Wednesday, April 30, 2008

Getting closer

The appraisal came back at $124K, enough to back the loan.

That's assuming the loan underwriter agrees -- that will take another few days, so Friday's closing is definitely delayed.

The buyer is moving in Thursday as a renter until we can finish navigating the banking bureaucracy.

Two recent housing horror stories:
  • My friend is going through the same low appraisal hassle on her adorable bungalow in Morton Meadows. The drive-by appraisal was $10K under the purchase price, so the appraiser is coming through the inside this week. (It's a conventional loan, so an interior inspection was not required like an FHA loan.)
  • When a former co-worker sold his house, his buyer got STOOD UP by the person buying his old house. The guy just didn't show for closing. So the buyer unexpectedly has two houses.

Housing prices may not have dipped like the rest of the nation, but this is how the crisis is hitting here.

Tuesday, April 29, 2008

Roller coaster continues

July 1, 2007

This morning

"This is the perfect example of the three most important things in real estate," the FHA appraiser told me Monday.

"Location, Location, Location."

The appraiser agreed that there are no suitable comparable homes -- similar age and square footage sold in the last three months -- in the neighborhood. She reviewed a year's worth of sales. It's also not comparable to homes the next neighborhood over because they aren't walking distance to the Old Market.

So she's using NEW CONSTRUCTION as part of her appraisal! Yes!

In fact, some of the new construction is actually smaller than the flip (about 1,400 square feet). A two-bedroom, one bath at the Towns sells for $241K.

She also had a pile of recent sales and listings of older homes.

I'd been in most of them and could tell her their condition ("Um, this one had a pair a furry handcuffs hanging on a closet door knob." True story.)

This is where knowing your neighborhood and staying on top of the real-estate market pays off. She at least knew I didn't pick the price at random or based on profit.

Thing is, she still doesn't have a price yet.

This bodes well for backing up my measly $120K purchase price, but we don't have it confirmed, now four days from supposed closing.

New construction down the hill:

This morning
The appraiser also was tickled to hear I had painted and gotten the windows underway. She swung by to take a look and get updated pictures to her report.
If I can get the windows finished (most of which are at the reglazer's), it looks like we might avoid a repair escrow altogether.
The final word rests on the loan underwriter, but things are swinging the right way.
We supposedly should know by the end of today. But I've heard that twice already.

Monday, April 28, 2008

Appraisal issues

The FHA has tightened its appraisal standards due to the housing crisis and typically requires houses to be compared to similar properties sold in the neighborhood in the last three months. They also can use current listings and pending sales to a degree.

Remember when I thought it was an advantage that nothing had come on the market in my price range in my area?

I had three written offers at and above the list price of $118,000 in less than a week, which shows the market agrees with the price, but it has to be proven through other sales.

The house has to be appraised at or above the purchase price in order for the buyer to get her loan. Banks want to recoup their money by selling the house if the buyer should not repay the loan.

Where I screwed up: I threw out the other written offers. They were only good through a certain date, which had passed, so I couldn't think of a reason to keep them. I have contact info for the potential buyers for an updated offer if this sale fell through. Now I have learned those written offers could have been used as part of the appraisal.

The appraisal was supposed to be finished Friday but was delayed because the appraiser was still trying to find "comps."

Today I should find out what the FHA has appraised the house at. Then the FHA inspector will have to come back to inspect the work I've done, which should lessen or eliminate the the amount to be put into escrow.

Depending on where the dollars fall, all of this could potentially undermine the sale.

Keep in mind, the buyer is supposed to close Friday.

I'm out time and money for this last round of projects; however, the house looks even better, should I need to put it back on the market.

The buyer has to move out of her apartment regardless.

So we're left to negotiate big decisions under unnecessary pressure because this appraisal/inspection process occurs so late.

Appraisal basics
What to do when an appraisal comes in low

Working alone?

Keep a cell phone in your pocket if you work by yourself.

I keep this in mind after one of my boyfriend's college friends slipped off a two-story barn and landed on his back. Still conscious but not moving a whole lot, he reached in his shirt pocket and called for help.

There's a million ways to hurt yourself doing home projects, so better to have a phone on board in case you manage to immobilize yourself.

Last round

The retaining wall on the north side of the house is still waiting to be replaced, a project under contract but delayed by spring rain.

The ground behind the wall is slumped and sliding because the wall was built with 1) undersized timber 2) with no supportive "dead men" in the bottom half.

Top view of retaining wall

(that's a sagging PVC pipe that's supposed to serve as a downspout)

The new wall will be made of concrete block and raise and level the dirt along the northside of the house.

I thought it'd make life a lot easier for when the homeowner wanted to paint.

Or, you know, I could do it now.

I spent Sunday morning balanced with one foot on the bowing wood wall and one on the soggy slumped earth while wrangling a paint roller on a 10-foot extension pole. I mean, how else would I spend my weekend?

I got the final coat of paint on the house and took the Shop-vac to the yard to vaccuum up the paint flakes.

The house looks better, but not dramatically so -- just freshened up. Whatever. It's done.

Pained painting


If you haven't painted in a while or are painted unusual areas such as a ceiling or, say, leaning out a house to paint a dormer, take a pre-emptive strike of Tylenol or some other pain reliever before bed.

You'll wake up with a spring in your step instead of a creak in your bones.

Sunday, April 27, 2008

Dormer painting

Saturday kicked off with pinching my thumb and index finger in an articulated ladder (one that is hinged to move into a variety of positions).

If you're familiar with these ladders, you know how I did it. If you aren't, the explanation is not worth your time.

And yes, that's my "painting" hand.

On the FHA's painting list is this dormer.

Not that it's a pain to get to or anything.

I set up shop from inside the house.


I removed the window (which will be reglazed anyway) and the storm windows. The window was too high for me to reach out while standing, so I sat on the sill to scrape and paint. I tried to move slowly and be cautious about keeping my weight centered inside the house.

I also imagined falling to my death, the media discovering my FHA rants online, creating a groundswell of criticism leading to Congressional hearings, where my mother -- who already, when she heard the list of required projects, immediately declared "that's bullshit" -- would testify and show death-scene photos of a little chalk outline around my body and my paint roller, and the paint splat where the roller hit the ground. Sadly, I survived, and legions of homeowners will continue to suffer through slap-dash repairs, crumbled deals and unnecessary last-minute stress.

I did what I could within arm's reach, then I used an extension pole, which screws into the handle of a paint roller.

I used electrical tape to attach a paint brush to the pole to get the trim.

Hell of a view up there.

That's downtown Omaha's skyscrapers in the distance. Both of them.

This is the finished dormer. I know, you can hardly tell in the picture. (sigh)

I was not insane enough to get on the roof to paint the dormer's sides, but I'm hoping my good-faith effort on everything else will weigh in my favor.

The difference is more obvious on the main floor siding in this photo. The left side has been scraped and primed. The center is untouched. The right has been scraped.

I ended up doing most of two sides of the house from the windows, which worked pretty slick. (The other ones I could reach while standing inside the window, not sitting on the sills.)

By the end of Saturday, all the scraping and priming was done.

Today should be the final coat. Whew.

Saturday, April 26, 2008

Friday's FHA adventure

What better weather to wake up to on a day you really, really need to paint a house exterior.

I switched my focus to the windows.

The FHA is requiring all the windows to be reglazed, which means replacing the putty that holds the glass in place. Plus, I have to scrape and paint all the sill areas.
This is because the areas where the putty and paint are flaking are exposing wood and possibly spreading that evil lead paint.
The windows are double-hung sash windows, but they were rehabbed at some point.

On an older window, you have to pry off a few pieces of wood trim, pull out the sash, then carefully detach the sash rope and either tie it in a loop or knot it around an object like a large screw -- if you're not careful, the rope goes shoooooop and disappears into the window frame -- then you've created a big job for yourself.
On these, you press the sash to one side -- one of the metal tracks is flexible (I think they're called a "metal jamb liner") -- and you can shimmy out the sash without removing any wood trim. The elastic sash cord has a plastic cap on the end, which holds it in place on the sash and, when the sash is removed, keeps it from disappearing into the wall. Sweet.

Metal track on the left, flaking paint on the right
Plastic tab thing at the top is the cap for the elastic sash cord

It took 40 minutes to remove all the 18 sashes for the main floor windows.

Fortunately, I already know about P&M Hardware, an old-school hardware store on South 24th St. buried among blocks of Latino businesses.

They do window repair for cheap in the basement. Pull around to their garage door in the alley to unload.
They've replaced broken windows for me for about $10 a window. Seems like a bargain compared to doing it yourself.
After that, I got all the sills scraped and painted, put another coat on the front porch ceiling, one on the porch floor to cover my drips and kept painting random bare spots of wood on the outside.

More on reglazing:
Replacing window glass from This Old House
How to remove old-fashioned windows from Old House Journal
Exhaustive old window info from the National Park Service
How to replace sashes from The Family Handyman

Friday, April 25, 2008

FHA paint rules

The FHA doesn't care about ugly.

Peeling paint must be removed from concrete and metal (such as gutters). You give them a scrubbing with a wire brush.

But, unlike wood, because the surface is not porous, it doesn't have to be repainted.

This front porch pillar is acceptable in FHA-land:

All so the children that my homebuyer DOESN'T HAVE won't get lead poisoning.

Go, government!

Porch painting

Thursday's work by the FHA-indentured servant:

No. 1: Scraped and repainted the porch




Blue is a traditional color for porch beadboard ceilings. I went with a pale shade so it should match anything the future homeowner should want to do.

Porch scrapings

FHA rule: No paint chips can be left on the ground. I've covered the area with a drop cloth when practical, but I will have to vacuum the ground!

Christ, who made up these rules? And what do I have to do to become a sovereign nation?

Also done:
  • Scraped and painted both back doors

  • Scraped three sides of house

  • Primed and painted front

  • Primed south side and half of east side
Well, better get started with today's list ...

FH-pain-in-the-A loans

So of course, I thought I was safe posting SOLD, waiting until after the home inspection.

Then came the FHA appraisal/inspection Tuesday.

I know FHA loans have extra requirements so I made a point of checking things that had been an issue when I bought my house with an FHA loan: outlets and I bought a railing to install for the staircase.

Turns out they've lightened some of those rules in the last year, particularly the railing rule. (not needed if the staircase has walls on both sides)

But they haven't modified any of the rules for the exterior:

No peeling or chipped paint.


Um, well, ...

It was obvious to anyone who looked at the house that it would need a paint job sometime. I figured I got the interior up to snuff and the new homeowner could tackle the exterior at some point.

So Tuesday night, I learned that the FHA would require the porch ceiling, some wood trim, two doors and most of the lower half of the house to be scraped and painted AND all of the windows needed to be reglazed to approve the loan ...


They're picky about this stuff because older homes likely have lead paint, which can be a hazard to children.

I've got an idea: How about the government doesn't back loans for families whose kids are so stupid they eat the dirt in the yard? A "don't lick the exterior" clause?

So the options are this:
  • The work gets done before the sale.
  • Money gets put in escrow (held by a third party) to pay for the work later.

The problem with the escrow money is it is 1 1/2 times the amount estimated to hire someone to do the work.

When I bought my house, there was a $500 minimum for an escrow. My porch needed to have the ceiling scraped and painted so I had to cough up $500 to ensure I would do the $30 project later.


We find out the escrow amount today.

I'm under the impression who set aside that money is negotiable, but my buyer's lender has said it's my problem.

Meanwhile, I've taken the last two days off of work to make as big of dent as I can in the project list to minimize the potential escrow amount.

Ideas for the FHA:
  • Inform buyers of regulations in advance to guide their home purchase
  • Give sellers the list of requirements immediately
  • Schedule inspections earlier to allow time for negotiations or project completion
A few helpful links:
Best list I've found explaining FHA requirements
FHA inspection checklist
Difference between a home inspection and FHA appraisal/inspection

Wednesday, April 9, 2008

Spring has sprung

The bulb garden I planted along the south side of the house is starting to bloom!
This is what I look at out my kitchen window.