June 2, 2013

House buying

I really didn't know what was involved with purchasing a house.   I'd read a little bit about flipping houses and I've sold a few houses but the Realtor took care of most of the work; I just had to sign the papers. Even having a Realtor guide me through the process I was still overwhelmed at times.

Inspection.
Inspectors evaluate the house's integrity. This includes the plumbing, electric, appliances and structural integrity. I followed my inspector around and asked as many questions as I could. My house is pretty simple, with very few secrets, so he didn't tell me a whole lot that wasn't obvious.

My brother recommends one every 5 years. If you live in a house that you love this makes a lot of sense. It keeps your house honest.  I skipped having the barn inspected, it's in rough shape and is not of immediate concern.

Most inspectors charge by a bracket of square footage. 500-1000 sq ft was $325, my house is 684 sq ft. Another inspector's estimate was $100 more. My inspector is insured and a member of ASHI. He also teaches at the Habitat for Humanity ReStore in town and I got a lesson last weekend about how to install a toilet.

Termite.
Termites are a big problem in Hawaii. My house doesn't have any termites. The Surveyor said it's because my house is redwood and termites will usually seek other sources.  The barn has termites. The house is actually made from Fir which termites also don't like.

Survey.
Orange - Barn
Blue line - Creek
Green - House
 Pink - Driveway
This is especially important if it's a large lot, old,  your neighbors are anyone other than your family, or strange in any way. Surveys trace the boundary of your property. The value is you can now see if any of your stuff encroaches on a neighbor's land or if their stuff encroaches on yours.

My house has a driveway that is actually on my neighbor's land. The neighbor's land is fenced and the fence allows the driveway, so to the unsurveyed eye it looks like the neighbor's land is marked by the fence and the driveway is mine.  The survey revealed this. He also mapped the house and barn.

The surveyor showed up 2 hours late, had pretty poor interpersonal skills and it cost ~$1,000. It's still worth it. He sent a CAD drawing a few days later with exact measurements of everything on the property, boundaries and structures. He used a Nikon DTM-420 with a module to collect all the data points.


Appraiser.
This is performed by the bank, and payed for by the Buyer.  Our appraiser decided to appraise the barn, which was not supposed to be part of the property value and determined it was unsafe and had to be demolished before they'd lend.  Great. That added another 2 or 3 weeks while the Seller found a contractor to demolish the barn. I had plans for that barn. He also complained about a few leaks all of which I could have fixed myself within a week or two, but the bank wouldn't hear of it. $250 for the plumber to resolve those issues.  Our home inspector was so annoyed when he heard about the barn that he inspected it for free and submitted his proposal to try and persuade the Underwriter to allow the barn. They didn't care and the barn was demolition. The foundation is still present so the permit still exists and we can rebuild if we ever want to.

If I got to repeat this process again I'd talk to the bank about what their appraiser is looking for. If your property has something funny on it, it might be work talking to the loan officer before the appraiser goes. Anything written in a report is serious business.


Realtor.
We hired a Realtor.  As a buyer it makes a lot of sense; the Seller pays the agent. All Realtors are real estate agents, not all real estate agents are Realtors.  Realtors have a legal obligation to serve your best interest.  Realtor.com has a list of reason to use a Realtor.

I really wanted someone objective. Our Realtor gave recommendations for all of the other agents I needed: surveyor, termite, house inspector.  I was skeptical that she wasn't just hiring her friends, so I searched for quotes from other vendors and the ones she recommended were always cheaper and legit; they had insurance, were bonded and certified in their respective fields.  So even though I ended going with her recommendations, I'm still glad I looked around and verified she was being straight forward with me.

Making extra calls for quotes, is a lot of extra effort. It means using vacation time, staying late and dealing with people I don't know.  Extra quotes keeps everyone honest.

The offer was accepted on February 20th 2013.  Our closing date is March 24th. I was not prepared for such an ordeal.

I am making a huge commitment by buying this house. Putting in an extra few hours, days or weeks of work upfront to make sure it's the right move is totally worth it.  It's difficult now, but in a month when we close I'll be satisfied that I put in the ground work to make this a good purchase.
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