Is going through this to own a home worth it?

July 4, 2009 6:57 AM

Buying a house has been a nightmare. How do we deal with this latest situation?

They accepted our offer, and that was the last thing that went well. During the inspection, it was noted that the cesspool had failed. Between that and the presence of fuses, we had problems with our insurance and our financing. There's no sewer in that part of town, so we negotiated the installation of a septic system and upgraded electricity before closing, at primarily the seller's expense. (Originally, the sellers were going to put the money for a septic upgrade in escrow at the closing, but our bank nixed that idea.) We signed a new purchase contract. Three days after that, our bank comes back with a new list of things that need to be done before closing. The main issue here is the raised deck. The bank wants it repaired by a licensed professional before closing. We can't ask the sellers to do it, because we've already signed a new purchase agreement and it's been more than ten days past the inspection. We've had a carpenter out, and the repair is much more extensive than we anticipated - to the point where he said the easiest cost of action would be to tear down and rebuild the deck. We've already stretched our budget to the responsible limit here. I know very little about these things, but the joists are not pressure treated and are uneven. The inspector said it needed to be repaired "eventually" but was still structurally sound. We intended on doing this after closing ourselves.

I don't know what we're supposed to do about this. How are we supposed to make repairs to a property we don't own? What if something else goes wrong and the deal falls through? Then we'll have paid to upgrade someone else's property. What is our best course of action here?

Our bank is my husband's employer, so there are benefits of going through them, otherwise, we would look elsewhere for a mortgage. I am ready to walk away from this house, but my husband really loves it. I do, too, but it's no longer worth the stress to me.

Throwaway email housenightmare at gmail dot com.

posted by anonymous to home & garden (13 comments total)

Are any real estate professionals involved? It is their job to help you resolve issues like this.

There is a serious defect with the house. Step back and look at the big picture. Price, cost of financing, cost of necessary repairs. What did it appraise at? Is the full cost equal to or less than the appraised value? If the cost is more than the value, either renegotiate or walk away.

In this market, many sellers are still in denial about the true value of their house. Don't pay more than it's worth in this crappy economy.

I bought a house a year and a half ago. No realtors. The offer was contingent on inspection, appraisal and financing. I had put money into the house (seller paid for repair, and I chose to upgrade the quality) and paid for inspection, etc. When the appraisal came in low, I sent a copy to the seller, and left town on a required trip. Waited a couple days, then called the seller, who immediately dropped the price to match the appraisal.

This is a huge pain, and it's easy to get talked into bad decisions. Write things down, do the math, talk to smart friends. Good luck.
posted by theora55 at 7:08 AM on July 4, 2009

i don't understand why the deck is an issue for the bank. if you are paying a fair price for the house with/without the deck it doesn't seem like their problem. if it's an issue of liability it seems that it would be a concern for your homeowners insurance company, not your finance provider.

and even though you may think there is a huge benefit to working with your husbands employer, you could be surprised by what else is out there. it is ALWAYS worth at least having a preliminary conversation with a few different lenders to see if there may be other acceptable options. there are federal programs right now designed to pump money into the real estate markets at very good interest rates. you should be open to looking around.
posted by cvilleluke at 7:09 AM on July 4, 2009

Can you just tear out the deck for now, and finance the house without the deck?
posted by M.C. Lo-Carb! at 7:11 AM on July 4, 2009

another thought... i bought a house a year ago and made the mistake of letting my realtor provide a home inspector. what we got was basically a glowing report on our house instead of a critical look at potential problems. in my case the problems seem minor (so far!) but the upshot is that our realtor had a vested interest in my purchasing the house and retained someone to help seal the deal. what you were told about the deck initially may have been optimistic.
posted by cvilleluke at 7:16 AM on July 4, 2009

You have signed a contract, but said contract is almost certainly contingent upon you being able to secure financing from the bank. The bank is giving you an issue here. Your contract probably makes that an issue for the seller as well. So talk to your real estate agent and lawyer (you do have one of those, right?) and see if you can wring additional concessions out of the seller. The seller will have some incentive to go along here, because 1) we're in the middle of the best buyer's market in a decade or more, and 2) if your bank is balking here, there's good reason to think that another bank probably would to, so holding out for someone else may not get the seller what he wants.

Your other option is to see financing elsewhere. As cvilleluke indicates, loyalty to one's employer isn't worth it if they're going to give you the runaround. It's a two way street.

If you can't make this work, or aren't willing to seek alternative financing, you really can just walk away. Again, consult with your lawyer first, but I'd be completely shocked if your contract isn't expressly contingent upon you being able to procure financing.
posted by valkyryn at 7:17 AM on July 4, 2009 [2 favorites]

First, is the bank refusing to make the loan due to the deck and do you have a financing contingency? If so, you should be able to walk away and get your earnest money back.

I would also go back to the sellers. They want to sell their house and might be willing to reduce the purchase price to accomodate the cost of the new deck or build it themselves. I am with you that I would not pay for repairs to a house I did not own. And I am also in agreement with cvilleluke in that it is perplexing that the bank would not make a loan based on this because it is an insurance issue, not a loan issue. I also agree to look at other lenders at this point. Your husband's bank is making some unusual demands.

Finally, the best advice I have ever heard is that you should not get too emotionally invested in a real estate transaction. It leads to some bad overall decision making if you have to have THAT house. There are always other houses. It sounds like you are already there. That said, if it is a good deal objectively, it may be worth trying to work with the seller and (new) lender to get the deal done.

Good luck.
posted by murrey at 7:27 AM on July 4, 2009

Walk away.
posted by rhizome at 8:13 AM on July 4, 2009 [1 favorite]

2nding the idea that you stop and look at the big picture. Sometimes while house shopping it's easy to imagine that the goal is to buy the house you've made an offer on. In reality, the goal is to buy a house that you will be happy living in for a price that you can afford. It sounds like you may want to reassess whether this is really the house for you. Beyond stress, ask your husband if the house of his dreams has cesspool, electrical, and deck issues in addition to the other issues that may not have been discovered yet.

If you decide that you don't want to walk away from the house immediately, you should do so with the understanding that you have a specific budget in mind that may not be broken. If the deck can't be included in that budget then you can inform the sellers that you won't be able to get financing since the deck prevents it. Valkyryn is certainly corrent in pointing out that closings are always contingent on the buyer's ability to obtain financing. The buyer pretty much always has the power to walk away.

Even the worst case scenario would have you losing only the earnest money. Earnest money may seem like a lot to lose now, but compare it to living in a house that's full of undisclosed problems while on a budget that's been stretched to the breaking point by the cost of a new deck.

Good luck.
posted by Quizicalcoatl at 8:14 AM on July 4, 2009

We can't ask the sellers to do it, because we've already signed a new purchase agreement and it's been more than ten days past the inspection.

You can ask and you should. You cannot get financing without the repair; lack of financing is a legitimate cause to nullify your offer.

The sellers have a problem. It's not your problem until you own the house. They need to fix the deck or wait for another buyer who's lender won't make that repair a requirement.

Ask the sellers to fix it at their expense.
posted by 26.2 at 9:06 AM on July 4, 2009 [2 favorites]

Look for a loan somewhere else besides your husband's employer. Peter Watts explains why.
posted by infinitewindow at 10:16 AM on July 4, 2009 [1 favorite]

You should be thanking your bank. Really. I know you're emotionally attached to the dream home idea, but look at the unforeseen expenses you'd have been facing had this deal gone through without the bank raising objections?

This sounds like a house with a lot of problems, and the kind that will almost certainly be way more expensive to correct than you anticipate. Once you're the owner, you'll have to fix those problems at your own expense and there's no guarantee you'll ever be able to recover any money from the vendor for correcting any undisclosed problems (around about now, I'd be wondering whether the house passes even the most basic current building codes in your area). There will be other houses. I'd let this one go (my advice might be different if you were paying cash for the house and had a couple of hundred thousand dollars stashed away for upgrading over the next ten years).

Yes, you can look for another lender, but just because someone else will lend you money to buy a lemon doesn't make buying it a good idea.
posted by Lolie at 10:47 AM on July 4, 2009 [1 favorite]

i don't understand why the deck is an issue for the bank. if you are paying a fair price for the house with/without the deck it doesn't seem like their problem. if it's an issue of liability it seems that it would be a concern for your homeowners insurance company, not your finance provider.

The borrowers are already stretched to the limit of responsible borrowing. That means they would have to borrow more funds to make any essential repairs. The bank doesn't want to lend money for a house that will decrease in value because of maintenance issues, especially when the borrowers have no capacity to solve those problems without further borrowing - they don't want to be stuck with trying to sell a lemon in the event of foreclosure.
posted by Lolie at 10:57 AM on July 4, 2009

In this order:

Please tell me you have a real estate lawyer. If you don't, get one first thing Monday morning and let him/her know everything that is going on.

Tell the sellers what is up. Tell them it's holding up the sale.

Look for another lender.
posted by jerseygirl at 3:29 PM on July 4, 2009