Buying my first home: advice?

Discussion in 'After Hours Lounge (Off Topic)' started by Ronald Epstein, Aug 29, 2006.

  1. Ronald Epstein

    Ronald Epstein Founder
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    I wasn't ready to purchase a home, but after trying unsuccessfully
    to transfer with my day job out of this state, I am now forced to
    invest in NJ, of all places.

    This past month I have been looking at many homes in my immediate
    area (Central NJ). I want to keep commuting to a minimal so I'm
    looking at rather expensive real estate in my affordability range of
    $350-400k.

    Most of the homes I have found at that price are small (which is
    perfect for me) and built around 1959-1970. That is the part that
    concerns me a bit. Though houses were built better back then than
    they are today, I am wondering what a house now 40+ years old
    will be worth to a buyer in another 20 years when I look to retire.

    What do you think of investing in these older homes? Any other
    advice you can give to a first-time looker/buyer?
     
  2. Eric_L

    Eric_L Screenwriter

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    The first thing you have to consider is; Does it have a room suitable for Home Theater? Dimensions, electrical, light control, etc. [​IMG]

    No really - the first consideration is summed up in three words - Location Location Location. Really. As cheezy as it sounds that is the truth. Ideally you want to buy the worst house in the best neighborhood - never the best house in any neighborhood.
    Age of a home is relevant. Even if you build new you will have plenty of handyman jobs to keep you busy - they just may differ in style. I would strongly encourage you to hire a home inspector. For $500 they will spare you from some expensive mistakes. One which I used found problems which required a new roof in a house I was going to buy. The seller was so eager she paid for a new one. (Once the cat was out of the bag she really had little choice) They will be far more thorough than anyone in a forum could help you to be.

    Homes built during the era of disco and bell bottoms aren't necessarily any better than homes built before or after. A reasonable home should last 100 years or more if properly maintained. It will go through three or four roofs in that period - several variations of paint and a few remodels. But it'll stand strong. Style on the other hand...

    I would advise you to buy this house as if you were looking to sell it. Being your first home you will eventually want to move up. Get a house which will sell fast so when the time comes you'll be more nimble. [A pool helps [​IMG] ]

    Also - be careful on financing. I would avoid an adjustable rate or quirky financing. Rates of 6.5% are not bad at all. A conventional 30yr fixed should do the job just fine. If you can afford to put 20% down that's good, otherwise just pay the mortgage insurance for a few years then appraise the house and drop it.

    Last but not least - the real estate market is sluggish and droopy. TAKE GROSS ADVANTAGE OF IT! You are the buyer - YOU MAKE THE RULES! (w00t!) Get an experienced Realtor to help you. They can negotiate a deal that would shock you and almost make you feel guilty. Remember - you are their boss. Also - stick with just one - don't float around too many. If one knows they will get the deal from you they will work harder.

    Things you can get in a slow market;
    Major home repairs (like roof), New flooring, closing costs, major price concessions, furnishings, appliances, etc.

    Good luck!
     
  3. DaveF

    DaveF Moderator
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    I'll be a gloomy gus on this one [​IMG]

    I'm a recent home owner, and if I could do it again, I'd wouldn't. Much less time and money for hobbies due to all the requirements of home ownership: decorating, furniture, lawn care, repairs, window treatments, etc.

    I've got great neighbors, and enjoy the community, I enjoy finally having my own space and no longer having shared walls. And it's great having a garage for my car. But on the whole, I've found home ownership a waste of time and money.

    If you want to "settle down", be sure to look at townhomes or condos. At least there you can save yourself some of the time of dealing with exterior issues like landscaping, mowing the lawn, etc.

    Or, budget for hiring professionals to manage the aspects of home maintenance you don't want to spend your personal time on.

    Seriously: I've spent more trying to get grass to grow than I've on HT equipment in the past two years. A strange life I've carved off for myself [​IMG]
     
  4. Ronald Epstein

    Ronald Epstein Founder
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    Gloomy Gus and all,

    Well let's look at the other side of all of this....

    Townhouses.

    I considered a townhouse. The problems I have with purchasing
    one is the fact that the resale value on a townhouse is notoriously
    bad. I have been following the realty listings for quite some time and
    see more homes being sold than townhouses....

    What's also amazing is that these tiny townhouses are selling as
    much as the houses I have been looking at.

    Now, granted, there is a lot to be said about having someone
    else do the maintenance, but for the $125+ association fee each
    month I can hire someone to take care of my landscaping and more.

    In a way, I'd rather move into a townhouse. It's newer all around.
    Just concerned with the resale factor and such.

    Thoughts?
     
  5. Jay H

    Jay H Producer

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    Bought my first house in Northern NJ, which is even worse than central NJ in terms of house prices, however it's a lake community and has a very decent property size for the community, I think it has good resale value.

    I followed Eric_L's motto to the tee, buy the worst house in the best neighborhood. The thing is, I've got it even better in that I love my small 1100sf log cabin. Most of my neighbors have aluminum/vinyl siding, a much newer looking house, so they're all cookie cutter looking. My log-sided cabin is distinctive and matches my woodsy personality! It does need a bit of work but nothing that makes it unliveable or anything. And I've fixed it up a bit already.

    Unfortunately, I did buy it at a time when it was more of a seller's market, however, my 20 year fixed mortgage is good as the interest rates have seened to creep up at least half a point since then.

    Jay
     
  6. Mary M S

    Mary M S Screenwriter

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    Things to consider/research. [​IMG]

    “Galvanized water-supply pipes were phased out in most locations in favor of copper between 1965 and 1975. Cast-iron waste pipes were replaced in most areas between 1970 and 1975.”*
    (the older cast iron can last very well.)

    * Our older home has copper underneath but the supply from the street was galvanized, these are known for buildup which slowly constricts your water pressure to nill! We replaced this a couple of years back.

    If you have or are considering children be aware:
    “Lead paint on old windows is also a major cause of childhood lead exposure because windows have higher average paint lead levels than other housing components and the friction and impact surfaces on windows create lead dust hazards – now the principal cause of elevated childhood blood lead. Window troughs are also the place in a home where you are most likely to find lead paint chips - the principal cause of acute cases of childhood lead poisoning. Residential lead-paint was banned in 1978, and pre-1980 homes are also less energy efficient than newer homes built after the oil price shocks of the 1970s. Therefore, homes at risk for lead paint hazards also have the greatest potential for energy efficiency gains."
    A “Lead Safe Home with Energy Star Windows”

    Significantly Deteriorated Lead Paint by Age of Construction.

    This order: Yr construction; Housing Units affected (millions);Percent with dust hazards;Percent with significantly deteriorated lead paint.

    Pre-194017.546%44%
    1940-195920.623%25%
    1960-197727.98%2%
    1978-199829.81%0%



    Aluminum wiring in older homes: See here

    *Ours was copper but we had to upgrade the panels interior and exterior.

    Check the spacing on studs, some of the older homes were framed on closer centers, a plus for stability of the home as years pass.

    Are the windows single pane? Rising utility costs will cause you to replace windows if prior homeowners have not.
    The oil concerns caused home built in mid – late 70’s to have greater insulation in construction.

    * We had to replace all our hole pitted original casement windows with double pane upgrades.

    !!!Get a property inspector, get your own...not one your realtor recommends, though he represents you, his interest is strongly biased towards a quick deal closing.

    Now that I’ve scared you with the above I live in a home approx. 75 to 85 yrs old. There are some pluses to older homes, which are often, much sturdier-built than those from 1950 forward.

    Is the home you are considering a custom build or originally tract (now increased due to location/time in value and desirability?) Don’t rely solely on custom being uniformly higher quality of base building materials. The in-laws bought the model in a custom gated community with a five-acre bird sanctuary, 500+ now worth over a million. First year the slab foundation cracked from the front door through the center of the house all the way to rear. They were in litigation with the builder for years.

    Now that I’ve scared you [​IMG] I love older homes and neighborhoods, often the trade for certain construction dates is upgrading energy efficiency areas, yet having a home which overall is more solidly built.

    Consider requesting seller provide (or purchase yourself) a 1-yr home repair coverage policy.
    Several family members here keep a policy like this in place, The father in law pays about 600.00 a year for the home described above, he has used it in the last years to have several of his HAVAC units repaired, (2 replaced)
    Just had his subzero fridge rebuilt with new compression (they would have replaced if non-repariable) etc.
    These policies cover all appliances HAVAC and a few other items. The appliances do not have to be late model or new, just in good functioning condition at purchase of policy.

    I hate apt/condo/townhouse life, and prefer my little personal slice of earth and trees, but maintenance and repair in certain years will always be a drawback. Unless its a brownstone in NY, you are throwing your money down a drain on most purchases of townhomes. Purchases of homes over the long haul....are 99.9 percent a sound investment, if you stay away from a huge local bubble and adjustable rate mortgages.

    Be very wary of Homeowners Associations which are generating more stories of abusive behavior towards individual owners.

    My 85 yr old, was not built with these Associations in place, yet a neighborhood group pushing our subdivision to City Conservation Status, is making life miserable around here with the “Mrs. Kravitz” types on board who wish to add in personal agenda’s like approved front door paint colors.

    Sorry no time to edit post properly for clarity, hope any of the above helps?
     
  7. andrew markworthy

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    Ronald, welcome to the fun-filled ulcer-inducing world of home ownership. [​IMG]

    You need to address several issues:

    (1) do any of your hobbies make a lot of noise (e.g. home theater)? If so, then anything but a detached property is going to cause neighbour problems over the years or (as I'm sure you're a really nice considerate guy) cause you to compromise by keeping the volume down low so you don't annoy the neighbours on the other side of the wall.

    (2) do you honestly expect to stay in the same property until retirement? If so, then try to choose something with the possibility of extending the property just in case you decide you need more space but don't want to move.

    (3) look carefully at the neighbourhood. As the experts always tell you, don't move into the currently fashionable area, but the one that's going to be the *next* fashionable area. Easier said than done, of course, but if you manage to do this, you have found a gold mine.

    (4) older houses are not necessarily worse, provided they have been properly maintained. E.g. any house over 20 years old may well need rewiring. Check on what's been done before you buy (duh ...)

    (5) in my experience, older, well-maintained neighbourhoods tend to have a more settled population and a sense of community. You may well find a greater age range of folks. Conversely, I've found that new estates tend to attract aspirational middle class twenty and thirty somethings on their way up who aren't likely to hang around long.

    (6) take a look at the local stores and the range of foods in the local supermarket. This will give you a reasonable guide to the sort of people living in the area.

    (7) The type and age of cars in the driveways will also be a reasonable indicator.

    (8) I can only reliably speak for the UK, but I would imagine it applies to the USA as well - a small house in an expensive neighbourhood will tend to hold its value better than a big house in a cheaper neighbourhood.

    Hope this helps.
     
  8. Mary M S

    Mary M S Screenwriter

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    #3 paid in spades for us.

    Nice post Andrew.
     
  9. Chu Gai

    Chu Gai Lead Actor

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    Look at the crime reports for the area you're considering. See what other homes are selling for. Consider doing a search for child molesters assuming you've got kids or plan on having some. Scope out the area at nights and the weekends. Get a sense of the neighborhood.
     
  10. Shane Martin

    Shane Martin Producer

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    Ron,
    Don't worry about age. Some of the highest end homes I've seen were buit in the 20's. Age isn't a big deal if the house is maintained well.

    Location, Location, Location.
     
  11. Randy Tennison

    Randy Tennison Screenwriter

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    Ok, a word of advice once you find the home.

    Hire an attorney to help you through the process.

    Look at it this way, when will you ever spend 350k on anything? Isn't it worth spending a couple hundred to protect that investment. Have the attorney write the offer, review documents, be with you at closing. When yo close, you are going to sign 50 forms which you have no idea what they are. Nice to have someone on your side.

    And lastly, remember, no real estate agent is ever "on your side". Their whole purpose is to bring a seller and buyer together. They don't get paid if the sale don't happen. They also have no confidentiality requirements. If you tell your agent, "I want to offer 350k, but I would pay 375K", they have every right to go to the seller and say, "He'll pay 375k". And, don't fall for the buyers agent route. Again, their loyalty is to getting the deal done. (I'm not anti-realtor, by the way. It's just some people have mistakenly believed that the realtor was their advocate).

    We're getting ready to start looking to upgrade to a newer home. So, I feel your pain!
     
  12. Jordan_E

    Jordan_E Cinematographer

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    We bought our first house 6 years ago, for a seemingly ungodly price of $245K...and now houses in the immediate area are going for $400+K. Timing is a wonderful thing. But, how is the area, economy-wise? I heard that the bottom is dropping out in certain areas back East. Also, if you go townhouse, forget that HT! My sis-in-law got into a townhouse in the area and it was just as bad as apartment living. She sold as soon as she could and got a home in the area instead. Six years later, we're no longer in that 'all-our-spare-money-goes-into-the-house' mode. The deck was put in, the front re-landscaped. But there is something about it being your own home that makes even all the costs well worth it. Good luck, Ron!
     
  13. Joe Szott

    Joe Szott Screenwriter

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    The housing market is starting to cool off big time in the USA. Hard landing or soft landing, all signs are pointing to a landing in the next few years. The coasts should see the most drop off initially (because they are the most overheated.) You can buy now at the top and watch your home lose $50k in a year, or you can wait that year and save the $50k.

    Why not rent a house instead? Then when you think the bottom is in (or close), go out and buy what you wanted. Owning a home vs. renting is overrated unless you plan on squatting in that spot for 10+ yrs.
     
  14. andrew markworthy

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    Exactly the same thing being said in the UK, but they still ain't giving them away.

    A good rule of thumb in buying a house is that:

    (1) the price of houses will instantly plummet as soon as you've signed the contract
    (2) you discover that a group of sex-crazed chorus girls (and/or guys, depending on your preference) each one of whom thinks you're hot is moving into the property next to your old one just as you are leaving
    (3) a week after you move in, you'll find a better property that's twice the appeal and half the price.

    But over time, unless it turns out there's a native American graveyard under the house, you are likely to come out on top, and at least it's yours. If you rent, then no matter how many years you pay the landlord, it's always going to be the landlord's.
     
  15. Mort Corey

    Mort Corey Supporting Actor

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    Another thing your inspector needs to look for in a home that age is asbestos.....nasty stuff and it costs a lot to have it removed.

    Mort
     
  16. BrianB

    BrianB Producer

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    In the US, they aren't giving them away, but generally, they are selling for less than last year, and take longer to sell, even in "hot" areas like San Francisco/Bay Area.

    Personally, I'd be waiting six months to see just how slower/"cooler" the market gets.
     
  17. DaveF

    DaveF Moderator
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    There's great advice in here. I'll just make a few small comments more.

    That's also a good way to go. Townhomes are no panacea, and a friend in new build has had troubles with his association and some some construction problems.

    Conventional wisdom is that Townhomes have worse resale value than homes. A speculative counter-argument is that retiring boomers will be more interested in smaller, first-floor living, homes and townhomes will have increased resale value in the future.

    Also, I see townhomes that are separated by garages and concrete firewalls, so no more noise pollution than between neighboring homes with just drywall and vinyl siding.

    My strongest recommendation is to honestly look at the finances and time investment of the houses you're considering. What hit (if any) will your hobbies take with a new mortgage? How much time is needed for home maintenance?

    And know yourself. Many, if not most, people derive a great deal of satisfaction from owning a home, and that alone is worth much of the time and money. I've learned that I'm not one of them. I'd rather have my cash and free time back, and live in a nice apartment or less expensive town home. [​IMG]
     
  18. Dennis Nicholls

    Dennis Nicholls Lead Actor

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    Actually, no. Most buyers - myself included - instantly instruct our realtors NOT to show us ANY houses with a pool.

    Andrew and Mary hit most of the spots. Don't forget that asbestos comes in many forms, from furnace insulation to "popcorn" ceilings to asphault tiles.

    People who try to quickly "flip" real estate can get burned. But if you are living in a house in an urban area for the long-haul, you should be rewarded. I was. I purchased a fixer-upper in San Jose in 1981 for $110K, paid off the mortgage, and sold it this May for over $650K. Even considering capital gains tax and costs of maintenance, that still is a healthy profit. Let's put it this way....I'm 53 and retired.
     
  19. Dennis Nicholls

    Dennis Nicholls Lead Actor

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    A speculative counter-counter argument points out a non-sequiter in your statement. Yes, I insisted on a single-floor floorplan for living spaces and bedrooms because I'm getting older. But most townhomes are multi-story to minimize footprint. Hence your argument falls apart.
     
  20. Jay Taylor

    Jay Taylor Supporting Actor

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    I want to emphasize Andrew’s point about buying a stand-alone structure to better enjoy your home theater. It is so great to be able to crank up the volume and know that your neighbors aren’t disturbed.

    We did a test one night by playing a DVD with explosions, gunfire & jet noise at an uncomfortably loud volume. We walked around our home and could barely hear the explosions in some places and not at all in other places. Having triple pane windows, good insulation and solid construction help with more than just saving electricity & gas. Since our neighbor’s home is built similar to ours they will never hear a sound from our home theater.

    Our next door neighbor also has a home theater that he plays loudly but we’ve never heard it from our home.

    Our daughter who owns a very expensive townhouse in D.C. can’t play their TV or stereo very loud or the neighbors complain.
     

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