Hi again, future me. Just checking in.
Here's the scenario at the moment: I'm still in law school -- about a month and a half left or something -- and I'm on spring break. The wife is off at a sewing class. Which leaves me home alone, with nothing terribly pressing to do. So I figured I'd write you a little note.
The prevailing feeling today is crushing pressure. That's because we've made an offer on a house, and the sellers are not behaving predictably, shall we say. The asking price was $419K, and we offered $340K. They've not responded to our offer with a number -- ours was obviously quite low, so I'm not too surprised that they seem to believe they couldn't really play ball -- but they have responded by trying to get us to get a mortgage from them (they happen to be lenders). The first time I heard this from our realtor, he didn't explain the situation well, and I got the mistaken impression that they'd said, "our counteroffer is $395K, subject to them getting a mortgage through us." My response was to put the mortgage thing to the side, and give them a higher offer -- $360K -- to see if we could settle on a price. I figured that we want to be free to get a mortgage from whomever; what we needed from the sellers was a price so we knew whether we'd be able to buy the house. This is what our realtor advised me to do. But like I say, I'd misunderstood the situation. What had actually happened was that they said to our broker "we can't come back w/ a number when their offer is so low. But tell them that, if they were to get a mortgage from us for $395K, we could give them a better deal than what they've got." So the didn't in fact give us a counteroffer, and we raised our bid anyway. Not something I feel very good about.
Their response to our second bid was basically exactly the same as our first: according to our realtor, it was something like "Hm, that's interesting. What's their credit score? Maybe we can give them a mortgage." After hearing this, and understanding it better, I was totally disinclined to follow our realtor's advice and raise our bid again. So I sent them our credit scores, thinking, we're not at our highest number, and I don't want to walk; let's keep them engaged, let them give us their mortgage pitch, and see if they can come up with a doable number. Now I'm waiting to hear back. I fully expect them to say "Okay. Our counteroffer is $395K, and here's a great deal we can give you on a mortgage." I will want to say, "wait, we already turned down $395K. Can't you do any better?" But I believe that if I do that, they'll say "we've come down $25K from the asking price. We can come down to $385K, but that is firm." To which I would have to say, "no can do." So instead I plan to give them our firm final offer if they do what I expect. And I'll say "we can't commit to getting financing from you unless you commit to a price, in writing. Once you've done that, we're happy to consider your mortgage." Giving them our final offer and telling them it's firm might get them to come down to us; if they give us their firm offer first, I think it'll be too high for us.
But, so the reason I feel crushing pressure is that I'm freaked out that I'm going about this wrong, and we're going to lose this fantastic house as a result. (Not that it's the end-all-be-all, but it's quite nice.) Am I insisting on a price that's too low? And by being hard-assed about the mortgage -- instead of saying, "hm, this is very interesting! I'm intrigued" -- am I going to run them off? Maybe I should dangle the possibility of the mortgage a little more temptingly. Hm, yeah.... At least maybe I shouldn't knee-jerk say "we can't commit to this" until I've really looked the mortgage over. If it's really good, maybe I should be more open about it at this stage. And now that I think about it, maybe I shouldn't refuse to commit; maybe I should just come back with a firm final offer and not mention the mortgage. That way I'm not insisting that I won't consider it; if they're so inclined (which I don't think they will be) they might just allow themselves to be committed to our price without deciding on the mortgage if they're not sure whether it's a possibility. Yeah, but that doesn't seem too likely. What seems more likely is they'll say "we can't give you that price unless you do a mortgage with us," and I'll have to say... I guess I'd have to say "put that in writing." At which point I'd look at the mortgage and either say "can't do it," or "you've got a deal."
But regardless of what they said, when I looked at the mortgage I'd want to show it to other lenders and see if they could do better. Don't tell them buying the house is contingent on financing through the seller, just say "can you match this." If it's really not a good deal, I guess we'd walk away.
Yeah, I guess the reason I wanted to refuse to commit until they agree on a price is to avoid a situation like that one: where we have to choose between getting this house at a fair price but with a lousy mortgage and not getting it at all. The idea is to completely sever the requirement of the mortgage from the house. W (my wife that is) is a proponent of this plan: make it clear that we will not buy the house if it's a requirement that we get the mortgage from them. We want to treat them just like any other lender. My only concern is that we'll lose a house that could have been ours for no reason other than our hard-headedness. What if they can really offer us a good deal on the financing? Or even just a decent deal, but the price on the house is right? What would be the harm in letting that happen?
The answer is that there's no harm in letting that happen. But the problem is that we're opening up a difficult, and risky, negotiation. If we allow ourselves to get into that situation, it will inevitably take a long time to sort out the details; and there's a good chance that we'll have to walk away at the end of it. Which we can't really afford to do -- time keeps on slipping into the future.
I'm not totally convinced that that's the only problem. But I can't think of what the other one would be right now.
Well anyway. This is not what I think a note to my future self should be like. It should contain a portrait of life today, not just a long train of thought. I actually do this when I work on pretty much any project -- I write for a while about it, just letting whatever comes to my mind come out. I find it extremely helpful. But I don't think the blog should be like that. Crap. So this was a bit of a waste of time, because I didn't come to any decision about what I should do, either. Shitty blog post, no decision. In fact, I just confused myself again. I was all ready to say "we can't commit to financing until you commit to numbers on paper," but now I'm not sure. Great going, there, man.