First Time Home Buyers

This past fall my wife and I bought our first home. It took us over a year of searching and the process taught us a few things I will attempt to pass on to my fellow Millennial’s or anyone else reading this blog.

Retirement Home vs Starter Homer

First question, do you know the difference between the “Retirement House” for a downsizing/retiring Baby Boomer vs the “Starter Home” for an up-and-coming Millennial?….no? Good, because its a trick question! Those houses are exactly the same…

That was the harsh reality my wife and I learned during our year long house hunt. Our particular area housing market is FULL of Baby Boomers entering their retirement years and looking to downsize into a small, manageable home they can spruce up a bit and live in until they die. Starter homes by definition are the exact same. Small, manageable home that just needs some ‘minor’ sprucing up.

Oh! I guess one difference is that as a “starter home”, the house goes for around asking (maybe even BELOW) but as a “retirement home”, it’s probably going for about $30,000 ABOVE asking price…Baby Boomers makin’ it rain yall!

Prepare for Rejection

Over the year my wife and I looked at houses, we put an offer in on close to 2 dozen homes. With those offers we came across just about every outcome possible:

  1. X number of other offers came in and the house sold to one of them because they offered more, or waved their conditions of finance or inspection (or both)…
  2. Twelve other offers came in and the house sold for over 100,000 more than asking (yay bidding wars)
  3. Four other offers came in and all 4 were rejected. Nobody offered enough OVER asking price for them to sell.
  4. House sold to another offer that was less than ours because the other couple was going to have a baby…
  5. Our initial offer was countered…then countered again…then ultimately rejected
  6. House sold one hour before we could present our offer
  7. Offer accepted…deal fell through based on our inspection results (we’ll get to that later…)
  8. Oh and eventually offer accepted and house is ours…yay!

What I’m trying to say is, if you’re thinking about buying your first home, it might take a while…

Home Inspections

Once you do FINALLY find a house, if you’re lucky you might get to put some conditions on your offer. One of those conditions being “the results of a Home Inspection.”

Everybody you meet will tell you this condition is mandatory and that you’re crazy if you EVER buy a house without having it inspected. If you’re fortunate that your housing market isn’t so crazy that 90% of offers wave that condition, you might even be able to squeeze it in there.

Now…they’re not wrong. You SHOULD inspect the home before confirming the offer/sale.

But…I can tell you from experience…don’t expect much out of your inspection.

The first home my wife and I tried to purchase we paid $400.00 for a home inspection. I spent 4 hours on a Saturday morning with the home inspector and my father (an electrician), “inspecting” the house. At the end of those 4 hours I received a binder that fully explained everything the inspector checked. It included pictures and his “recommendations” based off what he saw.

What were those recommendations you might ask? Everything he inspected can be summed up with two sentences.

“It might be fine, or it might stop working tomorrow” or,

“I can’t really see, so you never know.”

It doesn’t matter what we looked at.

  • Furnace? “It’s old…might make it another 10 years…might die this winter…”
  • Air Conditioning? “Looks new-ish…should be fine, but could die this summer…”
  • Electrical? “The panel looks like it’s had some work done to it, but I can’t open up any walls to see what’s what.”
  • Plumbing? “There’s been some work, but I can’t open up a wall to see whats’s what.”
  • Roof? “I don’t have a ladder to go up there, but from here the shingles look…ok…”

Ultimately those 2 sentences are what it all comes down to. They either can’t predict the future or can’t open up walls (they really wish they could open up walls).

My dad had a much clearer recommendation which was

“That house is a pile…keep looking.”

Going forward we saved ourselves the $400.00 and just brought him along instead…

Closing Periods

Depending on the sale, you will have a varying amount of time between the sale of the house and when you “officially” take ownership/possession. You might have a 30 Day closing, a 60 Day closing, a 90 Day closing or even just a 2 week closing…

Typically you will have at least 30 days (although likely 60). That might seem like a lot, but in that time you will need to meet with the bank or mortgage broker to finalize finances. Meet with a lawyer to handle deeds and land transfer arrangements. Setup utility accounts for power and water. Call the insurance company for home insurance quotes. Setup mail forwarding…I could keep going with this list but I think you get the point.

Closing periods will give you the illusion of  time and all your friends will look at you like “You have 2 whole months to pack? Why are you stressed?”

Make a list and start chipping away as you go. Packing really is the easy part.

Advice

Buying a house is a big deal. It’s equal parts exciting and scary.  Everybody will approach it a little differently. Some as purely a financial investment, others as a set of roots for their family.

The best piece of advice I can give is the same advice my dad gave to me. As a first time home buyer you are in the unique position where you likely don’t NEED to buy RIGHT NOW! You’re not being pressured into a sale because you just sold your current house and will be homeless in 60 days.

For a lot of people the worse case scenario is that they just stay where they’re at for another year…

To all of us instant gratification millennial’s this might seem like the worst thing EVER! (*tongue firmly in cheek here*) But ultimately it is one of our strongest cards in buying a good quality first home, and a card we will likely never have the opportunity to play ever again. Don’t rush it.

 

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7 thoughts on “First Time Home Buyers

  1. I found this post super helpful, but with the housing market so hot in Toronto, it seems rather hopeless to even imagine being able to own a house anytime soon!

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    1. I understand the discouragement. My wife and I had basically given up looking when the stars suddenly aligned and we actually found something decent that we could afford. It’s easier said then done, but all I can say is try to be patient and just never stop looking.

      Liked by 1 person

  2. I agree with you in your advice to never stop looking. It can be so exhausting to keep looking but when it’s done you’ll be glad you were patient. Also I agree with the part about a home inspector being a total waste of money if you know someone (preferably another home owner) who knows what they are looking at and can come along as a second set of eyes and advisor. Great post!!!

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    1. Yeah sometimes you just need to scale back how “hardcore” you’re looking for a few weeks. Never stop, but when it get’s overwhelming only check listings like once a week…rather than multiple times a day (I was a little addicted).

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