The 5 stages of Home Buying

So this is my first post on this blog. I’ve always wanted to post on a blog but every time I sit down to discuss something I find important I realize that I have very little to say. So instead, I am choosing to discuss a very frustrating topic that I am sure many can relate to. I call it…The 5 Stages of Buying a Home. For those who have not gone through this process, read carefully. For those of you who know what I am about to talk about, I’m sure you will get a laugh or at least nod in agreement. Here we go…

The 5 stages of buying a home are very similar to the 5 stages of loss only with a different order: Denial, Depression, Anger, Bargaining, and Acceptance.

Denial:
About a month ago, Heidi and I embarked on the home buying journey. The big push came when our landlord gave us the option of a 12% rent increase if we signed a new lease or a 30% rent increase without a lease. WHAT!?!?!? (You won’t find rent control in Pasadena and I will spare you the actual numbers of what it would cost us to stay) At first, I didn’t want to believe it. I poured over my lease agreement and discovered the unscrupulous, yet creative, structure they had created to suck people in and screw them over at the end. I thought to myself, do I negotiate? Do I call an attorney? Do I burn the building down? I put on my accounting cap and began to find areas in our life where we could cut. It was Heidi that eventually drew the line and said “Let’s buy a house!” “What the..How the..Huh.. Us?”...I exclaimed with great confusion. “No.” I finally ended with. How could we possibly buy a home? We are young and must rent. After much discussion and number crunching we agreed to begin looking.

Depression:
If you live in any metropolitan region of California you will be able to relate to this next section. California, and more specifically Los Angeles, is a country unto itself. It has higher product prices, higher taxes and most of all higher home prices. The price of a 3 bedroom 2 bathroom home in an area that has any sort of decent school district and isn’t consistently the topic of nightly news is enough to make any man cry. In fact it’s just stupid, and I hate stupid. Then you factor in property taxes, home insurance and since we are putting less than 20% down, mortgage insurance. If you put less than 20% down you must pay a monthly premium that can be up to 1% of your loan amount per year. “What the..How the..HUH..” I once again exclaimed when I learned this. Once we factored these costs in we realized just how our budget had to be in order to be fiscally responsible. After some adjustments I think we ended up with 100 options between 6 cities.

Anger:
Having watched an MLS feed of homes on the market for about a year and being avid HGTV viewers, Heidi and I figured this would be a week or two affair; 5-10 homes max and we should be able to pick one. If you know me at all then you know that I cannot stand shopping, and make no mistake about it, this is shopping and there is no 30 day return policy if you decide you don’t like something. I think it was after the 30th home viewing that I had to just keep my mouth shut on the drive home to keep from going off about the situation. We learned that descriptions like ‘Desirable Neighborhood,’ ‘Cute and Cozy,’ and ‘Perfect starter home’ are code for “This home needs TLC and we’re begging you to take it off our hands.” It seems that pictures never match the home and half the time the neighborhoods are never desirable. I remember one home we looked at was in pristine condition after being renovated top to bottom by some house flippers. After careful inspection we realized, they forgot, or neglected, to put in a dishwasher. Who forgets to install a dishwasher? Another home we saw had an amazing layout after being flipped but some of the kitchen cabinets couldn’t even be opened due to their proximity to light fixtures. The most annoying had to be the homes that were built with 4 bedrooms and 3 bathrooms crammed into 1,100 square feet, roughly the size of my 2 bedroom, 2 bathroom apartment. Are you kidding me?



Bargaining:
The bargaining stage was an interesting one. I found myself bargaining not only with the seller of the home but also with Heidi and our agent. I even found myself negotiating with myself. I need a big office…Well how about a slightly smaller office but an extra bedroom. Maybe the rest of the house can be really nice so it’s ok the rooms are small. Do I really need all these features? When it comes to the sellers it’s just a big game. First of all, do you really think I’m going to offer full price when every comparable is drastically lower? Next, every seller wants to see that you are “Pre-approved” which as a banker I can tell you is a big joke because it’s really irrelevant what is on that letter from the bank, read the fine print. They also want to see proof of liquidity and my favorite part was a copy of the check that you plan to deposit into escrow if they accept your offer. WHY DO THEY NEED A COPY OF THE CHECK????? I’m signing a contract acknowledging that I will have to deposit that sum of money and the contract doesn’t even require that it be the same check you show proof of. We actually had a seller require that we be “pre-approved” through their lender even though we had a better offer from a different lender. For the house that we ended up getting into contract on the sellers wanted to have a 17 day contingency where they wouldn’t open escrow unless they found a house to buy and if they didn’t they could cancel the contract. In real estate, they say “Everything is negotiable.” The problem we found is, in reality, people are anything but realistic and it doesn’t matter what the comparables show or what condition the home may be in. All that matters is what the seller believes their home is worth and is willing to take.

Acceptance:
If you’re strong enough to really take in the last sentence from the bargaining section then you will finally reach the Acceptance stage. At this point you have been broken down by the process and your agent has built you back up stronger. You are ready. You are fit. You’re a beast, foaming at the mouth set to attack home buying. (The foam might actually be from the heart attack this whole process gave me) Once we hit this stage we were writing an offer every few days. We would walk into a home, walk out, and write the offer. It’s an REO? Sure lets write an offer. This house has no dishwasher? Yeah why not, lets write an offer. 17 day contingency for seller to buy a house? I can live with that, lets write an offer. We began to see which features we could live without and which were absolutes must have’s. If the home was missing something we left without seeing everything. If it fit our ever shrinking bill, an offer was made. Fortunately this method paid off and our offer was accepted by the owners of a home we really like, in an area we preferred to be in. It seems you just need to accept the rules and play the game.


-Eric