# My thoughts on the current real estate market



## StarRidgeAcres (Feb 19, 2012)

We recently learned that the home we lease (small farm house and 6 acres) is heading toward foreclosure. It wasn't overly surprising to learn since we've known for a while the owners are having financial difficulties. So we have to look for a place to buy. Although I knew it was coming, I'm still finding the process somewhat depressing. Dealing with lenders, seeing all the houses that are empty and losing value...it's just not pretty out there.

We started with lenders first so we'd know what price range to be looking in. I thought, going into this, that lenders had tightened their strings a bit and had become more conservative in what they'd lend. And I actually think that's a great idea. People do not need to be overextending themselves and when the lenders were allowing people to borrow more than they could pay for each month and allowing 2nd and 3rd mortgages and creating a whole population of folks that were upsidedown in their mortgages. But I'm sad to report that I think they are still up to some of the old (bad) policies. We both went to be pre-approved initially. They said together, our limit was $485k, or just Robert alone was $200k. I personally think both numbers are RIDICULOUS!




We have ZERO business buying a half-million dollar property. We'd be totally overextended, imo. Why in the world would a lender want their customer to be in a situation where they'd have difficulty paying? Isn't that what we (collective we) just got out of? And if Robert were just by himself, I think $200k is too much. I just don't understand.





So, we decided that since Robert is technically a first-time homebuyer, we will go with him getting the home in just his name. It means we can have several options open to us that we wouldn't if I'm also on it since I've owned before. There is one program that allows him to just put 3% down, another that allows for 5% down (as a seperate loan) and that loan is completely forgiven if he stays in the home for 5 years, an another means we have no PMI to pay. We haven't decided which way we're going, but there are some options and that's a good thing.

But the real driver behind our decision to look at properties that are $200k or less is that we want to keep our payment at $950 or less per month. That gives us the flexibility to pay it off in 15 years, instead of 30. I will be 60 and he'll be 48 and that sounds great to me! Also, if one of us should lose our job, we could still make the payment and not have to worry about losing our home. If we had a $2000 per month payment it would almost impossible to keep it up, for very long, if one of us lost our job. So why would a lender even consider that? I just don't get it.

The second part of this I'm finding depressing is the HUGE number of empty/foreclosed homes out there. To date, we have looked at 21 places. Of them, 19 were empty and foreclosures.



I find that SO depressing.



These homes were obviously loved at one time and now are running down, have the utilities turned off, some have frozen/broken pipes, some have been vandalized, etc. It's just so sad. They will need thousands in work to repair them/bring them back to life. One we looked at and really like its potential is a 3br, 3ba, 2200sf ranch, kitchen, breakfast room, dining room, living room and great room and a full/partially finished walk-out basement. The home has real hardwood floors and a great layout. The property is 6 acres with an old barn and a new (early 2011) Morton building with concrete floor (30x55) and also a pool. It is listed (the bank owns it) for $100,000. It will take, we estimate, $35k to get it livable. But where else in the world would we find all this for $135,000????



It's crazy. And there are TONS of properties out there just like this. The only difficulty we are having is finding ones with flat enough land for the horses and close enough for the drive to work. If those two things weren't considerations, we'd have our pick of just about anything we want.

My last thought comes from our agent. He is someone I met about 20 years ago when I also was a licensed Realtor. We've remained friends ever since. He is probably in his upper 60's now and is very successful, even in this market, in what he does. Sadly, he told us he doesn't think we've hit the real bottom yet and he also thinks the market won't turn around (completely) in his lifetime. That really bums me out. Things are already so bad, I just can't imagine it getting worse before it gets better.

So, now that I've thoroughly depressed the rest of you, what are your thoughts/experiences? Is it as bad in your area? Is this just a mid-west thing?

I'm excited about getting "our" place, but learning the banks really haven't changed their ways and seeing how despressed the market really is has made it kind of a bummer. I guess it's a good time to be a buyer, but it's so sad for the sellers. Many of the homes we're seeing have been on the market for well over a year....with no nibbles in sight.


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## Carolyn R (Feb 19, 2012)

A family member is currently looking to buy. He looked at a foreclosed property, but unfortunately the ten acres it was on was getting rezoned as industrial, making the home value gone down and the property tax go up in the end.

I know you don't have much leeway with foreclosed properties as far as making offers, the price is pretty much what it is marked at. They may look at offers that are close but tend to take forever responding to them, likely waiting for other buyers willing to pay the asking foreclosed price. The pipes in foreclosed properties are usually cut. This is so all the water is drained, they will not freeze, and I am sure there is a slew of other reasons, but it is common practice and usually a required procedure in a foreclosed property.

There are many foreclosed properties in the small towns around here, but very very few that have acreage and aren't in total direpair in this area.

Regardless, the loan procedures as far as proof of income and identity have tightened up significantly since his last home purchase but the allowance given for a line of credit when being pre approved was stll absurd.


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## Sonya (Feb 19, 2012)

If you have a good credit rating, then the bank will loan what they feel you can afford (they are not taking in account of other bills you actually owe for the most part)....thats how people got into the bad situations....people who make $50k know they can not afford a half a million dollar home, it's about being realistic and knowing your limits, unfortinately many felt 'well the bank gave it to me so I can do it'. I really believe thats an attitude that got people into thier bad situations...this attitude did not exist a dozen years ago....my mother who is now


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## Sonya (Feb 19, 2012)

....my mother who is now 70 just said recently that when her and my father bought their first house many moons ago that the bank was willing to loan them over $80k on a salary of $15k, they knew with three kids this was no way realistic so instead they opted for a $28k house and still struggled but they made it....I do feel sorry for those who have lost their houses (especially those who have lost their jobs) but many were not thinking realistically...I would never think of taking on a mortgage more than twice my salary, but people do it and then they are surprised when the numbers don't work. Its basic math. On the up side for you this is a buyers market, and your purchase helps the economy, you will be able to get a great deal if you play it right. Good luck, hope you find the place of your dreams. (sorry this is two posts, working on a tab that I am not real good with)


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## izmepeggy (Feb 19, 2012)

Why not try to buy the house you are currently in.It would help the (now) owners and you may get it at a good price.Plus, you wouldn't have to move.Just a thought.


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## StarRidgeAcres (Feb 20, 2012)

We did briefly consider buying the home we're in now. However, it doesn't look like that is a viable option. The current mortgage is assumable, but the amount owed is $70k more than it's worth. The owners have asked their lender about a short sale, but they were told no. It's heartbreaking for them I'm sure. And probably very frustrating as well.


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## Marty (Feb 20, 2012)

These banks and lending institutions are setting people up for failure. I cannot believe the way things are being done. What the heck are they thinking! They are helping desperate people get into debt.

I wanted to sell our 15 acres in the valley but we wouldn't get nearly what it was appraised for so we're sitting on it and working on it for the time being. Hus wants to sell our mountain home but same thing, we may not even get what its appraised for either right now so we're in a holding pattern. Our plans are flexible because I'm not about to take a bath on either place.

There are foreclosures here too and its a buyers market. You'd get exactly what you wanted here for a song right now. On the other hand, Amazon, Volkswagon, and a couple other very large companies have located to Chattanooga with pilot offices this way so people are flocking here for work and to buy property. Gads we're even getting two new fast food places too! Homes are being built which is keeping my son's company busy so I think things are going to be breaking loose pretty quickly in my neck of the woods.


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## Marty (Feb 20, 2012)

If you want the mortgage in Roberts name only, be sure you have your name put on the deed. Heck, I can't even get a phone in my name because all the bills are in Hus's name only. Also do check out an FFA loan. I think its call FFA ......


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## StarRidgeAcres (Feb 20, 2012)

Carolyn R said:


> but the allowance given for a line of credit when being pre approved was stll absurd.


This is what has blown my mind also! I agree it is up to each of us as individuals to make sound decisions and not get into more than we can handle, but I think it's still too lenient to allow people to buy at 2X their salary. Or more. If you make $100k per year, I think a $200k home should do you. Maybe it's just me. I think with Robert, based on his age, never buying before, not having a lot of credit, etc., they were fairly close to where they should be. But when he got the approval letter, they told him this is the "low" end. You can actually get more if you wish. Seriously? He's technically "one" person in this scenario and he shouldn't need more. The loan person said just come back when you've found a place you want to put an offer on and we'll provide you with the "real" letter at that time.


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## StarRidgeAcres (Feb 20, 2012)

Marty said:


> If you want the mortgage in Roberts name only, be sure you have your name put on the deed. Heck, I can't even get a phone in my name because all the bills are in Hus's name only. Also do check out an FFA loan. I think its call FFA ......



Yes, Robert's name is the only one that will go on the deed. Once we're married (after we buy) we'll both be on it. And I think you mean FHA? That is one of the options he's been offered. The loan for the repair/updating/remodeling on a foreclosure is a 203K I believe.


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## StarRidgeAcres (Feb 20, 2012)

Some additional anecdotes...

The home I lived in when I was married was purchased by me only (my husband wasn't working outside the home) in 2003 for $242,000. After we moved in, we got an equity LOC to finish the concrete work ($10k) and some finish work in the barn and also the floors on the main level of the house). When I sold it in 2009, I let it go for $218,000 and owed $216,000. It was purchased by a young couple who have since lost it to foreclosure. I looked it up recently and it's now for sale, by the bank, for $149,900. How sad is that?





Another story... A friend at work purchased her home 3 years ago for $270,000. Her husband recently lost his job so they would like to downsize. Plus she is in her late 50's and doesn't want to work for the rest of her life. She had her home appraised two weeks ago by an independent appraiser, so there was no "number" to hit for mortgage purposes, just the real number. It appraised for $199,000. She owes $201,000.





And my last one for the night. (I need to stop thinking about this because it's making my blood boil!) My work "husband"



Doug recently came into some money through an inheritance. He paid off his home with it. He lives in a cookie-cutter subdivision (I can't STAND those!). He bought 4 years ago for $344,000. He owed $250ish. He paid the balance. The identical home to his, in age, floor plan, finishes (with the exception of no granite), etc. is still being built today in another section of his subdivision. It's being marketed at $199,000.


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## Norah (Feb 20, 2012)

In the next year or 2 I would like to buy a little ranch , with 5 acres somewhere in the uSA , where there are no earthquakes or tornadoes ( sorry Kansas, and California ) no large reptiles that would eat my chihuahua either , sorry Arizona . I live over seas , and toy with the idea of renting it out to someone very responsible at a great price to keep it up . I would like to retire in 15



or so years from now , and move there . Is this a crazy idea? Are there people out there that would nurture a farm , keep it in order , fix the small things , and call for assistance on the bigger things and be honest , not ruin my place ? It would be a win ,win , situation for both of us .


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## MountainWoman (Feb 20, 2012)

We have a large 300 acre farm in Vermont. Just a few years ago, we could have probably sold it within a month for top dollar. Now, we'd have to virtually give it away. The market is stressed in this area and not much is selling. We also have a ranch in South East Missouri which we tried to sell but even at a giveaway price, just no interest. One person looked at it. Our agent there says lots of people are looking but not much actual buying activity. On the other hand, I think it's a great time to be a buyer. Prices are so soft and lots of people are willing to negotiate so there are some fantastic deals out there. It's very sad to see foreclosed homes and to think of all the sadness and turmoil in people's lives. I'm not talking about people who were flipping properties for profit but people who had homes they just couldn't hold onto any longer because of job losses. Very sad. Kind of reminds me of the auction thread on the main board with so many horses losing their homes as well.


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## Minimor (Feb 20, 2012)

In this area housing prices are good. Very good. There is a housing shortage in town so everything is selling at premium price. Anyone who bought 20 years ago or even 10 years ago could sell now for a huge profit. People who bought new homes 2 to 5 years ago are selling now for sizable profits. Even rural properties--anything within 30 minutes of town (I say town but it's really a small city) is selling high. If you go further out, to some of the smaller communities or acreages that are 40-60 minutes out of town then you will find some more reasonably priced homes.

When we purchased this property in December 1985 the 5 acre lots in this subdivision were selling for around $8500. When the lot next to us went up for sale in the mid 90's the guy was asking $12000, which we thought was too much. We were stupid--we should have bought it for that price. Now I'm told that 5 acre lots here have been selling for $35000 and $50000. Unbelievable!


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## Flying minis (Feb 20, 2012)

Here houses are not depressed, more of a "normal" market I guess, not super high, but still selling, and not a lot of foreclosures. BUT, farmland is insanely high priced! Ethanol and the subsidies that are allowing it to be profitable have taken corn prices so high, that farmers are flush with cash, and willing to pay top dollar (and then some) for farm land. We rented my husband's aunt's land (20 acres), when she passed, the family sold it - but wanted more money than we wanted to pay, so we helped a neighbor get it at $5500 per acre. Since then (last October) land here is now selling for $10,000 / acre OR MORE. A 200 acre farm not far from us started a bidding war between two neighboring farmers and went for $20,000 per acre at auction a month ago.

We toyed with the idea of buying an investment / winter property in Georgia last winter, and in fact I looked at several places on a business trip to Atlanta, but we decided the whole "absentee landlord" thing was going to be more work and worry than it was worth - although I have to say, there were some pretty sweet deals on horse properties there at that time.


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## targetsmom (Feb 21, 2012)

Around here there are a number of foreclosed properties, including one about a mile away with a huge house, several acres, run in sheds, several turnouts, 11 stall big horse barn... and an indoor arena that collapsed this past year under the snow. That is common around here that collapsed farm buildings haven't been fixed to add to the problems. Very depressing. We consider ourselves very lucky that we were not-overextended, so when my husband lost his job last year we have been able to manage and even re-finance at a much lower rate. And even buy another mini!

Here is something to think about - when I was 26 years old and single (back in 1971) when it was almost unheard of for single women to buy property, I purchased a house on 2.5 acres to have my horses in my backyard. The cost - $19,900, and that mortgage rate was about 7 1/4%. Even in this horrible market, that house must be worth at least $200,000 today. The guidelines in those days were to pay no more than 2.5 times your annual income for your house. I think it might be a good thing if those guidelines were revived - or ANY guidelines at all.


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## sfmini (Feb 22, 2012)

I haven't checked in our area but I imagine land prices are going up in a big way. I know there is no way we would let our place go unless it was a huge offer as we are sitting on top of the Utica Shale. Gas leases are going up in price, around $5,000 per acre and the owners also get royalties for any gas or oil taken from their property. We are part of a large group that has banded together and hired a lawyer so we can get prime dollar in leases and also make sure we have very tight contracts in place to protect the environment from any "mistakes" made by the oil company.

We will see how it shakes out, I have hopes (but like Charlie Brown and Lucy with the football, don't want to fall on my butt counting on it).

I will be eligible to retire in about 4 years (actually could now at a reduced rate), but can't afford to keep up our lifestyle without this ship coming in. Otherwise I keep working.


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## Genie (Feb 22, 2012)

Southwestern Ontario rural properties are selling around 10,000.00 per workable acre.

A 100 acre farm on the edge of Clinton, a neighbouring town sold for 1,100,000.00 to the adjacent farmer with a dairy quota.


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## Jill (Feb 22, 2012)

You know, I think things have become a ridiculous mess, in part because the Government was mandating that banks give the American dream out for pennies on the dollar... I used to be a mortgage loan officer, in the early - mid 90's, but it was for "the" home town bank. It was 20% down, none of which could have been borrowed, and strict debt to income ratios. My first 3 questions were: How will you pay us back? How will you pay us back? and How will you pay us back?

People were NEVER late on the payments. H and I have a LITTLE house, like 1600 square feet MAYBE. Still, what do we do? We use the living room, kitchen and bedroom. Have 2 bedrooms and a Florida room we don't use at all and the dining room... I think I ate in there 1x twelve years ago -- in other words, small but more than what we "need" or even use. But, regardless, I love it... Little 1950's red brick Sears home





This is "all" we have. Could have more, but why sweat it over rooms we wouldn't even use? Plus, who wants to spend too much time INSIDE a house when horses are outside?


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## BBH (Feb 22, 2012)

I have been reading this with alot of interest. We bought our place in 1982...The real estate agents kept telling us we could afford xxx.xx for a monthly payment.....we knew what we could afford and stuck to it. We were able to buy this due to a divorce, paid just the market price at the time, had to get a 2nd mortgage to make up some difference and the interest rate was 18%...and we considered ourselves lucky......we refinanced about a year later to put up a barn and the interest rates had fallen so much in that year that the payments were less but we had a barn. Yes the house is small, but it is only the two of us....and yes we spend most of our tme outside when weather is decent. And i hate to clean.....so it all worked.

Whole point is the real estate and mortgage market is a mess.......buy what you can afford and be able to sleep at night. My husband was laid off in Sept. still looking for job and we are doing fine, yes we have cut back but we are okay......


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## StarRidgeAcres (Feb 22, 2012)

I appreciate all the responses. I'm learning that the real estate market must be better in some areas than it is currently is southeastern Missouri. And for all of you I'm happy!

But if I had to sell a place right now in MO, I'd be devastated! The values have dropped considerably, although some would say it's simply a correction to the over-inflated prices of the last ten years, but it's horrible. The people who can afford to "wait it out" aren't getting any bites and those that have to sell are seeing their asking price go down by 40% or more. We've literally looked at a hundred properties online (via Realtor.com, zillow.com, homepath.come, foreclosure.com, etc.) and on those sites you can see a price history in many cases. I know that over half of the homes that have been on the market more than one year have dropped by, or close to, 40% in asking price.

The home we really want, but are having to sit on our hands, is a 1800sf, 4 sides brick ranch, 3br, 2.5ba, 5 acres, 2 car garage and an extra 2 car garage used as a workshop, plus a tiny shed. It's solidly built, but 35 years old so it needs updating: kitchen, baths, etc. It has been on the market for 470 days. They started at $249,900 and are now down to $169,000. We started negotiating and our last offer was $160,000 and theirs was $165,500. We couldn't get any closer. Will we just give up and pay the extra $5,500? We might. But sadly, based on what else we see, it's really only worth the $160,000 (or less) of our last offer. But yet it's a lovely home! We just don't want our emotions to dictact our actions and we end up paying more than something is worth just because we love it.

And one last note, we got a call from one of the mortgage places last night "encouraging" us to look at properties in the $300-$350k range!




Since when did mortgage companies solicit business like this? We told them to take a hike and we certainly won't be using them when the time does come. To me, it looks like all the law suits, foreclosure disasters, and financial crisis news has done little to bring a dose of reality to these big mortgage companies.


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## muffntuf (Feb 22, 2012)

Did you ask them "Did that $350,000 property suddenly go down to $160,000? If that's right, then I would gladly look!" LOL!

The real estate market is horrible. UP here the state decided to re-value all our homes. I took a huge hit for what the state thinks my farm is valued at to what my mortgage says. AND they increased my taxes.

It will be awhile before I can make any kind of moves.


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## StarRidgeAcres (Feb 25, 2012)

Well, after reviewing MLS info, pictures and driving by another 23 homes the last two weekends (I've put hundreds of miles on my car since we have such a broad area we're willing to look in!), and we've seen nothing that makes either of us go WOW. So we are putting another contract (offer) on our original choice. We're going to meet their price, but ask for a 60 day closing instead of the 30 they wanted. At 457 days on the market, one would think they'd be willing to accept this.

Please keep your fingers crossed for us!


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## dgrminis (Feb 26, 2012)

Good Luck!!! I hope it works out for you both!


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## REO (Feb 28, 2012)

Any news Parm??


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## StarRidgeAcres (Feb 29, 2012)

Thanks for asking Robin. You are always to sweet.





It's been pretty stressful and of course hindsight is always so clear, but I wish I had just followed my gut, and not my heart, and walked away earlier.

We have an "accepted" contract, albeit very much under duress on their part. I won't drag out all the details, but I know FOR SURE they do not want us buying the home due to the horses. The family members that still live on the street do not want them and they've said it outright to their agent, she told our agent, our agent said "well then their asking for a lawsuit because they don't have the legal authority to not sell on that basis." About 20 mins later they accepted our offer (which was exactly the dollar amount they wanted.

So now we are "stuck" having to pay $1005 for the five inspections which are tomorrow. And I know it's wasted money because there will be things wrong, it's a 37 year old house. And if we ask for even 5 cents in assistance toward fixing anything, they will just say no and we are out $1005. But we legally have to go forward as we now have a binding contract.

I wish I had followed my gut. I knew from the first moment we looked at the home and it was "shown" to us by a family member and not the agent we were in trouble. These people just can't let it be.


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## Tab (Feb 29, 2012)

I think that the lenders take advantage because the buyers aren't savvy at all. When a buyer is approved for $XXX,XXX It flatters them into thinking they can spend that much. I was one of those in the not savvy category. I had NO sense when we were looking at our first home. I want to go back in time and slap some sense into myself. We were pretty desperate and needed a place for ourselves, our young baby, and the horses. I feel we settled because we were desperate. We may have missed out on the promised land because of our haste. Don't do that. What have I learned in the process? Stop and breathe. Whatever you are pre-approved for, go under. Go WAY under. Stay away from first-time home buyer government loans (er, gimmicks, like the plague), look for reputable lenders, avoid anything that looks "too good to be true" and find a low, fixed interest rate. Save a big down payment. We just should have looked around and researched more, started smaller and maybe upgraded.

In hindsight, Rog and I could have put more money into our kids and more FUN together, had we not settled on what we did. Life is good when you can work hard but be able to afford to do what you want with your loved ones when you aren't at work. What Jill says is true about their small Sears home, and I think the people that are making it are the ones who either rent or own below their means. Those giant subdivisions are disturbing to me. I am not an environmentalist, but I feel that some thought should be put into space efficiency and family size. They really don't make very much sense. They are big but are often built cheaply.

Enough ramblings, hope some of this made sense!


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## Sonya (Feb 29, 2012)

I wouldn't say you are stuck...if there are repairs that need to done and they don't do it, you can still get out of it...real estate people correct me if I am wrong...when I put in an offer on our house/and it was accepted I believe it was still congigent upon inspection...


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## susanne (Feb 29, 2012)

Parmela, I think eating the cost of the inspection is far preferable to being stuck for the long haul with hateful neighbors.


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## REO (Mar 1, 2012)

I agree with Susanne! UGH! Even if all goes well and you move in, if they are hateful people (and it sounds like they ARE outspoken and have a nasty tinge) they may make your life h3ll to live there. You don't need them calling animal control or complaining about your horses all the time or them throwing bad things over the fence.

Can you walk to their front door and talk to them face to face? Maybe they'd change their minds when they know more about minis?

Nice new life starting! You deserve only good things and happiness!!!!!!!!

Love you Parm!


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## KanoasDestiny (Mar 1, 2012)

We went through four different escrows before we finally bought the place we are in now. Long story short, we had trouble with one shortsale, didn't get bank approved for another property which ended up having mold, and we backed out of the other two because of we reached a point where they just didn't 'feel right'. Needless to say, we lost out on alot of escrow money. But this place was well worth the wait, and not settling or getting stuck in a situation we would have regretted. At any point, you can back out of the agreement/contract. The only downfall is that you would then forfeit the earnest money and anything you've spent for inspections, which may be worth it in the longrun if you're neighbors might be a problem in the future.


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## Jill (Mar 1, 2012)

I've got my fingers crossed, Parm!!!


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## StarRidgeAcres (Mar 2, 2012)

Well, inspections were yesterday. The summary is:

New roof absolutely necessary "prior to closing" per the inspector.

Termite damage, due to how "finished" the basement is, we don't know if it's active or not.

Septic system needs new motor on aerator.

Well head is above ground and must be below ground here.

Electric furnance, central air and hot water heater are ALL 37 YEARS OLD! Oldly, they all still work.

Wood burning furnance is over 20 years old.

We meet tomorrow to decide what we are going to ask for - repairs and/or money.

We talked to a neighbor yesterday, that isn't one of the family members, and they have horses and goats. They said the people are way more bark than bite and just want to make sure their property values aren't diminished. He said if we keep our fences in good shape and our horses in good condition and don't junk up the place, we won't have any problems with them.

These pictures were taken from the public website, zillow, so I don't believe this is breaking any rules. We really love the house, even though it's dated, because we feel like it has good bones and lots of potential. I wish this was going easier.


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## chandab (Mar 2, 2012)

I hopeit goes well for you. I like the looks of the house and it sounds like one neighbor would be good.


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## REO (Mar 2, 2012)

Ooh nice!!





Our first house was built in the 60's. And this one is 100 years old.

I'm glad to hear that family won't be a bother! whew!

Good luck Parm!!!!


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## dgrminis (Mar 4, 2012)

The pictures look great... Sounds like it does need some work though... Hopefully you will be able to work something out...


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