Lessons we learned when we bought our house directly from owner
DISCLAIMER:
Your experience maybe different than ours so do not take this post as your gospel. If anything, be more diligent in looking for houses, and this post is no way discouraging you to purchase DIRECT from seller nor encourage you to do the same route.
Okay, so since the wedding, Reagan and I have been living in my condo for the past few months. Suffice to say that living with someone has it's pitfalls and wins, like I share calories with someone now, I couldn't be too lazy for menial chores because sometimes it gets too much, someone picking up the grocery tab, higher electric bill, etc. But staying here in my place was never a long term solution. In fact, we should have left months ago if it weren't for extremely bad timing.
That Friday of the week of our wedding should have been the day Reagan had to sign for our bank loan papers but had to wait for almost a month just for the bank to get back to us. We were on a bind that time because of the CENOMAR requirement which he cannot provide now since we've just gotten married and due to the same reasons, we had to restart a lot of things since I have just now become a lawful co maker. This brings us to:
Lesson #1. Do not make life changing decisions in the middle of processing your bank papers.
In our case, all the papers are invalid unless my name is also on it as my husband's wife. And make sure as well that you'd know what name (if you're a girl) you're going with. The house title made it seem like I've changed my name to his name but I haven't, and I decided I don't want to. This seems like a problem in the future we have to fix now.
Another thing, one of the requirements is a marriage certificate and we're quite lucky that when we test ordered for one via serbilis we were able to secure it even though we've only been married for less than 3 months.
Lesson #2. Get yourself a legit agent, (like with the license numbers and everything) both as a buyer and seller.
No seriously. Someone who knows what to do and what they needed to do. This has been a huge lesson for us both because the agent we got was clueless on what his responsibilities are. Fixing papers in the middle of the pandemic is hard enough, dealing with someone who fails to know what to do is amazingly stressful. The legit agent I know even laughed on why we the buyers had to deal separately with WHO transfers the title and who pays the CGT to the bank.
We were also unfortunately conned by our agent who repetitively asked us for money whenever he needed and never returned some of our money back just because he felt like it's his commission.
Lesson #3. Moolah. Lots of Moolah.
As the name implies, CGT refers to capital gains tax which means rightfully, the seller must pay for this since they are the ones who have "gained" in this transaction. However, most seller/owners would have their buyers shoulder that so if you are tight on the budget, make sure that when you purchase a property , automatically add 6% of the TCP in your consideration before purchasing. This is a non negotiable tax that you need to pay before the property is transferred to you. You can, however be in cahoots with the seller on how much is the TCP that would appear on the Deed of Sale so you can "save" on the taxes but doing so would require you to either convince the seller to lower their price (which never happens) OR you pay MORE upfront.
Consider having money on how your papers will be processed. It's either you run the papers on your own or pay your agent, or pay someone else. The agent is an excellent choice but if Lesson #2 failed you, then you're on your own. This is an expense that would vary since you have to pay for someone else's time and effort, probably gas allowance and the expenses incurred in the actual transfer. You know how the government works where every request needs you to throw money to? Yes that's the one. And don't forget that some even need bribes to have your papers ready ASAP because not only are you dealing with a skeletal workforce due to pandemic, you're an individual fighting over corporations that sell multiple properties at the same time. Our government unfortunately prioritizes larger projects than it's own people. In short, if you want your title as early as possible, you'll definitely be hemorrhaging money for the entire period.
There's also the case of when you loan money from the bank, you don't usually get your expected amount. In our case, the approved amount is a bit low. We suspect two possible reasons:
Banks are now more conservative than ever that they are not willing to go as high as 80% in fear of buyers defaulting especially in this pandemic.
OR
Worse, the property we got was overpriced by the seller according to the bank's assessment and they feel like the property only is worth x amount.
In our case the difference was highly significant it's not even funny. Yes it results to lower amortization and we're just lucky that we can still afford the required DP. Some buyers with 0 savings have no chance. We were stuck in giving more money up front if we wanted the house. I take it as a lesson that before we commit to any purchase we should consider checking with an assessor first. This would cost money (banks have assessment fees) but this would ensure that we’re not overpaying.
Lesson #4. Make sure you have everything on record.
This is to ensure that the original plans are followed maybe not to a perfect T but as a guide on how both you as a buyer and as a seller can get by. Do not be pressured into changing, let's say the TCP, just because the seller suddenly demands it. Also, know where they live as well so it would be easier to meet up.
Lesson #5 Maybe know the history of the house you're getting and what is actually included.
It sort of pissed me off that we're nearing the end of our process that suddenly the seller raised on how the cove lights are not part of what we paid for, and how the doors and grills in our windows were paid for by the previous owner and now we had to pay for it as well. Later on we were also asked to pay for a kitchen cabinet that is not even modular for 7,800PHP! I was flabbergasted I stop myself from telling her I have no intention of keeping a stupid cabinet that looked like it was made from scraps of wood! I mean, who does that?
Lesson #6 Maybe visit the house from time to time so you'd know how it looks like in different situations.
We're lucky that the seller was honest when the kitchen ceiling garnered stains after a long rain and was gracious enough to ensure to have it fixed. As it turns out our gutter was filled with leaves hence the overflow. We were also able to pinpoint the things we wanted fixed or changed like those small nicks on paint, dirty grout, etc.
Lesson #7 Transfer of papers involves A LOT OF PAPEEERSSSS
This is the first time I learned that transferring the title of the property is not enough especially for banks. Ensure that once the title has been renamed to you, begin the process of transferring EVERYTHING else immediately, utilities and most importantly tax papers. I didn't know that you have to have it transferred as well and again, this would take another long time to finish. Ours took almost 3 weeks before we got all of the papers in order. Check for the MERALCO and water bills and assoc dues if there is, these should be transferred to you and since you only just bought it, the bills should be debt free.
Lesson #8. Really, truly check everything.
When we attempted to live in the house, that’s the only time we noticed things we never paid attention before. Like how some of the tiles in the bath aren’t good, the missing faucet, how some windows are not level to name a few. We only learned about this when we had measurements for blinds and additional window fittings. It’s extremely annoying. If you know expert builders, take them with you, their eyes would be very helpful. If we’ve only noticed it earlier, we would have dragged the price down further because of shoddy work. We could have also required electric plans and latest house plans since both they can’t provide anymore.
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All in all, the experience is probably a 4/10. The house is in good condition but not as good as we both hoped. The ordeal for 6 months was stressful, confusing and time consuming. There are still a lot of stuff we need to fix before we can fully move in (the locks still needed to be fixed for instance, we gave up on the seller fixing this because it’s been months and they still don’t know how to deal with it, same as the other stuff we were hoping to be fixed). Will I purchase another house from an owner seller? Maybe but I will make sure that it will be under scrutiny more than we’ve done this time. Or maybe once I get the chance to sell a property I wouldn’t be as hard to transact with.
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