So: Today's the Day?
Everyone has said that 3 pm is the settlement time. Don't know why, maybe that's when the Bankers can all get together?
So all day I'm waiting for the phone call to tell me I'm a home owner.
3 O'Clock comes and goes...
At 4:30 my wife calls to say that she's not been called and what should she do. I suggested call the conveyancer (I'm not sure why though as he wasn't going to be there).
4:32 Sandi calls back to say the Real Estate have just called to say that the settlement has taken place!
So: We are now proud owners of 5% of our house!
Very odd all this happening in secret; and then the announcement with no fanfare. The Conveyancer left a message on my voice-mail later in the day to say that the settlement occurred and that we have the balance of our First Home Owners Grant transfered into our account (after his fees were taken out). It will be interesting to see what that all adds up to...
At least all the moving arrangements we've made for the weekend can go ahead (why do I get this feeling I've just jumped from the frying pan into the fire?)...
Now it's our house we'll be able to take photos and measure properly (so be patient for the images). First job is to see if there are really termites in the bathroom wall.
One Day to Go!
So, apparently we'll be settling on our house tomorrow! But you wouldn't know: it seems all of this is done in secret.
That was said at the beginning: that we just had to get the ball rolling and it would all take care of itself.
Fair enough (maybe): but we'd still like to know what is happening. We are the ones, after all, who bears the cost if it's delayed. The last we heard was from our Conveyancer who said that the vendor's bank wanted to bring the Settlement day forward a day (because the lass who was handling it didn't work Thursday or Friday): that was last week.
I guess we'll find out tomorrow?
On a brighter note:
The past two weeks have seen the contents of our house progressively disappear into boxes, that are now stored in our sun room.
The actual move day is this Saturday; at this rate we'll only have the day-to-day things to pack on the move day.
- We've got a locksmith booked to come in and do the door locks
- We've got a box full of window locks ready to go on
- We've got the carpet cleaner booked to clean our rental carpets
- Telephone, Gas and Electricity are booked to move to the new address
We'll be SO glad when it's all over!
Two Weeks to go...
Four weeks in and two weeks to go...
- The revised loan documents finally arrived, have been signed, and sent back to the Bank.
- We've had the house insured
- Which meant that we had to commit to the house having dead-locks and window lock
- Have been informed by the Office of State Revenue that the First Home Owners Grant was approved (still not sure where that money goes...)
So today we inspected the house again to check those things and discovered that we needed to get the doors locks up-graded.
I'll do the window locks myselft, bought locally at $40/pack of 4; and put them in the day after settlement before we move in.
The Real Estate Agent said it's all just a matter of booking the removalists and waiting. I can agree about the waiting!
Waiting, waiting, waiting...
It's two weeks down, four to go...
and no news from the Bank re the new loan.
How long does a loan take to go through?
Because we're renting, we have to give three weeks notice, so allowing for a week's overlap (for moving) thats 2 weeks from now: it's amazing how tight it all feels (we'll certainly be glad when it's all over).
Did I mention this before? The Real Estate fellow said that he was surprised that this was the first house we'd bought. Part of the reason for that is that we were very structured in the way that we looked at the houses and had a good
House Finding Kit.
The Loan: Part II
OK: How long do you sit and wait for the Bank to get back in contact with you whilst the 42 day exchange period is ticking away (and the penalty clauses are getting closer every day)??
I guess I got to the end of my limit last Friday. So I rang the Bank again and explained again...
They said that they had a record of speaking with the Loan Agent earlier in the month but no record of my fax. They suggested that I contact the Loan Agent.
When I rang the Conveyancer and told him the problems we were having it felt like he reprimanded me for not using the services of the professionals I'd hired (Loan Agent and Conveyancer). Is that reasonable?
So I rang the Loan Agent and he said that the Bank had sent him the fax I'd sent the Bank and he was preparing a response; but the up-shot was:
- A new Loan Offer is required (which is completely different to what they'd told him previously); and
- Salaries can not be deposited into the loan account (which he says that he showed us in a product disclosure statement - which he definitely did not show us).
To my understanding, this Loan Offer was going no where, and if we'd just continued as we were the wheels would have fallen off down the road a ways, and could have delayed us some more.
What I don't understand is:
- The Conveyancer gave us the Loan Offer without reading it and asked us to sign it and bring it back: would he have picked up the Special Condition issue?
- The Loan Agent didn't even see the Loan Offer (it was sent directly to the Conveyancer), so he didn't even have the chance to detect the problem. That sort of separation almost had disastrous effects!
Recommendation: Read everything, Pray, then read it again!
Then to top off my non-understanding of things: the Conveyancer said on Friday that he'd just received the new contracts from the other solicitor a week or so after being posted (he was presuming that the poor handwriting had cause a slow delivery from the Post Office). I was caught off guard and didn't ask what I should have:
- If you only got the new contracts on Friday, what did you exchange the previous Thursday a week ago?
Sometimes it feels like we are being given the run-around to keep us confused (but I'm sure that can't be true??)
The Loan
We've received the Loan documents from the Conveyancer, and apart from being long, involved and with a fair amount of lingo, were not too bad: we're hoping that the Conveyancer knows what he's doing.
We were quite surprised to find though, a section in the Special Conditions section that says that the Bank's solicitor needs to satisfy himself that the house sold for the agreed price. This is quite different from what the Loan Person told us!
We were going through a third-party consultant to the Bank, and were not unhappy to do so as that way he'd receive a commission for all the time he'd spent answering our questions. But as the time went on the cracks between lender and agent became more and more apparent:
- He said it was more advantageous that we went through him as the Bank would then do a full pre-approval not just a conditional approval: The pre-approval came through exactly the same as if we'd done it ourselves!
- He said that the Bank we wanted to use was the second most popular loan product he wrote: but when he came to do the application form he stumbled through the whole thing as if that was the first time he'd seen it!
- He said that we'd be able to have our salaries deposited into the loan account directly by our employers: The Loan Account terms & conditions says this is not possible!
And now the repercussions of the price reduction are completely different to what he said!
I know that when I was at Macquarie controlling our Agents was a real issue: it was just too easy for their information to become 'out of date' or them to use our information incorrectly. But it's the Bank's job to control the Agent...
It makes you wonder if it would not have been better to go straight to the Bank and let the bank keep the commission??
So I rang the bank and asked what the story was when the sale price of the house is renegotiated after the loan is approved: They said to fax the details in and they'd get back in contact with us.
I've sent the fax, but are yet to hear from the Bank.
The Exchange
Our Conveyancer informed us that the vendor's Solicitor has sent the revised contract with the reduced sale price and the other changes he requested and was ready to exchange on our approval.
We transfered the Deposit into the Real Estate Agent's bank account (in three bites because of the $5K daily limit), and once that has cleared the contracts can be exchanged.
We had been in contact the the Loan person about the reduced sale price. He had suggested that we keep the sale price the same and get the vendor to give us the difference after the sale. When I mentioned this to our Conveyancer, he said he knew a few people in gaol for doing the same thing!
We've obviously decided to keep everything above board.
We gave our Conveyancer approval to exchange on Thursday.
The House Finding Tool-Kit
This is not meant to be an all inclusive list, just what we found helpful.
- Real Estate Websites
- Council Map Website
- Loan agent
- Analysis Spreadsheets
- A good idea of what you want
- Tape measure, pencil and paper
- Good looking practices
- A good builder friend
Real Estate Websites
Although sites like just-listed are good overall sites, I prefered to look at the actual Agent's website. Surprisingly, these were sometimes hard to find!
Council Map Website
The local council map website is a great resourse for checking zoning, slope, character, etc. Even the aerial photography map is very handy!
Loan agent
We chewed the ear of a third-party loan agent for many hours to understand the whole mechanism. Although the information has been very helpful, we've wondered about the accuracy sometimes.
In hindsight we would probably go straight to a Bank in future.
Analysis Spreadsheets
I like spreadsheets: the spreadsheets we used did calculations for:
- Post mortgage Budget [Essential]
- Borrowing capacity (based on budgeted repayments)
- Real position (for each house looked at) based on price, additions required, etc.
- We even did a questionaire to rank houses to help choose between a couple of house.
We knew exactly what we could afford, and allowed for higher interest rates. When we discussed our needs with the Loan Agent, what we were asking for was well below what the Bank's limits.
A good idea of what you want
This is best written down [in point form] and taken around to the houses when you view them; then you can actually check-off the Essentials, Desirables and Optionals.
Our list formed the basis our the questionaire, so that we could rank each house and get an overall score based on our requirements. The questionaire was not essential (but was good fun) and did prove that the two houses we compared were very close (numerically) and one of us liked one house and the other one liked the other house!!
Tape measure, pencil and paper
Essential for measuring up the house and making notes. Room sizes can seem to be incredibly different to what they really are, which makes comparisions impossible. Taking measurements, even if only pacing out a room, make it easy.
Notes are very important for recording initial impressions: these are very easy to forget once you've left and gone home again to discuss the houses.
Good looking practices
- Always drive to the house in a different car to the Real Estate salesman: this gives you some privacy to discuss the houses.
- Only look at 3 house at the most at one time.
- Always look at houses together.
- Take measurements and make notes.
A good builder friend
Someone impartial, who knows what they are talking about and can give ball-park figures for various options: absolutely essential (thanks Greg!).
Staying Fair
I know that I'd want the buyer to be fair with me if I was selling, so it's important to me to be fair to the owner; although it is somewhat scary at times and does strain the trust.
So the Owner has reduced his price by $10K to accommodate the structural issues of a 70's addition that compromise the Termite inspection abilities (the additions can hide any access ways termites might make and then we'd never know if there was an infestation - apart from getting lucky).
The issue I guess was that we had already decided that we needed to do some alterations to the house so that we could live the way we want (I should describe this a little more at some stage), and the extra funds required to do the rectification work was pushing those alterations back (more than we liked).
A big problem in all of this thinking is that we are not working on real numbers (so much for
getting real), but only estimates and ball-parks. The house was not drawn up and our builder friend had only seen it once. So our builder friend could say "allow $X", when in actual fact it could be double, or even half (
I wish). But that was all we had to deal with, so we did...
So we tossed and turned this issue around:
- 289K - 30K = 259K [Original price minus reconstruction ball-park of addition]
- 280K - 20K = 260K [Original agreed offer minus ball-park to rectify issues]
- 280K - 10K = 270K [Original agreed offer minus minimum rectification to bathroom area]
What was the fair calculation? And was it do-able??
Was it do-able?
What tipped the scale, was a LONG talk to the Pest Professional, who said that
HE would live in the house for 10 years with a chemical barrier treatment. What that did for us was that that gave us the time necessary to save up to do the rectifications, and conceptually the alterations could be done whilst we lived in the house. Yes we could do it!
Was the price fair?
We finally decided we thought it was. We didn't think that we could ask the Owner to fund our alterations, but it was fair that he pay for the rectification of the problems. $270K was fair.
Can we be bothered?
Because this house is still the only house we've seen in the 3 months looking that we feel we can work with, and the expected results are quite nice: We can be bothered!
So we've replied to the Real Estate Agent that we've accepted the Owner's $270K offer.
Now the plethera of other people take over to organise contracts, exchange, cheques, etc and we can sit back and have a cup of tea!
Getting Real
The Owner, the Real Estate Agent, the Pest Professional and the prospective buyer (me) were all on site to look into the wall that was identified by
the Tyrrells Pest Report.
The Owner had agreed to an offer of $280K, $9K down on his original price. We'd first offered $270K as alterations were necessary. But it all felt pretty tight still, and the thought of having to spend a further $4K on termite treatment felt like it was pushing us over the edge.
No dramas so far: the Agent was doing what all agents do and the Owner was a very likable chap; but when the Pestie took a look at the problem area, he basically said:
There's no point looking into the wall as the "new" additions to the house (we were guessing done in the 70's) were so bad (in terms of visually inspecting for termite intrusion), that we'd never know if termites turned up in one week, one month, one year or one decade!
He also gave us a ball-park quote of $4K to barrier treat the house, which at the time the Owner agreed to split by taking his portion off the price. I was happy to split it around the 70's additions, but unfortunately that was $1K/$3K with the owner's share being $1K.
The Pestie then billed me for two hours after only being on site for one saying, "I don't work for less than two hours!" Oh, well.
I left the site feeling very disappointed: all that hassle for $1K?!? And then no guarrantee that the house was free of termites.
This was a huge shock. A call to our builder friend (an essential piece of equipment in your house hunting arsenal) and determined that the cost of rectifying the problem areas could be anywhere from $15K up to $30K. Not amounts that we had just waiting to be used, especially with the alterations that are required to make the house fit our lifestyle.
So we were back to analysing with spreadsheets, fiddling with drawings, thinking and praying to try and determine if we could make this house work.
Our final decision was that we couldn't, not for $280K. So we offered a re-negotiation of $259K, which we didn't think the Owner would accept.
He's now come back saying that he'll accept $270K!
So the question we now have to answer are:
- Is there enough left over to do the rectifications required or can they be staged?
- Is there any money left to do the alterations?
- Does this mean we'll have an extended construction zone for a longer period of time?
- Can we really be bothered?
There were a couple of very late nights as we discussed these questions...
Real Estate Agents: They're not too bad!
Previously we've only had dealings with real estate agents over renting a house; but everyone has heard, and probably told, the jokes about real estate agents!
That is why it was such a surprise to find our local agents so helpful and nice, didn't tell untruths or stretch the truth
too far. And it was generally great to interact with them as people.
Our impressions:
- Enthusiastic (and not too pushy once we said that we were not going to react favourably to being hurried).
- Followed up via email (great!), sometimes.
- Some were a little too laid back, in the sense we could have done with a little more following up rather than doing all the leg work ourselves by checking their website (but maybe this was a reflection of the number of properties on the market?).
- Were happy to do the leg-work required for a sale (which is what they get paid for).
I've got to say that the Agent who had the house we finally bought was very good. At times he'd say "You shouldn't be telling me that as I'm acting on my client's best interests..." when I was saying what price limits we had.
But in the end, he has done a wonderful job in treading the middle road and getting a result that both the Owner and the Buyer thinks is fair: I'd think that the final price of nearly $20K less than the original figure meant that the Owner would have hoped for a little more, and I was certainly hoping for a little less.
When we were in the throws of the first negotiations, I asked the Agent's thoughts if I split the difference again between the Owner's counter offer and my last offer. He said that to squeeze any party to much may not produce the results desired: I didn't want to rob the Owner! Both parties should walk away from the sale satisfied with the result: if I sqeezed too hard the Owner will lose satisfaction, if I didn't offer around what I wanted I'd lose satisfaction. It's a difficult juggling act, I guess all of us are a little concerned about losing?
Delay? What Delay?
We waited a week to get some sort of communication back from the vendors conveyancer, but at the end of that week our conveyancer was saying, "
I don't know what the delay is?"; but not doing anything constructive.
I guess we were feeling quite out of our depth: not really knowing what we could or should not be doing.
An
update call from another Real Estate office (I have to admit that the
real estate people have generally been great) provided the opportunity to ask what we could and couldn't do. He said that if the report mentioned termites that I should jump into
the loop and not wait to be ushered into it.
So I got off the phone and rang our Real Estate agency and explained the situation and problem. He was of course aware of some of what the report had highlighted, and when I said all we wanted to do was to ascertain whether there was an active termite infestation or not before agreeing on a final price he rang the owner who readily agreed for an inspection where our builder friend and a pest professional could inspect the pesky wall.
A few other calls and the inspection is all organised for tomorrow (the following day)!!
So I've got to ask: Is the delay just because conveyancers don't get paid for speed and the lack of delay because real estate people don't get paid until the sale goes through?
Or is that too cynical??
That Pesky Report
So we've found a house
we think we can live in (with a few alterations), so we're investigating deeper. We were a little amazed that the Money Lenders didn't want a pest report done.
Our Conveyancer recommended
Tyrrells. A great service, with a combined building and pest report, and very friendly too as they gave us the name and phone number of the chap who did the inspection.
All up, the report said that the house was a good representation of the type of house it was, and
not too much termite damage.
But there was one area with excessive moisture levels, which could indicate a leaking pipe or termite activity. What a shame!!
So a call to a local pest fellow confirmed that a barrier treatment would cost between $2-4K.
So we've instructed the conveyancer to ask the vendors legal representative for a pest history on the property. If that comes back blank, then we'll ask to inspect the wall (which means taking off the outside cladding).
I think $5K treatment and rectification is enough to get worried about and consider renegotiating the offer?? But on the other hand, I don't want the Conveyancer's costs to blow out either...
What's the story on the vultures?
At it's most basic, buying a house is a simple agreement between someone who wants to sell a house (that they own) and someone who wants to buy the house.
Right?
I am amazed at the number of peripheral people who are taking their cut from this possible deal:
- A Real Estate agent (or more probably a company of agents)
- Someone registered to inspect the structure of the house
- Someone (probably the same person) to inspect for pest damage
- A legal person to talk to the other legal person
- A legal person (probably the same) and to check notices and orders, etc
- and I nearly forgot: someone to make money for their customers by lending you money.
I don't mind paying for service, but is it all necessary?
Finding a house
So, is there a "perfect" house or is it just finding house that will do?
I guess you need to answer the question: "What do you want in a house?" and then temper that with the reality of what you can afford...
Older acquaintances encouraged us to formulate a check list of things that were essential in a house, those things that were desirable, those things we wouldn't mind having and also those things, that if present, would rule the house out.
Our List
Essential:
- Meals/Dining area to accommodate large family dining table
- Large room to handle study requirements
- Three Bedrooms
- Good sized backyard suitable for vegetable and fruit gardening
Desirable:
Optional:
- Offsite views
- Gas connected
- North facing block (for garden)
Must not:
We didn't start out thinking 3 was the minimum, but as we thought about it and the future when the kids have grown up and are married with their own children, we realised that we wanted our house to be able to accommodate, as much as possible, their comings and goings. So the minimum number of bedrooms increased from 2 to 3.
It's always going to be a compromise, that is, unless you're filthy rich, you are never going to have a guest room for every guest that may come to stay at your house. And besides, why would we want to take the joy of sleeping in a tent on the back lawn away from our grandchildren when they all come for family celebrations?
But on the other hand, we didn't want the restrictions of the house to mean that people were hesitant to come and stay.
Maybe it should be: "The way we want to live"?
Anyway, when we thought about the way we live now and any improvements we could implement in the future, we realised that we wanted an open living/work area in the house close to the kitchen.
A lot of our time (in our current and recent houses) has been spent around the kitchen table or in (what we call) the study (where the computers and the desks are located). Our lounge room has never got a lot of use, and the sun-room is largely unused (except at Christmas time when it gets set up with the Christmas tree and the baby Jesus in a manger.
One of Sandi's strong desires was to have the Study within talking distance of the Kitchen: Sandi spends a lot of time in the kitchen, I tend to spend a lot of time in the Study. We both didn't want to be separated by walls during those times.
The Search so far
I guess we began looking at the end of 2005. We suddenly realised that because I'd just got a job a lot closer to home that we could sell one of our cars and that meant that the budget would accommodate mortgage repayments.
Because we live in a relatively small village (one of a series of connected villages that forms a "city"), there is are not a lot of houses coming on to the market. In fact the market downturn probably is mixed blessing in that the prices are either flat or slightly down, but the number of houses on the market is also reduced.
We have looked at every house within our price bracket (<$310K) in our area, and to be honest, there is not one that jumps out and says, "Hi, I'm your new house!".
I think finding the perfect house is not as easy as we first thought?