Might Be In Over My Head…Maybe?

royal_flush

My next three tips come from true personal lessons learned not just from buying our new house but also from life lessons. This kind of one of those “Know When to Hold Them, Know When to Fold Them” and I add Know When to Ask for Another Card…

1. Go On, Ask Questions – So I gave my husband a hard time during our house hunt and buying time for asking questions over and over again. It wasn’t so much that he asked questions over and over again that was frustrating but mainly when I was right he didn’t believe me and went to our realtor…it was always satisfying when the realtor told him the same thing though…ahhh :-). That said, my philosophy is they (your realtor, your broker, escrow, insurance, mortgage/loan officer, etc.) work with you but ultimately for you as your purchase can earn them up to 6%. You have the right to ask any question you want.

You are the one signing documents, putting your name, your credit and your money on the line. Ask questions so that you feel comfortable with everything you are doing. This is so important when it comes to terms of your loan, insurance, offers, inspection, etc. I know a lot of people got in trouble for not fully understanding the terms of their loans. Some where caught by surprise at the size of the payments after the interest adjusted. It was a tough lesson for many, but asking questions and understanding what you are agreeing to is key. And if you don’t keep asking until you do!

Another good example happened when I was investigating home and earthquake insurance. Some would say differently but in Southern California, earthquake insurance is almost a nonnegotiable. However, I didn’t ask enough questions (lesson learned) to know that here in So Cal that if you want earthquake insurance through the California Earthquake Authority that you must have your home owner’s through the same company. Had I known, it might have altered my choice in home owner’s insurance as independent earthquake insurance can reach up to the THOUSANDS of dollars.

2. Know YOUR Terms and Ask for What You Want – When writing an offer, you can ask for what you want…like the fridge to be included. Everything is kind of up for grabs. I have heard of cars and houses full of furniture being written into the deal. However, you have to ask for it. But be clear and cover your bases.

The sellers’ of our home wanted the right to “rent back” the house for up to 45 days. So it went in with the offer. We wanted to make sure that the funds for the rent were held somewhere not in their hands…we wanted to make sure the money was there when they vacated. So we countered and included in the offer that the funds for principle, interest, HOA and taxes beheld with the escrow company for the maximum term of the 45 days. On a side note regarding rent backs…I would highly, highly, highly suggest that before the “terms” are closed that you include a cleaning fee in the clause that either holds funds for cleaning the property or is in agreement that until all the possessions of the seller’s are removed, the rent back does not stop. As a personal example, when our house was turned over, it was so filthy and covered in grim, debris, and junk left by the sellers that our agent offered funds to help cover the cleaning costs and it took us 2 months to get it clean enough where we felt comfortable living in it. So know your terms and don’t be afraid to ask for them. Worst case, they say no.

3. Have Walk Away Ability – This is where logic really has to win in that if the terms aren’t meeting within your budget, know when to walk away. Its hard, I know, especially when you have fallen in love with a house or a location. I know some will say that you will shoot yourself if you lose a house over a few thousand dollars but, if you truly live by that there is always just an other few thousand dollars. There has to be a cut off, a point when you know its time to walk away. Either it, whatever it is, is good enough or it is not.

Again, I know its tough. There is this beautiful area in the city were we live nested in the hills and is considered an exclusive area. Thanks to some savvy house buying on my mom and her agent’s part, I had been blessed to live there for many years. It was an area my husband and I would dream of living but homes that would meet our needs usually ran about $100,000 more than our budget. That said, by chance there was this one house that came up in our dream area for an affordable price. At first it looked like we would get a deal, so despite work needing to be done, including adding another bedroom, and armed with the knowledge that the value of that home most certainly would grow greatly with any work done, we put in an offer. We were informed that the house had multiple offers and if we wanted it, we would need to amend our offer to a more aggressive offer. After long consideration we went up significantly to the listing price ( I should mention this was an REO needing some major work). A Multiple Counter offer came back asking for everyone’s best offer. As much as my husband and I loved the house, the view, the area, and more, we made the decision to stick with our original aggressive offer. If it worked then, great! We got a house that would be a good investment but if we didn’t we could at least feel comfortable knowing that in walking away we didn’t put ourselves in a position that would be financially challenging down the road. And you know what, I don’t regret the decision one bit! To go higher would have left us unable to do the much needed renovation and with a home we would not have been comfortable in its “as is”. In the end, walking away was the right decision for us.

Hope these help and I will see you next blog!

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