My loan funded on the ninth. It began to feel still more real. I contacted the post office with my address change, and started getting quotes on housecleaning. I had a feeling that I might need it once the tenant vacated.
For a while I'd been planning on joining up with Angie's List for at least a month or two. If you're an NPR junkie like me, you've heard endless ads (er, "underwritings") from them. It's basically a more elite, homeowner-oriented version of Yelp... the philosophy seems to be that, if you charge people to enter, you keep out the riff-raff and are left with more "real" reviewers.
I found myself cross-referencing both Yelp and Angie's List for some providers, namely cleaners and movers. Others were almost totally absent from Yelp and more visible on Angie's List, like plumbers and electricians. I was a little bummed to see that Angie's List didn't list many handymen, at least not in the very local area that I was hoping to draw from.
I started to work through the logistics of my transition. I had been planning a trip to Yosemite for nearly half a year, and, through sheer coincidence, my departure date was September 11, the day after closing on the 10th. I had given notice to my landlord at the end of the previous month, and so had the whole month to play around with. I decided that I would bring a basic kit of essentials on the tenth, spend the night there, then head out for Yosemite the next morning. After a week of hiking, I would return back to San Jose, spend the weekend cleaning up and finishing packing, then move up to Millbrae.
I was scheduled to get my keys at the end of the day on the 10th. Redfin sent another field agent, a nice woman who I hadn't met before. Again, their model is fascinating... I dig the depersonalization aspect of it, where they would send a stranger in at the end.
The tenant had cleared out all of her stuff, which was pretty impressive, as it was quite packed; she had also spent time cleaning up, and the place looked decent. I picked up the keys, and she pointed out to me the laundry area nearby. It was only at this point that I learned that my unit came with an external storage unit - score! It wasn't anything fancy, but was fairly sizable, and I was happy to realize that I could keep my old school papers and other stuff in there without taking up space in my main area.
I had brought up a sleeping bag, a little food, a flashlight, and a pillow. I spent some time just walking around the unit, giggling to myself, thinking "Mine... all mine!" I called my parents and chatted a bit about how I was feeling. The sun went down, I laid down, and drifted off to sleep.
Since that night, I've spent many more months in my California condo, and I hope to spent many years more. I've gotten to know it better, started to make it more and more my own. I've been pleased to see how many of the fantasies I'd had about the move - strolling to the train station, shopping at Dean's Produce, taking random walks up into the hills - have become a part of my life. I'm living the dream. It was a long, hard, often stressful process, but I think that by keeping somewhat disengaged from the craziness and deliberately taking my time, I ended up enjoying myself and ending up with something great.
Friday, December 31, 2010
Friday, December 17, 2010
Kicking & Screaming
The last thing I had to do before getting my keys was conduct the final walkthrough. It's generally a formality. The idea is to check and make sure that the property is still in the same condition as when you agreed to buy it: you can check and make sure that the owner didn't tear out the stove, or knock a hole in the closet, or whatever.
In my case, because the loan was funding on the 9th, I had to do the walkthrough before then, even though the tenant wouldn't be moved out yet. This isn't ideal, but is better than the alternative of finding out too late about something bad which had happened. We eventually scheduled it for the Tuesday after Labor Day.
I showed up at 9AM to find Matt in an animated conversation with the tenant. Apparently, the listing agent or someone had failed to notify her about the walkthrough, and she was kind of freaking out. She didn't want to let us in, because she was in the middle of moving, and had so many boxes out that you couldn't even walk around.
Matt and I huddled; he said he'd contact Regina, who would get in touch with the listing agent and work it out. We were running short on time, and while the walkthrough shouldn't be a big deal, I still wanted to check on the property.
Before heading in to work, I swung by Provident's Millbrae branch. It's tiny, but pleasant. The teller gave me another wire form, which I filled out with Kathy's instructions. Her information didn't completely line up with all of the boxes on the form, so I filled it out the best I could, repeating some information in multiple places. I felt just a little nervous - after all, I was moving a LOT of money, and hated the idea of it disappearing into someone else's bank account by mistake.
Later in the day, I got an email from Kathy, who said that the sellers had indicated while signing that they would be doing a 1031 tax exchange. I was already very familiar with this - several properties I'd been interested in earlier on had been 1031-ing properties, so I had already done all my research on what that meant - but it was still amusing and pretty unsurprising that they hadn't mentioned it before now. I signed the form, sent it back, and asked Kathy if she could check on my fund deposit. She confirmed that the monies (I love that word!) had arrived safe and sound, and I breathed a deep sigh of relief.
The walkthrough got squared away, and we rescheduled for the next day at 11:30AM. The tenant was present, and this time was all smiles and friendly. The condo was almost exactly the same as before, just very obviously in the middle of moving; I did see some scratched paint in the bathroom, but it didn't seem worth making a fuss over. The tenant talked a bit about how nice the unit was, how she wanted me to like it, and asked if I wouldn't mind holding on to a package that she would be receiving in a few weeks.
We walked out, I signed the walkthrough form, and Matt and I shook hands. He mentioned that it hadn't taken too long for me to find what I wanted. I agreed, and pointed out that Redfin really shines in that regard - their awesome website had done a lot to help me narrow down what I was interested in, and combined with my own side research (walking tours of neighborhoods, demographic research, etc.), I had an excellent idea of what I wanted before I even started touring. All in all, a pleasant experience, bumps in the road notwithstanding.
In my case, because the loan was funding on the 9th, I had to do the walkthrough before then, even though the tenant wouldn't be moved out yet. This isn't ideal, but is better than the alternative of finding out too late about something bad which had happened. We eventually scheduled it for the Tuesday after Labor Day.
I showed up at 9AM to find Matt in an animated conversation with the tenant. Apparently, the listing agent or someone had failed to notify her about the walkthrough, and she was kind of freaking out. She didn't want to let us in, because she was in the middle of moving, and had so many boxes out that you couldn't even walk around.
Matt and I huddled; he said he'd contact Regina, who would get in touch with the listing agent and work it out. We were running short on time, and while the walkthrough shouldn't be a big deal, I still wanted to check on the property.
Before heading in to work, I swung by Provident's Millbrae branch. It's tiny, but pleasant. The teller gave me another wire form, which I filled out with Kathy's instructions. Her information didn't completely line up with all of the boxes on the form, so I filled it out the best I could, repeating some information in multiple places. I felt just a little nervous - after all, I was moving a LOT of money, and hated the idea of it disappearing into someone else's bank account by mistake.
Later in the day, I got an email from Kathy, who said that the sellers had indicated while signing that they would be doing a 1031 tax exchange. I was already very familiar with this - several properties I'd been interested in earlier on had been 1031-ing properties, so I had already done all my research on what that meant - but it was still amusing and pretty unsurprising that they hadn't mentioned it before now. I signed the form, sent it back, and asked Kathy if she could check on my fund deposit. She confirmed that the monies (I love that word!) had arrived safe and sound, and I breathed a deep sigh of relief.
The walkthrough got squared away, and we rescheduled for the next day at 11:30AM. The tenant was present, and this time was all smiles and friendly. The condo was almost exactly the same as before, just very obviously in the middle of moving; I did see some scratched paint in the bathroom, but it didn't seem worth making a fuss over. The tenant talked a bit about how nice the unit was, how she wanted me to like it, and asked if I wouldn't mind holding on to a package that she would be receiving in a few weeks.
We walked out, I signed the walkthrough form, and Matt and I shook hands. He mentioned that it hadn't taken too long for me to find what I wanted. I agreed, and pointed out that Redfin really shines in that regard - their awesome website had done a lot to help me narrow down what I was interested in, and combined with my own side research (walking tours of neighborhoods, demographic research, etc.), I had an excellent idea of what I wanted before I even started touring. All in all, a pleasant experience, bumps in the road notwithstanding.
Friday, December 10, 2010
Default Title
California is a very chill state. They're very libertarian, live-and-let-live folks, where people just kind of do their own thing and everyone else thinks that's great.
That same philosophy applies to closing. In other states, closing is a bit of a theatrical production: all the actors assemble in one room, walk through a ritual of signing, papers are passed back and forth, checks are written, and at the end you own a home. In California, it's way more relaxed. In the Bay Area, title companies also handle escrow duties. I could show up whenever I wanted, sign my papers, and be done with it.
We were with Fidelity National Title company. I'm still not clear on exactly how we ended up with them, whether it's the seller's choice, the lender's, or some other decision. Their office was in Burlingame, decently close to the property in question, and also within easy walking distance of the Burlingame train station. I had dropped by there earlier to drop off a check for my 3% earnest money deposit. Now, I ambled over about a week before closing to take care of signing.
There were a ton of documents, but according to my escrow officer, it's actually quite a bit less than normal - apparently Provident isn't as paper-happy as other lenders. We sat down in a conference room and went through it. For each page, Kathy described what it was about and pointed out the most important points, then indicated where I should sign or initial. In a few cases I had questions or scanned to make sure the numbers were right, but for the most part everything was really straightforward. It definitely helped that I had seen a lot of the important documents before, like the appraisal, the Truth-In-Lending disclosure, and so on. A lot of the other stuff was more or less boilerplate: I agreed to pay back the lender, I agreed to keep the property in good condition, I agreed to notify the lender if any adverse action affected the property, and so on.
I initially blanched when I saw some of the fees, but upon further reflection, I realized that they were actually lower than the initial estimates I had received. I don't remember the exact figures, but I think that the lender's title insurance had been estimated at $2100 and my title insurance at $1900; the actual figures were more like $1800 and $1700. There's a lot of dumb stuff in there, like an "email doc fee" of $50, but even with those I was coming in under budget. I'd read earlier that, with the recent financial reform laws and improved truth-in-lending laws, stated fees were increasing because lenders no longer have the leeway to jack them up at closing. Which works for me - under-promise and over-deliver is one of the very best policies there is.
The whole process took less than half an hour. The sellers would be signing their own documents at some other time. The lender would sign the funding documents on the 9th. Everything is written to be contingent on everything else, so once everyone has signed off, stuff just triggers, and the deal is done. Less dramatic, but way more relaxing, just the way I like it.
I asked Kathy about the closing costs. There was a sum - yes, a pretty large sum - that I still had to pay, which would cover the remainder of my down payment and all the fees. This needs to be paid in "ready money", and I had just learned that Provident does not offer cashier's checks. They do offer "corporate checks" and money orders, but Kathy said that neither would work for this transaction. Therefore, I would have to wire.
I've received wires before - it's how Apress handles advances and royalties - but hadn't sent one. Provident has an excellent online banking system, and I tried to use their "Contact Us" section - which includes a helpful option called "Wire Transfers" - to schedule one. They politely wrote back, included a form that I would need to fax or fill out and bring in. Wires over $50k need to be done in person, so that's what I would be doing.
That same philosophy applies to closing. In other states, closing is a bit of a theatrical production: all the actors assemble in one room, walk through a ritual of signing, papers are passed back and forth, checks are written, and at the end you own a home. In California, it's way more relaxed. In the Bay Area, title companies also handle escrow duties. I could show up whenever I wanted, sign my papers, and be done with it.
We were with Fidelity National Title company. I'm still not clear on exactly how we ended up with them, whether it's the seller's choice, the lender's, or some other decision. Their office was in Burlingame, decently close to the property in question, and also within easy walking distance of the Burlingame train station. I had dropped by there earlier to drop off a check for my 3% earnest money deposit. Now, I ambled over about a week before closing to take care of signing.
There were a ton of documents, but according to my escrow officer, it's actually quite a bit less than normal - apparently Provident isn't as paper-happy as other lenders. We sat down in a conference room and went through it. For each page, Kathy described what it was about and pointed out the most important points, then indicated where I should sign or initial. In a few cases I had questions or scanned to make sure the numbers were right, but for the most part everything was really straightforward. It definitely helped that I had seen a lot of the important documents before, like the appraisal, the Truth-In-Lending disclosure, and so on. A lot of the other stuff was more or less boilerplate: I agreed to pay back the lender, I agreed to keep the property in good condition, I agreed to notify the lender if any adverse action affected the property, and so on.
I initially blanched when I saw some of the fees, but upon further reflection, I realized that they were actually lower than the initial estimates I had received. I don't remember the exact figures, but I think that the lender's title insurance had been estimated at $2100 and my title insurance at $1900; the actual figures were more like $1800 and $1700. There's a lot of dumb stuff in there, like an "email doc fee" of $50, but even with those I was coming in under budget. I'd read earlier that, with the recent financial reform laws and improved truth-in-lending laws, stated fees were increasing because lenders no longer have the leeway to jack them up at closing. Which works for me - under-promise and over-deliver is one of the very best policies there is.
The whole process took less than half an hour. The sellers would be signing their own documents at some other time. The lender would sign the funding documents on the 9th. Everything is written to be contingent on everything else, so once everyone has signed off, stuff just triggers, and the deal is done. Less dramatic, but way more relaxing, just the way I like it.
I asked Kathy about the closing costs. There was a sum - yes, a pretty large sum - that I still had to pay, which would cover the remainder of my down payment and all the fees. This needs to be paid in "ready money", and I had just learned that Provident does not offer cashier's checks. They do offer "corporate checks" and money orders, but Kathy said that neither would work for this transaction. Therefore, I would have to wire.
I've received wires before - it's how Apress handles advances and royalties - but hadn't sent one. Provident has an excellent online banking system, and I tried to use their "Contact Us" section - which includes a helpful option called "Wire Transfers" - to schedule one. They politely wrote back, included a form that I would need to fax or fill out and bring in. Wires over $50k need to be done in person, so that's what I would be doing.
Friday, December 3, 2010
We're in the Money
The loan approval came back thumbs-up: I was funded!
By now we were less than a week away from my originally scheduled closing date of September 2nd. Due to all the uncertainty around the deal, the tenant had not yet started moving out. The sellers asked if I could push back the closing date to September 10th so she would have time to relocate. I agreed - I was happier with closing later in the month anyways, and in any case, I was willing to do whatever it took to avoid needing to deal with an eviction.
At last, I let myself exhale and started to believe that this was actually happening. I began taking care of all the little stuff in life that would need to happen as part of my move.
I switched over my electrical utilities. This was all quite easy to do online - it took a little while to find the right options on the PG&E website, but once I did, it was pretty automatic. One oddity was that, while I was turning on the power in my new place on 9/10, they wouldn't let me keep power in my old place later than 9/23. I'm not sure if this is because they don't allow more than a 2-week overlap between services, or if it was because of the date when I was submitting the request. In any case, while I still would have my apartment until 9/30, I was planning on being all moved out by then, so didn't see a problem even if they cut the power early.
Next up was Internet. Again, Comcast lets you shop for stuff and schedule it online, but requires you to complete the order with a chatroom-esque customer service rep. Once again, I was blown away by how positive the experience is. I know that everyone loves to hate Comcast, but they really do have great customer service. They let me order my internet-only package at the promotional price even though I was a current customer and wasn't getting any of the bundled services; and, the rep even knocked my installation fee in half without any prompting. Good stuff. (All their goodwill would be promptly annihilated a few weeks later when I met the Incompetent Install Technician from Hell.)
I'd decided that I would switch over insurance agents as part of the move. For some reason my lender doesn't require HO-6 insurance, but I wanted to get it anyways, because, y'know, it's smart. I scouted for local agents in Millbrae, found one I liked, and started moving stuff over. This turned out to actually be the single most difficult of my various transactions, because my previous agent did not want to let me go. I think it's actually easier to switch between different insurance companies than to switch between different agents in the same company. It took a couple of phone calls and a firm written letter until I got my policies set up with my new agent. (If I had to do it again, I probably wouldn't have bothered. One of the funny things about all this is that, in the more than five years I've been with my agent, this is the first time we've ever actually talked; previously everything was handled through his staff or online.)
Last but not least: the move. I'd thought for a while that I would pay for a moving company. I used to move myself, but it was always incredibly stressful. The last time I moved was from Kansas City to San Jose, and hiring professionals (Allied, in that case) was so great that I decided it would be well worth doing again. Unfortunately, all of my friends and relatives move themselves, so I didn't have any good referrals. Instead I hit up the online review sites (Yelp, Angie's List, Google Local, etc), scouted out a few places, followed up with three (Go Pro Moving, Lunardi Moving, and one other whose name escapes me at the moment), and eventually decided to go with Go Pro. None of the companies was willing to do an an-person binding estimate, which I kind of understand - especially for a 1-bedroom single guy like me who is packing himself, they aren't making a lot of money on me anyways, and so the time it takes to drive out and do the estimate isn't worth it for them.
I decided to wait until later for a few other things - updating the Post Office and my magazine subscriptions, for example. I was now more or less set, and coming down the home stretch.
By now we were less than a week away from my originally scheduled closing date of September 2nd. Due to all the uncertainty around the deal, the tenant had not yet started moving out. The sellers asked if I could push back the closing date to September 10th so she would have time to relocate. I agreed - I was happier with closing later in the month anyways, and in any case, I was willing to do whatever it took to avoid needing to deal with an eviction.
At last, I let myself exhale and started to believe that this was actually happening. I began taking care of all the little stuff in life that would need to happen as part of my move.
I switched over my electrical utilities. This was all quite easy to do online - it took a little while to find the right options on the PG&E website, but once I did, it was pretty automatic. One oddity was that, while I was turning on the power in my new place on 9/10, they wouldn't let me keep power in my old place later than 9/23. I'm not sure if this is because they don't allow more than a 2-week overlap between services, or if it was because of the date when I was submitting the request. In any case, while I still would have my apartment until 9/30, I was planning on being all moved out by then, so didn't see a problem even if they cut the power early.
Next up was Internet. Again, Comcast lets you shop for stuff and schedule it online, but requires you to complete the order with a chatroom-esque customer service rep. Once again, I was blown away by how positive the experience is. I know that everyone loves to hate Comcast, but they really do have great customer service. They let me order my internet-only package at the promotional price even though I was a current customer and wasn't getting any of the bundled services; and, the rep even knocked my installation fee in half without any prompting. Good stuff. (All their goodwill would be promptly annihilated a few weeks later when I met the Incompetent Install Technician from Hell.)
I'd decided that I would switch over insurance agents as part of the move. For some reason my lender doesn't require HO-6 insurance, but I wanted to get it anyways, because, y'know, it's smart. I scouted for local agents in Millbrae, found one I liked, and started moving stuff over. This turned out to actually be the single most difficult of my various transactions, because my previous agent did not want to let me go. I think it's actually easier to switch between different insurance companies than to switch between different agents in the same company. It took a couple of phone calls and a firm written letter until I got my policies set up with my new agent. (If I had to do it again, I probably wouldn't have bothered. One of the funny things about all this is that, in the more than five years I've been with my agent, this is the first time we've ever actually talked; previously everything was handled through his staff or online.)
Last but not least: the move. I'd thought for a while that I would pay for a moving company. I used to move myself, but it was always incredibly stressful. The last time I moved was from Kansas City to San Jose, and hiring professionals (Allied, in that case) was so great that I decided it would be well worth doing again. Unfortunately, all of my friends and relatives move themselves, so I didn't have any good referrals. Instead I hit up the online review sites (Yelp, Angie's List, Google Local, etc), scouted out a few places, followed up with three (Go Pro Moving, Lunardi Moving, and one other whose name escapes me at the moment), and eventually decided to go with Go Pro. None of the companies was willing to do an an-person binding estimate, which I kind of understand - especially for a 1-bedroom single guy like me who is packing himself, they aren't making a lot of money on me anyways, and so the time it takes to drive out and do the estimate isn't worth it for them.
I decided to wait until later for a few other things - updating the Post Office and my magazine subscriptions, for example. I was now more or less set, and coming down the home stretch.
Friday, November 26, 2010
The Long Pull
By now we had cleared the inspection and appraisal contingencies. The ball was squarely in the seller's court. They were having a hard time getting the HOA documents, so we extended that contingency date.
Redfin initially sent me the wrong documents - I was a little confused when I started reading through them and kept running across guidelines on using the marina. Finally, we got the real documents. They were fairly simple - the HOA started back in 1980, so all the documents were typed up the old-fashioned way. It all looked pretty typical and straight-forward... association meetings, several elected offices (President, Vice-President, Secretary, and Treasurer), rules that seemed reasonable and not onerous.
The one thing that made me nervous was a sheet filled out by the HOA manager, which listed the owner-occupancy ratio as 50%. Since I was buying one of the rented units, that would push the ratio up to 60%, but that was still below the 70% that I frequently heard mentioned. This seemed likely to sink the deal, and once again I bemoaned that we were doing the HOA docs at the end of the contingencies instead of at the beginning.
There are an incredible number of people involved in a real estate transaction. In addition to the buyer, seller, buyer's agent, seller's agent, and various hired professionals, there's also an escrow officer, and, on the loan side, a loan officer, loan analyst, underwriter, and funder. Almost all of my interactions up to this point had been with the loan officer, but as we came closer to the finish line, I started getting a few inquiries from the loan analyst, who prepares documents for the underwriter. A few of the things that she wanted included:
* An explanation for why the company name on my paycheck didn't match the company name on my W-2. (We were acquired by another company, and are handled by their payroll, and operate as a wholly-owned subsidiary.)
* An explanation for why a credit bureau was reporting that I still lived at an old address. (My answer: I have no idea, I haven't lived there since 2003, it must be an error.)
That was pretty much it. I'm not sure how far they dug into these things, it felt like they just wanted a satisfying answer from me that they could document.
A day or so later, I got a conditional loan approval. That meant that Provident would fund the loan once certain conditions were met. Some of those I had no qualms about, like verifying my employment and checking my rent history. I was pleasantly surprised to see that the occupancy ratio wasn't a dealbreaker. Instead, it was the HOA budget.
Ever since Fannie Mae and Freddie Mac entered federal receivership, the government has been tightening their lending guidelines. This didn't happen all at once; rather, it's an ongoing, rolling process; another loan officer told me later that it felt like the guidelines were changing every few weeks. Right now, virtually every loan made in the country is backed by a federally-affiliated program - FHA, VHA, Fannie Mae or Freddie Mac; private money is still extremely scarce, and can have restrictions as tight or tighter than the federal ones.
I've complained about this on the blog before, but I think that Fannie and Freddie have seriously miscalculated in their approach to condo loans. I suspect that what happened is, they looked at the subprime mortgage meltdown, saw that a lot of those units were condos, and decided to make condo loans harder to get. The thing is, though, that condos by themselves aren't any riskier than single-family houses. The reasons why there were so many condos involved were because there were so many flippers operating in places like Miama, Las Vegas, and Phoenix; condo construction boomed, people were treating them as investments instead of as places to live, and as a result they became the biggest part of the bubble. In places with high costs of living and extremely limited space, like, say, the San Francisco Bay Area, condos are a very prudent and conservative housing investment. Fannie and Freddie's one-size-fits-all approach ignores that reality.
Back to my loan: in their current incarnation, the guidelines actually have a wonderful new policy: owner-occupancy ratios are only a factor for investment properties. They are not a consideration if the buyer plans to live in their unit, as I do. This is great, since it allows associations that have slipped towards renters to gradually move back towards owners; under the previous system, once the ratio ever slipped below a magic number, it became impossible to recover because new owners could not get loans. So, I'm a big fan of that change, and look forward to seeing its result.
In its place, though, is a new policy - the HOA's budget must set aside at least 10% of the budget for a reserve fund. Now, in practice, I think that's a great idea. I'm a fan of well-funded HOAs and a foe of special assessments. Once again, though, this one-size-fits-all policy couldn't capture the nuance of each association. In my case, the amount set aside for reserves was rather low - just about 3%. However, the reserves themselves were quite well funded; they had enough cash in the bank to cover all scheduled capital improvements for the next few years, with some more left over. I could certainly see why the association would want to keep fees low... I'm paranoid, so I will always sock more away, but there really didn't seem to be a need for it.
That said, a rule's a rule, and this is one that couldn't be waived. That set things into a minor panic. Everything else had been taken care of, all other contingencies cleared, but this could send the deal down in flames. Regina urged me to start checking around with some other lenders to see if someone else could make the loan. In the meantime, she and the listing agent kept working with the HOA to see if there was any way around the budget.
Regina had worked before with a lender from Wells Fargo who I connected with. I was initially quite skeptical - I didn't feel at all like switching lenders this late in the game, and especially not to someone from a big bank. I was pleasantly surprised when he quoted me a rate and fees competitive with what I was getting from Provident, one that came in below that listed on the Wells Fargo web site. I suppose that loan officers have some leeway in making offers, and can trade in some of their commission in exchange for landing a deal. There was a catch, though - they didn't care about the budget, but would still require a full HOA review, which could take a while, and might come back negative. I could fast-track the application by putting down 30%, which sets it into a different set of standards and has a speedier approval process.
That was a possibility for me; I could have bumped up my down payment, but obviously that wasn't my first choice. I also spoke with a mortgage broker who the listing agent knew. (The listing agent was with Prudential Realty, and the broker with Prudential Finance, so it seems likely that there was some back-scratching going on.) She took all my financial docs - tax returns, pay stubs, etc. - but we never got around to actually meeting due to some late nights I had to work.
Regina and the listing agent were having a hard time tracking down the HOA. The contact person's cell phone mailbox was full, and the only way they could get ahold of him was by camping out in front of his office until he showed up. When they did get him, he was helpful. The budget we had received was the official one drawn up in February at the start of the fiscal year; since then, the budget had been revised, but not yet reprinted. He produced the updated one, faxed it off to Regina. The loan analyst checked on my verification of employment and rent history and submitted everything back to the underwriter. He came back and said that the budget would need to be signed.
Regina mildly flipped out, pointing out (accurately) that this requirement hadn't been expressed before, that it always took days to get updates from the HOA, and that we were running up against the extended contingency date for loan approval, and that our closing date was in jeopardy. Then, we all went back to work. We got the signed budget, put it back in, and waited for the answer.
Redfin initially sent me the wrong documents - I was a little confused when I started reading through them and kept running across guidelines on using the marina. Finally, we got the real documents. They were fairly simple - the HOA started back in 1980, so all the documents were typed up the old-fashioned way. It all looked pretty typical and straight-forward... association meetings, several elected offices (President, Vice-President, Secretary, and Treasurer), rules that seemed reasonable and not onerous.
The one thing that made me nervous was a sheet filled out by the HOA manager, which listed the owner-occupancy ratio as 50%. Since I was buying one of the rented units, that would push the ratio up to 60%, but that was still below the 70% that I frequently heard mentioned. This seemed likely to sink the deal, and once again I bemoaned that we were doing the HOA docs at the end of the contingencies instead of at the beginning.
There are an incredible number of people involved in a real estate transaction. In addition to the buyer, seller, buyer's agent, seller's agent, and various hired professionals, there's also an escrow officer, and, on the loan side, a loan officer, loan analyst, underwriter, and funder. Almost all of my interactions up to this point had been with the loan officer, but as we came closer to the finish line, I started getting a few inquiries from the loan analyst, who prepares documents for the underwriter. A few of the things that she wanted included:
* An explanation for why the company name on my paycheck didn't match the company name on my W-2. (We were acquired by another company, and are handled by their payroll, and operate as a wholly-owned subsidiary.)
* An explanation for why a credit bureau was reporting that I still lived at an old address. (My answer: I have no idea, I haven't lived there since 2003, it must be an error.)
That was pretty much it. I'm not sure how far they dug into these things, it felt like they just wanted a satisfying answer from me that they could document.
A day or so later, I got a conditional loan approval. That meant that Provident would fund the loan once certain conditions were met. Some of those I had no qualms about, like verifying my employment and checking my rent history. I was pleasantly surprised to see that the occupancy ratio wasn't a dealbreaker. Instead, it was the HOA budget.
Ever since Fannie Mae and Freddie Mac entered federal receivership, the government has been tightening their lending guidelines. This didn't happen all at once; rather, it's an ongoing, rolling process; another loan officer told me later that it felt like the guidelines were changing every few weeks. Right now, virtually every loan made in the country is backed by a federally-affiliated program - FHA, VHA, Fannie Mae or Freddie Mac; private money is still extremely scarce, and can have restrictions as tight or tighter than the federal ones.
I've complained about this on the blog before, but I think that Fannie and Freddie have seriously miscalculated in their approach to condo loans. I suspect that what happened is, they looked at the subprime mortgage meltdown, saw that a lot of those units were condos, and decided to make condo loans harder to get. The thing is, though, that condos by themselves aren't any riskier than single-family houses. The reasons why there were so many condos involved were because there were so many flippers operating in places like Miama, Las Vegas, and Phoenix; condo construction boomed, people were treating them as investments instead of as places to live, and as a result they became the biggest part of the bubble. In places with high costs of living and extremely limited space, like, say, the San Francisco Bay Area, condos are a very prudent and conservative housing investment. Fannie and Freddie's one-size-fits-all approach ignores that reality.
Back to my loan: in their current incarnation, the guidelines actually have a wonderful new policy: owner-occupancy ratios are only a factor for investment properties. They are not a consideration if the buyer plans to live in their unit, as I do. This is great, since it allows associations that have slipped towards renters to gradually move back towards owners; under the previous system, once the ratio ever slipped below a magic number, it became impossible to recover because new owners could not get loans. So, I'm a big fan of that change, and look forward to seeing its result.
In its place, though, is a new policy - the HOA's budget must set aside at least 10% of the budget for a reserve fund. Now, in practice, I think that's a great idea. I'm a fan of well-funded HOAs and a foe of special assessments. Once again, though, this one-size-fits-all policy couldn't capture the nuance of each association. In my case, the amount set aside for reserves was rather low - just about 3%. However, the reserves themselves were quite well funded; they had enough cash in the bank to cover all scheduled capital improvements for the next few years, with some more left over. I could certainly see why the association would want to keep fees low... I'm paranoid, so I will always sock more away, but there really didn't seem to be a need for it.
That said, a rule's a rule, and this is one that couldn't be waived. That set things into a minor panic. Everything else had been taken care of, all other contingencies cleared, but this could send the deal down in flames. Regina urged me to start checking around with some other lenders to see if someone else could make the loan. In the meantime, she and the listing agent kept working with the HOA to see if there was any way around the budget.
Regina had worked before with a lender from Wells Fargo who I connected with. I was initially quite skeptical - I didn't feel at all like switching lenders this late in the game, and especially not to someone from a big bank. I was pleasantly surprised when he quoted me a rate and fees competitive with what I was getting from Provident, one that came in below that listed on the Wells Fargo web site. I suppose that loan officers have some leeway in making offers, and can trade in some of their commission in exchange for landing a deal. There was a catch, though - they didn't care about the budget, but would still require a full HOA review, which could take a while, and might come back negative. I could fast-track the application by putting down 30%, which sets it into a different set of standards and has a speedier approval process.
That was a possibility for me; I could have bumped up my down payment, but obviously that wasn't my first choice. I also spoke with a mortgage broker who the listing agent knew. (The listing agent was with Prudential Realty, and the broker with Prudential Finance, so it seems likely that there was some back-scratching going on.) She took all my financial docs - tax returns, pay stubs, etc. - but we never got around to actually meeting due to some late nights I had to work.
Regina and the listing agent were having a hard time tracking down the HOA. The contact person's cell phone mailbox was full, and the only way they could get ahold of him was by camping out in front of his office until he showed up. When they did get him, he was helpful. The budget we had received was the official one drawn up in February at the start of the fiscal year; since then, the budget had been revised, but not yet reprinted. He produced the updated one, faxed it off to Regina. The loan analyst checked on my verification of employment and rent history and submitted everything back to the underwriter. He came back and said that the budget would need to be signed.
Regina mildly flipped out, pointing out (accurately) that this requirement hadn't been expressed before, that it always took days to get updates from the HOA, and that we were running up against the extended contingency date for loan approval, and that our closing date was in jeopardy. Then, we all went back to work. We got the signed budget, put it back in, and waited for the answer.
Friday, November 19, 2010
Inspector Gadget
I'd become mildly addicted to Redfin's forums during my home search. Redfin lightly moderates them, and tolerates an amazing range of voices. The Bay Area board contains a few cheerleaders, who tend to obsessively focus on the specialness of particular areas like Palo Alto, but seems generally dominated by skeptics who are convinced that the market has a ways more to fall. The skeptics range from people who forecast stagnant prices for the next five years to people convinced that we will see a return to 1996 prices.
Anyways, it's always interesting, and often useful. The best bit of wisdom I've heard on there was something along the lines of, "your negotiations have only begun once your offer is accepted." That proved to be very true for me, and I was glad that I was mentally and emotionally prepared for the roller-coaster that followed, rather than passively believing that the hard parts were over.
Like I mentioned earlier, we had put together an offer with a fairly aggressive 30-day closing period. That worked fine for me, but I would have been happy with almost anything - I'm renting month-to-month right now, and while I've been looking forward to shortening my commute, I don't have any particular deadlines to hit. After learning that the unit was tenant-occupied, I actually wondered whether the sellers wouldn't prefer a longer closing period so they could give the renters adequate notice. In any case, though, we decided to go ahead with the 30-days.
Most of the closing period focuses on closing contingencies. My offer had included all the major contingencies - loan approval, appraisal, home inspection, pest inspection, and HOA review. In retrospect, one annoying aspect of this period was that, perhaps partly due to the shortened timeline, I needed to do all the contingencies that I had to pay for up front, and the contingencies that the seller had to pay for towards the end. That meant that, for example, I could easily spend a thousand dollars on my loan application and inspections, only to find out later that the HOA was in bad shape and that I wouldn't want it anyways.
Redfin has a very streamlined and efficient closing process, which is both good and bad. I felt like I couldn't give a lot of input into the process - for example, Regina went ahead and ordered the inspections right away, without asking if I had a particular inspector I wanted to use. I was planning on going with her guidance anyways, but still, I would have appreciated being asked. I'm sure that if I had kicked up a fuss I could have gotten my own inspector in there, but whatever.
On the plus side, it's always very clear what you need to do at any stage of the process. A lot of that involves reading documents, signing them, and then faxing them back by a certain time. I probably put over a hundred pages through the office fax machine before it was all done - fortunately, Redfin's fax is a local call to us.
We did the property and pest inspections on the same day. I stopped by on the way in to work, met up with Matt, and waited a few minutes for the inspectors. They were both friendly and helpful; I tagged along, they voluntarily pointed out the things that they were noting, and answered all my questions. They re-noted some things that had previously come up in the disclosures - for example, that the sliding balcony door didn't have a lock - and also went into more details; the property inspector suggested that I check with the HOA to see if they had records about the door brand and model, since with that information I could easily find a replacement locking handle that I could install myself. They also found a host of other issues, nothing critical but plenty that I would want to take care of... some voids in grout, a loose wax seal on the toilet, some holes on the balcony railing. All the major stuff seemed fine, though... the electrical system was good, no leaks in any plumbing, no mold, all appliances functional.
Matt also did his own walk-through, again noting some of the same things as from the disclosures. He also observed that some of the issues noted in the initial seller agent's walkthrough were probably actually OK - for example, the disclosures had noted that the cabinets above the sink were missing doors, but we agreed that they were almost certainly designed that way.
I chatted with Regina about the results. None of the proposed repairs seemed onerous, so I released these contingencies and waited for the next round.
Anyways, it's always interesting, and often useful. The best bit of wisdom I've heard on there was something along the lines of, "your negotiations have only begun once your offer is accepted." That proved to be very true for me, and I was glad that I was mentally and emotionally prepared for the roller-coaster that followed, rather than passively believing that the hard parts were over.
Like I mentioned earlier, we had put together an offer with a fairly aggressive 30-day closing period. That worked fine for me, but I would have been happy with almost anything - I'm renting month-to-month right now, and while I've been looking forward to shortening my commute, I don't have any particular deadlines to hit. After learning that the unit was tenant-occupied, I actually wondered whether the sellers wouldn't prefer a longer closing period so they could give the renters adequate notice. In any case, though, we decided to go ahead with the 30-days.
Most of the closing period focuses on closing contingencies. My offer had included all the major contingencies - loan approval, appraisal, home inspection, pest inspection, and HOA review. In retrospect, one annoying aspect of this period was that, perhaps partly due to the shortened timeline, I needed to do all the contingencies that I had to pay for up front, and the contingencies that the seller had to pay for towards the end. That meant that, for example, I could easily spend a thousand dollars on my loan application and inspections, only to find out later that the HOA was in bad shape and that I wouldn't want it anyways.
Redfin has a very streamlined and efficient closing process, which is both good and bad. I felt like I couldn't give a lot of input into the process - for example, Regina went ahead and ordered the inspections right away, without asking if I had a particular inspector I wanted to use. I was planning on going with her guidance anyways, but still, I would have appreciated being asked. I'm sure that if I had kicked up a fuss I could have gotten my own inspector in there, but whatever.
On the plus side, it's always very clear what you need to do at any stage of the process. A lot of that involves reading documents, signing them, and then faxing them back by a certain time. I probably put over a hundred pages through the office fax machine before it was all done - fortunately, Redfin's fax is a local call to us.
We did the property and pest inspections on the same day. I stopped by on the way in to work, met up with Matt, and waited a few minutes for the inspectors. They were both friendly and helpful; I tagged along, they voluntarily pointed out the things that they were noting, and answered all my questions. They re-noted some things that had previously come up in the disclosures - for example, that the sliding balcony door didn't have a lock - and also went into more details; the property inspector suggested that I check with the HOA to see if they had records about the door brand and model, since with that information I could easily find a replacement locking handle that I could install myself. They also found a host of other issues, nothing critical but plenty that I would want to take care of... some voids in grout, a loose wax seal on the toilet, some holes on the balcony railing. All the major stuff seemed fine, though... the electrical system was good, no leaks in any plumbing, no mold, all appliances functional.
Matt also did his own walk-through, again noting some of the same things as from the disclosures. He also observed that some of the issues noted in the initial seller agent's walkthrough were probably actually OK - for example, the disclosures had noted that the cabinets above the sink were missing doors, but we agreed that they were almost certainly designed that way.
I chatted with Regina about the results. None of the proposed repairs seemed onerous, so I released these contingencies and waited for the next round.
Friday, November 12, 2010
Rebound
Real estate really is a game. It's a game where the rules are constantly changing, and no two rounds are the same. I've spent well over a year reading up on every aspect of the process, both nationally and locally, and still was regularly surprised by what happened during my own search.
Case in point: about a week after I turned down (or was rejected by) the Mateo Avenue condo, I got a call back from Regina. The sellers were wondering if I would be interested in seller financing. I was fairly familiar with this idea based on my research; the basic idea is that, since I had offered $X and they wanted $X+30k, they would lend me the $30k in a separate loan. There can be some advantages to seller financing - you can get a better rate than from a bigger lender, and you can more easily get approved. I figured that the sellers probably realized that I was the only serious buyer they had encountered, and that they thought I wouldn't go above $X because it was the most I could afford. In reality, I could afford more than their asking price, I just didn't think it was worth that much. I wasn't interested in taking out a $30k loan for an overpriced home.
I told Regina that I wasn't interested in financing, but, if they were willing to drop their price, I'd still be interested in the property. We went through some back-and-forth, and they ended up coming down $20k. That was still $10k over my initial offer. I mulled it over for a while - it was more than I thought it was worth, but it seemed like this might be my last and only chance to get a decent condo that I could afford in the area I wanted. In the end, I decided that I'd go for it.
Rather than put together a new offer, we got back a counter from the sellers with the agreed-upon price. It also came with an "as-is" addendum. I talked with Regina for a while about what this meant - basically, it said that the sellers wouldn't be making any repairs for stuff that had already been disclosed or for "minor" problems found during the inspection. It's intended to acknowledge that this is an older property and that stuff won't be perfect, and that I'm buying it with that understanding. I wanted to make sure that I wouldn't be giving up any rights to ask for repairs or credits for major issues found during inspection. I was safe on this front, so I signed the counter and the addendum, and we entered contract.
Case in point: about a week after I turned down (or was rejected by) the Mateo Avenue condo, I got a call back from Regina. The sellers were wondering if I would be interested in seller financing. I was fairly familiar with this idea based on my research; the basic idea is that, since I had offered $X and they wanted $X+30k, they would lend me the $30k in a separate loan. There can be some advantages to seller financing - you can get a better rate than from a bigger lender, and you can more easily get approved. I figured that the sellers probably realized that I was the only serious buyer they had encountered, and that they thought I wouldn't go above $X because it was the most I could afford. In reality, I could afford more than their asking price, I just didn't think it was worth that much. I wasn't interested in taking out a $30k loan for an overpriced home.
I told Regina that I wasn't interested in financing, but, if they were willing to drop their price, I'd still be interested in the property. We went through some back-and-forth, and they ended up coming down $20k. That was still $10k over my initial offer. I mulled it over for a while - it was more than I thought it was worth, but it seemed like this might be my last and only chance to get a decent condo that I could afford in the area I wanted. In the end, I decided that I'd go for it.
Rather than put together a new offer, we got back a counter from the sellers with the agreed-upon price. It also came with an "as-is" addendum. I talked with Regina for a while about what this meant - basically, it said that the sellers wouldn't be making any repairs for stuff that had already been disclosed or for "minor" problems found during the inspection. It's intended to acknowledge that this is an older property and that stuff won't be perfect, and that I'm buying it with that understanding. I wanted to make sure that I wouldn't be giving up any rights to ask for repairs or credits for major issues found during inspection. I was safe on this front, so I signed the counter and the addendum, and we entered contract.
Friday, November 5, 2010
Ball One
I knew that my lower offer would have a tougher chance of getting accepted, so I made clear to my agent that I was happy to do anything outside the price to make the offer more attractive. I included a sizable 3% earnest money deposit (the maximum allowed for liquidated damages under California law), and offered a 30-day closing window - I had been pre-approved through Provident Credit Union, and was ready to move forward with them, plus since I'm in a month-to-month lease, I could move out of my current place whenever I wanted.
Because of the slight delay getting the disclosures, we ended up submitting the offer on a Monday instead of a Friday, and gave them 48 hours to respond. I was expecting a "Yes," "No," or, more likely, a counter. Instead, I got a pseudo-counter - the seller's agent wanted to know if I'd be willing to pay just $10k less than the listing price. My response was, "Uh, no." Again, having done my research, I knew that that was way too high. Regina wanted to know what my final offer would be; I let her know that my initial offer was basically my max, but that I would be willing to go a few thousand higher to close the deal. That still left a hefty gap between us. She called back in a bit to say that they weren't interested. I shrugged, went "OK," and moved on.
I was kind of surprised by how well I took it - it was the closest I had come yet to buying a condo, and it had seemed like it had the right potential to work. It was a rare unit in the area I wanted, small enough to fit into my price range, and overpriced enough to scare off competition. Again, I continued taking a break... it seemed like by this point I'd exhausted all my options, and, barring a price drop at Belamor, I'd be best served deciding whether to switch my search to another area or resigning myself to renting. Still, I wasn't too disappointed - since I had based my price on facts and not on emotion, I could confidently say "No" and not second-guess myself.
Because of the slight delay getting the disclosures, we ended up submitting the offer on a Monday instead of a Friday, and gave them 48 hours to respond. I was expecting a "Yes," "No," or, more likely, a counter. Instead, I got a pseudo-counter - the seller's agent wanted to know if I'd be willing to pay just $10k less than the listing price. My response was, "Uh, no." Again, having done my research, I knew that that was way too high. Regina wanted to know what my final offer would be; I let her know that my initial offer was basically my max, but that I would be willing to go a few thousand higher to close the deal. That still left a hefty gap between us. She called back in a bit to say that they weren't interested. I shrugged, went "OK," and moved on.
I was kind of surprised by how well I took it - it was the closest I had come yet to buying a condo, and it had seemed like it had the right potential to work. It was a rare unit in the area I wanted, small enough to fit into my price range, and overpriced enough to scare off competition. Again, I continued taking a break... it seemed like by this point I'd exhausted all my options, and, barring a price drop at Belamor, I'd be best served deciding whether to switch my search to another area or resigning myself to renting. Still, I wasn't too disappointed - since I had based my price on facts and not on emotion, I could confidently say "No" and not second-guess myself.
Friday, October 29, 2010
Wind Up
Back to the home-hunting story:
I let a month go by after the Mateo Avenue condo hit the MLS, and finally put in an official request to tour. Once again Matt took care of me; we had gotten to know each other pretty well by this point, to the degree that we started to reminisce about the first property I'd seen way back in the previous year.
Before the tour, I'd spent some time walking around the neighborhood at different times of the day and different days of the week. I was happy with what I had seen - it isn't as fancy as the streets west of Magnolia, but the area was kept up well, there was a good amount of activity on the streets, and overall I got a good vibe off of it. I wandered farther afield, across the tracks, then back again and around the other streets. My favorite aspect was still the access - it's a good walk to the train station, and even shorter to Safeway, Trader Joe's, and the excellent public library - but I dug the spot itself as well.
We learned that a tenant occupied the unit, and waited while she got the kids and headed out, then moved inside. Yup... definitely a tenant and not the owner. Even though the tour had been scheduled for a few days, the place was pretty messy, with half-eaten pizza (at nine in the morning?) and croissant all over the kitchen. Still, by this point I'd gotten pretty good at zeroing in on the important stuff and ignoring the rest. I'd learned to pay good attention to Matt, too, and picked up on some of his observations as well.
Overall, it was nice - not a dream unit, perhaps, but one that definitely fit everything I'd been looking for, and a lot of stuff that I'd been hoping for. It had two bedrooms, which is almost impossible at my budget in Millbrae. It also had two baths - not very useful to me, but the second would be handy if I ever got a roommate or long-term guests. The kitchen was good - it didn't have a spectacular gas oven like the newer condos I'd seen, but it had plenty of cupboards and counter space, which had been fairly recently renovated. It had a nice big balcony - the view is of the back of a big-box store, which isn't great, but on the plus side there's a lot of privacy (no windows facing me), a lot of sky (no other buildings nearby), and if you look up a bit, nice partial views of the Millbrae hills and San Francisco Airport.
I spent more time this go-around than I had on my open house, and Matt and I chatted a bit. We agreed that the unit was overpriced, but otherwise fine - considering that it was 30 years old, it was in quite good shape.
I kept on pondering everything, and eventually decided to go for it. I'd put in a fair offer for what I thought it was worth, and see what happened. At worst, the sellers would just say "no," and at least I'd know to give up on it. If that happened, I was ready to restart my home search or just resign myself to renting for another five years - like I said in a previous post, I'd taken a full inventory of the Millbrae condo market, and seen that there just isn't much out there.
Once again, I submitted the offer wizard on the website. This time Regina got the ticket. As a side note, the wizard is still a bit mysterious to me. From my early reading on the Redfin web site, I had been under the impression that when you start an offer, you can choose which agent will represent you. That never happened with me, though. I'm guessing that if you had someone who you really wanted to use in particular, you could enter that in the notes field and get them. I now think that by default they just hand out the requests to whoever is available.
Regina was also good - as with Sean, she contacted the listing agent to find out the seller's situation and figure out what the timeline would be like. She also sent me a list of comparable properties along with her analysis of the price. She had a higher price in mind than I did, and with some good reason - her comps included recent condo sales near 280, which I had discounted because of how far away they are, but since most people buy into Millbrae for the school district, it seemed valid to include them. I pointed out another sale that she hadn't included - one which was quite a bit bigger, but sold for noticeably less, and was closer to this property than the other comps. She agreed that that was a good comp. I re-ran my numbers taking all the data into account, and settled on a fair price that was about 7% under the seller's listing price.
There were a couple of odd things about this transaction. One early issue was the disclosures; on previous offers, I had received disclosures early on and been encouraged to review them prior to making an offer. This time around, Regina urged me to put together the offer prior to receiving the disclosures. Again, that seemed strange - if there was anything in there that was a turn-off, then I'd be wasting everyone's time by making an offer; and, from the seller's perspective, it seems like they'd want me to know everything I could up front. If I make an offer for $X, based on all the disclosures, and they accept, then I can't come back later and ask them to take off $Y due to issues that they had disclosed. On the other hand, if I make an offer for $X without any disclosures, then even after they accept, I can ask them to take off $Y to deal with things that they already knew about; this makes it harder for the seller to compare offers, since different buyers will grade issues differently, and they run the risk of accepting an offer that the buyer will end up backing out of altogether later on.
In any case, I did end up getting the disclosures just prior to when we were going to put in the offer, so I did get a chance to read them. This should have been a good clue of how the process would continue. Everyone on the selling side was somewhat removed from the transaction - the listing agent was a part-timer who was helpful but not always quickly responsive; the sellers didn't live in the property; and so on. I think that if they had been a bit more organized, I could have gotten the disclosures sooner and moved forward more quickly.
In any case, the disclosures were fine, far less scary than the Palm one. Bay Area disclosures are fairly long, with a good amount of boilerplate, but still well worth reading. The seller fills out a long list of questions, mainly yes/no with space for explaining negative answers. It covers things like structural defects, neighborhood nuisances, odors, and so on. I learned the details about some recent renovations, which was helpful. The disclosures also include observations from the listing agent as part of their walk-through. In my case, there weren't any bombshells here, just a few fairly minor things that we had noticed during my tour - a missing lock on the balcony door, for example. Nothing seemed like it would seriously ding my offer price, so I gave a thumbs-up, submitted the offer, then crossed my fingers and waited.
I let a month go by after the Mateo Avenue condo hit the MLS, and finally put in an official request to tour. Once again Matt took care of me; we had gotten to know each other pretty well by this point, to the degree that we started to reminisce about the first property I'd seen way back in the previous year.
Before the tour, I'd spent some time walking around the neighborhood at different times of the day and different days of the week. I was happy with what I had seen - it isn't as fancy as the streets west of Magnolia, but the area was kept up well, there was a good amount of activity on the streets, and overall I got a good vibe off of it. I wandered farther afield, across the tracks, then back again and around the other streets. My favorite aspect was still the access - it's a good walk to the train station, and even shorter to Safeway, Trader Joe's, and the excellent public library - but I dug the spot itself as well.
We learned that a tenant occupied the unit, and waited while she got the kids and headed out, then moved inside. Yup... definitely a tenant and not the owner. Even though the tour had been scheduled for a few days, the place was pretty messy, with half-eaten pizza (at nine in the morning?) and croissant all over the kitchen. Still, by this point I'd gotten pretty good at zeroing in on the important stuff and ignoring the rest. I'd learned to pay good attention to Matt, too, and picked up on some of his observations as well.
Overall, it was nice - not a dream unit, perhaps, but one that definitely fit everything I'd been looking for, and a lot of stuff that I'd been hoping for. It had two bedrooms, which is almost impossible at my budget in Millbrae. It also had two baths - not very useful to me, but the second would be handy if I ever got a roommate or long-term guests. The kitchen was good - it didn't have a spectacular gas oven like the newer condos I'd seen, but it had plenty of cupboards and counter space, which had been fairly recently renovated. It had a nice big balcony - the view is of the back of a big-box store, which isn't great, but on the plus side there's a lot of privacy (no windows facing me), a lot of sky (no other buildings nearby), and if you look up a bit, nice partial views of the Millbrae hills and San Francisco Airport.
I spent more time this go-around than I had on my open house, and Matt and I chatted a bit. We agreed that the unit was overpriced, but otherwise fine - considering that it was 30 years old, it was in quite good shape.
I kept on pondering everything, and eventually decided to go for it. I'd put in a fair offer for what I thought it was worth, and see what happened. At worst, the sellers would just say "no," and at least I'd know to give up on it. If that happened, I was ready to restart my home search or just resign myself to renting for another five years - like I said in a previous post, I'd taken a full inventory of the Millbrae condo market, and seen that there just isn't much out there.
Once again, I submitted the offer wizard on the website. This time Regina got the ticket. As a side note, the wizard is still a bit mysterious to me. From my early reading on the Redfin web site, I had been under the impression that when you start an offer, you can choose which agent will represent you. That never happened with me, though. I'm guessing that if you had someone who you really wanted to use in particular, you could enter that in the notes field and get them. I now think that by default they just hand out the requests to whoever is available.
Regina was also good - as with Sean, she contacted the listing agent to find out the seller's situation and figure out what the timeline would be like. She also sent me a list of comparable properties along with her analysis of the price. She had a higher price in mind than I did, and with some good reason - her comps included recent condo sales near 280, which I had discounted because of how far away they are, but since most people buy into Millbrae for the school district, it seemed valid to include them. I pointed out another sale that she hadn't included - one which was quite a bit bigger, but sold for noticeably less, and was closer to this property than the other comps. She agreed that that was a good comp. I re-ran my numbers taking all the data into account, and settled on a fair price that was about 7% under the seller's listing price.
There were a couple of odd things about this transaction. One early issue was the disclosures; on previous offers, I had received disclosures early on and been encouraged to review them prior to making an offer. This time around, Regina urged me to put together the offer prior to receiving the disclosures. Again, that seemed strange - if there was anything in there that was a turn-off, then I'd be wasting everyone's time by making an offer; and, from the seller's perspective, it seems like they'd want me to know everything I could up front. If I make an offer for $X, based on all the disclosures, and they accept, then I can't come back later and ask them to take off $Y due to issues that they had disclosed. On the other hand, if I make an offer for $X without any disclosures, then even after they accept, I can ask them to take off $Y to deal with things that they already knew about; this makes it harder for the seller to compare offers, since different buyers will grade issues differently, and they run the risk of accepting an offer that the buyer will end up backing out of altogether later on.
In any case, I did end up getting the disclosures just prior to when we were going to put in the offer, so I did get a chance to read them. This should have been a good clue of how the process would continue. Everyone on the selling side was somewhat removed from the transaction - the listing agent was a part-timer who was helpful but not always quickly responsive; the sellers didn't live in the property; and so on. I think that if they had been a bit more organized, I could have gotten the disclosures sooner and moved forward more quickly.
In any case, the disclosures were fine, far less scary than the Palm one. Bay Area disclosures are fairly long, with a good amount of boilerplate, but still well worth reading. The seller fills out a long list of questions, mainly yes/no with space for explaining negative answers. It covers things like structural defects, neighborhood nuisances, odors, and so on. I learned the details about some recent renovations, which was helpful. The disclosures also include observations from the listing agent as part of their walk-through. In my case, there weren't any bombshells here, just a few fairly minor things that we had noticed during my tour - a missing lock on the balcony door, for example. Nothing seemed like it would seriously ding my offer price, so I gave a thumbs-up, submitted the offer, then crossed my fingers and waited.
Friday, October 22, 2010
Freakish Depth
This is probably a good time to sing the praises of Property Shark. I should start by saying that Redfin has one of the best web sites, period - not just the best real estate web site, but best overall. It combines an almost comically broad range of useful information about homes, and somehow manages to present it in an engaging and highly readable manner. It's responsive, fun, informative, and incredibly addictive.
As I previously mentioned, I had attended a Redfin homebuying seminar late last year. It was very informative and helpful, and one of the things that pushed me toward working with Redfin. The presenter included an extremely useful list of helpful web sites, and made particular note of Property Shark, which she cheerfully explained had a lot of data that even Redfin doesn't have.
And, boy, does it ever. Property Shark isn't nearly as pretty as Redfin, but the amount of information it has is amazing, maybe even a little scary. You can search for properties in any supported area, and pull out an incredible amount of information from there. Things like:
As you can see, I'm a fan. I think Property Shark is a harbinger in the same way Redfin is: the real estate model is moving from the traditional closed, secretive, divided world that kept consumers at arms-length from the transaction, and moving towards a more modern Web-ish approach of empowered consumers who drive their own searches and be responsible for their own education. It will be fascinating to see how the real estate world I sell in will be different from the evolving world in which I bought.
As I previously mentioned, I had attended a Redfin homebuying seminar late last year. It was very informative and helpful, and one of the things that pushed me toward working with Redfin. The presenter included an extremely useful list of helpful web sites, and made particular note of Property Shark, which she cheerfully explained had a lot of data that even Redfin doesn't have.
And, boy, does it ever. Property Shark isn't nearly as pretty as Redfin, but the amount of information it has is amazing, maybe even a little scary. You can search for properties in any supported area, and pull out an incredible amount of information from there. Things like:
- The owner's name
- The owner's address (thus providing one of the only ways that you can determine the owner-occupancy ratio of a building or area)
- Complete sales price for the property. You might see that a house sold for $40,000 in 1945, for $120,000 in 1990, for $800,000 in 2006. If you see that it's on the market today for $700,000, you know that the seller is already accepting a major loss on the property.
- The loans on the property. So a house might show, for example, a $417,000 first loan from Wells Fargo, and a second $105,000 loan from Citibank. Again, this is amazing information. You can check to see whether the seller is likely underwater - if they bought in 2006 or 2007, have loans close to the purchase price, and are asking for something close to the last sales price, then they are probably already as low as they can go without negotiating a short sale. Conversely, if a home sold 15 years ago with a sensible loan and the owner is asking twice as much for it now, they may have considerably more flexibility.
- A ton of maps! There's a population density graph, which seems to operate on a neighborhood-by-neighborhood basis, that shows the number of residents per square mile in an area.
- There's a population age map, which shows the median age of each neighborhood. (This is an area where you can really visibly see Millbrae's strong dichotomy between young and old.)
- There's an environmental hazard map, which shows EPA-designated hazardous sites, which range from scary brownfields to innocuous photo development chemicals.
- There's an earthquake hazard map, which shows which areas are vulnerable to liquefaction, sliding, or other problems. (Lots of this in the Bay Area, but Millbrae is surprisingly safe.)
- A flood zone map. This was yet another incredibly useful find; usually, you can't find this out until near the end of closing or with a ton of legwork to track down paper FEMA maps from a government agency. The map breaks down areas in a 100-Year Flood Zone, a 500-Year Flood Zone, or other area of concern. Having access to this let me determine which areas I could feel safe about and which needed concern. Nearly all of Burlingame east of El Camino Real is in a flood zone, and a lot of the western area is as well; Millbrae had a few tendrils of 500-year flood zones, but none ran through the blocks where I was interested. Success!
- The public records for a property. This seems especially invaluable for FSBOs or older transactions; you can find out the official square footage, number of bedrooms, and so on. The Bay Area (and probably much of California) has a pretty significant problem with people performing unpermitted renovations, done without county approval, in an attempt to dodge a property tax increase; you can spot where a seller's statements don't line up with the official word, and be prepared to deal with the extra headaches involved with an illegal property addition.
As you can see, I'm a fan. I think Property Shark is a harbinger in the same way Redfin is: the real estate model is moving from the traditional closed, secretive, divided world that kept consumers at arms-length from the transaction, and moving towards a more modern Web-ish approach of empowered consumers who drive their own searches and be responsible for their own education. It will be fascinating to see how the real estate world I sell in will be different from the evolving world in which I bought.
Friday, October 15, 2010
Searching through the Rough
Around this time, I started to have a crisis of faith. By this point I'd been closely following the Millbrae-area market for about half a year; the more I learned, the more I liked the area, but also the more I realized what a difficult thing I was looking for. There just are not that many condo developments in the area. As a matter of fact, I had a complete list of every one in the whole city.
Burlingame had just a handful of options:
I decided to take a little break - after all, the commute wasn't killing me, and perhaps the situation would change. Along the way, I kept monitoring an interesting property. In addition to my Redfin emails, I also had subscribed to Craigslist RSS feeds that reported on condos advertised in Millbrae and Burlingame. Most of these duplicated information in the MLS, but some were FSBOs, and one in particular caught my eye: a FSBO condo on Mateo Avenue. It seemed overpriced, but otherwise matched what I was looking for. I decided to wait and see what would happen.
The property didn't seem to be advertised too heavily; after that first Craigslist post, nothing else came up, and I never saw it on any of the major FSBO web sites. About a month later, it popped up again, this time with agent representation but without being listed on the MLS. I decided to keep my distance - it still bore the same high price, and without the MLS connection I wouldn't be able to use Redfin. It also had mysteriously lost about 90 square feet between the time it was a FSBO and when an agent took it.
About a month after that, it finally hit the MLS. Still at the same price. I decided to wait for now - I didn't want to play my hand by seeming too eager, and by now I knew the market well enough to feel pretty sure that it wouldn't get snatched up at the current price. I knew from advice and observation that well-priced homes were selling quickly while overpriced homes languished for a month or more, so I figured that waiting for a while would give the seller time to adjust to more realistic expectations.
After a couple of weeks, the seller hosted an open house. I still wasn't ready to officially tour, but decided to drop by. It's kind of funny that I didn't do my first open house until towards the end of my search; I'd been scared off by warnings early on about attending open houses without representation. Listing agents can use them to scout for new clients, and if you aren't already represented by an agent and decide to make an offer after attending an open house, the listing agent becomes your agent, which leads to a conflict of interest. By now, though, I was happily represented by Redfin, and didn't think I'd have a problem.
As it turns out, I needn't have worried. I attended two open houses, and both were very pleasantly low-key, with no pressure to sign a register or do other stuff I was worried about. First I attended a house-house open house: an interesting, very old small house on Magnolia Avenue that had dropped by hundreds of thousands of dollars from its initial listing, and, if it dropped another two hundred thousand, would finally hit my range. It was nothing spectacular, but still intriguing: nice large lot, cute small house, a bathroom that had probably been renovated in the 1940's, an old-fashioned detached garage, very little set-back from the sidewalk. I thanked the agent and moved on to Mateo.
Once again, I had timed my visit to coincide with the arrival of Caltrain. The open house was on a Sunday, so I had a narrower window. The building is on the east side of El Camino Real, about a block from the tracks, but set much farther back than the California Avenue building had been. The agent greeted me when I arrived, then took a call while I wandered around. The train came by while I stood near an open window. It was audible, but infinitely better than the California Avenue one, and without any vibration. With time, I was confident that it would just become background noise, like a passing car; similarly, my current apartment is near a light rail line, and after the first few weeks I no longer noticed the sound.
The unit itself seemed crowded, but mainly because of all the furniture. It was occupied by tenants, and while it had been cleaned up, it didn't show as well as the other condos I'd seen. Still, nothing seemed wrong with it, and it was in better shape than the Palm Avenue unit that I had started making an offer on. I wandered around, checked for mold, looked under the sinks, played with the doors and light switches. Everything seemed in good order.
Still, the fact remained that it was overpriced. This wasn't just a subjective feeling, and wasn't taken from the popular online home estimation tools like Zillow and CyberHomes. I kept crunching possible values based on different methodologies, and kept coming up with a pretty consistent price range that was quite a bit less than the asking price. At the simplest end, I took the price per square foot for similarly sized and aged units in Millbrae/Burlingame that had recently sold, and adjusted it for this unit's size. I also took the most recent sales prices in the complex (which required going back to 2004-2005, during the boom but before the peak of the bubble), and tracked where those prices would go assuming that they followed the same overall price changes of Millbrae as a whole. Doing this quantitative work helped me gain a lot of confidence, and made me more secure in deciding to wait until I could get a better price.
- Park Broadway - Nice, but expensive, and too far away from the station and downtown for me.
- 88 South Broadway - Insanely expensive.
- Belamor - Too expensive, uncertainty around construction status.
- Palm Avenue - Perfect location and nice size, but worrying HOA situation.
- 15 Magnolia - Only 10 units, never available.
- 75 Magnolia - Only 4 units, never available.
- Mateo Avenue - Only 10 units, more on this later.
- 1396 El Camino Real - Too far away from the station and downtown, practically in San Bruno.
- Windwater Mills - On a busy street near the high school, plus some worrying online reports.
Burlingame had just a handful of options:
- California Avenue - Great units, but pricey and too close to the tracks.
- Ogden - In retrospect, I wish I had pursued the one-bedroom from here at the end of last year, but I had been too focused on Belamor. Nothing else entered the market during the spring or summer of my search.
I decided to take a little break - after all, the commute wasn't killing me, and perhaps the situation would change. Along the way, I kept monitoring an interesting property. In addition to my Redfin emails, I also had subscribed to Craigslist RSS feeds that reported on condos advertised in Millbrae and Burlingame. Most of these duplicated information in the MLS, but some were FSBOs, and one in particular caught my eye: a FSBO condo on Mateo Avenue. It seemed overpriced, but otherwise matched what I was looking for. I decided to wait and see what would happen.
The property didn't seem to be advertised too heavily; after that first Craigslist post, nothing else came up, and I never saw it on any of the major FSBO web sites. About a month later, it popped up again, this time with agent representation but without being listed on the MLS. I decided to keep my distance - it still bore the same high price, and without the MLS connection I wouldn't be able to use Redfin. It also had mysteriously lost about 90 square feet between the time it was a FSBO and when an agent took it.
About a month after that, it finally hit the MLS. Still at the same price. I decided to wait for now - I didn't want to play my hand by seeming too eager, and by now I knew the market well enough to feel pretty sure that it wouldn't get snatched up at the current price. I knew from advice and observation that well-priced homes were selling quickly while overpriced homes languished for a month or more, so I figured that waiting for a while would give the seller time to adjust to more realistic expectations.
After a couple of weeks, the seller hosted an open house. I still wasn't ready to officially tour, but decided to drop by. It's kind of funny that I didn't do my first open house until towards the end of my search; I'd been scared off by warnings early on about attending open houses without representation. Listing agents can use them to scout for new clients, and if you aren't already represented by an agent and decide to make an offer after attending an open house, the listing agent becomes your agent, which leads to a conflict of interest. By now, though, I was happily represented by Redfin, and didn't think I'd have a problem.
As it turns out, I needn't have worried. I attended two open houses, and both were very pleasantly low-key, with no pressure to sign a register or do other stuff I was worried about. First I attended a house-house open house: an interesting, very old small house on Magnolia Avenue that had dropped by hundreds of thousands of dollars from its initial listing, and, if it dropped another two hundred thousand, would finally hit my range. It was nothing spectacular, but still intriguing: nice large lot, cute small house, a bathroom that had probably been renovated in the 1940's, an old-fashioned detached garage, very little set-back from the sidewalk. I thanked the agent and moved on to Mateo.
Once again, I had timed my visit to coincide with the arrival of Caltrain. The open house was on a Sunday, so I had a narrower window. The building is on the east side of El Camino Real, about a block from the tracks, but set much farther back than the California Avenue building had been. The agent greeted me when I arrived, then took a call while I wandered around. The train came by while I stood near an open window. It was audible, but infinitely better than the California Avenue one, and without any vibration. With time, I was confident that it would just become background noise, like a passing car; similarly, my current apartment is near a light rail line, and after the first few weeks I no longer noticed the sound.
The unit itself seemed crowded, but mainly because of all the furniture. It was occupied by tenants, and while it had been cleaned up, it didn't show as well as the other condos I'd seen. Still, nothing seemed wrong with it, and it was in better shape than the Palm Avenue unit that I had started making an offer on. I wandered around, checked for mold, looked under the sinks, played with the doors and light switches. Everything seemed in good order.
Still, the fact remained that it was overpriced. This wasn't just a subjective feeling, and wasn't taken from the popular online home estimation tools like Zillow and CyberHomes. I kept crunching possible values based on different methodologies, and kept coming up with a pretty consistent price range that was quite a bit less than the asking price. At the simplest end, I took the price per square foot for similarly sized and aged units in Millbrae/Burlingame that had recently sold, and adjusted it for this unit's size. I also took the most recent sales prices in the complex (which required going back to 2004-2005, during the boom but before the peak of the bubble), and tracked where those prices would go assuming that they followed the same overall price changes of Millbrae as a whole. Doing this quantitative work helped me gain a lot of confidence, and made me more secure in deciding to wait until I could get a better price.
Friday, October 8, 2010
Too Slow, Too Loud
By now I was fully plugged in to the Redfin alert system. Every morning I would receive an email providing an update on the condo market in Millbrae and Burlingame: what properties had hit the market, which had dropped their prices, which had sold and at what price. This was incredibly useful, as it let me get a feel for the overall trends in the market, even beyond the (very) narrow area I was focusing on.
On a Tuesday morning, I saw a fascinating property hit the list: a small 1-bedroom condo at 88 South Broadway. I've been aware of this development for years, but hadn't thought that it had any 1-bedrooms. It was on the smallish size, but extremely well priced. A little too well priced. The only way I could imagine explaining the low price was if it was on the first floor facing directly onto El Camino Real. Still, I was sufficiently intrigued to request a tour.
I put in the tour request on that Tuesday. I got in touch with Matt, but we weren't able to schedule a showing before Saturday. When I showed up on Saturday, I found that it was more or less mobbed, with perhaps five or six parties squeezed into this small one-bedroom space, walking around and chatting. Matt was juggling me and another client. I really liked what I saw. The building is almost brand-new, having finished in 2007, and while this unit is less luxurious than most, it was still in great shape and had a really nice-looking kitchen.
So, why the low price? It was on the ground floor, but was at the back of the complex, facing onto South Broadway. Privacy was slightly limited, since a walkway came right outside the window. Matt had also learned from the listing agent that there were some complications with the unit - it was technically a "caretaker's unit," and theoretically intended for occupation by the property manager. Still, in practice, it could be freely bought and sold; the only restriction was that, if you rented it, you couldn't charge more than a certain amount for rent... I think that the limit was something like $1200 a month, pretty reasonable. So that helped explain the low price, but still, the restrictions didn't bother me, and this seemed like a once-in-a-lifetime chance to get into the development.
I'd toured the property Saturday. I started the offer wizard on Saturday night. Redfin agents have the weekends off, which I do not begrudge them, so I didn't hear from Sean until mid-Monday. He got in touch with the listing agent. On Tuesday, I learned that they had already accepted an offer and the property was no longer available. The next day, I saw it pop up as "Pending" in my email inbox.
That was probably the low point of my relationship with Redfin, although I don't know that it's necessarily their fault. For this very well-priced property with a lot of interest, getting in a few days earlier would have given me a shot at buying the property. Now, I don't know what price it ended up selling for, and it's totally possible that a bidding war would have pushed it beyond what I would be willing to pay for a small one-bedroom. Also, I don't know that a traditional agent would have been able to get me in to see it earlier, or been able to communicate my interest any more quickly to the sellers. Still, this was a case where Redfin's model seemed to suffer a little.
A little while later I toured a townhouse that was on the Burlingame side. This was the first townhouse I'd seen, and I have to admit to liking it. It had an integrated two-car garage, three stories, plenty of space, a balcony... lots of the stuff that I associate with traditional residential houses, but still at a (relatively) affordable price and in a great area.
The catch? As I had instantly noted on Google Maps, it was next to the train tracks. I went ahead and toured it since I wasn't sure if this particular unit was next to the tracks or farther back in the complex. Nope - it was front and center. I toured it in the morning during commuting hours, and paid attention as two Caltrains rumbled by. Nope... not happening. Even with the windows closed, it was quite loud, and while the floor didn't exactly shake, you could still feel the movement. I gave a sigh, and let that one go.
On a Tuesday morning, I saw a fascinating property hit the list: a small 1-bedroom condo at 88 South Broadway. I've been aware of this development for years, but hadn't thought that it had any 1-bedrooms. It was on the smallish size, but extremely well priced. A little too well priced. The only way I could imagine explaining the low price was if it was on the first floor facing directly onto El Camino Real. Still, I was sufficiently intrigued to request a tour.
I put in the tour request on that Tuesday. I got in touch with Matt, but we weren't able to schedule a showing before Saturday. When I showed up on Saturday, I found that it was more or less mobbed, with perhaps five or six parties squeezed into this small one-bedroom space, walking around and chatting. Matt was juggling me and another client. I really liked what I saw. The building is almost brand-new, having finished in 2007, and while this unit is less luxurious than most, it was still in great shape and had a really nice-looking kitchen.
So, why the low price? It was on the ground floor, but was at the back of the complex, facing onto South Broadway. Privacy was slightly limited, since a walkway came right outside the window. Matt had also learned from the listing agent that there were some complications with the unit - it was technically a "caretaker's unit," and theoretically intended for occupation by the property manager. Still, in practice, it could be freely bought and sold; the only restriction was that, if you rented it, you couldn't charge more than a certain amount for rent... I think that the limit was something like $1200 a month, pretty reasonable. So that helped explain the low price, but still, the restrictions didn't bother me, and this seemed like a once-in-a-lifetime chance to get into the development.
I'd toured the property Saturday. I started the offer wizard on Saturday night. Redfin agents have the weekends off, which I do not begrudge them, so I didn't hear from Sean until mid-Monday. He got in touch with the listing agent. On Tuesday, I learned that they had already accepted an offer and the property was no longer available. The next day, I saw it pop up as "Pending" in my email inbox.
That was probably the low point of my relationship with Redfin, although I don't know that it's necessarily their fault. For this very well-priced property with a lot of interest, getting in a few days earlier would have given me a shot at buying the property. Now, I don't know what price it ended up selling for, and it's totally possible that a bidding war would have pushed it beyond what I would be willing to pay for a small one-bedroom. Also, I don't know that a traditional agent would have been able to get me in to see it earlier, or been able to communicate my interest any more quickly to the sellers. Still, this was a case where Redfin's model seemed to suffer a little.
A little while later I toured a townhouse that was on the Burlingame side. This was the first townhouse I'd seen, and I have to admit to liking it. It had an integrated two-car garage, three stories, plenty of space, a balcony... lots of the stuff that I associate with traditional residential houses, but still at a (relatively) affordable price and in a great area.
The catch? As I had instantly noted on Google Maps, it was next to the train tracks. I went ahead and toured it since I wasn't sure if this particular unit was next to the tracks or farther back in the complex. Nope - it was front and center. I toured it in the morning during commuting hours, and paid attention as two Caltrains rumbled by. Nope... not happening. Even with the windows closed, it was quite loud, and while the floor didn't exactly shake, you could still feel the movement. I gave a sigh, and let that one go.
Friday, October 1, 2010
Scared Off
Like I said: far too little happened, then far too much.
I'll skip my description of the remaining units at Palm Avenue. I eventually did decide to start an offer on one of them, a short sale. It seemed perfectly situated - top floor, corner unit, views of the hills and the park - and I thought it would be worth the hefty price and HOA fee, despite the fact that it wasn't in great shape. (It wasn't decrepit or anything, but the doors stuck, and was really cluttered.)
I did the Redfin offer wizard thing. This works pretty well. Because this was a short sale, it wouldn't fit into the normal Redfin model - typically they refund up to 50% of their commission, but it's only 15% for short sales. Their web site says that these deals are handled by special affiliated agents, but in my case it was a Redfin team member, Sean Sullivan. He was extremely nice and helpful, like everyone I met at Redfin. He talked me through the process, got the disclosures, and sent them over.
Well.
I'd been cautiously optimistic before, but after reading the disclosures, I was ready to run away screaming. The seller seems to have been barely conscious while filling it out. Not only were many sections indecipherable, but many were just blatantly wrong. I mean, yeah, I can see why a seller might not want to admit certain things, but why on earth would you say "No" to the question "Is this property a condominium?" when, uh, it's a condominium? Are you trying to fool someone, who things that your single-family house happens to be elevated thirty feet in the air and surrounded by other single-family houses?
I chatted with Sean, and we mutually agreed that it wasn't worth pursuing. In addition to the "haphazard" (to use Sean's wonderfully understated phrase) manner in which the seller had filled out the disclosures, the seller's agent's disclosures also listed some serious stuff that I had overlooked, like mold and some encroachment issues. Sean's basic message was, "If you want to move ahead with this, we can, but personally I'd recommend against it." I agreed, and from that moment on felt confident that Redfin was on my side.
I'll skip my description of the remaining units at Palm Avenue. I eventually did decide to start an offer on one of them, a short sale. It seemed perfectly situated - top floor, corner unit, views of the hills and the park - and I thought it would be worth the hefty price and HOA fee, despite the fact that it wasn't in great shape. (It wasn't decrepit or anything, but the doors stuck, and was really cluttered.)
I did the Redfin offer wizard thing. This works pretty well. Because this was a short sale, it wouldn't fit into the normal Redfin model - typically they refund up to 50% of their commission, but it's only 15% for short sales. Their web site says that these deals are handled by special affiliated agents, but in my case it was a Redfin team member, Sean Sullivan. He was extremely nice and helpful, like everyone I met at Redfin. He talked me through the process, got the disclosures, and sent them over.
Well.
I'd been cautiously optimistic before, but after reading the disclosures, I was ready to run away screaming. The seller seems to have been barely conscious while filling it out. Not only were many sections indecipherable, but many were just blatantly wrong. I mean, yeah, I can see why a seller might not want to admit certain things, but why on earth would you say "No" to the question "Is this property a condominium?" when, uh, it's a condominium? Are you trying to fool someone, who things that your single-family house happens to be elevated thirty feet in the air and surrounded by other single-family houses?
I chatted with Sean, and we mutually agreed that it wasn't worth pursuing. In addition to the "haphazard" (to use Sean's wonderfully understated phrase) manner in which the seller had filled out the disclosures, the seller's agent's disclosures also listed some serious stuff that I had overlooked, like mold and some encroachment issues. Sean's basic message was, "If you want to move ahead with this, we can, but personally I'd recommend against it." I agreed, and from that moment on felt confident that Redfin was on my side.
Friday, May 14, 2010
New Condo Tours
So, exactly what have I been up to since my last post back in December? That is, almost six months ago?
Waiting and seeing, mostly. I'd become increasingly interested in Millbrae as my target area, but had also come to realize that there just weren't a lot of options out there in my price range. There are very few older condos in Millbrae, and the newer ones are darn expensive. Since I wasn't in a big rush to move, I decided to wait until the Millbrae Paradise units came on to the market; if they were reasonably priced, as seemed likely, then I would proceed. I was worried that, if I picked something else in the meantime, I'd feel like a dud when Millbrae Paradise came online if it turned out to be a better deal.
So, for the most part, I've been monitoring Redfin and Craigslist - or, rather, reacting to the subscriptions that I have set up on those sites for notices of new listings - but hadn't been actively touring anything. Finally, Millbrae Paradise started touring, so I got back in touch with Redfin and set up a tour; along the way, I also decided to visit Park Broadway, which had always been a marginal choice for me but seemed like a good basis for comparison since it's the newest nearby construction.
I first discovered that, thanks to the vagaries of Redfin's territory division, the area I was interested in (southern Millbrae and northern Burlingame) was divided between two totally different offices. Burlingame is covered by the Peninsula team ("Redwood City to San Mateo", though they do handle points north and south as well), while Millbrae is covered by the San Francisco/Marin team. I didn't just have a new field agent, but a whole new office as well. I just sort of shrugged it off and went with it, though. I was happy to see that, even though it had been more than four months since my last Redfin tour, they still had all my approval stuff on file and I didn't need to give them anything more to keep going.
Millbrae Paradise isn't listed on the MLS, so I submitted a tour request for a Park Broadway loft that was listed, and in the tour notes also requested a tour of Millbrae Paradise. I indicated my flexibility for tour times. This was towards the end of April, so I was kind of pushing to do it soon; in the best case, I figured, I'd check out Millbrae Paradise, it would be totally awesome and affordable, and I could quickly get in an offer and do a double-dip on the federal and state tax credits as a first-time homebuyer of a new construction condo.
First up was Park Broadway. It ended up being much nicer than I had thought. They've dropped the prices of these 1-bedroom loft units substantially, most recently another $50k. I had never bothered to visit because I was weirded out by the fact that they directly face onto El Camino Real at street level. I was pleasantly surprised to note that, at least in the model unit, the noise was practically unnoticeable, and with the demo window treatments, you got a lot of light without feeling like you were sitting next to a highway. It helps that these units are set a bit below street level, behind a railing that separates them from the street and public sidewalk. Plus, they're just huge; even though they are only one bedroom, they are extremely spacious. Despite my reservations, I found myself actually considering grabbing one; it fit within my price range, looked great, and was freaking huge. Ultimately, though, I decided that the siting was just a non-starter for me. If I'm going to pay Bay Area prices for real estate, I want to be able to enjoy Bay Area weather, and it was depressing to think that I'd need to always keep the windows shut and stay indoors when I was home.
Next up came Millbrae Paradise. I'd patiently been waiting a long time for them to finish, and was glad to finally get inside, but they clearly have a lot more left to go; even though the model units are ready, there's a lot of construction happening throughout. After a little initial confusion over exactly where the sales center is (a sign points into an adjacent parking lot, while the actual trailer is farther up the street), I met the very pleasant sales associates. I was turned off by how unforthcoming they were about the prices on the units; apparently this is fairly typical for new construction, but still, I would have really appreciated a straight answer regarding how much something costs. I eventually figured out that even their cheapest 1-bedroom unit (a smallish condo on the second floor) would be going for a cool $100k more than my maximum budget. Yikes! I felt glum - I'd staked too much on a couple of words on their website, which boasted about "Affordable Elegance"; I guess we have different definitions of "affordable." As long as I was finally there, though, I went ahead and did the tour.
The models do look really nice. They are just a little slap-dash - I thought that their cabinets were extremely modern, but it turns out that the contractors just had forgotten to attach the knobs. On the whole, I could really see myself living there, which just made me more bummed that they were outside my range. Even though the rational part of my mind realizes that the quality of finishes and appliances are the least important aspects of a home, far behind the importance of location and solid construction, there's still an undeniable visceral reaction that I experience when I walk into a place that just feels really nice and high-quality.
We finished the tour, went back to the sales trailer, I sat down, we chatted just a little longer, I asked about a particular unit, they again wouldn't tell me the price, but said that they could speak with the manager. I said "No, thanks," and left.
All in all, a bit of a bummer. I spent the next day moping around; I hadn't realized until then just how thoroughly I had convinced myself that I would end up living there.. Still, what was done was done. I decided to make a clean break, put Millbrae Paradise (which, inexplicably, has now changed its name back to Belamor again) out of my mind, and decided where to go from there.
Waiting and seeing, mostly. I'd become increasingly interested in Millbrae as my target area, but had also come to realize that there just weren't a lot of options out there in my price range. There are very few older condos in Millbrae, and the newer ones are darn expensive. Since I wasn't in a big rush to move, I decided to wait until the Millbrae Paradise units came on to the market; if they were reasonably priced, as seemed likely, then I would proceed. I was worried that, if I picked something else in the meantime, I'd feel like a dud when Millbrae Paradise came online if it turned out to be a better deal.
So, for the most part, I've been monitoring Redfin and Craigslist - or, rather, reacting to the subscriptions that I have set up on those sites for notices of new listings - but hadn't been actively touring anything. Finally, Millbrae Paradise started touring, so I got back in touch with Redfin and set up a tour; along the way, I also decided to visit Park Broadway, which had always been a marginal choice for me but seemed like a good basis for comparison since it's the newest nearby construction.
I first discovered that, thanks to the vagaries of Redfin's territory division, the area I was interested in (southern Millbrae and northern Burlingame) was divided between two totally different offices. Burlingame is covered by the Peninsula team ("Redwood City to San Mateo", though they do handle points north and south as well), while Millbrae is covered by the San Francisco/Marin team. I didn't just have a new field agent, but a whole new office as well. I just sort of shrugged it off and went with it, though. I was happy to see that, even though it had been more than four months since my last Redfin tour, they still had all my approval stuff on file and I didn't need to give them anything more to keep going.
Millbrae Paradise isn't listed on the MLS, so I submitted a tour request for a Park Broadway loft that was listed, and in the tour notes also requested a tour of Millbrae Paradise. I indicated my flexibility for tour times. This was towards the end of April, so I was kind of pushing to do it soon; in the best case, I figured, I'd check out Millbrae Paradise, it would be totally awesome and affordable, and I could quickly get in an offer and do a double-dip on the federal and state tax credits as a first-time homebuyer of a new construction condo.
First up was Park Broadway. It ended up being much nicer than I had thought. They've dropped the prices of these 1-bedroom loft units substantially, most recently another $50k. I had never bothered to visit because I was weirded out by the fact that they directly face onto El Camino Real at street level. I was pleasantly surprised to note that, at least in the model unit, the noise was practically unnoticeable, and with the demo window treatments, you got a lot of light without feeling like you were sitting next to a highway. It helps that these units are set a bit below street level, behind a railing that separates them from the street and public sidewalk. Plus, they're just huge; even though they are only one bedroom, they are extremely spacious. Despite my reservations, I found myself actually considering grabbing one; it fit within my price range, looked great, and was freaking huge. Ultimately, though, I decided that the siting was just a non-starter for me. If I'm going to pay Bay Area prices for real estate, I want to be able to enjoy Bay Area weather, and it was depressing to think that I'd need to always keep the windows shut and stay indoors when I was home.
Next up came Millbrae Paradise. I'd patiently been waiting a long time for them to finish, and was glad to finally get inside, but they clearly have a lot more left to go; even though the model units are ready, there's a lot of construction happening throughout. After a little initial confusion over exactly where the sales center is (a sign points into an adjacent parking lot, while the actual trailer is farther up the street), I met the very pleasant sales associates. I was turned off by how unforthcoming they were about the prices on the units; apparently this is fairly typical for new construction, but still, I would have really appreciated a straight answer regarding how much something costs. I eventually figured out that even their cheapest 1-bedroom unit (a smallish condo on the second floor) would be going for a cool $100k more than my maximum budget. Yikes! I felt glum - I'd staked too much on a couple of words on their website, which boasted about "Affordable Elegance"; I guess we have different definitions of "affordable." As long as I was finally there, though, I went ahead and did the tour.
The models do look really nice. They are just a little slap-dash - I thought that their cabinets were extremely modern, but it turns out that the contractors just had forgotten to attach the knobs. On the whole, I could really see myself living there, which just made me more bummed that they were outside my range. Even though the rational part of my mind realizes that the quality of finishes and appliances are the least important aspects of a home, far behind the importance of location and solid construction, there's still an undeniable visceral reaction that I experience when I walk into a place that just feels really nice and high-quality.
We finished the tour, went back to the sales trailer, I sat down, we chatted just a little longer, I asked about a particular unit, they again wouldn't tell me the price, but said that they could speak with the manager. I said "No, thanks," and left.
All in all, a bit of a bummer. I spent the next day moping around; I hadn't realized until then just how thoroughly I had convinced myself that I would end up living there.. Still, what was done was done. I decided to make a clean break, put Millbrae Paradise (which, inexplicably, has now changed its name back to Belamor again) out of my mind, and decided where to go from there.
Tuesday, May 11, 2010
The Pre-Approval Aeneid
Well!
It's been a while, hasn't it? I apologize. For a long time, nothing much was happening on the condo front. Then, too much was happening. I'll try and work through the backlog here, in roughly chronological order, to the best of my recollection.
First topic: financing!
I previously described getting pre-approved for a mortgage. You can get pre-approved from any lender at all; you aren't obligated to get a loan from them, and in fact, many people will get pre-approved from a traditional bank or broker that gives them great service, and then get their final loan from a cheaper source. However, I wanted to go ahead and get pre-approved from the lender I was most likely to close with, so I shopped rates for two weeks, and ended up with San Mateo Credit Union.
Because this is the first time I had gotten pre-approved, I assumed that my experiences were typical. In particular, I was surprised that, contrary to my expectations, they asked for a deposit and would only pre-approve me for a specific amount, one I had to guess myself. Well, it turns out that that isn't the way everyone operates!
A pre-approval is only good for a certain time, in my case 2-3 months. After that, you should renew it. In my case, though, I really didn't want to. Every time you renew a pre-approval, the lender pulls your credit again, which causes your credit score to drop a little more, which makes it harder for you to get a loan. Yeah, I know, crazy, right? As a result, I let my pre-approval lapse a few times, only renewing it when I thought there was a good chance that I would be making an offer soon.
Most recently, that was in early May. I had decided to slightly change the range of properties I was looking at, which required a bump up in my pre-approval limit. I felt comfortable going above it; I had chosen the original amount more or less at random, based on my comfort level at the time and expecting that my lender would automatically adjust it up or down to the "real" limit. Since then, I had just been refreshing the same amount, but now I wanted to hit a specific target; my finances have improved since my first round, and I felt comfortable with a bigger figure.
Since it had been so long since my original submission, the folks at the credit union asked me to start my application over again. Which was fine; because I was asking for more, I wanted to be sure that they saw my most recent paycheck, bank statements, etc. I got to the end of the application, and came to an ugly realization - they were asking me for a $250 deposit, but unlike the last time, this was non-refundable. If I went ahead with a loan, they would apply it to my closing costs, but otherwise, they would just keep it.
Needless to say, I was peeved. This was a pre-approval! I understand that they incur a cost to pull my credit, but even so, if they're going to charge me for it they should just charge for the pull. And really, this should just be part of the cost of them doing business. "Is this customary?" I wondered, and I dusted off my old list of links from summer 2009 when I first went shopping rates.
Well, well, well... turns out that things can change in a year! In 2009, San Mateo Credit Union was hands-down the best lender for my type of loan (conforming mortgage on a condo, 20% down). Both their fees and their rate were lower than anyone else, across the multiple weeks that I monitored things. Now, though, Provident Credit Union had come roaring back. Provident is another regional credit union, although they cover the entire Bay Area and not just the Peninsula. Their fees were now just a little larger than SMCU's, where before they were about $5000 more expensive. And, their rates were .15% less... not huge, but enough to make a difference. I did some quick calculations, and realized that Provident's rates would more than make up for their higher fees in the first year.
I dug a little more. Both Provident and SMCU use the same back-end service for loan application/pre-approval, but Provident doesn't charge a bogus $250 deposit. Score! I happily took my business elsewhere. The process was a breeze, and unlike my initial SMCU experience, they completed the whole thing online and furnished me with an initial pre-approval letter in my browser. Success!
The good times didn't end there, though. I was soon contacted by a loan officer from Provident who asked me to send him my proof of income and assets. I complied - I already had my letter, but would need to do all that stuff if I went ahead with the loan anyways, so why not get it over with? He was great, keeping in touch via email, and went ahead and told me the maximum I qualified for, without me even asking. He even sent me an Excel spreadsheet, personalized for my type of loan, where I could play with different figures to see what my monthly payments would be. That's the sort of thing you can find online, but still, it was a great convenience, a nifty use of technology combined with a personal touch. He also went out of his way to tell me that he could re-generate a loan approval letter for me when I'm ready to make an offer (to avoid tipping my hand in negotiations).
As you can probably tell, I'm now a fan of Provident. I went ahead and became a member, and, assuming that their rates stay at about the same spot relative to their competitors, will most likely take my final mortgage from them. The whole thing is kind of funny - because San Mateo Credit Union tried to get $250 out of me, they'll end up missing out on hundreds of thousands of dollars in interest that they could have collected out of the life of my loan. I suppose a business person could draw some sort of conclusion from that.
It's been a while, hasn't it? I apologize. For a long time, nothing much was happening on the condo front. Then, too much was happening. I'll try and work through the backlog here, in roughly chronological order, to the best of my recollection.
First topic: financing!
I previously described getting pre-approved for a mortgage. You can get pre-approved from any lender at all; you aren't obligated to get a loan from them, and in fact, many people will get pre-approved from a traditional bank or broker that gives them great service, and then get their final loan from a cheaper source. However, I wanted to go ahead and get pre-approved from the lender I was most likely to close with, so I shopped rates for two weeks, and ended up with San Mateo Credit Union.
Because this is the first time I had gotten pre-approved, I assumed that my experiences were typical. In particular, I was surprised that, contrary to my expectations, they asked for a deposit and would only pre-approve me for a specific amount, one I had to guess myself. Well, it turns out that that isn't the way everyone operates!
A pre-approval is only good for a certain time, in my case 2-3 months. After that, you should renew it. In my case, though, I really didn't want to. Every time you renew a pre-approval, the lender pulls your credit again, which causes your credit score to drop a little more, which makes it harder for you to get a loan. Yeah, I know, crazy, right? As a result, I let my pre-approval lapse a few times, only renewing it when I thought there was a good chance that I would be making an offer soon.
Most recently, that was in early May. I had decided to slightly change the range of properties I was looking at, which required a bump up in my pre-approval limit. I felt comfortable going above it; I had chosen the original amount more or less at random, based on my comfort level at the time and expecting that my lender would automatically adjust it up or down to the "real" limit. Since then, I had just been refreshing the same amount, but now I wanted to hit a specific target; my finances have improved since my first round, and I felt comfortable with a bigger figure.
Since it had been so long since my original submission, the folks at the credit union asked me to start my application over again. Which was fine; because I was asking for more, I wanted to be sure that they saw my most recent paycheck, bank statements, etc. I got to the end of the application, and came to an ugly realization - they were asking me for a $250 deposit, but unlike the last time, this was non-refundable. If I went ahead with a loan, they would apply it to my closing costs, but otherwise, they would just keep it.
Needless to say, I was peeved. This was a pre-approval! I understand that they incur a cost to pull my credit, but even so, if they're going to charge me for it they should just charge for the pull. And really, this should just be part of the cost of them doing business. "Is this customary?" I wondered, and I dusted off my old list of links from summer 2009 when I first went shopping rates.
Well, well, well... turns out that things can change in a year! In 2009, San Mateo Credit Union was hands-down the best lender for my type of loan (conforming mortgage on a condo, 20% down). Both their fees and their rate were lower than anyone else, across the multiple weeks that I monitored things. Now, though, Provident Credit Union had come roaring back. Provident is another regional credit union, although they cover the entire Bay Area and not just the Peninsula. Their fees were now just a little larger than SMCU's, where before they were about $5000 more expensive. And, their rates were .15% less... not huge, but enough to make a difference. I did some quick calculations, and realized that Provident's rates would more than make up for their higher fees in the first year.
I dug a little more. Both Provident and SMCU use the same back-end service for loan application/pre-approval, but Provident doesn't charge a bogus $250 deposit. Score! I happily took my business elsewhere. The process was a breeze, and unlike my initial SMCU experience, they completed the whole thing online and furnished me with an initial pre-approval letter in my browser. Success!
The good times didn't end there, though. I was soon contacted by a loan officer from Provident who asked me to send him my proof of income and assets. I complied - I already had my letter, but would need to do all that stuff if I went ahead with the loan anyways, so why not get it over with? He was great, keeping in touch via email, and went ahead and told me the maximum I qualified for, without me even asking. He even sent me an Excel spreadsheet, personalized for my type of loan, where I could play with different figures to see what my monthly payments would be. That's the sort of thing you can find online, but still, it was a great convenience, a nifty use of technology combined with a personal touch. He also went out of his way to tell me that he could re-generate a loan approval letter for me when I'm ready to make an offer (to avoid tipping my hand in negotiations).
As you can probably tell, I'm now a fan of Provident. I went ahead and became a member, and, assuming that their rates stay at about the same spot relative to their competitors, will most likely take my final mortgage from them. The whole thing is kind of funny - because San Mateo Credit Union tried to get $250 out of me, they'll end up missing out on hundreds of thousands of dollars in interest that they could have collected out of the life of my loan. I suppose a business person could draw some sort of conclusion from that.
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