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"This Old Mold House" #6: Deal or no deal ?

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Blog entry by Dusty posted 12-02-2007 04:47 AM 1218 reads 0 times favorited 10 comments Add to Favorites Watch
« Part 5: Hind sight is genius ! My crystal ball... Part 6 of "This Old Mold House" series Part 7: Making a deal on a house full of mold…what’s up with that? »

Although I had spent a weekend doing an assessment, evaluation, preparing a bid and possible offer, I never heard a word from anyone connected with the house that

Not a peep.

I left the presentation open ended, though I never really put in a formal offer.

I didn’t have a buyer at the time and I felt the market was unfavorable. I wasn’t really looking for any work. Because the mother-in-law was very familiar with my work, I was asked by the sellers if I might be interested in buying the house to renovate and re-sell it.
However, based on the price they were seeking and the cost entailed in renovating the house to bring it up to could, the project was not viable, so I put it behind me.

Fast forward 14 months.

The market has deteriorated and the bottom doesn’t seem to be insight yet. Every day there seems to be more bad news about foreclosures, sub-prime mortgage woes, slow housing sales, and housing inventory surpluses. In short the market seems dismal and in free fall.

In the back of my mind I have been thinking to myself, all that noise I hear out their in the housing market maybe opportunity knocking.

I am cautious however. Not only am I much more disciplined these days about buying properties, I no longer wear that pair of “rose colored glasses”. Any wisdom I my posses is not a result of being so smart, it’s derived from a lot of very expensive “life lesson” mistakes. It’s interesting how quickly a person can learn something if it hits you hard in a spot located on your back side – your wallet. Yes, it’s a great teacher; far more effective than someone giving advice.

Money talks.

I listen now. That wasn’t always the case. On some of my projects I was absolutely convinced that my investment, time, skills, and optimistic dreams would surely pay off.

Oh how I learned.

Reality bites. Dreams are just that.

Mortgage payments need to be made on time regardless of how the dream is progressing. How quickly the dream fades when the mortgage due-date comes around. The same can be said for how quickly the “money-tree” dries up and stops producing fruit. At this stage of my life I no longer need the practice or experience of doing a remodeling job or project. I have had a long history with these learning projects. I won’t possibly live long enough to make all the mistakes on this learning curve. My money will run out long before I find and do a perfect project.

A good friend and former client, to whom I had previously sold a house which I had remodeled, was forced to sell the house back to me after he became an unexpected victim of downsizing. Without warning, his long-term job had been eliminated.

After his initial shock, denial and a bout of depression along with his house going into foreclosure, I made a deal to buy it back. I then finished the remodeling that he couldn’t afford the first time around and resold the house at a profit.

He moved back home, returned to technical college, and graduated becoming an electrician.

After almost five years, which consisted of taking college courses, working two jobs, and paying off his debts, he completed his apprenticeship becoming a journeyman electrician. While doing this, he was able to save enough money for a house down payment. He was now ready to ready to buy another house. He really wanted to move back to our neighborhood.

He asked me to keep an eye out for a home in our area. He knew I would know about the houses that were, or would be, offered for sale.

Almost everyone who had a house for sale approached me before placing their home with a realtor. They knew that, not only could they save the selling commission, I would buy their house as is, at a fair price.

I had several clients who would wait until I found the perfect house for them.

With the market so down, I no longer bought and renovated houses to place them on the open market. I wouldn’t start a renovation without having them pre-sold.

I had been approached by the owner of a house across the street from me who was forced to sell because of his divorce. His youngest child had graduated from high school and moved out. He planned to sell his house before winter set in.

I mentioned this to my friend who indicated his interest. The timing was almost perfect. He had applied for a new position wanting to get off the night shift after almost three years.

So I arranged for a showing of the house. I had provided the owner a rough idea of what his house was going to be worth considering the market and what I remembered the house to be like. It was simply a ball-park figured or a starting point. He knew this and was comfortable with this arrangement because he wasn’t ready to sell quite yet.

We toured the house. It was disappointing for me. The house certainly had fallen on bad times. It was obvious to me that the demands of being a single father of two, one of whom was in college, didn’t leave money for upkeep.

I knew that he had taken out a second mortgage just before his divorce, cemented the driveway and had done some other select remodeling like refinishing the hardwood floors.

The house was small to begin with and poorly laid out. It didn’t flow well. It also was in need of updating and required a lot of maintenance. The biggest shock and disappointment was the presence of mold in the bathroom.

Certainly all these defects could be overcome in the remodeling, however this would be time consuming and costly. Based on my experience and a quick assessment, my preliminary estimate was about $25,000.

I felt this was a lot of money for what the end results would yield. Considering this, I knew the purchase price would have to reflect an adjusted value. If it did, my attitude towards the house might be somewhat different. Only time would tell. This was simply a tour.

After the tour, my friend and I had a frank discussion about what needed to be done. He seemed not in the least bit discouraged from the possibility of making an offer.

I less enthused. However, it wasn’t my money or decision and I would merely be a neutral resource he could rely upon for an accurate and honest evaluation.

Before touring through the house, I had indicated that the house should be valued in the mid $160,000 range. After seeing it, I adjusted the price downwards a minimum of ten thousand dollars. This figured was really only reflective of correcting the glaring and defrayed maintenance.

I really had lost my enthusiasm for this home. I gently suggested that, because of the number of houses for sale and bargains that are available due to the depressed home market, we at least look at some of these for comparative values.

However, he seemed to dismiss the idea because this was the only house in the immediate area.

Again it was his money so I dropped the topic and focused on the task of what it would take to bring the house up to code and accomplish what he wanted in the remodeling project.

To me, this was a daunting task. We had some time because the owner wasn’t ready to sell and my buddy hadn’t obtained his new.

I went to work doing a comprehensive analysis and bid for the work that needed to be done. All the time I was doing the bid work I had a nagging feeling about putting in a offer for this house.

About a week later, while my buddy and I were in my driveway, the owner stopped and asked whether we were still interested in his home.

I gave him a thumbnail sketch of all that I felt needed to be done and an honest assessment of the condition of the house with a reflected “ball park” price.

He seemed a bit taken back, but understood. I was unsure where his reluctance was coming from. I didn’t know if it was that he felt it was worth more or had hoped and was merely in denial. He clearly knew the state of the house market and that he was going to have to sell regardless of this, splitting any net proceeds with his ex-wife.

At this point I was unaware of the amount of his mortgage. However, I had a hunch as a result of re-financing just before his divorce, that he was very close to owing more than the house would bring in the depressed market conditions.

He informed us he was leaving for a vacation in Florida with his new girl friend and would let us know if he would be able to consider our ballpark offer.

I reiterated all of the reasons for the offer, the fact that there would be no commissions and that the house would be “taken as is” along with it being a sure sale because I had my buddy get a pre-approval for his mortgage.

He thanked us and said he would get in touch with me and let us know his answer upon his return.

My buddy had received and accepted his new job offer increasing the urgency to buy and renovate a home up several notches. He lived with his parents, so it was a great advantage to be able to live there while we finished all the remodeling before moving in. From experience, if the remodeling is extensive, I will no longer be the one doing the work. It simply is too difficult to work around all the dust, distractions, and obstacles of an occupied home.

Been there – done that; but no more.

Over the proceeding period, my buddy keep bugging me about whether I had contacted or heard from my neighbor on the status of his decision of pursuing our offer on his house. The answer was always the same. I had no contact and no new news.

Everything now had fallen in place and my buddy was more than ready to get a home an get going on the rehab project. He would do all the electrical work and whatever else he was capable of doing to save money. The clock was also ticking as summer was over and fall was fast approaching.

Late fall and early winter can be brutal in Minnesota. He didn’t need to remind me of these facts. I knew this only too well after doing several projects during this time of the year. I have the frost bitten scares on my hands and feet to prove this.

I could tell my buddy was annoyed and anxious with the lack of an answer.

Disappointed, and a sense of frustration. I suggested we begin to check out some other homes that were being offered for sale near out neighborhood. He was clearly lukewarm to the idea.

I hung up the phone and was sitting in my formal front parlor where my writing desk is, in full view of the house he was interested in buying. I wondered out loud if I should go over to my neighbor’s house and ask about his decision about selling his house.

Something told me no; don’t go over there.

He clearly told us he would get back to us with his decision. But I realized that I had soured on the home and felt strongly it wasn’t a good value. Additionally, with the market as bad as it was, I was convinced we could find another house that was a better value proposition for him.

As I sat looking out the window of “This Old Crack House, I looked across the street, four houses down, to see the corner house on which I had 14 months earlier done a comprehensive analysis. I never did hear a word from the son-in-law or anyone else for that matter. Then I remembered that I had not actually put in a formal offer 14 months earlier.

I had often wondered about the status of that house. I hadn’t seen anyone at the house for almost a year and knew the owner was in her eighties. She had moved closer to her daughter several miles away. The house had stood unoccupied all this time.

I wondered out loud if the house might be available for sale now. I knew that there was an ongoing expense of having the yard mowed, snow removed, heat, lighting and other monthly expenses.

I picked up the phone and called my buddy back and mentioned that I was thinking about calling the owner of that house and seeing if it might be for sale yet or again. I gave him my reasons for doing this, including my true feelings toward the house in which he was interested. I reminded him that we had heard nothing about the owner’s decision to sell or not.

My buddy recalled the corner house. He had actually given me a bid on the electrical work and helped me prepare my analysis.

Although he knew it needed a lot of work and suffered from mold, his recall of the house was surprisingly positive. I told him I had no idea if it was even available but was willing to make the call and find out.

I had to track down the number first for the lady who owned the house. I had never talked to her as I only had dealt with her son-in-law. I knew only her name and what town she supposedly lived in north western Minnesota. I got the number from information.

I dialed the number and an elderly lady answered.

I introduced myself and said, “I’m sure you don’t remember me, but I’m the one who lived four doors from you and did a compressive bid on the possibly of purchasing your home in the cities.”

She instantly responded in a friendly voice, “Oh, I remember you.”

I made some small talk then asked if she might be interested, or would consider once again, in an offer on her house.

She interrupted me informing me that is was very hard to hear me. She was 84 now and was hard of hearing.

She then told me that, for the first time this summer, her son-in-law David would be down to the house on Tuesday. I asked her if it would be ok if I called David to discuss this with him.

She encouraged me to do so. I also asked her if she was aware how much the market had deteriorated since I had last talked to her son-in-law 14 months earlier.

She was well aware of the market conditions and shared that the reason her son in law had not been down this summer was because of the tough housing market and construction economy. He was a job foreman for a large twin cities company and there simply had been no work.

I obtained the number from her to contact her son in law and called his cell phone. I reintroduced myself and told him that I had called his mother-in-law to ask her if she might be interested in selling the house.

He was driving in his dump-truck, working doing his side-line business and told me he thought she might and that he would be down in the cities on Tuesday. He said he would talk to her and if she was interested in selling we could meet when he was here.

I hung up the phone and called my buddy and told him that I was to meet Tuesday with David after he had a chance to talk to his mother-in-law.

I began to wonder what her decision might be. I really had no clue but hoped she might sell because regardless of whether my buddy was interested in buying the house or not, I was.

I had been looking for a project for a while and had been on the sidelines.

Was this to be?

What would the answer be?

copyright all rights reserved D.Jerzak Dec 4 2007

-- Dusty



10 comments so far

View Karson's profile

Karson

34902 posts in 3124 days


#1 posted 12-02-2007 05:10 AM

My Guess is Yes, And you are in deep do-do again. All this stuff to do.

Dusty you are a rich man in your efforts to help other people. I know you are blessed in many ways that you might not even be aware of.

Bless you Dusty.

-- I've been blessed with a father who liked to tinker in wood, and a wife who lets me tinker in wood. Southern Delaware karson_morrison@bigfoot.com †

View rjack's profile

rjack

110 posts in 2579 days


#2 posted 12-02-2007 05:29 AM

Dusty,

You actually have me hooked on this story! I want to know how it turns out.

-- Roger - Havertown, Pennsylvania

View Diane's profile

Diane

546 posts in 2847 days


#3 posted 12-02-2007 05:37 AM

I think Karson it right.

Diane

View MsDebbieP's profile

MsDebbieP

18615 posts in 2884 days


#4 posted 12-02-2007 12:39 PM

you must be proud of the respect you have earned from the people in your neighbourhood.
Well done.

It’s also fascinating to hear your “instincts” talking to you.

-- ~ Debbie, Canada (https://www.facebook.com/DebbiePribeleENJOConsultant)

View Sawdust2's profile

Sawdust2

1467 posts in 2811 days


#5 posted 12-02-2007 03:04 PM

Keeping an eye out for a house that is not really the apple of your eye, eh

-- No piece is cut too short. It was meant for a smaller project.

View Diane's profile

Diane

546 posts in 2847 days


#6 posted 12-02-2007 05:03 PM

Just came back in and noticed a strange thing with that picture of the house. Was the picture damaged, that’s what I think it looks like. What I’m talking about is, there’s a strange light source come in and landing on sidewalk and partially on the grass?

Diane

View Dusty's profile

Dusty

785 posts in 2880 days


#7 posted 12-02-2007 05:10 PM

Karson, Diane

Thank you for your kind comments. They humble me.

I am great full and thank full for the blessing I have had bestowed on me.

It comes natural for me so I have no idea if it is suppose to be that way or not.

I just do it. And when that is done.

Then do it again.

I don’t really know why, nor does it matter I guess I like doing it, so I do it.

It must be the Polish in me,said my late grandmother who raised 19 children.

She also used to say, “if you have time to think about something or question why you are doing it you might have time to come up with a reason not to do it”.

So, just do it, and move along to the next task.

Shrug.

Worked for her and seems to work for me.

-- Dusty

View Thos. Angle's profile

Thos. Angle

4438 posts in 2686 days


#8 posted 12-03-2007 03:03 AM

Interesting story, Dusty. I’ll be waiting for the other shoe to drop.

-- Thos. Angle, Jordan Valley, Oregon

View dennis mitchell's profile

dennis mitchell

3994 posts in 3038 days


#9 posted 12-03-2007 05:59 AM

...getting smarter in your old age…maybe…

View Dusty's profile

Dusty

785 posts in 2880 days


#10 posted 12-03-2007 05:36 PM

dennis,

Or just lucky?

Even a blind squirrel finds an acorn once in a while right?

-- Dusty

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