How do you buy a house?

If this is your first time buying a house, OP, then get a good realtor, someone you trust and who you immediately feel comfortable with. You'll appreciate having someone there to do all the hand-holding. A good mortgage broker is key too.

If you're done this before, there's a lot you can do yourself, but first timers are going to be better served by finding a pro they trust, someone who can hook them up with the right inspectors, banks, contractors, etc.

The FIRST step is to find out just how much you can afford to spend for a house. Go through the process to get a preapproval from a lender. You're wasting everyone's time in the process if you haven't nailed down a firm maximum you will be able to spend on a house. You don't really want to go to your max in most cases but it establishes the top of your budget. Step two find a realtor experienced with first time home buyers. It's a whole different ball game then with experienced buyers. You will need to be walked through the entire process with them holding your hand. Your questions definitely indicate you need such a realtor/broker.

You typically don't do an inspection until you have an accepted offer on a house. Their is a contingency that the sales contract can be changed, or renegotiated, or dropped altogether based on the findings of the inspection. The offer comes BEFORE the inspection. And yes it's the broker that makes presents the offer and does any negotiating on your behalf based on your guidence.

Best deal, you're a long way from figuring that out yet.

Thanks R1 and R2.

Yes, first time home buyer here. Thanks for the information.

What's the contractor for, R1?

Oh, and how do you know what a "good realtor" and a "good mortgage broker" is? Anything special to look for? I definitely need the hand holding thing.

Op, buy much less house than you can afford. Try and pay cash if at all possible, even if it means 2 bedrooms instead of 3, or a townhouse or condo rather than a single family home.

If he has good credit it's actually not a great idea to pay cash when you can get interest rates locked in for less than 4%. There are better uses with higher returns for the cash.

The FIRST step is NOT to ask Dataloungers for advice. Find a trusted friend to recommend a good realtor and have them walk you through the first steps. You are not ready for an Open House quite yet. Realtor First.

Ask around, OP. You have friends that have bought houses/condos, don't you? Ask them if they used a realtor and if they liked the realtor they used. Most people will happily tell you about their experience with their realtor.

Once you find a good one, they will walk you thru the entire process and tell you what you need to do when. That's what they get PAID to do.

Good luck!

Present hole along with your offer.

You seem very bright, OP. Don't use a realtor and manage it all yourself.

[quote]Present hole along with your offer.

The hole was the offer.

Having just bought a house, it's definitely best to find a realtor. This "buyer's" realtor will take your best interests at heart when negotiating price with the seller's realtor. Plus, it's free to you (the seller pays a percentage based on the price of the house).

Since most sales are available on the internet, you can direct your realtor to which houses you want to go see,

I'm interested in a house that was built in 1920, and it's selling for $150,000.

Superficially, it has been remodeled with new appliances, flooring, etc. But I'm worried about the pipes, heating, electrical wiring, etc.

Are the sellers asking too much? Personally, I think that 150 grand is kind of high for a house that's 95 years old.

You really don't know anything about real estate R12. The price all depends on the market you're in. What you "think" about the price doesn't really matter. What are the comps for a similar property in the area?

So I'm supposed to just ignore the problems with a 95 year old house, just because it's in a high-priced "market?"

This is what I hate about real estate. I'm supposed to be okay with getting ripped off, just because I live in an expensive area.

Fuck that. There's no way I'm paying for a money pit, just because some stupid realtor tells me that's what it's "worth."

I'll tell you what it's worth, motherfucker, and not the other way around. It's my money, not yours.

Obviously R14 you shouldn't be buying a house.

Good luck, R12... You're going to need it.

[quote] So I'm supposed to just ignore the problems with a 95 year old house, just because it's in a high-priced "market?"

No. Don't buy a 95 year old house if you are concerned with maintenance issues. Trust your instinct. If you plan to live in the house, make sure you love it or it's not worth it.

Pity the poor realtor that get's stuck with this one. It's going to be a LOT of work for a few thousand dollar commission if they end up buying a place.

An inspector? Why on Earth would you buy a house from someone that is untrustworthy enough that you would need an inspector?

Let's hope that dummy R12 is also too cheap to hire the right people and will just do it himself. He'll fuck it up, of course, but at least he won't be bothering professionals.

It's not like buying a used car, dear. You don't set the price and houses don't usually depreciate in value over time. As a buyer, this is actually *good news* for you.

r19, I'm guessing you either aren't from the US or really stupid?

[quote] You don't set the price and houses don't usually depreciate in value over time

I guess you don't live in Detroit, or the South or West side of Chicago or the South Suburbs of Chicago, or Florida or Central California or...

No, of course I don't live in any of those places, R22. Why would I?

Try NYC, San Francisco, Boston, London, or where I live now - Montecito CA. But really, you don't have to live in the best neighborhood or town in order to have a property that appreciates in value. Your own improvements will increase its value along with, hopefully, a decent housing market.

There are areas that depreciate in value. Don't buy there.

Mama mia.

If you can pick up an older home in an expensive area for $150,000 do it. Just be aware you'll have to probably upgrade the plumbing and the electrical, and deal with structural issues. Everyone should get a property inspection before they buy a house, even if you're buying "as is." You need to know what condition the property is in, and what needs to be done. Getting a fixer upper in a good area is a wise investment.

OP, start by going to open houses and talking to the realtors. Also go online and look up the best realtors in your area. They always rate them. The state realtors association will tell you who the top three sellers are. Realtors who have won awards will post it in their marketing materials. There are websites all over the place like Trulia or Zillow that rate realtors.

Frankly, the only way you're going to get shown a house, aside from just walking into open houses, is if you sign up with a buyers agent. Determine the areas you want to look into, go online to one of several millions of websites that will tell you how much house you can afford, and start looking. Window shopping on Zillow or Realtor.com is the best way. Then set up appointments with your agent to see the ones you're interested in.

When you find THE ONE, make an offer. Always go lower than the listed price. You can negotiate up if you have to. Usually, your offer is pending an inspection. Listen to your agent. They 'll know what comparable properties sell for, or if your offer is too low to take seriously. They will also know if the seller has turned down other offers that were too low, or if the seller is desperate to unload, etc.

Your offer is accompanied by a check, usually around $500 -$1,000 or so. If you back out of the deal, you can lose your deposit. If the seller refuses your offer, you get your money back. If the inspection turns up a problem, you can get your money back if you quit the deal. If your offer is accepted, and you have been approved for a mortgage, then you wait for the closing. Before a closing can be scheduled the seller's agent has a title company do a title search to make sure the title is clear of all impediments. The property has to be appraised by the lender to make sure they aren't lending you money for something that's not worth it.

Once all the legal hurdles are overcome, a date is set to close. This allows the seller time to fix anything you two agree needs to be fixed by the seller, and it allows the two of you to decide when you can have access to the premises. Once you close the deal the property is yours. That means if the seller doesn't vacate the house, he has to pay you rent for every day he is there, rent being a pro-rated portion of the mortgage payment.

IMO, what you really need to understand is the financing process. Make sure you pay attention to that with the various lending institutions. Educate yourself. The other thing to understand is, you have to get a clean title from the seller. All liens and impediments have to be cleared by them, and they have to be the authorized seller. Sometimes adult children of the elderly are attempting to sell the house without legal authorization, so make sure the seller is authorized, or is the actual owner. These are the things realtors and title companies handle. That's all I can think of for now. The seller pays the commission, and the closing costs are negotiable. Sometimes the seller will cover closing costs to sweeten a deal, otherwise the buy has to cover them.

Some people just shouldn't buy a house. Just aren't equipped to handle it. If you can get any house for 150K it's not an overly expensive area. That would buy a couple of parking spots at most inf SF or NYC.

OP,

Most states still have squatters' rights laws on the books.

Therefore you can just sneak in at night with your stuff, change the locks, and go on about yo bidness.

Easy peasy.

[quote] Some people just shouldn't buy a house. Just aren't equipped to handle it. If you can get any house for 150K it's not an overly expensive area. That would buy a couple of parking spots at most inf SF or NYC

Agreed. I don't believe home ownership is right for everyone. And if you are agonizing over a $150k home purchase in 2015 then it may not be the right move.

Oh, hush. OP is a first time buyer and that's bound to induce anxieties. Plus he may be a timid sort who needs the reassurance only DL can give him. DL is a great confidence booster. Especially people like R28 and R26. ... You fuckers...

First get pre-approved at a bank and figure out what your payments will be. Be sure to factor in property taxes, closing costs, etc. Also, remember that you aren't "buying" a house...you're essentially just renting it from the bank until it is paid off. And it's just sticks and stones...a place to live, nothing more. If you can rent for cheaper, then do so. It only matters if your house appreciates in value if you decide to sell it. Otherwise, that it is worth more doesn't mean much. In some cases, having your house jump in value significantly means much higher payments on property taxes.

OP, banks used to occasionally offer "first-time home-buyers' workshops. My bank offered it for an hour once a week for six weeks. They had people come in and briefly lecture about the process. In the six weeks, we had:

A realtor

A mortgage broker/banker

A real estate lawyer

And a home inspector

Maybe some others. I went to the series a couple times. A credit union might be more likely to still do this kind of thing. It's important to understand the process.

I have to respectfully disagree with R1 and some others. I don't think it's helpful to have a realtor you trust, because you should NEVER trust a realtor. When you buy a home, the realtor gets a fee from the seller. If you have a buyers' agent, the fee is split between the two realtors, by the seller. Neither get paid if the property doesn't sell.

You might think they'll work hard to sell your place, but they do not. In large part, property sells itself. An experienced broker knows that they might work hard to sell a white elephant, only to lose the sale at the last moment to a new buyer. In my experience, they don't work hard. In addition, in a small market, the realtors are technically competitors; however, after you do buy a place, they will never see YOU again, but they will have to work with the other realtor again. So their loyalty ought to be with you, but it isn't.

I toured my childhood home when they had an open house 30 years later. The realtor was flat-out making things up. Just lying straight out.

So be skeptical about everything you hear. Ask for proof of something if it's important to you. Likewise, if you're promised anything, get it in writing!

Educate yourself on the process.

In my neighborhood, the buildings are all very similar. I evaluate property by looking at sales prices of similar nearby property per square foot. In the old days, I'd ask a realtor for this info. Now, you can find it on Zillow or Trulia. I'd use this info to have an understanding of the selling price of comparable housing. Once I had an average selling price, I'd go to open houses and when I got home, I'd use the average price, and adjust it based on the open house. In other words, if average is $800 per sq. ft., and was 1000 sq. ft., that is $800,000; but if the place needed a new bathroom, I'd estimate the cost of a new bathroom, maybe $50,000, so the most I'd offer on the place would be $750,000. In my neighborhood, a crappy parking spot sells for $120,000. It would be crazy to but at that price, but they are still selling, and that's all that matters.

As mentioned earlier, be aware that you should be comparing to recent ACTUAL SALES prices of similar houses, and that people expect you to barter. People list their homes with the expectation of selling for less than that price.

I have a correction to my post at R32. A "buyers agent" might be paid a flat fee by the buyer, and not receive a cut from the sale. That's only marginally better. I think different states allow for different arrangements.

Not OP, but have a question for the real estate people here. I'm newly retired, and will be selling in a few years. My house should go for around $1.5 million, and it's in an area that absolutely won't go down in price. I'm thinking about getting a real estate license and selling it myself. What say you?

R19: An inspector? Why on Earth would you buy a house from someone that is untrustworthy enough that you would need an inspector?

Oh, dear, you are in for a lifetime of tears. Everyone selling their property is untrustworthy. They're strangers who you probably will never see again. Plus, info usually passes from you to the realtor to the seller and back through the realtor. That arrangement allows for "misunderstandings" to regularly occur. Both parties can deny responsibility for problems and claim that there must be some misunderstanding between the other two parties.

An inspector should be experienced, but be advised that your contract with him will stipulate that his maximum liability, such as if you need a new $30,000 roof after the first Winter, will be the cost of the inspection. That's maybe $250 or whatever, but nothing near your $30,000 new roof.

When you make an offer on a house, include a provision that stipulates that the place will be left in "broom-clean" condition; that the agreement is contingent on a home inspection that meets YOUR satisfaction (not their satisfaction); and that you need apply for a mortgage at one lender only.

Broom-clean does not mean "scrubbed-clean", but is there to make sure they take all their garbage with them and didn't break things when moving out. My sister bought a place and there were old, unfixable large appliances left in the basement (like broken stoves, etc.) The seller also took the good fridge, and left a crappy one in its place. They also took every light bulb. Can you imaging how cheap they must have been? The sellers [italic]seemed[/italic] so nice. If this happens to you, you can postpone the sale; or "hold back" $500, or $10000, or whatever, fix the problem yourself, and then send the seller the money held-back, minus the cost of whatever you fixed.

I bought something once under a money-back guarantee. In small claims court, the merchant claimed that the guarantee was that she would be satisfied, not me, the customer. I thought that was all I needed to hear, but I still lost the case!

Most contracts will stipulate you apply due diligence in applying for a mortgage. Well, does that mean going to a dozen banks, if you can't get approved for a mortgage? How many loan applications must you submit? The language is vague, so clarify by stipulating that one is enough, even if you make multiple applications anyway. Otherwise, you might not be able to buy the property, and the seller can claim that if you tried harder, you would have been approved, and they might keep your deposit, claiming that they lost out of selling to others while waiting for you to get approved. And the deposit might be much more than $1000. I think it's more like $10,000 or higher these days, so it's not peanuts to forfeit it. .

R35, I don't think you need a license to sell it yourself. Every state is different, in any event. It might help to study on the subject to learn what to expect, who is open to negotiation and who is not, how to price the property, etc. I'm guessing that the realtor would want 6% or $90,000 to sell the place. You have to find-out whether a realtor will take less than 6%, or if they won't, whether $90,000 makes a difference to you.

If you can't sell your place and then you go to a realtor, some realtors won't work hard to sell your place, since all the easy-selling opportunities have already passed you by.

R35, if you live in a state with a state income tax, you might want to '"move" to FL or TX before the last year of ownership. Since those states have no income tax, you might save $90,000 in state income tax. You'd have to ask a lawyer how to do this. I would imagine there are very specific steps you must take in specific order, to make this work.

If you sell, you owe Fed and State income taxes (if your state has an income tax); minus $250,000; minus cost of capital improvements (unless the law changes). If you die, your heirs inherit tax-free! So, if you're dying and want to leave an inheritance, you ought to consider whether it might be better to die as the owner of record.

R35, hire a fucking realtor. And BTW. There are some very food smart ethical knowledgeable realtors out here. Find one. They have a legally recognized fiduciary relationship with their client, so if you have a buyers agent he is legally and ethically bound to serve your interests. Yes there are some sleazy people out here just like there are in any profession. But today's realtors, at least in my state, have to be highly trained in real estate law and the municipal codes and state laws and regulatory policies. They have to take continuing education courses and they have to be qualified in order to renew their license on an annual basis. So find one that is highly rated and go for it. Some of the people on here think that they know every fucking thing just because they had a bad experience. They're wrong.

You can tell when a realtor is good because she list all of the certificates from her two week study courses on her business card, with a headshot, of course.

Certified Buyer Representative, Chase Priority Partner, Equator Certified, Estate Sales, First Time Home Buyers, Investment Homes, Luxury Homes, New Construction, Rentals

See, you can trust Tiffany! She has a lot of letters after her name!

Hi Tif! See you Saturday.

-Gi-Gi O'Brian, CLA*

R28 A lot of our problems as a society come from this notion that EVERYONE should be a homeowner and have a college degree.

No R43 most of our problems stem from the fact that Republicans exist and that Trump somehow got elected. Pull your head out of your ass.

good thread, OP