TALES FROM THE TRENCHES

Editor’s note:

In the Dec. 20 Real Estate section we asked you for your advice to first-time home buyers, and you came through like champs. The advice--based on your personal, sometimes painful, experience--was excellent. With our thanks to all of you who wrote, here is a sampling of your tales from the home-buying trenches.

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From Bob, Joyce Ferrell of Mission Viejo:

With so many homes for sale in today’s market, the new buyer has to be aware of true value.

We were transferred to Southern California, and the area and it’s housing prices were a complete shock to us. There are so many extra costs--Mello Roos, association fees, etc.

We found several houses in different areas involving varying fees. We decided to “bottom line” every house. That means we factored in all things--price, fees, taxes, etc. and figured out the “price per square foot.”

There were three houses we liked equally and we chose the lowest in price per square foot. It was amazing the large difference in prices when you factor everything down to price per square foot. We feel that we got a true value with our purchase.

This system is almost like grocery shopping when you try to find the best value in a product that comes in many sizes, i.e.: price per ounce.

This system helped us immensely when we started getting confused about extra costs, taxes, etc.

We have looked around since our purchase and feel we got a good deal by jumping off the emotional plane and getting down to basics.

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From Vicki Tamoush of Tujunga:

I bought my first home in July, and I made a lot of big mistakes, but I also had a few real successes too. In the mistake category:

I scared myself into trying to learn everything that every carpenter, plumber, electrician and septic tank pumper knows before I would allow myself to seriously consider a property. I spent way too much time trying to be an expert so that I could get repair work done properly, and would have been better off spending that time getting references on workers and companies.

Until I got to know the workers, I should not have allowed them to work on the house when I was not there. This is especially true of work done to fulfill the requirements of escrow, such as termite inspections and septic tank pumping. These gentlemen either arrived late or not at all, and did not do what I had paid them for.

While I very carefully checked out the neighborhood before I purchased the house, I did not consider the number of dogs that the neighbors own and how much of a ruckus that causes at night. I should have spoken with the neighbors at more length about this or could have gone up there one evening to see how much noise the dogs might make.

Although there was no way for me to avoid it, I should never, never have moved my belongings into the house until it was painted. It caused both me and the painters a great deal of grief, and considerable damage to my furniture and curtains.

And the last mistake on my list is one that probably everyone makes:

I was and still am much too impatient about getting the place in tiptop shape. I have to learn to take my time, especially since the place was, well, worse than a fixer. It was, quite bluntly, a dump. But after six months of hard labor and several hundred dollars later, it is a cozy little nest on the way to becoming downright adorable.

Now for the things I did right:

I made a point to visit the neighborhood at various times of the day and night, in various types of weather. I checked for the way rain drained off the yard and how well the fence stood up to high winds. I listened for loud music on Saturday nights and watched for graffiti (this is where I missed out on the dog problem).

Before seriously considering the property, I met two of the neighbors to ask about the area, the history of the house, and whether there were any problems with noise, police, teen-agers, racing, etc. They were amazingly candid, and this is how I found out when my roof will need to be replaced next and where the septic tank pipes are. I also found out which part of the yard had the best soil and that I should get light-filtering window shades on one side.

It was hard, but I had to trust my realtor, once l felt confident about her. She couldn’t have been nicer or more helpful, and she never made me feel silly about the fact that I was making a huge federal case out of buying an absolute disaster of a house. She respected the fact that this was the biggest purchase of my life, and she made the suggestion (very gently) that ultimately led me to my little haven: She showed me a house in an area outside of where I had told her I wanted to live. Sure, it’s a little bit farther out than I wanted to be, but I live on the edge of a national forest, have the cleanest, freshest air, and couldn’t be more pleased. She helped me take this risk.

Also, I was able to determine which repairs I should hire out and which I should try myself. For example, repairing a roof vent turned out to be too scary for me, but I managed to hang all the screens (even high up), revarnish the bathroom floor, re-grout the kitchen and hang shelves in the garage. As a single woman with nothing but the library to teach me these things, it was a wonderful feeling and saved me a lot of money.

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From John Wood in Oakland:

What didn’t I do that wasn’t dumb?

Looking back, I can almost laugh at some of the stupid things I did. Actually, though, it’s no laughing matter, especially when you consider that the bad decisions revolving around housing issues can linger for years.

I looked at one house and bought it. This was 1975; today, people might look at dozens before finalizing anything.

A “friend” helped me in securing this house, and I assumed that because she had bought several houses for herself that I could leave things in her hands. Wrong. Always handle everything yourself.

This house has an easement and my “friend” said, “Oh, these things can be worked out.” They can, but sometimes they can’t. This one proved particularly disputatious, until I educated myself on what an easement meant and what were my rights.

Plumbing was another problem. I never investigated anything before purchasing the house and soon after moving in I discovered my line was hooked up to the next house. Every time they had a problem, I did also.

Crime was another item I did not consider. Compared to some parts of Oakland, the section where my house is has little crime. It has some: my house was burglarized in 1975 and 1980. I somewhat circumvented this problem by installing an alarm. But always check with the police department for crime statistics.

It would have been nice if I’d talked to neighbors before moving in, but I didn’t. Not only does this tactic allow you insights into any hidden faults of the neighborhood, but you have an opportunity to get a feel for your neighbors. Could I live next to so-and-so for five or 10 years?

Walk the neighborhood, during the day and at night. I didn’t do this either.

Contrary to popular sentiment, Oakland has many nice sections and what’s irritating now is that had I been more knowledgeable and more willing to investigate on my own, I could have afforded a more desirable location in 1975.

I believe at the time I bought my house you could look at the situation and say, “Well, I made some mistakes here. It’s time to move on.” I think, though, the time is past. House prices really escalated. Even my property taxes would go up four times were I able to buy anything in today’s market. My income is so meager that realtors are always exclaiming “You make how much?!?”

Reading this advice over is painful. I was naive and I suppose it’s no heinous felony to be uninformed, but poor choices about housing can haunt you for years.

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From Peter Fleming, a West Los Angeles real estate agent:

Many first-time buyers have three things in common:

1) They know how much they can afford to pay; 2) They are comfortable in their rental. Let’s face it, they’re paying off someone else’s earlier, less-costly investment, and 3) In searching for a home to purchase, they don’t like either the neighborhood or the house they can buy for the amount they can afford to pay.

Sound familiar? As a working realtor, here is my suggestion for becoming an immediate property owner instead of waiting a few more years: Buy what you don’t like.

That’s right: Acquire a suitable rental property that doesn’t otherwise meet your own personal needs. Become landlords, stay in your comfortable rental and start building the responsibility, equity and tax benefits today. In several years, you’ll be a more financially qualified buyer.

Yes, a non-owner-occupied mortgage may require a slightly higher down payment, points and rate than owner-occupied lending, but you are buying a lower-cost property today as opposed to waiting an uncertain time for that more costly “right” home purchase.

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From Taryn Breen of Calabasas:

One of the least-understood areas to look for homes is in the distressed property arena.

In over 15 years of buying, building, developing and selling homes, I have come across some really great buys. Many of these homes required little cash and no credit to buy. These properties weren’t castles, but they were excellent starter homes that were excellent buys. All of these homes were purchased anywhere from 10% to 30% below market. This makes these homes ideal for first-time buyers.

A recent gem I acquired was a three-bedroom home in a middle-income area in the San Fernando Valley. I was contacted by the property owner who indicated an urgent need to sell. I acquired this property with no cash and after fix-up costs of about $5,000, the property was appraised for $35,000 more than I paid for it.

This was not a unique occurrence. The methods that I used to acquire this property will work for anybody. What I did was simply print up 200 flyers and have them distributed to a neighborhood I wanted to buy in. I received several calls from people who wanted to sell and I simply selected the best one. Amazingly simple, but the technique does work.

The most important advice is to start shopping and comparing today. Seek out those persons and publications that can give you the workshops that deal in areas of knowledge you lack. The cost of these types of education is minimal compared to the knowledge you acquire.

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From Tobi Dragert of Tarzana:

Here is my advice to first-time condominium buyers:

Educate yourself about homeowners associations. Don’t expect your real estate agent to explain how they work. When you find a unit you want to buy, study the latest financial statement and audit. Note the amount of money in reserves, keeping in mind $100,000 doesn’t go far if the building needs paint or a new roof. Look at the reserve study, which tells when each element of the building needs replacing. Ask for and read the CC&Rs; (government documents of the building) and minutes from past board meetings. In the minutes, look for references to special assessments or money problems or neighbor problems.

Ask for the name of the property management company, then call and ask them a few questions: How long have they managed the building? How many years’ experience do they have? Do they belong to the Community Associations Institute (CAI)? Smaller associations may not use a management company at all, which means the board of directors collects all dues, files liens, does bookkeeping, files taxes, hires, pays and supervises vendors, etc. Ask if you can attend a monthly meeting to get a feel for the board’s day-to-day involvement in management.

Sounds like a lot of work, doesn’t it? It is. But it’s nothing compared to the mess you could walk into if you haven’t done your homework. When I bought my condo, I didn’t know enough to ask my real estate agent for relevant documents. But even if I had seen them, I wouldn’t have known what to look for.

During my first year in a home of my own, I learned the building needed a new roof. The trouble was, reserve money was literally zero. We couldn’t even afford small necessities. We had trouble paying the water bill every month. Board members had no access to bank statements and were not signatories to the checking accounts. They never saw vendor invoices, audits or reserve studies. Essentially, nothing in or around the building had been properly maintained since it had been built 10 years earlier.

If you have trouble getting the facts you need, there may be a good reason. A well-managed complex has nothing to hide. The next time I buy, I will make my offer to purchase contingent upon knowing and being satisfied with the financial and management circumstances of the building. There are fine condominium complexes out there. Next time, I’ll find one.