Wednesday, December 08, 2010

[House and Home] Getting Real Estate

Getting Real Estate: You know the story: rates are down; prices are down. Will prices come back? Slowly -- will take years. But that's OK for me. Let's say it takes fifteen years to realize another significant gain in housing. In fifteen years I'll be 65 and seriously contemplating retirement, right? (Gawd, I hope not. Maybe from my day job, but not work in general -- but still...) All in all, it was the right time for me to make a major real estate investment. And yes, I am bravely putting this judgment in writing to live forever in the internet's time machine, so you everyone can point and laugh if my investment goes down the toilet.

The housing search took 2 or 3 months. I had a geographic area that I wanted to be in: specifically within about five miles from where I am now. I had a fairly set budget too at first, but when I figured in the inheritance from my father I was able to bump it up another level without impinging horribly on my savings and liquidity.

In the course of all this I encountered for the first time the concept of a short sale. A short sale is effectively a foreclosure that doesn't terribly damage on the credit of a seller. Like foreclosure, it happens when a house is "underwater" -- the value is lower than the amount owed on the mortgage. If you need to get out from under your mortgage at this point you either have to a) cough up the cash difference, or b) default on your loan let the bank foreclose and devastate your credit rating, or c) enter an agreement with the bank to sell for whatever they can get, the bank eats the loss (although it may be considered "income" to you for tax purposes), and you are less worse off credit wise than a foreclosure; generally you'll end up waiting a couple of years before you can get another mortgage, but as long as you don't screw up in the interim, you'll probably be OK. Theoretically, a short sale requires demonstration of hardship, but we all have hardship, don't we? Very strange, the official machinations we go through to save face.

Anyway, I had actually picked out two houses I was interested in, coincidentally right across the street from each other. My number one selection was on the high side as far as listing price. My number two selection was a short sale. So I low balled an offer for the short sale just to see what the bank was willing to sell it for. While that offer was in the price was dropped on my first choice. When I got the response from the bank, I proceeded to negotiate on the first choice knowing that I had short sale house to fall back on. There was some give and take, but we eventually agreed on a price. Then came inspections and approvals and a blizzard of paperwork, although all I really needed to do was copy some statements and sign my name like Colonel Henry Blake. We almost snagged when the inspection turned up some minor issues I wanted fixed or credited for, but we settled on them leaving me their fine John Deere lawn tractor and nearly brand new snow blower instead. Now, unless financing falls through, which it shouldn't, the deal will be closed mid-December.

Sorry for all the boring details.

It's a little scary. I still have to fix up and either sell or rent my condo. I will have a lawn and landscaping and large heating and water and insurance bills and all the evil stuff people are warning me about. But I will also have a big kitchen, and a deck, and a beautiful view of protected land outside my living room window, and an office, and a bar in the basement, and a ton of storage in the garage.

My skeptical friends sneer and say "you'll never make use of any of these things, you silly bachelor, but you will suffer the costs," but your friends are the biggest impediments to change. It's time for me to find a new way of living and cease the stagnant habits of old. There are experiences I still need to have rather than live my life out on the same template as the last ten or fifteen years. I am going to try to make a home of this place, a place I want to be in, rather than just have it be a place to sleep and watch HBO between work and travel. If I fail? Nothing good comes without failures.

First I need to buy a washer and dryer. And a flat panel for the basement.

And some furniture.

And I need to get the septic tank pumped.

In a while we'll all be nostalgic for a good travel rant.