For members of the U.S. Foreign Service, “home” is a complex concept, and buying a house can seem daunting.
BY DONNA SCARAMASTRA GORMAN
It might happen on that first night of home leave, when jet lag awakens you at 2 a.m. in your childhood home. You try to sneak downstairs in search of something to eat, but you trip over the dog and slam headfirst into the bedroom door, awakening your elderly parents, who until that exact moment had no idea you knew so many curse words in so many different languages.
Or it could happen one week into home leave, when your kids are bickering with one another for the fourth time that morning about whose turn it is to use the guest bathroom while your spouse is on the phone trying to find a gym with a decent monthly usage fee. You look up from your task of finding matching socks in the depths of your suitcase at the exact moment that your toddler dumps her juice on your sister’s brand-new suede couch.
Or maybe it won’t happen until your trip is over, when you’re settling in at your new post and you get the credit card bill for that three-week stay in a dingy hotel room, near your relatives but miles from the beach.
At some point, it’s going to happen. You’re going to gnash your teeth and wail, “Why can’t I just buy a house that I can go to whenever I have R&R or home leave?”
Some of your colleagues have succeeded in doing just that. And they have some tips for you on how best to make it happen.
All of the officers and family members interviewed for this story recommend buying in an area with which you are very familiar. Dave Pernal, the spouse of a third-tour officer currently assigned to Bahrain, bought an R&R home in Cape Cod, Massachusetts, where he spent most of his summers growing up. He recommends that you buy in a place with which you have a connection. “Having summered down-Cape for most of my childhood and pre-FS life, I knew a lot about the area,” says Pernal. “My wife pinned many a house on Zillow in our search, and by looking at the map I could tell if there would be noise issues, green-fly issues (being bitten by those suckers hurts), flooding issues, traffic, etc.” The couple also had help from a family friend who is a Realtor in the area.
All of the officers and family members interviewed for this story recommend buying in an area with which you are very familiar.
Lynne Skeirik, currently the consul general in Paris, spent 15 years looking at homes online with her husband before they found a home in Maine, near where she grew up. “At the 10-year point, at the 15-year point, we went out with a Realtor to look,” says Skeirik. “My husband did a tremendous amount of research. Schools were not an issue for us, but we wanted to keep expenses down, so we looked for places with low property taxes.” In the end, advises Skeirik, “you have to find the place that you fall in love with.”
“I think you need to really be careful about where you decide to buy,” she continues. The house they eventually chose will also serve as their retirement home, so they needed to think about what would work for them now and into the next decade. “We got very lucky with this place. We didn’t want to be too isolated because we want to be able to age in this house. It’s a long winter in Maine, and we don’t want to have to trek out.”
Dave and Shannon, a fifth-tour couple currently serving in Port-au-Prince, bought a house near family in Texas. Shannon spent one entire summer renovating the house so it would be exactly what she wanted when they came home for R&R the following summer. But just one week before they were scheduled to fly home, the hose connecting the toilet tank to the wall burst. Says Shannon, “That tiny hose dumped more than 5,000 gallons of water into our 1,246-square-foot house in under 10 hours.” A neighbor noticed water coming out of the house through the walls and running down the foundation. He cut off the water at the curb and called for help.
“If you buy a house,” says Shannon, “make sure you turn off the water before leaving town. Expensive lesson! And it was not a relaxing summer, with one construction crew after another to fix first the floors, then the walls, then paint, because at that point there was no way I was spending the rest of my summer painting every single wall in the entire house.”
Dave and Shannon were fortunate that their neighbor noticed the water. Other FS homeowners also recommend asking property managers or trusted neighbors to keep a close eye on the house when you’re away. Skeirik hired someone to close her Maine house in the fall, check on it after every snow storm, and reopen it in the spring. Pernal says he has “a rental agent who takes care of the seasonal rentals for us, and we have a couple of handymen on speed dial if something goes sideways.” His parents also check on the house when they go up in the winter.
Kelly Aley and her husband, who are currently based in Las Vegas, bought a house in Puerto Rico back when they were posted there. Aley recommends “getting people you trust to manage your house.” For us, she says, this was “cheaper than using a company that charges a percentage of the rental fees. We were going to have to charge more than the market could bear to have a company run it.” She recommends locating “an electrician, plumber and handyman that you know you can call. Make sure your pool guys and yard guys are reliable. Our cleaners are our house managers.”
Some families rent out their houses when they are overseas; others choose not to.
Some families rent out their houses when they are overseas; others choose not to.
“We use Airbnb, VRBO and TripAdvisor,” says Aley. “The first two produce the most rentals. Quality of renters is higher with Airbnb, and I like that you can review the guests easily. Our entire house is coded with locks, so we don’t have anyone on the property when guests arrive.” She does warn, though, that dealing with renters can be a hassle. When people are on vacation in close quarters, they often bicker with their family members, she says, and “when their vacation feels out of control, it is the homeowner who is attacked. I once got a call because it was too cloudy.” Aley recommends that you state in the contract that you “do not give refunds for the electricity going out, for the pool pump breaking, for the weather, if the area is evacuated, etc.”
Skeirik doesn’t rent out her house, choosing instead to make it available to family members. “Everybody has been great about it so far,” she says. “In my family, we have a beach house that my parents built back when I was in college. We’ve all spent time there, both together and individually, so we all kind of know the drill” in terms of keeping it clean and being respectful of the property.
Shannon and Dave don’t rent their house out, either. “We offer it up to family who come into the city from out of town,” says Shannon, but it’s usually empty. They have a friend who checks the mail weekly, and they leave a car at the house that family members use often enough to keep it functional. Pernal has chosen to rent the house on a weekly basis during the summer and offer it up to family members in the off-season.
Often, people want to buy a house so that they don’t have to spend precious vacation days travelling from relative to relative—they hope that instead they can invite family members to come visit them in a place of their choosing. That’s a nice thought, says Shannon, “but it doesn't really work, at least not in our family.”
Still, she says, even though family members haven’t really been as receptive to her plans as she’d hoped, “I don’t regret buying the house here. We have friends in the neighborhood. Friends who left food in my fridge and flowers on my front porch to welcome me home. My son went swimming with a friend yesterday, and the same friend spent the night last night. Having lifelong childhood friends is a rarity in the Foreign Service, and being able to give this gift to our boys is priceless.”
Buy where you want to be, but don’t expect family members to rush to see you when you come into town.
Dave Pernal says his house is “about 25 minutes away from family in the summer, and about two hours from my parents’ home in Mystic, Connecticut. That said, more days than not, we end up going up to my parents’ Cape house to go to the beach with them.” He doesn’t really mind going to them, but it can be frustrating when “no one really wants to come to our beach.”
The moral here? Buy where you want to be, but don’t expect family members to rush to see you when you come into town. You might find you still have to travel to them if you want to see them.
“We’re extremely happy with our decision to buy,” says Pernal. “Our first home leave cost us $6,000 to rent a house for four weeks. That was just the rent. Last summer, a home leave in Eastham, Massachusetts, would have cost at least $2,000 a week, and we spent 10 weeks in the Cape in our home—that’s $20,000 just for rent.” The only negative consequence, he says, is the fact that they won’t be able to buy in D.C. if they are ever posted there, so they’ll need to find a place they can afford to rent. “We figured we could get a really nice beach house that our 9-year-old son could call home for about the same price, if not less, than a shoebox in the District.”
Skeirik is also happy with their decision. “My perspective has really changed since we bought this place,” she says. She’s been moving around as a federal employee for 27 years. “You spend that time with no place where you can see yourself in five or 10 years,” she says. “Now I have a place, and I can picture myself there in my house. We’re even planning to look at boats! Something small; nothing fancy. We’ll buy a small sailboat before we retire. It can sit in the garage and wait for us to get there.”
Another bonus of owning a home is “having a safe haven when bad things happen,” says Shannon. “When Hurricane Matthew came through Haiti and we went on authorized departure, we just came home. We didn’t have to even think about where to go. The house was waiting; we didn’t have to stay at a hotel or with Mom. We just went home.” Plus, Shannon says—and this could seal the deal for many of you—her home in Texas has not a single piece of government-issue Drexel furniture. It’s all hers.
Carolyn Connell is a former eligible family member (EFM) and current Realtor with Keller Williams Realty in McLean, Virginia. Named to Washingtonian Magazine’s “Top Realtors” list for the past three years, Connell says more than 50 percent of her business comes from the Foreign Service community. Katie Stowe is an EFM and Realtor with McEnearney Associates who recently closed on her own home while her FSO spouse was in Dhaka. Bob Rosenbaum is a senior loan officer with WashingtonFirst who has worked with many FS members over the past decade. Here’s what these experts told us about how to buy a house.
First: Find a Great Realtor. Get referrals from family and friends, says Connell. Ask potential candidates what areas they serve and how much experience they have helping clients buy a home long-distance. It’s also critical, she says, to find out how technologically savvy they are, because “you will be dependent on technology to be able to view every aspect of the house, neighborhood, statistics, etc.” Make sure you check their references, and ask if they have connections with other community experts, such as lenders, contractors and inspectors.
“A poor agent can cost thousands of dollars to buyers and cause all kinds of headaches,” says Stowe, so choose yours carefully. Because working with a buyer from a distance can potentially be more work for a real estate agent than working with local clients, Stowe recommends that you look beyond the area’s high-volume Realtors, who may simply not have the time they need to put in on your behalf.
Get Pre-Approved. You will need a pre-approval letter from a lender. Talk to both the State Department Federal Credit Union and the United Service Automobile Association (USAA), but also ask your real estate agent who their preferred local lenders are. Connell says that local lenders “will be more motivated to win your business, because they don’t get paid until the home closes, unlike the employees at large credit unions.” A local lender might be able to match a valid quoted rate from another institution, and “you might get better service from the local guy.” Make sure to compare rates on the same day, as they vary on a daily basis.
To find a loan officer, Rosenbaum recommends asking friends for references and checking out online resources such as AAFSW’s Livelines, Angie’s List, Checkbook and Facebook. Don’t be surprised, he says, if potential loan officers ask you to fill out an application. This doesn’t commit you to using that specific officer; but, he explains, “as a loan officer, it’s extremely difficult for me to provide you with accurate answers, or my best advice, without having your full financial picture.”
One advantage that SDFCU provides, says Connell, is that “they can sometimes treat the purchase of a home as a primary residence if it is your only home or will be your primary residence when you return to the United States.” You’ll get a lower interest rate on a primary residence.
Why can SDFCU do this when other banks can’t? Rosenbaum explains that unlike Freddie Mac or Fannie Mae, “SDFCU holds their loans on their books and therefore can create their own rules.” Any bank that lends its own money can decide what rules are appropriate. His own company also keeps some loans in-house and so can decide what amount of risk is acceptable.
Investment properties, such as a home you intend to rent out, present a greater risk to lenders than owner-occupied homes, so banks frequently require at least 20 percent down for such properties.
Decide What You Want. Get clear about the details of your ideal home: Connell advises clients to write out the non-negotiables ahead of time so they aren’t swayed by a beautiful view or appealing kitchen tile. Imagine yourself in it: Will you be entertaining? How many bedrooms and baths do you want? Do you need a garage, view, etc.? Do you want to be able to walk to restaurants and shops? Do you want something move-in ready, or are you willing to do some updating?
Research the Rental Market. Ask yourself: Is this house an investment or a future home? If it is an investment, Connell advises you to “make sure it makes sense from a cash-flow perspective.” At the very least, the rent should cover your mortgage plus expenses like homeowner association (HOA) fees and property management fees; you also want it to provide you with income. Unlike purchasing a primary residence, buying a second home is much more of a financial, dollars-and-cents decision.
Make sure to consult a tax expert for the tax treatment of your potential second home.
Before You Buy… “Eyes and ears on the ground are critical in purchasing a home from a distance,” says Connell. Besides your real estate agent, ask a friend or family member whose opinion you value to go and look at the homes for you: “Have them Facetime you while they walk through the house, and stand outside so you can hear the sounds and traffic.”
Don’t ask your real estate agent to tell you if a specific school is “good” or a neighborhood is “safe,” advises Stowe. “We’re just not allowed to make those kinds of judgment calls, and we can get in big trouble with fair housing laws if we do.” What your Realtor should do, she says, is look up statistics on schools and crime. They should also “take video and pictures of the surrounding areas to let prospective buyers make their own judgements.”
When you’re starting the process, Rosenbaum advises you to gather your paystubs, W-2s, two years of tax returns, two months of bank and brokerage statements, travel orders if you’re moving soon and financial information for any other property you own, such as mortgage statements, HOA fees, taxes and insurance forms.
You can do it all electronically if you’re organized. When Stowe did her own paperwork, she says, “we signed overseas, had the American Citizen Services officer notarize, scanned the documents and couriered them to the lender. I would think that if we could do it from Dhaka, people could do it from almost anywhere.”
Rosenbaum agrees that closing from overseas is doable. “We just closed for a Foreign Service client in nine days from start to finish, all while she was overseas,” he says. “She never saw the house in person; I’ve never met her; and it was all done electronically.”