apocryph.org Notes to my future self

Home Buying Experience – AAR

I recently bought my first home, after renting for my entire adult life.  I’ve been eyeing a home purchase since 2003, but until the recent cratering of home prices I felt the NoVA market was overheated.  I ended up getting a nice 5br 3200 ft/2 house in NoVA for what I believe to be a reasonable sum, but the experience was hellatious, so I will recount it for my future reference.

Home Search

The first hassle is the search for a possible home.  There are of course tons of listings, but the damned real-estate industry (by which I mean Realtors) has a monopoly on listings with their MLS listing system, and not surprisingly they get it wrong.

I have some very particular requirements for a home, and I would like to search for.  For example, the architectural style of the home, the size of the lot, the presence or absence of hardwood floors, fireplaces, basements, gas appliances, etc.  Usually these are covered in the narrative description of the house, but the actual fields for this purpose are often not populated accurately.  This makes it hard to configure automated search agents to find possible homes.

The second problem is the impenetrable jargon used by realtors to pretend a house isn’t shit.  Things like ‘charming’, ‘cozy’, ‘huge potential’ obviously mean ‘beat to shit; run do not walk’, but since every listing will be written by the person who stands to make a fat commission if they can trick you into buying it, you’ll never read things like “bathrooms need a ton of work” or “roof needs immediate replacement” or “applicances upgraded after WWII”.

The third problem is the photographs taken of the home.  I get that realtors can’t be expected to shoot like a professional photographer, but for the love of God, don’t they have an incentive to show the actual house?  Showing up with a cheap digital point-and-shoot with a 38mm equilvalent wide angle zoom and snapping a few half-assed shots of the front and each room simply doesn’t cut it.  Then they have the balls to slap these shit photos together into a slideshow and call it a ‘virtual tour’!  ”Virtual tour”!?  It’s a fucking powerpoint of your shit photos!  That’s not a tour!

Home Purchasing

So let’s say you’ve defied the odds and found a few houses that seem to not suck.  You go to see them.  Now the fun really starts.

At first, if I ran across a house listing with an asking price way up in the suborbital altitude range, I would simply ignore it.  However, soon there weren’t any houses left.  Apparently, you have to know that sellers for the most part smoke crack, particularly when deciding how much they should get for their house.  You have to play a game with them, wherein you feign disinterest, highlight all the things that suck about the property, and put in a low-ball offer.  They counter with another suborbital offer, you counter with a slightly higher one, and back, and forth, and back, and forth.

With each offer, you wonder if this will be the one they accept, or if this will be the one that makes them walk, or if someone else will come in with an offer of just a few thousand more and nab the property.  You hear from their realtor about all the interest they’re getting, and what a great deal it is, and how it won’t last long.

In my case, the sellers started with an astronomical figure of $535,000.  I offered $470,000.  Hilarity ensued.  We went back and forth multiple times, me pointing out all the stuff I’d have to do to the house to get it ready for me, them pointing out how absolutely awesome it was and paying absolutely no heed to the economic reality of the area housing market.  I finally put an exploding offer on the table for $500,000 with $10,000 of seller subsidy.  12 hours after the deadline passed, they accepted, and so did I.

At first, I thought that meant it was done and I was buying a house.  Um, no.

Contingencies

Once you have a ratified sales contract, it’s not so much that you’ve agreed to buy a house, but that you agree to agree to buy a house.  I insisted on contingencies for home inspection, financing, termites, and the usual appraisal and title contingencies.  There’s a fixed amount of time after which you must remove the contingency, so you’re on a clock, but no one else in the process seems to be.  Unfortunately, everyone involved in the process gets paid for little to no work of usually shoddy quality, and they don’t give a shit that you’re on a tight schedule.

Realtor

I do not like realtors.  I never have.  I remember as a young child in the 80s being exposed to realtors my parents used, and instictively disliking them.  They’re like car salesmen, but with a facade of integrity and competence.

The first realtor I used, Marguerite, meant well and worked hard, but was very difficult to communicate with, not least because of what I am absolutely certain was a moderate developmental disability.  My preference for communicating via standard English in email seemed particularly problematic.  She must’ve felt I was equally slow, as every conversation with her would result in the same points being made repeatedly in slightly different ways, and any of my questions being met with a vagueness and uncertainty that would surely be the envy of any politician.

While she was useful in drafting an offer that favored my interests over those of the buyer, once the offer was written her value to the process became less clear.  She couldn’t tell me whether the price I was paying was high, low, or just right, and provided very little guidance during negotiations.

Shortly before the sellers finally ratified the contract, Marguerite went out of the picture for a combination of health and legal reasons, and appointed a colleague, George, to take her place.  Her colleague was similar to her in competence, English comprehension, and value to the process.  Ostensibly the Realtor is there as your agent to act on your behalf, but I found myself calling him to tell him when to follow up and how I wanted the deal structured.  In fact, I’m quite certain I would’ve worked just as hard and fretted just as much had I no realtor after the initial contract was written.

Once the offer was accepted, the realtor was useless.  I made my own home inspection and radon testing arrangements, I had the roof examined and an estimate obtained, I negotiated with the sellers for some additional subsidy, and I coordinated with the lender.  Not worth the thousands of dollars he was eventually paid in commission, to be sure.

Home Inspection

The home inspection is one thing I definitely got right.  I ignored my realtor’s recommendation and went with JD Grewell, who by all accounts is a god among home inspecting men.  I made an appointment with him, rescheduled it because the seller decided she needed to sleep that day, and finally met him on the agreedupon morning.  He didn’t say much, but he was incredibly thorough.  After three hours, I had his written report, and I’d learned alot about my prospective house.  Most of the problems he found were either minor or stuff I already knew, but there was one surprise: the roof was in terrible shape.  By his estimate, if it wasn’t already leaking it would start by the winter.

I had a roof guy come out to provide a written estimate.  He came back with $8150, so I came back to the seller demanding an additional seller subsidy for the roof.  Or, I should say, I told the realtor to go back to the seller.  I don’t know what he said exactly, but the seller was not amused, offered $2k towards the roof, and insisted there was ‘no fat’ on that number.  The realtor must’ve know how much he’d fail at this, as he prepared me before I got the seller’s response that I should expect them to pay only a fraction of the new roof cost, since I would benefit from it more.  Who’s side is this guy on anyway?

I finally did what I should’ve done in the first place, and composed a long email to the seller via the listing agent, explaning why I wanted additional money, that the roof was in need of absolutely immediate replacement, and offering to accept half of the cost of the new roof, or $4075.  He agreed.

Mortgage Broker

Another complicated and stressful part of the home buying process is the financing.  At first I assumed I would go with USAA for the lending, but they were less than helpful, and did not offer any loan products that would work with the purchase I was trying to make.

I poked around and finally looked at the brokers on Zillow, sorted by satisfaction rating.  #2 in the country at the time was Greg Darlin at Choice Finance in Rockville.  I submitted a request for a quote, and there was immediately some confusion when I called back into the Choice Finance main number to check the status.  Apparently he has his ‘own system’ separate from the other brokers at Choice Finance.

Once I got that straightened out and spoke with him on the phone, he walked me through all the myriad financing options, and told me to call him back when I decided what I wanted to do or if I had questions.  My impression of him on the phone is that of an experienced salesman with deep knowledge of his field, but I certainly didn’t trust him.

I poked around a bit on the ‘net, reading about mortgage brokers and how they can be useful or disastrous.  I made sure I understood how they were compensated, then asked him to explain his compensation to me cold.  What he told me and what I’d read lined up, so he passed the first test.

Once I decided to do an FHA jumbo loan, he walked me through the various lenders.  He seemed to know which ones would be able to close on time and which ones wouldn’t (or some of them were more profitable than others; I guess I have no way of knowing).  In the end he came up with three or four lenders with rates in the same ballpark and a good probability of closing on time.  I chose Sierra Pacific at a 5.5% rate, which I got by paying 1.5 points.  At the time it was competitive with rate quotes I was seeing elsewhere.

Once I settled on the lender, things with Greg went pretty smoothly, however I very often had to repeat details like how long I worked at my job, and more than once I had to re-send various documents.  My impression was that he was very busy and lost track of details of specific clients, which irritated me greatly.  However, considering USAA was so swamped they kept me on hold for over an hour before I got through to a person to answer a question, I figured this is just the reality of the industry right now, and resigned myself to one more indignity in a process which was already trying my sanity.

Things went fine until we started to get close to closing.  Somewhere in the broker/lender/underwriter process, things broke down.  The second appraisal wasn’t ordered, or wasn’t reviewed, or wasn’t approved, or something.  There were delays getting documentation.  The day of my closing, 7 July, loomed.  And passed.  They ended up being ready the next day, 8 July, so as closing delays go it wasn’t too bad, but it was a very stressful couple of days.

Which brings me to the last bit of this process: settlement

Settlement

Settlement seems like a great business to be in.  You make a list of things you can charge for, like ‘attorney fee’, ‘lawer fee’, ‘paralegal fee’, ‘binder fee’, ‘postage fee’, ‘delivery fee’, ‘handling fee’, ‘review fee’, ‘administrative fee’, ‘recording fee’, ‘miscelaneous assorted other fee’, ‘fee fee’, etc.  You then charge these fees and in return handle some paperwork.  Too easy.  Or so it seemed.

I foolishly went with George’s recommendation and chose The Settlement Group for the settlement company.  Their prices were much higher than the company Marguerite had recommended, but I had George’s assurance that TSG would match those prices.  At closing I showed up with copies of all of George’s emails and the two price lists, and to my great surprise the HUD 1 form did not reflect any of the agreedupon price adjustments.  Once I caught it, the TSG people didn’t even have the competiting price list they were supposed to be matching; they had to borrow my copy.

At settlement I got a call from Greg the mortgage broker, who was upset that TSG had refused to let him review the HUD 1, claiming the lender had approved it.  He insisted, and found a litany of errors, some in my favor, some not.  He had to go back and forth with TSG to get a corrected version printed out.

After I reviewed the numbers as much as I could and squeezed out all the graft I could find, it was time to get around to signing the documents.  Oh, my, the documents.  Thankfully most of them had been included in the loan packet Greg sent weeks earlier, so I’d already read and signed them for him; I just signed them again.  Those I had not seen before I read.  This was apparently unusual, as there was much shifting in chairs and distracting me with idle conversation, but I sure as fuck wasn’t about to blindly sign documents just because the people who had conveniently ‘forgot’ the terms of our agreement suggested I do so.

At one point, I signed a document affirming that I understood the Federal Housing Authority, by subsidizing my loan, was not guaranteeing the house would go up in value.  Really.  In fact, I’d say 25% of the paper I signed wasn’t legally obligating me to something, but rather affirming that I’d been given this or that stupid government disclosure.

Eventually the pile of signed documents was sufficiently high to satisfy the pantheon of greater and lesser gods of bureaucracy, and I was allowed to leave with the keys to my new house.  At last, all the bullshit was over.  Or so I thought.

I got a call from Greg a couple days later, saying there was a problem with the loan packet sent on to Sierra Pacific.  Apparently the TSG notary had an expired seal, and had not renewed her commission with the state.  Instead, she’d stamped the documents with her seal, and made hand-written corrections to the seal to reference another notary’s name and commission #.  This was unacceptable to the investors to whom Sierra Pacific would sell the loan, and was in direct violation of the closing instructions which had been provided to TSG.  The lender was upset and threatening to demand their money back.  George and TSG lept into excuse-making action, and a finger-pointing match ensued.

To this day I do now know what happened or how it was resolved.  I got a statement from Sierra Pacific with information about where and went to send my first mortgage payment, so it seems they straighted it out.  I’ve not heard from George or Greg again since then.

Closing Thoughts

The process of finding, buying, and settling on a house was probably the most Byzantine, frustrating, stressful processes I have ever undergone.  It is littered with actors of little competence, high disinterest, and no accountability.  It is expensive, time-consuming, and there is a real risk it will be all for naught.  The actual move (which will be covered in a separate AAR) is even more hellatious.

However, now that I have all that behind me and am typing this up in my new office, in my new house, with no shared walls and much greater freedom, I can honestly say I’m glad I went through the process.  And, I never want to go through it again.