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Thinking about buying first house. Advice?

Old 11-17-2006, 12:42 PM
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Default Thinking about buying first house. Advice?

I'm thinking about buying my first house. I don't have a ton of money, but I think I'm about to be in one area for at least another 5-8 years. I've been moving to a new city every 1-2 years since 1996 and renting apartments the whole time. My credit is excellent and I'm already prequalified for more than I want to spend, so that shouldn't be an issue.

I've got a location picked out. I'm just wondering what I should look for when I check out houses.? What should I ask realtors? Any negotiation tips when making an offer? Any tips on a good place to get a mortgage? Ways to avoid state/county/city fees? Closings costs? First-time home buyer incentives/benefits?

I can do pick the location and things like that fine, but it's everything else I could use advice on.

Thanks!
Old 11-17-2006, 12:46 PM
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Default Re: Thinking about buying first house. Advice?

if the real estate market in your area is fairly hot, I would actually be the one to pick out my realtor, and have them do the shopping for you. They will be able to find what you are looking for in the price range you are looking at, and also know of alternate acomidations that would also work for you if and when they seem them.
Old 11-17-2006, 01:45 PM
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Default Re: Thinking about buying first house. Advice?

In many places the lender/mortgage insurer will require a variety of pre-purchase inspections. If at all possible you want to be there when the inspector works so you can shadow them and see with your own eyes. Nomally only one will be scheduled at a time, try to avoid simultaneous inspections because you wont be able to follow them both.

I missed the septic tank inspection and when I had to get it drained I dug up my leach tank by mistake. No harm was done but I almost had a heart attack looking into that before I realised the error!

Even though the inspectors are liable to you, they do reply on literature palcement for a lot of their business. Unless there is a fault severe enough that the lender might sue them later, they might overlook something that is not imediately serious. That is why you want to walk around with them.

Some states permit a real-estate agent to function as the buyer's agent simultaneously as the seller's agent. On paper it is to your advantage to do this because the disclosure rules are sometimes different for a sellers agent. In actuality they wont get paid if the sale doesnt go through so dont expect them to tell you anything the seller hasnt told them even if they've seen it with their own eyes.

Relax. Take your time. Search through the net and drive by places before you contact agents. Dont give your personal info to any site that requires it to access listings or you'll never be free of those agencies. Due to multiple listing services almost all properties will actually be visible on several agencies' web-sites.
Old 11-17-2006, 02:00 PM
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Default Re: Thinking about buying first house. Advice?

do not buy the first house you like, even if it "seems" perfect
as kamper said be patient and do the legwork yourself...mls listings for all properties for sale in your area are readily available on the net

re: making an offer know the market first, and do that research yourself (not just what the agent tells you)
if homes are selling near asking price, then you need to know that
Old 11-17-2006, 02:05 PM
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Default Re: Thinking about buying first house. Advice?

As to what to look for in the house, well that widely depends on the area, the age of the house, and to some extent the style of the house. We could fill pages with "what to look for".

Hire your own realtor - and be weary of any properties they recommend that they are also the listing agent for. They have a vested financial interest in "double dipping" these properties.

Definitely hire inspectors, and NEVER use an inspector recommended by the realtor. Realtors and inspectors have a love hate relationship. Inspectors are dependent on realtors for business, but how many referrals do you think they will get for blowing up deals, even though they technically work for you?

As for mortgage - no brainer shop for the best rate, but be very careful when comparing GFE's - make sure the closing costs and pre-paids are comparable and one is not trying to hide fees on you.
Old 11-17-2006, 02:20 PM
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Default Re: Thinking about buying first house. Advice?

This is my best advice:

- Inspections......if you don't know house construction, have the house you are seriously interested in inspected!!! The money you spend today should save you surprises you weren't prepared to pay for tomorrow.

- Location, Location, Location! Before your even serious at buying a house school yourself on what makes one location better then another. Just because you find a house appealing doesn't mean anyone else might.....resales can be a b!tch!!! Location also comes into play with resale value. Pretty much in any market prices of homes will fluxuate, but if you pick the right areas you could find yourself on the up side of the scale whereas other parts of town are holding fast and others are dropping slightly. School yourself on what location is all about.

- Relators.......the hardest part for you to get your mind around is that "your" relator although they appear to be working for you, they ARE NOT!!!!!!!!! They know how to make you feel special, but make no mistake about it, they DON'T want you to get the best deal going.......they pull percentages off of "your" purchase price!!!!! They will lie to you while looking you straight in the eyes and tell you the seller won't go there with that offer........remember Relators are only after getting as much money as they can out of you!!!!!

- * NEVER, I SAY NEVER let a relator know you are dead set on buying a particular home......they will suck the money out of your pocket like a Dirt Devil!!!! Regardless of how perfect a house might be for you, you HAVE TO SAY that this will need changing, that will have to be changed, you don’t like this and you don’t like that........you have to be a better poker player then they are!!!!!!!!! !!!!!!!!!! !!!!!!!!!! They Are trained to suck as much money out of you as they possibly can!

- Mortgages........if you DON’T plan on staying in that first house long enough to pay it off, then pick a mortgage that leaves as much money in your pocket as possible! After 5 to 8 years you have paid peanuts on the principal.....basically 100% of every payment you made for the past X amount of years is going straight towards interest!!!!!!!!!!!!!!

- all the rest of buying a home is all good.........Good Luck and have fun!
Old 11-17-2006, 03:48 PM
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Default RE: Thinking about buying first house. Advice?

cgrand - 11/17/2006 2:00 PM
do not buy the first house you like, even if it "seems" perfect ...
Actually, I did buy the first house I looked at but it was not the only house I looked at!

Dont be afraid to walk away. When my 2nd offer (first was admittedly low) was declined I told the agent to let me know if something similiar turned up. I got a call back within an hour that the seller had changed his mind.

Be sure to tell the agents not to call you to chat. I gave the agent my cell phone to "call me if there's a problem." He called me about twice a week until I told him I was under 'counseling' due to excessive job interruptions and if I got fired I would no longer be buying a house!

Create a disposable e-mail address that you can abandon after the sale goes through. You dont need to hear from these folks for referrals etc... Giving them an e-mail will cut down on interuptions to your routine. Dont be afraid to make it something obvious like cooperbuyingahouse@email.com

Old 11-17-2006, 04:53 PM
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Default Re: Thinking about buying first house. Advice?

Do your home work.

And then do your home work again.

Study about flood zones, home inspectors, building covenants, restrictions the list goes on and on.
Old 11-17-2006, 06:56 PM
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Default RE: Thinking about buying first house. Advice?

Questions to ask a realtor?
Call a well recognized real estate office and ask to speak with the broker in charge. Ask to meet with that broker and to refer you to one the best agents with regard to hardwork, ETHICS, and honesty. Use those words. If you cannot speak to the broker in charge leave a message. Do not tell the receptionist why you need to talk to the BIC. A good BIC will meet and be happy to refer you. If you don't receive a call back by the end of the day call another office. Now for the questions… How long have they been selling and buying real estate? How do they feel about dual representation, that is they represent the buyer and the seller, my wife won't do it, she will bring in another realtor. If the realtor doesn't have an issue with dual agency then be aware. Most all ethical ones will admit its difficult to serve both parties best interest, but possible. Use your instinct, judge of character when selecting an agent. There are tons of slimy ones out there. Make sure they show you lots of houses from all brokerages not just thier listings. Make sure they show houses in your price range. Don't be afraid to take notes if you plan on seeing lots of properties. By the end of the day you'll be spent and won't remember the first from the last. Make sure they show you a professional image. I can't believe how many agents will drive people around in filthy vehicles. A clean car and well dressed agent is important. Lots of brokerage real estate websites will show MLS listings of all properties. Make sure your realtors agency does if surfing the web. A good agent will help you negotiate a good deal. The fact that you don't have a contingency to sell gives you huge leverage during this slowing down market. Its market constipation now where everyone is waiting to sell before they can accept an offer. Some sellers won't even accept an offer with a contingency. When it comes time to make an offer don't be afraid to low ball.
How to find a good mortgage officer?
Ask around friends, co-workers, family. When you meet and get the ball rolling ask for a truth in lending statement. That will help itemize most all your costs and leave very little surprises at closing. Most MO's will give you a TILS without a fuss. Don't just shop the rate. Often times mortgage companies will bake in fees at closing while you think you are getting a low rate. Its like paying for points without calling them that. Ditech site is famous for advertising a great rate without disclosing all the extra fees thay bake in. If your agent does suggest a mortgage officer ask why? Be aware of phrases like exotic or creative financing. Mortgage companies have come up with not so great long term mortgage products that focus on short term payments. Interest only and 5/25 mortgages are totally different types. Do some web search and familiarize yourself with those terms. Learn about Private mortgage insurance as well.
First time home buyer incentives?
Go to hud.gov there are high income limitations that can prevent any incentives.
Get a home inspection!
Hire one yourself. They work for you. Interview them just like you would your agent. Ask the HI if you can be a part of the inspection. A good one will encourage you to get dirty during the inspection.
A good agent is worth their weight in gold. Its just hard to find one.
Both my wife and myself were screwed are first time buying before we met.
My first house was built...the builder, mortgage officer, realtor, and home insurance and attorney were ALL togther. I didn't know it till later. At closing there was a typo on my rate, a full 2 points higher than my TILS.
Go slow and be diligent. It should be a fun process with a lil stress thrown in for good measure. Sorry this is long and I know I repeated some other advice but I hate seeing people get screwed from baaaad agents. Reply back if you get into something you don't understand. Lots of good advice here. Oh yeah DO NOT sign anything with any agent. They try to sneak in an "exclusive right to buy" without you knowing it. Some agents may ask for identification or a sign in sheet. This is not to be confused with a right to buy contract. Ask them direct if this is exclusive right to buy. If they won't show you property without a signed right to buy….walk away. The exclusive right to buy contract should come at the time just before the offer is written and should have a short duration like 30 days max. Security has become more important than ever now since crimes against realtors have climbed at an alarming rate. If my wife is asked to show property without properly meeting the clients she will bring me or a co-worker every time! They may ask you questions for security purposes. I am not a realtor I am just married to a great one, and I did stay at a Holiday inn express last night.
Old 11-18-2006, 03:14 AM
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Default Re: Thinking about buying first house. Advice?

Thanks for all the great advice! Quite a few of you guys took the time to write out a long and detailed response, which I appreciate. I printed all of this and will highlight the high points, then make myself a list. I've been doing tons of research, finding what stuff has been selling for, etc. I just haven't actually gone into any homes yet. Tomorrow is the first day of that.
Old 11-18-2006, 06:51 PM
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Default Re: Thinking about buying first house. Advice?

RI Builder - 11/17/2006 1:05 PM

and NEVER use an inspector recommended by the realtor.
Or an attorney.
Old 11-18-2006, 07:16 PM
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Default Re: Thinking about buying first house. Advice?

Good advice from everyone.

Learn or "farm" the area you are looking at. Try to find out how much homes have sold for, on your own, on the internet. Real Estate ABC is good for that. Don't take that info as "the final word or truth!" but it gives you an idea of recent sales. Then when you are ready to make an offer on a house, ask your agent for comparable sales. A good agent will have done his/her due diligence and should have recent sales. Compare that with your area research.

As to the home inspection, MONEY WELL SPENT, ALWAYS! I don't care if you are familar with construction or not, a home inspector is a must, in my opinion. Too much money to risk. Even the best make mistakes, but is cheap peace of mind. Find an ASHI certified inspector! http://www.ashi.org/ In most states, home inspectors don't have to be licensed by the state. Get a ladder, flashlight and some business card, instant HOME INSPECTOR! The ASHI inspectors are certified and tested by the organization. They have knowledge and ethics! RE Agents hate to see them coming, afraid they will "kill" the deal! They are not deal-killers, but they will give you the TRUTH!

Enjoy the process and don't rush into anything, unless it feels right!
Old 11-18-2006, 08:40 PM
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Default Re: Thinking about buying first house. Advice?

Location, Location, Location.

You can fix nearly everything else about a house except the location.
Old 11-18-2006, 09:00 PM
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Default Re: Thinking about buying first house. Advice?

remember its a BUYER's market right now..the housing boom is over....never pay asking price always lowball the hell out of them, if your realtor doesnt like putting in alot of lowball offers, drop her like a hot potato and find someone that will....you'l be surpirsed at the deals that will be coming soon with all the ARM's ,I/O and "creative financing" that was rampant in the last few years, get a 30 yr fixed nothing else.....also DC area is way overpriced...happy lowballing, trust me it will pay off
Old 11-18-2006, 09:16 PM
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Default RE: Thinking about buying first house. Advice?

As a Realtor, let me offer you some advice. Find an experienced agent or broker...10 years or more in your area. Real estate is too easy to get into and this causes some of the horror stories - most agents don't have a clue of what they are doing.

Look at the recent sales before making any offer (agent will furnish). Don't be afraid to ask seller to pay closing costs or to make improvements ie: new carpet, paint etc. Don't let home inspectors scare you. There is no perfect house or boat - but they will make you think twice about buying ANY house. I have had many, many home inspectors miss problems (leaky roofs, electrical problems, etc) They are not a silver bullet but can be invaluable.

Believe in your gut. You have to be happy there. You will know when you find it. I have purchased hundreds of houses (rental/resale purposes) I have never regreted buying any of them. Trust your gut.

Lastly, watch the mortgage brokers. Many will try to pile on garbage fees - most states have very little oversight on mortgage brokers.
Old 11-21-2006, 09:48 AM
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Default Re: Thinking about buying first house. Advice?

Cooper,

I'm gonna be the contrarian here and advise you to not buy a house just now. Here's why:

You are moving every two years. In a robust housing market, that is fine. With a flat housing market, the house would have to appreciate 3% / year just to cover the selling commission after 2 years. According to most housing specialists, that ain't gonna happen. That said, there are other economic benefits of home ownership including mortgage interest deduction, which will lessen this loss...

(I believe) times will get worse for existing sellers before they get better. There are tens of thousands of 125% mortgages, balloon mortgages, and interest-only mortgages out there that were financed with the "knowledge" that they would continue to appreciate 20 - 30% / year. When they don't appreciate, these folks are gonna walk, the lenders will get them back, and there will be a glut of foreclosures.

(I believe) interest rates will not decline anytime soon. If anything, the Fed continues to consider raising rates, not lowering them. Although, the safe bet is on them leaving them stable, at least for the short term.

Just my advice - take it for what little it's worth.
Old 11-21-2006, 10:02 AM
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Default Re: Thinking about buying first house. Advice?

Make sure you get a "Buyer's Realtor" agreement with your realtor, then they ARE working for you and you alone.

Also work out how much you can afford and go 10% higher. Make it tougher on yourself at first because it will get easier after 3-4 years with raises etc. You don't want to regret underbuying.
Old 11-21-2006, 11:02 AM
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Default Re: Thinking about buying first house. Advice?

I agree with GreyGator and Menzies. Don't sell yourself short. Buy a little more than you think you can safely afford, but not too much more. Also, if you are not in a great hurry, look around, learn what's out there and then start making offers. I would wait as long as possible before buying a home right now, and if not, I would certainly throw out what some would consider ridiculously low offers. The market is going down like a ... well, use your imagination. I just heard on the radio this a.m. that in Broward County, Florida, the median home price dropped 3% in the last month and in Palm Beach County, it dropped something like 5 or 6%. That's a big drop in just one month.

Think long and hard before committing to anything.

One other piece of advice. If you can swing a 15 year mortgage, go for it. You will laugh all the way to the bank. I know some will say it's good to have a mortgage for tax purposes, blah, blah , blah... I say, it's good to be debt free. I will worry about sheltering for taxes some other way.

Either way, have fun.
Old 11-21-2006, 11:31 AM
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Default Re: Thinking about buying first house. Advice?

Also, once you have a mortgage (30, 20, or 15) consider an equity accelerator plan. If you go with a 30 year mortgage and pay that extra payment a year you would be amazed at the years it knocks off.
Old 11-21-2006, 11:47 AM
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Default Re: Thinking about buying first house. Advice?

In the market myself and this thread is helping me also. As you can see I am in Louisiana and there are tons of flooded homes on the market at very reasonable prices. Ones that were not flooded you almost need to sell your first born. We are thinking about getting a flooded home that has been gutted on the first floor and the 2nd is liveable. Should I if the price is right or bight the bullet and get one that is ready? Some are redone just add paint and others are just structure below. They are in great neighborhoods also that will be back in the future.

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