So You Want To Buy A House?

All you really want is a home you can live in comfortably, have the family over, let the grandkids run through, well there are people out there who don’t want you to have it.  At least not at the same price they can outbid you for, but they will gladly sell it to you after they have done all the cosmetic work to hopefully cover up the flaws.  It is a shark tank out there, a big shark tank. 

I have been looking for a home to buy for the past two months.  We have looked at quite a few places and have found out there is no rhyme or reason to the pricing.  The Real Estate agents will tell you, “it is just the going price of the day” or “the market is coming back so grab one now” what ever happened to a good old fashioned true appraisal?  What I have found out is no one learned a lesson from the mortgage meltdown.  Not the banks, the loan agents, nor the Real Estate professionals.  In fact the only ones who might have learned a lesson is the title companies but their involvement is at the back end of the process and to my knowledge they never caused the mortgage problems.

So, what happens in the buying process now?  Well, for one thing, never count on the actual list price especially if it is a short sale or a foreclosure.  The banks have absolutely no intention of actually selling that home at that price.  Let me give you an example.  We looked at a home and there was quite a bit of interest.  They listed the home for $123,000.  A decent home, not in the best neighborhood but in an area where homes are being bought at a price people can afford.  This home needed little work except for a wall in the living room.  A previous owner had bricked in one wall in the living room in order to install a free standing fireplace.  Yes they mortared the brick onto the existing wall and yes, the wall was splitting from the weight.  No problem though that could be easily fixed, we have a friend who is a contractor.  The rest of the home was really pretty nice.  There were a lot of people going through and in retrospect I now can tell who the investors were.  “Oh look at that wall, I would sure not buy this house”.  “Oh that tile is disgusting”.  “Oh that back yard is no where near big enough”.  Uh huh sure, you were probably one of the people who bid it up so real people with real families could not afford it and that is the catch. 

See while they listed it at $123,000 the bank had no intention of actually selling it for that price.  And people who have been in the market for awhile know this and bid accordingly.  Of course our Realtor should have known and warned us but that is another story.  Needless to say our measly bid of $125k was not accepted.  Ok by me I would really have preferred a home on another street in that subdivision.  So onward we search.

Then we looked at another place, good bones but needed a great deal of work in order for me to live in it.  We had seen another home in the same neighborhood that sold for $155k in immaculate condition and even one that was in the same shape as this one go for $129k so we were going to bid $135k right in the middle kind of.  There were 10 bids and all over asking price on that house.  Again it was not move in ready so investors were looking for a flip or a rental property.  Out bid again but this lady is not giving up, no sirree bob. 

We bid last week on another condo.  Asking price $82.4k and yes we learned our lesson so we went in with $92k.  Then a couple days later the bank came back and asked for everyone’s BEST bid.  Huh?  They did not counter anything but wanted best bids anyway?  Well we did because we really like this unit and offered $95k going in and we will see where it goes. 

But I have learned, we are still looking and have already found another townhouse in a better town so we will be bidding on that townhouse.  It is a Fannie/Freddie home and the skinny is that they prefer families or owner occupied on their foreclosures.  So yes, we will bid over their asking price of $164k because it is well worth it (1400 sq ft and ready to move in) but now we are in another conundrum.  Do we go in way over and hope ours is selected?  Do we go in a little bit over and not look like greedy investor types?  What exactly do you do with a seller who wants to sell to families?  Well, we will somehow go in with a bid that is not outrageous but solid and we will include a buyer letter.  We are very familiar with this particular part of town and have looked there for months trying to find a place.  So we will tell them that.  We will tell them how perfect that home will be for us and we will wait. 

In the meantime, while we are waiting, what do you think we will be doing?  That’s right, we will be looking for another home.  Because, THAT is the reality about home buying these days.  One out of 10 that come on the market are actual straight seller sales(and that is a generous guess).  And the banks are still trying to recover all of their money.  As far as the insurance paid by the Private Mortgage Co/AIG I am not aware of what they are doing in regard to any claims they had to pay out either.  You never know on any house you bid on whether or not the bank received PMI insurance reimbursement so they very well could be making a profit on any given home.  In fact most homes could be in that category.  The GSE’s are now forcing the banks to buy back on the loans they can prove were fraudulent so who knows what a house’s history really is and that is just how the banks want it. 

In fact beware of the bank who wants to use their Title Company.  You could very well end up with a robo-signed title search.  After all when all the business is done, a title company you or I have never heard of could very well vanish just like mortgage brokers did back in 2008.  And when that happens, the buyer could be left with a mortgage on a house where they do not hold clear title.  In fact homes sold since the mortgage meltdown business could very well run into trouble when they try to re-sale and it would take hundreds, maybe thousands of them prior to people even becoming aware of a problem.  That is fact but also based on my total mistrust of banks these days and a clear understanding of the mess they have at Mortgage Electronic Registration Service( MERS) who was supposed to be keeping the docs on loans that were sliced and diced.  Problem is now they cannot exactly match docs to original loans, big problem – huge.  So what is the best way to fix it?  Lie your ass off again, plain and simple.

So, if you have not guessed yet the business of buying a home is not for the faint of heart or for the novice without a real good realtor.  I am lucky my sister-in-law is an escrow officer, a loan officer and has her real estate license.  She is not active in the business anymore but she knows a great deal after 25 years in the business.  But the market has changed and not for the better.  Even in the heady days of multiple bids and ever increasing home prices you still had a buyer and a seller on somewhat equal terms.  And an offer was taken, usually as soon as you had looked at the house. I put together my offer and my RE person would present to the other realtor, then we would either dicker a bit or just accept the offer.  There was not a great deal of mistrust, in fact making an offer for the asking price a lot of times was just what a seller expected.

It was not until the Bush administration, the banks, mortgage companies and realtors dreamed up these new processes that things changed and not for the better.  It all came crashing down on them and instead of learning their lessons, they are still trying to screw the consumer.  THEN they wonder why they are so hated.  When I close on my home, I am sure going to let them know…to be continued.