Wednesday, January 31, 2007

The Big Reveal (Y1/M9/D31)

Okay, at long last, the house is officially in escrow (with people other than Me & E). But, as luck would have it, a house was listed today that we like better! And it does not require any construction! So we are making an offer on this newly listed house this week.

Cross your fingers because this new house was just purchased a few months ago -- the owners subsequently found their dream home and bought it too so now they are stuck with two houses and need out. Which of course means we are dealing with sellers who are again facing a loss. (I know how to pick 'em, don't I?) . This newly-listed house is straight out of Sunset magazine and I really dig it but I'm not getting my hopes up because ... well I don't really need to tell you why after this last adventure.

Anyhoodle, here's the pictures of the high drama house. And when it closes I'll tell you how much they paid for it.

The front (very tract-housey):

The back (this house did have a lovely big yard but those power lines concerned me):

The living room with dining room in background:

Other view of living room (there's a hole in the ceiling over that cabinet):

This is the den (which they called "third bedroom" because there's some built in closets. But nobody wants a bedroom that has one door to the kitchen and another door to the hallway and a third that leads to the patio):

This is the other view of the den (see the cute back porch and big yard):

This is the kitchen that is off the dining room (it's a bit narrow and those are the original 1950s cabinets). That's the laundry room in back with a door leading to back yard.

Here's the bathroom that is between the two tiny bedrooms (it's nicely updated but the tub leaks or something... the base boards were warped near the tub and the grout around the tub is cracked and water damaged):

Obviously, a master suite with master bath needs to be added to this house but the lot is big enough to add one in back. However, if you add the cost of expanding the existing bedrooms and adding a true master suite to the list price, the house is overpriced for the neighborhood. Plus, the house needs all new windows and the kitchen will need a true update shortly as it still has the original 1950s cabinets so you have to add in those costs too. They have it priced as though the kitchen were brand new, the windows and plumbing were brand new, and the bedrooms were standard size (none of which is true). That's the main reason I wasn't willing to pay list for this otherwise very cute little house.

UPDATE: This home sold for $679k after about a month on the market. It was listed at $695. (I wouldn't have paid a dime over $650k).

Tuesday, January 30, 2007


Ugh. My agent called to set up a time to submit the offer and now Magda says: "Oh you should've called me this morning they just accepted a full price offer and the inspection is tomorrow." It's not listed on MLS as pending and the rules require it to be listed as pending by close of business tomorrow. (Hi! Don't think I won't report you for a violation!)

I must say I'm a tad skeptical after the last make-believe offer. And it's really weird to have an inspection before even opening escrow, so I honestly have very real doubts. But even if this is a bona fide offer, deals fall out of escrow all the time ... so it's still not over. And for good measure I actually left a voice message for the home owner (thanks Google!) saying: "I'm trying to buy your house but your agent keeps telling me she has a full price offer but then she doesn't. If your house is for sale still, can you please call me or my agent?" Sheesh.

I guess tomorrow I will have a better idea. On the bright side, two new listings came up today that I really like. ::rolls eyes:: Here we go again.

Saturday, January 27, 2007

Lying listing agent, oh my! (Y1/M9/D27)

Okay, so last week I got a call from my real estate agent ("Lisa") saying that the seller's got a full price offer so there was no need to submit our revised offer. I was disappointed but, since I would never have paid their list price, figured it just wasn't meant to be. We set up a few appointments to look at new listings and I started to forget about the house.

THEN, Lisa calls again yesterday saying that she just spoke to the seller's agent ("Magda"). Apparently, the full-price deal was falling through and Magda wanted to know if I still wanted to make an offer. Lisa also mentioned that Magda kept asking: "What did your client say when she learned they got full price? Has she changed her mind about the home value?" She asked so many times that Lisa started to suspect the whole thing was just a ruse. That is, Magda never had a full price offer at all she just made it up as a negotiation tactic. How insane is that? I mean, Madga is definitely a bit looney tunes, but that is just out-right stupid to jeopardize a sale like that. But assuming Magda really had an offer, what really went wrong? Are there major repairs? Did the buyers simply offer full price to get the house off of the market so that they could negotiate with a captive audience? Did they just get buyer's remorse?

I haven't decided whether to submit my revised offer though. We will go out and see a few new listings tomorrow and we should know more then. No matter what, I don't think we should submit our offer until Magda confirms that house is no longer in escrow (if it ever was). I certainly don't want to get dragged into a bidding war or be used by Magda to scare the current buyers into paying more than the house is worth.

Can you believe the drama? How long could this possibly drag out? *sigh*

Friday, January 19, 2007

Posh & update on offer numero uno (Y1/M9/D19)

I like Victoria Beckham! I mean, yesterday I had about zero interest in Old Posh Spice, even if she is my new neighbor here in Los Angeles. HOWEVER, today I learned that she has rejected Scientology. And I thought to myself: "Wow. Her smart! Who knew?" Also, I am loving because apparently I am some kind of gossip-monger.

But I know you are dying to know what is going on with the house negotiation. (Hello? Okay, maybe you're not "dying" per se...) Basically, my agent is saying that it is too early in the listing for the sellers to take a $20k hit becasue the sellers used their house like a credit card. That $150k equity loan I mentioned earlier turned out to be a revolving credit line and they did not draw it all down but they nevertheless owe more to the bank than their house is actually worth because of it. So she says that if I really really want this house, I need to offer about $20k over market. I say: "Eff that."

As it stands, my offer is from a fully qualified buyer and non-contingent. I am now including repairs, assuming they are reasonable, and I am offering full market value. That is a dream-come-true offer for Christ's sake. And my agent is all: "They will have only been on the market for 20 days when they get your offer, they won't accept it."

First off, WTF? Who does this agent represent? Second, it is not my job to bail these people out; they need to take their hit. And third, let's let them make that call, shall we? I mean, these people are in financial distress. If they don't get a sale in the next couple of weeks, then they are going to end up paying not only February's mortgage but March's too. Each month they get further into debt and they have no other offers right now. They can't just keep holding out for somebody to fall in love with their house and pay $20k over market.

I'm so sick of this. I think I will just have the agent present the offer as best-and-final and then move on. There's always going to be more houses. And odds are good that prices are coming down or, at minimum, leveling off. Seriously, almost every house I look at was just purchased two years ago (if that) and there are at least half a dozen foreclosures in my price range and in the neighborhoods I'm considering. Meh. So ready for this to be over.

Saturday, January 13, 2007

Our first bona fide offer to buy (Y1/M9/D13)

We did it. We made our first offer on a house. Here's all the boring details but no photos until I know the results.

The couple is asking $553 a square foot. That's high for the area. This style house in their neighborhood averages $450 to $475 a square foot. We offered $513 a square foot which some might call generous but I really like both the street and the lot. Also, I know that even at this price they will take a loss. See, this couple bought the house exactly two years ago with 100% financing (or 0% down) and then, they took out another $150k home equity loan last June. And they didn't put a dime into the house (all the improvements were done by the prior owner). If they accept the offer as written they will lose$140k minimum (not included the interest payments they made on that outrageous loan for the last two years).

I'm sure they will counter and ask for another $20k -- which still leaves them $120k in the hole. But I am not budging much on my total cash out of pocket so here's what I'm thinking: I'll offer to pay all the closing costs and the brokers' fees on both sides, BUT the total home price will be reduced by that figure. Why do this? Because the seller will get the same exact net dollars for the house plus their closing costs paid -- that's an advantage they didn't have before. I will get a lower cost basis in the house because the brokers' fees and the seller's closing costs are not included in the home sale price. Thus, I have a lower tax basis in the property every year. Further, the extra closing costs we'll pay are tax deductible for us. So for just a couple of thousand dollars more, we end up with serious tax savings but haven't really budged on our total cash output.

I also told my agent not to let them know they have an offer until AFTER their open house tomorrow. I did this because their house is overpriced so I want all other prospective buyers at the open house tomorrow to think: "Well, this house is overpriced and nobody is making offers so I'll wait until they lower the price to make an offer." If the agent is telling people at the open house that they already have an offer, others may panic and make an offer now and also make a generous offer because they don't know what's already on the table. Of course, this is all just speculation. The other argument is that if the seller's agent tells open house people that they have an offer it may cause them to just keep shopping.

At any rate, we should have a response by Monday night. So nerve wracking!

Thursday, January 11, 2007

House Hunting is the suck. (Y1/M9/D11)

House hunting is so unbelievably complicated. For example, here's another house we aren't buying but that we agonized over. It's actually about ten times cuter than this photo (see the living room below), but notice that tall building in the background? That's the Sherman Oaks Galleria (Like ohmygod. I'm so sure! Totally.) Which is a plus, I mean we could walk to the movies and restaurants but you can totally see that from the backyard. Hell, you can see that from the front yard.

And apparently we aren't the only ones who feel that is a drawback because the house sat on the market for four months (a long long time in Sherman Oaks). They lowered the asking price from $819k to $729k. Then I called to see if they would consider $700k and they said they would absolutely take $700k but that they had an offer on the table and I would need to come and write my offer tonight. Which means somebody else is about to close for like $680k... which is not exactly confidence inspiring. I mean, how are you supposed to know what this house is worth? Comps are not enough because each house is so unique.

UPDATE: This house sold for $675k after several months on the market.

I guess it just comes down to the house that feels right because even if all the math adds up (it's the right street, it's the right number of bedrooms, it's the right price per square foot) you still might not feel comfortable. And for no reason that you can identify. No one part of the house is the problem. And maybe that's just nerves. Right? I mean I think your average bear gets a little nervous about spending close to a million dollars. I'm pretty sure that in my entire life I have not spent a total of one million dollars so this is a crazy big purchase when you think about it. And I don't recommend you think about it for too long because if you do you could get all twitchy and OCD like me. I'm only half kidding there.

*heavy sigh*

Monday, January 08, 2007

Bunch of Houses We Didn't Buy (Y1/M9/D8)

I haven't posted much lately for a couple of reasons: (1) my digital camera is no longer talking to my laptop. I don't know why but I'm looking into it;and (2) we're busy house hunting. Let's look at some houses that we won't be buying:

This house is cute as a button. However, the bathroom remodel is weird -- it's like the bathroom has a long hallway in it and really they should have built two baths in the space (one dedicated to each adjacent bedroom). Also the kitchen needs to be 100% redone and the swimming pool takes up 85% of the back yard. With a list price of approximately $750k, the remodel costs would make this house too expensive for the neighborhood. Also, it's on an alley and that exposes you to some unsavory elements.
UPDATE: As of April 18, this home back on market. Prices increase and decrease between $765 and $785k each week.

This house is in a great neighborhood. And it's priced about $200k below all the neighboring houses. It's in great shape inside (and my contractor was tickled to meet the semi-famous musician who lives there). But this house is such a bargain because it's only 1000 sq. feet (2 bd/1ba). And the garage is a sound studio. So we'd have to convert the garage back into a garage or at least convert it into living space -- but if it were living space there's no way to access it (except from outside). Basically walls have to be moved. It's also on an alley and it's a small lot (less than 6,000 sq. feet). We really could make this work, especially at the price, but we'd outgrow this small house quickly and I don't think we want to buy a house where we know we will want to move in two to three years. This was a really hard call. We thought long and hard about writing an offer but finally we just decided it wasn't the house for us.

UPDATE: This home sold for $685k. It was listed at $675k. It was the same agent who had the little Spanish style bungalow that I bid full price on. He apparently has quite a talent for creating bidding wars.

Oh my god I love this house. I love it so much. It was built by one of the Disney architects and the house is modeled after Snow White's cottage. Inside the details are amazing. The corbels have faces carved into them! And it's a full quarter of an acre lot in a decent neighborhood. Here's the drawback: the house was built in the 1930's. It needs new wiring and new plumbing. Also that roof, it's a cathedral ceiling with lots of custom woodwork.... and no insulation at all. If you add insulation, you lose all this craftsmanship but if you don't it's Cold! Or Hot! I mean, it's a brick house with cathedral ceilings and it gets to be 100+ degrees in the summer and 30s and 40s in the winter. Can you say "ginormous electric bill"? I knew you could! It's also a pretty small two-bedroom one-bath house. But I love it!!!!!!! E won't let me buy it. But even if he would, the seller and I are about $200k apart in value (I'm right about value; she is insane). You want to know how insane? She already lowered the price $300k and has had no offers in six months. Yeah. Her crazy.

UPDATE: As of March 9, it was off the market and now it's back on at $850k.

So we are still looking. It's hard and very time consuming. We thought about buying the condo we rent now, but I just don't want to pay HOA's and deal with an HOA and Sid needs a yard. I'm just trying to keep focused on three questions: (1) Is it the right street?; (2) Is the lot big enough; and (3) Can I live with the walls where they are? You can't change the street, you can't change the lot, and it aint cheap to move the walls. So, if the answer to any of those questions is "no," then we keep looking. I think it's important to stay focused on those three points because there are so many other variables that it's easy to get caught up in the process and make a big mistake. And honestly, if the answer to all of those questions is "yes" the damn house is sold before it even gets on to the MLS. It's crazy, even in an allegedly soft market.