House Buying

My landlords decided they needed to live in a 2500 sqft house, and the little duplex just wasn't big enough. Out of the blue, they inform me they're selling.  Now that I'm 50, I decided it was time to settle down and buy a house, even though i was woefully unprepared for this.

A friend turned me onto a great Realtor, who sat me down at a local Starbucks and sugarcoated the crazy DFW real estate market. Taking a day to visit the dallas inventory was a smack of reality.  Anything that I could afford that was $150k or below, was gone in the nieghborhoods I was interested in.  I would have to branch out, and i did.

Well here is the dallas market in a nutshell. If you want $150k in a good hood, then you're getting a unique fixer-upper. If you want something ready to move in, you're going to bump up to $200k..minimum. And these aren't large homes, if you stay inside the Dallas loop.
Im not sure of the market outside the loop, but i suspect it's just as nuts. And those $200k's are going fast.

Ok so i found a house, was outbid, then got the bid, and we're off to the races.

For those of you who've never gone through this process, this is for you.

For a $200k house, and an FHA loan of 3% down, you need about $12500 for closing costs.  
For cash in hand, I'd say $5000.

After you get your realtor, get a good mortgage company.  They can make or break you.

You first hand over $100 option money. If you bail at any time on the deal, you lose this money. If you land the house, it goes towards your closing costs.

Then you hand over a check of $2000.  This is earnest money.  It's usually 1% of the total you bid for the house. if you bail on the house, you get it back, but it will also go towards closing costs.

Current total for first week: $2100.
Week 1: You now have 7 days, including weekends to get all your inspections.

At minimum, you need a regular housing inspector and they cost about  $3-500.  This is a person, who is supposed to know housing and should go through your house with a fine tooth comb.( Mine apparently didn't and most don't) This money does NOT go towards your closing costs, nor does it get refunded back in any way. But it's money well spent to save you thousands in the future.

What i didn't know to do, was to interview inspectors. IF YOU ARE THINKING of buying a house, start calling those guys NOW, before you put in a bid...

  Questions to ask, that i didn't know until now..
"Will you climb through the attic with a flash light and look over every inch of the space?
"Will you check the duct's and insulation?"
"Will you take pictures of the attic"
 "Will you inspect every electrical outlet to be sure it's working?" 
"Will you check the AC Filter and inspect the HVAC system, check the amps it's pulling and the thermostat?"

There are a million things that an inspector needs to look at.  Get referrals. Line those guys up.  
Other experts you want, and are DEF worth the money:
Roofer
Foundation
HVAC
Electrical
Plumber

The roof and foundation guys are pretty self explanatory. You want to know what to expect if you're going to need a new roof. Slab foundations are supposed to float on the ground as one piece, but if they 'break' or bend, then it's bad.  Run away. A bad foundation will kill you later.

HVAC. Check the date. You need at least 1 ton for every 500ft. Have him pull the filter (or you at least pull it)...IT cost an HVAC person $100 to check a filter later if the system isn't running right.  Also, have him PULL the thermostat off the wall and check the wiring. Here is an important Tip:  Today's smart thermostats need 5 wires..the 5th being the "control" wire.  This wire trickle charges the thermostat since they don't run on batteries anymore. 
If you BUY A NEST thermostat, you have to have this wire. BUT for now, NEST Will reinburse you for a HVAC tech coming out to fix it.  NO other thermostat company does this.  However, this might be a negotiation tactic for you before you buy the house.

Also, have the HVAC person crawl around in the attic.  Are all the ducts complete, not broken, insulated, etc.  How's the insulation? Is any needed?
NOTE: If you have a vaulted ceiling, it's a real bitch getting insulation up there. I'll blog about adding insulation later.  This could also be a negotiation tactic if there isn't any. Because, trust me on this, in 108F Texas Heat, it will rob you blind on your electric bill.

ALSO, make sure that they drain to the HVAC system drains outside and note where it is.  My neighbor's was concreted IN when they redid his porch before he bought the property.  He had no idea until the temps outside ramped up and the condensation from the AC unit started to drain..into his house. 
Note were all the a/c vents are in the house.  Note where in the intake is, and where the thermostat is.

Electrical. Check all the plugs to be sure they're working. Sketch a floorplan of the house and note where all the plugs are, esp the garage.  

Plumber. Ahhh. OK here's a real clue folks, and take this one to the bank. 3-1-1 is a direct line to the city of dallas.  IF you are suffering from plumbing issues, THEY WILL Come out and run a camera through your lines for FREE! YES FREE!.  The rule of thumb they go by, is if they find a problem, they will fix it if it's 11 feet back from the curb. FOR FREE.  All you need to say is the plumbing is backing up into the cleanouts and you need it checked. 

What are clean outs? There are little pvc pipes that connect to your sewer lines, sticking up out of the ground that have screw caps on them. They're usually white.  The sewer pipes in your house from your toilets, sinks, and laundry washing machines needs a vent to the roof. If you don't HAVE A vent, the water will backup into your house or garage and flood you.  Walk around the property and look for cleanouts on the ground and vents on the roof.  Usually there are two main cleanouts...one that goes INTO your house, and one that comes from the city. The city will snake and camera the latter for FREE!!

If you have NO cleanouts, then you will have to snake through the VENTS from the roof. IF there are no cleanouts, point this out to the seller and tell them you want them installed, or $$$ for them.

If you really want to cover your ass, you can rent a camera from Home Depot to check out the plumbing and save the cost of the plumber...if you know what to look for.

You may think this is overkill, but you have NO idea how much money and hell you can save yourself if you do this BEFORE that first week is up.

If you find anything, ANYTHING, you can insist that the seller fixes it, or gives you $$$ to have it fixed.

Find yourself a really good handyman, even if you think you are pretty good at this stuff.  There some guys out there who will do stuff for a good price.  I know of a VERY good one, but if you have one, line him up too. In fact, have him walk the property for anything he might notice.  A good handyman can do some electrical, lights, tape, bed, texture and sheetrock.  These things are really important as you will find in a rehabbed house, most of these things are overlooked.

Make a list of things you want the Seller to fix or pay for BEFORE that first week is up.  Try to be at thorough as you can. Don't take any one's word for it that something is "probably" ok, because it's probably not.  Until you sign that contract, you have some negotiation power. If the seller refuses, then walk, no run away. Even if the house is your dream house, because it will quickly become your nightmare house if you don't.

Your realtor should help you manage your expectations as well.  Asking the seller to change light fixtures is not reasonable, but asking them to make sure they all work, is.

Someone told me, if the foundation and roof are good, it's good. However, if the plumbing is bad, you're dream home will become the ultimate money pit.  Find out what is under your house.  Better yet, talk to neighbors who have the same floor plan.  Ask what issues they've had. I wish i had done that.

One more thing to do..walk around the property and look at the fence, if there is one, and check out the neighbor's property that touches yours. Is there anything that goes over the property line?

That's your first week.  More later.

Clear Skies!