2009-06-11: The Story of Hatton's Acquisition

The story started on 3/10/09, when I stumbled upon a listing for this place on realtor.com on a night when I just couldn't sleep at all. I would post the URL and address, but given that this is our new home address I have just a little bit more persec by not posting it openly.

The house was 2,730 square feet and was listed at $399k, which resulted in an attractive price per sqare foot compared to other properties. As a long time follower of Socal Bubble, I've been watching the San Diego housing market with interest for the last six months or so, watching as foreclosures hit the market and the prices steadily drop. Texie and I really liked another place a while back, 7890 Montara in Mira Mesa, but they wanted $405k for it when dealing directly with the listing agent and it was only 1440 square feet. It was a nice place, and laid out beautifully, but it really needed to be in the $250k-$300k range in order to be a relatively good deal.

I dropped an email to the listing agent and was contacted by Danny Briggs, of First Team Real Estate. We took a tour of the place, did some contemplation, and decided that we wanted it as long as the inspections came out all right.

I used Bill Crowther of CMC Home Inspection again (he inspected my trailer too, and did a very nice job of it). He found a number of issues, including some apparent mold, and recommended that I bring in a mold tester. The mold tester, AMI, came in and found truly massive, off the charts levels of mold infestation in one of the bathrooms and serious levels in the kitchen and other bathrooms. We certainly were not going to pay list price for that!

The bank was getting twitchy about the sale and demanded a final "take it or leave it" price, and demanded the numbers before we could get a remediation quote. I prayed about it and submitted an offer of $320k for the house, and my realtor cleverly enclosed the mold report and home inspection report in our offer packet. I hear that the bank had been going to re-list the property and hope that the next guy wouldn't pay for inspections, but that because the data had been submitted with the offer, it became part of the mandatory disclosures with the house. The guy at the bank sighed and accepted the offer.

Unfortunately, you can't get a mortgage financed on a house with mold problems. That wasn't too big of an issue, because we would have actually been fine with paying for remediation out of our own pockets and then rebuilding the bathrooms ourselves, slowly over the next year or two. The bank was fine with this approach, but then it turned out that the mortgage industry was not fine with it either. Apparently speculators had been defrauding mortgage brokers by taking out construction loans in cash, then running away. So, everything had to be done in the mortgage, including restoring it to a "habitable condition". Now in my opinion, a house with one bathroom IS habitable when you only have three people living in it! Apparently the industry feels otherwise. Anyway, at this point the bank was thinking of walking away and re-listig again at the $320k they'd accepted, but the listing agent pointed out to them that if it was cash offers only and at $320k, no one with cash was going to offer more than $250k and they'd just have to take it. The bank grudgingly concurred that working with us was still the best option for them.

So, the price was raised to $385k ($14k less than the full list price) and we're getting all-new bathrooms and kitchens. Presently, if all goes to schedule we should be able to start moving in on June 19th, 2009.