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So, buying a house, then. How does it work?
CroakerBC
TorontoRegistered User regular
TorontoRegistered User regular
My wife and I are finally in a position to buy our first home, after several years of economic unpleasantness, and desperate saving. But we've got a deposit together, and we're now on the hunt for somewhere to live. Unfortunately, never having bought a house before, we're a bit at sea as regards the houses themselves. We go to viewings, we look round, we ask a few questions (in my case usually about the heating, age of boiler/furnace, double glazing), and then we leave.
Being naturally paranoid, we suspect we're missing something.
A bit of background:
1. We're buying in the UK, which uses Estate Agents (sort of like realtors) as the gate between the vendor and the purchaser. Agents make a commission on every sale, so effectively they work for the vendor.
2. Either the Estate Agent or the Vendor will take the purchaser around a property during a viewing. Obviously this means that you can't take anything they say at face value.
3. We've sorted ourselves out financially via a Mortgage Broker (someone who looks at mortgages on the market and selects the best one for you). Our guy is, thankfully, properly independent, and does, in fact, work for us.
4. The purchaser is required by their mortgage lender to have a survey done on any property they intend to buy, which is intended to highlight any significant problems (subsidence etc.) before purchase. This prevents the bank backing the mortgage on a house which is about to fall in a hole, and as a side benefit, also prevents us buying a house that is about to fall in a hole.
Our funds are effectively sorted. But we're trying to think of all the things we need to ask the vendor, in an effort to avoid any nasty surprises. Also, surveys are expensive, and we'd rather not get all the way through the process and find a problem in the survey that we could have caught by asking "So, the house doesn't have a roof, then?".
At any rate, we'd really appreciate some advice. What to ask, what not to ask. What those of you in houses now wish you'd known before you started, anything you want to pass on to a pair of hopeful (but slightly cynical) first-time-buyers.
It's all really appreciated!
Being naturally paranoid, we suspect we're missing something.
A bit of background:
1. We're buying in the UK, which uses Estate Agents (sort of like realtors) as the gate between the vendor and the purchaser. Agents make a commission on every sale, so effectively they work for the vendor.
2. Either the Estate Agent or the Vendor will take the purchaser around a property during a viewing. Obviously this means that you can't take anything they say at face value.
3. We've sorted ourselves out financially via a Mortgage Broker (someone who looks at mortgages on the market and selects the best one for you). Our guy is, thankfully, properly independent, and does, in fact, work for us.
4. The purchaser is required by their mortgage lender to have a survey done on any property they intend to buy, which is intended to highlight any significant problems (subsidence etc.) before purchase. This prevents the bank backing the mortgage on a house which is about to fall in a hole, and as a side benefit, also prevents us buying a house that is about to fall in a hole.
Our funds are effectively sorted. But we're trying to think of all the things we need to ask the vendor, in an effort to avoid any nasty surprises. Also, surveys are expensive, and we'd rather not get all the way through the process and find a problem in the survey that we could have caught by asking "So, the house doesn't have a roof, then?".
At any rate, we'd really appreciate some advice. What to ask, what not to ask. What those of you in houses now wish you'd known before you started, anything you want to pass on to a pair of hopeful (but slightly cynical) first-time-buyers.
It's all really appreciated!
CroakerBC on
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In Canada (and the US, I'm sure) there are realtors that work for the seller AND the buyer. They split the commission, so the buyer never actually pays his realtor (until he theoretically sells and uses him).
You're right in that anything the seller's realtor says should be taken with a grain of salt. They want to sell the house, obviously.
Some things to consider financially:
Property taxes
Fees (if any)
Average utility bills (seller should have some bills for you to look at)
Insurance
Car insurance changes (if you're moving a significant distance. Ours almost doubled compared to where we grew up, only 40 min away)
Other than that, the inspector will be the one who can tell you if the foundation is sound, if the chimney's falling off the house etc, if there are any code violations.
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There doesn't seem to be a rulebook but on a first viewing we don't tend to ask that many questions, we observe more. It feels like we should be asking more questions but we usually save that for a second viewing.
-How long the property has been on the market.
-The heating system and how new it is.
- what building work they have done themselves to the house
- how old the house is.
Things to observe:
- Play spot the difference with the rest of the houses on the street, do they have new roofs for example?
- Try researching dampness a little, particularly condensation dampness, it is a particularly common problem in the UK, don't let a little of it put you off but be careful. It's something that a surveyor will check anyway.
- Check for splits in drainage pipes, this can cause big problems.
- check to see what building work is not original to the house
- parking somewhere if there's no off street parking
- how bright the house is
- magnolia covers everything and it makes it look blank canvassy.
- if you're feeling particularly cheeky you can ask the vendor how much negotiation on price there is but I only tend to ask if i've got some kind of rapport with them.
On a second viewing if we like a house we ask everything:
Internet speed, average monthly elect/heating bills, council tax, water rates, bus availability, mobile phone reception.
Even if you're not planning on having kids, ask about local schools. Look up their ofsted reports, when it comes to selling your house later, a house next to an 'good' or 'outstanding' performing school will sell a hell of a lot easier than a 'satisfactory'
Including, most importantly, double checking everything you asked for in the first viewing with the estate agent. It's a buyers market (or so they keep telling us) and vendors lie (well not all of them), an example, a woman told us her house had been on the market for 3 weeks and it had been on for 4 months.
If its leasehold of freehold, if you proceed the solicitor will ask.
Finally, when you do get a surveyors report, be aware that they include every single little detail and will raise issues where there maybe are no issues, for example, they might say that the house is 65 years old and the wiring may need to be replaced, at which point you hire a second opinion to check this, the surveyor is a surveryor, not an electrician. Ive found surveyors reports to be hypercritical, they are useful to ensure the house isn't going to be swallowed by the Earth but on the other hand they read like a massive arse covering exercise so that in the event the house does fall over the surveryor doesn't get sued.
I'd almost recommend you go with them while they do it, you'd be surprised at how many inspectors walk around and do very little actual inspecting.
BWAHAHAHAHAHAHAHAHAHAHAHA! It's called opening the window.
Anyway, in more useful advice. Don't worry too much about the house, the super obvious stuff is super obvious if you go looking. The less obvious stuff is what the surveyor and solicitor is there for.
And really don't trust the estate agent. The house we bought was listed at two estate agents. After we made a cheeky low offer the agent came back and said 'Another offer had come in at the other estate agent just that afternoon so you'll have to up yours a bit!.' Being suspicious as the thing had been on the market for months at this point we called the other estate agent who happily confirmed that they hadn't had any interest in weeks and that the first guy was probably lying to us. Bastard.
Also note that all recent local house prices can be checked online and it shouldn't be too hard to use the internet to check how long it's been on sale.
I don't have a ton to say about the process of buying a home in the UK, but I will observe one universal truth: the only thing that you can never change about a house is where it is. If you buy near a lousy school, or if you buy on a super-busy street where you can hear traffic going by outside your bedroom window at all hours of the day or night, or you buy across the street from, like, a gas station or something horrible to look at, you're going to have a much harder time selling that property later.
The terms of the mortgage
Location
You only determine the terms of a mortgage by talking to banks. Often the monthly cost of the loan is not all of your expenses, as well, and determining the monthly mortgage + all other costs is the ultimate determination for what you can afford. Remember that by purchasing a home, the idea is that you will live there until the mortgage is paid in full or you sell it (and pay the loan in full). In both cases, you need to be able to pay every month until that point, and you cannot simply move out to somewhere cheaper in order to reduce your payment -- you are to pay the bill every month even if you don't live there. Even if you rent it out, you are still to pay the mortgage and other fees.
Location is obvious but important, as it determines not only the first part (the terms of the mortgage, the price of the house, the ability to sell), but the overall feel of living there. Few people buy a house in order to never go anywhere -- even people who buy in the country want to be in the woods and travel to town for supplies and socializing. Do you like walking places to do things? Driving? Mass transit? Are you a light sleeper and will a nearby level train crossing wake you every morning at 2am?
A few thoughts:
1. @Figgy : Interestingly, UK 'estate agents' are fairly unique in only operating on behalf of the seller. There are 'buying agents' , but they are rarely used (wikipedia gives me a figure of ~1% of property purchases using a buying agent), and correspondingly high-end market only.
2. Property taxes are generically covered by a thing called 'Council tax' in the UK. Since as renters we have to pay this tax anyway, and we're unlikely to go into a more expensive tax band than we're currently in, we can budget at roughly what we pay now. But we are asking about council tax bands for properties - good thought.
2. Utility bills is a great idea, and I have no idea why I didn't think of this earlier. They do require an energy efficiency assessment these days, but nothing beats a hard number.
3. Roofing and heating systems, also good thoughts. I've been making inquiries about the heating system on principle (as renters, we've had terrible systems), but it's nice to know it isn't a stupid question. We've been told about the roof so far, but again, it's good to know this is not a dumb thing to ask.
4. Surveyors: I'm not sure if this is the same outside the UK, but surveys are typically done after an offer is accepted, and are, again, fairly expensive. Anything I/we can identify to cut a house out of our list before we make an offer, and avoid finding in a survey, is one less survey to do that we can't really afford. In an ideal world I'd like to do one survey after our own viewing(s), and have to confirm everything I know or come back with no problems. But I know enough to know that I don't know the right questions!
5. I am taking away the importance of remembering "all estate agents are lying, evil people to buyers". I mean, we knew this already, but it is nice to have that returned.
6. Location, Location, Location - always something we're considering, but again, thanks for validating it. One of those things that happens with me, I tend to research a lot, and worry a lot, especially with a purchase as...defining as a first home. You guys are a great help.
In any event...all the advice is gratefully received, believe me. Got a viewing tonight, and I am, even as we speak, cribbing notes off this thread so that I remember to ask about drainage, extensions, to check for corrosion, and so on. Really, appreciate the advice, and anything else you can think of - I'm absolutely terrified we'll buy our first house, and it will promptly fall into a sinkhole.
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Part of the thing you should be doing when walking around a house for the first time is visually inspecting every room for obvious signs of damage/disrepair. You can easily look up the age of the furnace and the age of the water heater, visually look at the valves to see if anything is being bypassed (good sign of something not working). Obviously you cant go turning things on or off at this point but you can get a good idea on how a home generally is.
Think of the inspection/survey as a double check to make sure you arnt walking into a losing situation. Before you put down a large sum of money paying someone to look at the house for you before you buy it is a really good idea. worst case you are out a small amount of cash and a lot of hassle if something major is found.
Always go with the guy/gal performing the survey and ASK QUESTIONS. And at this point they will be testing things and turning things off and on. After the survey you can negotiate with the seller. If for example the garage door was found not to be working you can either ask for it to get fixed, or you can ask for a credit. Or in some cases eat the repair cost yourself.
I dont know how the UK handles the legal end, but in the US you can get a real estate lawyer to help you in the process. Mine is charging a flat 450$ for his services. I am also using a buying agent, which has been really helpful for me but doesnt seem to be standard practice in the U.K. Its helpful having an advocate for you, but even with buying agents keep in mind some of them will try to push you to the most expensive house you can buy, as that way they can get more money.
Also mortgage history, pull that up you can see how often the house has changed hands recently and at what price. And generally you can pull up the tax history on a property and make sure everything is up to date.
My survey/inspection cost me 275$ stateside and came with a 65 page report with pictures of everything found that was ok, and not ok. And as I said earlier you can use it to negotate credits/repairs even after the offer is accepted (at least in the U.S.).
I just had my inspection done and a couple of things i would have never noticed myself was that the deck was nailed and not bolted to the house, the AC was on a 30 amp breaker instead of 25 amp, the insolation in the roof was covering some outside vents not allowing some proper air circulation. And a bunch of other minor to major stuff. All of them were acceptible issues for me (no house will be perfect, there will always be something).