Buying your DREAM HOUSE

[mad.co.walker]

We recently have come across a house overlooking the mississippi river on the bluffs. We have always wanted to have the chance to purchase a home there. Low and behold we now have our chance. The owner now lives in Australia and really wants to sell this house. It originally listed for $375,000 and now he has dropped the price to $185,000. I think he will take alot less. It has been empty for over a year but has had someone "taking care" of it. It has 2725 square feet and was built in 1905. Is now a good time to sink your lifes savings on a house of this nature. Anyone with insight would be greatly appreciated. THANKS. The home is on the bluffs in illinois. Its in great condition and is ready to move in. New central air, oak floors, six panel doors, deck overlooking the river and too much other upgrades to mention.

 

[RL OH]

I would have no problem buying the house you are looking at, but if you are planning to move on in a couple of years, I say no. I have bought, fixed up, and sold four houses for a healthy profit, but I finally have met my match. I bought a home similar to yours, way under appraised value. It had been sitting for two years and I had alot of work to do. Every plumbing fixture needed replaced as did much of the floor coverings. My problem was I bought a house for 60% of the appraised value which I could afford. Since that time, I went on a disability retirement and the property taxes are "killing" me as well as the upkeep. With my income at a lower level and my health care premiums going through the roof, I will be forced to sell the home for much less than I have invested. If you are young enough and financially secure enough to buy this home, I say "go for it". But, look at all of the variables before buying. Taxes, utilities, upkeep, and other hidden costs. I have a beautiful home with extremely high taxes and upkeep. My home is paid for, but I will never get what it is worth. Live and learn. R.L.

 

[mad.co.walker]

WELL WE HEARD FROM THIS GUYS NEIGHBORS AND SAID THEY HAD HEARD FROM THE OWNER AND SAID HE JUST WANTS OUT OF THIS. THEREFORE REALTOR SUGGESTED WE OFFER AROUND $160,000. FOUND A MORTGAGE AT4.5% ONLY $20,000 DOWN DUE TO THE FACT THE REPAIRS NEEDED EVENTUALLY SHOULD DROP THE PRICE DOWN. WE ARE REALLY EXCITED AND SCARED AS WELL. WE THINK THIS IS A GREAT INVESTMENT FOR OUR MONEY. WILL KEEP YOU POSTED.

 

[calisdad]

Do your homework and don't get caught up in the moment. Its quite possibly the most important financial decision you will ever make. A 100 year old house is bound to need some work and the first thing I'd look at is the termite report. I don't know what taxes and insurance run but you need to factor all of it in and a cushion for unexpected expenses and layoffs to make sure you can afford it. Don't be afraid to ask a million questions.

That being said I don't think there will be a better time to buy a house for years to come.

Best of Luck !!

 

[mad.co.walker]

all the inspections went great. now just trying to get the offer ready. an investment firm owns the house not the previous owner. has anyone ever dealt with an investment firm when purcasing a home. we have enough in stocks to pay off our present home.which we probably will then our house will be paid off and if this DREAM HOME is still available and we can sell our house we can use that money for a larger down payment. i heard investment firms wont deal with CONTINGENCIES so still a long way to go but the inspectors said the house is in great shape new wiring throughout in1998 new furnace and boiler and central air. NO TERMITES and just a few cosmetic places to touch up. were excited but will be more at ease if we can sell our house for around $75,000. let me know what you think about INVESTMENT COMPANIES PLEASE, THANKS FOR YOUR REPLIES.

 

[calisdad]

Not the best time to sell a house so its a buyers market. In your case you're on both sides of that so I wouldn't be in a hurry to take a loss on the house you have now.

Information is power. If I were you I would go down to the county clerk and get all the info you can on the house you want to buy. By getting the tax info you will be able to tell what the house sold for before and if there are any leins on it. If you know what the investment firm has in it you can strike a better deal. If all that work was done it should have been permitted and perhaps reassesed. You could also find out who the investment company is. Start with a ridiculous offer and if you're in the game they will counter offer.

Don't forget - Its a buyers market.

 

[mad.co.walker]

no liens and taxes were paid through 2010 which were $6500 for that year. we were told for the first year of our mortgage we would have to pay that rate. then after the first year the house would be re appraised . now my question is ...... one of many we are going to ask ......... is this. when the new appraisal is done will they assess it at the price we paid or at an assessed value pretaining to other homes in the area. this DREAM HOME sits on the bluffs overlooking the mississippi river and was last assessed at $289,000. i cant think of the firm off hand but i know they are out of TEXAS. we are meeting with the realtor on tuesday to do a market analysis on our property so he is going to get alot of questions thrown at him. I think if we can get a house for $150,000 and it was appraised last at $289,000 we will be doing okay.

 

[calisdad]

If the tax rate there is 2.25% then that would be right. I would still head down to the county to confirm the 1 year delayed reappraisal and to find out what the house has historicaly sold for. Not knowing what my property taxes were going to be would make me uneasy. Verify. You may have all the confidence in your realtor but they don't always get it right.

 

[stefen]

I wouldn't pay off your existing residence...

Go ahead and sell it and in the meantime let your stocks increase in value...

You will take a commission and tax loss by selling the stock now.

 

[mad.co.walker]

I wouldn't pay off your existing residence...

Go ahead and sell it and in the meantime let your stocks increase in value...

You will take a commission and tax loss by selling the stock now.

its walmart stock she has accumulated for the last 27 years since she started working for them. will she still have to pay a commission if its through her work. thanks. forgot about the possible commission. we are in no hurry but the price seems to be right wouldnt you think its just the amount of time its going to take to sell our house and the time we need to make an offer on the dream house is the pressure cooker !!! thanks for the replies. steve and pattie from illinois.

 

[calisdad]

Steve, You guys need to talk to a good accountant. If your wife's stock is in a 401k, IRA etc its possible you could borrow from it for a short period of time and pay it back when the house sells without taking a penalty.

Remember, you make money on real estate the day you buy it- you 'realize' it the day you sell.

Get professional assistance. It will more than pay for itself.

 

[mad.co.walker]

Steve, You guys need to talk to a good accountant. If your wife's stock is in a 401k, IRA etc its possible you could borrow from it for a short period of time and pay it back when the house sells without taking a penalty.

Remember, you make money on real estate the day you buy it- you 'realize' it the day you sell.

Get professional assistance. It will more than pay for itself.

great advice. and another option we have to look at. thanks so much. i take it you have been down this road before. how did it turn out ?

 

[stefen]

Your stock is your ace-in-the-hole...in the event that you need to be rescued in the future.

Lets say you get this 'Dream Home' property and for whatever reason, get yourself upsidedown...maybe an illness, accident, out of work or whatever...the stock comes to the rescue.

Been there a few times...in fact, a few years back, my brother and I were buying some commercial business property and he was in India on business and was unable to pay his 50% down payment when escrow needed to be funded...my stock comes to the rescue.

A buyer should always be money savvy...

 

[calisdad]

Steve, You guys need to talk to a good accountant. If your wife's stock is in a 401k, IRA etc its possible you could borrow from it for a short period of time and pay it back when the house sells without taking a penalty.

Remember, you make money on real estate the day you buy it- you 'realize' it the day you sell.

Get professional assistance. It will more than pay for itself.

great advice. and another option we have to look at. thanks so much. i take it you have been down this road before. how did it turn out ?

Steve, it was the best investment I ever made. It allowed me to retire in my early 50's with property in the Sierras and no mortgage. You have to buy right tho. I bought a small house in a good area and added to it. I couldn't have done it as well without my accountant tho. You need to push yourself on one hand but have a cushion on the other. I mean if you have to work 2 jobs to get it and never have time to enjoy it, what's the point? If you go down the the county clerks or tax assesors office and find out more about this property you are less apt to leave money on the table. Just because its owned by an investment company doesn't mean they don't need to sell quickly. You just won't know unless you check it out. In my case the past owner carried me for a year until I was able to sell my house. I offered a good cash down and paid them interest for a year. At first they didn't want to. Once they understood I wasn't going to walk away from my down payment and they were getting more in the end (interest for a year) they gladly took it, and wished in the end I never paid them off because they got accustomed to the monthly payment. Your investment company might need money for other obligations. You just never know.

Best of Luck,
Calisdad

 

[mad.co.walker]

thanks for all the replies and we will consider all options . we met with a realtor today and they want us to list our house in the low 80's. we know its a buyers market right now but if we list too high they thought noone would look at it. paid $70,000 10 years ago and property appraised at $99,500. taxes are $2475 per year. we want to make an offer soon but they insist we list ours first. tax assessment office told us the DREAM HOUSE appraised at $249,00 and they now have it listed for $178,000 almost $20,000 less than a month ago. there are no problems with this house, move in and enjoy type house. will keep you informed and again thanks for all the advice. ANYONE NEED A HOUSE IN ILLINOIS !!!!!!!! one more thing they will take 3% down now . ithink they really want to dump this investment. if i could only get inside their head and find out why the price is what it is. ? there is nothing wrong with this house. !!!!!!!!

 

[calisdad]

It doesn't sound like you spoke with an accountant. It does sound like your realtor is offering financial advice, which is a fine line. Did they insist you list it with them? Are they negotiable on their fee? It appears they could be getting double ended deals on both transactions. Pretty sweet for them if they can swing it.

I would want to keep both houses if at all possible. Why sell a house at a historical low in the market? An accountant could tell you what your tax advantages would be with no conflict of interest.

 

[mad.co.walker]

thanks for more advice. and no accountant yet but we are both off on vacation next week and are going to see someone. never sold a house before so we are in no hurry to take a huge loss on our present home. and if the DREAM HOUSE gets sold in the meantime oh well there are always more DREAMABLE HOUSES out there.