How Good Deals Go Bad

It’s been a while since I posted on my private blog. I haven’t had the need to. Between Facebook, Twitter and my busy writing schedule over at ZTGD.com. I’ve been happy and busy.

Since moving back to New Jersey in September 2009, we always knew that a home purchase was going to take about three years. We repaired our credit after some youthful stupidity along with taking a hit on our home sale in Rochester, we socked money away and we learned all we could about the surrounding towns. We finally decided we wanted to stay close to where we are, but not in the same town because of schools. Everything was in place for us to begin the long trudge through open house after open house.

At the very beginning of the year, we sat down with our landlord, who is also our real estate agent to discuss everything. Two weeks later, we walked into a private showing for a house that had just gone up. While there were some things we didn’t love (only one garage, a little closer to a main road than we liked), we were won over by the space and the care put into the maintenance of the house. We moved on an offer, surprising ourselves by how quickly we found something that seemed pretty darn close to our ideal home.

Things moved smoothly at first. The house was listed at $619,000 and we put in a very competitive offer. We wanted to communicate we were serious and, based on the acceptance without a counter, we hit the sweet spot. Everyone was happy. The agents were thrilled and the seller was astonished to receive such a good offer, in January, in this climate. Unfortunately, attorney review isn’t always a formality.

Before we could even breathe a sigh of relief, the Seller’s attorney started making noise. We were initially approved for an FHA loan and, while that used to mean silly things like requirements to paint the house or put in more attractive railings, right now, it’s a means for people to afford down payments on properties in markets with extremely high property values. It’s the difference between putting down 10% and putting down 3%. In this market, that’s huge. Thankfully, we were able to sidestep this issue because of Danielle’s profession. There are a few lenders out there still offering 0% down, 0 PMI (that’s Private Mortgage Insurance) loans for physicians. We got our prequalification quickly, meeting the Seller’s attorney’s demands, and thought we were clear to move forward and get out of attorney review.

Not so fast.

Now, the Seller’s attorney had a problem with us not putting any money down (which is not the same as not putting down a guarantee amount, we would just get that back at closing). For some reason, The Seller’s attorney was obsessed with our financing, and it’s none of her business. It finally came out that it wasn’t really about our financing. Rather, there is concern about the appraisal. BIG difference. It was also revealed that the Seller’s attorney is not a real estate lawyer. Rather, she’s the Seller’s sister, which explains the problem with FHA and misunderstanding what it means to not have to put any money down (she thought we could just walk away from the deal at any time and not lose a thing… which isn’t entirely different than any other mortgage).

The Seller’s attorney responded with an absurd request that we guarantee the difference between the purchase price and the appraised value, regardless. When we responded that we could only do between purchase and the Seller’s take home after concessions, it wasn’t good enough. Essentially, the Seller’s attorney wants us to guarantee $8,000 under appraisal. No one in their right mind would do this. Starting out your home ownership under water isn’t smart and it certainly isn’t fair. Moreover, the sister/attorney, who is likely to be representing the Seller when she purchases her new home (in progress), would NEVER allow that to fly.

Right now, I’ve had one of the most stressful weeks of my life, haven’t slept and find myself with a hair trigger. What should have been a (relatively) easy transaction has become a nightmare. We’re emotionally distancing ourselves from the house and it’s painful. It should never have played out like this.

So, if you saw those tweets or Facebook posts about the house trauma, now you know (mostly) the full story.

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