15 May 2011

Go Canucks!

Tonight the Vancouver Canucks open the Western Conference Finals. I wish I was up in BC for the vibe

Anyways...here is my opinion of folks in the Real Estate "industry"

Friday I took off work for a full day of inspections at the house. I went in with the attitude that for $875K - in my opinion at the higher end of "fair" - it needed to be perfect beyond known wear-and-tear

The folks in the "industry" would say "Oh, on a per-square-foot or per-bedroom basis for this zip code it's quite fair" and that is a fine enough data point. However, I have not yet seen houses at this kind of price point moving in Boulder and most have been on the market for months

We had 5 inspectors out - general, roof, septic, pest and mold. Mold featured Molly the Mold Dog (seriously)

The cats were ok though surprised by Molly

Anyways...from a Net Worth perspective the size of the mortgage was relatively minimal. It is mostly trading one asset (cash) for another (house) plus a trade-off in expenses (rent versus mortgage interest). Our issue was cash flow. We had already decided we would handle i) painting ($1k-$2k), ii) a new carpet ($3k-$4k) and iii) sort of repairing the hardwood floor (unknown up to $6k, depending on what was needed). I say "sort of" because I found out "we" used the floor as justification for our initial offer. I wasn't pleased as there was no need to justify the offer - either it is a price they would accept or a price they would decline. They know their floors are worn. Going back later with a specific reduction in an agreed upon price with specific items seemed to be a more relevant time to mention. Now in the seller's minds they would think "Why would I give money for the hardwood floors, they said that was already included in adjusting their initial offer?"

Long story short we were already pushing what we could afford from the banks and definitely pushing our cash over the next 4-5 years with 20% down and any money that needed to be spent before moving in. It also took away any flexibility as far as my bi-annual resigning from work

The gist of the inspections is that is was quite a well-built house 19 years ago but has not been maintained. Repairs were needed. Many were minor enough:

all screens needed to be repaired

the cast-iron bath tub had chipped

repairs around windows were needed

There was a vent / duct directly from outside that came into a room that served no purpose other than cooling things off in the winter (it had a use apparently before that I can't remember)

And so it went on and on - anywhere from 20-40 "minor" issues that could range from $20 to $750 each. There was no carbon monoxide alarm (County violation), the work on the back porch apparently had not been closed with the County and had one violation (seemingly minor but still in violation) and the gas fireplace wasn't working

Plus there were more expensive items - the roof was relatively good but needed work ($700+), the swamp cooler had some issues ($500+), the septic failed it's test (no alarm), and it appeared there was more than one dead tree (so another inspetion would make sense as one theory from more than one inspector was it could be pine beetle - but it could be the drought)

It seemed as if the sellers weren't trying. When we sold our house in Bothell we spent $5K on repairs and "making it attractive" in addition to moving a lot of things into storage. That laissez-faire attitude worried us as well as it was likely reflected in that they were years overdue for a "septic sucking" - which may have caused damage to the pump

We thought about going back with a revised offer to get cash back at closing to cover all these repairs but I do not trust the "industry" so we followed the letter of the contract and sent notice of termination to kill the deal and get our money out of escrow

Bummer. This guy still likes us

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