Gordon Pulls a Miracle

Gordon Pulls a Miracle

In late summer of 1980, IBM offered me a promotion that was accompanied by a move to Raleigh, NC. Geri and I had recently had David, our second child and had been living in Franklinville, NJ for the last four years. We had purchased the house there in 1976 and it had been a big step up from the house on Jericho Rd. It was a bi-level (called a raised ranch in some places) and had three bedroom and 1.5 baths. The downstairs had been unfinished when we moved in and I had finished off a family room and a fourth bedroom down there. I was in the process of finishing out a recreation room with a combination laundry and another half bath.

I accepted the offer after making several trips to Raleigh and assuring that Geri would be okay with the move. Since her mother was living in Florida at the time, this would put us 8 hours closer and we would still be less than a day's journey to the other members of our family. Raleigh is a beautiful area with tall pines and oak interspersed with dogwood. The climate is great and at the time, even though it was the state capitol, in was actually small and provincial in nature.

Because there were three other IBM'ers already there on temporary assignment, management did not want my move to become officially known until their assignments were up to avoid any hard feelings. For this reason, I was sent on "temporary assignment" starting in August of 1980. 

The director of our group had a friend who was a realtor and suggested that I call him. Since I understand implications, I gave Gordon a call. He was a personable man in his mid thirties and had lived in the area all his life and therefore had many acquaintances in all the areas of business. As it turns out, God put him in our path to allow us to do the best with what we had.

 To explain how this all fit together to create a miraculous result, the reader needs to understand that just six years earlier, I had been working as an underpaid teacher. Our first house had also been providential since we had been able to purchase it with no money down and even had some remodeling done as part of the deal. However, this house had sold for $22,000 and the one in Franklinville had cost $34,000 and we owed $21,000 on it. IBM was offering us $49,000 as part of the relocation package, which meant if we couldn't sell it for more, at least we would have $28,000 equity.

As Gordon showed me around, it became obvious to me that houses were a bit more expensive than I had anticipated. The first house he showed me was a two story country style house with 2.5 baths and four bedrooms. It had a bonus room over the garage which was almost big enough to park three cars. It sat on a one acre lot full of trees. I told Gordon that it was a contender, but it was listed at $99,000! We looked at about 20 homes during a two week period, but I kept coming back to that first one he showed me.

It was time to fly Geri in so we could make a decision. We allowed three days and Gordon and I had winnowed the list down to about six houses. Unfortunately, there were none under $80,000 and I was a bit worried about how we would handle the finances. We took Geri to see the $99,000 house first and just like me, all the others seemed to miss the mark for her as well.

I need to insert here something about the financial conditions of the time. In 1980, inflation was at an all time high. Mortgage interest rates were in the 16-18% range and difficult to get even at those rates. It was the beginning of renegotiable and adjustable mortgages to compensate for the high cost. I knew that $600 per month was going to be about all I could handle, which meant that I could only borrow about $45,000 which meant we would need $54,000 as a down payment. With the equity and sale of my IBM stock, I knew we would be short about $20,000!

So it was on the second evening in our hotel room, Gordon outlined the plan of attack. I told you earlier that he knew many people in the town and  he felt he could make this work. First, we offered the builder $92,000 as our highest offer. Gordon knew that the builder was about to default on a construction note and would have to convert it to a regular mortgage, something neither he nor the bank wanted to happen. Gordon also knew the bank president involved and thought he might be able work a deal there as well. So he left us saying that he would be back in the morning with the results.

He later related that first he went to the builder and told him of our offer, the builder was a bit disappointed, but Gordon assured him that he would be able to convince the bank to extend the construction note if he had a firm deal. The builder agreed. He then went to the bank and told them that I would buy the house if they would give me the best rate they could and if they would extend the builder's note. The banker realized that this was a firm offer and would resolve his problem with the builder and that as IBM'ers we were probably a good risk, so he offered a three year renegotiable mortgage at 12.75% on $55,000. The catch was we had to decide that morning since the mortgage was one of only three that the banker held and would go fast. The bank also didn't want an escrow account so we would have to do taxes and insurance ourselves. This turned out well since taxes were half of the ones we had been making and insurance was about the same.

Doing a fast calculation, I could see that $28,000 equity plus $55,000 meant that we would need $9,000, but we still had 120 shares of IBM that were currently worth $8000 so this was going to be tight but would work. And our payments would be $597.68 with no escrow. We accepted the deal and closing was set for early November.

Geri's dad loaned us $5,000 against closing costs and incidentals and the stock was sold the day after Reagan was elected President. This had had the effect of raising the stock market and the stock sold for $82.00/share or about $9,800. I hadn't read the relocation package carefully enough to see that IBM, as well as paying all moving expenses and closing costs, also gave a one time $10,000 for incidentals. 

In the end, we lived for almost ten years in the house and the rate went down each of the three years we renegotiated until it was 6.75% in the end. We paid Geri’s dad back a month after settlement and still had the $10,000 to furnish and pay off all debt.

Gordon indeed pulled off a miracle.

Davdan @ 2008-2018