My Personal Experience of Purchasing Real Esate

I found myself in a steady job and on my own. Renting was great, my roommate was great and I was content. However, I don't like to settle for content, I wanted more. Friends were buying homes and settling into a house they could call their own. I thought that if they could do it so could I. Thus began my crazy idea of buying real estate as my retirement plan. As I began my search my Dad gave me the advice to go beyond my spending limits and let my salary catch up. Although I knew my job would never leave me a millionaire, I figured in time I would be making more than I was at that moment.

I began my search sometime in September with my Real Estate Agent who happened to also be a friend. I set my budget and made a list of things I wanted in a house. Then I began looking online and reviewing the listings my agent was providing for me. A few things to consider when you begin:

1. For Sale by Owner. There are many resources to help you find these homes besides driving around. There are different websites, the newspaper, and word of mouth.
2. Real Estate Agents. It is cheaper to buy a house that is for sale by owner but the risks may not be worth it. A real estate agent knows and understands the laws. They know what to look for, what can be negotiated, and will help out after the sale of the home.
3. MLS. The multiple listing service contains all the houses for sale by real estate agents. This list is comprehensive with all the information you could want including but not limited to interior features, exterior features, school district, etc. Although agents can do detailed searches and have access to the more details, the database can be found online.

Little did I know that the selection of houses for my price range was unappealing and down right scary at times. I visited one house after another and still not satisfied I looked some more. My real estate agent became very frustrated with me and told me one day to just pick a house. Since my parents were a few states away I had to decide on my own. Luckily I had a boss that was willing to help out. I found one house that seemed like a good fit. It had enough rooms to have a couple of roommates, a good size kitchen, and the right price. Of course I would need to change the carpet and paint the walls and a whole lot more but I saw the potential. As a first time homeowner it is difficult to know what to look for in a house. The first thing my boss noticed was the busy street. A busy street deters buyers so it may take longer to sell the house and the resale value is poor. When creating a list make sure to include the following:

1. The number of bedrooms you want. Make sure you plan ahead for additions to the family. This makes a huge difference. I had a house that was too small for the number of roommates we had - what a mess. Then I bought a house with too many rooms and never used half the house (I had to also pay the utilities on the unused portions of the house).
2. The number of bathrooms and sinks. If there are multiple levels it is helpful to have a bathroom on all levels. I found one home that had a bedroom upstairs but the bathroom was downstairs. The house I bought had a bedroom and a half bath in the basement. We had to go upstairs to shower.
3. Neighbors are extremely important. I was given the advice to go knock on the neighbors' door to see what they were like. Of course I was too embarrassed to even think about that. Well, I paid for it. In my first house the neighbor threatened my cat, which then disappeared. In my second house the neighbors didn't let winter end before they called the city because the yard was out of control. I was still unpacking! How was I suppose to get the out of control yard in order when it had been like that for years?
4. That leads to buy a house you can take care of according to the number of people living there. My second house was more than I could handle by myself. Buying a condo is convenient because the outside is maintained by the association.
5. Location is key as noted in my example above. A busy street is unsafe, noisy, and has poor resale value. Also, living in smaller towns may have its perks but if nobody wants to live there, it won't sell.
6. House vs. Condo. I suggest learning the pros and cons of each. In the condo neighbors were too close but the yard, the roof, the outside walls, were all taken care of by the association. In the house I had breathing room but had more to worry about and larger bills.

Finally I picked a house, or more like a condo. It was perfect. It had enough bedrooms to fill up with roommates. Although the condo had been a rental, the owner remodeled the condo to sell. I didn't have to paint, upgrade appliances, or change the carpet. It was almost all done and I was excited so I put in an offer. I have been told numerous times to low-ball the offer. That is a joke. It is possible to put in a low offer but it is important it is done under the correct circumstances. A few rules to go by include the following:

1. Get to know the seller. Why is the seller selling the house? Is the seller sick or spouse past away? Going through a divorce? Lost a job? Lawsuits? A desperate seller is willing to entertain a low-ball offer.
2. What is the market in general doing? A buyer's market allows for better negotiating.
3. How long has the house been on the market? There are pros and cons to this question. I would ask "What is wrong with this house? Why has nobody bought the house?" Look closer at the house but the seller might be ready to just let go.
4. What time of year is it? Winter buyers can buy at a lower price because less people are buying.

The seller did not like my offer and didn't even bother to respond. I probably insulted him but I doubt I was the first. He bought and sold houses all the time. Well, I wanted this condo so I decided to put in another offer. This time he was more interested and gave a counter offer. Since he was still in the process of remodeling I wanted to make sure he finished. As part of the negotiations I put in everything I wanted done or changed in the offer. Don't be afraid to ask for whatever you want.

After the negotiations I then needed a loan. There are rules lenders follow when it comes to condos. The rule that stumped me was the percentage of units that one owner can hold. This complex had one owner of more than 50% of the units. The only way around this rule was to go to the lender he had negotiated with previously. I talked to at least half a dozen different lenders and found one lender that would work with me but then we hit another problem. (There are so many types of loans that lenders do not know all of them and different lenders use different loans.) Lenders rate condo complexes according to the upkeep. Mine fell short. By the way, that is a good red flag that something is wrong with the Homeowner's Association. That left me only one choice. Thanks to the loose rules of lending I barely got the loan. In reality I should never have been given the loan but thankfully I quickly closed on the loan and was able to move in. It was the greatest day of my life.

Move in day came and so did all the problems and quirks of owning a home. Once I moved in the previous owner had no interest in finishing the remodeling that we negotiated. That is when a real estate agent is great. They become the mediator between buyer and seller. After I sold my third property the buyers tried to come after me for the meth problem found before he bought the property. Since we already negotiated price to cover the additional expense, he couldn't do anything about it. The only reason I ever found out he tried to come after me is because my agent mentioned it in conversation one day. I love using agents!

Another problem I came across was when summer came along the air conditioner did not work. (I tend to buy houses in the winter.) This may not have been such a problem except that I had roommates that were not happy at all. This is also a good time to mention the importance of getting a warranty. This can be negotiated when buying a house. The seller paid for this perk. Unfortunately the problem was bigger than the warranty covered. The original air conditioners were too small for the units. It was a problem for all the units in the condo. We just had to suffer in the heat. Yuck!

The funniest problem was the remodel job. The owner contracted the condo's handyman who happened to live right next door to me. This unit was his pride and joy. He may have been impressed with himself but I wasn't impressed with him. The kitchen floor was redone with laminate squares and tile. If you know anything about these materials, the tile is thicker than the laminate squares. We were tripping on the tile all the time! That was only the beginning of all the little quirks of the remodel.

Buying a house was great. Despite the stress I enjoyed the whole process. Not only did I learn more than I ever expected to learn, I was proud of my purchase. After I had moved in and was enjoying my house I found out that my friends all had help from their parents. Their parents either helped with the down payment or cosigned on the loan. I bought my house all by myself. I consider myself lucky. Since the down-turn in the housing market, I suppose it will be much harder to get into a home without proper income. My luck extended to buying and owning three properties at one time but life doesn't always work as expected. I ended up selling all three. That is another story for another day.