Buying a Home

[Sun Tzu]

Soooo I know there's a "House Buying" thread, however it looks to me like it's more in the vein of "I just bought a house, w00t!" instead of "any pointers?"

The wife and I are officially in the market to buy our first home. We have been talking about buying for a while, and saving for even longer. We both work from home (no we are not amateur porn stars), so having an office area is important. We've been pre-approved for an FHA loan already, and we're also looking at a few Fannie Mae homes. We're not sure if we should be looking for places in the lower end of our budget to renovate, or on the higher end that need minimal fixing. Anyways, I'm wondering if anyone else has any free advice they'd be willing to dish out.

I'd like to keep this thread free from posts that fall in the following categories: gangs, religion, face-sitting by not yet 18 year old girls, politics, and whether or not Huey Lewis and the News were under-appreciated. I know I might be dreaming, but please, humor me.

[DaddyTorgo]

Is this house going to be in Sac-area then and not in Hawaii?

[Sun Tzu]

Is this house going to be in Sac-area then and not in Hawaii?

Indeed. We like Hawai'i, and it's beautiful out here, but we're lonely and miss our family/friends. This way we will live within 10-20 minutes of all of our close friends (who are also couples, which is nice), and an hour or so within most of our family.

We're looking in the Fair Oaks area, which is supposed to be a nice, safe, affluent neighborhood of Sac. The wife went to Sac State, so she's moderately familiar with the whole area, but we are still going to need some coaching on what places to look around in. We're flying out this Thursday for a Fri/Sat/Sun tour of the city. We'll be looking at houses, checking out shopping areas, and the like. We already have a realtor who we get along with quite well.

[DaddyTorgo]

I haven't ever bought a house, so I have no thoughts in that regard. My sister and her husband and kids just moved out to that area though.

[johnnyshaka]

If you are "handy" or know of handy people who you trust and are willing to do the work at an affordable price, then I would think getting a "fix 'er upper" in the best neighbourhood you can afford would be the best bet. I can't stress enough that location is the most important factor because your dream home in a shitty part of town is absolutely useless but a shitty house in the your dream neighbourhood is a situation you can improve upon.

Good luck!

[Sun Tzu]

I haven't ever bought a house, so I have no thoughts in that regard. My sister and her husband and kids just moved out to that area though.

Nice, despite what JediKooter says, it's actually not that bad of an area ;)

Do you know where?

[Flasch186]

Find a good Realtor. interview them make sure they 'get' you. Theyre free for you to use so why not use a GOOD one.

[lighthousekeeper]

They're free for you to use so why not use a GOOD one.

are they really free? i thought even the buyer's realtor arranges some split of comission with the seller realtor.

[DaddyTorgo]

Nice, despite what JediKooter says, it's actually not that bad of an area ;)

Do you know where?

Yep - in Folsom.

Well technically they're in a rental for the next couple months, but we presume they'll end up buying in Folsom too.

[Sun Tzu]

Yep - in Folsom.

Well technically they're in a rental for the next couple months, but we presume they'll end up buying in Folsom too.

Very nice. My understanding is that Folsom is a nice area too. In face, we considered Folsom, but it's quite a drive if we want to see friends. Congrats to your Sis.

[terpkristin]

Find a good Realtor. interview them make sure they 'get' you. Theyre free for you to use so why not use a GOOD one.

Good grief I cannot emphasize this one enough. I hated my realtor. Also get a good home inspector.

Be prepared to see a lot of houses, especially at first. I thought I knew what I wanted when I started looking for my house, but when I saw houses that fit my "profile," I found I didn't like them much. I'd go out twice a week and see 5-10 houses each time.

If you're looking into foreclosures, be prepared for some ICKY things. At least, 2.5 years ago, I walked into a house that had looked like it had engine work and someone had bled on the family room carpet. I went to another that somebody (or some animal) had pooped on the floor. I went to many where wires were ripped through walls and/or there was deliberate water damage.

Take notes and take pictures, if you can (easier in unoccupied houses than ones where the owners still live there or they rent it out). After you've seen so many houses, they will blur. I noted which pictures were of which house and put down my gut feelings on each, as well as any particular features (good or bad) of the house.

Look into the Homeowners Association fees and rules if you can. My HOA is a bunch of pricks. And since they're not regulated, they can get away with doing a lot of douchey things (Top 7 insane homeowners association rules - The Week (http://theweek.com/article/index/104150/top-7-insane-homeowners-association-rules), also there have been stories in my area of HOAs being able to force houses to be sold because owners didn't follow the rules of the HOA and then have HOA board members buy them inexpensively...it's ridiculous).

At the same time, if you can, get an estimate of what the utilities will be (as these are things that sometimes you don't think about when switching from a small apartment to a multi-level house). My water bill is cheaper than it was when I was in an apartment, but my gas bill is twice as high (not unexpectedly).

One of my sister's friends apparently didn't know that if you don't put down 20%, you usually have to get mortgage insurance (PMI). Apparently they didn't factor this into their budgeting. 20% isn't always a fixed rule, and there are ways to get around it (like getting a low-interest loan for the 20% and then mortgage the rest). Also your taxes and homeowners insurance usually are never factored in when they give you a quote about how much you'll be paying a month (how much goes to P&I is quoted, but how much goes to escrow rarely is), so try to get a feeling for that if possible.

DO NOT USE LENDING TREE. I actually had a very good experience using MetLife Home Loans on my refi earlier this year (after a disaster of a time with Lending Tree trying to do a refi) and would recommend MetLife to anybody.

Figure out if there are any "funnies" with parking or situations where parking could be stupid. For example, on my street, people have more cars than you'd think they need for the houses (granted, many people seem to use their garages for storage and not for cars, no idea why), and park on my side of the road. This isn't usually a problem but when it snowed this year, that meant that the plows couldn't come to the street's edge and I had to shovel out 6' or so into the road to get my car out of my garage and driveway. It's something I would never have considered prior to this snowstorm.

I'm sure I'll think of other things, but that should be a start hehe. Good luck!

/tk

[Flasch186]

the pictures thing is one of the exact reasons why we went with our website of choice. We're now one of the only real estate websites in N Florida that show FULL Size images of the homes (if the realtor's take the pictures of them - dont get me started on them).

[terpkristin]

the pictures thing is one of the exact reasons why we went with our website of choice. We're now one of the only real estate websites in N Florida that show FULL Size images of the homes (if the realtor's take the pictures of them - dont get me started on them).

Oh yeah, that was something else I wanted to add. I found, when I was looking 2.5 years ago, that if the listing didn't have pictures, or only had 1 or 2, there was usually something they were trying to hide. This happened quite often on foreclosures/bank-owned properties (I suppose it's to be expected). I wouldn't rule them out entirely, but if a place didn't have pictures, it dropped on my priority list.

/tk

[Sun Tzu]

Loving this already.

We fully plan on taking as many pictures as humanly possible.

We have already gotten quotes on our loan that include approx taxes/HOI/PMI.

We are not putting 20% down, which as a first time buyer (especially in California) is damn near impossible. This means we will be paying PMI, which sucks. Our monthly bills are still going to be lower than what we're paying for rent though.

There are a fair number of foreclosed homes in Sac, as I imagine there are in the rest of the country too. I'll keep the nasty stuff in mind when walking into those houses, and if I come across any incredibles, I'll take pictures and post them in here.

[JonInMiddleGA]

Take whatever seemingly reasonable estimates you have for work on that (hypothetical) fixer-upper & double 'em. That will usually get you close to the real cost of the same work.

Take pictures as you look at houses, even if its just a few (few houses that is, not a few pictures). You'd be surprised how easy it becomes to mentally mix-and-match things about houses you've seen only once.

Based on your initial post, I'd say you're overlooking the obvious: pick a house that's around the middle of your price range & a needs a moderate amount of work. But of the two extremes, I'd recommend something that needed as little work as possible if you're happy with it as is, but in all honesty that's a personality issue that comes down to the individual. Having gone through two extensive renovation/remodel/repair homes in my lifetime, I'd sooner be shot than to ever contemplate it again, the most utterly miserable abject despair provoking experiences of my life & not something I'd wish on my worst enemy ... but YMMV.

[DaddyTorgo]

I'd never live anywhere with a Homeowners Association. Those things just seem like pure evil. Fuck that - I don't need someone else setting rules for me.

[Flasch186]

As an example, this is the biggest brokerage in the city and as big as you can browse photos on their site:

http://watsonrealtycorp.com/Search/SearchResultsBasic.aspx?ID=3aef2ef0-a36a-43cc-9c7c-9f57b1177363

AND you cant make them any larger...

Same home on ours:

11268 Spurline Dr, JACKSONVILLE Property Listing: MLS® # 549418 (http://www.roundtablerealty.com/listing/549418-11268-spurline-dr-jacksonville-florida-32257-4507/)

..and click the "large size images" button on the top right corner of the picture.

[terpkristin]

Just thought of 2 more tips.

1) Be prepared for something to go wrong in the first year of home ownership. My first year I had some plumbing "fun" with my top floor toilets, ended up replacing one (it wasn't as difficult as I feared it would be). I also had a water heater die on me and leak into my finished basement. I was glad I had money set aside to deal with those issues.

2) Angieslist.com has come in super handy time and time again for me for services around my home (including plumbers hehehe)

/tk

[bhlloy]

We are in the same boat as you Sun, except we're looking in and around LA which is even more of a disaster. Looking to buy when our current lease expires which is around next March time.

Who did you go to to get the pre-approval and what was involved in that?

[Sun Tzu]

We are in the same boat as you Sun, except we're looking in and around LA which is even more of a disaster. Looking to buy when our current lease expires which is around next March time.

Who did you go to to get the pre-approval and what was involved in that?

I spoke to 3 different lenders and got written quotes from each. We wound up going with the one who was centrally located in the area we're moving to, and was easiest to work with. In other words, one of the other lenders was based out of San Diego (500 miles away) with no office in Sac, and the other lenders agent was someone who spoke broken engrish, and talked to me as if she had 50 other more pressing matters to deal with. Oddly enough, the two we decided to not go with we found on our own. One was a credit union I belong to, the other was a referral from the FHA. The one we decided to go with we contacted off the recommendation of a Realtor.

Regarding Angieslist, I signed up for that a few days ago. It's $5/month, with a $10 signup fee. I dug around online and found a coupon code that waived the signup fee, awesome :). I think I've already decided on who we're going to use for inspections based solely on their reputation on Angie's list. So I'll actually double this recommendation. Thanks terpkristin!

[Sun Tzu]

Take whatever seemingly reasonable estimates you have for work on that (hypothetical) fixer-upper & double 'em. That will usually get you close to the real cost of the same work.

Take pictures as you look at houses, even if its just a few (few houses that is, not a few pictures). You'd be surprised how easy it becomes to mentally mix-and-match things about houses you've seen only once.

Based on your initial post, I'd say you're overlooking the obvious: pick a house that's around the middle of your price range & a needs a moderate amount of work. But of the two extremes, I'd recommend something that needed as little work as possible if you're happy with it as is, but in all honesty that's a personality issue that comes down to the individual. Having gone through two extensive renovation/remodel/repair homes in my lifetime, I'd sooner be shot than to ever contemplate it again, the most utterly miserable abject despair provoking experiences of my life & not something I'd wish on my worst enemy ... but YMMV.

Duly noted, thank you.

[Masked]

are they really free? i thought even the buyer's realtor arranges some split of comission with the seller realtor.

They are not free for either the buyer or the seller. In California, the standard fee is 3% for each. So for a median price house around San Jose (~$600K), each agent makes $18,000 which is a very steep price. You should be able to negotiate a much lower commission though.

[Flasch186]

My point is its free to the buyer (in Florida). The Seller pays the entire commission and the Listing Agent puts out a split of that commission to get the Realtors to show the home (per se). A good Realtor should offer a buyer much much more than simply opening doors... that pisses me off when I hear about that. For me, and perhaps it has to do a bit with my personality type / Anxiety, this Job is 24/7 much to my wife and family's chagrin but it is what it is.

So yes, Lighthouse, in Florida theyre free to the buyer. The seller pays to list their home (or figures out a different way to try and sell theirs [FSBO, Flat Fee, etc.])

[Sun Tzu]

Realtors are free to the buyer in CA too. Our realtor will make $xxx in commission which is paid by the seller. True, this may drive the sale of the house up, and we will be paying that sales price, but it's not like the seller is giong to say "listen, I would sell you the house for $250k, but your realtor is greedy as all hell, so we're going to have to bump it to $260k."

[cartman]

I think the thing about realtors being free is that you should never have to pay an upfront fee to a realtor for anything. The only money they should see should come from the commission.

[Masked]

Well, that's true - the 6% commission comes out of the price the seller receives for the property and is split between the two agents. So if you pay $100 for a house, the seller gets $94, the listing agent gets $3, and the buyer's agent gets $3. In a very simple example with no agents, the seller would accept $94 for the house. The seller get's the same amount and the buyer saves $6.

Agents play an important role, but they are not free to either the buyer or the seller.

[terpkristin]

Good Agents play an important role, but they are not free to either the buyer or the seller.

Fixed that for you.

Though I suppose it may have been easier for whoever said it was "free" to say "the cost will be included in the price of whatever you buy; no extra out of pocket," however it breaks down (which I think varies state to state.

/tk

[Flasch186]

Well, that's true - the 6% commission comes out of the price the seller receives for the property and is split between the two agents. So if you pay $100 for a house, the seller gets $94, the listing agent gets $3, and the buyer's agent gets $3. In a very simple example with no agents, the seller would accept $94 for the house. The seller get's the same amount and the buyer saves $6.

Agents play an important role, but they are not free to either the buyer or the seller.

Well without getting into a debate about statistics re: how many homes are sold in the country using the MLS, the avg. price of homes bought & sold with and w/o Realtors etc., the amount of exposure one can achieve for their own $ vs. the part of the commission the Realtor spends on exposure (if anything at all), etc. lets just say I am biased. Very rarely have I seen a home carrying two prices, 1 w/ a Realtor & a price without, advertised.

[Honolulu Blue]

My humble recommendation is to try to find an exclusive buyer's agent - that is, an agent that doesn't sell homes, but exclusively works with the seller on homes to buy. They're scarce, but Sacramento should be big enough to have a few of them. In Michigan, the 6% commission is split between the seller's and buyer's agents. My agent taught me a lot about what to look for in a home just by looking around at them and commenting.

Also, I land on the side of finding a home that needs little maintenance. Fixing things up is something that I do not, as a rule, enjoy. Others may feel differently. That doesn't mean you won't need money for maintenance, decoration, and other things. You will, so try to find it somehow.

Good luck and have fun.

[lighthousekeeper]

WHat you need to do is get a buyers agent, and then fire him right before closing, but after the price is agreed verbally. Then force the sellers agent to split the comission with you.

[lordscarlet]

As an example, this is the biggest brokerage in the city and as big as you can browse photos on their site:

http://watsonrealtycorp.com/Search/SearchResultsBasic.aspx?ID=3aef2ef0-a36a-43cc-9c7c-9f57b1177363

AND you cant make them any larger...

Same home on ours:

11268 Spurline Dr, JACKSONVILLE Property Listing: MLS® # 549418 (http://www.roundtablerealty.com/listing/549418-11268-spurline-dr-jacksonville-florida-32257-4507/)

..and click the "large size images" button on the top right corner of the picture.

I think it's your market.. pretty much every real estate site in the DC metro area shows large images.

Sun Tzu: It looks like Find All the Homes for Sale & Experienced Real Estate Agents | Redfin (http://redfin.com) covers the Sacramento area.. I can't recommend their site enough. I'm not saying use them as agents, but to do your own searches it is fantastic.

[Flasch186]

WHat you need to do is get a buyers agent, and then fire him right before closing, but after the price is agreed verbally. Then force the sellers agent to split the comission with you.

Well, then there's the lawsuit...but {shrug}

[wade moore]

WHat you need to do is get a buyers agent, and then fire him right before closing, but after the price is agreed verbally. Then force the sellers agent to split the comission with you.

Well, then there's the lawsuit...but {shrug}

Yeah, I don't even know the legal ramifications, but what kind of person would do that?

[Swaggs]

Consider the ages of the homes you are looking at and what types of big ticket items may need replaced soon.

Seven-years ago, we bought a home that was built in 1984 (so it was roughly 20-years old). Between 20-25 years, things like the roof and furnance components (or the entire system) need replaced. Roofs can be anywhere from $3,000 -$20,000+ depending on the size and complexity. Furnance/heat/air pumps can be anywhere from $2000 to $15,000 +.

For most appliances in "newer" homes, I'd consider anything over 8-10-years in danger.

Also, think about the exterior of the home and what type of maintainence it will need over the years. I consider exterior improvements to be considerably more difficult than interior ones, so think about whether you want a house that needs painted every few years (aluminum or composite siding, various types of wood exteriors, etc.) vs rarely, if ever needing touched (brick, stone, hardee or aluminum siding, etc.). Wood windows vs aluminum or vinyl windows -- stuff like that.

[Noop]

The police are a gang and so are the neighborhood watch... oh and the home owners association which have mastered the art of extortion. Make sure your you keep your pistol underneath your pillow and by the window homie. Blast them fools if they try to take whats yours you feel me?

Thug Life. You knew Pac.

[DaddyTorgo]

Consider the ages of the homes you are looking at and what types of big ticket items may need replaced soon.

Seven-years ago, we bought a home that was built in 1984 (so it was roughly 20-years old). Between 20-25 years, things like the roof and furnance components (or the entire system) need replaced. Roofs can be anywhere from $3,000 -$20,000+ depending on the size and complexity. Furnance/heat/air pumps can be anywhere from $2000 to $15,000 +.

For most appliances in "newer" homes, I'd consider anything over 8-10-years in danger.

Also, think about the exterior of the home and what type of maintainence it will need over the years. I consider exterior improvements to be considerably more difficult than interior ones, so think about whether you want a house that needs painted every few years (aluminum or composite siding, various types of wood exteriors, etc.) vs rarely, if ever needing touched (brick, stone, hardee or aluminum siding, etc.). Wood windows vs aluminum or vinyl windows -- stuff like that.

$20,000?

Pretty sure I know two couples (my parents and grandparents) who both spent closer to $40,000 on new roofs within the past year. One here in MA and one in Houston.

Probably depends on the part of the country you're in and thus the weather/type of roof you need.

Guessing out in Sac it's cheaper as you don't need to worry about snow & hurricanes/wind/whatever the fuck in Houston.

[DaddyTorgo]

Well, then there's the lawsuit...but {shrug}

I'm thinking he was joking...i hope?

[Alan T]

I'm thinking he was joking...i hope?


Yeah, I don't know him other than a few random posts on this board, but I had read it as a joke... At least I would hope it was.

That would be pretty sleezy to really do otherwise.

[Swaggs]

$20,000?

Pretty sure I know two couples (my parents and grandparents) who both spent closer to $40,000 on new roofs within the past year. One here in MA and one in Houston.

Probably depends on the part of the country you're in and thus the weather/type of roof you need.

Guessing out in Sac it's cheaper as you don't need to worry about snow & hurricanes/wind/whatever the fuck in Houston.

Yeah, if you get into materials like wooden, some metals, or slate shingles, the price can be considerably more than that. I'd guess for a starter home (although for all I know, the original poster may be a billionaire looking for a 10,000 sq ft home), with asphalt shingles, $20K would be pretty pricey.

[cubboyroy1826]

If you are going to use an FHA loan to buy the house October 4th is an important date. All FHA case numbers ordered after this point will only be charge 1% for upfront mortgage insurance by HUD instead of the current 2.25%, sounds good right. Well not really. While HUD is lowering the upfront mortgage insurance they are raising the monthly mortgage insurance which is currently .50-.55% depending on the down payment to .85-.90% thus really messing with your monthly payment. The case number it typically ordered when the lender has a signed purchase contract.

You might also look at the Fannie Mae Homepath homes. Here is a link to the site HomePath - Special Offers (http://www.fanniemae.com/homepath/incentive/index.jhtml). In California you may be eligible for a $10,000 tax credit. These are homes that Fannie Mae owns and the Fannie Mae Homepath loans allow you to go to 97% ltv without monthly PMI or the upfront mortgage insurance that FHA will charge.

Good luck in your house hunting.

[DanGarion]

This is just one person's opinion, but if you can don't use FHA. Yes you can get away with only a 3% down payment, but considering the cost of the required mortgage insurance, I personally think it's a rip off. Plus if you only put 3% down that means your monthly P+I payment will be higher than if you are paying the typical 20% down needed for most loans.

[DanGarion]

2) Angieslist.com has come in super handy time and time again for me for services around my home (including plumbers hehehe)

/tk

Another vote for Angieslist.

[DanGarion]

They are not free for either the buyer or the seller. In California, the standard fee is 3% for each. So for a median price house around San Jose (~$600K), each agent makes $18,000 which is a very steep price. You should be able to negotiate a much lower commission though.

In CA it's free in the essence that the commission is taken out of the sale. You aren't paying the sale plus commission...

[cartman]

Or, if you wanna try something exciting, you can find a foreclosed home and try and see if you can get it via squatter's rights!

[JediKooter]

Nice, despite what JediKooter says, it's actually not that bad of an area ;)

Do you know where?

Haha!

[Masked]

In CA it's free in the essence that the commission is taken out of the sale. You aren't paying the sale plus commission...

Right - but that is not free (which is the point I am arguing). You do not have to pay separately for your agent because his fee is embedded in the cost of the transaction. The total amount you pay for the house is the amount the seller gets plus the amount he gives to the two agents. The seller, who is the final decision maker on which offer to accept, only cares about how much he ends up with. So if you agree to a lower commission with your agent, the seller is not impacted, and the buyer ends up paying less. At the end of the day everyone, seller, listing agent, and buyer agent, is getting paid with money that comes from the buyer.

[Sun Tzu]

Lordscarlet: We have been using Redfin for years actually. We swear by it and hyperlink all of the houses we have on our spreadsheet directly to Redfin. Amazing site.

If you are going to use an FHA loan to buy the house October 4th is an important date. All FHA case numbers ordered after this point will only be charge 1% for upfront mortgage insurance by HUD instead of the current 2.25%, sounds good right. Well not really. While HUD is lowering the upfront mortgage insurance they are raising the monthly mortgage insurance which is currently .50-.55% depending on the down payment to .85-.90% thus really messing with your monthly payment. The case number it typically ordered when the lender has a signed purchase contract.

You might also look at the Fannie Mae Homepath homes. Here is a link to the site HomePath - Special Offers (http://www.fanniemae.com/homepath/incentive/index.jhtml). In California you may be eligible for a $10,000 tax credit. These are homes that Fannie Mae owns and the Fannie Mae Homepath loans allow you to go to 97% ltv without monthly PMI or the upfront mortgage insurance that FHA will charge.

Good luck in your house hunting.

I'm a bit confused by this. So, I know about the upfront insurance charge of 2.25%, but what they typically do here is work that into the loan, otherwise it's a massive shit-ton of money added to our down payment. I don't know how much this is going to affect our monthly payment if we're going to be paying both over the lifetime of the loan anyway. I'll check with my lending agent and have them send me a quote using both options. Thank you for this.

In regards to Fannie Mae, their rates are ridiculously high, despite our 800+ credit scores. We scratched them from the list when we got a quote much higher than everyone else.

This is just one person's opinion, but if you can don't use FHA. Yes you can get away with only a 3% down payment, but considering the cost of the required mortgage insurance, I personally think it's a rip off. Plus if you only put 3% down that means your monthly P+I payment will be higher than if you are paying the typical 20% down needed for most loans.

Unfortunately, we can't get away with not using FHA. I recently changed careers (just four months ago), and though I'm already making good money, they can't use my income with the loan approval process unless I've been doing the same thing for two full years. That means we are using only my wife's income, which restricts us to using the higher debt/income ratio's of the FHA. Note that this doesn't necessarily bother us, as the amount we want to pay monthly for our PITI is right in line with what we were approved for.

[chesapeake]

It is very easy to get caught up in the cool features a house may have. My wife and I almost put an offer on a house that had a hot tub on the back deck that overlooked a lake. It was AWESOME!!! But when we came to our senses, we realized that the layout was poor, the kitchen was way too small, and the price they were asking for was ridiculous.

We regrouped after that near disaster and came up with a plan to not get mislead by the cool stuff and to keep focused on what was genuinely important. We developed a list of 15 or so things that were truly important to us -- kitchen quality, commute length, noise level, room for potential offspring -- and gave each a maximum score relative to the others. We found that it really helped us to stay on task as we looked for houses. Our discussions about the features as we came up with the scores made each visit more productive.

[DanGarion]

Unfortunately, we can't get away with not using FHA. I recently changed careers (just four months ago), and though I'm already making good money, they can't use my income with the loan approval process unless I've been doing the same thing for two full years. That means we are using only my wife's income, which restricts us to using the higher debt/income ratio's of the FHA. Note that this doesn't necessarily bother us, as the amount we want to pay monthly for our PITI is right in line with what we were approved for.

I know exactly where you are coming from. Our credit union wouldn't give us a loan because we had only owned our business for about 18 months at the time, although we were able to get Wells Fargo to work with us on it because they were willing to accept that my wife had worked at the business 6 years before we bought it.

That's good it's working out for you, I just hate seeing people waste away money on insurance because they decided to get a FHA.

[Sun Tzu]

We developed a list of 15 or so things that were truly important to us -- kitchen quality, commute length, noise level, room for potential offspring -- and gave each a maximum score relative to the others. We found that it really helped us to stay on task as we looked for houses. Our discussions about the features as we came up with the scores made each visit more productive.

We did this last week at the recommendation of someone else. I think it's great advice, and we've already pointed to the list when looking at places online.

Has anybody had any experience with price negotiation? Sac is currently a buyers market, and it seems to me that 95+% of these houses are dropping in price at least once, if not two, three, even four times, before they sell. If we find a spot that we just "fall in love with" but has only been on the market for a week, what do you think our chances of getting it 5-10% under asking price are?

[DanGarion]

Always remember, the colors of walls can be changed, don't get caught up on how a room is currently being used, etc. We watch HGTV a lot and there are always people that get caught up on these things and say they don't like a house because of simple cosmetic things that can be changed easily enough.

[Masked]

We did this last week at the recommendation of someone else. I think it's great advice, and we've already pointed to the list when looking at places online.

Has anybody had any experience with price negotiation? Sac is currently a buyers market, and it seems to me that 95+% of these houses are dropping in price at least once, if not two, three, even four times, before they sell. If we find a spot that we just "fall in love with" but has only been on the market for a week, what do you think our chances of getting it 5-10% under asking price are?

This is where your agent makes his money because it really depends on the particular neighborhood and what the asking price is (i.e. is it high, low, or in-line with comps). Also, how likely is the house likely to attract multiple offers? I don't know about Sacramento, but in the Bay Area, if you are looking at a small house in Palo Alto, you probably have to meet or exceed the asking price and expect their to be multiple offers. If you are looking at Santa Clara, you'd probably be the only bidder and could make an initial offer under the asking price.

[cubboyroy1826]

I'm a bit confused by this. So, I know about the upfront insurance charge of 2.25%, but what they typically do here is work that into the loan, otherwise it's a massive shit-ton of money added to our down payment. I don't know how much this is going to affect our monthly payment if we're going to be paying both over the lifetime of the loan anyway. I'll check with my lending agent and have them send me a quote using both options. Thank you for this.

You are correct this is wrapped in to the loan so you do not have to come with that money to close. My point was after October 4th if you do not have a contract then the upfront mortgage insurance amount will only be 1% which will get rolled in but the monthly mortgage insurance will almost double thus being a bigger hit to your dent ratio.

Once you get some figures from your lender let me know. I will be more than happy to review things to make sure you get a good deal. I have done a few deals in California for friends or family members in the past.

[Sun Tzu]

You are correct this is wrapped in to the loan so you do not have to come with that money to close. My point was after October 4th if you do not have a contract then the upfront mortgage insurance amount will only be 1% which will get rolled in but the monthly mortgage insurance will almost double thus being a bigger hit to your dent ratio.

Once you get some figures from your lender let me know. I will be more than happy to review things to make sure you get a good deal. I have done a few deals in California for friends or family members in the past.

Excellent, will do. I have a rough estimate in PDF form right now, but it's for pre-10/4 rates. I can't get a GFE until we're in contract, or something like that, which I imagine is standard procedure. Would you need concrete numbers to review them? Thank you, by the way.

[lordscarlet]

I had planned on doing a dynasty about my house hunt late last year/early this year and just never did. I really wish I had. We looked at foreclosures, had an offer accepted on a short sale, all kinds of fun stuff. It probably would have been helpful. :( Too bad I suck.

[Sun Tzu]

It probably would have been helpful. :( Too bad I suck.

Yes...yes it is too bad. :p

I'm going to blog about the whole process.

[cubboyroy1826]

Excellent, will do. I have a rough estimate in PDF form right now, but it's for pre-10/4 rates. I can't get a GFE until we're in contract, or something like that, which I imagine is standard procedure. Would you need concrete numbers to review them? Thank you, by the way. <!-- / message --> <!-- sig -->

No problem. You can request an Initial Fees worksheet from the lender you are dealing with which should be at least in the ballpark for numbers. While these numbers will not be exact they should at least give you a rough idea. Feel free to email what you have to me at roypaeth at openmtg dot com.

[RomaGoth]

Too lazy to read the entire thread, so not sure if this has been mentioned (it probably has).

When we bought our first home, we had no real idea of what to look for. We knew the basics, i.e., foundation, dining room or not, that kind of a thing, but all of the little things that you don't think about until AFTER you move in.

It all depends on what is important to you. In our next home, for example, we will be looking specifically for a foyer, larger laundry room, and numerous other things that we didn't give too much thought on the first time around.

It is all personal taste, but my advice is to make sure you are getting the basics of what you want. Many things can be changed later, but some things cannot without a lot of extra expense.

[Sun Tzu]

snet!

[lighthousekeeper]

Well, then there's the lawsuit...but {shrug}

Huh - guess they're not so free after all. I just wanted to show how a buyer's agent is in no way, shape, or form free as you purport.

(If you haen't guessed, I regard realtors slightly below lawyers on the sleaze factor.)

[Dutch]

Think about homeowners insurance and add flood Insurance, even if you aren't in a flood zone just because it's a good idea (and cheap if you are not in a flood zone) and will protect you if there is a water main burst that floods your house...for instance.

I got bitten by finding out the home I just bought is in a possible "sinkhole" area that limited my homeowner insurance choices. Not thrilled about that, but apparently, lots of areas in Hillsborough county are now "sinkhole" territory.

[Dutch]

Quick rundown on what I discovered while house hunting in Tampa last month...

NEW HOMES
PROS: Lots of incentives, upgrades, and minimal closing costs.
CONS: Most were on the outskirts of the outskirts (which actually makes sense) so expect longer commutes. I did find a new neighborhood relatively close to my work (30 minutes) so I think I lucked out.

FORECLOSURES:
PROS: CHEAP!!!
CONS: Like mentioned before, age without TLC = gross, scary, unhealthy

BANK OWNED:
I think this is the same as a foreclosure, should be able to negotiate price down a bit and quickly close though...

SHORT SALE:
PROS: Generally selling at huge discounts
CONS: Check local laws, lots of homes go on short sale and you go into negotiation for months...only to then find out the owner gets his/her situation under control and takes the house off the market.

RESALES:
PROS: Usually reasonably prices homes, lived in, older, but lots of upgrades are usually present
CONS: Watch out for folks that are desperate and cannot negotiate. Also, watch out for folks that are not serious sellers. You could go through a lot of trouble just to find out they are just "testing the waters" on your time....

Things to check:
Research schools (if you have kids). I decided against a great home on a lake because the school was horribly rated. I then drove to the school just to see for myself and confirmed what I had reviewed. There are usually tons of websites and magazines for you to check out.

Research neighborhood: Lots of foreclosures in Tampa. It was sad to see all the homes in disrepair...some neighborhoods worse than others. Perfectly good homes, nobody to care for it....overgrown weeds, bushes. Very sad.

Research commute:
While everybody would love to live 10 minutes from work, that's usually not reality. Try to judge your commute off of the perceived "average". In Sac-Town, I'm guessing everything looks like it sucks. But if the average commute is 30 minutes, then that should be your gaugue.

Check county property appraiser websites to see what the home previously sold for and if it's "on par" with what you expected. You can do this to check the sale price of homes on the street. Obviously every home is different and there is no way to get an exact match, but if you review enough homes on the same street as the home you are interested in, you will get a decent feel on if you are in the right ball park for price.

Don't be the biggest, baddest house in the neighborhood...just a good rule of thumb.

Definately stay in your price range, keep your cool, be prepared to walk away from your "dream home" if negotations aren't going your way and always, always be ready to move on to your Plan B home. And when you do, already be thinking of your new Plan B home. This keeps your emotions in check a bit and really helps with your pyche if negotiations are not going well.

That's all I can think of right now.

[Dutch]

Oh, sorry if that's all 101 house hunting stuff....just throwing in my .02 cents.

[dacman]

I'm no expert, but I did buy a house in 2008 which included an offer on a house in a flood zone (didn't buy that one) and this is what I learned.

Think about homeowners insurance and add flood Insurance, even if you aren't in a flood zone just because it's a good idea (and cheap if you are not in a flood zone) ...

The rules and regulations on flood insurance are all over the place, and it's largely dependent on your state, county, and even local area whether or not flood insurance is required or available or a good idea. Consult your local expert on that one.

...and will protect you if there is a water main burst that floods your house...for instance.

That would be on your homeowners (at least initially). Flood insurance is for when the local damn breaks, or the nearby river overruns its banks and floods your house (events outside the home in other words).

[Dutch]

Yeah, the main water main in the street is what I had in mind.

[cartman]

It depends on the homeowner's policy, but some consider a burst water heater as a 'flood event' and will only pay if you also have flood insurance. So it definitely is worth it to read the fine print.

[Flasch186]

Huh - guess they're not so free after all. I just wanted to show how a buyer's agent is in no way, shape, or form free as you purport.

(If you haen't guessed, I regard realtors slightly below lawyers on the sleaze factor.)

no problem, next time you see a home with two advertised prices, let me know, or forward it to me.

[lordscarlet]

no problem, next time you see a home with two advertised prices, let me know, or forward it to me.

It's all about the negotiation process. Are you telling me that, as a seller's agent, someone wouldn't come in and say, "hey, you don't have to puy the buyer's agent fee" and it wouldn't be a more attractive offer?

(FWIW, I always use an agent)

[dwardzala]

no problem, next time you see a home with two advertised prices, let me know, or forward it to me.

Actually, I had this happen on numerous FSBO's I was looknig at purchasing 10 years ago during the sellers market.

I would see the advertised price, and walk in, the guy would see a realator with me and hand me a different sheet with price increased 6%. I'd usually just hand the sheet back to him and say good luck and leave.

Probably not an issue with the buyer's market now, but it was back then.

[wade moore]

Well without getting into a debate about statistics re: how many homes are sold in the country using the MLS, the avg. price of homes bought & sold with and w/o Realtors etc., the amount of exposure one can achieve for their own $ vs. the part of the commission the Realtor spends on exposure (if anything at all), etc. lets just say I am biased. Very rarely have I seen a home carrying two prices, 1 w/ a Realtor & a price without, advertised.


I think this is the best one to pick out on this issue.

I just think you're wrong flasch.

I know plenty of people that have negotiated a price based on the net profit they will make on the house. This means, what they get in their pocket after commission, etc.

You're naive if you think that a buyer without an agent cannot buy a house for "cheaper" than a buyer with an agent.

I've always thought the whole "it's free" is a bit silly. It puts you at a competitive disadvantage if you are competing with a) another buyer or b) a seller that has a bottom line net profit.

[Flasch186]

ok. FSBO vs. listed homes statistics perhaps are wrong, could be.

& a failure to recognize that there isn't much net, if any at all to be had, renders debate moot IMO.

[Flasch186]

It's all about the negotiation process. Are you telling me that, as a seller's agent, someone wouldn't come in and say, "hey, you don't have to puy the buyer's agent fee" and it wouldn't be a more attractive offer?

(FWIW, I always use an agent)

Im not understanding the scenario in which the above occurs.... Are they standing there with their Realtor and they say that? Do you mean as a "Listing Agent"?

[wade moore]

ok. FSBO vs. listed homes statistics perhaps are wrong, could be.

& a failure to recognize that there isn't much net, if any at all to be had, renders debate moot IMO.

I thought we were specifically discussing buyer's agents here? What do FSBO vs. MLS houses have to do with buyer's agents?

I think it's common sense that listing with an agent will be more successful than FSBO, that's not what we're talking about here.

I don't understand what you're trying to say about the net.

[Flasch186]

I was simply using that title to reference all the topic encompasses including buyer's agents, price one pays, # of offers to compete with, commission v. Value, closing costs etc.
Neither one of us will convince the other so I too don't understand the point of this.

[lordscarlet]

I was simply using that title to reference all the topic encompasses including buyer's agents, price one pays, # of offers to compete with, commission v. Value, closing costs etc.
Neither one of us will convince the other so I too don't understand the point of this.

Could you at least point us to the statistics you are talking about? I am interested in seeing them.

[Flasch186]

When I get home. However when they come from the NAR wont you just discount them making it a waste of our time?

For example, people pricing their home to exclude an Agent (lets say) would be cutting out:

Information sources used in home search:

Internet: 90%
Real estate agent: 87%

...of buyers.

For Sale By Owner (FSBO) Statistics

The median selling price of an open-market FSBO home was $185,000, while the median price for all agent-assisted sales was $215,000. The median home size in FSBO sales was smaller than homes sold with professional assistance – 1,700 square feet for FSBO homes, compared to 1,870 square feet for agent-assisted sales.

Or Trulia's quote:

For Sale By Owner (FSBO) Statistics
Did you know?
. . . the typical FSBO home sold for $187,200 compared to $247,000 for agent-assisted home sales.

from another brokerage site (could be any of them but in this case it is Doorfly.com)

It is a statistical fact that the competent agent negotiates a higher sale price than the owner does. The buyer responds differently to the agent than they typically do with the seller.

The buyer of a "By Owner" expects to pay less than the fair market value because they don't expect the services of the professional.

FSBOs sell at least 3% below the real estate industry sales.

For Sale By Owner sales typically take longer to secure an offer and longer to get the offer to closing.

If the property is on the market just one month longer than it could have been, about 1% is lost in costs to the seller.

Statistics tell us that only about 3% - 4% of home buyers actually buy the home that they called on.


and....

Pure “For-Sale-By-Owner” transactions – where the seller did not know the buyer – remain historically low at 6 percent, according to the 2009 NAR Profile of Home Buyers and Sellers.



Thats a lot of the market to cut out to try to save 3% not to mention all of the ancillary benefits you get using a good Realtor...


Thus a home sold using a Realtor is FREE to the buyer, the Seller pays for it and a Good Realtor (with a Good Selling agent on the other side) earns it especially in the current climate.





ANYWAYS, the point is that when a seller PAYS for the buyer to have an agent, it is free to the buyer. IF the FSBO wants to price a home twice go ahead, by the time they get their home sold, for the lesser price, and get it done, statistically it is said they'll have spent/lost far more than what they couldve spent using a Realtor, blah blah blah. Now that that is out there, if you dont trust the stats (like I dont - although the conclusions are probably the same) then so be it however the buyer is NOT paying to have a GOOD agent by their side. If they get suckered into one of the big brokerage houses and linked ot one of the puppy mill agents and theyre shite (which most are) than that sucks, but if you use a good one (me :) ) Then I'm worth every penny. Im biased in this arena as well as the Realtor arena so you can pretty much ignore this post if you want.

[wade moore]

You continue to throw out stats about FSBO - I've agreed with you that it costs you in the long run to sell without an agent.

Again, I'm not seeing anything concrete that says the same for BUYING without an agent.

[flere-imsaho]

Good grief I cannot emphasize this one enough. I hated my realtor. Also get a good home inspector.

Thought I'd re-emphasize this. We had a great realtor who listened to what we wanted, showed us 7 houses on the first day, three of which were great, and one of which we bought an live in happily six years later.

Also the home inspector. Pay for the full inspection. This is a huge purchase - you should want to know everything about it before you buy it.

Also, when figuring out how much you want to spend on your mortgage, don't forget taxes and homeowner's insurance, plus utilities and maintenance.

[JonInMiddleGA]

Have looked at, God knows how many houses, with a buyer's agent each time.

Never found any indication it cost me an extra penny. When you're working with a buyer's agent, the only impact on the distribution of money seems to be that the seller's agent ends up with only half the commission instead of all of it.

[lordscarlet]

Have looked at, God knows how many houses, with a buyer's agent each time.

Never found any indication it cost me an extra penny. When you're working with a buyer's agent, the only impact on the distribution of money seems to be that the seller's agent ends up with only half the commission instead of all of it.

That's my impression as well. You have to really negotiate to lose that amount -- the default is for the seller's agent to get all the commission. He doesn't automatically get half.

Despite having a discussion about the numbers with Flasch, I recommend everyone have an agent. An agent IMO is very beneficial during the negotiation and contract process. With the internet today they're not a ton of help in the search process, though. I spent at least 2 hours a day looking at houses online when I was looking -- an agent just can't put that sort of time into it.

[dwardzala]

Thought I'd re-emphasize this. We had a great realtor who listened to what we wanted, showed us 7 houses on the first day, three of which were great, and one of which we bought an live in happily six years later.

Also the home inspector. Pay for the full inspection. This is a huge purchase - you should want to know everything about it before you buy it.

Also, when figuring out how much you want to spend on your mortgage, don't forget taxes and homeowner's insurance, plus utilities and maintenance.

I'd also recommend being present during the home inspection. You will learn a lot about the home you are buying while walking around it with the inspector (things like where the main water shutoff valve is, things about your electrical and HVAC systems, what's probably been upgraded/replaced and what is original, etc.)

[Flasch186]

That's my impression as well. You have to really negotiate to lose that amount -- the default is for the seller's agent to get all the commission. He doesn't automatically get half.

Despite having a discussion about the numbers with Flasch, I recommend everyone have an agent. An agent IMO is very beneficial during the negotiation and contract process. With the internet today they're not a ton of help in the search process, though. I spent at least 2 hours a day looking at houses online when I was looking -- an agent just can't put that sort of time into it.

tell my wife that.... she hates how I handle this job (as well as starting the brokerage)

[chesapeake]

I'd also recommend being present during the home inspection. You will learn a lot about the home you are buying while walking around it with the inspector (things like where the main water shutoff valve is, things about your electrical and HVAC systems, what's probably been upgraded/replaced and what is original, etc.)

+1

And a good home inspector should give you a detailed written report on what s/he found in the the house.

[lordscarlet]

tell my wife that.... she hates how I handle this job (as well as starting the brokerage)

Well, first of all, from everything you've said, your market is very odd compared to here. :) But, having said that, I absolutely love my Realtor. He does a fantastic job (I have used him for three transactions) and was a friend before becoming my Realtor. However, there was not a single house he showed me that he found before I had thoroughly investigated it on Redfin/etc. He did have the added benefit that his searches in MRIS that were emailed to me every morning could be more specific/accurate than Redfin. Most notably, he could draw his own boundaries. With Redfin I could only use pre-defined neighborhood boundaries for the search.

But I digress... I would look at every single home emailed to me, google the owners names, check crime statistics/etc (until I knew that stuff just based on the neighborhood). Some of that a Realtor isn't even ethically allowed to tell you about (whether it is a "safe" neighborhood, the things that blogs can bring up about a neighborhood/property/etc). But, really, a motivated buyer is going to be honed in on his specific needs. Let's say an agent has 10 buyers he is representing (I have no idea how high/low that number is). For him to spend 2 hours looking at homes online for each.. I mean.. you do the math. Granted, some of those homes will overlap, but... Anyway.. I'm preaching to the choir here. :) What I tell people is that they should absolutely have an agent for the legal part, basically. But, not to be demeaning, but the searching part is really just them opening doors.

Having said that, the other advantage to having the realtor with you while looking at houses is their experience with repairs. They are certainly not home inspectors or general contractors (at least in most cases), but they've been around and can spot common problems and have a general idea of how much those may cost to repair. Today you're paying for their experience in the evaluation, negotiation and contract process. The days when a Realtor would surprise you with an amazing home you've never heard of are fading in the distance.

[johnnyshaka]

So, if a buyer's realtor gets paid based on the commission of the sales price then wouldn't they benefit from a higher sales price?

[Masked]

So, if a buyer's realtor gets paid based on the commission of the sales price then wouldn't they benefit from a higher sales price?

Exactly and they don't get paid until you actually buy a house so they have an incentive to get you to buy sooner rather than waiting.

[lordscarlet]

So, if a buyer's realtor gets paid based on the commission of the sales price then wouldn't they benefit from a higher sales price?

The actual realtor walks away with like 1% or so. So fighting to get 10,000$ more is worth about $100 to the agent. Does it really seem like that big of a deal? It's much better that they go with a lower price and make sure the deal gets done than fight for $100.

[Swaggs]

Exactly and they don't get paid until you actually buy a house so they have an incentive to get you to buy sooner rather than waiting.

Agreed. Another shady practice that I see them pushing for more and more is folding the closing costs into the sale price (ie: seller "pays" buyer's closing cost) and then collecting 5-6% of that, as well.

I would probably never buy or sell a house without a realtor, but it is an uneasy alliance. I appreciate their knowledge of the market and the closing process, but the manner in which they earn their money leads me to be very skeptical of where their interests are.

[Flasch186]

without quoting one of the quotes above, this is just not happening right now here. Appraisals are tight and lending guidelines are tighter.

If anything, in some cases, if a buyer really really loved a home and I knew it had multiple offers I could recommend to my buyer's to make a really high offer knocking the other offers out, knowing that when the appraisal comes in, the seller is going to lower the price back to the field we started in.

Anyways, after broker's cuts & time spent, etc. It isnt worth trying to push up a price that will never stick anyways due to the appraisal issue and repairs issues that have already been brought up. Perhaps in a seller's market you'll find that more readily but not right now.

PLUS if you do a shite job, your customer is going to find out when they meet the neighbors etc and you'll have gotten bad word of mouth which is a killer as opposed to 'raving fans' which is what you need for longevity.

[johnnyshaka]

I would probably never buy or sell a house without a realtor, but it is an uneasy alliance. I appreciate their knowledge of the market and the closing process, but the manner in which they earn their money leads me to be very skeptical of where their interests are.

Knowledge of the market? Pay enough attention to the area you want to buy in and you'll be just as informed as any realtor. Call homes after they've been sold and ask what they sold for...99% of the time they're happy to tell you.

And the closing process is nowhere near as complicated as they make it out to be...I just sold my place by myself and the process is straight forward and very easy...up here, at least.

[JonInMiddleGA]

Knowledge of the market? Pay enough attention to the area you want to buy in and you'll be just as informed as any realtor. Call homes after they've been sold and ask what they sold for...99% of the time they're happy to tell you.

If you believe the average person is willing (or capable) of putting in enough time or effort to track those things down, I believe you're overestimating the average person by a pretty wide margin.

And the closing process is nowhere near as complicated as they make it out to be...I just sold my place by myself and the process is straight forward and very easy...up here, at least.

Makes me wonder if location isn't playing a role. I've endured an 10+ hour closing, had another that was more reasonable in length but was still about as pleasant as a traumatic amputation. The single most miserable "event" I've dealt with in my life, from the business standpoint it's easier & more pleasant to buy a coffin & plan a funeral.

Those things said, let me be clear on something else though: I trust the average realtor I've met about as much as I trust the average lawyer or doctor. That is to say, slightly more than the average politician and slightly less than the average crack dealer. Regardless, in each of those cases, they're more qualified, more willing, and more capable of working within their specialty than the vast majority of the rest of the world.

[Flasch186]

...and thats only the good ones which is only about 10% of them and I think I know because for almost 10 years I had to work on the other side of the table from them {shudder}.

[johnnyshaka]

If you believe the average person is willing (or capable) of putting in enough time or effort to track those things down, I believe you're overestimating the average person by a pretty wide margin.

I suppose somebody needs to be motivated to do so.......something $10,000-15,000 did for me. I am by no means a "go-getter" but when that kind of cash has the potential to end up in my pocket vs. somebody else (and after seeing how little work it really was/is...again, keeping in mind the amount of savings) then I figured it was worth a shot. Remember, there are LOTS of realtors in this world for a reason...*cough* easy money *cough* ;)

Makes me wonder if location isn't playing a role. I've endured an 10+ hour closing, had another that was more reasonable in length but was still about as pleasant as a traumatic amputation. The single most miserable "event" I've dealt with in my life, from the business standpoint it's easier & more pleasant to buy a coffin & plan a funeral.


Maybe that's it then. The closing of the sale of my house probably took about 2 hours, my total time, over a few weeks...including driving to the lawyers' office a few times. The buyer and I signed off on everything once conditions were met and then the lawyers did their thing and had us sign everything once they finished their stuff.

[lordscarlet]

I think the argument Flasch would make is: Did you sell for the same you would have with a realtor?

[lighthousekeeper]

I think the argument Flasch would make is: Did you sell for the same you would have with a realtor?

maybe not, but between the seller and buyer (or combination thereof), someone made out 6% better.

[johnnyshaka]

I think the argument Flasch would make is: Did you sell for the same you would have with a realtor?

If that was directed at me then I would have to say pretty darn close. My neighbour sold for nearly $10,000 less than us but we had a few upgrades that I would think would probably make our place worth that much more, maybe a little more. We probably could've listed a little bit higher but it would've put us over $300,000 and I think that would've definitely deterred a lot of buyers for a place like mine...a half duplex, more or less a starter home.

[terpkristin]

I'd also recommend being present during the home inspection. You will learn a lot about the home you are buying while walking around it with the inspector (things like where the main water shutoff valve is, things about your electrical and HVAC systems, what's probably been upgraded/replaced and what is original, etc.)

I didn't know you could get it done without being there....I was definitely there for mine, thought it was just what you had to do; take off work for the inspection, take off work for the closing. Who knew? :)

/tk

[cartman]

I didn't know you could get it done without being there....I was definitely there for mine, thought it was just what you had to do; take off work for the inspection, take off work for the closing. Who knew? :)

/tk

Yep, mine happened while I was still living over in Europe. That made it a bit difficult to be there in person. :)

[lordscarlet]

maybe not, but between the seller and buyer (or combination thereof), someone made out 6% better.

Not if the final price was 7% less than it would have been if a realtor was used.

[Sun Tzu]

Update:

We toured about 20 houses in two days. Day one we looked at 12 houses, spending most of our time in three or four houses, and very little time in the rest. That night (which was a Friday night on a holiday weekend) we spent about 20 minutes walking the neighborhood between 10 and 11pm. One of the houses had an obvious rental right across the street, which, by coincidence, was having a party with about 30 teenagers pulling up every five minutes. The other three houses were dead silent, in great neighborhoods.

Day two we did a second tour of one of the previous houses, and also looked at eight more. That night, we put an offer in on the house that we did a second tour of. Here are the logistics.

http://hoopes.homestead.com/front_small.jpg

Two story house
1,796 sq feet living space
6,534 sq foot lot
3 bed w/ den attached to master suite
2.5 bath
walk in closets
bar area
pool
2 car garage
wood burning fireplace
dark laminate flooring
new roof, new HVAC, new exterior and interior paint
remodeled kitchen w/ granite & new SS appliances
remodeled bathrooms

It's listed at $249k

The sellers bought the house in October of '09 for $185k and flipped it. They originally listed it at $259k and dropped it to $249k after a month. We looked at the comps and decided that they were overpriced by quite a ways. We offered $228k w/ a 3% credit toward closing costs and a year home warranty. Our realtor says that the sellers spent more money than they should have fixing the place up, and wound up pricing the house out of the neighborhood. I say, that's not our problem, and nobody is going to pay more than the house is worth, especially in a buyers market like Sacramento. Here's what happened.

They countered...with $245k and NO closing credits. Which is ridiculous.
We countered back (last week) with $230k, WITH closing costs, and a full packet of comps showing why this is the best offer they're going to get.

Both realtors (ours and the sellers) know that this is a fair offer, so word is now that the sellers are in negotiation with another property. They've acknowledged that they're going to have to take a loss on this property, but if they can make that up with the new property, they'll just bite the bullet and take our offer.

We're supposed to hear back in the next couple days on how that goes. I do not like waiting...sigh

[Swaggs]

Looks nice and sounds like a great deal on the price per square foot.

Did you guys not give them a 24 or 48 hour deadline?

[johnnyshaka]

Very nice place...good luck!!

[Sun Tzu]

Thank you!

We gave them 72 hours, but since the seller wants to wait to see what happens on this new property, we have to wait too. As I understand it, if he accepts post-72 hours (which has already expired), we have to accept his acceptance to actually go into contract.

[cubboyroy1826]

Good luck Sun it looks like a nice house.

[Swaggs]

Gotcha.

Well, good luck. I know that both buying and selling our first home was really stressful, but exciting at the same time. The waiting stinks, but it sounds like you found one that you like and, even if they don't agree to your last offer, you guys are close enough to make something work.

[Sun Tzu]

Gotcha.

Well, good luck. I know that both buying and selling our first home was really stressful, but exciting at the same time. The waiting stinks, but it sounds like you found one that you like and, even if they don't agree to your last offer, you guys are close enough to make something work.

We keep saying that we're not willing to overpay for a house, and if we go any higher than we just offered, we would be doing just that. There are several houses in the immediate area (including on the same street) that have sold or are listed at less than our offer. One of these houses has an identical floorplan, and is also flipped, but is listed at $225k. The flip-job isn't as high end, but it's certainly not $25k more. It's pretty standard for houses in Sac to sell for about 10% less than their list price.

[cubboyroy1826]

Yeah if your offer is based on the comps you have researched the appraisal might be an issue with a higher offer.

[Dutch]

This sounds extremely familiar to a house I put an offer in on.
The problem was they couldn't lower the price as they had no capital and were in danger of shortsaling...if they

can't negotiate be wary that you aren't overlaying. Sounnds like your original offer is very fair. Did youverify there sale price via the county property appraiser?

Update:

We toured about 20 houses in two days. Day one we looked at 12 houses, spending most of our time in three or four houses, and very little time in the rest. That night (which was a Friday night on a holiday weekend) we spent about 20 minutes walking the neighborhood between 10 and 11pm. One of the houses had an obvious rental right across the street, which, by coincidence, was having a party with about 30 teenagers pulling up every five minutes. The other three houses were dead silent, in great neighborhoods.

Day two we did a second tour of one of the previous houses, and also looked at eight more. That night, we put an offer in on the house that we did a second tour of. Here are the logistics.

http://hoopes.homestead.com/front_small.jpg

Two story house
1,796 sq feet living space
6,534 sq foot lot
3 bed w/ den attached to master suite
2.5 bath
walk in closets
bar area
pool
2 car garage
wood burning fireplace
dark laminate flooring
new roof, new HVAC, new exterior and interior paint
remodeled kitchen w/ granite & new SS appliances
remodeled bathrooms

It's listed at $249k

The sellers bought the house in October of '09 for $185k and flipped it. They originally listed it at $259k and dropped it to $249k after a month. We looked at the comps and decided that they were overpriced by quite a ways. We offered $228k w/ a 3% credit toward closing costs and a year home warranty. Our realtor says that the sellers spent more money than they should have fixing the place up, and wound up pricing the house out of the neighborhood. I say, that's not our problem, and nobody is going to pay more than the house is worth, especially in a buyers market like Sacramento. Here's what happened.

They countered...with $245k and NO closing credits. Which is ridiculous.
We countered back (last week) with $230k, WITH closing costs, and a full packet of comps showing why this is the best offer they're going to get.

Both realtors (ours and the sellers) know that this is a fair offer, so word is now that the sellers are in negotiation with another property. They've acknowledged that they're going to have to take a loss on this property, but if they can make that up with the new property, they'll just bite the bullet and take our offer.

We're supposed to hear back in the next couple days on how that goes. I do not like waiting...sigh

[Sun Tzu]

I haven't confirmed with anyone their sale price of $185 in October, but I have seen it posted on a half dozen sites. We were stunned by their counter of $245 w/ no credits...we even considered telling them to stick it. Judging by what the selling agent has said however, it doesn't sound like our offer would push them into the short sale zone.

[cubboyroy1826]

Good point Dutch. Some people cannot go any lower due to what they owe.

[terpkristin]

Good luck! Without sounding cliche, the waiting really is the hardest part.

/tk

[Flasch186]

good Realtor if it was s/he that suggested including the comps with the offer. Many people dont know that you can 'include' anything when submitting your offer, pictures of the family, a letter, etc. Sometimes it works, sometimes it doesnt but as long as the included stuff is honest I see no problem with it one bit.

[Sun Tzu]

I got this email from my Realtor last night.


I heard from the xxxxx agent that the seller just won't budge. I think he is not rooted in reality, and will regret this decision, but that's where he is.

So, sounds like we're moving on and continuing our search. The man is delusional if he thinks someone is going to pay $25k more for that house than any other house around.

[Dutch]

Short Sale is probable for them (or just a curiousity seeker). Definately not a serious seller in any event. Sorry to hear that, but it's still a buyers market, there are many other fish in this sea right now. :)

[Sun Tzu]

Short Sale is probable for them (or just a curiousity seeker). Definately not a serious seller in any event. Sorry to hear that, but it's still a buyers market, there are many other fish in this sea right now. :)

I'm not sure it's a short sale though. It's an empty house, and we know for fact it was flipped. He supposedly flips houses for a living, but goofed and spent too much on making upgrades in this place. He bought the house for $60k less than what he's selling it for.

[JediKooter]

That dude can suck eggs then. There's just not as many suckers out there right now for him to be asking what he's asking for. Keep on looking man, you'll find something you two like soon.

[lordscarlet]

I'm rather certain you have to disclose if it is a short sale? Flasch?

[flere-imsaho]

Yeah, this is definitely not the kind of market where you should feel like you have to settle as a buyer. Keep looking and you'll find something.

[terpkristin]

Yeah, this is definitely not the kind of market where you should feel like you have to settle as a buyer. Keep looking and you'll find something.

Agreed. Bugger the seller...but keep an eye on the house while looking for others. He might come to his senses later, and if you're still looking if/when he does...

/tk

[Flasch186]

I'm rather certain you have to disclose if it is a short sale? Flasch?

I can only speak for the NEFAR and up here a Seller has to give the Realtor permission to disclose if its a shortsale. Thus if they dont check that box we cant...

That being said, I'd never work for/ take the listing of someone that wouldnt let me market a home honestly and properly.

Edit to add: the box they tick is for 'public' marketing so that being said it may be a gray area about what you can/cant disclose to a buyer who inquires. I however, wouldnt disclose it without the seller's permission due to the box... hence why I wouldnt take the listing. It would cause me an ethical dilemma later and I wont have it.

[Honolulu Blue]

sounds like we're moving on and continuing our search.

Sorry the first one didn't work out, but you'll find something you can live with. Keep up the good work.

[lordscarlet]

We put in 4 offers and had a short sale offer accepted by the seller. We were waiting on bank approval for a couple months and then found the home we eventually bought. I hate, "everything happens for a reason," but this house was the best of the 5 we put offers on (that's a little bit of a lie, there is the "dream house" that we just had to bail out of a bidding war on, but it would have ultimately been "too much house").

[Sun Tzu]

We put in 4 offers and had a short sale offer accepted by the seller. We were waiting on bank approval for a couple months and then found the home we eventually bought. I hate, "everything happens for a reason," but this house was the best of the 5 we put offers on (that's a little bit of a lie, there is the "dream house" that we just had to bail out of a bidding war on, but it would have ultimately been "too much house").

So, if you have a short sale offer accepted by the seller, and while you're waiting for bank approval you find another house, you can just bail on the short sale with no repercussions?

Thanks HB

[lordscarlet]

So, if you have a short sale offer accepted by the seller, and while you're waiting for bank approval you find another house, you can just bail on the short sale with no repercussions?

Thanks HB

Basically. Or so my realtor explained it. I think, perhaps, technically you could be stuck in it. However, my understanding (Flasch probably knows more) is that the way Short Sale contracts (law?) is written, the day the bank approves the offer you can take it or leave it. So if it hasn't been approved you can just say, "Well, I'm going to nullify the contract when it is approved, so we might as well stop now."

My understanding could be incorrect, though. I know for a fact that I got out of my contract without any issues. Some Short Sales are drawn out so incredibly long that it would be rather shitty if you can't back out at some point. I think they also often have an expiration on the offer.

[DanGarion]

So, if you have a short sale offer accepted by the seller, and while you're waiting for bank approval you find another house, you can just bail on the short sale with no repercussions?

Thanks HB

Totally. If all the parties involved haven't accepted the offer anyone can still back out. Heck you usually can get away with backing out at the last minute, especially if you don't feel comfortable with the sale after things have been finalized (before closing).

We had to put a 10k good faith deposit down on our house a couple weeks before we signed the closing papers, but our realtor basically told us that it's very atypical for the seller to demand to keep the money if you back out, especially since there are so many things the close of the sale is contingent upon. (Inspection, Repairs, Final Loan Approval, etc.).

[JediKooter]

Isn't 2 months kind of an oxymoron for calling something a short sale? Or does short sale have nothing to do with how long it takes?

[Greyroofoo]

I think a short sale is selling a property for less than what you owe on it.

[lordscarlet]

Isn't 2 months kind of an oxymoron for calling something a short sale? Or does short sale have nothing to do with how long it takes?

Short sale means you're selling it short of the mortgage amount.. or something like that...

[JediKooter]

I think a short sale is selling a property for less than what you owe on it.


Short sale means you're selling it short of the mortgage amount.. or something like that...

Ah, ok. Thank you gentlemen.

[Sun Tzu]

Ah, ok. Thank you gentlemen.

http://www.techepics.com/files/all_your.jpg

[JediKooter]

http://www.techepics.com/files/all_your.jpg

Haha!

[dacman]

All your base are belong to Sun Tzu.

[Sun Tzu]

Alright, so we spent this past weekend touring some more houses, and we've found another house that we're going to put an offer on. Here's the info...

http://5108filbert.homestead.com/10060515_0.jpg

There's on caveat to this house. It's a short sale. It's located in an absolutely fantastic neighborhood, in fact, probably the best area in all of Sacramento/Fair Oaks. We're talking places with 4-6k sq feet and higher, crime rates next to zero, and Mrs. Cleaver in the kitchen cooking an apple pie. There are two streets with older/smaller homes where housing prices are over 100k less than the surroundings. The houses are still beautiful, and that's where this house sits. The house was originally listed at $295k two months ago, and has dropped to $235k since. That's perfect for us, being just 5k more than we offered on the last house. We're going to get a lot more information on the house today, as our Realtor is supposedly talking to the listing agent at length. I'll fill in more info as I get it.

Any recommendations on Short Sales?

[Edward64]

Somewhat related, glad to say I got my house refinanced 15 years @3.75%. A hassle but significant savings.

[Flasch186]

Any recommendations on Shot Sales?

Patience.

Have the shortsale docs already been submitted to the bank? Is there a negotiator assigned? Is there more than one loan? Does the seller have a hardship? Which bank is the lienholder? Is the selling Realtor a SS specialist?

[Sun Tzu]

Patience.

Have the shortsale docs already been submitted to the bank? Is there a negotiator assigned? Is there more than one loan? Does the seller have a hardship? Which bank is the lienholder? Is the selling Realtor a SS specialist?

Ok, so I just heard from our Realtor, who said she had a long conversation with the listing agent. Here's the lowdown.

Yes, the docs have already been submitted.

I have no idea

Yes, there are two leinholders. One is Wells Fargo, and I forget the name of the other one (not a big bank).

The seller has already established that they have a verifiable hardship. Supposedly the main breadwinner of the household lost their job, and a few other things.

Our Realtor (who has 30+ years experience) said the selling agent is a SS specialist, and commended her over and over on how well she's been handling this. She has already spoken to both leinholders, and according to her, if we agree on a price, the banks should give a thumbs up within 4-6 weeks.

That being said, we sent off our initial offer just a few minutes ago. Here's how it breaks down.

$225k
3% sellers assist for closing costs (not a necessity, but hey, it couldn't hurt)
60 day commitment period
1% deposit to be held in escrow

The big difference with this Short Sale, is that we will be required to remove our contingencies immediately upon contract execution, instead of post-bank approval. So, if the banks take forever and we get restless, or if they just flat out say no, we could be out the cost of an appraisal, pest inspection and home inspection. Ouch...

I wrote up a personal letter to the sellers, and included it in the offer...I'll keep ya'll in the loop.

[Flasch186]

GOOD LUCK!!!

If you know anyone around here who needs a good Realtor. I think I know one :)

[Sun Tzu]

Alright...here's an update on the house.

We finally heard back from the first lein-holder about a month and a half ago. They said no to $225k, and countered with $250k. The Wife and I seriously went over our budget and decided that though we would have liked to have gotten the place for $225 (an absolute steal) we think $250 is a fair price that's still within out budget. We accepted, and moved forward pending approval of the second lein-holder.

Two days before X-mas (over a month later) we got a call from the Realtor saying that the second lein-holder has approved the short-sale. There was just one issue...interest rates had jumped since we originally agreed to pay $250. They had jumped so much in fact, that we no longer qualified for the loan. We were expecting rates to stay put around 4.375 for a 30 year fixed FHA, but they jumped to 4.75 which put our debt/income ratio over the limit. We could buy down the rate, but at four points, which is an extra $10k that we didn't want to spend. So...over X-mas we weighed our options and decided we would start looking at other houses. Last Monday, as a last ditch effort, I called around some other lenders and miraculously found one that was able to get me the rate we wanted for a half point...w00t! I filled out untold piles of paperwork and locked the rate in for 45 days. Fantastic!

Monday we had the inspection done, and it came back fabulously. Several things were wrong, but nothing that couldn't be fixed on a weekend project. Note to self: every weekend from closing time thru the Opening Day of baseball season is already booked solid with home stuff.

The Appraisal was also Monday, which came back $252, 2k over what we're paying...yesh! Today is the Pest inspection. We're also supposed to hear back about final approval on the loan today. The maximum debt/income ratio you can have for an FHA loan is 51%, and we are exactly at 51%. We're going off of my Wife's credit score of 800, so hopefully that will be strong enough for them to give the approval. If we get denied after all this time, I'm going to lose it.

I can't explain how excited and nervous I am right now. I'm not usually one to get nervous about much of anything, but I feel like a kid on the first day of school. I'm glancing at my Outlook inbox every three minutes to see if our Mortgage officer sent me the approval email yet. I'm already mentally and emotionally moved in to this house...criminy. I need a drink.

Thanks again for all of the pointers throughout these three full pages. Your advice was priceless, and hopefully this thread will help someone else along the way.

[JediKooter]

Good luck Sun Tzu.

[Sun Tzu]

Thanks Bri...er...JediKooter :)

[DanGarion]

Good luck man, I'm hoping you finally get it!

[Sun Tzu]

Thank you good sir.

*edit* and thank you johnny...the FACC should advance tonight :)

and Marc!

[johnnyshaka]

Good luck, dude!

[Marc Vaughan]

Good luck

[chesapeake]

Good luck! Incidentally, my wife and I just bought a new house a little closer to downtown DC and will move in on Saturday.

[Sun Tzu]

Congrats chesapeake!

We got the pest inspection results back already. Zippo termite damage, though he did recommend some work be done on some siding in back. He also found some sort of clothes eating Moths, or somesuch, in the closets, which I guess is common in homes that have been vacant for a while. Anyone have any experience with this type of stuff?

[Dutch]

Finally! Congrats, good job.

[lordscarlet]

Good luck! Incidentally, my wife and I just bought a new house a little closer to downtown DC and will move in on Saturday.

Falls Church it appears, based on your profile. Congrats! My Dad was raised in Falls Church and lives in that same home now.

[chesapeake]

Thanks! I live in unincorporated Falls Church today. Tomorrow I will live in Arlington. It won't be a huge difference -- about 15 minutes less on my morning commute to the Hill. But it is definitely an improvement in that regard, plus there will be more space for my kids to grow into.

[terpkristin]

Right on to all the new homeowners in this thread. :)

/tk