Buying house, what are the expenses?

Discussion in 'After Hours Lounge (Off Topic)' started by Brett_H, Jun 14, 2005.

  1. Brett_H

    Brett_H Second Unit

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    We're considering buying a new (to us) house in order to downsize our mortgage pmt and be closer to family/better schools. Our current home is our fist, purchased in April of 2003 for ~$200K. It was very outdated when we bought it, and thus we got it for cheaper than other comparable homes on our street which were going for $225K+. We're looking at selling for $225K - $235K in order to be able to have 15-20% down on our next house. Based on some research we've done, that should be within reach.

    Now for my questions: this is our first time selling a house and buying another, and we're apprehensive to say the least. I know the seller typically pays closing costs, so we'd be on the hook for those.
    What other expenses are typical? (Ohio, if it varies by region)
    How long do you have from when you close on selling your house until the time you have to move out? Is that negotiated in the selling agreement?
    How long can you sit on the profits from a home sale without getting reamed with taxes? We might sell now and wait until spring to buy if we don't find something right away, would this be a problem?
    We were looking at using a flat fee realtor (NextHome.com) service that gets us listed in the MLS but requires us to host our own open houses. Does anyone have experience with these services?
    Are there any sites that will list home sales for our area to assist in pricing our house? Wells Fargo has one, but doesn't list any data for our house (although it did two years ago when we bought it).

    Thanks for any help you can give,
    -Brett.
     
  2. SteveA

    SteveA Supporting Actor

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    As long as you've lived in the house for two out of the past five years, you can keep up to 250k in profit tax-free (500k for a married couple). There's no requirement to buy another house.
     
  3. Scott Merryfield

    Scott Merryfield Executive Producer

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    This is negotiable, but you will be paying rent to the new owners after closing until you actually move out. Since their mortgage payment will probably be higher than your current one, you will end up paying more in rent than you are on your mortgage (plus, none of the rent will probably be tax deductible). You should try to time your closing date as close as possible to your move date to your new home.
     
  4. Jeff Ulmer

    Jeff Ulmer Producer

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    A couple of things to consider. You are far more likely to get more money for your house with an agent making a good commission. Open houses are not very good for selling, they are great for tourists. Having an agent that will bring by only qualified sellers makes life a lot less disruptive. A good agent will also be able to help you set a price that will actually sell in your market. Even if you decide not to list with an agent, you can still have a few come through for an appraisal. That said, some realtors will encourage a low selling price in order to make their job easier. Depending on your situation and market, you may be better to list higher and see what happens, then if someone lowballs you may get what the house is worth anyway.

    The closing arrangements are negotiable, and are usually proposed by the buyer in their offer.
     
  5. Michael Reuben

    Michael Reuben Studio Mogul

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    Other expenses the seller can expect to pay:

    The bank holding your mortgage (or its law firm) will probably charge a fee to attend the closing. There will probably be a fee for the filing of the UCC-3 (possibly more than one) to release the bank's hold on the property.

    I assume you'll be hiring an attorney. Real estate closings are usually done for a flat fee, and you should establish that in advance.

    M.
     
  6. Kirk Gunn

    Kirk Gunn Screenwriter

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    Side note: What is the housing market like in Ohio ? A house that sold for 200k, April 2003 in this area would easily go for 300k+, especially with upgrades....

    Another complication is if someone puts a contingent contract on your house, i.e. - they will buy your house, but only after their current home sells. Make sure you don't accept a low-ball contingent.

    Good Luck !
     
  7. Brett_H

    Brett_H Second Unit

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    Guys,

    Thanks for the replies so far.

    The catch with bringing in a full commission realtor is that we need to clear at least 30K for this to be possible. Adding a realtor into the mix would mean we'd have to sell for a minimum of 235K, which isn't likely to happen, IMO. Selling through other means would mean that we could take as little as $225K.

    Kirk, the market's OK here, but by no means out of control like it seems to be on the coasts. The only reason that we're thinking we can do this is that the house was UGLY when we bought it. Wallpaper everywhere, etc. We've redone every room cosmetically, as well as renovated the 1/2 bath. Let's hope it pays off...

    Thanks,
    -Brett.
     
  8. Scott Merryfield

    Scott Merryfield Executive Producer

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    Have you checked out what similar houses in your neighborhood are selling for? This will give you a good indication of how much you can expect to get for yours. If Ohio is anything like Michigan, you may be surprised at how much houses have gone up in your area. Our next door neighbors just sold their house for $400k, after having bought it for $330k only 3 years ago.
     
  9. Mort Corey

    Mort Corey Supporting Actor

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    There's a boat load of paperwork involved and, depending on your local laws, all kinds of possible pitfalls even after the house is sold. A realtor knows the ropes (if they're any good) and makes the process as effortless as possible. Trying to save a few bucks could turn into a penny wise, pound foolish, situation. Interview a couple agents and present them with your desired outcome and see if they think it's possible.....it's free. (A professional realtor probably has errors & omissions insurance as well....that puts them as a line of defense between you and the buyer should the need arise)

    Without an agent, you'd likely need the services of a real estate attorney. You really don't want to get sued by the buyer for something stupid like not revealing a faucet drips or some such thing.

    Mort
     
  10. Ted Lee

    Ted Lee Lead Actor

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    don't forget about inspections and possible incurred costs. here in california, we had to get a clear termite/pest/dry-rot report, clear roofing report, etc.

    anything that comes up on those reports has to be fixed and signed off prior to the sale ... usually at the sellers expense (unless you work something out with the buyer ... usually purchase credit).

    there's plenty of fees (which it sounds like you already accounted for) as well ... those can really add up.
     
  11. Sami Kallio

    Sami Kallio Screenwriter

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    Have you looked into leasing your current house? It has its risks but could also possibly be a very good investment.
     
  12. Brett_H

    Brett_H Second Unit

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    Small update:
    Thanks to the advice from this thread, we're getting a few realtors to give us an idea of an asking price on our house. One of them pretty much said that a 5% commission was do-able.

    I recently read an article that stated upwards of 90% of buyers are represented by realtors. This means that we have a 90% chance of having to pay nexthome a 4% commission (to the buyer's agent) anyway, so why not list with one of the big local realtors, as long as they're only charging 5%.

    One other consideration is that time is pretty critical right now in several ways. We just had our first child and my wife goes back to work soon. The addition of daycare expenses are going to make things pretty tight, so we'd like to downsize soon. Along with that, we just don't have the time or energy to do this on our own right now.

    -Brett.
     
  13. Jeff Ulmer

    Jeff Ulmer Producer

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    Sounds like a wise decision Brett. That 5% could be well worth it if you end up with a higher selling price, and less intrusion on your family during the selling process. My realtor also offered a couple of grand back if she sold the place herself, which she did. That allowed me to take a lower selling price and still get what I was expecting, dollar wise.
     

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