07 Mar 2015
Last week, we looked at why most of the time it’s preferable to buy a home rather than rent. This week, I’ll go into our experiences house shopping and share what we learned.
House Shopping for Beginners
The house you choose, like the spouse you choose, can help you reach financial independence, or it can ensure you will remain a wage and debt slave your entire life. If your job situation is uncertain and you know you must rent, then you should still draw your circles and look for rentals in the magic area. The goal, always, is to reduce your costs and make your life better. This applies to renters just as much as it does to buyers. Eventually, you won’t be a renter anymore, so plan ahead.
Amy Dacyczyn in her Complete Tightwad Gazette talked about looking for her dream house. She and her husband chose their area. They then looked at 176 houses before settling on the one they bought, #177. What they found was that the more properties they looked at, the more they educated their eyes. They started to recognize whether or not they even wanted to go into the house, they began seeing potential problems that took houses off of their list, and that taught them to spot a great bargain when they found it.
This takes time, clearly. You may end up having to rent while you house hunt. Yet is that bad? You learn the area, where the services you want are, which neighborhoods meet your needs. You can’t learn this by buying a house sight unseen and in a hurry. My sister in Florida sold a house to out-of-town buyers. Only out-of-town buyers would have bought this place as everyone local knew that, even though the house was charming, the street it was on turned into a 55 mph motorway twice a day. Only local buyers knew that the neighborhood was becoming progressively unsafer, year by year. The out-of-towners did not know this either.
I remember quite clearly some of the houses I’ve looked at over the years. A house I saw in Norfolk had a view of the Elizabeth River from two different spots. You could see the river if you stood on the roof with a pair of binoculars and you could see it flowing in the unfinished basement under the wooden pallets. I also didn’t buy the house in the obviously skeevy neighborhood where you clearly needed two husbands and a big dog to feel safe in your kitchen.
A house we looked at here in Hershey showed the importance of being your own building inspector. At first, it appeared to be a charming house on a charming street. A closer inspection revealed suspicious stains on the ceiling and walls below the second floor bathroom. The second-floor bathtub had caulk all around it swirled and layered on like cake frosting. The basement had been subdivided into a warren of tiny cells. The addition on the back of the house clearly sagged. Floors seemed uneven. The kitchen needed a lot of work. How much of a hurry were we in? We could wait, so we made a lowball offer due to the obviously needed renovation costs and were refused. I have been grateful ever since that Mrs. Grenada (named after the street the house was on) wouldn’t make a deal. We walked away. She saved us tens of thousands of dollars in aggravation. How do I know this? Years later, I met the new owners of the house, and they described the amount of money they were pouring into it.
We only looked at houses in our price range and in our target area. We saw, both me and Bill, separately and together, many, many houses. We didn’t buy the house that had the shaking floors and bedrooms that also acted as hallways into the next room. We didn’t buy the house that was surrounded by freeways on three sides. We didn’t buy the house where sewage and water lines had to be installed by the homeowners. We didn’t buy the houses in the boondocks where you had to drive ten miles to pick up a gallon of milk. We didn’t buy the house that was right next door to an all night Kwicky-Mart or the no-tell motel.We didn’t buy the house in a flood zone in Harrisburg. That’s the one I most regret, because it was a gorgeous house, with original tile, parquet floors, high ceilings. Everything a house junkie could want and the price was well below what our top amount was. But, it was on a one-way street that became a four-lane 55-mph speedway every day at rush hour. Harrisburg also has some of the worst school districts in the state. And we knew the city had flooded during Hurricane Agnes in 1972. Most of Harrisburg did! Would this property flood again? We don’t know personally, but Hurricane Isabel blew through in 2003, followed by Hurricane Ivan in 2004 which flooded much of Harrisburg. Then Tropical Storm Lee in 2011 flooded much of the midstate again.
There is a part of Harrisburg called Shipoke that is so low-lying that it floods with every heavy rain. People buy houses here regularly and are then surprised when they get the flood insurance premium and complain that the basement is full of water. What did they expect? If the potential house is built in a flood zone, you will get flooding! Regularly! Don’t do this to yourself and quickly walk away onto the next property.
I didn’t even get out of the realtor’s car at one house. We drove up to the edge of a cliff. All you could see was the plunging driveway with its mailbox and newspaper tube alongside it. You could not see the house; God knows where the photographer stood to take the picture in the real estate brochure. I thought about that driveway in a Pennsylvania winter, covered in ice and snow. I stayed in the car, and we moved onto the next house.
The moral is to take as much time as you can while house-hunting. Look at school districts, walkable services, the size of the yard, is the house in an HOA? Run away, run away, run away if you don’t like what you see. Look at road maps: is the house on what looks like a road in the country? Is that the only road between two larger areas? Is it a state or federal numbered highway? Expect that road to be widened in the future, giving you less front yard and more and faster traffic. How isolated is the house if you need fire, police, ambulance, snow-plow services? Does the house have access to gas lines, electrical hook-ups, newspaper delivery, cable, telephone, water and sewage hook-ups? If you want these things and the house doesn’t have them, you will have problems and major expenses.
Plenty of people around here get their new water from a well and have their used household water flow into a septic tank. These two things need to be spaced far apart or your well might pull in water that passed through your septic tank. Make sure you ask where the two are, in relationship to each other. Get the well tested for bacteria to be sure.
What can happen next, is that the sewage lines are extended as the area grows and the homeowner is required by the government to pay to install water and sewage lines. Never mind the preexisting well and septic tank. Did you know that septic tanks need to be regularly pumped out? Did you know that even if the septic tank is regularly pumped out, the leach field eventually fills up and the septic tank and its accompanying pipes needs to be moved to somewhere else in the yard? At the homeowner’s expense? A contractor told me that one. He wondered what people would do when there was no location left in the yard to move the septic tank to, particularly if the water came from a well. Install a new, more expensive system, no doubt.
Visit houses with a pair of binoculars, a flashlight, and a heavy marble. Use the binoculars to look at the roof for uneven ridge lines, leaning chimneys, and missing shingles. Use the marble to see how uneven the floors are. Use the flashlight to look into every single dark corner, cabinet, attic, and basement. Look for water damage, mold, missing insulation, suspicious stains. If you don’t like what you see, move on to the next house and save the cost of a home inspection. Start training your eye to see damage and potential problems.
A thought to keep in mind is that if the homeowner who is trying to sell the house can’t be bothered to clean up for you, the prospective buyer ready to hand over a bag full of money, then why would this person have done any of the routine maintenance? This is similar to going into a restaurant and facing dirty bathrooms. If the part they let you see is unsanitary, do you really think the food preparation areas are kept any cleaner?
Next Week: What to Do When You Find Your Dream Home