Listen in as Ron Wieczorek shares some exciting news about upcoming changes for Eagle Home Mortgage! Thom and Dave discuss current inventory in the Treasure Valley real estate market and a quickj wrap up of what happened in 2018. They also go over some of the commonly asked questions when going through the home buying process.
Dave Burnett: This is the Idaho Real Estate Buzz. He is Thom Dallman, the co-owner, also one of the associate brokers at Core Group Realty at eXp. CoreGroupRealty.com, that is the website. 208-933-7777, that's the phone number you can call at any time to get ahold of the folks at Core. You have a question about the show, if you have a question about one of the properties we talk about, any questions you may have, you can call Core and talk to those folks there.
Thom Dallman: Please do.
Dave Burnett: It's another great week in the Treasure Valley and-
Thom Dallman: Yeah. A little bit of a snowy week this week.
Dave Burnett: Yeah. I guess we couldn't expect spring not quite yet.
Thom Dallman: Not yet. We have to get through some of this winter weather, I suppose.
Dave Burnett: Yep. Well, let's see.
Thom Dallman: But-
Dave Burnett: 2018, in the books.
Thom Dallman: 2018, in the books, yep. We've got some officials stats and numbers that came out from Boise Regional Realtors about 2018. Just a year end wrap up, if you will which ... Yeah, that was an interesting year.
Dave Burnett: That, it was.
Thom Dallman: Just such an interesting year in the fact that our inventory levels just continue to just decrease and decrease. I think they were reporting that it was 52 consecutive months in a row that the inventory has decreased. 52 months in a row that it just kept decreasing our inventory, which of course has been great for new construction. We talked about new construction over the last few months and how prevalent that has been in the market right now for home sales. Ending with December, the highest percent of sales for new construction versus existing home sales, at 35.5%. So, 35.5% of the sales were new construction.
Dave Burnett: Which means ... and I think it does show as well that our population is pushing to the outside edges because that's where the new subdivisions are going in is out on the outside edges.
Thom Dallman: Yeah, and just nobody wants to sell their home, so they're having to ... The buyers that are moving into town are having to get out there and buy new homes, new construction homes in the market.
Dave Burnett: But the only good news about that, Tom, though is that if somebody is looking to sell their home, maybe they want to downsize. Maybe they're moving out of the area. Maybe they're looking for that change. Now is a great time to sell that existing home.
Thom Dallman: It's a great time, yeah. The existing home sale prices are still really good. We're still continuing the upward trend on pricing. As long as your priced right, your home can sell very quickly. So, I have chatted with several people who are hopefully gonna be listing here in the next few weeks but they're hoping to get their house on the market and get it sold and turn around and buy a new one. So, their hesitation is of course that finding that house first that they want to buy right away because they know that the houses will sell fairly quick as long as it's priced correctly.
Dave Burnett: Before we get into some of the numbers from last year, let me ask you this because you mentioned it. How can I know ... I mean, how do I know that I'm listing the house priced correctly? What do you do for your folks at Core Group at eXp to make sure they get that house priced properly? Because you don't want it too expensive but you don't want to give it away.
Thom Dallman: Exactly. You don't want to give it away, yeah. We do a pretty extensive market analysis when we go to look at homes. We really dive deep into comparing it to other homes on the market that are within the area. Of course, first concentrating on the subdivision. Seeing what similar homes have sold for in the subdivision, that will give you a really good idea and indication. And then we can kind of move out from there and kind of go out to about a one mile radius really looking at the homes that have sold in the last couple months and making sure that they are similar, same square-footage, same bedroom, bathroom, garage sizes. If you have one house with granite countertops, making sure that it's compared with other houses with granite countertops and stuff like that. So, we do a really extensive job when we're looking at pricing homes to make sure we're getting it on the market at the right price. If it goes on the market at the wrong price and too high, you're gonna sit there with no showings and so that's what we usually tell people is if we go in a little bit higher at the top of the market and we don't get any showing, that means that we're too high. So, we're gonna have to reduce the price at some point.
Dave Burnett: And if you get too low, somebody's gonna walk up and say "Sold!"
Thom Dallman: Yeah. There's the potential that if you get it too low, you'll get multiple offers and get offers above your list price and stuff. So, yeah. You definitely don't want to get it priced to low but you do want to get it in there where you're getting a couple offers and having them compete against each other.
Dave Burnett: So, that's what it really takes, working with an agent who's knowledgeable, with a company that's knowledgeable and able to do it. Not take Uncle Bill's advice of "Well, the guy over there, he sold it for that. You could too."
Thom Dallman: Exactly. Exactly. We've run into that where people have said "You know what. So and so down the street just sold their house for much, so I think I should be able to get this much." It's a bigger house and not quite the same-
Dave Burnett: Different house, different circumstances.
Thom Dallman: Exactly. So, super important to really talk to us about it and let us do our job in evaluating those homes.
Dave Burnett: Some of the other numbers from 2018 we're looking at?
Thom Dallman: Yeah. So, let me see here. While our inventory was going down, the medium price points have been going up for all the areas, actually, Ada, Canyon and Jim County. So, we had a 17.2% increase in medium sales price for existing homes in Ada County, which was a huge increase over the year before. We've talked about just the medium home prices kind of continuing to go up. December actually saw the medium home sales price, that 324950 which was just slightly above what it was in November. Overall, in the whole valley when you look at all the numbers together over 2018, the average price was about $3.14 from taking the numbers from the beginning of the year to the end of the year. So, $314,000 which was a significant increase from 2017. It was an 18% increase from 2017, so pretty substantial increase in home prices.
Dave Burnett: For an old-timer like me, I've been here forever. That's like oh my goodness, this is crazy but the reason the growth continues here and I know part of Montana, other areas that continue to grow, is that that is still, on the nation scope, extremely affordable.
Thom Dallman: Still. Still super affordable compared to other areas when you're looking at the nation and other areas like California, Chicago and you get all these just ...
Dave Burnett: The Seattle Area.
Thom Dallman: Yeah, Seattle Area. All those .... Portland, we just did a trip up to Portland and looked at a few houses up there just on a whim and it's amazing what you can get here for the price of a home up there.
Dave Burnett: That's all it takes it to go do that and suddenly you realize why people are moving here.
Thom Dallman: Exactly. Exactly. So, yeah. Super affordable. Obviously, rates are still good even though they're sneaking up and stuff. We'll have to ask Ron how the government shutdown is affecting out alone rates and stuff but as of right now, I have not seen any indication that it's changes, so just kind of a final thought on inventory, we talk about the inventory, about the month supply of standard healthy market is four to six months of inventory. That means if not another house gets listed, we run out of homes to sell in four to six months. For Ada country, for existing home sales, we only have a .9 month supply. So, less than a month supply of homes. So, if another person decided to list their home, we'd run out.
Dave Burnett: Just lower. Three weeks from you, you can-
Thom Dallman: Just a little bit over three weeks, yeah. On the reverse side of that, we have two months inventory of new construction. Once again, we have lots of inventory out there for new construction. So, if you're in the market for upgrading your home, reach out to us. We have some great new construction options out there for people.
Dave Burnett: And speaking of new construction, I wanted to point this out. I saw an article this week that ... Ron has talked about the fact that this areas's gonna be perhaps a little bit insulated. Things continue to grow. Have any kind of a slowdown and I know Kuna City Council, that approved a new area of growth and impact out near falcon crest golf course. There could be 2000 homes. A lot of people ... There's people out there very upset about it going no but that's a lot of homes.
Thom Dallman: Unfortunately, it's inevitable that we're gonna grow as a city . As much as we'd like to keep it small and hometown, we've got people just migrating this way and wants to come for the cost of living here and the affordability and everything. So, I think we're just gonna have to get used to it. As they see this ... Yeah. All thee farmland getting bought up.
Dave Burnett: And the big impact, obviously if you're talking about subdivisions that side are the road and schools, utilities, water, all of that has to go in and I would assume that the planning and zoning out that area, they did their due diligence to see-
Thom Dallman: Exactly.
Dave Burnett: And by the way, all those homes is not one fell swoop. It is over a period of time.
Thom Dallman: Oh yeah, I'm sure. Yeah. The subdivisions usually get built out that way over time.
Dave Burnett: Yeah. Over the course of time, it's pretty tough but the good news is Meridian Road out to Kuna, it's already wide, a lot of lanes.
Thom Dallman: It's cool. Yeah, exactly.
Dave Burnett: So, it can handle the-
Thom Dallman: Exactly. And you know, the growth to ... just doesn't only pertain to the homes. Homes as well but we're getting businesses coming into the valley that are bringing jobs and bring people with them too. I think I just ... Was it Amazon that's getting a new center open in Nampa and stuff. So, yeah. We've got ... I mean, the growth is not just with people moving in. There's actually jobs moving into town too as that's helping the economy and helping our unemployment rates as well.
Dave Burnett: And that is a good thing.
Thom Dallman: That is, yes.
Dave Burnett: I do want to remind you if you're thinking about selling your home, now really is a great time to sell that existing home and you can give the folks at Core Group a call at 208-933-7777 and sit down and talk with an agent. There's no obligation to sit and talk with somebody, is there?
Thom Dallman: No. No. No obligation at all. That's what we live for. We live to just meet with people and tell them about the industry and what's happening out there and get them prepared. So, I'd love to do an in-house consultation, get you set up with some ideas for getting your house ready for spring. Spring is right around the corner.
Dave Burnett: Believe it or not, it is.
Thom Dallman: It's a good time to start kinda thinking about those small little projects that you can do to get it ready for sale.
Dave Burnett: 208-933-7777. That is the phone number at Core Group at eXp or you can go to the website, CoreGroupRealty.com. Check it out. Find out why they say you get more with Core.
Dave Burnett: This is the Idaho Real Estate Buzz. He is Thom Dallman, the co-owner, also the associate broker with Core Group at eXp. Give them a call today 208-933-7777 or go by the website, which is CoreGroupRealty.com.
New name, no not for Ron, Ron's got the same name.
Thom Dallman: Ron's got the same name ...
Dave Burnett: But your company has changed hands and has a brand new name.
Ron Wieczorek: We do, and I'm excited to announce that Eagle Home Mortgage company was bought by Movement Mortgage, and I'll give you a little background about what went into the acquisition and why, and why we're excited.
Thom Dallman: Mm-hmm (affirmative).
Ron Wieczorek: So Eagle Home Mortgage is owned by a parent company which is Lennar Homes, and Lennar Homes is, at its core, a home builder, and that's where they've made their money. That's where they went public. That's where the backbone of their business.
They launched off a mortgage company originally and it's still in place to help facilitate the homes they build to give them a place to finance and maybe double dip in that process, and then came the retail branch, and that's the branch that I'm in.
So, I've never touched any of the builder loans. None of my colleagues have touched the builder loans. They don't even have an office in Boise. But, when that retail branch came alive, it was just added income. It was a good venture for Eagle Home Mortgage.
Well, let's fast forward to the past couple years, and we all see a lot of things going on in the mortgage industry. I'm in tune with it. Maybe others aren't as in tune with it, but with the added regulations with what we call margin compression technology and how they build it to be competitive, the cost to do a loan was, and I think I've talked about it on this show before, the cost to do a loan nationwide is about $7800-
Dave Burnett: So, there's not a lot of profit.
Ron Wieczorek: Not a lot of profit now, especially if that's not your focus. If your focus is to build homes, and now you have a channel that was largely profitable, and now is just slightly profitable, you kind of say, "Hey, if we shed that weight, we can reinvest that money that we're tying up in these retail offices around the U.S., and primarily the Pacific Northwest, into just our core business. Let's get back to basics."
And there was some change in leadership at the top, some retirements that kind of spurred the new leadership to say let's take a really look at where our money's going.
So long story short is once we were on the market there was about eight or nine buyers that were really interested in making offers, and making offers more than Movement made. Movement was very attractive to a lot of the top sales associates across the Pacific Northwest because we were looking ... when we're being bought as a mortgage company, and anyone in sales, you don't have to stick around with the company that buys you.
My phone is just a lot, a lot of recruiters, a lot of opportunities and a lot of people saying, "Hey we know what you did with Eagle," and not just me, just a lot of my colleagues. So, when that happens, what are you buying at that point? Are you just buying computers?
Thom Dallman: Are you just buying a name?
Ron Wieczorek: Right, so Eagle was gracious enough to involve a lot of senior leadership into the acquisition which is unheard of. Typically they hear as we hear at certain levels. So they saw the marriage that Movement lined up with a lot of our ideals, our business model, and where a lot of us were looking at to go if the wrong buyer was the one that ended up buying it.
So, when Movement was the one that made an offer and it was quite lower than other offers, and I don't know the numbers because it wasn't disclosed, but they saw that a lot of the assets were gonna stay in place. My management's still the same. Everything in my world is still the same. My team's still the same. It's just gonna be a company that has rates that are a little bit better.
Dave Burnett: So really in the mortgage industry, assets really are people.
Ron Wieczorek: Has to be.
Dave Burnett: It's not just the stuff, it's the people-
Ron Wieczorek: Some of it is just the stuff, but the stuff is data, and they can get new stuff and they're not gonna pay a premium for the stuff. They're paying for the people, and that's what, luckily that saw that and we don't have to leave in the middle of the night, which I was afraid if the wrong company were to buy us, that ... no one leaves in the middle of the day apparently. You have to leave in the middle of the night. If you're gonna leave, you're leaving in the middle of the night.
Dave Burnett: I guess so.
Ron Wieczorek: So that scared me. I've been in two places in my 17-year career. One for 14 years, a little under 14 years, and Eagle now for a little over three, so change is not my ... moving is not my thing. I was very, very excited that this was the marriage, this was the partner.
The leadership came out last week and, man, I've been gushing about them since. I'm just so excited for the change because they just line up with everything that we hope for and they have a bigger menu of products. The rates are a little better, and their marketing is maybe 100 times better. They're in 2019. I was not in 2019, so I'm very excited where that ... pushing me out of my comfort zone of that, so it's a good fit. Movement Mortgage.
Dave Burnett: Movement Mortgage. So if you're gonna google it look for Movement Mortgage and find it that way. By the way, I need to say this, Movement Mortgage, an equal opportunity lender. Gotta get that legality in there as well.
Let's talk a little bit about ... we were talking earlier this morning, Thom and I were about 2018 a little bit, and you mentioned as you came on the break before we started, interest rates went up, what, four times last year in 2018?
Ron Wieczorek: Yeah, so that's the overnight lending rate. That's what we see when we pick up a newspaper or see a feed of saying the Federal Reserve increased the overnight lending rate, and that has a trickle down effect. That doesn't always affect mortgage rates directly. And what usually happens when the fed increases the rate, a lot of it has to do with the anticipation. It's almost like the stock market.
If you have earnings in mind for a certain company, and they beat the street, then stocks go up. If they're less than the street, stocks go down, and if they're even keel, it's what we expected, they don't do anything.
So every step of 2018 the anticipated four increases. We were prepared for that. So every time the rate would increase, that was already baked into the rates because we knew that was gonna happen.
Dave Burnett: In part because as you've explained in the past and I've come to understand is, they kind of give hints in the way they talk about what's going to happen at the next meeting.
Ron Wieczorek: Yeah, if you're a huge nerd like me and you read the minutes after the fact that they need, and kind of look for some of those key words that they'll talk about, and sometimes it's subtle, sometimes it's not so subtle, and they do, they give indicators of what we're going to do next time.
So the four increases in 2018, now we're at 2 and a half percent for the overnight lending rate. That's what prime's at. That's not what mortgage rates are at, but that's what banks give other banks to borrow money overnight. Before that increase, and our president's been very, very vocal about his dismay with the increase in rates, 'cause he feels that the economy's now at a point where he doesn't want anything to disrupt it, he wants to keep it going.
Thom Dallman: Keep it on a plateau where it's at.
Dave Burnett: Yeah.
Ron Wieczorek: The problem with that is, if it goes too strong and too hard, it's like running an engine on a car, it can overheat, and if it overheats, then you're looking at ... and that's what the Fed's really trying to prevent is the engine from overheating.
Dave Burnett: Inflation.
Ron Wieczorek: Inflation, right. So he comes ... right before their meeting, and I have a quote from him or a tweet from him, he says, "It's incredible that with a very strong dollar and virtually no inflation, the outside world is blowing up around us. Paris is burning. China's way down. The Fed is even considering another rate hike. Take the victory." That was right before that meeting.
Well, they ignored that, and they're supposed to ignore that because they're not into politics, they're into doing their business as the Federal Reserve. The reason I mentioned the Trump quote was because he might have been on to something in hindsight.
We fast forward to January 3rd, and now the Federal Reserve, we had a steep dip in the stock market, we saw some slowing in the global growth, weakness in interest rate-sensitive industries, and tightening and financial conditions, has all kind of hit us right after the holidays, and it's coming on a lot of people's radar.
So, we talked about ... what the market was anticipating was three rate hikes in 2019, and now the street is backing off that considerably to where, it depends what outlet you look at, but some are saying no rate hikes in 2019-
Dave Burnett: At all?
Ron Wieczorek: At all. CNBC, there's a report from CNBC saying that there's less than a 10% chance that there's gonna be a hike before the end of the year.
Dave Burnett: Interesting.
Ron Wieczorek: So it's always a moving target. Go ahead Thom, I see you-
Thom Dallman: Well yeah, 'cause you made a comment once in the middle of the summer last summer about the reason that the Fed is raising rates and why interest rates need to go up is because they have to somewhat anticipate a little bit of that slowdown or that economic crash that could happen, like what happened in 2007 and '08.
And so my question, or my concern would be if they don't raise rates, and we do have this turnaround that seems to be on everybody's radar for 2020, what do you predict could happen? Throwing you a hardball there.
Ron Wieczorek: I think as these new numbers come out, I think they're more pulling the reins back, and it is a fluid situation. I mean, just 'cause we anticipated four last year and three coming up, now we have a chance to look at numbers, and I say we, I'm no part of it, but there's a clean slate and you have to look at each situation differently each time.
So now they're looking at the ... when they were raising the rates before, steamrolling the market, steamrolling the market, stocks were up. I mean, if you got a recent 401K statement, at the end of the fourth quarter you saw a massive chunk of your wealth that was not there anymore.
Dave Burnett: Yeah, probably a good idea not to look at it.
Ron Wieczorek: Yeah, if you do look at it, stay away from maybe high bridges, tall buildings, anything like that.
Thom Dallman: Don't panic.
Ron Wieczorek: Don't panic. I just remind myself I'm in it for the long run when I see that. And then when it goes up I'm like, "Yay," so I try to be happy either way.
But to answer your question, I think it's just they anticipated it keep going, keep going, keep going, that's why they pushed the rates up, and now that it may be we see a little bit of a slow down, they're like, "Okay, we'll reanalyze." That's their job. That's the way to do it is to reanalyze it every step of the way to see where we are at. Are we comfortable in doing this right now?
Dave Burnett: Ron with Movement Mortgage, I do wanna say this before we close this out, even though we're talking about rates and rate increases, still incredible rates out there for getting a home.
Ron Wieczorek: And that's part of what I was gonna say is historically we're still really, really low. Actually there's been a reprieve, with this downturn in the markets, that is made rates come off a little bit, so we saw that since Trump was elected, rates have gone up over a point, maybe a point and a quarter, now maybe we got a quarter back. Not a football quarter back.
Dave Burnett: Well if somebody wants to call you, Movement Mortgage, to find out more about getting a home loan or finding out what's going on, you don't have a crystal ball, but you can kind of tell them where we stand right now, how do they get a hold of you?
Ron Wieczorek: Yeah, you know, we always game plan and we always kind of look at every individual as different. Everyone's plan is different, and we just analyze it and say, "Hey, this is probably what's best for you right now. This is the game plan moving forward," or "You're better off than you thought you were." I see you looking at the clock. Nothing has changed, even though the name has changed. Movement Mortgage. My phone number's still the same. My cell phone is 208-869-9154.
Dave Burnett: Ron, thank you so much. Movement Mortgage. Make note of that if you're going to be looking into getting a loan. Of course you can always go to the website CoreGroupRealty.com. Look for the service providers, and it's Movement Mortgage. I'm assuming we're gonna get that changed on the website.
Thom Dallman: I'm assuming so.
Ron Wieczorek: February 1.
Dave Burnett: February 1. Very good. 208-933-7777, that's the phone number over at Core Group at eXp, can always call and get the number there, or go to CoreGroupRealty.com, one of the sponsors of this program, along with the folks at Movement Mortgage, equal opportunity lender.
We'll continue on the other side. It's the Idaho Real Estate Buzz.
Dave Burnett: This is the Idaho Real Estate Buzz. He is Thom Dallman, the co-owner, also the associate broker, at Core Group at eXp. (208) 933-7777, that's the phone number to call, or you can always go to CoreGroupRealty.com.
Thom, one of the things that I love going into is the fact that, for most of us ... See, you deal with real estate day in and day out-
Thom Dallman: Day in and day out. I live, sleep, breathe, eat it.
Dave Burnett: I can count the number of real estate transactions I've made on one hand.
Thom Dallman: Oh, yeah.
Dave Burnett: And most people are that way.
Thom Dallman: Most people are like that, yep. Unless they're flippers. Unless they're the Gaines family and they're out there flipping property and-
Dave Burnett: So there's a lot of terms, a lot of questions, a lot of things about real estate, that for me, the average guy, is just foreign. Or it's something we may know, but don't really know, or like to pretend we know but we don't. But you've come up with a list of some of the most common questions about real estate.
Thom Dallman: Yeah, I thought for today's next couple of segments, we'd go over a few of those things. I know over the last couple of years that we've been doing this radio show, we've kind of brought up this topic here and this topic there, we kind of talk about these subjects off and on. But it's nice to have it all in one list. One good list that I'm going to have my staff put on the blog site on CoreGroupRealty.com, so that we can have it out there for people. The quick "Frequently Asked Questions," if you will.
And of course, the very first question that everybody always asks is, "What's the first step in the home-buying process?"
Dave Burnett: Okay.
Thom Dallman: They're doing all of this. Can you answer that?
Dave Burnett: What is the first step in home-buying process? After doing this show for a long time, what I think it would be is, get pre-approved.
Thom Dallman: Pre-qualification. Get yourself pre-qualified. Good job.
Dave Burnett: All right.
Thom Dallman: Something sunk in there, after doing this for so long.
Dave Burnett: I would not have answered that way before I started doing this show with you.
Thom Dallman: Uh-huh (affirmative).
Dave Burnett: I found out through you that, really, if you're going to go out shopping, you need to know how big your purse is.
Thom Dallman: Yeah, yeah. It's the most important part of the process because, for many reasons ... A, it lets you know how much you can afford in a house, so that you're not looking at houses that are outside your spectrum of what you can afford, and then you get yourself broken-hearted.
Dave Burnett: Yeah, I was going to say, nothing's more disappointing than to walk in and go, "This is fantastic."
Thom Dallman: Right?
Dave Burnett: Well, you can't afford it. Congratulations.
Thom Dallman: Exactly. And it also helps to know, the secondary part of that is that it helps you to know how much money you need to put down, because there's a down payment that you're going to need, depending on which loan type. It's going to help you to know what your monthly charges are going to be, monthly rates are. And it'll help you understand that maybe now is not the right time for you to buy a house. A really good lender will go through this pre-qualification process with you and identify things that can help you get yourself prepared for home ownership down the road and being able to afford that loan. Getting certain credit cards paid off or loans paid down and whatnot before you actually take on the responsibility of a full loan.
Dave Burnett: Well, let me ask you this-
Thom Dallman: Pre-qualification is one of the most important parts to start with.
Dave Burnett: Even before I walk into Core Group at eXp, I could go and get this done?
Thom Dallman: Yeah. Oh, yeah. Yeah.
Dave Burnett: Okay. Is it something your agents tell them? I'm walking in going, "Yeah, I want to buy a house." I'm assuming one of the first things out of their mouth is-
Thom Dallman: "Are you pre-qualified?"
Dave Burnett: Yeah. So you want to get that-
Thom Dallman: Yeah, and it's really super important, especially right now in this seller's market, where multiple offers are still happening on certain properties. You want that pre-qualification letter, because more than likely, the other offers that are being submitted have that loan behind it. It shows that you're really earnest and that you're really qualified for the house and dedicated to purchasing it if you're already pre-qualified.
Dave Burnett: Yeah. And while that may only take a day or two to get qualified, you may be behind the eight ball and late.
Thom Dallman: Exactly. Very much so. It just happened this week, I had a client reach out to me to go look at a house, and we scheduled an appointment for the next day and then got a phone call that morning that the house accepted a contract overnight.
Dave Burnett: Sold.
Thom Dallman: So it's happening fairly quickly still, with the low inventory and stuff. Pre-qualification's super important, that's the first part of the home buying process. I know a lot of people like to get on the internet and start looking at homes right away, which is fine, you know, go to CoreGroupRealty.com, hit our home search site and go look at properties. Just be realistic about understanding what you can afford and get in touch with a lender so that you can get that pre-qualification and understand where you're at in the process.
Dave Burnett: Okay, so getting pre-qualified, that's the first step you want to take. What's number two on your list, there?
Thom Dallman: Pre-qualification. Number two is, let's talk a little bit about the home buying process itself. A lot of times people ask, "How long is it going to take me to get a home?" Once I go and find a property and whatnot, how long does it take? The usual escrow from the time of the contract getting accepted to closing is between 30 and 45 days. It kind of depends on the loan type. Cash purchases can happen a lot quicker than that, usually those are about two weeks out. But typically, it's between that 30 to 45 days for the whole process.
You still have the timeframe of looking for a house, and that can be anywhere from a week to-
Dave Burnett: It depends on you.
Thom Dallman: Yeah, it depends on you and how much you want to go look at homes and stuff like that. That's actually one of the questions on the list is, "How many homes should I look at before I purchase one?"
Dave Burnett: That's a good question.
Thom Dallman: And there's no answer to that. I've had clients where I've showed them three houses, the third house they fell in love with, then wrote an offer and bought it. I've had clients that I've showed 50 houses to, and it was finally that fiftieth one that they looked at that they fell in love with.
Dave Burnett: Let me ask you this question though, Thom. As a seasoned real estate agent, can you tell, when somebody walks into a house and they have fallen in love with it, can you tell?
Thom Dallman: Yeah. After the amount of time that I've done this, yes, I can tell now.
Dave Burnett: Is it body language, or is it-?
Thom Dallman: It's a body language, it's the oohs and the ahhs of, "Oh my gosh, I really love this, I love that." It's one of my favorite parts.
Dave Burnett: "Oh, that's nice."
Thom Dallman: Yeah. That's one of my favorite parts of the processes, when you actually walk into that perfect home for your clients and they see it, they recognize it, and see that look on their face of, "Oh, this is the one. I love it."
So yeah, yeah. It doesn't happen for everybody, but it does happen a lot of times, so-
Dave Burnett: So how long it takes really depends on you, what you're looking for, and what kind of personality you have. If you want to turn over every rock, or if you're just happy to go.
Thom Dallman: I was one of those people. I was not a real estate agent at the time, but the very first time that I ever bought a house, we literally went through probably 50 houses before I found that one, because I wanted ... It was going to be my first home purchase, it was going to be that perfect house with just everything. It had to be unique, it had to be really close to where I was working at the time and stuff. I get it, I get when people want that specific property. That's why I coach my agents and I work with clients and say, "As long as it takes to find you that perfect house, we'll work on it and get you out there and find it."
Dave Burnett: So for your agents, they have to really learn to read the person to know what to expect.
Thom Dallman: Exactly, exactly.
Dave Burnett: Okay. And try to fulfill that.
Thom Dallman: One of the other terms that's getting thrown around a lot this last year is seller's market versus a buyer's market. There's actually something known as a stratified market that we don't really talk about.
Dave Burnett: I've never heard of that one. I've heard of the other two terms.
Thom Dallman: So, just starting with the seller's market. With the low inventory and not a lot of houses out there for sale, that's when it becomes a seller's market. Sellers can somewhat dictate how the transaction goes, because they kind of have the power. There's not a lot of inventory, there's not a lot of options for the buyers. So a seller's market means that the ball is in the seller's hand. They have kind of the power when it comes to negotiating, a lot of times.
Dave Burnett: So there's three houses for sale, ten buyers, it's a competition.
Thom Dallman: Yeah, exactly. So, more than likely, they're going to have other offers. So if you're not willing to play ball and step up to the plate, they're going to go with another offer, go with someone that will.
Dave Burnett: And right now, we are in a seller's market.
Thom Dallman: We are in a seller's market, correct.
Dave Burnett: So the opposite would be true for the buyer's market.
Thom Dallman: For a buyer's market, yes. That's where we've got lots of inventory, you have lots of options. You can go out there and write a contract on any home. Homes aren't selling. We have the surplus of inventory, so going past that four to six months' inventory of supply that we talk about. Yeah, there's just a surplus. A buyer can go out and just point a finger and find a house for sale that they want to write an offer on. That's kind of the opposite side of the spectrum.
Dave Burnett: Okay. What is that third one you mentioned, what is that?
Thom Dallman: Stratified market. A stratified market is where it's a seller's market in a certain price point and a buyer's market in another price point. So, not unlike what's kind of happening in the Treasure Valley, where it's almost impossible to find anything under $300,000 right now in the Treasure Valley. It's definitely a seller's market in the under 300 category, price point, because there's just not that much inventory. But, in the inventory that's above $300,000, there's a lot more inventory out there, a lot more available. Not a lot of buyers that can qualify for that high of a price point or want that much. So it tends to kind of be more of a buyer's market, because there's more inventory and stuff. A stratified market is where it's kind of a little bit of both, where they have that price point differential that's happening where it's a seller's market in the lower and a buyer's in the higher.
Dave Burnett: So if you're trying to buy a house in the subdivision, in the Valley, it's going to be a competition getting out there.
Thom Dallman: Correct.
Dave Burnett: If you're looking at a million dollar house up in the foothills, well, a little bit easier.
Thom Dallman: You're not going to have a lot of competition. Those tend to stay on the market a little bit longer than usual.
Dave Burnett: And you said that's a strati ... What is it?
Thom Dallman: A stratified.
Dave Burnett: A stratified market.
Thom Dallman: Stratified market.
Dave Burnett: Okay, that's a new term for me.
Thom Dallman: Yep, and it's not one that's used very often, because we don't really have stratified market places that often you could say so.
Dave Burnett: We have time for one more.
Thom Dallman: Okay, let's get one more in. One of the biggest questions. "How much do I have to pay an agent for finding me a house?"
Dave Burnett: Aha.
Thom Dallman: You don't pay us.
Dave Burnett: What?
Thom Dallman: Technically. The buyer does not technically pay the commission to the buyer's agent. Typically it is paid out of the seller's and the proceeds to the seller, out of their proceeds from the house sale. When you're working with a buyer's agent out there to purchase a home, you typically don't have to pay the agent anything. They get paid out of that commission from the seller. There's no fee associated with that.
Now, there are some companies that do charge transaction fees and little fees here and there, so that's why it's really important to check with your agent and make sure that you're finding that good agent that kind of fits what you're looking for.
Dave Burnett: But to use the excuse, "We can't afford to buy a house right now, honey, because we can't afford a real estate agent," that's not the case.
Thom Dallman: That's not true. That's not the case.
Dave Burnett: That is not the case.
Thom Dallman: Now, on the seller's side, that's where the discussion comes, because that's where we talk about commissions and how much it costs to sell a house. That's where the commissions come from, and the commission discussion comes into place, is with the sellers. The houses are priced to accommodate that commission and pay the cooperating broker that brings the buyer.
Dave Burnett: All right. We're going to take a quick break, and when we come back, we're going to talk about a few more of these commonly asked questions about real estate. I can answer this for you. If you want more information, you can go to CoreGroupRealty.com, that is the website where you can go 24/7, or you can give a call, (208) 933-7777. That is the phone number to call if you have questions or want to know more about the buying and selling a home, you can do that as well.
The Idaho Real Estate Buzz being brought to you by the folks at Movement Mortgage and Core Group at eXp. Call them today, (208) 933-7777. Find out why they say you get more with Core.
Dave Burnett: This is the Idaho Real Estate Buzz. He is Tom Dallman, the co-owner. Also the associate broker at Core Group at eXp. CoreGroupRealty.com, the website. 208-933-7777. That is the phone number to call. We've been talking about commonly asked questions about real estate.
Thom Dallman: Yeah, throughout the two years that we've been doing this, Dave and I, we've tried to communicate to the public and everybody listening kind of those questions here and there, but I wanted to combine them all into the two segments today. To throw them out there and once again reiterate the questions and the answers so that people have that going into the new year if you are thinking about buying or selling. Most of the questions obviously revolve around buying property.
Dave Burnett: Right.
Thom Dallman: One of the most typical question is what is earnest money? We get that question a lot.
Dave Burnett: Yeah.
Thom Dallman: The earnest money is the initial amount of money that you're gonna put into your offer that shows that you are earnest. That you are really eager to purchase this property. So, earnest money is kind, if you will, a part of your down payment. It gets applied towards your down payment at closing.
Dave Burnett: If you go through with though deal.
Thom Dallman: Yeas, if the deal goes through. All the way. So, typically it's about one percent of the purchase price is what we encourage people to do. For earnest money, to show that you're earnest. To show that you're really eager to buy the house, and that can vary depending on the situation and what the house type is, and if you have multiple offers you might wanna go a little bit higher with the earnest money. And there's certain things, certain terminology like non-refundable earnest money. A lot of builders ask for non-refundable earnest money upfront. Which means, no matter what happens to the transaction you can't get the money back.
Dave Burnett: Right.
Thom Dallman: That's earnest money that goes to the builder. It's really prevalent in new construction. It goes to the builder for taking that off the market and letting you go through your process.
Dave Burnett: I think that earnest money part, that portion, for me, in the transactions I've done over the years. That's the crazy part.
Thom Dallman: Yeah.
Dave Burnett: Because you are now committed.
Thom Dallman: You're committed to this property, to purchasing this property.
Dave Burnett: To me, and I'm just speaking on my sake, that's the one where suddenly I have now gotten in the water.
Thom Dallman: Exactly.
Dave Burnett: I've put my toe in it. I have gotten in the water.
Thom Dallman: And it's one of those things that a lot of first time home buyers don't think about actually. I have throughout the years have had first time home buyers that when it came down to writing a contract I'm like, "Oh yeah, we need an earnest money check. Usually about this much, one percent." And they're like, "What? I need earnest money? What's this? I have to write a check? Can you wait until next week to deposit it?" And so, that's why I like to make sure that we're talking up front about the structure of a offer and what we're gonna be doing because that is a portion of it that you're gonna want to do and a lot of sellers wouldn't take an offer if it didn't have some kind of earnest money applied to it.
Dave Burnett: But it is if you suddenly back out of the deal then you do run the risk of losing that money.
Thom Dallman: You run the risk of losing it if you just walk away for no reason. There's certain time frames that you can walk away from a transaction. You can terminate during the inspection time frame if you go to investigate the house or investigate the neighborhood. All that needs to be done in that inspection time frame. And you can terminate during that process or if for some reason your funding falls through. Most contracts are written so that if your funding falls through and you can't get a loan on the property, then you get your earnest money back. But outside of that-
Dave Burnett: That's where that big word contingent comes in.
Thom Dallman: Yes. Exactly.
Dave Burnett: You have that written in the contract. Contingent upon approval. Contingent upon-
Thom Dallman: Upon inspection and so forth. Speaking of inspections. That's one of the biggest questions too is, do I need an inspection? I say, yes. No matter what the house is. No matter if it's new construction or not. Get an inspection.
Dave Burnett: Do you not have to have an inspection?
Thom Dallman: You don't have to, no.
Dave Burnett: Oh, you don't? Okay.
Thom Dallman: Yeah, you can crawl around the house yourself and you can just say, "No, I really don't care to have an inspection. I'm just gonna take the house as is." Very few, very few people have ever done that. I don't encourage it. The only time that I am kind of okay with it is new construction, but even in this last year I've had three new construction homes that had an inspector go in and two of them found mold in the house. 'cause they had closed though house off during the winter while they were building and stuff and so some mold had started developing, and the builders don't get up in the attics. They don't go in the crawl space once they get things settled. So, the builder didn't know about it.
Dave Burnett: On a personal experience. We built a home in Eagle and we had the new home inspected and they had, I don't know what the word is but the little rings on the pipes in the plumbing. And they crimp them down. Well, evidently those rings have been recalled. And the plumber had put them on there but the inspector goes, "Nope, I can't approve those." And so the plumber had to come back and change them all. and had we not got an inspection done we would've had leaky pipes. On a new home.
Thom Dallman: Exactly. Nobody wants leaky pipes on a new home. We had, if we're gonna tell stories, my very first new home construction that we did and moved into. When we had the inspection they had found that the master toilet had the pipe, the-
Dave Burnett: The drainpipe.
Thom Dallman: The drainpipe had disconnected at some point during the process. So the construction people that had been coming through had been using it. And so, yeah, they had to go through and remediate the whole crawl space because it was full of sewage.
Dave Burnett: -had you not had an inspection done that wouldn't have been caught right away.
Thom Dallman: We would not have caught that. I don't know when we would've caught 'cause we never crawled in the crawl space and we lived in that house for two years. Can you imagine two years of sewage building up in your crawl space?
Dave Burnett: Not good.
Thom Dallman: I encourage everybody. Get an inspection done whether it's new construction or not. It's super important to make sure that you get that done.
Dave Burnett: Okay, so inspection is different than the appraisal.
Thom Dallman: The appraisal, yeah. We talked about that over the years. Inspection is for your personal knowledge of what the house is like, and appraisal is for the loan. For the bank that's loaning money on the house. So, if you're doing a cash deal, no appraisal. Yeah, it's great but the appraisal's really for the lender to know that you are buying the house at market value. That it's a value that the market can support. That you're not over investing money into a house and end up with more than what the houses should be worth.
Dave Burnett: And a sidebar on this, that is where recently with the housing situation the way it is. It's gotten borderline sometimes that people are asking for a little more than the bank feels it's worth.
Thom Dallman: Exactly. This is exactly what's happened. We've had a few homes that have come in the appraisal's a bit lower than what the house should be on the market for through whether it's multiple offers raising the price up, or just they've listed it too high in the first place. But, my argument with that always, with the appraiser is the price is what the market supports, and the marker supported an offer at this price. So, there should be some leeway. Especially when it's a $350,000 house and all of a sudden the appraiser says it's $345,000. So you're $5000, such a small percentage off. But that will hold up a loan. That little bit of stuff, so ...
Dave Burnett: To get a good agent.
Thom Dallman: Correct.
Dave Burnett: Who can go do your battle for you.
Thom Dallman: Yeah, who can go to the lender and say, "What's the process for fighting this appraisal?" And stuff.
Dave Burnett: As I've said, I've only done five real estate transactions in my life. I wouldn't even know the first place to start.
Thom Dallman: Yeah, exactly.
Dave Burnett: So that's where a good agent's-
Thom Dallman: That's what we're here for. And if there's nothing that can be done with the appraiser or the loan offers it then becomes negotiation with the sellers again and saying, "Who's gonna come up with the money? Who's gonna come up with the difference? What can we come up with as far as a game plan for moving forward to get this house sold?"
Dave Burnett: So that's a difference between appraisal and inspection.
Thom Dallman: Inspection. Inspection's for you, appraisal is for the bank. And appraisal usually happens after the inspection because part of the inspection is to find out those little things that might hold up the appraiser. Such as peeling paint, broken windows, exposed wires. Things like that. So, we want that stuff fixed before a appraiser gets in there.
Dave Burnett: Next on your list of common questions?
Thom Dallman: Do I need a walk through? Do I need a final walk through? And recently we've just changed our contracts to where they buyers have two different walk throughs they can do. One is three days after getting notified that all the items that they've asked during the inspection period to be fixed are fixed. You have three days to make sure that the stuff that you asked to be fixed is fixed.
Dave Burnett: So-
Thom Dallman: -and stuff.
Dave Burnett: Whatever, a leaky faucet or whatever.
Thom Dallman: Correct.
Dave Burnett: Make sure-
Thom Dallman: Just make sure that has been done. So, there's walk through number one. Very important I think because, I hate to say this but a seller could say, "yeah, it's been done. I fixed it."
Dave Burnett: Yeah. Surprise.
Thom Dallman: You walk in and it's still the exact same way it's been. Unfortunately on occasion that has happened. So, super important for that walk through, but more importantly is the final walk through. Maybe not so important on new construction, once again, because people aren't moving in and out of the house. But really super important for homes that are occupied when you go to put in the offer and they've moved out during the process of that. You wanna do that walk through before going to sign off documents.
Dave Burnett: It does?
Thom Dallman: Because what if they've banged walls while they're moving their furniture out? And they've put big old scratches on the walls.
Dave Burnett: A hole in the wall.
Thom Dallman: Yeah, or holes. What if-
Dave Burnett: Is that also like appliances? If you're going to supposedly get the dishwasher and get the microwave and suddenly you go in the kitchen and there's two big holes.
Thom Dallman: Correct. That's also the walkthrough to make sure that everything that you thought was gonna stay with the house, stays with the house. One of the most common things that I've seen over the years is the actual mechanical garage door opener.
Dave Burnett: Really?
Thom Dallman: Being removed, yes. I have no idea what the phenom a is with that, but we have had sellers that have removed that thinking that they can just take it with them.
Dave Burnett: I paid for that, I'm taking it.
Thom Dallman: Onto the next house.
Dave Burnett: Wow.
Thom Dallman: And then buyers go to do their walk through and they're like, "The garage door opener is gone." And that's an attached fixture. That's a part of the house.
Dave Burnett: In all the time I've been doing this program with you I've never heard that before.
Thom Dallman: Oh, we've had some strange things like rose bushes. We had seller dig up rose bushes once because they were family air looms that were passed down from mother to grand ... you know, grandmother to mother.
Dave Burnett: - you need to do that in the negotiations.
Thom Dallman: Yeah, I usually tell people, "If you're gonna take it, remove it before we get it listed so there's no misunderstanding." So, yeah that final walk through is important to make sure that the house is in the same condition from what you thought it was when you walked through. There are some difference in opinions out there about the cleanliness of the house. Some people think it should be sterile-y cleaned by the sellers because they move, but that's not the case unfortunately. You're buying a resale house. There's gonna be dust in the corners.
Dave Burnett: - taking their stuff and leaving.
Thom Dallman: Exactly. Some sellers don't even get in and vacuum, vacuumed condition. It's take it as it is. So, it's very important for that walk through to make sure that the house is what you expected and that there's no damage been done when they moved out.
Dave Burnett: The website is CoreGroupRealty.com and Thom, we're gonna have this posted up on there.
Thom Dallman: Yeah, we're gonna work on here in the next week or so to get these up there.
Dave Burnett: And some others that may be listed as well. And of course, you can always get hold of the folks Core Group at eXp if you have any questions. If you're thinking about buying a home, now's a great time, by the way, to sell a home as well. You can go to CoreGroupRealty.com or give them a call. And this is the Idaho Real Estate Buzz which we do each and every week at this time and invite you to ... if you have a question you can send it in. Just go to the website CoreGroupRealty.com and address it to Tom and we'd be happy to answer it. And if you have questions about real estate you can get your answers there as well. At CoreGroupRealty.com being brought to you by the folks at Movement Mortgage. New name, same company. And the folks at Core Group at eXp. Do this, call 208-933-7777. Find out why they say you get more with Core.
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