It Takes a Village to Buy a Condo
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It is an understatement to say the real estate market in America has been in upheaval since the bubble burst last year. But while foreclosures due to unemployment and subprime borrowing have been the scourge for many homeowners, and while the economy is in a stumble, for others, it is the perfect storm to start buying.
I am a first time home buyer. And I just bought a brand new condo in downtown San Francisco.
If I gained something akin to the American dream from the American economy going south, I don’t particularly take joy in it. In fact, having gone through the trials and tribulations of buying a condo, I can say with certainty that if it weren’t for my family and friends, it would never have happened.
First, here are the facts:
a) For first time buyers, there’s an $8,000 tax credit, part of the new stimulus package.
b) For those buying newly constructed homes in California, there’s an additional $10,000 tax credit. (The catch is that there’s a limited amount, so it's first come, first served).
c) The interest rate has been the lowest in decades, according to a Freddie Mac Survey.
d) Many San Francisco Bay Area homes are being sold 30 to 40 percent below the listed price from two years ago, and the new condo builders, caught at the tail end of economic boom, are willing to bargain. At one newly built condo with few buyers, a sales agent offered me $35,000 in home owner association credits if I bought a condo at the listed price, and that listed price has been reduced twice since it’s been on the market.
But perfect storms or not, it was hard going. Part of the problem was my own mentality. By any American standard I’m middle class, but I long ago resigned to the idea that I’d always be -- as long as I refused to leave San Francisco -– a renter. I lived for so long in the economic bubble that I was conditioned to believe that I could never own a home here. I took pride in having a rent-controlled apartment that was within walking distance of work. I watched as relatives and friends moved to the suburbs in order to buy something affordable.
Then my older sister, who works in finance, told me, "You’re stupid if you don’t buy now. The window of opportunity is open, so take it."
A few more lectures later, and I went condo-hunting. But the listed costs, even though they had fallen 30 to 40 percent, were out of my price range. Sister was not discouraged. She brought in an ex-boyfriend of hers, who’s into real estate development and property management. "You can go 30 percent below the listed price in some cases," he told me. "Bargain like mad."
"Are you kidding me? They’ll laugh in my face."
"It’s just business," he said. "And they desperately need yours, Mr. First Time Buyer." By walking without an agent, he added, I would be able to shave another 5 percent of the asking price.
Then he gave me the real estate prophecy: "San Francisco and New York are the last to go down, and will be the first to go back up."
That did it. With my sister as my de facto agent, I negotiated for a day or two (the whole process was terrifying, not the least of which was having to haggle over something into which I was throwing my entire savings), and I finally got the price range I aimed for.
But there was another problem: How could I come up with 20 percent down -- a sum that would wipe out my entire savings?
This is when my sister called my parents in Fremont. (We’re Vietnamese and nothing that has to do with real estate escapes us.) "We’ll help. We always wanted you to buy," said my mother in her usual dramatic way. "As long as you are buying a home, I at least can die with my eyes closed."
The next hurdle was applying for a big, big loan.
"We’ll cosign for you," my older brother, an engineer in Silicon Valley, offered. "We’ll throw in a credit line if you need it. You should buy."
Then came the terror of borrowing money: The condo’s preferred lender offered a one point rate on the loan and when the locked-in contract came a week later, it was up to 1.25 percent, the difference being several thousands of dollars extra. I smelled a rat.
So it was my high school best friend (also Vietnamese), a real estate broker, who walked me through it. "Bargain like mad with the loan folks," he said. "Most likely they are making around one point so there is room for negotiation. It's just how thick-skinned you want to get with them."
I got the one point. But three weeks in and my loan was still not approved. "Underwriter still reviewing it," was all I could get from my less-than-trustworthy lender. On the fourth week, they said there was a glitch with my 1040 form. A minor discrepancy, which was quickly corrected. Still there was no news. I began to loose sleep. I stood to loose my large deposit and my rent-controlled apartment. My family rallied. "We’ll figure something out. You won’t be homeless," my mother assured me. "You can come home and stay with us." At this point I began to pray for deliverance.
Finally, on the 29th day, one day before the deadline, the loan was approved. I signed the documents, wired the money, hired the movers.
Now I own a condo. "It takes a village to buy a condo," my sister wryly quipped. In this case, she wasn’t kidding.
NAM editor Andrew Lam is author ofPerfume Dreams: Reflections on the Vietnamese Diaspora.