Home buying thread

Discussion in 'The Classics 97.3' started by Tuco, Jul 22, 2016.

  1. Tuco Well-Known Member DONOR

    Tuco
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    Note: I was requested to post this here by a couple people. I don"t know what direction my life or this journal will take, but my overall goal is to loosely document the process of getting my first house, fixing it up, and then leaving the house in the future (I don"t know when that"ll be, but I hope 10+ years). The intent of it is to create an interesting read that can also inform people who are looking to get a house to see how a complete newbie either pulls off something decent or approaches financial ruin. What happens exactly is yet to be seen, but from a personal preference I hope the former option is selected by fate.

    If you have any suggestions for what I should do or consider at my current place in the story (It"s up to date currently and if people like it I"ll make an effort to keep it up to date), please mention it. If you feel that part of the journal is boring/useless or that I skipped some steps or need to expand on some part, mention that too.

    Forward - October 2008
    It is with great uncertainty and loathesome trepidation that I step closer and closer to to purchasing my first house. There is no argument that I am in a tremendously fantastic market for purchasing a house, as we sit on a steeply downward trend of housing value. However, I am not at all satisfied with the average of greatness, but must complicate a relatively simple task by demanding a great deal in a great time. It is not just a foreclosure I seek, but the absolute rock bottom that I am for: an auctioned house. Auctioned houses come with an immense burden of difficulty that exist upon the full breadth of aspects to consider when buying a house. Every hill of buying that a person must travel through before walking into "their" house is confused by the particular path I have taken.

    That is the way I am; the way I was raised.

    I sit looking at the final goal of home ownership, still a distance away, and the next choices that lay directly before me are still cloudy. Perhaps if this was not the first house I have owned it would be more clear, but I force myself into this position because I know that with a lot of effort and a little luck, I can save some money. An additional stress is that everyone I know is looking closely at my progress either out of genuine concern for me or out of curiousity to see if I can pull it off. Out of the latter group come either people who want me to succeed so they can follow the trail I have blazed, or people who want me to fail because it would fill them with regret to see me succeed.

    There is no need to elaborate on the importance of a home purchase and thus the importance of finding a good deal for a home. The man who spends 20 seconds haggling at the Saturday morning garage sale over some used boks, just so he can work a 50 cent investment should, in theory, spend a proportionate amount of time haggling for the cost of a house. If that cost happens to be $200,000, then that 20 seconds becomes over 2,000 hours of shopping, comparing, researching and haggling. Most likely he does not. Out of pressure and desire to find a house, uncertainty of the less traveled paths and the undesirability of having a part time job of house shopping, he opts for much easier, and expensive, paths. This is not my way.

    So I trek on. Blindly onward into a jungle filled with those who would make a career profitting from folly. I am armed with good friends with mixed advice, a sound foundation of patience and frugal behavior, lots of time and the inclination to absorb as much information I can. My hope is that possibly you can watch my progress and perhaps be able to follow my path in your search for a good deal.

    September 2007 - August 2008
    The first issue I face is the problem of information on the current market, available houses and what recent houses have sold for. Most people would find these answers in a real estate agent. The comfort of a professional agent who works to find you what you want is a warmth that I would like to seek. But I was advised against it and discovered that this comfort may be deceiving.

    The primary motivation of a real estate agent is not to get you a good deal but to sell you as expensive of a house as they can. They want you to be happy with the purchase but they mostly want their cut. For someone like I am, who minimizes the amont I must pay, this can be a conflict of interests. Perhaps I should have given it a shot, but I felt with great certainty that an agent would only attempt to dissuade me from my desired path and veer me onto a course that would prove profitable to them. If I sat down at their desk and explained my strategy I would quickly face the unapproving look, the condemning glare that seeks to unsettle an inexperienced person in order to set them up for a different path. A path whose confidence would be quickly built upon the promise of a good deal for me and a fat paycheck for the builder.

    So I have not spoken to an agent yet. Instead I have used the great resources of the internet to tabulate through thousands of entries in a database and give me up to the second coverage of all the houses available on the market. I had the distinct feeling that I was peering into the same information that a professional real estate agent would see as they mentally filtered the houses in order to find the most expensive one I would like. While these websites may fade by the time you read their addresses, here is what I have discovered that has helped me replace a real estate agent:

    Real Estate Valuations, Homes for Sale, Free Real Estate Information | Zillow Real Estateis a website that attempts to programmatically calculate appraisals based upon both history and parameters of the lots. It does this well.
    www.zillow.foreclosure.comis a part of the Foreclosure.com website that I used that focuses on the available foreclosures in the market. If you pony up the modest subscription fee it provides to you detailed information about houses, along with information about the mortgage they are assigned. With this you can gain insight onto the houses, or contact the owner, set up an inspection, and lowball them until you find someone desperate enough.
    Auction Zip - Live Auction Locator - Find Auctions Anywhere!is a website that has virtually every legitimate auction in the United States. I have never seen an auction listed anywhere that was not at this website. It also has an excellent interface and search engine. You can check this once every few days and know every real estate auction in an area.
    Williams & Williams - Real Estate AuctionsIs a website for one organizations auctions. While everything in it is listed at AuctionZip, it has the unique ability to see auctioned properties and what they"ve sold for. Other than making phone calls or attending auctions this is the only way to get an impression of what the auction market is like. You may even witness the ridiculous nature of auctions by finding the extremes that could only happen at an auction.
    HotPads - Map Search for Real Estate, Apartments & Houses for Rent, Foreclosures and Homes for Saleis a website that lists rentals, roomates, houses, foreclosures and statistics, and it is here because it has, by far, the best interface.
    Google MapsIs the best website for distance calculations and satellite images. They also have limited access to terrain, but you"re better served by accessing topography maps for that.

    With these resources, I replace a real estate agent.

    My focus now rests upon determining what I want. Oh what a troublesome task this is! The freedom of my youth allows the difficulty of thought on future changes rather than upon the reality of today! Virtually every aspect of a house rushes at my mind at once, disorienting my thought as I attempt to discern what is important and what is an imaginary desire that will not pay comfort upon acquisition! So rather than prioritizing desire, I instead build requirements. These requirements set up a firm foundation of what houses I will consider and what I will not:

    1. Location - close to work, family and freeways. Freeways become important when you abandon the flawed technique of measuring the distance between two points on a map, and begin calculating real drive times.
    2. No major issues with the foundation, structure, roof, plumbing or electrical.
    3. Family friendly neighborhood.

    You will notice an absence of highly critical items including any real parameters of the house, land and area. This is done intentionally because even in such a buyer favorable market the number of auctions that fit these parameters is low. But even If I ditched auctions and went with a broader method of purchase I would still desire a short list of requirements in order to raise my chances of a good deal.

    I begin my search timidly and without commitment. I am approaching a project I feel will extend long into 2009"s long winter months. In April of 2008 I have finished paying off my student loans and am building up the cash for a down payment. Thus, I am in no rush and my home search carries on without incident.

    September 2008
    I find a new auction. What catches my eye about this is the amount of land under this house. 9 acres. 10 football fields. 20 times the number of acres I wanted. It is also in an amazing location I am very familiar with, because I have driven that road many times, enjoying the dirt road because it was an open stretch I could reach 100MPH on, and I remember it because the view opposite of the house is amazing. The area is a bubble of rural area surrounded by four developing cities. I am excited.

    Quickly after announcing my discovery, my social circle wanted to check out the house. We jumped into a car and when arrived at the house everyone remarked at the amazing view. We walked timidly towards the house wondering if it was vacant. We didn"t want to trespass. It looked vacant. There was a large dumpster next to it full of home goods that apparently weren"t valuable enough to auction. We presumed it was truly vacant but then noticed the neighbor casting furtive glances at us. We quickly introduced ourselves and began asking questions about the property that only a neighbor could answer. He reported that the woman who lived here has resided here for 62 years and that her family has owned the area since 1840. The neighborhood was cozy, not a lot of noise except for the occasional fool that would drive down the dirt road too fast. He gave us an open welcome to traverse his back yard and inspect the property freely. We said our thank yous and departed.

    Eagerly we hiked into the backyard noticing the healthy terrain, the large trees. We came across a beautiful willow tree that was surrounded by grape vines eagerly climbing the branches. We tasted the rich fruit and agreed it was delicious. From then we walked towards the outer barrier of the forest. Wanting to see what was held beyond the grassy terrain I left my fellow inspectors and passed into the woods. It was fairly standard until I came to the edge of a large expanse of an open meadow. At the center lay a trickling creek, meandering through the pasture at the heart of the nine acres. I inspected the area and was pleasantly surprised to find no pest insects in this grassy haven. I walked back towards the house to meet up with my party and could see the excitement in my woman"s eyes. I smiled, asked her what she thought and she responded with glee. I smirked cynically and told her that I thought this house would be our first disappointment because I felt we wouldn"t bid high enough for it.

    With this sudden arrival of a potential house came two difficult questions. Are you pre-approved at a bank? Well, no. Do you know how to inspect a house? Not really.

    To answer the first question I quickly asked for the advice of my friends who knew about that, one of which happened to be a loan officer. He was witness and perpetrator of the same slimy atrocities that are blamed in the media for the very downfall that would allow me to purchase a house at a cheap price. And while I did not think I would collect debt I could not afford, I was concerned with both the reliability of a bank and the hidden fees they make a living on. I was unable to find any books I felt were valuable, as the libraries and book stores were filled with such trite documentation of flipping houses and get rich quick schemes. In a sea of uncharted territory I became slowly more informed of its waters and made my first move to get "pre-approved". Armed with a 771 credit score, a good job and $12,000 of cash (Which was not bad considering I was broke when I graduated 14 months ago, and also paid off $14,000 in loans.) I first looked at what appeared to be a reputable online mortgage website,E-LOAN: Mortgage Refinance, Home Equity, Auto Loans, Savings Accounts, CDs, Line of Credit, Home Loans, Second Mortgage, No Hidden Fees, I applied for a loan there and was well received. Within minutes of finishing the application I was called by one of their loan officers. He ran the paperwork and eagerly pre-approved me for 200,000 at %6.5. We discussed specifics and happily made arrangements to get in contact once I successfully signed a purchase agreement with a seller. I later ran the numbers on the deal and found out it would be very difficult to afford the payments on a $200,000 loan, and I would face certain ruin if unexpected costs came my way. This was ironic to me as the same day I was pre-approved for a loan I could not safely afford, the stock market lost one trillion dollars because of loans people could not afford. I had no intention of even approaching that number, but shook my head at it.

    Although I had a pre-approval already, I did not want to abandon the local bank I"ve used for over a decade. I sought their approval and was curious to see what their numbers were. It turned out they were much superior to ELOANS, both in rates and upfront costs. I did not bother seeing if I could get approved for the $200,000 loan, but instead went with a more conservative $150,000 loan, which was still much higher than I expect to pay. This was happily approved as well.

    October 2008
    The open house was scheduled for the next Monday, merely a few days away. I had until then to answer the second question better. While my friends had sporadic advice about home inspection, I had more luck at printed material than I did with loans. I shippedAmazon.com: The Home Inspection Book: A Guide for Professionals: Marcia Darvin Spada: Booksthis book to my house as soon as I could. In one weekend I read through it all and memorized as much as I could in order to adequately inspect this house. I sifted through the dull material, being largely familiar with most of it, I was able to quickly go through it and absorb its contents. The open house quickly approached and my excitement spread to many of my friends who began to peer eagerly into my adventure. As I mentioned earlier, people were typically excited either because they wanted to see me succeed so they could possibly take the same actions, or see me fail so they could be assured they did not make a mistake with their strategy. Word spread about me finally venturing to an open house and a group of four people were interested enough in my progress to check out the house with me. We arrived roughly at the same time and strode into the house. Overall its conditions were better than I expected. The house had been vacant since March, but it looked well maintained, without odors, major structural defects or serious issues. At the very least it was livable, and at the worst it was a house that needed some extra work. It was originally made in 1870, but had been well kept until 1973, where two additions were basically stapled onto it. The basement was sobering as the ceiling grazed my head and I felt cramped in its mere 400 square feet. I climbed into the attic and found no defects, though it was quite small. Overall the open house provided me exactly the information that I needed, the house that rests upon a heavenly nine acres of land is without major concern. All that was left was a water test conducted by the Michigan Department of Environmental Quality.DEQ - Department of Environmental Quality

    So now comes the first real decision of this process. I must ascertain the maximum amount I will bid at the auction. What the home appraises for is important, but much less so given my circumstances. I sit at the bottom of a huge rut of economic depression that gives me the distinct opportunity to purchase a home for much less than it appraises for. Additionally I seek out the troublesome candidates that make their way to auctions, most likely lowering the price considerably. I am in no rush, and that offers me the advantage of being able to low-ball auctions until I get lucky. I have been monitoring house prices for the last year, anticipating decisions like this. However, any data I have gathered holds little weight for a variety of reasons. The volatility of the recent market and the lack of data I have on houses in decent locations with lots of land make it difficult to predict. As I think I consider likelihood of winning, my desire to come out of this adventure with minimal debt, how much I would love 9 acres of land, how great the view is, the short term and long term economy, the average number of eligible auctions per month. I speak with my close friends, run simulations in my head (day dream) and pray. I come up with a number. $80,000.

    "You"ll never get it at that price.", a colleague exclaims as he admits he paid $50,000 for 0.25 acres of undeveloped land not far from there. "I"ll give you 1 to 200 odds on winning it at that price.", states another colleague who owns similarly sized property. "I"d hate to see you pay that much for that house.", guides my father, who says I should limit it to $50,000. "You should totally think about raising it to 125", advises a colleague who really wants to see how this plays out. "I trust you to do what"s best, but I think you"d be okay to make it one hundred thousand.", says my girlfriend. All these voices, coming from people as in the dark as I, the auctioneer and the owner are. I don"t have long to wait, a couple weeks from now I will be leaving work early, venturing to the location and watching someone"s life be poured out the lawn and literally sold to the highest bidder. Before then another open house is scheduled and I will have a chance to speak to speak to the actual auctioneer and review the details of the auction.

    October 9th, 2008
    Initially I was intimidated by the auction process, with how the payments worked and how insecure the entire process was. Now I still feel intimidated but more secure as I understand it better. I expect to go to the auction, register, attempt to win the bid at a sinfully low rate, and if I am successful at my heist, I must have a cashiers check for $7,000 ready as a deposit to hold my prize. I then have thirty days to hope that a bank is capable of lending money in a time of such financial ruin. If so I, well, I don"t know, I haven"t figured that part out yet. I intend to hire an attorney simply out of paranoia, though I feel that these auctioneers are fairly reputable. I have a certain degree of (possibly misplaced) trust in my bank, and if they are the ones to loan the money I will feel even better about it. The two risks are that if I can"t get the loan approved I"m out $7,000, and if I screw up the process I may buy an $80,000 mortgage and no actual property. I am attempting to safeguard myself against the first risk by hiring an attorney, and my only option against the second is to get pre-approved at a lot of banks before hand and brace myself for having to take a bad rate on the chin if need be.
     
  2. kegkilla Hustle. Loyalty. Respect. DONOR

    kegkilla
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    i clicked on this thread thinking it was about buying a horse. needless to say i"m pretty disappointed.
     
  3. Darkko_foh shitlord

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    Good stuff, I enjoyed reading that and will keep up to date on your project. I hope to buy a house sometime in the next 5 years as well.

    During the part when you guys were inspecting the house I got the image in my head that this was going to be some drug experience story lol. You and your friends were exploring this old house, tasting berries, and checking out streams and stuff haha. "We tasted the berries, and agreed they were very good..." Anyways, good luck. I can"t wait to hear how everything goes.
     
  4. Repyh_foh shitlord

    Repyh_foh
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    I don"t understand why you wouldn"t get pre-approved... only sounds like win to me. No sense in tempting fate, when it is perfectly easy to mitigate that risk.
     
  5. Kugbok_Fennin_foh shitlord

    Kugbok_Fennin_foh
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  6. Tuco Well-Known Member DONOR

    Tuco
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    Repyh, if you"re referring to this line:

    I follow it up with two paragraphs explaining my pre-approval process. I"m currently pre-approved at two places. I could do more but it"s kind of a pointless operation for me because I have no problem getting pre-approved.
     
  7. rinthea_foh shitlord

    rinthea_foh
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    heres an email I sent to my sister a year ago, when she wanted to buy a house

    its to gather a price, based on the local area"s income and tax

    its the average housnig price of an area, a better house will be a bit more and worse one will be a bit less

    fwiw asset bubbles, prices go up too high, then they overshoot on the downside too. I"d go 20-40% below this.
    Also dont be afraid of missing the reserve price at the auction. Chances are if theres no other bids, you can go make an offer and someone might be desperate enough to sell it.
     
  8. rinthea_foh shitlord

    rinthea_foh
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    I should add, my 2 cents is that I think the worst of this economic hardship and market decline is yet to come and I"d expect that "socio economic" downturn to getmuchfurther worse by the time this is over.

    So theres still plenty of time and no hurry to get into real estate. I"m thinking another 12 months at least before I have a look at some property. Gonna try and grab some old chateau in southern france for cents in the dollar. Assuming I havent lost everything gambling on financial markets by then.
     
  9. Tuco Well-Known Member DONOR

    Tuco
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    October 23rd, 2008
    On a crisp autumn morning I approach the property on the day of the auction. The wide breadth of the lawn is full of vehicles, the dirt road lined with more. Many are pickup trucks and SUVs, waiting to haul the tangible memories of a now deceased couple literally sold to the highest bidder. I exit the silver bullet and stride towards the sound of auctioneer getting rid of the least valuable baubles. The crowd there, around 150 strong, is mostly old, retired folk. As an obviously employed youngster I stand out. I receive the stares without irritation and gladly respond to the strangers who ask if I am there for the house. There are thousands of items that are neatly littering the lawn, and two auctioneers are sifting through them with their chant as quickly as possible. The auctioneer"s process was to throw out a high number, then gradually decrease it until someone was willing to go for that price, then the price would quickly shoot up, often higher than the initial number.

    Most of the people there do this as sort of a hobby or a side profession. Most of them, again, are older. It"s strange that it is the elderly that prey upon the remains of the dead elderly, but I suppose it makes sense. It seems a never ending cycle of elderly procuring useless antiques at "bargain" prices only to die and have those antiques bought by a younger generation of elders. Many of them know each other and greet each other warmly as they value the items being sold, noting who got good deals and who got bad deals. A constant re-assurance sweeps over them because they know that every item they buy cost more when it was original bought.

    I was only interested in one item, the very thing that the crowd stood upon. The auctioneer announced that bidding for the property would begin in 45 minutes, so I had time to kill. Being a complete novice I looked for a buyer with talent to witness their techniques. Anyone can raise their number high at an auction, surely there was some skill to it that could negotiate with a crowd of people and an auctioneer. This was difficult to find. Most were too lazy to do anything more than act uninterested in whatever they were bidding on. However, I did soon come across one specimen. He was a large gentleman, with a bald head and a keen eye, he commanded respect as he walked among the goods, casually interrupting the auctioneer in a cocky fashion. I could read the game immediately, but even if I recognized the acting I could still feel impacted by it. The first item I saw him bid on was a very large air compressor. He stood in the back, behind the crowd and waited for bidding to begin. He marched towards the auctioneer with a hamburger and drink in hand and questioned, "What is that you"re sellin"". As the auctioneer told him the answer he already knew, he saw that all the crowd was looking at him. He scrunched his face and shook his head as he said, "Hell, how about ... $25 for it." As he dismissed the item with his demeanor, surely a feeling of uselessness was thrust upon the item itself. Another man challenged him with a counter bid, and he raised it lightning fast. He mixed a tactic to devalue an item while attempting to affirm that he would bid it into fortune. The effort worked and he won the item at $45. As the time between me and bidding on the property passed, he took the same tactic on various, unrelated items. Each time he won. During a break he approached me and asked me if I was going to buy the house. I answered casually and my heart sank as he began to dismiss its value based on various criteria. I realized he was there for the house as well, and my naive dreams of winning uncontested were smashed.

    Soon the last item before the property was up for bidding. It was some baseball cards. Because we were preparing for the house there was a large crowd gathered around and he employed his technique again. This time, however, he was met with fierce opposition by another gentleman. The crowd looked in curiosity as they bid upon the cards far beyond our estimation of worth. He shouted, "I"m not stoppin"!" as he obstinately pointed his number at the competitor. His foe laughed as he kept bidding, but soon the price approached the unreasonable and he backed down. Perhaps there was some worth in the cards that none but those two knew about, but I had a feeling that the victory was part of his strategy.

    The auctioneer gave the call to gather around a trailer that he stood upon. I noticed the expert buyer escape to the rear of the crowd. The bidding started at $150,000, no one bit. The auctioneer asked me directly if I would like to start it at $125,000 and I politely refused. Soon the large gentleman in the back bellowed out, "I"ll give ya $50,000!". The auctioneers there sneered at him and said he needed medication, but that kicked off the process. It quickly rose between he and I towards $80,000, and I finally reached that number, my max. Finally, as if my hard thinking and estimation never happened, the bidding unceremoniously passed that number and the mantle of contention passed from me to different man. He looked as nervous and out of place as I did, and attempted to contend with the professional for the house. The bidding was not fierce, but the large man taunted his opposition with claims of negativity towards the house. He would claim that the taxes were too high, the land was no good, the roof was put on wrong, then every time he was forced to raise he would state he would not stop raising. His negativity were all somewhat true claims that would seek to lower the valuation of all those who would hear it. The auctioneers bravely attempted to thwart his technique with insults and denunciations, but it had its affect. He won the auction and I stood clutching the paperwork I prepared for victory. While I was not surprised, I grimaced in defeat. So much planning took place in order to lose that day, but I had expected that would be my first disappointment in this adventure.
     
  10. Cad scientia potentia est

    Cad
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    What did it eventually go for?
     
  11. Tuco Well-Known Member DONOR

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    Should have included that eh.

    96000
     
  12. Sharmai_foh shitlord

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    Might I ask a few questions Tuco? I read your home adventures and couldn"t find a couple of answers that I went through while buying my house. Feeling you"ve asked yourself these questions already I am interested in your PoV.

    1. From your time line it almost looks like you went from Aug 2008 to Sept 2008 in your choice to buy a house. With sometime before Aug 2008 your interest in buying a house started to pick up.

    My question is how many houses did you look at before you decided on that one?

    I ask because I spent greater then a year looking for a house and in that time had I not resolved to make no decision in under 12 months there were easily several circumstances where I would have bought a house and not come out as richly as I have now in the matter.


    2. Did you have the auction property inspected before you auctioned? By how many inspectors? From different firms?

    I used 3 at one point. The price varies by inspector but a house is such an important purchase I did not take chances.

    3. I noticed you said the house you were looking at was on a large amount of land nearly 10 football fields big.

    How did that factor into your consideration in any negative way?

    I ask because such a large amount of land would be huge on maintenance costs. Possibly even having a full time gardener. Was that a factor for you?

    4. Plumbing and modern housing regulations
    A house on such a large amount of land leads me to believe it is an older one possibly using plumbing systems that require additional inspection.
    Did this house have any of those issues?

    5. Location
    Did you consider then 5, 10, 15, year growth for the neighborhood around you and what it will do for your home value?

    We often forget to look at things like this but I have already gained on my purchase because of new growth. If at all possible take it into consideration.

    6. New home vs Old home

    What thoughts have you on the subject?


    I do not ask any of these to offend you I am merely curious as a recent home buyer.
     
  13. Darkko_foh shitlord

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    That other guy sounded like a dick. I say you burn it down after he restores it and post the pics Jk, seriously, don"t do that.

    Good luck the rest of the way, keep us updated. Pics would be nice to. would be sweet to see the house/crowd at the auction.
     
  14. Tuco Well-Known Member DONOR

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    Darko has to say he"s just kidding because he"s from Ohio State and his fellow Buckeyes might actually burn down a house. (Just kidding! thanks for the support)

    How many houses did I physically go inspect? 0. I"ve been looking online and curb shopping for about a year now, pricing things. That and zillow have helped me guestimate house worth.

    Additionally I am offsetting risk of miscalculation by intentionally low balling house offers. If my efforts for home search had been unsuccessful I would have probably went up to 100-125k for the house I lost yesterday assuming everything was the same.


    No. The reason I didn"t for this house is three fold:

    1. Given that I am buying a home at an auction, knowing various details that need to be replaced/fixed (things that cost less than $10,000 to fix) aren"t that important to me because I can"t use them to negotiate, and I wouldn"t change my mind on price much if I knew small things needed to be changed. Thus only the really big things were stuff I wanted to make sure of. namely foundation, walls, roof, plumbing, pest damage and electrical.

    2. I read a book on home inspection and talked with various people about it and although I"m no where near qualified to inspect a home, the scope of the home inspection is much more narrow than I expected. The things I wanted to check can be fairly easily done with a little knowledge within reason (IMO). For foundation, you should check if the walls are straight up and if there"s any cracking in the walls/drywall/paint etc. For the walls, check to se eif they"re straight up and have water damage. Ceiling /roof is the same. Plumbing you can check by testing all the faucets/water pressure, and electrical you can check with a radio/multimeter etc. Pest damage you can just check by looking for rotted wood. Also check doors to see if they swing correctly.

    And that"s how the professionals do it I believe. Most of the home inspection involves "minor" stuff.

    3. Even if the house ended up being total-shit (low chance really) I could bulldoze it and make new house and still do okay. It"d be like a 1-5% chance of that.


    About 2.5 acres was grass, which needs to be mowed once every one/two weeks and takes 1-2 hours each time with a good riding lawnmower. The rest was woods which require very little (if any) upkeep. The only negative with owning that much land is increased taxes, but that is true of anything that improves the value of the home.

    Eomer may make me look foolish but I believe it had copper and cast iron piping, which was fine I believe. I think you"re supposed to be worried if it has lead piping? The reason I wasn"t worried is because the county it"s in requires water testing before it can be sold.

    Investment future is probably half the consideration of a house for me, but it"s difficult to reliably predict that in metro Detroit. For this property, it was between three large cities, and I was hoping the cities would expand towards the nine acres and eventually I could sell the house for a profit.

    I"m looking at living in whatever house I get for 10+ years though.

    I would say that new homes are typically better as more codes and enforcement of them are good as well as less problems from age. The only good thing about a house that is old is that you know it"s not full retard (sinking structure, in a huge flood zone etc). This house was built in 1870 (and moved a mile to its present location in 1930) so I don"t know if you can say whether certain parts like the foundation are more reliably than a house built in 1970, 1980, 1990, 2000 or 2008. Maybe you can, maybe you can"t. But if you get a newish house you can be sure of the age of things and perhaps warranty stuff. However older houses are cheaper so yeah.

    One thing I will not is that almost certainly, the cost of fixing/replacing most things is more than the difference of how much that house would be worth if that item was fixed. In other words, putting $5000 into renovating a bedroom or finishing a basement etc rarely increases the value by $5000. The big exceptions from what I"ve seen are landscaping, kitchens and maybe bathrooms.
     
  15. Zippygoose_foh shitlord

    Zippygoose_foh
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    Great posts, very interesting. Good luck to you sir.

    Having worked with a couple of different real estate agents I 100% agree with your assessment of their profession.

    Edit: The guy that beat you on the auction sounds like quite a character. Did you get the impression he was buying up lots of property in this way?
     
  16. Zeste_foh shitlord

    Zeste_foh
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    I can"t comment on buying a home, but I did just build a very nice 2300 sqft home in Feb-May, so if there"s any curiosities you have about building, I could share my experiences.
     
  17. Tuco Well-Known Member DONOR

    Tuco
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    October 24th, 2008
    Back to the drawing board, to search for houses whose purchase would replace the disappoint of loss. As I have been more closely surveying the market I began to realize that limiting my shopping to low balling auctions would make ownership unlikely. A calculation of able houses would present perhaps one house a month that I would bid on, so I must tackle the idea of expanding my options. I clear the board and evaluate my options. One type of house is a "HUD" owned house. These are the products of FHA, where the government buys a house that no one else wants and attempts to rid itself of it as quickly as possible. Pursuing this brings back the previously rejected real estate agents, as only an agent can investigate and bid upon a HUD house.

    I ask a trusted friend for a real estate contact and he fetches a card. I go to her website and it feels reputable, so I make the call to her office. She gladly receives me, asks what type of house I"d like and promises to make me an account at her website. The account never comes but a few days later I was contacted by one of her colleagues/subordinates who presents me a list of houses she found based on my requirements. They don"t meet them or even come close.

    Meanwhile in my search I find an interesting, foreclosed property. It is a little further from my house and a little more expensive. However it appears to be an amazing deal. Deep in the heart of one of the better communities in Metro-Detroit is a 2 acre, grassy plot pegged by a 2700sq ft house that is listed at $150,000. It is surrounded by houses valued at $300,000 and is adjacent to a large park and golf course. The downsides are that the house is butted against a busy 2 lane street and is in dire need of renovations. It is far from a tear-down house but the first floor has a few issues and the second floor is stripped to its studs. Someone bought the house two years ago and decided upon a grand scheme of remodeling. She sledge hammered the walls at the second floor and then got foreclosed upon.

    October 28th, 2008
    I asked my newly acquired real estate agent when her next available time was to show me this house, and she replied that she was very busy and could "fit me in in six days." I figured that if her office had so much business they had a one week turnaround for a showing, they would not mind if I contacted the listing agent for a showing for the house. I did this and within a few hours I was pulling into its driveway.

    The back yard was beautiful. Rolling hills stretched away from the property and were dotted by large trees. The neighbors seemed like typical older white folk, which was okay. There was a healthy apple tree with large apples rotting at its feet. The Realtor showed me into the house and I saw pretty much what I expected. There was a slight, stale odor to the house, which may be typical of a property having been vacant and not aired out. The wallpaper was cracked and peeling and the drywall behind it in spots may need to be replaced. The only real notable part of it was the fact that the ceiling was 9 feet rather than the 7 feet I"m accustomed to in houses. We ventured into the basement, which was clean but did not venture under the entire house but rather 75% of it. The furnace was enormous and the walls looked sturdy and intact. There was no electricity so I made due with a mag-light. With it I did as best I could to determine the quality of the foundation and look for water damage. I could find none but would like a second look with better lighting.

    With the basement and first floor taken care of I braced myself for the second floor. We passed a barrier intended to stop sawdust and climbed up the stairs. As expected the entire second floor was framed in studs and otherwise bare. I looked for the attic but was surprised to be unable to find it, as it looked quite large from the ground. Houses certainly look smaller when they are not sectioned off with drywall, but there was not much else to see up there so I hiked back down.

    Overall the house was what I expected. I estimate around $35,000 of material and many long months of my time in order to get the house in shape. I would need to finish the second floor, redo some of the walls/floor of the first floor and finish the basement. The big disadvantage I saw with the house was that it was positioned right against the road and by chance it is caged by a road, neighbor and garage. The price was also a burden as well.

    I"ve ran the numbers and have determined that at this point I could easily afford the monthly payments with $850 money left over (taking into account mortgage, insurance, taxes and utility bills). My current career as an automotive engineer looms above me like a curse, and although my company is making a profit every year I feel the threat of layoffs biting my heels.

    I am in the least enjoyable part of the home buying process, the decision making one. With so many conflicting facets to this dilemma, I have trouble thinking clearly. I do not know how much time I have, as according to the agent others are making offers, but if I found out the house was taken off the market I would sign in relief, just because the burden of choice would be lifted off of me.
     
  18. bouhhan_foh shitlord

    bouhhan_foh
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    these are great posts tuco. all this research/self education will pay off in spades, i have no doubt. i definitely agree that real estate agents are superfluous if you know what you are doing.

    i have one piece of advice: pay for a professional to inspect any property you are seriously interested in.

    i"ve been looking for a home in the new york city area for the last 3.5 years and haven"t pulled the trigger yet.

    the closest i came was on a 750k townhouse that looked like a steal for the price. we did our first inspection (i"ve paid for seven of these now and they run @ $150 each here, and last @ 2 hrs) and the guy recommended a structural engineer to look at a tiny crack in the wall. we almost didn"t do the second inspection because it was pricey ($650 if i recall) but decided to do it because we were set on buying the house and wanted to negotiate with it based on whatever he found.

    the structural engineer told us that this hairline crack was moving the wrong direction, and that basically the home would need to be torn down and rebuilt within the next 10 years due to a faulty (no pun intended) foundation.

    needless to say, we didn"t buy the house.

    it was a lesson in "you get what you pay for".

    good luck!
     
  19. Zippygoose_foh shitlord

    Zippygoose_foh
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    Yeah I"d have to agree. I think it"s a great idea to educate yourself and do some preliminary inspection work yourself, but if you"re seriously considering pulling the trigger on a home $150 is a worthy investment for a proper inspection.

    Really enjoying the posts as well. I think the key advantage we (first time buyers without babies on the way) have in this situation is that time is on our side. You don"t need to worry about getting into something ASAP, my advice would be to just remind yourself of that from time to time and continue to really think things through like you have been doing.
     
  20. Ravvenn_sl shitlord

    Ravvenn_sl
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    You"re not bound to that agent, so I"d personally look for a new one. In the event you had a good agent, going to a property without them always scares them since listing agents (especially with distressed sales) poach buyers so they can get double commission.

    Distressed sales are tricky and can be traumatic. I have pictures saved from about 15 I saw and plenty of stories to go with.

    Short Sale prices are almost always deceptive, they"re priced very low (unrealistic) to bring in traffic in hopes of starting a bidding war. If you have a good agent, they will look up tax records and show you what they paid for the home, what they owe on it, and how many loans they have against it. Short Sales are also not short, most of them take 30-90 days before you hear back on your offer.

    Bank Owned can be good deals, but it depends on the listing agent. I don"t know about your area but in this area when listing agents are picked up to list these properties (bank owned, short sale, etc.) they are supposed to pick up utilities and are to be repaid after the sale. Since sales take forever, none of them do this. They"re also supposed to keep up on gardening and pool services (if applicable) - every distressed sale I saw had a green pool with mosquito fish in it added by Vector Control and they also had VC notices plastered on the doors and/or windows. Some are even given a small allowance to tidy things up (touch up paint, carpet clean, etc.).

    You always want to ask if the price isAPPROVED(by the bank) - if it"s not, it"s just something the listing agent pulled out of his/her ass to get people in. 100% of bank owned properties required pre-approval letters with the bank that owns the property along with the offer, in addition to that - they require proof of funds to match your listed down payment.

    If you"re looking into those, don"t get your heart set on one. I"m sure the market differs between here and there, but most banks work the same. Bank of America and Wells Fargo were hands down the biggest pains in my ass. Wells Fargo had a metric fuckton of REO"s so on all short sales they had an average response time of 4 months or more. On one property, it had been a short sale for 380 days with multiple offers. They misplaced one guys paperwork, then found it - after he threatened to sue he ended up getting it even though he had the lowest offer.

    Bank of America is anal, and they also have a lot of their loan officers call you. In addition to that, they don"t run the basic pre-approval - they will "register" themselves as your lender and do a hard pull that can rape your FICO. A few people complained they "accidentally" ran several checks resulting in a loss of 10+ points.

    BofA (in California) has shady listing agents. I don"t care about name dropping, they use First Team. These people squat offers while trying to get their own buyers (for double commission). I found one house on accident looking for another, it wasn"t on the MLS and after the listing agent told our agent we"d have to pay them CASH (under the table) just to see the property I found out BofA owned it and called them who welcomed us to do a drive-by.

    The house was stripped and left wide open, so I got my showing for free. I told the bank the listing agent had his friend put it on Craigslist instead of MLS as they had agreed to split commission if she sold it in 5 days (they can"t do that when bound by contract with a bank - it should instantly go on the MLS). Within an hour it was on the MLS and our offer was placed within 30 minutes of that.

    I continued calling the bank who kept saying they never got the offer. 3 days later, the listing agent sends out an email at 11pm saying BofA moved to BidSelect. After we looked it up, the home was always on Bid Select and we could have placed an offer weeks before it hit the MLS. The agent submitted her clients offer on the 3rd day, but claimed she misplaced ours.

    Funny thing was, once we found a new house (normal sale) they called our agent saying the "winning" buyers" financing fell through.

    If you find something from BofA, go to bidselect.com and see if it"s there. From what I was told, they"re trying to move everything over to that. They look at all offers submitted every night at 11:59 and pick one the next morning. In some cases, it works like a lottery drawing depending on the method the bank picked. Their GFD"s are 1% but you have to send a certified cashiers check, and you also have to FedEx (overnight) your offer along with tons of other stupid crap.

    You can search properties on bidselect for free, but you can"t submit an offer without an agent.

    After two straight months of being convinced every listing agent in California is a greedy devil worker, I was happy to find a normal sale. It was so fast it didn"t feel real. People were nice. Negotiations are allowed, the seller pays for inspections, and the home comes with a warranty!

    A helpful thing was using a mortgage broker, he could email approval letters that catered to the house to avoid people trying to counter like dicks. I"d just ask him to do like 10k over the asking price if it was a normal sale, and a lot higher over asking if it was REO/Short Sale (since their listing prices are usually bullcrap).

    Get a good agent who will tell you the truth. We were lucky and I feel confident to say we had the best agent in all of southern California. This guy would request a midnight showing if I asked. He was always honest, even if it wasn"t what I wanted to hear. He has morals, which is rare "round these parts.

    Hopefully that didn"t discourage you, I know some agents are money driven and won"t go out of their way to find what you asked for and they won"t tell you when something is BS. Grats on surviving auctions, they sounded scary. Here they are on the court steps and you basically need all of the money with you.

    Good luck with your search!