One of my golfing buddies likes to remodel homes in Massachusetts, he’s not a big builder or developer just an average Joe tying to make a living. He decided to venture up to New Hampshire to see if he could find some projects. He just happened to find a house here in Hampstead that another one of his friends told him about. The house was not officially on the market but his friend told him that the owners were going to sell. He figured he could get a good deal buying directly from the seller without any brokers involved or paying a brokerage commission. It would save the seller some money and he’d get a better deal. Or at least that was the plan. He committed to buy this home in May of ’06.Well, the first week of June he asks me to come over and look at a house he is going to buy. He had already come to an agreement with the seller and was just 2 weeks away from closing. I said no problem figuring he was a buddy and I’d get the listing when he finishes fixing it up and sells.

The owners were still living there when I went to see it and they had a mutually agreed closing date of June 15th. The home is a small 3 bedroom ranch with farmers porch with the potential for adding a lower-level family room in the basement. It has a large one car garage under that enters from behind the house. It is on a dead end street and in an older neighborhood.

After I go thru the house he asks me what do I think it’s worth and I tell him I’ll run some numbers. I end up telling him that fixed up it will be worth…tops… just under 300K.
He tells me he is paying 265K and needs to probably put in another 25K+ to make it presentable. He has to refinish all the hardwood floors and finish the basement, new granite counter tops, new furnace, hot water heater etc…My suggested list for the renovated home was $299,900 for the small 1300 sq ft ranch and that price was too tight for him. Not the news he wanted to hear. But at least he got the news before he closed…not after.

I found out that he ended up buying the house anyway. The summer rolls along and all is well, my friend is feverishly renovating the home he just bought and not golfing as much as he’d like.

We head into fall and it is around the middle of November when I get call from my golfing buddy, he wants me to come over and check out to see what he has done. He has done a fairly nice job with painting and new granite counters etc..

I told him the market has not improved and he would be lucky to get the 300K. He mumbles I guess I’m going to be a FSBO. I said to him that I was surprised that he bought the house in the first place. He says he knows that but he said his word was his bond and he had to go though with it. I respect him for that and it is now the middle of January and he has it on the market as a FSBO for $314,900 a few lookers but no buyers. Meanwhile his costs are mounting and the market is not anywhere near booming. Renting it is not a desirable option. I feel bad for the kid and wish he had asked my opinion before he committed to buy it. I admire that he is a man of his word but at what cost…to him and his family?

I guess I don’t understand why people always ask your advice when it’s too late. If you asked him today he’d tell you going it alone…without representation isn’t the smart thing to do. It’s too late to help him but maybe someone else can learn from his mistake.