Real estate protip: identify stupidity early, and back away

Deb and I are in the process of looking for a hovel, hut, or well-appointed army tent in the Portland area. Those cost $250K and up.

San Franciscans can laugh all they want, because I’m laughing at the idea that anyone anywhere thinks any dwelling is worth $750K unless one is so rich one doesn’t care what houses cost, or is an investor. So there.

We made an offer on a house in a Portland suburb, and we saw what we should have realized was a combination of listing agent stupidity/apathy and seller loopiness. The way this works is that the seller either accepts the offer or counters with another. In this case, the seller came back with a weird counter offering two options: raise the price and get a credit at closing, or accept our price but refuse to perform repairs. Well, you don’t want the seller to do the repairs anyway. Better to just negotiate a price reduction and hire the repairs done right than have the seller pick the lowest bid that will satisfy the obligation. However, the counter was too weird, so we rejected it and just reiterated our original offer. They accepted, and quickly.

We should have seen that goofy counter as the first serious trouble sign, and not gotten too hyped up. That’s the message of this blog post.

Then the fun began. First, our highly capable agent began to worm details out of her inept counterpart. The gist: she wasn’t paying her clients much attention, her clients were cash-poor with the wife pregnant and them needing a new place, and the seller fancied himself a Master of Home Repair/Improvement Space and Time. We hired the necessary inspections and awaited the results.

Sadly, the seller had neglected the roof for years. Portland is a very wet climate where all conscientious homeowners must look very carefully at roofs, the weather side of houses, and drainage. The seller had done a remarkably poor job caulking the weather siding, had permitted a lot of moss to grow on the roof, and was unaware (or did not disclose) that he had water and rodent turds in his crawl space. There were other issues, with added potential for mistakes on his part that might be behind walls or bathtubs or sinks he had installed without benefit of professional guidance.

After estimating that it would cost us $12K to bring the property up to basic standards of good weather resistance, we sent the seller two offers: either fix a list of problems himself, or give us $6K off the price and we’d handle the repairs on our own. Lenders won’t lend on worn-out roofs, so we were sure he would just sign the one with the discount. If he wasn’t very careful (or if his agent was a moron), the evil word ‘roof’ would become part of his necessary disclosures should he choose to sell. We sent selected inspection pages to show the problems.

Incredibly, he put into writing that he rejected both our offers (thus making the one with ‘roof’ part of the record, because he acknowledged that one’s existence) and reiterated his price. His agent over-revealed, complaining that he had so little equity he couldn’t lower his proceeds. (However, he did have a very nice boat in his garage, and had wanted a long closing date, because he and his wife had a big vacation planned.)

I cyberstalked him a bit and found out that he worked in accounts payable. Accounts defaultable is more like it.

The more I thought about it, the worse I felt about the place. Who knew what troubles lurked? I had visions of having to pay tens of thousands to rip off an entire mold-filled house side. Plus, he was being a general pill. He had under-disclosed the condition (a polite way to say that he lied), and was now being an ass when caught in his under-disclosure. Deb and I talked it over and decided to trigger the inspection contingency. Back to the search.

Fortunately, the guy will get his just rewards. Now he must disclose the conditions. If he refuses, his agent will dump him. If she doesn’t, she could be in major trouble. In any case, he has to hope for a sucker to come along, a sucker of such magnitude that said sucker will box him/herself into accepting a home with enormous potential downside. He needs a first-time home buyer represented by a lamentable agent. And even then, when the roof is inspected, he’ll have to either fork out himself or convince a buyer to do that–before closing. In the end, if he’s that strapped, he’ll have to keep the house, because he evidently can’t afford to fix it and won’t compensate a buyer for doing so.

And that’s hoping that after the sale, no one happens to send his buyer a copy of the previous inspection report, proving that the seller knew of the problems and failed to disclose.

I really, really don’t like dishonesty in business transactions. Maneuvering is fine; negotiating is expected; compromise is necessary. Lying is punishable.

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