There was a great thread on new homes a few weeks ago, but I need advice on used homes. I'm about to buy my first home, and I'm pretty clueless at this point. The home in question is 22 years old, buy the way. I know I need to hire an inspector before I buy, but what are things I should do on my own first? I know I need to find out if the area floods, since it's fairly close to Lake Houston. It has a wooden fence. One plank is broiken in half, then it's missing about 4 planks alltogether. Should I expect the current owner to fix this? Also, I noticed two patched cracks in the plaster in one room. One ran horizontally and was about 2 feet long. The other was only about 6 inches long, but it seemed to run vertically along a stud. Is this something to worry about, or should I ownly be worried about stress cracks on the joints? I think I also need to find out how old AC is? I have no idea what I'm doing and I don't want to make a costly mistake. Any and all advice would be appreciated.
The inspector will be very helpful with some of your questions. I moved into a new home so I didn't have to go through a lot of what you are going through. I would think the owner would either take care of the fence or you can use that in the bargaining of the price of the home. From what I've heard there were a lot of bad homes made in the 80's...at least that's what the home improvement guy, Tom Tynan, says on his radio show...so just be careful and follow your inspectors advice.
Definitely get the seller to include at least a one year home warranty package. This will ensure that you won't get any lemons included. The A/C is paramount. Just imagine your house at 90 degrees in August when the A/C craps out. The inspector should be helpful in this area. He'll also be able to address any structural questions you might have. If you're concerned about flooding...go talk with some of the people in the neighborhood. They'll give you a better opinion as to the flooding situation in the neighborhood. If you're using a real estate agent, utilize them for everything. Make them earn their three percent and force them to fight for everything you want out of the house. If there are a few minor problems with the house...you'll have some bargaining power to get the house at a cheaper price. Good luck!!!
My wife and I are actually going through this process right now. We're purchasing a home in the Houston area (after coming *this close* to moving to Austin). It's an older home -- built in 1946 -- but completely renovated. Still, I had lotsa concerns about an older home. The inspector walked us through everything and gave us a very thorough understanding of what needed to be done, and what didn't. It put our minds at ease. Get an inspection as soon as you can. This will answer a lot of your questions. The sellers disclosure will tell you a lot, but getting an inspection is well worth a few hundred dollars. Then talk with your realtor about reasonable requests (fixing broken fence boards, for example). If the sellers are looking for a quick sale, or have more than one offer, they might decline. But they may say yes, too. Oh, and start shopping for a mortgage right now. The process is a freaking backbreaker and the sooner you start, the better. Congratulations on buying a home! Good luck!
Cracks in the wall may be an indication of foundation trouble. More telling would be cracks in the external facade (if brick) or in ceramic tile. Fixing a broken slab is very very expensive. Don't worry about the fence. Pickets cost about a dollar each. A hammer is maybe $7. A box of nails is maybe $3. I think you can handle that yourself if you buy the house.
DanHiggsBeard, The best thing you need to do is hire a realtor. Their services would be free to you (assuming that person selling the house is not doing a FSBO). They will guide you through the whole thing. Normally, you don't hire an inspector until after you put in a contract offer for the house, and negotiate the sales price. After that is done, you enter what is called an option period. During that option period, you hire an inspector, who will go over the house with a fine tooth comb and check out any code violations as well as stuff like the foundation and AC. On a 22 year old house, you definitely need to have it inspected (even on new contruction, you should have it inspected). Inspections usually run $300-$400. Depending on what the inspector finds, your realtor will then send an addendum the seller requesting that the items be fixed. If the seller refuses or you can't negotiate the repairs, then you can opt out of the contract and are not obligated to buy the house (option money is usually a couple of hundred dollars, so you would lose that). Stuff like whether or not its in a flood zone will be on the seller's disclosure, which has to be provided to you by law. But again, make sure you use a realtor!!!! It would be silly not to seeing as how they don't cost you a dime.
Definitely the right era. Okay, DHB, I would recommend getting serious recommendations for your inspector. Make sure the person has a good rep and has some happy former clients. In my experience, some inspectors are pretty lame, and you could end up a couple of years down the line thinking "why the hell didn't that idiot catch this?"
I recommend West Home inspections, Jerry Drolet is the guy's name. His price was very reasonable and he brought a digital camera and printer with him to the house so that he could print a copy of the report on site. He is the owner of the business and has been doing this for a really long time. I was very pleased and would use him again. His website is http://www.homeinspections-usa.com/inspector/243 and you can get a free quote. Take it easy.
Getting a good inspector is a crap-shoot. Remember, its only like a 2-3 week class to be an inspector, so you want somebody that has actually been in the business a while, that knows what to look for. Also, most inspectors are going to fill out 3-5 pages whether they need to or not. It makes it look like they didn't do anything if they don't fill out several pages of stuff. Don't take the inspector's word at everything, often times they may THINK that something is wrong, but nobody knows until a professional checks it out. And it only has to be them THINKING that something MIGHT be wrong for them to put it on the inspection. And don't let cracks in walls scare you too much in Houston. Especially in dry wall. With the humidity and quickly changing weather in Houston, houses expand and contract, causing cracks. 99.9% of cracks in drywall are not serious.
* A realtor can provide a market analysis (what homes are selling for in the area over a specified length of time). Compare that to the appraised value and the seller's asking price to determine aa fair offer. * <b><u>ASK TO SEE ALL UTILITY BILLS FROM THE LAST YEAR!!!</b></u>. Sellers are required to show them to you...IF YOU ASK. Sellers are NOT required to just offer them up. Case in point: I recently sold a 2-story, 2200 square-foot house. My electricity bill was about $600/month...that's why I was selling the place. My home warranty company put in a new air conditioner about 2 months before I put it on the market. The buyers never asked...now they're stuck with 2 mortgages (get this, one was at 8% and the other at 17.4%...yes, you read that right, a mortgage at 17.4%...and that was the larger mortgage!), plus a $600/month electricity bill. I check all the time to see if it's been foreclosed on. They were young and extraordinarily stupid (they paid $5000 MORE than asking price...they offered it the second day on the market, and I only had one other offer at more than $10,000 UNDER asking!). Don't let something like that happen to you!
Okay, I hate this. The mortgage broker we were using was also our realtor, but he flaked out on us yesterday when he was supposed to show us home. I know it was Mother's Day, but he had made an appointment with us and didn't bother to call and let us know he couldn't make it. Anyway, My wife talked to a mortgage broker from our church today, and said he would approve us for more than $55,000 more than the first mortgage broker. This sounds incredibly suspicious to me, and the first guy's approval amount sounded much more reaslistic. I'm so confused. The first guy runs his own business, and the 2nd guy works for a company with a name that kind of screams "DON'T USE US!" to me. However, we know him from church so I'm conflicted. We're looking into finding a new realtor.
yes sir. I'll reply this evening. I can only use that address at home and I haven't been around much.
codell: still no computer last night. Sorry! I'll get to it. okay, here is a list of question I want to ask up front before I sign any paperwork or even put in a bid. Please let me know if there is anything else I should ask or know about. For the mortgage broker: -what are your fees? Do I pay those or do you get a comission from the lender? -he says I only need 3% down, but another broker said if I come up with 5% I can avoid $40-50 mointh in mortgage insurance. True? -what exactly kind of insurance is included my mortgage payments? Does it include fire insurance? theft? -how much can I expect to pay for closing costs assuming the seller contributes 3%? what other fees should I expect to to pay put of pocket (inspector, etc.)? -do you have nay soprt of application/processing fees NOT included in closing costs? -are there early payment penalites? any balloon payments? For the realtor: -will the seller include a 1 year warranty? -ask about the seller's disclosure and find out if the area is known to flood -how can i compare the appraisal price with pther similar houses in the area? -can I see the seller's utility bills from the past year? Am I missing anything?
DanHiggsBeard, Alot of your questions I really can't answer. I am not a realtor or a mortgage broker (thats my wife's line of work). She would be more than happy to answer your questions though. If youd like, you can email her charlotte@myonestoprealtor.com. Just send her that list of questions and shell respond pretty quickly. She usually at her computer most of the morning. A few of the questions I can/will try to answer: Mortgage broker fees - Usually its 1% of the loan amount and its called a loan origination fee. This is usually split up between the mortgage broker, loan officer and lending institution. So there is no seperate commission. Its built into your closing costs. Mortgage Insurance - Usually, you need 20% down to avoid PMI (Primary Mortage Insurance). If you dont have 20%, you can usually do a split loan, where you say, put 5% down, take out an 80% loan for your main note, and then a smaller, shorter term, higher interest loan for the other 15%. If your lender is loaning you more than 80% of the home's value, then they will require you to carry PMI. But like I just said, there are ways of avoiding that. And yes, some loans, you can get away with putting down as little as 3%. Also, Mortgage Insurance is insurance just for your mortgage. Its not the same thing as HOI (home owner's insurance), which covers fire, flood, theft, etc. Closing costs - It really varies, so I wouldnt want to speculate. Paying for the inspector is not part of your closing costs, but a fee you pay while you are in your option period. I know my wife's inspect charges like $350. Other costs not usually included in closing costs: Earneest money, option money, etc. Application fees are usually like $50. I am not sure if they can include that in your closing costs or not (again, this is something my wife would be better off answering). Early payment/baloon penalties: Some do have this. Just make it clear to your mortgage broker that you don't want a loan that has this built in. Home warranties - They won't always include it. Sometimes, they will have an existing warranty on the house that is transferable. If they have no warranty at all, they sometimes you can negotiate for the sellers to pay a 1 year warranty or just pay it yourself. Its not usually that expensive. Seller's disclosure - You, or your realtor, can ask for a seller's disclosure before even making an offer or putting anything in writing. Its the law. And yes, a realtor, or your insurance company can find out if its in a flood zone (100 year flood plain) Comparing prices - Your realtor will be able to access the selling prices of all the homes in that immediate area. They call it a CMA or Comparative Market Analysis. The appraisal price is really a seperate deal. Its not really used to put a value on the house, but rather, to make sure that the bank is not going to be lending more than the house is worth. Again, your realtor will be able to establish the value of the house. Utility bills - Not sure about that one.
Make sure your home inspector is a member of either ASHI (American Society of Home Inspectors) or NAHI (National Association of Home Inspectors). Make sure they are certified for pest inspections Radon (Gas Inspections) Water testing septic/cesspool inspections air quality lead paint
Not much to add except that the home warranty is a good idea and you will typically be approved for much more then you can afford to spend on a house. Work out your budget, figure out how much you can spare for mortgage, insurance, and utlitities and then stick to that number regardless of the amount you are qualified for. You don't want to get into a situation where you are house rich and money poor. That said, now is a good time to make that first purchase with the interest rates what they are. Even if you can't afford your dream house go ahead and get one so you can take advatage of the low interest rates, build some equity and maybe trade up later. Good luck.
I already knew this much, but thanks. We got pre-approved for about $100,000 more than what I'll actually spend.
