So... tell me about buying a house.

Having left the Big Apple to head back home(ish), I’m coming towards the end of my first year in Columbus. I’ve already decided I don’t really want to stay in my current apartment; I don’t like big complexes, honestly, and I’m still pissed that they painted all of the buildings weird colors and cut down my privacy bushes. And so, I’m finally starting to think its perhaps time to Buy a House.

I know absolutely nothing about this–not even enough to really know what I ought to ask you fine folks, other than that I definitely need to figure out timing, as I don’t want to either get stuck carrying a lease and a mortgage payment at the same time, or run out of time on my lease before I can find a place. So, please tell me… oh, just about everything. :slight_smile:

http://lmgtfy.com/?q=buying+house+site%3Aboards.straightdope.com

The one time that I bought a house in Columbus, Ohio, my wife and I used a buyer’s agent t help us through the process. (We later used the same agent when selling the house 11 years later.) Use of a buyer’s agent seems to be quite common, and doesn’t add to agency fees because of how the seller’s agent and buyer’s agent divide up the fees. (They aren’t used so much in Australia.)

Our agent’s help included finding finance: although I had a large part of the likely cost of a house in cash, I had recently moved from Australia so I didn’t have a good credit rating. So I’d recommend finding a buyer’s agent as the first step in the process.

Because you are asking here I assume that means you don’t know any realtors very well. It might be a good time to network through people you do know.
But be smart and stubborn if you do find one that way. I know a few people who were trying to “be polite” with a friend of a friend realtor and didn’t have the confidence to stand up for themselves when the realtor was pushing something.

The Complete Idiot’s Guide to Buying a Home was quite helpful to me twelve years ago, and I’m recommending it for you now. You’ll get bits and pieces of good advice from individuals in this thread, but this book (or another like it) will give you all of the details on the entire process, and sound advice on how to navigate each step without getting burned.

And they do that from time to time because they get paid when you buy a house, even if it’s not the best house (or the best price) for you.

Get pre-approved from a mortgage lender first. Start with your current bank and see what they can do.

I agree with wolfman. I’ve learned through watching my friends and even on this board, don’t choose a Realtor because they are related to you or someone you know. Get a recommendation based on actual reputation from people who have worked with them, and not just based on relation or friendship.

A couple of things; a real estate professional may be friendly but they are not your friend (unless they’re already your friend which I doubt or you wouldn’t be here). Their job is to make money by selling you a house they want to sell you. That may or may not be a house that suits you or that you want, it’s simply in their inventory to move and then they move on. None of them have admitted as much to me but their actions always tell another story (rather than the one they think you want to hear).
They have friends who are in the home inspection business. It’s nice to have friends. Hire your own local inspector on a recent recommendation from someone you know.
If you’re very fond of a house look up its tax record online; they can be very enlightening and something for free in the buying process will be a nice change for you. Go back and drive by the houses you like at a different time of day to see what life may be like in the evenings or on the weekends.
Don’t expect to close on the date you’re told; if it’s within 5-7 days of the date originally promised that’s great. When you give your notice, give yourself a week or even two weeks’ buffer.
Don’t get a cashier’s check/wire transfer for the amount required at closing until the day of; even the day before it can still be wrong. And there are no refunds on fees for them when they’re wrong.
Be prepared to show how every cent you had in the last 6-12 months was earned. You’ll be screencapping bank statements and scanning tax docs, probably over 40 pages when you go for your mortgage.
Pull one or two of your three free credit reports from annualcreditreport.com before you start seriously hunting; chances are the agent meeting you will have pulled one on you as well.

You will want more closet/storage space than you think you need.

Trust me on this.

Yup, that’s the first step. The second step is looking at how much you’re actually willing to pay (and how much you can comfortably afford - you don’t want to make yourself house poor) - banks sometimes are willing to loan people more than is good for them.

In addition to getting a real estate agent, it’s a good idea to familiarize yourself with your local market. Look at online listings to see what houses are selling for in which areas; go to any open houses you can find; drive around and look at neighbourhoods and see where you think you’d like to live.

Find out what the previous owners average utility bills were. Living up here in cold Upper Michigan, it was very enlightening. Many of the homes I looked at had ZERO insulation, and this was reflected in their sky high heating/electric bills. This is public knowledge btw.

Really?! So if I were to call up the local utility companies, they would have to tell me what the previous owner spent on natural gas and electricity for my house? I’m pretty dubious that that’s the case for Michigan, much less the entire country. I’d like to see a cite.

Regarding mortgages, be prepared with all the financial information you can think of. I can’t believe how much paperwork was required to get a mortgage/buy a house.

I would also recommend using a mortgage broker, who searches for the best deal for you rather than going through your bank.

One thing I never thought much about was which way the yard faces. If you love the morning sun, make sure you get an East face. I love enjoying my yard after work and have had west facing backyards and never regretted it.

The first time you go through a house, you won’t really see anything. While Nawth Chucka is right about hiring an inspector, this comes late in the process, when you’ve committed to the house and don’t want to start looking again.
Definitely drive by at different times - on Saturday, when school is out, in the evening.
In NJ flooded basements were a big problem. We arranged to visit right after the rain - and found the guys’ electronic instruments on the floor of the basement, which gave us a good feeling about the construction of his sump pump. We were right.
If you’ve never owned a house you don’t know all the things that can go wrong and ways they get hacked. Turn on all the faucets and see if the water pressure is good. Check doors for fit and finish, especially closet doors. Look under the sink to make sure things are installed properly. Look under rugs. Look behind pictures. You won’t find all the surprises, but you might find some.

Also, look for staging tricks. We toured some new houses the next block over, and since we were not the least bit interested in buying we could look for the tricks. For instance, they had a single bed in the master bedroom to make the room look bigger. They took off a lot of the doors. They had no curtains or glazing on the bathroom window to let the sun in and make the room look brighter - despite the fact it looked down on liquor store parking lot.
Don’t fall in love with a house until your third visit. Then it is okay.

I’ve owned a house since I was 23…
The mechanics of buying a house are pretty straightforward, so I won’t go over them.

My recommendations (based on living in a few different neighborhoods) are:

  1. Find out something about the neighbors. You could have the most spectacular house in the perfect area, and still be in hell if you live next to some bad neighbors.
  2. If you are interested in a house with a homeowners association, make sure you read the CCRs before you buy. Also, ask other homeowners what they think about it. Some HOAs are real bastards.
  3. Do some research on barking dogs and traffic patterns, if you like quiet.
  4. Find out about utilities - If you like to cook with gas, and gas is not available in the area, oh well.
  5. In Phoenix, the city has a publicly available crime grid . If this is available in your city, use it.

I got pre-approved, then interviewed three different realtors. I went with the one I felt understood what I was looking for and that I was the most comfortable with. He did such a good job.

Make a list of things you must have vs things it would be nice to have. I wouldn’t even look at a house that didn’t have all of my must haves, unless I learn I’m being unrealistic about my expectations.

Have fun! I love to look at home choices. I hope you find the perfect place!

Regarding your monthly budgeting, as you calculate how much you can afford on a mortgage: add in a maintenance fund. These expenses will be irregular but potentially costly, so take out a fixed amount every month and put it into a special savings account. I can’t tell you how much, a lot depends on the condition of the house, but $200/month seems like a minimum.

When they are writing up your mortgage, be sure your property taxes are included in the monthly mortgage amount. It makes the monthly amount larger, but you don’t have to scramble for the funds when tax time rolls around. I didn’t do this and I kick myself every year.

Be prepared to look at a lot of frogs (you don’t have to kiss them) before you find your prince of a house. There are a lot of lousy houses out there, especially if you are in a hot real estate market.

You can make an offer before having the house inspected, but make the offer contingent on passing inspection. Absolutely do not contract on any house without a reliable inspection. If you don’t absolutely trust your agent, don’t use their inspector, find one some other way.

If you are going to have any kind of a yard, that is also an expense. Buying new plants and maintaining a yard is not cheap.

After buying, join Angie’s List, if it is available in your city. If you don’t have already have contacts with plumbers, electricians and other contractors, this is an invaluable resource of unbiased and unpaid reviews from people just like you (and you should add your own reviews once you have used a provider.)

There is probably more, but that’s what pops out at me right now.
Roddy

ETA one more: don’t buy a house just because you are out of time. If your lease runs out, find a monthly rental and stay there as long as it takes. Buying a house under any kind of deadline is a bad idea, you will end up with buyer’s remorse later.

We bought our first house in the middle of our lease term. If the rental market is not horrible, your risk is not that bad. A lease is a contract, and both parties to a contract have a responsibility to mitigate losses if the contract is broken. That means the landlord must make a reasonable effort to replace you in the apartment, though you would likely be responsible for the costs of that effort, such as advertising. Once the apartment is re-leased, you would stop being responsible for the rent. If you can find someone to sublet, you can mitigate the loss as well. I think we ended up forking over a couple of grand to get out of our lease, which had 6 months remaining at $900/month. Peanuts compared to the cost of the house.

Someone upthread mentioned sunlight relative to house placement. Keep this in mind not only with respect to morning/evening differences, but also seasonal fluctuations. Colorado, where we live, is chilly in the winter, but dry. So even if the air temperature is below freezing, snow in the sun tends to disappear very quickly. Our house is south-facing, so the front walk melts much faster for us than for our neighbors across the street. And, in summer, our back yard is much shadier and cooler than the front yard, which is good for cookouts.

I’ll second the call to budget for maintenance in determining how much house you can afford. I’ve heard 1-2% of house value/year, depending on age, as a good rule of thumb.

To illustrate the point about agent incentives more concretely: The seller’s commission on a house is around 6% of sale price, typically split evenly between buyer and seller agents. So for every $100K in house price, each agent gets about $3000. A $5K change in price changes the amount each agent gets by only $150. They don’t care at all about a price difference that might mean a lot to you. So you may get pushed by your agent to accept an offer that’s not particularly good just so they can get their payout. We used this to our advantage when we bought our first house. It needed a new roof, so by the inspection contingency clause, we were entitled to pull out of the offer with no loss of earnest money. We asked the sellers to either drop the price or pay for the new roof outright at time of sale. They refused to pay more than half, so we threatened to walk. They wouldn’t budge, but the agents just made up the difference by cutting us checks out of their commissions. Cost them each about 10% of their total, so it was worth it for them.

Other things:

Make sure to talk to the neighbors before putting in an offer.

Ask how many rental houses are in the neighborhood.

Quality of school district can have a massive effect on price. If the house is close to a boundary between school districts of greatly different quality/prestige, check independently with the districts which one it’s in. Don’t believe what the agent tells you without verification. I have a coworker who lost a pile of money years ago when she mistakenly paid District A prices for a house that was actually in District B; the boundary was in the middle of the street, and she was on the wrong side.

Same with us. You might look in the paper and see who the agencies are calling their top agents (most of them do this). It doesn’t mean they will be a fit for you, but it DOES mean that they’re out hustling for their clients. Don’t be afraid to tell the agent that he/she is not showing you houses that have what you’re looking for, or is taking you to neighborhoods that you don’t want to live in. Otherwise, they’ll continue to show you houses that have been in their inventory forever and that they’re trying to get rid of. I’d stay completely away from friends and friends of friends who are realtors. It’s just too hard to fire them, should it become necessary.