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Wednesday, November 4, 2009

How to buy a house in 25 steps!

In August of this year I started a new job. In September, my wife gave birth to our second child. So naturally, my wife and I decided to buy a house in October.

Because, hey, our lives weren’t already complicated enough.

For the past couple of months, my wife and I have been spending our Saturdays looking at other people’s houses and trying to decide which one to buy. We made four offers. One of them was outright rejected, another was ignored, and the other two were accepted. The first of the two that were accepted fell through because of legal reasons having to do with large pills and lots of water.

No, wait. That’s prostate. The problem with the offer was probate law. My mistake, though it’s understandable. Both problems are painful but would be largely preventable with some common sense.

If you’re reading this, it means we’ve closed on the other offer that was accepted and we’re in the process of moving into our new home. If you’re not reading it, it’s because we got screwed over by a combination of bankers, realtors and lawyers. Or because you don’t visit this blog. Either way, I’m pissed off.

But assuming that you are reading this, I’d like to share some of the lessons I learned while shopping for a house. First off, you should know what the steps are to buying a house, because nobody in the whole process; not the lawyers, not the bankers, and sure as heck not the realtors; is going to tell you. So here are the steps to buying a house:

1) Find a house you like. You think this is the hard part, but it’s not.
1A) While you’re looking for a house, get a preapproval letter from a bank saying that you can afford to buy a house. It’s a worthless scrap of paper that will be of no use to you ever, but seller’s agents like to see them.
2) Make an offer on the house you like.
3) Wait for somebody to acknowledge that you offered them hundreds of thousands of dollars for a large wooden box. Sign and initial two more offer letters because the seller let the first two expire.
4) Find out that the seller thinks there weren’t enough thousands of dollars in your offer to purchase his large wooden box that he doesn’t want anymore.
5) Make a counteroffer on the house.
6) Get a verbal acceptance that means precisely jack.
7) Sign and initial at least three additional offer letters saying exactly the same thing but with different expiration dates because the seller dragged his feet on signing the one he said he accepted.
8) Hire a home inspector to make sure you still want to buy the house.
9) Take the home inspection results and make a new offer on the house because at least some of those thousands of dollars you offered were based on the assumption that the roof wouldn’t cave in on you during the first winter.
10) Repeat steps 3 through 7 until you arrive at a price and set of conditions in which nobody is really happy but everyone just wants to be done with it. This is called compromising.
11) Get a lawyer to draft a Purchase and Sale agreement that won’t be acceptable to either you or the seller.
12) Apply for a mortgage loan and pray that the bank says yes in time for the closing date on the draft of the purchase and sale agreement.
13) Review and make changes to the purchase and sale agreement because the lawyer put in some language requiring you to perform the rite of Ash Kaban in the nude every solstice or forfeit the house and any equity to the lawyers.
You think I’m kidding.
14) Review and make changes to the changes that the sellers made while you were making changes to your draft.
15) Hold a gun to the seller’s agent’s head until he or she takes the agreement that you and the sellers came to and gets an actual, you know, signature on it.
16) Have the house appraised so the bank will loan you the money to buy it, and hope that the bank thinks it’s worth the money you think it is.
17) Provide the same employment and bank information to another person at the same bank you applied for the mortgage loan at because bankers don’t trust other bankers either.
18) Buy homeowners insurance. You will be allowed to think that someone else deals with this until it’s almost too late to do it.
19) Wait around thinking everything is lined up and squared away.
20) Receive a letter from the lawyers informing you that you need to do something that involves spending a lot of money to do something you didn’t know you needed to do, but probably involves either something to do with the title, or something to do with “points.”
21) Wait around hoping everything is lined up and squared away.
22) Do your “final walkthrough” to make sure the sellers didn’t take the light fixtures or toilets.
23) Get a call from the lawyers telling you how big of a check to bring to the closing ceremony.
24) Sign away most of your life’s savings and a large chunk of your income for the next few decades in exchange for a large wooden box.
25) Move into the wooden box and live there.

That’s a lot, and I’m probably missing some steps. And yet nobody will tell you what you have to do until it’s almost too late to do it. No other industry could survive by taking so much money and providing so little information about the actual product.

And that's it for this week. Next week, maybe a post!