What to do if you are forced to buy a house?

NEW -> Contingent Buyer Assistance Program
" food (wife has a longer commute and I don't know how to cook, so I have no other choice)"

Muzie, not to pick a nit (or maybe I do), but that is what psychologists call "learned helplessness." At some point you didn't know how to drive, but you learned. Driving is vastly more complicated than cooking. Head to the library and check out The Joy of Cooking. If you don't want to have to think or plan, check out the free menus at www.savingdinner.com - it even gives you the shopping list for the week. Don't be afraid to try. If a dish doesn't work out, you can always order a pizza.
 
Guys,

Owning a home is an art! It's the art of how much you can keep to pay for the expenses (I am not talking about tax evading here!). People say it's not what you make, it is how much you can keep. So true.

I have friends who make hundreds of thousand a year; however, have no saving, living paycheck-to-paycheck.

Ex: When I was single, I spent most of my free time at the mall shopping, then I spent my time to get rid of stuffs I over bought. I had no saving. When I bought my house, I was busy buying more stuffs for the home, and getting rid of more stuffs. I could not make enough money! But I have more savings now thanks to tax breaks and staying away from the malls. Then I have children and I have no time to buy anything, I do not feel like eating out so I learned how to cook. Now I really have a healthy saving and my life is so much better.

My point is you can really simplify your life, be creative with your expenses. If you are not creative, then talk to a financial adviser. You can really afford any home you want (speaking from real experience), just for the fun of it, and eventually, you will be AOK!
 
I can relate to nirvinerelator, I spent over a decade accumulating huge amount of junk and my last move costed me $3000 in moving expenses. I finally had it and decided to adopt a minimalist lifestyle by dumping/giving away as much crap as I can.

However in stillConfused's case, it may be difficult because he has 2 kids, and children tend to require a lot of stuff these days. Try and convince grandma not to buy so much cloths and toys for the grandkids is also near impossible.

Owning the roof over your head is an important security factor to many people, and it's usually more emotional than logical. You cannot successfully use logic to argue that it's better to rent than own when the desire is emotional, even if it makes little financial sense. I've been down that road before and it just doesn't work.

The best suggestion that I can give, is that if you have to buy, find a home that you feel good about, and can comfortably afford. This is not a market where you want to buy the biggest and most expensive house in OC right now.

Paying 12% of your after-tax income on housing is pretty exceptional. Most people pay a lot more than that. If possible, I'd recommend taking this opportunity to save as much as you can.
 
momopi,

It just amazes me how many people do not understand what they can afford; eventhough, everyone claims they know what they are doing. This is the area where I think I really earn my commission, where to figure out how much house to buy. I work with doctors, lawyers, CFO, CEO, business owners, young college grads, you name it. Their numbers are usually running 50 - 60% less than my number. . Wrong, my numbers had always perfect as I get appreciated down the road.

I review my client's monthly spending expenses, then I have them classify expenses as "wants" and "needs". Then we work on lowering the "needs" ones. Saving for rainy day is "needs". Then we work on lowering "needs" cost. Ex: Haircut of $200 per every 5 weeks get chopped to $50 per every 6 weeks. Then we look at tax saving to the dollar. After 5 years, you should be done with ever being on a budget as your income improves.

Remember, it's not what you make, it's what you can keep!

IMO, it's a nightmare to be a tenant. In fact, I was a renter for only 6 months, and I had it with landlord.
 
Paying a huge interest payment every month on a depreciating asset is not "owning" a home. It is flushing money down the toilet. A homeowner is one owns his/her home and has no mortgage. Renting is much less expensive than mortgaging right now, and if folks want so bad to be interest payers under the guise of being homeowners, maybe it would be prudent if they stopped and thought and maybe changed their wants to fit their needs, instead of listening to a agent who hardly knows them and is telling them how much they can afford. Gosh, why in the world would anybody take the financial advice of someone who has known them for a few days or hours and obviously has an monetary interest in them purchasing a home? Isn't that like going to a car dealer and asking them how much car can I afford? Would you ask a waiter how much meal you can afford; a television salesman how much big screen you can afford? Why in the world would folks trust a real estate agent to look out for their best financial interest? Is it just me, or does it seem a bit odd that a real estate agent would be advising someone on their budget? Maybe folks ought to consider that just because then want to be slaves to a mortgage and someone is willing to enslave them, it doesn't mean that it is a good idea.
 
Thanks a lot for all of your valuable feedback here and I really mean it....

It is really these blogs that have kept me informed about the true state of RE environment in SoCal. Spending about 25-30 minutes everyday is well worth it.

It was just last December when our verbal offer for a house was countered with almost full list price. This was our first ever attempt to buy a property in CA with a lot of hesitation and very uncomfortable feeling. When our offer was rejected, we were truly shocked and confused and we had decided to wait out one more year and continue to rent. Looks like that was the smartest thing I ever did in my life. Now the same house we were dying to buy is available for $80K less than our offer!!

We feel that landscape has changed now to favor buyers as there are more houses are available to choose from and more houses are available for lower prices. We are more confident that we will be able to make an informed decision in near future.

I am really glad that I asked this question on this blog about a week or so ago.........
 
awgee,

I wondered the same thing. I even asked my clients the same question how could they trust me? Their answer to me was "guts feeling". I take that as a complement! I assumed these folks are intelligent people who managed to finish at least college education.
 
nirvinerealtor - How often do you tell your clients that it might be in their best interest if they don't borrow as much as the bank will let them, or how often do you tell clients it might be in their best interest if they wait a couple years to purchase a home? I wonder how many college educated people with a gut feeling are going to lose their home because they borrowed as much as the lender would let them and are now obligated to a mortgage which they can not make the payments on?
 
nirvineraltor - So, when you say the future is always a big unknown, you never mention possible future apreciation? You never mention that the client's salary may increase?

What if your clients needs are different than their wants? What if their wants could lead them into borrowing more money than is prudent? So you think that just because a lender will lend the client alot of money for a home, that borrowing that amount is always in their best interest? Do you think it is always in the client's best interest to purchase a home? If you are truly working for the client's best interest, wouldn't you be considering that the biggest loan is not always the best loan, and that purchasing a home is not always in the client's best interest?

Your answer of "never" would seem to indicate that you are working in your best interest and not necessarily those of your client.
 
awgee,

Certain things you can control and vice-versa.

You can not control the future housing market.

You can control your future income increases. Create your dream and make it happen. Simple logic!

Client's best interest for the future?, only my clients will know what are best for them in the future.

The biggest mistake that I made was "NOT GETTING THE BIGGEST LOAN THAT I SHOULD", I guess I was too cheap back then due to lack of vision! . I settled for less then I had to pay dearly later. Speaking from personal experience.
 
Nirvinerealtor - Maybe I am missing something, but it seems to me you did not answer my question. Do you mention future apreciation to your clients? Is it ok to talk about future possible apreciation, even though the future is unknown? But, because the future is unknown, you never mention that it might be best to wait a few years to purchase a home? You see the contradiction, don't you. The future is unknown so it is never advisable to talk about future depreciation, but it is ok to talk about future apreciation?
 
awgee,

You are not missing anything. Remember nirvinerealtor makes a living on these transactions. It would be foolish for her to emphasize the negative if she wants to continue selling homes. There is a blurry line between puffing and lying which becomes even blurrier if you drink a great deal of kool-aid. From what I have observed in her posts, she doesn't lie and manipulate; she just has a different opinion than us bears, and she expresses that to her clients in order to sell homes.
 
Nirvinerealtor did not answer/respond many of awgee's comments or questions. So far as I can tell, most of his/her answers are cliches without any substance.

For example, "You can control your future income increases. Create your dream and make it happen. Simple logic!" What does that mean?!?!?! I don't think most of us do control our future income increases as most of us are employees at the whim of others' evaluations of our financial worth.

Also, the idea that we should buy the most house we can "afford" (eg, the bank will lend us) by cutting our "wants" and reducing our "needs" is circular. Nirvinerealtor is basically imposing the most costly house on us (which is a "want") at the expense of our other "wants." Why should someone desire a more costly house over a costly $200 haircut. Either way, you're feeding a want, not a need.

Frankly, I don't understand Nirvinerealtor's posts on this board. It sounds like you're selling to a crowd that is very skeptical to begin with. Whether we're right or wrong, I don't think bullish posts on a bearish board are going to convince us to rush out and buy the most house we could "afford."
 
IrvineRenter - You may be right. I may not be missing too much. I may just be making a point to the other posters / readers that a broker's or agent's interest and a seller's or buyer's interest are often at odds with each other, and it is foolish to trust that a broker or agent is working for anybody's interest other than their own. Also, I hope that some folks realize that it is ridiculous to think that an re agent will ever, ever, ever give you accurate information on the housing market. They will always tell you it is time to sell or buy. If you have any doubt of this, please again read nirvinerealtor's posts. Their only concern is to close the deal and collect their commission, and I hope folks are not fooled into thinking that an agent has their best interest as a priority.
 
Our personal decisions on education and career does have major impact on our current & future earnings. i.e. my buddy's wife went back to school and got her pharmacy certification, and I think that job pays $100k to start. Heck it took me years to reach that working in the IT field, but I slacked off back in school and spent my time chasing skirt, so I won't blame my employer for paying me less today.

However I don't necessarily agree with Nirvinerealtor's comment on buying the most you could afford. There's a right time and wrong time to do that. 1999-2002, yes. 2006-2007, no. We're not in a rapidly appreciating market and there's really no "rush" to buy the most you could afford right now. It's a buyer's market, so take it easy and shop leisurely.
 
OffBase and awgee,

You are both right, and I also see what you see. I have beat up on nirvinerealtor a few times on these boards as well. I like having her post here because she keeps the boards from becoming a bearish echo chamber, so I don't want to chase her away either. To be quite honest, I am so immune to the deleterious effects of kool-aid that hearing it is more amusing to me than anything else.
 
IMHO, nirvinerealtor is simply here trying to drum up business. After all, a fair number of people have commented that they value the information on this blog since they are looking to buy, right now or very soon, in Irvine. Even if nirvinerealtor only picks up a couple of buyers from this blog, that's more than she'd pick up by picking her split ends at an empty open house weekend after weekend.
 
IR,

I am glad you want to keep me around for now. Any time you want to boot me off this blog, just say so and I will disappear. Getting a beating from this blog is good for my ego because it's completely opposite in real life for me. I do soft sale, meaning, no cold call. I work with a core group of clients and getting referrals that way.

ISM,

It is not my goal to drum up business here, I would have asked for business already. If I was, I would have sung the same tune (mirroring sales technique). I must have done a horrible job so far with prospecting on this blog, all I got is beating! LOL. I admit, I learn so much from this blog. Thank you everyone.

OffBase,

I think you are expecting direct answer from me. I can not ethically do so. Each one of you have different situation and goal.

Real estate is a long term investment, not a short term. If you are looking at real estate as short term investment then buy securities instead or do day trading. Moreover, you need a STABLE roof over your head just like you need GOOD food in your tummy. If you run off and purchase the most expensive house at whatever price today, 10 years from now, it will make no difference. It also makes no difference if price increases or decreases if you have a 30-year loan. Your housing payment is constant, is that nice? YES!. The key is to buy something that would work for long term! Whatever I comment here, I am speaking from my own experience of buying and selling my own homes for the last 25 years. I made all the mistakes that can be made.

I think this blog should be named "Irvine Anti-Homeowners Blog"

OK, I will be direct for once.... OffBase got me started!

I hate to say this, but I think you all are capable of purchasing a SFS in Irvine ($575K+), they are availble now. I am not a fan of condos as they only serve as an interim of housing need. If you are able now, do it before the opportunity slips away. Example, you can not easily get a prime loan with 0% down now as you could 5 months ago. You do have a lot of competition to purchase - It will be clearer to you soon. The market has changed and you will hear from the press 2-3 months from now.

Remember, there is no financial gain for me here.

OK, please be easy on me!
 
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