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[Real Estate] Need advice from experienced home buyers

Discussion in 'BBS Hangout' started by RKREBORN, Jul 29, 2015.

  1. RKREBORN

    RKREBORN Member

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    So, trying to purchase my first home. Here is my dilemma, I have two homes approx the same price. One is in a brand new neighborhood, and is developing so projections are unclear. The other is in New Territory in Sugar Land, but the home is 24 years old. I eventually plan on selling the house in 5-10 years, so I'm trying to ensure that I do not lose any money. I am purchasing the home mostly for my elderly parents. Question is, which is the safer bet:

    1) Brand new home in developing community near 99 and 1464
    2) 24 year old New Territory home with all recent upgrades, but asking above market value

    I am very confused, as this is my first home purchase. Please help any one?
     
  2. DonkeyMagic

    DonkeyMagic Contributing Member
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    I wouldn't be too concerned with a 24 year old house so long as it's it good condition and the original construction was good. 24 years is not that old for a house. The only immediate item i thought about was/is the potential for a new roof with varies depending on what kind it is, but typically you're good for 30 years and above.

    New builds are nice though but i pay close attention to the quality of the build since a lot of the homes are thrown up quickly and corners are cut.

    There is something to be said for an established neighborhood, you know what you're getting for the most part.
     
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  3. RKREBORN

    RKREBORN Member

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    Roof was replaced last year, as were the AC's
     
  4. ima_drummer2k

    ima_drummer2k Contributing Member

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    This.

    We built about 4 years ago and are starting to see corners that were clearly cut. Nothing major, but a lot of minor annoying things like carpet starting to fold in gameroom, seams in crown molding, seams in shower tile, towel racks becoming loose, etc.

    Again, nothing that can't be easily fixed with a trip to Lowe's, but it does seem kind of soon for things like this to start happening.
     
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  5. Dubious

    Dubious Contributing Member

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    Check the current tax, MUD district charges and HOA costs for both. The annual difference could be thousands of dollars a year.

    Even though you and you parents have no children, consider the school district and school proximity, it will be a factor when you sell.

    Consider your parents mobility and what services they will need to access, shopping, doctors and hospitals, community centers.

    Look at the utility bills, the older home may not be as energy efficient. Also see if the newer house comes with A/C and appliance warranty's.

    Look at the HOA contracts and how the compliance is in the older neighborhood. The stricter they are the better the neighborhood value is retained. 24 years is getting to the point where they could crumble. In the newer home, find out what subdivisions the developer has done before and go see how they are holding up.
     
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  6. Xerobull

    Xerobull You son of a b!tch! I'm in!

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    If location isn't an issue, I would buy new for the same price. WAY more efficient than a house built 25 years ago. You're going to need to carry a home warranty on the older home, which is going to be an extra $600 or so a year. Also, the chances that you can work a better deal with a builder are much better as they have wiggle room.

    If you buy new and can wait a bit, have them customize a house for you. Also, make sure you hold their feet to the fire on absolutely every little detail of your finished house, and MAKE SURE the attic is fully insulated. I see a lot of builders scrimp on attics because buyers don't look at the attic.
     
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  7. RKREBORN

    RKREBORN Member

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    New builders are DR Horton. I think they are established. I'm just concerned because the location is a little outwards (near the prison). While New Territory is New Territory. HOA is $1100 a year, and I heard they are pretty strict.
     
  8. mug

    mug Member

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    New Territory, or anything with Sugar Land in the address, will always be the better investment if you really do plan on selling in 5 years.
     
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  9. JayZ750

    JayZ750 Contributing Member

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    Nothing beats location.

    If resaleability is a concern, you're number one thing to consider should be location - it's current desireability, and likely desireability in 5-10 years.

    I don't know the 2 areas you are debating, just pointing that out.

    Location means general area desireability, school districts, proximity to whatever, etc.

    I'd buy an "overpriced" well located house before buying a fair priced but questionable location property.

    You don't want to way overpay of course, but I've owned houses where they were on the market for a while and I was the guy that came through and bought it and got a "great" deal... but the deal isn't as great 5 years later when you are moving, and it takes 9 months to sell, and you don't get the price you think it should get, etc.
     
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  10. RKREBORN

    RKREBORN Member

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    Did you take a loss 5 years later?
     
  11. JayZ750

    JayZ750 Contributing Member

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    No...

    But that's only because after 6 months on the market, I put it up for lease and got a GREAT lease offer. Had it leased for 3 years with basically zero problems, then my tenant moved out and I got it sold in 2 months. After costs, etc. I had a slight profit on the sale, but was making money during the 3 year hold on the lease, so all in all did ok.

    I was actually in a great neighborhood, but VERY SPECIFICALLY to my lot, I was on a corner, where the side fence was along a "busier" through street in the neighborhood, and I had a very small city owned water utility directly behind us. It was like a tank, but you couldn't really even see it from the backyard because of the trees, and it was a small tank.

    We actually loved the specific location - we only had 1 neighbor that we shared property line with, and that was on the driveway side... but buyers first thought immediately busy side street and water tank behind the house... pass.

    Conversely, I've been in bidding wars on houses in Austin. I'm on my second house in Austin. Only got the first one because we were the VERY first person to see it. Paid up for it. But sold 3.5 years later (family expanded quicker than expected!) and did 20%+ annual return on my equity, because it was perfect location, perfect school district, etc.
     
  12. tmacfor35

    tmacfor35 Contributing Member

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    New home.

    Warranty has to play a factor here. Most new home warranties cover foundation/roof/major interior walls for 10 years.

    It minimizes the risk.

    If all you are concerned about is making money down the line, then buy the new house at base price or an inventory(depending on building or buyer one that is already up).

    Houses that are 10 years and above usually have about 3000-4000$ on fixes a year.

    Depending on what your budget is, will also play a role in what new home you want. New is smarter with recent tech upgrades in AC's/insulations/etc.

    No brainer here. Of course, I sell real estate, but I feel that new homes depending on builder are they way to go.
     
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  13. Space Ghost

    Space Ghost Contributing Member

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    Depending on what kind of person you are, a strict HOA is not bad. If youre going to be the neighbor everyone complains about, you will hate it. Strict HOA's will help ensure your property value doesn't diminish.
     
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  14. RKREBORN

    RKREBORN Member

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    The roof on the older home has a 10 year warranty (replaced last year), the AC's are new, and the foundation was repaired last year (lifetime warranty).
     
  15. Ericstocracy

    Ericstocracy Member

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    New Territory is a great location, and I have family that live and own businesses there.

    The only complaint my family has is that the county swears that they won't be increasing property taxes, but then every year continue to increase property values well above what they're worth to make up that income loss. My uncle has been fighting it for the past few years now, and it's getting to the point where he's thinking of leaving.

    As for a new build home, be very careful. I have heard good things from DR Horton but large companies do sub-contract out, and then those sub-contractors may hire someone else to do the job. Have the home inspected by an independent home inspector.

    My father and I run a handyman business, and we've seen houses 30+ years old in better condition than a 2 year old house. It's all in the craftsmanship and the quality of materials used. I've seen houses that were framed entirely with 2x4, which completely astonished me.

    My best way of testing the build quality is climb in the attic and see how the roof is joist. If they're are full length beams, vs spliced and bridged pieces that they used to cut corners. Check where the facade meets the roof, if you can see any light coming in through those seems from within the attic it is poorly built and will be an energy sieve.

    Pull cover plates off of light swtiches/outlets and any junction boxes you come across. See how many circuits are being fed by one power source. Switch breakers off one at a time and record how many different outlets/switches and lights are shut off and in how many rooms. Electricians tend to be extremely lazy and will try and run as many switches and outlets they can off of one break/power source.

    I don't know how many new homes I've been to where you'll have a switch box running one light filled to the brim with 10-12 other circuits running off of it. If there are exterior lights installed, especially on brick or stone facades see if the top 1/2 of the lights back plate is siliconed/caulked. Lazy electricians won't take the extra step to weather tight them, even if the eave hangs over, they should be sealed. There also should be a non-sealed gap at the bottom to ensure proper draining of water encase moisture does end up getting back there any way.

    On the older house watch out for cracks in brick that may have been previously filled with caulking. If that's the case, find out if the foundation issues that caused that cracking had been fixed.

    That's all I've got for right now, if you've got questions hit me up and I'll answer them to the best of my knowledge.
     
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  16. dobro1229

    dobro1229 Contributing Member

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    As someone who used to work in real-estate before the bubble burst in 2007 IN THE SUGAR LAND AREA (worst possible time to be in Real Estate FYI)-

    Regarding warranties-

    FYI, even with an older build, as part of the sale, you absolutely will be able to negotiate a home warranty for at least the first year or two. That's a given. It will cover your major appliances, plumbing, etc. With a new builder warranty, yes it will cover things like your foundation, roof, along with many other things, but I know my best friend is a home Warranty Manager for David Weekly... trust me... new builder home warranties don't cover as much as you'd think.

    Also, you'd probably have to share with us both listings to get a better since of what is the better purchase. I'd need to see the square footage, surrounding streets, and updates to give you a better idea. I know you might not want to do that, but I think you can PM me if you'd like.

    Keep in mind that even with new builds, you are going to want to do upgrades even if you don't plan on living there long. There really is no such thing as true move in ready. That's why buying new is kind of deceptive. They charge you an arm and a leg to get high end upgrades, you end up settling on what you think you can live with, and within 2 years, you are updating anyways.

    Sugar Land, and surrounding areas are a bit of a crap shoot. You really don't know how the neighborhoods are going to age with time. Some of the new build neighborhoods from Missouri City to Pearland I'm telling you now, there is no way I'd buy new at some of them. Alot of the existing established neighborhoods in Sugar Land, especially in around First Colony are more predictable to hold and extend their value over time.

    Of course, keep in mind we are at the tail end of another real estate bubble right now. Prices are likely to not hold from everything i hear, and we are likely to see a burst, albeit smaller than 2008 from what I hear from my friends still in the business.

    ........

    My advice, if you only plan on owning a home for 5 years, is to buy an older home, in a good established neighborhood that HAS NOT been updated. You are paying top dollar for the work someone else has already done. If you are somewhat handy, and keep up with things like a responsible adult, you should be able to INCREASE the value of that home over 5 years easier than maintaining value on a higher priced "move-in-ready" home that has fixtures and appliances that will deteriorate.

    Let me know if you have further questions.
     
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  17. Ericstocracy

    Ericstocracy Member

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    I wonder if that warranty covers any issues that may be from their work or just the manufacturers warranty of the shingle. 10 year warrantied shingles typically only last about 5 years. I've only ever used 30 year guaranteed shingles, which then only last about 15-20 years, but I'd rather only re-roof my house once a decade or less.
     
  18. JuanValdez

    JuanValdez Contributing Member

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    I would say the quality of life for your elderly parents over the next 5-10 years is more important than optimizing your real estate risk, especially when (1) so much of that risk is unknowable, and (2) we're talking about a delta between incremental changes.

    I did this for a parent before, and I knew his situation and what would be important for him for a place to live and bought accordingly. If both houses fit all of the parents' criteria as well as your own criteria, you might ask them which they like better.
     
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  19. tmacfor35

    tmacfor35 Contributing Member

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    Of course DR's warranty company is located out of North Carolina(not in house). That screams blah to me, their express product has been taking major backlash in San Antonio for major structural issues as of late.

    Speaking of David Weekley, they are probably the best construction based home you can buy via manufactured builder. They are a safe bet.

    RB-sounds like the old home isn't such a bad deal, but with new construction you will have more options and choice to get what you want.

    Both homes will be market stimulated, and on top of what I mentioned, the home is already going through major repairs. You have better opportunity for growth in the younger area.
     
  20. bongman

    bongman Member

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    OP, just like any investment, there is no assurance you will not lose money. It should be a seller's market at the moment so you will be buying when the house prices are much higher than 2-3 yrs ago. It would be difficult to predict if the industry will trend up or down. Good luck !
     
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