Wednesday, May 31, 2006

House 3: My Signing Scheduled

I hadn't heard back from the escrow company by mid-afternoon, so I decided to give them a call. Turns out, my escrow officer is out of the office the rest of the day because his grandfather's health is failing. His assistant has "put my file on top of his desk" and I've made an appointment to sign the papers at 11 AM tomorrow. We close on Monday, but I'll be out of town then and my Friday is rapidly filling up as well, so I'm running out of time to sign.

I still have not heard back from my agent, either by email or phone, as to the status of the buyer's loan and appraisal. I'm a bit nervous that things are going to fall through. If you recall, we will likely need to adjust the sales price of the property based on what the appraisal comes back at. This has still not been done, yet I am supposed to sign docs tomorrow morning.

Oh... It appears I never posted about that, although I referred to it yesterday. So no, you don't recall.

After we educated the buyer's help that their strange contract addendum was not required, they went ahead and started the appraisal process. The next day, we found out the buyer's mortgage broker spoke with several appraisers and all of them said they would not be able to justify the $205,000 price. The highest any of the appraisers could go would be $193,000, based on a quick examination of comps in the area. Since at this point, I am just looking to get rid of this place, I agreed that my absolute lowest sales price would be $193,000. I will still kick back 3% plus the $3,000 to cover the stuff in the home inspection, plus $350 for a new stove. The buyer agreed to this and the appraisal was ordered. We put the $3,000 and $350 in writing but were holding off on adjusting the sales price in writing until the final report came back from the appraiser. That was about a week ago and I have not heard anything since.

Tuesday, May 30, 2006

House 3: Less Than 1 Week Left

I spoke with my escrow officer today to see if the closing, which is scheduled for Monday, is on track. Unfortunately, his response was a bit disappointing. He said the file was on his desk and he was planning on starting work on it in a day or two. This is what I hate about title companies. They've had this file for three weeks and they haven't done a thing with it yet. What will happen is they will suddenly need stuff done at the last minute and the buyer and seller will have to scramble like crazy. But the good news is I know to expect this now and shouldn't get too stressed out when it happens. The only problem here is I will be out of town on Monday, so I need to get my signing done before then. I told this to the escrow officer, who originally wanted me to come in on Friday, and he said he'd give me a call tomorrow to set up an earlier signing time.

I was hoping to learn something about the loan status of the buyer, but haven't heard anything on that. I'll need to talk to my agent. We also need to put the lower appraisal-based purchase price in writing.

I also stopped by the property on the way in to work this morning and was pleased to see the place is still standing :-) No more break-ins or vandalism, either. Hopefully, this will continue until at least right after escrow closes.

Tuesday, May 23, 2006

House 3: Increased Police Patrols

I called the police department today and spoke with an officer in the Community Response Office and told them what has been going on at my property. They filed a request for increased patrols in the area. This doesn't mean they will guarantee increased patrols, but it does mean that whenever the police have some extra time, they are supposed to spend it patrolling the neighborhood. Hopefully, that will help cut down on the crime.

Monday, May 22, 2006

House 3: Can't Get Rid Of It Fast Enough

My handyman called me Sunday afternoon. This was not a good sign, since he was finished repairing the window and back door on Friday. He was in the neighborhood and drove by the house just to check it out and he saw someone had pulled out the window air conditioner unit from the converted carport. He said it didn't look like they broke into the house, but just pulled it out from outside. He's stopping by today (Monday) to board up the hole and, the day escrow closes, he'll put a new unit in. No sense in putting another one in now, just to have it get stolen again.

In the meantime, I'm going to buy a couple cheap lamps and some timers and put those in the house to at least give the impression someone is living there. If all goes well, I'll only have this place for 2 more weeks, so I just need to hold the thieves at bay until then. Of course, I don't think there is anything left to steal, so now it's just vandalism I'm worried about.

I'm also going to call the police department and ask for increased patrols in the neighborhood.

Wednesday, May 17, 2006

House 3: Burgled Again!

My agent called me yesterday with the results of the buyer's inspection. The buyer basically faxed over the inspector's report and wants everything fixed. That's not going to happen. But the scarier news was the inspector called and told us the house had been broken into. They only stole the new stove that I just put in - that's about all that is in the house anyway. That by itself isn't a big deal. What scared the crap out of me however, was what else the inspector told us: whoever stole the stove, turned on the gas outlet and left it open! The place smelled of gas when the inspector showed up. I am incredibly lucky I still have a house to sell.. Thankfully, the last time I was there, I turned off the pilot lights on the two gas wall heaters - one of which is on the opposite side of the wall from the gas outlet. The water heater pilot light was still burning, but the inspector said there was inadequate ventilation in the water heater cabinet and that actually kept the gas out. The thieves got in through the back door at the laundry room by kicking it in. The inspector shut off the gas and locked the place up the best he could.

I checked it out this morning and it was not as bad as I feared. The stove was gone and the back door was kicked in, but the door itself appears fine. The door jamb is splintered and that will need to be replaced. No gas smell was present, but I turned off the pilot light on the water heater, just to be safe.

Now, on to the list of stuff the buyer wants fixed:

The roof shows signs of unprofessional repair and cracking. It shows exposed nails and is missing some drip edge flashing on one side. In addition to getting these things fixed, the buyer wants a roof certification.

The plumbing is mixed copper and galvanized pipes. The water heater had corrosion on pipes and valves. The TPR overflow pipe did not extend to a safe location outside. (Deja vu - this is very similar to a problem I had with the heat pump condesate drip pipe on the first house I sold.) Two supply pipes were not clamped to the wall.

Two rooms did not have cooling or heating at time of inspection. (Meaning there are no vents in those rooms, not that the airflow into those rooms is blocked.) The evap unit only worked at the high cool setting.

The main power lines to the building are in contact with tree limbs - contact the utility company to fix. The GFCI outlet and kitchen did not test properly. The conduit at the main panel is not clamped to the wall. Three pronged outlets did not test as properly grounded.

There was broken glass at one bedroom window. Bathroom door jamb had damage. The room laundry room door jamb was damaged. The rear sliding door dual pane only has one pane. The back windows at the room addition were missing latches.

The laundry sink faucet leaked. The dryer vent was damaged.

The kitchen cabinet doors have damage.

Some of this stuff is the most ticky-tack stuff I've seen. For instance, the kitchen cabinet doors. All I can see is one door that has some wood chips out of it. However, this was painted over and it was in this condition when the house was for sale. And the reason there was glass at a bedroom window is because someone threw a rock through it. Yet, the report does not mention the hole in the window!

Anyway, the buyer is cash poor - hence the 100% loan to purchase and the 3% seller's contribution he wants from me so he can pay his mortgage broker and others involved in the process. I did a recorded documents search on the buyer and came up with nothing, so I don't have much info about him. However, he is obviously cash poor, so I instructed my agent to make the following offer: I will fix the back door jamb and the broken window. I will give the buyer $350 at closing for a new stove. I will also give the buyer $3,000 at closing to fix everything else. I'm hoping this guy will realize he can do the work himself and pocket a nice chunk of change. We're presenting this offer verbally first, to see if it will fly. If it does, we'll write it up. If not, I'll submit a list of things I will and won't fix.

This will probably be the last time I buy in a lower income part of town.

Thursday, May 11, 2006

House 3: May Fall Through (Updated)

I just found out that the buyer's lender found out this property was a flip and they want an addendum to the contract. The addendum states that I will sell the house for whatever the appraisal comes back at (or $205,000, whichever is less) AND I will still contribute 3% of the price.

There is no way any seller in their right mind would agree to this. Suppose the appraisal comes back at $175,000? I'm not going to agree to sell the property for an unknown amount determined by some stranger that is paid by the buyer. That conflict of interest seems pretty clear to me. My agent thinks the buyers will have to back out if I don't agree, but so be it. I rejected the addendum and my agent is moving the listing status back to active.

Update: Things are changing by the minute. My agent talked with her broker about this addendum and we all agree it's poorly written and there is no real need for it. The addendum actually states that if the appraisal comes back for less, than I will still contribute 3% towards the selling price. It doesn't actually specify a selling price and leaves things very vague about what happens should the appraisal not match the selling price. But this is unnecessary because the standard sales contract already includes a clause where if the appraisal doesn't match the sales price, the parties can renegotiate or cancel the sale.

How funny! I just got another call. Turns out, the buyer's agent didn't know that the standard sales contract was contingent on the appraisal! They are happy with that and are ordering the appraisal now and are moving forward without the addendum. I asked if this was a new agent and my agent said it was. And it was the buyer's mortgage broker that asked for the addendum to be written in the first place. So it appears we were just dealing with some uninformed people. Once things were explained, the problem went away.

Wednesday, May 10, 2006

House 3: Insurance Obtained

I've got another company to insure the property from May 15th, when my current coverage expires, until I sell the place. I just did an online search and pretty much chose a company at random. I have to pay for a year, but since the house is selling soon, I'll get most of that back when I cancel the policy. The company I got was about $100 more per year than what my current insurance company charged me, so this exercise provided a nice little verification that my current insurance provider has decent prices.

Tip: Remember to either get the policy in the name of your company or, if the insurance company won't do that, get your company listed as an "additional insured" on the policy! Protect yourself legally from having the "corporate veil" punctured.

House 3: Sale Moving Forward

Last night, I faxed my agent the Seller's Property Disclosure Statement and Lead Based Paint forms. That should be the extent of the info I need to provide the seller.

I also contacted the escrow company this morning to make sure a couple things were clear. I mentioned that my title insurance policy should be the same as the one I bought last time, since I paid extra to hold the policy open. I confirmed I was getting investor rates. We also discovered the escrow write up was done incorrectly - it listed me personally as the owner of the property, instead of my LLC. That was corrected. They told me there was no need to fax them my Articles Of Incorporation since they have the copy from when I bought the house. I also mentioned I will be out of town on the closing date, which they said was no problem. And finally, I got the escrow number for my reference. Oh, I will need to provide them with my bank account information so they can wire the funds to me.

The next step in the sales process is for the buyer to have the property inspected and to present me with a list of items, if any, they want me to fix. They have until the 16th to do this.

Monday, May 8, 2006

House 3: A Double Dose Of Not So Good News (Updated)

A while back, I got notice that my insurance company was canceling coverage of this house, effective May 15. I had asked my agent to see if there was a way they would extend coverage until it was sold. I had not heard back from him yet, so I sent him an email over the weekend. This morning, I got a reply. They will not cover the property based on the condition of the rear patio and roof, not even until it is sold. So that leaves me without coverage for approximately three weeks, assuming escrow closes on schedule. It's tempting to just let the coverage lapse and go without insurance for those three weeks, but that's too great of a risk to take. I'll have to start shopping around for another insurance company.

The other bit of bad news was that the title company I want to use does not have a Spanish speaking person on staff, which my buyer needs. The only reason I want to use this title company is that when I purchased the house, I bought an option to keep the title insurance policy open so that when I sold it again, I wouldn't need to buy a new policy. I've emailed my agent and told her the situation. If the buyer is willing to pay my title insurance costs, I will be willing to use whatever title company they want.

Update: My agent said she didn't feel like dealing with changing title companies, so she called the title agent directly. It turns out the title company has a mobile agent that travels around. This person speaks Spanish and can go wherever the buyer is to get the documents signed. Sweet!

Friday, May 5, 2006

House 3: Sold!!

Just got the word that my counter offer was accepted! The house is sold! The only condition is that the title company I requested be used have a Spanish speaking employee to translate for the buyer. I'll check on that on Monday.

One more oops - I neglected to notice that I will be out of town on the day we are supposed to close escrow, June 5th. I'll be in Los Angeles seeing a Springsteen concert :-) I should be able to get all my stuff done early though, so it shouldn't be a problem.

House 3: Offer Received

An offer came in last night at around 9 PM. The agent's cover sheet said the buyers fell in love with the house and will work to make the sale happen. I have the house listed at $199,000. They offered $205,000 with me contributing 3% towards the purchase - meaning their offer is really for $198,850. They also want me to pay for the appraisal and home warranty. I'm going to counter back that they pay for the appraisal and warranty. The only drawback to their offer is that the buyers are getting 100% financing, so there is a chance the sale could fall through if they are not approved. I'll have to review the financing disclosure in detail to see their loan status. On the plus side, however, they are putting up a $1,000 earnest money deposit.

Thursday, May 4, 2006

House 3: The Wait Begins

My handyman contacted me yesterday to say he picked up the gas flex hose, connected the stove, and tested it. All is working.

No offers yet, but the house hasn't even been listed for a full week yet. I'm estimating it will be on the market for a month before it gets sold, than we'll have another month in escrow.

Tuesday, May 2, 2006

Not That I Would Ever Do A Shady Deal..

.. but I like this Dilbert: (click to enlarge)

Monday, May 1, 2006

House 3: Before And After Pictures

Here are some before and after pictures of House 3. The original Before pictures were part of this post, but I've reposted them here for comparison. Unfortunately, I did not take any before pictures of the outside of the house. I also tried to take pictures from the same perspective, but I didn't always succeed.

Entryway / Family Room
The archway in the after pics is to the right in the before pic.



Converted Carport Room






Through Archway



Bedroom 1



Bedroom 2



I did not take a before picture of the bathroom, but here is one after it was redone:

Here are a couple pictures of the front and back yards:

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