In the last few weeks, we’ve been actively trying to find and purchase our first home.
Experienced real estate agent. check. Buyers representation agreement. check. Mortgage pre-approval and submission of a stack of tax returns, bank statements and other financial documents. check. The only thing left was to find a house and buy it.
Unfortunately, we had no idea we were stepping into a distorted world of house flippers, hucksters, and sellers who have a detached sense or reality.
But what happened this week made me frustrated and angry.
Last week, we looked at house #5 with our real estate agent. While the price was substantially more than most other houses in the neighborhood (cost per square foot), it was perfect. The only defect was that the garage dumped into a very busy county road. Other than that, we loved it.
After the showing, we were ready to make an offer just as soon as I figured out what a fair price was. I looked at the MLS sheet again, and saw some terse verbiage about a city project and assessment. The MLS remarks had a city project id, there was an assessment, and, something about a payment to the buyer from the city for replacing a retaining wall and fence.
My buyer’s agent called the listing agent, who casually explained that it was “a little utility work and she thinks they completed most of it.” A URL was provided that led to some newsletters the county sent out several years ago when they were voting for the project.
My agent suggested I call the city. He said he would do it if we wanted, but it was probably better if I had all my questions answered directly. I agreed and I said no problem. After all, it’s only a little utility work and most of it has been completed.
Major and Extreme Disruption
The next day, once I caught up with all my work, I took a break and snuck into a quiet conference room. I plopped down into a chair, pulled out my notepad and started dialing the city.
I called the city’s main switchboard, and after I was transferred several times, I finally connected with someone in the city’s engineering department.
“Hi. I’m hoping you can help, or point me to someone who can. I’m putting an offer on a house and I have a few questions about some utility work.” I said.
“I definitely can help. What’s the address?” she cheerfully asked. I gave the city employee the address. “Oh” her tone immediately changed from one of cheerfulness to quiet resignation. “what questions can I answer?”
I made mistake of asking the general question, “can you describe what kind of impact the construction will have?” That is the exact moment when the fire hose of bad news started to flow.
You see, when a listing agent says, “a little utility work,” it means a three year major construction project.
The city engineer basically stated that the project would be extremely disruptive, and would take place in two phases, over a total of three years. The street would be closed to all traffic and be completely torn up. We would not have access to our garage for the better part of the summer. We would also might have to park a block or two away during the construction.
They would be digging down 20 feet to replace a 36" water main, sewer lines, and putting the power lines underground. Other utility companies would be allowed to work in the area as well.
Moreover, they were going to excavate in the front yard and behind the house, in addition to the county road (on three sides of the house).
Construction is going to start in April, end in November, and resume the next year, and finish the following year. On the plus side, she said that by November they would have partially paved the county road and would be allowing traffic on it, but the final layer of payment would not added until 2016.
I was dumbstruck. She mentioned something about the assessment and easement negotiation with the home owner, but I was overwhelmed with idea that I am purchasing a house that will be the nexus of heavy construction for three years.
I discussed it the real estate agent, who wisely suggested we move on. But after talking with my wife, we decided to make an offer with a price that takes into consideration the construction. We made the offer.
The house was listed at $179k; I offered $145k.
“I’m not going to present your offer.”
The seller’s agent was not pleased. My agent relayed that the listing agent basically told him that she would not present the offer to her client because it was too low. Apparently, there was some back and forth and I got the same URL in an email.
Obviously, she must not know how bad it is going to be. I looked over the two year old newsletters in the URL to see if I made a mistake. The newsletters touted new bike trails, beatification and in small print mentioned some utility work. There was a timeline that mentioned negotiating rights of way.
I realized several things that I had missed. 1) it was possible that when they construct the new road, they might expand the road (shortening the driveway to the point it is useless); and 2) more importantly, the seller might have sold a portion of their property to the city.
I called the city again, got even more information. The sellers had negotiated (and was paid for) a temporary easement by the county, and also negotiated a payment plan for the assessment with the city. Therefore, the sellers knew about the construction.
I hammered out an email with the facts from the discussions with the city, and cc’d the listing agent. At that point, I felt like the listing agent was misrepresenting, but my agent said he expects the other agent to be ethical and professional. Giver her the benefit of the doubt, he communicated in a statesmen like fashion.
Regardless, I know the sellers knew of the construction. They met with both county and city personnel and negotiated payment.
Then nothing. I assumed the listing agent was ambushed with this information and was probably scrambling to verify the information with the city.
A few days later, I asked my agent to see if the buyers had received the offer. The response:
The Sellers would take their home off the market and wait until the work is complete or further along so Buyers can see this will be a better improvement for all rather than work with an offer at this price.
If I was an optimist, I would have imagined that the listing agent confronted the sellers and after a heart-felt conversation, they decided to take the house off the market. But I’m not.
I think you can guess what happened next… onward to part 2.