Against all advice and reason, I'm looking at buying my first home. It's a fucking nightmare. Prices are absurd, inventory is low, and I'm competing with investors who can pay cash. However, I'm tired of throwing rent money away, and if I had my own place, my tax situation would be more advantageous. FOCUS: What advice do you have for home buying? What was your first real estate purchase like? What are your red flags?
Considering the way the market is and will be for the foreseeable future, this should have some legs. I am SO glad I bought when I did which was towards the end of the last bubble. I feel for my clients and those that are out there trying to buy. What a fucking nightmare. Any advice would be worth sharing.
Research the home buying process A LOT before you start. Not in the "make sure you have the money for it" way, but in a "make sure you realize that no sale in the history of sales is as fucking weird as buying a home" way. You agree to the price, and THEN you start haggling over the cosmetics and shit. Also, if you've followed my RnR posts regarding it - try and learn about the sellers as much as you can. Google them, ask questions to the listing agent, try and understand why they're selling the house. So that you can avoid dealing with 11th-hour shit like "oh hey, we said we'd sell it for this, but we haven't been paying for it and our debt is higher than that, so....just wait and see what happens, eh?" I am a little bitter about this, I admit.
Related to this, if you're using an agent, make sure you have a good one who is fast and has teeth. If they aren't on it when you first start corresponding, move on and find another. Make them earn their %. We bought a house across the country and having a snappy agent on our side really made things easy. She wasn't the first we reached out to.
Agreed. The reason we're having issues right now is because the listing agent (for the seller) is horrible with correspondence. Again, short version: We learned that our home purchase relies on a short sale being accepted by the seller's bank - which can take a long, long time to figure out. I know this, because I researched it on my own so I would be aware of the process. However, the listing agent was blowing smoke up everybody's ass about how it would be no problem and be figured out quick - and now that EVERYONE is bothering him for answers, he's trying to get us to back out of the purchase so he can fix his mistakes. And the market blows, so we aren't backing out unless a similar/better house comes around.
Some tips I learned: When you find one and it’s time for inspection, get your own contractor and don’t use the one your realtor recommends or has “worked with” in the past. And do not buy a house waiving the inspection. I didn’t do the second part, but I have a friend who did and he regretted it. Drive by the house you want to buy a few different times at different times of day so you get a feel for the neighborhood. Whatever your bank tells you can “afford” is likely bullshit. It’s not just your mortgage you’re paying. It’s mortgage + insurance + taxes + all of the other expenses. I was approved for a $2 million mortgage, apparently. If you want to know how people lost their homes in 2008, that’s part of it. Go with a fixed rate. Variable rates can bite you in the ass if you don’t know exactly what package you’re buying into. This is the other part of how people got fucked up in 2008. Don’t drain all of your savings on your down payment. You’re going to want to furnish the place and keep an emergency fund. Pull any construction permits for the house in the town where you’re buying. That’s all public record. See if the house has had any major issues like sink holes, foundation problems, etc. also, drive by the house after it rains a lot if you can. See if the yard floods. Find out if your neighborhood requires to join an HOA. Don’t join an HOA. I probably have more, but this is off the top of my head.
In my buying process I went to my bank and sat down with the loan officer, got preapproved...all the normal shit. In the end the only good thing that fucker did for me was hook me up with a great real estate agent, outside of that he was worthless and let me down in (as Nat said) the 11th hour. He let me know at 4pm the Friday before I was suppose to close the following week that the deal had fallen through. When I pressed he gave no real answers. Later I came to realize I was too small of beans for him and he had moved me to the bottom of his "I give a shit" pile of files. In the area the bank was there was/is a lot of money, me and my little house were in little Whoville, while the richest sat at the top of the mountain sipping wine. Those were his kind of people. Anyway, lucky for me I had a client that was a broker but had recently left that industry for personal reasons. After a very tearful weekend, on Monday I reached out to her and she put me in touch with the best. On Tuesday morning I was sitting at her desk with what felt like my life spread across it in paperwork. She got in touch with the sellers agent and got a 10 day extension. The deal was done seamlessly. The best advice I got was from the client that was a former broker, if you get the wrong vibe from your closer OR real estate agent get out and find another. They can literally make or break your deal. And your mind for that matter. I did not get the "I care about your home purchase" vibe from him, ever. Good luck man, and don't get your heart too set on a house (easier said than done) if the deal falls through it wasn't the right one. EDIT: Yes, what everyone has said.
This is huge. Before our offer on the current one was accepted, we tried two other properties. If you fall in love with a house, and your offer is not accepted, it's like getting dumped. And if you keep doing it, you get really jaded. All of the points @Juice brings up are big, too. They scare me, which is why during this whole fucking debacle, my main goal is to pay off all the debt I can, so our monthly expenses are lower than they were planned for even when we got approved.
I know a few friends who have gotten their houses because of the letter they wrote the owner and submitted along with their offer. Basically “hello I am a real human, i will love your house and it would mean so much for me to live in it blah blah blah” because so many homes are getting snatched up by investors and some people will take a slightly worse deal to know their home will be lived in and loved. I was always skeptical if it made a difference, but I’ve seen it happen twice now.
I'm in the position where I should buy a house, but I have no idea where I actually want to live long term, so I just keep putting it off. But yeah, the money wasted on rent hurts.
We were pretty much forced to buy. There was a single rental house in the area that was small, shitty and overpriced. Other, nicer but more expensive rentals were available even farther from the jobsite, an hr commute that could be dangerous in winter conditions. There were at least a handful of houses on a list I put together in a price range we could live with. Would have preferred to pay less but unless I wanted to live in a trailer, I had to be realistic. We got lucky on this house, the listing agent was not in the region (family member of owner) and was not marketing the property to other RE agents at their local meetings. I found it on craigslist. It has already appreciated about 36% in the 3 years we have lived here. If we can get remote work going for hubs, we would like to move to a rural property in the NE and rent this place out. Hub's employer is building like crazy here and the already insane housing market is under so much pressure. There is not enough housing, period. We could make a good bit of money on this place.
I thought I read somewhere or something that they were going to stop this practice. I'll have to do some digging.
Reading these posts reminds me how easy we had it. My wife worked with someone who mentioned they were moving. They lived a mile down the road from where I grew up. We arranged to meet and have a look at the place, already half ready to buy. The husband and I were walking in the woods behind the house and I asked him what he was looking to get. He told me, and I picked a number in the middle. The lawyers handled the rest. Off the top of my head I can't add too much to what everyone already said. I agree on the fixed rate. As for home inspectors, they are worth their weight in gold. The guy we hired had me second guessing our decision to buy this place because of all the stuff he was noting as he walked me through his findings. I actually asked him if we should run. He assured me it was a good buy, but his job was to find problems, and that's what set out to do. It was nice to have a list to look at not only from a negotiation standpoint ( which for us, there was none ) but also to know what things to work on as we were settling in. Oh, I did just think of something. If there's a lot of candles burning, be on guard. One of the ongoing issues here is the groundwater, and the basement can get pretty damp. After we moved in it'd get a little musty smelling and I remembered they had candles burning when we were here. That problem was solved along with most of the others. Anytime I get the urge to move I think about all the improvements we've made and having to start over.... shudder. Not to mention the housing prices, Christ! Good luck.
In this feeding frenzy, so many people are pushing to sell their houses with no conditions. Including waiving a home inspection. NEVER buy a place without a reputable house inspection. My mom was a broker for 30+ years, and her business partner still calls daily with the recent horror stories about people paying over list for a house that all of a sudden needs a new foundation.... or some other thing they can no longer afford to do, but now own.
Location location location. You can change pretty much anything about your house. You can't change where it sits. If you have kids or are thinking about having them, look at the school districts nearby. Think about how close you are to the freeway, supermarkets, etc.
Apart from the house itself, think about the property holistically. Yard maintenance and landscaping is a real time commitment, so look for something that's manageable (or budget for a company to manage it for you). Also, check out the trees. If there are any dead or diseased ones within striking distance of the house/yard, you'll need those taken down at some point soon. That can run thousands, per tree. Take utilities into consideration as well. Oil heat or natural gas? Sewer or septic? Well or city water? None of those are deal breakers per se, but definitely need to be considered. Just thought of something else. Make sure you understand the properties around the one you want to buy if they are undeveloped and what they are zoned for. You don't want to buy a place and then have a strip mall or gas station put in next door a few years later.
I've found that 25-50% of your pre-qualified amount makes for a nice comfy life. I don't know if that is even possible in this market. But that is literally what I told the wife when we pre-qualified, we need to stick to something far below what they say. We ended up closer to 25%.
25-30% is about what we ended up on. 500K and change was plenty for the amount of house we wanted. We bought it 4 years ago and according to Zillow, it’s worth about $700K. I would not want to enter the market as a buyer right now in this area.
Yeah, I'd take that with a grain of salt... https://www.cnbc.com/2021/11/03/zil...after-company-exits-home-buying-business.html
I just bought an apartment (new construction), but I also bought an apartment in Canada before I came here. Advice: Fixed rate mortgages are _generally_ for suckers when you look at what the long term fixed rate is for banks (which lets you know where the bank thinks they'll always make money over the variables). Best way to look at it is that if you can _comfortably_ manage a 1% increase in interest rates for a 2 year period, you should go with a variable rate. The GFC actually dumpstered loan rates because well-qualified buyers were needed, and the feds cut rates to promote spending. https://www.erate.com/mortgage-rates-history I'll repeat this later, but look at long term fixed interest rates. That's the bet by banks that interest rates for their variable loans over that period will be _lower_ than that number. That way you're paying more than the variable. Caveat to that: You still need strong cash flow to absorb that risk, and that means you absolutely shouldn't be stretching yourself thin over repayments. Canada stress tests you based on an prospective interest rate of 5.25%, or 2% above contract rate, whichever is higher. This is totally fucked up as well because high earner, single income families can only afford something like $650k CDN. This will buy you 2 bedrooms at 1000 sq. ft. in something built no later than '95 (26 years old or older) Inspects are the #1 thing that will save you from yourself. Get your own, don't use the realtor's preferred inspector. I recently had friends who were buying in Vancouver get rescued from a terrible buy because the inspector found a gas leak, mold, shoddy work under the surface, etc. Stick with the traditional mortgage if at all possible. That means 20% down, and still consider insuring the mortgage depending on price and affordability. (I didn't, I did 8.3% down, but Japan's mortgage rate is 0.67% for a 35 year variable mortgage and has a historically stable-as-fuck market. Also, I bought in the city everyone wants to move to, e.g. Vancouver-like) The more home, the more maintenance, plus high costs. Think about your work and the maintenance too. Anything you think "I can/will do this", plan to _not_ do it. Injury, mental health, just getting old, etc. takes a toll on you. Further to that, consider getting older heavily if you plan on living there long. Stairs, high slopes, etc. become a real pain. Get those strata minutes if there is a strata, check the reserve funds, check the maintenance plan If there is an HOA, get those minutes, check the reserve funds, check the maintenance plan, check for shitheads demanding things like "you can only use 2.5cm mini venetian blinds in white", or "Bob doesn't cut his grass between the hours of 6am and 6:15am on every third saturday" Consider the neighbourhood. My bicycles were stolen twice from our underground apartment in Canada because Coquitlam (Vancouver suburb) has become a shithole. Had a guy live secretly under the stairwell too, shat and pissed just outside the door (sometimes inside), and let other addicts in to try and steal from the units.