Why people think they can get top dollar for a house they have neglected for twenty years is beyond me, but they do. Home sellers and their perfectly coiffed agents peddle their worn out wares, all the while knowing what lies beneath are wood destroying insects and a furnace that will most likely decide to give up the ghost just in time for the coldest day in recorded history. The words “beautifully decorated” in a home’s online profile is code for “pay no attention to that smell, look at the snazzy decor instead.”
Real estate transactions make people a lot of money, and mortgage lenders, appraisers, and realtors have their head in the game. They are always looking for that sucker home buyer who blindly trusts that they know a home’s value. Just so you know, a home’s value is what someone is willing to pay for it NOT what the seller paid for it plus realtor fees, plus the cost of every lame home improvement project the seller ever attempted, plus the emotional equity they keep stored in the basement behind a rusted water heater.
In what is called a buyer’s market, there is a lot of inventory of affordably priced homes, and of course, the opposite is true in what many in the real estate biz like to remind buyers is a seller’s market. “Well, it’s a seller’s market, you know, and they’ve got you over a barrel.” If a real estate agent says those words to you, you should call bullshit and walk away, fast! The point so many people in “the biz” tend to miss is that you can’t make a silk purse out of a sow’s ear. If a home has $20,000 worth of deferred maintenance, it should NEVER go on the market at top dollar. Period.
Sellers, listen up! If your house needs new windows, doors, siding, appliances, light fixtures, major plumbing repairs, attention to an overloaded electrical system, and a new roof, do not slap a coat of paint on an accent wall and re-tile the wet bar counter top! Do not tell buyers that you recently changed the air filters for the A/C and cleaned the gutters! Do not expect buyers to pay for all of the crap you can’t be bothered to fix!
I have, no exaggeration, visited hundreds of homes for sale in cities across the country. I purchased my first home when I was nineteen. I have relocated more than a dozen times, and with each relo I have moved twice. First to a rental before purchasing a home. Sometimes this was necessary because we still had a house for sale in another city. Sometimes it was because we were co-located for six months until the school year ended, but every time I was responsible for the home search, and every time, without exception, it has been enlightening and excruciating. Some real estate agents will let you do their work for them. If you are lucky enough to find one who is experienced, or at least hungry, the process can be fun. Sort of. Here are a few things home buyers need to know.
Buying more house than you can comfortably afford is a mistake. Taxes, insurance, AND maintenance are part of the deal. So, if you think affording monthly mortgage payments is all there is to home ownership, think again. Maintaining your home is the best way to preserve its value.
Real estate agents need you. Without you, they go out of business. Find one who will work FOR you. Interview them. Don’t just take Bubba’s recommendation. Tell them what you are looking for and how much you can afford. It helps to know what you are looking for. Make a list of what is most important to you and shop from that list. Anything extra you get is just icing on the cake. If you tell an agent what you are looking for and all they show you are McMansions out of your price range, find a new agent.
If they try to convince you that you might learn to love sheet rock repair, find a new agent.
House hunting in real life is not the same as on TV. Realtors, lenders, and appraisers know each other. In some cases they have worked together for decades. They network with everyone from the home inspector who finds a leaky faucet and the handyman who fixes it to the gal at the title company who checks county records to see if the property has any liens or delinquent taxes. This is important to know. Why? Because these people play an important role in the housing industry, an industry that has created enormous wealth for some, poverty for others, and a resurgence of DIY for those in between.
No matter what market watchers say, homeownership is still the American dream. Unfortunately, bank owned and foreclosure property has become an American nightmare. Flipping and flim-flamming have replaced the block party in many communities where faceless entities pay to keep the grass cut. Homelessness is a growing trend while homes across America sit vacant; rotting on the cul-de-sac of the mortgage lender’s inventory of REO (real estate owned). We have to ask ourselves, where does it end? Buying and selling mortgage debt can’t be all there is left of the American dream. Can it?
Our homes should be our sanctuary, our safe place, our place to take refuge and take pride.
Let the buyer beware of money pits. Let the seller beware of educated buyers. Stay tuned for Selling Your Home The Feng Shui Way. Until then, here’s a video just for fun. Sort of.
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28 thoughts on “Caveat Emptor – Seriously”
As soon as I saw the gingerbread house I about busted a gut.
My sister almost bought a house a while ago, until she was given a proper viewing and the foundations were falling to pieces. Thankfully someone was honest with her!
I saved $$$$ pressing for homeowners policy from buyer from a company that I researched–not the one the realtors suggested. Made it a condition of escrow. Had two compressors and ice maker go out along with dishwasher. All repaired or replaced. Saved over $2000.
Excellent point, Lil Fafa. Home warranties are a must have item in any home purchase. That you negotiated a provider of your own choosing shows just how brilliant you are. Home warranties are not like extended warranties that car dealers try to push on you when you purchase a car. Like you said, the savings can be big. I once had to deal with a home warranty provider based in Chicago. My home was not in Chicago. The phone rep didn’t understand why I couldn’t wait a week for them to approve having the air conditioner repaired. “It’s August, I said, I don’t know what the weather is like where you are, but it’s hotter than hell here. Do you think maybe you could ask your supervisor to expedite my request?” Reluctantly they contacted a vendor in my area, but it still took them a week to get a new condenser to fix the AC. Same thing happened with the oven. TWICE. That’s what happens sometimes when you buy other people’s crap. Always ask for a home warranty paid for by the seller.
You need to host your own reality TV series, “Buyer Beware!”
I smell a hit….
oh, I might just do that…in my spare time. 😛
You have spare time?
There’s a brief window, but I try to use it for personal hygiene. It doesn’t always work out that way. 🙂
HA! So I’m not the only one more obsessed with iving than hygiene!
Good stuff. it didn’t take us long to figure out that nobody’s agent was on our side and we had to make sure the bases were covered.
Too bad there’s no such thing as a money pit warranty. I can’t tell you how many times I have had to do the agent’s job on both the buying and selling side. 6% of the sales price down the drain!
I bought my first house when I was 25 and working at a convenience store – remodeled it over the course of a decade and sold it for twice what I had in it. You pass on a lot of wisdom. I have had great agents and slimy ones over the years. The best one stayed in touch for several years after the sale – she was a fixture in the neighborhood. The worst was the one who worked with me on my current home. Everything in me was telling me that she was off base – her home inspector didn’t catch that the windows were not completely installed – just nailed in, he missed the organic roofing materials that were rotting the decking, he missed the AC unit that literally died 20 minuted after escrow closed. She told me she never bothered with repair policies, she walked away with a hefty commission and I got to spend 20K in repairs. The thing is – I would have bought the house anyway, I would just preferred to have been in a position to negotiate a better price. You are right that everyone knows everyone in the trade – I felt hoodwinked by the system. Everyone wanted a quick sale, and everyone walked away with money in their pockets except me. Lesson learned – when relocating never rush things – let them inspect when you can be present. Get a bonded inspector and let him or her know that you will be holding them accountable for the quality of their work. Don’t fall in love with the porch to quickly 🙂
I know exactly what you mean, “you would have bought it anyway” THAT is what happens, we fall in love with a feature and nothing else matters. The romance starts to go out of it just about the time the contractor says, “Hey, lady did you know the sub-floor in the master bath is lousy with termites? Your gonna need to call an exterminator.”
Now I ask ya, how the heck could a person miss such a thing when they were imagining a nice soak in that whirlpool tub?
I found a house recently that I really liked. I saw the potential it has to be a great home. Some things were obvious, like outdated fixtures and minor repairs, but then I saw the report summary from a previous inspection. I couldn’t believe that the seller seriously thought they could get a full price offer with the deficiencies it listed. People want to move on, I get it, they don’t want to pump money into a house that they are leaving, but at least have the decency to come off the price if you know there are major repairs needed. GAAAHHH! Where’s a housing lemon law when you need one?
I have always repaired everything I could before putting a house on the market – the markdown over some simple repairs makes it silly not to. The folks I bought from were pretty firm on their price, but if I had been armed with an accurate inspection they could have at least been pushed to buy me a home shield to get out from under the issues. The house had been empty for a couple of years and had not sold so it’s possible that the owners had come down as far as they could and that they didn’t know the extent of the issues. With all the issues I would still have bought the place. It is my sanctuary – I feel like I saved it from decay. Here in the Ozarks there is an awful lot of “hillbilly engineering” that you encounter. Undoing that was quite the chore. All said and done I ended up with a fair price even with the repairs and it’s worth a whole lot more today that it was then. I guess things work out if you stay long enough.
You have some good info in your post and an entertaining video. Thanks.
You bought your first house when you were 19? Overachiever huh? 😉 I didn’t buy my first house till, well this year. Before that I was married to a man who liked to flim-flam people too much to actually buy anything. This husband owned his house before I came along. But yes you are right, you need a good agent and not someone who just wants to unload a place.
I needed a place to live. I lived there for a year before I left for basic training and I didn’t live there again for another four years. Then my son and I lived there for a couple of years. I borrowed money for a modest addition and then I got married. We didn’t live there long, but we definitely got our money’s worth out of that place.
Sounds great actually. If I would have been smarter when I was 19 I would have bought my first house. 🙂
Great advice for anyone to heed. We didn’t get our first home until well into our 30s, so we’ve only gone through the process twice. Hopefully it will be a while before we go through it again.
Love the house above the photo of you and your son painting. Is it yours?
I would love to tell you yes, but no, that isn’t my house. -sigh- sigh again – 🙂
Well, you can always pretend. But if you decide to do a little B&E, I’ll pretend I don’t know you… 😉
LOL – Yeah, B&E to see if it has a Viking range and a Jack & Jill bath. Too funny!!
My son’s have a Jack & Jill bathroom between their bedrooms. That’s a very scary room. When it’s time for them to clean their bathroom, they argue over who has to clean the tub or toilet based on who left the most ‘pubes.’ Nice, huh?
Sorry. That may be TMI.
LMAO – I can’t stop laughing. Well, I totally get it. My son shaved his beard off just before he moved out. He told me the J&J was clean so, of course I didn’t go in there until it was time to get ready for the photo guy to show up. OMG! Yeah, nice!
Haha, gross. So you know of what I speak. Excellent!
Yes, yes I do.
Timely post, given my own personal circumstances. Of course, we’re short selling and not turning around to buy, but still…it’s important to find a reputable agent who knows what he/she is doing, and that’s going to be our next step here.
I’m impressed you bought a house at 19. We were 27 when we bought our first home, and even then all our neighbors referred to us as “those kids.” Heh.
Buying and selling real estate is just business, but finding a place you want to call home is serious business as far as I’m concerned. I’m one of those people who can see the potential in a place. I’m also one of those people who knows a rip off when I see it. My first home purchase was for $15,000. It was somebody’s old weekend get away that my father and I renovated. When my loyal follower and I got married, we sold it and went house hunting. I asked the seller how much they wanted for the house we ended up buying. When he said $95,000 and I didn’t blink when I replied “We’ll take it,” I thought my husband was going to come unglued. Thinking back to that house now, it’s unbelievable homes of that same square footage/condition can go for three or four times that price in today’s market. I wish you luck on your next move.