10 Rules for Getting a Good Deal on a House

Wealthy people just call up a realtor, find a nice-looking house, buy it, and move in.  But that’s not us! :D  Getting a good deal on a house was the only way for us to leave our apartment and move into a house in the neighborhood of our choice. We had to work a bit harder to get into home ownership.

getting a good deal on a house

Fortunately, I grew up in a family that loves a good deal on a house.  My parents moved us a couple times as a family and acquired a few investment properties while I was growing up.  They love looking at houses, talking about houses, and buying houses when they’re a great deal.

Here’s everything I know about getting a good deal on a house, boiled down to 10 easy rules.

1. Don’t Hurry

I put this rule first because this is really the one rule to rule them all.

Don’t rush into the largest purchase of your life.  Don’t let anyone rush you.

The market is not going to run out of houses.  Even in the “off season”, even in a “bad market”, people are constantly breaking up, moving cities, and changing jobs.  There are always more houses.

When you start looking, 99% of what’s on the market will be stale houses.  You won’t find deals among the stale houses, but if you buy in a hurry a stale house is probably what you’ll be buying.  Stale houses have sat a while because the deal hunters ruled them out already. No, if you want a deal you want to sit and wait for a fresh house, which brings us to…

2. Be an EXPERT in Your Local Market

Long before you’re ready to buy, start attending open houses in and slightly above/below your price range. (Note: if you’re like us, your price range really has no bottom so you’re just looking at everything in and slightly above your price range).

Look at a good variety of houses. Aim to tour fifty houses before buying.  

“Look at 50 houses” was the advice my dad gave me when I set out looking for my first home and wow, was he was right. If I’d bought the first house (or tenth) I’d looked at, I’d have gotten ripped off.   When I started my search, I had no idea what houses were a deal and which ones were robbery.

getting a good deal on a house master your local market

Every market’s different, but I guarantee you the good deals sell within days to people who are experts in their local housing market. If you want a good deal on a house, you must become a master of your local market.

Want more proof?  Our home was a new listing deal.  We saw it get listed on a Sunday afternoon and knew it was a deal without even stepping foot into it. 2 stories at that price?  We’re there. We toured it Monday morning and put in an offer immediately.  It was ours Wednesday, and at a price that prompted other realtors in our neighborhood to call our realtor and ask why the house went for so little.  (Slightly more awkwardly, all our neighbors seemed to know what a deal we got, too, and all of them brought it up when we met them. Good thing that was three years ago now…)

3. Start Looking Early

Do not wait until your lease is running out to look at houses, you won’t have time to master your local market or really figure out what you like (and don’t like) about houses in your price range.

As soon as you think you might want to buy a house, start going to open houses.  Go even if you have 11 months left on your lease.  Looking’s free, so have a good look around your potential neighborhoods.

Call a few realtors.  Get your savings in order.  Learn what you like (and don’t like) in houses.  All these things take time.

4. Have a Net Worth of At Least 50% of the House’s Closing Price

This is my own personal rule of thumb, and I think it’s good advice to anyone wondering just how much money they need to have before buying a house.

You’re not ready to buy a $200,000 house until your net worth is $100,000.  Houses are expensive and random stuff breaks in them all the time.  It it took every penny in your pockets to scrape together a down payment, then the maintenance will bury you.  Prove you’re capable of sitting on a pile of money without spending it before you enter home ownership, it will save you a lot of grief. 

5. Have 30% of the House’s Closing Price in Liquid Cash at Closing

20% is for the down payment, the other 10% for moving and immediate repairs.

getting a good deal on a house

If you got a deal house, it’s probably because there’s some annoying thing(s) wrong with it.  In our house, one of those things was the furnace (it didn’t work).  Since we were buying in November, a furnace was the first thing to go into the house.

We also had to replace all the carpets and purchase a hardware store’s of tools and paint to get basic repair and painting done before our stuff moved in at Christmas.  We spent thousands of dollars after closing but before we even moved in.

PS: I once had a co-worker who asked the boss for a loan to hire movers so she could actually move into her new house.  Definitely don’t do that.

6. Know Your Hard Limits

Hard limits are things you just can’t deal with and will never grow to love.

Hard limits are not things that can be changed, like “the light fixtures are ugly”.  Hard limits are things that  will never change, like the house being too close to a busy intersection or not having enough bedrooms.

Want some examples?  Some of our hard limits were:

  • No permit-less constructions
  • No HOAs (home owners associations)
  • Nothing under 1600 sq feet
  • Nothing over $325k
  • No highways within a mile

Want more? Read my bigger list of things to compromise on (and not compromise on) when buying a house.

It’s okay to tour houses that violate your hard limits as research, but don’t let a nice kitchen fool you into living on a busy street you can’t back out into.  You’ll go crazy.

7. Don’t Buy More House Than You Can Afford

If the 2008 recession taught us anything, it’s not to buy more house than you can afford to pay for.  Start by knowing your monthly expenses – the more months worth of data you have, the better.  A whole year is ideal, because if you’re like me, your months vary wildly.

For the previous year, look at each month’s income (your salary) and spending (credit card bill) and savings (if you don’t have this, don’t buy a house).  Is a mortgage payment reasonable?   And keep in mind that unless you’re living in some bangin’ apartment, there’s a good chance your mortgage will be higher than your rent.

It’s always better to rent an apartment than it is to stretch your finances too thin for a house.

8. Dump Any Real Estate Agent You Don’t Like

Your agent is your employee, and you are entitled to make them work for you.

Don’t be shy, this is their job.  Even if your agent is the nicest person in the world, they secretly want you to buy something ASAP so they get paid and can move on to new customers.

Remember, you’re the one living in the home you buy.  If your agent pressures you to just buy something already, or is unreliable, or intimidates you, or if you’re just not comfortable with your agent for any reason, dump, dump, dump.

9. Don’t Pin Your Hopes on a Short Sale

Here’s a dirty secret about short sales: that low list price may not be for real.

We put in an offer on a short sale.  Three months later, we heard back: the seller’s realtor wanted $35k more than their list price and our offer. We rejected their counter-offer with some paperwork from our realtor (who was awesome, by the way) to make it extra official and forgot about that house.  That low list price wasn’t even for real.

(The real kicker was when a few weeks later, the same week we closed on our house actually, that same seller came back asking if we’d be interested at our offer price.  I guess that $35k wasn’t so important now, but that ship had sailed and I’m glad it did because the house we got was way better and $50k less than the one we put that offer in on.)

When people go looking for a deal on housing they often look at foreclosures and short sales.

Yes, they have low list prices.

But they can be extremely frustrating and time consuming (several months, if not a year+) to actually purchase.  I’m all for bending over backwards for a deal, but foreclosures and short sales are too much for me.

One more story: We live near a short sale home.  It’s identical to half the houses in this neighborhood (houses that sell quickly).  It’s still on the market nearly 3 years later.

10. Be Critical (and Realistic)

Walk into every house ready to hate it.  Look for problems: bad floor plans, impractical kitchen layouts, too much yard, low water pressure.  Be extremely critical.  Homes are expensive and moving is expensive, so you’ll be putting up with this one’s crap for a long time.  Make sure there isn’t too much crap to put up with.

We looked at houses that would have had lower mortgage payments than the one we ultimately bought, but they came with things I hated.  Bad floor plans were everywhere – who puts a water heater next to a toilet??  Why is the master bedroom half the house’s square footage?  Why is the toilet in a closet?!  Ugh.

We also encountered a lot of “oops, ran out of money!” situations: half-finished kitchen remodels and basement remodels were common.  Good luck matching the tile and finishing the project.

We wanted a deal, but we didn’t want a stupid bathroom layout or the hell of finishing someone’s remodeling project.

In Conclusion…

getting a good deal on a house probably not in san francisco

If you can do all this, you’re pretty much guaranteed to get a good deal on your next house.  Or, at least, as good a deal as your local market will allow for (good luck if your city is San Francisco or New York).

Just remember to go slow, stalk the market, and be ready to pounce.

Photo credits:

For sale signs: coffeego via photopin cc
Red houses: Images_of_Money via photopin cc
Aerial neighborhood: San Diego Shooter via photopin cc
San Francisco houses: nicolas.boullosa via photopin cc

Financial advice to my 22 year old self

I’m almost 30 now which gives me License to Dispense Advice. Home improvement, life optimization, and financial security are a trio of BFFs. Sometimes alliances shift, but ultimately they’re inseparable.

At 22 I was just starting out.


Me at age 22 dressed up for work

I just got my first “real job” (full time pay just above minimum wage, but with health coverage!) and I moved away from home for the first time ever to a 1-bedroom apartment some 45 minutes from where I grew up. I now had grown-up things to do, like buy groceries and wash my own clothing.

I managed to do pretty well in the intervening 8 years, but here’s what I would tell myself:

1. Maximize your entry level income

Money doesn’t buy happiness, but it does buy everything else.

My biggest regret: I wish I had negotiated my first salary. I didn’t have the confidence to ask for a little more because I had no idea how good a candidate I really was.

Let me tell you this: every company I’ve worked for has been careful in their hiring. Phone screens, all-day interviews. If you make it to offer stage, you are a good candidate and we want to hire you. Asking for a (reasonable) increase over the offer at this step is likely to succeed.

I did not negotiate my first job’s salary, but I did:

  • successfully negotiate my first raise at my first job
  • successfully negotiate a higher starting salary at my second job
  • successfully negotiate a and a higher starting salary at my third job

I have found it easier to increase my income by changing jobs and negotiating a larger salary upfront. Feel how you will about what this means for the relationship between employees and employers, the fact is this is the game and this is how it’s played.

Things you can do at your current job:

  • Be a top performer. If you can’t identify the person in your organization they’d lay off before they got rid of you, you’re it!
  • Keep track of your accomplishments! When review season comes along, you’ll have plenty to say about your contributions to the company
  • Outright ask for more at raise time. To be frank, I’ve had mixed success with this one. I’ve succeeded at it once, but every other time the “raise pool” was locked at some fixed amount for the department and couldn’t be negotiated. What I did have success with, though, was working for an excellent manager who negotiated larger portions of the raise pool for his top performers.
  • Keep your resume/portfolio up to date and loaded with accomplishments.
  • Remember, it’s a business relationship. Don’t become emotionally invested in working for your company. Your employer will dump you the second they need to in order to make their numbers. It’s not personal, it’s business. Likewise, you need to be ready to dump them if they aren’t paying you a competitive wage.

Things to do when you change jobs:

  • Consider cities better for your industry. A thousand times this. Moving from the midwest to the west coast was the best career decision I’ve made.
  • Ask for moving expenses to be rolled into your salary instead of taking them as a lump sum upfront. I got a $3k annual increase doing this, and it was a gift that kept giving year after year
  • Just outright ask for more when you get an offer. Cite increased responsibilities, your amazing performance record, anything that justifies your argument. The Internet is full of advice on how to phrase this. This has been my most successful tactic for increasing my income.

One last word on this topic:

Don’t get your heart set on any promises of bonuses or profit sharing. Your game is salary. Salary is consistent, reliable, and your salary history will follow you to your next job. Bonuses are not reliable income and in many cases, they don’t materialize. If I had every bonus I was reassured was coming, I’d have thousands of dollars more in the bank.

2. Learn how to prepare food you like

This will save you thousands and thousands of dollars over your 20s alone. This will also save you time, and will probably keep you thinner than you would be relying on takeout and restaurants.

Start simple (chicken roasted in a pan!), work your way up (homemade cake!). Don’t run out and buy a shitload of exotic cookware. You’ll feel bad when you give it all to charity 5 years later, hardly used.

3. Don’t buy DVDs / entertainment

I’ve lived without television service for 7 years. I don’t miss it (your mileage may vary) or need it. I don’t want to sound like a crazy media-hater, and I’m not. Hell, I work in entertainment. :D I just find that I have plenty to entertain myself with using only Netflix streaming and the Internet.

At roughly $100/month x 7 years, I’ve saved $8400.

DVDs frighten me. Next time you’re visiting a friend who has a ton of DVDs, try to estimate how many and multiply it by 10. That’s how much that collection cost. DVDs are sold everywhere and are seemingly inexpensive. It’s easy to “just $10 bucks” your way into a serious pile of cash spent on movies you’ll never have enough time for.

4. Drive your car into the ground… gently

A rule of thumb I heard somewhere: driving the car you drove in college when you’re 30 is a sign of financial well-being.

I acquired my first car at age 19, and I still drive it 10 years later. I love that it’s paid for. I love that it still looks new inside because I didn’t crap it up with food wrappers or junk. Take good care of your vehicle – and keep it as long as you can.

  • Park in covered parking as often as you can: Doing this reduces the odds of it getting pooped on / hailed on / baked in the sun. Plus, the covered parking is where people with nice cars park. They won’t throw their door into your car.
  • Don’t eat in your car: A “no food” rule will keep your car cleaner and nicer smelling. Plus, eating in your car is sad. Eat at a table or on a sofa in front of a favorite show, it’ll do you good.
  • Vacuum its interior regularly: You’re less likely to want to crap up a car that looks and feels nice.
  • Park far from other cars: The extra walking is good for you anyway. If you have to park near other cars, try to park it next to an expensive car.
  • Wax it regularly: This one’s somewhat debated, but twice yearly waxes seemed to work for mine.
  • Rent a car for long trips: Depending on season and location, you can often score a rental for as low as $12/day. Put all the wear and tear of a road trip onto their car, not yours.
  • Don’t do stupid things in your car: I used to try to make my car airborne when going over a particular set of train tracks that seem designed for the trick. Wait, I still do this. You’ve got to have some fun your car!

5. Wake up way earlier than you need to

What makes this financial advice? Because it helps make you awesome at your job.

Being somewhere (like work!) on time is the easiest way to succeed ever. You don’t want to be known as someone who oversleeps and comes into work late. That’s not the path to promotions and raises, even if you’re the best worker in the office. Someone will hold this stupid thing against you, so just get it right – it’s easy.

When you’re accustomed to waking up earlier than you really need to, you have a buffer zone. If you oversleep, you can still make it to work on time. If you need to run an errand, you have a block of time. If you don’t need to do anything and you’re up early anyway, exercise. Read. Accomplish something. This is your time!

By doing what’s most important to you first thing in the day, a bad day at work or working late can’t ruin it.

6. Open a savings account as soon as you earn income

Savings are the best thing you can give yourself. Having a big pile of money saved up lets you do awesome things like:

  • Quit a shitty job
  • Move across the country for a better one
  • Buy a Nice New Thing once in a while
  • Not live in an utter state of panic

You want options, right? Then open a savings account and put money in it.

Set up automated transfer out of your checking account. Without any help from you, this humble account will receive money and grow in size. Get addicted to that feeling of reaching a milestone. $1,000! $5,000! Can you reach five digits? Six?!?

Here, I even broke it down into steps:

1. Go to https://home.capitalone360.com/ and open a 360 Savings Account. It’s free.

2. Connect your new Savings Account to your existing Checking Account

3. Wait a couple days for the accounts to link up

4. Set up an automatic transfer so money goes from your Checking Account and into Savings Account without you having to lift a finger

7. Open an IRA investment account

These are fancy words but the concept is simple. Every year that you earn income, you can set aside up to $5,000/year in a special account called an IRA (individual retirement account).

You won’t be allowed to contribute to past years, so put as much in as you can (up to the limit) each year. Start as soon as you are earning money. My IRA is with Vanguard in their Retirement 2050 fund. I highly recommend them, and this fund, as it seems to turn a small profit each year.

I would have lost years not contributing to my IRA if it wasn’t for my boyfriend (now husband) who insisted I open an IRA and spelled it out for me. I didn’t think I had money to sock away like that. I opened the account, and I put a little in every few months. I didn’t make it to $5,000 my first year, but once it was habit it became easier. I met my IRA savings goal every year since. I now have $45k socked away for retirement in that account.

That’s pretty cool, especially since the earlier your money goes into the market, the longer it has to earn money (interest), which then gets rolled back into the investment to make even more money. It’s like earning money for doing nothing.

29-year-old me says thanks 22-year-old me!

8. Continue to develop your skills

Learning didn’t end at college graduation – it started.

Once I was on my own I struggled with inspiration and general despair over how much of a burden working full time placed on my ability to build my skills (artistic and otherwise). It was quite a shock going from developing my talents 24/7 to selling them to an employer 40 hours a week. I endured some inspirational droughts as I adjusted, but over the long haul, this was an essential step. Learning how to invent my own free time projects and challenge myself to learn new things outside of work was crucial.

Working on “hobby skills” gives me:

  • A clear sense of identity: I am much more than my day job
  • Something to work at: When I come home, I can work on any number of projects
  • Something apart from work: I don’t think about work at home, I think about my hobbies.
  • A safety net: When I was laid off, I had so many opportunities in so many directions I was nearly paralyzed. I could easily have reinvented myself as a freelance artist, a full time artist, a web developer, a writer, a fledgling programmer – I went back into game design, but if that ever dries up I’ve got numerous safety nets.
  • A side income: I sell plush, I freelance art. I can ramp this work up or down depending on my needs.
  • Something to talk to people about: Not that most people want to hear about it, haha.

Learn something outside of work. If nothing else, you’ll be more interesting than someone who communicates entirely in movie plots and Internet memes.

9. Don’t buy it unless you REALLY. NEED. IT.

Try to do without it for a week. If you can return it, buy it and hide it (don’t unbox it) for a week.

Did you survive? Did you even think about it? If so, you may not need it.

Did you think about it every day? Okay, you pass – go buy it.

You’re going to toss A LOT OF STUFF when you move, and no, not before you move. After you move. After you’ve paid thousands of dollars to move it. Because you moved in a hurry and it made no sense to toss things you thought you would need.

Your next apartment won’t have room and your house will have next to no storage space. Plus, most of what you bought when you were 22 was cheap junk because you didn’t earn much back then.

10. Marry Jim!

Okay, that advice is specific to me.

What I really mean is marry the right person (or partner with, if you’re in one of those shitty states that doesn’t yet let you marry the man or woman you love).

Your partner must be someone you can work with, someone you’re on the same page with in regards to money, how free time should be spent, what your hopes for the future are. Don’t move in with (or marry) anyone who falls short of those standards. Warren Buffett, who is super insanely rich, has said plenty on this.

Jim is my best friend, my co-conspirator, and my partner in everything. We work well together, and we’re on the same page financially. We agree on how much money should be saved and how much should be spent. This simple arrangement has spared us both the drama many couples get to live as they fight (and sometimes divorce) over money. I know it’s not super romantic, but it sure does simplify our relationship. I’m super glad I found him.

Best Couch for Our Budget: IKEA’s Karlstad

We bought a couch!!

What? Yeah, I am surprised too. :D  Our new Karlstad from IKEA is our first furniture purchase since buying our home two and a half years ago(!!!).

On break during work, Jim and I walk through Bellevue Square which has no shortage of extremely expensive couches on display. I’m talking $7500-$12000. Seriously, who spends that on a couch? That’s car territory.

But this got us talking about how we’d love a larger couch: one we can both stretch out on, and one that can accommodate a third person so we aren’t stuffed like sardines when Dad comes to visit.

So we went couch-hunting at My Home and a few other neighborhood stores. All of these stores wanted a lot of money for their couches, like $3000-$5000. I suppose I could *theoretically* spend that much on a couch, but I don’t want to. A couch isn’t worth that kind of money to me. My last one was $700 and it’s great, just too small.

Alas, this is when we realized that Jim and I like very different things in a couch. He wants something to sit on, something with support. I want a mushy bed to melt into. And we both dislike spending more than a thousand or so bucks on this. Realizing this, we shelved the idea again for a couple months.

Then we ended up at IKEA to return an unneeded desk leg.

We sat on some couches. We sat on Karlstad. It happened.


Couch nirvana.

Jim loves it. I love it.

We both love its price.

$900 for the whole thing? What? How is this possible, IKEA? Don’t you know stores 10 miles north in Bellevue want $7000 for an uncomfortable couch half this size? And that’s about when I realized that Young House Love has the exact same couch and raves about it regularly. SOLD!

Karlstad didn’t fit in the Subie so it’ll be delivered Saturday, plus we bought assembly for $39. I’ve never bought assembly of anything before (I even build my own computers!) but $39 seemed like a bargain when weighed against the misery of spending Saturday putting a couch together.

We bought a bookshelf to put together instead.


December 2013 update: We still adore our Karl couch!  The cushions have stayed firm and crisp, and the cushion covers still fit tightly.  If I have any complaint at all about our Karl couch, it’s that we both seem to spend more time on the couch now that we can both lay on it at the same time!

Free Redecorating: Flip a Room

The family room (okay, all our rooms) are pretty thrown together – they’re just full of the stuff we still have after multiple moves and everything is where we decided to put it on the hectic move-in day. The couch is from 2006 – it was the very first thing I bought for my apartment when I moved closer to my first job.

Anyway, now that we’ve been here two and a half years, there’s some bandwidth for thinking about the way rooms are arranged and potentially upgrading some of the furniture. I hate to get rid of perfectly useful stuff (I’m also super cheap), so I wanted to see if just moving furniture around would make me feel better about the room. That’s free and easy.

Here’s the original arrangement:


Here’s the new arrangement (+grubs on the mantle):


This is nice, I like it.

I like that the TV and fireplace are more of a set and a centerpiece to the room. I’m sure an interior decorator somewhere is cringing, but it’s hard to argue with a free room refresh via re-arranged furniture.

We also used this as an excuse to further thin out our book collection. Go to your bookshelf and find three things you’ll never read again. Remove them. Feels good, doesn’t it? Do it a few more times, and now you have room for new books!! :D

Other Rooms We’ve Flipped:

Dining room – rotating the table 90 degrees opened up new “traffic” patterns and improved the view for both of us!

Family room (apartment) – flipping the whole room 180 degrees put the TV in front of the fireplace, but improved traffic flow and lighting.

Bedroom (my first apartment) – changing which wall the bed was on improved airflow and made the closet more accessible.