We have bought multiple properties in the Tallahassee area over the years we have lived here. Some of the experiences have served as a reminder of the kind of sales agent we do NOT want to become. Sometimes we read the real estate horror stories on-line and shake our heads. We also keep in touch with buyers and periodically check in with them to see how happy they are with their homes. What follows are some things we hear most often and how to avoid putting yourself in a similar situation.
1. We wish we had gotten preapproved before visiting houses.
We have worked with buyers in the past that did not want to have their credit pulled until the last minute. They were not concerned about their credit scores or down payment so did not feel the need to reach out to any lenders to start the loan process. When a rare four-bedroom home came to the market in their preferred neighborhood, they were the first ones to put an offer in on Saturday morning. Unfortunately, the sellers choose another offer Saturday night that had provided a pre-approval letter. After talking to a lender, they also discovered that if they had purchased that home, the monthly mortgage payment would have meant struggling to fund the two-week beach vacations they loved and cherished. Once the had seen the homes in the higher price point though, they were disappointed with their options in the price point they were more comfortable buying.
2. We wish we had not bought at the top of my price bracket.
Beware of being house rich and cash poor. Eating ramen noodles and beans for weeks on end will get old. The house can be beautiful and the schools top notch, but the financial strain on you, your relationship and your family is not worth the stress in the long run. Before you commit to any home, make sure you have reviewed your budget and the cash to close estimate with your lender and significant others.
3. We wish we knew we needed cash for more than just the down payment.
We hear this one a lot. There are at least four checks you need to write on the way to the closing table.
- Earnest Money Deposit – This money is handed to the neutral third party as a commitment to the buyers’ interest in the home. This check is deposited immediately and must be given to the closing agent within 3 days of the last signature agreeing to the contract.
- Inspections – This is not a place to skimp. Some inspectors may offer veteran discounts if asked. This is your chance to test whether the home is solid.
- Loan Down Payment – This is at least 3% of the agreed upon sales price. Some loans do not have a down payment requirements, but most require at least 3.5%.
- Closing Costs – These are the costs that vary the most from buyer to buyer. It includes all the other costs to transfer ownership from the seller to the buyer. Typically, the closing costs are 1-3% of the price of the house.
4. We wished we had talked to the neighbors before we bought the house.
We had a buyer that bought the home next to the crazy neighbor. Every neighborhood seems to have one. This older guy had lived there since before it was even a subdivision and he did not like the number of cars that came and went at our buyer’s home. The buyers had several teenage children and a pool in the backyard that acted as a magnet for all their friends and friends of friends. The neighbor’s retired lifestyle of tending to his garden and bees did not mesh well with the buyer’s teens cannonballing into the water. If they had known, they probably would not have changed their minds, but they may have started off with the neighbor differently knowing his low tolerance for noise.
5. We wished we had asked more questions.
There is no such things as too many questions. This is the biggest investment of your life (or close to it likely). We created this website to answer some of these questions you may have, but real estate is personal, and each circumstance is unique. Ask your agent lots of questions! This is a time when having an experienced agent really matters. Whether you are a first-time home buyer or an experienced investor, choose an agent that has been to the closing table more than you. Ask questions about the neighborhood, the schools zones, Saturday morning traffic, HOA value, etc. Some things agents are not allowed to answer for you, but Realtors have access to community reports at the zip code level.
When talking to your lender, ask questions until you are comfortable with every number. Some of the initial numbers you were provided will change based on whether you are required to pay an HOA, or purchase flood insurance. Some fees can be negotiated away or lowered. Some fees are lower at another lender. Talk to 2-3 lenders before you choose which one you commit to, and ideally do this before you make an offer. Agents often have lenders they have worked with and know will treat you honestly and get you to the closing table.
When talking to your inspector ask about the potential life left for the air conditioning system, the roof, hot water heater, and any additional systems in a house like a pool or hot tub. Ask the inspector what he would be concerned about if he were purchasing the home. Some inspectors are also contractors and can give estimates of repairs and remodels. And for what it is worth, skylights and chimneys always seem to leak first.
Just a note here – many Realtors do not like the idea of buyers and sellers hanging out together. We judge this on a case-by-case basis and for the most part, buyers and sellers are curious about each other anyway, and there is no harm in meeting. Just be careful not to reveal any compromising information.
6. We wish we had gotten more inspections.
In Tallahassee, buyers have 15 days to inspect the home and make sure there are no deal breakers. (Freddie Mac and Fannie Mae offers a 10-day inspection period.) This inspection and the contingency period with it, are the most amount of time you will get to spend in this house before you sleep in it. Use this time to check out as much as you can about this house and ask lots of questions.
A home inspection will help you make decisions about one of the largest single investments you will make. To avoid surprises after your purchase, you want to know as much as you can about the home you about to buy. Even if you are purchasing a new home, a home inspection can identify major required repairs or builder oversights or shortcuts. In those cases, get the inspection before the drywall is posted so the inspector can see the wiring and plumbing before it is hidden. A new home has no history. Since the water has not run through the pipes yet, problems with the water heater may not be obvious. Depending on timing a roof may have never baked in the Florida sun or withstood one of our torrential downpours. In those cases, finding a leak may be very difficult until long after you are moved in.
Sometimes the inspector will recommend calling a specialist to take a closer look at a potential issue. Most of the time, those recommended specialists will investigate the issue for free or charge a small fee. Even if you are running out of time on contingency period, do not settle on the house until you are comfortable. Inspection contingencies can be extended for an additional inspection. That allows the buyer more time to investigate and still get their deposit back if they do not like the answer the specialists gives them. Although not every inspector will catch every issue every time, they are human and may miss things occasionally, they have been trained to catch the big things.
Sometimes subdivisions have Facebook pages. Contact the administrators to ask to be added to the group. Get a feel for what the owners are saying and whether you can live with what they say are the biggest setbacks for living in the community.
7. We wished we had not lacked vision for potential repairs.
Often buyers will apologize for being picky. It can feel like being Goldilocks in the three bears’ house: that is too big, this is too small. Figuring out what you can live with given your lifestyle and knowing what is beyond the budget is important. Do not let ugly flooring chase you away. That is usually a easy thing to replace.
Even if you are not able to rip out that hideous wallpaper in the master bathroom right now, it might be worth it to live with the ugliness for a while in exchange for getting into a house in the neighborhood you desire and that you can afford. If the home otherwise meets your needs in terms of the big things that are difficult to change, such as location and size, please do not let cosmetic items turn you away.
At the same time, do not be fooled by minor upgrades and cosmetic fixes. These are inexpensive tricks that sellers use to play on your emotions and fish for a higher price tag. Sellers may pay $2,000 for minimal upgrades like paint, cabinet pulls, or lights; or they may fork over several thousand dollars on staging. They do it because it works. Many buyers like the ugly homes because they are often cheaper than paying the increased home value to a seller, even if you must hire a contractor to finish your work. Then you can have the upgrades according to your taste, not someone else’s.
8. Overlooking Important Flaws
While looking for homes whose full potential has yet to be realized, consider carefully any areas of the home that cannot be inspected. We had one buyer we worked with for many years. She was especially careful because she did not feel her first Realtor watched out for her and her resale value for her first home. She had a townhouse that is still underwater from the housing crash of 2008. The house she picked was ideal for her, near her mother and aunt and room for her sister and a pool. After inspections, the inspector noted that the garage had been added on and part of the foundation was not visible due to the location of the old wall. Because of what he was seeing on the outside of that wall, he recommended getting a foundation expert to take a closer look. The buyer opted out. The contingency period was ending, and we had already negotiated a new roof and a new air conditioning system from the seller. A year later, that part of the garage was sinking into the ground. Their repair costs were steep.
9. Dragging Your Feet
Many buyers are like us and do not want to feel rushed making this very important decision. In an ideal world, buyers would have plenty of time to make a careful decision. In this crazy seller’s market, time is not on the buyer’s side. It is a tough balancing act for buyers in Tallahassee right now. You must make a careful decision, but if you take too long to make it you may lose out on a property because someone beat you to it. This can be heartbreaking. It can also have economic consequences.
Remember, you will have two weeks to investigate this home. If you do not make an offer right away, someone else might, and you will have to keep looking. Do not underestimate how time-consuming and routine-disrupting and nerve-wracking and anxiety-producing house shopping can be.
Some questions you should ask include:
Are there any development plans are in the works for the neighborhood?
Have home values in the neighborhood been declining or rising?
What do the neighbors think about the HOA?
What do the streets look like at 3:35 in the summer?
How long was the neighborhood without power during Hurricane Michael?