Home Buying Thread

[Zeste]

I can't comment on buying a home, but I did just build a very nice 2300 sqft home in Feb-May, so if there's any curiosities you have about building, I could share my experiences.

[Tuco]

October 24th, 2008
Back to the drawing board, to search for houses whose purchase would replace the disappoint of loss. As I have been more closely surveying the market I began to realize that limiting my shopping to low balling auctions would make ownership unlikely. A calculation of able houses would present perhaps one house a month that I would bid on, so I must tackle the idea of expanding my options. I clear the board and evaluate my options. One type of house is a "HUD" owned house. These are the products of FHA, where the government buys a house that no one else wants and attempts to rid itself of it as quickly as possible. Pursuing this brings back the previously rejected real estate agents, as only an agent can investigate and bid upon a HUD house.

I ask a trusted friend for a real estate contact and he fetches a card. I go to her website and it feels reputable, so I make the call to her office. She gladly receives me, asks what type of house I'd like and promises to make me an account at her website. The account never comes but a few days later I was contacted by one of her colleagues/subordinates who presents me a list of houses she found based on my requirements. They don't meet them or even come close.

Meanwhile in my search I find an interesting, foreclosed property. It is a little further from my house and a little more expensive. However it appears to be an amazing deal. Deep in the heart of one of the better communities in Metro-Detroit is a 2 acre, grassy plot pegged by a 2700sq ft house that is listed at $150,000. It is surrounded by houses valued at $300,000 and is adjacent to a large park and golf course. The downsides are that the house is butted against a busy 2 lane street and is in dire need of renovations. It is far from a tear-down house but the first floor has a few issues and the second floor is stripped to its studs. Someone bought the house two years ago and decided upon a grand scheme of remodeling. She sledge hammered the walls at the second floor and then got foreclosed upon.

October 28th, 2008
I asked my newly acquired real estate agent when her next available time was to show me this house, and she replied that she was very busy and could 'fit me in in six days.' I figured that if her office had so much business they had a one week turnaround for a showing, they would not mind if I contacted the listing agent for a showing for the house. I did this and within a few hours I was pulling into its driveway.

The back yard was beautiful. Rolling hills stretched away from the property and were dotted by large trees. The neighbors seemed like typical older white folk, which was okay. There was a healthy apple tree with large apples rotting at its feet. The Realtor showed me into the house and I saw pretty much what I expected. There was a slight, stale odor to the house, which may be typical of a property having been vacant and not aired out. The wallpaper was cracked and peeling and the drywall behind it in spots may need to be replaced. The only real notable part of it was the fact that the ceiling was 9 feet rather than the 7 feet I'm accustomed to in houses. We ventured into the basement, which was clean but did not venture under the entire house but rather 75% of it. The furnace was enormous and the walls looked sturdy and intact. There was no electricity so I made due with a mag-light. With it I did as best I could to determine the quality of the foundation and look for water damage. I could find none but would like a second look with better lighting.

With the basement and first floor taken care of I braced myself for the second floor. We passed a barrier intended to stop sawdust and climbed up the stairs. As expected the entire second floor was framed in studs and otherwise bare. I looked for the attic but was surprised to be unable to find it, as it looked quite large from the ground. Houses certainly look smaller when they are not sectioned off with drywall, but there was not much else to see up there so I hiked back down.

Overall the house was what I expected. I estimate around $35,000 of material and many long months of my time in order to get the house in shape. I would need to finish the second floor, redo some of the walls/floor of the first floor and finish the basement. The big disadvantage I saw with the house was that it was positioned right against the road and by chance it is caged by a road, neighbor and garage. The price was also a burden as well.

I've ran the numbers and have determined that at this point I could easily afford the monthly payments with $850 money left over (taking into account mortgage, insurance, taxes and utility bills). My current career as an automotive engineer looms above me like a curse, and although my company is making a profit every year I feel the threat of layoffs biting my heels.

I am in the least enjoyable part of the home buying process, the decision making one. With so many conflicting facets to this dilemma, I have trouble thinking clearly. I do not know how much time I have, as according to the agent others are making offers, but if I found out the house was taken off the market I would sign in relief, just because the burden of choice would be lifted off of me.

[bouhhan]

these are great posts tuco. all this research/self education will pay off in spades, i have no doubt. i definitely agree that real estate agents are superfluous if you know what you are doing.

i have one piece of advice: pay for a professional to inspect any property you are seriously interested in.

i've been looking for a home in the new york city area for the last 3.5 years and haven't pulled the trigger yet.

the closest i came was on a 750k townhouse that looked like a steal for the price. we did our first inspection (i've paid for seven of these now and they run @ $150 each here, and last @ 2 hrs) and the guy recommended a structural engineer to look at a tiny crack in the wall. we almost didn't do the second inspection because it was pricey ($650 if i recall) but decided to do it because we were set on buying the house and wanted to negotiate with it based on whatever he found.

the structural engineer told us that this hairline crack was moving the wrong direction, and that basically the home would need to be torn down and rebuilt within the next 10 years due to a faulty (no pun intended) foundation.

needless to say, we didn't buy the house.

it was a lesson in 'you get what you pay for'.

good luck!

[Zippygoose]

Yeah I'd have to agree. I think it's a great idea to educate yourself and do some preliminary inspection work yourself, but if you're seriously considering pulling the trigger on a home $150 is a worthy investment for a proper inspection.

Really enjoying the posts as well. I think the key advantage we (first time buyers without babies on the way) have in this situation is that time is on our side. You don't need to worry about getting into something ASAP, my advice would be to just remind yourself of that from time to time and continue to really think things through like you have been doing.

[Ravvenn]

I asked my newly acquired real estate agent when her next available time was to show me this house, and she replied that she was very busy and could 'fit me in in six days.' I figured that if her office had so much business they had a one week turnaround for a showing, they would not mind if I contacted the listing agent for a showing for the house. I did this and within a few hours I was pulling into its driveway.

You're not bound to that agent, so I'd personally look for a new one. In the event you had a good agent, going to a property without them always scares them since listing agents (especially with distressed sales) poach buyers so they can get double commission.

Distressed sales are tricky and can be traumatic. I have pictures saved from about 15 I saw and plenty of stories to go with.

Short Sale prices are almost always deceptive, they're priced very low (unrealistic) to bring in traffic in hopes of starting a bidding war. If you have a good agent, they will look up tax records and show you what they paid for the home, what they owe on it, and how many loans they have against it. Short Sales are also not short, most of them take 30-90 days before you hear back on your offer.

Bank Owned can be good deals, but it depends on the listing agent. I don't know about your area but in this area when listing agents are picked up to list these properties (bank owned, short sale, etc.) they are supposed to pick up utilities and are to be repaid after the sale. Since sales take forever, none of them do this. They're also supposed to keep up on gardening and pool services (if applicable) - every distressed sale I saw had a green pool with mosquito fish in it added by Vector Control and they also had VC notices plastered on the doors and/or windows. Some are even given a small allowance to tidy things up (touch up paint, carpet clean, etc.).

You always want to ask if the price is APPROVED (by the bank) - if it's not, it's just something the listing agent pulled out of his/her ass to get people in. 100% of bank owned properties required pre-approval letters with the bank that owns the property along with the offer, in addition to that - they require proof of funds to match your listed down payment.

If you're looking into those, don't get your heart set on one. I'm sure the market differs between here and there, but most banks work the same. Bank of America and Wells Fargo were hands down the biggest pains in my ass. Wells Fargo had a metric fuckton of REO's so on all short sales they had an average response time of 4 months or more. On one property, it had been a short sale for 380 days with multiple offers. They misplaced one guys paperwork, then found it - after he threatened to sue he ended up getting it even though he had the lowest offer.

Bank of America is anal, and they also have a lot of their loan officers call you. In addition to that, they don't run the basic pre-approval - they will 'register' themselves as your lender and do a hard pull that can rape your FICO. A few people complained they 'accidentally' ran several checks resulting in a loss of 10+ points.

BofA (in California) has shady listing agents. I don't care about name dropping, they use First Team. These people squat offers while trying to get their own buyers (for double commission). I found one house on accident looking for another, it wasn't on the MLS and after the listing agent told our agent we'd have to pay them CASH (under the table) just to see the property I found out BofA owned it and called them who welcomed us to do a drive-by.

The house was stripped and left wide open, so I got my showing for free. I told the bank the listing agent had his friend put it on Craigslist instead of MLS as they had agreed to split commission if she sold it in 5 days (they can't do that when bound by contract with a bank - it should instantly go on the MLS). Within an hour it was on the MLS and our offer was placed within 30 minutes of that.

I continued calling the bank who kept saying they never got the offer. 3 days later, the listing agent sends out an email at 11pm saying BofA moved to BidSelect. After we looked it up, the home was always on Bid Select and we could have placed an offer weeks before it hit the MLS. The agent submitted her clients offer on the 3rd day, but claimed she misplaced ours.

Funny thing was, once we found a new house (normal sale) they called our agent saying the 'winning' buyers' financing fell through.

If you find something from BofA, go to bidselect.com and see if it's there. From what I was told, they're trying to move everything over to that. They look at all offers submitted every night at 11:59 and pick one the next morning. In some cases, it works like a lottery drawing depending on the method the bank picked. Their GFD's are 1% but you have to send a certified cashiers check, and you also have to FedEx (overnight) your offer along with tons of other stupid crap.

You can search properties on bidselect for free, but you can't submit an offer without an agent.

After two straight months of being convinced every listing agent in California is a greedy devil worker, I was happy to find a normal sale. It was so fast it didn't feel real. People were nice. Negotiations are allowed, the seller pays for inspections, and the home comes with a warranty!

A helpful thing was using a mortgage broker, he could email approval letters that catered to the house to avoid people trying to counter like dicks. I'd just ask him to do like 10k over the asking price if it was a normal sale, and a lot higher over asking if it was REO/Short Sale (since their listing prices are usually bullcrap).

Get a good agent who will tell you the truth. We were lucky and I feel confident to say we had the best agent in all of southern California. This guy would request a midnight showing if I asked. He was always honest, even if it wasn't what I wanted to hear. He has morals, which is rare 'round these parts.

Hopefully that didn't discourage you, I know some agents are money driven and won't go out of their way to find what you asked for and they won't tell you when something is BS. Grats on surviving auctions, they sounded scary. Here they are on the court steps and you basically need all of the money with you.

Good luck with your search!

[Eomer]

Very much agreed on real estate agents. Most are either total scum, dishonest, or just plain old incompetent. It's a fucking racket as far as I am concerned. If you're feeling ballsy, you can just skip the agent part if the seller's agent is willing to let you, and then negotiate a much lower commission (in total, since the half going to the buyer's agent obviously is no longer an issue).

I don't know what it's like in your area, but in Edmonton upwards of 30% of homes are now sold through commission free online services, like Comfree: Comfree Private Sales, For Sale By Owner, Private Sale, Homes for sale, Real Estate, Winnipeg, Calgary, Edmonton, Vancouver, Brandon, Medicine Hat, Lethbridge, Red Deer, Perth, Sydney, Australia - ComFree

I sold my first condo through them and had a great experience doing it. You might not get as much traffic as you would if you were listed on MLS through a licensed agent, but you can still get a good price if you know what you're doing. It was fucking obnoxious though how many sales calls turned out to be fucking real estate agents trying to get me to list through them. One even had this big fancy presentation about why he's better than a regular agent, but as cheap as the Comfree service, but when I read the fine print his fees were significantly higher than what a traditional agent would have charged (here I believe the standard was 7% on the first 100k, and then 3% after that, but it's been coming down due to the competition with other services).

[Tuco]

Wow Ravven, you think I'm reading that wall of text? Just kidding. I'll be sure to check out bidselect in the case of BoA. Plus Comfree looks pretty interesting too. edit: GG Canuck website, Eomer.

I think Real Estate are going to be less of a factor for single family houses in the future, which we can all agree is a good thing.

[Eomer]

I can understand having a REA if you have a large house worth a lot of money. They DO know how to sell oil to an arab, there's no question there. And on houses that large, they're probably going to be willing to negotiate on the commission. But for buying/selling small houses or condos, I just don't think they can justify their existence.

And the fact that their commissions are based as a percentage of the sale price is just bullshit, in my opinion. Real estate went up 50% one year in Edmonton, and had gone up 15-30% in the years before. Were Real Estate agents working 75-100% harder in the summer of 2007 than they were in the summer of 2004? Fuck no! They were working half as hard, because people were panic buying shit sight unseen, the agents were barely putting any time in to it themselves.

And especially given the internet and other methods of viewing listings, it's no longer necessary to have an agent who has access to a secret database to scour through for your dream home using your criteria, you can do all that yourself. When I bought my first condo I had an agent, recommended to me by my parents, and they were fucking useless for finding decent places. I had given them all my criteria and they came up with two or three places I didn't even have to go see to know I wasn't interested. Eventually I just got on MLS.ca and found half a dozen places to look at myself. The only thing my agent did was call the listing agent and set up a time. They maybe put in a total of 8 hours in to helping me find my condo, and probably walked away with a $4,000 commission.

[chaos]

Ravvenn is right on. I recently bought a bank owned property, got a great deal on it but it does need some significant work, nothing like the place Tuco mentioned, mostly just a lot of little things plus updating the kitchen and bathrooms. Even with me being preapproved for well over the amount that this house was listed for, and having a VA loan, and all that business Indy Mac was still insistent that I get preapproved through them and even tried to get me to get the loan from them. Yeah that would have worked out great. Luckily my realtor was really great and helped me out a lot. I never got the stereotype of the shady lender, because mine was fine.

[dolaan]

I have a couple of things that maybe you have already thought about and maybe not.

1) First time homebuyer programs. I bought my house 4 years ago and I live in Rochester, NY so I am sure there will be some differences. I ended up getting 1% off my mortgage because I was a first time homebuyer. Ended up with 4.75% thru HSBC. My buddy sells mortgages thru Chase and said he could not touch that rate. Also you said you work for a car manufacture. Well, large companies will often have deals with banks offering discounts. I would talk to your benefits department and see if this is the case with you. Everything helps and while some deals can’t be combined others can.

2) Home inspections. I still believe these are necessary as they are the professionals and will just see things that a layman to the building business will miss. That being said do you due diligence as well. When my home was inspected he found a few things that would need to be addressed nothing big as the house was build in 1989 there should not be any major problems. Then a day later he presented me with this real nice folder with everything documented and I remember being impressed. I figured I have nothing to worry about and bought the house. The first time I looked at the house I remember seeing an area in the living room ceiling where it looked "off", but figured if the inspector did not comment on it must not be a problem and I forgot to specifically point it out to him. Well after I bought the house the mark kept getting bigger and one freezing cold and rainy day I noticed a drip. Well I ripped the ceiling apart and there was a lot of water damage and it ended up that a small lip on the roof would funnel water behind the siding and would wash down the side of the house. My brother and me ended up taking the siding off the house and replacing the exterior plywood/insulation/various damaged structural pieces of the house and I also had to replace a window. I cant imagine how much this would have cost if I had not have done it myself. I probably still would have bought the house but maybe not it is hard to say. I at least could have used this to negotiate a lower price or have the seller fix it as part of the sale.

Also in the basement if you have blocks and most houses do. If you see and crystals on the blocks would may want to ask about any potential water problems.

[hauwk]

And that's how the professionals do it I believe. Most of the home inspection involves 'minor' stuff.

rofl.. Who the hell inspected the house you want to buy? that is so far from the truth it's rediculous.. there's a reason you have to get certified to inspect a house... it's all about CODE.. every state has their own building code that has to be complied with then the county tacks their code on, then the city tacks theirs on, then the HOA tacks theirs on... The reason you get your home inspected before you buy it is to save you bigtime money in the event that something happens to your house.

for instance: I just got done building my fence. I built it 3 feet too close to the road (the city ordnance says I must build 15 feet from the center of the road, I went with 12 feet). Say the power goes out due to the lines snapping next to my house, if the city gets down there in the power truck and they have to drive over a section of my fence to repair the power line.. im fucked.. legally fucked. I have to repair my fence out of my own pocket and there's nothng I can do about it. That was OK with me when I built the fence. 20 foot of fence section really only costs 2-3 hunred bucks.

Now say I want to sell my house... the guys that want to buy it, get some crackpot home inspector, or better yet waive the inspection and just up and buy the house because they're stupid. Now three years later the power goes down and the city comes out and runs over their fence.. because they dont know about fence building and whatnot (nothing wrong with that at all) they get a fence company to come out and quote them to repair it.. Wha??? 5k?? to fix the entire south line of fence? Well fuck guess we dont have a choice.

That is TINY scale. Here's another - your house inst wired to code, you get what you think is home insurance for fires. Oops guess what, due to some shitty assed wiring some douchebag like me did in your house, it burns to the ground and now the insurance company is telling you to get fucked.. So enjoy paying for that piece of property minus a livable house because you decided to scrimp on your inspection or even worse waive it.

Think about it..for 99% of Americans out there, the home is your #1 investment. Now wouldn't you do the absolute MOST to protect that investment.. Think about it this way - it could be the difference between you retiring @ 60 with a home that's payed off, or being forced to work to 70 because of a fucked mortgage payment. If I were you I would find an extremely thorough home inspector that works for a PROFESSIONAL company and FOLLOW HIM/HER around your house and ASK A SHITLOAD OF QUESTIONS.. That's what I did, and Im handy as fuck - I built a fence, redid my roof, did some bathroom work.. I still followed that fucker around with a notepad and a pen during the inspection.

[hauwk]

these are great posts tuco. all this research/self education will pay off in spades, i have no doubt. i definitely agree that real estate agents are superfluous if you know what you are doing.

HOLY CHRIST..

Real Estate Agents are superfluous.. you guys are asking to get fucked in the ass and smile about it in court. How many homes have you bought and sold each? Ever wonder why there's such a thing as a Real Estate agent??

THEY PROTECT YOUR ASS and make sure you dont fuck yourself, which if your ADHD like me you wouldn't get past the 4th legal document they throw infront of you to sign when you go down to the title company. God Damn, I hope there arent kids reading this and taking it for truth..

[hauwk]

Then a day later he presented me with this real nice folder with everything documented and I remember being impressed. I figured I have nothing to worry about and bought the house. The first time I looked at the house I remember seeing an area in the living room ceiling where it looked "off", but figured if the inspector did not comment on it must not be a problem and I forgot to specifically point it out to him. Well after I bought the house the mark kept getting bigger and one freezing cold and rainy day I noticed a drip. Well I ripped the ceiling apart and there was a lot of water damage and it ended up that a small lip on the roof would funnel water behind the siding and would wash down the side of the house

I couldn't agree more. If you're home inspector gets out of his truck and he's not wearing some kind of "get dirty" coveralls.. tell him to get the fuck out and find someone who's ready to take pride in their job and do it right.


you know what's totally fucked? the next guy that comes and looks at this dude's house will instantly be able to tell that they replaced the siding and all that shit. That's gonna spark immediate questions about the roof/siding and everything involved which may end up costing him 4-5k in repairs before he's able to sell. >.<

[Eomer]

^hey jackass, no one said you don't still need to have a lawyer doing the legal/titles shit. I sold my first condo on my own without a real estate agent, and the buyer did not have one either. It was fucking easy. Outside of a couple hundred bucks for the legal fees and a dozen weekends spent having open houses, I saved myself 5-10k. By some estimates upwards of 30% of home sales in Edmonton are through various commission free services that don't have real estate agents involved.

[Tuco]

Originally Posted by hauwk

rofl.. Who the hell inspected the house you want to buy? that is so far from the truth it's rediculous.. there's a reason you have to get certified to inspect a house... it's all about CODE.. every state has their own building code that has to be complied with then the county tacks their code on, then the city tacks theirs on, then the HOA tacks theirs on... The reason you get your home inspected before you buy it is to save you bigtime money in the event that something happens to your house.

Home inspectors aren't required to know building codes nor do they typically sign off for the building being up to code.

For the house that I auctioned for, I was mostly interested in the land.

For the house I almost got, I would have got a home inspection for it. Most houses fall under this category. However I stick by my initial response that a home inspection covers a lot less than I had hoped. Most of the serious plumbing and structural issues that I would be unlikely to spot aren't part of the home inspection.

THEY PROTECT YOUR ASS and make sure you dont fuck yourself, which if your ADHD like me you wouldn't get past the 4th legal document they throw infront of you to sign when you go down to the title company. God Damn, I hope there arent kids reading this and taking it for truth..

What do REAs protect you from that the title company and bank do not?