28 October, 2014

1209 North 46th Street, Seattle, WA 98103 (and the giant apartment building that will soon be behind it)

This would have been our new address, in the coveted Wallingford neighborhood.

1209 N. 46th St.
Seattle, WA 98103

Listing Agent: Paul Isenburg from Windermere.

That would have been the address on all our mail. If we hadn't backed out of our offer to purchase the home. Instead, it will be someone else's new home, receiving someone else's mail.

Let me tell you how that happened just a few weeks ago.

The opportunity was better than we'd expected to find. We were looking in Phinney and Ballard, and then this one popped up, and the price looked good, so we figured we'd take a look. It had just come on the market October 15th, and there couldn't have been many people to see it. From the curb it was not the most attractive place, because it had a flat roof, which didn't really fit in with the rest of the neighborhood, but the inside was quite charming. We'd been looking at homes for a few weeks, and probably seen 15-20 places. I have some experience from past searches, too, and we'd looked online a lot. So we knew this was somewhere high on the optimization curve for price versus quality and location.

The inside of the home was really nice, and I almost immediately found myself looking for reasons to get to "yes." Long story short, we decided to make an offer on the home that night. We started the paperwork with our realtor for a full-price (actually a little bit over) offer. Our offer was $475,000 and the asking price was $469,500. We figured that if there were no other offers then it would look appealing enough that perhaps they wouldn't wait to accept it. That was an unusual thing about this home. The sellers didn't do the usual Seattle procedure of waiting 5-7 days to review offers, which results in craziness like escalator clauses, waived inspections, etc. There was a chance we might have it easy.

It was almost that easy. There was one more offer, which meant we did need to add an escalator clause. We didn't waive the inspection, because there was no time to pre-inspect. After a brief review period, our offer was accepted. That was on a Thursday. The accepted price was $494,600 because that was $3,500 above the other offer's maximum price on escalation.

We weren't able to get an inspection scheduled until Monday morning, but we decided to stop by the house over the weekend with the realtor and take another look. I managed to talk to two of the neighbors. One, a Japanese woman, to the right of the house, told us she'd owned it since the late 1980s and was about to sell her home because she didn't feel like commuting from Redmond to keep up the property, which she'd been renting. The other woman had purchased her home less than a year ago and was living two doors down on the corner. She also wasn't in her house because she was having remodeling done. They both seemed nice, and were apparently friendly with the current owner of the house we were buying.

The neighbors were nice, and they had nothing but good things to say about the neighborhood. I learned from the Japanese woman that there had been a problem with a portion of the sewer line that was shared between what would be our two homes. She and the current owner had repairs done on this in recent years. Interestingly, this was not disclosed on the disclosure forms. I should mention that the only thing that was disclosed on the Form 17 was that there was a sump pump in the garage to deal with a problem from before the previous owner had bought the house. Otherwise, the Form 17 looked squeaky clean.

Oh yeah, I should also mention that the seller's agent was named Paul Isenburg. He's an agent with Windermere on the other side of Lake Washington.

I took a walk around the block, and noticed that the small business, a medical office, which was located directly behind the house had signs in the window about "No Cash. No Drugs." Presumably that meant they were either the victim of break-ins, or were worried about them. I wanted to ask about this, but it was the weekend and the offices were closed. The signs looked quite old, so it probably was ancient news. We'll come back to that in a moment.

On Monday, we had the inspection, and it turned out there were a number of major issues with the house. Roof problems, needing replacement. Water problems. Venting problems. Settling problems. Sewer problems. The sewer problems varied in severity from a couple of small cracks on the property, to a large offset in the sewer, located almost all the way to the sewer main, which would require digging up Midvale to repair. This was identified by the guy who did our sewer inspection and, interestingly, there was already a marker on Midvale Place in the exact location he identified, made by some previous sewer inspector, perhaps done when someone else in the neighborhood had the sewer inspected in past years.

There were other issues with the house, which I won't bore you with. All told, we probably were looking at needing to ask for somewhere in the ballpark of $15,000-$20,000 in concessions from the seller to address the problems. We learned this over the coming 2 days of extended inspection period, which we'd requested to allow time to get some bids from contractors. It felt a bit daunting, and we also had doubts as to whether the seller would be willing to compensate for these problems.

But it never came to that.

On one of the mornings where we were getting bids for the repairs, I decided to take another stroll over to the medical offices to see if I could chat with anyone there. The offices were open, and I introduced myself, and said "So what's the neighborhood like? Have you ever had any problems with crime or anything?" They told me about some break-ins in the past, which didn't sound too worrisome. But the next thing they said was "You know this building's being demolished and they're building a 33-unit, 4-story apartment building, don't you?"

Stop the press.

"Um... no... can you tell me more?"

So it turned out that the medical offices were sold (after the building had been owned by same family for 3 generations). They sold because of a water leak in the building that they couldn't figure out. They sold to a developer, and the deal had already closed, and the permits had already been approved (as in "Proposed Land Use Actions"). There had been signs posted in the neighborhood for months about the project. And those signs had been removed just a few days earlier. Just before the house went on the market (coincidentally?).

So I didn't know about this when I made the offer. And the seller didn't disclose it. And the neighbors didn't disclose it. And, of course, Paul Isenburg, the realtor from Windermere, didn't disclose it (not sure it's his responsibility to do so, and it's also not out of the realm of possibilities that he didn't know, although given the timing between the notices and the start of the listing, it's unlikely).

We tried to get our heads around what it meant. How bad would it be? There would be construction. There would be a big building. There would be more people. Would there be a privacy problem? Would it block the light from our house or our yard? How long would construction last? What would happen to the parking in the area?

We called the architect's office. They were very nice, and told me some info regarding the project and the proposed dates. They gave me the developer's number, so I called them too. The developer gave me more info. I found out that everyone in the neighborhood knew about the project, and that the people on the neighboring properties had all corresponded or met with the developer. So this was not a case of "We didn't know." In fact, I learned from the developer that one of the neighboring land owners (whom I had met) had tried to sell her house to the developers! (they weren't interested)

We learned in the development plans that this would amount to 1 year of construction starting next summer that would yield a building that will block 100% of the light from the house for a portion of the year, and 100% of the light from the back yard for the majority of the year. Not so great for gardening. Not so great in a city that already has a sunlight shortage. We also learned that the building would have no parking, so any cars associated with these 33 units would be spread throughout the neighborhood.

We decided not to buy the house. Thus, we lost $700 for the inspections we did, and we wasted a bunch of contractors' time giving bids, our own time dealing with the offer and inspections, and our agent's time. Worst, we got our hopes so high for something that we never would have even considered if the facts about the project had been disclosed (which, technically, they should be on the Form 17 under the topic of "Notices or permits affecting the property"). But sadly, it's apparently a well-known fact now that the Form 17 isn't worth squat as a legal document, and there is basically no recourse for people who get screwed, even in far more explicit fashion.

I wrote a polite letter to the seller after we rescinded our offer, explaining to her why we decided not to purchase, and imploring her to disclose this so that the next buyers don't blindly end up walking into the nightmare that we almost walked into. She never replied to my message. I am not surprised. Doing so would admit culpability, and addressing it would cost them potentially lots of money (though, in fairness, I do not know what they will decide to do... maybe they've disclosed it now... if so, then I will at least offer them kudos for the change of heart). My realtor contacted Paul Isenburg from Windermere to explain the reason we backed out of the offer. Paul Isenburg never responded after that. Again, this doesn't align with the "benefit of the doubt" that they didn't know since, had it been completely news to them, we might have heard a reply indicating their surprise as well.

The house was back on the market the day we rejected the purchase. And the house was back to "Sale Pending" status by the end of the weekend. I don't know if the people who bought it were given the facts about this construction project that will be occurring at 1240 N Midvale Place, Seattle, WA 98103. But I really feel for them if they made the purchase unaware, or if they find out too late, and end up trapped in a decision that they don't want to be in.

This is my disappointing story about real estate. Caveat Emptor is in full effect. And you can never be too careful when making such a huge investment. I seriously recommend that you don't waive your inspection period if you can avoid it. Or if you must, to compete with other offers, make sure you walk the neighborhood and ask these questions before submitting your offer. And ask lots of people. The first two people I spoke with told me nothing of the project, perhaps because they didn't want to ruin the sale for their neighbor (or for the sake of their own future sale plans).

Furthermore, a friend of mine who happens to be an attorney pointed out that, although Seattle is a city that tends to do all its real estate transactions between agents and escrow companies, sans attorney, it is highly recommended that you have your attorney look over your documents, just to make sure everything looks legitimate.

We got lucky to escape what would have been a major headache. It cost us $700 that I really wish we hadn't lost. But the most painful part was losing the opportunity to have a great home in a great location... because the location wasn't as great as one would think.