Buying a home - help!

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Buying a home - help!

Postby boggler » Sat Mar 23, 2013 2:56 am

I'm considering buying my first home, because I'm tired of paying rent to build up someone else's net worth. What are things I should be aware of in the process, in terms of deciding whether this is a good idea, how to get a good place, and pitfalls/fees to avoid in the process?

I'm looking in the SF Bay Area, and plan to live in the area for quite a while.
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Re: Buying a home - help!

Postby Valuethinker » Sat Mar 23, 2013 5:30 am

I have never bought a house in the USA so others here will have more specific and germane concepts re surveys, what to walk away from, etc.

I think you need to look at 20 houses all in your price range/ area. By that time you will *know* what you want, it will be easy to go and buy. Keep a file (preferrably with pictures, they all start to blur after a while) of the the houses and why you turned them down (pluses and minuses).

Generally make sure you have a 20% down payment.

Houses *cost* - - the additional costs are significant. Make sure you have c. $10k spare cash (ie borrow a little too much possibly) when you move in. Wait til you pay your first property tax bill ;-).

It's all about location, more than anything else. Usually the worst house on a street has a reason why it's the worst that probably cannot be fixed (lot too small to permit extension etc.). But you definitely want to be in the cheaper houses on a better street rather than a better house on a cheaper street-- below the median house for that street.

Location is about local amenities, time to work, schools. Schools is the one that waxes and wanes in importance, but even if you don't have kids living in a good schools area has positives (downside: loud teenagers. Upside: good parents who work hard and want a quiet life). Biggest issue is that a good school pushes up housing prices *a lot*.

The commuting situation, for most of us, has the biggest single impact on quality of life.

Usually better to buy that smaller house on the street that in a few years you can renovate/ extend.

Beware Homeowner associations (HOAs). Endless horror stories about small groups dominating and setting unreasonable rules. There are good ones, but you need to know the score on that.
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Re: Buying a home - help!

Postby kitteh » Sat Mar 23, 2013 7:49 am

Look at a lot of houses to get an idea of what a reasonable price is.

Find a good house inspector and make your offer contingent on your finding his or her report acceptable.

Since it's the Bay Area, watch out for houses in the noise path of airports.

Set aside a reasonable amount and then some for closing costs. Have an emergency pot of money for repairs.

If you have a specific house in mind, visit the area at different times, to get an idea if noise is a problem. Neighbors may be able to clue you in to potential problems.

The police are likely to tell you about problem neighborhoods if you ask. I might show up at the local police dept. with a map or ask people you know. There are well to do areas right next to ghettos, with the associated gunfire, crime and the latter spills over.

Decide if you want a condo or a house.

I don't know if we can recommend individuals, but Nancy Chillag, a real estate attorney and former real estate broker in Menlo Park, handled the sale of my house. She was super and gave me a lot of guidance. I saved a bundle over real estate agent's fees. http://www.chillag.com/
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Re: Buying a home - help!

Postby bberris » Sat Mar 23, 2013 8:56 am

boggler wrote:..., because I'm tired of paying rent to build up someone else's net worth ...


That's not a great reason to buy a house. You've saved yourself a lot of losses and grief for the last 5 years. You paid rent to keep the rain out, not to build up ...
Carefully consider taxes, insurance, and maintenance. Depending on the age and condition of the house, maintenance could be 1-3 % of the house value.

Buy if you can easily afford it, to get a wider selection of house than you can by renting.
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Re: Buying a home - help!

Postby kitteh » Sat Mar 23, 2013 9:44 am

bberris wrote:
boggler wrote:..., because I'm tired of paying rent to build up someone else's net worth ...


That's not a great reason to buy a house. You've saved yourself a lot of losses and grief for the last 5 years. You paid rent to keep the rain out, not to build up ...
Carefully consider taxes, insurance, and maintenance. Depending on the age and condition of the house, maintenance could be 1-3 % of the house value.

Buy if you can easily afford it, to get a wider selection of house than you can by renting.


This reminds me to take into account Prop. 13. The property taxes that the current owners are paying may not be a guide to what you will be paying.
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Re: Buying a home - help!

Postby pennstater2005 » Sat Mar 23, 2013 4:58 pm

Valuethinker wrote:I have never bought a house in the USA so others here will have more specific and germane concepts re surveys, what to walk away from, etc.

I think you need to look at 20 houses all in your price range/ area. By that time you will *know* what you want, it will be easy to go and buy. Keep a file (preferrably with pictures, they all start to blur after a while) of the the houses and why you turned them down (pluses and minuses).

Generally make sure you have a 20% down payment.

Houses *cost* - - the additional costs are significant. Make sure you have c. $10k spare cash (ie borrow a little too much possibly) when you move in. Wait til you pay your first property tax bill ;-).

It's all about location, more than anything else. Usually the worst house on a street has a reason why it's the worst that probably cannot be fixed (lot too small to permit extension etc.). But you definitely want to be in the cheaper houses on a better street rather than a better house on a cheaper street-- below the median house for that street.

Location is about local amenities, time to work, schools. Schools is the one that waxes and wanes in importance, but even if you don't have kids living in a good schools area has positives (downside: loud teenagers. Upside: good parents who work hard and want a quiet life). Biggest issue is that a good school pushes up housing prices *a lot*.

The commuting situation, for most of us, has the biggest single impact on quality of life.

Usually better to buy that smaller house on the street that in a few years you can renovate/ extend.

Beware Homeowner associations (HOAs). Endless horror stories about small groups dominating and setting unreasonable rules. There are good ones, but you need to know the score on that.


Everything that Valuethinker said plus if you use a home inspector ask around to see what other people who have used him/her think. We made the mistake of taking a card from the realtors office and using him. He was terrible! He missed a bowing garage wall, water damage around the windows and more. But, as said above, location is of utmost importance. In the end we were happy overall with our purchase because we love the neighborhood. Good luck.
To hell with circumstances; I create opportunities. - Bruce Lee
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Re: Buying a home - help!

Postby Valuethinker » Sun Mar 24, 2013 4:46 am

boggler wrote:I'm considering buying my first home, because I'm tired of paying rent to build up someone else's net worth. What are things I should be aware of in the process, in terms of deciding whether this is a good idea, how to get a good place, and pitfalls/fees to avoid in the process?

I'm looking in the SF Bay Area, and plan to live in the area for quite a while.


Long run due to economic growth and planning restrictions, houses in the Bay Area have done well. So far, no evidence that will change.

Generally you have to be committed to 5 years+ in a house. 'Quick flipping' doesn't work except in bull markets and even then. The cost of real estate agents, lawyers, title insurance, surveys plus the 'spread' (ie the mark down you have to take to sell a property) -- the transactions costs in the round, eat you.

It is generally better to try to get the right location then extend or improve the house over your tenure in it (exception: you never want the biggest or best house on the street, if you are in that position, you should trade up in location instead).

The happiest people I know found the home they liked living in, and lived there for 30+ years (in my parents case 50+ years). But you have to get lucky on job, schools and the neighbourhood not going down hill.

Only in the long term is housing an investment, although right now many metropolitan markets in the US have a housing shortage due to absence of new building in last 5 years. It's really better to think of housing as a form of consumption, an alternative to rent, with the added filip that it may pay for your nursing home care at the other end of your life (or your retirement somewhere cheap).
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Re: Buying a home - help!

Postby lightheir » Sun Mar 24, 2013 7:32 am

boggler wrote:I'm considering buying my first home, because I'm tired of paying rent to build up someone else's net worth. What are things I should be aware of in the process, in terms of deciding whether this is a good idea, how to get a good place, and pitfalls/fees to avoid in the process?

I'm looking in the SF Bay Area, and plan to live in the area for quite a while.


As long as you fully realize how crazy expensive the Bay Area I think you'll work the rest out. It's a hot market - you'll be forced to do your due diligence when you see both the staggering sums and the competition for homes.
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Re: Buying a home - help!

Postby Dandy » Sun Mar 24, 2013 12:03 pm

My child bought a house so I am familiar with some of the pitfalls they ran into.
1. Didn't invite either set of parents to look at the house - not that we are real estate experts but just living longer in a house gives you some
idea of what is expensive to fix and space utilization issues. Even just from our own house problems. So try to get someone else that may be
more objective to look at it before you sign on the dotted line.
2. They did use a house inspector who wasn't very good. The previous owner had a lot of do it your self electrical work that was dangerous. They
could have seen a lot of warning signs like over use of extension cords. They may have gotten the inspector from their Real Estate agent - which
could be a conflict of interest.
3. The kitchen is not very workable. Small, lack of counter space, no room for a table etc.
4. The garage is not useable More like a shed.
5. Everything is old and is fair to poor condition - expensive to upgrade.

Now, they have done a lot to improve the house, the neighborhood is great, they can walk to schools, business district, parks etc. So location is great, house is a work in progress and will be challenging to live in especially if they have children.

I think they found that owning a house is very expensive and time consuming. It can be rewarding to fix it according to your tastes but it does suck up a lot of their time and money. Don't buy a house just based on financial feeling that it will be a better deal than renting.
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