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The Tao Gals' Guide to Real EstateSix Modern Women Discover the Ancient Art of Finding, Owning, and Making a Home
By Bernadette Murphy Michelle Huneven
BLOOMSBURYCopyright © 2006 Bernadette Murphy and Michelle Huneven
All right reserved.
Chapter OneTAO GAL QUALIFIES FOR HOME OWNERSHIP
The Tao doesn't take sides; it gives birth to both good and evil. The Master doesn't take sides; she welcomes both saints and sinners.
I never dreamed I could buy a house.
I was prejudiced against the whole idea.
I began my career as a freelance writer with no savings and an unsteady source of income. Over time, I began to make a decent living, but my income was still unpredictable, arriving as it did in big bursts and small bits. Even when I inherited enough for a small down payment, I was sure that nobody would trust me with a mortgage-though what exactly a mortgage entailed, I couldn't quite tell you.
My reluctance to buy a house wasn't just about money.
I was a single woman, living alone. Houses were what couples bought-couples who planned to have children. My sister, at a time when she was also single, once asked my father for advice and help in buying a flat in London, where she lived. (My father made part of his living carrying secondmortgages.) He advised her against buying a flat. "Single women are bad risks," he explained, and refused her a loan. My sister, I should point out, was also self-employed, but incredibly disciplined and frugal. She was and is so frugal, in fact, she makes car payments into a savings account and only buys a new car when she has the cash in hand. This is the person my father labeled a bad risk. But he was our father, and he knew about mortgages, and for a while, at least, we couldn't help but take his opinion to heart.
If my sister was a bad risk, I was an appalling, unspeakable risk. I never really balanced my checkbook or regularly put money into any account, not even my checking account. I splurged on clothes and shoes and books and gardening supplies. And as a restaurant critic, I was notoriously slow in filing my expense reports.
All things financial both frightened and bored me. I could not look at a bank statement without immediately wanting to take a nap, no matter how rosy or grim the numbers were. I would've happily sacrificed all refunds in exchange for not having to file tax returns, except that I was terrified the IRS would swoop down and punish me. Back in the mid-eighties, when I went out on my own as a freelancer and no longer had an employer who deducted taxes, I found myself at a loss regarding financial doings and froze. Come tax time, I had a zillion scraps of paper from a zillion different sources and no idea what to do with them. Somebody told me that I should be paying money to the IRS and state every three months-all of which seemed like such a big awful mystery that I just ignored my taxes for a couple of years. Of course, my terror of the IRS grew proportionately. Then, somebody else suggested I just needed an accountant. Actually, what she said was "I'm sick of hearing you fret about your taxes. Just go to an accountant and get them done." I was flabbergasted. Me and my pathetic dribbling income required an accountant? Who could've guessed? And how did she know? Are some people just born with the knowledge that at a certain point they should go to an accountant?
You can see why home owning didn't occur to me then, or later. Home owning was too big, too much responsibility, too much about finances for a single woman like myself, a single woman who ran a loose ship, who was sorely undereducated in such matters.
For who knew how to buy a house? Even once I had that nice little down payment languishing in my checking account, I had no idea what to do with it, what steps to take to pledge it to a home. The whole process of home buying had an aura of such complication and difficulty that I felt automatically excluded-or, I automatically excluded myself. Meanwhile, I watched my best friend, Jan, go through the process with her husband. Jan had inherited money and property and was a freelancer like I was. When she got married, she and her husband, also a freelance writer, decided to buy a house. For months, they looked, and when they finally found something-it was not quite in the lowest tier of the market but maybe half a step up from the lowest tier-they were able to pay more than 50 percent down, which you'd think might've made things easy for them. But no. For two to three months, every time I phoned her, Jan was filling out this and that form or application for the bank, or she was frantically looking for one of last year's bank statements, or faxing two years' worth of statements to the bank, then two or three years' worth of rent checks-both hers and her husband's-and then there were inspectors and geologists and more inspectors and more documents required by the bank. From the sidelines, it seemed like a form of hell, an abyss of uncertainty: not to mention a suffocating haystack of paper-work. And this was a couple! With two incomes! With a huge down payment! Buying pretty damn near the bottom of the market! Their new home was one step up from a shack!
How could I, with my tiny nest egg, ever hope to take part in such a process? I, who was a rotten risk. I, a paperwork-phobic. I could never qualify. My own father wouldn't lend me the money, let alone any bank. Clearly-and I would be the first to tell you - I did not deserve a home of my own.
And there were still deeper issues at work, more half-baked ideas and assumptions lurking in the dim zones just under consciousness where they flourished and essentially ran my life.
My friend Claire, a longtime spiritual adviser and mentor, went out house hunting. She was single at the time she set out to buy a house, but she had a steady job as a construction supervisor. She wanted company in the search for a house and-curiously-she wanted me to buy a house too. Claire didn't question my ability to buy and pay for a house and she quickly dismissed my fears. She knew me and my finances as well as anybody and she essentially gave me permission to buy a house. But I still resisted. While she knocked on walls and cranked open windows and wrinkled her nose at this and that, I entered prospective homes like a skittish cat, never quite believing I had the right to be there. I didn't dare like any house, even for her. I was scared for her as well. Buying a house on one's own, I realized, was about more than money It seemed like giving up. Like saying, okay, this is it. I'm not getting the spouse, I'm not getting the family. I'm setting up alone.
In fact, when I thought about living in my own home, I thought about one single woman in particular. She'd bought a house and made it perfect in every detail. Off-white walls. Off-white furniture. Off-white rugs. A breakfront filled with matching china and silver. A sparkling kitchen. Three coddled cats. No wet towels on any floor, no dishes ever in the sink. Her house broadcast such an entrenched, perfected, airtight, impenetrable femininity, it all but forbade the possibility of any man or child inhabiting it. It was a fortress and I wanted no part of such a place. I liked a mess, and a lot of company.
What's more, renting was fine for me. Renting was tentative, uncommitted. Renting left me ready for adventure. Never mind that I'd been in the same place for eight years-with a thirty-day notice I could, at any time, opt out for a whole new life. I wrote one check a month, made a phone call when the furnace blew out. Nobody asked to see my tax returns or bank statements. Nobody talked of interest and equity and, heaven forbid, property tax. I didn't have to decorate, let alone retoof.
So leave home ownership to the predictably employed, the responsible, the settled, the defeated. In terms of finances, home repair, and human connections-I was not fit for home ownership.
Thus was I prejudiced against buying a house. One definition of prejudice, however, is "an opinion or leaning adverse to anything without just grounds or sufficient knowledge." And if you look at it, my home-owning aversion was really just based on a few anecdotes, a dearth of information, and a big dose of fear and shame-a bunch of straw dogs, false fronts. However baseless, all of these elements were still deeply entrenched, and they might never have gone unchallenged, except that heaven and earth have no such opinions about the housing market and who qualifies-or anything else-and the time came when a reality greater than that existing in my own mind opened up before me.
What happened was, after nine years renting a small house in Atwater Village, I was evicted. My landlord wanted the place back in order to make the extensive renovations necessary to rent it to someone else for twice the pittance he charged me. But no hurry, he said. I could have five months to find someplace else to live.
Naturally, I brought this crisis to the Tao Gals. "I have to find a new place to live," I wailed. "With a yappy terrier, an ancient cat, and a screaming parrot! Nobody, will rent to me."
"Why don't you buy?" asked Marie. She's married and has owned her home forever. She also worked for real estate lawyers, and in the real estate arm of a big storage company buying and selling properties.
"I can't buy a house," I said. "I'd never qualify."
"Are you sure?" she asked. "How much did you earn last year?"
I hemmed and hawed, insisted I was too flaky, too poor. But Marie, like heaven and earth had no opinion-at least about my ability to buy a house-and somehow I agreed to meet her and her calculator and an amortization table for breakfast on Saturday morning. She asked me only for a few very basic figures: my yearly income, how much rent I paid, how much money I could put down. Even I could handle that.
I showed up with my paltry sheet of paper. She took the figures, punched some numbers on her calculator, consulted some long rows of numbers in her little book, and gave me the price range of homes I could afford. I was stunned: The figure (which I needn't bother putting in here, given that it has already become so ridiculously outdated) was already a good $100,000 more than I ever dreamed I could pay. Patiently, she showed me that, with my down payment, my monthly payments would still be below most of the rent prices I could find.
In short, I could afford to buy a home.
"Start looking," she said.
"I have to start looking for a house to buy," I told my friend Michele. She and I had been friends-"the two Michelles"-since high school.
"The one behind us is for sale," Michele said. "It's on a flag lot-in the middle of the block. The house itself is awful, but it's a great big beautiful piece of property. We almost bought it as a rental, but decided we couldn't. Wanna go see?"
"Sure." I said, though I already knew I didn't want an awful house. I wanted a house like Michele had a historically significant Spanish-style home on an acre of gardens, which her husband, a landscape architect, had made lush, balanced, and serene. Of course ! couldn't afford Michele's house, but I hoped to do better than awful. Also, I'd grown up in Altadena-a small, unincorporated town-a mile due west of that very house. I had no interest in returning to the scene of my childhood. But no harm in looking.
We considered hopping the fence in her backyard, then walked around the corner and down a long driveway to a white stucco house with ugly blue shutters and bars on the windows. Positioned right on the front property line of its large rectangular lot, the house had no front yard, merely faced a wide asphalt driveway and, a few yards away', another, identical house.
The seller allowed us inside, and the house was awful, a claustrophobic, '50s stucco cube inhabited by heavy smokers and three dogs. The bathrooms were depressing; the kitchen cabinets were a soft composition board, that fake wood made of sawdust; in this case, it blistered where it had gotten wet.
But Michele danced around the kitchen. "You could knock out these walls, open it up to the back. Mount more cabinets over there ..."
I saw her point. The house could be nice, if you poured buckets of money into it.
When we tried to go into the backyard, the dogs barked and growled at us. "They won't hurt you," the owner said, but they indicated differently. The yard was dirt and weeds, anyway with a few small fruit trees.
"How much are you asking?" I said. Given the flag lot, the dereliction, the smell, I was certain it wouldn't be much.
Wordlessly, the man handed me a flyer, and I saw why he dared not speak the sum. It was huge. Flagrantly, depressingly, shockingly expensive. He was asking close to twice what Michele had paid for her gracious and elegant home eight years before. He was asking $70,000 more than my friend Claire paid for a much better house four years ago.
We walked back down the driveway "He's not living in reality," I said.
Michele agreed. "That's why it's been on the market over a year. But house prices are rising," she added, words that would become the understatement of the decade. Who knew that this was to be the year the market exploded? Who knew that this would be the least expensive house I would look at?
Thus began my house hunting, which proved to be a complex process in every way possible: financially, emotionally, socially, spiritually.
Luckily, I had the Tao Gals, who reminded me not to get overly attached to any one idea, to remain open, to do the necessary footwork, to pause, to check in with them whenever confusion and fear threatened to overwhelm me.
Luckily, too, I'd read Independence Day, by Richard Ford, the Pulitzer Prize-winning novel whose protagonist, Frank Bascombe, is a real estate agent. The novel, among other things, offers an extended meditation on the nature of home and belonging. There's always some conflict, the book seems to say, between where we think we deserve to live versus where market forces and our own incomes and credit ratings allow us to live.
House hunting, then, is a reality check, and always a bit of a rude awakening. I like to think that, unlike many of Frank Bascombe's finicky clients, I did not have unrealistic expectations. And I was open to anything, with only a few basic wants as guidelines.
I wanted at least a thousand square feet and at least two bedrooms, since I worked at home and needed an office. I wanted some yard, as I am an avid gardener.
Then, the night after I saw the house with Michele, I had a dream.
What Can You Afford? List your monthly income (before taxes) from all sources: Subtract your current monthly debt: Car payment Credit cards Student loan Department store charge cards Child or spousal support Other personal debt Homeowners Association fees you will be charged for new property (check with your real estate agent) Total remaining Multiply the total remaining amount by .38 to get your maximum monthly mortgage payment, including principal, interest, property taxes, and insurance Note: While this formula is a general guideline, many lenders have different or looser interpretations and may be willing to allow you to borrow more.
Learn the 6, 7, 8 Rule
To calculate your expected housing costs-including the cost of capital used in your down payment-here's an easy rule of thumb you can follow.
To figure the approximate monthly mortgage cost (principal and interest), multiply the purchase price (reduced to thousand-dollar increments) by 6. ('For a $500,000 house, you'd multiply $500 x 6 = $3,000 a month.) This approximates the carrying cost of both the mortgage and down payment amounts.
To figure the monthly mortgage payment plus interest and taxes, multiply the purchase price (reduced to thousand-dollar increments) by 7. (For a $500,000 house, you'd multiply $500 x 7 = $3,500 a month.)
To figure your total monthly costs-mortgage payment, insurance and taxes, as well as maintenance and utilities, multiply the purchase price (reduced to thousand-dollar increments) by 8, (For a $500,000 house, you'd multiply $500 x 8 = $4,000 a month.)
Excerpted from The Tao Gals' Guide to Real Estate by Bernadette Murphy Michelle Huneven Copyright © 2006 by Bernadette Murphy and Michelle Huneven. Excerpted by permission.
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