The time we tried to buy a house

00:02, Aug 28 2012

I'm going to be honest. I think I've been more cranky than usual the last few weeks, but not without reason. The Silver Fox and I, after months of playing nosey parker looky-lou at weekend open homes, finally found a house.

I thought when we first went to the open home that there'd be no chance that we could afford it. The rooms were too big. The stained glass in the bathroom too elegant. The street and neighbouring houses were too nice. And the rateable value of the property was over half a million. Dollars. You should have seen the poker face I had when the real estate agent landed that one on me. Nonchalant AS. Like there was ice water running through my veins. Honestly, James Bond couldn't have done any better.

The kitchen and bathroom needed updating and the guttering on one side of the house needed replacing but we weren't too worried about those. There were EQC repairs pending with piles needed repacking in one corner of the house, but, hey, we'd also get the whole place replastered and painted for free and it was perfectly habitable in the meantime, not to mention bigger and nicer than our current rental. 

In any event we decided to make an offer on the house. Probably it wouldn't be enough but it would be good practice for us to go through the process. We did all sorts of calculations with spreadsheets and came up with a number we could manage and signed all the necessary papers. Even if we didn't end up getting the house it was still kind of exciting. Look at us, being all grown up! The Silver Fox started looking at puppies for sale on TradeMe (I've vetoed us getting a dog until we live somewhere more dog-suitable).

But then the anxiety started. Neither of us could sleep properly. We'd both try not to think about the house and moving into the house and enjoying frosty beverages in the backyard of the house but we couldn't. And then we'd start to worry about not getting the house and...I haven't felt that stressed out since the last time I moved. And that was because of earthquakes. And I was moving in with my mum.

As it turned out ours was the best offer. The owner's counter offer was $10,000 higher so we added $5000 to our original offer and Bob's your mother's brother, we were buying a house. BUYING A HOUSE.

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And then we tried to get a mortgage. You know that "wah-waaah" sound effect that they play on game shows when someone gives an incorrect answer thereby forfeiting their lead and missing out on the speed trivia round and the opportunity to win large cash prizes? Imagine that sound playing about now.

We had already spoken to our own bank about getting a mortgage beforehand. We'd sashayed our numbers past them coquettishly and they'd given us a lascivious wink in return.

It's no accident that I'm framing the exchange this way. When approaching a bank for a mortgage, essentially your main aim is to be as attractive to the bank as you possibly can be. You hoist up your "assets" and say "like those, do you? Plenty more where that came from, if you know what I mean." And they do. Better than you do, most likely.

But as I've hinted, there was trouble a-brewing.

The house we wanted to buy, live in, and barbecue outside at with impunity, is on TC3 land. For those of you not fully cognisant of the intricacies of land in the Christchurch area at the moment, green zone land (i.e. the stuff you're allowed to build on) is broken down into 3 Technical Categories. TC1 is unlikely to be affected much by liquefaction from a large earthquake, TC2 might have slight to moderate land damage, and TC3 is moderate to significant but requires specific testing to be done to be sure.

The property we wanted to buy had some liquefaction, which had resulted in a very slight lowering of the floor in the kitchen but to be honest it was less noticeable than the floor dipping I've experienced in every rental property I've ever lived in, and with a scope of works from EQC stating what work was needed, we just assumed that the work would be done, we'd eventually have a fixed house and a mortgage, and throw some more sausies on the barbie would you, dear, the neighbours look hungry!

Let's play that "incorrect answer on a game show" noise again, shall we?

What we didn't factor in was the insurance. Insurance companies have been carrying over policies for new owners and this is what we'd anticipated would happen with us. However, with all things and especially with all things insurance-related, there are caveats. Lantern, the company which currently insures the house, is underwritten by IAG. IAG will provide insurance to new owners of earthquake-damaged homes. Yay! But they won't cover you for the costs associated with moving out of your house for several weeks while the work is done. Boo! They also won't provide full replacement cover but only indemnity cover. 

But what does that have to do with our ability to get a mortgage? Well, as best as I can tell, a lot of it is to do with the relationship between EQC and insurance companies, as well as the difference between full replacement and indemnity insurance cover.

Where earthquake damage costs less than $100,000 to repair, EQC pays the cheque. It might take a while (or seemingly eternity) for the repairs to get done but under the $100,000 cap there's at least a commitment to do them. Once you're over $100,000 it's the insurance company's dollar. If they decide, based on their calculations, that it's not actually cost-effective to repair your house, then they'll just pay out whatever your policy covers you for. With TC3 properties a lot depends on the state of the land the house sits on and with regards to foundation repairs the potential is there for a simple, cheaper job to become more complicated and more expensive depending on what analysis of the land shows. "Knock it down" expensive.

So even though the bank thinks your deposit and future earning potential are fairly attractive *winkity wink*, they're not keen on lending you a large chunk of cash for a house that your insurance company might pull the plug on and pay you tens of thousands of dollars less for. Apparently that's a bad investment.

In the meantime you've got a lawyer (OH MY GOD. SO EXPENSIVE) and filled out more forms than you've ever signed in your life and ordered a LIM report and wrung your hands and lost sleep and by the end of it, well, I was actually relieved that the sale couldn't go through. Sad but relieved. And boy are we a whole lot wiser about the process now and the added complications of house-buying in Christchurch. This emotional rollercoaster prompted me to make the graph below as a visual of just how crazy the whole thing felt.

Now, I know I'm not the first person in the world to attempt buying a house so I've got to ask...is this emotional seesaw normal? And never mind buying a house on TC3 land...how on earth does anyone ever sell any? 

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