March 29, 2004

Buying a house, part one of a lot

I’ve alluded to this in the last month or two but we’re actively looking for a house right now in the Pittsburgh area. We’re concentrating on the fairly close South Hills (Dormont and Mount Lebanon), but wouldn’t necessarily beat away a good place in Squirrel Hill if it came up. A few of the important parameters are very flexible so we’re looking at a wide variety of places, which presents its own problems (paralysis by choice).

Fortunately for us Pittsburgh isn't someplace bubbly like the DC or SF areas -- not only are there a lot of houses to choose from right now in our price range ("a lot" meaning "substantially more than 50") but they don't get five offers on them the first weekend they're listed. I'd imagine this is a much less stressful environment to operate in.

Barb and I are in pretty close agreement about the type of place we're looking for -- neither of us wants to live too far out (me more than her) and both of us are willing to sacrifice traditional wants (space, yard) for the ephemeral "character" (her more than me). No generic boxes or ranches, which actually isn't that hard because we're looking in areas where the houses are generally 60-90 years old. On other parts of the house we have different wants (I cook more, so the kitchen has more weight with me), but they generally balance out so with an exception here and there we've agreed pretty much all the way. This also makes life much, much easier.

Unfortunately there is still a ton of stuff to learn and do. Buying a home is one of those exercises that takes up pretty much whatever spare time you had, plus 10% or so. Particularly for first-time people like us where it's all new -- prices in the area, neigborhood dynamics, all this financial lingo and context, what to look for in a house, finding the right balance of emotion and rationality, trying not to think about how much money you're talking about, all that plus a million other things I don't even know enough to think about yet.

We did get pre-approved for more than we're looking to spend, which is nice. There are two "pre" features out there -- "pre-qualified" is a fairly informal judgement by a lender to give you an idea of how much other people think you can borrow, "pre-approved" means that a lender is saying that they actually would lend you this money (barring any crazy surprises). Being pre-approved is apprently one of those features that lets sellers feel a little more warm and fuzzy about you so I'd recommend it. A number of online lenders (like e-trade) will do this for you, although they'll need the same documentation (pay stubs and the like), and I guess it carries the same weight any other.

We've been looking seriously for about four weeks. ("Looking seriously" means to me visiting a bricks-and-mortar house to determine if you could actually live there as opposed to browsing online.) And we've been planning to move around late-June/mid-July so we're a little early looking now. (This is a good thing.) But as you might expect we found a place we both loved enough to balance out the lost future opportunities and this weekend put an offer on the place. It was a pretty solid offer, as was our counter offer, and we're still going back and forth with the seller about it (kind of odd circumstances); hopefully we'll know more tonight. But it's still early enough in our process that we're not desparate, so if this doesn't work out we won't be in deep trouble. That's a good position to work from if you can get it.

I was fairly surprised at how quickly the initial offer process went. I was thinking it would take a week or something once we finished with the paperwork, but instead we heard back from them later that evening. The paperwork basically outlines your terms ("I can back out of the deal if I don't like what the home inspection says", lots of stuff like that), and with that you typically write a check for what they call "hand money." It's a deposit and the amount depends on the desirability of the house (some people say 5%, we put down less than half of that) -- if the seller accepts the offer and you have to back out in an unspecified manner (not in the terms) then they keep the cash. So more money up front gives them more warm fuzzies that you're not going to screw them. If everything goes okay that money gets applied to the Big Upfront Chunk of Cash, which for us is the scariest part of this whole thing. (We haven't been saving very long for a house, instead concentrating in the last year on getting our Bad Debt down to manageable levels, which we did but didn't quite finish off.)

Anyway, more later on all this...

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