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What to do after stalking Zillow; How to avoid being ‘house poor’

MORGANTOWN — You’ve stalked Zillow and the Sunday real estate pages, and you are determined to buy a house. What now?

The most important factor, said Melissa Hornbeck, a broker with White Diamond Realty, is to find an affordable home without becoming “house poor.”

“What can you afford per month, including utility payments?”

According to Investopedia, to be “house poor” is to spend most of your monthly income on housing-related costs, such as the mortgage payment, utility bills, property taxes and maintenance. Someone who is house poor may struggle to pay other debts, such as car or student loan payments.

Finding that balance of necessity and affordability — as well as deciding whether renting or buying is right for you — is why, Hornbeck said, “This is a discussion that needs to be had at length with a professional advisor prior to taking the ‘plunge.’ ”

In Hornbeck’s experience, most first-time homebuyers who come to her are in their late 20s to early 30s, and they usually come with a budget of less than $250,000. “I find townhouses are very popular for this demographic.”

Townhouses, she said, “offer an irreplaceable option for first-time homebuyers trying to break into our market.”

Compared to detached homes in Morgantown, townhouses offer a “polished” product at a lower cost.
Victoria Shuman, with Howard Hanna Realty, said clients come to her with a budget beginning around $175,000 and increasing from there, depending on what stage of life the buyer is in. Clients looking in the $175,000 to $225,000 price range, she said, will tend to lean toward townhouses because they can get a nice one at that price point.

“It all comes down to the specific needs/wants of the buyer at the time,” Shuman said. “Some buyers don’t want the fuss of maintaining a property if they are super busy with work or school, while others prefer a little distance from neighboring properties and like yard work/gardening.”

Sold, to the highest bidder

Jared Shinn, with Joe R. Pyle Auction and Realty, said auctions can be a good route for first-time buyers. “Auctions allow buyers to place bids within their price range without the need to negotiate with sellers to reach a mutually agreeable price.”

He’s also seen an increase in younger bidders since auctions moved primarily online with the pandemic.

Andrew Yoder, with Kaufman Realty, agrees that auctions can be a good place to start for a first-time buyer, but there’s a caveat.

“There are properties that sell at auction that are great for first-time homebuyers and properties that sell that will not pass inspection,” Yoder said. “Therefore, a bank will not finance it unless renovations are made to bring it up to code.”

He recommends potential first-time buyers contact the auctioneer and ask about the state of the property. Or, he said, “they can be represented by any Realtor.”

When purchasing a house through auction, the winning bidder usually has to put 10% down at the close of the auction, according to Shinn.

Yoder said the 10% down required by the auction house can be included in the 20% down payment a bank may require as part of financing. “The buyer thinks they may need to put 30% down. That is not correct. The down payment is held in our escrow account and brought back to the closing table for the buyer to use towards whatever they need it to go to.”

Being pre-approved by a bank isn’t strictly necessary, but it’s not a bad idea.

“Many buyers finance auction purchases,” said Shinn. “We recommend prospective bidders talk to their lender and have a full understanding of their price range prior to bidding.”

“Buyers do not need to be pre-approved to bid,” Yoder said. “The financing process of real estate at auction is no different than if you are buying it from a traditional listing.”

Making a wish list

After you’ve determined your budget, it’s time to consider what you need from a house and what you can get at that price point.

“Contrive a list of top five questions regarding housing regardless of whether you’re renting or buying,” said Hornbeck. “For instance, do you have to be a certain distance from work? What is the minimal amount of space you need?”

Buyers also tend to consider other factors as well, said Shuman, such as schools, access to highways, distance to their workplace and community amenities (e.g. pools, sidewalks, gated or secure, size of yard, mature neighborhood vs. new neighborhood, etc.). While supply and demand ultimately rule the real estate market, the availability of the above factors can contribute to making some neighborhoods pricier than others.

For Melanie Raleigh, who shares an apartment with her partner, her must-have list for a future home includes multiple bathrooms and at least two bedrooms, so one can be turned into an office/crafting space. Also, proximity to work is non-negotiable.

“I would be willing to compromise on neighborhood, but I can’t compromise on commute, because I don’t have a car,” she said. “I can compensate for bad neighbors … but I need to stay close to town or at least the rail-trails.”

Carolyn Brown is a little more nonchalant when it comes to necessities in her future home. “At the moment, we just look at the price and just kind of see what it has and go, ‘Oh, well, that’s not too bad or like, that’s kind of nice to have.’ ”

At the moment, it’s just her, her boyfriend and their two cats sharing a townhouse. But she has to admit that a decent-sized kitchen is important to her. “So if it has a little closet of a kitchen, then it’s kind of like a no for me.”

Any other must-haves?

“And parking,” Brown said. “Decent parking.”

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