Holy Cr@p! We're buying a house!

[shanewalker]

So we've signed contracts to buy a little brick bungalow, circa 1924 w/ some mid-90s 2nd floor and kitchen build-outs/upgrades. Very excited...a real house, w/ character, fantastic neighborhood.

And damn if it isn't going to near break us financially...but it seemed the time to make the move, as prices had dropped on what we were looking for, and we're in the throes of starting a family, so...

Now I'm just trying to cover all the bases on work that needs to be done (fence needs mending, some older electrical needs re-working, garage may need serious work as its an old structure and the pad is crumbling due to nearby large tree roots). Not to mention my stumbling about, trying to secure the best financing strategy possible...we went into this aggressively to get the property and no one seems willing to take contingencies AND drop prices, so we'll have two mortgages (a 3-bdrm condo) for a while. And the new place is going to run us double monthly over the old--yowza. Big boy pants, indeed.

So, this is a very thrilling, but TERRIFYING time for us. So much to think about, to learn and hopefully not make huge ignorant blunders.

And, yes, I still love my e-lectronic toys (so I'm getting a PS3 before the finances shrivel up completely ).

How to make it all work? Don't relish being so 'house-poor' that I can't enjoy life...

Any advice/insights from you all would be most welcome.

 

[Van]

It's definitely a buyers market, have you finalized yet because it might give the sellers more insentive to sell at a lower price if you did just that. You could also lease out the condo for monthly mortgage plus $50 to cover the payment until you got it sold. I wish I knew more about your market as it stands now, I know that where Im at it is without a doubt a buyers market squared. The duplex we live in has master bedrooms that are so big you could fit three queen size beds side by side with two more at the foot length wise and be able to walk around the room and open the door to get out. Add to this a decent size living room along with a smaller second bedroom with a full bath and kitchen though its a small kitchen and a fireplace it hasnt sold in the year that Ive been here and the asking price is $104,900 and its a working class area. I've thought about lowballing the owner with a price of $80G because so far everyone prospective buyer I've seen looses interest pretty quick when they see that its a mixed race neighborhood.

 

[Eva Greczkowski]

Congrats! GL with the new home.

 

[brainiac]

I've thought about lowballing the owner with a price of $80G because so far everyone prospective buyer I've seen looses interest pretty quick when they see that its a mixed race neighborhood.

Isn't racism grand!

 

[Van]

I'm not looking at it from that point of view, I like my neighborhood even though Im a minority here but if every prospective buyer that has come along ( white, black, hispanic so its not as if its a race issue as you would like to think ) is backing away then offering a lower price may be in the sellers best interest since they have about 8 other properties that they are trying to sell.

 

[voomvoom]

Congratulations and remember "There's No Place Like Home". And owning your on home, makes it all the more Special!

Al

 

[jpn]

Congrats! Will you also be the proud owner of a brand-new mortgage?

 

[turbosat]

Congratulations! Hope you've considered all the possibilities with selling/leasing the old property. If you lease, be sure you have a good contract with anyone you lease to, makes for less problems in the future.
And, after 5yrs of doing mortgage loans, I urge you to read read read all
your documents concerning your loan. Ask questions and ask them of someone you trust (attorney, real estate expert, etc). A purchase is not like a
refinance loan, in most cases, where you have 3days to rescind, so be sure everything is as close as you can get to what you want. I think there is less chance of borrowers being confused about the terms of their loan since the
recent meltdown, but anyone who says they didn't know they were getting an ARM or that their loan had a prepayment penalty-DIDNT READ THEIR LOAN DOCUMENTS! All the information is there, its required by law to be there, and you have to be given a copy of all the documents you sign, when you sign them. Leave nothing to chance, and enjoy your new home!

 

[Grandpa J]

Just a second to what turbosat said. Remember when dealing with real estate it must be in writing. It is one of the rare cases when oral agreements do not stand up if you should ever need to go to court.

I'm not a lawyer, but I believe you should consider having one who knows real estate law particularly on older properties and mortgage agreements. I've purchased a few homes in my life time and only once did the lawyer ever have to do anything more than a routine review. But that one time the lawyer saved my rear end.

Good luck with the house and future family members.

 

[Van]

Yea if you do decide to lease out the old place be sure to document document document both on paper and in photo, this will keep a great deal of the headaches at bay.

 

[shanewalker]

Thanks for all the input/advice so far. We are going to try to sell the condo ASAP, but it all depends on the market...plus we'll be putting it up first of the year, before the (hopeful) Spring resurgence in buyer traffic, so we'll have to see. There are only 4 units in our building, and the Garden unit is already a rental, so don't know how kindly the other owners would be to another lease arrangement.

Right now I'm trying to decide between two mortgage lenders/agents...and its tough. I like both guys, and they've both been quite attentive and patient as I'm the kind of client that asks a lot of questions. They ended up in a bidding war, which has lowered my rates, which is good--but I feel bad dropping the fellow who did alot of the initial phone calls/discussions with us only to go with a more aggressive latecomer. I hate these things, I like to be loyal...but I guess getting the best deal for my family has to come first, right?

Anyways, wish us luck--tomorrow (Fri) is a big day, our inspection. And we have other contractors coming buy to give us estimates on a new fence, deck refurbishing, tree trimming (we have a HUGE 100-yr old Maple in the back yard), etc. It could be a make or break day for this house--we really have to be able to afford to make some improvements and have the place be ultimately what we need it to be...and no big 'surprises' hidden in the walls/roof/foundation/etc. I truly hope its a good 'Black Friday' .

 

[vegassatellite]

Pay your mortgage every four weeks instead of once a month. You'll pay off in under 20 years. 13 payments yearly instead of 12 that way.

 

[Claude Greiner]

The only thing that scares me about a house that old is the plumbing and electical.

The plumbing you probably got old galvanized pipes, which will eventually need to be switched to Copper. Lots of expense cutting through the plaster and running all new plumbing.

The second thing that scares me is the electrical with the old knob and tube wiring. I would pay very close attention to the breaker box and the condition of the existing wiring.

 

[shanewalker]

The only thing that scares me about a house that old is the plumbing and electical.

The plumbing you probably got old galvanized pipes, which will eventually need to be switched to Copper. Lots of expense cutting through the plaster and running all new plumbing.

The second thing that scares me is the electrical with the old knob and tube wiring. I would pay very close attention to the breaker box and the condition of the existing wiring.

Yeah, we're going to be paying especially close attention to those things. The plumbing/boiler for the downstairs radiators will get a sharp eye from the inspector today, and we have a company coming in to scrutinize the electrical next week. Fingers crossed...or there are some deal killers in wait.

 

[Van]

Play it safe and have a second inspector come by, I've seen far to many times where home inspectors miss some of the most obvious stuff such as extensive fire damage to an attic along with electrical damage from said fire.

 

[shanewalker]

Play it safe and have a second inspector come by, I've seen far to many times where home inspectors miss some of the most obvious stuff such as extensive fire damage to an attic along with electrical damage from said fire.

Tops on our list this time around was a very thorough inspector. We were let down by the inspector who did our condo a few years back--didn't identify some issues w/ windows, HVAC, electrical and the shared garage structure that all came to bite us later. The fellow we had out to do the house inspection did a great job (we think )...it was slated as a 3hr inspection, but it ended up taking over 5 hrs! We were utterly mentally/emotionally/physically exhausted by the end of it.

Now our situation is all in the hands of the real estate attorneys. If we can't get a palatable deal worked out on fixing the issues that arose in the inspection (a bevy of large to small defects: from a rotted support beam in the basement and the fact that the garage is actually NOT a 2-car, but a 1-1/2 car that needs rebuilding, to minor electrical, HVAC and window repair/servicing)...this whole enterprise is moot.

We spent most of our Thanksgiving 'holiday' slogging through mortgage paperwork, faxing and xeroxing financial docs and making calls to contractors. I walked back into work more exhausted than when I left Wed eve.

Oh the humanity...what are we getting ourselves into?

 

[69Mustang]

Tops on our list this time around was a very thorough inspector. We were let down by the inspector who did our condo a few years back--didn't identify some issues w/ windows, HVAC, electrical and the shared garage structure that all came to bite us later. The fellow we had out to do the house inspection did a great job (we think )...it was slated as a 3hr inspection, but it ended up taking over 5 hrs! We were utterly mentally/emotionally/physically exhausted by the end of it.

Now our situation is all in the hands of the real estate attorneys. If we can't get a palatable deal worked out on fixing the issues that arose in the inspection (a bevy of large to small defects: from a rotted support beam in the basement and the fact that the garage is actually NOT a 2-car, but a 1-1/2 car that needs rebuilding, to minor electrical, HVAC and window repair/servicing)...this whole enterprise is moot.

We spent most of our Thanksgiving 'holiday' slogging through mortgage paperwork, faxing and xeroxing financial docs and making calls to contractors. I walked back into work more exhausted than when I left Wed eve.

Oh the humanity...what are we getting ourselves into?

Hi, congrats on the possible purchase. I wish you all the best.
However, I couldn't help to notice more than a slight tinge of concern and a couple of "yellow flags" so to speak. I personally have seen people get into the emotional side of buying a house only to ignore or allow themselves to go past deal breaking, costly expenses to get their dream home only to have it all turn into a terrible nightmare.

If I could possibly give you some things to think about:

1) Can you financially maintain your family's lifestyle for an extended period (6-12 months or maybe longer even) if you are unable to sell your first residence?
2) Are you in a position (physically, financially) to be a full time landlord if you are unable to sell and need to rent out your first place? What if the renter fails to pay? Will that seriously damage your ability to pay for possibly the two mortgages? (sorry I'm not looking at your exact posts at this moment) Plus repairs and/or remodeling expenses??

Oh the humanity...what are we getting ourselves into? [/QUOTE]


Buyers Contingencies are very helpful especially for a buyer who needs the equity/low monthly payments to make the purchase of the second home work. I am not sure if you said you have a real estate agent handling your side exclusively? I strongly urge you to get an agent that does. Finally remember to be fully honest to yourself & your family with your physical, financially abilities and needs in regards to the "the worst possible situation" type concerns. If you are thinking out loud that you are in over your heads with the purchase then you probably already are.

I think you have done well by seeking legal and professional advise and doing your due diligence. Please have everything in writing, read everything carefully before closing and I agree, good photos are always helpful. Good luck and best wishes.

 

[shanewalker]

I think the deal is falling through, folks.

We seem to be under an unholy trinity of dark clouds: steep and uncertain real estate taxes; a growing list of fix/upgrade items, especially since the highly illuminating 5hr inspection last Fri; and a seller who seems to be adrift in that common denial ether of where they think their home is valuated (i.e. way back in the boom days, and alongside the luxury properties nearby, which is NOT what this property is) and that the deal/price they agreed to presumes no responsibility for further negotiation based on the inspection revelations.

The other big issue is the garage: we knew going into making an offer that is was in pretty poor shape and in likely need of complete rebuild. What we didn't know until the inspection was 1) it is NOT a true 2-car garage in size, but rather a 1-1/2 car garage and 2) that its current placement on the property is non-conforming to Village building code (it lacks 3ft setbacks from the property line). Well, the back yard where the garage needs to go is an odd shape (triangular) and if we need to move it to conform and want to build a true 2-car garage (1-1/2' wider & longer), its likely going to eat in significantly into an already tight/compact back yard. Getting anything in writing from contractors and the village will be tough enough...but doubly so as the sellers are refusing to give us an extension to work this out.

Bottom line--we don't trust the sellers/sellers agents to be forthcoming on all house history details or to be willing to give us the things we need, and overall that we're being protected from future steep costs in terms of taxes and repairs.

That's the story. And we're not feeling good about it.

 

[Paul Wozniak]

Move on to the next seller. It's a buyer's market. Better deals are out there.

 

[jpn]

All things considered it's probably better that you don't complete the deal. Yes, real estate is uncertain now. It runs in cycles and given enough time (more than a few years) you would most likely turn a profit. The issue with the garage is treacherous. From what you say there is no variance on the setback; at some point the neighbor could force the issue, possibly requiring removal of part of the garage. Repairs are part of every home but you don't need to be saddled with the negligence of the current owner.

Plus, keep in mind: no inspection will ever provide a complete list of flaws. Things can be inadvertently overlooked. My house also had a 5-hour inspection and I still have the bound report. I observed the inspector test all the plumbing fixtures including the shower in my master-bath for running water and proper drainage. Then we moved-in and used the shower. It was a one-piece fiberglass unit, and after a week of use the floor started sagging around the drain. The unit was not properly supported and it only became apparent from standing in the unit repeatedly. We had to remove the unit and have a tiled shower installed at a cost of $2200. We think it was a good thing to have a nicer bathroom, but did not expect to spend the money a month after buying the house. My point is that you could encounter similar issues.