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Where to start with shopping for a home?
Posted by: mattkime
Date: January 27, 2016 10:00PM
I'll start with this - i live in nyc. the market is crazy. i'm not one to jump into a crazy market. this is mostly speculation.

any advice on where to start with buying a home? we've done some "window shopping" which mostly consists of sticker shock. we're wondering if its possible to get past that.

i'm curious about the intricacies of the transaction. i just listened to a podcast that mentioned the seller is likely to choose a buyer with a larger down payment. why??

i'd also like to renovate my own place which is probably worthy of its own thread. in most places i simply wouldn't sweat it. the potential complexities of nyc are frightening.



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Re: Where to start with shopping for a home?
Posted by: Filliam H. Muffman
Date: January 27, 2016 10:14PM
30 years ago you needed at least 10% down for the bank to take a risk on you if you didn't have a long credit history. Higher down payment used to mean you were buying up and more likely to get approved for the home you want. It is a little different today, but bigger down payment always means less risk for the bank if the market goes all 2008 again.

I was a little surprised, a quick look on Zillow shows houses in Brooklyn under $450k. Is it all really bad neighborhoods or teardowns?

See if you can get pre-approved. It isn't fail safe because the bank might have terrible people validating the property value.



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Re: Where to start with shopping for a home?
Posted by: datbeme
Date: January 27, 2016 10:16PM
You may have just posted the broadest thread topic ever. No small feat.

In regards to sticker shock, I remember when my wife (then fiancé) and I were testing the waters about 20 years ago. After struggling to find something that proved it made more sense to buy than rent, her parents came with us to look at a couple houses. They lived in an area where things were much more affordable. Her dad was (and is) a pretty shrewd investor, but I will never forget him saying, "I believe I'd rather rent."
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Re: Where to start with shopping for a home?
Posted by: rgG
Date: January 27, 2016 10:23PM
The best thing is to get pre-approved by a lender or lenders to see what the max you can afford is. I would also say that in the old days, they used to approve you for much more than I was willing to have to pay each month.





Roswell, GA (Atlanta suburb)
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Re: Where to start with shopping for a home?
Posted by: Speedy
Date: January 27, 2016 10:32PM
Start by downloading the aforementioned Zillow onto your iPad.



Saint Cloud, Minnesota, where the weather is wonderful even when it isn't.
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Re: Where to start with shopping for a home?
Posted by: Black
Date: January 27, 2016 10:38PM
Quote
mattkime

a) i'm curious about the intricacies of the transaction. i just listened to a podcast that mentioned the seller is likely to choose a buyer with a larger down payment. why??

b)i'd also like to renovate my own place which is probably worthy of its own thread. in most places i simply wouldn't sweat it. the potential complexities of nyc are frightening.

a) Probably because that buyer is less likely to crap out during the mortgage contingency (i.e. less likely to be turned down for a mortgage after a couple weeks of crapping around and having the house off the market.)

b) Be aware that it's hard to get a loan for a home that's not in some sort of move-in condition, and construction loans are a complicated expensive PITA.




New forum user map 8/2015: [www.zeemaps.com]
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Re: Where to start with shopping for a home?
Posted by: Black
Date: January 27, 2016 10:42PM
As to where to start-- get a good realtor (with whom you fully intend to go all the way) and have them set you up with whatever the current consumer-interface for the multiple listing system is-- so you can start to look at searches of your choice and get a feel for what's out there.

Best piece of advice I can offer--- when the right place comes along at the right price it won't last a day on t he market. You will need to be in the habit of scanning daily, going to take a look at anything that looks good that same day, and getting an offer in the next morning. Somewhat counterintuitive, but when something's been sitting on the market a while, you don't want it.




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Re: Where to start with shopping for a home?
Posted by: Black
Date: January 27, 2016 10:43PM
And-- screw Zillow. Get a realtor to set you up.




New forum user map 8/2015: [www.zeemaps.com]
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Re: Where to start with shopping for a home?
Posted by: rgG
Date: January 27, 2016 10:57PM
One other thing to remember, everything is negotiable in real estate.





Roswell, GA (Atlanta suburb)
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Re: Where to start with shopping for a home?
Posted by: cbelt3
Date: January 27, 2016 11:05PM
In housing, it's all about location, location, location. For a buyer it's about money and then location.

Good luck..you're in one of the tougher markets. I could put you into a nice new 3BR starter house down the road from me in a nice suburb of Cleveland for about $145K. Or an older house for about $85K. Because Cleveland.
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Re: Where to start with shopping for a home?
Posted by: max
Date: January 27, 2016 11:29PM
Are you planning a public school education for your kids, or private?....
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Re: Where to start with shopping for a home?
Posted by: Janit
Date: January 27, 2016 11:55PM
What kind of commute do you want? Subway, train or PATH?
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Re: Where to start with shopping for a home?
Posted by: billb
Date: January 27, 2016 11:57PM
some people look at the school system they want for their kids first



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Re: Where to start with shopping for a home?
Posted by: btfc
Date: January 28, 2016 12:28AM
Yes, find a good realtor and be up front with them about your intentions. Don't be shy about window shopping or putting in a low offer, you'll learn a lot in the process. When you get serious about a place, find the best inspector that you can.
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Re: Where to start with shopping for a home?
Posted by: Carm
Date: January 28, 2016 12:49AM
* Location of what you can afford.

Schools are graded by how well/poorly the students score on standardized test. "Better schools" are in better neighborhoods with better off parents of said better scoring students. The local schools my boys attend are labeled "international" schools. Middle school is labeled as international studies and high school is an IB school (International Baccalaureate Diploma Program) and feeds into the local state university. The schools have to fulfill requirements to be labeled as such. The HS is also labeled a CA distinguished school.

* Zillow/Realtor.com/etc to window shop.
* Realtor to actually show you properties and forward you possible listings that might interest you. Give them a list of your requirements.

Recently purchased again. Been through the hoops. Got a good house in a good neighborhood. It was a rental property and needs work.
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Re: Where to start with shopping for a home?
Posted by: mrbigstuff
Date: January 28, 2016 01:18AM
99% of what people will write will be moot in nyc, it's just too crazy a market. Ask your bank how long your preappoval will last, and then hope the market tanks.
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Re: Where to start with shopping for a home?
Posted by: Sam3
Date: January 28, 2016 04:16AM
Get pre-approved.
Find a good realtor that will act as a buyers agent. This forces them to take only your best interests at heart. [www.realtor.com]
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Re: Where to start with shopping for a home?
Posted by: Ombligo
Date: January 28, 2016 04:43AM
While Zillow and Realtor are nice, they are only as good as the listing agent. Everything will read glowingly and pics will generally look good (unless it is a true fixer upper). You can use them as a broad guy but a good realtor will be able to target you to homes you are likely to buy.



“No persons are more frequently wrong, than those who will not admit they are wrong.”
-- François de La Rochefoucauld

Growing older is mandatory. Growing up is optional.
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Re: Where to start with shopping for a home?
Posted by: 3d
Date: January 28, 2016 05:45AM
Businesses, schools, and people in the NYC area come, go and evolve.
Projects/Public housing? They stay FOREVER. For the safety of you and your family, beware.

Window shopping will just get you depressed. Most advertised listings are the "nice" places. The homes you are interested in do not photograph well. Brokers don't waste advertising money on these places. These homes sell themselves, quite well, to the right people, very quickly. Find the area you like, and find a local broker in that area.

Bushwick gentrification SNL skit smiling smiley
[www.youtube.com]



Edited 1 time(s). Last edit at 01/28/2016 08:36AM by 3d.
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Re: Where to start with shopping for a home?
Posted by: Lizabeth
Date: January 28, 2016 08:16AM
Quote
cbelt3
In housing, it's all about location, location, location. For a buyer it's about money and then location.

Good luck..you're in one of the tougher markets. I could put you into a nice new 3BR starter house down the road from me in a nice suburb of Cleveland for about $145K. Or an older house for about $85K. Because Cleveland.

Location plus a good school district!
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Re: Where to start with shopping for a home?
Posted by: Bixby
Date: January 28, 2016 08:48AM
Quote
rgG
The best thing is to get pre-approved by a lender or lenders to see what the max you can afford is. I would also say that in the old days, they used to approve you for much more than I was willing to have to pay each month.

You should get pre-approved because in markets like NYC things move fast and you need to be able to make an offer. BUT: get pre-approved for the amount YOU know you can afford. Do not let a bank make that decision for you. Even in this 'new' climate, a bank's job is to make money off of you. Don't trust a bank's judgment on how much you can afford.
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Re: Where to start with shopping for a home?
Posted by: mattkime
Date: January 28, 2016 08:54AM
Quote
3d
Bushwick gentrification SNL skit smiling smiley
[www.youtube.com]

I lived near there and was pushed out / left.


....the only reason why this is worth asking here is because nyc will test my limits. in other markets i could easily afford something sufficient for my needs. in nyc it might be a stretch.

At this point i easily have 10% down. 20% would take another couple of years.

I guess the first step would be defining what we need and can afford.



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Re: Where to start with shopping for a home?
Posted by: rz
Date: January 28, 2016 09:01AM
Quote
Black
Somewhat counterintuitive, but when something's been sitting on the market a while, you don't want it.

Can't say I agree with that. The house I've lived in for the past 12 years was on the market for a long time (like 6+ months). It's in a great neighborhood, but the original asking price was high. The biggest problem with it was the layout. The kitchen was tiny, it had a large formal living room in addition to a very large family room, and it had a bedroom right behind the kitchen that had no windows. After 6+ months, the seller was getting desperate. He had already moved out and needed to sell. He had already come down over 20% on his asking price. So we low-balled him another 10%, and he accepted it. We hired a contractor, and had them completely re-do the layout. Formal living room got turned into a nice large bedroom, with part of it going to expanding the master bedroom closet. Bedroom behind the kitchen was used to expand the kitchen, and add to another bedroom behind it. We ended up with the same number of bedrooms, a bigger kitchen, a bigger bedroom, and a bigger closet for us. And we were still well under his original asking price when all was said and done.

So the house was move-in ready, but we chose not to move in right away. If a house is on the market for a while, many times it's because it's overpriced. You might get lucky like we did and find someone who finally gets to a point where they're desperate to sell and will finally accept your offer. Note, however, that we had been looking for about a year and had made offers on several houses that were ultimately rejected. If/when we ever choose to look for another house, we'll probably do the same thing... look at a LOT of houses, and make a lot of offers before we finally get something.
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Re: Where to start with shopping for a home?
Posted by: Buck
Date: January 28, 2016 10:06AM
Since you mentioned sticker shock, do this first:

Get your finances in order. A home should be a blessing; not a curse.
Banks will approve you for at least twice the amount you can really afford.
Only get a mortgage of 15 years or less.
Your monthly payment of Mortgage Principle/Interest/Tax/Insurance should ideally be no more than 25% of your monthly income.

Since you mentioned renovating, it's probably the best option. If you like where you're living, that is.

Full disclosure: I'm following the Dave Ramsey baby steps.
[www.daveramsey.com]
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Re: Where to start with shopping for a home?
Posted by: mattkime
Date: January 28, 2016 10:12AM
>>Your monthly payment of Mortgage Principle/Interest/Tax/Insurance should ideally be no more than 25% of your monthly income

monthly income before or after taxes?



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Re: Where to start with shopping for a home?
Posted by: 3d
Date: January 28, 2016 10:18AM
Quote
mattkime
Quote
3d
Bushwick gentrification SNL skit smiling smiley
[www.youtube.com]

I lived near there and was pushed out / left.

I guess the first step would be defining what we need and can afford.

If you got pushed out of Bushwick, look further out but still in NYC. Staten Island?
There's also a "nice" area of the Bronx that I hear about often. The exact area escapes me at the moment.

LongIsland still has MANY affordable areas which are walkable to LIRR for commuting.

A cheap area will most likely have failing schools. But then again,, the cheap price of the house may offset private school tuition. So that's not a deal breaker.
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Re: Where to start with shopping for a home?
Posted by: cbelt3
Date: January 28, 2016 10:29AM
Ditto vote for LI. We'll be visiting my uncle in Glen Cove in a few weeks.. he lives 1 block from a LIRR station. OK, admittedly he lives in a 100+ year old house on the hill that is worth a couple $M, but he loves it.

FWIW... 'pricing' and 'value' on Zillow is often VERY WRONG. Working with a realtor will give you a better idea of true value. Zillow has no idea of comparability, and doesn't differ from a home that has been completely updated vs. a home that needs to be gutted a renovated.
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Re: Where to start with shopping for a home?
Posted by: rgG
Date: January 28, 2016 11:34AM
Quote
mattkime
>>Your monthly payment of Mortgage Principle/Interest/Tax/Insurance should ideally be no more than 25% of your monthly income

monthly income before or after taxes?

A standard rule for lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. This debt-to-income ratio is called the "housing ratio" or "front-end ratio."





Roswell, GA (Atlanta suburb)
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Re: Where to start with shopping for a home?
Posted by: anonymouse1
Date: January 28, 2016 01:43PM
Lots of good info in this thread. Here's mine, based on buying our first house 3 years ago:

1. The good school district thing is complex. If you put your kid into private school, you'll never see that money again. (Where we live, the private school tuition is about the equivalent of a house payment.) If you put the money into a house, you'll probably get at least some of it back--maybe enough to pay for college tuition, if you're lucky.
ON THE OTHER HAND, if you have a kid who just doesn't fit the public schools (doesn't have to be special needs, just not a good fit, because of ADHD, shyness, sensitivity, being a non-verbal learner, etc.), then you end up with an expensive house AND private school payments. On balance, I'd go for the best school district I could afford. YMMV.

2. Get a great realtor. We phone-interviewed 10, and got someone who was spectacular--she found our home because she heard someone in her office discussing it nearly a month before it went on the market. We were able to get in weeks before anyone else, and build a relationship with the selling family, which is how we won the bidding war. Again, YMMV.

3. If you can, visit the house during rush hour--it can make a big difference in the feel of the area.

4. Get a good home inspector.

5. It's worth thinking about taking a long commute. I have one colleague who did that, and they live out in the country with an amazing life-style. She sleeps for an hour on the train every day, and has to get in and leave early, and for hear it's worth it.

Good luck!
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Re: Where to start with shopping for a home?
Posted by: Bimwad
Date: January 28, 2016 05:34PM
Quote
rgG
A standard rule for lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. This debt-to-income ratio is called the "housing ratio" or "front-end ratio."

A 28% DTI, or a low LTV (loan to value) is not going to be realistic in a high cost area like NY, or LA, SF, etc.

Borrowers can go up to 43% DTI and still fall under QM (Qualified Mortgage) guidelines, which govern the bulk of the loan products being offered today.

To reiterate:

1) find a good real estate agent
2) get prequalified

3) save up for your down payment. An LTV above 80% will require private mortgage insurance, or a second loan, which is going to increase the costs

4) carefully manage your credit, especially before applying for a mortgage. That means no big purchases, opening new accounts, or anything that might affect your credit score negatively. It should go without saying that too much debt, late payments, etc. should always be avoided.

There are those here who have scoffed at credit scores before. This is the time when it can cost you real money, since it directly affects what kind of loan you qualify for, and what kind of rate you can get.

5) consider going through an independent mortgage broker, especially if your financial life is complicated. A broker can pull from many sources, not just one lender, and accommodate borrowers with less than perfect records, or abnormal situations. There are certain categories of loans where the retail lenders want to keep the business, so they can offer pricing where wholesale can't compete, but for every other situation, a broker is going to offer more flexibility, and choice.



Edited 1 time(s). Last edit at 01/28/2016 05:45PM by Bimwad.
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