Monday, November 17, 2008

Big Week

We've made an appointment with a real estate agent this week (I believe Realtor ® is the preferred designation--great excuse to make that "®" sign!) to come and tell us our bottom line: what is the top dollar amount we can expect for this house if we put it on the market now, as-is, still needing some cosmetic repairs and paint? And how much more will we get if we wait until those repairs are done? We'll be talking to a guy who lives in our Zip code and has been doing business in it for nearly 20 years. His name is on virutally every For Sale sign around here. If he can't give us the real 4-1-1, nobody can.

You may wonder why we hadn't taken this step earlier. Honestly, we didn't think we had to yet. The shock we had a week ago today, to which I've only alluded because I was still absorbing it, was that the bank doing the construction loan suddenly pulled the plug. Unbeknownst to us, our mortgage broker wasn't being straight with them, or with us. As settlement day approached and we were learning more details about the documentation the bank required to process the loan, we realized we were coming up short. We had no signed builder's contract, for one thing, and no "draw schedule"--an agreement between the bank and the builder as to how and when funds would be used. Our plans were nebulous because we knew we had to wait until this house sold before we could start building the new one, and the broker had led us to believe that the bank would roll with that ambiguity. Well, no.

An unrelated phone call I made to the bank, which led to a few questions from them I found odd, thinking the bank should already have those answers from the broker, made it clear that the broker was treading a fine line just this side of fraud. When the broker started telling us, "Don't worry!" but was foggy on details, that's when we should have started worrying. She was building a house of cards that was bound to collapse, and the one thing we're grateful for is that the inevitable happened before we were all seated at the settlement table and thousands of dollars had been committed.....

Anyway, this setback has forced us to re-group and take some logical steps we now see we should have taken earlier. The commitment letter we have from the bank is good for six months, or until the first week in May. We know what our window looks like now and have our marching orders. Ergo, the question: will we get enough for the house now, showing it "as-is," or do we wait and do the repairs? Given the time frame, the quicker we can sell, the better. But given our needs, the more we can get for the house, the better. This week, we hope to learn in which direction those marching orders will be sending us.

Living on the edge. I thought I'd left that behind when I turned 26 and could no longer be drafted. Well, at least it's a familiar feeling!

4 comments:

Zoey and Me said...

If you are putting your house up for sale, don't invest anymore time and money in it. That would be my advice. 1) you may not get it back value wise and 2) if you paint it, it will always be the one color the Buyer hates. That's Mr Murphy at play. Price it within 5% of the comparables and you should do OK. I think the D.C. area is wildly invigorated with the newness of his O-ness coming to town. With him, a thousand will follow and they will all need housing. Arlington is almost walking distance to the DC line. It should sell.

Ralph said...

We shall see, Z&M. I just had an initial conversation with the agent. Our zip has had more foreclosures than any other in Arlington. On the surface, comps for us don't look as good as we'd wish, but we'll get the full MA tomorrow. I asked him specifically about the effect on the DC real estate market when a new administration comes to town--whether it's just a dearly-held local urban legend or it's true there's an uptick. He said in his 25 years working in these close-in suburbs, he hasn't seen a surge in these middle-value homes. The bigwigs will go to McLean and Potomac. The rest often rent till they get their bearings.....


He loved the house and was impressed with the work we've done, saw no huge negatives. It'll boil down to what the market will bear.

Zoey and Me said...

We can't use foreclosures as comparables here in Florida. It might be the same up there, you could ask. Only arm length transactions, real numbers, can comp a property, even for banks foreclosing. The fact that your zip has more than others means very little other than some people are getting deals. Just don't get talked into giving the house away. Even in a market downturn most homeowners make money, just not a lot of money. FHA, VA should be hot up there. Those buyers will pay for a nice place to live. And don't forget: Location, Location, Location.

Ralph said...

But "getting deals" on foreclosures has its effect. Those depressed prices tend to depress all the others. We won't "give the house away" because we can't. There's a floor on our potential profit we can't go below without the entire Delaware deal becoming impossible. We should get much to think about tomorrow.