Truth be told, my father-in-law first showed us the property listing at least six months before we went to see it. I vividly remember saying something to him like "what do you think we're rich? We can't afford that!" But the price of the property dropped dramatically in that six month time period. So, one chilly Sunday morning we found ourselves looking at two houses on five acres with a huge garage and partially collapsed tractor shed. The place wasn't exactly a complete mess (in our opinion), but it certainly needed TLC. One saving grace of the situation is that both houses had been rented to tenants for a few years -- that kept all the systems running in the houses and people inside to notice when something was leaking/broken. After looking at a lot of vacant and foreclosed houses in our property search, we learned that an occupied house is the safest house. That Sunday morning, we fell in love with the place in all its fixer-upper glory and endless possibilities for the land.
After talking over the property with our parents and crunching some numbers, we drove out to the realtor's office after work the following week, put in an offer, and within thirty minutes we settled on a price with the seller. Wow, that's was easy! we thought.
Then the real work started.
First off, we scheduled the home inspection. For reasons mentioned in my previous post, we love our home inspector because he really protected us from buying a damaged house. Also, he's a fun guy and knows that we are a little nutty. There was nothing that turned up in the home inspection that was extremely detrimental, but there was a list of repairs we would need to take care of, including the septic system.
The next step was getting a whole bunch of paperwork in order to obtain a mortgage for the property. This entire process took us five months. Seriously. I had bought a condo back in 2007 and because of the housing and mortgage market crash, buying a property had become much more difficult. The mortgage company wanted everything they could get aside from a DNA test. And we had a mortgage broker who was a complete idiot, lost paperwork we sent him, and pushed our closing date three or four times.
It was also a particularly a tough deal because we did a 203k FHA building loan rolled into our mortgage to account for some necessary repairs, like a new septic system. Not only did the building loan make the mortgage process more complicated, it also raised our closing costs considerably. The other really nerve-wracking aspect of doing a 203k FHA loan is that the property had to appraise for both our purchase price and the building loan. It was a nail-biting, phone screaming, micromanaging kind of situation. I spent countless hours on the phone with the mortgage broker, the bank, our lawyer, and the realtor. And then I had to spend a lot more hours on the phone with family members to talk us off the ledge.
Let me quickly break down why this deal was so tricky:
1.) Some things took a long time because the sellers are in their 70s, have no cell phone, don't "do" email, and take long trips. A lot of times it was difficult for the realtor or their lawyer to reach them.
2.) There was a partially collapsed tractor shed on the property. You can't have partially collapsed structures around with an FHA loan, but we expressed that we wished there was a repaired tractor shed. So, we were able to negotiate that the sellers (with some of our labor) demolish the tractor shed and then give us the insurance claim check at closing.
3.) The cost of a new septic system for this size property was so exorbitant that we wouldn't progress with the deal unless there was an agreement met for the sellers to contribute money to the new system. The lawyers handled it and made it work and now I know more about septic systems than I ever thought was possible.
But as I said before, five and a half months after settling on a price, we got to show up to the closing.
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