Who to talk to about buying a home?
April 27, 2009 8:46 AM Subscribe
Who is the best person to give me information on the housing market?
My partner and I are looking into buying a home. Not being experts in real estate, we'd like to have someone to consult with on basic questions about the current housing market, including the best places to buy property in Northern California (or beyond) and the legal and financial aspects of buying a home, including paying cash vs. getting a mortgage. The thing is, we don't really know who to talk to about these things.
Our first thought would be to talk to a real estate agent, but we have two concerns: 1) that a real estate agent would have a vested interest in talking us into buying, and 2) that any real estate agent we talked to would not have sufficient experience about the market outside of their "neighborhood".
Where should we go for objective and helpful advice on the housing market and the particulars of buying a house?
My partner and I are looking into buying a home. Not being experts in real estate, we'd like to have someone to consult with on basic questions about the current housing market, including the best places to buy property in Northern California (or beyond) and the legal and financial aspects of buying a home, including paying cash vs. getting a mortgage. The thing is, we don't really know who to talk to about these things.
Our first thought would be to talk to a real estate agent, but we have two concerns: 1) that a real estate agent would have a vested interest in talking us into buying, and 2) that any real estate agent we talked to would not have sufficient experience about the market outside of their "neighborhood".
Where should we go for objective and helpful advice on the housing market and the particulars of buying a house?
When we recently bought a house, we dealt with a very experienced banker at our local credit union. She was (and continues to be) hugely helpful and objective. We also had a really good experience with our real estate agent.
It's probably less about job titles in this case and more about individual people; if you find a good banker or real estate agent (or lawyer, home inspector, etc. etc.), they'll give you valuable, objective, helpful information. If you go to a bad any-of-those, you'll get misled and pressured. Can you get some names from trusted friends?
posted by pocams at 9:28 AM on April 27, 2009
It's probably less about job titles in this case and more about individual people; if you find a good banker or real estate agent (or lawyer, home inspector, etc. etc.), they'll give you valuable, objective, helpful information. If you go to a bad any-of-those, you'll get misled and pressured. Can you get some names from trusted friends?
posted by pocams at 9:28 AM on April 27, 2009
Well a financial advisor would be a great place to start to look at the financial aspects of home buying and the best strategies.
posted by saucysault at 9:42 AM on April 27, 2009
posted by saucysault at 9:42 AM on April 27, 2009
Talk to a Realtor. Disclaimer: I am a Realtor (but not yours). Ask for Realtor recommendations from friends and colleagues for the neighborhoods you're interested in and you're apt to get several good names. A good agent will explain the process to you and help you understand the housing market. Yes, I get paid when my clients buy a home; but if I ran by business by being pushy and focusing only on the money I get when the transaction closes I can assure you I'd not be in business very long. Any agent worth his or her salt will understand that their duty is to their client and not their personal bottom line. Also, get an agent who's familiar with the area you wish to look -- if you chose to look in another neighborhood and your agent is not familiar with the new market area, they will most likely refer you to an agent who is (at least, that's how I work).
posted by rtodd at 9:42 AM on April 27, 2009
posted by rtodd at 9:42 AM on April 27, 2009
If you find someone who gives you what sounds like good advice, you might want to ask a few people from the same profession to validate the first bit of advice you received. Ask the same questions you asked the first time, and don't say more than you're looking for information at this time. You don't want to turn your conversation into a comparison of other local professionals.
Agree with your partner well ahead of time on your limits (costs, commute times, necessary rooms and preferred layouts), and stick to them. If something seems out of your range or comfort zone, don't push it. It doesn't sound like you're in a rush to move into something, so take your time and make sure you want to live there.
A tip on visiting homes: ignore what's inside the home, forget the paint colors and light fixtures. You're buying the structure, not the previous people's lives. If the planting plan is hideous, maybe ask for a cost cut so you can re-landscape the yard.
And if you're looking to buy somewhere you don't currently live or know well, go and visit that area, and talk to some folks who live there. Your first house is a big step, and you don't want to get stuck with a great deal in a neighborhood/city you can't stand to be in.
posted by filthy light thief at 9:59 AM on April 27, 2009 [1 favorite]
Agree with your partner well ahead of time on your limits (costs, commute times, necessary rooms and preferred layouts), and stick to them. If something seems out of your range or comfort zone, don't push it. It doesn't sound like you're in a rush to move into something, so take your time and make sure you want to live there.
A tip on visiting homes: ignore what's inside the home, forget the paint colors and light fixtures. You're buying the structure, not the previous people's lives. If the planting plan is hideous, maybe ask for a cost cut so you can re-landscape the yard.
And if you're looking to buy somewhere you don't currently live or know well, go and visit that area, and talk to some folks who live there. Your first house is a big step, and you don't want to get stuck with a great deal in a neighborhood/city you can't stand to be in.
posted by filthy light thief at 9:59 AM on April 27, 2009 [1 favorite]
Not being experts in real estate, we'd like to have someone to consult with on basic questions about the current housing market, including the best places to buy property in Northern California (or beyond) and the legal and financial aspects of buying a home, including paying cash vs. getting a mortgage
Buying a home is a big investment so it's a good idea to ask these sorts of questions and it makes sense to spend the time and money required to get good answers. You've covered a lot of different areas with your questions here and to really get good answers you'll probably have to talk to several people and do some research on your own. Some experts you can consider talking to:
Financial Advisor: You'll have to pay for the advice, but financial advisors can be extremely helpful in going over your options and making sure you don't end up missing some important aspects of the effects that a home will have on your finances. As long as the financial advisor isn't going to try to sell you on a certain type of investment, you can usually count on them to give you unbiased advice, which is very important.
Real Estate Agent: A real estate agent will be able to give you a rundown of what the pros and cons are of different neighborhoods, and give you a good idea of what you can get for your money. As you said, they have a vested interest in getting you to buy, and they make more when you spend more.
Mortgage Broker: A broker can give you a good idea of what the mortgage market looks like, what kinds of loans you could be approved for, and what kinds of rates you can get. If you actually do end up getting a mortgage, a good one will find you a loan with a good rate without anything bad hidden in the fine print. They also have a vested interest in you taking out a mortgage, so expect them to push that option (and to refinance later).
Lawyer: You didn't specify what kinds of legal questions you have, but talking to a lawyer is always a good idea. You'll need one to help with closing the deal if you decide to buy anyway.
Ask for Realtor recommendations from friends and colleagues for the neighborhoods you're interested in and you're apt to get several good names.
This is good advice as well. If you or someone you know has a good contact for one of the above experts, they can usually refer you to other experts who know more about your specific situation. With any of these types of experts, there is a big difference between a good one and a bad one. Word of mouth is sometimes the only way to filter out who you should or shouldn't trust.
posted by burnmp3s at 10:01 AM on April 27, 2009 [2 favorites]
Buying a home is a big investment so it's a good idea to ask these sorts of questions and it makes sense to spend the time and money required to get good answers. You've covered a lot of different areas with your questions here and to really get good answers you'll probably have to talk to several people and do some research on your own. Some experts you can consider talking to:
Financial Advisor: You'll have to pay for the advice, but financial advisors can be extremely helpful in going over your options and making sure you don't end up missing some important aspects of the effects that a home will have on your finances. As long as the financial advisor isn't going to try to sell you on a certain type of investment, you can usually count on them to give you unbiased advice, which is very important.
Real Estate Agent: A real estate agent will be able to give you a rundown of what the pros and cons are of different neighborhoods, and give you a good idea of what you can get for your money. As you said, they have a vested interest in getting you to buy, and they make more when you spend more.
Mortgage Broker: A broker can give you a good idea of what the mortgage market looks like, what kinds of loans you could be approved for, and what kinds of rates you can get. If you actually do end up getting a mortgage, a good one will find you a loan with a good rate without anything bad hidden in the fine print. They also have a vested interest in you taking out a mortgage, so expect them to push that option (and to refinance later).
Lawyer: You didn't specify what kinds of legal questions you have, but talking to a lawyer is always a good idea. You'll need one to help with closing the deal if you decide to buy anyway.
Ask for Realtor recommendations from friends and colleagues for the neighborhoods you're interested in and you're apt to get several good names.
This is good advice as well. If you or someone you know has a good contact for one of the above experts, they can usually refer you to other experts who know more about your specific situation. With any of these types of experts, there is a big difference between a good one and a bad one. Word of mouth is sometimes the only way to filter out who you should or shouldn't trust.
posted by burnmp3s at 10:01 AM on April 27, 2009 [2 favorites]
I agree with rtodd. I am not a realtor, but I have had excellent luck with the realtor we've used. She came highly recommended, was patient and informative, and really listened. It's probably as difficult to find a great one as it is to find a great car salesman, but I doubt anybody has better knowledge of the area, the market, and the process.
Take the time to find a good one, and don't be afraid to drop them and find someone else. You should be able to tell very quickly if they are going to be on your side or on their own side.
posted by amanzi at 10:01 AM on April 27, 2009
Take the time to find a good one, and don't be afraid to drop them and find someone else. You should be able to tell very quickly if they are going to be on your side or on their own side.
posted by amanzi at 10:01 AM on April 27, 2009
I don't think you can trust anybody. All of the experts are trying to sell something. It's frustrating, but you have to make yourself an expert.
I'm not referring to the particulars of buying a house. You can get that information form bankers, lawyers, and realtors. I'm talking about information about the current market. I've been looking at houses since 2004, and I've never met anyone who didn't tell me that the present moment was a great time to buy a house. That was most definitely not true in 2004 (and I personally don't think it's true now).
Go directly to the source for price and sales data. Determine for yourself which way the market is moving. There's probably a California association of realtors that provides data. My state also has a private group that does the same thing. Figure out when they release the numbers each month and get in the habit of reading through the associated documents. Depending on the organization, they might provide county and town level data.
There's probably someone in your state that is collecting this information and charting it over time so you can see trends. If not, do it yourself in Excel.
For more localized info, use Zillow to see past sale prices (don't bother with their estimates). For more up-to-date info, figure out how to access the registry of deeds for your county. Many of them are online. You'll be able to find the mortgage documents for houses you're interested in or that sold recently. This will allow you to do your own comps.
Use Zip Realty to access MLS listings without going through a realtor.
posted by diogenes at 10:08 AM on April 27, 2009
I'm not referring to the particulars of buying a house. You can get that information form bankers, lawyers, and realtors. I'm talking about information about the current market. I've been looking at houses since 2004, and I've never met anyone who didn't tell me that the present moment was a great time to buy a house. That was most definitely not true in 2004 (and I personally don't think it's true now).
Go directly to the source for price and sales data. Determine for yourself which way the market is moving. There's probably a California association of realtors that provides data. My state also has a private group that does the same thing. Figure out when they release the numbers each month and get in the habit of reading through the associated documents. Depending on the organization, they might provide county and town level data.
There's probably someone in your state that is collecting this information and charting it over time so you can see trends. If not, do it yourself in Excel.
For more localized info, use Zillow to see past sale prices (don't bother with their estimates). For more up-to-date info, figure out how to access the registry of deeds for your county. Many of them are online. You'll be able to find the mortgage documents for houses you're interested in or that sold recently. This will allow you to do your own comps.
Use Zip Realty to access MLS listings without going through a realtor.
posted by diogenes at 10:08 AM on April 27, 2009
Be sure to skim these two Steven Levitt classics on real estate.
posted by jourman2 at 10:12 AM on April 27, 2009 [1 favorite]
posted by jourman2 at 10:12 AM on April 27, 2009 [1 favorite]
For the last 3 years, I've had realtors tell me that the housing market will reach it's bottom in 6 months. I can't think of a worse person to be asking than a realtor. Their interest, as well as their knowledge has only to do with moving product (and making their well-deserved 3%). They can't be bothered with important details like understanding market fundamentals as they relate to the cost of housing.
Fundamentals: Wages are tied to Rents, which are tied to Prices. So, how much money people in a community make, determines the cost of rent (supply and demand), and the cost of rent has a correspondence to what someone would pay to own the thing that they rent.
Historically, there are wage-to-price median ratios for different geographical areas that are related to home pricing. So, for SF it's a crazy high 4.9 wage-to-price ratio. So, if the median income is 100k then the median house is "worth" $490,000. In the recent real estate run up, these ratios got way out of wack, like to 10. When the housing market goes down, and corrects itself, we always go down or below these ratios.
The point is, we're still way over-inflated. It's not a wise idea financially to buy yet.
"But, renting is just throwing away money. . . we want to 'invest!'"
"Will you be paying in cash? No? Then you'll be borrowing money, and that costs money to rent."
Anyway, you should consult one of the various housing blogs. There is unbiased information, and they root out realtor shills pretty quickly. Plenty more crotchety advice on those just like I've expressed here.
posted by No New Diamonds Please at 10:22 AM on April 27, 2009 [1 favorite]
Fundamentals: Wages are tied to Rents, which are tied to Prices. So, how much money people in a community make, determines the cost of rent (supply and demand), and the cost of rent has a correspondence to what someone would pay to own the thing that they rent.
Historically, there are wage-to-price median ratios for different geographical areas that are related to home pricing. So, for SF it's a crazy high 4.9 wage-to-price ratio. So, if the median income is 100k then the median house is "worth" $490,000. In the recent real estate run up, these ratios got way out of wack, like to 10. When the housing market goes down, and corrects itself, we always go down or below these ratios.
The point is, we're still way over-inflated. It's not a wise idea financially to buy yet.
"But, renting is just throwing away money. . . we want to 'invest!'"
"Will you be paying in cash? No? Then you'll be borrowing money, and that costs money to rent."
Anyway, you should consult one of the various housing blogs. There is unbiased information, and they root out realtor shills pretty quickly. Plenty more crotchety advice on those just like I've expressed here.
posted by No New Diamonds Please at 10:22 AM on April 27, 2009 [1 favorite]
Have bought and sold 5 homes over the years. Trust a realtor. You can't do better than to talk to a real estate agent. Not sure where you want to live? Get a realtor in every town you're curious about. Local knowledge is best. I've never had a real estate agent that pressured us into buying or even looking at a house we weren't interested in.
Advice about where to live? What factors are you interested in knowing about? Property value, schools, commute, taxes, safety, water quality -- again, ask any realtor. They're networked and national.
I sound like a shill for the real estate business ... but I'm not.
posted by birdwatcher at 12:00 PM on April 27, 2009
Advice about where to live? What factors are you interested in knowing about? Property value, schools, commute, taxes, safety, water quality -- again, ask any realtor. They're networked and national.
I sound like a shill for the real estate business ... but I'm not.
posted by birdwatcher at 12:00 PM on April 27, 2009
this might be slightly off the point of your question, but i can't recommend strongly enough (in addition to your other research) just getting out and doing your legwork - every weekend, go to as many open houses as possible in your chosen area(s). you should eventually get a feel for what is good or bad value. and believe me, there can be quite a lot of variation in value.
also, it pays to have an idea of what kinds of structural & building / renovation issues to look out for, and the approximate costs of re-doing a kitchen or bathroom etc. often, houses that look nice & renovated on the surface have just been shoddily done up for a quick sale, eg with false plasterboard walls hiding shitty & defective walls, so you can often be better off buying something that doesn't look so nice on the surface, but which you know would only take a few tens of thousands to fix up.
apologies if that was off topic, but i think these things are important. good luck!
posted by UbuRoivas at 1:53 PM on April 27, 2009 [1 favorite]
also, it pays to have an idea of what kinds of structural & building / renovation issues to look out for, and the approximate costs of re-doing a kitchen or bathroom etc. often, houses that look nice & renovated on the surface have just been shoddily done up for a quick sale, eg with false plasterboard walls hiding shitty & defective walls, so you can often be better off buying something that doesn't look so nice on the surface, but which you know would only take a few tens of thousands to fix up.
apologies if that was off topic, but i think these things are important. good luck!
posted by UbuRoivas at 1:53 PM on April 27, 2009 [1 favorite]
And if you're looking to buy somewhere you don't currently live or know well, go and visit that area
on Friday and Saturday nights....
posted by IndigoJones at 2:34 PM on April 27, 2009 [2 favorites]
Trust a realtor. You can't do better than to talk to a real estate agent.
Quotes from David Lereah, former Chief Economist and spokesman for the National Association of Realtors:
"The returns are still going to be good, but not as great as they have been. Real estate should still be extremely competitive [in terms of] return on investment." August 2005
"...housing activity will remain healthy for some time to come." October 2005
"We are really on track for a soft landing. There are no balloons popping." December 2005
"With sales stabilizing, we should go back to positive price growth early next year." August 2006
posted by diogenes at 5:00 PM on April 27, 2009
Quotes from David Lereah, former Chief Economist and spokesman for the National Association of Realtors:
"The returns are still going to be good, but not as great as they have been. Real estate should still be extremely competitive [in terms of] return on investment." August 2005
"...housing activity will remain healthy for some time to come." October 2005
"We are really on track for a soft landing. There are no balloons popping." December 2005
"With sales stabilizing, we should go back to positive price growth early next year." August 2006
posted by diogenes at 5:00 PM on April 27, 2009
Realtors have a dual role- they aren't just salespeople with a capital R. If you, as the buyer, employ a realtor, their duty is to help you buy the home you want. Just like lawyers, their job is to represent the interests of their clients.
(Just because they are wrong a lot of times doesn't mean they aren't still the best people to use.)
(And "the market" is a constantly changing thing. Every home that sells or gets put up for sale changes the marketplace in a very real way. At least from the perspective of the people in the marketplace. It's easy to sit on the sidelines and say real estate is OMGBADDONOTWANT, but if I sell my home for a good price and find another one for a good price, the market is just fine.)
posted by gjc at 6:30 PM on April 27, 2009
(Just because they are wrong a lot of times doesn't mean they aren't still the best people to use.)
(And "the market" is a constantly changing thing. Every home that sells or gets put up for sale changes the marketplace in a very real way. At least from the perspective of the people in the marketplace. It's easy to sit on the sidelines and say real estate is OMGBADDONOTWANT, but if I sell my home for a good price and find another one for a good price, the market is just fine.)
posted by gjc at 6:30 PM on April 27, 2009
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