Rituals and incantations to buy homes

I bought a place and learned some things.
I decided to write up questions as I went along, pointers where I can give them, and then end with big takeaways. It’s called ‘pointers’ and ‘takeaways’ because this is not professional financial or legal advice.

No one explains anything

You might think that a decades-long agreement, maybe the biggest financial commitment for years to come or a lifetime, is something to research and approach with caution.
Unfortunately any website with information about buying a house/condo provides just enough information to get you as a customer. It’s as if you looked up recipes online and all you got was “you better not put wet and dry ingredients together, call us today for the perfect cake!”.

My bank doesn’t have a real guide — they had a calculator to remind you what percentages look like. Then after I filled out the online forms for pre-approval, the bank linked me to a real estate agent who then called me.

I won’t fall for this friendly phone call nonsense, I thought. I’m going to research who this person is and what they want, I thought. But the info was scarce.

So if you have a housing FAQ of your own, here are a list of my real questions. I put answers if I have them. Hope this helps.

Pre-Planning / Choosing a City

  • Is there an advantage to getting a home loan from my main bank? Do we have a history? [Ultimately it was easier for them to set up autopay on my account, confirm when I sent money to investments, and confirm the funds came from my paychecks]
  • If housing is an investment, shouldn’t I buy in Houston or Phoenix, ignore any negatives, and keep on buying and flipping? Or invest in REITs / Fundrise? [you don’t have the time or energy for this]
  • If housing is about careers and opportunity and likeminded people, shouldn’t I move to SF and accept that I’ll never afford to buy a place?
  • Is buying into a co-op a thing outside of New York City? [Condominium agreements were popularized in the late ’60s / early ‘70s so older buildings may still be co-ops, but also this is complicated. Park Vista is a co-op in Seattle which looked cool.]
  • Is there a site to see 1–3 years of listings, de-listings, closings, and trends within a specific building? [Zillow has pages like this but not quite what I wanted]
  • I can tell it’s a bad sign if I can afford only 3–5 places in a city — likely there is a shit-ton of competition with above-asking-price offers for those places, and they likely have issues. Are there green flags for when I’m looking at the right location? [I don’t know.]

Connecting with agents

  • What are the steps…? Just one timeline of pre-approval, finding a buyer-agent, boxes to check off with specific people, calendar invites, etc.
    When my phone rang, I usually had no idea what we would happen.
  • If I want to buy in San Diego, do I need to look up a bank branch there and talk to them and get a contact person there, or elsewhere in California…? [I did an online pre-approval. They could place me anywhere but did need to select one city. Then at closing, be near a bank branch!]
  • If my lender introduces me to agents, is that a convenience or are they mediocre? [There isn’t allowed to be a kickback between the lenders and agents, but I have no idea of the quality.]
  • If an agent has a map of properties but is missing one, can I tell them, or is that like me showing a doctor what I found on Google?
  • After I fill out a form on the Zillow/Trulia/StreetEasy megacorp or Realtor, who gets that info and who is texting me? [Realtor connected me to a call center which connected me to a buyer-agent]
  • If I need a lender where I don’t have a bank account yet, what information will they need? [This was an issue for floating houses in Portland, where you need a local lender with relevant experience]

Timing

  • Is there a better time of year to buy a house, and does this depend on the region? [I heard that fewer people are looking in December, but I don’t know if that’s good or bad?]
  • Should I do the actual purchase in the beginning of a year, so there’s time before I take a tax hit from selling investments for the down payment? [Talk to a financial advisor before starting this process; I regret not having someone else think it through as I was playing it by ear]
  • After I get pre-approved in one city, can I get a new pre-approval somewhere else? [This worked. My interest rate changed, though the pre-approval rate didn’t matter much when we locked in a rate later?]

Due diligence

  • How much time should I set aside to do open houses? I want to visit a city and hash this out with only paperwork and digital signatures left to go. [It seems like this could be done in one busy week, or mostly online if you want, but visit. I kept putting it off, then visited with the inspector before making a second payment [earnest money]]. In this Financial Diet video, it sounds like it is common in 2021/2022 to tour just one place as you are seriously prepared to make an offer.
  • How much time should I expect between visiting and closing on a place? [Too much variance to know, this closing was set 40 days after inspection but mostly due to the holidays and seller’s preferences]
  • Who hires the inspector? What kind of inspector do we need for a condo in a well-known, functioning building? [You (the buyer) are hiring an inspector and a real estate attorney, but your agent probably has one on speed-dial. For floating houses, things are more complicated; you need an underwater diver inspection.
    Extra content: I asked the inspector how often he said ‘
    don’t do this’ to buyers and he said, it’s always your choice, but about 1% of the time he stops the inspection and asks if they’re prepared to redo the whole foundation or something on that level.]

Financial planning

  • How much (in %) should I expect to pay over the asking price, where the seller could have put any asking price that they want, but put a fake number instead. [Depends on listing, timing, and city. I got just below the asking price].
  • What are closing costs, in %, in $, in included items, just someone make a sample receipt instead of mumbling ‘closing costs’. [When I got the actual cost it was about 4% of total sale price, and included some prepaid taxes and the title company’s search and things. 4% seems to be typical.]
  • If I plan to buy in 3–6 months, do I hold my next paychecks in cash/savings, or see if they yield investment income? When do I cash out existing investments? [In my experience this was way too stressful and easy to regret. Don’t move the investments until you’re staging them in one account for lender approval (unless you’re checking how many days it takes to settle before withdrawing! Some systems take their time!)].
  • When I was getting hired in 2017, someone told me that the 401(k) would be useful when getting a home loan. What were they talking about? [LOL]
  • HOA fees in online listings: are these estimated or official? When do I see the actual HOA agreement? [They’re accurate. You get cc’d on bills and minutes and things later in the process when those get sent to the attorney. I also had to do an online orientation for the building]
  • Is there anything authoritative about which neighborhoods could be in peril of climate change by the time I try to sell this on in 2035–2050 ?
    [For earthquake / Pacific tsunami] What places are best for survivability? Should I be paying some kind of disaster insurance every month until then?
    [Flood and landslide potential are known risks and disclosures, but I’d be skeptical of any climate maps on a detail level where you could pick one building over another. The real estate agents didn’t have any suggestions on this. If you’re worried, how about investing in consumer staples?]
  • I ought to travel less because instead of spending $1,000 to visit an organization, it would be better to support them with a donation. By that standard, is a down payment to call myself a homeowner ever justifiable? [Is this Peter Singer? This post is all about going out in the world and buying a home so 1. lighten up, 2. keep it on-topic, and 3. no sympathy is owed for successes under capitalism]

More unknowns on the way to closing

Stuff that never happened

  • Family members told me that I would sign a contract confirming one person as my realtor, but I don’t think that I did this?
  • Someone at my lender made a stink about whether I would use my middle name or initial or first/last-only on bank documents and IDs at closing. When I followed up with the attorney, agent, lender, etc. they would only suggest someone else could handle it. I went into closing thinking at least I told everyone, and then it did not come up. This also happened to my dad when he bought his first home so maybe it’s common.
  • I was shown an offer letter template , a personal intro about my hometown, my life story and dreams, and how I can’t stop thinking about the home. This was going to be annoying to write with my stranger realtor, for another stranger, because I have no kids and the sellers do not need me to hype up their own place.
    Luckily, nothing like this happened. Any communication happened through our agents.
  • The lender waived their appraisal (?). I don’t know what motivates that. Maybe they had already financed units in this building.
  • The escrow company was going to use a special system to send official wire instructions. Their system did not inspire confidence. [watch out for scams]
  • Maybe due to covid, there was not a meeting where everyone sat around the table signing forms before the owners handed me a big key, like in a cartoon.
    I went to the title insurance office downtown, waited at reception until someone asked me why I was there, then got a room with no conference equipment. There was a photo prop so I did think the cartoon moment would still happen. I joined a Zoom on my phone and my lawyer had the same documents prepared in the same order. I asked some questions but naturally I did not discover anything there. The documents make sense and mostly codify your rights and obligations. When I finished signing, everyone congratulated me, then the title company person (notary?) ran in to take the documents and send them to the lender. Then I hung up and waited for a long time.

Stuff that did happen, unexpectedly

  • I did not expect Earnest Money (my agent texted “EM” and I was like ????) This was the main piece in the seller’s negotiation on our offer, even though it’s small potatoes.
  • It was rather sudden and frantic getting condo insurance.
  • I knew that I would need to wire the final payment to the escrow company, but I didn’t notice that I would need to be in-person at a bank branch for it!!! [The payment type you use might be a special check instead of a wire — everyone does this a little differently]
  • There’s a cost to move into my building. But I don’t have furniture. [I never reserved a time to use the service elevator, so no one ever asked about it.]
  • Whenever I talked to the agent/attorney/lender, they would also introduce me to a new person. Was I being overcharged?
    From the inspector’s report, I now believe that the additional agent was the seller’s agent (oops), the additional legal person is an attorney but just not the main boss, and my original contact at the lender was changing roles (yet he came back for the final details? I don’t fully get this).
  • The lender took a long time. The title company gave me the keys and asked me to leave.
    Cut to me standing on the L platform in the snow thinking uh, whatttt. Luckily they called and emailed soon after.

Stuff that I read up on but still don’t “get”

  • How does the official REALTOR® company factor into this? Was the agent who I met in person reporting to a REALTOR® boss?
  • What is Chase HomeStories? They called for my feedback and I answered honestly, “I don’t know what that is”.
    That was harsh so I added, “everyone talking to me is really helpful”.
  • Some people care about using “apartment” and “condo” terminology correctly, but it’s blurry for me. Are some condos actually co-ops?
  • There was a listing that said, “remodeling required”. Do you mean: legally do not occupy this space, or that the dishwasher is old? How can someone write this and think that’s enough??
  • Whether to buy interest points..? The bank called and gave me many numbers over the phone but never followed up with written details or tables specific to my loan.
  • Why did escrow wait to email wire instructions until the afternoon before closing..?
  • If I buy an apartment where someone currently rents, am I obligated to manage their rental until move-out or eviction, or is the closing extended by 60 days while they leave early..? Am I going to be the bad guy for wanting to move in?
  • Is there an intelligent, non-scammy way to pick the agent, attorney, inspector, title, and home insurance? Everything happened fast, and I accepted who the system threw at me or appeared on my insurance. I tried to look everyone up on Google Maps reviews, but mostly I was lucky.

My Big Takeaways

I’m not a financial or legal professional, this is not professional advice.

  1. YOLO. There’s too many options, too many signatures, and no one running in to point you to the correct home or person. If you have experienced “analysis paralysis” and are determined to exit this process with a home, you will be saying YOLO to something or other.
    Find something in your price range with no ‘deal-breakers’. As you go through the process, stay alert and aware, read things, ask questions if something sounds wrong. But at times you’re along for the ride.
  2. These things move fast. I assumed that I should try out pre-approval to see if I could get a loan, find a property in my price range, scan reviews for realtors and other professionals, then put together the dream team. Actually I should have waited to start until I was two weeks away from making an offer.
  3. Be conservative about the price, but only at the end. Suppose I am willing to make a down payment x. Under the 20% guideline I could call my bank and say here’s the $, this is my salary, I want a 5x pre-approval, then gone to my agent and said ‘3x to 5x range’.
    Here’s what I did wrong — I had it in my head to be conservative and do 25% down. So I gave that number to the bank and lowered the number again with the agent while setting up their search. Then I would see a place on Zillow and ask, how did we miss this one? I had asked them to filter it out!
  4. Changing real estate agents was right for me. I feel strongly about not being a picky person, but:
    - The first agent said something weird in our first conversation and never recovered from. They were concerned about re-selling my place (in a landmark building) because it doesn’t allow dogs.
    - Their company’s search tool was unusable and the communication was choppy. When a listing appeared on Zillow or Realtor (which I started to think of as the ‘real’ search site), I realized that instead of being excited and sharing the link, I didn’t want to risk confusing our conversation further. So I went with someone else.
    - When I found a new agent, they pinged places within a day or two. Most of the responses were pre-made videos, but answers and details helped us eliminate places and reach a speedy decision.
  5. You can make a choice remotely. The transaction already involves you hiring an agent, an inspector, and a real estate attorney. Are you a professional in those fields? If not, you aren’t going to have a Sherlock Holmes / Columbo moment. It’s impossible that in a brief visit, you will hear all of the pets, kids, music, quirky utilities, and weather which could affect you in the next several years. If you’re familiar with the city and neighborhood, you’re on the right track.
    I’ve stayed in 240 Airbnbs as a nomad and generally there are loved lived-in places, fresh new places, comfortably nice old places, crash pads just getting by with a sloppy paint job / Target haul, and places where the bathroom reveals the whole thing is in bad shape. You can figure these things out.
    [I did visit the property before buying, but only during inspection between Earnest Money payments].
  6. Before I bought, I was too tough on investment mindset. Buying a place always seemed exorbitant. It’s a lot upfront, but…. you know this already, but rent money is GONE, and the cost keeps going up. Knowing some committed money will return someday has become a huge relief.

If you are conflicted about buying a home and want to laugh about it, watch Tuca and Bertie Season 1 - Episode 6 (it’s on Netflix)

Reminder that this was not advice from a financial or legal professional.

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Web->ML developer and mapmaker.

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Nick Doiron

Nick Doiron

Web->ML developer and mapmaker.

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