Cost to Buy New Property (Houston, Mission: comparable sales, sales, for rent)

[ChocolateBabz]

OK so it looks pretty much like we will be relocating at the beginning of the year. We still haven't agreed on the exact area but it will be North West Houston. Can you guys advise us of the 'hidden costs' in buying a new property. We are looking at a new build, aprox $350,000 (upgrades inc). Do we have to use a realtor?, What are closing costs likely to be, and what do these actually cover?. Are there any other costs that we need to add in?

[Rick4Life]

You are going to need to include your Home Owners Association fees, home owners insurance, taxes, and interest on your mortgage into your payments. If you are relocating at the beginning of the year and are looking for a new build I suggest you start building within the next month, many builders can take up to a year to complete your home, there are a few that can do it in as low as three months.

I'm not sure on a $300,000 home but say a $150,000 home in the NW it would be approx:

$3.24610 Tax per $100 of assessed value of the home
$871.00 Homeowner's Association per year
$850 Homeowners Insurance (includes flood, which you want here in the south)
Plus the mortgage and tax rate your mortgage payment gives you.

That would come out to about $1,200-$1,400 a month. I don't know if you have any equity to put down on the home but I'm sure that would make a huge difference.

Closing costs can range, usually around $6000-$8000 from what I've seen. Using a Realtor can be a good idea, however they might misleed you because of the BTSA they are trying to get off homebuilders. It is completely illegal and unethical, they can lose their license for it, however you'd be suprised how many people do it. You can do your own research in some communities and find which builder you want to go with, go to their website and look around and see their communities that are in your price range. Some communities that range from $300-$400 in the West and North West areas of town are Cypress Creek Lakes, Bridgeland, Firethorne, Pine Mill Ranch, Cinco Ranch and Grand Mission.

Good luck

[ChocolateBabz]

Thanks R4L. We are hoping to have at least $250 - $300 equity to put down on the property so mortgage should be relatively 'small'. We came over for a visit in August and looked round most of the areas that you suggested. My husband really likes Bridegland although I thought it was a bit bland (I think it will be beautiful eventually).

Husbands work will pay for rent for six months while we find somewhere to live and most homebuilders were quoting 4 - 6 months build time. Sounds like that might be wishful thinking.

Are then any downsides to [u]not[u] using a realtor?. Do you know who would draw up the legal paperwork for the sale?

[SkyeAnjel]

You should always use a realtor. The sales people work for the builder in the builders best interest, the realtor works for you. While it is true that some builders offer btsa's, we work for the clients best interest, the btsa can encourage a realtor to show that community first, but if the realtor is ethical, they will be sure that the client is seeing everything that would fit that clients criteria. Private resale homes sometimes offer btsa's also. Your realtor gets paid by the seller in any case, so there is not any reason not to use one to represent you.You should also get a home inspection done by your own inspector. Each community should have tax rates and hoa fees for that community. There are alot of nice communities out here. [MOD CUT]
Negotiations are done through your realtor, sometimes you can get extra upgrades or be able to get some closing costs etc.,this is all worked out, then papers are drawn and closing date set. Alot of times you can get a better deal on an inventory home they want to get sold.

[rmilleta]

I must agree with SkyeAnjel that I wouldn't buy a house without a Realtor. My realtor really came thru for us when we purchase our home last month not only in negotiating for us, but making sure all the t's were crossed and the i's dotted.

[jconrad]

I also agree! Use a realtor!!! They will be able to tell you what other homes have sold for in the subdivision you are looking to build in. This is critical for investment purposes. In addition, you are in a buyers mareket, so you really want someone on your side negotiating the best deal for you. A realtor can also have info on how good a builders reputation is. If they have had problems it gets around in the realtor community pretty fast.

[jptexas]

If you have no idea what you're doing it may be a good idea to use a realtor.
However, it is kinda misleading to say things like a realtor doesn't cost anything to the buyer.

The realtor gets paid by the seller. If you don't use a realtor, the seller has that extra budget he can use for your upgrades or price reduction, that s 3% of the sale price, so in your case around $10K.
This means that if the realtor can not negotiate $10K better than you would have, you re better off not using one (if we only talk about negotiation, there are other pros of using a realtor)

It is also misleading to say that a realtor works in your best interest. A realtor works in his/her own interest first, obviously. So let's look at that for a second. Is a realtor better off if the sale price is low or high, considering they re being paid as a percentage of a sale price ... ? Unfortunately the incentives are not aligned.

Actually the commission difference is not huge for the realtor, whether they negotiate good or not. The main point for a realtor is to get a commission, period. That means, to have a deal signed, as soon as possible. So a realtor DOES try to negotiate with the seller for a lower price, but also negotiate with you, explaining why you should increase your offers. Look also how they try to always see the positive in the houses they show you, but don't insist much of the negatives. No sale, no commission.

Yes a realtor provides other services than negotiation. Someone mentioned comparables sales. You should know that these data are available for like $20.

If you don't know anything about buying a house, and don't feel like learning then yeah you may want to use a realtor, but you're 'loosing' 3% of your negotiation power. If you have been documenting yourself for a year and know all the communities out there, and feel comfortable negotiating, then you probably can do it on your own.

Good luck anyway!

[jconrad]

There are quite a few things about this post which are untrue! The price of the home is usually the price of the home whether you use a Realtor or not. And a Realtor does not just work to get a higher commission. I have advised clients to buy cheaper homes resulting in me receiving less commission because I am working in my clients best interest and I want to have them as a client for life. The only way to do that is to make sure you are working in the very best interests of your clients. I had a client who wanted to purchase a home in a new sub last year and they were unaware that there was a diving line for the school district. The site where they were going to build was in a much less desirable school district, but the builder was charging the same price. There is no way that the home will resell for the same price as the other homes in the subdivision down the road which would have cost them over $20,000 to $30,000. I advised them on a sub which was actually $30,000 cheaper and had much bigger lots. Yes you can get comparable sales info, but do you know how to evaluate it? There is a lot that goes into determining how much a home is worth--amenities, sub, floor plan, sq. footage analysis. Do you know all the formulas for this and how much value a pool or granite counter tops add to the value of the home? How about having someone on your side if you have a problem with the builder? Believe me Realtors earn their commission! A good Realtor works hard for their client to represent them in their best interests.

[jptexas]

I think we agree jconrad, and I probably did not explain myself correctly. Again, I believe that if you ve spent one year doing your research and you know all these things (school districts, value of a granite countertop...), then the realtor knowledge probably adds a lot less value, but if you don't know all these things, you may need some help.

And yes, you re right, the sale price is usually what it is. However, I do maintain that whatever commission the seller had in mind for the realtor, it is possible to have it applied to closing costs and upgrades if you don't use a realtor.

So again realtor bring some value, but that value depends of the existing buyer's knowledge. And yes they also take away some negotiation power. You have to weight these 2 to know what's best for you.

Now if you get a realtor, there are good and bad ones. The good ones will the long term benefits of working in the best interest of the customer. However I do maintain that incentives are not aligned and that quite a lot of the realtors won't be as ethical as jconrad.

Originally Posted by jconrad

There are quite a few things about this post which are untrue! The price of the home is usually the price of the home whether you use a Realtor or not. And a Realtor does not just work to get a higher commission. I have advised clients to buy cheaper homes resulting in me receiving less commission because I am working in my clients best interest and I want to have them as a client for life. The only way to do that is to make sure you are working in the very best interests of your clients. I had a client who wanted to purchase a home in a new sub last year and they were unaware that there was a diving line for the school district. The site where they were going to build was in a much less desirable school district, but the builder was charging the same price. There is no way that the home will resell for the same price as the other homes in the subdivision down the road which would have cost them over $20,000 to $30,000. I advised them on a sub which was actually $30,000 cheaper and had much bigger lots. Yes you can get comparable sales info, but do you know how to evaluate it? There is a lot that goes into determining how much a home is worth--amenities, sub, floor plan, sq. footage analysis. Do you know all the formulas for this and how much value a pool or granite counter tops add to the value of the home? How about having someone on your side if you have a problem with the builder? Believe me Realtors earn their commission! A good Realtor works hard for their client to represent them in their best interests.

[Beto]

What are you feelings on receiving a free service at no cost to you? Realtors who know the market or area have a better understanding of what the buyer can expect when going to the table.