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'This Old Crack House' #40: Sale or no Sale?

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Blog entry by Dusty posted 05-13-2007 02:21 PM 2705 reads 0 times favorited 15 comments Add to Favorites Watch
« Part 39: Gentleman start your skill saws...Let the remodeling begin.... Part 40 of 'This Old Crack House' series Part 41: Stair way to heaven...Day by Day...One step at a time...some times one foreward and two back »

I have always prided myself in doing a first class job regardless of who I was working for or what I was building. My personal motto has been to build the project like you were doing it for yourself.

Still, there comes a time, especially when the budget is tight, when you have to compromise on this work ethic. I am not saying that the quality of the work should change but rather you have to become more realistic with your time, money and efforts, so you don’t bankrupt yourself during this process.

For those of us who are perfectionists, this is easier said than done.

This was a constant battle for me on this project. I had no intention, at this point, to live in this house. Nor could I afford to pay two mortgages; I had to sell the house and the sooner the better.

I had entered into an intent to sell agreement and had defined what would be done in the remodeling process so I wouldn’t go over budget. This provided some control over the costs and scope of the project.

Never-the-less, at that point, I was feeling very frustrated. I had no intention or desire, for that matter, to live in this house. I was in over my head and the huge black hole of a money pit, the old crack house, had some real shortcomings.

I was already co-owner of the house across the street with my business partner and we had spent substantial money remodeling it to fit our needs and tastes. Even though our house had substantially increased in value and we had gained a lot of equity over the last five year, the Crack House had too many shortcomings to even consider moving into it. Amongst these was a very small cramped kitchen, no main floor bedrooms, only one bathroom on the main floor, no bathroom on the second floor and a garage that, neither my pickup or any full size car for that matter, wouldn’t fit into.

The garage was also smaller than the one we had already and we had spent a lot of money on new lights, heating and insulation, to make it a functional shop. I considered this a major draw back.

In short we were happy with what we had and the primary reason for buying this house was to eliminate all the problems that were part of the previous owners. We wanted to have some say and control over who moved in.

One other consideration was the vacant lot that existed adjacent to the house. No final decision had been made about the fate of this lot. The intent to sell agreement into which I had entered, had only listed it as an option to purchase for $35,000 extra upon purchase of the existing house.

I had toyed with splitting the lot off and building a duplex or single family home and selling it for a nice profit, hopefully recovering some of the labor that I was sticking into this substantial remodeling project. My research and investigation with the city zoning department revealed a rather substantial process to split off the lot and prepare it for its own single family home or duplex. It would likely be would be rather lengthy and possibly expensive. At this point, this wasn’t a very appealing prospect. I just wanted to complete this project and get out from under the two mortgages.

I proceeded with the original plan to complete the remodeling and sell the house. This seemed to be the most economical and practical way out of this mess I had gotten into. Besides my business partner had no interest in anything but a plan which involved selling the house.

It was pretty much a foregone conclusion that this would be the end result.

In fact the buyer had already placed his house on the market for sale.

Two years earlier I had substantially remodeled his house. It was in prime condition and was very saleable. The only question was how he would price it. He liked to make a lot of money on things he owned and often I felt got a bit greedy with his properties. This, however, was his choice and decision to make, not mine.

He did exactly what I thought, priced it outrageously high. He priced it so he would clear over 120 thousand dollars in less than 18 months. Not that there is anything wrong with making money I just felt he priced himself out of a market for his house, but this was his choice and none of my business.

I did know that in order for him to buy my house, he would have to sell his. I keep close tabs on him qualifying for another mortgage with his mortgage broker. They made it clear to me that he would be required to sell his existing property in order to qualify for another mortgage.

He traveled a lot for his job and would be on the road all over the United States at least 3 weeks a month. He clearly didn’t need the space or the expense of keeping the house up he currently live in. In fact, this house had become a burden, not only in terms of expense but due to the amount of work and maintenance just the yard upkeep alone required.

His idea was to rent out the basement of this house that I was working on and to live upstairs. He wanted to rent the basement mother- in-law apartment out to a friend who would in exchange of a reduced rent take care of all the mowing and shoveling and other yard tasks that had to be done.

The small kitchen and no bathroom on the second floor where the bedrooms were located didn’t matter one bit to him. The fact was, he wasn’t much of a cook and because he lived on the road, and was single with no plans to change his status, these shortcomings simply didn’t matter to him.

Everything seemed to be in place and this plan for both of us seemed to be the logical thing to do. It just made a lot of sense to follow through with as intended. It appeared to be a good deal for everyone involved.

However, even the best laid plans have away of going awry. One lesson that I learned doing this project was, you can plan plans, but not outcomes. Remain focused and committed, but flexible and open minded.

A good example of what I am talking about is the position in which I found myself with this house.

I had entered into an intent to buy agreement with a friend whom I had done business with in the past. We had done a few real-estate deals and they worked out for both of us.

His house had been on the market for a little over 45 days without even so much as a second showing. In fact, first showings had been limited only to six prospects in forty five days. I keep close tabs on the status of the sale of his house. I had a lot riding on him selling it and being able to buy mine. He already had gone through the underwriting process and they approved him based on the sale of his existing home and using some of the expected proceeds from the sale as a down payment to buy my house that I was remodeling.

Although how he priced his house was his business, I was concerned about my financial situation and the potential impact his situation, and his house not selling, might have on mine. I had spoken to him on a regular basis about the status of his house and his intentions.

Two things had changed since I first entered into the agreement with him. He had a promotion at work and his new job required intensive travel beyond what had been expected of him in his previous job. Hence, he was home less and had less time because of the training and demands his new job required. One other change that was occurring even, if it wasn’t as big an influence, was that he had begun dating one person on a much more serious basis than he ever had in the past.

Reading between the lines and looking out for myself, the outlook of him purchasing this house wasn’t looking very promising.

When I factored in the lack of any activity on his existing home, I didn’t need anymore signs. In case it became necessary, I needed to have contingency plans ready to put into action .

I began to openly discuss this with my business partner. He always wanted to be keep in the loop, regardless whether the news was good or not. He was an accountant and understood black and white.

He hated surprises and so did I.

We quickly determined that, even if we could make all the payments for both homes, it would be very tight and uncomfortable until we sold the house. We began to develop a contingency plan.

We addressed this plan on several fronts.

We decided to take on some side projects that would be smaller in nature and manageable. We would utilize Sid who, after nine years, had been laid off as a teacher. He had been helping me with the remodeling of the house. He had been a great helper and an asset to me, but I was getting to the point where I would no longer need him on the project as much as I did previously. I also didn’t want to just cut him loose. I felt a moral obligation to keep him busy as long as I was able. He had been with me a long time and I just couldn’t let him down during his time of need.

We also agreed that we could and would take on some of those requested commissions and projects we had turned down in the past.

With the renovations on the house soon winding down, we would have more time. It was agreed I would manage the projects. I would contact the people, design the project, sell the job, and help Sid with the layout and rough cut or any other part with which he needed help. He then could do alone what work he was able to, thus giving us some additional income to not only support what I had been paying him but also to provide us some additional income to pay expenses.

This would take a lot of coordination between the house work and these new projects. The good news was that the shop was just across the street from the house we were working on, so it made it easy to allocate our labor resources as needed.

The bad news was I had to work seven days a week to keep it all straight and functioning.

I did this.

When I look back, how I did it I will never know . I guess you have to do what you have to do, and just don’t question it. I had no choice and had a lot riding on this working.

Failure wasn’t an option.

Part of the new plan was that I began to actively seek interested potential buyers who had previously expressed interest in the remodeled house project.

One problem with this, other than the distraction of having to stop and show the house, was that the house wasn’t complete and I found that people had a hard time visualizing what the finished project would look like.

It seemed all they could do was see the immediate mess of the construction that surrounded them.

This was a very eye-opening lesson for me.

I quickly stopped doing showings, realizing that I was causing more harm and discouraging the buyers from buying because the project wasn’t completed. I had taken for granted that others could see my end-result vision for the project.

I was terribly mistaken about this.

I’m glad I saw this early and stopped showing the house so I didn’t prematurely cause a lost sale.

The learning never stops. Worse yet, the lessons are different for every project.

Two weeks into our newly implemented contingency plan my buddy flew home for a rare weekend and stopped by to see me and the progress we had made on the house.

It was at this time that he indicated he thought it would be unlikely that he would be able to complete the purchase of this house.

Based on his house not selling and his recent job demands, he felt he had better tell me now before time ran out. Even though I had expected as much it still took some wind out of my sail.

Somehow, hearing it from him brought it home and now it was real.

I was grateful that he told me as when he did so I could move forward with whatever other plans I needed to implement. He also wanted to remain in the loop so that if his house sold and some other things changed, he would still have an option to purchase the house. I agreed to this and amended the intent to purchase the house to reflect this.

The pressure was on now more than ever. Not that pressure hadn’t been present previously, it just had been shifted to the front burner.

I had already been working seven days a week in addition to my part-time job as a bus driver. The bus driving job required me to get up at 4:00 am and work split shifts that had a twelve hour spread. I was spending every moment either in the shop or the house.

This house project was no longer fun.

It had become work.

I had to fight off all the doubts, what ifs, naysayer’s, and personal demons that seemed to haunt me. These included the self-talk that, “You got yourself into this and you are in over your head, but just won’t admit it”. In reality I could admit this.

I just wasn’t sure what the outcome would be.

I had a plan and was working the plan. What else could I do?

I wasn’t sure but one thing I knew was that, if I offered fate my resignation, it would accept.

What would I do?

I really wasn’t sure at this point.

Copyright… all rights reserved D.Jerzak 05/05/07

-- Dusty



15 comments so far

View Karson's profile

Karson

34876 posts in 3053 days


#1 posted 05-13-2007 03:57 PM

Great trail of your thinking and planning, I’m with you on trying to show a house that is not in an almost live-in state. many people can’t see your vision.

They want a “I see it now” view.

Keep it coming.

-- 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 WayneC's profile

WayneC

12290 posts in 2750 days


#2 posted 05-13-2007 04:02 PM

Your vision is a rare gift.

-- We must guard our enthusiasm as we would our life - James Krenov

View Dusty's profile

Dusty

785 posts in 2808 days


#3 posted 05-13-2007 08:42 PM

Karson,

You certainly sound like you have had experience in this happening also.

When ever I have designed or built any project I always envision the end restult first. I then work back wards from there to complete the project.

For me it came easy. I always figured that if I didnt know what I wanted or what something would look like when I completed it would be very hard to to achieve what It was I wanted.

In other words, if you don’t know where you are going its is going to be hard to get there.

I however find ,that for most people ,this is a difficult thing to do. It seems hard for them to see the end product. They seem like they are so focused in the present and the surroundings that they can’t make that leap.

I certainly was a huge discovery for me.

I also noticed that even if they ( the client) didn’t understand something they often pretended they did. I think a lot of that came from they didn’t want to appear like they didn’t know what they were doing.

After all no one likes to look silly or appear dumb. However, its hard for some one to trust that the person won’t take advantage of them.

That is also understandable.

I have no problem asking for help of clarification now, because I have made to many mistakes. Many of these were very costly.

I let my pride get in the way and never asked for help or clarification on something I was confused about or never understood.

My teachers used to say “the only dumb question is no question”.

That is still relevant today for me.

-- Dusty

View Don's profile

Don

2599 posts in 2829 days


#4 posted 05-13-2007 11:03 PM

Dusty, once when my Irish Grandfather was asked for driving directions, I thought his answer was a classic. “Well”, he said, if I wanted to get there, I wouldn’t start from here.” LOL

-- CanuckDon "I just love small wooden boxes!" http://dpb-photography.me/

View Diane's profile

Diane

546 posts in 2775 days


#5 posted 05-14-2007 12:44 AM

As of this date is the actual story with the house completed or are you still looking for a buyer?

Diane

View MsDebbieP's profile

MsDebbieP

18615 posts in 2813 days


#6 posted 05-14-2007 01:09 AM

i’m feeling stressed once again… last chapter, I could see the light and now.. dark cloud again.. sigh

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

View Karson's profile

Karson

34876 posts in 3053 days


#7 posted 05-14-2007 01:16 AM

Dusty:

When I go to look at a house. I like to look at ones that are empty. No furniture. Other people was it all decorated up so they can see what it looks like with furniture.

I went through one house that was full of Antiques and they even had price tags on them.
The house was overflow from their store. We left and we asked ourselves. “What did the house look like?”

-- 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 Dusty's profile

Dusty

785 posts in 2808 days


#8 posted 05-14-2007 01:22 AM

Diane,

I am not sure how I can answer that question with out giving away the “rest of the story”.

There is several chapters, twists, turns, heartbreaks,tests and….....

Stay tuned.

-- Dusty

View Dusty's profile

Dusty

785 posts in 2808 days


#9 posted 05-14-2007 01:28 AM

karson,

I understand.

One of the basic truths of real estate 101 that I learned early one the hard way was the more cluttered the house the more you would remember the clutter and not the house.

I also learned there is no accounting for taste. We all have our tastes, and what we find tasteful some one else could find distasteful.

I found the more I keep things simple and natural, even that dreadful word neutral. However I had to remember I wasn’t selling my tastes I was selling the house.

Chalk up another lesson learned.

-- Dusty

View Dusty's profile

Dusty

785 posts in 2808 days


#10 posted 05-14-2007 01:31 AM

Don,

Classic, you have to love a person with a quick sense of humor.

I can’t count the number of times I have felt up against the wall, defeated and convinced this was the end of the line, only to find a good hardy laugh put every thing back in perspective again.

-- Dusty

View scottb's profile

scottb

3648 posts in 2979 days


#11 posted 05-17-2007 04:52 AM

Our house was sparsely furnished for the walk through, set up nicely for an ideal showing. Made the rooms loook nice and large. Despite several rocking chairs around the fireplace, throw rugs under tables and couches. They must have been living out of a rental storage unit, or they really didn’t have much in the way of books, clothes and what-not.

Wasn’t until we signed that we could see how terrible the floors and windows were. Furniture hiding some, but not all of the worst sins. Who’d move a couch to see how the room looks there?

The irony is now, with all my repairs in various stages of completion, the house was closer to open house ready then, than it is now even with many of those old issues fixed

-- I am always doing what I cannot do yet, in order to learn how to do it. - Van Gogh -- http://blanchardcreative.etsy.com -- http://snbcreative.wordpress.com/

View Dusty's profile

Dusty

785 posts in 2808 days


#12 posted 05-17-2007 04:55 PM

Scottb,

Been there did that.

One of the many truths I have discovered about rehabbing a old home is the work is NEVER done. There is always something that needs fixing, replacing, or updating.

Of course there is the domino effect. The minute u start a project and get into it the good oh “well while we are doing this” or “we might as well as long as we have the mess and are on the middle of”.... you can add your own.

Never ending black hole that sucks money and time.

The funny thing is those of us who have been involved with any major rehab effort keep feeding this hole.

I will never understand what that is all about.

-- Dusty

View scottb's profile

scottb

3648 posts in 2979 days


#13 posted 05-18-2007 02:48 AM

Yep, so many projects grow in size or scope. I never bothered reinstalling the kitchen/DR baseboard as I’ll (eventually) be removing/restoring the floor. 5 years later, and I’m still gonna.

I read in This Old House the most expensive words in renovation are “while we’re at it”. I understand this… but I also don’t. I mean isnt’ it cheaper to fix stuff while the walls are open, rather than demo and re-drywall/paint again later. It should be. Yes you’re going to blow the original budget, but come in under the cost of two seperate jobs.

-- I am always doing what I cannot do yet, in order to learn how to do it. - Van Gogh -- http://blanchardcreative.etsy.com -- http://snbcreative.wordpress.com/

View MsDebbieP's profile

MsDebbieP

18615 posts in 2813 days


#14 posted 05-19-2007 12:37 AM

one of my old co-workers decided to pave their driveway.
They had to dig up a section of the driveway.
He saw a crack in their foundation
To fix the foundation they had to renovate their basement
In renovating their basement they found that the water pipes were about to blow.
To fix the water pipes they had to tear out part of their kitchen area.
“While they were fixing the sink area” they decided to make the changes to the kitchen that they had planned to do in the near future.
To renovate the kitchen they had to change their living room area.

Their paved driveway became an expensive decision.

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

View Jeff's profile

Jeff

1011 posts in 2746 days


#15 posted 05-22-2007 07:28 AM

E’gads!!! KT and I are about to embark on buying a new home and this is very disheartening (yet informative at the same time)... I am of the mind that sweat equity is not a bad thing but your journeys really give me pause Dusty. It is a VERY odd dichotomy for me. I mean I can’t stand the thought of living in a home (unless I built it) that is less than 50 yrs old. Yet, the impending dangers are numerous if one goes with an older home. Believe me, the assessments for this 1892 condo we are in now are proof positive of that (tuckpointing, boiler work, new windows). The cumulative loss that will be realized in the sale is daunting enough… Thanks for you candor and detailed account.

Scott and Debbie, thanks for your stories as well.

-- Jeff, St. Paul, MN

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