First Time Homebuyer

Yay!  I just got pre-approved and can start looking for my first place.  My monthly payments including property taxes, condo fees, pmi, and insurance are going to be $100 less than my rent!  Its the perfect storm of low prices, low interest and the $8000 tax credit. 

So here's my question: should I look only at properties that are under my pre-approval amount, or can I look slightly above my price range in hopes that the seller will accept an offer less than the asking price?  If so what is a reasonable amount? 10%? 

I'm having a hard time finding a competent real estate agent that I trust.  That's why I'm asking here.  Thanks!

hey well congrats on your loan aproval! we got ours on Friday! very exciting! If you have only got PRE-approval I would stay within the limit.

However if you offer below the asked amount, be prepared for others to compete, if that is legal within your state...

good luck!

we move in in 3 weeks! i feel so grown up its scary...

I personaly would (and do) look above your price range, people price things expecting to be dragged down from that price. People expect to negotiate and as a first time buyer with no chain in this market you can afford to be cheeky in your offers.

it really depends on the market and the neighbourhood.  i just sold my place.  it went in less than a week, with competetive bids, at higher than asking price, because i live in a great neighbourhood and there's very little available. 

list price and market value can be a long way apart, but not always in the direction you expect.  watch for places that have been on the market for a long time.

keep in mind that the cost of home ownership is much more than just the mortgage.  i've heard that you should budget 40% more in housing costs than if you were paying the equivalent in rent.  remember, all those things that were the landlord's responsibility are now yours, and most of them are unpredictable: roof, hot water heater, taxes & utilities, plumbing, heating, electrical, landscaping, and lots of other things you're probably forgetting about.

get a home inspection, and don't buy more than you need.

Thanks Pgeorgian.  It's interesting to hear what is going on in other areas.  I'm glad it went so quickly for you. 

Its my understanding the the condo fees generally cover the common areas and things like landscaping, water, sewer, sometimes heating, etc.  My actual mortgage payment is less than 30% of my current rent payment and I am budgeting for the other expenses, including taxes and condo fees at almost twice the amount of my mortgage.  When I sat down with the lender, he said my situation is very rare in that my monthly expenses would be going down. 

All of my friends, co-workers, etc. that I asked about offers pretty much said that it really just varies on the individual property and how motivated the seller is.  My next step is finding a real estate agent that I click with.  Why are there so many duds out there?

Does anyone have any insight on signing a buyer's agent agreement?

?are you buying a condo or a house?

Be aware that if you're buying a condo/townhouse/house in an association that the association will frequently make special assessments.  For instance, my association fees started at $175 and have gone up to $275 in the last 7 years in addition to an assessment between $1,000-$2,000 per year.  You do not have a choice if the association votes in higher dues or assessments.

?are you buying a condo or a house?

A condo probably.

Be aware that if you're buying a condo/townhouse/house in an association that the association will frequently make special assessments.  For instance, my association fees started at $175 and have gone up to $275 in the last 7 years in addition to an assessment between $1,000-$2,000 per year.  You do not have a choice if the association votes in higher dues or assessments.

Two things I have been asking is how old is the roof and how much is in the association's reserve fund.  The lender and I used $300/mo as an estimate for condo fees although most of the properties I looked at are under $150/mo. 

I know they can do special assessments.  Last year my friend's association was $19,000 over budget for snow removal because of all the crazy snow we got, but she was only charged $100.  What were your special assesments for?

i'm wary of condos for another reason: when it comes time to resell, you don't have nearly the control over the first (not to mention second, third, and fourth) impressions of potential buyers.  you can't control your neighbours' behaviours, what's going on in the parking lot, etc.  even the best condo association can only control so much.

if you have to go that way, try to go with a no-rental building. 

and in the us--- condos have been heavily diminishing in value-- with the drop in prices now, you may get a profit or break even upon sale but even before the bubble burst, most were only breaking even or taking a small loss just to unload the thing....

look into small single family homes, or even a duplex (that isnt "considered" a condo) and talk to your realtor about resale and ability to unload.  for me when i bought my house, im not in it to make a profit (altho one would be nice) but i do need to know that when it comes time to sell, it will move and move relatively quickly.

good luck! its such an exciting time!

The assessments for my association were to fund the reserve accounts which had been underfunded for years and to do repairs such as the roof and slurry seal the parking lot.  Unfortunately, my association consists of 6 townhouses so there's not a lot of folks to share the costs with.

If you do end up buying a townhouse, try to get one like mine that has bathrooms attached to each bedroom.  This is so convenient and doesn't typically cost more but does make the unit more attractive.

I too would warn you to think twice about a condo.   They tend to drop in value before homes do and can be harder to sell.  My friend's husband bought a condo before they were married.  By the time they wanted to sell and look for a house, there were at least 10 other units in their neighborhood for sale and other units had been turned into rentals.  They are still in the 3 story condo, now with a toddler.  If you do get a condo, make SURE they do not allow rentals.

Look for a motivated seller. Some times you can find out why the house is on the market, such as the sellers have already moved out of the area, etc.  I figured my sellers were motivated when I looked up the tax records and saw that they had not paid the previous year's property taxes. 

As for a realtor, ask around and see who people you know have had good luck with.  Do not go with a family member, friend or a co-worker's family member or friend if at all possible.  I used my co-worker's husband and not only was he awful, I couldn't say anything about how ticked I was at work.