Real Estate Buyer Information

Info on many aspects of your next transaction. Contact us if you want more details.

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What to expect

If this is your first home purchase, you are in for a surprise! Home ownership is extremely gratifying, probably more than you may expect; but at the same time it requires more work in continuing maintenance than you may expect. Houses in our area all require some repairs on purchase. As a home inspector I like to say that I have never done a home inspection that has not paid for itself. This is since I find preventative maintenance items that will pay back tenfold if you, the new owner, actually do them! This is true whether the home is a year or a century old.

Beyond the physical status of your new home, you need to focus on your finances. initial capital and recurring costs need to be budgeted, and you need to pay attention to your overall financial well being while doing so. The finance section below provides a bit more information.

Finally, when you are ready and have chosen your favorite areas or need help deciding, get in touch with me to get a more information (email) and/or to take a tour (email).


The first thing for you to do before you start looking at properties is to verify your financial status and how much house you can comfortably buy. Everyone’s comfort level is different. However you should have money for the purchase, for closing costs, for repairs (they will be there), and money set aside as your reserve fund for living expenses.

In the best of all worlds that would mean 25% down, 3-5% for closing costs, 10% for repairs (the less you have the greater the chance of falling out of escrow, although sweat equity and patience on repairing certain items can help close many gaps), and 6 months living expense reserves on top of that (please include your mortgage!). So that is roughly 40% of the purchase price plus your personal reserves.

Many people will not have the patience or consider it a great decision to wait so long before purchasing. At the other end of the spectrum, someone might decide on a “shoestring” budget to use an FHA or other low money down loan at 3-5% down (or 0% VA / USDA rural), again 3-5% closing costs, 5% for repairs, and a smaller reserve fund that they plan on restoring asap after they move in. In this scenario, monthly costs will be higher since there will be PMI added to the loan, and it is just not realistic to expect to close on your first escrow without planning on sweat equity to reduce repair costs and/or patience for non-safety issues which can be repaired over time. Some repairs may be required by your lender. This is true for any house, in any price range, and any presumed condition. Newer luxury homes can have just as expensive hidden problems as older visually outdated homes, and in general you want to take care of them for quality control – plus sellers just aren’t interested unless they absolutely have to. So 12-15% of purchase price plus personal reserves is about as low as you can go and expect to have much of a chance of success of actually closing on your home. Your offer will not be as strong as a higher down payment loan or an all cash offer, so expect to make more offers and refine your tactics as you go.

Along with this initial cost analysis, you need to figure out what size of loan you might qualify for, and get pre-qualified. There isn’t much of a point submitting offers in our area otherwise – sellers have no reason to take the chance your financing may never materialize. In general you are going to need an income such that your total debt payments, including the presumed mortgage, is not more than 43% of your income, but there are loans available at the moment (beginning 2018), which allow for a 50% debt ratio. However, of this 43%, only 28% can be from the mortgage itself. A 500,000 home at early 2018 interest rates and 5% down would therefore require about 11,000 /month in household income, and no more than 3800 a month in other debt payments. There are online calculator to give you a better sense of what you can qualify for, one that I use can be found at Go knock on doors. There are a lot of local lenders and mortgage brokers, and there are options on the table. If you would like a few contacts as a starting point, send me an email.

New vs Used

The newer the house, the more turnkey it is – to a point. Every decade two over the last 50-70 years has had its share of new products which proved to be inadequate or just lower performing than hoped for. At the same time, there is no way to look at the age of a home and decide that it has issues. Far from it. Many home have gone through extensive upgrades, homes are situated in different locations with different challenges from water flow etc., and the only way to know is with a full inspection profile. Nonetheless it is worth knowing a little bit about the different periods so you can be less surprised by any eventual issues that might come up in an inspection report.

The 2000s has generally produced quality homes, with one possible exception being the quality of fixtures and finish in lower end homes. There has a widespread use of OSB sheathing and flooring, as well as engineered I joists made from OSB. OSB can perform adequately, but if it gets wet, it delaminates rapidly. This means that any water related issues can require more extensive repairs than they would otherwise. Fortunately there has been more attention on drainage, and water related issues have been reduced. There has been a greater use of PEX tubing for water in recent years. PEX tubing is highly UV sensitive, and any exposure requires immediate repair. In practice, plumbing leaks still appear largely at joints, which are reduce in PEX systems since the tubing is flexible. Modern code makes for a stronger, more earthquake resistant home.

The 80s and 90s saw code improvements with the elimination of asbestos, lead paint, and other hazards. The earthquakes during this period taught California engineers valuable lessons about better seismic practices, and the code improved to require greater earthquake resistance. At the same time, some products such as pressboard siding should on hindsight be considered a mistake, and require more maintenance to perform as intended. Fortunately there are not many homes with these materials still installed. Higher efficiency furnaces and other appliances become more widespread, more insulation was used, and energy costs are often lower with these homes than those from earlier periods.

The 60s and 70s mark the beginning of the movement towards modern construction practices. More emphasis was placed on basic seismic features (although un-retrofitted houses from this period require upgrades whenever possible), electrical systems began moving from braided cloth insulated wiring to vinyl sheathed, grounds were added to all outlets, etc. At the same time there was continued widespread use of leaded paint, and the “wonder” product, asbestos, was used for insulation, flooring, and ceiling finishes. Homes from this period can ave faulty breaker boxes that require replacement, and in very rare cases, aluminum wiring which should be replaced or retrofitted for safety reasons. Due to the more modern concept of urban planning, the areas where these homes are located are often still considered highly desirable areas, and these homes are the bread and butter of our area.

The 40s, 50s and before. As we move to earlier periods, we begin to enter the periods considered historical construction. These homes are often built wit old growth redwood and plaster interior finish. Even when there are water leaks, this construction is resilient and suffer little damage compared to many homes built at a later date. The older the home, the longer the history, and the history of retrofits. Most homes older than the 50s have probably had their foundations replaced at least once, have been wired, sometimes with three styles of wiring, and the actual status of their components can only be determined through inspection.

All the homes in our area could be subject to damage from moisture, dry rot, termites, and other pests. It is strongly advised to enter into a purchase here with a pest inspection on top of the home inspection. The two inspections have some overlap, which is good since you have more eyes on the same issues, but a large part of each inspection is not covered by the other, and either can uncover costly items you want to know about when you decide to buy a home. Certain homes may require specialized inspections of well, septic, sewer lateral, pool, HVAC, or other components. If they need one, it is best to get it done. $2000 of inspections on a $500,000+ purchase is 0.4% of the purchase price, and money well spent. For context, this high end of inspection costs is the equivalent of spending $100 on an inspection of a $25,000 car.

Good luck, and happy hunting!