# Buying a house: ADVICE?



## jgraeff (Dec 2, 2013)

Hey guys so i think I'm going to be purchasing my first house, a little nerve wrecking. 

Im also planning to ask my gf to marry me within the next year so a lot is happening fast.

I qualify for the loan by myself and will be purchasing it alone. 

However anyone have any advice to lend? What to watch for, or how to handle the closing costs etc, any tips for keeping electric and water bills down?

i have been saving up for a while, even though I'm only 23 i feel I'm ready for this, or at least i hope to be. Its scary seeing all these numbers in front of me. Never even knew about closing costs etc. 

Id appreciate it!


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## boomchakabowwow (Dec 2, 2013)

23?!!

badass! older home or newer home?

no real advice except..find a real estate agent you like. mine found homes and drove me around in her car. nice touch. dont forget, they work for you. and unless you sign something you can move from agent to agent until one clicks for you.

if it is an older home..i got a really old home. if i could do it again, i would have paid the $200 for a company to come and video tape my sewer line. man..it was awful. 

good luck. like you..i bought my home alone, altho i was prep to propose to my GF. a mortgage i could afford alone was a godsend.


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## Johnny.B.Good (Dec 2, 2013)

boomchakabowwow said:


> if it is an older home..i got a really old home. if i could do it again, i would have paid the $200 for a company to come and video tape my sewer line. man..it was awful.



This is good advice. A woman that I work with recently purchased an older home, which she had inspected before signing on the dotted line. A new shower head didn't solve the weak water pressure issue she was having, and two different plumbing companies have told her that she needs to replace the pipe from the city water supply to her house, and all pipes in between! Price tag? $30,000 (minimum). She was practically in tears telling me the story last week. Look at big ticket items carefully (roof, foundation, etc.).


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## toddnmd (Dec 2, 2013)

Actually, the real estate agents work for the seller (who pays them)--unless you are paying the agent out of your own pocket. Good buyers agents will do their best to serve the buyer, but in the end, it's in their financial interest for the sale to go through (whether or not that's in the buyer's best interest).

It's really easy to get loan quotes online. I used zillow and found a new broker a couple years ago (it took just a few minutes to put in the info and start getting quotes). He had the best rates, and great ratings. I was quite happy. I've referred several friends to him as well, and all were pleased.

Good to get a house you can afford on one salary. Get cheap used furniture from craigslist or yard sales at first, then you can take your time to upgrade. You'll spend more than you think furnishing, decorating, upgrading, buying tools, etc. All that is good, but it's easy to underestimate those expenses.


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## DeepCSweede (Dec 2, 2013)

Before you close on the place make sure you get a really good inspector that knows everything about the local codes and make sure they check the place thoroughly, roof, electrical, masonry, plumbing, etc. That could cost you big if you don't. I know a little bit, but I have had good and bad ones and a good one could save a bucketload. 

If you haven't put in your offer, try to get the seller to pay closing costs in your offer to purchase. Many times they don't pay attention and will sign off on it. Also, when you put in your offer, make a contingency that you qualify for financing and also contingent on the inspection - if something comes up in the inspection, get the seller to pay for it or get a credit. 

Regarding the agent - I disagree with the Boomer - They SHOULD work for you, but they don't they work for the commission they are getting from you. The best ones will talk you into the deal and help you overlook issues. It sucks but it is the truth. We have a family friend that is one of the best real estate agents in our area and she totally pressured my wife in closing the deal (but was extremely subtle in the process).

Shop the mortgage heavily. Avoid the big boys unless they give you a great deal but make sure you have them itemize what closing costs are going to be. Also, if you are going to escrow anything, try to close in January or February. In escrow, when you close, you are required to come up with a percentage of property taxes and/or insurance. Depending on the state, they will credit you in the purchase for the sellers share, then you may be required to put the cash in to the bank at closing. Some states will just transfer it from the close to your bank, but check on that ahead of time. If you close in January (assuming property taxes are due for December), you will only need your share of one month.

I may come up with some more, but that will head you in the right direction.


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## jgraeff (Dec 2, 2013)

boomchakabowwow said:


> 23?!!
> 
> badass! older home or newer home?
> 
> ...



this is good advice i was wondering about this, i mentioned it to my realtor and she seemed confident that the inspector would see any potential problems with this. Its an older house built in 1953. I think i will pay to have it done, id rather not have any surprises.

And ya i started working super young actually 10 under the table in the kitchen just a few hours in the mornings during the summer before fishing all day, when i was 12 they hired me to bus, and then at 14 back to the kitchen. I moved out at 17, learned it wasn't as easy as i thought, ended up with a kid and back at home... go figure, but i have been able to save quite a bit and progressed quickly in my career to Chef de Cuisne and now Sous chef at a reputable place. So i have been lucky i am able to live for 5 years with little bills. 

Its time me and my gf move out though, we figure rent will run us about the same as a mortgage, why not put it towards something? 

Keep the tips coming this stuff makes my head hurt thinking about all the $$

Thanks!


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## Chrismit29 (Dec 2, 2013)

Make sure you have a reputable company do the home inspection. Your realtor probably has someone they like to use, ask to see a sample report if you are concerned. It's worth paying a little more for a better inspection. Closing costs Are going to vary by state and some will be dependent upon the lender. If haven't selected a mortgage company already it's worth getting at least 3 quotes. Even if you decide to go with someone local it's worth seeing what some of the larger online brokers can offer. After you've decided on your broker and the loan is in process don't apply for any additional credit unless absolutely necessary I.e your car blows up and you can't get to work on the bus for the next month or two and you are going to lose your job. Seriously new credit apps and loans have the potential to derail the mortgage loan in the underwriting process. Finally, if things feel wrong at any point, even if you're far into the process don't be afraid to walk away. Even if you lose a deposit. It's better to lose a deposit than be stuck with an asset you don't want or can't sell


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## hobbitling (Dec 2, 2013)

Try not to fall in love with a house that has serious issues. Keep emotions out of it. Don't buy on a deadline. Desperation and emotionally clouded judgement put you in a terrible negotiating position and can lead to very bad decisions.

My wife and I _almost_ bought a house last year. We were moving to a new city we didn't know well, I had just gotten my first stable job, we were tired of renting, and It was our first time on the market. We absolutely fell for this old farm house that was perfect, except:... The roof leaked, the attic had rot issues, half the house had been partially remodeled (torn apart and never finished), the basement leaked, it was too far from my job, we had barely enough money to make the down payment, etc... But other than the fact that it was a dilapidated wreck with a bad location that we couldn't afford, it was perfect! And since we were living 10 hours away at the time, we had about a week of vacation to view all these houses with the realtor and make a decision.

At the last minute, some family and friends talked sense into us and we walked away from it. Best decision we ever made. We're renting for a year or two while we get to know our new city and take our time searching and saving.


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## jgraeff (Dec 2, 2013)

DeepCSweede said:


> Before you close on the place make sure you get a really good inspector that knows everything about the local codes and make sure they check the place thoroughly, roof, electrical, masonry, plumbing, etc. That could cost you big if you don't. I know a little bit, but I have had good and bad ones and a good one could save a bucketload.
> 
> If you haven't put in your offer, try to get the seller to pay closing costs in your offer to purchase. Many times they don't pay attention and will sign off on it. Also, when you put in your offer, make a contingency that you qualify for financing and also contingent on the inspection - if something comes up in the inspection, get the seller to pay for it or get a credit.
> 
> ...



Thank you! lots of good stuff here, can you explain the contingency for financing and the inspection? not sure i follow there, are you saying to have it in the contract that if anything in the inspection comes back as in bad, that they will pay for it or issue a credit?


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## Johnny.B.Good (Dec 2, 2013)

jgraeff said:


> Thank you! lots of good stuff here, can you explain the contingency for financing and the inspection? not sure i follow there, are you saying to have it in the contract that if anything in the inspection comes back as in bad, that they will pay for it or issue a credit?



The contingency means you can back out with no penalty if you a) fail to secure a mortgage, or b) see something in the inspection that you don't like. Whether or not a seller will agree to credit you for things that the inspector notes is entirely up to them. I asked for a laundry list of little things, and the seller refused to do any of them! It just depends on the market, and whether or not you are willing to walk away from the deal or not.


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## jgraeff (Dec 2, 2013)

Johnny.B.Good said:


> The contingency means you can back out with no penalty if you a) fail to secure a mortgage, or b) see something in the inspection that you don't like. Whether or not a seller will agree to credit you for things that the inspector notes is entirely up to them. I asked for a laundry list of little things, and the seller refused to do any of them! It just depends on the market, and whether or not you are willing to walk away from the deal or not.



ok makes sense now! Thanks!


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## tripleq (Dec 2, 2013)

^^ DeepC has obviously been around the block a few times. Absolutely great advice. Get the best inspector you can. Research them before you hire. There are good and bad ones. It might seem like a huge expense when looking at a house but the $$$$ you might spend for a good inspection and written report can save you big money and lead to a much more satisfying home ownership experience.


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## gic (Dec 2, 2013)

Definitely look online for the mortgage, then compare it to what you can get from Costco

https://www.costcofinance.com/

between the 2, you are sure to get a good deal - it may be worth becoming an executive member of costco just for this but you got to run the numbers


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## HHH Knives (Dec 2, 2013)

Congrats in advance both on the home and the future wedding!!  LOTS of Great advise so far. I would add, Buy a home protection plan and add it to the deal. There around 500 to 1000.00 and cover many of the things that you just cant see even with a inspection. Stuff like Sump pumps, condenser on the AC unit, If something dont work right after the paperwork is signed. Your covered and only have a small deductible to get it replaced or repaired. 

We just purchased a home built in the 50's and I included this stipulation in my offer. I selected the plan I wanted. and had it written up and ready to go with the offer. Your agent should be familiar with these plans and have options for ya to choose from. 

So far I have not used the insurance. Yet have the piece of mind that when I turn on the AC in the spring. (something I could not really test because of the time of year I purchased) If it doesnt work. BLAM I get a new one. Or if the sump pump or fridge dies. BLAM I get a new ones. etc. This policy was about 650.00 for the things I wanted. and as I said. the seller paid for it for me.  Its a one year policy! 

Blessings
Randy


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## Mrmnms (Dec 2, 2013)

Ask the people your work with if you have any good regular customers in the appropriate lines of work. Regulars like feeling important and valued. A couple drinks and a few apps may get you a lot of help with any questions you have.


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## Orcasite (Dec 2, 2013)

It used to be that you could buy a house and it would appreciate over the years and become a source of future wealth or even retirement monies. The recent housing bubble changed that. One factor that could be useful to think about is that - if you have the skills, or could acquire them - you could buy a fixer-upper and put in the sweat equity that would greatly increase its value - then either trade up to a bigger or better situated house, or simply sell it after five years, thus avoiding any federal taxes on its appreciated value up to $500,000 profit. You could keep doing that over the years and build up considerable wealth by not having to share the increased value with the tax folks. This is a good pathway for a young couple (before having kids) to follow to quickly build up their asset value and get a house more adapted to their exact desires that may presently exceed their cost limits.

Good luck!


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## Craig (Dec 4, 2013)

I have to advise against the home protection plan. Unless you really, really, want the peace of mind, you're almost always better off just putting the money away yourself to pay for contingencies. They generally don't make financial sense, which makes sense, otherwise why would insurance companies offer them?

Given that you're 23, my only real advice is are you sure you can afford a house? Figure out exactly how much your monthly payments will be on your mortgage and don't forget to include property taxes, utilities and I would budget 1-2% of the value of your house to go towards maintenance. It won't be that much every year, but some years it will be more if you have to do the roof or furnace or whatever.

Also, keep in mind that interest rates are historically low right now and that's a situation that won't last forever. If you're on a variable-rate mortgage this could start costing you in a year or two. If you're on a 5-year fixed it could cost you in 5 years. For most of your adult life mortgage rates have been 3% or less, but for most of the 2000s they were 5-7% and in the 90s they were 7-9%. On a 20-year, 200k mortgage your payment is 1100 a month. Will you still be able to afford it if rates go up to 7% and you have to pay 1550 a month?


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## DeepCSweede (Dec 4, 2013)

jgraeff said:


> Thank you! lots of good stuff here, can you explain the contingency for financing and the inspection? not sure i follow there, are you saying to have it in the contract that if anything in the inspection comes back as in bad, that they will pay for it or issue a credit?



What it says is that if you put in an offer and it is accepted that if there are issues with you not being able to obtain financing or if there are issues with the inspection that you can break the contract and walk away. It gives you a legal out if you want out of the deal. Financing would probably be less of an issue because a lot of the time they want pre-approval before accepting the offer (but not always).


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## DeepCSweede (Dec 4, 2013)

Craig said:


> I have to advise against the home protection plan. Unless you really, really, want the peace of mind, you're almost always better off just putting the money away yourself to pay for contingencies. They generally don't make financial sense, which makes sense, otherwise why would insurance companies offer them?
> 
> Given that you're 23, my only real advice is are you sure you can afford a house? Figure out exactly how much your monthly payments will be on your mortgage and don't forget to include property taxes, utilities and I would budget 1-2% of the value of your house to go towards maintenance. It won't be that much every year, but some years it will be more if you have to do the roof or furnace or whatever.
> 
> Also, keep in mind that interest rates are historically low right now and that's a situation that won't last forever. If you're on a variable-rate mortgage this could start costing you in a year or two. If you're on a 5-year fixed it could cost you in 5 years. For most of your adult life mortgage rates have been 3% or less, but for most of the 2000s they were 5-7% and in the 90s they were 7-9%. On a 20-year, 200k mortgage your payment is 1100 a month. Will you still be able to afford it if rates go up to 7% and you have to pay 1550 a month?



My last home purchase had a mandatory policy built in by the real estate company that the seller had to pay for. It really paid itself off in the year that we had it as we had to have a dish washer repaired, replace a double oven and fix washer / dryer. We had to haggle with the insurance company constantly and that was a major PITA but economically paid off. They really tried screwing us on the double oven replacement, but we ended up kicking in extra to get a better model.

I have owned two homes and several duplexes and probably refinanced ten time over the last 15 years, so I am somewhat used to the game, but find that I learn something new every time, so I am by no means an expert.

A couple other things I have learned from my current home. Pay extra attention to how water drains away from the house. We have several spots that leak into the basement that with my next project of ripping out a deck and putting in a patio will be rectified. Also, we are one of the lower houses in our area and I have eight acres of water to the west and about the same from the north that drain around my property and within 30 feet of my house. This requires me to have two sumps and backups on both of them because they get used. Thankfully the backup worked this spring when the main one went out. Another thing I noticed about six months after I bought the house was that the dry-waller did a really crappy job taping and a lot of it is separating now - a simple but very time consuming fix for me in the future. 

If you are buying a 50's house interior walls could be either plaster or sheet rock. If there is wallpaper, feel it to see if you can feel any cracking. My first house was built in 1880 and I wanted to remove the 1960's wallpaper, when I removed it the walls were so cracked that I decided to just paper over it. I also had to sheet rock a ceiling with cracked plaster.


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## jvanis (Dec 4, 2013)

There is some good info in this post, and some other mis-information. I will call out a few things that should be addressed.

1 - Mortgage - As others have said, shop around. Take a look at mortgagenewsdaily.com to get an idea of what current rates you should be finding, then shop around for them, or better yet, you can go through a mortgage broker who will help shop for the best one for you. If you have any special situation, they can sometimes know which lenders can best accommodate (say you get an I9 rather than a W2) As a first time home buyer, you could also look into an FHA loan which can sometimes be a lower rate (and has different rules vs a traditional fixed rate)

2 - Contingency - You can add a contingency on a number of things, but from the seller's side, this makes your offer weaker. I would spend the time to get pre-approved (not just pre-qualified) for a loan, so you can present the pre-approval letter with the offer/Purchase Agreement. Depending on your state, they handle the inspection differently. Some states do not require one and others do. That being said, some states also leave you the buyer, the opportunity to back out after the inspection, no questions asked. (Minnesota is this way, very buyer protected state) A good realtor should be able to relay this type of information to you. 

3 - As a younger first time home buyer, it would not be unheard of to ask for the seller to cover your closing costs (rules vary by state on how much you can receive for this) Just know that this ultimately plays into the final "purchase price" Any realtor that is worth a crap, would see this on the sellers side and make note of it, it will not just "slide through" Unless the seller has a crappy realtor.

4 - Home Warranty - If the house is older sometimes the sellers offer this already as part of the sale, other times you can ask them to provide it. It is mostly a peace of mind thing, as is all insurance/warranty coverage. If applainces are included, you can look to add insurance via the utility companies, many offer insurance for say all gas appliances for only a couple dollars a month. If the furnace is older, it may be worth looking into if repairs are likely. 

There are a number of additional costs which come up as others have said, heck, having just moved into a new home, I have already been to the hardware store a half dozen times for this and that.

Best of luck!


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## Seth (Dec 4, 2013)

After the acquisition: There is always something to fix; learn to do it yourself. If you are not a compete bozo begin to collect a library of 'how to' books and buy good quality tools as needed. Most repairs are not rocket science but do require experience, some common sense including knowing your limitations, and having the right tool. You can always try a repair, then go to plan B and call the contractor, trying not to do additional damage in the process. When you do hire a repair guy, ask to hang out while they work and politely ask questions. If you stay out of the way, most guys will like the company and even like to explain what they are doing.

With zillo and trulia you can do your own little appraisal to help with getting the right price and the agent should be showing you comp properties as well. I think you are on the right track already by asking questions - keep it up until you understand what is going on. See if you can get a sample HUD settlement statement so you can see the typical charges, - and congratulations on entering phase II of life.


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## quantumcloud509 (Dec 4, 2013)

DONT FREAK OUT!!!

Ask people you trust who have bought recently about who is a good home inspector, their mistakes/ fortune comings could save you a ton of money.
Most of the time a rule of thumb in the realty business is "you get what youre paying for".
Make damn sure the furnace and water heater work well. Theyre very expensive to replace, especially the furnace. Trust me your gf/wife wont like you if its cold when its supposed to be warm. Trust me. 
Take the realtor out for a couple of drinks and feel him/ her out. Drunk people tend to spill the truth rather quickly. 
Did I mention to pay for a good inspector? You obviously dont have too much expertice in the area...look for a well seasoned inspector, he works for you. He wants you to be happy. He'll tell you exactly what is a booboo, "a-ok", or something that will go on the "honey-do" list. In the end of the inspection you will get a printed out report of everything...a good inspector knows how much stuff costs and can advise you what works best. 
Remember: youre winning. you got a chick you love and youre about to score a house. Dont get pushed around. Sleep on every big reply or signature you gotta make. Sharpen your knives and dont forget to oil the handles. Cheers!


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## ar11 (Dec 4, 2013)

Lots of good info has already been posted. Just couple thoughts having recently going through it. 

*Financing*, look at what internet companies have to offer. Usually their rates are much better than the big name institutions. In some ways less painful than dealing with someone in person, easy to scan and send data. I used First Internet Bank, but there's several good companies out there. 

*Preapproval *make sure you get it before shopping. Lending rules are pretty strict now, and most online calculators say you can afford much more than you can really qualify for. Unless you have significant excess savings don't buy at the very max of your range. There will always be unexpected expenses that come with owning a home, some very expensive

*Inspection *- get it done right like others have said. Would also strongly suggest hiring a plumber to check pipes with a camera usually $250. Inspectors regular checks won't necessarily catch breaks or leaks in the drain. I actually had rotted pipe under the slab, cost 3k to fix. So yeah - I'll be getting the pipes scanned next time. 

*Do your own homework* - There are good realtors but tons of crappy ones. Through some research you arm yourself with knowledge to help yourself. City-Data is an awesome resource. Also if you know exactly what you're looking for you can use Redfin.com or similar sites to save money. Usually those online sites are partnering with newer realtors who will take a commission cut to start up their business.

Bonus thoughts - home warranty don't do it, waste of money. I had one they are worthless they send subpar labor. Just read online review of home warranty companies for fun. Get a fixed mortgage! I'm a finance guy by trade and this makes the most sense in the longrun. People always say variable make sense if you're going to trade up soon, but life can change your plans and put you in a pickle.


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## 99Limited (Dec 4, 2013)

toddnmd said:


> Actually, the real estate agents work for the seller (who pays them)--unless you are paying the agent out of your own pocket. Good buyers agents will do their best to serve the buyer, but in the end, it's in their financial interest for the sale to go through (whether or not that's in the buyer's best interest).



Find a trustworthy real estate agent. Obtaining referrals from former clients is one of the ways that helps them stay in business, so taking care of a buying client is in their best interest. Besides that how are you going to get in to inspect a house without a agent helping you? You'll have to work with the seller's agent to let you in and you definitely don't want to do that. 

Here's some of my advice:

Make sure the home is not in a flood plain. You can't buy enough insurance to cover flood losses so just walk away from any flood prone property. 

Test for mold, lead paint or any other toxic substances that were once used in building. It wasn't that long ago that lead based paints were all that was used. Also asbestos floor tiles were used in 1000's of kitchens and bathrooms. As far as mold goes, IT'S BAD, BAD, BAD, BAD !!!!!!!!!!!!!!!!! If any is found you might want to walk away. Mold can be contained, but only get involved with this if you really love the place. Remember this though, for every home you really like there will be others you will like just as much. 

Make sure the electrical system has been updated. You'd be surprised at how many homes still use fuses instead of circuit breakers.

Heating and A/C systems. Find out how old the current system is. If it is 10 years or older, figure about $15,000 for replacement. 

Hot water heater. If it's old and it's natural gas look into replacing it with an on demand system. It will cost more to install but in the long run it will be cheaper to operate.

Make sure the house has modern double or triple pane windows. Triple pane windows are only necessary for really cold climates like Alaska, but there's a lot of really cold locations in the lower 48 too.


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## Craig (Dec 5, 2013)

Man, some of you guys have it pretty good. In Toronto, if you include a condition like wanting a building inspection done you may as well not make an offer. Testing for lead paint and mould would be a total non-starter. When I got my place it was basically go look at it at 6 after work, present your offer the next day by 12 or don't bother. Decision by the next night at 8, after they send the top few back for more money.

Plus the average house price is like 600k for a semi-detached like I got. 850 for a detached.


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## Zerob (Dec 7, 2013)

Also don't forget cost to own a home. Gas, electric, water, internet, cable tv, hoa fees....they all add up fast. Your mortgage might be 1500, but add living expenses and u could be well over 2000 a month.

Don't become house poor and leave yourself room to have some spending money and savings too.

Also get a good home inspector. Mine was the president of the home inspectors association. He found just about everything wrong with the house. He gave me a spreadsheet of cost to fix things and priority in which I should fix first. It's worth paying a little extra for someone good.


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