Long time homeowners, please drop a pearl of wisdom or two

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Sunny Sarkar
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Long time homeowners, please drop a pearl of wisdom or two

Post by Sunny Sarkar » Sun Dec 30, 2007 11:47 pm

We're looking for our first home and will probably commit to something within the next 3-6 months. Please share with us the most important bits of wisdom that your home ownership experience has taught you - little or big things that we should keep in mind while we decide, yet are most likely to otherwise forget during the process.

Thanks,
Sunny

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Post by ronr » Mon Dec 31, 2007 6:11 am

There are many potential gotcha's that have occurred to us with the various homes we've bought. Including unmarked boundaries that turned out not to be where they were described; missed problems on home inspection; etc.

Making the assumption that you are going to be financing this with a mortgage, I will point out that you need to have a good attitude about the process in order to get your best deal. Remember that "money" is just a product, and all the "stores" (banks) are selling the same stuff. So you go to the store where the product is least expensive, or where you are getting some other real benefit from paying more money for this product.

The last few homes we purchased, we went to several institutions and mortgage specialists before deciding who had the best deal. And we have excellent credit, so that was not an issue.

Do NOT believe the "we will match any deal" promises. The conditions are usually such as to make this not feasible!

Read the documents closely, and ask questions if you don't understand them.

I have always avoided escrow for taxes and PMI by putting enough down (usually 20%).

Be sure YOU can afford the monthly payments. If you have a variable rate mortgage, be sure you can afford it when the rate goes up. Do NOT believe that just because the lender says you are qualified, that you will be able to afford it (and continue your lifestyle unchanged). YOU need to do the math.

I'm sure others will contribute more.

ronr
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Post by ronr » Mon Dec 31, 2007 6:11 am

There are many potential gotcha's that have occurred to us with the various homes we've bought. Including unmarked boundaries that turned out not to be where they were described; missed problems on home inspection; etc.

Making the assumption that you are going to be financing this with a mortgage, I will point out that you need to have a good attitude about the process in order to get your best deal. Remember that "money" is just a product, and all the "stores" (banks) are selling the same stuff. So you go to the store where the product is least expensive, or where you are getting some other real benefit from paying more money for this product.

The last few homes we purchased, we went to several institutions and mortgage specialists before deciding who had the best deal. And we have excellent credit, so that was not an issue.

Do NOT believe the "we will match any deal" promises. The conditions are usually such as to make this not feasible!

Read the documents closely, and ask questions if you don't understand them.

I have always avoided escrow for taxes and PMI by putting enough down (usually 20%).

Be sure YOU can afford the monthly payments. If you have a variable rate mortgage, be sure you can afford it when the rate goes up. Do NOT believe that just because the lender says you are qualified, that you will be able to afford it (and continue your lifestyle unchanged). YOU need to do the math.

I'm sure others will contribute more.

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Post by nisiprius » Mon Dec 31, 2007 7:32 am

Get it clear in your own head what you'd like to do with regard to housing over your life. In particularly: would you like to stay in one place, stay in one house, and have the kids grow to maturity without having to move? This was a goal for us, certainly not for everyone.

The reason I say this is that real estate agents like to emphasize how often people move and trade houses. I believe they do this because it's in their self-interest--if everyone bought four houses in their life, they'd make four times as much as if everyone bought one. I believe they also do this because it is easier to sell people a house that doesn't seem perfect if they can create the feeling that it doesn't matter, because it's only temporary.

Something that I think we did just right is that we bought about the right sized house for a lifetime. It was bigger than we needed when the kids were toddlers. It was, I will say, a tight fit when they were adolescents. (Our house only has one bathroom and if I had it to do all over again I think I might have sprung to have a second bathroom added even when we couldn't afford it). As we approach retirement, it is about the right size.

It has also been a house that was relatively well matched to our income, i.e. we didn't go for the biggest thing we could possibly afford and then trade up to a bigger one as our income grew. The mortgage was a stretch initially, but maintenance and taxes have been affordable for us, and as we head into retirement, we believe they will be affordable even in retirement.

Location, location, location. This is totally an individual thing of course, but we live within 1/2 mile of the center of our suburban town, which means that several banks, the post office, the library, one full-sized supermarket, several convenience stores, a pharmacy, a "dollar store," a McDonald's, a coffee shop with wifi, a discount clothing store, and several restaurants are all within walking distance. This will give us a reason to take walks in retirement, and will make it easier to drop down from two cars to one, and generally provides some "buffer" for times when the car is in the shop.

P.S. I should say for the record that the kids do not express any particular affection for the house, or gratitude for growing up in one town, so I don't want to be too smug about it. During adolescence my daughter, who was socially conscious, hated it because she had friends who had much nicer houses. (She also had friends who had houses that were not nearly as nice as ours, but somehow that's not the way envy works).
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Re: Long time homeowners, please drop a pearl of wisdom or t

Post by gatorman » Mon Dec 31, 2007 7:36 am

Sunny wrote:We're looking for our first home and will probably commit to something within the next 3-6 months. Please share with us the most important bits of wisdom that your home ownership experience has taught you - little or big things that we should keep in mind while we decide, yet are most likely to otherwise forget during the process.

Thanks,
Sunny
Sunny


Assuming you are buying a pre-owned home, make sure of the following:

1. Do your own inspection before signing the contract, look at the condition of the roof, the age and condition of the heating and cooling plant, paint condition, evidence of dry rot, mold, mildew, etc. Use any negatives to negotiate a better price.

Before you sign the contract have it reviewed by a real estate attorney. This is the biggest purchase most people will make and it makes sense to pay the small amount required to get a review.

2. Home inspection- you pay for it, make sure the contract has an out clause if any major problems turn up.

3. Survey- get one, you pay for it, allows title company to delete the survey exception on the title policy. Make sure surveyor has errors and omissions coverage.

4. Title insurance- make sure you are getting it, seller usually pays for this.

5. Termite Inspection- get one, you pay for it, make sure the contract has an out clause if any major problems turn up.

6. If radon is potentially a problem in your area, consider having the house tested. Make sure the contract has an out clause if any major problems turn up.

7. Try to get a fixed interest rate mortgage with no prepayment penalty if you can and, if moving is not likely, see if you can swing a 15 year term, you will save a lot vs. 30 year term.

Regards,
Gatorman

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Post by Sunny Sarkar » Mon Dec 31, 2007 9:41 am

Hi Gatorman,

Which of these do not apply for a new house?

Thanks,
Sunny

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Re: Long time homeowners, please drop a pearl of wisdom or t

Post by Gekko » Mon Dec 31, 2007 10:06 am

Sunny wrote:We're looking for our first home and will probably commit to something within the next 3-6 months. Please share with us the most important bits of wisdom that your home ownership experience has taught you - little or big things that we should keep in mind while we decide, yet are most likely to otherwise forget during the process.

Thanks,
Sunny
do you have any concerns about your timing?

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Post by fishnskiguy » Mon Dec 31, 2007 10:14 am

Hi Sunny,

If you are buying a new construction house, I recommend you pass on the professional house inspection, termite inspection, and survey, especially if the house was built by a major national or regional builder.

In my experience with six new construction houses in WA and CO, the local building inspectors do a very good job of making sure the house is built to code, and modern code just about guarantees a well built house.

The most important thing is the reputation of the builder for promptly following up on "punch list" items. Ask around the neighborhood and find out how other buyers feel about the builder. This is key in new construction. All new houses have defects, and some you won't find for weeks or months after moving in. You want a builder who will willingly and promptly fix those defects.

Chris
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Post by iranutmeg » Mon Dec 31, 2007 10:22 am

Sunny:

My "Pearls of Wisdom" is to make sure that you are moving to an area where the school system is acceptable to you. Really take the time to compare test results, % of students graduating and going to college, cost per pupil, teacher/student ratio etc. Visit the schools too!

Paying less for house in an area that you will be needing to pay private tuition for 13 years can really cause a dent in your budget.

Also, buy a house big enough to handle another child, you never know what the future may hold! :D

Happy New Year!
Best Wishes to all, | | PJ

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Post by stratton » Mon Dec 31, 2007 10:25 am

fishnskiguy wrote:If you are buying a new construction house, I recommend you pass on the professional house inspection, termite inspection, and survey, especially if the house was built by a major national or regional builder.
I'm going to disagree. Get an inspection. Always. The old saw about buying a used car and not knowing who's mistakes your getting applies to a new house. You don't know which screw ups you're buying. As an example a friend was in their new house 10 months and a pipe broke in the wall. Luckily they were home.

Know where the water shutoff is located and how to turn it off and you have the tool to do it.

If you're getting natural gas get an earthquake shutoff valve. This can also be used as a gas shutoff.

If you're having the house built for you take daily photos if at all possible. This shows whats going on can establish a trail of responsibility. Not to mention the builders know you are watching. This protects you if you get in an argument with a builder or sub-contractor. Stuff hidden behind sheetrock can be ignored by them. The photos can't be ignored.

Be there a couple of times when the building inspector is and learn what is acceptable and what isn't. Ask questions. You're paying for it!

Paul

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Sunny

Post by GIS Guy » Mon Dec 31, 2007 10:26 am

Property tax and homeowners insurance. Depending on where you live, these can be huge considerations! I live in FL and these have been extremely volatile, so just make sure you can afford a doubling of both if it happens. I bought in '02..property taxes were 900 and are now 1900, insurance was 920 and is now 2400!

Of course this isn't normal throughout the country, but increases are important to consider in future budgeting anyhoo...these increases rarely stay below the inflation rate in most areas of the country, right?? Maybe do an analysis of rates and rate history in your area to answer this.

Another thing to consider about property taxes if you have them, and realtors/real estate lawyers/closing agents/mortgage agents/the government sometime to not inform new home buyers of this is that when you buy you get to finish the tax year paying the previous homeowner's taxable value. The next tax year the taxable value is readjusted to the current assessed value, which can be huge in some places. So understand that first your your tax bill could be 600 and then jump to thousands then next year - this is how it is in FL anyhoo.

Cheers,
GIS

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Post by downshiftme » Mon Dec 31, 2007 10:33 am

If you are going to have YOUR OWN attorney to advise you at closing, then you might as well ask the same attorney to review all the documents - even the first offer you make. Brokers don't like this, but everything you sign has legal implications and for this rare, big event being as informed as possible is worthwhile.

Read all documents at closing. Ask attorneys to explain if necessary. Be prepared for mistakes and be willing to slow down the process to get them corrected - even though bankers may say that doesn't matter and we'll fix it later.

Unless you are looking for a starter house you don't intend to stay in, be picky about finding a place you really like. You will spend a lot of time and money there.

Do not stretch for the most house you can afford. The house will have extra expenses you don't know about. Life can throw you curveballs. Better to have a little room in your budget to take care of the unexpected instead of feeling like a house owns you.

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Post by iceport » Mon Dec 31, 2007 10:39 am

Hi Sunny,

I would like to echo everything the first three responders have said. [I'm a slow typer, and haven't read the others yet.] Their observations are very good. I would add:
  • If you're lucky, as we were, you'll find a real estate agent that is pleasant, professional and responsive to your questions and needs. Our was, and nine years later we still think highly of her. However, that is all you should expect. Don't expect the best advice when you need it the most. They're there to close a deal. The best outcome is that it's a fair one for all involved. But only you can ultimately decide if you're making the right choice and the price is right. If you've looked around for several months, you will have a good feel for fair pricing in your area -- probably as good as your RE agent's.

    Most of the time, the house inspectors depend on business from real estate professionals. They don't like to break deals. Even if they correctly identify all the problems, they can be very good at framing the scope of necessary repairs as minor inconveniences. Try to be thorough and objective when reviewing the inspection report. If possible, ask around and find a good one that does not rely on referrals from RE agents.

    As a friend of mine astutely advised me years before I ever bought a house, you should look at homeownership as a quality of life decision, not a financial move.

    Following up on that, it's easy to underestimate the huge costs involved in owning your first house. Between remodeling, furnishing, and buying all the large and small tools you'll need to maintain it, the first few years are usually very costly.

    I have no idea what the qualification standards will be like for you -- after the recent sub-prime mortgage crisis, the lenders might not know yet, either. But I would highly recommend staying within the older expense ratios that were in effect in prior decades: shoot for a maximum loan amount of, including principal, interest, taxes and insurance of <28% of gross monthly income, and a total debt <34% of gross monthly income. (That's just my $.02 -- I'm sure you're savvy enough to figure out what you can afford, even if the lenders are willing to give you a much bigger loan.)
Good luck, and try your best to enjoy the process!
--Pete

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Post by SamB » Mon Dec 31, 2007 11:01 am

*****
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Post by magellan » Mon Dec 31, 2007 11:06 am

fishnskiguy wrote:If you are buying a new construction house, I recommend you pass on the professional house inspection, termite inspection, and survey, especially if the house was built by a major national or regional builder.
While everything fishnskiguy said about the importance of builder reputation is 100% true, things will be missed in a large construction project. Even with a good builder it can be worth getting a professional inspection.

When I had my second house built, I hired a home inspector to give it a once over before the final payment was released. My builder (who did a great job with the house) was actually impressed by the thoroughness of the inspection. The inspector found a couple of minor things that both the builder and I had missed. The most important of them was that ventilation was missing on a 20'x8' section of roof over part of the living room. There was also a problem with the grading on one side of the house. The builder fixed everything without any complaints.

Jim

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Post by Retiree » Mon Dec 31, 2007 11:14 am

Excellent advice from all the previous posters. Only things I would add:
1. My experience indicates the optimal house age to buy is from 1 to 5 years. Earlier than 1 - lots of "bugs" to get worked out. Older than 5 - maintenance costs start to escalate. This assumes you plan on being in the house for several years.

2. Depending on age of house - assume at least 3% of house value annually for ongoing maintenance (HVAC system replacement, roof replacement, window replacement, floor covering replacement, major appliance replacement, improvement items you will think of like a patio, landscaping, kitchen overhaul, bathroom overhaul, etc.) Some years you will spend less than the 3%, some more. I.e. if your house is worth $400,000 allow at least $12,000 in your annual budget for items like those I mentioned. Thus, don't put every penny you have into buying more house than you can afford - then there will be nothing left for maintenance and improvements.

Good luck and enjoy making the house turn into your home.

... Retiree

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Post by stratton » Mon Dec 31, 2007 11:43 am

One other biggy:

Even if local code says 3/8" plywood is ok for roof decking go with 1/2". Any money save on cheaper plywood now will be made for in damages later. You, and heavy people, can walk on 1/2" plywood and not break it. 3/8" plywood breaks very easily. If you're in a heavy snow area the minimum is probably 1/2" plywood.

For example, in the Seattle area 3/8" plywood roof decking is allowed, but in snowy areas 1/2" is required.

Paul

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Post by stratton » Mon Dec 31, 2007 11:45 am

One other biggy #2:

During the homebuilding boom flashing around doors and windows was often left out of quickly built homes. This can lead to rot and leaks four or five years down the road. Make sure your inspector checks this!

Don't use artificial stucco. It's plastic and unlike real stucco doesn't breath. Commonly the fake stuff will get a pinhole leak and capillary action will cause the water to sit resulting in rotting. Real stucco breaths so the water evaporates and water won't sit there causing rot.

This, and early fake siding, are why there are dozens of building in the Seattle and Vancouver, BC areas with plastic tarps draped all over them as they replace the plastic stucco. This is on top of fixing all the leak rotting. Some places leaked so bad they had waterfalls inside the building.

Paul

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Post by Sunny Sarkar » Mon Dec 31, 2007 12:35 pm

Schools are of particular importance in my decision since the little Boglehead on your left is going to kindergarten in 2008. So the first thing I did was narrow my choices to areas and communities with elementary schools rated "Exemplary". Here are my choices:

Area 1: New homes, Good prices, 45+ min commute, suburbs
Area 2: 80s homes, 1.5x to 2x prices, 15+ min commute, central location
Area 3: Late 90s to New homes, 1.5x prices, 30+ min commute, location between 1 & 2.

All three areas have good schools (area 2 is stellar!), and low crime rates.

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Post by p14175 » Mon Dec 31, 2007 12:55 pm

Read up on the HOA laws in your state and if the neighborhood you are considering has an HOA. I personally don't like HOAs because of the restrictions they can place on what you can do or can't do with your property. Some people; however, appreciate living in neighborhoods where all the front yards and houses look the same.
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Post by kerry75 » Mon Dec 31, 2007 12:56 pm

There many valuable ideas in the posts above. I would further emphasize that you retain your own experienced real estate attorney. I work in commercial real estate (not an attorney and don't deal with residential) and I am constantly amazed at the number of people who buy and sell homes without a lawyer.

You are in deep water in real estate just as with medical issues; you must have professional representation and counsel at every step-and that includes offers, so-called "binders" (which are usually disguised contracts to buy/sell), all the way through closing and the delivery of the relevant documents to you.
Last edited by kerry75 on Mon Dec 31, 2007 6:21 pm, edited 1 time in total.

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Post by Valuethinker » Mon Dec 31, 2007 1:07 pm

Sunny wrote:Schools are of particular importance in my decision since the little Boglehead on your left is going to kindergarten in 2008. So the first thing I did was narrow my choices to areas and communities with elementary schools rated "Exemplary". Here are my choices:

Area 1: New homes, Good prices, 45+ min commute, suburbs
Area 2: 80s homes, 1.5x to 2x prices, 15+ min commute, central location
Area 3: Late 90s to New homes, 1.5x prices, 30+ min commute, location between 1 & 2.

All three areas have good schools (area 2 is stellar!), and low crime rates.
I wouldn't even blink. I would buy in Area 2.

In 20 years time, that area will be even more valuable. There will be no new homes built in that area, the schools will relatively likely be as good or better. This will command a scarcity value.

I believe house construction quality has been steadily declining-- your mileage may vary. Therefore a 20 year old house is generally a better bet than a new one.

Commutes only get worse and more taxing, with worse traffic, in life. And that 60 minutes a day with your family you can never have back.

I have real issues with the Millionaire Next Door/ The Millionaire Mind books, but one point I think they make correctly is that wealthy people buy in good neighbourhoods, which hold their value. The people in Area 2 are likely the most settled, live there the longest.

People on my parents street still live there after 40 years. Their kids, if they can afford it, move back into the neighbourhood. Both the private and public schools are excellent. The houses aren't the largest (1920s brick) but the area has a perfect location.

Location, location, location. Through boom and bust and boom again, my parents have held in that neighbourhood.

You can't leave your children much in life, but you can leave them good schooling. That will stay with them wherever they go, whatever they do.
Last edited by Valuethinker on Mon Dec 31, 2007 1:09 pm, edited 1 time in total.

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Post by psu9932 » Mon Dec 31, 2007 1:09 pm

Speaking from experience:
1. Commute time: If you are used to a ~ 15 minute commute, then do not put yourself into a long commute (~45 minutes) situation. It will kill you.

2. Buy what you know you can comfortably afford not what you think you can afford.

3. Make sure the house has a bathroom that provides privacy away from entertaining rooms.

4. Keep storage space needs in mind.

5. The bigger the house and yard, the less time you have for yourself after work and on weekends unless you are paying for maintenance service.

4. Remember it is not your house until you pay it off!

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Post by rwwoods » Mon Dec 31, 2007 1:24 pm

If you only remember three things about buying a house they should be location, location, location! The location of your home will be the major driver in its price appreciation. Other tidbits:

The average person stays in a home about 7 years which brings up the other points.

Don't buy the most expensive home in the neighborhood. The price appreciation will be hurt by sales of the less expensive homes, and it will be harder to sell at the price you want. Its best if your home has an average or lower price for your neighborhood.

Do make changes/additions/upgrades to your home to make it is more liveable for you, but don't make changes that others would not want (e.g, pink and green striped floor tile).

Make major renovations if necessary, but realize that you may not recover the full cost when the home is sold. There are various web sites on this subject that can provide you with the expected payback for various renovations.

Live in the home at least 24 months out of 5 years prior to sale to ensure you get the capital gain exclusion. (There are some exceptions to the rule noted in the IRS publication on selling a home.)

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Post by SamB » Mon Dec 31, 2007 1:35 pm

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Post by Sunny Sarkar » Mon Dec 31, 2007 1:40 pm

Valuethinker wrote:
Sunny wrote:Area 1: New homes, Good prices, 45+ min commute, suburbs
Area 2: 80s homes, 1.5x to 2x prices, 15+ min commute, central location
Area 3: Late 90s to New homes, 1.5x prices, 30+ min commute, location between 1 & 2.

All three areas have good schools (area 2 is stellar!), and low crime rates.
I wouldn't even blink. I would buy in Area 2.

In 20 years time, that area will be even more valuable. There will be no new homes built in that area, the schools will relatively likely be as good or better. This will command a scarcity value.
What's giving me pause regarding area 2 is that everything is so much more expensive there: higher cost = smaller house, higher tax rate, older house = higher maintenance cost, older appliances = higher energy costs, etc.

In general, being a first time buyer and inexperienced, and not being a handyman kind of guy, I'm generally more suited for a relatively newer home.

But I do understand your points about a good education and good location, and agree with it. We're still deciding, and there is a good chance of us ending up there.

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Re: Long time homeowners, please drop a pearl of wisdom or t

Post by Zander » Mon Dec 31, 2007 1:41 pm

Sunny wrote:We're looking for our first home and will probably commit to something within the next 3-6 months. Please share with us the most important bits of wisdom that your home ownership experience has taught you - little or big things that we should keep in mind while we decide, yet are most likely to otherwise forget during the process.

Thanks,
Sunny
You make money in Real Estate when you buy, not when you sell. Make your initial offer very low, even insulting. Do not allow a Real Estate agent to bully you into making a "reasonable" offer. The realtor wants one thing - their commission. They do not place your interests ahead of their own and they'll often use emotions to manipulate you. Once your initial offer is in (along with a letter of qualification from a lender) let the seller come back with their offer. You may be surprised at how much they'll come down. Just remember, everything is negotiable.

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Heres another one

Post by SamB » Mon Dec 31, 2007 1:49 pm

*****
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Post by iceport » Mon Dec 31, 2007 2:25 pm

Sunny wrote:What's giving me pause regarding area 2 is that everything is so much more expensive there: higher cost = smaller house, higher tax rate, older house = higher maintenance cost, older appliances = higher energy costs, etc.
Where we are, people are willing to pay a premium for the school system. They look at it as a trade-off, with the alternative being private schools. However, depending on the depth of the tax base, that could mean not only higher taxes now, but a higher rate of tax growth into the future. We've had tax appreciations of anywhere between 4% to 7% per year for many years. Our property tax bill has gone up about 40% in 8 years. With the housing boom came more single family homes (attracted largely by the schools), putting a much greater burden on the school system -- more teachers, school renovations, etc. Houses really don't pay for themselves when it comes to funding the school system through taxes. If the community is fully-developed, it's not as much of an issue. But where there's still a lot of residential development without corresponding commercial development, tax increases can be steep. Many long-time residents who are retired with their houses paid off need to relocate due to the tax increases. This is not to detract from Valuethinker's philosophy, just hoping you'll make your choice with your eyes open.

FWIW,
--Pete

Edit: On the other hand, a desirable area (eg. one with a good school system) will generally see good price appreciation in good years, they'll hold values better in downturns, and the market will generally be more "liquid" (you can usually sell quicker if you need or want to).
Last edited by iceport on Mon Dec 31, 2007 3:34 pm, edited 1 time in total.

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Post by stan1 » Mon Dec 31, 2007 3:16 pm

I'd add something about the size of the house. The larger the house, the more furniture you will want to buy and the harder it is to clean and maintain. Who really needs 4 bathrooms in a house unless you have 5 kids? Do you need more than one private space (extra bedroom) for the adults to use as an office? Do you need a separate guest room if you only have guests one week per year? Do you need a formal living room and dining room if you only use them once or twice per year?

To me, a frugal lifestyle goes right along with a simple lifestyle.

When you are shopping for a house, you will always see things you don't like. Try to think about what you could do to solve the problem so you don't miss a good opportunity. If the house is dark, could one window be added in an otherwise empty wall that would make it bright? If the kitchens or baths are out of date, could they be easily updated with a new countertop and fixtures or do they need to be gutted? Are the rooms a good size? Some problems are very hard to fix; others are relatively easy to fix.

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Post by tashina » Mon Dec 31, 2007 3:25 pm

Okay...my advice is going to be about the floor plan. You need to take a good look at it and see how much of that square footage is usable by you. Really usable, not just "hey, it's nice to have that extra space".

We made that mistake twice with new homes. Our first new house was 2733 sq ft and had a formal living and dining room that we thought we'd use for a vague "something". We didn't. We never sat in the dining room because there was a breakfast room and we never used the living room at all. It wasn't separate enough (sound-wise) from the family room to be used a quiet get-away, and wasn't connected enough to feel like you were part of things if you sat in there. But when we first saw the house, we had both agreed it was a perfect floor plan. Here it is - still being built - we had the sitting room option.
LINK

The second new house was 3294 sq ft and gorgeous. It was two stories with a media and game room up. We lived in those rooms and neglected the living room/dining room/breakfast room/kitchen - basically the whole lower level except the master bedroom. We would cook TV dinners in the media room microwave to avoid having to stand downstairs for 5 minutes watching them cook - because there was nothing to do downstairs. We used about 1500 sq ft of that house. When we first saw the house, we sort of imagined that we'd be upstairs during the day and come down at night, but with the TVs, husband's office, and comfy furniture upstairs, we never saw a reason to go downstairs.

The "new" (1981) house is 2849 sq ft but every square foot is usuable space for us. I walk into every room every day pretty much. I told my husband they'll have to pry me out of this house - I love everything about it - well, except the brass levers on the doors and the a few of the funky paint colors. And it's much cheaper than either of the other houses. 8)

So, really think through how you will use the space. Better to have a smaller usable space than pay more for square footage that is unusable for you.

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Post by LynnC » Mon Dec 31, 2007 3:27 pm

I'm generally more suited for a relatively newer home.

Hi Sunny,

I have an idea where you are.

Keep in mind that in your #1 (new homes), you do not know who will be your neighbors and this will be an influx of new students into your local school system. There will be no way of knowing in advance how transient the population might become.

I also vote for #2, as the communte will end up killing you and look at the extra money you will spend on gas. Two hours (in traffic) will be lost forever. Your schools in area #2 will tend to be stable and as the neighborhood. If crime stats are reported as "low", you may well visit your local police department to check it out in person.

Also, consider a single story, if you and the wife are planning to stay there a long time. Those stairs can grow really old after a few years.

Does the city you are thinking of begin with an "S"?

LynnC

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Post by Christine_NM » Mon Dec 31, 2007 3:45 pm

More items:

1. Once you start putting money in a house, never take it out again. That is, no refinancing or HELOCs. This makes it easier to trade up later.

2. Go ahead and have the inspections, but take them with a grain of salt. In my experience they are pretty much a waste of time. A relative discovered after 26 years of living in the house that a bathtub overflow drain was not connected to anything and never had been.

My inspector didn't "find" the rotted patio wall and leaking shower causing bulge in outside wall -- I had already seen these and this is stuff you can fix.

The important thing is, do you really like the house and neighborhood? That's difficult to know if the neighborhood is as new as the house.

Also, continue the home inspections -- do them yourself every three months.

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maintenance

Post by mchampse » Mon Dec 31, 2007 4:07 pm

I would say go for the shorter commute. There were some studies done that showed that people who bought larger homes far away with large commutes were generally more miserable than those with smaller homes and shorter commutes. Home size is relative. I grew up in a 2000 sq. ft. home and the other day a friend was telling me about the tiny home that his brother lived in which was 3000 sq. ft. My own home is 1500 sq. ft. and I think its massive.

The thing to remember about maintenance is this...the old adage is true, they don't build things like they used to. There is also the part about builders squeezing every cent out of their costs.

In a newer home, the problems are going to start coming soon. I painted homes during college and we were always advised to look for business in new developments that were 2-3 years old (paint should last way longer than that).

In an older area, the homeowners have already seen some of the problems and will have fixed it right when something went wrong. Get a sense of the owner and their attitude towards repairs and maintenance.

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Post by heyyou » Mon Dec 31, 2007 7:19 pm

Not that houses are built this way now, but my BIL bought a new one with a completely unfinished basement in the 1960s. As each kid got older, she got a BR downstairs.

In older homes, look at the location of the laundry room. The laundry room should be near where the laundry items are generated, not just located where it was convenient for access to the water pipes, e.g. in a basement or a passageway to a garage off of a kitchen.

Avoid the commute as much as possible. It is not just the family time lost, it is the stress during that time, according to a study cited by Scott Burns. You can get used to some types of stress, but the study said that commuting presented such a variety of problems so it was a "different hell every day."

I like split floor plans so the adults can get away from the teenagers. If you have more than one child, several years apart, those teen years can last a long time.
Joe

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Post by satori » Mon Dec 31, 2007 8:20 pm

Hi Sunny!
Gee, your daughter is as cute as can be!
There are a lot of great ideas in the other posts. Here are some of my random thoughts.

If possible view a geological map of the area to make sure you are not in a slide area or in a neighborhood that was built over filled-in creeks/springs. You don’t want your house sliding off the foundation down a hill during a heavy rainy season,or being buried by those at a higher elevation; and you don’t want dampness seeping upward into your house from hidden bodies of water. Be very nervous if there is a sump pump below the house! If possible buy at the top of a rise to ensure water flows AWAY from the house. (Frank Lloyd Wright’s famous house “Falling Water” which is built over a flowing creek might be an exception! :D http://www.wright-house.com/frank-lloyd ... water.html

Two bathrooms are better than one – for convenience and family peace.

If possible have a separate laundry area for washer and dryer with venting directly to an outside wall. We have a W/D in an area contiguous with the kitchen and the W/D is not on an outside wall. The venting runs straight down through the floor then under the house and then to an outside wall. We are then limited to buying washers and dryers that have a vent hole at bottom and venting is labyrinthine and therefore not as efficient. Plus, I have always disliked sharing a kitchen with the W/D. But it wouldn’t be so bad if the W/D were directly vented to an outside wall.

What is the vehicle and foot traffic like on your street? Try to avoid buying on a busy street where buses run. Visit the street during different times of the day to discern any undesirable traffic patterns (just try not to look like you’re casing out the place for nefarious purposes) :lol: . Where are the schools, esp junior and senior high schools. Will your house be passed by 200 young people a day, some of whom might find your yard a convenient repository for their trash? :wink:

Now that we're getting older, we're appreciating the fact that ours is a one-story ranch-style home and we don't have to deal with a lot of stairs -- not that we bought with that in mind.

Of course, there will be compromises.

I would favor your #2 option, for the many reasons other posters have given. I find the short commute and stellar school system especially appealing.

Lastly, if you haven’t already done so, you can look up the demographics of most neighborhoods by plugging in a zipcode at: http://realestate.yahoo.com/neighborhoods

Happy New Year Sunny and everyone else.
~Satori

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Post by mudfud » Mon Dec 31, 2007 8:30 pm

Sunny wrote:
In general, being a first time buyer and inexperienced, and not being a handyman kind of guy, I'm generally more suited for a relatively newer home.
I was pretty much in the same position as you, with the same concerns. We went with Choice #2. No regrets. I'm still not a handyman type guy, but slowly figured things out (by surfing the web; I suppose there are books you can buy). If things are too challenging, one can always hire a real handyman.
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Post by ajbibi » Tue Jan 01, 2008 10:22 am

Like many of the others, I would favor 2. 3 might be possible as well. Nix on 1.

However, having bought a new house last summer, I have a different nugget of wisdom:

Try not to fall in love with a house when you're buying. Decide what kind of house you want and then go after it in cold blood.

We knew the housing market was tanking when we were buying, but didn't want the hassle of moving, renting, and then moving again in a year, so we had to buy. However, we looked at several possibilities that were priced a tad high but which were vulnerable to low offers. We carefully decided what a reasonable lowball price would be and worked our way down that list of finalists methodically.

The first one said No, but the second one turned out to be very eager to unload. They threw in a bunch of extras and we're happy with the house. We think that the price we got would have been reasonable even in the current bad market.

Our real estate agent was flabbergasted by our methods. She had never seen someone "like" a house, make an offer and then just move on when the owners spurned our first offer. Usually she said, couples would fall in love with a place and become so enamored of it that getting their first offer turned down would often make them eager to offer even more.

There were several houses we wanted but the owners just wanted too much money and were unwilling to bargain. I predicted that none of them would sell until they fell below price X. Half a year later and I proved prescient on every single one.

So it helps to know what you want and then find owners who will be realistic about the price. In better areas, many owners overprice their homes and will only bargain after the market has beaten them over the head for months. Some will pull out of the market entirely. Conversely, many buyers feel a home that has been sitting is "tainted" when in fact, it was just overpriced. So they overlook bargains that are now even more negotiable.

Remember, YOU make a house a home. And a good house, at a good price, is likely to make a better home.

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Post by gatorman » Tue Jan 01, 2008 10:22 am

Sunny wrote:Hi Gatorman,

Which of these do not apply for a new house?

Thanks,
Sunny
Sunny-I think only the termite inspection. In lieu of same, in my area, the builder should give you a certificate stating that the area under the foundation and slab was treated. Not sure about oyher areas. One poster suggested not getting a survey, a bad idea in my view because with the survey you get a better title insurance policy, the exception for matters which would be disclosed by an adequate survey of the property will be deleted. Having legal representation at every stage of the process is extra important if you are buying new construction. Builders are notorious for slipping clauses that are of great benefit to them and which could be of great detriment to you into contracts, so be extra careful when buying from a builder.

Valuethinker's post was spot on in regard to where to buy.

Acouple of other thoughts,make sure you hire the persons who perform the various tasks for you, that way you will have privity of contract with them if they screw up and can sue if necessary. Don't hire anyone who wants you to sign a contract stating that your sole remedy is to receive a return of what you paid them. If they make an error, thar amount will probably not be enough to cover your damages.

Regards,
Gatorman

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Post by leonard » Tue Jan 01, 2008 11:31 am

Here are a few, on several aspects of buying/owning a home:

1. When closing on the house, get a copy of all documents to review before signing. Read every word. Also, have a lawyer review it before signing. One of the biggest personal expenditures of your life, so worth having a lawyer review it.

Then, take the documents you have reviewed to the signing. Then, as you sign, compare the documents you reviewed to the documents you are signing page by page and line by line. MAKE SURE NOTHING CHANGED. My last refi, the documents mysteriously changed over the course of 1 day, from the review copies I looked at to the copy presented to be signed. I was glad I took the extra time to compare the 2, otherwise the final signed copies would have been wrong. Just query this forum on refinancing to find some of the stories of incompetent escrow/closing agents.

Yes, the escrow agents will likely get impatient, as they have probably only allowed 15 minutes for the signing. Who cares? They are not the ones making the biggest purchase of their lives. They can wait for a proper review of documents.

2. Landscaping, mowing, and yardwork are no fun. Some will claim they are relaxing. I personally hate it. After a full week of work, do you really want to spend the weekend doing yardwork?

My recommendation: get a house with less yard to maintain than you even think you will want to maintain.

3. Avoid PMI. Not only is it usually a bad financial deal (although sometimes not), it can be a huge pain to get rid of. An old mortgage company had hoop after hoop to jump through to get it cleared: letter requesting PMI removal, letter from them confirming my letter (seriously), letter from them saying another letter was coming (yes, again, they seriously did this, too), a new home inspection, etc. etc. Took forever to get rid of it and was a royal pain. Don't do PMI.

4. If you have upgrades you want to the house, that you would prefer to finance as part of the purchase, you can negotiate that up front with a motivated seller. house need new windows? more insulation? better furnace? paint job? or whatever. You can negotiate with the seller to do the upgrades, then finance them in your mortgage as part of the purchase price. Especially these days, sellers will likely be willing to go the extra mile to sell and you may even be able to negotiate the price on the upgrades.

5. If you have mobility problems or are afraid of working at heights, you might consider a 1 story home. Much easier to maintain (clean gutters, paint, etc.)

6. An idea i have toyed with for new construction. Write performance standards in to the contract. For example, establish a minimium insulation efficiency for the home in the contract. For example, it is very easy to do thermal imaging these days. In the contract, you could specific a minimum insulation/heat retention rating. Once the house is built, you could have a thermal image done of the house, to ensure it conforms. Then, I suppose you would have to write a remedy in the contract for underperformance. This is just an example.

I have never heard of such a contract for a house, but to me it makes sense. You have certain requirements for your house: energy efficiency, accessibility, etc. To me, it makes a lot of sense to quantify what is important to you, write it in to the contract, and hold the builder accountable. Otherwise, you just have to take a builder and/or inspectors word that it is "good enough". If you can quantify it, why not?

7. House Maintenance is no fun (see yard work comments above). Invest heavily in ZERO maintenance features: Vinyl fencing, composite decking, vinyl/cement fiber board siding, vinyl/composite facia, metal/other non-maintenance material roofing.

Yes, some of these products have a premium, but again - you have worked all week at your job. Do you really want to spend several weekends in the summer refinishing the deck or fence? Or, repainting the house?

8. Consider a Water Catchment System. Personally, I would install a water catchment system in a new house, with a buried/concealed water tank. A minimal system could handle outdoor plant watering, could be as simple as large water barrels. Full system could have a huge water tank with filters for use as potable water source for the house. Or, could be something in between.

9. Consider Solar power. Depending on where you live and where the house is situated (southern exposure), this might be an option to consider.

10. If new construction, consider high energy efficient contruction like using Structural Insulated Panels (SIPs) or insulated concrete form construction. A bit more expensive to build, but saves considerable energy dollars as long as you own the house.

11. Don't buy too big a house. If you are a "collector", you might tend to keep too much stuff around, just because their is room to store it. A house just big enough to meet your needs can help reduce clutter and "keep it simple".
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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In Regard to Schools

Post by ttcbj » Tue Jan 01, 2008 1:59 pm

As far as evaluating schools, I found the site:

www.schoolmatters.com

very helpful. Its a free service of Standard & Poors. Its useful because it consolidates so much information about demographics and various forms of testing in a single place.

When I was looking, I initially found sites that will charge you for a refined version of public school testing data, but those results are not too meaningful if you expect your kids to go to college. The state tests are usually for "lower-bound" proficiency.

Even statistics on average SAT scores can be misleading, because in some high schools only 30% of the kids take it at all. In my area, the best school districts had slightly lower average SAT scores (usually just 5-10 points), but 90% of the kids were taking the SAT. In the lesser school districts, the average would be higher, but only 30% were taking it at all.

You can tell from that kind of information which schools are really getting the best results for all the kids that go there, and which are only serving a small percentage of the kids effectively.

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Post by wlpotts » Wed Jan 02, 2008 1:59 am

Hi Sunny,

Be sure to get an additional Umbrella Policy that covers personal liabilty issues!

This is not soley a homeownership issue, but it REALLY should be required as a family man that has any assets, especially one with real property.

There are people out there that may want your assets. Protect yourself.

Respectfully,

Warren P.
Some have it. Some don't. Either way, here I am!

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Post by sailor234 » Wed Jan 02, 2008 6:56 am

Lots of excellent advice already listed here; some things I can add:

If you are building new, when wiring, plumbing and HVAC are installed but before sheetrock is installed, take detailed photographs of each wall in each room. Later when you want to move a sink or add an electric box, you will know where things are located. (You can also capture the framing details of key structures, e.g., load bearing walls)

With new construction, if you want recessed lighting have it done during construction; it's a major project to add recessed lighting afterwards.

If you are buying and expect to stay a long time, avoid homes on slabs,where it is very difficult to make any changes in wiring or plumbing without basement access under the rooms. In a friend's 20 year-old house on a slab, with lots of cathedral ceilings, we had to run the cable TV wire from a tap in the garage to outdoors, buried in the lawn, and then tap into an outside bedroom wall to reach that end of the house.

Best of luck

Ray

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AP classes

Post by VictoriaF » Wed Jan 02, 2008 7:08 am

Disclaimer: I have never been a homeowner, and this discussion scares me just as I am trying to make a similar decision.

Still I would like to add a couple considerations:
1. When you compare commute from your choice areas #1, 2 and 3 - please also consider if your job location may change in the future. If area-2 is close to the concentration of current and potential jobs, it's a bonus.

2. When you evaluate schools, check out quantity and variety of Advanced Placement (AP) courses they offer. A wide choice is an indication that the area has a core of academically ambitious students. Frequently, schools are measured by SAT scores and number of graduates who went on to college. This could be misleading, if you want your child to succeed far above averages.

Good luck,
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Post by CaptMidnight » Wed Jan 02, 2008 8:27 am

My advice on buying a home is don't do it. Houses will be cheaper in five years, cf Japan.

However, if you go ahead with a purchase I would make these recommendations:

1. You will have a lawyer for assistance in dealing with the legal aspects of the transaction, but there is no one involved in the process to advise you on the financial aspects, such as whether the terms of the mortgage (assuming you are getting one) are reasonable or risky. Try to find someone experienced to go over the mortgage details with you.

2. Apply to more than one lender. People shop around carefullly for coffee pots, but they almost never apply to more than one lender. Yes, it will cost you a few hundred dollars more, but that is chickenfeed given the size of the transaction. Apply to a bank (because they are regulated) and maybe a mortgage broker, although they are scum. Read every word of every document and get your financial adviser to explain it to you if you don't understand it. Negotiate. No one ever invites you to negotiate, but you always can, even if you don't always get what you want. If you are dealing with two lenders who want your business you can demand a rate reduction from one the last minute. Since you have a back up, you have more flexibility.

When I bought my home the lender's lawyer pulled a surprise condition out of the hat at the closing. Very unfavorable to me. I could take it or leave it. Leave it would have meant losing my 10% down which he well knew. I swallowed hard and determined never to be cornered like that again.

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Jim R
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Post by Jim R » Wed Jan 02, 2008 10:48 am

Once you find a house that you think you like, my advice would be to really get a feel for the neighborhood / neighbors first before committing to the house.

Try to meet any immediate neighbors if possible. Ask them what they like / dislike about the neighborhood ( also you are getting a feel for them too, incase they are a nut job.)

Drive thru the nieghborhood at various times of the day and just observe. Morning, daytime, evening. Cars parked infront of "your" house? Oil leaks? Loud music? Bored teenagers on the corner? Barking pit bulls?

Maybe check the state's sex-offender web site too.

...just my $0.02!

Jim R

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magellan
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Post by magellan » Wed Jan 02, 2008 11:55 am

One more new construction tip:

During construction, just before the sheet rock goes up, install a couple of empty conduit runs in the walls from the basement to the attic. They'll make it easier to get electrical, phone, network, cable, or anything else that might be invented in the future to second floor rooms or to the attic.

Jim

gary11
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Post by gary11 » Wed Jan 02, 2008 3:24 pm

Sunny wrote: I'm generally more suited for a relatively newer home.
If you're looking into new construction development then be aware that cheaper building lots have obvious future disadvantages- They are mostly corner lots, or at entrance of a potentially huge community or hiding behind main streets. Usually builders build model houses over there and offer huge discounts/upgrades hoping people would fall for that.

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Post by manuvns » Wed Jan 02, 2008 3:39 pm

If you are planning to buy a single family home make sure you buy minimum of 3 bd/2bth with 2 car garage . If you plan to sell if after few year it will be easier to do so .

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Post by PlainJane » Wed Jan 02, 2008 9:15 pm

I haven't read through this entire thread, so I'm not sure if you have gotten this advice yet, but make sure you look behind every piece of furniture to see every bit of wall in every room, especially boiler room and basement. We didn't move aside the junk the sellers were storing in the boiler room and missed a huge water problem that was expensive to fix. I naively assumed that the engineer would see these issues when he did his inspection but he never moved anything aside either.

Good luck,

Jane

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