arrabal, 22, is trying to buy a house with girlfriend Karen Parlee. And as he related for us all on Monday, getting something for $206,000 or less in Montgomery County hasn't been easy.

Today he shares Part II of his tale, which picks up after they'd made several offers -- most on foreclosures -- to no avail.

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Four offers written. Four offers denied. There were almost 80 houses in our file of previously viewed homes. We had started in late August and it was now early October.

We went out once more. Out of five we saw that October Saturday, we liked one townhouse. Another odd neighborhood: The street names were Starboard, Portside, Sternwheeler and Sloop. Who comes up with these things?

It needed some work, but the location was perfect, and it had a big deck and a big back yard. There was real hardwood flooring throughout the main level.

Offer in. The agent called: The bank wanted our highest and best, and wasn't taking any more offers. We held fast at $31,100 over the listing price.

Shortly after that, our agent called us: Success! The bank, Wells Fargo, had accepted the offer, but wanted to push our closing date back from Nov. 18 to Dec. 11. We would miss the tax credit, but at this point, who cares? We got a house!

We signed the counteroffer, scheduled our inspection and appraisal, and updated our now out-of-date loan application.

The inspector came and did a wonderful job. He spent three hours combing over the 1,600 square feet of the home, plus the deck and the outside of the building. He pointed out every minor flaw and every feature, big and small, about how the house worked.

There were some negatives: Only three of the four burners on the stove worked and the oven door was broken, so we would have to replace the range. The deck needed some repairs done and would need replacing soon. There were no deal-breakers, though.

We spent a few days searching for day care for our infant daughter. We found one and put down a deposit with an awesome in-home daycare. They would hold the spot until the end of December.

Our lender sent out the appraiser a week later. The appraisal report was devastating: In order to get the FHA-backed loan, changes had to be made. Changes that would cost about $3,000, the appraiser said.

Our agent was livid. Our lender was baffled. The appraiser had put things on the appraisal report such as "the carpet has exceeded its economic life" and "puddle of grease in the oven." No mention of the broken oven door, though. Neither the agent nor loan officer had seen anything like this before. The appraised value was well above our offered price, but the "livability" of the property was in question.

They suggested we ask the bank to make the changes, even though we had repeatedly signed that this was an "as-is" sale and that we wouldn't ask the bank to make changes. We had some leverage, though. The appraisal is binding for six months, our agent said. If we back out of the sale, and the bank tries to sell it to someone else with an FHA loan, the appraisal stands and the changes still have to be made.

While we waited for their answer, things got worse. The title agency had "performed a routine records search" and found the previous owner had filed for bankruptcy.

What? The lender couldn't have done that before? You know, like, before it listed the home for sale?

We were now in a "post-foreclosure bankruptcy" situation. The bank didn't legally own the house.

Tomorrow: The waiting game.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (3)
Categories: Dispatches, Housing market experiences
        

Comments

Without seeing in report, it's hard to say that the appraiser was completely out of line by calling for those repairs. But FHA is now more lenient, as shown in this repair & inspection mortgage letter.

this is a sad story. and as a former agent it infuriates me, as it highlights the real problems with reselling foreclosed properties. its the banks, who rightly so, have no business reselling property.

but part of the blame lies on this couples real estate agent. you know you are showing your clients foreclosed properties... a lil due diligence on your part would reveal the bankruptcy and the banks limbo ownership. this bigger issue would have been revealed, way before the crazy appraisers assessment. and you would have moved on to the next property.

i once faced a similar issue w/ a HUD resale that HUD claimed was free and clear pending a small court claim.... turned out they were in a bitter battle with neighbors over property lines... i advised my client of the situation and they rightly decided to walk away... it took years for HUD to settle the matter. meanwhile my client was sitting comfortably in another property.

i think this whole real estate market is a fraud the houses out now are mainly for investors to purchase fix up and resell for almost double what they paid for the property

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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