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December 1st, 2009

Should Buying A Home Be This Hard? — Part II

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Earlier today we posted a story from the Real Estate Wonk (Jamie Smith Hopkins of the Baltimore Sun) of one couple and their unsuccessful attempts at buying a home in today’s unique real estate market. The couple, Peter and Karen, saw all types of properties, everything from foreclosures, to short sales, even “regular” sales. After three months of searching and almost 80 homes in their file, not one of the couple’s offers had been accepted.

Even after the couple had finally had an offer accepted, and after the inspector gave the home a passing grade, more and more factors — again, brought on by the home-buying era in which we are now in — came into play, stalling the buying process even more:

Our lender sent out the appraiser a week later. The appraisal report was devastating: In order to get the FHA-backed loan, changes had to be made. Changes that would cost about $3,000, the appraiser said.

Our agent was livid. Our lender was baffled. The appraiser had put things on the appraisal report such as “the carpet has exceeded its economic life” and “puddle of grease in the oven.” No mention of the broken oven door, though. Neither the agent nor loan officer had seen anything like this before. The appraised value was well above our offered price, but the “livability” of the property was in question.

They suggested we ask the bank to make the changes, even though we had repeatedly signed that this was an “as-is” sale and that we wouldn’t ask the bank to make changes. We had some leverage, though. The appraisal is binding for six months, our agent said. If we back out of the sale, and the bank tries to sell it to someone else with an FHA loan, the appraisal stands and the changes still have to be made.

While we waited for their answer, things got worse. The title agency had “performed a routine records search” and found the previous owner had filed for bankruptcy.

What? The lender couldn’t have done that before? You know, like, before it listed the home for sale?

We were now in a “post-foreclosure bankruptcy” situation. The bank didn’t legally own the house.

This scenario seems similar to the ongoing battles borrowers are waging with their lenders at attempts to get their loans modified. The desire is there, the tools are there, but the process seems to be overly complicated, slow, and unrewarding.

Do you agree?

In a market filled with tons of unsold and vacant inventory, should buying a home really be this hard?

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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