First Time Home Buying Help

[slpeters]

I don't live in a condo but in a housing development with an HOA that charges us fees. The fees cover our trash removal and maintenance of the common areas (we have a big drainage pond that needs to be drained and cleaned every 10 years or so, and we have landscaping and signs).

Basically an HOA board cannot charge residents for things that "might" come up. It's sort of pay as you go to cover operating expenses. You can keep a small cash reserve but nothing major. I know a few people who live in condo situations and, well, you wouldn't believe the amount of everyday maintenance there is to upkeep a condo community. None of them ever seem to have funding for bigger projects like roofing, siding, etc. Those all end up being special assessments and they can be hefty. Honestly, I've gone back and forth with the idea of downsizing and getting a condo, but at least where I live, condo fees are high and then there's the assessments. It's a little to unstable for my taste. Plus, even though I'm in a hot housing market, their appreciation is negligable.

You should look pretty closely at the health of the condo association and what services they do and don't provide. Our reserves are very substantial, as they should be in a high rise like ours. We've been here for ten years, done lots of major work, without ever having a special assessment. There are associations that are managed quite differently. In the end you pay for all of it, it's just a matter of whether you pay for it in a consistent predictable manner or in unpredictable spurts. I'll take the former. It probably means our regular monthly fees are higher but I'm fine with that. Reserves are one thing you may or not be paying for, services and routine maintenance may be another. Our condo is our first owned home and I remember my Mother gave me the whole "you're going to be a homeowner, no calling the landlord to get stuff fixed any more" talk. A couple months after we bought there was a minor issue with the kitchen sink. Because I was new to the neighborhood I called down to the front desk and asked if they might be able to suggest a local plumber. I'll always remember the long pause before the doorman on duty said "... Mr. P, is there a reason you don't want us to just come fix it?" I know so many people who so resent their HOA fees. I really don't. We have great reserves and the security that comes with it, doormen, valets, maintenance people, gardeners, lifeguards, cable TV and internet, a couple really nice parties each year--in January when you're done with your Christmas tree they send up two guys with a tarp to wrap it up and take it out so you don't get needles in the hallways. It's just nice--and I don't mind paying for it. On the other hand I know a lot of people who pay as much or more and seem to be of the opinion that they really don't get anything out of it.

 

[disneychrista]

My only advice is be aware of what you are or are not willing to accept. I thought I was okay with a house that need a little work and well found out quick that it is not as easy, fun or cheap to do do "home improvement" as it appeared on HGTV.

 

[_19disnA]

^^ I agree. Those HGTV renovation shows make it look FAR easier then it actually is. Major work requires hiring skilled contractors and take WEEKS/MONTHS to accomplish and it usually isn't practical to live there during the renovations. If you have no experience at hiring/coordinating/scheduling all of the sub-contractors, it can easily turn into a disaster. If you can see a lot of obvious cosmetic things, then likely the homeowner didn't take care of things you can't easily see either. Don't let the realtor push you into a buying something you aren't comfortable with.

A condo has it's own set of issues to deal with so you might also look at buying a house instead.

 

[LovesTimone]

Buying a home is the biggest purchase your going to make.

We looked for a year, before we decided to build a new house. I spent hours and hours looking on line, and we went to a ton of open houses, Depending on where you live this might be a option for you, there are lots of townhome, condo's, patio home, communities that are going up right now. For us we went with single family.

Do not rush the process.... slow down, take your time...

Tip 1 - just don't depend on the realtor to show you what you want. You need to get very specific in what your needs are. Make a priority list. This way you both know what the goal is.... If you want move in ready, and they keep showing you fixer's, then the realtor is not on the same page as you are, you need to find someone else. If you only want a certain area or do you just need to be close to a highway, or public transportation, is the school zoning what is important. It so much more than how many bedrooms, and baths.

Tip 2 - be realistic - what you want to spend... and what that price point gets you... might not be the same thing.... in the area you want to be in...

Tip 3 - do the math, if you spend this amount what will your house payment be... then go up in price, you might be surprised that you might be able to afford more in the monthly payment.

Tip 4 - HOA fees, look at what you get the amenities, as well as the condition of those amenities. this is a big hint if the HOA does keeps up with everything, Were we live we have really great amenities, and they were the ones we wanted and were willing to pay for, resort style pool, club house, on site gym a really nice one with current equipment, tv's in the machines and such, really nice play ground area for the kids, several small parks for dog walking with doggie doo stations through out our community. Look at the common area, are the mowed, edged, and the plant beds in good condition, ride through at night, are the street lights working. This the trash picked up.

Tip 5 - Cruise neighborhoods, that you think you might like to live in, look for how the neighborhoods are really living.

Tip 6 - Parking, dedicated parking spots... if you have guest where do they park? especially in town-home or condo communities

Tip 7 - Home owner insurance cost - do not skimp here, again this is the biggest purchase you make, make sure its covered... As well ask question about special insurance, for things like hurricanes, natural disaster, replacement insurance, flood insurance.

Tip 8 - If you want in a certain area, and that area is hot or super popular at the moment, maybe look at a up and coming area.

Tip 9 - check out property taxes, homestead exemption, if its a current property ask what the light, gas, water, trash bills run... then double check them. Most states you can see what the electric will cost you...

Tip 10 - What the list price on a house is not written in stone, use zillow or other sites to see what they say about what the house is listed at. When you make a offer, don't take it personal if the seller rejects your offer, if they come back with a counter offer, if its not right for you, you do not have to accept, just decline the offer and move on...

Tip 11 - Don't use words like, I love it, or I can see us living here, it's perfect... use those words for at home away from the realtors. Keep your game face on...

Tip 12 - Make sure you know what closing cost are going to look like,

Tip 13 - Get a home inspection use someone you choose/hire.... it's worth it to pay more as they are working for you, and you alone... Make sure they are licensed... and see what they reviews have to say...

Tip 14 - this is not a race, take your time, go over all the fine print...

Tip 15 - Keep your eyes and ears open... WOW the neighbors dog sure barked the whole time we were touring that house, or the music is blasting down the street in the middle of the day... I could hear the neighborhood toilet flushing... Let your nose lead you.... if it smells like someone was smoking what could that cost us to get rid of? or a damp, moldy smell... is there mold behind the wall, water leak... use your eyes look up... water marks, uneven flooring, look in the bathtubs and shower areas, around window and doors...

Tip 16 - If you find somewhere you like and are thinking of pulling the trigger, drive through the neighborhood at night, early evening, even around midnight or later... so you know really what it would be like living there.

 

[_19disnA]

^^ I agree with many of those, but websites like Zillow use arbitrary formulas to 'estimate' home price which are fairly useless. Recent SALES are a MUCH better indicator of value. Zillow has no idea if the roof is new/old, how the interior might have been upgraded or maintained, so don't get overly hung up on those figures. Two houses next door to each other may have totally different values just based on a number of factors none of the home websites can consider.

I would not tell the SELLER you like/don't like their place (usually the owner isn't home during a showing), but be honest with your realtor so they can better match your interests with available properties.

 

[barkley]

Tip 9 - check out property taxes, homestead exemption, if its a current property ask what the light, gas, water, trash bills run... then double check them. Most states you can see what the electric will cost you...

also look to see if anything is brewing with the providers of an individual property's utilities (a google search can pull up local articles). in some cases major impending upgrades/repairs will impact future costs as well as impending MAJOR lawsuits (SO GLAD i'm not a pg&e customer in california any more with what will happen with rates due to the fires). as an example-local water provider to us (we don't use-we are on well) has been VERY remiss in maintaining and upgrading their systems while the city has been issuing now construction permits like crazy. overwhelmed system has been creeping along with big problems and now need crazy expensive repairs-it will be passed on in much higher monthly costs (and that's on top of insane water restrictions to just keep the system minimally operational).

Tip 13 - Get a home inspection use someone you choose/hire.... it's worth it to pay more as they are working for you, and you alone... Make sure they are licensed... and see what they reviews have to say...

research what the laws are pertaining to home inspections-in some states the inspectors are awesome b/c they can be pursued if they miss something or fail to properly inspect, in others there's not only no recourse but a basic inspection doesn't include some of the most potentially costly repair items. if you find a place you like it can be worthwhile to have a trusted and proven construction person take a look as well as an inspector-that way you get a rough idea of how much any repairs or upgrades will actually cost.

^^ I agree with many of those, but websites like Zillow use arbitrary formulas to 'estimate' home price which are fairly useless. Recent SALES are a MUCH better indicator of value. Zillow has no idea if the roof is new/old, how the interior might have been upgraded or maintained, so don't get overly hung up on those figures. Two houses next door to each other may have totally different values just based on a number of factors none of the home websites can consider.

zillow also lets homeowners tweak their home values so they can sign up for that ability and artificially increase the value. on the flip side-if there's some kind of major issue with the property that they are going to try to get around by selling it at what would seem a crazy low price they can make it not appear so crazy low by signing up and lowering zillow's home value. you have to look at the price history-and if the values are off from what the rest of the area is trending at then you have to take the values with a huge grain of salt.

 

[Callie]

We went and looked at another one last night but my realtor was out of town so she sent a co-worker. If it is still on the market Monday, I'm going to go back with her for her opinion. We think it's about 10K to 15K overpriced compared to the comps that have recently sold in the same neighborhood.
They are still finishing the flooring replacement on the main level.

It has good bones but a few weird things. They don't have any doors on the closets which is strange, and they have a ceiling fan in the master bedroom which is plugged into the wall so the wiring is hanging from the ceiling.

Also the HVAC and Cooling is from 1996 which means it'll need replaced soon.

It needs some updates but it's livable with some closet doors, and making sure it passes inspection. We will see what she thinks and if they will negotiate. Same floor plan just sold for 20k or so less two weeks ago but it had one less half bath.

 

[Christine]

A quick Google search seems to indicate that an HOA should have an Operating fund for month to month expenses, plus a Reserve fund ,setting aside enough money to major expenses like roofing because they KNOW they are going to be coming up in 20 or 30 years. I get that unanticipated costs could cause assessments, but a roof they know is coming. They should over the years have set aside 100% of the expected cost.

https://www.nolo.com/legal-encyclopedia/why-hoa-needs-sufficient-cash-reserves.html
https://kuester.com/much-hoa-reserve-fund/
https://blog.hignell.com/hoa-manage...Should-Use-the-Reserve-Fund-vs-Operating-Fund
https://spectrumam.com/hoa-reserve-fund-management/

Good to know. I believe you. I can only go by my own HOA that is not allowed to keep but so much over operating expenses and a small reserve to use for legal fees should a situation come up (which, unfortunately it has). I've been in my neighborhood for over 20 years and we are not a "condo" so maybe that's the difference, or maybe different jurisdictions have different rules. We aren't allow to raise our dues but a certain percentage over operating expenses.

So, for the first time in 20 years we needed a new sign, entryway landscaping, and having the drainage pond drained and cleaned. We had to put to a vote to assess an extra $80 so we could pay it. Otherwise we go on some sort of credit and due a low, gradual rate hike.

 

[tvguy]

Good to know. I believe you. I can only go by my own HOA that is not allowed to keep but so much over operating expenses and a small reserve to use for legal fees should a situation come up (which, unfortunately it has). I've been in my neighborhood for over 20 years and we are not a "condo" so maybe that's the difference, or maybe different jurisdictions have different rules. We aren't allow to raise our dues but a certain percentage over operating expenses.

So, for the first time in 20 years we needed a new sign, entryway landscaping, and having the drainage pond drained and cleaned. We had to put to a vote to assess an extra $80 so we could pay it. Otherwise we go on some sort of credit and due a low, gradual rate hike.

The IRS does have rules for non-profits about carrying over cash. It pretty much has to be designated for a specific future expense. I ran into this when I was on the Little League Board. Things like our Charter fee, and insurance came to about 10% of our annual budget and had to be paid in December, and our sign ups, and the associated registration fees weren't collected until January. And our field improvements were all done in November, December and January, between the end of Winter Baseball and the Regular season.

 

[Aimeedyan]

We have bought 3 houses, each time on a weekend trip, so we definitely don't follow all the suggestions for buying

I'm unfamiliar with condos and HOA's but did want to mention that in a hot market, you may have very little negotiating room when it comes not only to cost of the house but also what you'd like the seller to do/offer. We recently sold in a hot market (4 above asking offers in 45 minutes of an open house) and I was not overly willing to fix a bunch of things before closing.

At the same time we were selling in a hot market, we were buying! We offered over asking and took the house as-is. We did an inspection, of course, but opted to not ask for minor things to be fixed. If there was something glaring, we would have simply walked away.

I learned in my first house buying experience that I can fix a lot of things about a house except the location. And that became our #1 priority moving forward. When we found the perfect location, I didn't worry so much about the weird things about the house. I just fixed them after we bought it.

Good luck in your process!

 

[_19disnA]

^^ I agree. That is also a reason to be flexible about what specific area you want to live. On some of those home buying TV shows, they just HAVE to live in a single very specific area and being flexible could say you a lot of money if you would widen your search. What is 'hot' today, my not be then next time you go to sell, so you might find you have over-paid for the house.