Hi everyone, it’s Sara Tramp here, EHD’s head of production and in-house photographer. A lot of you might already know me, but what you might not know is that I’ve worked here at Emily Henderson Design for over FIVE years. It’s safe to say I’ve been through a lot with my EHD family during that time (and you have probably been along for a good portion of it).
Early in my career with EHD, I moved back home for a little while and made over my childhood bedroom. Then my boyfriend (Macauley) and I decided to move in together, and we rented our first joint apartment in the Pico-Robertson area of Los Angeles. It was an amazing 1930s Spanish place, with huge windows and beautiful archway details. We shared that with you all by revealing our living room, office and bedroom. Not even a year after that final bedroom reveal, we were heartbroken to lose that apartment to an early morning fire in December of 2017.
The fire completely burned out the apartment below ours and severely damaged the front half of our apartment. BUT we were super lucky. Once the fire department arrived they had the fire out within minutes and were able to save 75% of our apartment from the actual flames. We didn’t lose anything in our office, kitchen or bedroom (and no one was hurt). The apartment itself, however, was sadly very unlivable. Not only was there actual fire damage in the living room, but there was smoke damage everywhere and the floors were ruined from water damage caused by the hoses. All the windows were broken out, and our front door didn’t exist anymore. Structurally, it wasn’t safe for us to live in.
Looking through the photos of what our apartment used to look like, the photos of the fire damage, and remembering that whole morning still gives me goosebumps. But we were safe, our cats were safe, and we had renters insurance (which saved us).
We spent the next few weeks bouncing around couches, making people’s houses smell like cat litter and a disgusting BBQ (because smoke was stuck in all of our possessions). But 5 months after the fire we finally moved into an apartment in West Hollywood. The location was great, but the apartment didn’t feel like home. We lived there for almost a year with a giant pile of boxes sitting right in our living room, unpacked.
Which brings me to the point of this whole post. My parents have been hounding me for YEARS to consider buying a house. I kept them at bay with petty questions like, “how do you expect me to afford one??” Because the idea of buying a house is terrifying. It’s expensive, time-consuming, and a whole lot more permanent than any sort of rental. But once our dream apartment was a partially charred, post-apocalyptic movie set, I started to let the idea creep into my head. And once it was there, I started trying to get Mac on board.
“Let’s just look,” I said. Well, I’ve never been very good at “just looking,” and long story short… now we own a house.
But here’s the long story anyway. I’ll preface this by saying I’m (clearly) not a licensed loan officer, realtor, or fully formed adult. All of this advice just comes from what I remember from our home buying process, and could likely be slightly off or entirely wrong due to the haze one constantly lives in during the process. But the broad strokes are there, and the biggest piece of advice I have for you is just to work with people who DO know what they’re doing. They were our real heroes.
Who knew that the housing market was so competitive? Literally everyone except us apparently, but we were about to find out. We lost out on our first offer pretty early on, and that was only the beginning of a long, painful 8-month search filled with being outbid by cash offers, exhausted by the amount of paperwork each round of offers took, and sacrificing a majority of our weekends during that time to hours of driving around Los Angeles visiting houses that were the size of past living rooms or practically falling apart (aka in our price range).
That’s the price bracket we were in, folks—$falling apart. These places were so bad that the only people we were competing against were developers who had the cash to not only outbid us but also fix the house up to throw it back on the market at double their purchase price. It was emotionally exhausting and wildly frustrating. We never felt like we fully understood the loan process, didn’t feel like our realtor really understood what we were looking for, and around month 7 we were ready to call it quits and try again in another year or so.
But we wanted to give it one last try. We had been feeling pretty lost and uncomfortable with the loan situation for a while, so I decided to try a different loan officer. I asked Emily who she had used to buy her home and after spending 30 minutes on the phone with Andy Green, I felt like I actually understood, for the first time, how we could afford to buy a house. It was eye-opening, liberating, and wildly educational. Not only did I understand what I was looking at when I was comparing house prices on Redfin, but we realized we could actually afford to look at houses in a slightly higher price bracket then we had originally been looking, which ended up making a huge difference.
TIP #1: Understand your numbers, or work with someone who can truly explain them to you. You might be able to afford more than you think…
Switching loan officers to someone who really took the time to break everything down for us was a game-changer, and so much easier than trying to figure it out via Google.
The truth is, we don’t own our house. At least not for another 30 years (if we don’t move or refinance). A loan company does. They fronted the real cost, and we just covered the down payment. Early on, with the guidance of our loan officer, we decided we would be able to cover a 10% down payment. That meant we were responsible, on the front end, for covering 10% of whatever the price of the house ended up being. The rest was up to the loan company. The loan company decided, based on our shared income, credit history, and assets, how much they would be willing to loan us (getting pre-approved really helps you to understand what you’ll be able to afford).
10% still sounds like a lot when houses in Los Angeles County easily cost upwards of $400k. That’s still at least $40k that someone would have to have on hand (and for us, it was just a bit more). And we were on the lower end of the down-payment spectrum. A more traditional down payment is 20%, which I believe is considered “conventional.”
Where did we get this wild amount of money from? A few different places – Years of being fortunate enough to put away money into personal savings, and help from my parents, Mac’s mom, my grandmother, and Mac’s grandfather. It took an almost literal village, and we’re so lucky and thankful for them (thanks guys *big heart eyes emoji*).
But don’t despair if you aren’t able to afford that high of a down payment! There are options for lower down payment amounts, and we seriously considered them. If you’re thinking about buying a house but can’t afford a 10% or higher down payment, you can look into something called an FHA loan, which is “designed for low- to moderate-income borrowers. FHA loans require a lower minimum down payment and credit scores than many conventional loans.” (I got that from Investopedia). There are even home loans out there that can help cover a down payment. The number you actually want to be seriously considering is what your monthly mortgage will be after you buy the house. Our loan company approved us for a much higher loan than we actually used, but using that full amount would have given us a monthly mortgage that we wouldn’t have been able to maintain.
Because we didn’t go with a 20% or higher down payment, we’re currently paying something called mortgage insurance. But it’s temporary, and after we pay off a certain amount (or pay on time for a certain number of years), that will be removed. It’s an extra $80 a month, and it allowed us to fall into a down payment category that we could actually afford. Another thing we realized is the difference between, say $450k and $550k isn’t nearly as big as it sounds, once it’s broken down into a 30-year mortgage loan. That gave us the confidence and ability to shift up in our price bracket (without going house poor right out of the gate). Again, you really just need a loan officer who is willing to explain all of your options to you.
Edit: There have been some GREAT comments from readers who have successfully bought homes with only a 2-3% down payment and an FHA loan. And few people have even been able to lump together the cost of buying the house PLUS a loan for renovations into a single loan, so they have money to fix up their homes once they’ve purchased it (which is then all part of their monthly mortgage). Which could be greatly beneficial if you’re in a lower price bracket and buying a fixer. We didn’t do that (I’ll touch more on our renovation process in the next post), but other EHD team member Emily Bowser did!
TIP #2: Work with a realtor who specializes in your area, who knows the other realtors in that area, and who makes you feel excited to see homes.
Our loan officer also introduced us to a new realtor. We had been working with someone who was super nice. But he wasn’t well acquainted with the area we were looking in, and it just didn’t feel like he knew the market there. No surprise, but you want to be working with a realtor who is familiar with your priority neighborhoods and needs. So on our loan officer’s recommendation, we reached out to L34 Group, and got paired up with Fawn Vu. We met with Fawn on a Saturday morning for coffee and it felt like she could finish all of our sentences. She had bought and renovated a house in an area we were interested in 10 years prior, and every house we mentioned she instantly knew the selling agent, had a good sense of how they operated, and had concrete opinions about whether it would work for us or not.
Now, I don’t honestly know if it was switching realtors, luck or the stars aligning for us, but within a month of working with Andy and Fawn, we were in escrow on our house. Here’s how it happened:
First, Fawn asked us to be super honest with her about what we needed and what we could do without. While I would have been fine with just a driveway, Mac really wanted a garage. Ideally, we wanted more than one bedroom, but decided that for a starter home we could compromise for a single bedroom if the house really spoke to us.
TIP #3: Be really honest with yourself and your house buying partner/s about what you need vs. what you want vs. what you’re willing to compromise on…
Mac and I individually made a list of our top 5 priorities, then cross-referenced our lists with each others and made those shared items our deal breakers. Fawn then took those and used them to help her narrow her search.
TIP #4: Constant Vigilance! (This is a Harry Potter reference, if you were wondering.)
Fawn let us in on a not-so-secret secret. Basically, realtors have as much of a jump on new listing as the general public. Every now and then they might get a pre-market tip-off, but with websites like Redfin and Zillow, they’re generally working with the same information we are. It’s really once you get into the actual wheeling and dealing of submitting an offer that your realtor is going to shine. That being said, Fawn and I were both scouring residential listing sites like starving rats, and sending each other new listings every day. It was exciting to see her as excited as me, and it made sure listings weren’t slipping through the cracks. Which is how we found the listing that would be our future house.
- First, we went and saw the house the day they dropped the price. It had been sitting on the market for a month without much interest. It was in a good area, but needed a lot of work. The key being it wasn’t cheap enough to be attracting developers (our sweet spot).
- Second, we went slightly above the asking price. This is where Fawn really gets all the credit. She had a good recommendation of how high we should go, got a lot of information from the selling agent, and helped us stick to our guns (even when I was feeling desperate and ready to offer more).
- Third, we reduced our contingencies. This part is a little tricky to talk about because it kind of falls into legal issues and really depends on your loan officer and your comfort level, so take this advice with a grain of salt.
When you submit an offer there are all sorts of contingencies, or “second chances” in place that allow you, the buyer, to back out of the sale once you enter escrow. Some of these include a loan contingency (if you’re not approved for you loan, you aren’t obligated to buy the house anyway), appraisal contingency (if the house doesn’t appraise for the amount you offered you can back out of escrow), and an inspection contingency (if, once the house is inspected, you realize there is way too much work that needs to be done, you can use this to back out). What you can do is speak with your loan officer and determine if you can remove any of these contingencies from your offer, which will make it more attractive.
TIP #5: Try and get pre-approved for your home loan, and speak with your loan officer about what other things you could offer the seller (besides going over asking).
For example, we were able to get pre-approved for our loan, which meant we were submitting our offer without a loan contingency. Cash offers are often accepted over non-cash offers because cash offers automatically don’t need a loan contingency. Not having to wait around for the buyer to get a loan approved lets the seller know the money for the sale is guaranteed, likely reducing the escrow period (another deal sweetener), therefore getting the house off the market (and off the seller’s hands) faster. All of that makes the seller feel more secure about the sale going through. No seller wants their house to fall out of escrow or linger on the market for too long. It makes other buyers suspicious, and the house less desirable. WILD RIGHT?! I feel like an encyclopedia of house buying knowledge, but we really just went through a solid crash course of “Home Buying 101” with our loan officer and realtor.
Edit: A few commenters have mentioned things like “please don’t get rid of your inspection contingency!!!!” and I want to be clear that I’m not telling anyone to get rid of it! Those were just the contingencies I could remember off the top of my head, and sometimes there may be a few other options (like covering closing costs for the seller, shortening the escrow period, etc.) that can make your offer more attractive without just offering over asking. It’s obviously very important to get your home inspected. First to make sure you’re not buying a foundation-less termite nest, but also because you can use certain things found during inspection to help negotiate the price of the house once you’re in escrow (negotiating these types of deductions once you’re in escrow is another place a great realtor will be wildly helpful). Our chimney needed to be fixed, so we had someone come out to give a quote and were able to have that estimated cost deducted from our offer.
TIP #6: Take time to write a heartfelt personal statement about what the property would mean to you, address it by name to the seller, and include photos!
Lastly, we submitted a killer personal letter. Now, personal letters don’t always close the deal. If a seller is faced with the best personal statement in the world or $100k over asking, I’ll let you guess which they’re going to take. But if you’re neck and neck with a competing offer, having taken the time to put together a compelling personal letter could make the difference between an accepted offer and another rejection.
Fawn found out a little about the current owner from the selling agent, and let us know her name and how long she’d been living in the home. She also let us know that she spoke very little English, so I wrote out our letter in both English and Spanish. It turned out that the owner was not only Hispanic, but she was Guatemalan which is where my mom’s family immigrated from when my mom was 10. I had written about that in our personal statement and had even included a photo of Mac and I in Guatemala back in 2015 (without ever knowing she was Guatemalan). I consider that our luckiest moment in this whole house search, and I think it may have been the final piece of the puzzle. Here’s a copy of our personal statement:
Finally we got the call that our offer had been accepted, and after what felt like a whirlwind escrow period, we were slightly dazed and confused homeowners.
But the real work was just getting started.
Stay tuned to see how this…
Turned into this…
And to see all the before photos of the house, what it looks like now, and all our future plans – plus more photos of us covered in dirt, holding rat skeletons from our crawl space, and generally looking like we have no idea what we’re doing.