Buying a house is like the Hunger Games
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[Note this piece is from 2015. But the first-time home-buying struggles are timeless.]
Hi, I’m Dana and I’m homeless. No, really. When I moved out of my apartment and into my boyfriend’s bedroom two months ago, I thought it was a temporary thing. At the time, I was under contract on a house and would be moved in within three weeks.
Ha.
The contract fell through Fourth of July weekend (a full month after I should have been in the home) causing me to spend America’s birthday sulking along to massive amounts of BBC on Netflix in the dark of an apartment that’s not mine, but was blissfully empty. Since then, I’ve had zero leads and one awkward, “so when are you planning to move out?” conversation with my boyfriend’s roommate. My life is really fun right now.
The thing is, I felt more knowledgeable than most people my age heading into the home buying process. I got my real estate license at 18 and my parents are in the flipping business. It should have been a piece of cake, right? Even with all this on my side, I’m still sitting here on a borrowed bed feeling sorry for myself.
I’m here to tell you that HGTV and their lineup of flipping, switching and listing shows are lying to you.
Trying to buy a house as a young professional on a single income isn’t like a breezy day with the Property Brothers. It’s wearing close-toed shoes because of unidentifiable stains you’re sure to encounter on questionable carpet and showering away the smell of horrible houses that people try to pass off as homes.
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This is a real photo from a house in my price range. Sigh. I bet the Property Brothers smell great.
These are things I wish I’d known before trying to buy a home.
(1) FHA, VA, USDA, 203K – there are a lot of acronyms when it comes to financing.
The hardest part of buying a house is figuring out the financing. How much of a down payment can you afford? Do you need a repair escrow? How much earnest money is the seller asking for? If you go with a lower down payment, how much more will you have to bring to closing?
I’ll be brutally honest with you; the max end of my price range is $135,000. I’ve only been out of school three years, I’m buying on my own and I don’t want to get a roommate. Trying to find a house under $135,000 in the SouthPark area is like finding a leprechaun with a unicorn tattoo soaking in a hot tub with Big Foot. All the houses I find need a lot of work, and loans that give you cash to do the work have a lot of stipulations.
Understand that your loan determines closing time and headaches. If you don’t want to deal with a lot of hoops, a 203K probably isn’t for you. This may mean you need to adjust your “must haves” in a house/neighborhood.
(2) The Internet is liar. Get professional help.
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If you’ve been surfing houses on Trulia and truly believe the $1,249 per month estimate for a $250,000 home in the Palisades, you’re a fool. Prices that low require enormous down payments. For example, you’d have to put down $51,000 to get that mortgage payment. Do you have $51,000 in savings, fellow young professional? Me either.
Sites like Zillow and Trulia don’t give you the full picture and often feature homes that have been off the market for months. Even if the home is on the market and at an accurate price, there could be property report addendums detailing major issues with the foundation that Zillow and Trulia don’t have access to.
You can shop for a lot of stuff online, but you really need the help of a real estate agent if you’re serious about looking at legitimate inventory and finding the right deal for you.
(3) SAVE EVERY PENNY, EVEN THE ONES YOU FIND ON THE GROUND AT THE GROCERY STORE.
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This one is in all caps because I really can’t stress it enough. Buying a house has a lot of unexpected costs. Earnest money, appraisal fees, charges for turning on the utilities so you can get an appraisal, real estate agent commissions, closing extension fees, home warranties, repairs… the list feels never ending.
Once you’re in the home, there are always going to be small maintenance issues or cosmetic features you want to change, and somehow they all seem to cost several thousand dollars. Did you know front doors run $1,000? Highway robbery.
I’ve got more bad news for you, even if your deal falls through, no one reimburses you for the utilities or the appraisal or any extension fees. You could be out $800 and back at square one.
Have I convinced you yet? Save! If you feel like you can’t save, you’re not ready to buy a house.
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(4) Your new house isn’t going to look like your Pinterest board over night.
With my budget, the houses I can afford are rough. Most need new vinyl, a new roof, new windows, new HVAC, new floors, drywall work, plumbing repairs, etc.
I had to learn how to look past the cosmetic issues and find the potential in places that look like dumps. Unlike an HGTV show, I don’t have a fairy godTVhost with deep pockets and designer donations to flip my house.
You’re going to have to continue saving even once you’ve moved in. You’ll have to tackle one room or a project at a time. I know you want subway tile in a custom shade for your kitchen backsplash, but you really need get a new gutter system so water on the property doesn’t do foundation damage.
If you’re lucky, you can afford a new project every few months and your house will take shape within two-three years. If that sounds miserable, tell me about it. You’re welcome to buy me a commiseration adult beverage at any time.
(5) When you finally find a contender, move quickly and give a fair offer.
I’ve been seriously house hunting since December 2014. At this point in my home search, I know the neighborhoods I like, the home features I’m looking for and the price point I need to be at based on the condition. When I see a new house come through, I drop everything and do an immediate drive-by. If it looks good, sometimes I’ll make an offer even if I haven’t been inside.
It’s a seller’s world right now and houses are flying off the market the same day they’re listed. Unless you’re looking at HUD homes (government owned foreclosures with a formalized offer system), you don’t have time to haggle or look at a place four to five times.
That’s not to say you should pay full price if a home is listed over tax value and needs repairs. You just need to be educated on fair market value and be ready to pay full price if it meets 7 out of 10 requirements on your checklist.
Conclusion
Finding a house is hard. Finding a house is extra hard when you’re young and doing it alone. I hope this list helps you ask the right questions and take a solid step forward in the research department. Good luck and may the odds be ever in your favor.
Some photos via Houzz.
