I have been on vacation all week getting lots of sleep. I have been working on this stocking holder - accomplishing something!
Thursday, December 22, 2011
Friday, December 9, 2011
Building Chairs is Hard Work
I'm hoping to have more a substantive post in the near future on the chairs I am building.
I went through a bunch of wood in trying to build the back of a chair until Pamela convinced me I needed to buy a jigsaw (she was right).
I've now got the frame of a nice chair together, but I'm struggling with the chair back and the seat. I want the chair back to be curved, so I'm trying to use a combination of jigsaw and wood files to accomplish that. Not sure if I'll have anything respectable looking though.
The seat should be a tough one too - perhaps I'll cut three boards that will be glued together after I take a jigsaw and files to them to create the right profile.
Wish me luck.
I went through a bunch of wood in trying to build the back of a chair until Pamela convinced me I needed to buy a jigsaw (she was right).
I've now got the frame of a nice chair together, but I'm struggling with the chair back and the seat. I want the chair back to be curved, so I'm trying to use a combination of jigsaw and wood files to accomplish that. Not sure if I'll have anything respectable looking though.
The seat should be a tough one too - perhaps I'll cut three boards that will be glued together after I take a jigsaw and files to them to create the right profile.
Wish me luck.
Wednesday, November 30, 2011
Property Market Turning Sour in China
Bloomberg posted an article today about Chinese apartment/home buyers who are demonstrating against their landlords/developers as prices are falling:
The article also tells the story of Zuo Hangxai,who "became a home owner after losing patience waiting for years for prices to come down. She recalled the frenzied scene when she picked her apartment in the same development as agents crowded around urging her to buy and then clapped and congratulated when she nodded agreement."
Evil Developers and Buyers Remorse
While I will contend that even in Zuo Hangxai's case, the people now protesting were willing buyers, the Chinese market has experienced a super-bubble which was aided by the developers. Developers near major cities had worked with the government to remove people from their current homes in order to demolish them and build massive complexes. There were many stories and videos about these cases a few years ago. Unlike here in the US, where there's a more rigid legal process for trying to evict someone, many of the Chinese who fought back would leave their homes for work and return to a pile of rubble.
Without a home, these people become buyers, and perhaps end up buying from the companies who destroyed their homes.
On the other side, China's super bubble was largely driven by rising demand and rising home prices, which led to price appreciation and speculation to an extreme degree. Many middle class families were priced out of even modest new homes and apartments because of the rampant speculation. Developers were happy to build more units knowing they could get a great price, and incremental buyers were happy to pay because they expected to flip the unit at a substantial profit.
As we experienced here in the US, eventually the music stops and some are left without a chair.
For the US, housing prices topped out sometime in mid-2006. More than five years later, our housing market still hasn't recovered. Anyone who bought near the top probably felt like demonstrating back in '07 and '08. I would suppose the reality of the situation has sunk in at this point - those who bought at the top, for whatever reason, may never recoup their "investment".
For Deng and Zuo, I think the worst is yet to come. The same Bloomberg article says that the home ownership rate in China is 87.8% compared to 66.3% in the US. That is a staggering difference and is very bad news for current home owners.
In the US, that means as prices fall, 33.7% of the population could conceivably enter the market and buy a home. In China, that number is 12.2%. Roughly one in ten people are not homeowners! Who do the other nine of ten sell their home to?
I don't know all of the socio-economic reasons behind such a high rate of homeownership, but the article does give a few hints:
#2 - China's burgeoning middle class also comes with "Keeping up with the Joneses" syndrome we know well in the US. Deng feels like he should own a home whether or not he can afford it so that he can fit in and also get a wife.
Financial Crisis Looming
China's centrally managed economy may be able to weather the oncoming property bust better than we could here in the US. Bear Stearns, Lehman, and other major financial firms collapsed or nearly did because of their exposure to the US housing market and because there were at least some rules they couldn't avoid (such as marking down investments to current market prices). The US government then took steps that were clearly anti-capitalism and maybe illegal to prevent the situation from getting worse.
In China, I would suspect the government will be much quicker to support firms and the economy and can more easily re-write the rules. If the Industrial and Commercial Bank of China found one day it was insolvent, the government could more easily make direct loans, rework the bank's lines of credit, or restrict withdrawals.
Given what seems to be massive over-development in China, I can't imagine this ending well.
On Nov. 19, Deng faced off a ring of security guards three rows deep wearing camouflage and carrying shields as he joined more than 100 homeowners rallying in front of the development’s sales office. His transformation from newlywed to street protester came after China Vanke Co. slashed prices for future buyers at the Qinglinjing complex, erasing about 20 percent of the value of his three-bedroom unit overnight.The story goes on to explain how Deng's parents contributed their savings and Deng's boss provided a loan so that he could meet the 30% minimum down payment on the apartment. He was only able to contribute 4% of the down payment himself.
The article also tells the story of Zuo Hangxai,who "became a home owner after losing patience waiting for years for prices to come down. She recalled the frenzied scene when she picked her apartment in the same development as agents crowded around urging her to buy and then clapped and congratulated when she nodded agreement."
Evil Developers and Buyers Remorse
While I will contend that even in Zuo Hangxai's case, the people now protesting were willing buyers, the Chinese market has experienced a super-bubble which was aided by the developers. Developers near major cities had worked with the government to remove people from their current homes in order to demolish them and build massive complexes. There were many stories and videos about these cases a few years ago. Unlike here in the US, where there's a more rigid legal process for trying to evict someone, many of the Chinese who fought back would leave their homes for work and return to a pile of rubble.
Without a home, these people become buyers, and perhaps end up buying from the companies who destroyed their homes.
On the other side, China's super bubble was largely driven by rising demand and rising home prices, which led to price appreciation and speculation to an extreme degree. Many middle class families were priced out of even modest new homes and apartments because of the rampant speculation. Developers were happy to build more units knowing they could get a great price, and incremental buyers were happy to pay because they expected to flip the unit at a substantial profit.
As we experienced here in the US, eventually the music stops and some are left without a chair.
For the US, housing prices topped out sometime in mid-2006. More than five years later, our housing market still hasn't recovered. Anyone who bought near the top probably felt like demonstrating back in '07 and '08. I would suppose the reality of the situation has sunk in at this point - those who bought at the top, for whatever reason, may never recoup their "investment".
For Deng and Zuo, I think the worst is yet to come. The same Bloomberg article says that the home ownership rate in China is 87.8% compared to 66.3% in the US. That is a staggering difference and is very bad news for current home owners.
In the US, that means as prices fall, 33.7% of the population could conceivably enter the market and buy a home. In China, that number is 12.2%. Roughly one in ten people are not homeowners! Who do the other nine of ten sell their home to?
I don't know all of the socio-economic reasons behind such a high rate of homeownership, but the article does give a few hints:
Deng had moved to Shanghai three years earlier from a small city in the north to be closer to a girl he met in college. When talk turned to marriage, his girlfriend insisted they buy an apartment first, he said. “At my age, I should get married and I should have my own home whether or not I can afford it so that I can be the same as my classmates,” Deng said.#1 - China's One Child Policy which led to infrantricide towards female newborns, has led to a massive imbalance in the sexes. If you are a young adult male in China, looking for a wife, you've got some darn stiff competition and need to prove your worth (buy a home). See also - China: Too Many Men.
#2 - China's burgeoning middle class also comes with "Keeping up with the Joneses" syndrome we know well in the US. Deng feels like he should own a home whether or not he can afford it so that he can fit in and also get a wife.
Financial Crisis Looming
China's centrally managed economy may be able to weather the oncoming property bust better than we could here in the US. Bear Stearns, Lehman, and other major financial firms collapsed or nearly did because of their exposure to the US housing market and because there were at least some rules they couldn't avoid (such as marking down investments to current market prices). The US government then took steps that were clearly anti-capitalism and maybe illegal to prevent the situation from getting worse.
In China, I would suspect the government will be much quicker to support firms and the economy and can more easily re-write the rules. If the Industrial and Commercial Bank of China found one day it was insolvent, the government could more easily make direct loans, rework the bank's lines of credit, or restrict withdrawals.
Given what seems to be massive over-development in China, I can't imagine this ending well.
Sunday, November 20, 2011
Project - Dining Table
Mission accomplished!
I wrote back on October 30th that I was building a dining table which needed to be ready for Thanksgiving. It took right around three weeks, but today the table moved into the house and was assembled. We even ate our first meal at the table tonight!
Here she is in all her glory:
Project Plan
I held onto the different receipts from Home Depot so that I could tally up the costs.
I went to the 'dimensional lumber' section for the wood this time and picked out boards made of Douglas Fir. The boards are more often used in framing for a house rather than the furniture inside of it, but with a good lot of sanding, they can look really good. The total cost for all the wood was around $60. The real difficulty was that these boards have lots of imperfections after being run through the different machines at the mill. They often have ink stamps on them too. Since I wanted to stain the project rather than paint it, this required extra effort. The various nicks and other imperfections that I couldn't sand out generally added to the 'character' of the table.
I used Minwax Polyshades, which is a stain and polyurethane finish all in one. The color we chose was Mission Oak.
For assembly, I used my Kreg Jig for all joints. Again, the Kreg Jig was really what inspired me to get going in creating pieces out of wood as it is a simple but good looking way to join wood.
Including wood, screws, stain, wiping rags, sand paper, rubber gloves, brushes, steel wool, and various other items, the total bill came out to just under $150. I'm really pleased to have a great looking dining table for that price.
Quick Step-by-Step
After buying all the wood, I took it home and began making all the requisite cuts.
I was so excited to get going on this project that I made a stupid mistake right away. The table top required five long boards, but I cut six. That screwed up another piece I needed to cut, because now I had already divided that board into one too long piece and one too short piece. So, I had to go back to HD to buy another board. Not terrible, but a waste of $7.
I think the most important part early on was to cut the legs correctly. If you screw this up, even slightly, you won't know how the table sits until close to the end. This I found out the hard way. I really focused on making sure the base of the boards on the legs were even on the bottom, but I left the tops with some variation. The best thing you can do is to stack several boards and cut them at the same time.
After all the cuts were made, I drilled endless holes with my Kreg Jig. Knowing this project was going to be heavy itself and having to support weight, I erred on the side of drilling too many holes for extra joints. As you are preparing to drill the holes, you need to picture the final project and decide which boards will go where, which side will face up/down, etc. I really enjoyed this part - deciding which were my favorites and assembling them in my head. I think the smarter move would have been to fully plan this out before I started making cuts. As I mentioned above, when using wood that isn't S4S (squared 4-sides - meaning it is completely smooth and looks good on all sides), you'll find blemishes that will force you to maybe hide an ugly side of a board.
I assembled the long boards into the table top and added a perpendicular board at the end
The one breadboard (the perpendicular board) pictured above was perfectly flush, but the other side had one board that was short by maybe 3/8". I then had to take my circular saw and cut off 3/8" from the assembled table top to ensure the other breadboard would attach and be flush. This threw off a lot of the dimensions of the table, so I now had to make adjustments to the plan.
I next assembled the two legs and the frame separately. The tabletop itself was already heavy and I began to realize how much of a pain it would be to put this all together myself.
Next came seemingly endless sanding. I'd read online, and now recommend myself, that you either sand before you begin assembling, or sand once you have a few boards together. By doing so, you'll make it a lot easier on yourself if you only have to maneuver a single or a few boards rather than an entire tabletop. I used a hand sander as well as an electric finishing sander. Sanding by hand was strenuous, but worked a lot better than the electric sander. I started with 60 grit paper to sand off the real rough spots or ink markings. Then I moved down to 120 followed by 220 grit paper to get the project ready for staining.
I then finished assembling the pieces to leave me with a table top + frame and two legs. The legs wouldn't be attached until I was done and the project was in the house.
This was my first attempt at staining and it could have gone a lot more smoothly. I watched a few videos on YouTube about staining and decided I would use a rag with stain to apply the stain to the wood. Staining is different from painting and I wish I understood that better when I started. Your job is to apply the stain to the wood, let it soak into the pores, then wipe away the excess. I used a cloth soaked in stain to apply the stain, which is a fine method, but what I didn't do was wipe off the excess as soon as I should have. This led to some splotching. For my next project, I will apply with a brush and use the cloth for wiping.
After the first layer of stain was on, the project needed to sit for 6 hours. Following that, I sanded the entire project again using 000 steel wool. This helps even out the stain and opens the pores up again to accept more stain. I next gave the project a second coat.
The Minwax can says that two coats are recommended. If you want to make the project darker, you can add subsequent coats after you hit it with the 000 steel wool, which I did.
The project was pretty much done - I thought.
Today, my brother came over and provided the other set of hands needed to move the table into the house and flip it to attach the legs / flip it back upright.
Unfortunately, once attached, the table had some wobble to it. This was really caused by two things - 1) the top of the legs weren't 100% even and 2) I focused on making sure the table top was flat, but the underside was a bit uneven.
After a lot of passes with the level, I realized that even if the legs were 100% even, the way they attached to the tabletop could leave them still uneven. So, I feel like I cheated, but I ended up attaching adjustable feet to the bottoms of the legs. I knew I'd be adding something underneath in order to protect our wood floors anyway, so why not kill two birds?
With the adjustable feet attached, the table is now steady and sturdy. We ordered sushi and everyone ate at the table.
What's Next
For Thanksgiving, the six attendees will either sit on the two red chairs we own or on folding chairs. Soon after though, I am going to try and build four wooden chairs and a long bench to match the table. Should be fun!
I wrote back on October 30th that I was building a dining table which needed to be ready for Thanksgiving. It took right around three weeks, but today the table moved into the house and was assembled. We even ate our first meal at the table tonight!
Here she is in all her glory:
Project Plan
I held onto the different receipts from Home Depot so that I could tally up the costs.
I went to the 'dimensional lumber' section for the wood this time and picked out boards made of Douglas Fir. The boards are more often used in framing for a house rather than the furniture inside of it, but with a good lot of sanding, they can look really good. The total cost for all the wood was around $60. The real difficulty was that these boards have lots of imperfections after being run through the different machines at the mill. They often have ink stamps on them too. Since I wanted to stain the project rather than paint it, this required extra effort. The various nicks and other imperfections that I couldn't sand out generally added to the 'character' of the table.
I used Minwax Polyshades, which is a stain and polyurethane finish all in one. The color we chose was Mission Oak.
For assembly, I used my Kreg Jig for all joints. Again, the Kreg Jig was really what inspired me to get going in creating pieces out of wood as it is a simple but good looking way to join wood.
Including wood, screws, stain, wiping rags, sand paper, rubber gloves, brushes, steel wool, and various other items, the total bill came out to just under $150. I'm really pleased to have a great looking dining table for that price.
Quick Step-by-Step
After buying all the wood, I took it home and began making all the requisite cuts.
 |
| All the boards |
I was so excited to get going on this project that I made a stupid mistake right away. The table top required five long boards, but I cut six. That screwed up another piece I needed to cut, because now I had already divided that board into one too long piece and one too short piece. So, I had to go back to HD to buy another board. Not terrible, but a waste of $7.
 |
| All cut up |
After all the cuts were made, I drilled endless holes with my Kreg Jig. Knowing this project was going to be heavy itself and having to support weight, I erred on the side of drilling too many holes for extra joints. As you are preparing to drill the holes, you need to picture the final project and decide which boards will go where, which side will face up/down, etc. I really enjoyed this part - deciding which were my favorites and assembling them in my head. I think the smarter move would have been to fully plan this out before I started making cuts. As I mentioned above, when using wood that isn't S4S (squared 4-sides - meaning it is completely smooth and looks good on all sides), you'll find blemishes that will force you to maybe hide an ugly side of a board.
I assembled the long boards into the table top and added a perpendicular board at the end
 |
| Table top almost done |
I next assembled the two legs and the frame separately. The tabletop itself was already heavy and I began to realize how much of a pain it would be to put this all together myself.
Next came seemingly endless sanding. I'd read online, and now recommend myself, that you either sand before you begin assembling, or sand once you have a few boards together. By doing so, you'll make it a lot easier on yourself if you only have to maneuver a single or a few boards rather than an entire tabletop. I used a hand sander as well as an electric finishing sander. Sanding by hand was strenuous, but worked a lot better than the electric sander. I started with 60 grit paper to sand off the real rough spots or ink markings. Then I moved down to 120 followed by 220 grit paper to get the project ready for staining.
 |
| Frame laid out |
This was my first attempt at staining and it could have gone a lot more smoothly. I watched a few videos on YouTube about staining and decided I would use a rag with stain to apply the stain to the wood. Staining is different from painting and I wish I understood that better when I started. Your job is to apply the stain to the wood, let it soak into the pores, then wipe away the excess. I used a cloth soaked in stain to apply the stain, which is a fine method, but what I didn't do was wipe off the excess as soon as I should have. This led to some splotching. For my next project, I will apply with a brush and use the cloth for wiping.
After the first layer of stain was on, the project needed to sit for 6 hours. Following that, I sanded the entire project again using 000 steel wool. This helps even out the stain and opens the pores up again to accept more stain. I next gave the project a second coat.
The Minwax can says that two coats are recommended. If you want to make the project darker, you can add subsequent coats after you hit it with the 000 steel wool, which I did.
 |
| Final stain |
Today, my brother came over and provided the other set of hands needed to move the table into the house and flip it to attach the legs / flip it back upright.
Unfortunately, once attached, the table had some wobble to it. This was really caused by two things - 1) the top of the legs weren't 100% even and 2) I focused on making sure the table top was flat, but the underside was a bit uneven.
After a lot of passes with the level, I realized that even if the legs were 100% even, the way they attached to the tabletop could leave them still uneven. So, I feel like I cheated, but I ended up attaching adjustable feet to the bottoms of the legs. I knew I'd be adding something underneath in order to protect our wood floors anyway, so why not kill two birds?
With the adjustable feet attached, the table is now steady and sturdy. We ordered sushi and everyone ate at the table.
What's Next
For Thanksgiving, the six attendees will either sit on the two red chairs we own or on folding chairs. Soon after though, I am going to try and build four wooden chairs and a long bench to match the table. Should be fun!
Thursday, November 10, 2011
Friday, November 4, 2011
Mortgage Forgiveness?
Bloomberg published an article today citing investors, funds, and economists who think principal balances should be reduced to help embattled homeowners
Greg Lippmann, of subprime shorting fame (more on him in a moment) says:
Greg Lippmann worked for Deutsche Bank as was a key figure among those who made millions or billions by shorting subprime mortgages. A client of his (forget the name at the moment, which is kind of the point) realized that these subprime mortgage bonds weren't worth the paper they were written on and got Deutsche Bank and others to help him position his investments to benefit from the housing bubble bursting. Lippmann, realizing the opportunity, then brought the idea to others, including John Paulson who ended up as perhaps the face of the "brilliant" investors as he personally made billions of dollars. I just gave you the quick summary of the book The Big Short by Michael Lewis - spoiler alert.
So Greg thinks he's got a good idea to help mortgage holders and investors in mortgage bonds, and several funds and economists agree with him.
Who would benefit and who would lose
I think the ship has long sailed on the opportunity for Washington to punish Wall Street on this. Some of Washington's actions in 2008 and 2009 may have actually done some good - TARP being one of them - but that was in the heat of the crisis. Laws and capitalism could be set aside to avoid a massive meltdown. So while #OccupyWallStreet is still raging, I don't think DC has the power to force the banks to write down loans.
One major complicating factor that everyone hopefully remembers from a two years ago is that these evil bankers don't actually hold the loans themselves. My mortgage is a great example - we used a mortgage broker who priced a loan for us based on what he saw in the market making sure he could sell the loan and make a profit for himself. So our mortgage was originally funded by the broker's company and the investors who back it. Within a month, as planned, they sold that loan to Chase. Every month, we will write a check to Chase. But chances are that Chase won't hold onto that mortgage for 30 years. Instead, they'll likely pool our mortgage with many others and sell it to investors. These investors could be Greg Lippmann's fund LibreMax Capital, or the California Public Employees Retirement System (CALPERS), among others.
My check then goes to Chase as the servicer, who pools all the monthly checks together, and distributes the funds to the investors such as CALPERS.
If, somehow Washington decreed that my mortgage principal should be reduced by 20%, the winner would be me, my mortgage broker and Chase would feel no effect, and CALPERS would be the loser. This would be a transfer of wealth from CALPERS to me - probably not the intended goal.
How to select mortgages to reduce
You clearly can't reduce ALL mortgages by any amount that would be meaningful enough to solve any problems. Washington also hasn't grown enough wherein you could reduce mortgages on a case-by-case basis. Therefore, the program would have to be broad enough to be meaningful to the country and the economy / housing market, but have some parameters.
One would be whether you've defaulted or not. If you've defaulted, that's a pretty good indication that you've hit rough times and could use help. Is it because you bought your house at the top and have too much debt? Is it because you lost your job? Have you defaulted on a 2nd vacation home in Miami that you bought on speculation?
The government could also look at loan to value. The difficulty here is what is the "value" part of the equation? Is it based on the appraisal done when you purchased the house - are these appraisals of any use if they are 15 years old or if they told you your one bedroom shack was worth $2 million in 2006? Or maybe to apply for this process you'd need to get a new appraisal. Fun.
What would be the end benefit
Individual homeowners would have lower monthly payments and have money to save or spend (the government surely wants you to spend). Some homes would be saved from foreclosure, which would help the housing market.
My suggestion
Leave it be. Again, many are suffering because of the housing crisis, but I don't think the government should be getting involved in private transactions and trying to bail out those who made a bad investment.
If a homeowner was defrauded into paying too much for a home, or buying a home they couldn't afford, they should go through the courts individually.
The solution, in my mind, is time - it is going to take years for the housing market to work through the inventory of foreclosed homes which will keep prices depressed.
Greg Lippmann, of subprime shorting fame (more on him in a moment) says:
Principal reductions are necessary to help ameliorate the housing crisis. The step will also lower losses on loans underlying mortgage bondsWho the heck is Greg Lippmann
Greg Lippmann worked for Deutsche Bank as was a key figure among those who made millions or billions by shorting subprime mortgages. A client of his (forget the name at the moment, which is kind of the point) realized that these subprime mortgage bonds weren't worth the paper they were written on and got Deutsche Bank and others to help him position his investments to benefit from the housing bubble bursting. Lippmann, realizing the opportunity, then brought the idea to others, including John Paulson who ended up as perhaps the face of the "brilliant" investors as he personally made billions of dollars. I just gave you the quick summary of the book The Big Short by Michael Lewis - spoiler alert.
So Greg thinks he's got a good idea to help mortgage holders and investors in mortgage bonds, and several funds and economists agree with him.
Who would benefit and who would lose
I think the ship has long sailed on the opportunity for Washington to punish Wall Street on this. Some of Washington's actions in 2008 and 2009 may have actually done some good - TARP being one of them - but that was in the heat of the crisis. Laws and capitalism could be set aside to avoid a massive meltdown. So while #OccupyWallStreet is still raging, I don't think DC has the power to force the banks to write down loans.
One major complicating factor that everyone hopefully remembers from a two years ago is that these evil bankers don't actually hold the loans themselves. My mortgage is a great example - we used a mortgage broker who priced a loan for us based on what he saw in the market making sure he could sell the loan and make a profit for himself. So our mortgage was originally funded by the broker's company and the investors who back it. Within a month, as planned, they sold that loan to Chase. Every month, we will write a check to Chase. But chances are that Chase won't hold onto that mortgage for 30 years. Instead, they'll likely pool our mortgage with many others and sell it to investors. These investors could be Greg Lippmann's fund LibreMax Capital, or the California Public Employees Retirement System (CALPERS), among others.
My check then goes to Chase as the servicer, who pools all the monthly checks together, and distributes the funds to the investors such as CALPERS.
If, somehow Washington decreed that my mortgage principal should be reduced by 20%, the winner would be me, my mortgage broker and Chase would feel no effect, and CALPERS would be the loser. This would be a transfer of wealth from CALPERS to me - probably not the intended goal.
How to select mortgages to reduce
You clearly can't reduce ALL mortgages by any amount that would be meaningful enough to solve any problems. Washington also hasn't grown enough wherein you could reduce mortgages on a case-by-case basis. Therefore, the program would have to be broad enough to be meaningful to the country and the economy / housing market, but have some parameters.
One would be whether you've defaulted or not. If you've defaulted, that's a pretty good indication that you've hit rough times and could use help. Is it because you bought your house at the top and have too much debt? Is it because you lost your job? Have you defaulted on a 2nd vacation home in Miami that you bought on speculation?
The government could also look at loan to value. The difficulty here is what is the "value" part of the equation? Is it based on the appraisal done when you purchased the house - are these appraisals of any use if they are 15 years old or if they told you your one bedroom shack was worth $2 million in 2006? Or maybe to apply for this process you'd need to get a new appraisal. Fun.
What would be the end benefit
Individual homeowners would have lower monthly payments and have money to save or spend (the government surely wants you to spend). Some homes would be saved from foreclosure, which would help the housing market.
My suggestion
Leave it be. Again, many are suffering because of the housing crisis, but I don't think the government should be getting involved in private transactions and trying to bail out those who made a bad investment.
If a homeowner was defrauded into paying too much for a home, or buying a home they couldn't afford, they should go through the courts individually.
The solution, in my mind, is time - it is going to take years for the housing market to work through the inventory of foreclosed homes which will keep prices depressed.
Tuesday, November 1, 2011
For Sale - Update
The winter months are approaching and home sale activity will decline. I understand this better now - when it was warm, driving around and looking at houses was fun. If I were still in the market today to buy a home, I'd be less enthusiastic. With houses and lawns blanketed in snow, there's less to see.
I've read too that families look to move in the spring and summer so that their children can be settled and enrolled in their new school for the fall.
Our sale process has been moving slowly. It took much longer than expected to get the listing up and we've had limited interest in seeing the house so far.
The housing market remains weak as I've detailed in other posts. With mortgage rates low, it may be a very good time to buy. As a seller though, your house is up against many others that have been on the market longer as well as short sales and foreclosures.
If you don't NEED to sell, maybe you shouldn't be trying to.
We are thinking about refinancing the mortgage to tap into the substantial equity. This way, we'd have cash on hand to deal with any repairs or renovations necessary to help move the house. As long as we can sell for a price above the new mortgage, it'd kind of be like a cash advance.
I've read too that families look to move in the spring and summer so that their children can be settled and enrolled in their new school for the fall.
Our sale process has been moving slowly. It took much longer than expected to get the listing up and we've had limited interest in seeing the house so far.
The housing market remains weak as I've detailed in other posts. With mortgage rates low, it may be a very good time to buy. As a seller though, your house is up against many others that have been on the market longer as well as short sales and foreclosures.
If you don't NEED to sell, maybe you shouldn't be trying to.
We are thinking about refinancing the mortgage to tap into the substantial equity. This way, we'd have cash on hand to deal with any repairs or renovations necessary to help move the house. As long as we can sell for a price above the new mortgage, it'd kind of be like a cash advance.
Sunday, October 30, 2011
Dining Table - It Has Begun!
Today I started my next wood project - building our dining table. Here's the wood:
I'm sitting at the desk that I built as I type this (start and completion). It hasn't fallen down and still looks good! That's given me enough confidence to take on this larger and more important project.
The big difference is the deadline - we are having family over for Thanksgiving and we need somewhere to eat dinner! The pressure is on.
I decided to create the design on my own - I looked around online with Pamela for tables for sale that we'd like to imitate with our creation. We borrowed a little bit from several designs we like. I sketched out the layout on the computer and put together complete plans (well, not step by step).
I'll be sure to post with progress and the project plans. Here's the wood cut into the pieces I'll need:
Wish me luck!
|
| Douglas Fir |
The big difference is the deadline - we are having family over for Thanksgiving and we need somewhere to eat dinner! The pressure is on.
I decided to create the design on my own - I looked around online with Pamela for tables for sale that we'd like to imitate with our creation. We borrowed a little bit from several designs we like. I sketched out the layout on the computer and put together complete plans (well, not step by step).
I'll be sure to post with progress and the project plans. Here's the wood cut into the pieces I'll need:
|
| Looking good team! |
Wednesday, October 26, 2011
Home Ownership and Taxes
You are probably aware that the interest you pay on your mortgage and the property taxes you pay are both deductible.
If you go from being a renter to a homeowner, you should expect to pay lower taxes or receive a larger refund come April. But how about boosting your monthly take-home pay to help your monthly budget?
By filing a revised W-4 with increased allowances, you will increase your net pay on each paycheck. You could wait until you file your tax returns in April, but you are essentially giving the government a free loan (well, the government certainly needs it).
Each allowance on your W-4 is worth $3,700. If you add your annual mortgage interest and property taxes, then divide by $3,700, you should get the number of allowances to file for (relating to your home; you may already have other allowances). You can then use a paycheck calculator to estimate what your new net paycheck will look like.
Of course, consult a tax professional before you take the advice of a blogger. Your individual circumstances will differ.
If you go from being a renter to a homeowner, you should expect to pay lower taxes or receive a larger refund come April. But how about boosting your monthly take-home pay to help your monthly budget?
By filing a revised W-4 with increased allowances, you will increase your net pay on each paycheck. You could wait until you file your tax returns in April, but you are essentially giving the government a free loan (well, the government certainly needs it).
Each allowance on your W-4 is worth $3,700. If you add your annual mortgage interest and property taxes, then divide by $3,700, you should get the number of allowances to file for (relating to your home; you may already have other allowances). You can then use a paycheck calculator to estimate what your new net paycheck will look like.
Of course, consult a tax professional before you take the advice of a blogger. Your individual circumstances will differ.
Monday, October 24, 2011
Free Credit Report (without the song and dance)
We've all seen the commercials on TV for various "free" credit report offers. The truth is, if they are advertising, they aren't doing this out of the kindness of their hearts.
The Fair Credit Reporting Act enables consumers a free copy of their credit report once a year - see details here. The companies that are advertising will get you your credit report for free, but they are trying to sign you up for a monthly monitoring service or other services for a fee.
The FTC's link brings you to AnnualCreditReport.com which is hosted by the three major credit reporting agencies - Experian, Equifax, and TransUnion.
You'll follow through the prompts on the site to fill out your personal information and then you'll have to select which of three agencies to get your report from. Your credit report will show your various outstanding lines of credit. The report will not provide you with your credit score. You'll have the opportunity during the process to sign up (and pay) to receive your credit score.
Getting your free credit report once per year is a good way to monitor your credit, although if there are problems, a once-per-year report may not be timely enough.
If you are planning on looking for a house, you may want to pull your report before you begin. If there are problems, such as fraudulent accounts, they can often take a long time to resolve.
The Fair Credit Reporting Act enables consumers a free copy of their credit report once a year - see details here. The companies that are advertising will get you your credit report for free, but they are trying to sign you up for a monthly monitoring service or other services for a fee.
The FTC's link brings you to AnnualCreditReport.com which is hosted by the three major credit reporting agencies - Experian, Equifax, and TransUnion.
You'll follow through the prompts on the site to fill out your personal information and then you'll have to select which of three agencies to get your report from. Your credit report will show your various outstanding lines of credit. The report will not provide you with your credit score. You'll have the opportunity during the process to sign up (and pay) to receive your credit score.
Getting your free credit report once per year is a good way to monitor your credit, although if there are problems, a once-per-year report may not be timely enough.
If you are planning on looking for a house, you may want to pull your report before you begin. If there are problems, such as fraudulent accounts, they can often take a long time to resolve.
Sunday, October 23, 2011
Project - Building a Desk - Finished!
The desk I built sat in the garage until Saturday morning. I moved it into the house just in time for our housewarming - at least one person commented positively on the desk without knowing I had built it. For everyone else, I made sure they knew right away.
Scorecard
Having made it through an entire project, I can confidently divide projects into a few different steps and grade myself:
Once I had the desk fully assembled and the drawer was sliding well, I felt like I had reached the finish line. How hard could it be to paint something?
First, you need to sand the project. This helps smooth the project, but also create "grip" for the primer. You could use a primer + paint, but I went with separate primer and paint. Primer is generally white or gray. It is suggested that you use gray if you are painting with dark colors.
So sand, then apply a thin layer of primer. After it has dried, sand again, then prime again.
Next, sand again before applying paint. It's really helpful to buy a "tack cloth" which is a cloth... that is tacky. You bunch it up and wipe the project and it picks up all the little bits of sawdust. I didn't do this at first, which was a mistake, because as I applied the primer, some spots looked gritty.
When I first applied the paint, I used a paintbrush. This was also a mistake. For a rookie, it seems that no matter how hard you try to keep from leaving brush strokes, they'll be there. And they don't look good. After a layer of paint, I bought a roller and the results were great. The problem was that I had a layer of brush-strokes beneath which I couldn't effectively sand away.
In between layers of paint (and you want at least 2 layers) I sanded again. At this point, you want to use a very fine sand paper and slide it across the project to again, create "grip" and to even out any minor bumps.
Once the paint has dried and you are happy, you'll want to apply a protective finish. I read that a spray can of water-based polycrylic was the best / easiest. Let me give you a tip to save you some headaches - you are going to be applying many layers of polycrylic, so spray the project very lightly, let it dry (30 mins) then do it again.
After my first pass with the polycrylic, I looked at the project and thought there were some areas I missed. So I gave those areas a more focused spraying. This only led to buildup of the polycrylic. I tried wiping them with my finger or paper towel, but then the area looked smudged.
After layers of poly, you again need to sand with very fine paper. Since I had created some smudges and buildup areas, I sanded with a bit more force - in at least two spots, I sanded away the poly and the paint underneath to expose primer. Ugh!
So now I needed to re-touch a few areas with paint, then hit it all with poly again. I probably should have re-touched with paint, let it dry, then done it again. At this point though, the project had been out in the garage for a good week and I was running out of time to show it off at our housewarming.
Feet
As a final step, I drilled some small holes in the feet and added screw-in felt furniture feet. This would also make it possible to adjust the desk if it wasn't level, although it was.
The feet did left the project off the floor by 1/4" which I felt took away from the look a little.
Summary
All-in-all, passing grades. The big test was whether Pamela would let me try to build us a dining room table next, and I have received the go-ahead. So, be on the lookout for dining table posts soon!
 |
| Victory! |
Having made it through an entire project, I can confidently divide projects into a few different steps and grade myself:
- Buying stuff - C or D - I didn't make a smart wood purchasing decision and I ended up making several trips to Home Depot. For the next project, I think this'll be an easy A.
- Cutting the stuff you bought - C+ - unfortunately, I let the 17 year old working at Home Depot make a few cuts so that the wood would fit in my car. This led to some pieces which were shorter than they should have been. Before I put together my saw jig, I think some of my own cuts with my circular saw weren't quite straight.
- Assembling the cut stuff - B+ - I would give myself an A, but I can't do that on my first project.
- Finishing the assembled stuff - B- - not terrible, but not great - see below.
Once I had the desk fully assembled and the drawer was sliding well, I felt like I had reached the finish line. How hard could it be to paint something?
First, you need to sand the project. This helps smooth the project, but also create "grip" for the primer. You could use a primer + paint, but I went with separate primer and paint. Primer is generally white or gray. It is suggested that you use gray if you are painting with dark colors.
So sand, then apply a thin layer of primer. After it has dried, sand again, then prime again.
Next, sand again before applying paint. It's really helpful to buy a "tack cloth" which is a cloth... that is tacky. You bunch it up and wipe the project and it picks up all the little bits of sawdust. I didn't do this at first, which was a mistake, because as I applied the primer, some spots looked gritty.
When I first applied the paint, I used a paintbrush. This was also a mistake. For a rookie, it seems that no matter how hard you try to keep from leaving brush strokes, they'll be there. And they don't look good. After a layer of paint, I bought a roller and the results were great. The problem was that I had a layer of brush-strokes beneath which I couldn't effectively sand away.
In between layers of paint (and you want at least 2 layers) I sanded again. At this point, you want to use a very fine sand paper and slide it across the project to again, create "grip" and to even out any minor bumps.
Once the paint has dried and you are happy, you'll want to apply a protective finish. I read that a spray can of water-based polycrylic was the best / easiest. Let me give you a tip to save you some headaches - you are going to be applying many layers of polycrylic, so spray the project very lightly, let it dry (30 mins) then do it again.
After my first pass with the polycrylic, I looked at the project and thought there were some areas I missed. So I gave those areas a more focused spraying. This only led to buildup of the polycrylic. I tried wiping them with my finger or paper towel, but then the area looked smudged.
After layers of poly, you again need to sand with very fine paper. Since I had created some smudges and buildup areas, I sanded with a bit more force - in at least two spots, I sanded away the poly and the paint underneath to expose primer. Ugh!
So now I needed to re-touch a few areas with paint, then hit it all with poly again. I probably should have re-touched with paint, let it dry, then done it again. At this point though, the project had been out in the garage for a good week and I was running out of time to show it off at our housewarming.
Feet
As a final step, I drilled some small holes in the feet and added screw-in felt furniture feet. This would also make it possible to adjust the desk if it wasn't level, although it was.
The feet did left the project off the floor by 1/4" which I felt took away from the look a little.
Summary
All-in-all, passing grades. The big test was whether Pamela would let me try to build us a dining room table next, and I have received the go-ahead. So, be on the lookout for dining table posts soon!
Friday, October 21, 2011
Donald Trump - Never A Better Time to Buy (from a bank)
Donald Trump, in the clip below, explains why he believes there has never been a better time to buy, as long as you are buying from a bank:
I think his comments are timely - six months ago, I believe banks would have been more reluctant or less likely to just "get rid" of properties they owned. Now with the economy really struggling again and the focus on banks' balance sheets, both in the US and Europe, banks should be more willing to cut deals.
His comments on financing a deal when buying from a third party may be a bit off - we didn't have a problem getting a good mortgage, but I guess I can't speak more broadly than my experience and what I've read.
One point to highlight - Trump, love him or hate him, is all about confidence. He sued a reporter who dared say his net worth was not in the billions. Over the past several years, Trump has been licensing his name for properties (and other projects) rather than buying and owning himself. It is interesting to note that he has now become a buyer again. If you think he is a savvy real estate investor, maybe you should follow his lead.
I think his comments are timely - six months ago, I believe banks would have been more reluctant or less likely to just "get rid" of properties they owned. Now with the economy really struggling again and the focus on banks' balance sheets, both in the US and Europe, banks should be more willing to cut deals.
His comments on financing a deal when buying from a third party may be a bit off - we didn't have a problem getting a good mortgage, but I guess I can't speak more broadly than my experience and what I've read.
One point to highlight - Trump, love him or hate him, is all about confidence. He sued a reporter who dared say his net worth was not in the billions. Over the past several years, Trump has been licensing his name for properties (and other projects) rather than buying and owning himself. It is interesting to note that he has now become a buyer again. If you think he is a savvy real estate investor, maybe you should follow his lead.
Wednesday, October 19, 2011
Housing at Core of Economic Malaise
Today's NY Times addresses the role housing is playing in the current downturn in its article Gloom Grips Consumers, and It May Be Home Prices:
There's been a lot of discussion around the idea of the "new normal" and whether it will remain in place. Will people remain frugal even after the economy has rebounded and their jobs are more secure? I think that is a toss up - we as Americans do tend to like reality TV, celebrity culture, and all these other influences which tend to make us want to spend and own more.
Can we return to the same level of economic activity (consumer spending) as before the recession? I doubt it and I hope not. Many or perhaps most people didn't over-extend themselves, but everyone has been caught up in the recession. Those that did spend in excess have likely had a harder landing. I tend to believe that the experience of the past few years won't simply be shrugged off.
I do fear the government's involvement though. The current and previous administration, along with the current and previous Fed created dangerous situations. The current Fed wants to keep interest rates artificially low to drive lending and grow the economy. The key, in my opinion, to being successful in this regard, is to turn off the spigot at the right time. Failing to do so will lead us back into an environment of easy credit and the bad decisions that follow.
That has led a growing number of economists to argue that the collapse of housing prices, a defining feature of this downturn, is also a critical and underappreciated impediment to recovery. Americans have lost a vast amount of wealth, and they have lost faith in housing as an investment. They lack money, and they lack the confidence that they will have more money tomorrow.I've discussed this changing perception of home ownership in previous posts. While I don't want to sound callous to those who are struggling, I think this shift in attitudes will be a strong positive long-term, although it will cause lots of people pain in the nearer term. Home owners - new and old alike - need to view their home as a shelter, not an ATM and not a stock that goes up and down. I think first-time home buyers likely get this while prior generations will have more trouble accepting it.
“I don’t know that it’s going to get better. We just have to get used to it,” said Sherry DeWeese, whose home in Ocoee, a northwestern suburb of Orlando, is worth less than she paid for it 13 years ago — and about a third of its value at the peak of the market. “It was nothing to buy whatever we wanted. Now we just think about what we really need.”Sherry gets it. While it is sad to hear her house is worth the same now as it was 13 years ago (the NY Times doesn't specify, but I'm guessing that is in nominal terms, meaning she has actually "lost" money on her home in real terms due to inflation). Is it perhaps more striking that her home has not changed in value in 13 years or that it was worth 3x its current value at the peak?
It remains the prevailing view of economic policy makers that economic activity will eventually return to the same trajectory as before the recession. Mr. Bernanke and others have said that they see no evidence of any permanent change in the economy. Previous bouts of economic pessimism, as in the early 1980s and early 1990s, went away once growth picked up.
There's been a lot of discussion around the idea of the "new normal" and whether it will remain in place. Will people remain frugal even after the economy has rebounded and their jobs are more secure? I think that is a toss up - we as Americans do tend to like reality TV, celebrity culture, and all these other influences which tend to make us want to spend and own more.
Can we return to the same level of economic activity (consumer spending) as before the recession? I doubt it and I hope not. Many or perhaps most people didn't over-extend themselves, but everyone has been caught up in the recession. Those that did spend in excess have likely had a harder landing. I tend to believe that the experience of the past few years won't simply be shrugged off.
I do fear the government's involvement though. The current and previous administration, along with the current and previous Fed created dangerous situations. The current Fed wants to keep interest rates artificially low to drive lending and grow the economy. The key, in my opinion, to being successful in this regard, is to turn off the spigot at the right time. Failing to do so will lead us back into an environment of easy credit and the bad decisions that follow.
Monday, October 17, 2011
Project - Build a Desk
First off, I have to say that none of this would have been possible without the help of Ana-White.com, a site and blog about an Alaskan mother who builds furniture on her own time. Please visit her site for helpful how-to's and project plans.
Background
Before we even moved in, I began thinking about DIY projects that I'd like to accomplish. We knew the house would be lacking in furniture, as we were coming from a one bedroom apartment and now had several bedrooms. Our apartment also had a kitchen island, so we didn't have a dining table or chairs.
I originally intended on building a dining table, but the scale of the project and the daily usage the table would receive guided me to try something a bit smaller first.
In our kitchen, there's a corner space where the seller used to have a desk with a TV on top. We thought that'd be a great place for a laptop and some stationary outside of the office. The space available is 40" x 24"
Pamela and I found a plan online that we really liked and thought we could adapt to the space. See the Simple Modern Desk plan here.
Our version would have slightly smaller dimensions, one large drawer instead of two, and wood boards as a top rather than a single sheet of MDF.
Supplies and Materials
On one of our first trips to Home Depot I got to buy power tools. I bought a drill and a circular saw, along with nails, screws, and an array of screwdrivers and other hand tools.
If you are in the market for power tools, I suggest buying corded tools if you can. If you are like me and will be working around the house where you have access to electric outlets and/or extension cords, spending the extra money on cordless tools might be a waste. Cordless tools also need to be charged and often aren't as powerful (for the same price point).
One of the key enabling tools for me has been a Kreg Jig. When joining pieces of wood together for furniture, you have several options. The Kreg Jig, in my opinion, is the simplest and may also be the most attractive visually. Just peruse a clip on their site and you'll see what I mean.
I purchased poplar boards from Home Depot for this project. This was a rookie move - I walked up and down the lumber aisles and thought these boards looked best. They were also labeled as good for furniture. I didn't realize they were priced per foot, as opposed to many other boards that were priced per piece. For a 1" x 3" board that was 8 feet long, I probably spent $15 to $20 per board. With other types of wood I could have spent less than $10 or even less than $5 per board.
Setup
Below is my garage / workshop / man-cave:
In the forefront on top of two stools you can see my saw jig. I use this to make perfectly straight cuts with my circular saw. The perpendicular board in the center of the photo is used as a guide, I press the circular saw's foot along that board as I am making the cut. I slide a piece of wood below that board but on top of the jig's base. You can see the channel that is cut in the jig to the left of the perpendicular board.
Before I had the saw jig setup, each cut was nerve wracking. Being new to a circular saw, I was concerned I'd make a lop-sided cut or remove several fingers.
Non-Step By Step
For a good step by step, please download the project plans from Ana-White.com.
Since the dimensions of our desk were going to differ, I had to sketch out each section including all the new measurements. This really saved me a lot of heartache as I realized making a board 1/4" shorter would affect both the length AND the width of the project in several instances.
I also didn't follow the advice on Ana-White.com in allowing Home Depot to cut a few pieces of wood to help them fit in my car. The guy at HD doing the cutting was probably 17 and had been off on a lunch break. He came back to a long line of customers waiting to have their wood cut. I only had him cut a few boards, but he managed to screw one up (I made the mistake of not measuring before I left). Now that I had one important board that was short, I needed to adapt all the dimensions to fit this board (the alternative was to buy another board and have it cut right, but I was home and ready to get working!).
Here are most of my boards cut down to size (some still waiting to be cut):
Here are the legs mostly assembled:
Here's the frame:
Fully assembled!:
Priming:
Primed and ready for some paint:
A Few Notes on Finishing
Wood filler is s savior. It's primarily used to fill cracks and cover nail heads - it can then be sanded and painted. For my first project, since some boards didn't fit together perfectly, I filled the gaps with wood filler so that they wouldn't be noticeable.
Adding to my rookie mistake on choosing poplar boards, I later found that poplar is very difficult to stain. My original plan was to stain the desk into a deeper brown / wood color. I found sites on the internet that said I could use a sealer first, then apply stain although the sites cautioned that the outcome might not be desireable. I tried this on some scrap and really didn't like the look. Poplar does paint well though, so that's what we'll do.
We primed the desk and will paint it in the next few days. We are leaning towards painting it white, but red is also under consideration. Anyone want to post a comment with their vote?
Summary
The project has taken me two weeks or so. If I were to do it again, I could probably do it all in one weekend (minus painting). I'll post again in a few days after it has been painted and moved into the house. Pamela is very impressed and has given me a free pass to build other things. There are a lot of other projects around the house that I could maybe build, but the dining table (and chairs) is probably next.
Background
Before we even moved in, I began thinking about DIY projects that I'd like to accomplish. We knew the house would be lacking in furniture, as we were coming from a one bedroom apartment and now had several bedrooms. Our apartment also had a kitchen island, so we didn't have a dining table or chairs.
I originally intended on building a dining table, but the scale of the project and the daily usage the table would receive guided me to try something a bit smaller first.
In our kitchen, there's a corner space where the seller used to have a desk with a TV on top. We thought that'd be a great place for a laptop and some stationary outside of the office. The space available is 40" x 24"
Pamela and I found a plan online that we really liked and thought we could adapt to the space. See the Simple Modern Desk plan here.
Our version would have slightly smaller dimensions, one large drawer instead of two, and wood boards as a top rather than a single sheet of MDF.
Supplies and Materials
On one of our first trips to Home Depot I got to buy power tools. I bought a drill and a circular saw, along with nails, screws, and an array of screwdrivers and other hand tools.
If you are in the market for power tools, I suggest buying corded tools if you can. If you are like me and will be working around the house where you have access to electric outlets and/or extension cords, spending the extra money on cordless tools might be a waste. Cordless tools also need to be charged and often aren't as powerful (for the same price point).
One of the key enabling tools for me has been a Kreg Jig. When joining pieces of wood together for furniture, you have several options. The Kreg Jig, in my opinion, is the simplest and may also be the most attractive visually. Just peruse a clip on their site and you'll see what I mean.
I purchased poplar boards from Home Depot for this project. This was a rookie move - I walked up and down the lumber aisles and thought these boards looked best. They were also labeled as good for furniture. I didn't realize they were priced per foot, as opposed to many other boards that were priced per piece. For a 1" x 3" board that was 8 feet long, I probably spent $15 to $20 per board. With other types of wood I could have spent less than $10 or even less than $5 per board.
Setup
Below is my garage / workshop / man-cave:
 |
| Man Cave-y |
Before I had the saw jig setup, each cut was nerve wracking. Being new to a circular saw, I was concerned I'd make a lop-sided cut or remove several fingers.
Non-Step By Step
For a good step by step, please download the project plans from Ana-White.com.
Since the dimensions of our desk were going to differ, I had to sketch out each section including all the new measurements. This really saved me a lot of heartache as I realized making a board 1/4" shorter would affect both the length AND the width of the project in several instances.
I also didn't follow the advice on Ana-White.com in allowing Home Depot to cut a few pieces of wood to help them fit in my car. The guy at HD doing the cutting was probably 17 and had been off on a lunch break. He came back to a long line of customers waiting to have their wood cut. I only had him cut a few boards, but he managed to screw one up (I made the mistake of not measuring before I left). Now that I had one important board that was short, I needed to adapt all the dimensions to fit this board (the alternative was to buy another board and have it cut right, but I was home and ready to get working!).
Here are most of my boards cut down to size (some still waiting to be cut):
Here are the legs mostly assembled:
Here's the frame:
Fully assembled!:
Priming:
Primed and ready for some paint:
A Few Notes on Finishing
Wood filler is s savior. It's primarily used to fill cracks and cover nail heads - it can then be sanded and painted. For my first project, since some boards didn't fit together perfectly, I filled the gaps with wood filler so that they wouldn't be noticeable.
Adding to my rookie mistake on choosing poplar boards, I later found that poplar is very difficult to stain. My original plan was to stain the desk into a deeper brown / wood color. I found sites on the internet that said I could use a sealer first, then apply stain although the sites cautioned that the outcome might not be desireable. I tried this on some scrap and really didn't like the look. Poplar does paint well though, so that's what we'll do.
We primed the desk and will paint it in the next few days. We are leaning towards painting it white, but red is also under consideration. Anyone want to post a comment with their vote?
Summary
The project has taken me two weeks or so. If I were to do it again, I could probably do it all in one weekend (minus painting). I'll post again in a few days after it has been painted and moved into the house. Pamela is very impressed and has given me a free pass to build other things. There are a lot of other projects around the house that I could maybe build, but the dining table (and chairs) is probably next.
Tuesday, October 11, 2011
First Mini-Project Complete
I always wanted a workbench and tools. With the proper equipment, I could become handy, right?
When our offer was accepted on the house, I immediately started dreaming of my man-cave. Whether it would be in the basement or the garage, I didn't care - all I know is that it'd be a workshop and maybe double as an indoor driving range. In the weeks leading up to moving in I found myself watching How-to videos and researching different project plans. I was particularly inspired by Ana White. You should really really visit her site. The short version of her story is that she is a mother in Alaska who decided to build furniture to save money. She blogged about the projects and posted detailed project plans for others to follow. Her latest undertaking is building a "Momplex" - a duplex for both her mother and her mother-in-law.
Back to us in Westchester...
Off we went to Home Depot the other week - wow, just getting some basic tools was expensive! I also made an agreement with Pamela - we would purchase a breakfast table and chairs that I wasn't necessarily thrilled about, if she would let me try to build our kitchen table. You'll see more posts in the near future about this and other projects.
As for the blog title, since I reached a stopping point on my larger project until this coming weekend, I decided to use some scrap to make... something.
Allow me to present to you, the Cellphone / Alarm Clock Nighstand.
I've used my cellphone as an alarm clock exclusively for some time now. It has a nice setting which makes the screen appear just like an alarm clock (not pictured - lights need to be out). Generally, I've laid the phone flat and propped myself up in the night to see the time. This stand will allow me to more easily see the time.
The stand is built from some scrap 1x4 as a base and a scrap 1x3 cut at a 30 degree angle as the upright. I sanded both pieces and I may decide to stain them - good practice for my first larger project! I used wood glue to attach the two pieces. My first attempt used a singular screw, but let's just say that is now officially unusable scrap.
Cellphone / Alarm Clock Nighstands now available for sale... umm... $5?
When our offer was accepted on the house, I immediately started dreaming of my man-cave. Whether it would be in the basement or the garage, I didn't care - all I know is that it'd be a workshop and maybe double as an indoor driving range. In the weeks leading up to moving in I found myself watching How-to videos and researching different project plans. I was particularly inspired by Ana White. You should really really visit her site. The short version of her story is that she is a mother in Alaska who decided to build furniture to save money. She blogged about the projects and posted detailed project plans for others to follow. Her latest undertaking is building a "Momplex" - a duplex for both her mother and her mother-in-law.
Back to us in Westchester...
Off we went to Home Depot the other week - wow, just getting some basic tools was expensive! I also made an agreement with Pamela - we would purchase a breakfast table and chairs that I wasn't necessarily thrilled about, if she would let me try to build our kitchen table. You'll see more posts in the near future about this and other projects.
As for the blog title, since I reached a stopping point on my larger project until this coming weekend, I decided to use some scrap to make... something.
Allow me to present to you, the Cellphone / Alarm Clock Nighstand.
I've used my cellphone as an alarm clock exclusively for some time now. It has a nice setting which makes the screen appear just like an alarm clock (not pictured - lights need to be out). Generally, I've laid the phone flat and propped myself up in the night to see the time. This stand will allow me to more easily see the time.
The stand is built from some scrap 1x4 as a base and a scrap 1x3 cut at a 30 degree angle as the upright. I sanded both pieces and I may decide to stain them - good practice for my first larger project! I used wood glue to attach the two pieces. My first attempt used a singular screw, but let's just say that is now officially unusable scrap.
Cellphone / Alarm Clock Nighstands now available for sale... umm... $5?
Monday, October 10, 2011
Busy Weekend
The pace of blog posts has slowed considerably since we closed on our house. We've been very busy over the past weeks getting settled.
One major impediment to blogging is our lack of internet at home. We tried to move our Verizon FiOS account from our apartment to the new house, but a technician wasn't available for the install until the end of October. I was fine dealing with this, but Pamela decided she had enough. She called around and found that Optimum / Cablevision could do an install today, so we are dropping FiOS.
In the coming weeks, you should see some updates on my status as newly found handy-man. I bought power tools. I'm building a small table. Wish me luck!
One major impediment to blogging is our lack of internet at home. We tried to move our Verizon FiOS account from our apartment to the new house, but a technician wasn't available for the install until the end of October. I was fine dealing with this, but Pamela decided she had enough. She called around and found that Optimum / Cablevision could do an install today, so we are dropping FiOS.
In the coming weeks, you should see some updates on my status as newly found handy-man. I bought power tools. I'm building a small table. Wish me luck!
Friday, October 7, 2011
Home Ownership Losing Appeal
Today's Wall Street Journal describes declining home ownership in the US:
I've discussed the rent vs. buy decision before, but I think this is more about the shift in attitudes towards home ownership. If you are in your 40s or later, you may have experienced or been part of the housing boom - low or no down payments, buy a home, then either refinance in a few years or sell at a profit to realize the gains on your investment. As the recession hit, those who were still in the game of "flipping" houses got stuck and watched their once profitable investment become a big, illiquid, losing investment. The economy hasn't substantially changed, so why get involved in that mess again?
For those who are younger, the weak economy creates uncertainty. Do I really want to sign up for hundreds of thousands of dollars in debt and be fixed in my location when I could potentially lose my job or be assigned elsewhere? You probably also don't view buying a house as an investment that will pay off anytime in the near future. Renting seems like a much better option.
So how do we make home ownership more attractive again, or should that even be a policy goal?
Many believe that until we "solve" the housing problem, the remainder of the economy will stay weak. The Fed, in it's "Operation Twist", is helping to keep mortgage rates low to spur home buying and refinancing. Other proposals have been floated, going as far as to suggest vacant homes should be blown up to reduce the inventory of unsold homes.
The problem with these (rational) ideas is that the inventory is massive. Bloomberg notes:
I believe the solution is to let nature take its course. Government intervention seems to almost always create unforeseen consequences and is frequently gamed by those who need assistance least. This will mean a long and painful period for those who hold mortgages that are greater than the worth of their home. They should rightly consider "strategic default" as an option. Those who are not in as dire of a situation should consider their home a place to live and forget any hopes of realizing gains on the value of their home. And for those renters out there, they need to see the lesson of what can go wrong when greed and government policy meet.
The rate of home ownership in the U.S. fell in the last decade by the largest amount since the Great Depression, although the percentage of Americans who own their home remains the second-highest on record, the Census Bureau said Thursday....with info graphic:
I've discussed the rent vs. buy decision before, but I think this is more about the shift in attitudes towards home ownership. If you are in your 40s or later, you may have experienced or been part of the housing boom - low or no down payments, buy a home, then either refinance in a few years or sell at a profit to realize the gains on your investment. As the recession hit, those who were still in the game of "flipping" houses got stuck and watched their once profitable investment become a big, illiquid, losing investment. The economy hasn't substantially changed, so why get involved in that mess again?
For those who are younger, the weak economy creates uncertainty. Do I really want to sign up for hundreds of thousands of dollars in debt and be fixed in my location when I could potentially lose my job or be assigned elsewhere? You probably also don't view buying a house as an investment that will pay off anytime in the near future. Renting seems like a much better option.
So how do we make home ownership more attractive again, or should that even be a policy goal?
Many believe that until we "solve" the housing problem, the remainder of the economy will stay weak. The Fed, in it's "Operation Twist", is helping to keep mortgage rates low to spur home buying and refinancing. Other proposals have been floated, going as far as to suggest vacant homes should be blown up to reduce the inventory of unsold homes.
The problem with these (rational) ideas is that the inventory is massive. Bloomberg notes:
The nation added almost 16 million homes, a 13.6 percent increase from 2000, as the number of vacant residences rose to 15 million, a gain of almost 44 percent.You can spur buying around the edges, but you can't force 20-somethings to buy a home when they don't want to. You can't force parents with college-bound kids to take on a new mortgage. In fact, the harder you push to create demand, the more likely you are to create bad loans - not unlike those that got us into trouble in the first place.
I believe the solution is to let nature take its course. Government intervention seems to almost always create unforeseen consequences and is frequently gamed by those who need assistance least. This will mean a long and painful period for those who hold mortgages that are greater than the worth of their home. They should rightly consider "strategic default" as an option. Those who are not in as dire of a situation should consider their home a place to live and forget any hopes of realizing gains on the value of their home. And for those renters out there, they need to see the lesson of what can go wrong when greed and government policy meet.
Thursday, October 6, 2011
For Sale!
As I noted in an earlier post, I am also in the process of selling a home in East Stroudsburg, PA. It's been a bit of a rocky road to start, but we finally got the listing up:
The house is 1,200 sq. ft. with 2 bedrooms and 1 bathroom. The house is in need of some repairs and renovation. The key selling points are that the house is on 3.4 acres which you could easily sub-divide, and the location - only minutes away from Route 80.
The listing price is $149,000.
Here is the official listing page.
Here is the listing on Zillow.
I'll be sure to keep everyone posted on our progress!
The house is 1,200 sq. ft. with 2 bedrooms and 1 bathroom. The house is in need of some repairs and renovation. The key selling points are that the house is on 3.4 acres which you could easily sub-divide, and the location - only minutes away from Route 80.
The listing price is $149,000.
Here is the official listing page.
Here is the listing on Zillow.
I'll be sure to keep everyone posted on our progress!
Wednesday, October 5, 2011
8 Step Home Buying Guide
The links below will provide you with a detailed 8 step guide to purchasing your first home. The guide is interlaced with stories about our home buying process as well as tips we've picked up along the way.
Step #8 - Onto Closing!
As you work with your broker / banker to get the final "clear to close", I would advise that you keep an open channel of communication with the seller's team. They will be quite anxious themselves - it has probably been weeks since you signed the contract and there isn't a lot of information flowing back and forth. I think it helps all parties to say "just fulfilling the final conditions; we are still on target for our scheduled closing date". Surprises near closing are never good.
On or About
The closing date you've put in the contract of sale is referred to as an "on or about" date. That means if you can close early, great. If not, neither party should be surprised.. There will likely be language in the contract that will put some brackets around that date giving both sides room if delays occur. Unless you have penalties written into the contract, there isn't much that can be done to force someone to close.
In our case, while we were ready to close on time (and ahead of our lease expiration), the seller wasn't ready. This can happen for a host of reasons - is the seller closing on a purchase of his/her own new home? Are they packing up and traveling far away? Or, perhaps the seller doesn't want to begin packing the house up until he/she knows there is a deal in hand.
If you have some sort of inflexible timeline, such as a rental lease expiring, my first advice is to schedule a closing well in advance. You'd love to have your lease end and move into your new home the same day, but as in our case, how big of a challenge will it be if you have to move out of your apartment but you and your belongings have no where to go? What if the seller says he/she needs an additional two weeks? You could make all sorts of empty threats about walking away, but #1) you won't and #2) depending on your contract, you might lose your deposit if you do so.
In that situation, you'd be livid about the injustice of it all (oh, I know), but there isn't anything you can do about it. When drafting your contract of sale, you should discuss with the lawyer the idea of putting penalties in place if the closing is delayed outside of the brackets. More often though, those delays will be the buyer's fault, so be careful.
Scheduling
Closing will require the presence of the buyer, seller, and their respective teams (agent, banker, lawyer). This can also lead to slight delays, but everyone at this point wants to close the deal and get paid. A few days before closing, you'll get your Closing Statement - this will be the final tally of closing expenses. You'll need to get a certified check in this amount. Take a good look over these expenses and have every item explained to you. Most of these expenses should be the same as what you've seen on your Good Faith Estimates.
One area that can be a surprise is taxes. You are required to reimburse the seller for the taxes that they've paid that cover the period beyond closing. So if the seller paid a tax bill in June that covers July through December, and you close at the end of July, you'll have to reimburse the seller for August through December. The amount you have to reimburse the seller depends on how many times per year your municipality collects taxes.
Once you've scheduled closing, I would suggest telling your cable / internet company of your planned move. You can always cancel your request if closing gets pushed back or called off. In our case, we waited until just before closing and then found we'd be without TV and internet for almost a month!
What Happens the Day of Closing?
On the day of closing, you'll first do a final walk-through of the house. This is your last chance to spot anything amiss. If the seller (accidentally or not) took an appliance that was part of the contract, and you don't notice for a few days, you are out of luck. You'll want to look for the key items in the contract such as washers, dryers, and water heaters, and anything that was specifically written into the contract as an inclusion. You'll want to check that all the appliances are in working order too. Check the house to look for any damage caused when the seller moved out, and look for any damage that was maybe hidden by a piece of furniture or decoration.
After you have completed the final walk-through, you'll head to your lawyers office to sign the documentation. It turns out banks won't lend you hundreds of thousands of dollars without asking you to sign an enormous stack of paper. Depending on the type of mortgage you've applied for, document signing can take several hours.
At closing, there can be final negotiation of any outstanding items. Sitting down and discussing things face to face can help bridge any gaps, although there is always a chance that the opposite could happen. The others in attendance though are very close to getting paid and will likely help to push the two sides together. In some cases, Realtors have agreed to reduce their commission if there is a small dollar difference on an issue that seems irreconcilable.
Once the paperwork is signed, the seller should hand you the keys to the house. Make sure to have the seller explain which key goes to which lock.
At this point, the house is yours! You've just purchased a house and locked yourself into a mountain of debt.
On or About
The closing date you've put in the contract of sale is referred to as an "on or about" date. That means if you can close early, great. If not, neither party should be surprised.. There will likely be language in the contract that will put some brackets around that date giving both sides room if delays occur. Unless you have penalties written into the contract, there isn't much that can be done to force someone to close.
In our case, while we were ready to close on time (and ahead of our lease expiration), the seller wasn't ready. This can happen for a host of reasons - is the seller closing on a purchase of his/her own new home? Are they packing up and traveling far away? Or, perhaps the seller doesn't want to begin packing the house up until he/she knows there is a deal in hand.
If you have some sort of inflexible timeline, such as a rental lease expiring, my first advice is to schedule a closing well in advance. You'd love to have your lease end and move into your new home the same day, but as in our case, how big of a challenge will it be if you have to move out of your apartment but you and your belongings have no where to go? What if the seller says he/she needs an additional two weeks? You could make all sorts of empty threats about walking away, but #1) you won't and #2) depending on your contract, you might lose your deposit if you do so.
In that situation, you'd be livid about the injustice of it all (oh, I know), but there isn't anything you can do about it. When drafting your contract of sale, you should discuss with the lawyer the idea of putting penalties in place if the closing is delayed outside of the brackets. More often though, those delays will be the buyer's fault, so be careful.
Scheduling
Closing will require the presence of the buyer, seller, and their respective teams (agent, banker, lawyer). This can also lead to slight delays, but everyone at this point wants to close the deal and get paid. A few days before closing, you'll get your Closing Statement - this will be the final tally of closing expenses. You'll need to get a certified check in this amount. Take a good look over these expenses and have every item explained to you. Most of these expenses should be the same as what you've seen on your Good Faith Estimates.
One area that can be a surprise is taxes. You are required to reimburse the seller for the taxes that they've paid that cover the period beyond closing. So if the seller paid a tax bill in June that covers July through December, and you close at the end of July, you'll have to reimburse the seller for August through December. The amount you have to reimburse the seller depends on how many times per year your municipality collects taxes.
Once you've scheduled closing, I would suggest telling your cable / internet company of your planned move. You can always cancel your request if closing gets pushed back or called off. In our case, we waited until just before closing and then found we'd be without TV and internet for almost a month!
What Happens the Day of Closing?
On the day of closing, you'll first do a final walk-through of the house. This is your last chance to spot anything amiss. If the seller (accidentally or not) took an appliance that was part of the contract, and you don't notice for a few days, you are out of luck. You'll want to look for the key items in the contract such as washers, dryers, and water heaters, and anything that was specifically written into the contract as an inclusion. You'll want to check that all the appliances are in working order too. Check the house to look for any damage caused when the seller moved out, and look for any damage that was maybe hidden by a piece of furniture or decoration.
After you have completed the final walk-through, you'll head to your lawyers office to sign the documentation. It turns out banks won't lend you hundreds of thousands of dollars without asking you to sign an enormous stack of paper. Depending on the type of mortgage you've applied for, document signing can take several hours.
At closing, there can be final negotiation of any outstanding items. Sitting down and discussing things face to face can help bridge any gaps, although there is always a chance that the opposite could happen. The others in attendance though are very close to getting paid and will likely help to push the two sides together. In some cases, Realtors have agreed to reduce their commission if there is a small dollar difference on an issue that seems irreconcilable.
Once the paperwork is signed, the seller should hand you the keys to the house. Make sure to have the seller explain which key goes to which lock.
At this point, the house is yours! You've just purchased a house and locked yourself into a mountain of debt.
Tuesday, October 4, 2011
Now to Make Our Big House a Home
We are very excited to have closed on the purchase of our first home yesterday. Pamela and I have said "we're never moving again" countless times over the past weeks - in part because we want to stay in this house and neighborhood forever, and because this whole ordeal was so stressful.
Final Walk-Through
We arrived at the house with our agent, the person who performed our home inspection when we put in our bid, and the seller's agent. We found that the wife/owner had left us a nice card wishing us luck along with the paint colors and lots of other goodies around the house (detergent, cleaners, extra siding, etc).
We also found out that the dryer that had caused us so much trouble does run, but does not heat. It is likely a damaged part, so maybe we won't have to replace the entire machine.
The drainage system was the last big item of concern. While walking the property, I saw the neighbor two doors down and spoke with him. He was able to provide me with enough comfort that the drainage pipe would not be a problem for us in the future.
Closing
We met at our lawyers office and began signing papers. A lot of papers. I was also instructed I'd have to sign my full name with initials which is considerably longer than my normal signature. After about an hour of being told what we were signing and marking the individual sheets, we went into the conference room where the seller and his attorney were, along with a person representing the title company.
In the conference room, we and the seller exchanged papers and continued signing. The process seemed more involved for him, as he probably had to payoff his outstanding mortgage while directing the rest of the proceeds to his lawyer and the agents, as well as to his own account.
There was only a brief amount of interaction - the seller seemed a bit gruff. He asked if he was done signing paperwork, and then got up to leave. He handed us the keys and explained which keys were for which lock. We then had a quick conversation about the drainage system and then he left.
We had been warned that closing can be very contentious. Had we gone into closing with issues remaining about the dryer or this pipe, we'd probably tell them our position, then they'd go to another room and confer. They'd respond, then we'd get up and go to another room to confer. Luckily, all the issues had been resolved, so we avoided that.
The entire process took about 2 hours. After the final docs were signed and we got the final handshakes, Pamela and I left to pickup the truck and move in!
Moving In
We had two movers help us unload, while Pamela, me and 3 family members moved boxes around the house and began unpacking. We ordered Italian food for everyone and our agent came by later with wine.
Sometime around 4am this morning, something fell with a loud thud.
Haunted.
Final Walk-Through
We arrived at the house with our agent, the person who performed our home inspection when we put in our bid, and the seller's agent. We found that the wife/owner had left us a nice card wishing us luck along with the paint colors and lots of other goodies around the house (detergent, cleaners, extra siding, etc).
We also found out that the dryer that had caused us so much trouble does run, but does not heat. It is likely a damaged part, so maybe we won't have to replace the entire machine.
The drainage system was the last big item of concern. While walking the property, I saw the neighbor two doors down and spoke with him. He was able to provide me with enough comfort that the drainage pipe would not be a problem for us in the future.
Closing
We met at our lawyers office and began signing papers. A lot of papers. I was also instructed I'd have to sign my full name with initials which is considerably longer than my normal signature. After about an hour of being told what we were signing and marking the individual sheets, we went into the conference room where the seller and his attorney were, along with a person representing the title company.
In the conference room, we and the seller exchanged papers and continued signing. The process seemed more involved for him, as he probably had to payoff his outstanding mortgage while directing the rest of the proceeds to his lawyer and the agents, as well as to his own account.
There was only a brief amount of interaction - the seller seemed a bit gruff. He asked if he was done signing paperwork, and then got up to leave. He handed us the keys and explained which keys were for which lock. We then had a quick conversation about the drainage system and then he left.
We had been warned that closing can be very contentious. Had we gone into closing with issues remaining about the dryer or this pipe, we'd probably tell them our position, then they'd go to another room and confer. They'd respond, then we'd get up and go to another room to confer. Luckily, all the issues had been resolved, so we avoided that.
The entire process took about 2 hours. After the final docs were signed and we got the final handshakes, Pamela and I left to pickup the truck and move in!
Moving In
We had two movers help us unload, while Pamela, me and 3 family members moved boxes around the house and began unpacking. We ordered Italian food for everyone and our agent came by later with wine.
Sometime around 4am this morning, something fell with a loud thud.
Haunted.
Monday, October 3, 2011
Sunday, October 2, 2011
Packed
Packing is the worst!
When you move into your first apartment, you might own a bed and a foreman grill. You guilt your friends with pizza, but you leave out that you have an 8 floor walk-up.
Today, we packed and loaded up a U-Haul truck. We paid for movers to help us load the truck and it only took 2 hours thanks to them, otherwise, Pamela and I would still be packing. There is something to be said for the quote "The things you own begin to own you" (Fight Club).
The apartment looks spacious without any of our stuff in it!
The apartment looks spacious without any of our stuff in it!
Here is everything we own, packed into a 14' U-Haul truck.
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| The Plant We Own Has Begun to Own Us |
Update on the Drama
The good news is that the seller has agreed to give us a $750 credit for the dryer, which is the amount we had asked for.
The other news is either a non-event or completely borks the deal.
One of the things we love about our potential new neighborhood is the people. We actually know several families and they have all told us how it's a neighborhood out of the '50s - everyone knows each other, is friendly, "howdy neighbor" and all that.
Early this morning we got an e-mail from one of the neighbors we know. He pointed out to us that the drainage pipe in the house's back yard flows into a nearby stream after it crosses another persons back yard. He said that we'd better make sure we have an easement in the deed and that this wasn't just some verbal agreement to allow us to drain water that way.
I asked my lawyer to check into this - nope, nothing in the deed. Without this drainage system, we know the backyard would turn into a mud pit and we could imagine the basement would be much more susceptible to flooding.
The complicating factor is that the neighbor whose yard the pipe crosses has sold their house to a developer. So, if an easement isn't in place, we'd have to negotiate with the developer who may or may not be willing to do so.
The seller works for our local municipality, and our lawyer says he could have filed with the city to allow this drainage connection, which would obviate the need for anything in the deed. We are hoping this is the case.
If we show up to closing tomorrow and it turns out there was only a verbal agreement, we can't close. And if we can't get the neighbor or the developer to agree to legally grant us access, we can't close - period.
So the chance of this deal entirely falling apart went from 1% to 25% very quickly. Again, the seller works for the city and I think it is unlikely that he just built a pipe and never filed for permission with the city.
Lessons Learned
We knew of the drainage system and spoke with the seller about it extensively. We did not ask him if the pipe was illegal. We also failed to let our lawyer know about this drainage system. He would have otherwise known to look for this in the deed. It was a failure on our part and our agent's part to not connect the dots.
Tomorrow
We are scheduled for our final walk-through tomorrow at 2pm, then closing at 3pm. If all goes well, we'll be done signing paperwork at 5:30pm and moving in soon after. If things don't go well, Pamela, Akina and I are spending at least one more night in a hotel and leaving all our belongings in the U-Haul for another day.
Saturday, October 1, 2011
Friday, September 30, 2011
Update - This is No Fun
It's Friday and we should be cruising into closing. We've got to finish packing and be out of our apartment on Sunday. One night in a hotel, then close on Monday. Not fun, but not terrible.
Things began to fall apart today at around 3pm.
Dealing in Bad Faith
A few weeks ago, the house sustained significant flooding in the basement during Hurricane Irene. The seller described this as a once in a decade type event, and we also confirmed with neighbors that flooding was unusual. We were concerned though that the washer, dryer, water heater, and central air equipment might have been damaged.
We were told through the seller's attorney that the water heater was being replaced due to damage, and that the seller had paid for the basement to be pumped, cleaned, and treated so that mold wouldn't grow.
We inquired about the other equipment - we were afraid that it might be damaged or destroyed. We requested that the seller have all the equipment inspected and pay for repairs if necessary. The seller's attorney stonewalled us saying that it was their duty to deliver the items in "working order". We want back and forth, but in the end, unfortunately that's the wording of the contract.
Flash forward to today - my attorney sends along the detailed final closing costs (more on that later) and it includes a $200 credit for the dryer. He contacted the seller's team, and we find out for the first time that the dryer was destroyed. We had inquired about the equipment and asked for them to be inspected, but we did not specifically ask what condition they were in.
In the contract, the seller had included a rider which said if any of the equipment was no longer in working order, we'd get a $200 credit per item. We included a rider subsequent to theirs, which said all equipment must be delivered in working order and that our rider supersedes theirs in all cases. Therefore, the seller is obligated to deliver the equipment in working order.
So now we are headed to a standoff.
The dryer, new, cost >$1,000 (it really is a high end machine). We think $750 is fair compensation, as it is a few years old and I found several listings on the internet for the machine ranging from $750 to $1,000. The language in the contract is clear that the seller needs to deliver a working machine. Since that is not an option, we're in a bit of a gray area.
The worst part is that we are heading into this standoff with no leverage. The seller and his team know that we are out of our apartment and will be staying in a hotel. The dollar difference is only $550, and it's not worth it for us to refuse to close and burn through the $550 in truck rental and hotel costs in a few days.
I think the seller and his team are clearly acting in bad faith - we inquired about the equipment weeks ago but we first hear about this just before closing. Their $200 offer is ridiculous given the value of the machine and that we are legally in the right.
I can't say I feel that this is going to work out well for us.
Surprises in Closing Costs
We've discussed what closing costs would be for months with our mortgage broker as we knew we'd be tight on cash. We found out today that we need to pony up several thousand dollars more on Monday, and there's nothing we can do about it.
The first increase in closing costs is expected - at closing you have to pay for the interest due on the loan for the remainder of the first month. When we had scheduled closing to be in late September, that total was four or five days worth of interest. Now that we are closing in the very beginning of October, we owe almost a whole months worth. The good news, though, is that our first mortgage payment won't be until December.
The second area where we were surprised was in the property taxes due up front. Property taxes can be collected by a municipality annually, semi-annually, or quarterly. Our broker assumed it would be quarterly. At closing, the buyer has to reimburse the seller for the property taxes paid that cover the days, weeks, and months after closing.
In our case, White Plains collects taxes semi-annually, not quarterly, so the two payments are much larger and cover longer periods of time. We found out today that the seller recently made a payment covering many months ahead, so now we have to reimburse him for that. There wasn't really a way to know this ahead of time, but the end result is a few thousand dollars due Monday that we weren't expecting.
On To Closing
Our attorney and Realtor are contacting the seller's team over the weekend to try and work something out about this dryer. They are in the wrong, but we have zero leverage, so we'll see how this plays out. It will be interesting to see the seller and his attorney face to face on Monday - I'd like to sign the final document then tell them both how I really feel.
Tips to Avoid Being Stuck in a Bind
Things began to fall apart today at around 3pm.
Dealing in Bad Faith
A few weeks ago, the house sustained significant flooding in the basement during Hurricane Irene. The seller described this as a once in a decade type event, and we also confirmed with neighbors that flooding was unusual. We were concerned though that the washer, dryer, water heater, and central air equipment might have been damaged.
We were told through the seller's attorney that the water heater was being replaced due to damage, and that the seller had paid for the basement to be pumped, cleaned, and treated so that mold wouldn't grow.
We inquired about the other equipment - we were afraid that it might be damaged or destroyed. We requested that the seller have all the equipment inspected and pay for repairs if necessary. The seller's attorney stonewalled us saying that it was their duty to deliver the items in "working order". We want back and forth, but in the end, unfortunately that's the wording of the contract.
Flash forward to today - my attorney sends along the detailed final closing costs (more on that later) and it includes a $200 credit for the dryer. He contacted the seller's team, and we find out for the first time that the dryer was destroyed. We had inquired about the equipment and asked for them to be inspected, but we did not specifically ask what condition they were in.
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| Such a headache! |
So now we are headed to a standoff.
The dryer, new, cost >$1,000 (it really is a high end machine). We think $750 is fair compensation, as it is a few years old and I found several listings on the internet for the machine ranging from $750 to $1,000. The language in the contract is clear that the seller needs to deliver a working machine. Since that is not an option, we're in a bit of a gray area.
The worst part is that we are heading into this standoff with no leverage. The seller and his team know that we are out of our apartment and will be staying in a hotel. The dollar difference is only $550, and it's not worth it for us to refuse to close and burn through the $550 in truck rental and hotel costs in a few days.
I think the seller and his team are clearly acting in bad faith - we inquired about the equipment weeks ago but we first hear about this just before closing. Their $200 offer is ridiculous given the value of the machine and that we are legally in the right.
I can't say I feel that this is going to work out well for us.
Surprises in Closing Costs
We've discussed what closing costs would be for months with our mortgage broker as we knew we'd be tight on cash. We found out today that we need to pony up several thousand dollars more on Monday, and there's nothing we can do about it.
The first increase in closing costs is expected - at closing you have to pay for the interest due on the loan for the remainder of the first month. When we had scheduled closing to be in late September, that total was four or five days worth of interest. Now that we are closing in the very beginning of October, we owe almost a whole months worth. The good news, though, is that our first mortgage payment won't be until December.
The second area where we were surprised was in the property taxes due up front. Property taxes can be collected by a municipality annually, semi-annually, or quarterly. Our broker assumed it would be quarterly. At closing, the buyer has to reimburse the seller for the property taxes paid that cover the days, weeks, and months after closing.
In our case, White Plains collects taxes semi-annually, not quarterly, so the two payments are much larger and cover longer periods of time. We found out today that the seller recently made a payment covering many months ahead, so now we have to reimburse him for that. There wasn't really a way to know this ahead of time, but the end result is a few thousand dollars due Monday that we weren't expecting.
On To Closing
Our attorney and Realtor are contacting the seller's team over the weekend to try and work something out about this dryer. They are in the wrong, but we have zero leverage, so we'll see how this plays out. It will be interesting to see the seller and his attorney face to face on Monday - I'd like to sign the final document then tell them both how I really feel.
Tips to Avoid Being Stuck in a Bind
- Communicate frequently with the seller. We should have explicitly asked him if anything was no longer in working condition.
- Avoid being forced to close - if we had our apartment for 15 more days, we could threaten to delay or threaten to walk away if they don't settle
- Every time an important date changes, make sure you know how that affects all the closing costs
- Ask the seller or the municipality about taxation policies and due dates
HGTV
I had never really watched HGTV until a few months ago. My Realtor said that would change, and he was right in a big way.
The programming is a mix of shows for homeowners and home shoppers. I assume it is an evolution - you watch the shows relating to house hunting, then once you've made a purchase, you are more interested in how to decorate and renovate.
House Hunters
You can probably guess what the show House Hunters is about. It tracks a couple who go see three different houses and discuss the pros and cons of each. At the end, there's a forced sit-down review where the couple makes their decision. Pamela and I guess which home they pick. It's amusing.
There's also House Hunters International which is the exact same, but you get a mix of US and non-US couples looking for homes / vacation homes around the world.
Be a TV Star!
Had I been watching HGTV before we began our own house hunt, I would have certainly applied to be on the show. You can find out about applying to be on one of the shows here.
We're definitely going to apply for one of the programs once we are in our house. Several are looking for NYC area volunteers. Wish us luck! Home buyers to bloggers to emmy winning TV stars!
The programming is a mix of shows for homeowners and home shoppers. I assume it is an evolution - you watch the shows relating to house hunting, then once you've made a purchase, you are more interested in how to decorate and renovate.
House Hunters
You can probably guess what the show House Hunters is about. It tracks a couple who go see three different houses and discuss the pros and cons of each. At the end, there's a forced sit-down review where the couple makes their decision. Pamela and I guess which home they pick. It's amusing.
There's also House Hunters International which is the exact same, but you get a mix of US and non-US couples looking for homes / vacation homes around the world.
Be a TV Star!
Had I been watching HGTV before we began our own house hunt, I would have certainly applied to be on the show. You can find out about applying to be on one of the shows here.
We're definitely going to apply for one of the programs once we are in our house. Several are looking for NYC area volunteers. Wish us luck! Home buyers to bloggers to emmy winning TV stars!
Thursday, September 29, 2011
Tips to Avoid Real Estate Scams
While we hopefully all know to avoid e-mails asking for money to release funds held in Nigerian, scam artists are trying new routes, both on and offline.
Avoid Anything Overseas
I ran into this one myself and actually followed along for an e-mail or two. We were looking for a new rental; both apartments and houses for rent. A seemingly normal Craigslist posting offered to rent a nice house for a low rate, but not astonishingly low rate.
I thought to myself, "well, this is possible, perhaps someone is downsizing or moving and looking for help with the mortgage payment for a few months". I looked up the address on Zillow and saw that the house was also for sale.
I e-mailed the poster and got a response asking for more information about myself including when I'd like to move in and other basic questions. To this point, the only red flag in my mind was that the asking rental price was low.
The next e-mail I received was a dead give-away. Poorly written, several woe is me stories about the missionary work this person was currently doing overseas in Africa, and then a request to submit a full application. The e-mail also said that upon receipt of my deposit, we'd be sent the keys. I didn't respond.
Flash forward to a few months ago. I mentioned this to our Realtor. He said this was a growing scam. Anyone can see which houses are for sale and possibly vacant. They can copy the pictures from the listing to make it seem like they do live there.
Another Realtor in his office had driven past a home he was selling and saw moving trucks. He stopped the people and asked what was going on. They explained how they were renting the house and so forth. He had the unfortunate task of informing these people they had been scammed and that the house was not for rent. They had to put their belongings back in the moving truck.
Go Straight to the Source
This might not apply to many people, but this was a frustration I ran into when I was renting in NYC. I found a post about an apartment on Craigslist. It sounded nice and the broker said there would be no fees. I actually knew the housing complex.
While it wasn't really a "scam", I met the broker on the street corner and he walked 25 yards with me to the leasing office. The leasing agent for the complex handled the rest of the process. I found out at the end that new renters either got $500 off, or $250 off and $250 to whomever referred them. Apparently this broker (and others) were making $250 a pop for the 25 yard walk.
Avoid Anything Overseas
I ran into this one myself and actually followed along for an e-mail or two. We were looking for a new rental; both apartments and houses for rent. A seemingly normal Craigslist posting offered to rent a nice house for a low rate, but not astonishingly low rate.
I thought to myself, "well, this is possible, perhaps someone is downsizing or moving and looking for help with the mortgage payment for a few months". I looked up the address on Zillow and saw that the house was also for sale.
I e-mailed the poster and got a response asking for more information about myself including when I'd like to move in and other basic questions. To this point, the only red flag in my mind was that the asking rental price was low.
The next e-mail I received was a dead give-away. Poorly written, several woe is me stories about the missionary work this person was currently doing overseas in Africa, and then a request to submit a full application. The e-mail also said that upon receipt of my deposit, we'd be sent the keys. I didn't respond.
Flash forward to a few months ago. I mentioned this to our Realtor. He said this was a growing scam. Anyone can see which houses are for sale and possibly vacant. They can copy the pictures from the listing to make it seem like they do live there.
Another Realtor in his office had driven past a home he was selling and saw moving trucks. He stopped the people and asked what was going on. They explained how they were renting the house and so forth. He had the unfortunate task of informing these people they had been scammed and that the house was not for rent. They had to put their belongings back in the moving truck.
Go Straight to the Source
This might not apply to many people, but this was a frustration I ran into when I was renting in NYC. I found a post about an apartment on Craigslist. It sounded nice and the broker said there would be no fees. I actually knew the housing complex.
While it wasn't really a "scam", I met the broker on the street corner and he walked 25 yards with me to the leasing office. The leasing agent for the complex handled the rest of the process. I found out at the end that new renters either got $500 off, or $250 off and $250 to whomever referred them. Apparently this broker (and others) were making $250 a pop for the 25 yard walk.
Blog Update - 1,000 pageviews!
Wow! Thanks to everyone who has been clicking and reading.
I wasn't sure if this blog would have 2 pageviews per day for a year, but I'm really pleased that people have taken the time to give a look. It's been a really fun project so far.
Please feel free to +1 this on Google+ or spread the word socially if you think this blog would be helpful to someone.
Leave me any comments if you have any problems, thoughts, or suggestions.
Anyone home shopping and want to guest blog?
I wasn't sure if this blog would have 2 pageviews per day for a year, but I'm really pleased that people have taken the time to give a look. It's been a really fun project so far.
Please feel free to +1 this on Google+ or spread the word socially if you think this blog would be helpful to someone.
Leave me any comments if you have any problems, thoughts, or suggestions.
Anyone home shopping and want to guest blog?
Tips for Checking Out New Neighborhoods Online
If you are moving from out of town or out of state, it can be a challenge to get a feel for a place you may be moving to. While nothing compares to visiting and talking to locals to get a feel, there are some good online resources you can use if that is not an option.
Virtual Stroll
Pamela and I used Google Maps and its StreetView functionality to actually see what "Main Street" looked like and whether it was inviting. You can do this by zooming all the way in on a map. Once you hit the final zoom, the map converts to a view of the street, which Google takes by driving cars equipped with cameras and GPS devices around town.
Forums
I found that the forums on City-Data were very useful. A lot of the questions you would like to ask have probably already been asked - "how are the schools? what is the nightlife like? what is there to do? pros/cons?". There is also a vibrant community of forum users who provide helpful responses very quickly.
Local News
Finding the local newspaper isn't always the easiest, but with a few good Google searches, you can probably be successful. Through the local news, I found out about local events and attractions and you can also learn about the key local issues such as upcoming tax hikes, crime, new developments, etc.
Search
"Where to live in ____".
Virtual Stroll
Pamela and I used Google Maps and its StreetView functionality to actually see what "Main Street" looked like and whether it was inviting. You can do this by zooming all the way in on a map. Once you hit the final zoom, the map converts to a view of the street, which Google takes by driving cars equipped with cameras and GPS devices around town.
Forums
I found that the forums on City-Data were very useful. A lot of the questions you would like to ask have probably already been asked - "how are the schools? what is the nightlife like? what is there to do? pros/cons?". There is also a vibrant community of forum users who provide helpful responses very quickly.
Local News
Finding the local newspaper isn't always the easiest, but with a few good Google searches, you can probably be successful. Through the local news, I found out about local events and attractions and you can also learn about the key local issues such as upcoming tax hikes, crime, new developments, etc.
Search
"Where to live in ____".
Wednesday, September 28, 2011
A Break in the Clouds
Our landlord is allowing us to stay in our apartment until Sunday night!
We had requested an extension when we first found out the seller wouldn't close before our lease was up. Our landlord said that they had already rented our unit to the next tenant, although they wouldn't be moving in that weekend. We were told that if the preliminary inspection of our apartment went well (no damage that would take time to repair), then we could potentially stay.
Hence, the drywall project (w/Montage!)
Today we were told we could stay until Sunday night. Now we only need to store our belongings and crash somewhere for one night.
So, here's a big Thank You to the Avalon White Plains - Time Well Spent!
We had requested an extension when we first found out the seller wouldn't close before our lease was up. Our landlord said that they had already rented our unit to the next tenant, although they wouldn't be moving in that weekend. We were told that if the preliminary inspection of our apartment went well (no damage that would take time to repair), then we could potentially stay.
Hence, the drywall project (w/Montage!)
Today we were told we could stay until Sunday night. Now we only need to store our belongings and crash somewhere for one night.
So, here's a big Thank You to the Avalon White Plains - Time Well Spent!
Buyer's Market; Best Deals in a Generation?
Bloomberg has an interesting article today arguing that the current property market may be the best opportunity in a generation:
How about this bold prediction:
People like the Matthewses who are able to survive the scrutiny of mortgage lenders are getting the best deals of the five-year U.S. housing bust, and perhaps the best deals of a generation, after a 31 percent decline in home prices since 2006. It’s the bright side of an otherwise bleak real estate market: Good houses at cheap prices are plentiful, while loan rates are hovering at record lows.
How about this bold prediction:
“It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,” said Dean Baker, an economist who in 2005 predicted a decline in the government’s home-price index that now is within two percentage points of his forecast. “Prices may go lower, but not by much. Even if they do, you’re still getting a good deal.”
Great time to buy - sure, but a no-lose situation?
There certainly are a lot of reasons why buying might be a sound decision right now, including rates and depressed prices. But let's not get going down the path of five years ago where everyday people were buying several homes with the expectation that they would flip them in a few years.
The economy is in the tank, and I predict it will get worse before it gets better. If your employer has been laying off workers, is it a good time for you to take on hundreds of thousands of dollars in debt?
The weak economy and layoffs also reinforce the foreclosure cycle. Layoffs lead to missed mortgage payments which lead to a foreclosure. That foreclosure can lower the value of other homes in the neighborhood and multiple foreclosures in the neighborhood can cause real problems. Mortgage holders who are current start to ask themselves if it is worth it to continue to pay a $500,000 mortgage when their house is only worth $350,000. This can lead to "strategic defaults" wherein a homeowner can afford to pay his/her mortgage, but chooses not to.
Where are we in the cycle?
Mike Shedlock at Global Economic Analysis updated the pictorial below in late August. The graph compares the US housing market's bubble and bust cycle to the cycle Japan experienced a decade ago. His most recent commentary was in response to a reader's question on when to buy and how far are we from the bottom:
As you can see, the housing bubble in the US (red text) follows a similar trend to the bubble experienced in Japan (blue text matching the prices on the left and dates at the bottom).
In his opinion, there are still many sellers who are at the edge. A slight push and they'll "Sell Before It's Too Late" which will compound the housing bust. I don't completely agree with this, although I am fearful that if we do enter a full-fledged recession soon, we may see this. My current expectation is for government support to keep the economy and housing market from collapsing, although I would not be surprised if we do technically re-enter a recession. My caveat is that if the Super Committee gets bogged down by political ideologies, the markets will tumble and uncertainty will abound. This will quickly reach the economy and the housing market.
Please note that in the above pictorial, the blue text highlights the psychology of home buyers and sellers. When the market is at its worst, participants believe "It's Better to Rent", while on the upswing, they believe buying is the best option. As I discussed previously, excluding potential appreciation of a home's value, I think the renting versus buying markets are priced quite similarly.
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