Thursday, February 9, 2012

Shopping for your new home and choosing your realtor

(originally written June 28, 2011)
If you thought all of the other stuff was crazy – well that’s barely the beginning of the roller coaster. It’s like the little hills before you go up and down before you hit the really big hill and get going. Add a couple of cork-screw turns and some upside-down thinggies in there to really capture the feeling.
Next is the fun part – shopping for houses. In your first-time home buyer class you will probably learn about writing down a list of your needs vs. wants in a home. That’s all very well and good, but sometimes you don’t always knowwhat those needs and wants are right away. Go ahead and start your list, but here are a few things to consider that may or may not be brought up.
1. Proximity to work: How much $$ on gasoline are you spending per month? How much can you afford? If gas prices go up to $5.00 a gallon can you still afford to pay all you bills?
2. School district: This is a little close to home since I work for a school district and spend a LOT of time with this information. Even if you don’t have kids or even plan on having them, you still have to pay school tax. Look at the last 10 years of passed school budgets (the district should be able to provide that information to you) is it pretty consistent or is it all over the place? Does the district historically pass their budgets or are they voted down? Generally you want to have a good idea of what the tax levy is going to be every year so you can budget appropriately. With a lot of school districts having to make cuts due to a decrease in state funding – a lot of district budgets are decreasing dramatically in order to save the taxpayers some money. If you really want to have a good idea of what’s going to happen in the next few years - try and find out what your state is planning on doing for school funding. Is it going to increase or decrease? If it’s decreasing expect a higher tax levy.
If you DO have kids (or plan on having them) you want to research the districts in your area. I will tell you – everyone is going to say their district is the best in the area. However, a good way to really look at a district is to go to this website: which gives you all of the school’s demographic information (class size, number of teachers, free and reduced lunch rate etc). You can also go to your state’s department of education site. On that site you can find school report cards, which tell you how the school performs (if it meets state standards), if it’s habitually a school that does well, does poor or is in the middle of the pack. You will also want to go to the district’s website and see what they are most proud of. Do they have a great football team? Is there arts program one of the best in the area? Do they have small classes that allow every student to participate? Most school websites will offer their newsletter (if they publish one) online. Take a few minutes to read it and get the overall tone of the district. If the website doesn’t offer enough information to satiate you – call the administrators or the superintendent. Chances are they will be more than happy to sit down and chat with you over why you should be a member of the community in their district. Some districts are more “community oriented” than others. From there you take all of that information and decide what’s best for you and your family.
3. Taxes: While we’re on the subject… paying them sucks. If you live in upstate New York (like us) - it really sucks. Most MLS listings give you an idea of how much the taxes are. If you live in NY state you should apply for the STAR tax reduction (which can be a few hundred dollars a year) which will reduce your school taxes. The amount changes per year, but any help is better than none. Talk to your local tax collector and find out if there are any exemption programs you may be elligible for. If you’re a veteran chances are there is a program for you. Before you get excited over tax deductions the mortgage broker or banker will process your application based on the taxes without any exemptions. That way is to ensure that you can still pay for everything if for some reason those programs are phased out or taken away. You need to look at how much you’ll potentially be paying in taxes over the year (before exemptions), divide it by 12 to get the monthly amount. If you live in non-rural NY it’s around few hundred a month. Everywhere else – not so much. Also – it may be worth-while to live a little further out in a rural setting where taxes might be cheaper than living closer to a city. You’d have to investigate that further.
4. Neighborhood: Is it a good neighborhood or a bad one? Just like renting an apartment you should call your local law enforcement folks and find out if it’s the kind of neighborhood that has a lot of trouble or not.
5. Proximity to highways or main streets: Being close to the highway may sound like a good thing if you have to take it to get to work – although if it’stoo close you’ll hear the freight trucks coming through at all hours of the night. Same thing with being on a main street. Cars will be coming through all the time. If it doesn’t bother you – fine, if the thought of constantly seeing headlights through your bedroom window at 1am grates on your nerves you might want to consider somewhere else. Being within walking/biking distance to town or grocery stores is good if you are so inclined.
Other than that – you should do some soul-searching. If you’re a “wanna be gardener” but everything you have ever planted has whithered and died in a week – putting “space for a huge vegetable garden” in the must have column is probably not a great idea. If you have bad knees – chances are a house with a lot of stairs is probably a bad idea.  Also – if you have friends and family with free time they might help you “house hunt” on your local MLS online. You can find tons of great houses that way.
When you pick a realtor, they should be someone who listens to you. They need to know what your likes/dislikes, needs and wants are. He/she will try to find everything you need and most of what you want. They also can help you find the answers to any questions about any specific property (such as average utility cost) that may not be in the listing. The other part of their job is to help you negotiate. If you find THE house, but you need the seller to accept an offer that’s $10,000 less than their asking price – that’s where your realtor goes to bat for you and makes it happen. Yes, sellers accept offers that much (and even more so) lower than their asking price.
Overall you need to have some trust for your realtor since they are negotiating your money. Like everyone else – they want money, but they also get a lot of promotion by word of mouth. If you have a good experience you’re more likely to refer your friends to them (which results in more money for them). A friend of ours hired a realtor that insulted him while he was showing him and his girlfriend a house. I couldn’t believe it until I met the man myself and he insulted Garry right infront of me and my grandparents (no joke!) at one of his open houses. Be wary of hiring a friend of yours that happens to be a realtor too. It’s always been my policy to NOT mix business and friends – but if you’re so inclined tread carefully. You can also request a realtor that specifically works with first-time homebuyers. Chances are you will have a million more questions that someone who has purchased a home before and maybe even need a little more hand-holding. Having someone that is willing to take those 1am panic-induced calls (if so are inclined to do that) is helpful to everyone’s overall well-being.
I will say though – one thing about house-hunting that irritates me (and makes me laugh) is when you walk into a house that the owners obviously did some slap-dash cosmetic work to sell the house, but completely ignored basic safety and structural problems AND THEN sign off on the disclosure form (that you get when you view a house) that there’s nothing wrong “to their knowledge” with the house. It’s like they’re insulting my intelligence! These are the people that spend too much time watching HGTV. Actually – I’m going to suggest that you DON’T watch HGTV for the design shows until much later on.
Instead of looking at how nicely decorated the place is you want to look for things that are less exciting (at first, but trust me they become really  exciting down the road) but are incredibly important and will save you a lot of money in the short and long-term.
1. Foundation: walk around the house and see if there are any cracks or damage. The size and location of the cracks can indicate water damage (if near a downspout or by an AC unit), settling, or deterioration. Large cracks = bad.
2. Grade: No, not like what you got in college – but the slope of the property. Is it level? (If you live in WVa, it probably isn’t) if there is a slope, does it slope toward the house or away from the house? If you live on top of a hill chances are you won’t have serious water issues – if you live at the bottom of a hill or near a river or stream – prepare to have to deal with water coming into your basement (and the mold that will result from it).
3. Electrical: It’s a good idea to have a basic idea of what an “up to code” electrical panel should look like. Garry and I both are NOT comfortable dealing with anything more than installing a ceiling fan so any electrical problems we’ll have a licensed electrician take care of. By the way – a lot of electric issues are EXPENSIVE to fix. You want to check the outside electrical main line (make sure it’s not deteriorating, rusting or frayed), the electrical panel and any exposed wires in the basement or attic. Something you should look out for is knob and tube wiring. It’s pretty old (we’re talking pre-WWII) and in some areas is grandfathered into code. While it’s techincally “up to code” it’s not as safe as updated wiring because it doesn’t have any place to ground, can overheat and cause house fires. Other things to look for is older, cloth-bound wires (can be a fire-hazard – especially if the cloth is frayed or deteriorating), random wires that go to nowhere (could be live and have no ground). Sometimes you can use electrical issues in bargaining (have the seller take care of it and provide documentation from a licensed electrician of the changes made and that it’s up to code) or if you have the reserves, use it to bargain a lower price and pay to take care of it yourself. Anything that’s an apparent, immediate and serious safety hazard should be alerted to the sellers whether you buy the house or not – it’s just good karma.
4. Plumbing: Plumbing is just as important as electrical although sometimes if the issues are minor you can handle them yourselves. Replacing one pipe under the sink in the kitchen is pretty easy, tearing down your walls to replace old galvinzed steel water pipes, not so easy or fun. Galvinzed steel while very strong - older pipes tend to have issues with rust build-up and can cause issues with your water pressure and/or leak. PVC pipe is great because it’s easy to install, maintain and there is less chance of the pipe bursting. PEX piping is becoming really popular now too and is less expensive to install and maintain than copper pipes. You want to make sure the pipes don’t show major corrosion or leaking. When you’re looking at a house – run the tap, flush the toilet, run the showers/baths – see how the water pressure is. Replacing one or two pipes isn’t as big of a deal as it sounds, replacing all of the plumbing – a big deal.
5. HVAC: It’s important to find out how old your hotwater, furnace and AC unit (if you have one) are. Some furnaces can run forever, others… not so much. If it looks to be in good condition (no corrosion or anything) chances are good it probably still works well. If it’s really old (your realtor should be able to tell you if it’s ancient or not) you’ll want to consider replacing it for a more energy efficient model. Furnaces are expensive – expect to spend a few thousand dollars if it needs to be replaced. Hot water heaters aren’t as bad – but they need to be replaced more often. If the one in the house you’re looking at is over 10 years old you’ll want to replace it soon. There are a lot of energy efficient models out there and the tankless options – while a little more expensive – have had great reviews. AC units tend to last about as long as hot water heaters, but like a furnace some of them can run forever with proper maintenance. For all units see if you can access the service records to see if the units have been maintained regularly.
6. Supports: If the home you’re looking at has a basement don’t be afraid to poke around down there. You absolutely need to find the supports to the house. Supports can tell you a lot about the condition of the home overall. If the supports look a little shoddy or unsturdy – you WILL have structural problems down the road (if they aren’t present now) if the issue isn’t addressed. Some supports are telescopic which are basically large tension rods that extend from the floor to a support beam. On top of those supports should be a plate of some sort. If the plate is bowing (so it looks like a dish – which actually is called “dishing”) the plate is too small and the support needs to be taken down and the plate needs to be replaced. It’s a pain in the butt. A sign of improper supports in a house are uneven floors on the first floor. If the floors are uneven (sloping) chances are the supports were done wrong. Even if you replace the supports it takes MONTHS to get the floors to even out again and if you have tile or wood floors you risk cracking as you adjust the support poles. Other structural problems in the walls (cracking in drywall) can result from improper supports.
7. Roof: Another very expensive thing to fix in a house is the roof. You should only have to do it every 20 years or more if done properly. Not all roofs are created equal! Roofs have different grades from 20 years to even 50 years. Chances are you’re not going to go crawling up around the roof when you look at a home, but take a minute to look at it from ground level. Do the singles look like they’re in good condition? Are any missing? Are they curling? Are the gutters attached in a way that makes sense? Is the chimney cracked? One common mistake made by DIY roofers is that they don’t do the flashings correctly. One way to tell if it was done by a professional or by Joe Shmoe is to look for tar. Is there tar slathered around the base of the chimney or near any vent pipes? Chances are that means water was leaking in and they didn’t know how to fix it correctly so slathering tar was the easiest and fastest “fix” to the problem. Hate to say it, but you’ll need to take all of that tar off and re-do it properly. It’s not a terribly expensive fix if there isn’t any extensive water damage, but it’s a pain. You’ll want to look for water damage in the house if you see a lot of tar on the roof. Fixing the flashings or repairing small patches of roof isn’t that big of a deal and if you’re not afraid of heights and somewhat handy you can probably handle it. It wouldn’t hurt to ask someone at a hardware store or look up directions online though.
8. Water damage/mold: It can be a serious health hazard and is very expensive to fix. If you see mold (especially if it’s black mold) that’s a bad sign. That means lots of consistent water damage over time. Water damage could be a lot of different things from a leaky pipe, roof, or water running into the basement from off a hill. Depending on what it is (if it seems to be caused by something that can’t be fixed that’s bad – if it’s something easily identified and fixed – a leaky pipe – that’s not so bad) will determine whether or not the house is worth pursuing. You will also want to look for staining or cracks on the ceilings or the higher parts of the walls (indicating a roof leak).
9. Windows: Replacement windows are great. They save tons in utilities every year. If you found a house with all replacement windows – chances are your utilities will be a lot lower and you won’t have to put plastic sheeting up during the winter anymore! Replacing windows isn’t a huge deal, but it’s a little pricey depending on the size of the window and you many you need to replace. If ALL the windows need to be replaced – negotiate a lower price or ask for a window replacement allowance to cover the cost.
10. Random things that make you uncomfortable: There are just some things about a house that might make you uncomfortable. This is where you point it out to your realtor and ask questions. He or she may know the answer – if not they can always research it for you. Remember that they see a LOT of houses and have seen a lot of weird stuff, so something that seems really bizarre to you may end up being more common than you think. If you just can’t place it and still feel uncomfortable move on to the next house.