real estate today 2010

OCwaste2 used Ask the Experts™
I considering purchasing a home within the next month or so, and will need to go through FHA loan.  I'm wondering if it's even worth the whole trouble of attempting to close escrow before, in California, the $8,000 tax credit.  Something in the back of my whispering to me not to purchase until the end of the year.  I keep having a feeling that things, housing being one of them, still falling in value.

I'm I alone?  I'm currently renting a two bedroom with my family and if I was to purchase today, I'm looking at paying almost double for becoming a home owner.  If I wanted to purchase somewhere where I'd like to see myself for the rest of my life, I would need to pay between 2,500 to 3000 payment.  Is all worth it?  Should I wait?  Any realtors out there in the Southern California area that can help.

I've heard of people submitting offers and never hearing from anyone after.  And also heard that I need to submit offers for over the asking price, roughly 30 to 40k over the asking price.

What gives?
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"I keep having a feeling that things, housing being one of them, still falling in value."
I cannot predict the future
"And also heard that I need to submit offers for over the asking price, roughly 30 to 40k over the asking price."
Unless you particularly want that home. I would (especially today) offer 10% less. If the owner wants to sell and does not have any higher offers, they will counter offer.
"Is all worth it?"   Depends on you finances. Remember part of you morgage payment goes into an asset. The house belongs to you. You payment increases your net worth. None of your rent goes to you.
Unless you have an overwhelming desire to own a home, from a financial standpoint, you could do as well or better by taking the difference between rent & home ownership and take on a balanced investment strategy.

You're forgetting the real costs of home ownership beyond the mortgage and property insurance.

The county gets their cut in property tax assessment.  You pay a big lump-sum check...not fun when you see the first bill for 4,000 or more.  You think...I just bought the place and my savings is all tapped out.

You may need more than simple property insurance: liability insurance, earthquake coverage.  In SoCal, people will sue at the drop of a hat...or when their kid falls out of your tree.  Earthquake insurance is about 50% additional in cost to your normal insurance premium.

Utility prices may be higher.  Some apartment or townhome dwellers don't pay directly for things like water, gas, trash.  Air conditioning requirements for a detached home are much greater than for a multi-unit dwelling.  In the summer, you could see electricity bills from $300-700/month.  Water and trash will add $50-80/month.  It all adds up.

Then, there are issues of maintenance and repair, for which you are 100% responsible.  No landlord or super to call.  Your sewer backs up...$100.  Your sewer line breaks...$3000.  Bust the water main while digging for the sewer...well, it costs about $3 for 50,000 gallons spilled into your yard...but it ain't fun.  New carpet $4,000.  New subfloor after you pull up the old carpet...$1,000 if you do it all yourself.  Termites $300 and up.

If you're handy, you'll "save" thousands of dollars, but you'll still spend money on materials.

If you're doing a lot of re-modeling, $5/month gets you an extra trash can.  $700 gets you a giant construction dumpster parked in the street.  Much easier than $25-50 every time you drive your car or truck to the local dump or transfer station.

I've not heard of people offering more than asking price, as a general rule.  I thought those days were over a couple of years ago when we bought our house.  The sellers where happy to get a few thousand below asking price.

With the ups and downs of the economy, anyone who tells you that a house is a financial investment opportunity is most likely a realtor or real estate agent.  Or a mortgage broker.  You can't cash out on a house.  It's not liquid.  And, very easy to get upside-down on it.  That not like a dip in stock prices.  Maybe if you're buying on margin, then you could understand.  You dip far enough, and the brokerage house will call your margin in...and you've nothing to pay with.

If you've got a family and long-term plans for staying's worth the peace of mind.  I'm not moving.  We picked this house for the schools, the neighborhood, and the upgradeability.  It's not the best house on the block, nor the worse.  Plenty of time to make improvements from the 1950s construction and 1980s re-model.

We saw some nice turn-key homes.  But, they were top dollar.  I didn't want to pay for someone else's re-model.

We saw some wrecks.  One was a house where they cooked drugs.  Drywall falling off the ceiling.  Holes in the floor that were open to the crawl space under the house.  Too much cleanup...would've taken tens of thousands just to make it inhabitable.

The big question is what are _your_ plans.  The house should fit your plans.  You shouldn't make plans to fit the house. much sweat and money are you willing to pour into a home for the next 5-10 years.  After that, you can sit back in the LaZBoy and relax.

Hint for homeowners: little kids love crawling under houses and in attics.  Clear the area of sharp/dangerous objects and give them protective gear.  Then, you might look forward to spending hours on DIY projects on the weekends.  You get family time and new wiring for that TV in the bedroom!
>I need to submit offers for over the asking price, roughly 30 to 40k over the asking price.

The only time a home sells for _more_ than the initial asking price is when qualified buyers are bidding against each other for the same property.  And, the buyers are highly motivated to get that home, and no other.

We started below asking price, and that was as the real estate market was just starting to slide downward.  (Lucky us.)

You have to keep in mind that the agents (yours and the seller's) have no fiduciary duty to you.  They are not obligated to help you get the best price or the best property.  Lower selling price means less commission, so neither agent will assist in the lowest possible price.  They try to get the highest price that both parties will agree upon.  That's just the way it is.

Same goes for the mortgage broker.  They can (and will) get you the best loan package that they think you'll buy.  Higher interest means more commission.  So, don't be surprised when you fill out one set of paperwork, but the final signing papers show a higher rate.  It's a common tactic.  The extra money is more than a commission.  The broker will split the extra revenue with the mortgage company.  They will not tell you that you don't have to sign at the higher rate.  You can say "no" and request the original rate.

Typical responses are, "The mortgage company wants a higher rate because of the ___ economy."  Sure...and I want lower rates because of the economy.  Or, just because it means less interest paid.

"It's only $20 more a month, and it makes the mortgage company happy."  Yep, and that means $9,000 in simple payments.  Which is $4,000 or more in extra commission for the broker.  I'd be happy to.  With the original rate.

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