Post # 1
My husband and I are on the hunt for our first home. Thankfully, we arn’t in a *huge* rush (we are living for free right now in a small place owned by my in-laws) to buy but as many of you know, we are expecting our first child in April, and would like to move into a home before then. Also, we live northern Michigan, and the snow is right around the corner!
Here’s the thing…we found a house we love! Problem? They are asking about $20,000k more then the top of our budget, and about $30,000k more then we want to spend. We have money saved up for a down payment (not 20%, but more then 10%).
The house is great and in move-in condition (so we think from the viewings!).*** However, the house was built in the 70’s (you can tell by style/construction) but we do not know the date! What can I do to find out the date? I will ask the realator to help but the seller is already moved out and only lived there for 4 years and don’t know the houses birthday. Also, the date of the septic system is unknown! Big issue! So I’m hoping to get that checked out soon (obviously before making an offer) but am unsure of who to contact for something like that? Also, what (on average) did you bees pay for home inspections?
Any ideas for ways to bargin down/compromise? If it is built in the 70’s (before a certain date) is it true I can get a deal because of the windows? anything else?
Basically, any advice is welcome!
Also, for this particular home, we signed a dual agent agreement because he is representing both the seller AND us (the buyers).
Also, how long did the process take for you (getting inspections/negotiating/making offers/etc) to get the house? to be able to move in?
Post # 3
The records of the property should be clear and that’s your realtor’s job to find out. However, if you like it, make an offer you feel comfortable with contingent upon an inspection and then take the inspection and use that to bargain further if the report indicates that the home needs work.
I’d rather buy a home build in the 70s than today (I think many modern houses are of poor materials/done on the cheap but look pretty). also, if they’re already moved out, you might have more leverage to get the price range you want to spend because they’re basically paying for a place they aren’t living in.
It took me just over 30 days to settle on my condo – the condo was an estate sale and the seller/seller’s agent FORGOT about the probate process so it took longer.
Post # 4
Congratulations on starting the search! Your agent should be able to find information on the age of the home. If not, call the city and it should be public record.
Also, most plumbing companies can inspect the septic system. I would also highly recommend that they camera your main drain to look for broken or collapsed pipes. This could be upward of $10,000 to replace if it’s busted and they don’t look for it in a typical home inspection.
Home inspections usually run between $300-500 depending on the size of the house. Make sure they take pictures of anything they find so you have a record of repairs that will need to be made. You can negotiate with the seller to make the repairs or take money off of the asking price.
You can bargain down based on any number of factors. Have your agent pull comparable sales in the area to find the true market value of the home. It could be that the seller already accounted for the windows/age/septic system in the price.
Bottom line, go with your gut. If you feel like you’re paying too much or it’s above your comfort level, walk away. There will always be another house.
Post # 5
I believe the year of the house should be on file with the city. Your inspector might be able to tell you more things.
How it worked for me: I offered the exact asking price for the house (sounds crazy, but my realtor knew about that house & the seller’s realtor so she had more info than most would). They accepted. We had a friend inspect the house, so that was free. We had issues with some windows staying open plus we had an old thermostat & we negotiated to have them reimburse us for that once the house closed. Then we had the appraisor come ($550) & it was a rush job & they appraised it for less than it was for sale. The sellers came down on the price to match that.
I offered the $ on the house around the end of March & moved in the first week of May. However, I started looking to buy towards the end of Feb/early March.
I looked at MANY houses & spent months researching them. I offered on 2 houses prior to the one I got. I missed out on the 1st house cause of issues with my realtor. My realtor was always late & never let me know, I’d waited 10-15 mins & had to call HER to ask where she was & she asked me more ?s about the houses than I asked her. I think she was just super busy & over-booked herself. I learned you want a good realtor, so do your research on that.
What can you afford? Your house payment should be about 30% of your income. Banks will approve you for more than you can afford. My bank (with my 1st realtor) approved me for a house that would have been 75% of my monthly income. So talk to your banker/lendor about what’s realistic & affordable. Know how much you can afford per month & still be comfortable.
You can just offer less than the house, you don’t have to give reasons for offering what you do. I know people who have offered $20k less on the house & still got it! I know others who offered more than the asking price & were “outbid” by someone else. It all depends.
EDIT: The 1st house I looked at was my “dream home” & I didn’t think any house could compare at all to this one. It was over what I wanted to spend on a house & the max my bank would lend me. The dream home house didn’t work out & I was really bummed, it even had a darkroom setup (for photography), perfect neighborhood, etc. However, 2 months later, my work hours got strongly cut (I had been full time for 4+ years, never woulda thought my hours would be cut) & DH didn’t get the job he was promised & the job he did find was low hours & min wage. If we would have gotten that house, we’d already be bankrupt. So things definately work out for a reason! The house I got I LOVE & its SO perfect for us! It has other things I wanted that the “dream house” didn’t have. My current house is amazing & awesome & I’m VERY glad I live there :).
Post # 6
Tricky. Lots of expenses also come up after you buy and with a baby, I would personally be hesitant to spend that much more. If you can get it down 20k to your comfort level then that’s one thing, but don’t overspend. Have your relator get the info and pull comps. If the comps are out of your price and comfort range, walk away.
One thing I learned… and so many others told me as well. When it’s right it works right. you may think the house is perfect but for one reason or another not end up in it. Everyone I knew “found the perfect home” only to loose it and be so much happier in the one they did get.
just, Don’t force it.
Post # 7
Congrats on the home search! It’s a very exciting, and also suuuuper stressful time! The most important thing, IMO, is to buy something that is affordable to you NOW, and not something that is a little out of budget, but you think will be more affordable later (like when you get a better job, etc). Like one of the pps said, having a baby comes with so many expenses that you just haven’t had to deal with, yet. For my FI and I, we knew we wanted a mortgage that one of us could pay alone, if one of us lost a job, got ill, or needed to take time off. As far as the age of the home goes, you should be able to get that info online through the MLS, if it’s listed, or through the county records department. Our inspection was about $500, and it was very thorough. One thing you may also want to look into, since you’re in a cold climate, is the utility bills, since you need to know how much it will cost you to heat/cool the home. Also take into consideration the cost of your property taxes and insurance. For us, utilities/taxes/insurance make up about 35% of our total monthly “house” expenses. If we’d just looked at our mortgage payment, we may have purchased a home we couldn’t really afford. It can be difficult to get people to come down on their asking price, especially during these tough times, but if the appraisal isn’t matching up to the asking price, or after inspection, there are serious issues, you should be able to get those problems fixed, or get a price reduction. Good luck with your search!
Post # 8
@simplifiedbride GREAT COMMENT about the taxes and insurance. So many people overlook this! In my city, the taxes are 1/2 of the city next door. People look for houses in both cities, and rarely figure out they tax situation until they’re almost at closing. My brother lives in the neighboring city. We bought our houses for around the same price, but he pays an extra $200 in month in taxes!!
Post # 9
@KLP2010: Great final comment. Don’t force it. If its not in your budget, I think you need to move on.
Our inspection cost us about $400, the sellers paid for the WDO (wood destroying organisims) inspection. We should have gotten a septic inspection but didn’t.
With a house that old there are things you are going to need to update/renovate in the coming years. If a higher % of your income is tied up in your mortgage that is less money to do those “projects”.
Post # 10
Congrats! This is a very exciting time for you.
Our house was built in the 1940’s so I understand your concern. We paid $420 for our home inspection and it was definetly worth every penny. Make sure you choose a company that actually goes ON the roof to inspect it (a lot won’t…atleast in this area) because roofing can be a major expense. With regards to the age of the house and the price to offer-your realtor should be doing that. He/She should pull comps and find out what other houses are selling for in the area. If the house is priced fairly you may need to walk away. If it was a few thousand I would say maybe figure something out, but 20K or 30K is A LOT. You can negotiate based on a number of different things. You also never know what could come up in a home inspection. I have heard plenty of times that deals fell through because even though the house looked great, it was actually falling apart behind the walls.
Also, as others mentioned, don’t forget to factor in closing closts, taxes, homeowners insurance, etc. in your monthly mortgage payment.
Just remember everythign happens for a reason. If this house doesn’t work for you, another one will.
Post # 11
Tread carefully if your realtor is representing both you and the seller, that means by law in most states he or she has fidiciary duty to the seller, which means in plain English that he or she is to look out for the seller first.
Post # 12
Thank you all so much for the advice!
@all how did you all shop around for inspectors?
@kayakgirl yeah, it made me nervous, in MI they have to disclose the same to both, we give up rights to have their sole interest but it doesn’t have fidciary duty listed on the contract.
Post # 13
zillow isn’t worth crap for value, but you can get general info that’s public record (including sq ft and year built)
RE: inspection-ditto what everyone else said. $300-500 depending on size. This is USUALLY done after you make the offer (and the seller accepts). Reason is two-fold: 1. Why spend $300-500 on a home inspection that there isn’t even an agreement on and 2. You are NOT obligated to buy or lose deposit if the realtor puts contingencies on the offer (ie: this offer is good as long as inspection passes, as long as house appraises for “x” dollars, as long as…..basically you can put whatever contingency you want on there and it’s up to the seller to accept or decline)
RE: dual agency…..this makes me cringe simply because there is NO benefit to the buyer whatsover when this happens. All agents (regardless of whether they represent the seller or the buyer) are paid BY THE SELLER. Their paycheck is a % of the sale price, so it is in their best interest to sell the home for as much as possible. The one “safety” you have to stop you from getting hosed is that especially in today’s markets, banks are VERY conservative on their appraisals and will not approve a loan for higher than what they think it’s worth.
RE: bargaining-throughout the entire process, there are opportunities to get the price down. When the inspector finds things that need fixing (ALL houses will need SOME fixing), you can ask them to credit you the cost of fixing things, or ask to knock the price down based on the anticipated cost. If the home appraises for less than the asking price, you won’t get the loan unless the seller knocks down the price or you come up with the difference.
Ditto on everything everyone else already said-don’t get sucked into the “I HAVE TO HAVE THIS HOUSE” feeling. Don’t walk into a bad situation simply because you don’t think there will ever be anything else out there. (lol, same advice I give to girlfriends who want dating advice)
Post # 14
I forgot to add: your downpayment and good credit are an EXCELLENT bargaining chip. It’s hard to find qualified buyers right now. Sellers who have to choose between a poorly qualified buyer with little down payment who is willing to pay more money isn’t ALWAYS who the sellers choose. They can take into consideration that you are a better buyer simply because the likelihood of your loan getting approved is better than the other guys’.
Post # 15
I think you should be ok sharing the agent, but just be very careful how you guys word things to them and what you say. You should treat them like a car sales man. Don’t sound too excited about the deal.
We just talked to a friend that had recently bought a house and asked who they used for a home inspector. It was pretty easy and didn’t worry too much about it.
My realtor said that we only had to show up at the end of the inspection so the inspector could go over their findings with us. I wish we had been there for the entire walk through. I think it would have been helpful to go through the entire house with them.
Post # 16
Have you talked to your agent about the price that you are willing to pay? If so, that’s a big no no since the agent is representing the sellers and will tell them everything that you tell them. This actually happens with any ‘sellers agent’ even if they don’t represent the seller of the house specifically.
To find the age of the house, you should be able to look up the property in the county clerk’s records. This will also tell you who bought the house, when and for how much.
The realtor should have a list of inspectors that you can use. I think we paid a few hundred dollars for our inspection.
I don’t know how long this house has been on the market, but I don’t know how much luck you will have to bring them down $30k in the asking price unless there are serious problems with the house.
Don’t forget about closing costs! We had to bring about $4k to our closing in addition to our down payment. You need to have a cashiers check at closing, not a personal check so go to your bank for this.
Closing can go pretty quickly. We started looking in Feb/March or so and closed our house in April.
Feel free to PM me!