Lessons From a Dream House That Got Away

When they say that part of the American dream is owning a house, they forget to tell you there may be a few nightmares along the way.

I am speaking firsthand: We experienced a deal gone sour. It meant sleepless nights, frustration, disappointment and even a few tears. Perhaps worst (or is it best?) is that I’ve been hardened by the events. I will never be as trusting of people in business transactions.

This isn’t to say everyone out there is sloppy, dishonest or greedy. But I have heard enough similar horror stories from others recently that I feel ours is worth sharing, if only for the lessons to be learned.

What happened is a chapter of my life I want behind me, but for the sake of this article, I must dredge the whole thing up, at least briefly. Bear with me through this mini-soap opera:

After looking at more than 100 homes in Los Angeles and Orange counties over a number of months, my fiance and I found what we thought was the perfect home (or as close to perfect as we could afford) in Lake Forest, a community within El Toro, in Orange County.

The same day we found the house, we heard through our realtor that another offer was coming in that evening. Because we liked the home so much, we moved a little more quickly than we would have liked and made an attempt to buy the house that same day. After going back and forth with an offer and a counteroffer, the sellers agreed to our latest terms. We celebrated. We looked forward to new weekend time now that we were out of the house hunting business. I phoned to arrange the movers.

But the bad news came the next day: Our realtor had accidentally failed to get my fiance’s signature on one line on one of the contracts. On that ground and because there was yet another offer, the sellers asked us to change the terms, although not the price. After a little back and forth, we agreed to their change, asking in turn that the length of escrow be extended.

Again we signed the contracts. We listened as our realtor called and read aloud the newest terms. The other realtor told ours that it all sounded fine to the sellers. It was a done deal and we celebrated again.

I fell asleep that night to visions of where our furniture would fit in the new house.

At midnight the phone rang and I heard the very subdued voice of our realtor. What’s wrong? I asked. There is an offer for more money and a shorter escrow, she said, coming in from another realtor within the office of the seller’s realtor.

I could feel the house sliding out of my dreams and out of my grasp. My fiance and I were not about to be part of a bidding war, not in this soft market. We pulled out of the deal.

The next day I was obsessed with doing something about losing “our” house. I phoned our realtor. I phoned an attorney. I phoned my fiance about half a dozen times. I grudgingly canceled the moving van.

I mulled over the options: a complaint to the Orange County Board of Realtors, a lawsuit, letters to the realtors’ offices. But by the next morning I had to face it: With no signed contracts in our hands, none of those options would get us the house. Best we could do was to delay the sale of the home, and that wasn’t my intention. We had suffered no real loses, other than a few nights of sleep.

So I finally decided my best revenge would be to help other unknowing buyers like myself learn from our experience. Perhaps they can sleep a little more soundly when it’s time to buy a house. These are all lessons I am following as we make another stab at buying a house.

* The biggest tip, and the one that sounds so simple: Do not get emotionally attached to a house.

If you have ever looked at a house, you have heard this before, but in a different context. The traditional advice is to be detached when you are in the process of making the offer: If you are willing to walk away you will get yourself a better price, a better deal.

But once the offer is accepted, maintain your objectivity. Someone can find a loophole. Your financing might not come through. The house might end up being a summer home for termites. An appraiser could tell you the house isn’t worth what you are paying. And on and on.

* Another old saw not to forget: An oral agreement is worth the paper it is written on. Taking our direction from the realtors, we felt that once the sellers had agreed to our offer the deal was done. Obviously nothing is done until the papers are signed and in your hand.

* Do not give all your trust to someone who just a few months ago was probably a total stranger, i.e., your realtor. As I said before, I am not saying realtors are untrustworthy or even careless. What I am saying is, with what other purchase would you leave so much of the responsibility to someone else? When a waiter leaves a bill, you probably check his addition. But when the realtor says sign here and here and here you just look for the red checks and move on to the next piece of paper.

Whatever your job or business, you are probably responsible in some way for details. Take that same degree of responsibility on what is probably the biggest purchase of your life. Check out books from the library (one of my favorites, about home buyers, was titled “Lambs to Slaughter”). My local library even had a couple of videos produced by consumer organizations. Some of the information may be extremely basic but as you skim through you will most certainly find out a nibble of information or a question you should ask or some advice to get you the best offer.

* Consider going without a realtor.

This advice may not be for everyone: There is no doubt that a realtor will do a lot of legwork for you. Realtors’ computers give them easy access to information you wouldn’t be able to get without waiting for hours at the county records office.

After the deal fell apart, luck was on our side: Another Lake Forest house we liked quite a bit had dropped in price that very day. We decided to go after it without a realtor representing us.

We had the advantage of having papers from the original deal so we could refer back to them. By this time we also had an excellent idea of the prices and best locations in the area. Much of that information came not from the original realtor, however, but from persistent reading of ads, visiting open houses and riding up and down the streets we liked and noting the “For Sale” signs.

We also checked out the realtor representing the sellers of the house we were interested in. We learned he had an excellent reputation and had lived in the area for a long time.

We feel strongly that we were able to make a better offer because we had no realtor. When we and the sellers were a few thousand dollars apart, the realtor gave up part of his commission to the advantage of both sides. Without that cutback in the commission we would not have been able to buy the house and the seller would not have been able to sell.