Tuesday, February 8, 2011

Bad News





Bad news. Our buyer couldn’t get her mortgage. Two days before closing. Not because of her credit. Not because of her income. Not because of the appraisal. All of that was fine. It was because of something totally ridiculous. We’re zoned agricultural. And I guess FHA doesn’t give out loans for property in rural areas.

My buyer can’t get a conventional loan—she’d need a 20% down payment and she doesn’t have it. FHA requires less money down. She’s not selling her house to buy this one, which is what most people to do to come up with that kind of money, in this case, about $52,000. Her house is a doublewide that needs some work and she was going to sell it later, at her leisure. This enabled her to give us thirty days to vacate the premises, a big plus when you’re moving a whole farm to another state and to a fixer-upper. Everyone was happy.

In the beginning of this process, what I was worried about was the house appraising for the proper price. It’s a tricky property because it’s a horse farm and comps are hard to find. I called the buyer’s banker, Bill Reynolds from Fairway Independent Mortgage Corporation, to make sure he was aware of this. I asked him to send an appraiser who was familiar with horse properties and who would understand the value of a real horse property and not compare it to a house with ten acres and a shed out back. I stressed this was a turnkey working horse farm. So he was aware of the nature of the property from the beginning.

But he let it go all the way to closing. And now everybody’s lives are in upheaval. I can’t tell you how this has screwed up so many people in time and money. One example is how Bill made us put in electric heaters upstairs, even though it is warmer up there than it is downstairs. That cost us five hundred dollars. It was totally unnecessary but we figured if that’s what they wanted, we would do it. How about how we had to stop work because we’re supposed to be leaving and now we don’t have jobs? What about the seller up in Jersey who is in financial hardship and is counting on us to close on Tuesday? I could give you dozens of examples how this has hurt us and other people. It’s just too long and upsetting to write.

My buyer was so upset she asked me if we could change the zoning. I said I didn’t think so but I would call the zoning department just in case. The zoning officer couldn’t believe it either. She said most of the county is zoned A1—agricultural, and single house dwellings are permitted. In fact, most of the state is zoned agricultural. Agriculture is our number one industry! FHA only gives out loans to people in cities? If that is true, Bill doesn’t know the products he is selling because he knew this was a horse property from the beginning.

And now I may lose the winery house because of all this. I have some other people interested in the farm, and I know that I’ll sell it sooner or later, in fact, I had a drive-by yesterday, and I have somebody coming over on Friday, but to go through this whole process all over again… it just might take too long and the winery house will be gone.

Of course I should have known the bank would screw it up. Just like they screwed up the whole country.

23 comments:

Cape Coop said...

This is TRAGEDY today, but in the future you may look back and not even remember the tragedy of it, so follow my modus operandi- don't worry over the things you can't control and work, work, work on the things that you do! If you can't close on the winery ASAP it will serve that mean woman in Mullica Township right- and there may be another silver lining that hasn't shown itself to us as yet- I'm going to think silver and gold thoughts for you, and your buyer!
I sure can't wait to have you as a "neighbor", though!

CountryDew said...

Oh no. This sounds weird. Can you go to the FHA website and do some research? Maybe check with another FHA person?

I am really sorry to hear this news.

Tanya said...

oh i am so sorry...just when you think things are moving along so smoothly...prayers that the buyer finds a way to get the house....would the winery be willing to lease to you till you get the farm sold? again, i am so sorry...seems house buying/selling never goes without a hitch...amazing considering how often home sales happen, you'd think banks would be a lot better at it...hang in there, it will all work out...

Greener Pastures--A City Girl Goes Country said...

Rebecca, that's good advice about not worrying about what you can't control and doing what you can. If the mean woman you're talking about in Mullica Township is the seller of the house, it turns out she's not mean at all. In fact, she's very nice and I feel terrible that this is going to cause her hardship as well.

Anita, that is EXACTLY what I'm going to do because as they say down here, it don't make a lick of sense. (I know my buyer is not lying though. It's the mortgage guy and FHA.)

Tanya, good idea but I couldn't afford to do it. The house up there is a fixer-upper and I need the dough I'm getting from this to make it livable. Plus, I'd be afraid to leave this farm vacant or in someone else's hands. I have to actively start staging it and marketing it again.

Gail said...

I am so sorry. I believe I would lodge a complaint with someone over the local FHA. Maybe too much acreage to be just a home but too small to be a farm...they should have seen that from the beginning.

A Higher Power will see you through this and things will happen as they should.

Gail said...

Can you rent to this lady, and go ahead with the move, loaded with buckets of faith, that may work.

Rural Rambler said...

Debi I am so sorry! I hate the whole buying and selling of houses. Such a mess. So many people messin' with the sale and nobody knows what's going on. You have a beautiful place there and I know it will work out but, oh, the agony!

Beth said...

I'm so sorry, Debi---what a disappointment! We've sold and bought several houses, so I'm well acquainted with the nail-biting and nerve-wracking experience that it often is. I do hope and pray that another buyer comes along soon for your beautiful property. And that winery house will very likely still be available then (or maybe one ever better)---so keep the faith!

qhgirl said...

I purchased agricultural land with a fha but it was only 3 acres.. zoned agricultural though.. I would think about trying another mortgage broker who might have more experience with something like this.. maybe check into the farm bureau too! Farm Credit?

Nezzy said...

Oh bless your heart girl, I hate to hear this. These real-estate deals are like dominoes and everything has to go smooth for the first person for the second person to....

In God's timing baby the perfect situation will arrive.

God bless and have a beautiful day sweetie!!!

qhgirl said...

You need to get her with a better mortgage broker.. this is acutally something that a realtor can sometimes be helpful with.. since they know the brokers that get things done.. even with difficulties. There are still ways to get loans with less than 20% down.. a good broker will figure that out.. he really should have known about the acreage limit.. because that is the problem with your property.. I guess you could see whether they would allow you to subdivide your place so that the house was on an acceptable acreage.. and you could work out a deal separately for the other part of the acreage with her.. that way she could get the loan on the house and up to 5 acres (if she gets a waiver).. and you could sell the other 5 acres to her owner financing.. or something?

qhgirl said...

Oh.. I know I was in a situation once with a jumbo loan in California.. where I was able to get a 2nd mortgage to make up the difference between the 5% I had to put down and the 20% the first mortgage wanted.. an 80-15-5.. but they also do 80-10-10's.. I would REALLY get another broker with more experience to help you!

Sweetflutterbys3 said...

Debi, I'm so sorry to hear about what you all are going through. Buying and selling homes is one of the most hardest things. Every time we did it, I swore I never wanted to do it again. You lose sleep, feel sick and can't wait till it's over- and that is if it all goes well!

I'll be praying it all works out for you.

Jeff said...

I sent you some links to look at for rural property financing. I agree with "qhgirl" - get rid of that broker, somehow. I know he isn't your broker, but the buyer needs to get hopping if she really wants the property. It sort of sounds like she isn't very motivated, though. Two days before closing???????

Tammy said...

Ohhhh, crap! What a downer! I would be pissed, too, especially with the disclosures up front. Hoping you can hang on to your NJ home while this gets worked out. Keep us posted.

Cynda said...

I can't say I'm unhappy that you're stay longer but it don't make sense to me. I know as a fact that there are people right down the road who have fha mortgages. Is this buyer telling you the truth??

Greener Pastures--A City Girl Goes Country said...

Cynda, yes, I believe she's telling me the truth--she really was denied--but I'm not sure she's really trying hard enough to make it happen with another loan. EVERYONE is telling me she should be able to get something. She told me she isn't able to get a USDA loan because she actually makes too much money. I looked it up and that means she makes over a hundred grand a year. We already know she has excellent credit. So I think Qhgirl is probably right--she should be able to get an 80-10-10 loan. She has the 10% to put down. I'll tell her what you said Qhgirl. But every time I suggest something to her, she gives me a reason why she can't, and I can't force her! I will tell her this latest suggestion and I'm looking at your links Jeff.

Oh, one other thing Qhgirl. It's not the AMOUNT of the acreage they're complaining about. It's the description of the zoning. Because it's A1 agricultural. But the zoning officer in our county told me the underwriters, who are in Wisconsin, don't understand our zoning here. Our A1 is mixed use--agricultural with single family dwellings allowed. FHA has rules that they only loan money for residential properties but this IS our residential. The guys up in Wisconsin don't know our area and Bill told my buyer that once they say no, that's that. But I don't know if she could try to get an FHA loan through another broker. Of course SHE has to be the one to check this out. I can't make her. It's very frustrating because I know if this was me and Kurt and we really wanted the house and we were losing it because of something ridiculous, we'd figure out a way to make it happen.

Thank you so much everyone for all your concern and ideas. It helps.

Sloan said...

Has this buyer tried to get a mortgage from another broker? They can't just tie up your property and lead you to believe you are settling and then don't without trying to get a mortgage somewhere else. Have they shown you proof of this? If I was you, I would make a complaint about the mortgage broker who knew from the start you were selling a horse farm.

Leonora said...

Debbie, Re: the gravity feed paint sprayer- I have a Campbell Hausfeld model that ran about $60. We already had an air compressor. It's great for repainting furniture and the cabinets.The downside is that you either have to work outside, or have a sealed plastic-lined room (which we built in the basement) since the fine mist gets everywhere. You also must wear a mask. When we built our house, we painted the interior walls and ceiling with a commercial paint sprayer and that made the job much quicker. Again, we had to put plastic over all the windows and the floors weren't in yet.
Re: the caves- this one has another entrance to it that is very big- rooms 20 feet high. Some of these were used for saltpetre which they mined during the Civil War, for making gunpowder.

qhgirl said...

Yep.. there's the rub, the buyer has to be motivated to make the financing work. That is always the best "out" if they don't want to go through with it! Most real estate contracts state they are subject to the buyer obtaining financing. You certainly can't hold their feet to the fire if they "can't" be approved!.. in fact, you would want to be able to dump the contract and find a buyer who "can" qualify. Unfortunately, that can mean a gray area where how hard did the buyer work to find financing?.. what if they would qualify.. but their interest rate was 15%!.. and that was more than they wanted to pay? Or in this case.. they got one turn-down and don't seem to be on fire to see if there are any other options. At some point, you will just have to move forward with trying to find another buyer if this one won't get it done.

The only good thing about this market is that the place you want to buy may linger on the market as well.. it is pretty hard to get conventional financing if a place needs too much work.. a FHA loan for example usually requires a home inspection that it sounds like this place might not pass in it's current state.. So, What I would do is go to your backup potential buyers and start the ball rolling again... don't hold yourself up!

Greener Pastures--A City Girl Goes Country said...

Qhgirl, yes, that grey area. There are no details in the contract about what exactly she needs to do to obtain the mortgage. Lesson learned. Every time I sell a house, I learn something new. This is the fifth house I'm selling and I've NEVER had a buyer get turned down because they couldn't get a mortgage. I pre-approve them, I communicate with them... I'll never allow it to get so close to closing again without demanding the mortgage commitment. That will be in the contract.

But get this. I called FHA today. It appears that they have no zoning regulations. There is an excess land regulation but nothing about zoning and the FHA lady said what you all said, that my buyer needs to find another lender! I am going to send her the info they sent to me but still, I know I can't force her to work hard at getting a mortgage. It's not an easy mortgage to get even so.

Greener Pastures--A City Girl Goes Country said...

Qhgirl, can I come to your blog?

qhgirl said...

I don't have much of a blog.. maybe I should start writing more:) I enjoy your stories about life where you live since I have a pretty similar type of background.. But we all have our farms now:)