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We’re Buying A House (Maybe)

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SoldWe haven’t covered it much on Bargaineering (you might have guessed given the increased interest in credit scores), but we’re buying a new home. We submitted an offer a little while ago and after a little back and forth, it was accepted. We’re buying a house about ten minutes south of where we live now and while we aren’t excited about packing up and moving, we are really excited about the home itself.

Bargaineering was around when we bought our first house and we chronicled the entire process. A lot of it is mundane, downright boring if you’ve already done this yourself, but at the time it was all new to us. Getting pre-approval, while much easier then, hasn’t changed much except for how much paperwork you need to submit. Back then you typed a few numbers on a form and you were in! That’s why I didn’t write much about the process this time around – it wasn’t that much different and it wasn’t a completely new experience for us.

That said, in the last eight years, some things have changed…

Redfin vs. a Realtor

When we bought our first house, we worked with a friend of mine who just became a real estate agent – Christina Elliott (she was with Century 21 at the time I think, then partnered with Keller Williams). Redfin didn’t exist back then (or at least in our area) and so she would send me some listings and we’d visit the homes. We visited probably around fifty homes over the course of a few months and it was exhausting.

This time around, with Redfin and its great search features, we were able to get a better sense of how much homes were in the area we liked. She would send me listings as they appeared and was my conduit into listings on the MLS and with the research we did on our own, we visited only around fifteen homes. We were much pickier this time around too, so we didn’t go to a home unless we already liked it.

I’ll go into this in greater detail (Redfin vs. Real Estate Agent) in a future post but there’s a big difference between working with a Redfin agent and working with a traditional real estate agent.

Fewer Homes

The stories about the real estate market being soft or slow are all true, but it’s picking up. A lot. I’ve heard stories of homes that get sold within hours. It’s like 2005 all over again! Part of it is supply, there simply aren’t a lot of houses out there. I don’t know if it’s because people are underwater or they aren’t thinking about selling, but there just aren’t a lot of homes coming onto the market. It’s now May, we’re fairly deep into the “nice weather” Spring period and we didn’t see an “explosion” of home listings when we exited the cold of winter.

The end result of this was that the homes that are coming on the market are selling fairly quickly and at very good prices. But it’s said that real estate is local so what happens here may not hold true near you.

Loans Require Lots of Documentation

Loans always require a lot of documentation but it seems like this time around the list has gotten a lot longer. So far we’ve had to provide W2’s, paystubs, bank statements (showing down payment plus 9 months of mortgage payments), proof of homeowners insurance, two years of tax returns, two years of business tax returns, two months of every account that paid out interest or dividends, and letters of explanation for a variety of little things. If there are any irregular transactions on the bank statements, we have to provide the associated account statement as well. The statements have to be official statements and can’t be screenshots or cropped photos.

I’m More Confident

Eight years ago, I didn’t do much in terms of trying to save money on the purchase. Outside of comparing lender costs, I went with whatever was recommended. This time around, and they’re minor savings in the grand scheme, I was more confident in the process to do some things a little smarter. For example, we wanted to radon test the home and the inspector said a radon test would cost $135. We purchased a $35 kit from the Radon Testing Corporation of America and tested it that way. The house is on well water so there’s a water test, inspector quoted us $235 and we found an actual water testing company that would do it for $100. These are all minor savings in the price of the home but instead of just going with whatever was presented, I did more homework.

We haven’t reached settlement yet, that won’t be until June, but we’ve gotten over the major hurdles.

(Credit: WCampos3)

{ 14 comments, please add your thoughts now! }

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14 Responses to “We’re Buying A House (Maybe)”

  1. You had to provide a ton more documentation than I did a couple months ago, but I just relied on W-2 income and our bank accounts.

  2. Like Lance, that is a lot more documentation then what was required of us when we bought several years though. The market where I live is starting to do the same thing you mention where houses are being sold right away. It’s very interesting to see.

    • Jim says:

      It really makes you realize how quickly things change. Ten years ago, the market was sizzling hot. Then for a few years it was down in the dumps, to the point we needed government programs to help people out (some who deserved it, some who didn’t). Now, we’re getting right back into it. If you have a long enough time horizon, you’re safe. If you don’t… good luck.

  3. I’m very interested in Redfin, so I’m looking forward to reading about that. I’ve been looking at houses but NY prices are too high for me so I’m still waiting. Redfin does have a great search function and I love that I can get a part of the commission back. I’d like to hear how their service is though.

    • Jim says:

      My friend used it with great success (as measured by the money he saved and he got the house he wanted) so I wouldn’t be afraid to give them a shot. That said, it really depends on how much you want to do vs. how much you need from an agent. It’s like the FSBO route for selling a house, an agent brings a lot to the table but you pay for that. They have to make a living too, you know?

  4. Michelle says:

    Wow that is definitely a lot of documentation. I think all we had to provide was our W2s and some other small things.

    And you are right, houses are selling a lot more quickly these days.

    • Jim says:

      It’s crazy, the other day our friend told us they fell in love with the house and their agent said it had 8 offers on it and it had been listed for a single day.

  5. cubiclegeoff says:

    We used redfin to buy our house a few years ago. Since I liked doing the research myself and could pick out things better myself than someone else could, I thought it was great. They provide pretty much all the information you need. Plus the agent we used was really nice, and the extra check we got after the closing also helped.

  6. I could always eliminate SO many houses through that I don’t think I could ever come up with 15 on the market at once I wanted to visit! For example, with this house, I wanted something within our price range with a big yard and decent privacy in the back yard, I wanted mature trees in the neighborhood, at least 4 bedrooms, at least 2.5 bathrooms, and a very large basement. That eliminated 99% of listings right off the bat!

  7. Brad says:

    Are you planning to sell your current house or keep it as a rental?

  8. Shafi says:

    When we bought the house we live in now, we had to provide many documentation which we thought was unnecessary.

  9. Chelsea says:

    Congrats to you both!

  10. Jane says:

    Be prepared to have to give more bank statements to Mortgage company. Back in February I was circle of bank statements that basically never ended. My main savings and checking accounts were on separate statement days one the 1st of the month one the 15th of the month. Every time I sent one in they asked for the next other one since I had reoccurring transfers from MY OWN checking to MY OWN savings account ever time my bi-weekly paycheck came in. They finally allowed me to print off my “since last statement transactions” to solve the problem. Oh and mind you this is with the proof of the 20% down payment and at least 9 months reserves.

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