First-Timers Tell How They Did It, Offer Tips to Others
I bought a condo in Cypress just before Christmas. I am very happy with my house, and I feel that my satisfaction is a result of my efforts.
For instance, the decision on what to buy and where to buy came only after I went over options. Safe neighborhood, house in good condition and short commute to work were major factors.
I read newspaper columns, checked Internet sites and visited homes with different agents.
Initially, I was evaluating not only properties, but also the skills of the agents. I finally chose the agent with whom I felt most comfortable because he never pushed me to make a decision.
I would like to give credit to the Internet, especially https://www.cyberhomes.com, for helping me find the property. There is tremendous information out there, all you need is time to digest it.
I also feel that with the Internet, the real estate agent’s commission should come down. I did good work checking property options, and as a result I live in a beautiful, 3-year-old condo two miles from my work.
On the other hand, I neglected the mortgage until the last moment. I ended up with a not very attractive loan from a small, unknown lender.
So, get educated. Nobody is going to look for you as much as you will. I wish I had planned a little more.
GAGAN AHUJA
Cypress
‘Realtors Knew I Had Done My Homework’
I bought a condo in December 1998, and the best thing I did was get familiar with real estate terms and the types of loans available to first-time buyers.
About a year before I bought, I went to the library and picked up “How to Buy Your Home and Do It Right” by Sue Beck, a guide for the layperson.
Understanding these terms and doing my homework helped me feel more confident. Realtors knew I had done my homework and treated me accordingly.
It’s also important to ask questions. During escrow, no one wanted me to take the time to read the documents. Granted, there are a lot of documents, but I was making the most important and expensive purchase of my life, and I wanted to know what I was signing.
It was very disheartening to me to be rushed and questioned about why I was reading the documents. Don’t be intimidated.
During your walk-through, insist that the seller not be in the house, so you can open and shut everything. Turn on everything. Have a friend with you who has a more observant eye than you.
If you are a female, get a male friend to go with you. People see things differently. I was thinking about decorating, practicality, storage and how things will look, while he was thinking about whether the foundation was level, the plumbing and structural stuff.
If I made any mistakes, they haven’t become obvious yet. I bought on a budget. I needed to buy for tax reasons and did not have any savings for the first year. If anything major had happened, I would have been in trouble.
I believe anyone can do anything they set their minds to. I do not have a college degree, but I know how to use my resources, and that made all the difference.
SHERI PALMER
Rancho Santa Margarita
‘I Am Well-Suited for Homeownership’
I am a single woman, teaching in a public high school. In 1998, I had credit card debt, a graduate student loan and two years left on a car loan. Nevertheless, that June I bought a two-bedroom, 2 1/2-bath townhouse with no money down. The seller paid all my closing costs. Here’s how I did it:
Two years before buying:
I went to open houses and talked to a mortgage company, which told me to keep paying down my debt and come up with a down payment.
One year before buying:
I had paid some of my debt but still had no down payment. I read the real estate section and also “100 Questions Every First-Time Homebuyer Should Ask” by Ilyce Glink. I continued to visit open houses.
My tax accountant asked me to “please buy something” as I was hit hard by taxes. She knew I had been an Army reservist for 10 years and told me that Veterans Administration loans now covered reservists.
February 1998:
I called the VA and found out that I qualified. I also learned about the “VA No-No,” with which the veteran pays no down payment and no closing costs.
I started serious house-hunting. I copied numbers off for-sale signs, looked through the paper and drove around neighborhoods where I wanted to live.
I made a list of what I already had in my apartment and what I wanted, so I was very clear on what it would take to make a move worthwhile.
March 1998:
I had been working with an agent but felt we were not a good match. I made a cold call to Mary Morrison of Macgregor Realty, and we clicked. She really listened to me, and she had done VA loans.
April 1998: Mary found a townhouse in Sunland. It was farther out than I had wanted to live and needed a lot of cosmetic repairs. But I made a bid that afternoon. I didn’t have $1,000 for the deposit, so I put down $500. My offer of $89,000 was accepted.
May 1998: Escrow closed; I was really scared, but it turns out that I am well-suited for homeownership. My mortgage is less than the $660 I was paying in rent for a one-bedroom apartment, and my townhouse is now valued at $125,000.
KIMBERLEY A. SINCLAIR
Sunland
‘It’s Hard to Believe How Naive We Were’
My husband and I bought a 1920 Silver Lake bungalow last year and made every mistake first-timers can make. Here’s what we learned:
* Pick your real estate agent very carefully.
As young first-time buyers, we were more concerned with being taken seriously than we were with the skills and qualifications of our agent. Do not rely on the reputation of the agency.
* The “pre-qual” letter.
Be sure to get a pre-qualification letter from your lender that does not state the loan amount for which you qualify. This will allow you to choose the price range you are comfortable with, rather than be steered toward the upper end of your range.
* Never use a home inspector recommended by your agent.
The inspector may be more interested in future business with that agent than with pointing out problems with the house.
* The home inspection should be lengthy and detailed.
The inspector should be a vigorous advocate on your behalf. The written report should be clear and not filled with boilerplate language. There should be no discrepancies between the inspector’s verbal and written reports.
* Use experts if necessary.
If the inspector raises any concerns or if you have any nagging concerns that your inspector does not address, do not hesitate to pay for a specialized inspection or a consultation with an engineer.
The money you spend will not be wasted if it prevents you from making a bad purchase or if those inspection reports help you negotiate a lower price.
In retrospect, it’s hard to believe how naive we were. We are usually pretty savvy consumers who do research before making a major purchase.
In this case, though, we made the mistake of trusting the industry, perhaps because we were intimidated by the size of the purchase and misled by the veneer of professionalism in all parties.
In reality, a person should be at least as wary buying a home as he or she would be on a used-car lot.
KELLY COYNE
Los Angeles
‘I Was Ecstatic . . . a Great Tax Refund’
I bought a house in July 1999 and have already been able to help some of my co-workers avoid the mistakes I made. A few still owe me lunch. Here are my do’s and don’ts:
* The home inspection.
Get an inspector whose work you have seen and communicate beforehand about your potential worries.
* Pay close attention to plumbing, particularly on tree-lined streets.
My sellers did not disclose any plumbing problems, but when I moved in, I found that the sewer line couldn’t accommodate even the water from one load of clothes.
It turned out that the sewer line ran directly under the roots of a tree in the city’s parkway and was being crushed.
After $2,500, the tree is removed and the problem is resolved, but I wish I could have stuck it to the owners.
* Check for building code violations.
The house had a deck that was out of code because it was built over the gas line. The gas company required me to take the deck out.
* Be careful on “do it yourself” termite fixes.
The termite company signed off on the owners’ half-baked job of fixing the termite-infested areas of the patio cover, but I came home one day and one leg of the cover was hanging from the overhead because my dog had bumped into it.
* Make sure the owners clean up before they leave.
My sellers left the backyard full of debris. Six months later, I am still cleaning up after them.
* Get pre-approved for your mortgage and lock in your rate.
I called around, and Countrywide did an awesome job.
* Avoid private mortgage insurance.
If you aren’t putting down 20%, consider piggy-backing first and second mortgages so you can deduct more interest and avoid private mortgage insurance.
* Get the sellers to pay your closing costs.
I saved a lot of out-of-pocket money by doing that.
* Know the area very well.
Check for neighborhood activity and people who don’t keep their houses up. An offer I made on one house was not accepted, but in driving around later, I noticed that there were a dozen kids constantly playing in the street in front of that house. My dogs would have been barking and my car alarm would have been going off every time a stray baseball hit the car.
* Use the Internet.
Go on Realtor.com (https://www.realtor.com) and find all sorts of information about buying a home. Everything is on there, including instructions for moving, changing your address, etc. I used that nonstop during the process.
Despite having made a few costly errors, I am very pleased with my home. I was ecstatic when I found that I am getting a great tax refund. Being single and never having had anything to write off, it is a wonderful thing to see a nice refund. It is also a great feeling to have my own home; it’s like a new hobby that has enriched (and taken over) my life.
DONNA PIERSON
Long Beach
‘Few Homes Have Ever Shown as Badly’
My nesting instinct must have been working overtime, because we decided to buy our first home just weeks before the birth of our second child.
We began our home search when we moved to Orange County by exploring different areas.
On one outing we saw a house we couldn’t resist. The two-bedroom townhome is on a quiet cul-de-sac in one of our favorite Irvine neighborhoods, close to my husband’s office and an excellent elementary school.
Few homes have ever shown as badly as this one. It had been rented for several years, and the paint and carpet were in dismal shape. There were water stains on the cottage cheese ceilings, and the kitchen and bathrooms were covered in dingy wallpaper.
But the home’s negatives were cosmetic, and it has large bedrooms, ample storage space, a cathedral ceiling in the living room and a big kitchen. We also like the entryway courtyard and the backyard, which is quite large for Irvine.
The house was listed at $199,000; we offered $190,000 and settled on $192,500.
We had an excellent FICO score, but we had only enough in savings to cover a 3% down payment and closing costs, which would not leave us any cash to remodel before we moved in. Borrowing money from relatives was not an option.
With a little creative financing, my husband, Kirk, who works as a tax attorney and financial planner and has contacts with several mortgage brokers, got us a loan package that would put our monthly housing costs at less than the $1,165 we were paying in rent.
Two weeks before we closed escrow, we welcomed Eric into our family. He was soon on a first-name basis with the Home Depot staff.
“How’s our baby?” they would ask when I came in to price items for our fix-up projects.
When escrow closed, we went to work. Friends and family painted; some removed worn-out counter tops and fixtures. My brother replaced every faceplate and switch, and installed new light fixtures and ceiling fans. We bought French doors for the kitchen at a parking lot sale. We paid a professional to remove the acoustic ceilings and to strip the wallpaper, and had new Pergo flooring and carpet installed. We laid tile floor in the bathroom and entryway ourselves.
When we moved into the house three weeks later, we felt as if we had bought a new home. And although the home improvement projects never seem to end, we are happy to have a place of our own.
Here are some tips:
Do:
* Get pre-approved for a mortgage.
* Clean up your credit.
* Research neighborhoods.
* Read real estate articles and talk to knowledgeable friends.
* Look for diamonds in the rough.
* Be flexible in your wish list. We thought we had to have a three-bedroom, but our two-bedroom has plenty of space for us.
Don’t:
* Overspend. Because we chose a home less expensive than what we could qualify for, we can afford to eat out once in a while and even plan to buy a new car.
* Be afraid to tackle home improvement projects yourself.
* Think that you can’t get a house if you don’t have a sizable savings account or a rich uncle.
KIRK and LIZA WALTON
Irvine
Giving ‘Freeway Close’ a Whole New Meaning
While I was shopping for my condo in early 1999, one of the most helpful tools I used was an Internet site called Mapquest.com (https://www.mapquest.com). There are several similar sites, including one on Yahoo!
When I would see an interesting property listed, I would enter the address on the Mapquest site, and it would provide me with a map showing the listed address and its surrounding area.
I learned a lot about property from this information. For example, I put in the address of a house in West Los Angeles that I thought was priced below market. Sure enough, the Mapquest screen told me that the Santa Monica Freeway ran right behind the house.
DAVID PLOTKIN
Los Angeles
‘Next Time I Will Be More Diligent’
I chose a wonderful neighborhood with top-rated schools where my daughter can walk to school, but I forgot to budget for home maintenance.
I also didn’t realize how much work it is to maintain a house. I had moved from a small condo where almost everything was handled by the homeowners association. Now, it seems I am constantly planning the next repair or maintenance job.
I have to rely on friends or hire handymen for almost every little household repair, and it’s expensive and time-consuming.
Some advice:
* A better home inspection would have solved some of my problems.
Next time I will be more diligent in following the inspector around and asking lots of questions. My inspector missed a few items that were costly to me later.
* Don’t use an inspector recommended by your realty agent.
My inspector seemed more concerned about pleasing the agents than satisfying his contract with me.
* Talk to the neighbors before you buy.
Only after I closed escrow did I find out that the homes in my neighborhood were often in need of very expensive re-piping of the main sewer line because of the materials used at the time the homes were built.
I now have a $4,000 expense awaiting me. If I had talked to the neighbors, I would have learned that it is “common knowledge” that these homes have a history of this problem.
TERESE SCHWARTZ
Westlake Village
‘Midnight Faxing to Britain’ Saved the Day
My wife and I and our 6-year-old daughter moved to Los Angeles after living in Britain. One of our first priorities was to purchase a house.
Our mortgage broker insisted that we would have no problems attaining a loan, as our English credit history could be used. She even produced a pre-approval letter to help strengthen our negotiating hand.
We interviewed a number of Realtors and chose Linda Seyffert of Jim Dickson Realtors.
We spent a day with her viewing houses. The last one we looked at had come on the market only that day and was exactly what we were seeking: a small cottage in Sierra Madre.
We submitted an offer the next morning, and negotiations started that afternoon. At midnight, a price and a 30-day escrow were agreed upon. The inspections went fine, and everything was looking good.
Then, a week before close of escrow, we became concerned that our mortgage had yet to be approved.
Despite numerous attempts to push the broker along, progress was agonizingly slow. Communication was not good, and we received numerous requests for more personal information, further delaying the process.
Linda asked the sellers for an extension, but they were reluctant.
We realized we were in serious trouble, but Linda came to our rescue. She took us to meet Nectar Kalajian of Genuine Home Loans.
Nectar was able to arrange and confirm the mortgage within 12 hours--after much midnight faxing to Britain--and the deal was saved. On Feb. 15 we took possession of our new home, happy but exhausted.
Here are some of our lessons:
* Do your own research first. Focus on specific areas. This will reduce information overload.
* Check sale prices in areas that interest you. This will give you a good indication of the price you will have to pay for your home.
* Get pre-approved by the lender, not just the mortgage broker. As we discovered, an approval from a broker alone is not worth the paper it is written on.
* Select your realty agent carefully. Get a referral from a friend. Find a Realtor you click with; you are probably going to go through some stressful times with him or her, and you will need support if the going gets tough.
* Help the agent to help you. The more information you can give the agent, the better idea he or she will have of what you are seeking; and you will minimize time spent looking at unsuitable properties.
CHRIS AND ILDI DAVY
Sierra Madre
‘We Had . . . Grown Wary of the Builder’
We had a home inspection done on our new home twice. The first time at the pre-Sheetrock phase and the second at the time of the walk-through.
During our visits to the site, we had become concerned about the quality of the work.
We had also grown wary of the builder for other reasons. After choosing our options, we found it difficult to get the design center personnel on the phone, especially after we found out that they had overcharged us for several options. (And we later learned that another buyer had bought our house plan for $19,000 less than we had.)
The builder had every right to raise prices because of market demand. But he had misrepresented the price of the other house in marketing material that he had shown us.
I imagine others were also shown the inflated price. We are considering legal action.
Despite our growing suspicions, we went through with the sale. We liked the interior layout and exterior architecture.
When we showed up for the walk-through, a major option that we had bought was not completely installed. It looked like the builder had simply put up parts of the rain gutters to fool us into thinking that the house was complete.
Twenty-four hours later, we filled up the bathtub and drained it. Water backed up into all of the bathroom sinks, tubs and toilets, spilling onto the floor.
We thought the home inspection would have caught this fault but were informed that most home inspectors do not fill the tub to check for blockages.
The worst part of this experience was the fact that up to this day (more than two weeks after the flooding), the carpet has not been replaced.
The customer service representative who is supposed to be fixing the discrepancies has never called us to apologize. In fact, no one from the company has ever formally apologized to us for the flooding, let alone the delay in getting our carpet replaced.
Of course, the signs of this builder’s incompetence were everywhere before we even signed the loan papers. As much as you may like a home, it will only be as good as the customer service and the ethics of the sales staff.
You will usually be able to judge the quality of the customer service very early on in the process.
* How quickly do the builder’s representatives return your calls?
* Do they answer your questions completely when they do return a call? It would be a good test of their responsiveness to try to contact them before you sign the contract.
* Does the builder do or say anything during the sales process that might cause you to suspect his ethics? That includes overcharging you for an option, not committing at the time of contract to building the house shown to you in the marketing materials and, above all, misrepresenting the sales price of a similar home.
If we had acted on these signs, I do not think that we would have been standing in water 24 hours after we moved into our new home.
DUANE BECK
San Marcos
Buyers Are Keeping It All in the Family
My wife and I recently bought our first home. We bought my mother’s house, where I grew up and which my wife and I have been renting for seven years.
Because of a state law that allows the sale of property from parent to child without having the property reassessed, we are able to save about $1,000 a year in property tax.
And we did not use a real estate agent and did not have to deal with the commission. This kept the purchase price of the house down.
Because we did not have the 20% down payment required to avoid private mortgage insurance (we had 10%), we found a mortgage lender willing to give us a first mortgage for 80% for 30 years and a second for 10% for 15 years with a balloon payment at the end.
Neither loan had points, and we got an excellent interest rate on both.Although there is a balloon payment at the end of the second mortgage, we do not plan on staying in the house for more than five to seven years, making the balloon payment insignificant.
Here are some of the things we learned:
* Carefully pick the neighborhood that you want to live in. Be sure to look at the neighborhood at night too.
* Find a reputable real estate agent. Ask friends and family for references.
* Develop a wish list of what you want in a house: number of bedrooms, fireplace, etc.
* Take pictures of each house and use the backs for notes.
* Buy the house for the next person; a house that someone else would buy.
* Don’t buy a house that faces a busy street.
* Don’t buy a house with a backyard that faces a freeway or busy street.
* Get pre-approved, rather than just pre-qualified, so you know how much you can afford.
* Find out if there are association dues.
* Make your offer contingent on a professional inspection.
* Insist that your offer be presented with you present or request a written response from the seller.
LEN and AMY POSNER
Granada Hills
Hard Work, but ‘I’ve Never Been Happier’
Last spring, when my landlord sent me a notice increasing my rent, I began the search for my first house. It had taken me 38 years to get to the point where I thought I could finally buy my own home.
I’m a single parent who has always lived from paycheck to paycheck, but I was fortunate enough to have invested in a 401(k) plan at work. A friend mentioned that he thought I would be able to use funds from my 401(k) as the down payment.
I found out I could borrow from my account, so that I would not face the penalty and taxes for early withdrawal.
The city I live in has an assistance program that helps with the down payment and closing costs for first-time home buyers. I was required to attend 18 hours of classes on homeownership, work 60 hours of community service, provide my own funds for 3% of the down payment and get pre-approved by a lender.
In return, the city would provide funds equal to 10% of the purchase price of my home that could be used for down payment funds and closing costs. The city would hold a silent second trust deed on my home for the amount lent to me.
For the loan from the city to remain interest- and payment-free, I must live in the house, and if I remain for 30 years, the loan will be forgiven.
I got pre-approved, started my community service cleanup duties and began to search for a house, no easy task. Prices had begun to escalate at an alarming rate and interest rates were rising.
Finally, I found the house. I had gone to look at a newly listed house that was more than I could afford and I noticed one right across the street with a “For Sale” sign. It looked in good shape and was a cute 1950s-style house.
When I found the house was well within my budget, I went and looked at it. It was perfect for my son and me. The next day my Realtor submitted my offer.
My Realtor thought that I would qualify for a loan from the California Housing Finance Agency. He talked to my lender and they found out that through the agency, I could get a lower interest rate.
Applying to that agency increased the time it took to process my loan. To close escrow, I would need approval from my primary lender, the city and the state department that administers the finance program.
The process took more than three months and was stressful, but I’ve never been happier, waking up in my own house every day.
KATHY WING
Redlands
