Tell me about buying a foreclosure house

[pinkmint]

... or share any experience/ knowledge you may have about buying a "below market" price house, or house buying options for low income folks. 

 

Long story short, the good news is that we found out we qualify for a state program for first-time home owners to get a small grant towards the down payment. 

 

Not so good news is that on one end, the only house we could afford to make mortgage payments on is going to need to be as below 100K as possible, all the while needing to qualify for an FHA type loan which means it has to be approved by an inspection as safely livable (so we won't be allowed to buy a fire damaged shack for $15k etc, and I've seen those types of listings). We are also hoping to not have to live in a high crime/ poverty area, and living rural is not really an option since DH work is so close to the city center and surrounded by suburbs, so basically a needle in a haystack is what we need to find. Cosmetic issues I fully expect. I don't have any illusions that we will be able to find a place that's not all kinds of ugly, but we are willing and happy to do work. 

 

We live in one of the strongest "seller's markets" in the country so that makes it hard too. Plus, from what I've read, this being 2016, the deals on those kinds of houses aren't as good as they used to be anyway. 

 

I mean, we're open to the possibility we may never be home owners but I'm trying to work with this little sliver of hope to the fullest. 

Edited December 13, 2016 by pinkmint

[mommyoffive]

Congrats on finding out about the program!  That is awesome.  Even if it doesn't work out now, knowing that you can do it is huge. 

 

Have looked into Habitat at all?  Would you get into that?

 

 

Are you sure you want to stay in your town? 

 

 

I haven't bought a foreclosure and I know the deals are not what they were a few years back.  But there have been people on my street who bought the foreclosures.   It worked out really well for them.

[pinkmint]

I have briefly looked into Habitat for Humanity. It's confusing to me. But my belief is that they build in areas that are higher crime/ poverty/ drug areas. 

[mommyoffive]

I have briefly looked into Habitat for Humanity. It's confusing to me. But my belief is that they build in areas that are higher crime/ poverty/ drug areas. 

 

Oh that isn't good.

 

I am glad you are doing your research.

[Happy]

There are good foreclosures and bad foreclosures. First, don't buy off the courthouse steps--too many unknowns there. Liens, back taxes, all kinds of unknowns.

 

You'll be buying a bank owned home or even a HUD home. Go to the Hudhomestore site to look for homes in your area. Some HUD homes are dumps. Some are almost move in ready. 

 

I'm an agent, so I highly recommend you work with an agent. :)

 

If you can see past dirt, filth, dark lighting, trash, and out dated décor you can find a gem. Get any potential home inspected (and look it over hard yourself. Even inspectors miss things.)

 

ETA--a HUD type home has very few outs once you've signed documents. Be very sure.

 

Regular bank owned homes will be listed with agents and easy to find on the MLS.

 

Don't underbid. Most foreclosures and most HUD homes are priced competitively.

 

Another avenue to look at are what I call Grandma homes. As in this was Grandma's pride and joy---it's decorated from the time of the Kennedy administration. Clean, well built, but dated. There are MANY buyers who can't or won't see past the décor. Those that do can get a great deal.

 

 

 

 

 

Edited December 13, 2016 by Happy

[TheReader]

Our first house was a home that was being sold to avoid foreclosure, or had been foreclosed and the bank was selling, or something like that. We were in exactly your situation at the time (qualified for a state program, had to get an FHA loan, had to be very low cost, etc.) and had the same issues -- stuff in our price range, until that house came available, were houses with horrible foundation problems (well beyond our ability to fix), homes in neighborhoods where every other car was up on blocks, windows had burglar bars, etc, homes that could show on those "nightmare real estate showings" type threads/shows, etc. It was rough, but God came through and provided this awesome house. 

 

So...it was a great floor plan, but some downfalls: the foreclosed owners had removed everything they possibly could. Outlet covers. Lightswitch covers. Lightbulbs. The actual thermostat, so you couldn't even test the A/C during the inspection, there was no control for it. the door bell had been removed (not the exterior button, but the actual bell inside that chimed). They had, either all along while living there, or once they got the foreclosure, allowed their dog to use one bedroom as a bathroom. They had, either just from being sloppy or out of spite, regrouted their bathroom tile (white tile) with forest green grout, and in the closet section, smeared it all over the entire (tile) floor rather than clean up the excess grout. So, "minor cosmetic stuff" was....well, it was a lot. We had to paint the entire interior of the house, we had to deep clean all the carpets (and I think maybe we replaced the ones in the one bedroom), we had to buy outlet covers, light switch covers, light bulbs, thermostat, door bell, so many things that "should" have come with the house, ya know? 

 

it was a Godsend for us, it was in a great neighborhood, at a good price, amazing floor plan, and we couldn't have owned a home at that time otherwise. But....needle in a haystack about sums it up, and the bidding war on the house was fierce; we almost didn't get it. So many offers came in, it was crazy. I think it was our desperation that won it for us; the sellers kept adding more and more ways of enforcing the "as-is" clause, and the other bidders ended up all backing out; we were so sure we wouldn't find anything else, ever, that would come close to meeting our needs that we just hung in there. We did have to replace the siding on the back of the house, the flooring in the living room, and the roof when we later sold that house a short time later (a job transfer unexpectedly moved us after only 18 months in the house, and the roof was replaced when we sold). So...it was a good buy for us, but it did cost us $$ (how we racked up credit card debt back then....). 

 

I have heard horror stories about even worse transfer of ownership happenings with foreclosures; even things like taking all the ceiling fans and toilets and light fixtures, not just light bulbs, etc. So, there is that. We did have an incident where between the time we made our offer/had it accepted and before we went to closing (so, we were under contract, but it was in that period of time in between), where someone went and further vandalized the back, ripping a board off the siding/trim in the backyard. Whether that was the prior homeowner or someone else, who knows, but just be aware, buying a foreclosure often (not always) has some risks. 

 

Oh, the big thing with a foreclosure -- in our state, at least, the seller is not required to give any information on the house, none of the usual disclosures. That's a big risk for a lot of people, and we think why so many dropped out during the bidding/negotiating process. Our real estate agent had been a prior owner to this house (NOT the one being foreclosed on; she'd owned it several years prior) so she knew at least some of the history and dug up old disclosures on it for us, so we were missing a few years of info but had a lot of background that others did not have. But that was one thing she cautioned us about re: foreclosures in general -- the disclosures aren't required, so you are really buying blind beyond what can turn up in an inspection. 

 

Anyway, it worked out for us, but it was definitely a "God thing" the way it all happened/came together. 

[Guest]

Why buy? I would rent and let someone else deal with all the hassles for a year or two. Buying the wrong house is a money pit. Heck, a good house in a good neighborhood is a money pit!!

[Spryte]

What a great program!

 

I have a few thoughts: if you're buying with FHA, you'll have a good inspector who will make sure the house is habitable. Otherwise, the loan won't go through. So I think you'll be spared the major headaches some people who buy foreclosures face. That's my limited understanding.

 

We have friends who bought a foreclosure in an area they could never otherwise afford. It had huge issues - and needed a mountain of work. That house never would have been approved for an FHA loan, so you wouldn't face what they did. For them, though, it worked out. They are handy. And they like that sort of thing.

 

So, I'm thinking it'll mostly be cosmetic, in your case, the stuff that needs to be fixed. And you can live with anything for a while, till you change it slowly.

 

Even if this doesn't work right now, its hope. Hope is good. :)

[Jean in Newcastle]

We bought a foreclosure. It was "as is"- i.e. we could not ask the sellers to fix anything. It was contingent on us getting the ok from the inspector. If the repairs needed were more than we were willing to take on, we could have walked away. In our case we had to make a decision very quickly. We knew what we wanted, had some experience weeding out the worst houses and told them ten minutes later that we wanted it. In our case, it was good that we jumped on it because minutes after we signed, others were trying to snap it up.

 

Our home is the ugliest in a nice (not fancy ) area. It continues to be ugly 20 years later because we can't afford to do much each year.

 

Btw, Habitat has some homes around here in a much nicer area than we live.

 

 

Sent from my iPhone using Tapatalk

[pinkmint]

Why buy? I would rent and let someone else deal with all the hassles for a year or two.

For one thing because our rental price range doesn't allow us to live somewhere anyone would call nice. I've heard people say renting is so great but given the choice why do almost 100 percent of people buy?

 

Believe me, I'm cautious and scared considering our situation. But it doesn't hurt to talk about it to see how bad or good of an idea it could be.

[Homebody2]

Another avenue to look at are what I call Grandma homes. As in this was Grandma's pride and joy---it's decorated from the time of the Kennedy administration. Clean, well built, but dated. There are MANY buyers who can't or won't see past the décor. Those that do can get a great deal.

Agree with this. We didn't buy a foreclosure, but we did buy a short sale. It was ugly with outdated everything.

 

We did pay for an inspection, but we couldn't ask for any repairs. At least we knew what we were getting. Older homes can have expensive issues. Over four years we've had to replace the roof and ac. We knew those were coming, though.

 

We've also spent money updating things. We didn't do anything major, and we still spent a few thousand dollars. It just adds up, and even a few gallons of paint is pricey. Just know what you're getting into cost wise even with a house that is just ugly.

[teachermom2834]

I don't know the details of Habitat but I wanted to mention I have seen them built in very livable areas.  So it is worth looking into.  Where they were built in two towns I lived in previously might have looked like bad areas on paper but in reality were really fine and places I would have lived. 

 

I have lived in two pretty nice neighborhoods that had drug dealers living in them so, there is that.  

[Jean in Newcastle]

One aside about buying a foreclosure. Sometimes there can be baggage from the former owners depending on why it went into foreclosure in the first place. In our case there were repo men showing up for months afterward looking for them (or really for their cars etc) and we even had the police show up looking for them. Of course I just said that they had moved and I didn't know where but I never knew who was going to be ringing that doorbell for awhile.

 

 

Sent from my iPhone using Tapatalk

[pinkmint]

I will look more thoroughly into Habitat. (update: from the local HFH website it looks like they're pushing hard to build houses in the worst neighborhoods. Maybe it's different in other areas. I will still research.) 

 

As far as Grandma Houses, depending on the era, I would probably love that. It if was all 1950's sign me up. 1970's diarrhea color palette, not so much. 

Edited December 13, 2016 by pinkmint

[Raifta]

We bought a house that had been foreclosed upon.  Back in that era, it was a buyers' market so we underbid, not sure if that still applies today.

 

The house had been vacant for a year and previously been an illegal after hours bar.  We didn't know if any of the plumbing worked as it had been turned off so that was a bit of a risk.  We had to replace 3 windows that were broken/missing (but we knew that going in).  Aside from that in order to make it 'liveable' we painted and shampooed the dickens out of the industrial grade carpeting.

 

Because we were able to get a great deal on the cost of the house, we got a house that was twice as big as the others we were looking at, with a good sized yard and in a central, walkable, decent (not great but nothing we were looking at was great) neighbourhood and our mortgage payments were less than our rental had been (even when we factored in now paying for some utilities that had been included in our rent).  Again, we lucked out in terms of when we bought.

 

The purchase was contingent upon an engineering report.

 

We've been in the house almost 20 years now.  There are still sections that have not been redone (most of the main floor - I'm looking at you).  There is still industrial grade carpeting full of cigarette burns from the after hours bar era.  We didn't have a shower until 3 years ago.  We finally replaced the last 2 windows that dated from the early 1900s this fall and the change in terms of warmth has been dramatic.   Our front entrance hall features a $2 fix from the dollar store to make it brighter (there's no drywall on the ceiling so the light was being sucked upwards into the floor joists - we put $2 worth of white poster boards above the light so the light reflects back down - one of our most effective and cheapest renovation hacks).  So it takes time.  A lot of time and a lot of patience and a lot of being willing to live with what you have and not wish for what it could be.

 

I suspect every foreclosure is going to be different, so I would say spend time figuring out what would need to absolutely be done before you could live in it if that applies, and what can wait.  And then be prepared to wait.

[happypamama]

Our first house, bought sixteen years ago, was a foreclosure, and it was a fantastic deal. However, ours was clean and not intentionally trashed (although suffering from needing serious updating and a few repairs that had been neglected). No cement in the drains or intentional stuff like that. We did a lot of wallpaper scraping, painting, carpet replacing, and other cosmetic repairs. And we sold it two years later for a 40% profit. However, my DH is a professional carpenter, and at the time, we did not have children. So we had both the time and skills to make up for not having a lot of extra cash. If we'd had to pay someone to do the work, it would have cost much more. (All three of our houses have been at below market value because of needing cosmetic repairs/updating. Our current one is two hundred years old and was empty for a year before we found it. It has quirks and needs but after ten years, we've done a lot of good for it and have some very nice spaces. But, time and money are both in short supply.)

 

I worked with a real estate agent who specialized in foreclosures (she hired me after we bought the foreclosure), and I saw a lot of foreclosures with her. Condition really varied. You need a very good inspector and/or knowledge of houses.

 

Our state requires a seller's disclosure, but there wasn't one for that house because it was bank-owned. So it was as-is and also we had to rely on the inspector and DH's knowledge to prevent costly surprises. Thankfully, there weren't any. The bank did pay for a home warranty for us, which got us a new dishwasher at one point.

 

Congrats on finding the program! Just be open-eyed and be prepared (as all homeowners ought to be, really) to spend time/energy/skills and/or cash on repairs.

[ktgrok]

Our home was bank owned, a foreclosure. The biggest issue was that to pass FHA inspection it needed to have a stove. (oddly, not a refrigerator!). But we didn't want to pay for a stove before actually closing on the house. Our lender let us in on a secret..we ordered a stove online from sears. Printed the receipt, faxed that to the mortgage underwriter, then went back on the sears website and canceled the order. That was enough to get us the house. (at which point we did go and buy a stove, lol). 

 

Oh, and there was a ton of outdoor wiering that wasn't up to code, for "mood lighting" around the pool. My husband got tacit permission from the realtor to just rip it out one day, and then they inspected again. 

 

The house had ugly wall paper, holes in the walls where people had punched the walls, etc. But it was sound, structurally and we've fixed stuff as we go. 

[ktgrok]

Oh, and the biggest factor in grabbing one is to be QUICK!!! My realtor gave me access to her MLS listings, and I was obsessive about constantly checking, and when one came on the market in the neighbhorhood we wanted, in the price we wanted, I made sure we saw it the very next day, and put an offer that very next day. 

[Jen500]

A lot of houses in my area have been foreclosed, many bought by investors and turned into rentals. One of the former homeowners came back to clean up the house after they moved out. He told me that he had some deal with the bank to get a few thousand $ if he left the house clean and undamaged. Not sure if you have any of those by you. 

 

Just be careful what you end up spending. Make sure it's really in your budget. Yes, renting is expensive, but when the house needs a new roof, and the heating system goes out, and all of the smaller repairs can really add up. Plumbers are expensive.

 

Good luck!

[wapiti]

My random two cents:

 

Another vote for finding a grandma house if you can.  I prefer to search by map (redfin and zillow, though in our area, redfin is somewhat more up-to-date on listing prices - things can change in a day).  One of the first things I do is google-map the exact distance and commute time from the address to the places your family needs to go on a daily basis (work, school, grocery, target, etc) in light of the usual traffic at that time of day.

 

I would also suggest using an agent.  We have bought and sold without an agent, but that is easier when you've been through the home-buying process before.  Realize there may be additional costs - a few hundred for the inspection.  The agent can go over the list of possible costs.  I highly recommend a real estate lawyer to review the contract (ask the agent about this; we use a real estate lawyer to review the contract, even though we are lawyers ourselves and I would never buy a house without one); usually that's a flat fee, in my experience in the neighborhood of $500.  Caveat on the agent:  do not feel pushed into offering more than you feel prepared to or more than you feel the deal is worth.  If it's too much for you, it's the wrong house; let it go.  (First rule of negotiation, know your BATNA, or best alternative to a negotiated agreement.  Your BATNA involves walking away before signing anything.  Never forget this.  Even when you think you have fallen-in-love with a house.)

 

On the foreclosure angle, in many counties you can find lots of info online about the foreclosure, such as the amount owed to the bank.  That may be useful info when it comes time to decide on a bid.  Unfortunately some houses may have more owed on them than they're worth, which doesn't mean you can't bid lower, just that there may be some special approval involved.  Once you are bidding over that amount to a house already deeded to the bank, you are probably in good shape.  However, if the house is still owned by the debtor, if they're in foreclosure they may be in strained financial straits and may be looking to squeeze more out of the price.  (ETA, you can almost always find out who owns a house online, what they paid for it, WHAT ANNUAL PROPERTY TAXES ARE, whether there are any liens, and, for foreclosure, where exactly the property is in the foreclosure process)

 

In the big picture, I would be extremely careful not to go overbudget if you are on the edge of affording home ownership.  And plan for maintenance costs, expected and unexpected (whoops, there goes the hot water heater!  whoops, the furnace! etc.  Have an emergency fund - not sure what is the right amount, but I'm thinking well over a thousand, not under).

 

Best of luck finding a deal that works for you!

Edited December 13, 2016 by wapiti

[TranquilMind]

There are good foreclosures and bad foreclosures. First, don't buy off the courthouse steps--too many unknowns there. Liens, back taxes, all kinds of unknowns.

 

You'll be buying a bank owned home or even a HUD home. Go to the Hudhomestore site to look for homes in your area. Some HUD homes are dumps. Some are almost move in ready. 

 

I'm an agent, so I highly recommend you work with an agent. :)

 

If you can see past dirt, filth, dark lighting, trash, and out dated décor you can find a gem. Get any potential home inspected (and look it over hard yourself. Even inspectors miss things.)

 

ETA--a HUD type home has very few outs once you've signed documents. Be very sure.

 

Regular bank owned homes will be listed with agents and easy to find on the MLS.

 

Don't underbid. Most foreclosures and most HUD homes are priced competitively.

 

Another avenue to look at are what I call Grandma homes. As in this was Grandma's pride and joy---it's decorated from the time of the Kennedy administration. Clean, well built, but dated. There are MANY buyers who can't or won't see past the décor. Those that do can get a great deal.

 

I go for the dated "Grandma" house every single time.  Happy is right that buyers have no imagination.  If you do, you can do great, but make sure all systems are working.  I just had to replace the entire set of gas pipes at a grandma house.  Leaks everywhere. 

 

You need to go through the system first and make sure you are ready to buy when a house comes available.  Meanwhile, be watching the board of Realtors listings in your area, the FSBO's, and also the auction pages.  Lots of good houses go by estate or guardianship auctions when none of the other family members live nearby or want the house.  This is one of my favorite places to buy. 

 

Edited December 13, 2016 by TranquilMind

[frugalmamatx]

I bought a foreclosure through HUD about 4 years ago. It was a cash sale, and I HIGHLY suggest going that route if possible - the best deals often are not mortgagable. It was fairly structurally sound, but stripped of a/c, stove, dishwasher and some of the lights didn't work. I got it for a song really - $35k. The price was so cheap because it couldn't be financed due to the missing appliances. It needed {and still needs} work but was fully livable after I figured out some of the wiring was dummy outlets to make Section 8 happy {it had previously been a section 8 rental}.

[G5052]

Just keep in mind that the condition may vary.

 

The one across the road from us was a sad situation with mental illness and unemployment. When she left, she poured gallons of bleach down the drains to ruin the septic field, ran the faucets until it completely flooded, and trashed the house. An investor bought it and lost his shirt trying to rehab it. The new owners continue to find horrible problems.

 

A friend bought one that was perfectly fine and even clean inside. It just needed updating, which she gradually did as she had the funds.

[regentrude]

Just another thought that I did not see mentioned: buying a house ties you to the area.

You have in previous posts mentioned that your DH has little opportunity to improve his earnings in his current job and few opportunities to change jobs. Before you commit to buying a home, think very hard whether you want to stay in this area long term; even with the assistance, buying a home will tie up capital and make it much harder for you to relocate, especially when you purchase a not-so-desirable property that will be difficult to sell (plus, there may be strings attached to the program that limit your ability to sell for profit).

From what you wrote before, it seems to me that in your current situation, improving the job situation would be higher priority than home ownership.

[Rachel]

We had a great experience buying a foreclosure, it's the only way we could afford the neighborhood where we live. The bank has already come in and fixed a lot of the things the evicted owners tore out but not everything.

 

FHA loans have more restrictions, so if your house passes that inspection, you should be fine living there.

 

Habitat home locations really vary. One place where we have helped build for the last several years is a brand new neighborhood, all Habitat homes. I don't think that's a bad thing as most families are in similar situations financially. The original developer went under and Habitat got the land at a greatly reduced price. I have seen Habitat homes in neighborhoods where I would not feel comfortable living as well though.

 

There may be other home building/buying programs in your area. Just be cautious before signing any paperwork. You may be required to live in the home for a certain time period in order to not have to pay back the grant. If that's 3 years, it may not be a big deal. If it's 15 years and your financial situation hasn't improved, it could be a huge deal.

 

Good luck!

[Schadenfreude]

Just a word of warning on grandma houses. You say it may be difficult to afford the mortgage. Grandma houses usually have a lot of older appliances and electrical systems. They need to be replaced sooner than a newer home. Systems only have to be up to code when the electrical things are put in. So, our home passed inspection, but when the a/c and heat went out two years later, we were required to bring all of our electrical up to code before a new one could be installed. It added thousands to the cost.

[Liz CA]

For one thing because our rental price range doesn't allow us to live somewhere anyone would call nice. I've heard people say renting is so great but given the choice why do almost 100 percent of people buy?

 

Believe me, I'm cautious and scared considering our situation. But it doesn't hurt to talk about it to see how bad or good of an idea it could be.

 

I agree with this. You have a good head on your shoulders and are aware of what you can afford. There is the possibility you may be blessed with something that is in your range and it could be less than the rent you are paying now - at least with a fixed mortgage your payments won't change and even with an adjustable - there is a top amount. I will be praying. :)

 

The only other - potentially useful - contribution to this thread I wanted to make is to be aware of all the small print with grants. Friends of ours did something similar and one of the conditions was that they could not sell the house for something like 15 years (I don't remember the exact number of years). They knew it going into it but there were times when they wished they had that option. I have no clue if your contract would contain a clause like this or not but it's something to be aware of.

[Lang Syne Boardie]

I hate to throw cold water, but I have to say...don't do it.

 

Fixer uppers of any kind (even necessary updates to grandma houses that seem very well-preserved) are the province of people with some reserve cash in the bank. Those of us who fret a little over next week's groceries, and are devastated by the need for new tires, and are astonished at what we'll have to do to pay a medical co-pay...don't have the scratch for busted water heaters, leaky roofs, septic needing pumped ahead of schedule, or unexpected *anything* that can go wrong with a property.

 

DH and I regret buying this house. It's definitely a grandma house with no disasters nor surprises, but it has needed a lot over the past 12 years just because stuff wears out! We thought we'd build up more equity by now than we have, but necessary home repairs and maintenance have prevented us from paying down the mortgage earlier than scheduled (although we have no penalty, if we ever manage it).

 

Home maintenance is so expensive, and time consuming, even if you save $ with DIY skills (my DH has a lot of construction skills). Also, homes don't always keep the same value as on the day you buy them...neighborhoods can turn worse, you could live through a housing crisis such as we experienced (our home lost 1/5 of its value). Don't buy a home unless job prospects are very good, and you know you want to stay in the area for multiple reasons.

 

If you don't have good job prospects and multiple reasons to stay, don't buy a house there.

 

 

 

 

[SweetandSimple]

We bought a foreclosure using an FHA loan a few years ago. FHA does have some restrictions, but it is surprising what the inspectors really look at. Our house was built in the 1950s and has a lot of issues--- I'm still trying to decide if it was a good deal or not.  :closedeyes: Anyway, the two things that stopped the FHA loan from going through initially were a bad roof and a fallen-down fence in the backyard. The bank that owned the house paid for both of those to be fixed, so that worked out well. But there are still a lot of things wrong that FHA didn't care about at all...

[Bluegoat]

I would not dismiss Habitat homes.  It's true they tend to build in lower income neighbourhoods, but there are very good reasons for that - it means low income families can afford the homes and taxes, and have the right kinds of services.  It's also a way to help improve and stabilize neighbourhoods - Habitat homes going in can be the beginning of a turn in an area's direction.  I've lived in a number of supposedly "crime ridden" areas tat were all great places to live.

[Lang Syne Boardie]

Just a word of warning on grandma houses. You say it may be difficult to afford the mortgage. Grandma houses usually have a lot of older appliances and electrical systems. They need to be replaced sooner than a newer home. Systems only have to be up to code when the electrical things are put in. So, our home passed inspection, but when the a/c and heat went out two years later, we were required to bring all of our electrical up to code before a new one could be installed. It added thousands to the cost.

 

Yes, this is definitely the kind of thing I was referring to.

 

And it's not just updating to code; frequently we've found that newer systems don't fit in the same slot (space, wiring, plumbing) as whatever was done in 1964. DH is rebuilding this house one wall at time, because of this phenomenon.

[pinkmint]

Tibbie, I appreciate that input, really. That's the kind of stuff I need to think about. Especially helpful from someone who knows what it's like to sweat grocery money first hand.

 

DH and I are not Chip and Joanna.

 

As for Habitat, the qualifications on our local one say it's for people with not great credit scores and who don't qualify for traditional home loans. DH credit score is over 800 and we do qualify for FHA loan. We're just low income/ no assets.

[Liz CA]

I will look more thoroughly into Habitat. (update: from the local HFH website it looks like they're pushing hard to build houses in the worst neighborhoods. Maybe it's different in other areas. I will still research.) 

 

As far as Grandma Houses, depending on the era, I would probably love that. It if was all 1950's sign me up. 1970's diarrhea color palette, not so much. 

 

People have made a lot of good points here.

Perhaps a couple of things to consider: Can you/ your dh do a lot of the repairs? Do you know other people like plumbers, roofers, etc. who would help you at a reduced rate or for a weekend project if need be? Do you have something like our community where teens go around cleaning up yards for a donation to their mission trip fund? Relatives with specific knowledge pertaining to house construction / maintenance / repairs?

 

Also, your dh's job situation could change. Is he still interviewing? Maybe I got you confused with another poster since several people on the board are looking for new jobs. Either way, best of luck and keep us in the loop. :)

[fairfarmhand]

Another caveat:

 

Know your family.

 

My dh would be well intentioned about getting repairs/cosmetic stuff done.

 

But at the end of the day, he really just wants to sit down. A fixer upper would be a nightmare for our family. He'd be at work all day doing his thing while I was at home handling overflowing toilets and drafts blowing on my feet. I'd be grumpy and thinking "Are you EVER going to fix this?"

 

Personally, since I am at home ALL the TIME, the repairs that got put off would drive me out of my mind. Not necessarily the ugly things. Just the stuff that doesn't work properly and affect my getting things done.

 

ETA: IT's not that I am above tackling repairs myself. It's that my dh is rather particular about stuff and wouldn't want me to do it.

Edited December 13, 2016 by fairfarmhand

[barnwife]

... going to need to be as below 100K as possible

 

...hoping to not have to live in a high crime/ poverty area, and living rural is not really an option since DH work is so close to the city center 

 

We live in one of the strongest "seller's markets" in the country ...

 

...I'm trying to work with this little sliver of hope to the fullest. 

 

The only good suggestion I had was 70's houses, they're much better than the typical 50's cape cod/bungalow as far as efficiency, ability to update systems, ease of upkeep, etc. etc.  Lead paint alone is reason enough not to buy a house older than the 70's.  

 

I strongly suggest getting groovy and learning to like shag and dark oak, these houses are great deals now.  It sounds like you might need to relax some of your standards, and the 70's house exclusion is the one I'd drop first.  50's houses are hip, so you'll pay a premium for houses weren't good houses to start with.  At least when my grandparents bought a fixer upper victorian, it was a solid house with room to do work.  I'm not saying there are lots of cheap 70's houses out there, maybe they're not bargains in your area.  

 

The only other advice (when looking for a needle in a haystack), don't ignore houses that have been on the market for a while, this is a great time to make an offer on a bank owned house that has been listed since spring, the bank has been paying the costs for years typically, and they don't want to heat it through the winter, but by the time you close the heating season will be mostly over anyway.  Also, something they optimistically priced at $99 in the spring might have sold at $90, or started a bidding war at $85, but being stale and in winter they'll seriously consider $75.  

 

The traditional advice is to buy only if you're sure you'll be there 3-5 years.  Renting isn't that bad, but I don't know how bad your rental market is either, so maybe it is that bad.  If the home and rental market are that high, the only other option is to consider a lower cost of living area.  

[Bluegoat]

Around here houses built in the 50s are typically a lot more solid than the ones from the 70s.  The 70s ones often seem to have been built out of much cheaper materials.

[wapiti]

  Lead paint alone is reason enough not to buy a house older than the 70's. 

 

FWIW, IIRC, interior lead paint was banned in the mid-1950s and decreased in use prior to that.  Exterior lead paint was banned in 1978.

[pinkmint]

I can see 70's houses being cheaper. Shag carpet would defeat one of the purposes of us trying to own a home though. Being able to finally get away from carpet. (We have major allergy issues with kids and current landlord won't allow us to replace crusty old carpet even though we offered to pay for laminate etc).

 

Renting is not as fun as it sounds either. Especially around here where you are paying way more to rent something than to own it.

[Lang Syne Boardie]

 

Renting is not as fun as it sounds either. Especially around here where you are paying way more to rent something than to own it.

 

Home maintenance can entirely close that savings gap, on a monthly basis. And unavoidable home repairs can tip the balance entirely the other way, in an instant.

 

We've run the numbers here. We keep careful track of expenses. It seems cheaper to own than to rent in our area, but it's not when you take into account all of the things that would be a landlord's responsibility that are now ours. We don't come out ahead, financially, at all. We come out behind. And that's with a wife who is willing to live in a very shabby, non-updated but only mostly functional setting, and with a husband who is remarkably handy and resourceful and a very hard worker...

 

So frugal home ownership does not save us money. What we gain is a better neighborhood than the trailer park we left, and a home base for our family that feels permanent. And it makes sense to stay for the following reasons: Due to a union ticket, we are not leaving the area; plus we are surrounded by extended family and 20 years' worth of friendships and associations. Also, when our kids are grown in just a few years, we can knuckle down and pay off the second mortgage...and then, of course, is the fact that the mortgage is underwater since we bought the home right before the bubble burst. We can't sell it, so we might as well live here and get it paid off as soon as we can..

 

in the long run, this might work? I might end up with what I always wanted, which is a stable, long-term family house for all the children and grandchildren to come and visit, a place that DH and I turned into a home. But for 12 years we have not saved a dime by owning this house instead of renting.

[Arcadia]

In the big picture, I would be extremely careful not to go overbudget if you are on the edge of affording home ownership.  And plan for maintenance costs, expected and unexpected (whoops, there goes the hot water heater!  whoops, the furnace! etc.  Have an emergency fund - not sure what is the right amount, but I'm thinking well over a thousand, not under).

 

I agree.  My condo complex won a multimillion lawsuit again the developer so building defects are being taken cared of by the settlement. My block was the last to be built and had the least defects compared to the first two blocks that went up.

 

Renting is not as fun as it sounds either. Especially around here where you are paying way more to rent something than to own it.

 

Depending on location, foreclosures can be snap up very fast just for the land.   Here land prices are high. When calculating mortgage, factor in PMI (private mortgage insurance), home insurance and property tax.  Being behind on property tax would incur a lien on the house.  If there is HOA, being behind on HOA fees would incur a lien too.

 

Another thing to consider is how easy would it be to rent or sell if you would like to relocate for a better job offer.

 

I remembered you have friends willing to help rip out the carpet so that is one less cost.  For us, ripping out the carpet for our living room and bedroom would cost at least $200 for labor cost. If there is a tree on the property, make sure it is healthy.  A friend had to pay a lot to remove the ailing tree on his property. 

[shawthorne44]

I go for the dated "Grandma" house every single time.  Happy is right that buyers have no imagination.  If you do, you can do great, but make sure all systems are working.  I just had to replace the entire set of gas pipes at a grandma house.  Leaks everywhere. 

 

You need to go through the system first and make sure you are ready to buy when a house comes available.  Meanwhile, be watching the board of Realtors listings in your area, the FSBO's, and also the auction pages.  Lots of good houses go by estate or guardianship auctions when none of the other family members live nearby or want the house.  This is one of my favorite places to buy. 

 

 

 

Another advantage to a Grandma house is that it is less likely to have a bad remodel done to it.   

[TranquilMind]

Another advantage to a Grandma house is that it is less likely to have a bad remodel done to it.   

 

This is true. 

[shawthorne44]

I've bought two HUD houses and they were both excellent buys.  Honestly, I think I prefer it just for the buying experience.  There isn't a seller making demands, changing their mind, etc. to deal with.  For the first one I even started demolition of an interior remodel before closing.   On that one, the house appeared in a lot worse shape than it was.   The neighbors gave me the disclosures on the house.  

[JFSinIL]

I have briefly looked into Habitat for Humanity. It's confusing to me. But my belief is that they build in areas that are higher crime/ poverty/ drug areas.

Well, there is a Habitat house just around the corner here, and a few more mere blocks away, this is not a slum by any means. So don't rule them out. The house around the corner was earmakred for a mom and her kids, they had to put in a certain amount of work (alongside the volunteers) to help get the 100+ year old house up to code and in good shape. We all brought cookie plates etc. for the big housewarming Habitat held for the new owners when they got the keys..

[Guest]

Another advantage to a Grandma house is that it is less likely to have a bad remodel done to it.

I was going to say the exact opposite. Permits for work are a fairly new invention. Lots of older houses have had work done by Uncle Joe who thinks he knows his way around a toolbox.