Home buying 102...

I am going through this right now. I just put in a an offer on a house that was asking about 15k higher than the comps that were pulled. So now the sellers' agent is trying to explain to the sellers that their house will not appraise for anywhere near what they are asking. The husband is a professional landscaper and feels that the work that he has done warrants the higher asking price....but yes, working for a bank, they have gotten alot more strict on mortgage loans and what they will appraise a property for.
and yes, if you can get closing costs....thats a big deal...I actually went up on our offer by $2500 to cover closing costs by the seller....hoping they bite....
 
^^^That's gonne be a big issue that I'm finding in some of the boutique/upper middle class wannabe-charlotte neighborhoods in Concord. Asking price is well within my budget...and I don't think it's too much for the home...but they're asking 25-30k more than tax value...which worries me when it comes time to appraise.

There is one house I'm really hot to trot about, on 12 acres...2600 sq/ft, unfinished basement. It was built in the 70's, so the exterior is outdated...it comes furnished and the interior has been completely redone. Asking price is 199,900...for the square footage and the land, I think that's pretty good. Tax value on the home is like 156k...I just don't see how that gap can be covered. So do I just cut my losses, or weasel the sellers down and weasel the bank up???
 
UTfball68 said:
^^^That's gonne be a big issue that I'm finding in some of the boutique/upper middle class wannabe-charlotte neighborhoods in Concord. Asking price is well within my budget...and I don't think it's too much for the home...but they're asking 25-30k more than tax value...which worries me when it comes time to appraise.

There is one house I'm really hot to trot about, on 12 acres...2600 sq/ft, unfinished basement. It was built in the 70's, so the exterior is outdated...it comes furnished and the interior has been completely redone. Asking price is 199,900...for the square footage and the land, I think that's pretty good. Tax value on the home is like 156k...I just don't see how that gap can be covered. So do I just cut my losses, or weasel the sellers down and weasel the bank up???
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Tax value and what it will appraise for are different. When I bought my house back in 2005 the tax value was $175k and I got a deal on it when I paid $190500. In around 2009 they redid my tax value and it is now $235k, which is a little less than I am currently trying to sell it for, although not much. Tax values can be all over the place depending on when they last assessed it.
 
UTfball68 said:
^^^That's gonne be a big issue that I'm finding in some of the boutique/upper middle class wannabe-charlotte neighborhoods in Concord. Asking price is well within my budget...and I don't think it's too much for the home...but they're asking 25-30k more than tax value...which worries me when it comes time to appraise.

There is one house I'm really hot to trot about, on 12 acres...2600 sq/ft, unfinished basement. It was built in the 70's, so the exterior is outdated...it comes furnished and the interior has been completely redone. Asking price is 199,900...for the square footage and the land, I think that's pretty good. Tax value on the home is like 156k...I just don't see how that gap can be covered. So do I just cut my losses, or weasel the sellers down and weasel the bank up???
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Tax value seems to be a weird thing with houses on land. My first house I bought in 2005 was on 10 acres, and I think I paid 15% over tax value at the time. I actually got into a bidding war on the house. It sold 2 days after being listed. I then sold it last fall at 15% over tax value and made a profit of $30k. Tax values are adjusted regularly of course.
 
Don't get hung up on tax value. Basically that is what the county is going to tax you on and is usually not quite accurate. Actually, on my last house, tax value went about $20k over my selling price and was nowhere near accurate. I had to appeal to get it lowered and finally got it back down to normal. Basically, just use tax value as a guide to see how much tax you are going to pay and use comps as a guide for the actual value.

When I bought this last house, the appraiser came out, looked around for about 20 minutes, then left. The appraised value was exactly what our offer was. After asking a few questions, basically the appraiser just confirms that the house is worth at least what your offer was and didn't even assess an actual value, mostly to appease the bank.


As Shawn said, check into an 80/15/5 loan to get around PMI, if they even still offer it. FHA won't do that; you'll have to go with a traditional loan, not FHA for the 80/15/5. The 15% 2nd has a little higher interest payment (usually prime + 1 or 2%) but you can set it up with an earlier payoff rather than 30, 20, or 15 years to reduce accrued interest and save some $. In the long run, its worth it and saves a ton of $. PMI is a crock! Basically, you are paying insurance for the bank that you will make your payments. PMI is there to cover the difference of the bank's loan and what it sells for at foreclosing, etc. (or something similar).
 
Thanks for the info guys...I wasn't really sure how the tax value correlated with appraised value. I knew they were different assessments, just didn't know how close those values would actually align with eachother.
 
Side question about agents...as a buyer, what is an agent really good for. I was just thinking about this off the cuff on my drive to lunch, so bear with me. There's no obligation until you tell them you want to put an offer in. The couple I've been working with now over the last couple of weeks send me a few listings to look at after I tell them what I'm looking for. I think 1 or two out of 150 have been anything near what I'm looking for. So I send them literally 3-4 dozen examples of what I'm looking for and have interest in. So if I'm finding the homes anyway...what good is an agent??? Are they a better negotiator than me...who knows??? Is there a formal process of home buying that I couldn't handle myself??? I look at it like this...if both agents are going to pocket 3-5% of the selling price...why not eliminate one of those commissions and take it off the top line, or negotiate with the seller to make that cover all the inspections and closing fees??? I'm just failing to see as a buyer what an agent is bringing to the table...given I'm ignorant on home buying, so pardon my naivety.

Shoot...if it's a matter of licensing, I'll go to the local community college and get my license.
 
I had a realtor when I bought my first house. All they really did was get me a Listingbook account, but almost everything is on other websites anyway. My realtor did nothing except show up when I asked to see a house and collect her 3% when I bought one. We decided to try and do FSBO last year with that house, which worked out great because the buyer didn't have an agent either, so no realtor fees!
 
UTfball68 said:
Side question about agents...as a buyer, what is an agent really good for. I was just thinking about this off the cuff on my drive to lunch, so bear with me. There's no obligation until you tell them you want to put an offer in. The couple I've been working with now over the last couple of weeks send me a few listings to look at after I tell them what I'm looking for. I think 1 or two out of 150 have been anything near what I'm looking for. So I send them literally 3-4 dozen examples of what I'm looking for and have interest in. So if I'm finding the homes anyway...what good is an agent??? Are they a better negotiator than me...who knows??? Is there a formal process of home buying that I couldn't handle myself??? I look at it like this...if both agents are going to pocket 3-5% of the selling price...why not eliminate one of those commissions and take it off the top line, or negotiate with the seller to make that cover all the inspections and closing fees??? I'm just failing to see as a buyer what an agent is bringing to the table...given I'm ignorant on home buying, so pardon my naivety.

Shoot...if it's a matter of licensing, I'll go to the local community college and get my license.
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Agents are generally useless in my opinion. A good friend of mine used one when he bought his house, but my friend did all the finding and all the looking, and the agent simply collected the commission on the overpriced house. The agent also told my friend to not offer $230k on a house listed at $265k, which had been on the market for months. I think he ended up paying $255k for it <rolleyes>

When I went to buy the 8 acres adjacent to me, my "agent" didn't want me to offer too low because it might offend the sellers. Land was listed at $57k, tax value was $38k, so I offered them $38k. A few months later they sold it to me for $44k and they paid closing costs, so they obviously weren't too offended...
 
They are good if you don't have time to look up all of the properties and call and schedule all of the visits. Many seller's agents won't just let a buyer look around without them being there like they would if you had a buyer's agent. They know new properties that come on the market and have contacts for inspectors, etc. and coordinate all of that.

I guess they get paid for their time and their fuel for carting you around to different homes. I think with our first house, we looked at about 25 homes, average an hour per home plus all of the "behind the scenes" scheduling and calling she did for us, I'd guess she had at least 40 hours invested with us, plus her fuel, car, entertainment, and closing day. I think the $3,000 is plenty fair for what she did, especially since I was a first time buyer back then and didn't know anything about the process or how it worked. If you are experienced and have the time, I think its a great idea to not have a buyer's agent. However, negotiating that 2 or 3% discount off of the seller's commission can sometimes be a PITA and not guaranteed.
 
jeepinmatt said:
Agents are generally useless in my opinion. A good friend of mine used one when he bought his house, but my friend did all the finding and all the looking, and the agent simply collected the commission on the overpriced house. The agent also told my friend to not offer $230k on a house listed at $265k, which had been on the market for months. I think he ended up paying $255k for it <rolleyes>

When I went to buy the 8 acres adjacent to me, my "agent" didn't want me to offer too low because it might offend the sellers. Land was listed at $57k, tax value was $38k, so I offered them $38k. A few months later they sold it to me for $44k and they paid closing costs, so they obviously weren't too offended...
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We had a very similar experience. We looked on our own for about a year or more for a piece of land to build a house. We finally decided to talk to a realtor. The guy talked a good game like he knew about properties before they came on the market and stuff like that. After we signed on with him, he didn't do squat, and didn't bring anything new to the table. He just gave us a Listingbook account again, and we were on our own. Then when we found a lot and were offering on it, he was trying to persuade us from making such a low ball offer. We stood our ground and told him that was our price, and the buyer ended up accepting the offer. The lower the sale price, the less money they make, so they have no motivation to get you a good deal.
 
I have a good friend who is our realtor. He's currently selling our house for us.

When we found the house we are under contingency contract with, it was FSBO. I talked with him and he gave me the numbers for if he helped buy/sell versus just sell and we went over all the numbers and figured out which would be cheaper. Turned out going straight FSBO on the buying with no agents and him selling ours was cheaper so we are doing that.

Honestly, for buying the only reason you need a realtor is for easier access to look at the houses. Our first two house purchases we had realtors who searched for houses for us, drove us around, etc. They were both useless except for their contacts after purchase. Both our houses we had found on our own. Our house we are buying we also found on our own. My friend is going to help me out with the final stuff as a friend, but he's going to make a nice bit when we sell our house anyway.
 
Here's my take...the OL and I have about 75 homes we want to look at. We're going to plot them out on google maps or my gps...and start looking this weekend. If we feel so inclined, anything wrong with walking up and knocking on the owner's door and arranging a meet at some time??? I figure if we can chop it down to 5-10 houses, we can get more serious with those owners and go forward.
 
Unless you really have no life, I suggest chopping 75 down to 10 before driving 1 mile. It really sounds like you don't exactly know what you are looking for. I've owned close to 10 homes and still remember looking for my first.

A few thoughts, all of which are my opinion. The market ISN'T a buyers market. The housing crisis is past. There aren't enough homes on the market right now. Any home that has been on the market for over two months at the longest isn't a deal. I always look for something I can make money on and don't base it on emotion.

Get a realtor. You as a buyer are out nothing by having one. Finding a good one can be tough, but if you can read people at all, it shouldn't be too hard. Realtors are there to set appointments and you can burn their time/gas riding around. I always bring a list of houses to the realtor. But, I know what I'm after. Another service they offer is an emailed report of new properties that meet search criteria you want. It helps save a lot of time searching for good/worthwhile properties.

Also, with you not knowing a lot about houses, I'd recommend buying something 80's or newer. You can get into a huge mess with old houses, especially if they were renovated w/out proper permitting. Cabarrus county can be very hit and miss, though they are getting better at code enforcement.
 
I said screw it and I'm going to build a house, I believe. I have land and I want to use it, so I figured it to be a wise investment. Although, being family land, it will never be sold. I always buy things with the intent of keeping them as long as I live.


Along the same sort of lines as house buying....once I have my house built on my land, how can I convince the bank to give me some money to build a 40x60? Think I could convince them to let me do it all at once?
 
broncosbybart said:
Unless you really have no life, I suggest chopping 75 down to 10 before driving 1 mile.
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x2

Back when we were looking, the first thing I would do to review any new listing was look at the county GIS. You can tell a lot from that website, ie highway in the back yard, 2 miles from the airport, run down mobile home with 20 cars in the front yard across the street, etc. It will allow you to cross options off your list from the comfort of you couch.
 
Thanks for the info guys. Between the OL and I, we have a laundry list of 'wants'. As I mentioned before, it's been a big ass game of give and take based on how we prioritized those wants. So the reason the 'search list' is so big (and we actually knocked it down 24 last night) is the same reason I go pavement pounding for a new car or go to a 'rent-a-gun' gun range...get a feel for what I like and if that little nuance is worth the extra trouble, or if it'll be a headache later. Hell, for all I know, the way we prioritized may be completely out of whack and unreasonable. That said...all the houses have been similar and met at least 75% of our wish lists, major differences have been lot size and year built. I've definitely gone in to this process ignorant, but I do appreciate the help. I think the big things now are getting a feel for floor plans and determining which area will be the best for both of us. Currently, we're looking in the southern parts of Iredell and Rowan, Cabarrus and WSW parts of Stanly.

And good call on the GIS...that should help out a lot.

Being the finance guy that I am...I'm definitely looking to make money on the deal 3-5 years down the road. I realize the market is rebounding, but I still haven't missed the boat when compared to 8 years ago. Sure, will I have to offer 93% of asking price instead of 75%...definitely. But home values are far from peaked, and I'm more than willing to capitalize 60k 5 years from now.
 
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Croatan_Kid said:
I said screw it and I'm going to build a house, I believe. I have land and I want to use it, so I figured it to be a wise investment. Although, being family land, it will never be sold. I always buy things with the intent of keeping them as long as I live.


Along the same sort of lines as house buying....once I have my house built on my land, how can I convince the bank to give me some money to build a 40x60? Think I could convince them to let me do it all at once?
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No and no, unless you can get a farm type loan and can prove the building will be income generating. All 'regular' construction loans won't help you out. As an aside, a home loan and a construction loan are 2 different animals. Depending on how much land you've got, building may or may not be the best answer
 
Ok the sellers agent gets 6% from the sale price. This is a standard realtor number, if they are a realtor and not just just a licensed agent, they can not negotiate these prices. If you have a buyers agent the seekers agent as to split his omission with your aent, if not the sellers ahent keeps all te commission.

A buyers agent costs you NOTHING.

there are soe professional etiquette and legal sues. A licensed realtor can not with hold damaging evidence from another realtor, but they can from you.

Will some still yet screw you, sure.

Now onto loans...don't do an FHA if you can help it. We did on our first house but regretted it. Go conventional if you can. quite horsy it is my belief you shoud be prepared to ay 20% down or hold off...but I'm risk averse by nature and I won't preach here.

Just remember buying a house comes with tons of unexpected expenses....what if the heat up goes out a month after you move n? Now you need 7k immediately....

Btw, if you need an electrical opinion within the area you are talking about, I'll hook up a fellow wheeler for free just ping me.

I'm o longer licensed in nc as a contractor, but I'll give you a free educated and experienced opinion and show you what I'm looking at and explain what I see.

Good luck and enjoy the process.
 
shawn said:
The shorter the mortgage term the lower the rate. You're better off getting a 15 year than getting a 30 and paying it like a 15.
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Ehhh maybe maybe not.

When we refi'd there was 1/8th point diff between a 15 and. 30...we took the 30 pay it as a 12 but if unforeseen happens we have the flexibility to drop back in to the lower payment options.
 
^^^^ This. Always a good idea to pay more, but still have a fall back if you run across something unexpected. Same way with an auto loan, I always paid extra every month.
 
Thanks Ron. I'll probably take you up on that. After all the home buying education I've gotten, it'll still probably be a couple months. It's definitely not the slam bam thank ya maam process in which I like to do things. Went and looked at 6 houses this weekend in Mooresville/Salisbury/Granite Quarry. We liked 2 of them, but the OL really wants to get a little closer to splitting the difference for work commute, so we'll be checking out another 4-5 homes next weekend. So much more goes in to it than just 'I see it, I like it, I'm gonna buy it'. Patience is not one of my virtues. Definitely getting schooled a bit.

Then the most recent big discussion for us has been...just because we've been approved for $XX, doesn't mean we have to use it all...especially if we already know 5 years is probably the max we'll be there. I get that, and it's the first real sense of financial responsibility the OL has had. However, my take is, the housing market is on the way up...do I want to buy a 130k home and 5 years from now it's 140k home...or would I rather buy a 200k home and it's a 240k home 5 years from now??? Either mortgage payment is easily enough made, but is the spending cash or extra cash going to the mortgage worth not buying more house???
 
Life happens. Man plans God laughs.
Buy the house that makes you happy today. I bought my 3 year house n 01 and sold it in 2010....for $400 ess than I bought it for.

Take 5 year plan into consideration but understand it will likely change....
 
our offer on the house was accepted. I know alot of people don't favor the FHA loan with a 30 yr. Mortgage..but for some...its the only way....there was absolutely no way we could put down 20% on a house living in an apartment. We were able to come up with the 3.5% that we needed and got a good interest rate locked in, so we are happy. Its an investment....plus the house that we got is only going to go up in value...its in the best school district in our area.... Will the interest and PMI kill us? probably, but we are in a house and creating equity and not throwing money down the drain every month living in an apartment.
 
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