In this weeks Buzz we get to hear about the changes coming up in FHA lending and how they will affect buyers with student loans. There is also a segment on the fees associated with the home buying process from Earnest Money to the Appraisal fees. Don't miss out on the coming soon homes at CoreGroupRealty.com as well as the discussion on custom home building. A fun packed discussion on all things real estate in Boise, Idaho!
Dave: This is the Idaho Real Estate Buzz, I'm Dave Burnett along with Thom Dallman of Core Group Realty. CoreGroupRealty.com is the website, 933-7777 that's the phone number for you to call if you would like to talk to the folks at Core. As your jingle says, "you get more with core." So we invite you to do that, to listen in for the next hour as we talk, not just about selling homes but also about empowering you. We'll talk to Michelle Guth from Diversified Mortgage, and some changes coming in FHA; it could impact some of you.
Thom: Definitely, yeah it's a huge impact for any buyer out there that currently has any student loans, so we will talk more about that.
Dave: Yes, but first let's do this, the website, CoreGroupRealty.com is where you can go, a great interactive website for anyone who wants to poke around if you want to sit there in your slippers and house robe and look at homes you can do it right now.
Thom: Yep, it's all on there, you can search for homes directly from the MLS, it gets fed through there every fifteen minutes so it has all the current information about all the homes out there that are available, as well as a great section on Coming Soon listings. Right now in this market where we have the low inventory as we've talked the last couple of weeks about, we definitely have the ability to get you into some of the homes before they actually hit the MLS, you can get kind of a preview and first glance at it.
Dave: You might want to call it the "Sneak Peak", because it really is, it's a look ahead before the rest of the market place gets a chance to look at it, Core Group customers can take a look and see what's coming up. What do you have on there?
Thom: We actually have a new property that's coming soon at 2021 N. Silver Leaf place in Meridian Idaho, it's a great 4 bedroom, 2.5 bath, 2848 square feet. It's going to be listed at $325,000, it's got a 3 car garage, .32 of an acre which is actually a little bit bigger for the average in Meridian. That's a pretty good size then. It's a 2 story, built in 2003 with granite, central vac, a nice family room, formal dining room, den and office, and so forth. Fully fenced and it's on a cul-de-sec, which people love being on a cul-de-sac, you don't have to deal with a bunch of traffic coming through.
Dave: I can attest to this, I live on one and specifically when we built we said, "we want a cul-de-sac", because I don't want cars coming through, there's other people in my subdivision that got onto what they thought was a dead end street but now 10 years later it's been developed through. Those cul-de-sacs are nice. So that's on the Coming Soon..
Thom: So that's on the Coming Soon tab, yes, nice little section there of all of our properties that are not yet listed but are available to look at. Once again that one was 2021 N. Silver Leaf Place in Meridian Idaho at $325,000 for 2848 square feet.
Dave: Alright, now that's on the Coming Soon so you can get an advanced look at that. You got a couple homes out there for sale that's on your regular part of the website?
Thom: We have our Featured Properties that are our listings as well on the website. A couple new properties actually that just came up on there. Brand new listings this week that just came on, very important to know about those because they go quickly, especially in certain price points. So the first one is one that we've talked about in the past for the Coming Soon, and that is 3497 E. Immigrant Pass drive in Boise. That's the one that's on Oregon Trail Heights subdivision near Columbia Village. It came on at $200,000 for 1627 square feet, it's a 3 bedroom, 2 bath with a 2 car garage. Nice thing about it is it's a single level. It's on .22 of an acre.
Dave: Which is your standard lot.
Thom: Yeah, that's more of a standard lot size, that .2 acres is where they are usually at. 3497 E. Immigrant Pass over there by Columbia Village, so South East Boise, a very popular area.
Dave: So if somebody worked at Micron it would be a perfect home.
Thom: Perfect for them. It's really actually convenient for a lot of the businesses downtown or up by the airport as well, very convenient.
Dave: Easy access to the freeway. So that would work out there at Immigrant Pass. Perfect, what else you got?
Thom: And then the second one that we just listed this week is at 10492 W. Gallahad Ave in Boise. This one is in the Camelot subdivision is west Boise over here, so once again kind of very convenient. You can go west and go to the Village shopping center, or east and come over here to the Boise Town Square mall. Very convenient location in West Boise in that Camelot subdivision. 10492 W. Gallahad Ave is a 3 bedroom, 1.5 bath on .2 of an acre. Also a single level, fully fenced with irrigation which is nice for watering in the summer time especially on days like we've been having this week.
Dave: You can water twice and not worry about your bill.
Thom: Exactly and this is a price point that is going very quickly in the Boise area, it's $159,000 for this house at 10492 W. Gallahad Ave in Boise Idaho. They've recently upgraded the flooring, so it's got new flooring throughout the house, definitely something to take a look at. Once again you can find that on the Featured Listings tab on our website.
Dave: Now if somebody is driving around and I'm only saying this because I drive up old Horseshoe Bend road from time to time and I just saw a Core Group sign go up there on a home here a couple weeks ago.. So I can go onto the website and find that home listed there?
Thom: Yep, you can find it on our website if you just input the address or go to our Featured Listings it should be there.
Dave: So if you're driving around and you see that Core Group Realty sign, you can go to the website CoreGroupRealty.com and look up the information on the house and snoop on your neighbors. (laughing)
Thom: Definitely. (laughing)
Dave: And you said you had a price reduction on one?
Thom: Yeah we had a price reduction on our beautiful newer home out there on Beach Cherry drive in Nampa, it's 14809 Beach Cherry Drive in Nampa. They've adjusted the price down to $575,000. So great price for a 4342 square foot home.
Dave: That's a big home.
Thom: Yes, that's a big home and I actually got to go through it this week and chat with them and it's a 4 bedroom, 4.5 bath, beautiful home, just beautifully done. Really well thought out, the builder is living in the house and he built it for his family. It was really well thought out obviously for the purposes for the family. It has a huge shop/RV garage that actually pulls through so you have doors on both ends.
Dave: Oh nice.
Thom: So you can pull your RV all the way through to the back yard to wash it down or do anything like that. Once again that's 14809 Beach Cherry Drive in Nampa Idaho, 4342 square feet on 2.41 acres, a nice big lot. And they are at $575,000 this week.
Dave: Excellent. You know one of these days it would be a nice topic to talk about advantages and disadvantages of acreage.
Thom: Oh yeah!
Dave: Every once in a while I think, "hey you know it would be nice to have a little acreage to do this, that and the other." And then I think to myself, "well wait a minute, I hate mowing the lawn, what am I gonna do with acreage?" (laughing) So..
Thom: There's definite bonuses and definite maintenance things that you have to deal with when it comes to the large acreages.
Dave: Maybe we'll do that as a segment one of these weeks coming up, the Pluses and Minuses of owning an acreage, because it's that American dream but it's also a lot of responsibility.
Thom: (laughing) Exactly.
Dave: Funny how the bare land isn't just something you can make light.
Thom: Yes, exactly. But for the nature lover and the person who loves to go out and mow and be outside all day long, it's perfect for them. Or if you have horses or if you wanted a couple horses or cows or whatever.
Dave: Or if you had chickens your neighbors will appreciate it..put a little space between you. (laughing)
Thom: Exactly. Exactly.
Dave: It would work out well, but maybe we will do that as one of the segments coming up here before too long. So CoreGroupRealty.com that is the website, Coming Soon is a tab if you want to see those properties that haven't been listed yet, kind of a private thing for Core Group a sneak peek as it were. You have your featured items, featured homes that are on there and other information as well. It's a good interactive website, which is one of the things to look for when you're looking for a real estate agent, to make sure that they have that.
Thom: Make sure that they have a current, up to date system that gets you notified quickly on what is new especially in this market where things are selling so quickly.
Dave: Yeah, well I won't rat out the name but I will say I was looking at some other real estate websites and there was homes that were listed from back in October on it, which I know are gone.
Thom: Oh, yikes! (laughing)
Dave: And if they're not gone, that's not good. So yeah, making sure things are current and that somebody is on top of that, which is one of the things when you interview your real estate person whether it's Core Group or not, is to want to sit down and talk about that. Right now that's how people initially get interested in homes.
Thom: For sure. If you're going to list your home, make sure it's listed with someone who is getting it out to as many people as possible as quickly as possible.
Dave: That's the way you're gonna get it sold. We'll continue, we are going to be talking to Michelle Guth with Diversified Mortgage, some big changes coming in FHA loans which could affect you if you're looking for a home right now. You're gonna want to pay attention to this, we'll talk to Michelle coming up in our next segment as we continue, this is the Idaho Real Estate Buzz being brought to you by Core Group Realty. CoreGroupRealty.com, 933-7777, somebody's there 24 hours a day 7 days a week to answer the phone and get you directed to the right spot with Core Group Realty. I'm Dave Burnett, we'll continue with Thom Dallman coming up on 580 KIDO.
Dave: This is the Idaho Real Estate Buzz I'm Dave Burnett, Michelle Guth with Diversified Mortgage, Equal Housing Opportunity is with us again. Diversified Mortgage you'll find them right there on Marigold right over by I guess is that City Hall? It's the public library I know.
Michelle: It is. Garden City Hall and Library right near the river.
Dave: So you can find that and stop by and see Michelle there. You know Thom we've talk about financing and how important it is the fact that you can find that dream home, but if you don't have it financed you're gonna sit on the curb and look at it
Thom: Very important part of the process. We can't really submit offers right now, sellers won't take any offers unless they have that pre-qualification letter, so it is a very important for a buyer to have a pre-qualification letter and to know what they can afford you know, you don't want to put an offer on a house that's above your price limit and your comfort level, so it's very important to know where you're at with those financials.
Dave: Well Michelle, we were talking during the break that things are changing when it comes to FHA loans shortly.
Michelle: Significant change I think this is a timely topic, the rules with regards to FHA financing are changing in the month of June dramatically with how we calculate debt ratio on your student loan debt.
Dave: Ok, what does that mean in English?
Michelle: So, for anybody that currently has student loan debt, whether it be in deferment or re-payment, the general rule of thumb, there's different variables but a general rule of thumb is that the end of this month, they are going to require that we calculate 1% of the outstanding balance so in essence the greater of what their current payment is for the 1%. So many people currently are on either a deferred status or they're in an income-based repayment program where they're paying much less than what the normal advertised payment would be. So, as a result, the government's taking a different stance and stating that we can no longer use those income based repayment programs and we have to go off of a minimum of a 1% payment calculation against the overall outstanding student loan debt.
Dave: How was it before? They didn't count it at all?
Michelle: It did, basically we would use what was reported on the credit bureau and in many case most of the people most people had an estimated payment if they were in deferment or they were in an income-based re-payment which was much less than the normal advertised payment. So it is not uncommon to see individuals with substantial student loan debt, we know how expensive it is to go to college now, so 50,000 of student loan debt, we are now calculating, you know, a $500 payment against that. So it can really impact their ability to qualify for a home.
Dave: Wow. And FHA is that the most common sort of a home loan out there you think?
Michelle: It's very common, a lot of our first time home-buyers utilize that program. There are other programs out there such as conventional financing with as little as 3% down in comparison the FHA program which is 3.5%. But again, FHA was the most lenient program out there with respect to student loan debt. So, you know, maybe one of those other programs isn't necessarily going to help their ability to qualify unfortunately.
Dave: Well, alright, so how is this going to impact, let's say Thom with CORE Group has a home could he get somebody pre-qualified they want to do...how is this going to impact his clients?
Michelle: Well the first thing I'd do is talk to Thom and all of his agents and anybody out there that currently is thinking is of buying a home or is pre-qualified, you probably want to pick up the phone and call your lender if you currently have student loan debt to see what the implications are going to be to your pre-approval. Or, if you haven't gotten pre-qualified, it is not too late to call us and call one of Thom or his team-members to get out and start the home buying process. If we can get under contract and basically order what's called an FHA case number, that's the number that's assigned to the house that you're purchasing, if we can get that case number before the end of the month, then they can qualify under their current guidelines. So, June is a big month to get out there and get pre-qualified and start shopping.
Dave: No pressure with that at all, hurry up, just a couple weeks to get a deal! Are homes getting done that quickly?
Thom: Um, they can be, yeah. They can get under contract and as quick as we can find a house for them, so. A lot of the homes that we go through and put an offer in we usually get those offers accepted within 24 hours. And if they can, we do have multiple offers going on right now so sometimes those get counter-offers and so forth so they can take a little bit longer, but as far as getting them under contract we can do that pretty quickly. As soon as they identify a house, as soon as they're pre-qualified first of course.
Dave: I guess for the lending industry is this a good thing in your opinion?
Michelle: You know I think it can be. What I hate to see is if the government comes back and changes their terms on the income-based re-payment program they are no longer they're making a minimum payment in comparison to their loan balance, we don't want to put a home owner in a situation years down the road where suddenly they have significantly increased their house hold debt, and then they have difficulty making that mortgage payment so I think there are pros and cons to it, unfortunately it is a pretty dramatic change for those that have, you know, maybe, you know, many years in college where they've done their Masters and they have a higher level of student loan debt, it's unfortunate to see what it's going to do to their ability to purchase a home. But in the grand scheme of things, long term, we want to make sure that we are setting them up for a secure financial future, so there are pros and cons without a doubt.
Dave: So it sounds like in the long run, it's a good thing, it is a good thing. CORE Group Realty, of course, one of the sponsors here of the Idaho Real Estate Buzz, Diversified Mortgage, it really is kind of a marriage when it comes to the two coming together and finding the home, getting the financing together Thom.
Thom: Exactly. We have a great partnership actually just along this lines we just had an office meeting this week where one of the loan officers over at Diversified Mortgage came over and explained this new change and everything to our agents so that our agents are aware of it and are now out there communicating to the buyers at they are currently working with and making sure that they're talking to them about hey do you have a student loan, you know, is this going to affect you? And so you can get under contract before the end and so forth, so it's that synergy of the relationship between us and Diversified Mortgage just goes beyond, you know, the normal transactions of a lender and an agent, so.
Michelle: I think you're bringing up a good point because I think that one of the key parts of our relationship is that we are pro-active not reactive in everything that we do, so even with Thom's agents when we have a borrower that's pre-qualified they're calling up if they feel that something maybe fell out of the scope of what we discussed with the terms of their pre-approval, they're giving us a call to make sure that we're not setting that client up for disappointment on a property that maybe they won't qualify for so I think that having that relationship and that key level of communication is huge in making sure it's a seamless process for our clients.
Dave: I agree. Well I will say this, I had the chance earlier this week to go by Diversified Mortgage, I've never been by their office but I went by and visited with Michelle there to see the facility. What a nice staff you have!
Michelle: Oh they're wonderful, yeah, they're family!
Dave: The thing I always look for and CORE Group's the same way when you go in, especially when it's a business that you're not going to feel high pressured into anything and that was a nice feeling there with Diversified, it’s just greeted at the door, good staff, nice, it was a comfortable atmosphere there.
Michelle: Oh I appreciate hearing that, I am very fortunate having an incredible team all of them have been there for many years so they take the approach with our clients that we treat everybody as if they were our family members so they have such pride in what they do and yes we are very fortunate
Dave: And something that I should do just in case somebody's driving down the road right now thinking "Wait a minute, we were talking about an FHA loan!" How do they get a hold of you if somebody wants more information about the changes coming at the end of the month for FHA?
Michelle: Sure! Just give us a call at 853-7878.
Dave: And you have a website as well?
Michelle: We do, dmgloans.com!
Dave: dmgloans.com. So Thom, when you have someone and you're out and you're looking at properties, hopefully they're pre-approved, that's the thing to do when they come is to get pre-approved, but do you kind of talk to them about, you know, some of the loans that could be available for different properties or do you refer them to Michelle?
Thom: We kind of let Michelle deal with the actual pre-qualification. We do know, we are fluent in the type of loans that are out there, and that are available and what could be options for them, but for the most part, we let the lenders do the talking and make sure that they're getting fit into the right profile we're not lenders ourselves, we don't know the rules and regulations behind everything so.
Dave: And they obviously change!
Dave: We're specialists in negotiating contracts, finding those properties, getting people in there. And we do need to know a little bit about the lending side just to be fluent and when we're looking at taxes that's like where it really applies mostly is when we're out showing property we need to be aware of what the taxes are and if there are HOAs, high HOA fees and stuff like that, and how it affects their loans, which Michelle's team is awesome at communicating to us and making sure that we are staying within the levels and likewise we communicate back to them when we are actually looking at property and finding things for them and saying hey, here's what the taxes are, do they qualify for this?
Michelle: I was just reading before I came over today, looking at the statistics for I think they had up through April they didn't have May yet but home purchases right now are at record levels, like 5 and 10% above what it was the previous month, people are getting loans and buying homes right now!
Michelle: They are, they are moving! So it's nice to see the market doing so well.
Dave: Now, let me ask you this and obviously, you don't know, you don't have a crystal ball but we know that the economy has kind of slowed down and now they're talking, eh maybe we're not going to raise rates is that kind of what you seeing in the lending business as well? Rates are going to stay low?
Michelle: Everything I've seen from all of the economists, I've been to several presentations and I think there's going to be a continual upward swing with rates it's only a matter of time but from what they're saying it's going to be a very gradual increase, so I don't think we're going to see anything dramatic over night, but I think we're going to see a very gradual increase and to the levels that are close to historic lows that if we were even in the high 4%'s everything I've seen over the next 3 years as they're progressing they're anticipating getting up to the high 4's. That's unbelievably low, I mean, I remember the day they hit 6%, I never thought I'd see the day I'd see a rate would hit 6% and we got down to the high 2's at one point is like, it's unheard of!
Dave: My very first home loan which was 30 years ago but my first was at 8%
Michelle: Oh and you got a great deal!
Dave: Oh we did we thought that was a great deal, at 8% and then when it got to 6% everybody went refinance! refinance! and so we went out and refinanced and then it kept going down but I guess if somebody has questions about whether it's credit, the FHA program, or any of the loans Michelle one more time how do they get a hold of you?
Michelle: Please give us a call at 853-7878.
Dave: It is Diversified Mortgage, one of the sponsors of the Idaho Real Estate Buzz, we're gonna continue on the other side as we continue here on our Saturday afternoon we gather together here each and every week and if you didn't catch Michelle's number you can always call 933-7777. That is the phone number at CORE Group Realty, Thom and his staff would be happy to get you in touch with Michelle to find out about FHA loans, what's happening in the market place as well. We'll continue on the other side here on 580 KIDO
Dave: This is the Idaho Real Estate Buzz, I'm Dave Burnett, along with Thom Dallman, with Core Group Realty. CoreGroupRealty.com, I can't stress that website enough because that's where you're going to start your search for your new home. Its right there, CoreGroupRealty.com.
Thom: Exactly, it's a great website to do it, to start it and reach out to us.
Dave: And when I say new home, you know, there's a home that new to you and then there are new homes.
Thom: Exactly, new construction.
Dave: I want to talk a little bit about that, because there's a lot of new construction going on and part because there is just not a lot available housing right now, pre-existing.
Thom: Exactly, with inventory being so low, a lot of people are choosing to go the new home route. So, all the way from, you know, builders that kind of have the pre-laid out homes, new construction all ready to go, spec homes, all the way up to the custom built homes, where they actually go in and help you figure out your design and your layout and stuff. There is a lot of builders out there right now.
Dave: Let's talk about the difference, let’s start first with the, I guess your kind of call it a pre-existing new home.
Thom: Um, hm. Sure.
Dave: You got a builder, you got John Doe builder, and he probably, might have subdivision, might work with a Real Estate Company or not, is that true?
Thom: Yeah, a lot of the builders that are, that kind of have those existing ones, do have either a Real Estate Companies that they are working with or they actually have Real Estate Agents that work for them, with in their company.
Dave: Oh, so it works both ways, but then again, that wouldn't exclude Core Group from going in and showing these homes.
Thom: Correct, yeah, you would actually want to do that because you would want your representation. Remember that those builders employ those agents to represent them.
Dave: To get the home sold.
Thom: To get the home sold for them at the best price that they can get for them, so the buyer's agent is there for the buyer to help them negotiate on their behalf and make sure they are getting a good deal out of it as well.
Dave: So that's, you know, let me back up here a little bit. That's probably a wise move, some people over look a lot of times, you will just go out on a Sunday and drive around and go "ohh let's go in this subdivision" and there is an Open House. They will go to the Open House, that agent who is there is really working for the builder to try to get the builder the best deal and get it sold.
Thom: Exactly, yes. And to try to get the best price for them, the builder, they are working on behalf of the builder.
Dave: And let me stress this, they are not doing anything dishonest, they just have their interest on their side, and what they want to do.
Thom: Exactly, just representing the builder.
Dave: So, it would be good for you to have an agent with you go and say, that's a good idea, but how about doing it this way.
Thom: For sure, for sure.
Dave: So you have those pre-existing areas that may be new construction is up. Do a lot, and obviously ... I'm going to put my brush out and do some broad strokes out here. These subdivisions may have 4 or 5 different floor plans in a subdivision, is that the way this works?
Thom: Oh yeah, some builders have, you know, some of the, kind of mass producing ones, have even more plans than that, twenty -thirty plans that you can pick from and different variations of those floor plans and so forth. So, it is very important to make sure that you have a buyer's agent there to help you talk to the listing agent to find out what other floor plans and what’s going to fit your family need. Do you need more space in living room and smaller bedrooms that is where you guys all hang out together as a family or if you are a single person, do you want to entertain and need a bigger entertaining space in the back yard and so the lot location is going to be important in that aspect.
Dave: And homes have changed over the years, I mean there is a time when bedrooms, I think, were they bigger or smaller do you think? Let’s say, if you go back to the 70's.
Thom: Yeah, there is an interesting... back in the 60's and 70's they were smaller, they have slowly kind of grown, like the bigger bedrooms and so forth were really had gotten popular, getting bigger and bigger through the 80's 90's and 2000's. We are starting to see a little bit of trend towards getting back to a normal size or I guess average size bedroom. Not having these massive bedrooms as much anymore where you could almost fit a whole living room set in with your bedroom set, in some of these.
Dave: But we are seeing an increase in size of the living area and family rooms, that kind of thing.
Thom: yeah, people are more apt to entertain and to you know have their family centralized together. We are looking at living spaces that are more open and definitely bigger.
Dave: So I guess that is what we are talking about, when you are looking at a new construction, you are going to want to pick a floor plan that is right for you.
Thom: Yes, that works for you. And as you kind of go up the line and get into custom build jobs, this is where you are actually going to end up sitting down with a builder and actually having them help you design a floor plan that fits your family. As you kind of get with these more custom home builders that's what their job is, that's what they specialize in, is listening to you as a home owner and your family's needs and your needs and what you do as far as entertainment and stuff like that and how it correlates to the floor plans that they have available or if they want to create a whole new floor plan for you. Those custom home builders can definitely do that create a home perfect for you.
Dave: Let me ask you this, Thom, we had home built for us a number of years back and basically we had the loan amount that we were qualified for and so the builder kind of worked backwards from there. He said, this is how much you have, we'll start building, here is what your lot is going to cost you, here is what your foundation for the floor plan you picked out is going cost you, here's the studs, and once we got to the studs things began to change, because you want to add that light, you want to add a Christmas light circuit? It's going to come out of your budget, so at that point it kind of started working backwards different things coming out of our budget.
Thom: That is actually how the new construction works, you have a budget on a specific price point for a home and then that usually includes a specific amount of certain amenities with the house and anything additional that you want to add, any upgrades in amenities such as flooring, you know, you don't want just your basic carpet and you want to do a higher end carpet, that is going to end up costing more on the purchase of the house obviously. Those costs do go in and you really, and this is once again where it is important to have a buyer's agent that is aware of those things and can help you navigate through that process. Along with the listing agent, remember the listing agent is going to be kind of encourage, they are sales people at the end of the day and trying to get a better price for their builder, they are going to be more apt to get the higher end carpet, the higher end faucets, and the higher end light fixtures.
Dave: But in the end it will cost somewhere else. We really found that out quickly, we were like kids in a candy store, we'd like that, let’s put this in and we want that, and we want to go with that, and it's like 'you’re out of money'
Thom: and then all of sudden you get that surprise bill and it’s like yeah, you are 20,000 dollars over your budget.
Dave: You did want a toilet in the other bathroom, right? That's going to cost me? Yeah, everything has a cost to the builder's credit they aren't going to pay for it. They have their bills they have to cover, so I guess that something, realistic expectations when you go into building unless you have a wallet that's a lot bigger than mine, to know that here's the budget, here is what the bank is going to loan you, and now you need to work and figure out what you want to put in there.
Thom: And stay within those parameters when you are looking at those amenities. Once again going back to a buyer's agent can help you know resale value. What is more important to put into the house versus what is more of a cosmetic thing for looks and stuff for your own benefit? And thinking about the long term, most people end up selling their homes.
Dave: But we don't think about that when we are building. So if we build a house that is twice the house as the rest of the neighborhood, we are going to wind up paying for it in the end.
Thom: Exactly, you are not going to get the value back out of it.
Dave: But that is when a Core Group Realty agent is going to say, you can do that, but if you do that there is a price to pay there.
Dave: I guess another question is when it comes to building a home, does that come with a marriage counselor or not?
Thom: (Laughs) it should sometimes.
Dave: If you are remodeling or building... oh my goodness.
Thom: There is a lot of tension that goes along with the home building process because there are so many little details. So you really want to make sure that you get in with a builder that has been in the business long enough and has a great reputation for getting you through that process together, so that there is no... You know divorces at the end of this process.
Dave: Let me ask you this, when it comes to choosing a builder or maybe going into a subdivision where a certain builder is at, how do I know as a consumer that I am getting a good builder, how do I find out?
Thom: You know there are different ways you can do it, when you actually sit down with the listing agent, ask for, or ask them to see if the builder will provide you with a list of references, you know past clients and stuff. Most builders should be able to provide you with people that have built with them. If you have, or hopefully you are working with a buyer's agent you can usually ask the buyer's agents to kind of research the builders and the builder's reputation in the area and so forth and give you some un-biased opinion on what those builders offer. There are a couple of avenues of different ways that you can research it. Obviously everything is online these days and you can kind of check out reviews on builders and check out their history and see how long they have been in the business.
Dave: you know what I think I might recommend? having been through this process, that if it's possible, Thom, could you show me one of this builder's homes from 5 years ago, and go look at a home that is 5 or 6 years old and make sure things aren't falling off? Show me one of the homes, if there is available to look at, that's up for sale to see how their quality of workmanship lasts. Because when you first get that home and you look at it, it can look good but it could also fall apart on you fairly quickly if it is not built right.
Thom: yeah. Exactly, there are houses that are always coming back on the market and stuff, and like I mentioned, 5-7 years is usually the average that people stay in homes. So, there is definitely some possibilities that there might be one of their buildings out there currently. Our MLS shows who the builder is, that is one of the functions of the MLS and so forth, when you do the home searches you can see who the builders are and look for a specific builder.
Dave: So, let’s do this, if somebody is interested in maybe building a home, or looking into building a home, you can call Core Group Realty, 933-7777, in fact you can do it right now, and they will get you hooked up with one of your agents, who really kind of specializes in lots, new construction, new homes and can help take care of them and walk them through that.
Thom: We can navigate you through that process and make sure that you get in front of the builder that best fits your needs and design aesthetic and so forth. That is what we do!
Dave: Perfect, so if you are out driving around, remember this, and I never really thought about it, the real estate agent that is sitting in there is working for the builder and working for the subdivision, you need somebody or your side to help you go in, if you are like me, you are not real experienced at it, you can go in and say I like that, but when it comes down to really cutting the deal, you need somebody that has been down that path before. We will continue on the other side, this is the Idaho Real Estate Buzz, Core Group Realty .com, 933-7777, that is the phone number, we will continue on the other side here on 580 KIDO.
Dave: This is the Idaho Real Estate Buzz. I am Dave Burnett along with Thom Dallman from Core Group Realty. CoreGroupRealty.com ,933-7777 that is the phone number to call. We found out about some of the new listings coming out. what is up and coming. talked to Michelle Guth about the FHA loans and what is happening. Talked a little about new construction vs. old construction and the different kinds of construction. But one of the things Thom I would like to find out from you, and that is once we put a deal together. It always seems to me that there is a fee and another fee, and we need to do this. What are all these and when do they end?
Thom: That is one of the most common questions we get from buyer especially first time home buyers. Is what fees do they go thought in the process. And there are a few fee and they do pop up. There are some fees that are necessary and have to be part of the process. some other ones that we will talk about that are optional things that you may run into as well.
Dave: Can we also talk about which one of these fees commonly be shared or which one of these fees be on the buyer or on the seller? It seems like some of them can be shared.
Thom: Sure we will talk about closing cost when we get to the closing cost aspect of things. So there are certain things you can ask the seller to pay for and stuff like that.
Dave: Now you have a list there. let’s start at the beginning.
Thom: The First amount of money you are going to have to come up with when purchasing a home is the earnest money. this is the money that goes along with your offer to the seller to let them know that you are Earnest about buying the house and you are really serous you are willing to put a little money down upfront to take it off the market and so forth. This money is usually refundable, if you get thought the inspection and appraisal and they don’t work out. usually get that money back, but it is money that can become nonrefundable if you decide to back away from the contract. In average that earnest money is only about 1% of the purchase price rounded up or down to the nearest thousand. On a $100,000.00 home we usually do $1,000.00 earnest money.
Dave: Put your money where your mouth is.
Thom: Exactly! That is what it is and it will usually go in to a trust account right away so it is money that is deposited and once again shows that you are sincere.
Dave: But that money is applied then to the purchase of a home.
Thom: That applies to the closing cost of a home. So yes it does get applied to your fees at the end of the transaction. It not like it is money that gets spent for no reason it actually applies to the closing cost.
Dave: And I guess for the seller they are taking their house off the market. In a day in age there could be 2 or 3 other offers that might come in while it is off the market.
Thom: Yeah! With the way the market place changes so drastically over 30 to 45-day average what it is taking to close a loan there could be all kind of drastic changes for the sellers in price of the house and so forth. That earnest money is a security almost to them to know to know that is for some reason it falls though and for no reason the buyer decides to walk they have curtain things they can walk for, but if they walk for no reason that the money can go back to the seller to compensate them for the time off the market.
Dave: So that is earnest money! So what is next!
Thom: The next step in the process once we get a contract excepted the next fee is the inspection fee. You are going to want an inspector to go thought the house and really evaluate the house and make sure you know all the hidden as we call it safety and soundness issues with the house. Any issues mold in the attic or crawlspace, to broken windows, peeling paint one the exterior of the house which leave the wood exposed to weather. SO the inspection in an important part of the process. The inspection fees run from anywhere from $250.00 to $600.00 depending on the sf, the inspector they do sometime charge extra for running a farther distance from Boise. They will charge a little extra for that to.
Dave: But it is also a frustrating fee because typically 99 time out of a 100 they will come back with a punch list of here are things that need to be fixed in this house. It could be anything from curling flooring by the bathroom sink to under the kitchen sink that needs to be fixed.
Thom: And that is why it is really important as a home buyer to remember to think about safety and soundness. It is not about cosmetic it is not about dirty carpet, not about nicks in the bathtub. It is about things that are going to cause safety issues to you or soundness issues of the house. That will make it deteriorate quicker if it is not fixed. our buyer’s agent is well versed in going though those reports with the buyers to make sure they are looking at the correct things and asking for those corrections from the sellers to be fixed.
Dave: So it protects you if you are buying that you are getting a house that is going to come to you in good condition. I guess the other thing I need to point out, because we have talked about this in the past, it doesn’t necessarily have to do with an older home this could be a newer home.
Thom: I have told you about my personal property. That we had built and found out that the master bathroom toilet was not hooked up and had been used for a few weeks.\
Thom: YA! They are doing to find that stuff.
Dave: Inspection fees! Next?
Thom: The next fee you are going to encounter is the appraisal fee. in the treasure valley it is a very popular to ask the sellers to pay that appraisal fee. But that appraisal fee gets paid at closing out of the proceeds from the sale of the house. so Most lender ask the buyer to pay up front as soon as it happens. Those appraisal fees can run anywhere between $400- $600.00. Depending again on the size of the house. Appraisal fee in an important part of the process this is the loan process so this is where the Leander is sending in an appraiser to make sure that the value of the house equals the purchase of the loan they are going to get.
Dave: And this appraisal this is not one the buyers side this is not on the seller’s side; it is no the banks side?
Thom: IT is on the Banks side but it is usually paid by the buyer or the seller. Depending on what we negotiate into it.
Dave: OR it can be split. Has it ever been split?
Thom: I don't see it split very often. Usually on or the other. In most areas of Idaho and other states it is always a buyers cost. But in the treasure Valley a lot of sellers pay for that. there has been an interesting push for that lately for sellers to not pay for it.
Dave: I could see as a seller for me who it would make scene you want to prove your value.
Thom; That is where the negotiation part comes in to play on the appraisal fee, but they do still need to pay that up front as buyer and if the sellers are willing to pay for it out of the proceeds then it will get added to the closing costs. the next thing to consider is the down payment! you are going to be coming to the closing table with a down payment of some sort. possibly depending on which loan program you go FHA is about 3%down, Conventional 5% up to 20% down payment. Once again with the earnest money that earnest money does come out of that down payment. IT will be the down minus the earnest money. Or the earnest money can be applied toward the closing costs. Which is the next set of fees.
Dave: and that down payment it can’t be, if it is gifted to you it needs to be accounted.
Thom: It needs to be accounted for and the lender can walk you thought the process of how that needs to be accounted for and documented. You can get gift funds with curtain loans programs.
Dave: The bank wants to know.
Thom: The bank wants to know. It needs to be clearly defined and explained where that is coming from.
Dave: They don’t like money suddenly showing up from nowhere.
Thom: SO your down payment and your closing cost you are going to get at the end of the process. Closing costs once against here is a long list of them Tax service, title insurance, documentation prep, pre-paid which would be HOA dues. sometimes seller will have dues paid for the year so you have to pay from the closing date on to the end of the year. The closing cost can be on average 1 to 2 % of the purchase price of the home.
Dave: That would be Home owner’s fees HOA. Home owner’s association` it is one of the terms you may not be familiar with.
Thom: And taxes if there any that are pre-paid on the property the comps will go thought it and credit and debit the correct amount to each party so they are accounted for. Like I said the closing cost usually run on average on hat 1-2% of the purchase price. Depending on what they are and what kind of loan program. Also some of that can be negotiated and asked the sellers to pay for. Right now with FHA loans it is very common to ask for a % or dollar amount towards closing costs from the sellers to help offset those cost.
Dave: For me personal the hole closing thing all the different fees. It just drove me wild. Make it stop! Do I get a pin at the end of this?
Thom: you get that two page HUD statement that shows all the different fees that are applied and dollar amounts.
Dave: That is the nice thing with having a good agent somebody who is on your side it is all explained to you. You don’t go in to that meeting going so what happens here if you are a first time buyer. The folks from Core Group will take care of you to get all that information to you. there are no surprised. If you are interested in buying or selling a home especially selling a home, Core Group is looking for home to put on the market place. you have buyer waiting now. If you are looking to sell a home or buy a home call Core Group Realty their number 933-7777 or you can find them on line at CoreGroupRealty.com. And Thom the nice thing is you have a customer care team ready here to help people out.
Thom: Yep we have people here 24/7. any time give or take in the evenings after 10:00pm there is not someone available. there is someone during the day 7 days a week. if you have any questions. We can get you the answers or get you in front of an agent.
Dave: As always we encourage you if you are doing a Real Estate transaction you probably one of the biggest transactions you will make in your life. Make sure you have someone there to represent you someone you know and trust. give the folks at Core Group a call. CoreGroupRealty.com. This is the Idaho Real Estate Buzz. We do it every Saturday at 2:00pm for you. Here on 580KIDO