Takin' the leap! (Security-Widefield, Fountain, Crawford: for sale by owner, real estate, renting)

[Sonic_Spork]

Well folks, I had planned to continue renting. I am scared of risk, irrationally afraid that I'll get stuck in an unfavorable situation and not be able to easily get out of it. I've known a number of people unable to sell homes who had cause to try, and heard so many homeowners' horror stories that I was just not comfortable buying.

On Sunday I got to talking to my husband, and he really wants to buy a house. He loves it here and wants to put down roots. I told him that admittedly, I did want to stay in the area for at least 5 more years...our 13 year old son is really happy in his school and with his social situation. Which is kind of a big deal for a kid his age. Based on that essential fact, husband talked me into buying a house. And we are doing so. Probably putting in an offer today in fact...we're going to look at one more before we decide for sure.

I'll be in Fountain Valley Ranch, between Bradley and Crawford off of Grinnell. The home husband is in love with has a 3 car garage, a beautiful lot, and a hot tub. The one we're looking at tonight lacks in those areas but has newer and prettier bathrooms and kitchen... Anyways, this is my first time buying a house...wish me luck!

[Carrera32]

Sonic - Good luck. Some of us are veterans of home buying (I'm on my eighth, and I'm not even career military). If you have questions on the process along the way, just ask on the forum or PM me.

Just the usual advice: Have enough down payment so you have a cushion if the market turns down, so you won't be underwater; have your monthly expenses under control (credit card balances, etc.); keep a cash cushion for the inevitable unexpected expenses; don't make a bunch of big discretionary purchases until you build up your bank account a bit after moving in (resist the 60 inch TV for your new family room for a while) and have a predictable monthly outgo; learn some do it yourself skills (i.e., the stuff you used to call your landlord to fix); etc. None of the above constitutes a "horror" story; it's just common sense. If you're financial footing is solid, and you plan for the bumps along the way, you'll be fine.

As for the purchase itself, get your loan amount "approved," not just "qualified" before you submit your offer. There's a difference. Having it approved means you've selected your lender and they've agreed to lend you the money you need. Qualified just means someone punched in a few numbers that you provide and out comes a number; there's no implicit or explicit contract. Your seller will be much more inclined to take your offer if you go in with your loan approved. I got mine approved on-line with USAA in one afternoon and had it in writing to take with me on my househunting trip.. Also, don't be dismayed at delays. Sometimes things go thru very smoothly and there are no issues. However, don't be surprised if your home inspection finds a number of things that will require you to go back to the seller to negotiate either fixing or lowering the price; no big deal, happens all the time. BTW, make a home inspection "satisfactory to the purchaser" part of the contract contingencies; your real estate agent can give you the proper wording. If you're not using a real estate agent, then get a lawyer to assist. If you are using a real estate agent (IMO you should; others may disagree) establish them as a "buyers agent." Real estate agents in general have a fiduciary responsibility to the seller, even the one you may be working with (that means they have the legal responsibility to get the best deal for the seller, not the buyer). If you engage them as a "buyers agent" then they still get paid out the seller's proceeds, but they have a legal obligation to get you the best deal they can. The whole relationship's a bit murky, but worth pursuing. In practice, my experience with agents has been positive; their livelihood is based on bringing buyer and seller together, so they good ones will have a heart to heart with the seller (as well as the buyer) when there are sticking points.

Buying your first house is a big deal; no question. With our first house, we were scared to death, but everything went smoothly and we were fine. If you go in with both eyes open, have a contract that allows you to bail without penalty (see contingency about home inspection above) if you find things that are not to your satisfaction, you'll be ok.

Finally, don't fall so in love with a particular house that you overlook or dismiss significant issues. If the house has cosmetic issues, no problem. Paint's cheap. If you have major structural cracks, evidence of water in the basement, etc. That's more serious. Either get the seller to fix them properly... or run away. There are lots of other houses out there.

Hope this helps. Again, good luck.

[otowi]

Ooh, you'll be pretty near me! Nice neighborly area. And I agree to your other thread post - Widefield schools don't suck.
I'm a product of them myself and have nieces/nephew in them now. As solid an education as anywhere.

[Sonic_Spork]

Thanks!!

We do have a real estate agent, she is the spouse of retired military, lives in the area we're looking at, and we "clicked" very well, unlike another agent I spoke to at one point. She claims to be particularly knowledgeable regarding VA loan transactions, which I guess one would if one served many clients in Security-Widefield. She's working on our behalf...the home we expect we'll be buying is one of six we've seen, and we're looking at one more today. There won't be a lot more to see, as we have a reasonably narrow range of geography and criteria we're trying to meet.

Money is not an issue really. We do not have a big down payment, we're getting a VA loan, reason we don't have savings to go in with is I was planning to keep renting (as I said) so I went on a big vacation last month instead of saving up...but I've got a killer job, we have $2K more than we need every month, at least, after housing, bills, and living expenses, and as an accounting major, I'm confidant in the accuracy of that statement. I've got earnest money covered and we are going zero down with a 3.375 rate and yes, we have been pre approved and not just pre qualified. (Although I didn't know the difference, the approval is what was done for us. I have the document.)

The house currently at the top of our list was built in 99, had one owner the whole time, who very obviously maintained it immaculately. The cosmetics are a little out of fashion...like the linoleum in the kitchen...but in perfect, perfect shape. The basement has an extra moisture barrier and the yard slopes away from the house in all directions, the roof was brand new last year and has a transferrable 30 year warranty. The agent lady who showed it to us, had never seen it before, she was saying that she goes through a house "looking for items that a VA inspector would take issue with" and said that she couldn't find any in this house--she pointed out at least one or two concerns in every other home we looked at, and no this house is not listed by her or her company. The landscaping is so perfect I think I will have to hire someone to care for it, because plants hate me. The feeling is nearly mutual, especially during allergy season. I might consider xeriscaping at least part of it at some point, as rocks and I get along just fine. I read the HOA covenants and there is nothing in there saying I can't, or restricting any of the minor changes (exterior paint color for instance) that I want to make.

[Carrera32]

Sounds like you're touchin' all the bases. Only one comment. My first house had a VA loan, and it was decades ago, so I don't really remember all the details. Also, it was new construction. Your VA inspector is probably more concerned that it meets basic VA standards and is worth the loan amount you're borrowing. I'm not sure that's the same as a full pre-purchase house inspection. if it's not, spend a few bucks ($350 or so) and get a full inspection, with you present to see everything and ask questions. You should get a comprehensive inspection report, with all the needed repairs along with rough estimates for how much the repairs will cost. It should also include an estimate as to how much life your major systems (HVAC) and the roof have left in them and how much in today's dollars they will cost to replace. With a house built in '99, you should be fine on the roof for another 17 years or so, but my understanding, though I could easily be wrong, is today's heating/AC systems, while they may be far more efficient than older models, simply aren't designed to last as long as they used to. Your inspector should be able to give you the straight scoop. If your real estate agent suggests someone she's worked with in the past, that's fine as long as you make it clear you're not looking for a white wash report. You're looking for all the warts so you can make an informed decision and can plan for future expenditures.

Again, good luck.

[Sonic_Spork]

Thanks!

If things work out with the #1 pick of the litter house, we do plan to get our own inspection on it, the VA guy is more an appraiser, not so much an inspector. The big concern there is making sure the VA dude thinks the home is worth the price we settle on (we're haggling now.)

We have an inspector that a friend has referred me to, and I'll probably poke around the internet and talk to a couple others before I settle on one. But they won't be a referral from anyone with a vested interest in this sale, but rather someone I pick on my own. I'd rather they didn't even know any of the agents involved, if possible. I want a truly unbiased and complete inspection.

The roof was brand new last fall because a tree branch apparently fell on it and the replaced the entire thing instead of repairing the one section. The current roof has an extra moisture barrier and a 30 year fully transferrable warranty. Of course my inspector will examine it and give me an idea how sound it really is. The appliances are older but well kept and presently serviceable, however they are out of fashion and I can afford to have them replaced within the next few months (and plan to, assuming nothing more urgent pops up and eats my money.) I do want more info on the HVAC, I don't know if any of that equipment has been replaced but I'm sure it's been serviced on a precise schedule. There is also a whole-house humidifier.

The owners (we met them Friday) are older people, they are meticulous and paranoid and difficult to negotiate with. They will probably insist on list price for the house, but as long as the VA agrees, I don't mind paying that...it's all contingent on the financing and inspection anyways.

The paranoid part is kind of funny. So it's in this really nice neighborhood, with 3 cops within a five minute walk of the place. Very quiet and clean, every yard well kept and every car looks new. And yet they have not only installed a security system and tons of motion lights, but these hardcore extra security doors which look like wrought iron storm doors until you notice the deadbolt on each of them and how sturdy they are. These people are prepared for the zombie apocalypse, or maybe an invasion from China. My husband loves it. The old lady talked to me for half an hour about how they have Life Lock because of course, everyone should, don't you know, or the identity-thieves will GET YOU... I do believe in a certain amount of common sense prevention, but these people have it piled on pretty thick, in my opinion. *shrug*

Right now I'm waiting for a response to the latest salvo in offer negotiation, and dreaming dreams of kitchen renovations and air-hockey tables in the basement...

[Carrera32]

From what you're saying, this is a FSBO (For Sale by Owner) or a Help You Sell deal, with the owners acting as the selling "agent." Usually, the parties (buyers and sellers) never actually meet until closing if the transaction is being handled through real estate agents (one of the owner, one for the seller or just the one who has the listing). The agent(s) handle all the back and forth. If the price is fair (and it sounds like you're doing all the right things to make sure it is) then there's nothing wrong with paying full price. However, in this market, there's usually plenty of room for negotiation. Some sellers still think it's 2006 and have unrealistic expectations (from your description of them, your sellers might well be in that category). If the house just came on the market and you're ready to buy it, that reduces your bargaining position. If it's been on the market for 6 months, and they haven't had any serious offers, that tells me they're overpriced for the market, as it exists today (check Zillow.com for the sales/listing history). I'm assuming the contingencies also include the house appraising for the selling price. If not, back to the table. You're holding the higher cards at that point. If they want to sell the house, they'll lower the price. Also, some (not all) FSBOs want to get the full market price, but simply don't want to pay the real estate commissions, so they price their property at that full market rate. If your sellers did that, that gives you a 3-6% negotiating cushion (depending on whether they're paying your agent's commission, i.e. the Help You Sell deal).

Hope this makes sense.

[Sonic_Spork]

It does make sense. Actually we do have agents, both of us, but when we were there Friday having another look before putting in our offer, my husband lingered (telling our agent his life story, that man makes me CRAZY...) anyhow, we stood around for so long, that the owners came back from wherever they'd gone off to. Of course with two MORE people present who didn't know his entire life history, it was yet another hour before I got to go home and make dinner. Especially since the old man was a Vietnam vet, and my husband is military to the bone. I had to drag him out of their driveway. >.<

But I took care to keep the conversation in appropriate bounds, didn't try and do any negotiation or anything like that. They confirmed what I already knew from the public records, which is this:

In 1999, they paid $170-180K (can't remember exactly) to have the home built. They only financed $70-something of that, and they've lived there since. The home has been on the market for a year, priced at 245K but no one was buying, so they dropped it to 239,500. Looking at Zillow/Trulia at comps immediately nearby, the highest one was a block away for exactly 239,500, so obviously that's why they chose that number. They claim that their home HAS no true comparables and is the best home in the whole neighborhood. I don't agree, but it is very nice. And the things that bring it down are cosmetic and fixable and more to do with tastes and trends--I bet a number of their neighbors have granite/steel for instance. The structure, size, and lot may very well be best in neighborhood however. I did find some homes within a quarter-mile though, built by same builder and same assortment of models, which are selling for more.

[Carrera32]

Check actual sales prices (not listing prices) for homes in your neighborhood. If they're in line, then their asking price may be pretty close to market. However, the house was on the market for a year and they've only reduced the price 5K? Are they serious? If they really want to sell, that price should be well under their competition. They have a "stale" listing and a 5K reduction won't change that. If other comparable houses sold in such a down market in the neighborhood, but their's didn't, there's got to be a reason. Since the house looks to be solid with no immediate issues making it a white elephant, then my guess is it's still a bit overpriced. You should be able to put in an offer at least a few thousand under the asking price and they should accept and their real estate agent should advise them to do so.

BTW, your husband (crazy though he may be) may have bonded with the guy (military vets, etc) such that they may be more predisposed to take a lower offer. Who knows?

When we bought our place two years ago, we'd been watching the house on Realtor.com for months. It had been listed previously for a wildly optimistic price, taken off the market, re-listed at a lower price, and had a couple of additional price reductions while chasing the market downward. When we were finally in the position to make an offer, the price suddenly dropped 35K. Woo Hoo! While our offer was within a few thousand, we still didn't offer full price. The owner accepted.

[lalahartma]

Congrats, good luck and have fun!