Buying a House

[Workdawg]

Jenny and I are looking to buy a townhome in the next few months and I'm hoping for some advice from those who have done so. I haven't done much research yet, so hopefully you guys can help us out.

So far it seems the broad strokes for at least the start of the process are:

1. Get credit reports and scores, make sure they are correct (James, what was the site you recommend for this)
2. Talk to mortgage broker and figure out what we can afford and get preapproval.
3. Go shopping.

We are thinking probably looking at new townhomes, hoping to score a good deal from a builder looking to get rid of their surplus. Hopefully the Savage/Shakopee area.

What kinds of deals are out there for first-time home buyers? Is this something the mortgage broker/loan officer would bring up or will we need to do the research ourselves?

Any other advice would be greatly appreciated.

[dmention7]

Here is a thread that was started awhile ago on a similar topic... http://72.167.222.118/forum/showthread.php?t=989

And your general plan is about right. Get your credit in order, see what you can afford, and then go to town.

First-time home buyer deals are going to vary from city to city (and from developer to developer if you're buying new). One commonality is that you'll probably be looking at an FHA loan depending on your income situation. You can often get into those loans with low or zero down payments.

[Jana]

Also, figure out what "you" can afford. Don't leave it up to a broker, as they'll push you to the max (not as much now in this market, but they will still go further than what you might be able to comfortably afford).

We use myfico.com for monitoring our credit. I believe it's one of the top rated, most used sites.

[ZoomZoom Diva]

Actually, a good overall place to start is www.creditfairy.org

It will indicate the truly free official site for getting your reports (scores are extra).

My other advice is to look at TONS of homes. Chances are you'll rule out the vast majority of them withing 5 minutes of entering the place. However, for the ones with real potential, spend lots of time and don't be afraid to measure spaces to see how it will fit with your stuff.

[dmention7]

It will indicate the truly free official site for getting your reports (scores are extra).

www.annualcreditreport.org


Jana makes a good point too. Chances are you will qualify for a larger loan than you can comfortably afford. The relationship between the price of a house, the size of the loan, and your total monthly payment can vary quite a bit depending on circumstances (local property taxes, down payment amount, interest rate, etc) so that's where the broker can be a big help in giving you an idea what you can actually afford (as opposed to what they will qualify you for)

[WhiteSpy9]

I would actually place this as step #1 as it is so freaking important.
Figure out what "you" can afford and lightly look around on the MLS listings in the price range and see if it makes sense to you.

The have some nice calculators on the Minneapolis MLS online to get you a month payment amount.


Also, figure out what "you" can afford. Don't leave it up to a broker, as they'll push you to the max (not as much now in this market, but they will still go further than what you might be able to comfortably afford).

We use myfico.com for monitoring our credit. I believe it's one of the top rated, most used sites.

[Workdawg]

We are thinking around 175k probably. When I punched that into various calculators with probably a little higher than average interest rates the results were affordable. That's a rough estimate, we could probably afford more, but I think we can find a good place for that price.

[dmention7]

The problem with the online calculators is that they don't usually factor in property tax payments, PMI, and the assorted other things you pay in addition to principle&interest. Which is one reason I recommend consulting with a mortgage broker before you start shopping for houses so you don't get a false sense of what you can and cannot afford.

For example, the one on the minneapolis MLS online site ONLY factors in P&I--your actual monthly payment could easily be 30-40% higher. Even more so if you have an association fee attached to a townhome...

I'm just saying, if you are unfamiliar with all of the extraneous costs associated with purchasing a house, it would be wise to consult with an expert who can help you estimate those costs, since they can significantly affect how much house you can realistically afford.

[Jana]

Good point Jay. That's why I would figure out what you can afford. And by that I mean, what monthly payment (for everything) can you swing, and keep in mind that if you look at townhomes, they may have high association fees that you'll need to cover as well.

[Picklz]

As others have said you have a pretty good list of the steps to take so far. I agree though #1 figure out what you can afford. First thing is add up all those expenses you can't avoid (car payment if any, car insurance, gas, electric, possibly water, gasoline, oil changes for your car (figure in x amount a month), tabs for the car (again x per month), food, clothing, etc etc) Once you have that number you can see what you have left over for the house. Obviously you are going to be guessing on gas/electric/water, and it will vary based on town home or single family, and if you are looking for a end unit or center unit (more shared walls = cheaper to heat). I haven't gone a full month yet so I can't really give you much of an idea.

As others have said, beyond P&I you need to figure in Property taxes (which may not yet be figured on new construction), I would estimate around $150/mo for that depending on the area, with a townhome you will have association dues which are again around $150/mo (if they are lower it wouldn't hurt to figure at $150 as they will likely eventually increase), if you have less than 20% down you will also have PMI which is around $65/mo. Also figure in an HO6 policy on the townhome, this covers all your personal belongings and will also cover an assessment made to you by the association for repair from storms and such ($500 is a lot better than paying $2500), mine runs around $20/mo.

It doesnt hurt to consult with a loan officer as they can help you, but I would suggest figuring out on your own also, dont let anyone pressure you into thinking you can afford more than you are comfortable with. I was approved for WAY more than I would want to be on the hook for every month and turned down a couple nice places because of it. Also I would suggest talking to at least two different places loan wise to make sure you are getting the best deal you can get, it also helps to work with someone who is familiar with first time buyers programs.

FHA generally runs 2.5%-3% down payment, and another 3% or so for closing costs. so thats $9-10k needed up front. Now some counties offer first time buyer programs that may help with that. Also there are programs such as Neighamia (im sure i spelt that wrong) which allow the Seller to contribute up to 3% of the sales price to a 'fund', and they in turn gift you up to 3% of the sales price as a down payment. Its basically a legal way for the seller to pay your down payment. Now you either have to offer 3% more than the asking price, or the seller is taking a 3% hit, same with closing the seller can pay up to 3% I believe, so you could offer a higher price, otherwise you are actually offering them less at the end of the day if you ask them to pay the costs.

Many builders are offering incentives such as 0 down (often times they are using one of those programs to give you 2-3% required down by FHA), seller paid closing costs, and or interest rates buydowns. I received all of the above.

Also, if you aren't buying brand new I would strongly suggest an inspection. It's still probably not a horrible idea on new, but I don't think its nearly as important.

[dmention7]

Good call on the inspection. Not only do you get an experienced inspector who will walk you over every inch of the house from structure to electrical to flooring, but the couple hundred dollars you spend can easily be made up by asking the seller to address any issues you run across in the inspection.

it's a little further down the line, but still an important thing to keep in mind.

[DrWebster]

Since you're looking at townhomes, don't forget to get copies of and read through the HOA rules & regulations for any property/ies you want to put an offer in on.

[Picklz]

Sometimes it's hard to get a copy of the HOA before writing a Purchase Agreement on a house, however in MN they are required to provide it to you and you have 10 days to, for any reason, withdraw your offer. Make sure you read through it carefully though, some places have some pretty crazy rules/regs.

[LASERBLUE135]

We are thinking around 175k probably. When I punched that into various calculators with probably a little higher than average interest rates the results were affordable. That's a rough estimate, we could probably afford more, but I think we can find a good place for that price.

For $175k in this market you'll be able to get a great townhome. If I were you I'd push the price MUCH lower and you'll be happy with what is out there.

If you are paying mortgage insurance make sure that it is not over $80 per month per $200,000 borrowed.

free credit report from all 3 agency's 1 time per year, so 3 per year, SCORE IS NOT FREE, equifax, experian, transunion.
to get it log AnnualCreditReport.com or call toll free 1-877-322-8228 USE THIS NUMBER!!! I've done it, very easy to do, fast and easy to read reports, get the credit report from at least 2 of the 3 agencies and make sure they match on the important things.

Inspector! Really go over the nooks of the house yourself, run the water in the house AND the outside faucets and see what happens in the drains, flush the toilets. My inspector screwed me on a few tiny things that he missed that pissed me off, but really weren't that big of a deal (but he should have caught them). Take your time with the inspector, REALLY!

Make sure you use your head and not your heart. look for a place that has the things you want now and will want in the future. If you "like" a place because of one or two things you might regret it later. No matter how much you like a place you will find many things with it over the years that bug you.

And my Mom, Dad, and brother are all realitors: Remember location, location, location is #1, #2, and #3 thing to look for. Also everyone in the process is a salesman, don't forget it. Look at tons of homes, even if you really like one, look at tons more. Only YOU can make the correct decision for yourself. Don't let anyone talk you into anything.


Last, homeownership is fun. Don't let it scare you, but really work and do the things that will make the process as favorable as possible for yourself. You're shopping in the best market you could imagine. There is blood in the streets. Get an UNBELIEVABLE DEAL! Not a good deal, in this market you should be getting a GREAT DEAL.

[DrWebster]

Make sure you read through it carefully though, some places have some pretty crazy rules/regs.

Also check for addendums to the regulations; there are five to mine, all dealing with the time people are required to put their garbage cans back in their garages. :rolleyes:

[Workdawg]

Thanks for all the advice, and keep it coming!

Jenny got her credit reports already and I'll be doing mine later tonight/tomorrow after work. So far everything looks good on hers.

We'll hopefully be talking to a loan officer/broker sometime this week to go over numbers and what not. Any advice on things to discuss with them outside of what's already been mentioned (coming up with a price we can afford on our own, taking into consideration every possible expense)?

[Picklz]

Well as I said before I'd reccomend talking to 2 of them (loan peoples), just to get a second opinion and make sure one didn't miss something. Another question for them is how they are compensated and if there are any other additional 'administrative' fee's, document fees, etc.

If you are looking at going brand new you could probably forgo a realtor, however I had one and he did a good job at educating me on the process and I was glad to have him there. Like Laser said the builders or sellers/sellers realtor have their own best interests in mind so just be mindfull of that.

Also, if you get to the point where you find a place you think you really like, spend some time there without realtors or builders around, play with everything, spend some time in the rooms, etc. Make sure it's a good fit for you because, especially in this market, you dont want to have to / want to sell in a year or two.

If you aren't on a time crunch push either the builder or the seller on price, especially on townhomes you can get some really killer deals right now. Center units generally are cheaper and they are more willing to deal on them as they are a little less desirable / slower to sell), they are nice from the standpoint that they are cheaper to heat though, all depends on your preferance.

If its still under construction and early enough that you can change things be carefull, its really really easy to suddenly make that $160k townhome a $190k townhome when you get done upgrading the appliances, flooring, lighting, granite countertops, etc.

[YSOSLO]

There are some excellent points that have been covered already. The only things I would add are, if you DO end up putting a realtor to work for you by contacting one and having them dig through the MLS for you to find specific things you're looking for, I would strongly recommend that the realtor pull the listing history of each place that meets your criteria. You might find 20 townhomes that have everything you're looking for, but by looking at which ones have been on the market the longest or which ones have had at least one price reduction, you'll be able to see which sellers are more motivated than others which means more money in your pocket when the deal is done. Having a realtor working FOR you specifically means you have someone completely on your side. I'm sorry if this sounds too "Homebuying for Dummies" but when a house is sold there are 2 sides of the deal. There is the Listing Agent and then there's the Selling Agent. The Listing Agent gets "half" of the commission, and the Selling Agent gets the other "half." I put half in quotes, because both of the agents typically end up also having to give a portion of their commission to their agency to help cover the costs of the office space, support staff etc. By initiating a relationship with an agent to find homes on your behalf, you're basically asking them to go out and find properties listed by any agent out there. Be sure to always ask your agent if the property they're showing you is one of their listings or is listed by another agent in their office. Not that properties listed by them or their office are bad, but it lets you know that they have an additional financial benefit to sell you on their properties. Most agents are great about being open and honest about all of these details and they're required by law to explain everything in detail to you. I'm sure you can imagine how many agents are jumping at the chance to make a sale, so be sure the agent you work with is someone you're very comfortable with. I would also recommend using an agent that's familiar with the area you're looking to buy in, because they will be able to give you additional information on things like schools, parks, churches, tax referendums and anything else you might be interested in as part of your buying experience.

The only other thing I would recommend is having the seller (in our case the listing agent provided this as part of the sale) provide at least a 1 year home warranty. If you're buying brand new, then you might want to push for more than a 1 year warranty, because a 1 year is typically given by a builder, however it can take a newly constructed home at least a year to completely "settle" into it's foundation, and this settling process often causes cracks to appear across a wall or where the wall and ceiling meet. Usually it's no big deal, but shoddy construction can cause larger cracks that require re-taping and mudding etc. The house Jess and I bought 2 years ago is 30 years old now and it was fully inspected prior to being listed and almost all of the deficiencies were taken care of before we moved in. The 1 year home warranty came in handy too, because our hot water heater died 9 months after we moved in and we were given $500 toward a new one, so we ended up getting a top-of-the-line water heater for $200-250 installed. Sweet!

[Picklz]

Oh that brings up another point, this doesnt apply to new construction, but if you end up looking at existing homes/townhomes you can visit the local courthouse and pull tax documents and sales records for the property to see what current taxes are, what they may be next year, and when/for how much the property last sold. If you find a place that sold 5-10 years ago for 100k and its listed at 160k you know you probably have some more room to work a deal vs a place that sold a year ago for 200k and is now listed at 180k.

When looking at new you can pull these documents on other units in the development, try and find out which addresses were sold first in the area you are looking at and pull thier records, you can see what kind of taxes they are paying and what they bought in at vs. what the builder is offering you for a price.

Bank owned and/or short sale can be a good thing to look at also, be prepared to find a LOT of places that are in really bad shape but the work can be worth it if you find the right place, the process can take longer as the bank will have to approve the sale - I've heard of some taking 30-60 days, and some like my friend who made an offer, the bank counter offered, then he counter offered that and the bank accepted, all in one day lol.

Also if you are using FHA the home will be inspected/appraised to make sure it is 'livable' and worth what you want to borrow, so the home has to be in much better shape for them to loan on it in comparison to a conventional loan.

[YSOSLO]

Yeah, with all of the houses out there that are being foreclosed on, the banks used to be happy getting rid of them for the amount needed to cover the remaining loan, but I've heard of a few instances where the bank tries to bump up the sale price so they don't lose out on the interest they would have gotten had the owner been paying their monthly payments. I would try to resist letting the bank push the price up much on you, because that's all profit for them.

[Picklz]

Many banks are agreeing to sell houses for less than the note that is currently on them, because they need to keep their cash flow going.

My friend just signed a Purchase Agreement on a Town home, the current owners owed 160k if i remember correctly, and the bank agreed to $145k and they are paying 3% down + 3% closing costs, so there are nice deals to be had. This is going to vary quite a bit by location, condition of property, and the bank your dealing with.

[ZoomZoom Diva]

Consider your time horizon in this house. If you are planning to live here more than a few years, the most important factor is that it needs to be a house you will enjoy living in. I would not focus excessively on what might be the least expensive or the best deal, but the house you will like to live in the most. Also, while location drives prices, consider the location you want to live in more than the location that may be popular to the market in general.

In the long run, having a house you love to live in where you want to live in good sound condition is a lot more valuable than a little higher payment or a little less when it's time to step up.

[YSOSLO]

That's true. Don't compromise on how you "feel" about a home, but if you find a few that feel about the same, THEN start looking at the other items we've mentioned above. One other thing I figured I'd mention only because one of my buddies made this HUGE mistake last summer...make sure you look at where your home is on a detailed map, because he and his wife ended up buying a place with an active train tracks about 100 feet behind their house and had no clue until a freight train came rolling through with it's horn wailing...lol Unbelievable!

[dmention7]

One thing also once you've found a solid candidate, cruise the neighborhood several times at different times of day. It may be less of a concern when you're buying a townhouse in the suburbs, but we were looking for a place inside minneapolis where the feel of the neighborhood can change quite a bit block to block. If we had looked a bit closer than we did, we might have noticed that our neighbor across the alley likes to blare his truck's stereo whenever he's outside or in the garage.... lol Not that it would probably have made much of a difference, but still.

[Workdawg]

Well... we went and talked to a "Mortgage Consultant" with Edina Realty last night looking for Preapproval. Things went well. We got easily preapproved for the amount we were hoping for and the estimated payment is affordable.

Next step is going to look at places. We are out of town this weekend, so that'll likely start next week.


Jeff posted this in the chatbox... saving it for later as it will likely be useful.
http://www16.co.hennepin.mn.us/pins/addrsrch.jsp

[Picklz]

Excellent, make sure you figure in PMI, Property Taxes, and Association dues in the monthly payment if they aren't already in the sample Good Faith Estimate you probably got to look at.

Also the tax and sale information is available in any county, some have them online and are easily searchable, but if they don't you can visit the courthouse for that county and get the information that way.

[Workdawg]

Yeah, all that stuff was in the estimate we got. She estimated high for everything... high interest rate, high taxes, high HOA... even high downpayment, lol. I put 3% in the application, so that's what she used even though FHA is only 2.25% apparently.

[WhiteSpy9]

If you study high.... and take the test high.... you get high scores...?

Glad to hear you are pre-approved! I just closed with Edina Reality last night. The closing officer lady was really nice.

Get some more good faith estimates when you have some free time! Unless you have the sellers paying the closing costs, you could be saving yourself some out of pocket cashish.

[mazdamn02]

My mouth is shut when it comes to my opinion of edina realty...

GL with the house search Dan!

[DrWebster]

My mouth is shut when it comes to my opinion of edina realty...

We had no problems with them, used them for the house search, mortgage and closing.

[ZoomZoom Diva]

Well, high down payment is going to mean a lower payment, but 0.75% of the purchase price is not likely to move the payment significantly.

On property taxes... if you're serious about a house, make sure they have the information correct, particularly on big items like bedrooms and bathrooms (mine were overstated on both, because they assumed the den had the optional bedroom and 3/4 bath).

[Jenny]

Hey so thanks for all the help from everyone So the agent that we are working with for the time being till ours gets back from vacation is setting up for us to look at 6 house's in one night. I don't think that is possible but i could be wrong does anyone think this is to many places to look at at once?

[WhiteSpy9]

Nope! looks at as many as you can.
You'll know when you find the right one!

Bring the lists for each one and take notes if you can.... What you liked/didn't like....and good luck!

[Jenny]

Thanks!

[dmention7]

I think we averaged about 5 houses/trip when we were shopping. Especially this early in the game, you're going to want to see as many as possible. Andy has a good suggestion with the notepad. Jot things down, sketch floorplans, etc and then review what you saw when you get home. Make lists of specific things that you liked and disliked about certain homes especially things that may not be easy to recall just by looking at the online listings.

[ZoomZoom Diva]

The notepad is a great idea. When you're looking for new construction, it's easy because you get brochures with everything you need right there (just add notes).

However, I wouldn't spend the time sketching and going into too much detail if the place fails the initial test. I found you can find that most places will be a definite no or maybe within the first quick pass through the rooms.

[YSOSLO]

Pics can be good too if there's something specific about a house that stands out for you, rather than trying to remember which place had the jacuzzi tub or which one had the huge deck with no stairs or whatever. With viewing so many places in one night your memory can start to mix-up which house had what etc. Volume is great, but using some sort of system to organize your thoughts and feelings about each place helps a lot. I'm a big House Hunters fan (HGTV) and people on there have even used a number rating system to rate on a scale of 1-10 each room of the house, curb appeal, garage, yard etc. to help them decide which houses rate the highest to help them narrow it down.

[LASERBLUE135]

However, I wouldn't spend the time sketching and going into too much detail if the place fails the initial test. I found you can find that most places will be a definite no or maybe within the first quick pass through the rooms.

I agree. You'll know right away if a house is a miss, just tell your agent that you want out of there. There were places that I spent less than 30 seconds at when I was house shopping.

And remember (no matter how much you like him/her) that your agent is a salesman, so trust yourself - not your agent. I'm sooooo jelous that I'm not house shopping right now, the deals out there are killer! Good luck.

[mndsm]

Pics can be good too if there's something specific about a house that stands out for you, rather than trying to remember which place had the jacuzzi tub or which one had the huge deck with no stairs or whatever. With viewing so many places in one night your memory can start to mix-up which house had what etc. Volume is great, but using some sort of system to organize your thoughts and feelings about each place helps a lot. I'm a big House Hunters fan (HGTV) and people on there have even used a number rating system to rate on a scale of 1-10 each room of the house, curb appeal, garage, yard etc. to help them decide which houses rate the highest to help them narrow it down.

I really like the pic idea. Easier to compare direct visuals than it is to compare notes, and with today's technology, even a cell phone can do the job.

[DrWebster]

Geez, we probably looked at 40 houses when we were house hunting. When we saw the townhome we eventually bought, we initially ranked it as #1, then two other houses we liked (just not quite as much) as #2 and #3. If any shit went down in negotiations with #1, we were ready to move on. We made our real estate agent work for her money, but she was awesome the entire time and we will definitely work with her again.

[Jenny]

Thanks For all the advice! I really like the picture idea i'll have to bring my camera with. One of us well keep you guys up to date.

[Workdawg]

Well, after only 2 days of looking, Jenny and I have found a potential townhome... we are going back to take a second look tonight.

For reference, here is the MLS ID: 3569972.

It's a 2BR/2.5 bath in Shakopee, right off 18 about half a mile south of 169.

We both really like the floorplan, it's got some unique features and things we really like. Also, I think it's in a great location (near 169, shopping, etc).

Some things we've considered already (besides the floorplan) the first time we were there are: the potential road noise from the road out back and the direction it's facing (WSW). There is some light wooded area between the yard and the road, and when we were there the road noise wasn't significant. While the house faces West (setting sun), my initial concern was sun in the morning interrupting my sleep. Convienently, the master bedroom is on the front side of the house (west side), so this shouldn't be an issue. The kitchen/living room downstair have many windows facing East, which would be nice for light in the morning.

One of the main things we need to find out is the pet restrictions... the MLS listing indicates both numbers and height/weight restrictions. We have a cat and small dog now, but want to get an English Bulldog (height not an issue probably, but weight could be) sometime soonish. This would also bring into play number restrictions.

Looking for tips from you guys as far as stuff to ask about/look at while we are there tonight and to have our agent ask about. Obviously we will make sure to have an inspector look at it eventually, at this point we are just making sure everything still looks good on the second go-round. Things such as I mentioned above (road noise, direction it faces) that we might not consider while we are there.

[Jana]

Every town will have it's restrictions on pets, it's whether you follow them or not. Not sure about the size restrictions, that could be association rules.

Oh, and check on your condo insurance. Having a fireplace will increase your insurance.

[Workdawg]

One of the nice things about a TH is that hazard insurance is covered by the HOA... I'm not sure if having a fireplace would include that or not. I think it would, seeing as they were built with the fireplace and it would pose a threat to all the other homes in the block. I'll ask about it. Thanks!

[WhiteSpy9]

that is the model home or the actual one you are going to bid on?

[Workdawg]

Haha... that MLS number is the actual home. It was staged by some company. The decor is pretty ridiculous, I know.

[Jana]

One of the nice things about a TH is that hazard insurance is covered by the HOA... I'm not sure if having a fireplace would include that or not. I think it would, seeing as they were built with the fireplace and it would pose a threat to all the other homes in the block. I'll ask about it. Thanks!


Your hazard insurance/HOA insurance only cover the exterior. You are responsible for any/all interior coverage which is H06 or Condo insurance. You would be responsible for the interior, and having a fireplace increases that coverage. You'll want to check with your insurance agent. It really won't be significant because it is a townhome. My insurance right now is $24/month, and that is also for having renter's so I'm covered if anything were to happen to them & they came after me.

[LASERBLUE135]

Get an idea of your total monthly payment(s).

for example:

monthly association fees: 150 (don't know what the average is)
mortgage, interest, mortgage insurance, taxes, home insurance: 1400
heat: 130
electric: 30
garbage: 30
water: 30

total monthly payment: $1770

And really ask yourself if you want to make that payment for 5-10 years minimum. You payment can change dramatically from place to place. I personally wouldn't want to spend $175,000 for a townhome in Shokopee right now. I'd slow down and look at many more places. This market is unreal and there are AT LEAST 72, 2 bedroom/2 bathroom 1500+ square foot units at or bellow $175k in that close area.

I don't know what you're pulling in right now, but I'd go cheap and save some cash in the bank. Build up for the next house you buy in 10 years. Be happy with the place you buy now, yes! But consider the benifits of buying a cheaper place, as there are unbelievable values out there. Have fun and happy home hunting.

[LASERBLUE135]

My insurance right now is $24/month

your what insurance is $24 a month?

[WhiteSpy9]

Here is my $0.02.
It looks like a wonderful pick. Lots of natural light, but just a few things I picked up on from the pictures.

The entrance is split with your neighbor, I wouldn't enjoy walking out of my house every morning and seeing my neighbor standing there or if they have kids. Them coming in and out etc....

The master bath is a bit small and it looks like the fixtures are dated.

Your laundry is on the ground floor(through the kitchen). Laundry sucks already, no one likes having to walk all the way through the house to do it.

Just other small things to consider. I would confidently say that you could get that house for quite a bit cheaper than what it is listed for.
At the end of the day though, the small things don't matter as much as you being happy with your choice and ultimately I would think location and floor plan would determine that...

[Jana]

My condo insurance. And that's for way more coverage than I'd ever need (increased coverage for assesments due to weather, etc). Condo insurance is much, much, much cheaper than your regular homeowner's insurance.

[LASERBLUE135]

My condo insurance. And that's for way more coverage than I'd ever need (increased coverage for assesments due to weather, etc). Condo insurance is much, much, much cheaper than your regular homeowner's insurance.

$24 a month is pretty good, I'm at $50 a month. I guess that's pretty cheap too for a lot of coverage.

[Workdawg]

I thought 175k for a 2 bedroom place seemed a little high too just looking at the listing, however after checking up on zillow and the scott county website, it seems like a pretty good deal. Zillow has most of the houses around it listed at 190-200k+ and the scott county website has the property value (for tax purposes) last year at 195k. In the TH complex there are only a few other THs for under 185k, and they are all smaller, 2 br, 1.75 ba and only 1300sqft. The one we are looking at is over 1600. The location is very appealing as I mentioned before.

Here is a link to the zillow info...the house we are looking at is the red one in the upper right listed for 175k.
http://tinyurl.com/housezillow

It might only be 2br, but there is a sizeable loft upstairs (that could easily be a bedroom if you put some walls in) and the layout of the main floor is very appealing and open.

We've looked at some 2br places in the 150 range and they weren't that impressive. We also looked at a couple 3br for about 180. They were decent, but we don't really need 3 br.

I agree that it seems like we are going pretty quickly, I didn't expect to find something right away, but this place seems like just what we are looking for, and the price seems fair from what I've found. Our agent is going to look into the price of similar and surrounding units, as well as the history of the house and let us know tonight how things look. We'll see how it goes tonight and

[Jana]

$24 a month is pretty good, I'm at $50 a month. I guess that's pretty cheap too for a lot of coverage.

Could be the size of my townhome too. This was for my first place I bought 6 years ago, and it's only 1100 sq ft.


Dan - Are you locked down to that area? I'm sure you could find just as nice of places for less in other areas of the city.

[Workdawg]

The entrance is split with your neighbor, I wouldn't enjoy walking out of my house every morning and seeing my neighbor standing there or if they have kids. Them coming in and out etc....



That is something I've thought about, I'd be going out through the garage 95% of the time though.



The master bath is a bit small and it looks like the fixtures are dated.


There actually doesn't appear to be a picture of the master bath. That pic is of the second bath upstairs. The master bath is actually pretty big, and the closet in the master bedroom is huge.




Your laundry is on the ground floor(through the kitchen). Laundry sucks already, no one likes having to walk all the way through the house to do it.


That is something we were considering, but its not enough to sway the decision at this point I don't think.



Just other small things to consider. I would confidently say that you could get that house for quite a bit cheaper than what it is listed for.
At the end of the day though, the small things don't matter as much as you being happy with your choice and ultimately I would think location and floor plan would determine that...

I agree here... we shall see what our agent says about the price and go from there, I'd never offer up asking price right off the bat in the current market; and as I've said before, we really like both floorplan and location.

[ZoomZoom Diva]

Your hazard insurance/HOA insurance only cover the exterior. You are responsible for any/all interior coverage which is H06 or Condo insurance. You would be responsible for the interior, and having a fireplace increases that coverage. You'll want to check with your insurance agent. It really won't be significant because it is a townhome. My insurance right now is $24/month, and that is also for having renter's so I'm covered if anything were to happen to them & they came after me.

Actually, the association coverages I have seen cover the structure whether it is inside or outside. The structure is even defined to include built-in contents such as cabinets, dishwashers, and over-the-range microwaves. HO6 or condo insurance covers the deductible on the association policy and contents.

[LASERBLUE135]

Zillow has most of the houses around it listed at 190-200k+ and the scott county website has the property value (for tax purposes) last year at 195k. In the TH complex there are only a few other THs for under 185k, and they are all smaller, 2 br, 1.75 ba and only 1300sqft. The one we are looking at is over 1600. The location is very appealing as I mentioned before.

We've looked at some 2br places in the 150 range and they weren't that impressive. We also looked at a couple 3br for about 180. They were decent, but we don't really need 3 br.


there are AT LEAST 72, 2 bedroom/2 bathroom 1500+ square foot units at or bellow $175k in that close area.
Zillow is easily 20% too high on many place right now, so be carefull there, I just had the city inspector at my house at 7:25am this morning and they are recalculating the taxes in all areas too.

$175,000 "sounds" right. Doesn't it, but prices are STILL falling. If you really think that that place is the one. I'd start negotiating at $20,000 less. You CAN NOT GO TOO LOW in this market. There is "blood in the streets", you have all the control. Make the most of a great opportunity.

[Jana]

Actually, the association coverages I have seen cover the structure whether it is inside or outside. The structure is even defined to include built-in contents such as cabinets, dishwashers, and over-the-range microwaves. HO6 or condo insurance covers the deductible on the association policy and contents.


Yes, for those such items. My main point is you are still responsible for your own items inside. And having a fireplace can cause an increase because of the fire risk being higher.

[LASERBLUE135]

from Zillow:

"Shakopee home pricing:

Average 2-bed price: $146,500"

I'm just saying...



also from zillow:This home was last sold:

Sold 11/21/2001: $169,445

OUCH!!!!!!!!!!!!!

also from zillow: Recently sold...
8061 Stratford Cir S # 1204 Shakopee MN 55379

3 beds, 2.5 baths Recently Sold: $153,075 Probably almost exactly like yours

and zillow has that one ^^^ at $207,000, has yours at $196,500

I'm just saying....

[ZoomZoom Diva]

I know this Ryland design well. I had friends with an end unit upper, and I live across the street from some of these.

Those are the base fixtures. I have the same ones in my house, and while dated in appearance, they are reasonably attractive and functional. It is also an inexpensive thing to replace if desired, and that is not the master bath.

I have a strong preference for a ground floor laundry. Not only does it keep the noise and vibration away from your living space, but it reduces the risk of serious damage if a water incident occurs.

My issue was the floor plan was not a fit for me. You find a use for three bedrooms much more quickly than you'd ever thing. I manage quite easily to fill up 1800 square feet with three bedrooms (my bedroom, guest bedroom, and office) sitting room, dining room, den, and kitchen.

I would be careful about lowballing too far because it's an exaggeration that everyone selling is desperate. An excessive lowball could turn off a potential seller. Bottom line is living in a place and a location you truly love and want to live in is more important than saving some money.

Laser, I would also say your utilities are overstated.

[Workdawg]

Zillow is easily 20% too high on many place right now, so be carefull there, I just had the city inspector at my house at 7:25am this morning and they are recalculating the taxes in all areas too.

$175,000 "sounds" right. Doesn't it, but prices are STILL falling. If you really think that that place is the one. I'd start negotiating at $20,000 less. You CAN NOT GO TOO LOW in this market. There is "blood in the streets", you have all the control. Make the most of a great opportunity.

I'm not afraid to toss them a low offer, and I intend to do so. I was looking through the "recently sold" stuff on zillow, and it does seem to indicate 175 is a bit high, but that is too be expected. I'm sure the seller realizes they won't get asking price for it. I guess I've failed to make the distinction between my considerations of asking price, and the price we'd pay. For purely comparison purposes, it's easier to just look at the asking price when comparing places we've looked at... when we are narrowing down the choices, then we can start to consider what kind of price we'd end up actually paying.

Also, here is a listing with a few more pictures of it... still no pics of the master bath or closet, but it's got different angles and some other pics. If you click on the top 'pic' that shows a blue house image with arrows around it it opens up a flash-based "virtual tour".
http://tinyurl.com/homeshouse


Edit:


also from zillow: Recently sold...
8061 Stratford Cir S # 1204 Shakopee MN 55379

3 beds, 2.5 baths Recently Sold: $153,075 Probably almost exactly like yours

It looks like that one is one of the units that is back-to-back with more townhomes in the middle of the complex. Also, zillow has it listed at only 806 sqft... Don't know if that is right, it could be the foundation is only 806, but even then, the one we are looking at has 900 sqft foundation IIRC.

[dmention7]

Laser, I would also say your utilities are overstated.

They look like pretty reasonable estimates to me

Mine are:
Water/sewer/trash: $50-55
electric: $30-50 (varies seasonally)
gas: $30-$250 (varies seasonally)

[LASERBLUE135]

Laser, I would also say your utilities are overstated.

my heat (on the budget plan) was $144 2 years ago when natural gas spiked, it was down to $68 just this last year, and now it spiked back again to $132. $30 for electric is standard, and water, trash, and other items are included in the association dues most likely. I was just pointing out that a monthly "payment" can be a lot of money and to look at the full cost of each home. I like to overstate a smidge, then when it's cheaper...that's cool.

[LASERBLUE135]

It looks like that one is one of the units that is back-to-back with more townhomes in the middle of the complex. Also, zillow has it listed at only 806 sqft... Don't know if that is right, it could be the foundation is only 806, but even then, the one we are looking at has 900 sqft foundation IIRC.

Zillow is not accurate, has our house as a 3 bed/1 bath, and its a 2 bed/2 bath. I'm sure that sq ft is very similar to yours. And I'd be pointing out that sale price when/if you make your lowball offer. It will give your offer leverage. like "your nieghbor's exact place sold for $153,000. So my offer of $155,000 is very fair".

[Workdawg]

I googled up some info on the house you are referring to, it looks like it was sold "pre-forclosure" which I'm sure skews the actual value. I will be sure to bring up the selling price though, they might now know this. One thing I've found though is that there appears to be multiple floorplans (which makes sense) in this complex. 8080 Stratford Cir is also for sale (for 180), and based on the pictures it looks like the floorplan is quite different.

[LASERBLUE135]

I'm not saying that they should jump at $155,000. And I'm not saying that it wouldn't be "stealing" this place for $155k either. All I'm telling you is that you can get a really nice place for 150k (that you will really like) if you are patient.

This palce sold for $169 over 5 year ago! It's crazy to imagine it selling for less than that today, but that's the reality of the market in that area.

If there are 72 plus homes in the area that have 1500+ sq ft, 2 bed/2 baths, how many have you looked at? I don't want to be a preacher or tell you what to do, but I was in your shoes 3 years ago and I know what its like.


...and if you aren't "married" to that area, there must be nearly 1000 metro homes in your shopping bracket. take your time, have fun, and get a great place:)!

[ZoomZoom Diva]

There are three floor plans in your building. The end units have a 3BR upper level unit and a small 2 BR lower level unit. The middle units are two level and like yours. The 8080 house is an upper level end unit (my friends owned one of these, and they're nice.)

The heat/gas bill seems high to me. I've never had a single monthly bill that high, much less a budget plan payment (I don't use it, but they have offered me one of $45 or something like that). My highest bill in the 5 years I've lived in my house was $110. The electric is a little higher than I pay, but not too out there when averaged. My water bill is quite a bit less ($20 a month). I average under $100 for gas/electric/water combined. I agree that one should consider the total cost of ownership, and one should be reasonably conservative, but to not go too overstated either.

[Workdawg]

There are three floor plans in your building. The end units have a 3BR upper level unit and a small 2 BR lower level unit. The middle units are two level and like yours. The 8080 house is an upper level end unit (my friends owned one of these, and they're nice.)

That explains why it looked like the kitchen was on the upper level of the place (slanted down ceiling).

[Workdawg]

I just realized we got off track a lot there... lol. I'm not complaining, always happy to hear people opinions and experiences.

Any tips for things to look for and consider when we go back tonight? Maybe there really aren't any, but I'm sure you guys can come up with something.

[ZoomZoom Diva]

Consider the difference between what is easy an inexpensive to change, and what cannot be changed or is very expensive. Paint, cleaning, and a plumbing orlight fixture here and there... cheap and easy. Flooring, appliances, actual damage repair... more costly and not so easy. However, something you like that's out there in decor may be a bargaining point.

Also ask if there are any custom options that make the home different from others in the development.

[LASERBLUE135]

Consider the difference between what is easy an inexpensive to change, and what cannot be changed or is very expensive.
^^^^ great advice. X2

[YSOSLO]

Dan if you're concerned about utility costs with your prospective new place(s) your realtor can get the last 12 months history for you from the utility companies themselves (you can't, but the realtor can), but they won't do it for 30 houses or anything...I'm just talking about once you have things narrowed down to 2 or 3. Many times the homeowner will also have that information on hand if you ask.

I hope all of the numbers being thrown out by others in this thread for utility costs are for similar square footage and ballpark-same-timeframe for contruction, because a 20 yr old home won't be as efficient as a newer home and size and layout effect heating costs as well. I'm sure you can see how those high lofted ceilings can keep the heat from being felt quite as well as an 8 foot ceiling. Things like a ceiling fan will help with this example too.

[Workdawg]

Great comments guys. We'll be taking a closer look at what things we like/dislike about it specifically tonight... last time was more of a floorplan/overall appeal. I'll pay attention to fixtures and stuff like that. I'll see if I can find out about any custom options.

Pete: I didn't know a realtor could pull that info, I'll ask him to, thanks!

[YSOSLO]

Like I said though, they won't do it for LOTS of properties, but if you're serious about a couple, they can track it down for you.

[Workdawg]

Update:

Well, Jenny and I met with out agent again last night and filled out the paper work to make an offer on the place. We offered slightly under asking price, and with seller to put up 6% towards closing costs and down payment. 6% should cover all out-of-pocket expenses except for the earnest money check we gave our agent last night.

Thanks for all the advice and help, hopefully we'll get some good news soon.

[mazdamn02]

Good luck Dan! Where's this place at?

[LASERBLUE135]

Update:

Well, Jenny and I met with out agent again last night and filled out the paper work to make an offer on the place. We offered slightly under asking price, and with seller to put up 6% towards closing costs and down payment. 6% should cover all out-of-pocket expenses except for the earnest money check we gave our agent last night.

Thanks for all the advice and help, hopefully we'll get some good news soon.

exactly what we did, worked out great. Good luck!

[Workdawg]

8088 Stratford Cir S. It's about .5 miles south of 169 right off 18.

[mazdamn02]

Looks nice, I'm guessing it is not subject to bank approval?

[YSOSLO]

Good luck with the offer Dan!

[ZoomZoom Diva]

I can understand seller paid closing costs, but I have never understood the concept of a seller paying a down payment in lieu of a lower price.

[Workdawg]

Thanks... we've already been preapproved for the mortgage amount. Just have to hear back from the seller.

[Workdawg]

I understand that it's not the greatest financial decision, essentially financing the DP, but it's only a couple thousand and it'd make things easier for us as we don't have a ton of cash sitting around and will need to be buying furniture and such things.

Also, it's an easy way to try and get a little more out of the deal. If they take that offer, great... if they don't it'd be easy for them to counter with having us cover some of the dp, which we could do if needed.

[ZoomZoom Diva]

It's really a zero sum game in terms of amount borrowed and such, it just gives some phantom equity in terms of the appearance of agreement (real equity is based on loan to appraised value, while a down payment is the appearance of said equity). You take $170,000 and $5K down or $165,000, and the loan amount (and equity) are the same. However, lenders seem to think the former case appears better. Financially, it's a wash.

I guess looking at it that way, and buying without a substantial cash position, where it can conserve your liquid capital.

[Workdawg]

Oh yeah... I understand that. The seller cares about the bottom line. If we were to offer 175 and they pay close/dp of 10k total, it's the same thing as just offering 165.

Just makes things a bit easier for us.

[dmention7]

If you have the cash laying around for a DP, then yeah it makes no sense to do it that way. But we were in the same boat as you Dan... needed to get out of the apt, but just couldn't comfortably put up several grand in cash. In some markets it would probably be most advisable to hold off until you do have that cash on hand. But right now IMO circumstances are such that the good of getting into a house outweigh the relative disadvantages of paying little to nothing out of pocket.

[DrWebster]

Did you look at an FHA loan? They allow for smaller (and sometimes no) down payment, and often have a first-year buydown on the interest rate.

[Workdawg]

We are doing an FHA loan. The DP is only the minimum 2.25%.

[Jana]

Did you look at an FHA loan? They allow for smaller (and sometimes no) down payment, and often have a first-year buydown on the interest rate.

I believe they have nixed the zero down with the way the market is currently. Things have drastically changed since I even purchased last Fall.

Good luck Dan!!

[WhiteSpy9]

We did FHA and were required to do 3% down. edit** for the best interest rate that is...

[dmention7]

^^^ Same here. But we got our downpayment paid through the CityLiving grant.

[mazdamn02]

We did FHA and it required 3% cash down. Good interest rate though.

[DrWebster]

Yeah, we did FHA too, I can't remember what it required. We put around 3% down as well.

[Workdawg]

Another update:

After going back and forth a couples times, the seller accepted our offer! The final price ended up to be right in between our original offer and the asking price, which is about what I expected.

[ZoomZoom Diva]

Congrats!

:rockband: housewarming party at Dan and Jenny's!

[Workdawg]

Haha... we'll have people over eventually I'm sure. Not closing until almost the end of september. I'll have to setup a "move our shit and get food and beer" meet. It took about 6 hours to get Jenny out of her apartment doing all the moving myself while she cleaned/packed. Now that it's all packed up, it's just a matter of putting stuff in the truck and then unloading it. I have to pack my shit up, but I have plenty of time for that.

[Jana]

Congrats Dan & Jenny!! :D

[Jenny]

Dan it took us 8 hours and that was just half of my stuff i moved the other half in april. put nice try.

[mazdamn02]

Congratulations, I will be there for said move boxes and drink beer eat food event.

[Workdawg]

Bump for update:

The inspection was on Monday and the inspector said everything looked great. I was there while he was doing the inspection and he seemed to do a pretty thorough job. We also asked the seller to move up the closing date, which also happened. We are now set to close the beginning of Sept instead of the end. I also got an email from our loan officer, she's received underwriting approval for the loan. We just have to provide further documentation of a few things and then sit down and lock in an interest rate.

Things are moving right along!

[Workdawg]

BUMPITY

Well, it's done. Jenny and I closed on the house today. Closing went very smoothly, it only took about 45 minutes. Between the two of us, we spent about 400$ on various things for the house at Target, Home Depot, and Pier1.

Holy crap, LOL

Thanks for all the advice guys

[blueamcat]

Congrats! That's so exciting. :D