House buying tips

[Whsoj]

I'm thinking of buying a house that connects to my family's land it seems to be a fair price it wont be ready for purchase until October. I'm in no hurry the people that are in it where doing a rent to own thing and have to purchase in October or get out. I was a construction worker in a past life so I can do all of the upgrade work my self no big deal just wondering I if there are things I should watch out for to make sure I don't get screwed by banks or current owner

 

[TyTanium]

I would have a real estate agent pull comps for the property to verify the price. 1) so you don't get ripped off and 2) so it'll appraise if you're taking out a mortgage

Use a mortgage broker; they can shop around for the best rate. Fees are negotiable. Paying points to reduce your rate is rarely worth it.

If you can, put down at least 20% to avoid mortgage insurance.

 

[McBrewskie]

My wife and I bought last year. Fixed rate is amazing, we bought FHA and our payments can only go down from here on out. The other thing that was the best advice I got was let the people involved do their jobs. You'll have so much to do and think about, just remember they are there to help you, don't be shy. Also, whatever you think it will cost, it will cost more so just be ready for unforeseen expenditures. It's great that you have a construction background, I'm learning on the fly.

Finally, have some beer brewed and ready for when the sale is complete and for the end of the day after busting your ass on project after project. Good luck, it's a ton of fun.

 

[finsfan]

i agree with a mortgage broker, they are obligated to serve the clients needs, opposed to a mortgage agent that is legally obligated to serve the company they work for

 

[Whsoj]

Thanks for the mortgage broker tip didnt know about that keep em coming

 

[Hang Glider]

Get an Inspection.

Foundation is the most critical (and usually the most expensive to fix) - and structural soundness right behind that.

then services like electrical, HVAC, plumbing.

the rest is mostly cosmetic - roofing, paint, sheetrock, caulk, sealing windows, etc. although these can certainly lead to structural problems (leaking roof, leaks around tub).

 

[Cyclman]

Find a good inspector. Ask friends if they know a builder or a GC, or at least a foreman who has built homes.

Inspectors are not liable if they screw up (ours did big time on our 1st house, cost us $20k). I wouldn't even consider an inspector who isn't a certified engineer, unless you know them to be a GC or very experienced builder.

 

[Billy-Klubb]

do not buy a house if it's on fire. that is a bad sign.

 

[dfc]

do not buy a house if it's on fire. that is a bad sign.

Seconded.

 

[OrdinaryAvgGuy]

Having a background in construction is a plus as you will likely be able to fix most items that are missed by you or the inspector.

If the general inspector finds any issues with the foundation, whether it is cracking, water seepage, etc, have it checked out by someone who specializes in foundations. This can be costly.

If the property has a septic system, also have this looked at closely. A simple dye test doesn't tell you a whole lot about the overall condition of the system. This can also be costly.

Everything else should be picked up by a general home inspector.

Good luck.

 

[ChuckO]

Since you are buying someone out of a rent to own contract, have a good lawyer and make certain that original seller and the renter have no residual interest in the property.

 

[GVH_Dan]

1. Don't get a real estate agent involved...automatic 6% fee...especially in this case. The true value of an agent is in finding buyers for a house you are selling or finding a house for you to buy if you don't know the area. This isn't your case.

2. Hire a real estate attorney. I hate lawyers but I never, ever, ever do a real estate transaction without one. Make sure they are a "Real estate Attorney" and not just a lawyer that has done some real estate work. On our last purchase, the lawyer bill came out to be $1,200. I know from the paperwork that he saved us just shy of $10,000 in special assessments and other crap. He probably helped us get another 20k off the purchase price because sellers and real estate agents all get nervous when you show up with a lawyer. Obviously, they will also make sure the paperwork is all in order.

3. I agree with everyone on the inspector advice. I've found if the inspector comes from a company with a nationally recognized name...forget it. They took a internet based correspondence course. Call around until you get some guy that sounds like he's in his 50's to 60's. Chit chat and when he says he used to build houses until the XYZ accident happened, you know you have your guy. No one knows how to find problems like the guy who used to create/fix them.

4. Skip radon tests unless you are looking for some leverage to scare the seller. They are a scam that does nothing. To get a true radon reading takes months of monitoring. But be sure to point out to the seller that you are doing them this favor.

5. Shop around loans and do your homework. Most times put as much money down as you can to get rid of PMI and get a lower rate than take out a second mortgage or a HELOC to get the cash back you need for renovations. They won't tell you this but if you keep pushing them the bankers will finally cave and be straight.

6. Make sure your appraiser is truly independent from the bank. (sometimes impossible) When we sold our last house we almost lost the deal because the buyers were trying some fancy crap so they could walk away from closing with $5k in their pockets. Well the appraisal came in at the exact selling price minus $5k. They asked if we would drop our price by $5k (hell no) so they ended up changing their plans and didn't have the cash to do whatever it is they wanted to do.

7. Like OAG pointed out, if it has a septic system get that inspected, preferably by a septic company. Those things hide problems easily but cost big $$'s to fix and sometime involve environmental fines.

 

[Whsoj]

do not buy a house if it's on fire. that is a bad sign.

Seconded.

You guys know this guy? http://gawker.com/georgia-man-burns-down-neighbors-home-over-unkempt-law-507540297

 

[OrdinaryAvgGuy]

Some may disagree with this statement but keep a real estate agent out of the picture and hire a good real estate attorney instead. This is especially true since you already found the property that you are interested in.

I have purchased property both ways and have encountered some real incompetent agents.

Use a combination of zillow (not the most accurate), and tax records that show recent selling prices of comps in the area to establish a fair market value.

Create your own contract using your states association of Realtor standard contract. Have you lawyer look over the contact before presenting it to the seller. Most times they will not even charge you for review time if you choose to close with them.

In your contract, discount the offer price 7% since no agents are involved and throw a $hitload of contingencies in there so you can back out, just in case.

Arrange financing and the bank will walk you through the rest.. Inspections, appraisal, etc.

If this sounds foreign, do a little reading on the subject.

 

[OrdinaryAvgGuy]

1. Don't get a real estate agent involved...automatic 6% fee...especially in this case. The true value of an agent is in finding buyers for a house you are selling or finding a house for you to buy if you don't know the area. This isn't your case.

You beat me to it... Great advice.

 

[Whsoj]

Yea I know the person I'm buying it from, and she doesn't want to put it on the market and spend more money my swmbo's mother is a closing paralegal so i'll get her real estate attorney I hope.

 

[yewtah-brewha]

I'm a mortgage broker, unfortunatly I'm not licenced in your state, but some advice is to talk to several brokers and get a feel for who is in it to help you meet your goals.

Glen beck does an ad for a company and they brag how thier lo's are not paid on commission so you get a better rate, I always laughed at this commercial and last month laughed harder when my customer showed me his good faith estimate from that company.
I closed his loan 1.125 percentage points lower than AG and was about 2000.00 lower in fees. and yes I get paid on commission.

I wasnt trying to beat the quote, My rates and fees are just lower because of the relationship I have with the bank. good luck if you have any questions id be happy to find someone in your area for you, and hopefully you have a decent brew room in the new home!

 

[Whsoj]

I'm a mortgage broker, unfortunatly I'm not licenced in your state, but some advice is to talk to several brokers and get a feel for who is in it to help you meet your goals.

Glen beck does an ad for a company and they brag how thier lo's are not paid on commission so you get a better rate, I always laughed at this commercial and last month laughed harder when my customer showed me his good faith estimate from that company.
I closed his loan 1.125 percentage points lower than AG and was about 2000.00 lower in fees. and yes I get paid on commission.

I wasnt trying to beat the quote, My rates and fees are just lower because of the relationship I have with the bank. good luck if you have any questions id be happy to find someone in your area for you, and hopefully you have a decent brew room in the new home!

If you don't mind looking maybe you could toss a few names this way in PM that would be awesome! Thanks for all the Tips everyone!

 

[GVH_Dan]

Hey, one more tip for after the purchase.

Anytime a friend/neighbor stops by and says, "You know what would look great and wouldn't be that hard to do? All you have to do is..." Either throw them out the window or wait until they bring a hammer/shovel to pitch in. I listened to my neighbor's "little" suggestion and I'm now on 43 labor hours of building stone steps and rock retaining wall with terraced flower beds that looks really nice from his kitchen window. I"m thinking project #2 should be a row of hedges and evergreen trees to block his view.

 

[Thunder_Chicken]

Yeah, if you know you are buying that property, don't get a real estate agent involved - all they do is take your money in this situation. DO get a real estate attorney.

And if you are in construction and know what to look for, save a few hundred bucks and DON'T get a home inspector. They have weasel language in their contracts saying that they won't climb ladders, go into crawls, etc.. which means that they flip on a few lights, run the water in the sink, point out some chipped paint, tell you everything else is fine, and then ask you for a big a$$ check. Then YOU get to find all the broken/dangerous code violations on your own. If something is obviously a mess (e.g. my house, half of it was "wired" using extension cords through the walls and studs), get a tradesman in to quote the cost to fix, and put that in as a contingency in the offer.

 

[TyTanium]

...don't get a real estate agent involved - all they do is take your money in this situation.

Not as a buyer's agent though...the seller pays the commission. Unless you can negotiate part of the foregone commission from the seller.

 

[broadbill]

If it has a septic then it may also have a well...have water quality and amount checked.

Check the zoning on it as well. Sometimes homes are built on some pretty marginal land, especially ones that are built as investment properties...it would suck if you wanted to build a deck only to find that it abuts a wetlands and you can't build (I actually know someone this happened to).

Actually, this sounds like an investment property so I'd be super careful about inspection and build quality. A good way to make money on an investment property is to built it with the cheapest materials you can find.

I know people were poo-pooing a real estate agent, but they are good for digging up the real history of a property not just the one being fed to by your friend.

Sorry, but when that much money is involved I don't trust anyone.

 

[wooda2008]

Sheesh, not a lot of love for real estate agents here...

Speaking as one, for the love of god and all things holy get representation.

1. Depending on what state you're in, there are anywhere from 75 to 120 SEPARATE steps that need to happen between inking the contract and getting the keys. That doesn't even consider the negotiating. You have a day job.
2. You know the seller personally. Your agent will be able to give you a needed perspective, and won't BS you to save your feelings.
3. It doesn't cost you anything to get quality representation. The seller pays the 6% on the understanding that half of that is going to the agent that brings the buyer.
4. Everything is negotiable. Your agent signs a contract to represent you, and is bound to serve your best interest

I would recomend contacting a bunch of buyers agents in your area and interview them. grill them on what their "list to sell ratio" is and their sales volume.

Once you pick one, your neighbor can either find an agent to represent her, or YOUR agent can refer her to a friendly competitor from a different office.

 

[broadbill]

2. You know the seller personally. Your agent will be able to give you a needed perspective, and won't BS you to save your feelings.

I think this is a big one....all too many times I think bad deals are run through because two people know each other and aren't evaluating the deal objectively.

 

[OrdinaryAvgGuy]

Sheesh, not a lot of love for real estate agents here...

Speaking as one, for the love of god and all things holy get representation.

1. Depending on what state you're in, there are anywhere from 75 to 120 SEPARATE steps that need to happen between inking the contract and getting the keys. That doesn't even consider the negotiating. You have a day job.
2. You know the seller personally. Your agent will be able to give you a needed perspective, and won't BS you to save your feelings.
3. It doesn't cost you anything to get quality representation. The seller pays the 6% on the understanding that half of that is going to the agent that brings the buyer.
4. Everything is negotiable. Your agent signs a contract to represent you, and is bound to serve your best interest

I would recomend contacting a bunch of buyers agents in your area and interview them. grill them on what their "list to sell ratio" is and their sales volume.

Once you pick one, your neighbor can either find an agent to represent her, or YOUR agent can refer her to a friendly competitor from a different office.

A good agent is worth their weight in gold. Unfortunately, I have never met one. I hear they exist but never encountered one.

I tried personal recommendations from others a handful of times with little to no luck. They all give you the same one liners "I'm not the pushy type" but most expect you to sign a contract after a half dozen houses. And then, they insist that you use their home inspector who turns a blind eye to the deal killers.

As for 75 to 125 steps - If you can successfully brew a batch of beer, you can follow instruction and diy in 8 easy steps.

- find the property that you are interested. Check.
-write a contract, have it reviewed by an attorney and give it to the seller.
-Negotiate if necessary. Hard for some, easy for others.
- Arrange financing
-arrange necessary insurance
-Meet with inspector and go over property
- the bank guides you through the rest
-show up for closing

As for the 6% being paid by the seller, why not say hey seller, as you know, an agent will end up costing you 6%. Lets do without and split it down the middle. Incorporate this into your offer price. Its a win-win.

 

[TyTanium]

All valid points. Some people just prefer buying beer. Totally your call.

As for 75 to 125 steps - If you can successfully brew a batch of beer, you can follow instruction and diy in 8 easy steps.

 

[OrdinaryAvgGuy]

All valid points. Some people just prefer buying beer. Totally your call.

Couldn't agree with you more. Most would rather pay others to perform tasks rather than learning a valuable skill that will be helpful in the future.

Personally, I prefer the latter.

 

[broadbill]

Couldn't agree with you more. Most would rather pay others to perform tasks rather than learning a valuable skill that will be helpful in the future and possibly screwing something up, costing you thousands of dollars, stress, and heartache.

Personally, I prefer the latter.

FTFY ....lets me honest; for the average American Homeowner (who does what? a total of 2-3 transactions in their lives?); the potential for screwing up a property deal probably outweighs the cost of having somebody else take care of it. Also, its not like its a skill like painting that you do once and master; there is a good number of ways to screw it up.

If you are a seasoned real estate person who does 2-3 deals every few years? sure, you can probably learn and do without the agent....

 

[OrdinaryAvgGuy]

FTFY ....lets me honest; for the average American Homeowner (who does what? a total of 2-3 transactions in their lives?); the potential for screwing up a property deal probably outweighs the cost of having somebody else take care of it. Also, its not like its a skill like painting that you do once and master; there is a good number of ways to screw it up.

If you are a seasoned real estate person who does 2-3 deals every few years? sure, you can probably learn and do without the agent....

I understand your point and for many, hiring an agent makes sense.

In the case of the OP, I believe he may be better off on his own with a real estate attorney by his side.

 

[broadbill]

In the case of the OP, I believe he may be better off on his own with a real estate attorney by his side.

Kind of funny, I would say the OP would be best served by getting the second opinion of an agent! The deal smells a little funny since its his friend that is the seller. It would begin to downright stink if the seller was trying to avoid involving an agent or if the seller was giving the OP a deal on it.

Its not really the mechanics of the deal that I think the agent would be useful in carrying out.

 

[Whsoj]

@ broadbill could you tell me what I could screw up, just off the top of your head. an example that could cost me 2000 thousand dollars lets just say because I didn't get a real estate broker/agent?

 

[broadbill]

@ broadbill could you tell me what I could screw up, just off the top of your head. an example that could cost me 2000 thousand dollars lets just say because I didn't get a real estate broker/agent?

Say for example you get a house inspection and you find the septic system needs replacing (15-20K job, easy). Are you willing to negotiate with your friend to get that fixed? Agent could do that for you.

Do you know how to see if there are any liens on the property or any issues with the title? An agent does.

Do you know if the house is priced fairly, according to comparable properties in the neighborhood? Do you know how to do that analysis? An agent does.

Do you know how to determine if the property zoning allows further development (say an addition of an extra room or deck), or if the building of the original structure was done correctly? Were building permits pulled for it?
An agent could do that for you.

As OrdinaryAveGuy points out, you could do this all yourself....the questions are: Do you have time? Are you sure you could do it correctly and in a comprehensive manner (given the seller is your friend?). Are you willing to drive a hard bargain with your friend?

Frankly, I'm sure your friend is a nice person, but when you are talking about many thousands of dollars at stake, I would not trust them as far as I could throw them. An agent can act as your intermediately and be the "bad guy" if need be.

 

[BBL_Brewer]

I can't believe no one has mentioned the obvious.......make sure it has a suitable place for a brewery

 

[OrdinaryAvgGuy]

Say for example you get a house inspection and you find the septic system needs replacing (15-20K job, easy). Are you willing to negotiate with your friend to get that fixed? Agent could do that for you.

Do you know how to see if there are any liens on the property or any issues with the title? An agent does.

Do you know if the house is priced fairly, according to comparable properties in the neighborhood? Do you know how to do that analysis? An agent does.

Do you know how to determine if the property zoning allows further development (say an addition of an extra room or deck), or if the building of the original structure was done correctly? Were building permits pulled for it?
An agent could do that for you.

As OrdinaryAveGuy points out, you could do this all yourself....the questions are: Do you have time? Are you sure you could do it correctly and in a comprehensive manner (given the seller is your friend?). Are you willing to drive a hard bargain with your friend?

Frankly, I'm sure your friend is a nice person, but when you are talking about many thousands of dollars at stake, I would not trust them as far as I could throw them. An agent can act as your intermediately and be the "bad guy" if need be.

If i'm not mistaken, title issues are ultimately handled by the closing attorney, typically a requirement for funding a loan.

Also, if the house is priced way over market value, it will be picked up by the bank hired appraiser and no loan will be issued.

You could have 3 different agents give you 3 different opinions on comps that vary several thousand from one another. It's just a matter of their opinion based on criteria such as square footage, age, location, and features. Not an exact science. This is all public information and at your fingertips.

Banks have been burned before and make the buying process fairly idiot proof. If its a bad deal the financing usually doesn't go through. The last thing the bank wants is a foreclosure with a bad title and an outstanding balance far above market value.

Boardbill makes 1 good point - an agent can be a mediator between you and your friend. If you are not comfortable discussing the deal with your friend then this may be a good enough reason alone.

Or you can hire me. For a couple thousand dollars I will tell your friend that hes giving you a raw deal.

 

[broadbill]

Boardbill makes 1 good point -

Woohoo! Ahead of the game!

Or you can hire me. For a couple thousand dollars I will tell your friend that hes giving you a raw deal.

Yeah, this is all the OP would need at the end of the day.


Personally, I'd be leary of buying a rental as my primary residence. I know how people treat rentals.

 

[Whsoj]

FTFY

Say for example you get a house inspection and you find the septic system needs replacing (15-20K job, easy). Are you willing to negotiate with your friend to get that fixed? Agent could do that for you.
I may have used the term friend a little to loosely
Do you know how to see if there are any liens on the property or any issues with the title? An agent does. isn't that an attorneys job?

Do you know if the house is priced fairly, according to comparable properties in the neighborhood? Do you know how to do that analysis? An agent does. yes

Do you know how to determine if the property zoning allows further development (say an addition of an extra room or deck), or if the building of the original structure was done correctly? Were building permits pulled for it?
An agent could do that for you. good point, but nothing has been added to the house since it was built I have lived next it my whole life, the deck that's on it is the same deck that was on it when the lady's boyfriend I'm purchasing the house from, blew his head off with a shot gun, back in 89 so yea that gonna get replaced definitely also going to be my brew deck. might name a brew after him

As OrdinaryAveGuy points out, you could do this all yourself....the questions are: Do you have time?yes Are you sure you could do it correctly and in a comprehensive manner (given the seller is your friend?)yes im a dick. Are you willing to drive a hard bargain with your friend?

Frankly, I'm sure your friend is a nice personnot really, but when you are talking about many thousands of dollars at stake, I would not trust them as far as I could throw them.I don't that's why I'm asking questions and researching An agent can act as your intermediately and be the "bad guy" if need be.

All good points!

I will say this about NC you get left alone a lot more here than other states you don't worry about permits less you live in some city limits some where, still haven't decided what to do but all ideas are helpful. Im going to find out about a mortgage soon. Thanks so much for the tips keep them coimng

 

[Whsoj]

Woohoo! Ahead of the game!




Yeah, this is all the OP would need at the end of the day.


Personally, I'd be leary of buying a rental as my primary residence. I know how people treat rentals.

They have only been in it a year and it was rent to own

 

[Whsoj]

If i'm not mistaken, title issues are ultimately handled by the closing attorney, typically a requirement for funding a loan.

Also, if the house is priced way over market value, it will be picked up by the bank hired appraiser and no loan will be issued.

You could have 3 different agents give you 3 different opinions on comps that vary several thousand from one another. It's just a matter of their opinion based on criteria such as square footage, age, location, and features. Not an exact science. This is all public information and at your fingertips.

Banks have been burned before and make the buying process fairly idiot proof. If its a bad deal the financing usually doesn't go through. The last thing the bank wants is a foreclosure with a bad title and an outstanding balance far above market value.

Boardbill makes 1 good point - an agent can be a mediator between you and your friend. If you are not comfortable discussing the deal with your friend then this may be a good enough reason alone.

Or you can hire me. For a couple thousand dollars I will tell your friend that hes giving you a raw deal.

Its only a 2.5 to 3 hour drive,well have some home brews, talk **** with seller and figure how to stop people turning around your drive way win win man

 

[wooda2008]

They all give you the same one liners "I'm not the pushy type" but most expect you to sign a contract after a half dozen houses. And then, they insist that you use their home inspector who turns a blind eye to the deal killers.

As for 75 to 125 steps - If you can successfully brew a batch of beer, you can follow instruction and diy in 8 easy steps.

So... If you don't have a contract, that agent is de facto representing the seller. They can and will be grilled for everything they know about you as a buyer, and they are legally obligated to tell the sellers agent. You shouldn't really be looking with an agent if they haven't impressed you enough to be exclusive.

Also, your batch of beer isn't a six digit transaction.

OP, I wish I was in your area. There are a lot of idiots who treat the job like they're selling cars, and it makes it suck for everyone.

 

[OrdinaryAvgGuy]

So... If you don't have a contract, that agent is de facto representing the seller. They can and will be grilled for everything they know about you as a buyer, and they are legally obligated to tell the sellers agent. You shouldn't really be looking with an agent if they haven't impressed you enough to be exclusive.

I was referring to a home purchase contract, not exclusive agent contract.