Settling or Settlement?

In the weeks leading up to settlement I grew more and more nervous about actually buying the house.  We are taking a major risk buying this house.  I am talking head first dive into the kiddie pool after eating  meatloaf and mac & cheese while no lifeguard is on duty kind of risk.  We stand to lose everything if it turns out that more is wrong with the house than originally believed.  Because of the age of the house it is almost guaranteed that 1. there is more wrong with the house and 2. it ain't gonna be purdy when we find out what it is. 

BJ and I hashed out so many scenarios of things that needed to be improved vs. things that could wait.  Looks like my dream closet kept getting pushed further and further down on the list.  I told them I would even settle for the wire rack kind that you drill into the wall.  My lost out on that one when we were budgeting and statements like "Well, maybe we can just get new windows in Amelia's room and the rest of the house can wait." were said multiple times.  In the coming weeks you will see the projects as they all start up.  Suffice it to say there is no room for luxuries.  Just the major systems are being updated and major fixes to the roof and structure of the house.  We knew this after the home inspection.

The home inspection that typically happens in the home buying process was done for this house, but we did it only to confirm what we already knew from previous home inspections from the multiple people who had submitted offers on this house over the past two years and had those deals fall through.  What the report should have stated was what was functioning in the house.  The inspection took about 5 hours to complete.  I actually left 2 hours in because I had a baby with me in an old dirty house.  I left feeling like we may be making a bad decision. We stuck it out though. 

By the time we made it to settlement I had signed my name on 2,341 versions of disclosures, initialed 79,887 times, and eaten 2,000,000,000 M&M's while waiting in the conference room at the attorneys office.  And we had not even signed the settlement papers yet.  BJ was late.  He is directionally challenged. He called me cussing really loudly.  Unfortunately for him, my phone volume was turned up and everyone within earshot heard his tirade of how f*$#ing outragous it was that a firm of that size was so far out of he g@# d^$# city and who the f#$% even gave this directions.  Needless to say he was not happy.  By the time he got in the room he was mad, hot, and late.   It was a hurry up and go slow situation thought.  Our lender was waiting to hear back from FHA on some of the loan documents.  We sat in the room with the seller's son (Power of Attorney), the settlement attorney, and our respective brokers just waiting.  Two hours later we had signed our lives away along with a majority of our savings.  We walked away with the keys to the house and the original blueprints to the addition put onto the house in 1916.   Too late to turn back now!

Going in for the Kill

Now we never thought that we would get this house for the price we wanted to pay for it.  The original asking price when the house first went on the market was around $450,000.  That was almost double our price point.  As months ticked by, however, the house was shown to hundreds of people who all loved the potential, but not the price.  They didn't want to take on the structural issues, the roof, the electrical revamp, and the lack of air conditioning.  Truthfully, neither did I.  I never wanted a project house.  I though that if I was going to stretch my budget, it would be to pay for renovations that someone else had already done for me.

BJ and I went back and forth with structural engineers, family friends, general contractors, all giving us prices of things that had to happen during the first phase of the project.  We narrowed it down to 3 lists:  Must Haves, Wish List, If We Win the Lottery.  The must haves were no glitz and glam.  My dream closet would have to wait until we won the lottery apparently.  We had to focus on getting realistic quotes from actual contractors to know exactly how much we were going to need to budget, and also, how much we could afford to offer for the house.

By this time we had already gotten involved with our mortgage guy to discuss the FHA 203k loan program.  I am not FHA expert, but essentially it is a loan that gets wrapped right into your mortgage from the bank.  The funds from the loan go towards making renovations and other major upgrades such as those we are making.  It is highly regulated by a loan supervisor and subject to a home inspection every single time the contractor submits to take his "draw", (a.k.a get paid).  The process has been pretty easy to navigate so far, but FHA does have a lot of regulations that you must adhere to in order to pass inspection.

Once all the numbers came in, this is what we had in front of us to work with:

• Roof fixes -anywhere from $3,000-$30,000.  Thank you for that narrow range.
• Structural - Approx. $10,000.  I asked you for real numbers here, people.
• Install central air and convert from oil to natural gas-$25,000
• Electrical overhaul-$20,000
• Remove plaster on 3rd floor, insulate and replace with drywall-$8000
• New windows (as many as we can with budget) -$10,000
• Kitchen-$10,000
• Bathrooms-$5,000 x2
• FHA requirements for asbestos and lead paint abatement: $2,000

GULP.  So with that I could offer the sellers $100,000 for the house.  No, just kidding.  But that is what I wanted to offer them.

We had conference call after conference call with our mortgage guy to go over numbers.  He gave us monthly estimated payments based on different offer prices and interest rates.  He calculated PMI and all kinds of other acronyms that I cannot remember.  But in the end I looked at my husband who was drooling over this house and I said, "We can do this."

We devised a strategy for our low ball offer that we were going to throw at the sellers.  It consisted of predicting what they would counter with, and then what we would finally end up buying the house for.  Our initial offer was $35,000 under asking price.  Yeah, we went that low.  The intention was that we would eventually negotiate to about $10,000 under asking price.  We put in contentions for the sale or rental of our existing home and for settlement to be 90 days from the date of the offer.

On March 4, 2012, we submitted our offer.  We would later find out that another person who had not been working with a specific agent was also feverishly trying to submit an offer that day.  Unfortunately for him, by the time he got in touch with someone to write up the offer, the seller had already negotiated a counter offer to us.  Sucks to be him.

When we got the counter back we thought they forgot to make changes.  Our offer price was accepted.  The only counter was that settlement happen in 60 days and we remove the contingency to sell or rent our house.  Holy crap!  They accepted our offer price!

The Hunt

After the last detective left, so did the baby and I.  We went out of state to my mother and father's house.  BJ stayed behind against my wishes.  But I could not stay away long.  I had a newborn who needed her own little place in the world.  And she also needed her Daddy. 

Neither BJ or I felt safe.  I was still on maternity leave so when I eventually returned to the house, I was there with the baby all day long.  It was winter so taking long walks or hauling her out into the cold was not a good idea.  I was a prisoner with a crying baby all day long.  We stayed upstairs in Amelia's room at the back of the house just in case the bad people came back to wipe away witnesses. 

After one week of sequestering, I'd had enough.  I wanted to enjoy my maternity leave, not constantly duck as I walked by windows with my baby.  So I started to look at the emails that I received on a daily basis already with homes within my price range in the zip codes that I wanted to live in.  I always kept my eye on real estate just for curiosity sake.  As I looked at the search results I saw at the top of the list, sorted from highest to lowest price, was my house.  Our house.  Amelia's house.  The family had just lowered their asking price for the 4th time in over year. The latest one put us at the top of our budget, but it was doable.  I loaded up the baby and we drove over to the new house.  The outside was as beautiful as the pictures.  While sitting in front of the house I called the agent to schedule a showing.  We were set for that weekend.

Our showing turned into our first "date" away from the baby.  Before we went into the house the agent showed his exhaustion with showing the house to people who "just fell in love with it from the pictures online."  He told me that was what everyone says.  He then told me that the pictures made it look a lot larger then it really is, and to be prepared for the amount of work that needs to be done.  BJ and I share a look before we stepped through the door as if to say "How bad could it really be?"

So for some background.  This house and its property dates back to 1663.  There have been 15 owners, including us.  It was once called Clearview Farm and Plantation. We have a straight view down hill across the one acre lot and over the large river that forms the border between us and the neighboring state.  Its an amazing view.  Previous owners were Swedes who came over as ship builders.  More recently, a former owner included a prominent local men's clothing store owner.  In fact, our street is actually named for him. 

Back inside the house, we very quickly realize what the agent meant.  The house had been vacated 2 years by an elderly woman who went to living in a nursing facility.  In her place every fly, any, spider, and wasp this side of the Mississippi came to live in the house.  And this was in winter, too.  The living room had an odd smell, but an even stranger configuration.  It has one large main fireplace that really is the main focus of the room.  On the other side of the room is a corner fireplace.  Thea beauty in the shape of the room, however, is house when the front and back doors are open, you look right through the house to the river.  Off of the living room to one side is a large sun porch that spans the depth of the original part of the house.  To the other side you head deeper into the house and into the"newer" section.

The new section of the house was built in 1916.  We have the original architectural plans for the addition.  On the first floor this includes the dining room and the kitchen.  In between the dining room and the kitchen is the butler's pantry, complete with original cabinetry.  Gorgeous, unpainted, what appears to be handmade cabinetry.  LOVE.  What I don't love of this new section is the kitchen.  There really isn't one.  Its bad.  There is a washer, dryer, stove, farmhouse sink, fuse box, and mouse poop.  That's it.  Or is it?  When we looked in the area that appeared to be the pantry, SURPRISE!, a toilet.  What?  Well that will have to be removed.

There is a back staircase in the kitchen that takes you up to what was the servant's room and bathroom.  Next to that is a bedroom, and then finally in the back corner of the house is another bedroom.  Making a right down the hall you walk past the main staircase and the main bathroom before arriving at the nursery and the master bedroom.  The nurser has a fireplace in it and will be converted to the large walk-in closet for the master bedroom.

There is a 3rd floor.  And this is where it got a little scary.  The agent gave us a warning here, too.  There was a roof leak, and it was active.  It had been for some time.  No one has done anything about it.  The third floor walls were covered in water stains.  There are two rooms and a large closet up there that were in desperate need of repair.

You would think that we should have run for the hills screaming.  Instead, we lined up our projects and called our mortgage guy.