Home - Additional Articles
My Short Sale Experience
The Appraisal That Saved Us Thousands
We Almost Rushed Into Buying The Wrong House
Trying To Buy A House From A Difficult Seller
I Am Now A Homeowner
Unexpected Homeownership Expenses
My Homeownership Update
"Save money for your mortgage down payment by reading our money saving tips and articles."
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This site is all about saving up money for your first house down payment. I'm really excited today because
I have achieved this goal and will shortly close escrow on my first condo with my fiancee. It's the end to
a journey that has been going on for several years. I'm also excited because this article marks the first in
a series documenting our personal experience buying our first home. The entire home buying experience has
been quite a challenge and has created a lot of stress. It's all totally worth it and we're so happy
to be moving into our place shortly. However, I sincerely hope that by documenting our journey we can help
you avoid some of the stress we experienced. Whether you have your down payment saved already or are still
in the saving phase, please read and benefit from our personal home buying experience. This is the first
article in a series of many...
How Our First Home Buying Experience Got Started
My fiancee and I have been saving money for the down payment on our first home for many years. We have been
living and breathing the money saving tips and strategies on this site day in and day out. In the last six
months, we had saved up enough money, especially because prices have come down a bit in the ultra pricy San
Francisco Bay Area. Almost everyday for the last year, we have both checked the MLS Listings to see the condos
on the market for sale. A new construction we had been keeping an eye on for a while suddenly piqued our
interest because prices had come down substantially, almost 20 percent. We had already visited this complex
before because it's right next to my old office building and I watched them build the condos. We had always
really liked the place and decided the time was perfect to make our move.
Our First Mistake - No Real Estate Agent
Almost as soon as we committed to finding ourselves a unit within this complex, problem after problem started
arising. At a meta level, I must stress that you need a
qualified real estate agent.
The builder of these condos actually did not entertain offers from buyers with real estate agents. Rather, he
wanted to represent us himself. He told us this would be good for us too because we could take the money he saved
from not having to pay a real estate agent and credit it toward a lower purchase price. At this very moment,
we should have walked. I cannot stress enough that a high quality real estate agent is absolutely necessary, especially
if you are a first time home buyer. The entire process is just too complex. You need a real estate agent to help
you out and represent your best interests. Until I tried to buy my first place, I had never met so many shady
people in my life. There are a lot of bad people in real estate. Get a qualified buyer's agent on your side,
period. In the long run, this could mean the difference between living the American dream and destroying your
financial life and everything you have worked so hard for. If that new construction condo or house will not deal
with real estate agents, it's time to walk away and find something else.
New Condos May Have Big Problems
The second mistake we made is assuming that something new is without problems. These new condos actually had many
more problems than anything else we have seen on the market, even very old condos. Following are just a few of the
problems that came back from our inspection report. (As a side note, if you're buying a condo, you need
an in depth inspection report. Don't let anyone talk you out of it. It could be the best $400 you ever spend.)
- Bad Shower - The shower that the builder installed has no slope to the floor. It was a beautiful shower
with stone flooring, but if it doesn't drain properly that could mean serious long term damage to our unit. Fixing
this would be expensive and we were not confident the builder would actually fix it because of financial burden in
a bad market where not that many units are selling.
- Bad Dryer - Here's another crazy one: There was no venting built in for the dryer to vent to the outside.
This basically means the builder would have to rip out the wall to install the proper duct for the dryer to vent to
the outside or else we would not be able to wash our own clothes in our unit. Again, we did not feel confident that
the builder would actually fix this.
- Uncapped Gas Valves - There were uncapped gas valves in the unit that posed a serious fire risk according
to our inspection report. The builder brushed this off as a non-issue and actually got angry with us when we questioned
him. Even if he did fix our gas caps, what if the same issue existed in other units, especially those that got no
inspection? We did not want to live in a building with such risk.
An Older Place May Be Better
Synthesizing all these problems, we concluded that an older place may in fact be better. Something that has been through
the test of time is more likely to have all of its issues fixed. This is exactly what we ended up doing. We are now
in contract to purchase a 10 year old condo and are so much more confident that the problems will be minimal to
non-existent, as already implied by our very clean inspection report.
High HOA Fees and No Homeowners
Another big red flag in this whole deal is that the building is only 50 percent occupied right now (with very few
units selling in the last six months). If only half the building is occupied, who will pay the HOA, we started thinking.
Moreover, the units are not selling well at all (it's no mystery given the shoddy workmanship). Our main concern here
is that the HOA dues would go up for everyone in the building, forcing them to carry the weight of the unsold units,
especially if the builder goes bankrupt which seemed like a possibility to us.
Only Deal With Good People
We were never really fond of the builder. We were even less fond of him after the inspection report came back with
problem after problem. Rather than addressing the problems, he got upset at us for questioning his workmanship. Life
is too short to be dealing with people you don't like and trust, especially when your life savings is at risk. You
have spent years saving up your down payment, pick who you want to work with and who you don't want to work
with. It's your call, especially in this buyer's market.
Don't Be Afraid To Walk From The Deal
Buying a home is difficult. You start mentally moving in as soon as you're in contract. You get attached and want it
to happen. A big lesson for us from this experience was to just walk away. Don't tie yourself to a bad deal. This is a
buyer's market right now. You have worked hard to save up your 20 percent down payment, and you are the one that calls
the shots, period. If you're dealing with someone shady and don't like what's going on, just walk. Life is too short and you
need to feel good about the home you are buying. One huge word of caution: When you go into contract to buy a home,
you will be required to put a deposit down (usually 3 percent). This deposit will be non-refundable once your contingencies
are closed. Make sure you fully understand what your contingencies are and when they need to be closed by. If you are going
to walk, you need to do so before closing your contingencies. Again, this is why a real estate agent is so important. They
can help you set up financing, due diligence, and inspection contingencies to protect your investment.
I sincerely these tips help you out. They are definitely not meant to scare you from buying your own home. This all
sounds really difficult and it is. In fact, it does not get easier for my fiancee and I after this deal. It actually stays
hard for a while. However, it does all end out very well and is totally worth it. Stick in there and surround yourself
with a real estate agent that you trust. You will be very happy you did so! The next step in my home buying journey? Check out
my personal experience trying to buy a short sale.
Want to learn more about new construction condos and new construction homes in general? I highly recommend checking out
New Construction Homes dot org.