House Fiasco

If you know me, you probably know that I am not very quiet or shy. Whatever is on my mind is usually on my lips. The only time I may get quiet is when I am really upset. So, something’s been eating me for a while now and I have been avoiding writing about it because it’s just so unpleasant that I didn’t want to go there. On the other hand, I needed to write about it because I wanted to get it off my chest and move on.

This is not going to be a short or happy post, so if you’re not in the mood for drama, you may want to skip it. Here it goes:

We had a house in St. Petersburg, FL. It wasn’t big or fancy but it was our first home and it was special to us. We bought it in the end of 2002 when the real estate market in Florida was pretty hot. We had been looking for a while and made offers on several other homes but kept getting outbid. Finally, we came across this home. It was a little two bedroom/two bath with a small pool in a very nice neighborhood. It was right next to a beautiful park, with a lake, tennis courts, a baseball field, and a playground. It was walking distance to downtown St. Pete, Tampa Bay and a bunch of restaurants and shops. We loved living in that house. It wasn’t the house of our dreams but over the years we made many improvements to it and it was getting as close to it as it could. We added a master bedroom, knocked down half a wall between the kitchen and dining rooms to open up the floor plan, turned a window in the guest bedroom into a door to the pool, screened the pool and paved it, put a new roof, new A/C, new flooring throughout, new paved driveway, painted it inside and out.

Here are some before (left with previous owner décor) and after (right) pictures:

While we were busy making the house our home, it started to settle (as in sink), which is not unusual in Florida but is still something no one wants to see happening in their home. When we bought the house, the previous owners had disclosed there had been settlement in the house but said they had fixed it. Naturally, we were concerned about it, so we asked questions. We talked to the company that did the work. They said they had fixed the settlement and the house was solid as a rock. We had an inspection. The inspector also said the house was solid. That gave us peace of mind to move forward with the purchase.

Then when we saw settlement a couple of years later, we were not happy but it wasn’t really bad, so we fixed it before it got worse. A couple more years later there was more settlement. This time it was bad and happened over a short period (six months). So bad, in fact, that our closet doors fell off their hinges. So bad, that if you looked from one room, you could see into the other - under the wall! I know it sounds bizarre, so here are a couple of photos, in case you can’t picture it. It was very strange and very, very worrisome.

  

I kept hoping I would wake up and realize it was a just a nightmare. No such luck. We started wondering if it wasn’t a sinkhole. We had sinkhole insurance coverage. We called First Floridian, our insurance company, and filed a claim. The insurance company said we had sinkhole coverage but no regular settlement coverage and tried really hard to prove what we had was not a sinkhole but regular settlement. They hired an engineering company and the engineering company found that (surprise, surprise) there was no sinkhole on our property. We were not convinced, especially because we had talked to a settlement sinkhole expert, who thought we had a “classic sinkhole case.”

Oh, how I wish we had believed him and just sued the insurance company right then. We didn’t want to believe him because he seemed like a jerk but we shared the information with the insurance company. They said they’d get a second opinion. The second opinion concurred with the first opinion – no sinkhole. It’s important to note that this happened right before we had a master bedroom added to the house. Whether or not there was a sinkhole, was important to know no matter what but it had a whole new level of importance before we went and spent $65,000 on a new addition. If there was a sinkhole on the property, we were considering knocking the house down and putting a modular (not to be confused with mobile) home in its place. Modular homes are less susceptible to sinkhole/settlement issues. We had looked into modular homes and found that they had come a long way in terms of quality, options and reliability.

But the insurance company said no sinkhole and we believed them. We believed that what we were seeing was regular settlement, which is more fixable and less scary than a sinkhole. Big mistake! They rejected our sinkhole claim. In a way we were relieved because it meant that we could move forward with our master bedroom addition.  But the rejected claim also meant that we were on our own as far as fixing the damage. And get this, as soon as they rejected our sinkhole claim, the insurance company dropped us like a hot potato stating that they were trying to limit their coastal exposure. This happened right after a particularly bad hurricane season in Florida and all insurance companies were doing that. Except, we were not coastal. As in our property was on higher ground and not in a flood area. That didn’t seem right and the thought of suing crossed our minds but we didn’t because we are not sue-happy people and we weren’t sure we were being cheated.

Nonetheless, we had to go to the insurer of last resort, Citizen’s (the state of Florida), because no one else was writing homeowners policies at the time. We couldn’t go directly to Citizen’s for some reason. We had to go through an insurance agent, so we used our State Farm agent, who wrote our auto insurance. We told them what had happened and that we wanted the same coverage as before. They wrote the policy. Shortly thereafter when we got our policy and reviewed it, we noticed that there was no sinkhole coverage. We called our agent and asked them to add it. They said it was too late but that we could add it at renewal (a year later). A few days prior to the renewal date (we had set up a reminder, so we don’t miss the deadline this time) we sent the agent a letter requesting the addition of sinkhole coverage. They said they’d add it. More on that later.

Meanwhile, we still had damage to fix. We had been saving money for the addition but now we had this unexpected expense to deal with. And let me tell you, settlement/sinkhole work is expensive. We got several quotes and picked a company that seemed reasonably priced. The work was incredibly messy. Our damage was such that fixing it required raising the floor. But because our house was built on a slab and had no crawlspace, there was no other way to to raise the floor than to go through it. Which meant the company that did the work had to dig 15 (yes, 15) 3x3-foot holes in our original 50-year old hardwood floors and the concrete slab underneath it in order to raise and support it. It looked like this:

  

It was even more awful in real life! But we did it and paid for it out of our own pockets. The hardwood floors were irreversibly damaged and we had no matching wood to fix them, so we had to “bury” them and put new flooring on top. At this point we were burning through money like it was going out of style. In an effort to curb our expenses somewhat, we decided to install the new bamboo flooring ourselves. The savings evaporated, however, because Paul herniated a disc in his back in the process and has been in and out of therapy ever since.

It was a very painful process but when the dust settled, we felt we had done what every good homeowner would – we had invested in our home by fixing a pesky problem. At this point, the thought of selling crossed my mind. We should have, because the market was pretty good then but we didn’t because we had just spent all kinds of money making the house the way we liked it and had gone through all the grief and none of the joy. We wanted to enjoy our creation. Unfortunately, the joy didn’t last. About 6 months later we noticed more settlement in an area that had not settled before and therefore had not been stabilized. The settlement was much less this time and in a much smaller area but it was visible and that was just maddening. We did not want to rip out our brand new bamboo floors in order to fix it. We had bought extra flooring just in case, we just did not want to go through all the pain again. But we had to do something, so we called our insurance agent and told them what was happening. They responded shortly thereafter saying we had no sinkhole coverage. WTF??? It turned out that the person we had been dealing with, did not add the sinkhole coverage to our policy. We later learned that that same person had messed up other things and had been fired, which was beside the point because now we had no coverage.

But wait, there’s more. We call the settlement company that did the stabilization work to see what it would cost to fix the new damage only to find out that they have gone out of business. At this point we already knew that in the field of settlement repairs, it is very difficult to get one company to fix another company’s work. It’s a liability issue – everyone points fingers at everyone else and it gets ugly. Not that it wasn’t ugly already. I am not a violent person but I have to admit that I was having violent thoughts, seriously violent!

That’s when a friend of ours told us that he knew someone who lived in our neighborhood and had a similar problem. They had sued the insurance company and won. Unbelievable! We talked to that person and hired their lawyer. We filed two lawsuits – one against First Floridian and another one against our State Farm agent.

That’s when Paul got the offer to join the Foreign Service. We were overjoyed – finally good news! But that meant we’d have to sell the house with two lawsuits hanging!

After months of legal back and forth both First Floridian and our State Farm agent settled out of court. We used the money to pay our mortgage, so we no longer owed anything on the house, which was definitely a relief. We were also fortunate that Paul’s first post in the Foreign Service was a one-year assignment in D.C. That definitely bought us some time and allowed us to wrap up both lawsuits.

However, the house was not selling. After being on the market for more than a year, we had only two offers, neither of which was serious. We had to disclose the issue with the house sinking and that was scaring people away, even though the house looked beautiful, with the exception of the last small settlement area, which we decided we were not going to fix. We agreed not to put any more money into it and sell it as is. We had discounted the asking price drastically to allow for repairs. Still no luck.

At this point, I wanted to rent it out. I was concerned that tenants may not take good care of it but I thought, if we rented it while we were overseas, we’d be getting a little bit of cash from it (very little because as a rental it would mean higher taxes, higher insurance and hiring a management company to deal with any maintenance issues while we were overseas). If it was still standing when we hit retirement, we could live in it. If it was seriously damaged, we could knock it down and put a modular home in its place.

Paul wanted to get rid of it. He didn’t want to have to worry about it from overseas. While I understood where he was coming from, it was becoming pretty obvious that even if we did sell it, we weren’t going to get much for it and I hated the idea. I did not want to give it away.

We talked about it many, many times and had to agree to disagree. After much discussion, we finally decided to sell it at an auction. A scary thought, right? What’s scarier is that we went with what’s called an absolute auction, which means there was no minimum or reservation price because we were told it tends to attract more bidders and thus yields a higher selling price.

So, the good news is that the house sold. The bad news is that it sold at a substantial loss. To the tune of $60,000 after all’s said and done. Yes, it sold for less than half of what we paid for it when we bought it back in 2002, never mind all the improvements we did to it. And that just breaks my heart. I wish I could say “it’s just money” and let it roll off my back because we are not the only people that lost money in this economy. I am not there yet.

Paul is a lot more philosophical about the whole thing. He looks at it as a bad investment, which it most definitely was. He sees the dismal real estate market as a large contributing factor and there is no denying that it made things worse because Florida has the worst problem country-wide in that respect. He says it was a money pit and we just had to get out of it. While I agree with all of that, I can’t help but think that it didn’t have to get this bad, that there were various points along the way, where we could have done things differently to avoid or at least limit our losses. Of course, hindsight is 20-20. If we had known then what we know now, we never would have bought the damn house. But we didn’t. And we were very naïve and trusted people we shouldn’t have along the way. And we paid for it through our noses. I am still in shock over it. It will take me a while to even consider buying another property.  Not that we have the money to do it but just saying…

So there you have it, our house fiasco, in all its sordid details. I realize it’s not nice of me to dump my emotional garbage on you like that. It’s selfish but I need a cleansing ritual, something to bring closure and get rid of the bad mojo we had somehow brought on ourselves. I am hoping that spilling my guts about it here will help me deal with the funk and let me move on to happier things.