Part II of II
As Kyle relocates to Nashville, he’s considering buying a house, rather than paying rent. He asked me what advice I have… and this is what I shared:
When we bought our first home, I created a list of things important to us. Don’t know where that is; however, here are a few key ones I remember:
> Everything is a negotiation, like buying a car. Find out what homes are selling for ($/sf). (In a hot area, they might be going for the list price – or above in California; however, typically it’s less.)
> Your Realtor’s role is to represent you. That said, he/she has minimal financial motivation for you to pay a lower price. Here’s the math:
– $300,000 listing price; Realtor commission is 6% split with Buyer and Seller agent. Agency gets half. So your Realtor receives 1.5%
– 1.5% of $295,000 is $4,425 / 1.5% of $285,000 is $4,275. While you pay $10,000 more ($30,000 over lifetime of 30-year mortgage), the Realtor’s only risk is $150. Think about how many more hours he/she has to work if you don’t get the first contract. More homes to show you, another contract to submit, etc.
> Don’t buy on a main ingress/egress neighborhood street. Too much traffic (risk) with young kids
> Don’t buy a corner lot
> Cul de Sacs are good: privacy and security
> Big backyards are nice; however, it takes longer to do the yard; have a sprinkler system unless you want to spend a lot of time moving hoses
> A pool is costly (maintenance, utility bills, and eventual repairs) and takes time to keep clean all year
> Find out about HOA annual fees
> Pay for an inspection. There might be things you can’t see that need repairing… like A/C or termites. The inspection will turn up something (that’s their job). You have every right to – and should – go back to the seller and ask them to make the repairs or give you a discount on purchase price.
> See if they’ll provide or you can get a home warranty. Usually these are around $550 per year and cover A/C, appliances, etc.
> Lay on your back in every room and look up at the ceiling. See where there might be issues like nails sticking through or cracks. (Might be covered by a fresh coat of paint.) Also, lay on your side and make sure the floor is flat. I remember a How I Met Your Mother episode where a ball rolled across a slanted floor. That’s a foundation issue… and can be really costly
> Check doors and windows by hand to see if there are drafts: increases utility costs
> Walk the driveway, sidewalks and garage for cracks and other issues (like boards that don’t line up)
> Find out when the roof was put on (perhaps when built?) and how long it’s manufactured for (20 or 30 years)
> Drive by the house at different times of the day to see what the neighborhood is like (kids playing or teenagers gunning their engines? young families or empty nesters? anyone running a car lot or repairs out of their driveway?)