House buying tips?

[Jazzy]

What are some tips you would give somebody looking to buy a house?

 

[Lamb]

Make sure to get a home inspection! Have it as a clause that you can back out if the inspection brings up things that would cause issues.

Make sure to do your homework on the various types of loans out there.

Don't buy more than you can handle and don't let yourself go paycheck to paycheck just to have that forever home. Because things could happen in your life where you lose that forever home when you can't make some mortgage payments.

Always have an emergency fund set aside. You never know when that furnace will go out in the dead of winter.

Look at the crime maps for the area. You want to know if it's safe.

Look at the maps for child sex offenders in the area.

Check out the school ratings. Even if you don't have children, it affects your home value.

Pay attention to property tax as well as the school tax that's based on your property. You could pay cheaper taxes in another county or even across a river.

 

[Fritz Kobus]

Beware. Every home inspector I have come across was incompetent. Learn some things and follow the inspector around to make sure he does the job right.

 

[Josiah]

Make sure to get a home inspection! Have it as a clause that you can back out if the inspection brings up things that would cause issues.

Make sure to do your homework on the various types of loans out there.

Don't buy more than you can handle and don't let yourself go paycheck to paycheck just to have that forever home. Because things could happen in your life where you lose that forever home when you can't make some mortgage payments.

Always have an emergency fund set aside. You never know when that furnace will go out in the dead of winter.

Look at the crime maps for the area. You want to know if it's safe.

Look at the maps for child sex offenders in the area.

Check out the school ratings. Even if you don't have children, it affects your home value.

Pay attention to property tax as well as the school tax that's based on your property. You could pay cheaper taxes in another county or even across a river.

Ditto.


My beloved and I bought a traditional, single-family house (1600 square feet) on a TINY lot (not a condo) in a planned community. We got a deal because THEN it was not a sellers' market and the house (while less than 20 years old) was a bit of a fixer-upper.

We've fixed it up (it's among the nicest in the community now)... and the house value has gone up at least $250,000 from when we bought it almost 5 years ago - probably more. And my income has gone up significantly too. So, before the Pandemic, we went house shopping. BUT we couldn't buy anything. We found homes we liked... offered FULL PRICE or even up to 10% OVER the asking price... and we're out bid every time. Some of the homes we inquired about - on the market one day - were already sold, for way over the asking price. Buyers are waving any inspections... even paying the seller's closing costs and all the realtor fees. We put offers on 6-7 homes and our offer either came in after the house sold or while at or over asking price, was well under offers they'd already received. We gave up.

It's even crazier now. A house just like ours down the street sold about a month ago.... for $50,000 over the asking price... cash..... no inspections ("as is"), buyer paid all the closing costs and let the seller live in it rent free until their new home closes. It's nuts.

Sometimes, it's probably best to not buy. Wait.



.

 

[tango]

What are some tips you would give somebody looking to buy a house?

Figure what you can afford without crushing yourself under the weight of the debt. Consider what might happen if mortgage rates rise to more normal levels and make sure you can still afford it. If the mortgage will be a stretch for you at 3.9% you've got no chance if rates go to 7.9%.

Don't factor in things like an annual bonus when figuring what you can afford. It's really not helpful if you've budgeted for a $50,000 bonus only to find that your $30,000 bonus is effectively a $20,000 penalty because you needed so much more. If you can buy based on only one person's salary give serious thought to that - it's obviously easier to buy more if you can borrow some multiple of a combined salary but if you plan on having kids in the next 25 years you'll find the loan more troublesome. Obviously many people can't afford to do this especially in more expensive areas, but maybe moving to a cheaper area would help there.

Consider location, location, location. If you buy a run down property in an expensive area and fix it up you've now got a nice property in an expensive area. If you buy a property in a run down area you can do whatever you want with it but you can't fix the area. If you live between the nuclear power station and the sewage works you can put a gold roof on your house and still nobody will want it; if you live on a flood plain don't think you can be using the basement as useful storage space.

Figure out what the house would ideally have done to it and what has to be fixed as a matter of urgency. When I bought my first house the inspection showed a concern with part of a chimney stack. The mortgage lender insisted we address it within six months. It had been that way for over a decade as best as we could tell so we didn't sweat it. Five years later we remortgaged and the new lender didn't even mention it. Another 18 years later and the stack is still standing just fine, and we never did see to it. If you've got something that's a serious fire risk, fix it. If it's something that isn't quite up to code but doesn't really matter you can afford to let it slide. What matters will partly depend on you and how you expect to live.

There are a few things you can do yourself. You can get an electrical socket tester from any hardware store for less than $10 and see for yourself if sockets are wired correctly. They aren't totally foolproof but can give you an idea of whether things are done right and don't need you to do anything other than plug them in.

If you're buying a new build, or a property based on a show home, take measurements. Sometimes the show home looks spacious because there's hardly any furniture in it, or because it's got custom furniture in it that looks nice but is too small to be functional. The last thing you want is to find you can't even fit a dining table into your dining room.

Consider whether buying at all is a good idea. Many people promote buying a home on the basis rent is "dead money". And it is, but so is mortgage interest. You either pay the landlord to use his house or the banker to use his money. Unless you're lucky enough to have a honking great pile of cash on hand you just get to choose what you want to pay to borrow. Renting means the landlord can throw you out (although if you're a good tenant they probably won't) and also means you're paying the landlord's mortgage and an anticipated profit margin. It also means that if the furnace fails or the roof leaks or the basement floods it's someone else's problem to fix it and you don't have to find the $$$ to do it. On the flip side once you get to making the final mortgage payment you don't have to pay any more as a homeowner but the tenant never reaches that stage. When the housing market is in silly season as Josiah described you can easily find yourself stuck with a house you overextended to buy and now can't afford to fix. I had friends in the past who did that - they knew they needed to do some work on the house but ran out of money before they discovered some major issues they never knew about. He had to juggle a full time job with learning how to do the work on his house himself, with doing the work himself because he couldn't afford to pay someone to do it. Eventually they pulled through but they were living in a building site for a very long time.

 

[Albion]

My beloved and I bought a traditional, single-family house (1600 square feet) on a TINY lot (not a condo) in a planned community. We got a deal because THEN it was not a sellers' market and the house (while less than 20 years old) was a bit of a fixer-upper.

We've fixed it up (it's among the nicest in the community now)... and the house value has gone up at least $250,000 from when we bought it almost 5 years ago - probably more. And my income has gone up significantly too. So, before the Pandemic, we went house shopping. BUT we couldn't buy anything. We found homes we liked... offered FULL PRICE or even up to 10% OVER the asking price... and we're out bid every time. Some of the homes we inquired about - on the market one day - were already sold, for way over the asking price. Buyers are waving any inspections... even paying the seller's closing costs and all the realtor fees. We put offers on 6-7 homes and our offer either came in after the house sold or while at or over asking price, was well under offers they'd already received. We gave up.

It's understandable that you gave up, given all that you told us. However, there may be another way of looking at it IMHO.

You are going to sell your present home, I assume. If so, it will probably be in the same situation with over-bidding and the waiving of inspections, etc. in order that the potential buyer can edge out other bidders. But this situation is changing fast. Just as the boom in the sales of houses you might want to move to is waning, it is also changing for your present house. So, is it to your benefit to wait, after all, until the market is much weaker all round?

 

[tango]

It's understandable that you gave up, given all that you told us. However, there may be another way of looking at it IMHO.

You are going to sell your present home, I assume. If so, it will probably be in the same situation with over-bidding and the waiving of inspections, etc. in order that the potential buyer can edge out other bidders. But this situation is changing fast. Just as the boom in the sales of houses you might want to move to is waning, it is also changing for your present house. So, is it to your benefit to wait, after all, until the market is much weaker all round?

If you can time it right you can potentially make a lot of money by selling during a silly boom and moving into rented, then buying with cash when the market cools. The trouble is that if you get it wrong you get off the train only to find there's no room on the next one.