Thursday, September 12, 2013

Roadblocks We’ve Encountered When Buying Homes

There are a variety of issues that can come up when buying a home.  While many of us are familiar with the usual items that can pop up during home inspections or credit checks, some issues are a bit less common or aren’t advertised as heavily in mainstream media.  However, these potential roadblocks can be just as aggravating and potentially disastrous when attempting to buy a home.  I can attest to the hurdles these issues can present, as I have encountered a variety of them during our various home-buying adventures.

Auctioned Out from Under us
During our first home sale, we stumbled upon what we felt what was a really great deal when looking for our next place.  We found a short-sale condo that was located in one of the suburbs in which we were interested in relocating. 

Knowing that it was a short-sale, we made a full-price offer and then sat back, prepared to wait for an extended period if necessary to hear back from the bank.  In the meantime, we got our finances together, got pre-approved for a second mortgage (since we’d yet to sell our first home), and started downsizing in the event our offer was accepted and we needed to move.  After several weeks spent patiently waiting, we were contacted by our real estate lawyer who informed us that even with our full price offer on the table, while the seller had accepted our offer, the bank had moved forward with foreclosure proceedings and had sold the property at auction.

Initially, we were quite disappointed, but about a year later, the property came back on the market as a foreclosure.  By this point we’d already moved on in our home search.  The property was sold at less than half the price we’d initially offered for it.  Shortly thereafter, another unit in the same six-unit building sold for a comparable price.  So what seemed like a disappointing loss at first could actually be considered a blessing in disguise since we would likely have overpaid significantly for the property.

Money Transfers
Encountering issues when trying to transfer or attain funds for a home purchase can be time consuming, frustrating, stressful, and costly.  In our most recent home purchase, we encountered several issues that we weren’t expecting when trying to wrangle our funds from the bank for our purchase. 

The first issue was obtaining the money from a certificate of deposit in a bank in another state before its maturity date.  Since we couldn’t come into the bank in person, we had to contact a personal banker who emailed us documents that then had to be express mailed back so that we could do a wire transfer of the money to our new bank.  The only issue with this was that we found that our new bank would put a 5-10 business day hold on what is considered “sizeable” transactions, which held up our money until the day before closing.  The final issue in this transaction was that we then found that we couldn’t just write a couple checks to bring to closing.  Since the amount of our down-payment was in excess of $50,000 (we were buying the property outright with equity from our first home), we had to wire transfer the funds from two different banks and pay two different wire transfer fees ($25 and $20). 

While we managed to get the stars to align to make the home purchase, it was a stressful process to say the least and one that might not have been completed on time were we not as on top of things as we were.

Family Gift Payments
When we were looking at that short sale condo I mentioned earlier, since we still owned our primary home, our available liquid cash was at a minimum.  We were planning on taking a temporary loan from a family member to help us with the down-payment; however, there was more to it than just cashing the check.  According to our bank, we had to provide documentation of the transaction and even have the family member sign a statement regarding the “gift” money.  While the deal ended up falling through anyway, it was certainly an additional aspect of the real estate transaction that we weren’t expecting.

Checks
As I mentioned, when we bought our current home, we decided to do so without a mortgage since we were downsizing and using some of the money from our previous home to buy our current smaller home outright.  This meant that when it came time to close, we had to bring a sizeable amount of money to the table.  We had planned to bring two cashiers checks from two different banks, but found as closing neared that due to new regulations, the money would have to be wire transferred.  While this didn’t stop the process, it was yet another roadblock that we hadn’t expected and added additional steps and costs (in the form of wire transfer fees) to our purchase process.

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