The Doldrums

I’m going to be taking a quick break from our regularly scheduled baby programming to talk about homebuying. I’ve griped about the process before, but now I’m going to temper that gripe with actual information.

Janelle and I are currently in escrow, as of the first of this month. And, with this period we have also entered into what is probably our most stressful and least happy time since we have known one another. We’re not unhappy with each other—but the escrow process is more or less sucking our will to live. And here’s why:

When we started looking for homes, we were in really great shape. We had been watching shows about real estate shopping and home renovation for a couple of years on and off. We had gotten a good sense of what made a good deal not only in Southern California, but anywhere. Before we worked with an agent, we scouted all of San Diego county and picked our area of interest, and then we canvassed that neighborhood, seeing open houses and sampling neighborhoods. Seven months ago, when we started working with an agent (after interviewing a handful and carefully selecting the one we liked most), we were well ahead of the game. We understood the pitfalls that homes could present and could grasp the intangibles that sometimes elevate a home beyond its apparent worth.

Once we actually had a bid accepted on a home, though, all our preparations were for naught. Buying a home isn’t really something you can practice, and there aren’t too many television shows that cover the intricacies of escrow week after week. Our failing point was our assumption that, come the start of escrow, that our agent would be able to shepherd us through the process. For whatever reason, this isn’t really the case. Some words of advice:

– Aim for a 45 day escrow: We find ourselves in a 30 day escrow (which we assumed would be standard and no problem at all because we are apparently fools) and it’s killer. Why 30 days is standard when just about every bank on the planet lists 30-45 as the average close time I have no idea. Oh, and try not to have your escrow start January 1 when January 1 is a Friday. That timing meant that we couldn’t really start out 30 day escrow until January 4, making it a 26 day escrow.

– Select all your helpers prior to entering escrow: You’ll want to make sure that you’ve selected the services you want to use for insurance, inspection and loan prior to escrow. You can do it during, like we are, but expect your stress to ramp up exponentially. When picking an inspector find out if they will be climbing on your roof or just visually inspecting it. Find out if they are insured and accredited and look for sample reports on-line to see if you like how they are formatted. You want thoroughness, so don’t just look at the numbers and fees. For a broker, however, it’s all numbers and fees. The interest rate they can offer will change daily and just about everyone will offer you the same, assuming you have good credit. The fees they charge, however, will vary wildly. You will save a lot of money typically with a bank or credit union, but may be looking at more lead-time required in the escrow process. Local brokers will end up charging more, but will be faster and may be more flexible in terms of the number of options they can present you with.

– Be sure to read all your paperwork: This is something that we, thankfully, are not realizing in hindsight. Always read the papers you are sent, even the legalese. You’re likely to end up signing something you don’t understand otherwise, and your agent is very likely to not think anything of it. Discrepancies are a big deal and very likely. There are a ton of things you need to remember, and even more that the seller has to catalog and disclose to you. They probably messed at least one thing up.

Overall, you need to be prepared to be stressed. Escrow is a process that can have a lot of emotional and financial investment from you. It’s likely the largest debt that you will ever enter into, and the entire thing can fall apart through absolutely no direct fault of your own. Be fearless with nagging and be stupidly over-prepared.

  1. #1 by Eric Thomas on January 8, 2010 - 12:37 PM

    This is really interesting. In the last 3 weeks, I have strongly considered, to the point of basically making a decision, the prospect of buying around mid-year. This was a consideration spurred on by my Mother and with some discussion and thought, seems like a good idea.

    That being said, the entire home-buying process scares the shit out of me. Having read this confirms my fears but also alleviated the sense of undue paranoia. It’s good to know, not just guess, that it’s a harrowing ordeal. If you don’t mind, in the coming months, I’d like to consult you when it comes to certain aspects of house hunting and buying. You and Janelle are thorough and intelligent when it comes to things like this so I figure you could be a great, and more importantly, a reliable, resource. Nothing inundating, mind you, maybe just some questions or requests for suggestions.

  2. #2 by mscarpel on January 9, 2010 - 9:37 AM

    @Eric Thomas
    This is a good time to buy, for sure. General consensus seems to be that the market is rebounding, so get in while the getting is good.

    And it’s only scary in certain instances. A short sale, for example, would yield us nothing but time. We’d be sick of how much time we had to get everything done.

    But I would be happy to give you stupidly detailed advice on everything we’ve been through. It has been so not fun for us that I relish the idea of making it easier for someone else.

  3. #3 by Badmoodman on January 9, 2010 - 2:51 PM

    Our first house we bought in 1981 had two mortgages (I can’t remember why) and one had an interest rate of 10 1/2% and the other was 17 3/4%. AND, I had to walk 12 miles through the snow to get to work. Ok, ok, I live in LA so that may be juuuuuust a bit of a stretch.

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