Garbage And Lies - Part 3 - Selling A House

:date: 2024-03-10 08:46 :tags:

This is the third and hopefully final part documenting my most recent home owning experience. You can also read part one and part two.

At about the exact time I had crossed the point of no return with beginning to remodel the kitchen, it is likely that it quickly became a bad decision due to forces beyond my control.

The housing market is not driven by what people can afford to buy; it is driven by the amount they can pay in monthly payments. If, for example, a household has $2000/month to spend on housing, they can rent a $2k apartment or "buy" a house with a loan that requires $2k payments. This makes the actual value of real estate strongly dependent on home loan interest rates.

Mortgage interest rates have been almost freakishly stable for the last 15 years as well as historically low. But that all changed the moment I was committed to holding onto that house for a few more months at which time rates shot up. It feels like had I just sold it in the condition it was in at the beginning of 2023 I would have received the same price I got selling it a year later. The difference would be I wouldn't have had to pour time and money into clawing back that value. When people tell me about their great stocks or crypto investments (bets) and I tell them that I can't follow along because I singlehandedly have the god-like power to massively destabilize entire market economies, let this be exhibit A.

So despite the house looking better than it has looked in many decades, I was still left catching a knife. I also just missed the optimal summer selling window for a house with "Williamsville Schools!". But it was time to get out one way or another.

The first problem to overcome is choosing the real estate professionals whom I will be compelled to work with. Obviously if you've got the time and temperament, definitely type for sale by owner into a search engine and see what you turn up.

Unfortunately, because I was leaving the region, I needed a selling agent. I strongly believe that a selling agent does nothing proactive to actually sell the property. But they do two crucial things. First and most importantly, they get you registered on a visible MLS despite what the FTC calls the "challenged conduct" of these "services". I call it extortion by rent-seeking parasites.

The other thing a selling agent can do is organize some sensible photography. I have to say that if I was selling real estate as a profession, my photography skills would be extremely sharp. But I've looked at a lot of real estate photography and, wow, some of it is shockingly awful. This real estate photography educational resource is absolutely worth a look as a reminder of the competence level in the real estate profession.

Although there should be much more to it, really it's about the photography because that is pretty much the extent of what is done to sell houses. Fortunately, an ability to coordinate reasonable photography is something a seller can check up on: simply look at other listings. I made a list of agents who had sold property in my neighborhood in the past year whose photos were not too objectionable. I then moved onto the next round of the selection process.

Since I was going to be selling this house while living hundreds of miles away, it was critical that I be able to communicate with the agent. I guess normal people are fine with the (agent's) plausible deniability with texting but I do not even own a telephone. I require email communication. I want to have the agent email me when there is something I need to attend to. All email. I do not want a text conversation jumbled with phone calls and isolated emails, etc. Let's have a nice consistent record we can show a judge. So how can we check that our agent is competent at receiving and sending a timely reply by email? Simply send them an email. And that's what I did for about ten agents.

Astonishingly, only two replied. Two! Come on idiots. I'm asking you to help yourself to a huge wad of cash for doing basically nothing and you can't answer a simple email? Wow. I was blown away.

The first guy who wrote back (check) did sell a house in the area (check), and did seem to feature photography that used absurd lens filters, but in a professional and probably effective way (check). That's our winner. I will say that in the end he was actually reasonably literate and kept up the email thing the whole time and, although my expectations are very low, he did not fall short of them.

Here's an example of the listing photography - this room is not that big and it's definitely not that bright!

Having been burned by being locked into an adverse situation when I bought the place, I insisted that the contract with this agent be 3 months and not the normal 6. Remember: "ensure commission at all costs" is their only goal, not yours.

I really have mixed feelings about the yard sign. At least they don't dig a post hole like they used to, but it's still a giant "Nobody's Home!" sign and that's a serious security liability to an unoccupied house. I'm not sure there's much that can be done about that.

Since the state of New York requires it, I also had to find a real estate attorney. They're not cheap but they're not shockingly expensive either (ahem Realtors). And they actually do some important things. The first attorney I had when I purchased the place was referred through the "legal insurance" I had with my previous employer. Yup, that's a thing and kind of worth it. That guy did a lot of work sorting out the title mess and I paid exactly nothing for all of it. Unfortunately that guy retired before I could use him to sell. I did ask for a recommendation and he did give me one. I tried to email them but no response.

At this point, I was in a very difficult predicament. How can you find a real estate attorney whom you will entrust the entire proceeds of your sale to? Let's assume you're not in the city where the closing takes place. Well, you could ask your selling agent whom you have met and verified is not a Nigerian prince. But we've already established that the recommendations of real estate agents should be regarded as bogus. Let's just say I used the internet and found someone who could answer emails. It was only later that I realized that there are probably a higher percentage of scammers with the skills to respond to simple emails than among legitimate professionals these days. We'll return to this conundrum.

With a team duly assembled, it was time to sell that house!

I was far, far away which was both good and bad. It was good for our agent who literally had to do nothing but text our house's electronic access code to various random people who hopefully were indeed buyers' agents. No scheduling to get us out of the house or actually doing anything.

And since nobody was there, the visitors really felt the need to kick the tires figuratively and I think the house literally. We went back every so often to mow the lawn and attend to things. And there were things to attend to! There were random weird messes left. Lights were left on. Stuff like that. But there were more disturbing things. Once we found a change of address confirmation for some random person that was not us or anybody involved. We found other scammer mail showing up too, our mail box apparently being used as a drop. Once I arrived and discovered that someone had run the garbage disposal until it seized up. I had to hustle off and buy a new one and replace it quickly. One time our agent called and told us that people can't get in because some stupid previous agent locked all the knob locks (the house is 100% keyless). Fortunately the agent proved why I repudiate those cheap ineffective locks (and perhaps highlighted a former career skill?) by breaking in with a credit card. Fixing and cleaning up new problems every time we visited was very stressful.

After way too long, we were finally informed that someone had made an offer. I was surprised by how long it took because I've toured other houses in the area and never felt like I had the worse one, certainly for the money. That was a good indication that, yes, someone was interested in our house. It seemed they had loan entanglements and other issues, but they signed a contract to purchase  —  contingent on "inspection". And I've already indicated how that can go in part one.

This inspection did a lot of unpleasant things. First, they left the furnace disassembled; remember that if they had disabled that the unattended house would freeze, pipes would burst, and the house's value would plummet rapidly toward zero.

They also broke my sump cover insulation. This is another area where they could effectively destroy the house. Every couple of years the new sump I had installed did get jammed with random spiders and such and breaking the insulation carelessly in an unoccupied house is a great way to jam it and destroy the place with a flood.

That was uncool. But what was really uncool was they undid the deal by crying "mold!" Apparently there had been evidence of mold in the attic (at least their inspector checked). Yes. No shit. Remember what I said about the showers venting directly into a sealed attic? Of course there had been mold. I fixed the root cause and it was not a problem. I never saw any mold and never had any reason to believe there was a problem. This is exactly the kind of thing you'd hope a selling agent would pass along. But no. That is too complex of a plotline.

I reassembled the furnace on my next visit and we were back to the starting line. All the while the price was being steadily lowered to match those annoying interest rate hikes. Finally I got word of a second offer. This one "as is" (not sure if our agent crafted that strategy, but it is one way to deal with transaction uncertainties).

Not only was there an offer, but the down payment was pretty big by American standards. They were still going to need a hefty loan, sure, but they definitely had committed to buying the house. Great. Give me the money and we're done!

Not so fast! In fact, so, so, so slow. Amazingly slow. Despite the fact that the purchaser had put up a 15% deposit and been pre-approved, the loan approval was very protracted. And we just had to sit on a decaying house waiting for an undetermined date. Sure, like before, there was a date in the contract, but this time I couldn't control how quickly their bank could issue a check.

It was really a full time job for me too. Every step of the way, I provided all documentation as perfectly as it could be done. I would tell the attorney that I was going to be in Buffalo and that I could just sign what needed to be signed and bring whatever documents were needed. Instead he'd contact me days after returning desperate for me to get stuff notarized and sent by overnight courier. But I did it. In the whole ordeal I dealt with 375 emails, composing 153 of them.

There was a lot of maddening stupidity surrounding the whole process. The lawyer really was worrying me with the endless cascade of mistakes and errors. He misspelled the simple-to-spell street name. He misspelled "Raod". He misspelled his own name. I am not even kidding! And the grand whopper of them all: (reusing old documents) he listed the beneficiary of the proceeds as the estate of some dead guy unrelated to me!

Then there was the stupid HOA. John Oliver correctly warns about the dangers of HOAs but I never had mine get too oppressive. I actually did enjoy some of the covenants that prohibited idiot neighbors from doing extra idiotic things around me. However, I consider it ridiculous that the HOA would hassle the seller during a transaction. If the buyer somehow gives me the cash, I don't give a shit about what the HOA would like from me. As it was, they sent me a nagging email telling me that I had a bush covering up the mailbox. Oh good job HOA. Did you use streetview for that? Did the streetview car come around before I cut that thing down every summer. I was able to send them this image to show them that it probably wasn't a problem at this time of year, and it certainly wasn't my problem because this plant (which I regularly cut back) is on the neighbor's yard!

The HOA then slunk off. But there were plenty of weird things for me, the seller, to pay for. Weird because I hopefully soon won't be giving a damn about this property. There was $525 for a survey. Does this make sense? Hell, I'd like to contract a corrupt surveyor who would falsely claim that I was selling 1000 acres. What's it to me? I would have thought that the buyer's diligence would demand they organize a survey that made sense to them. But whatever. Then there was $320 for a title search  —  same deal. I don't care if the title is encumbered. In fact, ideally I've taken out a whopping HELOC, and bribed a title search to say it's clean. Then I would have just disposed of that liability. So that makes little sense either. And then there is an HOA "Closing Doc Fee" of $100. That's just a little dig to parting customers, kind of like cancellation fees for phone services if you terminate them. Again, I don't care what they do to that property when I'm gone so why should I pay that? Whatever.

I took care of my end promptly and with no errors. And I waited. And waited. And waited. And one random day without warning, it was closing day!

It would have been great to know when the closing was going to be, but scheduling such things in advance so that I might plan a trip to collect my money is not something the real estate profession seems ready for. I learned about the closing from some people working for my agent's feudal lord (yes, very much like the mafia). My attorney never emailed me. Apparently my house was now the buyer's house and money had changed hands and I had no idea where that money was.

I waited until the next day to hear from my attorney. I got no answer to my email asking about the transaction. At this point I'm thinking, ok, it's a scam. He has taken my money and is off to a tropical island. I started doing some research on the silent attorney who has all of my money and it's looking sketchier and sketchier. It really was a blind spot in the whole process and I've still not worked out how I could have done better. I didn't realize he'd be entrusted with the entire proceeds. Months ago I thought this process was predictable enough that I could be there to take possession of the proceeds in person.

After some more days, I finally was able to ascertain that the check was sent by the purchaser's vassals who really did want the bank's money to get to me. Still some glaring holes in that defense but apparently it was on the way and they finally coughed up a tracking number. But consider that packages are left lying around for all my hundreds of neighbors to pick over at my apartment. That was extremely insecure. Once I got on the trail of the delivery I was able to meet the UPS driver in the parking lot. I immediately took that check right to the bank and only when it cleared was the house sold in my mind.

There was also the matter of the down payment which the agent's feudal lord had been earning interest on this whole time. No incentive for them to make any of this go quickly! They waited four days after the closing to send me the rest of my money. They never mentioned it or sent me a tracking number. Again, I had to frantically look into it so I could again meet the UPS driver.

After that insanely protracted transaction, you'd think that after banking the closing proceeds it would be over. Well, not quite. It turns out that in Erie County NY, the water supplier is some kind of governmental agency. This means that, unlike the electric company and other utility providers, they secure your account not to you but to the house. This means that if you don't pay your electric bill they can sell your debt to bill collectors; if you don't pay your water bill they can take your house. Because of this, there must be provisions for what to do if the seller somehow accrues a large water bill and tries to pass that on to the new owner. In my case this meant proving that I didn't owe some astronomical amount and then having $250 withheld, i.e. about 5x the expected bill.

You can start to see the circular dependency here. I can't fully pay off the water bill until the house has closed and I can't close on the house without securing the water bill. In practice this means that after the house has closed the meter is read and a final bill is prepared. Once this is payed, you must request proof of a zero balance in your name for that property. And with that the attorney should send you the last of your money. It was 2024-02-23 when the final money was received. That's three months after the purchasers said they'd buy it.

To people who've gone around the block with a real estate transaction, these may not seem like surprising insights. And we could all just shrug our shoulders and say this is par for the course in the service economy. But the important part is the numerator in the equation of how much was paid per service rendered. I think it's very illustrative to compare the two sets of people involved in both of my transactions, the real estate agents and the attorneys.

The attorneys, well, for a start, had to go to law school; the agents seem to have no competence minimum. For the purchase the attorney did a lot of scary work to resolve the title insurance mess. All of that was paid from a set amount from the legal insurance and I have to imagine it was under $1k. While my selling attorney did a lot of work recovering from his own mistakes, he also did a substantial amount of paperwork too. If I'm not mistaken, he also legally absorbed some professional liability in case something under his responsibility went wrong. I'd say the agents had a similar amount of forms and office work to do. They took on no liability for anything happening. Their liability came in the form of investing in the project (to the limited extent they did) and having no sale. I thought that the attorney fee was probably a little high for the work done at $1300, but probably about right to get an attorney to do it. Let's say that buying and selling a house  —  one complete transaction  —  cost $2000 in lawyer fees.

How much did I spend on real estate agents? I'll give you a hint. It's more than I've ever spent to have anybody do anything by quite a bit. The total for half of both transactions (one complete buy/sell cycle, splitting the damage with the other parties) was $16,600. For that kind of money I'd expect an architect to design me a really nice custom house. Or a roofer to get pretty far along with replacing the roof. Or someone to mow the lawn and shovel snow for the rest of my life. Or the entire house repainted inside and out. But what real estate agents do is nothing at all useful or helpful like that.

If that kind of money was it and it included the attorneys and hefty tax bills and all kinds of other transaction costs maybe that would be reasonable. But at the time where you're simultaneously needing to pay for moving expenses, internet installation, new car registration, title insurance, house insurance, repairs, etc, etc, etc, having to pay such a massive bill to "service" providers who don't really seem to provide much of a service is pretty absurd.

Sometimes attorneys create jackpots from nothing as in the case of large class action suits, but for quotidian matters, their fee structure is usually per job or per hour, sometimes the latter tacked onto the former in difficult cases. This is the reasonable example that real estate agents need to understand. If they don't, I have to imagine there will be a reckoning. I hope so. My favorite tech start up is the one that may not exist yet which eliminates this corrupt and mostly useless profession.