How to purchase a home in a hot real estate market!

Branch NMLS number 33041 Rick Ripma's NMLS number 664589 equal housing lender some restrictions apply. Welcome and thank you so much for joining me today. I truly appreciate you taking a little time on your weekend to listen to my show. This is Rick Ripma, your hard work and mortgage guy and this is Indies Real Estate Gurus. If you would like to talk with me or get a hold of me, if you have any mortgage questions, just go to my website, hardworkingmortgageguy.com. That's hardworkingmortgageguy.com. And all my contact information there, you can even contact me through my website. I look forward to talking with you. Today we want to talk about the market for purchases. It's obviously very, very hot. I think pretty much everybody knows that. But it's been hot for quite some time, there's not a lot of ....... we lack inventory. We have a lot of people looking at homes. So I want to talk about how you go about purchasing a home in a hot market like this. It can be a little different. And, you know, some of what I'm going to talk about is ALL markets. Some of what I'm going to talk about is THIS market. I want to start with the 10 benefits of using a realtor to buy a home. In THIS market, it is extremely helpful to use a real realtor to do that (buy a home). It's always very important. But....People might think it's less important in today's market. It is probably more important in today's market. You know, there are a lot of things that a real estate agent can do. One, they can help you negotiate the tricky process of buying a home. It really helps to have somebody who's done this. They're used to this market, they're very used to this market currently, they know how to walk through it. It makes a world of difference, it makes it so much easier. So it's extremely important that you use a realtor make your life a lot easier. And in tough times, most people are looking to cut costs. So this is when things are slow, they want to cut costs any way they can. And then a home purchase; who wouldn't want to save that extra 3%? That's $3,000 on $100,000 sale price. And that's typically what a buyer's agent makes on a real estate transaction. Most experts think it's money well spent. I agree with that. It's true that anyone can shop for a house. And you can even get a peek inside without formally signing on with a real estate agent. But unless you have time to make (house) shopping a part time job, an agent might be able to match you with the perfect property much faster. Especially in this in this market, because they sell so fast. You really, really need that agent who is watching the market,that knows what comes on the market, knows when it's coming on, may even have the listing come on themselves, so they know it's coming. And they can get you into houses that by the time you as a non realtor trying to do it yourself, get there, that house is sold. You never have a chance to look at it. So in this market, it's extremely important....it just helps you tremendously. Let's say you want a pool or you don't want a swimming pool, or maybe you want a fenced in yard for a dog, or maybe a basement playroom for the kids. If you're looking for something specific, a real estate agent is the person whose job it is to know if there's a house out there that will fit your needs. And he or she will hold your hand through the deal. Let's look at some of the top benefits of using an agent to buy a home. Number 10 Is the ethical considerations. Though not all real estate agents are members of the National Association of REALTORS -- or NARS is what that acronym is. Those who do, join a group that agreed to abide by a code of ethics. That code stipulates that realtors deal with all parties of the transaction honestly. Under the code, the realtor is obligated to put the client's interests ahead of his own and this isthe buyer's agent. He or she is also required to make full disclosure about any problems with the property and be truthful in advertising. The Code of Ethics has some teeth. The local board, governed by the NAR, inforce the provisions. Penalties can include a $5,000 fine, a one year suspension from the Association or a three year expulsion. How frequently this happens is unclear because local boards handle enforcement actions, there are no no national statistics on penalties You know, against real tours are available. That's from the National Association of Realtors. But it is important that you find somebody who you know are going to care about you and work with you and be ethical. I have many agents that I work with. I know a lot of the top agents here in the city. So if you're looking at doing that I can really help you find the right agent. Now the number 10 is the legality part of it or the thing that is important, most people don't think about. Number 9 is their price expertise. This is extremely important. I will talk to a customer and say hey, what do you think you're house is worth? Or they call me (because) they want to they want to refinance. One of my first questions is what do you think the value of your home is today? What do you think it would appraise or sell for, and the vast majority of people don't know. Or they guess, or sometimes they've talked to a realtor and they have a perfect idea. They know exactly what they think it will go for. And that is extremely important. It is important that you don't underpriced or overpriced the home. If you underpriced the home, somebody's going to buy it for much lower than what you should have sold it for. And if you overpriced the home, you're going to probably have trouble getting offers. That's the only type of homes I see sitting on the market, are those that are very, very overpriced. And I have seen a few of those that are sitting on the market.......most homes sell in two weeks or less, or they have a lot of work to be done. And even though homes with work to be done seem to be selling much quicker today than they were, because it's so hard to find a house that people are using their renovation loans to do that. So we are seeing those starting to move again at a decent pace. But the ones that are overpriced, those are the ones that can be very difficult and can take some time to sell. And especially in this market, there's no reason to overprice a home in a market where you get three or four offers, and people will offer you more than you're asking. Your best to is make( price) the home as close to the value as you can, the real value, and then if they want offer more, you can let them do that. And a real estate agent will walk you through that process. They'll know what it should be. They'll know what the value of the property is, they'll know how much you should be asking for it. And if they are unclear, they will get with other agents, they'll talk about it and they'll come up with a value. One of the things I can tell you, when we are not in this market, it's a little different, but in many, many markets- if there's a real estate agent on the sale of the property and on the listing of the property, so the buyer's agent and the sellers agent. If they're on both ends, it's very rare, our appraisals don't come in (as expected) because the agents know what the values are. And they don't overprice them generally, unless somebody forces them to. And they don't normally have you make an offer higher than the value. Today, it's different. Today people are doing that. Let's say that the next one is requesting repairs. So let's say you find a house you make an offer. They accept the offer. But there are repairs that need to be done. You need to know what to ask them to do. For instance, you can have a house that maybe there's some minor things ( that need done). In this market, there could be some minor things, you just want to get the house and the real estate agent will walk you through it. We don't ask for these little things because they aren't that big a deal, and it could kill the deal. They could come back and say no; we're gonna put the bounce back on the market because we've had four offers, or we have a backup offer that will just come in and buy the house and they aren't requiring this. So it is one of those things where with a real estate agent, they can walk through that. It's much more comfortable for most people to have the real estate agent deal with it then for them to deal with it with the seller. It's just a more comfortable situation for most people. So it is easy if you're going to shop for (a house), one falls in your lap, and you don't need an agent, that's different. But for the most part, you're going to be much better off with a real estate agent. If there's work that needs to be done. Now there could be major things. The agent will also help walk you through these major items . They know what needs to be done, how important it is. Again, it's just one of those things- by having an expert, it can make a huge, huge difference and make you feel a lot better. We're going to break, but after the break we're going to talk more about the way to use a real estate agent why you should have a real estate agent to help you buy a home in this market Welcome back and thank you so much for joining me today. I truly appreciate it. And we've been talking about whether you should use a real estate agent, a realtor, when looking to buy a home in this market, or in any market, or really the 10 benefits of using one. I think it's really important, especially in this market, but in all markets, when you're buying a home, to use a realtor, if it's at all possible. Now, sometimes a home will fall in your lap; a neighbor wants to sell it, and you want to buy. Maybe you don't need the agent at that point. Or a friend has a house to sell, you want to buy it, those are times when maybe you don't need the agent. I still think it doesn't hurt, but certainly (there are) times when you can kind of understand why somebody doesn't use an agent. Otherwise, these reasons are, to me, very clear. We talked about the ethical considerations, their price expertise, they know what to offer, they know how to negotiate those pricing. They know how to request and look at the inspection and what repairs should befixed and how to request those repairs to be done through the seller. So it is important that you do that. The next thing, obviously, is they can help you find the available homes. You know real estate agent will most likely know quite a bit about unadvertised homes that you may have missed, which helps you with the search. And when we say unadvertised homes, there could be homes that are close to coming on the market. My son bought a home last year, the area he bought in just happened to be in Chicago. In the area they bought there home, they just kind of tell the agents that are there, they don't list them. They'll pay the listing agent; they'll pay the selling agent, but they don't want to list the house. Because the houses are selling so well. So you can find houses like that, if you work with a real estate agent. You don't generally find those on your own. So you're much better off with an agent. Additionally, they're going to know the houses that have come on the market. And in this market that is extremely, extremely helpful. Because many times, by the time you see a sign out in front of a home, that it is for sale, it is already sold. In this market, that is not unusual. So you really want somebody who's there and can help you. A lot of the homes you can find on websites. You can go out there and look on realtor.com. You can look at Zillow. There's lots of places you can look up homes. But again, by the time they get there, they may have already been sold. I've seen that happen over and over again. It's just amazing, because our market is so so great right now, but it doesn't matter. Even in a slow market, it can be even more valuable because you need some additional tools that an agent has, which we'll talk about here. And a little later. You know, another issue that I've seen is when somebody is buying a house on their own, without a real estate agent, usually a family member, you know, Dad selling the kid a house. Somebody's buying their neighbor's house, something like that. And then you have the paperwork. And I don't know what it is about paperwork, but paperwork tends to scare people. When it's something they don't know how to fill out. Even things that , if we just calm down and look at it, we could fill out very easily. Well, are we putting in the right thing? Are we not putting in the right thing, you know, the date- well so do I put in the day I make the offers should I put in the day that it's accepted......all these things tend to go through our mind; we second guess ourselves and make the paperwork much more difficult. The real estate agent will know how to fill out the paperwork; that takes away that problem. I remember when I got into sales; I actually got into car sales; the first thing I ever sold, I was a used car salesman. I love to tell people, even when I was selling used cars, because everybody looks so negative at the used car salesperson, but I tried to do it Right. And I think most do. It's just a few give them a bad name. I read where the first three sales, a salesperson misses because they're scared of the paperwork. So if you don't train people on the paperwork, they miss the sale. Well, that is the same thing. If you're not comfortable with the paperwork, if the seller is not comfortable with the paperwork, you can actually mess up the whole thing. So you don't want to do that. You want somebody who's familiar with it. You want somebody who understands the paperwork, and the process of the paperwork. So it is extremely important you use a realtor who can help you through that, can walk you through it and make sure that you have the paperwork done correctly and that it doesn't create the stress that it can create. And really it shouldn't, but it can if you insist on doing it yourself. You can. Again, it's not that hard to fill out the paperwork. I've seen it cause a lot of people a lot of stress and feel very uncomfortable that they don't have all of the information correct. Number five is the purple room phenomenon. Aside from the technical aspects of a sale, and the mistakes people can make with the paperwork. Real estate agents know the neighborhoods and the houses inside and out. They know this area. Mendenhall calls it the purple room phenomenon. If a buyer wants a house with a purple room, she says the experienced real estate agent will know the house that's for sale that has that room. In a more general way an agent will be aware of features that don't show as well on the internet. If a buyer is looking for a house with a space that could be used for an office, an attached mother in law's unit or a room that's perfect for showing off a prize grandfather clock. A human agent is more likely to find a match than a real estate website. And that is absolutely true. I haven't looked for houses because I'm not in the market. But I have looked for many other things. And it is amazing how you put in very specific, this is what I want to see. And you get back everything but what you're wanting to see. And an agent may have already walked through that house, they may have gone and seen that house, they may have listed the home, they have agents in their in their office; they may have talked and said hey, I listed the house it has this it has that and they store that, they know that information. So when you go to them and you say I want certain things, they may know exactly where to take you to cut down on the amount of time you have to run out look at houses. And in this market, it's really difficult because if you go through a house- usually now it's an appointment. You go in, you've got half an hour or whatever time, you walk through the house, you leave, and then you may have to make an offer that night or the next day. They're taking offers by this time, they're gonna look at, and then they make a decision. So you don't have a lot of time to make that decision. You want to cut down as much as you can on the houses that you look at. Because you need fortunately/unfortunately, you need to make a decision, you need to make it quickly. I've watched too many people spend weeks and months looking at houses and they can't get anything done, because they aren't comfortable making the decision. Once they've done that for a while then they make a decision, they get the house and it helps a lot. So it is very, very important that you have an agent who can help you through those those timeframes too. The next one is on emotional negotiating. And I know everybody thinks they won't get emotional in the negotiations. They can keep a clear head. I'm that way. I think I can be level headed. And I can stay out of falling in love with the house and negotiations can be unemotional. But it just isn't. It isn't what I've seen for most people. And truthfully, I know it's not really for me, when I buy a car, I know better than to fall in love with a car but I do anyway. It's just, it's just hard to do. So you want that third party who's level headed, who can walk you through it and help you stay on the right side and be level headed, because they're not going to be emotional about it. And if you're fighting with the seller over adding a hose to the dishwasher, because the water drains on the floor, you know, it's just easy to lose your cool. Having an agent write the request objectively and forward it to the sellers, usually to the selling agent, the agent then gets it talks to the buyer. All that works because you've got these third party people who are now the ones doing it and they can calm the seller, they can calm the buyer. They can kind of give people the right direction because they have a lot of experience and they understand what they're doing. So again, it really does help you if you have a realtor to help you through that process. They will have code experience. So they'll have an idea what the codes are in an area, it's important to know about the city codes when buying a house, and your agent should be able to fill you in. If you want to buy a charming little house near a business district and turn the front parlor into a candle store. You need to know if the city is going to allow that. Typically an experienced real estate agent is familiar with the local zoning ordinances to make sure you don't buy the wrong house. The other thing is they they'll also go to the city they'll, find out if it's possible, if that's important to you, so that you know whether you can do that or not. Because you don't want to buy the wrong house. You know, by the same token, if you want to build a fence in the backyard, or add a bedroom, an agent should be able to make sure you're buying a property with the city allows it. Also some cities may require expensive upgrades on older properties when they sell. For example, if a house isn't connected to the city sewers, and a buyer could be required to spend 10s of 1000s of dollars to connect to the property. The real estate agent will make sure that requirement is disclosed before the deal goes very far. So you'd know about it. So you don't buy the house move in and all of a sudden have a $20,000 bill to hook up to the sewer that you didn't expect. And that can be a real shock. And the agents should know about those things. They should be disclosed. But the agent should also know about those things. Most of them do, they will if you're making an offer. They check out the house, they're going to look at it for what you're trying to do. And they're going to make sure that you're actually getting a house that is in the realm of what you can do, what you want to do with that home. So it is, again, another area where-can you go check code and all that? Absolutely you can. The problem is, for most of us, we don't actually know what to check. You can check with the city and check codes. But I mean, there's a lot of code. So you don't know what what might be wrong, you don't know what might not be wrong. You may be a person who does, but most people don't. I worked for a builder. I sat on a plan commission for eight years. And I still don't know all the codes. And I've been off for a while. So I wouldn't know any of the new codes. It's just one of those things that it's it's hard to know what you might need to do. Number 2 is thorough record keeping. Although real estate agents aren't lawyers, they can serve as a good resource years after the deal is closed. In some states, licensed agents are required to keep full files of all documents and all transactions for several years. I just know most of the agents I talked to, they have that information, They keep the information. It's important, they want to make sure they have it at their fingertips if you need anything. Most of them can get the information, if you have anything that comes up, and it just does. It doesn't happen to everybody, but there are things that come up. I get calls many a time, you know, needing something from the title company or something like that. Somebody can't remember what title company we closed at and they need that information. So I'm able to get that information because we keep it. I always can get the information. If it was a purchase, there might be things I don't have. Like I don't necessarily have the purchase agreement. Normally actually, I probably would. But if I don't, I would send you to the real estate agent together, I'd call them myself and see if we could get you what you need. You know, while you may and should keep your files yourself, you can count on on your agent to keep that information organized and safeguards. You know, in case anything comes up, any trouble any property issues come up. You'll be able to contact your agent at any time in the coming years. You should be able to have the questions, they should be able to answer them or be able to look them up and get you the answers. I don't know about you, but I keep records, I keep meticulous notes. That's just how I am. But if they get older and older, and I don't know why I could find a note from 20 years ago, I keep them I keep them all I could find a note from 20 years ago, but for some reason I can't find the note that I needed from six months ago. You know, when somebody calls. That's always the issue. I will find it eventually. But it's one of those things where it just helps to have somebody else with the information in case you can't find it. Now you're saying I don't want Rick, he won't have the information. But like I said, I almost always find (it). I have people call me from 15 years ago and I still have the information in my notes. Generally I know the basics of what we did. Again, if you have any questions or you want to get a real estate agent, you want to start looking at houses, and you want to talk to a top notch, solid real estate agen,t just let me know go to my website hardworkingmortgageguy.com. That's hardworkingmortgageguy.com All of my contact information is there. Contact me from there, you can even contact me from my website, and I'll get back with you as soon as I can. Or you can even call me if I can answer I will if I can't, I will call you back as soon as I can. Number one problem that you can avoid with having a real estate agent is you may not be able to avoid it 100%. But you can avoid it 99%. And that is closing problems. The real estate agents will really work to make sure that at closing everything is already done. There's no surprises. You don't have any issues, you close like you're supposed to and there are no issues. Used to be like on the mortgage and you know we we may not have all our paperwork done until right before closing. So you haven't seen it yet. Now we still may not have all the paperwork done if there's issues and we're trying to meet a date, and it's really close...... But you're going to have the very, very basics three days beforehand, guaranteed, (that) has to happen or we can't close the loan. So you're going to have that three days before you close. Then we're going to update any any issues, any problems, we're going to correct it in that three days. And then there'll be a final closing disclosure. And that normally comes out a day before closing. Sometimes again, there could be issues where it takes a little longer. I'd say 90%, 95% of time, it's a day before closing. You're totally ready, you've wired your funds, you know where you are, everything works perfectly. Once in a while, something happens that it takes a little longer than what it normally does to get that to you. So, it is something that that that can happen. But for the most part, you are going to avoid the closing problems. Now, one of the things, even though it's not the top 10, it's kind of one of the things I think is one of the most important things that a real estate agent can do is when you're out looking at homes, first, they can make it much more comfortable when you go through a home. Because they're used to doing it at somebody else's house, it can feel very uncomfortable. They're there opening doors, making sure you're looking in all the areas, because you don't want to. I sold new homes and I can tell you even in a brand new home, some people didn't want to open the door that was shut. They felt like they were invading somebody's privacy. So I would open the door. And that's what a real estate agent will do. Because you need to see the closets, you need to see the pantry, you need to see those areas. You may not have that issue. But you may and it's just as easier if they're doing it. They're opening it, they're looking at it, they're helping you look at it. And they may notice something you didn't notice. It just one of those things that can be very, very valuable. They'll also help you decide what's the best way to make an offer. There's a lot of

It's price, It's when you're going to take possession of the home, what you're going to do about inspections, those kinds of things. They can help you through all of that. A real estate agent is extremely important in helping you purchase a home. If you have any questions on real estate agents, looking to have one, you know you'd like to hire one and you just want some ideas of who might be great for you. Or any mortgage questions, please go online to hardworkingmortgageguy.com That's hardworkingmortgageguy.com You can contact me from there. And I appreciate it so much. I hope you have a great weekend.