Posts Tagged ‘ homeownership

The house saga

To conclude the cliffhanger I left you hanging from in my previous post, I have to maintain that real estate may still be a racket. However, it ended up serving me well.

The dispute on the low appraisal went through, adding about $6000, which mean it was still $7500 short of the agreed upon price. The seller had already knocked about $2000 of the list price I saw (which was over $10k under what he originally listed at 6 months earlier) for me, and was paying all of my closing costs.

So, the seller had to decide if he was willing to take that big of a hit. His realtor said he would rescind his commission to make the sale. It helped that the realtor was the seller’s cousin. However, I had to bring $1500 more to the closing. But I was getting $7500 off our agreed upon price.

I agreed.

Now I’m a homeowner.

I met a neighbor later on closing day. He seemed to think that I was renting. He must have thought the seller gave up. I accidentally said that the process had been a roller coaster but stopped myself short of explaining the details. I’m sure he doesn’t want to hear that he may be under water.

I can’t help but look to the day, probably less than 10 years from now, when I’ll sell the place. Will I make a profit because I got such a deal? Will the neighborhood go sour? Will I have stuck thousands of dollars into it?

So far the only money I’ve stuck into the house itself is a programmable thermostat that I’ve yet to install. I’m not even going to paint (yet, anyway). I’m still acquiring adult things at 32 — I’m not married or have a kid, so I’ve lived off used & crappy kitchen supplies, free couches, and cheap sheets for long enough. That’s where my money will be going for now — the stuff I can take with me to the next place.

Real estate is a racket

Financial stuff is complicated, and apart from retirement funds, home buying is one of the most common manifestations of it amongst the rabble. Computers are also complicated parts of every day life, but in terms of technology, not finance.

The last 10 years in computer technology, especially software, have brought on several innovations that help users deal with computers. This is due to the amazing User Experiences revolution taking place in tech companies around the world. Companies like Google, Yahoo, and Microsoft are keen on user testing and feedback, but it all comes back to design.

Is the financial industry, or more to the point, the real estate industry, really much different from software? Wouldn’t the real estate industry benefit from a user experience consultancy?

I offer a resounding yes.

I’ve been in the process of purchasing my first home for about a month now, and I’ve been burned. After signing sheets and sheets of paper multiple times, after copies of all my finances have been strewn around tables, after quibbling over an offer — now it may fall through because the lender’s (Edina Realty / Wells Fargo, I believe, though it’s hard to tell) appraiser that I paid for has given it a low appraisal. About $16,000 lower than my loan amount. This means the seller would have to agree to sell at this super low price. Obviously he’s hesitant to do this.

This snag has come up after the following events have already occurred:

  • loan formalization: I’m making up that phrase, but I don’t know what else to call that meeting with my loan officer where I sign even more papers about the terms of the loan. He tells me about the appraisal that I have to pay for (~$400) and takes my credit card, because that is the preferred method.
  • home inspection: I paid $240 to have my (potential) future home inspected to ensure that no major issues would impede the closing and final sale. None were found. My realtor said that the inspection must be done 3 days after the accepted offer.
  • assigned a closer: Much to my surprise at the time, my realtor has little to do with the closing. I was appointed a closer, who sent me a bunch of cryptic papers about title insurance and home insurance, and a form I needed to fill out inquiring any past sins. Why is my closer asking me, after the offer is accepted, after my loan is approved, about whether I’m a criminal? I was told this form is crucial to fill out and send in before the closing. There are methods in which to look this stuff up. Easy methods.
  • title business: This includes signing up for insurance and trying to find out if the seller has title insurance. I went around in circles with my closer and realtor about who finds out for me whether the seller has title insurance (he didn’t, which means I have to pay more now). And WTF is the point of title insurance anyway, especially if your title is held by the lending agency? Total rip-off.

On top of this, I am an organized person and thusly have completed several tasks. I scheduled a mover ($50 deposit gone if I have to cancel), I bought cleaning supplies and random stuff for the new place ($50), I have my insurance agent drawing up a new policy for me, and worst of all, I included my new address and the story of my new home in my Christmas letter. I will be so ashamed to send out an additional note explaining that I didn’t get the house.

The appraisal was filed on December 23rd and my offer was accepted about 20 days earlier. I was notified by my realtor (who forwarded me my mortgage guy’s email with the PDF) and the printed file in the mail on December 30th. My realtor said a week is normal for the distribution of the appraisal. Yet, the inspection had to be done within three days. Why the disparate timing?

The appraisal in question was done by someone apparently known for low appraisals. His opinion is now attached to that property for the next six months. I have conflicting information on whether we can do another appraisal. Winning a dispute is rare. Appraisals are totally subjective things, yet one person’s opinion tarnishes a property for six months. Why would the lender (the appraiser’s employer) want to do this to themselves?

Why doesn’t the real estate and mortgage industry realize that if things like this can happen (and my realtor said it’s become fairly common in this market), something is dreadfully wrong with the process. If this deal falls through, think of all the wasted hours Edina Realty has put into this. Three people did a bunch of work for nothing, not to mention me, my insurance agent, and movers.

This could have been prevented with a more streamlined, smarter process. I realize that they just want to make money, but putting the goodies (like the actual offer and loan acceptance) ahead of the finer details that are out of the buyer’s control creates unnecessary work for all. Also, appraisals should be an average, not one person’s opinion, or they should be connected to the assessed value of the home.

Get it together, mortgage and real estate industries, or suffer another failure as catastrophic as the one you are recovering from now. You need a User Experience Designer to help with your processes and forms. I am open for business.