Making an Offer on a Home

[CRA]

enough about inspectors.   

You must 100% claim your man cave space up front.   More importantly, don't allow any such language of "maybe this could be" or we "might could use this as".  You need to make sure your gal is 100% committed to the man cave space up front and that there is no future conversation that is on the table of said space.   

[cookinwithgas]

that is true. When my ex and I bought our first house it was about my only requirement, and everything worked out fine.

[onmyown]

On 10/1/2020 at 9:11 AM, Captroop said:

Hey, Huddlers!

So the wifey and I are about to make an offer on a home, and we're a little nervous. I figure collectively there's centuries of experience here, so some of you probably have some good insights. Any advice you guys could offer to some first-time home-buyers?

How much were you comfortable spending relative to your income? Stretch your budget or not? Build in an escalation clause?

Anyone waive a home inspection? Why? Why not?

Thoughts on furnishing and yard care? Did you get consultants or just wing it?

How much of the square footage percentage-wise should be committed to my Panthers man-cave?

I spend a little more than 1/3 of my income AFTER taxes but I am guaranteed, steady raises. Otherwise I’d stay closer to 1/3 AFTER taxes to be real comfortable. That’s just me. I wouldn’t do an escalation cause.

Why? Because after experience I can tell you for sure - patience is key and there is always always always another house that will come up just as good if not better. Do not jump or pay more than you need to or get in a bidding war, I don’t care how much you love it. Unless you know you’re lowballing to begin with.

Never waive an inspection. Inspectors may find something but they only glance a few things over. 3 things on your to do list - research foundation, electrical, flooding/water (mold). Do NOT rely on an inspector for these. I’d hire an electrician and a plumber FOR SURE. And a mold company depending on what the plumber sees. It will cost a bit but it’s pennies in the bigger picture. 

The inspector along with and expert will give you better info. The foundation is trickier. I once hired a geologist for $870. Saved me a 500k mistake. Inspector had no clue. But this was a mountain house. Look up things you can do (spotting settling ceilings, foundation cracks etc. irregular abnormalities etc.). Make sure those are all solid. A new roof, water heater or hvac will set you back...but these big 3, they will all destroy you financially.

Take note at the sellers disclosures. Do they add up to what you find during your own personal inspection? To your professional inspectors? Did you find something that wasn’t there? You’d be surprised how many people will break the law of non disclosure and how little any court or judge will care you MUST take it upon yourself.  I cannot stress this enough - request all damage and repair information to be freely divulged by the seller and request a Lexus Nexsus report. This is common and refusal is a bad sign.
 

Why? Because laws get very tricky when it comes to disclosure. There are things they do not have to report but you’d want to know. A Lexus nexus report tells you any insurance claim they may have made for a repair and gives a lot of details. For instance a $20,000 flood repair claim. Well shouldn’t that be disclosed to you? I mean that’s a big repair and issue. Not necessarily. Depends on the circumstances. Which is bullshit. But that claim will be visible for up to 7+ years on a Lexus nexus report.

This is the same report insurance companies pull in order to agree to insure your house. Problem is, sometimes they’re lazy and don’t do it. Also, only the home owner can pull it so that is why you must request it from the sellers. I cannot stress this little secret enough!

Never get consultants for anything but the big stuff like electrical, some HVAC etc. Do things yourself. Most new owners who buy a house will get stressed very quickly - mentally and financially taking this route. If you learn to do repairs yourself, it may suck and take time and time again but in due time you will save a lot of money and learn life skills all homeowners aside from the rich, must have.

As to your last question, at least 50%.

Oh and here is a pro tip. If you close on it put it in writing - that all items must be removed and it MUST be professionally cleaned by a professional cleaner after vacated. Trust me on this one. It won’t break the deal, and in some cases is expected, but always put it in there. Entire house must be professionally cleaned. Just tell your realtor.

I give you this info after many hard lessons learned. I don’t mean to scare you, a house can be a great investment. Or not really, just a way to make a little when you resell. Or hell maybe you’ll just break even but at least you lived in a house instead of rented.

Just don’t forget, a house can also very easily ruin you financially and no court or judge will stop that. Take inspections and details seriously. It’s up to you. This is something to be learned before all else and something I wish I realized my first home.

A 30k repair on top of the fees you just paid, turning around and having to sell for let’s say exactly what you paid for after like 2-3 years.... That’ll put you in the hole 50k+  at the very least. And no home.  Most people go to bankrupt at that point and struggle to recover. That is why due diligence is important now.

[Happy Panther]

On 10/1/2020 at 11:11 AM, Captroop said:

Thoughts on furnishing and yard care? Did you get consultants or just wing it?

We tried to do our own yard care and for me it just didn't stick. Takes forever and five dudes come in every week and the yard looks great. Now that the house is paid off we outsource everything. Plumbing, electricity, pest control. Up to you but just  keep in mind all of those expenses.

More importantly when you are budgeting make a list of all the large items that you may have to replace. Within a couple of years we replaced the HVAC $20k, driveway $15k, deck $40k and water heaters (under warranty). Driveway and deck were largely aesthetic but would have had to be done eventually. The biggest one I would tell someone looking at a house is windows. People tend to see a clean window and gloss over it. New windows can run $100 to $1k. Check the frame on the outside.

The final item is the roof. Oh and painting the house.

Say to yourself if the HVAC goes out after a year and I need to paint the house can I afford that?

[Captroop]

Thanks, everyone, for your feedback! I truly appreciate y'all taking the time to share your experience with us. We have heeded your advice, and even worked several provisions you suggested into our negotiation.

 

Just to give you the latest, our offer was accepted, and we are now under contract!

[panther4life]

14 hours ago, Captroop said:

Thanks, everyone, for your feedback! I truly appreciate y'all taking the time to share your experience with us. We have heeded your advice, and even worked several provisions you suggested into our negotiation.

 

Just to give you the latest, our offer was accepted, and we are now under contract!

Just saw this. I just changed careers to real estate this year. Gotta say everyone here gave solid advice and don’t have much to add. 

I will say, Congrats on the excellent rate. I just had a client close at 2.75, but 2.67 is the lowest I’ve heard of yet! 

[Ja Rhule]

If you young... no worries, your pay will continue to increase.  Wifey and I trying to stay around ~25% of our salary for mortgage+escrow.  You will be fine to go as high as 35% depending on your other debt/expenses.

[Captroop]

fug. I think I developed ulcers from the home inspection process. Does anyone go through that at not get the feeling they're making a huge mistake and about to ruin themselves financially?

[onmyown]

32 minutes ago, Captroop said:

fug. I think I developed ulcers from the home inspection process. Does anyone go through that at not get the feeling they're making a huge mistake and about to ruin themselves financially?

Depends. The inspector, if good, will point out every single thing including small fixes. All houses have those. Pay attention to HVAC, electrical, cracks/foundation, flood and water damage, plumbing comments.

Things like holes in the wall, bad toilets, stains, gutters etc. can all be easy fixes.

Pay attention to signs of water damage like floorboards, ask inspector if he didn’t tell you how long the roof has left. The HVAC has left. Water heater is a semi small fix. If he suspects water damage hire a plumber or mold company. Pay attention to foundation, ground should always be going away from the house/patio not dipping into it.

Get a warranty in contract, if you have a good realtor, it should be in there already.

Don’t even mention the small stuff, be a hardass on the big stuff. For instance if the roof has a couple years left you can ask to get it replaced or an allowance for it.

Instinct is huge. If it doesn’t feel right don’t do it.

[thefuzz]

56 minutes ago, Captroop said:

fug. I think I developed ulcers from the home inspection process. Does anyone go through that at not get the feeling they're making a huge mistake and about to ruin themselves financially?

They are paid to find things that are wrong with the home, nothing more, nothing less.  They do tend to make mountains out of mole hills often enough though.

Go over it piece by piece, see what is actual structural vs. cosmetic.  If he's writing in that the dishwasher could go at anytime...well, that's correct, and not needed unless is a VERY old dishwasher.

Buyers and their agents use them as a negotiating tool, be careful what you ask for on repairs or taking money off the table, you ask for too much, they will just tell you to pound sand, as you stated, this isn't a buyers market.

[Captroop]

1 minute ago, thefuzz said:

They are paid to find things that are wrong with the home, nothing more, nothing less.  They do tend to make mountains out of mole hills often enough though.

Go over it piece by piece, see what is actual structural vs. cosmetic.  If he's writing in that the dishwasher could go at anytime...well, that's correct, and not needed unless is a VERY old dishwasher.

Buyers and their agents use them as a negotiating tool, be careful what you ask for on repairs or taking money off the table, you ask for too much, they will just tell you to pound sand, as you stated, this isn't a buyers market.

 

22 minutes ago, onmyown said:

Depends. The inspector, if good, will point out every single thing including small fixes. All houses have those. Pay attention to HVAC, electrical, cracks/foundation, flood and water damage, plumbing comments.

Things like holes in the wall, bad toilets, stains, gutters etc. can all be easy fixes.

Pay attention to signs of water damage like floorboards, ask inspector if he didn’t tell you how long the roof has left. The HVAC has left. Water heater is a semi small fix. If he suspects water damage hire a plumber or mold company. Pay attention to foundation, ground should always be going away from the house/patio not dipping into it.

Get a warranty in contract, if you have a good realtor, it should be in there already.

Don’t even mention the small stuff, be a hardass on the big stuff. For instance if the roof has a couple years left you can ask to get it replaced or an allowance for it.

Instinct is huge. If it doesn’t feel right don’t do it.

 

The biggest issue they found is they built a roof on top of their roof: wood/shingles/wood/shingles. And it's baffling everyone who sees it.

Outside of that, we're hearing nothing that really concerns us. The foundation is rock solid. No water damage. No bugs.

There is a t-junction where they fed the water heater ventilation into the HVAC, and they say that's a carbon monoxide risk. And there may be a material in the underground ductwork that contains asbestos, but we don't know for sure, or if that ductwork is even being used.

Interestingly, in Maryland, after they have had these issues shared with them, they are required by law to disclose them to all future buyers. So they can't just pull it off the market and re-list it as-is, and hope to pull a fast one on someone. So we're in pretty solid bargaining position to get the seller to fix all this.

[thefuzz]

3 minutes ago, Captroop said:

 

 

The biggest issue they found is they built a roof on top of their roof: wood/shingles/wood/shingles. And it's baffling everyone who sees it.

Outside of that, we're hearing nothing that really concerns us. The foundation is rock solid. No water damage. No bugs.

There is a t-junction where they fed the water heater ventilation into the HVAC, and they say that's a carbon monoxide risk. And there may be a material in the underground ductwork that contains asbestos, but we don't know for sure, or if that ductwork is even being used.

Interestingly, in Maryland, after they have had these issues shared with them, they are required by law to disclose them to all future buyers. So they can't just pull it off the market and re-list it as-is, and hope to pull a fast one on someone. So we're in pretty solid bargaining position to get the seller to fix all this.

The roof over roof thing would bother me quite a bit, the other stuff not so much...but I have a high pain threshold in real estate (purchased my current home with no inspection and paid over asking in a market that was much worse than this one).

How old is the roof currently?  You could get a roofing contractor to give you a quote on removing both sets of shingles and doing it correctly.  Then negotiate with the homeowners on it...but again, start asking for too much and they will just tear up the contract (which isn't always the worst thing).

Shingle over shingle is a cheap way to reroof your home, but cheaper ain't always better.

[Captroop]

9 minutes ago, thefuzz said:

The roof over roof thing would bother me quite a bit, the other stuff not so much...but I have a high pain threshold in real estate (purchased my current home with no inspection and paid over asking in a market that was much worse than this one).

How old is the roof currently?  You could get a roofing contractor to give you a quote on removing both sets of shingles and doing it correctly.  Then negotiate with the homeowners on it...but again, start asking for too much and they will just tear up the contract (which isn't always the worst thing).

Shingle over shingle is a cheap way to reroof your home, but cheaper ain't always better.

The roof was, well, not exactly re-done, 2017, so newish. But considering it was just slapped on top of the old roof, I don't know that it matters much. The roof underneath could be as old as 18 years. We definitely put the roof in our repair request addendum. I agree, they will either fix everything we ask for, or tear up the contract. And either way I'm happy with the outcome. I'm not moving into and tethering us to a house that I'm on the fence about, and I'm certainly not paying to fix these things out of our pocket.

[thefuzz]

40 minutes ago, Captroop said:

The roof was, well, not exactly re-done, 2017, so newish. But considering it was just slapped on top of the old roof, I don't know that it matters much. The roof underneath could be as old as 18 years. We definitely put the roof in our repair request addendum. I agree, they will either fix everything we ask for, or tear up the contract. And either way I'm happy with the outcome. I'm not moving into and tethering us to a house that I'm on the fence about, and I'm certainly not paying to fix these things out of our pocket.

Some things are worth overlooking, others...not so much.

When I walked through my home (I was only in it for 10 minutes before I put in an offer, and didn't return until the day of closing), I knew that the HVAC was on it's last legs, there was some water damage on the rear entry door and frame, roof was old, but was still holding on, lot's of nail holes and otherwise in the walls....etc.

Didn't care, the deal was too good to mess screwing it up with repair requests, especially when the person that lived there seemed perfectly fine with said issues...she would never have agreed to fix what she would have likely called "cosmetic" issues.  However, that's not for everyone.

If you are getting a really good deal, you may need to overlook some things and learn how to do things yourself (in fact, this is a must as a homeowner, you need to get good at minor plumbing, electrical, etc.) if you aren't getting said deal, stick to your guns and keep looking for a new home, even while under contract.