The bad news is just piling on, perhaps so heavily my dream has already been buried. The appraisal came in at $460K -- yikes -- which is $75K less than the price I signed off on. And this was provided by Rusty, the cute red head who clearly appreciated the uniqueness of the house. The truly bad thing about this is at that value I could never remortgage the house for enough to pay off the seller's loan, never mind get some extra $$ out of the loan to pay for further repairs.
In addition, it's clear the city sees the house as having only two residential units plus the commercial space, meaning the two small apartments are supposed to be one larger one -- the present owners probably split it in two sometime over the past thirty years, without mentioning it to the city and, in doing so, getting a legal building permit. Or, who knows, maybe some else in the litany of owners over the past hundred years chopped it up that way -- it's impossible to know from the microfiche pages of permits and complaints and petitions in city hall. The only thing I do know is that the house, in addition to its view, has an extremely colorful, and somewhat shady, history. In any case, according to Ann who I talked to at the city on this visit, while the fact that the actual house doesn't match the city's records doesn't definitely require me to turn the two apartments back to one -- but it does mean I'm up for reams of paperwork, applications, delays in review, etc., which all simply means $$ to me.
The final blow was my meetings with the two contractors -- my old acquaintance Nick and Scott, the guy who has done work on Nikki's house. On the plus side, they both said approximately the same thing about what needs to be done to convert a big chunk of the commercial space into an apartment -- lots and it won't be easy, but it's not impossible and could look cool. So at least the problem is clear. But on the other, not so happy, side... they both said approximately the same thing about the costs of these renovations -- more than twice as much as the commercial real estate broker had suggested to me. (Nikki thinks that guy was blithely quoting a price for an already cleaned up space.) Nick's price was around $60K and Scott's around $100K -- a very wide split but I suspect it would end up in the $80-90K neighborhood, particularly if I used Nick.
So why am I not totally depressed? Probably because I feel like a gigantic weight has been lifted off my shoulders. I obviously can't buy it for $535K, and probably not even for $460K. So I will either not buy it at all -- which may make me (very...) sad for losing my dream house but immediately blows away the financial stress I've been under. On the other hand, if I do still manage to buy it, for MUCH less money than I've got on the table now, I might even be able to do all I want to it and without losing any more sleep about the future of my bank account -- a thought that was further confirmed by Jim, the banker, in my call this afternoon. It sounds like he could help me with an additional loan if the numbers work, which I guess is what you would expect a banker to say.
So tomorrow Nikki and I meet to regroup. It's hard to imagine the sellers will agree to cutting another $100K+ off the price -- I suspect they will be hurt and angry, which is understandable. On the other hand, their other options aren't clear. Now that I've been through what I've been through over the past couple of weeks, getting to know seemingly everyone in the Portland housing industry, it's hard to imagine there are many other West End house-hunters who would be willing to invest the same kind of time and suffer the same types of headaches. In addition, the sellers have already started thinking that they're about to get out from under their problem -- how much will it be worth for them to leave that problem behind? I'll know in the next few days.
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