The Art of the Deal
An up-close-and-personal look at one Pelham family’s two-and-a-half-year ride on the local real estate roller coaster
It is difficult to think of buying a house now without flashing on headlines about the mortgage crisis, foreclosures, predatory lenders, and hapless consumers. It’s easy to forget that there are still people who are successfully buying and selling homes—or trying to. Let’s take a close look at Tom and Becky Ross from Burbank, California.
Tom Ross, 44, and Becky Ross, 37, who have three children under the age of eight, had been kicking around the idea of moving to the East Coast from Burbank, California, for some time. The reason? Tom’s family has had a vacation house on Martha’s Vineyard since the 1940s. “The responsibility for it is coming to us and we want to spend more time there,” Tom explains. “Traveling from L.A. just wasn’t going to work.” Tom who is an underwriter for specialty insurance company, Axis Capital, which has an office in Manhattan, put in for a transfer in January 2005 and got the go-ahead. Now what? It was time to research the move.
The Rosses come up with a price range—between $800,000 and $900,000—and their requirements: an older home with character, four bedrooms, a usable basement, yard, and garage in a town with sidewalks. They know a house in that price range would need work. They factor this into their budget. The Internet helps narrow their search. “We eliminated Long Island and New Jersey, based on where my office was,” Tom says. That left Westchester. They gravitate to Pelham for its schools, 29-minute commute, and because “it seemed very quaint,” Tom says.
February 26, 2006
The Rosses call Barbara McCann of McClellan Sotheby’s International Realty in Pelham, who shows them four Pelham houses in their price range. When the Rosses return to LA, Tom’s company tells him the move needs to be postponed for a year. The couple stay in touch with McCann, who advises them to sell their house before they return to house-hunt. “Barbara said, ‘People won’t accept contingent offers,’” Tom recalls. They sell the Burbank house and rent it from its new owners for two months.
May 1, 2007
The Rosses return to Pelham, “highly motivated to make a purchase,” Tom says. “We came with money in hand,” Becky recalls. McCann shows them three houses. They are ready to bid, but take MCann’s advice and contact the Village Manager first to make sure they’ll be able to make the remodeling changes they have in mind.
May 3, 2007
Their $740,000 bid on a Cape Cod on James Street is accepted. “It had great space, great location,” gushes Becky. The initial asking price was $819,000, reduced to $779,000, then $759,000. They hire a ‘home inspector’ who finds mildew and asbestos in the basement, carpenter ants, an old leaky roof, and a broken oil-based furnace. No problem. But there is also an oil tank buried in the front yard, which the Rosses and their realtor assume the seller will remove (for well over $10,000) . The Rosses, excited, hope to close on the house by June 1. When the seller receives the contract, stipulating that he remove the oil tank, he rejects it. Deal off.
May 15, 2007
Becky, now alone in Westchester, considers a house on Manger Circle listed for $899,000 but doesn’t like the 1950s-style ranch: “I really wanted something with character and 1952 was not what
I wanted.” She looks at a few other houses, even some above their price range. “Tom said to me, ‘You need to go look in Larchmont, go to Mamaroneck.’ I said, ‘We need to up our budget!’ Then he would talk me down.” “They could have afforded more,” McCann says, “but they didn’t want to be house-poor. They were very smart buyers—they didn’t over-extend themselves.”
June 1, 2007
The Rosses rent, for $3,300 a month, a little red two-story clapboard on Hunter Street. Right away, the little red clapboard begins imparting its wisdom. “I really wanted a house with character,” says Becky. “Well, this 1902 house was full of character. And you know what it taught me? Character homes are really old. They have old wiring, old windows, they don’t have insulation, their doors don’t shut.” The Rosses start to give their priorities a rethink.
July 11, 2007
A house, built in 1953, on Roosevelt Avenue, which had gone to contract in April, suddenly comes back onto the market: the buyers failed to tell the seller that the deal was contingent upon them selling their two houses, and they have not managed to pull it off.
July 14, 2007
The Rosses see the Roosevelt Avenue house. The asking price is $785,000.
July 16, 2007
Their bid of $760,000 is accepted.
July 18, 2007
Back comes the inspector (at around $600 per inspection). “He said, ‘Wow, this one is in much better shape than that last house!’” Tom recalls. Still there’s two inches of water in the basement. No sweat: install French drains (a building device that redirects excess water) and move the downspout away from the house’s foundation. Yet, no contract materializes. “This is where it gets kind of nuts,” says McCann. She calls the office of the realtor representing the house and talks to someone who happens to represent the first buyers. She tells him what the situation is and what the accepted offer is. As it turns out, the Rosses’ bid is less than his client’s. If his client’s bid wins, his agency stands to make more money. “Instead of saying, ‘I can’t talk to you,’ he used the information to his advantage,” Tom explains. Fibs begin flying. The contract has been faxed, no it has been sent Fed Ex, etc., etc. The Rosses’ lawyer, meanwhile, “is hearing that the secretary for the seller’s lawyer broke her hip, and all these crazy stories about why we hadn’t received a contract,” Tom says. It then emerges that the attorney for the sellers never released the first buyers from their contract, and is still holding their down-payment check.
August 1, 2007
A contract for the Rosses to buy the Roosevelt Avenue house suddenly appears. “That’s the biggest no-no,” says McCann. “You can’t have two contracts out.” The selling agent has put the house back on the market, while legal issues with the first deal are still unresolved. To the further amazement of Team Ross, the seller’s lawyer sends a letter to the first set of buyers, telling them that they have until August 15 to close the deal. It becomes clear that the Rosses and their bid are being used to pressure the first set of buyers into action. No deal.
Barbara tells the Rosses about a two-story Colonial on Peace Street about to go on the market. “It had a great yard, four bedrooms, an attached garage, and it was right in our price range,” Tom recalls. “We were thrilled! So, when the house comes on the market, we go in, and it needs so much work.” Lots of water damage. The asking price is $899,000. The couple makes a lower offer “because we knew how much work it needed,” Tom says. They are outbid; the house sells for $905,000 to someone else. “We were heartbroken,” Tom says.
The Rosses begin looking again. They adore a corner house on Wolfs Lane, but the zoning codes won’t permit changes. They revisit houses, and look again at the house on Manger Circle. It has been on the market for eight months; the initial asking price has been reduced from $899,000 to $859,000. Becky says: “Our friends began to say, ‘You’d be amazed at what a coat of paint and ripping up the carpet can do.’” Though a 1950s ranch-house is not on their wish list, they do like the interior space.
November 18, 2007
They make an offer of $750,000 on the Manger Circle house. He makes a counter-offer of $849,000. Meanwhile, McClellan tells Becky and Tom that the seller has already turned down a $820,000 bid, “so you’re going to have to jump up.” So the Rosses raise their bid, and go back and forth with the seller in increments of $5,000.
November 27, 2007
The owner calls Susan Reddy, another McClellan broker, at 11 am to accept $805,000. “I wrote it down I was so shocked,” says Reddy. “What happens is, a seller finally accepts that this is as good as it’s going to get.” (The seller had paid $386,500 in 1996 for the house.) One incentive for the seller to accept was the fact that the sale could be closed in January. “One of the best times for people to bid on a house is November/December,” Reddy says. Sellers don’t want another winter’s heating bills. Re-enter the home inspector. “I thought you’d moved in somewhere!” he says at the reunion.
January 26, 2008
The Rosses take possession of their 2,484-square-foot, 1952 expanded ranch (with taxes of $20,830). They take out a 50-percent mortgage. They replace some walls and ceilings. They also replace the garage door. They stay in their rental house while the work is being done.
May 13, 2008.
The Rosses move into Manger Circle. “We love the space this house gives us and its functionality,” Becky reports. “I may not love this house yet…but I can see us building memories here.”