A while ago, I wrote about us finding a house in the Paso Robles, CA area! We had put in an offer and it was accepted.
For all of you who have never purchased a home, the above would sound like a slam dunk.
(Brushing hands together…) Yup, OK, that’s all done. Now… Onward!
Except… that isn’t how it goes.
After an offer is accepted, the next step is ‘escrow’ which is kindof like falling in heavy ‘like’ and then moving onto the next step of meeting the respective parents.
Everyone has to get along and all the skeletons need to fall out of the closets correctly.
Oh, and the relationship (the house) has to be appraised appropriately. What is it really worth?
THE BLUE HOUSE
So, I have been very lucky in my life and have purchased a few homes before this one. All purchasing processes went very well, even ‘swimmingly’ really…
But the fact that we had been looking for a few years and had not been able to find a property – that didn’t already have a cash buyer – had been a challenge.
So, when we finally found the “blue house”, and no one had made an offer in over a year (usually a bad sign, but for us, it was great because we had no competition)… we pounced!
Sure, it wasn’t our dream house, but it would work. (Just to refresh, we are moving to the ‘wine country’ because Hubby has a great job there. Bringing 12 horses to prime real estate central has been a challenge.)
The blue house was next to the straw bale house.
That’s how we referred to the houses while we were contemplating them both on the day we decided to go for the blue house.
Hubby liked the straw bale house better. I liked the blue house.
We decided upon the blue house because it would be easier to get up and running right away, fence posts were up for the pastures (no fencing, but the posts), it had a new master bedroom and bath (yippee) and a huge office (yippeee) and an insulated 3 car garage (triple yippee)! The down side was several fold… but all was workable. Mainly, the rest of the house was sorely outdated. And, there wasn’t one tree in the pasture areas. All the pastures were sloped downhill.
We liked the straw bale house but we were a bit afraid of resale. It, too, had been on the market for over a year…
(As an aside, these two houses, next to each other, had both not sold in over a year. Scary, huh?)
The straw bale house was much more updated and had an INCREDIBLE view. Awesome. Beyond awesome. The best view. And, it had two, very powerful wells. Bonus!
But, it had no garage, it was designed oddly (I thought), had no set up for the horses, was on a frontage road, had an easement (road) right through the property and looked like a monastery or some sort of institution on the outside.
We entered escrow; which should be called “Adult Homework”. If you have ever purchased a home, you know what I mean.
Anyway, all was going along fine until we ordered the appraisal.
You see, Hubby is using his VA loan. So, we had to use a VA appraiser. Well, there are only a few of them in San Luis Obispo County. The guy we got took his time because he was not familiar with ‘country’ property. He took soooo long, that we had to order all of the other reports (well, septic, house inspection…) before we had an appraisal – which isn’t really a good idea since without an appraisal, we have no loan.
All the reports had come back before the appraisal.
We were losing time. Luckily, the seller agreed to add 2 more weeks to the escrow to accommodate the VA appraiser.
Finally, the appraisal came back, and it was far below the selling price.
The VA will not loan on a house that appraised below the selling price. It will only loan up to the appraised value.
?? What happened??
We received a copy of the VA appraisal and found out that one of the four comps (comparison homes sold in the area recently to use as reference for value) was a house that had a faulty foundation so it sold for $100K less than it should have – yet the VA appraiser used this house as the determining comp house for the price of the blue house.
Our lender called the VA and told them about the faulty foundation on the comp house. The VA said to create the paperwork and submit it – which they did.
A week later, the lower appraised value was upheld.
Our lender went back to the VA and asked them how they came to this conclusion. The VA said they needed an alternate 4th comp to replace the bad comp. (Why didn’t they tell us that the first time?…) So we supplied the new 4th comp.
A week later, the lower appraised value was upheld.
At this point, Hubby (a veteran) called his Congresswoman for help.
Our lender called the VA rep again and begged. He said this was simply not reasonable… The VA said that they needed the paperwork that described the faulty foundation from the contractor that did the house inspection on the bad comp house. (Why didn’t they tell us that the first time?…)
Our lender told us that it didn’t look good. They had escalated this twice now with the VA and had been stonewalled. He told us to keep looking at houses so we had a Plan B, just in case.
Hubby and I said, “Well, there is always the straw bale house…”
So, we set that ball rolling. Hubby asked to go back and see the straw bale house – which is next door to the blue house. He went yesterday. He like it – again. We chatted very animatedly about how we could make it work and talked about the dual wells and electricity already installed in the flat area where we could build the barn… we were very excited to have that glorious view. By this time, we had our minds wrapped around the straw bale house – although our lender wasn’t too sure. He told us it would be very hard to finance…
IN THE MEANTIME…
In the meantime, our lender called the listing agent of the bad comp house. (By this time our own real estate agent was on her honeymoon – so much time had passed that her life continued without our escrow closing.) So, the listing agent of the bad comp house went back into his files or did something to find that engineering report about the bad foundation. Our lender sent the report to the VA. He was confident that we could resolve the issue with this proof.
This morning, I got a call from our lender saying that the VA upheld the low appraisal using the bad comp house. We now had to find another house or see if the seller of the blue house would come down in price to meet the lower appraised value.
I called Hubby.
We made the decision to move on the straw bale house.
And then, about 10 minutes later, I received an email from Hubby saying that the VA had called him and apologized for being so slow and that they had approved the new appraised value and our loan on the blue house would be put through.
I called our lender who had just gotten off the phone with the VA denying our loan not just 10 minutes previously.
He was so confused – as was I.
So, our lender called the VA again… and called me back.
Evidently, the senior officer had reviewed the engineering statement on the comp house with the faulty foundation and had agreed that it should not be used as a comp. He then agreed with the value of the blue house and green-lighted our appropriate appraisal. He had his assistant call Hubby.
At that same time, his other assistant had our name on the list to call today to deny the appraised value – for some reason.
So, one assistant called to congratulate while the other was calling to deny – at exactly the same time to two different people – Hubby and our lender.
In the end, we now have a green light on the appraisal of the blue house.
The next step is final loan approval.
And so the dance continues… the courting of the blue house, with the straw bale house waiting in the wings… straw bale is a long shot, the blue house is a much better prospect… but the dance continues. Allemande left, swing your partner… do si do!
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