We decided that when our apartment lease runs out at the end of May next year, that we wanted to buy our own house, instead of continuing to rent.  We're fairly certain that we'll be living in the LA area for at least the next five years (given the ongoing training that Agnes has planned), so it makes a great deal of financial sense.  On this page, we document and describe what we went through in the process of buying a house.

December 1, 2002
December 8, 2002
December 15, 2002
December 22, 2002
January 30, 2002 -- we closed!

The house we bought

December 1, 2002

After much procrastination, we decided to get out there and start looking at some neighborhoods we're considering.  We read "Home Buying for Dummies" and "The Everything Homebuying Book".  We've been saving for a down payment.  And we've looked both online and in the newspaper for price listings.  We have an idea what we're looking for:  a three bedroom, 1.75 bath single family home in a nice area close to Agnes' work in Torrance.  Based on a feature in the Los Angeles Times that lists the median house prices in LA and Orange County each month by zip code, we've decided that the two areas where we'll look first are Carson and Torrance.  Later, we may throw in areas of Long Beach, but we suspect that the nicer Redondo Beach and Manhattan Beach will be outside our price range.

We started the day by driving down to Torrance, where we stopped at Tapioca Express, a local boba place.  Our idea was to buy a copy of the Los Angeles Times, which would hopefully have an insert for the open houses in the South Bay.  The copy we receive up in Marina del Rey lists open houses in on the westside.  We were disappointed to find no such section in the local edition of the LA Times.  No idea why -- maybe there aren't enough listings to warrant a special section in the South Bay?  We finished our boba green tea (no milk), with large tapioca balls, and tried to decide what to do next.  Within the same shopping plaza, we saw a "People Realty" office, and decided to take a look at the listings posted on the window.  An agent noticed us outside their door and invite us in to talk.  We described what we were looking for, as well as a conservative price range, and asked that she help us find listings in Carson and Torrance.  She came back with a print out of fourteen listings that matched our criteria.  We exchanged contact information and said that we wanted to drive around a bit to see what was out there.

The rest of the afternoon was spent visiting each of the fourteen places.  We started in Carson.  The first one sounded promising: it was newly built (2001), was fairly large, and fairly inexpensive.  It was situated in a new gated community.  When we arrived, the community itself was very nice, but it seemed to be an island surrounded by a much less nice area.  The neighborhood just didn't seem that safe outside the gates and walls.  Now it's possible that this is the first sign of an up and coming community, but we thought that it's an unsafe experiment.  After visiting the ten locations in Carson, we decided Carson is just not for us.

We quickly drove by the four locations in Torrance.  One, described as "use imagination", we discarded as very strange looking.  The others we saw as possibilities.  We finished the day with the idea that our conservative price range may have been a little too conservative, and that we would really prefer Torrance to Carson.  We hadn't seen any of Long Beach, so we couldn't rule that out.

Next Steps:

December 8, 2002

We had two ideas for today.  We could go out and visit Long Beach, or we could go back to People Realty and ask them to help us focus on Torrance, with a higher price range.  Agnes has a co-worker, Christine, who recently bought a nice place in Long Beach, but Christine has been on vacation.  We decided to wait until Agnes talked to Christine before we checked out Long Beach.

From the previous week, we had a couple of "next steps".  We weren't ready to talk to a lender.  We hadn't gathered the required financial records together, and we weren't sure who we were going to talk to.  At a dinner with some high school friends, Agnes had heard that we could get a recommendation from one of them for a lender he used.  We're waiting to hear back about who that lender is.  We still hadn't decided on an agent.  If we were going to focus our efforts on Long Beach, then we would ask Christine for a reference.  If we were considering Torrance, then we needed to interview our contact at People Realty more thoroughly, and ask around for other people's suggestions.  We did decide we were going to increase our price range, and we temporarily put the idea of buying a condo or townhouse on hold -- too many sources suggest that houses increase their price faster and are easier to sell, when it comes time for us to move.

After a quick lunch at Asahi Ramen, and after picking up a boba green tea (no milk) from Volcano Tea, we headed back to People Realty.  We told Naru, the agent, that we had ruled out Carson, and that we were considering a higher price range.  She said that with our new price range, we should definitely consider Torrance -- the school system is considerably better (good for resale value), and a three bed/1.75 bath place should be affordable.  We ran another search, and came up with sixteen listing, in three areas of Torrance.  Each listing can be found with the Multiple Listing Service (MLS), and the sixteen listings fell into three MLS areas, numbered 32, 36 and 37.  The four locations we had seen the previous week were all in section 32 and were duplicated in this week's search results.  We had twelve locations to visit this week.

The first place we saw was the only listing in section 36.  It's a cute place down a street with a tree-lined center island.  They were having an open house, and after a bit of discussion (Should we see an open house without an agent?  What are we supposed to look for?) we decided we were just going to go in.  The place was great: hardwood floors; three bedrooms, with a small fourth room that had been converted into a wet bar upstairs; a garage for one car, though the driveway was large enough to fit two cars; a nice grassy backyard; and a newly renovated, brightly lit kitchen.  It did have its downside: there's no air conditioning (though that may not be necessary in the South Bay); the backyard didn't seem to have a sprinkler system; as a whole, it wasn't large (1,200 sq ft) and one of the three bedrooms downstairs was more of an open walkway through which one can get to the rest of the house (there was a crib there).  The place had been on the market for five days.  We really liked it.  We couldn't have it.

We weren't nearly ready to place any kind of a bid on any place: to place a bid, we want an agent with us who can help us research the prices of comparable houses sold recently in the area.  We also want to get pre-approved with a lender so we have some idea of what we can get as a mortgage.  Finally, if everything went through quickly, we would have a house on our hands well before the end of our apartment lease, and we hadn't figured out what it would take to terminate that lease early.  It's likely the property will be sold well before we're ready to buy.

We saw a number of the other listings in section 32, but we didn't stop by section 37.  With the other places we saw, we found neighborhoods we liked, and houses that we marked as a definite possibility.  We decided to call it a day.  Once we were home, we decided we needed to do everything possible to be ready to make a bid on a house when we come across another one we like.  These steps are very similar to the ones we listed the previous week:

  • Find a real estate agent to act as a buyer's agent (which means we need to compile a list of questions we will use to interview an agent)
  • Get our finances together for a discussion with a lender
  • Create a list of questions to ask as we examine properties in more detail, which would not be covered by a subsequent home inspection.

We compiled a couple of checklists -- what we need for our pre-approval talk with a lender, and what we need to get apply for a mortgage.  The two lists can be found here:

We spent the rest of the afternoon pulling together our financial information, which we've placed into our growing file of house shopping stuff.  We have a folder for our finances, and we have a folder for our maps and listings.  Next week, we'll probably take the weekend off since Agnes will be working both days.  In the meantime, we're going to try to get recommendations for lenders and real estate agents.  Hopefully on the following weekend, we can be close to ready to pick an agent, and get pre-approved for a mortgage.

December 15, 2002

We didn't have a whole lot of hope for making progress on shopping for a house this weekend. Agnes was working on both days of the weekend, we didn't have an agent yet, and we hadn't even decided if we were going to focus on Torrance or Long Beach.  Our plan entering this weekend was to just accomplish one goal: get pre-approved for a loan with a lender.  We figured that we could talk to our local Washington Mutual branch where we have our bank accounts.  At worst, we might end up paying for pre-approval twice, if we didn't ultimately choose WaMu (as we call them) for our lender.

For those following who have not been through a house purchase, pre-approval is an early step you can take to make your offer on a house more attractive.  The idea is that you go through all of the work necessary to get approved for a loan, and a lender then writes a letter saying "we have pre-approved this person for the amount of money it would take to buy your property".  If a seller has two offers, where one person says "we'd really like to buy your place, and we have a lender who has pre-approved us for the amount we're offering" and the other person says "we'd really like to buy your place, but it's going to take us a while to find a lender and get everything lined up", the seller is likely to pick the first.  At least in theory.  There is another early lending stage you can achieve as well called "prequalification".  If a lender pre-qualifies you for a loan, they are saying that according to what you have told them, you would qualify for the loan you need.  It's less stringent than pre-approval, because the lender doesn't actually verify the information you tell them.

On Saturday, I made an appointment to meet with the assistant manager at our Washington Mutual branch.  I told him we were interested in buying a house, and I wanted to know about the rates for their mortgages, how they were structured, and how we would go about getting pre-approved.  He gave me information about their rates, and he said this: because of the glut in refinancing being done these days, he cannot have us pre-approved in anything less than twelve weeks.  If we had an offer accepted on a property, he could have our loan application processed in twelve weeks, but probably not much shorter than that.  In other words, if we wanted to be pre-approved, we would have to wait three months.  This didn't sound good.  It sounded like we would have to skip the pre-approval step and just make our offer stand on its own.

I mentioned this to my mother Saturday night, who said she would talk with Connie, a realtor that our family has used for years in the Bay Area.  Sunday morning, Connie replied: whoever said it would take twelve weeks must be an idiot.  She had the names of two lenders who could turn around a pre-approval in 48 hours.  One of them even worked for Washington Mutual.  Apparently, it matters who you know.  Since it was Sunday, we figured we would wait until Monday before trying to reach one of them.

Agnes had the name of a real estate agent named Tom, who is the neighbor of one of Agnes' co-workers.  Agnes and Tom had spoken on the phone before, and he seemed like a "pro-active" kind of guy.  He even described himself that way.  Seriously though, he was clear, energetic, and seemed very capable.  I called him up and asked if we could meet.  I figured that it was short notice, and he might not be able to meet on a Sunday if he were already working with other clients at the same time.  He said that he was on his way to some function, but he would be willing to meet that evening.  We set up a time for 7:00pm.

After a lunch of ramen and boba green tea (no milk), I killed some time in the afternoon before going to meet with Tom.  He was the only one in the office, with the exception of his two daughters.  We talked for about an hour, and I was really pleased with him.  He had experience, he seemed to know what he was doing, and he had contacts.  He gave me the names of two mortgage brokers who would be able to find the best rates amongst various lenders, as well as get us pre-approved.  I said we would call them on Monday.  He also dug up a good deal of information about the house that we liked (from the Open House we visited the previous week).  To his eye, the sellers were pretty motivated to sell (which is real estate talk for -- "they seem to be in a hurry").  I told him that I would talk with Agnes, who was still at work, and maybe he could approach the listing agent for us to talk about our interest in the house.

We decided we are interested in possibly placing an offer on the house (yay!), that Tom should talk to the sellers, and that we would try to push things through as quickly as possible.  For a weekend where we didn't expect to make much progress, we feel a lot got done -- we have a real estate agent who can help us find everyone else we need; we have a good lead on getting pre-approved; and that house that we really liked last week seems like a solid possibility!  Next week, we'll write about what has happened since then.

December 22, 2002

It has been a busy week.  On Monday, I got in touch with a mortgage broker that Tom recommended.  Actually, he gave us two names, and recommended that we call both and see who gets back to us first.  He had worked well with both people in the past, but he said that the one who calls us back first may give us better service.  I reached a mortgage broker named Sarah in the afternoon, and told her what we were looking for: 10% down, and financing for the rest.  I also gave her the address of the house we were interested in.  She took down our information and said that we shouldn't have any problems getting pre-qualified.  She wanted to meet up later to get copies of all our financial information so that she could get started on a loan application.  When we delivered our offer, we wanted to be sure we had everything in place for the loan.

On Tuesday, Agnes dropped by to meet Sarah and review the financial information we had put together.  She also met Tom on the same day and they put together the offer we delivered.  We asked for an amount well under the asking price.  We didn't expect them to accept the offer at that price, but we did know that the sellers wanted to sell in a hurry -- in their listing information, they said that they had already purchased a new home.  Also working for us is the fact that few people do house shopping over Christmas.  Our offer would likely be the only one on the table.  We were hoping they would come down in price in an effort to lock in the deal while they had an offer.  The offer was delivered to the selling agent on Tuesday afternoon.  They had three days to review it.

On Wednesday we had a flurry of faxes.  I was off in Atlanta, and I needed to fax a copy of the signed offer to Tom.  Wednesday night, we found that the sellers had read our offer, and presented to us a counter-offer.  The amount of the counter-offer was what Tom had guessed they would do, and Agnes and I had already decided that we would accept a counter-offer for that amount.  Tom faxed me the counter-offer, and I faxed it back with my signature.  We agreed that Agnes' signature could come later in the week, and we would open escrow then.

On a side note, escrow is a process that starts when an offer is accepted, and ends when the sale is final.  In between are a number of activities:

Our escrow closing date is set for January 30th, a Friday.  You never want escrow to close on a Monday because you start paying interest from the previous Friday, even though you don't own the place until Monday.  That's two extra days of interest you would need to pay.

On Thursday, our real estate agent visited Agnes at work to get her signature on the counter-offer, and delivered it to the sellers.  Everything was signed from both sides to move forward with the sale!

On Friday, I was finally back in LA.  I met with Tom, and signed the original copy of our offer, so we didn't need to keep the barely readable faxed copy.  I also signed a number of other forms informing us of the need for a house inspection, the dangers of lead and earthquakes, etc.  At the same time, I met with Sarah, and made some adjustments to our loan application.  I called a home inspector who was recommended by Tom and scheduled an inspection for Monday.  I called our insurance agent and asked him to take care of our home owner's insurance.  And I called our apartment manager, and settled on how we would break our lease early.  All this and Christmas shopping, too.  It's going to be a busy holiday break, but hopefully most things will be finished before I start traveling again in the New Year.

If all goes well, then on January 30th, we officially become home owners, and we'll move in.  Here's a picture of what our house looks like:

January 30, 2003

We officially recorded our purchase of the house! We've closed escrow, we've spent a lot of money, and as our real estate agent puts it, we're the proud new owners of a mortgage.  Obviously, much has happened since the last time we wrote about house shopping.

We've posted more information about the house in the About Us section.  For the most part, things went pretty smoothly.  The two responsibilities we had were to make sure we asked for repairs for everything we wanted repaired before buying the house, and to make sure that we get all of the required money into the escrow account.

We hired a house inspector who went through the house noting things that had to be fixed by law (such as missing smoke detectors), things that are a safety hazard (like a missing handrail on a staircase), and recommended fixes (such as a three prong electrical outlet which is missing a ground).  We took the list of fixes and extracted the ones that we thought were worth negotiating with the sellers.  With each item, they had the option of fixing it, crediting us some money so we can fix it, or telling us that they aren't doing anything about the issue, and we have to live with it.  Fortunately, out of a list of 15 fixes, there was only one item that they refused to do anything about.  The roof over the garage is deteriorated and our house inspector recommended that it be replaced (for about $1,200).  The sellers refused to fix it or pay to have it fixed.  We ended up negotiating over this point for quite a while, and ultimately we decided to take the house without a new garage roof.  It just wasn't something that would force us to walk away from the deal.

On January 28th we signed all of the loan documents, which releases the money from the lender to the escrow account, and on January 29th, we wired the remaining portion of our down payment and closing costs to the escrow account.  On the 30th, everyone was paid and so now we officially own the house (yay!).

In the meantime, we decided we should move in as soon as possible.  Our move date is February 1st and we have everything ready in boxes.  Shane and Anna are driving down from the bay area to help us move.  Hopefully, it won't be too painful.  All of our utilities (water, gas, electricity, telephone, etc) will be on by the time we move in, with the exception of the cable TV and the high speed Internet access.  Those will become available next week.

A friend recently thanked us for becoming home owners which would undoubtedly cause us to spend more money and which, in turn, helps keep our economy going.  We can see what he was talking about.  Since buying the place, we've already had to purchase a refrigerator, and we have a number of other purchases to make this month:

Beyond that, we want to fix the garage roof, buy a bed and a sofa, maybe put in an irrigation system to water the lawn, and replace some plants which have died since we started escrow.  For now though, we just want to get settled in and start enjoying our new house.