Jun 15, 2011

The Long and Winding Road of Real Estate

I've hinted at it before, but I realized I never fully shared the story of our real estate journey and how we ended up being homeowners.  It was a long, stressful and painful process; and honestly I think it's just taken this long (a year!) for me to recover emotionally enough to share the story publicly.  And I do want to share the (rather long) story because I hope it helps other people who are going through the same thing.  So I decided, in honor of our blog's anniversary, it was finally time.  At least our story has a happy ending (obviously).

Basically, real estate in NJ sucks for first time home buyers.  It really does.  I know across the country everyone has been touched by the housing crisis and there's still a lot of frustration still out there, but the market in Northern NJ remains very expensive.  Yes prices have dropped - significantly - from their peaks, but at the same time prices still remain incredibly high compared to most of the country.  In nice NYC commuter towns with train stations, highway access and good schools - prices haven't moved that much.  And of course those were the towns we wanted to live in.

We started looking in June of 2009.  We didn't find our house until mid-April 2010 (and didn't close until June 1st).  We looked at least 50 houses, bid on dozens, and went under contract three times.  It was an emotional roller coaster.  The biggest problem was that we were scraping the bottom of the barrel for houses - the lowest of the low-end homes on the market.  The fixer-uppers, the ridiculously small, the foreclosures and the short sales.  We wanted a yard so condos were out, and we didn't want to go above our self-set price cap because we didn't want more mortgage than we could handle.  At this entry level price point, in a densely populated state and highly desirable area, it was VERY competitive.  Throw in the federal housing rebate of $8k, and it was downright cutthroat.

We would look at houses that were in terrible shape and needed a ton of work, put in an overpriced offer, and we would still get outbid.  Or we would overbid and lose to someone who came in with a suitcase full of cash (true story).   Or the house would need more than a hundred thousand dollars worth of work to be livable and the owners, still not believing in the housing bubble, wouldn't budge on a dime (and why would they when it was so competitive out there?).  We saw houses where I swear there was a body in the basement.  Or was about to slide off a hill.  Or had massive water damage.  Or was so creepy it was most definitely haunted.

In late August of 2009, we saw a charming ranch with a cute little yard in Summit, NJ on a quiet side street.  We fell in love.  The owners wouldn't budge on price, but it was still within our budget so we offered asking and they accepted.  And then things started to go to hell in a handbasket.  The house was actually part of an estate owned by four women (retired daughters of the owner who passed away), two of which wanted to sell, one that was on the fence about selling and one that didn't (who happened to be living in the house).  And they were CRAZY.  Pardon my French but bat-sh*t insane.  This is still hard to talk about because it was so difficult, they made ridiculous demands and were completely unreasonable.   Their mother's bedroom was kept as a shrine, something we didn't realize until we started coming back for the various appointments.  They always insisted on being home when we were there for things like the inspection and appraisal (so we wouldn't steal their Precious Moments figurines) and made the appointments almost impossible to schedule.  The one who was on the fence about selling actually screamed at me (yes literally) about disrespecting their mother's memory, though I of course did nothing of the kind.  It was awful.  She even changed her mind about selling to us out of pure irrational hatred, but to break our contract it had to be unanimous.  And I was in love with the house so we kept persisting.  At the time it was one of the nicest we had seen - 3 bedrooms, 2 bathrooms and a full finished basement.  It still needed tons of work, but it wasn't falling down and was mostly cosmetic.

We fought tooth and nail to stay under contract for months.  The crazy sisters were making it almost impossible to stay sane with all their demands.  It got to a point where I was crying from stress more than I care to remember (i.e. every day).  It was horrible.  Yet we persisted, because we loved the house.  We kept telling ourselves it would all be worth it once we were homeowners.  Then, two weeks before closing, everything fell apart.  Our apartment was packed, the lease was up.  The appraisal finally came back (after being prevented/postponed by them over and over for weeks) and it was too low for us to qualify for our mortgage.  We had to make up the price difference.  One of the problems was that there were no permits for the bathroom in the basement.  Without permits they couldn't count it to bring up the value.  The crazy sisters refused to get permits and refused to budge on the price.  If they were willing to meet us halfway, we would have borrowed the money to make up the difference, but of course they refused.

We had to walk away.  And we were completely and totally devastated.

Luckily our apartment hadn't been rented to anyone else, and thanks to a sympathetic ear in the rental office they modified our rental agreement.  We unpacked and took a two month break to nurse our wounds.  I couldn't believe we had lost the house.  We did everything right, we persevered, and we still got screwed.  We were out thousands of dollars and it felt completely unfair.  Things like that aren't supposed to happen to good people.

Months later we found out that we actually dodged a bullet.  Everything happens for a reason and we were so lucky that we didn't get the house!  In January of 2010, the laws in the town changed and so that all permits had to be closed to complete a house sale.  The sisters had to let the town plumbing inspector come in and open up their walls, something a regular home inspector cannot do.  And the plumbing inspector did not like what he found.  In fact the inspector condemned the bathroom and told them that if they didn't rip it out in 30 days the whole house would be condemned.  Whatever he found, it had to be pretty bad.  And these women were so crazy that they actually wanted to raise the price of the house to cover demolition costs (even though they would be down a bathroom and the house value was still too low for the asking price!).  With that news we were finally at peace over the loss of the house and actually felt very relieved.

By the new year more houses were on the market and we started up again.  More houses, more dumps, more bids.  We actually found a house in the same neighborhood as the ranch in Summit (so close you could SEE the house we almost bought) - it was mostly redone inside, a foreclosure from a builder who ran out of money.  It was much nicer and cheaper.  We were so excited.  We overbid (bidding against 20 other people in the 3 days the house was on the market) and lost.  Then the people who won the house backed out and we were next on the list.  We were so excited until we heard the bank's demands - we had do our mortgage through them with lousy rates and terms and we had to sign their contract within 24 hours, which they didn't send over until 4 pm on a Friday afternoon. They also said we weren't allowed to change anything even if our attorney didn’t like it.  And it was a horrible contract - somehow we got it in front of our lawyer before he left for the weekend and he had one word for us: "RUN."  So we did.  But not before falling in love with this house too.

The rest of the winter was a blur.  More houses, more bids, more disappointments, more losing out to people willing to pay asking price in cash on places that were falling apart and overpriced.  We grew bitter.  By early spring we were tired, running out of steam and time was running out for the April 30th tax rebate deadline.  We were frustrated and starting making backup plans to stay in the apartment.  We were losing faith that we might never find the right house at the right price, though we were hoping that once the tax rebate deadline expired, the competition might cool off a little bit.

In mid-April, just as we were ready to take another house hunting break, there were a couple new houses that came on the market.  Our realtor said they were both in the same neighborhood, similar layouts (1920's colonials), both estates and both owners eager to sell.  They were at the top of our price range, but we figured it was worth a look because they were in an ideal location.  We made an appointment with our realtor, but then Mike was called away to work at the last minute so I went alone.  The first house was nice - a very similar layout to the second (with a stained glass window and sun room) but had a very small yard, only one bathroom, and had the washer and dryer in the kitchen because the stairs down to the basement were too narrow for anything to fit.  The second house had a huge backyard, a half bath off the kitchen, a garage, washer and dryer hookups in the basement, was freshly painted (pink!) and had newly redone wood floors.  I loved it.  I called Mike, trying not to get too excited (since we had been burned so many times before) and told him that I had found a house that had almost everything on our wish list except for 3 things - no central air, no dishwasher and there was a toilet in the kitchen.  We joke that of course the only time I go house hunting alone is when we found our house.

Of course we still had a long way to go, but things went surprisingly smoothly - something that had never happened before.  It really made us feel like this house was always meant to be ours.  Mike came and looked at it, loved it, and we put a low bid on the house.  Amazingly there were no other offers.  It was the first time, after dozens of other bids that we weren't competing with other people.  Then it was negotiating time and we won a game of chicken without even realizing we were playing.  The owner responded to our low offer with a rather high counter and said take it or leave it.  We responded by going up a little bit and said take it or leave it.  The owner said “no,” and we walked away because we were so used to dealing with crazy irrational sellers that we assumed she was serious.  And then while doing some grocery shopping I got a call from my realtor - the owner of the house (the niece of the woman who had lived there until she passed away) accepted our offer.  I did a mini victory dance next to the tomatoes but didn't let myself get carried away - we'd been at this point before and still been burned.

From there though, things went the way normal real estate transactions are supposed to go.  We even made the tax rebate deadline!  The owner was actually a nice person (imagine that!) who actually cared.  The house was well loved and maintained.  The inspection only found minor things and the owner was willing to fix half of them without issue.  The appraisal (the part we were most frightened of) also went well in the end.  Everything moved along the way it's supposed to in a normal transaction.  It was so easy in comparison to what we'd been through.  We packed up our apartment for a second time and gave the landlords notice that we'd be moving out at the end of June, giving ourselves a month to fix things up and move.  We closed on June 1st and the rest is history.

The point of the story is that everything happens for a reason.  I really, truly believe that.  It was hard, but we just had to keep going and have faith that our house was out there somewhere.  And it was.  We just had to be patient until it was ready.  And the house we ended up with was significantly nicer than anything else we looked at and we're so happy it's ours.  So to anyone else who's struggling in the current real estate market - just keep going.  The house that's meant to be yours is out there somewhere, it just might be a bit of a long and windy road to get there.


  1. Thank you for sharing this story. My husband & I have been house hunting in St. Louis for 6m+ & we're having a hard time. Under contract 2x & walked away 2x after bad inspections. We're a family of 3 about to be a family of 4 & the pressure to find a bigger space is unrelenting! Losing houses we loved is heart breaking. Glad to know we aren't the only ones.

  2. We bought during the peak. It was so hard and so competitive... we lost so many houses and when we finally got one we were so happy - until the market crashed and now we're underwater!