Buying a Home
 

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.

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.

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.

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!

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

Do you know where?

Find a good Realtor. interview them make sure they 'get' you. Theyre 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.

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.

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, 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

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

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.

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.

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.

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/S...c-9f57b1177363

AND you cant make them any larger...

Same home on ours:

11268 Spurline Dr, JACKSONVILLE Property Listing: MLS® # 549418

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

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

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!

Duly noted, thank you.

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.

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.])

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."

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.

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.

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

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.

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.

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.

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 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.

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?

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.

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.

$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.

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.

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.

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. 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.

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.

Another vote for Angieslist.

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...

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!

Haha!

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.

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.


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.


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.

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.

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.

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?