Question for home owners

I'll just share with you my personal experience with buying our home.

We weren't really even looking for a home, in all honesty. We had been casually looking through the ads in the paper every Sunday and looking around a homes but most were out of our price range or in the wrong area, etc. We just assumed we'd be where we were at the time for a while.

Then, we saw an ad for our house and decided to drive by. We both liked the way it looked on the outside and were surprised it was in our price range. We decided to walk through with the realtor and loved the inside as well.

There were two gay guys living here and they were very nice. They said they had a bid but it was a government loan and they really didn't want to do that because of the hassle and paperwork.

I decided that the best way to handle it was just to talk to the guy. So, I came back one afternoon by myself and sat down with one of the guys and just talked with him. He was a really nice guy and I finally got around to simply asking, "How much will you take for this house? What is the lowest you'd be willing to sell it to me, no bull****?"

He told me straight up and I could sense he was being totally honest about it because he said, "I won't sell it to anyone for less than that."

We submitted an offer two days later and that was it.

Note that we used a buyer's broker. He made things MUCH MUCH easier for us because he wasn't on the seller's side. He was in it to help us out. We didn't have to pay him because he got a percentage of the sales commission. He handled all the legal documents and was there from the day we offered to the day we closed.

 

Harris County tax appraisal district almost always appraises homes lower than their market value. They get fewer complaints that way.

The best way to determine a fair offer for a home is to find out how much homes are selling for per square foot in that neighborhood or area. If your not using a realtor, you can still ask one to provide you with the info that you need. Not having a realtor can also work to your advantage because generally the seller pays less commision if there is only one realtor involved. That way the seller can be a little more flexible on their price.

The amount of haggling involved varies from deal to deal. If the original asking price is fair and any subsequent counter offer is not totally rediculous, the 2 parties can usually come to a quick resolution. I'm in the process of selling my home now and there wasn't much haggling on the price because I had the home priced right for my particular neighborhood.

This probably goes without saying, but figure out beforehand what things are most important to you in a new home and how those priorities might change in the future (schools, location, floorplan, street traffic, commute, etc.). I mention this because my wife and I built a nice home 5 years ago on a busy street in my subdivision, now 2 kids later we're building a smaller, more expensive home at the end of a cul-de sac. Not realizing how my priorities might change cost me a lot of money.

Good luck with the house hunting.

 

This is really an excellent point. A neighbor of ours paid $200K for their house just under a year ago. At the time, the property value from Harris county was $110K.

 

Yeah Brads right, houses sell for about 10 grand sometimes more than what they are actually appraised at.
Some good sites to compare prices versus appraisals:
(I look up zipcodes...)
www.har.com
www.hcad.com

BTW, I'm lookin' at selling my Heights 2-1, 964SqFt, wood floors, central air and heat, needs a little work, & detached 16X20 studio in the back, 50'X150' HUGE lot.

 

A few things other than final selling price you might want to haggle over are fees.

-Get your own appraiser and make a final list of EVERYTHING that you WANT fixed. Notice I said want, not need. Get an approx price of how much it will cost and present that to him. From there you guys can haggle over prices.

-I don't know what kind of loan you are going for, or what kind of loan the seller will agree on, but if you qualify, I'd go for some of the gov't-backed loans. There's a lot less fees you have to pay. I believe there's no PMI on an FHA loan. But then again, if your credit is immaculate, you won't need to pay PMI.

Like I said, I got my own appraiser and his number was pretty much what the seller was asking for.

My own advice after buying my first home is to remember the resale value. You may think it's a great place, but if no one else does, you're going to lose money. Also, I'm a strong believer in feng shui, so that prolonged my home search. I really kept an eye out for my neighbors everyday for 2 weeks before putting down on offer.

Good luck!

 

Regardless of your credit you will pay PMI as long as your loan is greater than 80% of the value of the house. In other words, if you put down 20% or more, you will not pay PMI.

Also, the seller has nothing to do with the loan you are getting for the house. Your home loan is up to you. Shop around. Neither the seller not agent can force you to use a particular lender.

 

The big problem with govt loans is that most sellers avoid potential FHA backed buyers like the plague. The reason being is that the paperwork is a huge hassle and the seller pays all of the closing costs. The can really eat up the sellers profit margin as closing costs usually run 4 to 5 thousand dollars. My realtor specified that we would only consider offers from people with conventional loans.

I'm not sure if a FHA loan contains PMI, but you will pay PMI on a conventional loan if you don't make a downpayment of at least 20%, regardless of your credit history. You could do an 80-10-10 loan to escape the rediculous PMI charges though.

Coma made some excellent points about the resale value of your home. This is not always something that people think about when buying a home. I had a harder time selling my house because it was on a busy neighborhood street. I never even considered that to be a problem when I built the house, but it cost me time and money when it came time to sell.

 

A buyers agent's commission is paid out of the sellers proceeds on the sale of his/her home. You won't have to pay them out of your pocket. As for a real estate attorney goes, I think that would be a waste of money IMO.

Something else worth noting is that if you are a little strapped for available cash for downpayment/closing, you can ask the seller to help you pay some of your closing costs. For example, if the seller is asking $120,000 for his home, offer him $124,000 with $4000 back at closing. This way you finance your closing costs and keep from having to dip too hard into your savings. I am doing this with the couple that is buying my house. It helps them and doesn't hurt my profit whatsoever.

 

Old School: I cannot remember where you are looking but the buyer's broker we used is an attorney named Frank Babinak. He is on Heights Blvd near 11th Street. He is really terrific and works not on a rate you pay but off of the sales commission. He gets a percentage of what the real estate agent gets - they negotiate it so you don't have to deal with it.

 

build a tree house.

 

I think Brad answered this one. A lot of sellers won't deal with FHA loans.

 

ahh, youth.

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OS, et al.... real negotiations start after the house has been professionally inspected. Once everything is inspected, you will know exactly where you stand with the house you'd like to purchase. then you can wheel and deal because if the inspector finds something major, you can really use that as a bargaining point and with some houses, you may have alot of bargaining points!

If you need a good home inspector, email me, I've got one that's a little bit more expensive, but man, is he worth it, and thorough!!

good luck.

ooh... another thing about buying a house. remember that when you go to look at it, you're there for a short time. if you can, drive around the neighborhood in the evening to see what it's like. drive the surrounding streets and streets behind the potential house you may buy. don't buy a house without thoroughly checking out the neighbors and neighborhood. also try to found out who immediatley around you may rent, sometimes renters can be the worst neighbors, sometimes.

much luck.

 

FHA has stricter standards with respect to appraisals. In addition, FHA will require the seller to pay for needed repairs. FHA does not require the seller to pay ALL closing costs. If it is a regular house (Not a condo or townhome), there should be no problems with an FHA loan. If anyone is prohibiting a buyer who will get an FHA loan, take a good, long hard look at the property prior to buying it because it sounds like the seller thinks there will be a problem regarding appraisal or repairs.

Some condos or townhomes are not "approved" by FHA so they can't use an FHA loan to buy it.

 

Just to let you guys know, MOST, home inspectors only do that job because they were not good enough to be a realtor or builder.

MOST, not all.

Also, most will really pad the list of things they think are wrong to make it look like they were doing a good job. They can really drive up the cost of buying/selling a home for both sides with unneeded repairs.

ALWAYS double check things they say are wrong, many times inspectors have no idea what they are talking about and can have you doing repairs that you don't actually need.

For instance, a buddy of mine sold his house recently and the people he sold it to had an inspector. The inspector INCORRECTLY told them that they needed to get some siding changed out because it was not the correct kind for the Houston area.

They argued that the repairs were dumb, but the people buying the house insisted that a siding company come out and check it out. The siding company agreed with the seller, the siding was just fine and the inspector was just plain wrong.

Would have cost thousands if he had his way.

They also "find" things that just can't be helped in Houston. Believe it or not folks, drywall cracks are going to happen in larger homes in Houston. 99.9% of the time there is nothing wrong with anything and the cost of repair will be a can of spackle and some paint. Houses settle in Houston, the water table is like 5 feet in lots of areas.


Sorry, got off on a rant. Just be wary of inspectors. Many know nothing of what they are doing. Just some words of warning.

 

The inspector I used was really thorough. He cost me $175.

 

Also, the type of market and time on market will affect the haggling price range. Better to buy in a buyers market. If the sign says "price reduced", the seller is in trouble.