Tips for first-time home buyers

[hiker_girl]

Hi fellow Mustachians,

My husband and I are planning to purchase a home within the next 1-2 years. We'd love to stay in Colorado, but we're also open to other locales; preferably one with several good schools and mountain hiking nearby. We're also hoping to do "lite" homesteading and would like a bit of acreage with this unicorn property.  So maybe a rural plot right next to a suburb or urban area with good schools.

We have been life-long renters and know nothing about the home-buying process, and it sounds more fraught than usual in the current market.  So we'd love to be on top of our game. Do you have any tips/ideas for:

-Efficiently FINDING this property, or even potentially relevant neighborhoods in the US?
-Getting a lower interest rate, or other ways to save on the costs of the home/homestead purchase?

And if you're selling a property like the above, please pm me :D

Thanks!

[darknight]

Similar situation..

Check if your state has a "first time home buyer" course or benefits. These help educate you about the process, advise you on potential benefits ($$ or rate) assistance, maybe not that you need it, but because you're buying for the first time.

-Use your resources. Ask people who have worked with bankers, and find a good bank/credit union. Don't just go with the bank you use, shop around. Make some calls to see how easy/hard it is to talk to a person when you have questions.
-Talk to a few realtors that your friends/family have used. Sure, we all hate realtors, but they have the "ins" with the market and properties. I work with realtors quite a bit in my line of work and they know properties. They know which ones have terrible neighbors, junk HOA's, water issues, potential land coming for sale.. Find someone you jive with and trust (again, shop around and maybe use one that's recommended by a close friend or family).
-Get pre-approved before you start doing walk-throughs. In the current market and for the next while, you'll need to be ready to make an offer that's backed up with numbers. The bank/er you decide to use will tell you how long your pre-approval is good for, seems like it's under 12 months, so time your pre-approval correctly.

[patchyfacialhair]

Budget is important, especially in Colorado. I thought we paid too much for our Colorado house in 2017. I cringe when I see how much it's worth these days. So yeah, maybe reveal your budget and folks may have better suggestions. If it's low, then people will probably suggest other places with mountain hiking.

Also, are you saying good public schools or good schools of any kind? For example, we're sending our kid to a private school next year despite living in a "good" school district in Colorado. For many reasons, we think this is the best path for us for the time being. So we paid extra to get into a good school district, and are now going to pay more to be at the school of our choice. So while I'd always advocate to buy in a good district for resale purposes, your circumstances may not mean that your kids end up going to those schools. Be sure to preserve that flexibility when purchasing a place.

I'd suggest finding a group of like-minded people that jive with your way of living, see what they think of certain cities/neighborhoods, and spend time in those neighborhoods. We used to live in a hoity-toity country club area of town, but everyone was standoffish. We ended up buying on the opposite side of town in normal boring suburbs and love it. Our cul-de-sac has a million kids in it all the time and there's benefit to that, in our opinion. We wish there was more old growth trees and stuff like that, but everything is convenient in this location, and with small children, every bit of convenience is important.

[affordablehousing]

Oh gosh, you're at the tip of the iceberg. So much to learn. I doubt you want to move to California, but the state now has a 10% forgivable loan to help make it more affordable if you live in the house for 5 years.

[Archipelago]

I have some general ideas on areas if you're open to relocating. I've lived in Connecticut my whole life and am moving to New Hampshire with my wife next month.

The northeast has excellent schools, consistently top ranked in the country. There are many suburban areas in Connecticut that have fantastic public schools. The taxes here are high in these areas - you get what you pay for. If public schools are important to you, CT is worth looking into. Another thing CT and the northeast has - lots of natural beauty. You're close to farmish areas, close to the ocean, and close to all kinds of hiking. Note: Colorado and the west has mountains, northeast has hills. It's great hiking here, but it's an order of magnitude different when you compare mountain chains to hills - catch my drift?

I consider Connecticut MCOL in most areas. The area near NYC tends toward HCOL. I'm not a fan of this area to begin with.

The northeast is very much car-centric. It also stays cold from mid November to early May. That's a lot of time cold out of the year. But we also get amazing microcosms of seasons in return. Summers are not grotesquely hot, spring and fall are beautiful.

Initial impression having visited New Hampshire a few times before our move. Lower COL (no state income tax or sales tax), more spread out, more folks keeping to themselves, very good highways, quiet, proximity to Boston which is a very strong city in terms of economics and opportunity.

[Archipelago]

I also have some tips on contacting owners directly to find off-market properties in a competitive market. PM me if you're interested in learning more. I don't like to post this information publicly because I don't like the thought of it being used in the wrong ways.

Btw, interest rates have really shot up recently which is already starting to damper the prices on homes. I've started to see properties that used to be sold $30k over asking, now getting price cuts by $30k because they're listed too high and people simply cannot afford them.

This is forcing a lot of homebuyers out of the market and into rentals. You already know this, but rental properties are ridiculously tight at the moment. Like "you can't make this stuff up" kind of tight.

[hiker_girl]

-Talk to a few realtors that your friends/family have used. Sure, we all hate realtors, but they have the "ins" with the market and properties. I work with realtors quite a bit in my line of work and they know properties. They know which ones have terrible neighbors, junk HOA's, water issues, potential land coming for sale.. Find someone you jive with and trust (again, shop around and maybe use one that's recommended by a close friend or family).

Thanks! This realtor part is a black box to me. If you were shopping from a distance, and you don't know anyone there, how would you go about finding a realtor, and how would you manage that relationship from a distance?

[hiker_girl]

I have some general ideas on areas if you're open to relocating. I've lived in Connecticut my whole life and am moving to New Hampshire with my wife next month.

The northeast has excellent schools, consistently top ranked in the country. There are many suburban areas in Connecticut that have fantastic public schools. The taxes here are high in these areas - you get what you pay for. If public schools are important to you, CT is worth looking into. Another thing CT and the northeast has - lots of natural beauty. You're close to farmish areas, close to the ocean, and close to all kinds of hiking. Note: Colorado and the west has mountains, northeast has hills. It's great hiking here, but it's an order of magnitude different when you compare mountain chains to hills - catch my drift?

I consider Connecticut MCOL in most areas. The area near NYC tends toward HCOL. I'm not a fan of this area to begin with.

The northeast is very much car-centric. It also stays cold from mid November to early May. That's a lot of time cold out of the year. But we also get amazing microcosms of seasons in return. Summers are not grotesquely hot, spring and fall are beautiful.

Initial impression having visited New Hampshire a few times before our move. Lower COL (no state income tax or sales tax), more spread out, more folks keeping to themselves, very good highways, quiet, proximity to Boston which is a very strong city in terms of economics and opportunity.

I lived in CT for 3 years and MA for 4 years. I liked it there! Now to convince my husband.... :)

[joe189man]

Where in Colorado do you want to be? And whats your budget?

Acreage in the Denver metro area and even the xurbs will be tough to find and well over $1 million. Homesteading on the front range maybe difficult - its been very dry lately

Check schooldigger.com and niche.com for schools info and ranking of areas to your desires. these two websites or best places to live lists can help narrow your choices down if you look outside of CO.

i found this site one day - it compares weather in one place to others world wide - pretty cool, so if you love denver or Vail weather you can find other places with similar conditions

https://www.codeminders.com/weather_similarity/

i think the Denver average home price is now in the low to mid 600s

i took a class through a local county organization to get some basics and understand the process

endless zillow searching may be helpful just to see whats out there

i would recommend doing the math on interest rates. you can "buy" a lower rate up front that will lower your monthly payment but you have to do the math on the cost benefit. if this isnt your forever home (and they rarely are) its better to not pay for a lower rate - you just have to look at the cost vs the savings on your monthly payment

In the last 6 months, a coworker bought a place south of chatfield reservoir with an acre or so that allowed horses and it was over a million

[Bartlebooth]

How about thinking about the modern-day "nice" house as a clown house, much like a clown car?  I believe a mustachian person can HALVE their housing costs by merely exposing themselves to "hardships" that were typical of a 1980s home.

• Master bath: don't need it, your guests don't care about having to wait 10 minutes to brush their teeth and it's just a few weekends per year.
• Walk in closet: don't need it.  One closet rod per person and some simple bottom storage is enough
• How much are you willing to pay for a bedroom big enough for king size bed, enormous dressers, and two nightstands?
• 30 year old golden oak kitchen cabinets: they will hold your dishes.  Soft close hinges for $150 total and two hours of work will dramatically improve the feel.
• Stainless kitchen sink: it's fine, put a nice faucet on it and wash some dishes.
• Three car attached garage: just more space to hoard crap, and/or a 20 second walk outside to the garage is harmless
• Laundry "room" (you need a dedicated room for this!?) in basement or built into a bathroom is good enough
• Is your basement unfinished or drop ceiling?  This is actually good for maintenance access.  You can get nice ceiling tiles to dress it up.
  Fiberglass all-in-one tub shower might just be superior to trendy tile and glass

[ChpBstrd]

If you have a job that requires you to be physically present at a location, then that simplifies the search process: You should live within a 15 minute drive or 30 minute bike ride from that location. Simply cruise the neighborhood and use zillow/realtor.com to get a feel for prices. Go on evening walks in eligible areas. Occasionally, you'll be among the first people to see a for sale by owner sign go up.

Also, go to estate sales and ask for the contact info of the executor if you like the house. Landlords putting houses up for rent will usually entertain offers, especially if it might mean avoiding realtor commissions or a couple of empty months.

Talk to someone about getting a construction loan. This will open up opportunities for "project" houses that might be otherwise great but can't qualify for regular loans because of their present condition.

No house is perfect, and if it was it would cost millions of dollars and be imperfect for that reason. So don't let the perfect be the enemy of the good. You'll settle on something that is good enough one way or another.

Keep in mind, it's perfectly fine to just say no to homeownership in MCOL/HCOL areas. Renting usually makes more financial sense. Do not make this a quest that you think your whole happiness in life depends upon. There are lots of ways to live. If rates keep rising, housing prices might crash anyway, and then won't you be glad not to have bought?

"Good schools" are a factor of living amongst wealthy people. Whether your kid or prospective kid is a "good student" will depend almost completely upon whether you read to them regularly starting from when they are babies, apply scientific reasoning and skepticism in your personal life, avoid the temptations to become absentee, keep them away from screens, etc. I still remember high school when friends of mine whose parents earned 3x what my parents earned and lived in the "good" elementary district were huffing spray paint. Their parents were absentee, let the TV be the babysitter, or never spent enough time with them to instill common sense and skepticism. So spending money does not necessarily fix parenting problems.

Also, if home prices in CO do not make sense, consider NW Arkansas or SE Missouri. The Ozarks have plenty of hiking opportunities, plenty of water, no real wildfire risk, no earthquake risk, a fast growing low-unemployment economy, affordable universities, and more. $200k will buy you a nice place there, and you can engineer a very high savings rate.

[ChickenStash]

As far as finding a realtor, if you don't have any local connections I'd suggest just looking for homes on the usual real estate MLS mega-sites like Realtor.com, Zillow, and Redfin to come up with a list of places you want to see. Make appointments with the listing agent to see the house and as you walk through quiz the agent to see what else you can learn about houses in the area.

Most agents aren't going to know much more than you can find from the MLS sites, anyway. Finding an agent that actually knows the market and is more useful than a simple web search will take some time. Hopefully, meeting a few agents from the general lookups will net a decent one.

[Dicey]

1. Wait
2. Wait
3. Wait
4. While you're waiting, start going to Open Houses. As many as you can possibly stand.
5. At every Open House, tell the agent (if asked) that you're already working with an agent.
6. Create a specific house hunting email address and only give that one out if pressed.
7. Most agents will spam the shit out of you. Anyone who sends you crap, just unsubscribe them.*
6. If/when you find one you really like, then and only then, consider working with them. If you do this long enough, you will learn who the good ones are.
7. Start scouring the areas you want to live in via Zillow and Redfin. Open accounts with both so you can see more history on each property.
8. Make an appointment with a Mortgage Broker to find out what you can qualify for, and what kind of documentation you will need. Collect all those documents and keep them current. Use the new email address for them, too. You're under no obligation to work with them in the future, and you will learn a lot.
9. Run your credit. Make sure there are no surprises.
10. See 1-3.

*When we were scouting property for DH's son, age 30, we met an agent who seemed really on top of it, so we broke our rule and DH gave her his real email address. She started sending a bunch of listings for a large 55+ community in our area. WTF? In the meantime, we found a property on our own, used the very experienced and well known listing agent to make an offer, and got it.

[NaN]

Good schools and rural/suburb areas usually don't go well together. In the Colorado Rockies area this is highly desired and will cost you. I would say you could look at some Northern New Mexico areas. West Colorado near Glenwood Springs and further west. Schools will be hit/miss. NM consistently ranks at the bottom of schools.

I have had friends buy land on the east coast in rural Maryland or Connecticut and have taken on a pretty intense homestead life. There is at least water there. But no mountains.

The PNW up north of Seattle and rural Oregon might be alternatives. I'm not sure about the schools but close to major urban areas and mountains.

My biggest recommendation is visit and rent a place nearby (even if camping, Airbnb) areas of interest for several weeks. Meet realtors for coffee, breakfast. Your places you probably won't buy just to get some info on how that feels in that area. Ask tons of questions.

Talk to people who own property in those areas like those you are interested in. Chat up people at a bar, or park. Heck even send some PM on nextdoor. Have people in the area give you feedback because they are the most knowledgeable on that area. They may give you honest assessments of that life (issues, etc).

Going from renting in a city to homesteading would be a huge shock. Biggest change - time. Do you have enough time to work, take care of the land, go hiking, read, rest, take care of a kid? You might realize the unicorn property, if it even showed up in your lap, may not be the real life you want.

[YttriumNitrate]

-Getting a lower interest rate, or other ways to save on the costs of the home/homestead purchase?

I've been lucky enough to only buy houses in sluggish/lukewarm markets, so this might not apply if things are still crazy in favor of sellers, but my tip would be to find two houses you like before putting an offer on a first. The ability to easily walk away from a deal gives you an immense amount of power in negotiations.

[kite]

1. Wait
2. Wait
3. Wait
4. While you're waiting, start going to Open Houses. As many as you can possibly stand.
5. At every Open House, tell the agent (if asked) that you're already working with an agent.
6. Create a specific house hunting email address and only give that one out if pressed.
7. Most agents will spam the shit out of you. Anyone who sends you crap, just unsubscribe them.*
6. If/when you find one you really like, then and only then, consider working with them. If you do this long enough, you will learn who the good ones are.
7. Start scouring the areas you want to live in via Zillow and Redfin. Open accounts with both so you can see more history on each property.
8. Make an appointment with a Mortgage Broker to find out what you can qualify for, and what kind of documentation you will need. Collect all those documents and keep them current. Use the new email address for them, too. You're under no obligation to work with them in the future, and you will learn a lot.
9. Run your credit. Make sure there are no surprises.
10. See 1-3.

*When we were scouting property for DH's son, age 30, we met an agent who seemed really on top of it, so we broke our rule and DH gave her his real email address. She started sending a bunch of listings for a large 55+ community in our area. WTF? In the meantime, we found a property on our own, used the very experienced and well known listing agent to make an offer, and got it.

This is some excellent advice.
Wait, wait, wait.

Because in between waiting and more waiting, there is soon to be another jolt to the housing market*** that nobody saw coming except for the people see it coming.  It's Boomer death. 

The oldest Boomers are reaching life expectancy shortly. 
Boomers & Silent Generation number about 90 million in the US. Over 1/3 of the US adult population. They aren't all leaving homesteads to their offspring because they didn't have that many kids.  A crap-ton of them will need to sell to afford assisted living or will soon sell because they are voluntarily downsizing and some other fraction will die as homeowners with houses that'll get sold to settle their estates.  That's ninety million who will be moving or moving on over the next couple decades.

Just narrowing it down to Silent Generation (20 million) who currently range in age from 77 to 94. Can't live forever, but even for the ones who will have a 99th birthday, home maintenance is a really low priority if not an increasing impossibility. These home sales are imminent. Have patience


***It's not just going to affect the housing market.  It's going to reverberate in the global economy, impacting everything: consumer products, manufacturing, employment, travel, politics, the environment, education, religion, energy, health care.  Literally everything will feel the effects of the seismic shift in demographics. 

[ChpBstrd]

Yes, I think at least half the homes in my city are owned and occupied by a single elderly person. There is some sort of generational preference to spend one's golden years all alone in a big SFH with empty bedrooms watching wheel of fortune. When they die or go to an elder care home, the new occupants might be a young couple or a family, so the housing density doubles or triples.

Of course, there are always elderly people and there are always households being formed. The question is whether this preference to live all alone in 3BR and 4BR houses continues to exist? Will gen X do the same thing, or will they prefer senior living apartments where the housekeeping and cooking is done for them and there's a lively social scene? 

[YttriumNitrate]

Because in between waiting and more waiting, there is soon to be another jolt to the housing market*** that nobody saw coming except for the people see it coming.  It's Boomer death.

As with all things real estate, location is everything (even for Boomer death). Certain areas are going to be hit much harder than other areas. With just 12-13% of Silicon Valley being over 65, boomer dying probably won't make much of an impact there. In Lancaster county, VA where 35% are over 65 the effects will be huge.
https://www.census.gov/library/visualizations/interactive/2014-2018-median-age-by-county.html

[GreenSheep]

Yes, I think at least half the homes in my city are owned and occupied by a single elderly person. There is some sort of generational preference to spend one's golden years all alone in a big SFH with empty bedrooms watching wheel of fortune. When they die or go to an elder care home, the new occupants might be a young couple or a family, so the housing density doubles or triples.

Of course, there are always elderly people and there are always households being formed. The question is whether this preference to live all alone in 3BR and 4BR houses continues to exist? Will gen X do the same thing, or will they prefer senior living apartments where the housekeeping and cooking is done for them and there's a lively social scene?

I don't think it's simply that they want to live in overly large house. It's that the house is where they've lived for decades, where they raised their children, took care of their grandchildren, built memories with their spouse, know the neighbors, can navigate to the bathroom in the middle of the night without turning on the light, etc. It might be literally the only home they've ever known as an adult. They might literally have built it with their own hands -- not terribly uncommon among 90-somethings. There are also a not-insignificant number of people who have mild dementia that becomes significantly worse if they move to an unfamiliar environment.

I've thought about this for myself, even though I don't plan on anyone dying anytime soon. Would I stay in this big house by myself? Would my husband? Well, our dogs need a big yard, the neighbors are our friends... it would be really hard to just pick up and leave. My parents are the same. Their house is "too big" for two people, but it's where they raised their kids, where my mom has spent decades getting the flowers in the yard "just so," where my dad has been vegetable gardening for decades, where the neighbors are some of the people they've known the longest in their lives, etc. They know the space is more than they need, but there's nowhere else they'd prefer to live. I doubt either of them will move when the first one of them dies.

[mavendrill]

1. Wait
2. Wait
3. Wait
4. While you're waiting, start going to Open Houses. As many as you can possibly stand.
5. At every Open House, tell the agent (if asked) that you're already working with an agent.
6. Create a specific house hunting email address and only give that one out if pressed.
7. Most agents will spam the shit out of you. Anyone who sends you crap, just unsubscribe them.*
6. If/when you find one you really like, then and only then, consider working with them. If you do this long enough, you will learn who the good ones are.
7. Start scouring the areas you want to live in via Zillow and Redfin. Open accounts with both so you can see more history on each property.
8. Make an appointment with a Mortgage Broker to find out what you can qualify for, and what kind of documentation you will need. Collect all those documents and keep them current. Use the new email address for them, too. You're under no obligation to work with them in the future, and you will learn a lot.
9. Run your credit. Make sure there are no surprises.
10. See 1-3.

*When we were scouting property for DH's son, age 30, we met an agent who seemed really on top of it, so we broke our rule and DH gave her his real email address. She started sending a bunch of listings for a large 55+ community in our area. WTF? In the meantime, we found a property on our own, used the very experienced and well known listing agent to make an offer, and got it.

I agree with all of this as well as:
Buying a house is a huge amount of money.  Using connections can be a great way to support and get service from someone you know.  But firing or suing someone you know can make life very awkward, and the game is being played with huge amounts of your money.  Think about this (or if you know no one in real estate (agents, mortgage brokers, etc) yippee.

Going to open houses:
don't look at the house, especially early on.  Use the house to have a series of conversations with your spouse about priorities.  For example, I found from open houses that my spouse loves built-ins to an essentially irrational degree.  I hate trim and moulding that is dark, and hate all blinds ever they should never be used.  Once you own a house, there are loads of aesthetic choices you will be able to make that renters don't, and while some of them are stupidly expensive, others are dirt cheap.  As you have these conversations, you will get a better sense not just of your day 1 house, but also of your long-term home vision.  This will also help you prioritize essential and expensive things once you are ready to buy (for example - we have always had houses that had a couple of rooms with multiple doors in a circle so that kids could (and do) chase each other endlessly... the best case scenarios for creating this is lots of effort and moderate money, and the worst case is absurd amounts of money, so it was something to prioritize in a house (and that could be present at any budget).

Also, have a LOT of conversations about home maintenance.  There is a lot of it, even if you buy the perfect move-in ready house.  Who is going to do these tasks?  Similarly how willing/eager are you for home improvement projects.  Going to open houses and seeing stuff you would want to change is a good way to evolve this conversation.