Home More house drama - dust needed....

[Pandora II]

Okay - the saga goes on...

We HAVE TO complete on Wednesday as our mortgage offer expires then and the bank is 'not extending offers in the current economic climate'...

If the offer expires we have zero chance of finding one even close to this one.

We've been trying to complete on this property since the beginning of July and things have been very frustrating. The sellers don't seem to have grasped that it's a bad market right now and have only got to work on some of the issues last week.

Three major issues will not be resolved by Wednesday - the forward plan for the next 3 - 5 years of major works (the property is a leasehold apartment so we are liable for a % of all major works - like new roof etc), the breach of lease on flooring by the owners etc All of these could potentially be VERY expensive.

The next door identical property is also for sale and the current price is over $50k less than our offer.

Last night we told the vendors that we would take the risk on the outstanding issues but we are reducing our offer to fall in line with the asking price for the neighbouring apartment.

They have emailed us today to offer a $10k reduction.

We have emailed back to say it's the full $50k or nothing.

I LOVE this property, but I'm not prepared to know I'm in negative equity as I pick up the keys so if I have to I'll walk away. Frankly I think the vendors are mad - the market hasn't hit the bottom, the neighbours have had no interest (I know as I called their agent last week and they have been ringing me 4 times a day ever since to see if I want a viewing) and there is no way they will get more than the neighbours price - which is what we are offering.

I should know tonight or tomorrow....

In the meantime, dust would be welcome - and hopes that the sellers see sense!

ETA: Gazundering is not something I ever thought I'd do - and if we wouldn't be taking a huge risk on the outstanding issues I wouldn't. The vendor's email is pretty much all about how they are doing us a favour and we're being picky - and how the issues won't be resolved so we just need to chill. What planet are these people living on???

 

[Lorelei]

Dusting as hard as I can!

 

[fisherofmengirly]

Oh Pandora, I hope things work out QUICKLY and well!!

If the house next door is listed for so much less, why can''t you make an offer on it, if the sellers of the one you''re looking at aren''t acting quickly enough?

And I had no idea a mortgage could expire! What does that mean?

Wishing you good thoughts, sweetie!!

 

[MichelleCarmen]

Will the sellers be taking a loss if they reduce the price by $50K?

 

[Kay]

Pandora, I am sorry you are still going through this drama. There are a few things to consider:

1. Review the contract to see what happens if you walk away from the deal. In the U.S., purchase and sale agreements for residential real estate frequently limit the seller’s remedy/damages to keeping the buyer’s deposit. Absent such a limitation, it is common in contract law for the person who is not in breach of the contract to be able to sue the other party for the “benefit of their bargain.” In other words, if you were under contract to buy for $250,000, and you refuse to purchase for a reason that is not excused by the contract, and the seller cannot do any better than $200,000 with another buyer because the market has dropped, then they could sue you for $50,000 unless their damages are limited by the contract.

2. I am surprised your lender will still fund the loan if the value of the house has dropped so substantially. Usually, they require the house to appraise for a certain percentage of the loan because the bank does not want to lend in a negative equity situation. Many purchase and sale agreements have a loan contingency, so if you can’t close because the lender won’t fund the loan, then the seller can’t blame you for not closing.

3. You may also have an out without penalty if you objected about the things that need to be fixed during the inspection period and the seller agreed to fix them, but has failed to do so.

4. If you want to close by Wednesday because it may be difficult to get a loan approved again, you and the seller could contract in writing to hold a certain amount of the purchase price in escrow to pay for all agreed repairs, and only when everything is fixed to your satisfaction would any excess funds be released to the seller. Make sure you withhold a large enough amount because repairs often cost more than you think they will.

Considering the house next door is a better bargain, it may be better for you to let the sale fall through, as long as you have a loophole under the contract so you can’t be subject to liability for breaching the contract. Will it be very difficult for you to get a loan approved for the lower price of the other house?

[I am a lawyer, but this should not be construed as legal advice because I have not seen your contract and am not familiar with the laws of your jurisdiction.]

 

[Miranda]

Sending dust! I hope it works out for you!

 

[VRBeauty]

Pandora: What a trying time to be buying a house in! Here''s some fairy dust -- I hope it helps!

 

[Pandora II]

Date: 10/4/2008 6:56:44 PM
Author: Kay

Pandora, I am sorry you are still going through this drama. There are a few things to consider:

1. Review the contract to see what happens if you walk away from the deal. In the U.S., purchase and sale agreements for residential real estate frequently limit the seller’s remedy/damages to keeping the buyer’s deposit. Absent such a limitation, it is common in contract law for the person who is not in breach of the contract to be able to sue the other party for the “benefit of their bargain.” In other words, if you were under contract to buy for $250,000, and you refuse to purchase for a reason that is not excused by the contract, and the seller cannot do any better than $200,000 with another buyer because the market has dropped, then they could sue you for $50,000 unless their damages are limited by the contract.

2. I am surprised your lender will still fund the loan if the value of the house has dropped so substantially. Usually, they require the house to appraise for a certain percentage of the loan because the bank does not want to lend in a negative equity situation. Many purchase and sale agreements have a loan contingency, so if you can’t close because the lender won’t fund the loan, then the seller can’t blame you for not closing.

3. You may also have an out without penalty if you objected about the things that need to be fixed during the inspection period and the seller agreed to fix them, but has failed to do so.

4. If you want to close by Wednesday because it may be difficult to get a loan approved again, you and the seller could contract in writing to hold a certain amount of the purchase price in escrow to pay for all agreed repairs, and only when everything is fixed to your satisfaction would any excess funds be released to the seller. Make sure you withhold a large enough amount because repairs often cost more than you think they will.

Considering the house next door is a better bargain, it may be better for you to let the sale fall through, as long as you have a loophole under the contract so you can’t be subject to liability for breaching the contract. Will it be very difficult for you to get a loan approved for the lower price of the other house?

[I am a lawyer, but this should not be construed as legal advice because I have not seen your contract and am not familiar with the laws of your jurisdiction.]

I''m here in the UK so things work a bit differently...

If you want to buy a house, you approach a bank that has reasonable rates - in our case we have a tracker mortgage that is fixed at 0.75% above the Bank of England''s base rate - currently 5% (an amazing deal in the current market) - they then assess your income etc and give you an Agreement in Principle to borrow £x amount and fix a term for the deal (normally 3 months).

You then put an offer in on a property - if the offer is accepted by the vendors, then you both apoint solicitors who start the conveyancing process.

This involves the bank doing a valuation and survey, your private survey, all the local searches and a gazillion other bits and pieces. Once everything is resolved satisfactorily you move to ''Exchange''. At this point, contracts are exchanged and the buyers pay a 10% deposit which is forfeit if they pull out of the deal. If either party pulls out at this point they can be sued - but frankly it''s not worth it...

At Exchange you set a date for ''Completion'' - which is when you get the keys to the new property.

Up until Exchange either party can walk away from the table and is liable only for their own costs.

Our situation is that our three month mortgage deal expires on Wednesday - in the past it was fairly easy to obtain a 6 week extension, but right now you can''t. So we either ''Complete'' on Wednesday or the deal is off with the bank.

Because the sellers have basically sat on the backsides and not got things sorted, we are behind in getting to the ''Exchange'' point.

We are offering to Exchange and Complete on the same day for a reduced price (a price that is in line with the current market).

The Bank will honour it''s June valuation, but if we suspend the deal while we look for a new mortgage deal, the new bank will want to value the house again - this is where the vendors are being stupid, no bank will value the property higher than what we are offering right now.

If it falls through on Wednesday it will cost us about $1k in lawyer''s fees...

 

[Pandora II]

Date: 10/4/2008 2:26:48 PM
Author: fisherofmengirly
Oh Pandora, I hope things work out QUICKLY and well!!

If the house next door is listed for so much less, why can''t you make an offer on it, if the sellers of the one you''re looking at aren''t acting quickly enough?

And I had no idea a mortgage could expire! What does that mean?

Wishing you good thoughts, sweetie!!

We might think about putting an offer in next door if this one falls through - but not at the asking price. We''d put one in about $40k under that price.

You can''t offer on two properties at the same time as no bank will give you a mortgage agreement that would allow it.

 

[Pandora II]

Right now, I think the vendors think we are bluffing and are going to let us sit it out over the weekend.

Fine with us - although if we don't have an answer by tomorrow morning, the deal is off as there isn't enough time to do the paperwork and move the money around.

They're not trying to buy at the moment (they're going into rental) so I don't think they appreciate the hell of the housing market and available borrowing.

(Oh, and I know they paid $250k less than our lowest offer for the property in 2004 so they are still making a very nice amount of money on it...)

 

[Rhea]

What a mess! I hope that they give you an answer by tomorrow so that the deal is able to go through.

 

[Pandora II]

Sellers have just offered to drop $30k off the price...

Decisions, decisions....

 

[purrfectpear]

Hold firm. Why would you want to pay more for this house, when you can pay substantially LESS for the same identical house? Think about what that extra $20K could buy. For that matter, as you said, the next door house would probably go for even less than they are asking. I would be hoping this deal fell through and then I would pounce on the next door property myself.

 

[Pandora II]

Date: 10/5/2008 12:19:04 PM
Author: purrfectpear
Hold firm. Why would you want to pay more for this house, when you can pay substantially LESS for the same identical house? Think about what that extra $20K could buy. For that matter, as you said, the next door house would probably go for even less than they are asking. I would be hoping this deal fell through and then I would pounce on the next door property myself.

The house next-door - whilst identical does have a few minor differences that don''t make a difference to the value of the property, but do make a difference to my definitely preferring the property we are offering on.

Things like this property being closer to the river, further from the main road, having a kitchen that needs replacing rather than a new one I don''t like but can''t justify taking out etc

Even if we could offer less on the other one - whilst it would reduce our mortgage, it wouldn''t leave us with much more cash in hand as we''d need to pay a 25% rather than 20% downpayment to get a decent new deal.

If it wasn''t for these things we would have walked away - but financially it makes sense to stick with the best deal we can on this one.

 

[Pandora II]

OMG!

They''ve just agreed to the new deal!!!!

 

[ladypirate]

Congratulations, Pandora!!!!!!!!!!!!

 

[fisherofmengirly]

Date: 10/5/2008 7:03:21 AM
Author: Pandora II

Date: 10/4/2008 2:26:48 PM
Author: fisherofmengirly
Oh Pandora, I hope things work out QUICKLY and well!!

If the house next door is listed for so much less, why can''t you make an offer on it, if the sellers of the one you''re looking at aren''t acting quickly enough?

And I had no idea a mortgage could expire! What does that mean?

Wishing you good thoughts, sweetie!!

We might think about putting an offer in next door if this one falls through - but not at the asking price. We''d put one in about $40k under that price.

You can''t offer on two properties at the same time as no bank will give you a mortgage agreement that would allow it.

Oh yeah, I forgot about that contingency. It was really annoying when we were waiting for our closure to finally go through!!

 

[fisherofmengirly]

Date: 10/5/2008 2:26:07 PM
Author: Pandora II
OMG!

They''ve just agreed to the new deal!!!!

Whoo hoo!!!

Glad you''re happy with the way things have worked out, Pandora!!

 

[Lorelei]

Splendid!!

 

[Elmorton]

YAYYYYYYYY!!!! That is awesome news!!!!

 

[fisherofmengirly]

Tomorrow is closing day, no?

 

[VRBeauty]

A bit mooooooore dust *** * * * **** ** * * *** * **** * * *
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*** * * * * ** * ** * * * ** * * ** * * * *
* * * * * * * * * * * * * * * * * * * *

just in case!

 

[Pandora II]

COMPLETED!!!!

Yay!!!!

 

[msb700]

yay pandoraaaaaaaaaaaa!!!!!!!!!!!!!!!!!!!!!!!!!

congratulations!!!!

now we''ve got to see some pictures!

 

[fisherofmengirly]

Yeah!!!

Pictures, pictures, pictures!!

Don''t stress yourself out with the moving, either. You have a baby in there, girlie!!!

 

[Pandora II]

Now that I have the keys, here's a few details...

We have a 15ft sitting room with enough space for a dining table, a separate kitchen, bathroom and an ensuite shower room in the main bedroom. A second bedroom and hallway with cupboards. The best feature of all is a 26ft by 9ft terrace overlooking an inlet off the Thames and with a view of the Thames.

The property is about 15 years old and Georgian pastiche so it has beautiful arched windows.

This is the view from the terrace at low tide...

 

[Pandora II]

The sitting room - the photo was from the estate agents not mine...

 

[Pandora II]

The terrace...

 

[Linda W]

Wow Pandora, I can see why you wanted that house. It is lovely. I LOVE that view. I would want to sit there every morning and drink my morning coffee and afternoon tea. Love the living room and adore the windows. I bet you can''t wait to move in.



Linda

 

[Aloros]

Oh GORGEOUS! Look at that view!

Congrats, Pandora! I''m so glad you got your house!