Know When to Hold ‘Em, Know When to Fold ‘Em

The Gingerbread Diaries

Time for another house update!

A couple of weeks ago I was getting ready to write a downer of a post. The good news was that the appraisal came in high enough for the roof repairs, the problem came with the mention of possible structural issues. And structural issues, regardless of cost, immediately take us out of the 203(k) Streamlined race and into the full shebang of 203(k) along with the need for a HUD Consultant and, because of the change in how the funds are disbursed (i.e., no up-front draws, only periodic draws based on work completed), the very real possibility of needing to change our contractor.

Despite the obvious gap between the pilaster and the porch, that corner is completely stable--we were hoping that would make it far more minor an issue.

Despite the obvious gap between the pilaster and the porch, that corner is completely stable–we were hoping that would make it far more minor an issue.

Cue freakout #I’ve-lost-count.

Underwriting demanded that we have a Structural Engineer evaluate the brick pilasters on the end of the addition (under the porch and laundry) to decide if there were, in fact, structural issues to be addressed and Todd thought it worthwhile to at least have it checked out–after all, knowing the structural integrity of the house we’re trying to buy seems like a good idea, right?

Let’s just total up the inspections we’ve now had on this house we don’t even own yet:

$275  Initial Buyer’s Inspection
$525  FHA Appraisal
$285  Structural Engineer Report
$1085  Total Inspection Outlay

Unfortunately, we didn’t get the news we held out hope for: the pilasters did need work and there were a few other things to work out. And the seller was still adamant that they’d gone as low as they were willing to by accepting our initial offer (which was almost 10K under their list price) and that it was already priced to sell.


So we did the only thing we could do: we walked away.

It was a very hard email to write, but we did it. And I almost felt better just being out of the limbo we’d been in for so very long on this project.

And then, in a move worthy of any used car lot in the country, the seller countered with an offer 10K lower than we’d originally settled on.

I was flabbergasted! Some say we called their bluff, but that implies there was a bluff to call. Others contend that the structural report finally convinced them of what they were trying to offload and what they’d have to ultimately do if they wanted to sell the home to anyone. The email I received made it sound like they wanted us to have it since we obviously loved it so much (which, yes, we do, but the timing is still a touch suspect).

Grinch-like compassion or desperation aside, this changed things more than I thought it would. It doesn’t change the fact that there are structural issues, but Todd seemed to think that the 10k wiggle room would be enough to make it doable. So the next morning I called our lender and asked if we could un-withdraw our application. Luck was on our side as the cancellation request hadn’t made it to the top of the queue and we were allowed to proceed, at least through the next hurdle.

And that hurdle come in the form of what amounts to a fourth inspection, this time with a HUD Consultant (who gets paid up-front) and the contractor in tow. Thankfully, our contractor was able to work with the changed disbursement schedule and stay on the project. This was such good news as we all remember the drama of trying to find a roofer at the beginning of this project! Our HUD Consultant pointed out a few more things than the FHA appraiser did (not that it was a big surprise) and then we were back to waiting for the contractor’s bid.

Of course, nothing can go smoothly and the loan was once again in peril once they were able to dig up the city property tax records (which are not available online anywhere–county and state are, for what it’s worth–making them damn hard for a prospective buyer to research) and the increase in the monthly mortgage cost was placing our DTI (debt-to-income) ratio close to the preferred threshold, before factoring in the additional renovation costs.

Thankfully (we had a lot of moments to be thankful during this process), that was before taking into consideration the lowered purchase price, so once the contractor’s new bid came in, we could run the numbers to see if there was any point in moving forward with the HUD write-up (another bit that gets paid on delivery instead of at closing, and whose fee is based on a sliding scale depending on the renovation amount). We caught a break and the bid came in below the appraiser’s estimated cost to cure (that phrase always makes me think of a house catching a cold), even with all of the HUD Consultant’s addition, and we got the “approvable” approval from the powers that be.

We’re not in for sure, yet–we’ve still got a few weeks until closing and the official underwriting approval to receive, but we’re a lot closer and, yes, a little more hopeful than we’ve been for the past month, truth be told.