Home buying 102...

Might not apply to that house, or any other you look at, but DON'T buy a house that needs a sump pump to keep the basement dry. My house has one in the back driveway and that is the #1 thing I hate. Another suggestion, try and find a lot that is higher than surrounding properties, so water doesn't stand in your yard as long.
 
One other thing to consider is the schools. I know you don't have kids now, but a big house like this one wouldn't be a starter home, would be more of a keeper home. Even if you don't want kids, you may slip one past the goalie one day and then your kid may end up in a school with a bunch of tweakers and then you're really screwed trying to unload the house.
 
UTfball68 said:
Initial meet, just to see the house will be with the sellers agent, but I do have agent friends waiting in the wings.

And the gf has been around for 9 years...we've both already said, one name on the mortgage, but if it came to making or breaking getting the house we wanted, we'd break that rule. As is...shouldn't be a problem, unless we started looking at 300k houses instead, of 200k houses. Not really looking for 300k+ homes though, because new job already told me to plan on moving up to a larger facility in the next 3-5 years.
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I forget the complete rules, but if you view a house with an agent, I think you are obligated to go with them. I wouldn't want to start out by even talking to the buyers agent, it gives the buyers more room to know what your hot buttons are and negotiate against you. Could be wrong it has been a while since I looked at the stuff.
 
^^^Good info...I did not know that. I hooked up with a ReMax agent that came highly regarded (I don't know any different) and was listed as the primary agent on alot of homes I was looking at anyway. She handles the areas we're interested in (Mooresville to Albemarle and Salisbury to Charlotte, and anything in between). I'm a little worried she's 'big company' ReMax, but like I said...I have other friends that are agents if I don't get a good vibe from her.
 
DSM Turbos said:
I forget the complete rules, but if you view a house with an agent, I think you are obligated to go with them. I wouldn't want to start out by even talking to the buyers agent, it gives the buyers more room to know what your hot buttons are and negotiate against you. Could be wrong it has been a while since I looked at the stuff.
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You are not obligated to work with an agent until you sign a "working with real estate agent" form
 
^^^When does that form come out??? Being a first time buyer, I feel like this process isn't really taken seriously until you tell an agent or the home owner you want to make an offer...factual??? I have banks that went from pre-approvals to loan proposals. Anything different between the two??? And how much differently do the terms change from a pre-approval to a proposal to what you actually get??? So if I've been pre-approved/proposed 225k, does that mean I can actually look at homes in that price range (less fees, plus down payment)??? I kinda feel like I'm a serious buyer, and I have an expectation of how things will go down once I find the house, but it still may not happen anyway pending bank final approvals and current owner approvals.
 
The agent will bring that form out. They should bring it out when they want your business and only sign it when you want to work with that one agent.

If you use the seller's agent, ask for a reduced commission since the seller usually splits the commission with the buyer's agent. If they are acting as both, ask to reduce the commission for a better sales price. Some will do it, some wont. If they won't, then hire a friend that is an agent and use them to do the paperwork and get the friend gets the buyer's agent commission.

I did this with my house. The seller agent didn't want to reduce the commission, so I hired my friend from Statesville to be my agent. He came down for a day for closing and made a pretty good paycheck. :D


But, don't sign anything until you are ready to hire that agent.
 
That form will come out when you tell your agent that you are serious about making an offer. Good rule of thumb is to not mix friends with business, but in this case, a friend may look out for your best interests better than just a random agent that has no connection to you.

Agents get paid a commission off the sale of the home. The higher the selling price, the more they make. An agent that is not a friend may not want to go as low on a price as one that is a close friend.
 
For ease of numbers, lets say you purchase a house for $100,000. The agent will get a percentage of the sale price, lets say 4% = $4,000. The seller will get $96,000. If you negotiate some closing costs into the sale price, lets say seller pays $3k, the seller will get $93,000. Buyer typically pays for appraisal, inspections, survey, closing costs (lawyer fees), and whatever fees the bank charges to process your loan.

Purchase a house for $200,000, the agent will get $8,000 based on the scenario above.


I am going thru all of this right now. Just sold my house 3 weeks ago and am closing on the new house next week. Any questions, feel free to ask.
 
If you are pre approved for 225k, I would look at houses in the 200k range at most. The fees, and other BS that goes along with the purchase can add up. Nowhere near 25k, but you dont want to max out your finances. How much of a down payment are you looking at making?


Another thing to think about with agents. If the agent works for a company like ReMax, there may be a set commission fee that is not negotiable. If you have a friend that is a freelance realtor, you may be able to negotiate the commission.

My realtor works for Allen Tate. I have known him since I was 12. He was my scoutmaster. His commission rate is set by the company and cant change. He is making a ton of $$ off me since he just sold my house and is working for me on this purchase. He got paid last month and will get paid this month from me. Lucky joker. He better buy me dinner one night.
 
Thanks for the info...that helped me out. I didn't figure I'd go all the way to 225...we've actually just been looking in the 175ish range, I was just curious. I didn't want to have 225 proposed and when I actually go to make an offer have the bank tell me they'll only loan 150. Which I suppose still could happen, because they take the lesser of the market or tax value, correct???

As for what I'll put down, I'll be somewhere between the 5 to 10% range depending on how long this draws out. I'll more than likely be going with an FHA loan just because the interest rates are better than any other loan type I've seen for me. I've gotten anything from 4.125% to 4.75%...most required to put down has been 10% least is 1.5%, all fixed rate, some 15 years...some 30. Only thing that's not appealing about the FHA is that PMI is no longer cancellable on new FHA loans...which is fine by me, because I think the math worked out to 8-9 years to get to 20% anyway...I'll be gone and out of the house before then.
 
If you offer to purchase a house at 175k and it only appraises at 160k, the bank may only loan you the appraisal value. Banks now dont really want to loan more than the value of the collateral.

That is something to take back to the negotiating table if it happens. Anything that comes up that changes your mind on the purchase price during the due diligence period can cause renegotiations. If it appraises for less than the agreed upon price, you can make a new offer. In the above scenario, I would make a new offer of 158k. If they dont take it, I would walk.
 
Couple other things to think about. When you make an offer to purchase, you will have a due diligence period. That is the time where you will have access to the house to have home inspections, survey, appraisal, ect. If something comes up in the appraisal or home inspection that will change $$ figures, you can renegotiate the price or ask the buyer to pay to have things fixed.


Couple different kinds of money also. You have due diligence money and earnest money. Usually the seller will ask for one or both.

The earnest money is paid directly to the seller for them to "take the house off the market" while you are working on getting your loan finalized, inspections, appraisal, etc. This is kind of a good faith payment that comes off the sales price showing that you are serious about buying the house. $100k sale price - $2k earnest money = loan for $98k. The seller can cash that check and do whatever with it. You will not get this money back if you walk away.

Due diligence money is a check that you write to the real estate company. Another kind of good faith deposit. The real estate company holds that money in escrow until closing. If you walk away from the purchase during the due diligence period, you get the money back. If you go thru with the purchase, that amount is deducted from the sale price. $100k sale price - $2k earnest money = loan for $98k.
 
Dont let a seller or their agent know that you are pre approved for 225k. That may make them not negotiate on the price as much. Keep that info to yourself.
 
sgtbriangreen said:
Couple other things to think about. When you make an offer to purchase, you will have a due diligence period. That is the time where you will have access to the house to have home inspections, survey, appraisal, ect. If something comes up in the appraisal or home inspection that will change $$ figures, you can renegotiate the price or ask the buyer to pay to have things fixed.


Couple different kinds of money also. You have due diligence money and earnest money. Usually the seller will ask for one or both.

The earnest money is paid directly to the seller for them to "take the house off the market" while you are working on getting your loan finalized, inspections, appraisal, etc. This is kind of a good faith payment that comes off the sales price showing that you are serious about buying the house. $100k sale price - $2k earnest money = loan for $98k. The seller can cash that check and do whatever with it. You will not get this money back if you walk away.

Due diligence money is a check that you write to the real estate company. Another kind of good faith deposit. The real estate company holds that money in escrow until closing. If you walk away from the purchase during the due diligence period, you get the money back. If you go thru with the purchase, that amount is deducted from the sale price. $100k sale price - $2k earnest money = loan for $98k.
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All this is out of pocket??? Not rolled in to the loan terms???
 
If you can go with a down payment of 20%, you can also get rid of PMI in most cases. On a $185k house, that is likely to save you about $125/month
 
^^^I was hoping it could be considered part of the down payment, not that I couldn't swing it...but the deeper I get in to this home buying thing, the more fees and charges I keep finding. I don't mind them, I just don't want to come to a scenario where I have to fork over 2k and don't have it or thought it could get rolled in.
 
rockcity said:
If you can go with a down payment of 20%, you can also get rid of PMI in most cases. On a $185k house, that is likely to save you about $125/month
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That's just short of 40k...I couldn't bank that for another 2 years probably. I can swing the $125 plus PMI a helluva lot easier than 40k.
 
Your good faith money can be as low as $500. That's what we offered. Given the time the house has been on the market and the price of the house, $500 would be fair.
 
rockcity said:
Your good faith money can be as low as $500. That's what we offered. Given the time the house has been on the market and the price of the house, $500 would be fair.
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Back to the drawing board...the OL didn't like the personnel at the apt complexes just down the driveway.
 
Not sure who your lender is, but the only out of pocket expenses I had on my home was the inspection ($350) and good faith $. Everything else was rolled into financing or negotiated to have the seller pay for it. So, it shouldn't be too bad.
 
I've only bought 2 houses, but both times I was able to negotiate that the seller covers all closing costs. That's your biggest fee right there. so don't be afraid to ask for that.
 
Two things.... You don't want PMI. Do they still do 5/15/80 loans? Run the math... You're almost definitely better off paying a higher interest rate (which you get to write off) than paying PMI... Which is basically $1500 that you piss away every year.

Appraisals are now a crap shoot, thanks to the new rules. Your appraisal request goes into a pool and is randomly assigned an appraiser. They come out to the property, assess condition ratings, then go back to the office and look for comps. There are rules about which comps they can take. These rules have nothing to do with the actual market value of the property.

Long story short, our next door neighbor and we got appraisals on the same day by different inspectors. Our houses are worth basically the same. Our appraiser went by the book on comps and used a couple of foreclosures about a half mile away. The other appraiser took some liberties with the rules, and picked houses that were a little bit outside of what he was allowed to use, in order to get a more accurate comp.

There was fifty thousand dollars difference in our appraisals.
 
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