So... tell me about buying a house.

One more thing - contingencies.
If you can at all get away with it, don’t buy a house whose sale is contingent on the owners buying another house. (If you were selling to someone I’d offer the same advice.) You may find yourself at the end of a long chain of problems, and wind up without a house to move into for a long time.
It won’t prevent problems, but it gives you the high ground.
Also, be aware of who does closing. In NJ it is an attorney, in California it seems to be the mortgage broker. I don’t know what it is in Ohio.

I second the advice about schools. In the Bay Area real estate agents show you test scores before just about anything. If you don’t have kids you might be able to get a nicer house at a lower cost - but it might be in not as nice a neighborhood.
People are very serious about this. I was at one large meeting where a bunch of people nearly rioted at the prospect of being moved from the district of the best high school to a still good but lower ranked one.

Oh, yes, this is a huge one. It seems like there ought to be some official way with the city to find out, but I’ve never tried. In any case, it’s a huge factor in livability of a neighborhood as well as re-sale value of your home. Of the rented houses on our (long) block there are two that have too many people (probably illegal) and too many cars taking up street spaces.

Of course this is also a factor that can change over time. When we moved in, the house next door was owned and lived in by a nice single older man. He died, his family sold, and now it’s one of those two rentals with too many people and too many cars.
Roddy

Thanks for all the replies! It’s a bit overwhelming. I appreciate the advice on schools; they don’t mean a rats to me, as I neither have nor anticipate having spawn. They’re a total non-issue, except as a proxy for how nice the neighborhood is and, in some rather intangible way, the ultimate resale value of the property.

As to realtors: I happen to be a lawyer, working in the real estate department of a rather large firm, so I’ve been meaning to poke around the partners a bit. On the other hand, we don’t exactly do single-family residential stuff, so it’s doubtful we’ll have professional contacts that way. (I’ve represented a couple of clients at SFR closings in NY and CT, but that’s not really relevant here, other than I’m aware of what a closing looks like and have some idea of things that can go wrong.)

One thing: One of the partners I’ve asked about realtors suggested that, in Columbus at least, they had… well, territories isn’t really the right word. Specialties might be better–but that specialty might well include a geographical area, as well as (say) property type (condo, single-family, etc.). Does this jive with y’alls experience? I’m far from being terribly familiar w/ areas/neighborhoods of Columbus–it’d be nice to have a “generalist” to whom I could just give some basic features (single-family, garage, fireplace nice but not essential, no pool, sidewalks (oh god, do I long for sidewalks), no goddamn HOA, etc.) and get results 'round town.

You wanna come shovel mine? It’s only 3 hours or so from Columbus to Detroit:)

Yes, many realtors specialize in specific geographical areas or certain types of houses. We live on horse property, and there is a particular realtor than probably sells 50% of the houses in the neighborhood - they’ve just made it their business to know the horse properties in the area, and when someone is looking for that type of hues, they are at the top of the list.

The same is true for high-end homes.

Realtors can pull listings from the entire area, but if you are interested in a specific neighborhood, it’s probably a good idea to find a Realtor that personally knows the area.

Also, check out the layout of your neighbourhood for walking. We somehow neglected to do this for our current house, and we have ended up on the crest of a hill - every time I go for a walk (i.e. daily), I end up walking back home uphill. Walking around the neighbourhood will also give you a feel for where the loud, busy streets are, if there is a swamp nearby to keep you in mosquitoes all summer, if there is a no-man’s-land of rentals between you and the nearest grocery store, etc.

When we look at houses, we tend to head to the basement and the utility room first - that’s where the rubber hits the road. You can see if the furnace/hot water heater are new, if the electrical has been updated, how the plumbing looks, foundation cracks, water leaks - all kinds of expensive to repair stuff. The bedrooms and kitchen are nice, but they can be fixed up relatively easy.

The mls.ca listings that I look at have added demographics to the listings as well - these are a fantastic reference. They also have a Walk Score for each property, which is crucial to us (I want to be able to walk to just about everything).

But keep an open mind on the frogs, too - something that might on the surface seem like a house you won’t want to live in might be a gem in the rough. Our first house was like that - it was beaten up after years of having tenants in it, but the bones of the house and the layout were good - we painted walls and replaced fixtures, and had a very nice house when we were done.

Definitely. I wouldn’t use their inspector regardless - find your own, reliable inspector and use them.

Oh my God, yes. My yards are like a plant sponge - I just keep putting plants in them, and the yards just keep soaking them up.

That’s one of the reasons that going to open houses in the areas you want to live in is a good idea - there will usually be real estate agents who are familiar with that area at the open houses, and they are always looking for new clients.

Realtytrac.com will show you foreclosures, auctions, pre-foreclosures, recent and regular sales in the area; if you want to avoid a neighborhood of foreclosures it’s a good place to look and get an idea of where that may be. I don’t think I have to tell anyone in 2014 what the cons of living on a street of foreclosed homes, but the biggest for us was our house’s resale value plummeting by over $20/square foot from the year our house was built to only 7 years later.
How long do you plan to be in the home? If it’s only a few years then proximity to schools will be good for resale.

I don’t trust Walk Score. I looked up the one for my house when we had a thread about it, and my score was mediocre. However I can and have walked to 2 malls, 3 grocery stores, infinite restaurants, lots of banks, and lots of other stuff. I have no idea of how they do the computation. But we chose our house versus another one because it was close to stuff, and we’ve always been glad we did.

Yes, this certainly works both ways. Work on learning how to recognize good bones and potential vs. a pretty face on a wreck.

Speaking of specialties, the agent we worked with specialized in lower priced properties (the ones in our price range) just within the city of San Francisco. When your housing market is this big, you can get specialists like that. We were lucky to find this agent, although she wasn’t perfect. I have friends in real estate advertising, and they pointed me in a good direction.
Roddy

In SE Wisconsin I can call the local utiliy company and get a monthly budget payment for any address. It’s an average of the previous 12 months utility costs.

When you buy a house, you’re committing to make monthly payments for a substantial period of time – at least a couple of years, possibly as long as thirty years. You don’t want to be surprised at all by the size of that monthly payment. When you receive a copy of your closing documents shortly before signing, you’ll have a fair idea[sup]*[/sup] of what it’s going to be, but at that point you’ve already selected a house, a lender, a downpayment size, an interest rate, and a payback period, and you’re just about locked into the purchase. Ideally, you would be able to calculate your own payment ahead of time and use it as a decision-making tool to determine all those other parameters.

You can in fact do this with Excel’s PMT() function. This lets you calculate a monthly payment on the basis of loan amount, interest rate, and payback period. However, this is only two components (principal and interest) of your monthly payment.

[sup]*[/sup] The third component of your monthly payment is property tax. Your lender takes this chunk of your monthly payment and stashes it in an escrow account, where it then gets used to make the annual/biannual property tax payments to your city. Many cities limit the rate at which property taxes can rise in response to increasing property values; this way people aren’t forced out of their homes by enormous property tax payments during a real estate bubble. The tricky part is that the taxable value resets when the property changes hands. So for example, if someone’s property value increased from $150,000 to $300,000 over the past five years, their annual property tax may only have increased from $3000 up to $3500. If that owner stayed in the house for another decade they might see the property tax slowly ramp up to the full $6000 associated with that $300K value. But when you actually buy the house for $300,000 today, the property tax calculation resets – and you’ll start owing $6000 per year right away. This will come as a shock if you were expecting the property tax to be only $3500. So when you’re calculating your monthly payment in Excel, you need to find out what the city’s millage rate is, and calculate what your tax will be based on that and your actual purchase price of the house. Divide by 12, and now you’ve got the property tax portion of your monthly payment. You won’t be paying this much right after you close, but as soon as the city reassesses your property (typically once per year), you’ll get a reassessment notice, and your lender will notify you of a pending escrow shortfall –and tell you to start making larger monthly payments. If you did your math right, this new payment will be pretty much the number you calculated before you even bought the house.

Note that in addition to the loan closing costs specified by the lender when you’re phone-shopping for a loan (loan application fee, title insurance, etc.), there are two other chunks of cash you’ll need to bring to closing that usually aren’t included in the closing cost number they give you over the phone:

-if the property tax bill is about to come due soon after you purchase the house, then the seller’s escrow account will be just about full – and he’s going to take that with him. You’ll need to bring an equal amount of cash to fill up the escrow account again so that it will be ready to make the property tax payment with your money instead of his. Depending on the amount of property tax that will be due, and when it’s going to come due, this chunk of cash could be several thousand dollars.

-at least one month’s interest. The first monthly payment won’t be made for at least one month, so you’ll be required to pay upfront for the interest that will accrue during that period.

With a well-built spreadsheet, you can go in and tweak the various numbers – purchase price, downpayment, interest, payback period, etc – and see how they affect your monthly payment, and how much money you need to bring to closing - and now you can know what you’re getting into well before you arrive to sign the paperwork. Now you’ve got a powerful tool for helping you figure out which house you can buy, which lender you ought to use, what payback period you can work with, and so on.

If you want to be really thorough, you’ll also be tempted to factor in the income tax deduction you’ll get for the interest and property tax you pay every year. My advice? Don’t factor that into your purchase decision. I think there’s a tendency for folks to push themselves into the biggest payment they can possibly afford, instead of one that their finances can comfortably handle. If you’re trying to factor income tax deductions in to your purchase decision, that’s a sign that maybe you’re overreaching, and not leaving any cushion in the rest of your budget. Instead, let that income tax deduction just serve as a pleasant stress reliever every spring instead of a critically important line item in your budget.

Random bits of advice:

  1. The Complete Idiot’s Guide Machine Elf linked to earlier is a great resource. Don’t be one of those people who think those books are demeaning because they somehow infer you’re actually an idiot.

  2. When you start narrowing your list down, try to carve time out to drive by the houses at night, and in the rain. You get a different feel for a neighborhood at night (neighbors, dogs, that searchlight of a street lamp outside the window, etc.), and in the rain you may see things that may be problematic (overflowing gutters, swampy areas, etc.).

  3. Several months/years after buying your home, you may get a mortgage bill from an entirely different company without any notice. Four months after I bought my house, another company bought my note from my originating lender, and it really threw me off. It apparently happens all the time.

  4. Be really honest with yourself on what sort of level of DIY experience you want to have. Are you really willing to paint, scrape wallpaper, do minor plumbing work, landscaping, etc.? What about repainting cabinetry, putting in crown moulding, wainscotting, refinishing hardwood floors? Adjust your market accordingly.

Really! Seems odd to me. What utility (gas/water/electric)? My gas comes from a different company than the water and electric. Would I be able to call all the different companies and get that information?

I don’t know if all mortgage lenders do this, but mine gave me a “Good Faith Estimate” of these costs that was fairly accurate.

Are you a first time home buyer. If so, ask your mortgage lender about first time home buyer programs in your state. Also see if you may qualify for HUD or FHA loans as they may be cheaper.

Also, if you don’t have the required down payment, you will probably end up having to get Personal Mortgage Insurance.

If you don’t mind waiting for that document to arrive from one particular lender for one particular interest rate, payback period, and loan amount, then sure, it’s helpful. I found it far more helpful to have a spreadsheet where I could adjust all those figures at will and see what it did to my monthly payment.

I don’t remember seeing this, but one thing you should absolutely do is to check with your local city permitting department for two things:

  1. If the realtor points out any additions to the house, like extra rooms, a deck, new electrical or new plumbing, you can find out if the home owner/contractor pulled a permit for the work.

  2. If a permit was pulled, you can find out if the final inspection was ever done.

If permits were not pulled, then the work was never reviewed for code compliance by the city, and you may be buying a huge problem.* If permits were pulled, but never closed, insist that the present owner get them closed prior to sale.

*Some work doesn’t require permits. Here in Portland, if a deck is less than 30" off the ground, no permit is needed.

Mine gave it to me right on the spot. But then I didn’t go through a mortgage broker, I just went directly to the bank.

The book title implies, the person reading it infers from that implication. Sorry, pet peeve. Back to all the good advice.
Roddy

OK, Sheldon.

:smiley: