This is the story of girl who cried a river and drowned the whole world.
We could discuss the psychological, moral and philosophical aspects of Megan McArdle's latest attempt to make her way through this cold, cruel world, but time is short and we're going straight for the
More Adventures in Home Buying
So, almost three months after we put in an offer on a house, we are still without a home. Without any home, in fact. We moved out of our rental in late July, because there had been a flood, and since we were scheduled to close on August 15th, it seemed to make sense to simply move out and let the landlord make repairs before re-letting it.
The "flood," which was burst pipes and was not actually an act of nature-gone-wild, took place around the 24th or so. McArdle and P. Suderman evidently decided that nothing could possibly go wrong with buying a house but everything would go wrong with getting the pipes fixed. They could have rented one of those monthly hotel suites--short stays in Washington seem to be a way of life for many government workers--but evidently they didn't want to spend the money. It would be so much cheaper to bunk with sis for a few weeks, even though that meant starting married life in less than ideal conditions.
We moved into my sister's basement for a few weeks.
Yeah, like that. Naturally everything went as planned for McArdle et al. in this, the best of all possible worlds.
McArdle is nothing if not predictable. But hey, we know that the market must be free to work and it tends to equilibrium and that people are rational actors who take every consideration into account when making economic decisions and that consumers always have all the knowledge that they need to make those informed decisions, so what could have possibly gone wrong?
The property we are supposed to buy had tenants. Though the tenants initially said they would move out by the first of August, that proved impossible.
McArdle says in the comments that she and Mr. McArdle were told the tenant would be gone, that the seller was working on it by offering the tenant money and there would be no problem with the closing, and "[t]here was no way to know this was going to happen until it did." But there was also no way to know that problems wouldn't arise. They usually do in unknown situations. Why McArdle chose to believe that she did not have to think about any negative consequences is beyond us but it is no surprise to see McArdle assume that everyone will do what she wants. She put off inspecting her car and mailing her wedding invitations until the last minute and complained vociferously when she finally realized that she had waited too late. It was the fault of the clerks or the government or liberal policies, never McArdle herself. The elite write the rules, they don't have to follow them.
We moved the closing to late August. Then to September first, because the tenants still weren't out. It wasn't that big a deal, so we didn't think[---]
McArdle could have stopped right there; the rest is just rationalization anyway.
[---]much of it--it can be hard to find a place, and while we certainly wanted to move in, we weren't in such a heroic rush that we couldn't give the tenants a little extra time to find a place. The tenants are recent college grads who'd been living in the place for four months, not long-term tenants who might have real trouble finding a new permanent abode. We had no reason to expect this to turn into a problem.
In other words, McArdle assumed that the seller, who had an ulterior motive to stretch the truth or lie to her, was telling the truth. We know McArdle had the same attitude in her professional work. We saw her marvel at the idea that bankers would lie to make enormous fees. Did McArdle have the same attitude while dating? "Of course I believe you when you say that the bra in the bed belongs to your sister. Why would you lie to me?"
We moved into my mother's spare bedroom, in order to give my sister and her roommate a break.
I think I saw this movie. It starred Hayley Mills and was a gritty slice of British working class life.
We were assured that the tenants would absolutely, without question, be out by the fifteenth, so we scheduled our closing for this past Friday.
For someone who makes a living by lying to the public she sure is gullible.
She says that a lot, doesn't she?
On Thursday morning, our agent, who had driven by the house, informed us of something strange: the tenant seemed to still be living there. We panicked. At 2:30, the worst was confirmed: the tenant was still there. Furthermore, the tenant, who had seemed happy to find another place, suddenly wasn't happy at all. In DC, tenants are entitled to 90 days notice before moving. They had been given that notice on July 1st. That entitled her to stay until the 30th, and on Wednesday night, she suddenly informed the agent that she intended to avail herself of that right.
Note that the tenant is availing herself of her legal rights. That becomes important later on and might be on the quiz.
I'm not going to take issue with the law itself--tenants should get some notice, and while maybe 90 days makes it too difficult to sell in this market, I'm not prepared to get into an argument about the platonically ideal length of tenant notification. Nor am I going to complain when someone makes a basic exercise of their legal rights.
Isn't the whole point of this post to complain about someone making a basic exercise of their legal rights? Yeah, I thought so.
However, it's a big problem for us. Our mortgage commitment expires the 27th. Had we known that she wanted the full 90 days ahead of time, we could have planned around it--finalizing our mortgage on a date that would give us leeway to close after she moved out. Certainly, we wouldn't have given up our old place, which is costing us a fortune in extra moving and storage fees, and has imposed a heavy burden on our relatives. Exercising her option at literally the very last minute has left us wondering whether we're going to be able to close at all.
None of us can predict the future and few of us can afford to learn only through hindsight, as McArdle seems to prefer. Therefore we consider all angles, even the ones we don't like to think about, make plans, and form contingencies. Hmmm, what could have McArdle done to avoid this problem?
We're not willing to close on the house while a tenant is still in it; we're worried that serving her notice that we intend to take occupancy will restart the clock on the notification, leaving us with nowhere to live. I don't really want to have to evict someone. Moreover, even if I did, eviction in DC, while possible, is extraordinarily difficult, including provisions like these: [snipped quote].
As you can see, if this drags out even a little, we could conceivably be forced to wait until spring to take possession; there aren't a lot of guaranteed warm, sunny days in DC in January. We're not eager to make a mortgage payment on a place we're not living in.
So McArdle didn't want to pay for a hotel and she didn't want to pay for storage fees and extra moving feels and doesn't want to pay for another appraisal. She wouldn't have had to but evidently she didn't want to pay for a lawyer to handle the transaction either. Savvy MBAs don't need to waste money on lawyers, do they? And everyone knows that "DC just doesn't seem to do that kind of stuff." In fact, McArdle's entire dilemma comes down to a question a lawyer can answer: Will McArdle have to wait another 90 days for the tenant to leave if she buys the house? Why did she would write this post instead of spend a couple of hundred to go over the contract with a lawyer and get answers to all her questions?
If we can't close, we'll be in a bit of a pickle. While I haven't compiled scientific data to back me up, my experience in going through the listings is that the housing tax credit grossly distorted the market. Almost anyone who wanted to buy, or sell, in the next twelve months, hastened to put their property on the market before April 30th. The market still clears--the few houses that are priced where the market wants to buy get snapped up immediately. But there are precious few of these. Most of the market, at least in the neighborhoods where we can afford to live, is the stuff that's hard to sell-- beautiful fixer-uppers that require more capital than we have, and overpriced places that won't appraise for where they're listed.
Then move to a cheaper neighborhood.
The rental market seems similarly thin, so we really don't know what we're going to do if we don't buy now. And moving in and out means added expense on top of the money we will have lost on the application process.
Do I regret it? Not really; you have to take some chances in life, and I did love that house. Still love it, and hope to live in it. We'll know in the next few days whether owner and tenant were able to come to some sort of agreement, or whether we have to start the process all over again. Wish us luck.
I do wonder what effect things like this are having on the broader housing market--either here, or in the country as a whole. A lot of people who needed to move and were underwater or close to it, ended up having to rent out their houses to help make the mortgage. At least in DC, however, this makes it harder to sell. Certainly, if we have to go back onto the market again, we'll be extremely leery of looking at any house with a tenant in it. That has to make it harder for the markets to clear.
As Megan McArdle goes, so goes the nation!
That's the end of McArdle's post but not the end of her story. In the comments we pick up a little more information, which the commenters slowly extracted bit-by-bit, like a dentist pulling a shattered tooth. It seems that McArdle's perspective house is owned by someone who "is underwater and lives abroad" and that
But Megan McArdle has learned several very valuable lessons: everything is someone else's fault, never pay for unnecessary services like legal advice, and the liberal government is trying to ruin a poor little gal's dream of owning a home sweet home.