(Cue the Britney Spears music). Yep, we did it again. We terminated the contract on the house we were buying. You may remember that last spring we also walked away from the contract to purchase a home, but that time it wasn’t the sellers that were the problem……it was their attorney. Yes the attorney worked for the sellers, but I never could convince them of that. (Click HERE if you want to read that little tale.) We’ve been looking, and will continue to look for a house, but we are pretty damn particular. For one, housing prices have run up tremendously in our part of Florida. Second, we’ve identified our ideal neighborhood…..but not wanting an enormous house with a pool…..leaves a relatively small number of potential homes. Three, we don’t want to saddle ourselves with debt…..and thereby lose what Flexible Independence we enjoy. Speaking of which, I am publishing today from Denver’s Startup Week. This morning’s panel on “What’s New in Tech”, still has my head spinning. AR/VR, Robotics, AI/ML, and Blockchain was all covered…..and the discussion made me realize that predicting the long term implications of these technologies is really tough. (Sigh)
Ok, so let me get back to the house. About 6 weeks ago, a 40 year old house….which I dubbed “That 70’s House”…..hit the market. It was a shade over 2000sf, a 4/2/2, and a block from one of my favorite parks. We checked it out a couple days later. Although it was larger than I would prefer, I saw it as a blank canvas to remodel and update to our particular taste. Mrs. IS had more trouble visualizing the finished product, but loved the layout and location. The asking price was $300k. That would be more than we could pay, especially since the house needed a ton of work. Oh yeah, and I figured I wanted to hold $22k in reserve to replace the roof and a/c…..each of which are about 20 years old. The house was part of an estate, and the deceased owner had lived in it for 40 years. She left 3 heirs.
I should mention that in addition to being trained as a civil engineer, I also hold a real estate license, and work occasionally as a real estate developer. Almost all of my real estate transaction experience has been in non-residential properties. So I enlisted the help of an experienced residential realtor I know, and we agreed to split the buyer agent commission. With that background in place, we began stalking the house. As mentioned above, we looked at the house and I took a quick inventory of the improvements we “wanted” and the improvements that were “needed” immediately. To our pleasant surprise, the house was livable….although horrendously dated. I am a frugal bastard however, and I was thrilled to see that the roof and a/c were the only pending failures. With that in mind, I figured we would hold back about $30k in working capital…..and cash flow the rest of the improvements over the next couple years. Score!
I should mention at this point, that if I was flying solo I would propose taking on three paying roommates or (more likely) be living out of a camper as I poke around North America. Seeing as I have a family, and would like to have another little one, those weren’t options. Even though I see increased inflation as a likely prospect over the coming I don’t love the idea of paying so much money for a house. Still, it is in a neighborhood we love…..and in one of my favorite parts of Florida.
We negotiated for about a week, and got the house under contract at $270k. We felt pretty comfortable with that price after I ran the recent sales comps from several different angles. The mustard yellow kitchen and bathroom worth of paisley wallpaper must have turned some buyers away. Undoubtedly, many others wished it came with more amenities…..like a pool. Here’s the thing. We don’t want to pay for a pool, especially when the HOA has a pool and clubhouse less than one block away. We wanted to buy a run down house in a great neighborhood, and that’s what we had under contract.
Things were progressing nicely until the home inspection. I used a very thorough home inspector, who literally spent over 3 hours going through the house. He found a few things, but no deal breakers until he got to the roof. The roof was a 20 year old “three tab” asphalt shingle roof. I was expecting to replace it within 2 years, but the shingles weren’t torn or curled. Apparently, the roofers hadn’t sealed the drip edge correctly however, and over the years the plywood decking had rotted out. Not the end of the world, right? Except that in Florida, homes over 30 years need to have what is called a “4 point” inspection…..before they can be insured. Essentially, this is a basic inspection that says the house is habitable. There wasn’t an extra cost, it was just part of my regular home inspection. Anyway, the roof is obviously very important….and one of those 4 points covered.
Without insurance, we couldn’t close on our financing. Without the loan, we weren’t going to be closing on the house. The dominos were falling. We passed along the inspection results and the listing agent’s first comment was…. “I told you they aren’t going to pay for a new roof”. Once we explained that we were not able to perform and close until a new roof was on the house, and no one else could get financing either. We also weren’t going to put a new roof on a house we didn’t own. His second comment was, “well I can find someone who will give the roof a passing inspection”. Ugh?! I assure you that there is no way I am risking my two professional licenses, as well as fines and jail time, in order to commit mortgage/insurance fraud.
At that point I got creative. From experience I ballparked the new roof at between $12k-$13k. We gave the listing agent specs for the roof we wanted, as well as what I believed it would cost, and suggested we amend the contract to increase the purchase price $6k…..but make closing contingent on having a new roof installed by a licensed/bonded contractor….that met our specs. Essentially, we were paying half the cost of the new roof. We thought it was a win-win. What did we hear……no response from the sellers. None.
So a day and a half later, we terminated the contract before our escrow deposit had gone non refundable. We literally heard nothing. No communication at all. I thought it was crazy….and fishy…..but sometimes real estate is that way. I’ve seen it before and I’ll see it again. The real kicker though was that they relisted the property a couple days later……for less money……and including a new roof. You read that right. The new asking price is 5% more than the last deal we offered them…..and we had already been under contract for weeks.
What are we going to do? Well we think things usually happen for a reason. This Thursday would be a full week since they relisted the property. We’ll reach out to them on Friday, and see if they have selected a roofer……and request a copy of the receipt indicating the roof they selected. If they communicate with us, and the roofer is legitimate, we’ll probably put in another offer in the low $270,000s. Will they take it, who knows. I have to say though, this is damnedest seller/agent combination I’ve ever worked with. They don’t even seem to want to help themselves.
Oh well, enough wasting our time on stupid people. Back to enjoying the flexible independence, Denver, great friends like the 1500s family, and Denver Startup Week.
How about you…..do you have a crazy real estate transaction story?