Wishing and hoping and thinking and praying

Yesterday I looked at a house that I would love to move into. It is the same layout as the first house I ever made an offer on. The price is right, the layout is right, the cul-de-sac is right, so what is the right offer? Part of me wants to throw down as much money as I have but another part is a little scared that the house won't appraise. I ran into this on another home. I ended up not getting accepted (an all cash offer got it) but the selling agent told my agent that he was a little worried that the house wouldn't appraise for what I offered. I was stunned. Here I was being out bid, now I was told that I was offering too much. I felt like I couldn't win for loosing.

My agent is doing some research to see what a good offer would be so we can put one together. In the meantime, I'm crossing my fingers and toes. Could this be my first home? Can I landscape the cute little yard just so? Will it be as warm and inviting a home as I know I can make it be? We'll see.

Get a Permit!

Just to update the two people following my blog, I'm not going to be the lovely neighbor of a sex offender, well, at least not this time - that house went to someone else. Secondly, I went to check out a house this weekend. Huge yard, relatively clean, nice bathrooms, three rooms, good sized kitchen. The carpet needed to be fixed, fence replaced and it was next to an empty lot, but these were all workable things. Just when I was getting my hopes up my agent unlocks the garage.

I literally moaned. It was another unpermited garage conversion. This has been the bane of my home buying existence, right up there with investment buyers, and banks hating FHA. Frustrated I started to do some research on unpermited garage conversion and FHA. Turns out it is mostly up to the inspector. FHA says it isn't their job to enforce local ordinances. On the other hand, most unpermited work has flaws that an appraiser can say make the home uninhabitable. Sure, I might never use the poorly installed toilet in the garage, but it still was improperly installed. I'm sure that there are plenty of good reasons people didn't get permits. Avoiding higher property taxes, ambitious do-it your-selfers, homeowners who didn't want to deal with city bureaucrats are just a few reasons homeowners might have done a conversion without the proper paper work. No matter how good the reason for the unpermited addition it is still a head-ache that can be avoided.

Moral of the story? If you're going to do a conversion or an addition - get a permit.

Call Me!

Sorry for being MIA for so long. I had a couple of final papers and a conference at work. During that time not much has happened on the home front. I haven't heard back on the last house I made an offer on, which I think means that I didn't get it, but it is hard to say.

It is my understanding that the agent only got 3 offers on this house, so it shouldn't be too difficult to give a courtesy call to those who didn't get the house, but when it comes to bidding on banked own homes it seems like common courtesy isn't too common. This is frustrating to me and my hard-working agent. My agent is the one who is calling several times a week to hear from many of the agent's who represent the banks. When I think of all the work my agent has done, on top of a commission that she would probably have laughed at 2 years ago I feel bad.

The control freak inside me wants to call the agent who hasn't returned my agent calls, but for the most part t his is a home-buying faux paus. When an individual is represented by an agent, that individual is suppose to let the agent make the contacts and do the phone calls. I actually did call one agent once out of frustration. it was a short sale, and of course things took longer than they were suppose to. My agent had been calling the other agent for weeks trying to get an answer. Out of frustration I called the agent. I go through I think because they thought I was a potential client. If I had said I was trying to follow up on an offer I think I would have been sent to the voicemail oblivion.

It is so easy to return a call or send an email, or even a text saying, "Sorry, home went to someone else. Thanks for your interest," that I'm not sure why listing agents don't return calls. It takes more time to keep listening to endless messages from parties waiting on the other line. Is it just hard for listing agents to say, "Sorry, we gave the house to an investor who offered 3/4 of asking price but gave all cash. Please tell your client that FHA is the equivalent to having leprosy."

The Monsters Beside Me

Just the other day I placed an offer on a home where a sex offender lives next door. It appears this sex offender abused kids which for me is not quite as big as a problem because I don't have kids and I don't plan on having one in the immediate future.

This sex offender, according to his Megan's Law profile he is in his seventies. When I looked up the property and the county assessor's office it isn't listed under this individuals name which leads me to believe he is renting. 70 something-year-old renting sex offender probably won't be living in the house in ten years when I'm ready to sell. I'm not as put out about living next to a sex offender as I would have been 4 months ago when I started looking. If there was a sex offender anywhere on the street I was wary, now I just look at the potential risk. If the sex offender targets a population that I'm not a part of I figure it is better for me to live next door than people with kids.

Don't get me wrong, I'm not excited to live next to a sex offender. I'd probably never invite him over to barbecue or ask him to house sit while I was away. I'd much rather not live next to any sort of criminal but choosing neighbors is next to impossible. I figure Megan's Law at least gives me a heads up. I know this is a person I don't want to befriend and don't want to involve in my life. I can't say that about the neighbors on the other side of the house. They may be good people, they may not be. It will be trial and error to try to find it out.

Antioch, California has been in the news of late because of the high number of sex offenders who live in the area. No one wants to live next door to a sex offender but someone has to. In Antioch there are large expanses of rural areas away from schools and parks. Sex offenders found a community to live in that met the legal requirements, to the chagrin of the neighbors. So where are sex offenders suppose to go if not next door to you are me?

I've thought about this and I think the formation of towns in rural areas, like deserts and in the Midwest where sex offenders could live independently but the town was populated only by sex offenders and parole officers. It would be illegal to have children in the town. Is this ghettoizing a population? You bet it is. Is that fair? To the sex offenders, of course it isn't fair, but I don't know how to protect the rest of society without incarcerating these folks for life.

So, house available next to a sex offender may be a boon for me and other childless home buyers but it is definitely something that the community could do without.

Dear Mr. Senator...

I wrote this to my State Senator when I had just started the home buying process. I never heard back (and I really wasn't expecting to hear back) but thought I would share it here. I blanked out some of the personal informaiton because I really don't trust you. Yes, even you.

June 15, 2009

xxx xxxxxx xxxxxx xxxx, xxx x
xxxxxx, xx xxxxx

Senator Joseph Simitian
701 Ocean Street
Room 318A
Santa Cruz, CA 95060

Dear Senator Joseph Simitian,

I’m writing you to inform you of a problem I am currently having. I am currently fortunate enough to be able to begin looking for my first home. So many Californians have unfortunately lost their homes because they have been unable to make their mortgage payment, which as you know, puts people like me with good credit and steady employment in a lucky position. I feel badly for those who have lost their homes but I was hoping that I might actually have a chance at home ownership in the state of my birth – something I was never sure I’d be able to accomplish before I was in my 40s!

I currently live in beautiful xxxxxx, located in the xxx xxxxxxx xxxxxx. I love xxxxxx and would be glad to continue living their, unfortunately, even with a large dip in housing prices I am not able to find a home that meets the FHA standards and my budget. With this knowledge I’ve decided to expand my search and decided upon Gilroy (I know, it’s outside the 11th District, but buying a home takes sacrifice!). I am still looking at homes that are near the least expensive in the area. I’ve been able to make offers on 2 homes but on both homes I lost out to buyers who were able to buy the homes out-right with cash for investment purposes. There are few houses for me to even look at in my price range, let alone make an offer on. I am discouraged and think that perhaps my opportunity to buy a home won’t come to fruition because I can’t compete with investment buyers. My agent tells me that my experience of not being able to compete with investment buyers is very common right now. I understand that California needs all the home buyers it can get right now, but I thought it was important to let you know that people like me may very well loose out on one of our few opportunities to buy a home in California.

I currently work in the social service field as a xxxxxxx xxxxxxxxxxx in xxx senior housing. I am lucky to make enough money to support myself but I know I will never become wealthy from this line of work. I also go to school at night where I am working on getting my Masters in Counseling Psychology. My earning potential may increase with my degree but on average most Marriage and Family Therapist only earn about $60,000 a year which only goes so far in California. One day after saving I’d probably be able to buy a home, but that probably wouldn’t be until I was into my 40s and I’d have missed out on being able to raise a family in a home of my own.

I don’t know exactly what, if anything can be done about this problem. My family has been in California since my great grandfather and grandmother moved here in the early 1920s and I hope to be able to raise a family of my own here as well – I just need a chance at buying a place to do it.

Sincerely,


First Time Home Buyer

And the chicky says cheap, cheap, cheap

If you told me a year or two ago that I would be looking for a house I would have told you that you were crazy. With starters homes even out in the thullies going for about $500,000 I knew it would be a long time until I could save up 20% (100,000) while going to school part time and working in the social service field.

With house prices bottoming out I was wishing that I was a little older with a little bit more savings, because even a $150,000 house would require a $30,000 down-payment and I just couldn't put that together in a year. Then I found out about FHA and saw a glimmer of hope. I decided to start looking but soon found that anything above the typical 3.5% FHA down payment would be a real boon. I had just paid off my car by emptying my savings in a fit of unrest over what I perceive to be meaningless debt, or debt that wouldn't help me (like home or school debt), just hinder me. To come up with the money here are the crazy things I've done, a la a college student.

*Cup O'Noodle for lunch anyone? I was having cup o'noodles every single lunch for over a month. I was starting to get green around the gills just from the thought so I've since upgraded to Amy's microwavable burritos. The burritos are more expensive but are cheaper than eating out for lunch.

*No take-out! The boyfriend and I are terrible about getting take-out. We don't like cooking or cleaning so we like eating things off of paper and out of disposable containers. It's a shameful vice. We seriously cut back on the indulgences the first 2 months of house searching but we've recently relapsed. Time to get back on the horse.

*Got recyclables? I'm not longer putting my recyclables out where the maintenance guy can bag 'em and cash them in -I'm now saving them for the money they can provide.

*Who needs name brand low end shampoo when you can have dollar store shampoo? This unfortunately applies more to boyfriend, because my shampoo hasn't given out yet

*Gas, grass, or ass - nobody rides for free! Whenever possible the boyfriend and I are carpooling to work. Gas is about $3 a gallon where I currently live and it takes me about a gallon and then some to get to and from work, and about 2 gallons for the boyfriend so by carpooling we save about $3 a day, oh, and the planet too!

*No boutique Doc for me. I love my boutique doctor who I pay out of pocket for since she doesn't take insurance. I kind of have some weird health issues and appreciate my doctor's inventiveness and thoroughness but it costs a pretty penny. I've been seeing my HMO doctor lately. Don't get me wrong, he's not bad, but he's not my doc.

*Has anyone seen my pants? No, because I haven't picked them up from the dry cleaner for a year and a day.

*I didn't wear them, for the most part. I needed a new pair of shoes to go with a dress to help out at a school event. I got to the event found out they didn't' need my help and went home. I spent a total of 10 minutes in the shoes. I took the right back to the store. Sssh, don't tell.

I've done other incredibly cheap things but these are the ones that come to mind. Drop me a line if you have other ways to be cheap!

No. 9

I wrote yesterday about how I was rejected on offer number 9 because it was an FHA offer. Here's a look at the house. Once again, this wasn't my dream house. I liked the back yard (though the green weeds pictures are now a straw brown). It was done in a tudor style with a bit of an identity crisis, mainly due to the spanish tile roof. I'm not a big fan of tudor architecutre. Outside of Disneyland or the 16th centruy it just comes off as fake to me - but I'm sure my love of little bungalows seems provential to others.

The house did have two full bathrooms with a cute little master's suite. Tin foil use to cover the windows and for the sake of not jumping to conclusions I'm not going to speculate on the reason for the tin foil on the windows. This house was attached at the garage to the neighbors which is pretty typical of many of the houses I've looked at as well. The garage was one of the biggest ones I've seen and suprisingly enough it did not have an unpermited conversion (imagine that!). So many of the houses I've looked at have had unpermited garage conversions of funky sheds in the back that appeared to house more than just gardening tools.

I would have redone all of the flooring, defintely gotten new cabinets and probably just re-setup the configuration of the kitchen sooner or later, eventually I would re-do the bathrooms, and like most of the houses I saw I would need to put in double-paned windows. There were some termite problems (in my unprofessional opinion), but I was hoping it wasn't too widespread and that maybe the bank woud allow us to fix a few areas before inspection.

Unfortunately, this house has gone to someone else. Hopefully it will be their home and hopefully they will be very happy their.

FHA, No Way! Or 9 for 9

The houses I mentioned in my rant about being carless post both were no-gos. It was a good thing that I canceled seeing the one place with my agent, as we later found out that the bank wouldn't even consider FHA for this short sale. The other house that I had an offer out on just gave me a no-go today. My offer was very similar to the offer accepted but the bank said no to me because I was FHA and a deal had fell through before on this while pending FHA approval.

Why am I doing FHA then? Well, I started out doing FHA because I only had 3.5% put away and I would need at least 5% for a conventional loan. Now I have more but I was recently informed by my loan agent that I am a few numbers lower than the minimum for PMI. I'll go into the whole I thought I could get a conventional-loan-but-I-guess-I-can't thing later.

Anyway, FHA does rather thorough home inspections before they'll give folks a loan. This makes sense when you consider why would the federal government give a loan for a house that is basically a slum and is about to fall over BUT it doesn't make sense when you look at how crazy they look at some of the homes. If a home has a small unpermitted addition it is out. If a home has any termite damage it is out. If the home does not have flooring (like carpet, wood, or linoleum) it is out and a million of other things.

When you think about this it is obvious that a bank would rather sell to someone with a conventional loan when compared with an FHA loan.

I think some compromise needs to be struck. I wish that FHA would review their guidelines as to not make things so difficult for buyers. The program should be about opening doors, not making them only open to the elite.

Wait, That's My House Money!

Life doesn't get cheaper just because you want it to, and despite an increase in my loan amount, I'm still working hard to save for the down payment. FHA only require a 3.5% down but it isn't against the rules to put down more, and the more money you put down, the more competitive you are. I'm currently 5% down with no seller credit requested. I'm working to get that 10%. Despite my best efforts, life keeps getting in the way. Here are a list of expenses that just have made life a little harder:

*My insurance company wouldn't pay for a Gardasil vac (or at least was making it really difficult) so I had to pay out of pocket for it.
*My dog got a UTI requiring an ultrasound. While at the vet we realized she was over due for a heartworm test and I also picked up her flea/tick/heartworm medicine. This all translates to mucho dinero, even if it was well spent.
*I scuffed my neighbors brand new car while pulling out of our crazy apartment parking lot. It was less than my insurance deductible to fix it so we were able to keep it away from them (no raise in rates) but it was a chunk of change I wasn't excited to spend.
*My car had a broken fuel pump and apparently has a weird fuel pump set-up meaning lots of money.

All of these unexpected expenses have really been a pain. I'm still in the game, but it just means I'm saving less than I thought I would. I've also done some crazy things to save money, as well. I'll write about those soon.

At one point I was thinking, "The universe is conspiring against me," but then I realized that anything I've ever really wanted I've had to work for, why would a house be any different? So I'm sticking to my guns and saving what I can and breathing through the unforeseen expenses.

Hoofing it While House Hunting

For the past 11 days I've been without my car. It's a long story but it all boils down to being stuck walking around or depending on the boyfriend to shuttle me around (which he has been a real champ about). Last week my lack of having a car did make life a little more complicated but it didn't affect the house hunting because nothing new in my price range came onto the market.

This week there has been two houses I wanted to look at. The first time I was able to hijack the boyfriend's car, the second time I had to call my agent and cancel. In a market where you have to push people over to get to the house I've been really wondering how people without cars are able to do their house hunting, especially for houses outside of their neighborhood.

I wasn't able to find much information about this online. I'm sure if you have a neighborhood agent they don't mind putting a few ticks on the pedometer to take you from home to listing, but for people like me who live an hour from where they are looking you would definitely have to be crafty. Does the agent do the preliminaries and only have you look if they think it meets your qualifications or do they walk around with a camera clicking every little plus or minus for your inspection?

Biking is very popular in Northern California (opposed to Southern California, where biking is saved for trails and 9 year-old girls)so I guess the athletic might see the house buying trek on two wheels as an opportunity instead of a nightmare. As a sane person I see this as a nightmare.

The website Redfin does tours where bunches of buyers jump on a bus and are carted from house to house. I see many problems with this, but for the carless it might be one of the few options. This of course, points out many societal problems among them classism (though there are many worse class issues in home buying), lack of decent public transportation, and a market where you can't even take a breath. Where I live people are continuing to beg for better public transportation but it continues to be an unsolved problem

Home buying in California, at least outside of San Francisco, definitely means you need a car and I'm ready to have mine back!

The Race to the Threshold

CNN had a piece about how quickly homes are being snapped up. It has been my experience that if you want a house in this market you have to act quick. Many times listing agents are only taking offers for about a few days. I have run into a few houses were offers were taken for up to a week another others that only seemed to be taking offers for 2 days.

Whenever my agent has called a listing agent they always make quite a fuss about how many calls they have been given about a particular house and how quickly you have to act. Even with the multiple offers I wonder if the fuss that the listing agents say they are getting on houses is completely accurate. I've made offers on about 90% of the houses I've seen but there have been those few I've been on the fence about. It doesn't help the decision making process when you feel like there are ten other people ready to push you over to get the house.

I have been thinking for a while about the way offers are made and I do believe a public, silent auction system would be the best. I want to see what other people are offering and how many offers are being made - not just take a listing agents word for it. I'm not sure how this would work exactly so I'd love to hear how others think this would work. Have any ideas?

I'm not alone - and that might be the scary part

The San Jose Mercury recently featured this article. The article talks about how first time home buyers (like yours truly) are being routinely outbid by investors. Here's a snippet:


Bill Powers, a broker with Coldwell Banker, said he represented a buyer who made an offer on a home on Willowbrook Drive in the Cambrian area of San Jose that received 73 other offers.

Another agent said a four-bedroom bank-owned home in South San Jose listed at $299,000 got 112 bids last month. The 1,220-square-foot house will probably go to a buyer who made an all-cash offer of about $360,000.

"There just seems to be a groundswell of people who have a good amount of money," said Brett Mattos of Ventura Barnett Properties, who listed the property. "The last four foreclosures I've had sold for cash."

The article goes on to say how more moderately to higher priced homes are still receiving few offers. Which of course makes me wonder why investors are scooping up the real deals that are homes that once went for a million and are now $500,000 or $400,000. These are the homes that are sitting empty for months while the small homes geared to first time home buyers like me are almost instantly snapped up.

When I read this article part of me felt vindicated. I would tell friends and family that I was looking for homes and routinely getting out bid and they would seem aghast that in this market I wasn't getting something. This article shows that I'm not making some silly novice mistake or perhaps setting my sites on homes that are out of my league.

The more I think about the fact that it probably isn't me, the more I worry.

If I or my agent were continuing to make a silly mistake on offers the situation would sooner or later correct itself most likely through us learning what we were doing. If we aren't the problem, though, if it is in fact the banks, investors, and the market in general then I have a problem that I'm not likely to be able to fix. I can't tell the investors to knock it off, I can't convince the bank that they are screwing the little guy (and subsequently communities and the country as a whole), and I certainly have little control over the market.

I've been reading (mostly on message boards - which is the place I always tend to start looking when I'm desperate) that this might be a sign that now is not the right time to buy - but that makes me wonder, if not now, then when? California real estate prices may still be inflated, but they are the most realistic they have been in over ten years. A year ago I often wondered how I would ever be able to afford a home in California and many times thought I would be 40 plus or have to move out of state by the time I got my piece of the pie. I'm not looking to make an investment, well, at least that's not my main motivation. I'm looking to find a home and just because it isn't the absolute best time to buy doesn't mean I'm still not interested. I rather come out with something that I could have gotten for 20% less in 6 months than to walk away from this opportunity empty handed.

When I read The Merc article I see that there are probably a lot of first time home buyers out there who have been empty handed for a long time. Many of them are probably more deserving of a home than I am. I'm routing for all of them. I think each time a non-investor walks away with a home in this area it is a triumph for all of us first time buyers.

Magic Money

I received an email from my mortgage broker and she says I can get a loan for an additional $10,000. Like magic, I have more money in my house offering pocket! This is of course good news, but it also brings me up to the max I'm willing to make for a mortgage payment monthly unless I get a raise (and non-profit raises won't raise the amount I could pay by much).

I wonder on some of the past houses I've made an offer on if I could have gotten them if put an additional $10,000 to my offer. I'm not sure if it would have made a difference. I've made some really good offers but they can't beat an all cash offer from a flush investor. I keep hoping that the investors will get all the properties they want and there will be room for me and some other first time buyers to get a piece of the pie.

How much is enough to beat out an all cash offer? I've seen other buyers ask the same question and I wish I could know. If there is an equation the banks use to weigh the risk of a mortgage against the higher cost I'd really be interested to see it.

Eight for Eight

Just heard back yesterday night on the the 8th house I had an offer on and I didn't get it. I'm sad on this one because it had lots of the elements I was looking for, the boyfriend and I both liked it (perhaps the boyfriend even more than me?), and once again the things that needed to be worked on once I moved in were really minimal.

http://www.redfin.com/CA/Gilroy/7521-Church-St-95020/home/686340

I also was only able to offer asking which made me know from the start that this home was definitely a long shot. The house was zoned for "R3" which meant that it could have three units on it, which I'm sure was a boon for investors. There was a little studio unit in the back that was about 80% done. At one point it had been red tagged for not having a permit, but it appears that situation was taken care of.

Who ever owned this cute little place and lost it to the bank was either a flipper or someone in the construction field who was looking to do things right. The boyfriend loved the water heater and heater set-up. The house wasn't completely done. The back deck probably needed to be replaced and the unit in the back needed to be brought along if it was ever going to be used for more than storage or a workshop. The street was busier than I would have liked, but there is something about trees lining a busy street that gives it more of a protected, insular feel.

The house was not only a historic home but it was also across the street from the Gilroy Museum. I have a soft spot for some of the historic homes. I like the little bungalow houses with built-ins but many of them just don't come anywhere near meeting the FHA standards I have to deal with. This house I really thought might be able to meet those standards.

Well, back to looking. There isn't anything out there right now that is in my price range but I'll keep on keeping on. Wish me luck - you never know what the banks will foreclose on next!

Seven for Eight

On Friday I heard from my realtor that I lost out on the 7th house I'd placed an offer on. That means 8 offers, 7 rejections. This house was a little different. Not only was it a time consuming short sale, it was also a home that required bank approval. My understanding was that the owners had declared bankruptcy. Apparently, when you declare bankruptcy and want to see your home the bank has to give the O.K. This is just my understanding of the situation - which could be far from correct.

http://www.redfin.com/CA/Gilroy/8300-Forest-St-95020/home/1210513
I was thinking I might actually have a chance at this house. I offered almost 20% over asking and I was hoping the complications of short sale and bank approval would put other buyers off. No such chance.

This house was significantly nicer than many I've made offers on. The sellers had gutted the property - not only taking all of the appliances but also just about all the light fixtures, as well as some of the faucets and shower heads - but it appeared to be well cared for with newer paint inside, carpet that looked like in might just need a good cleaning, and dated but livable kitchen tile. The landscaping had to be redone as well, but this is really not a problem for me. The picture on the website shows a nice green lawn, but that photo must have been taken months ago. Now there are waste high weeds browned in the sun. The backyard revealed a similar scene littered with a few condom and snack food wrappers but all of this is so superficial for a home like this. Was it my dream home? Not by a long shot, but I have yet to see a home that is my dream home. Every home I've looked at I know I will have to work to make my own. I'm okay not getting my dream home as my first home, maybe it would be nice if my 3rd or 4th home was my dream home.

I would have been really happy getting this house, though.

So, 7th rejection out of 8. I'll suck it up and see what I hear on number 8.

So here it is...

So here it is, Adventures of a First Time Home Buyer - my decent into madness! Like so many people across the country I though that this would be my time. I'm steadily employed (knock on wood), I have good credit, and have always dreamed of owning my own home. I may be young, but I'm not impulsive so I weighed the pros and cons of home buying. I decided this is it, this is my chance to become a home buyer, to get my foot in the door, to work on moving up. Sigh. I was so naive.

2 1/2 months and 8 offers later I sit here, a victim of a bay area bidding war on starter homes between the likes of me and the likes of them - who are rich investors with all cash offers. I started out this adventure fresh-faced and excited but I have quickly become a jaded lookeeloo, feeling my time may never come. Here's my adventures.