Teach me about first time home buying

Steve_Jones said:

z31maniac said:

RevRico said:

especially when it will be paid off from the get go.

Wait, you're buying it in cash?

No, GF Dad is lending him the money, or said he would if they bought in a certain area. This house is not in that area, and RevRico does not want to live in that area, but the guy with the money will just have to accept that. 

The way this will play out is the guy that made the offer will somehow end up being the shiny happy person in a month when he decides he does not want to lend money for a E36 M3 hole that Rev is now convinced is "perfect", wait and see. 

I really want to call you a prick right now, but I don't entirely think you're wrong.

What I suspect will happen, as my luck has been my entire life, is that I will take an actual inspector to the house, getting good results from him, the future FIL will be satisfied and agree to write us a check, then I will call the listing agent and find out it had been sold in the mean time. 

We've looked at several school district ranking websites. His preferred district is ranked 115(average of 4 sites) of the 605 districts in the state. The school district the children are currently enrolled in averages 195, the school district this house is in averages 150. Better than where they are, but not as good as the other, but bring better than where they are will at least help us out here. 

I called today to setup viewings at 2 other houses we've been talking about, one has been sold, the other is under agreement now, realtor just hadn't updated the listing. 

I recognize, now, that we're looking for a needle in a haystack, and that it would really take a lot of time to find it. The house this thread was started over hits more things on both our lists of wants and needs for a forever home than anything else we've seen even increasing the budget to uncomfortable but doable levels or giving up things like overall land or friendliness of the township with regards to outbuildings and vehicles. Lots of good places in bad locations, lots of bad places in great locations. 

She is just now in a rush to get things going because I guess his health is starting to go. He's 74, his dad uncle and brother all fell into Alzheimer's by 76, and I guess she's been seeing some signs lately that it might be starting. I honestly don't know if she just wants to get a house before a nursing home bleeds him dry, or if she wants him to get to see the whole big happy family before he forgets it all, or what, but after she saw him the other day she said we need to speed things up.  

I'm willing to make compromises or concessions to speed things up, but I cannot and will not have less or worse working space than I have now. I'm not getting any younger, I'm only going to buy one house, I just can't settle for poor working conditions to keep the daily driving or make some money. 14 years of wrenching on gravel with no real weather protection, I feel I've paid my dues and deserve concrete and coverage at this point. 

You are doing an awful lot of looking around and planning without talking to the man lending you the money. The first thing on your list should be talking to him to find out if the school thing is non negotiable, and see exactly how he is expecting this to go. Without him, it’s a no go, so why waste time before talking to him?

z31maniac said:

"Men make plans and god laughs" and all that. 

This.  And I'm an athiest.

In reply to Steve_Jones :

I'm just doing what his daughter tells me to do. She says go shop, this is what I want, I'm going shopping looking for what she wants. It was explained to me that he will just write her a check, which we in turn will give to the bank or realtor or whoever. Of that check, 20% will be considered a "down payment gift", the rest we will be paying him back at $500/month plus a lump sum at tax time every year. (Her words, verbatim)  So I'm pretty in the dark about the situation other than that, and just shopping for what she wants that I can live with. 

"Nothing ridiculously high priced" and "I would prefer xxx district".  Was all he told her. She seems to think the district is flexible, so I'm going with that assumption. She knows him a hell of a lot better than I do, so I'm trusting her judgement. 

When we see him before Xmas she wants to have a few options on the table, and be ready to go. I don't necessarily agree with the rush, but I'm not really in a position to argue the point either. 

ProDarwin said:

z31maniac said:

"Men make plans and god laughs" and all that. 

This.  And I'm an athiest.

I am as well. 

Sorry, RevRico, not trying to crap on your party, but there are more red flags here than a Chinese military parade. 

Steve_Jones said:

z31maniac said:

RevRico said:

especially when it will be paid off from the get go.

Wait, you're buying it in cash?

No, GF Dad is lending him the money, or said he would if they bought in a certain area. This house is not in that area, and RevRico does not want to live in that area, but the guy with the money will just have to accept that. 

The way this will play out is the guy that made the offer will somehow end up being the shiny happy person in a month when he decides he does not want to lend money for a E36 M3 hole that Rev is now convinced is "perfect", wait and see. 

This will sound harsh, but if he is 74 and on the verge of failing health? This isn't a loan they are going to have to pay back for long and I have a feeling that's why she is in a hurry.

The biggest red flag has revealed itself on this property.

There WAS gas. The gas company has no billing records at the address. They sent someone out to look around and measure stuff since their maps don't show service at the house.

The service guy they sent called me and said it looks like they were using a well with Columbia as a backup.

No one, not the realtor, not the gas company, has any information about a well on the property. Maybe a title search would reveal it? Maybe I can track down the bank that owns it?

The main line they see on their maps is 200 feet away, with another 300+ feet away. They want $62/foot to lay a line. 

Still waiting on a callback about official, we'll stand beside this number price.

I wonder though, since it's a boiler, hot water tank, and stove (that isn't there at all yet) how expensive it would be to convert to propane.

1000 gallon tank is about $1800, a new boiler is $2500 plus installation. That's a lot cheaper than $14k to run a gas line, but I'm not personally sure what all would be involved. I do know some people in that industry but I'm not getting through to them on a Friday afternoon.

Oh and get this, yesterday after we looked at the property again Dana sent me some links to houses. 3 bed 2 bath less than 1000 square feet. I asked why so many tiny houses? She says "I don't get how square footage measurement works". When I explained the house I'm currently living in is about 1100 square feet her jaw hit the floor. Now she understand why I've been saying no to so many "cute, move in ready" houses she's been showing me. 

That paragraph, combined with a distinct lack of garages, sheds, basements on a lot of things she's showing me, tells me she doesn't understand that having a from home business, be it my internet business or the property preservation business I started, has space requirements. I'm trying to help her get it without being mean by pointing out that I'll be paying double to rent space to work out of if the house doesn't have it on site. 

z31maniac said:

Steve_Jones said:

z31maniac said:

RevRico said:

especially when it will be paid off from the get go.

Wait, you're buying it in cash?

No, GF Dad is lending him the money, or said he would if they bought in a certain area. This house is not in that area, and RevRico does not want to live in that area, but the guy with the money will just have to accept that. 

The way this will play out is the guy that made the offer will somehow end up being the shiny happy person in a month when he decides he does not want to lend money for a E36 M3 hole that Rev is now convinced is "perfect", wait and see. 

This will sound harsh, but if he is 74 and on the verge of failing health? This isn't a loan they are going to have to pay back for long and I have a feeling that's why she is in a hurry.

I kind of agree. I just don't think she wants to say it out loud because it's obviously not polite. But honestly I've been thinking that too.  

I also remember all too well how greedy and bloodthirsty the nursing homes my dad was in for for rehab after he lost his leg were, and fully stand beside "the money would be better off helping us and our kids than lining their pockets"

In reply to RevRico :

Maybe it would be good to have a frank discussion with him while he is still lucid? Without her as the intermediary. 

Why not see about converting it to electric?

Still gonna be cheaper than running gas lines, I'm sure.

Here's a scenario for you. What happens if her dad loans the money, and he passes in the next few years and there is an expectation that you settle the Balance of the debt as part of finalizing the estate?

You've already been in a situation with messy inheritances and first hand seen how people can be when money is involved. If you think her brother/cousin/half sisters dog/ whatever is just going to forget that 100k you guys got loaned ever existed, you're in for a shock. 

Mate, I mean this in the nicest possible way, if you aren't in a position to do this on your own, you aren't in a position to do it at all.

I also think you're playing a dangerous game with your "we're not selling in the next 15-25 years". Life does as it chooses and you're just along for the ride.

Also, I said it on page one and I'll say it again, if you guys haven't lived together, you're mad buying a house together. I've seen more than one relationship fall apart due to a change in circumstances. Who's to say living together with her child and yours will be all Brady bunch happiness. Who's to say yours or her bad habits won't drive one of you batE36 M3 crazy. You're trying to get a business off the ground, what happens when the stresses of that start getting to either of you. Don't rush into it now just because daddy dearest may be on his way out, or you somehow see it as a shortcut to success.... 

I'm not trying to rain on your parade, but it's pretty obvious you're looking way more at the upsides than the potential pitfalls. 

In reply to FuzzWuzzy :

Valid idea. But with the house already setup for radiant hot water from a boiler, and not having any ductwork, I feel it would be a lot of work and money to go to electric radiant heat which is rather inefficient and therefore expensive month to month. Not to mention the clusterberkeley of wiring that would be. 

Looking at going to propane isn't so bad though. Local company offers free underground tank installation and trenching, with a monthly payment instead of a balloon payment for the tank. Would definitely need to factor in replacing the boiler to the cost, but modern boilers and location of the hot water tank would let me run a combination boiler/water heater unit. 

In reply to Z31:

I plan to. We're having dinner with him the week before xmas, with or without houses to show him. When she goes away, as she's planning on, for me to talk to him about the whole marriage thing, I'm going to keep her away to have an upfront and frank conversation with him. This whole "not knowing what our actual budget" thing is is a real pain in my ass, and I have a few other questions for him as well, like why not just cut her a check for what you feel comfortable with so we aren't scrambling around trying to get proof of having the money and bouncing it between banks when the time comes. 

I need to go do a driveby on another property tomorrow, and try to setup an appointment to look at it. All the ad has for a picture is a 6 year old satellite image, and streetview stops miles away. From the satellite it looks OK, rather close to the neighbors on one side, but the back side of the property is on a small 2 acre lake, and it looks like there's a dock on the property. It's also in her fathers preferred school district, and one of my preferred permitless townships. I suspect there is no phone service or internet available in the area though, which would be a big problem.  My pandora stops working about a mile from the street the house is on, but I haven't been on the actual street since high school on a school bus. 

It's been enlightening and disappointing in this search finding out how rare broadband internet access still is in this area. 

In reply to RevRico :

Thanks for understanding I wasn't trying to be an a$$hole with my observation on "why the rush?"

But I'm with daeman, if you aren't in a position to do it yourself, you really aren't in a position to do it. Because he's absolutely correct about the estate, especially since I'm assuming there will be legally-binding paperwork to that effect. Which is what I was hinting with life changes, etc. 

Also...........holy hell, no broadband? I haven't lived anywhere without broadband since 2000, when I started college. And that's here in backwards Oklahoma!

In reply to daeman :

I agree with you. I do. 

I've seen the will, and I'm going to suggest he setup a trust if it looks like he's going towards a home. Her and her brother are the executors of the estate, while she holds sole power of attorney. According to her, the brother already has a house that it turns out he's paying about $500 a year towards, so berkeley him. I'm inclined to agree, as it looks like there's still a healthy chunk of change going to him anyway. 

Who knew mathmatics professor paid so damn well?

But I have seen these battles play out before. From the upfront sibling rivalry, to lies about a trust and estate, to skeevy relatives trying to sweet talk their way into something before it becomes an inheritance to someone else. They'll also be repeating it further down the road when their mom dies, although that side of the family tends to live into their 90s. 

Honestly I think it would be better for us to wait until after the inevitable happens barring a nursing home stay, and/or we can do it on our own. I really don't like the rut that my life is stuck in, but it's my rut, and if it's worked the last 5 years, it can go 2 or 3 more. 

Satellite is available. I've had satellite internet, I'd rather learn how to setup a mesh network with 2 cell phones. Verizon DSL 3mbs is also availabe. A friend is stuck with it. It averages closer to 1.2mbs. 

There's a fiberoptic startup near where this house is located, but they haven't reached that property yet. They also haven't reached my current neighborhood. Comcast is fighting them over every pole and run of wire, but they're slowly growing. 

In reply to RevRico :

Good, I'm glad you're seeing the whole picture vs the just the fun/exciting part.

That's crazy 1.2mbs would probably have so much latency I wouldn't even be able to have my work from home days anymore.

^Latency and bandwidth are different.  But yes, it would suck.

Given the status of your relationship, your financial situation, and what sounds like a terrible place to buy a house, I think you need to chill out and focus on making yourself successful, especially since you have a kid.  Are you also providing for her other child?  Think of it like putting on your own oxygen mask before assisting others; if you pass out, no one gets help. 

I've made a lot of stupid mistakes for another person (read: female).  Given the warning signs, you should realize that you may be putting yourself in a very painful situation that can be hard to climb out of.

Just some general questions I this post.

Is title insurance worth it? Obviously we'll be paying for a title search on any place we look at, but it's it worth the extra for the insurance?

Is house insurance the same PITA shopping as auto insurance? Are home and auto bundles generally better or worse deals? Should it be shopped before or after any renovations? 

Is there a rule of thumb for negotiating price, either with a bank or private party? Even though I hear a lot of "banks don't really negotiate foreclosures" with a 6 figure purchase I feel it's worth a shot, unless it would somehow disqualify us entirely if we offered to little. 

1. You may or may not have a choice about title insurance, depending on financing.  In your case if the insurance is not exorbitant, I'd consider it, especially if you're looking at auction properties and foreclosures.
    
2. Homeowner's insurance is very cheap because your house isn't likely to go out of control and run someone over.  It will be somewhere around $750 / year depending on the property.  Usually bundles are cheaper, but that may vary.
    
3. Offer what you think it's worth.  The worst they can say is no.  You can always counteroffer if they reject it.  But if you waste a lot of time dickering too much, someone else may snipe you.

You want title insurance. My current house was a foreclosure, and the title insurance company found an unpaid $7,000 water bill attached to the title that the seller (a bank!) did not disclose. The seller put up some resistance but finally paid it as part of making the deal happen. So the ~$1200 or so I paid the title company was sooooo worth it in the end.

The trouble with financing a foreclosure is that the bank wants to make sure the house is in habitable, re-sellable condition in case you end up foreclosed yourself. Stuff like holes in walls, non-functional plumbing, anything that interferes with the house being usable as a house by an average person is going to need fixed prior to closing. I was all set to use a regular conforming loan and the bank I was working with kept saying - no problem, as long as there are no structural issues we're good to close. Well, ~30 days prior to close and it turns out to a bank "structural issues" doesn't mean a failing foundation or rotted framing like I thought, it means very minor (to me!) issues like water damaged drywall and minor roof leaks and such. I planned to replace the roof, of course, but to a bank a home with a failing roof is a nonstarter. I ended up having to do a "Homestyle" loan which rolled the improvements into the loan and treated them as if they were already done for appraisal purposes, then the bank paid for them once they were done and the appraiser confirmed they had been done. Keep in mind I am a licensed general contractor at work and was able to bid the job using my company, and my credit and income and asset position is very solid, and I still found it a pain in the butt and felt like it wasn't going to work out. IT DID, but you'll have a lot of heartburn doing it from your position - they required bids from licensed contractors, exact total amounts they won't pay a penny over, commitments that the work be done within a specific timeline, and no in-progress payments, something most contractors will balk at.  Meanwhile a bank is going to have a magnifying lens on your employment, your wife's employment, the property, etc. And if there are vague areas or unacceptable areas, they'll just say no and you'll still be on the hook for the appraisal, title work, all that. I had dozens of hours of work just into buying our house, then the fun part of working on it to live in it began!

I'm not trying to discourage you at all, it's totally worth it. But be realistic and be prepared for several hard moments of "this isn't going to work," and be willing and able to work through them.

Also be careful with the "he should just give us the money so we can shop" type talk. He's offering you an incredible hand up here, be grateful, humble, and willing to accept it on his terms. Most people go their entire lives without an opportunity like this.

Duke said:

1. Homeowner's insurance is very cheap because your house isn't likely to go out of control and run someone over.  It will be somewhere around $750 / year depending on the property.  Usually bundles are cheaper, but that may vary.

I know this is off topic, but wow that's cheap! For my very standard 3/2/2 1800 sq ft home in OKC, State Farm wanted $3100/yr for insurance. Of course we have lots of hail/wind damage here.

In reply to z31maniac :

Well, maybe I'm lucky?  I'm in Delaware so not exactly tornado alley, and we're well away from the flood plane.

RevRico said:

Is there a rule of thumb for negotiating price, either with a bank or private party? Even though I hear a lot of "banks don't really negotiate foreclosures" with a 6 figure purchase I feel it's worth a shot, unless it would somehow disqualify us entirely if we offered to little. 

If you are working with a realtor, you might hear the realtor say something like, "im sure they wont take under $200k" or "if I was you I would not offer only $150k"  Keep in mind that the realtor is required by their contract to present any offer you make.  So, if you want to start with an offer of $150k, the realtor is required to present it.  

In addition with that though, don't tell the realtor too much.  If you casually say to the realtor, "lets start with a $150k offer and if I have to I will come up to their $200k"  you can be sure that the realtor will convey this info and the seller will counter at $200k.  

Also be careful with the "he should just give us the money so we can shop" type talk. He's offering you an incredible hand up here, be grateful, humble, and willing to accept it on his terms. Most people go their entire lives without an opportunity like this.

Agreed and understood. I'm just waiting for him to backout like my grandfather did to my parents. I'm also frustrated that this entire thing is my job, and I hardly have any real say in the matter "because he's paying for it even though he won't live there and we'll be paying him back". 

I'm just confused by the title insurance thing. I asked the woman when I called about a search what it was for and it didn't really make sense how she explained it. Makes a little more sense with your example though, and yea, probably worth the extra money in this case, since there are signs that whoever was outfitting the shop ran out of money before he could finish. 

RevRico said:

Just some general questions I this post.

Is title insurance worth it? Obviously we'll be paying for a title search on any place we look at, but it's it worth the extra for the insurance?

If you have any kind of loan on the property, you usually need to get title insurance as part of getting the loan. Keep in mind that the regular title insurance protects only the lender. You can usually ask to have an 'owners title insurance' rider attached to the policy as well that protects you as the owner.

Is house insurance the same PITA shopping as auto insurance? Are home and auto bundles generally better or worse deals? Should it be shopped before or after any renovations? 

In our case, bundling home and auto knocked the hom insurance premium down by something like $900. So yeah, it's worth it.

Is there a rule of thumb for negotiating price, either with a bank or private party? Even though I hear a lot of "banks don't really negotiate foreclosures" with a 6 figure purchase I feel it's worth a shot, unless it would somehow disqualify us entirely if we offered to little. 

I'd get at least an opinion from your buyers agent on the value of the property. When we bought in WV we had several instances of the agent pointing out that the house we were looking at was severely overvpriced. You usually want them to look at comps anyway and that should show if the price is OK or not. Plus, what's the worst the seller can say other than "hiss off"?