home buying

Time is of the Essence so Get it Right the First Time

So last week I wrote about Ernie Harwell and warm fuzzy nostalgia prompted by Tiger baseball on tv or the radio. What I didn’t mention is that while I was writing I was thinking about how I couldn’t believe I had made it to my forties and never been to a ballgame.  It’s on my list of course, or at least it was, but it just hadn’t happened yet. But that was Friday.  Saturday found me at Comerica Park, Section 104 row T seat 9… under the lights for a night game no less… won with a walk in the 12th inning. Holy crap! How did that happen?! Who knows – such is life – I am just so appreciative I had the opportunity.  You know what else can happen? ANYTHING! Good and bad – even when it’s irritating -  it keeps us on our toes.

You know what I had happen TWICE last week? Botched home inspections. Thankfully the home inspector, the same in both occurrences, has a one time return included in his price. Even so it would have been so much more efficient and true to the old “time is of the essence” clause if things would have been properly prepped to begin with.

In both situations the water could not be tested.

Property #1 is a repo. Listing agent asked if we could have our inspection done by the weekend. We confirmed Monday that we would do it on Thursday.  Too bad the well pump, for which we had negotiated and CONFIRMED repair, was not working. Nor was the property dewinterzied properly. We, the buyers,  are facing deadlines, per diems, changing rates, and paying inflated month to month rent. Would it hurt terribly to remember to have the water turned on when we get there? We are now looking at at least a week delay, waiting for it to get from listing agent’s mouth to contractor’s to-do list so that we can re-inspect.

Property #2 is public water and seller owned. The water was on when we were in the property two weeks ago… just as it has been for the last three years that the house has sat vacant and for sale. Home inspection was confirmed with the listing agent.  However, the seller had for some reason taken it upon herself to have the water turned off without telling anyone. Why? Who knows- such is life.

All I know is it’s tough enough to find buyers who are both interested in buying your home and qualified to do so.  Let’s all pay attention to the details and keep things moving smoothly and on schedule. Mistakes happen, sure, we understand. But there could be less of them, and the outcome will be happier customers, less stress, more frequent paychecks, and time for fun things like baseball games!

home buying

OMG You Should Totally Like Live Within Your Means, For Sure!

Right Nic Cage?  Look at him there, twenty some years ago, with a full head of hair and all rich and famous already.  Now personally, of the two, I would have borrowed against the equity of my house to put big money on his costar there, Deborah Foreman, to continue to charm audiences for decades. But SHE went on to become a Pilates instructor, while HE – my personal pick for least appealing & most over rated actor in Hollywood – has gone on to kidnap babies, eat cockroaches, fight for what’s right, take his face off, bring down planes of bad guys, buy a winning lottery ticket, and even WON AN OSCAR in Las Vegas! In fact, Nicolas Cage was the 5th highest paid actor in the United States last year, having raked in $40 million between June 2008 and June 2009.  Had I wagered the equity in my house for that bet I’d likely be in foreclosure right next to extravagant Nic, closing the gap between Burtucky and Bel-Air.

But I didn’t. So I’m sitting in my tiny home office – also known as “the kitchen” in some circles – thinking about how stupidity with money brings us all together.  The $40 million dollar a year guy and the $40 thousand dollar a year guy both have blemished credit and cannot get a loan for 5 to 7 years. I was going to say “… brings us all to the same level” but that’s not true at all. Nic can say – and undoubtedly feel like – he is broke like the rest of us. But while he was selling off his million dollar comic book collection to pay off his multimillion dollar tax lien, the rest of us were taking our CD collections to Jellybeans for grocery money.  Even so, the lifestyles of the rich and famous – Annie Liebowitz, Aretha Franklin, Ed McMahon, Whitney Houston, Michael Jackson, tons of sports dudes  all going bankrupt and losing their homes – is not that different than our own. Just bigger.

Although it’s true that lending institutions were very generous with the loans they gave us  a decade ago, we made more mistakes beyond simply taking them. Our homes were soaring in value so what did we do? We took more money from the generous banks by borrowing against our equity – not for home updates that would have been so useful right now trying to sell the houses we can’t afford, but to finance swimming pools, and jet skis, and snowmobiles, OH BOY! Now these bad decisions might never have become bad decisions if we hadn’t started losing our jobs and seeing our home values plummet. But they did, and we were screwed. Just like Nic. But smaller.

I should interject here… After a few days of researching and writing some more serious stuff, I thought that the NIC CAGE foreclosure story would be a relaxing no brainer. Draw a few comparisons, show some cool pictures… but no. The research sucked me in! His expenditures were outrageous.  We’re not just talking about a repo in Bel-Air… Dude has cribs, mansions, and castles in Newport Beach, Venice Beach, Malibu, San Francisco, Middleton, New Orleans, Rhode Island, New York, Las Vegas, England, and Germany! He owns 2 islands in the Bahamas, 2 yachts and a jet.  I don’t have time to get into what he paid for the Lambo he bought from the Shah of Iran, or how  many exotic animals he has in addition to his two pet King Cobras he keeps, complete with antidote serum nearby – just in case! Really, you have to look it up yourself. It’s remarkable. My favorite news site THE DAILY BEAST has a lot of the details if you want to check it out.  What blew my mind is something much more simple. More like you and me.  He paid for a lot of it with EQUITY!

The house was built in 1940 for a whopping $110,000. Dean Martin and Tom Jones each made additions and improvements when they lived there.  Nic paid $425,000 for it in 2005.  When it went into foreclosure he owed SIX DIFFERENT BANKS, are you ready? 18m!!! Here’s where my mind is blown. How did it get from $425,000 to 18m?  He borrowed against it on two separate loans in 2007 – one for 10.35m and one for 5.5m.  Then three more times in 2008 totaling 2.1m. WHAT! THE! HECK?! If your 40m per year salary does not allow for a $276,000 auction win of a dinosaur skull – you shouldn’t have gone into a bidding war with Leonardo diCaprio. Common sense should dictate this.

Oh well. Maybe he didn’t have good role models or learn to manage money. He probably looked up to his great Uncle Francis Ford Coppola and want to be just like him one day. But didn’t he have money troubles too? And I don’t know how much Hollywood is affected by recession, but when your business manager isn’t paying your taxes, it only makes sense that you’ll end up suffering your own private recession one day. So maybe his refinancing and beyond his means spending wouldn’t have come at such a price if he hadn’t been hit with millions in back taxes.  I don’t know, and that’s the point, we never do.

We never know what’s waiting for us around the corner. Illness, job loss, unexpected responsibility… and somehow we’ve got to stop being obsessed with what we don’t have and what we “need” – be it a ski boat or every Astin Martin ever made – and get instead excited over saving some money and being prepared.

We all got out of control just like Nic- at all different levels – and have a chance to start over here.  It’s easy to see the ridiculousness in the mistakes of a Hollywood actor who buys 30 cars and displays some of them in his house as decoration, but we shouldn’t be too judgmental when we do the exact thing on our own smaller scale. When it comes time to buy a house again, shop more conservatively. Don’t buy so much “stuff”. And when your home gains some equity, enjoy that security and save it for your kid’s education and rainy days.