It Takes a Village to Buy a Condo in San Francisco

New America Media, Commentary, Andrew Lam Posted: May 31, 2009

It is an understatement to say the real estate market in America has been in upheaval since the bubble burst last year. But while foreclosures due to unemployment and subprime borrowing have been the scourge for many homeowners, and while the economy is in a stumble, for others, it is the perfect storm to start buying.

I am a first time home buyer. And I just bought a brand new condo in downtown San Francisco.

If I gained something akin to the American dream from the American economy going south, I don’t particularly take joy in it. In fact, having gone through the trials and tribulations of buying a condo, I can say with certainty that if it weren’t for my family and friends, it would never have happened.

First, here are the facts:
a) For first time buyers, there’s an $8,000 tax credit, part of the new stimulus package.

b) For those buying newly constructed homes in California, there’s an additional $10,000 tax credit. (The catch is that there’s a limited amount, so it's first come, first served).

c) The interest rate has been the lowest in decades, according to a Freddie Mac Survey.

d) Many San Francisco Bay Area homes are being sold 30 to 40 percent below the listed price from two years ago, and the new condo builders, caught at the tail end of economic boom, are willing to bargain. At one newly built condo with few buyers, a sales agent offered me $35,000 in home owner association credits if I bought a condo at the listed price, and that listed price has been reduced twice since it’s been on the market.

But perfect storms or not, it was hard going. Part of the problem was my own mentality. By any American standard I’m middle class, but I long ago resigned to the idea that I’d always be -– as long as I refused to leave San Francisco -– a renter. I lived for so long in the economic bubble that I was conditioned to believe that I could never own a home here. I took pride in having a rent-controlled apartment that was within walking distance of work. I watched as relatives and friends moved to the suburbs in order to buy something affordable.

Then my older sister, who works in finance, told me, “You’re stupid if you don’t buy now. The window of opportunity is open, so take it.”

A few more lectures later, and I went condo-hunting. But the listed costs, even though they had fallen 30 to 40 percent, were out of my price range. Sister was not discouraged. She brought in an ex-boyfriend of hers, who’s into real estate development and property management. "You can go 30 percent below the listed price in some cases," he told me. "Bargain like mad.”

“Are you kidding me? They’ll laugh in my face.”

“It’s just business," he said. "And they desperately need yours, Mr. First Time Buyer." By walking in without an agent, he added, I would be able to shave another 5 percent of the asking price.

Then he gave me the real estate prophecy: “San Francisco and New York are the last to go down, and will be the first to go back up.” This was why, he said, investors from China are on a real estate shopping spree here in California.

That did it. With my sister as my de facto agent, I negotiated for a day or two (the whole process was terrifying, not the least of which was having to haggle over something into which I was throwing my entire savings), and I finally got the price range I aimed for.

But there was another problem: How could I come up with 20 percent down -- a sum that would wipe out my entire savings?

This is when my sister called my parents in Fremont. (We’re Vietnamese and nothing that has to do with real estate escapes us.) “We’ll help. We always wanted you to buy,” said my mother in her usual dramatic way. “As long as you are buying a home, I at least can die with my eyes closed.”

The next hurdle was applying for a big, big loan.

“We’ll cosign for you,” my older brother, an engineer in Silicon Valley, offered. “We’ll throw in a credit line if you need it. You should buy.”

Then came the terror of borrowing money: The condo’s preferred lender offered a one point rate on the loan and when the locked-in contract came a week later, it was up to 1.25 percent, the difference being several thousands of dollars extra. I smelled a rat.

So it was my high school best friend (also Vietnamese), a real estate broker, who walked me through it. “Bargain like mad with the loan folks," he said. "Most likely they are making around one point so there is room for negotiation. It's just how thick-skinned you want to get with them.”

I got the one point. But three weeks in and my loan was still not approved. “Underwriter still reviewing it,” was all I could get from my less-than-trustworthy lender, never mind that I have a perfect credit report and a steady job and mutual and other investments. On the fourth week, they said there was a glitch with my 1040 form. A minor discrepancy, which was quickly corrected. Still there was no news. I began to loose sleep. I stood to lose my large deposit and my rent-controlled apartment. My family rallied. “We’ll figure something out. You won’t be homeless,” my mother assured me. “You can come home and stay with us.” At this point I began to pray for deliverance.

Finally, on the 29th day, one day before the deadline, the loan was approved. I signed the documents, wired the money, hired the movers.

Now I own a condo. “It takes a village to buy a condo,” my sister wryly quipped. In this case, she wasn’t kidding.

NAM editor Andrew Lam is author of Perfume Dreams: Reflections on the Vietnamese Diaspora.

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Articles by Andrew Lam

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User Comments

hangemhi on Jun 02, 2009 at 19:03:58 said:

you don't save 5% when you don't use an agent... they offer 2.5% to a buyer's agent. and avoding all that pain and lost sleep may have been worth 2.5%. besides an experienced negotiator might have beat your deal by 10%.

but who knows.... love to know what building, and rough price and size... care to share???

Bill Hortman on Jun 01, 2009 at 23:28:54 said:

Congrats! You sank your life savings into condo which probably isn't much of an upgrade from your rental situation and you no longer have any investment capital. Tell me - why is it more advantageous to rent your home from a bank vs a landlord that doesn't require a 20% down payment? The day that the average american was brainwashed into thinking this twisted form of home "ownership" was a dream was the day we were all made into slaves.

renina on Jun 01, 2009 at 16:05:29 said:

My name is Renina, I run Model Minority, and I have allays been fascinated by the lack of conversation around how home ownership is the major way in which wealth is transferred between generations in the United States.
Thank you for sharing this.


ES on Jun 01, 2009 at 09:18:35 said:

Ah, the American dream
or the American nightmare. You don't have to apologize for being able to purchase a condo at this point in time. You still paid a lot for it. What's most interesting is the buy-in to the American dream. That was how the bubble was sold to everyone, including those who could not afford it. And that's still how it's being sold right at this very moment. I grew up in NYC - a renter, of course. My parents had a small summer bungalow in Park Ridge, New Jersey. Also a rental - every summer. My view of the world is through a renter's eyes. I've always considered home-ownership an unnatural state of affairs. I live in Portland, OR now and spent a decade in southern California. Everyone wants to own a home. I'm trying to figure out why. I'm still a renter. It's a sweet little house - we offered to buy it from the owner as we've been here six years, but it was half-hearted. Our divorces from prior spouses were extremely expensive - and each of them got to keep the houses. We walked away with precious little - just to get away. I'm not sorry. We have disposable income and time. We garden and relax in our tiny hidden backyard treasure - a country to itself within a city. We're happy here. Still, everyone still asks us when we're going to buy. I wish you all luck and happiness in your new home. You held out as long as you could. You're a brave man either way.

Alex Wang on May 31, 2009 at 08:00:35 said:

Great real life story and what it takes to buy a condo in this Bay Area real estate market. Banks are tough and financing is not easy. Your experience is something that the bay area home buyers need to know.

Thanks for sharing.




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