Today on the Idaho Real Estate Buzz listen in as we have our regular chat with Michelle Guth of Diversified Mortgage. Michelle is here today talking with us about debt to income ratio, qualifying for a home loan, when you should get your credit checked, and the difference between a 10-99 and a W2 when it comes to lending. Also on the show we have Shawna Schnabel and John Good our Core Group listing specialists, they are here to share a lot of home selling tips with you, including information about wells and septic systems. We've got a great show for you today, tune in!
Dave: This is the Idaho Real Estate Buzz I'm Dave Burnett Thom Dallman who is taking a little time away from the microphone. If you listened last week you heard how froggy he was. Well, it's not much better this week so he's going to rest his voice just a bit. Going to be talking to some of the folks from CORE Group Realty. By the way, Thom is the co-owner/designated broker of CORE Group Realty 933-7777 that is the phone number to call if you want to get a hold of the folks at CORE and whether you didn't get Michelle Guth's information you can find that at coregrouprealty.com. Welcome back ladies to the show.
Kristina: Thank you Dave!
Dave: So, you're going to take Thom's place and normally at this point he talks about some of the new listings, open houses, things going on. What do you got?
Kristina: Yeah! So actually, today right now going on we have an open house going on at a property over at Lone Tree Way in Boise. So that's going to be today from 1-4 and if you don't have time to stop over there it's also tomorrow from 1-4 and that is at 6512 S. Lone Tree Way in Boise and that is a great 3 bedroom 2 bathroom 1500 square foot home.
Dave: OK so Lone Tree Way. And you said that's in what part of Boise?
Kristina: That is 83709.
Shawna: It's in South Boise.
Dave: OK 83709 South Boise. So if you're looking to get down that direction great time to do that. I know, kind of chilly, but it's going to be nice and warm inside the house.
Kristina: Yeah, go warm up!
Dave: Let me ask you this really quick, for the agents and doing open houses. I've often wondered about open houses. I mean it's difficult, you're sitting there, you kind of prospect, people coming in. Can you tell the difference in people who are just kind of kicking tires and people who are serious in looking at homes?
Shawna: Probably the biggest difference right now is, it's like you said, cold out there. If they're out looking at homes, they're serious buyers and that's one of the great advantages of listing a home in the middle of Winter is you don't have people out kicking tires. It's really not that much fun in this weather. So they're serious buyers if they're coming out and looking at houses.
Dave: And the good new, if they're serious buyers they are serious sellers as well.
Dave: People wanting to get deals done so that's a good time to do that. That open house going on Lone Tree Way 6512 so you can just load that in to your GPS and find your way over there 83709 is the zip code going on today 1-4 so it's underway and then Sunday 1-4 as well. Got a featured listing, a home that's kind of featured on the website at coregrouprealty.com what do you got?
Kristina: Yeah! We've got another great property it's actually in Caldwell. So that's at 28751 Country Lane and that is a great 3 bedroom 2 bathroom just over 2100 square feet and it is on actually 20 acres. So you get a lot of property with that.
Dave: Wow! OK so we're going to talk about a couple of properties with a lot of acreage on here. So Country Way and that is out in Canyon County as well. Give me the address on that one again.
Kristina: 28751 Country Lane.
Dave: Country Lane. Now, you don't have to drive out there today to look at it, you can go to coregrouprealty.com to take a look. When they go to the website how do they navigate to get to that listing?
Kristina: So it's great because when you hop on the website there's actually a search bar right on the first page and you can punch in that address and it will take you right to it.
Dave: Oh OK, so you don't have to go here to there to there to find it.
Dave: Just put the address in. Let's talk for just a minute about that website. If somebody has never been to coregrouprealty.com what all can they find on that?
Kristina: So you can find all of our Featured Listings like the property on Country Lane. You can also find out upcoming Coming Soon properties. I know that Thom talks about a lot so you can get a sneak peek at those before they hit the market. And then you can also get some information if you're looking to sell a home so if you are kind of kicking tires on that and want some more information you can do that on there. And then we also have a really great blog on there as well. We update that weekly I believe, and that's actually transcribed as well and you're more of a reader than a listener you can actually go through and read through the blogs and actually we transcribe all of our radio shows as well!
Dave: That way if there's something that came up and you missed it you can get that as well. Now the nice thing also is if you call 933-7777 you have your customer care agents that can help guide you through there. What else do they offer the customer care agents?
Kristina: So if you have any questions about homes or what the market's like right now, anything real estate related. If you maybe aren't from this area and you want to know the places to be looking or what there is to do, anything like that we're able to help with all of that.
Dave: Alright, Shawna also with us today talking a little bit earlier. There was a property Thom mentioned last week and I don't know why it intrigued me. We just talked about a place over on Country Lane with 20 acres but this is a property with a nice home on it and is it 41 acres?
Shawna: It is. This is a beautiful property, custom built home. 4600 square feet.
Dave: So, it's a big house!
Shawna: Nice big family home and it is on 41 acres. Fully irrigated, all set up for very easy and convenient irrigation with siphon tubes and gated pipe. Also has a 48x43 barn in the lower level of the lower area of the property. It's completely set up, the gentleman that's selling it has been running some registered Angus cattle on there and growing some really good top quality hay.
Dave: They're not included with the sale right?
Shawna: No, I'm afraid those cattle are going to be going to auction here pretty soon.
Dave: But it is, and really you could pretty much farm anything whether you wanted to do cattle or whether you wanted to do agriculture.
Shawna: Yeah you could do anything you wanted to do, you could change that up and put in grape vines, you could do anything you wanted to do on that. It's got plenty of water, it's just a beautifully set up property.
Dave: Now, what is the address and how do they find this?
Shawna: So the address is 18840 Goodson Road. You go out to Highway 26 a little way, just the other side of Caldwell. It's a Caldwell address. The school district for that is actually Notus which I understand is a good school district for the kids.
Dave: Go be a pirate!
Shawna: Go be a Notus Pirate! So it's out there and it has great views in all directions, very private. It's just a really really great property.
Dave: And Thom mentioned it last week and I went home and I mentioned to my wife "They've got this property with 41 acres" and she looked at me like "Are you nuts?" You don't like mowing the lawn!
Shawna: You know if you don't want to do your own farming, buy it and lease that farm land out to one of the local farmers and just enjoy the privacy and the view.
Dave: That would be nice. So you can check both of those properties out at coregrouprealty.com and as you mentioned just put the address in the bar that is very convenient to do that. So we're at a time of year with the holidays on us with the feature inclement but real estate still appears to be moving fairly well!
Shawna: It's still moving along pretty good. Our inventory is very very low, I just looked at the report that came out from our realtor's association yesterday and we're actually at a lower level of inventory this year than we were last so there's not a lot of homes out there right now. So prices are holding very good and things are pretty busy.
Dave: But I guess what that means though is if somebody is selling, get a hold of CORE Group Realty and there's a good chance you'll get probably more for your property than you had anticipated and it probably should sell fairly quickly.
Shawna: Yeah! If it's a good sell-able property we will get out there and get some good professional photos so we can show it in it's very best light and get it fully marketed with all of our radio programs and all of our other marketing.
Dave: The social media.
Shawna: Social media, we get it out on Facebook, we just push it out everywhere and if there's a buyer for that property we're going to find them.
Dave: Now for an agent when inventory is so low, I mean, basically what that means, that agent's gotta work even harder yet.
Shawna: They do, because there's just not a lot of things for people look at so your buyer's agents need to be really watching for things. They really need to be checking out our Coming Soon areas so they have the information before it actually hits the market.
Dave: Thank you so much ladies for joining us and giving Thom a bit of a rest as he tries to re-coup. See that teaches him not to go on vacation.
Shawna: It does, you would think!
Dave: Catches a cold he should know better than that. We're going to continue on the other side here this is the Idaho Real Estate Buzz again the website is coregrouprealty.com and you can always check that out and you can always call 933-7777 if there's not somebody in the office picking up the phone, somebody will answer that call and get it directed to where you need to go. The Idaho Real Estate Buzz continues on the other side here on 580 KIDO.
Dave: This is the Idaho Real Estate Buzz I'm Dave Burnett along with Michelle Guth from Diversified Mortgage an Equal Opportunity Lender as we get together and talk all things finance which really is what Michelle really makes the world go around when it comes to buying a home. Going to talk about a couple of topics that I don't know if we ever really touched on these before. One would be, you know we're coming to the end of the year, and some people may have, well, they may not have claimed enough deductions, they may have claimed too many, so their withholding's for paying back taxes next year may be off and they may owe the IRS and that can make a difference.
Michelle: Absolutely, you bring up a good point Dave. That is a trend we've been seeing as of late with several of our clients where they are in a re-payment plan for previous tax years and unfortunately it does impact their debt to income ratio so when they're trying to qualify for a home it can impact how much of a property they can purchase with regards to price point.
Dave: Now are we talking how much I in years past have had to repay taxes where it's like $50 a month. At what point does it really begin to impact, or is there a point per say?
Michelle: It depends on the client and their overall income level and other debt levels. So it is specific to the person but unfortunately we talked before where for even $25 in payment can impact your purchase power by $5,000. So it can be pretty significant and unfortunately for example if we have somebody who just recently entered into a repayment plan we have to show that they've been in a repayment period for at least 90 days before we can move forward with the mortgage.
Dave: Oh so it's really kind of a two pronged problem.
Michelle: It is.
Dave: One is the fact that they owe money to the IRS and by the way the IRS will get their money and two the fact that they may not have been in it long enough so it may delay the whole process.
Dave: So obviously the idea is to get your deductions correct so you're not having to re-pay the government but it's something now where we're in the month of December where people will need to think about because tax season is right around the corner.
Michelle: Exactly and factoring in that expense I mean it's something you definitely want to pre-plan for without a doubt. The other thing that lenders take that so seriously is because an IRS lien can surpass a lender's lean on title so that's why we don't like to see any type of IRS information, judgments and so forth because it can impact our ability to be in first lane position on the title for the property.
Dave: OK and let me ask you this and I don't know, with the IRS do they put that on your credit report?
Michelle: It does typically show up under the public records section where it shows that they do have a tax lien filed against them. If the client was proactive and they were able to get into a payment before it ever got to the point of becoming a lien, then that's where we're going to be in great shape.
Dave: OK so lien is bad, a repayment program is better.
Dave: Well let me ask you about this on a couple of things because we are reaching the end of the year and I mentioned credit checks. If somebody hasn't done one for the past year is there a better time of year to be doing a credit check? Is now the time to do it?
Michelle: I think that now is the optimum time to buy, so often people are wanting to buy during tax refund season. They're getting that refund, they're getting ready to get out and start looking at homes so I would say look at it now. Many times we do find there is erroneous information on their returns and going through the dispute process with creditors can be time consuming so pull it, absolutely see if there's anything outside of the norm there and if you do want to file a dispute make sure and get that process going because the creditor does have 30 days to respond to your dispute so it can take quite a period of time to get through that.
Dave: And responding doesn't necessarily take care of it from personal experience, I had Sprint on a credit thing that said I walked away from a bill which I've never had Spring in my life so they responded within 30 days and said "Yep you owe it!" is what they said, it took 6 months to get them to go away.
Michelle: Yes everything is pretty much in 30 day windows when you're going through the dispute process. They can respond and they can say "We want this piece of paperwork" you send it to them then they have 30 days to respond. The fair credit reporting act has required that the creditors respond within a timely manner within that 30 day window or they can be in default of the dispute but unfortunately when you're dealing directly with the credit reporting agencies, they have to do their due diligence they have to take the documentation you receive, go back to the creditor and so forth. So it can be time consuming.
Dave: So now would be a great time if you're planning on this Spring taking out a loan of buying a home to get that credit checked and then the nice thing is that I really like with you there at Diversified Mortgage if somebody's looking for some advice, even if they're not looking until April or May no problem with coming in now and talking about it.
Michelle: Absolutely not, in fact I encourage them to come in now so we can have a game plan in place and be identifying any potential issues that could be a problem down the road so we can try and address them now or work towards addressing them and have them hopefully rectified hopefully by the time we're ready to buy, March or April.
Dave: One other thing I want to talk to you about and that is self-employed. For those, I am partially self-employed we've talked about doing some re-financing coming up this Spring as well. What's the difference between being a 10-99 because I'll have more income on 1099 and W-2, how does that work?
Michelle: I'm glad you brought that up. I've had clients that unfortunately have thought they were in a great position to buy but have come in finding out that they don't qualify because they recently have been transferred from a W-2 position to a 1099 position. With the 1099 position the lender's are going to consider that to be self employed, so even if they're working for an employer in their mind they're thinking "I'm not necessarily self-employed" but it is a self-employed earning. The reason for that you well know is that can determine what you're going to show for deductions and so forth. So until we see those taxes we really don't have what kind of income we're going to be working with to qualify. So if a borrower has recently gone to 1099 we need to see 2 years receipt of that income on taxes before we can count it.
Dave: And what is the reason for that? I know you said that and I said *gasp* now I've been 1099 for several years but this year I've done more. So just 1 year because you don't really see the deductions or what ...
Michelle: Right, there's just not enough trend history for us to determine how much net income they're going to receive from that 1099 income from the tax returns and unlike a W-2 wage earner where we can look for year to date earnings, consistency in pay and so forth there's not a lot of variable there whereas with 1099 they can dramatically change their deductions from one year to the next. They typically have the ability to write off more items than maybe a W-2 wage earner does so as a result their net earnings could be significantly less than what we would estimate which is why we need to see that 2 year trend.
Dave: Or they could be significantly more!
Dave: Yeah, because i mean, and I guess not to talk about my situation but this year I'm going to have more deductions this year than I've had in years past because I've opened an office in my home and different things. What advice would you give somebody who's a 1099-er.
Michelle: All the more reason to go talk to a mortgage lender. Have them take a look at where you're at. Hopefully you've already been doing it for a year + maybe this is going to be year two. Visit with them about what deductions you may have and they can at least do some form of an estimated income analysis to give you an idea of what you may have for qualifiable income when you do go to apply for the mortgage.
Dave: Alright very good. And of course interest rates have been a conversation that's been going on all week long as far as the federal government and what happens. In the year ahead if we just kind of take a broad brush, let's get out Michelle Guth's crystal ball here, we're expecting more interest raises throughout the next year or more, what will that do to loans and the lending industry?
Michelle: Well in the grand scheme of things I don't think necessarily an increase in rates is going to be a bad thing, I do think it is good for the economy because they have been held so artificially low for so long. It's going to help strengthen the economy, help without returns and other forms of investments but with regards to mortgages, it can have an impact on our buyers especially those that are first time home buyers maybe looking in the first time home buyer price arena, it can make a huge difference. That's why again I think it's imperative that you do all of your due diligence very soon, don't wait until you know "Oh I want to buy a house in the next 30 days!" Do your due diligence now so you know what you're working towards and hopefully you have some cushion within what your expectations are for mortgage so that as rates do increase which I think there is a high likelihood that will be the case you are well educated and prepared for how that is going to impact you potentially.
Dave: And let me ask you this and it's obviously it will be partially opinion based, but the presidential elections have been settled. We know who the president to be will be with Donald Trump coming in to the presidency. Has there been any chatter in the banking and the real estate world as far as finances go, is that a good thing? Is that a bad thing? Taking the politics out of it, taking the donkeys and the elephants out of it but a man with a business background, has there been any chatter about that at all?
Michelle: Boy, I think a lot of chatter. What the end result's going to be is a whole other question so I wish I knew what the answer was going to be to that.
Dave: Your crystal ball's getting foggy!
Michelle: It is a little foggy so looking through that fog I'm actually hopeful with many of these changes we've had such status quo with things in regards to finances that hopefully it will help the mortgage industry as a whole. And we had talked about hopefully having some form of adjustments to the Dodd Frank rule. I'm hopeful that we'll see a little bit of loosening on some of that which will in turn help consumers in my opinion where they're wanting to address some of the items with the CFPB but again that's something that even if they did look at that, that's months down the road. That's not a quick process to go through but I'm hopeful. I think it's going to be good for our industry.
Dave: Alright, very good. Michelle Guth with Diversified Mortgage. So if somebody is self-employed and they're a 1099 earner and now they're going "Uh oh, maybe I'm not in good shape!" or maybe you need to get that credit check done you need to know what to do or if you found something on your credit, if somebody wants to get a hold of you to set up an appointment just to chat about what they're doing in 2017, isn't that weird to say that?
Michelle: It's coming up fast!
Dave: In 2017, how do they get a hold of you?
Michelle: Give us a call at 853-7878 or visit our website which is DMGloans.com or even stop by our office we're right there on the corner of Marigold and Glenwood right across from the Garden City Hall and Library.
Dave: Perfect, Michelle thank you so much, do appreciate it as we go into this holiday season and everybody's busy busy, take time, make your plans for 2017 as my dad always told me, "Make a plan, work the plan!"
Michelle: Love it.
Dave: Michelle, thank you so much. We'll continue on the other side this is the Idaho Real Estate Buzz here on 580 KIDO.
Dave: This is the Idaho Real Estate Buzz I'm Dave Burnett. Thom Dallman taking a bit of a break from the microphone this weekend because well he's still got a froggy voice so we're going to give him a little more chance to heal up here during the cold weather but Shawna and John join us in this segment. We're going to be talking about something that you might not even think about when you go in to buying a property but suddenly it pops up and there's a lot of questions in there. Shawna, John, that would be wells and septic systems.
Shawna: That's right. There's a lot of things that you need to think about and be aware of when you're looking at properties that have a septic or well. Surprisingly enough there are quite a few right within the city limits that are still on septic systems.
Dave: Yeah I was telling you during the break that we bought a house a long time ago but when we bought it, it was on septic and the requirement by the city of Boise was that it had to be put in to city sewer before it could be done and if I remember right I think it was the owner that had to do it but he came to us and then said "Would you pay for half of it?" We went back and forth and our agent at the time said "You don't have to, unless you just want to be nice, you don't have to do that." So he wound up having to get that switched over from septic to city sewer but if you're not in that situation, I mean are you finding it John out there that you're finding situations like that that are on well or septic that have to be switched over?
John: I have seen it where there is an option now whether or not there is some mandate in the future that comes forth I have not seen it where it is required at that point. I've seen it where it's plumbed up to the street and maybe you're just outside of city limits and not having to do it, so you can keep your septic or well whatever is on board with the property now, but some buyers may want that. They kind of like that option moving forward. But I've not seen it where it's a mandate.
Dave: Well I think this property was in the county and then was annexed into the city and that's why it was mandated that it had to be that way. If you're a buyer and you're looking at a property and it's got a well on it, what do I need to know going in to that to make sure ... do you get it tested? I mean, what do you get done to a house?
Shawna: Yeah, you should always have that well tested, there's a couple of different things you should do. You should have it tested for potability to make sure there's no bacteria in the water. You should also probably test for nitrates, arsenic all those different things that can be in water. Most wells you really want to do a productivity test to make sure that that well is recovering at the right rate so you know you're going to have adequate water. Most of your lenders will require at the very least they will require the potability test and some lenders will require the productivity test as well simply because if you don't have water, you don't have a good viable property.
John: As well, home owners should be taking it on their own onus and really doing these well tests probably about once a year, that's what I would recommend. And that's going to mean taking a sample, running the water for about 10-15 minutes before you gather that sample and using a cup with a lid that doesn't have any outside contaminates already like don't use a Kool-Aid cup or something that you've already used.
Dave: You've got Kool-Aid in your well!
John: You don't want those creeping in to the test as well. But homeowners can do it, or they can contract with a company that will come out and test the well for them but people can always take it on themselves and collect that water like I said about once a year. Take it over to a lab, have it tested, the Idaho department of water resources is an excellent resource for finding out where a close lab is to your home making it very convenient to have it tested.
Dave: Let me ask you this where we've had snow, we've had rain, the ground is good and saturated. Is there a time that's better than another for a well? I mean if I go and have a well tested in the Spring when run-off's going on, is it going to test better than it would in October?
Shawna: You know that's a pretty good question, that might require a bit more level of expertise than what I have on wells. I would think early Spring when there's a lot of run-off and a lot of things going on depending on where your well is, if you're out on a farm and you've got the stuff that you have on farms running around on farms running around a lot you might have a higher possibility of having contamination in your water. That I would think would be a time where you could have some contamination.
John: And in an area like Robie Creek where you have run off from the hills and just around you, you don't have that farm land around you so probably wouldn't matter the time of year. I would definitely point any buyers who are interested or homeowners that are interested in getting their tested for all of the things possible and season, when to do it, I would point them in the direction of the Idaho Department of Water Resources.
Dave: And I also would think, if you're a homeowner and you're on a well, if you have it tested regularly to keep good records on that.
John: Oh definitely.
Dave: I would think, if I was a buyer and I was looking at a well I would want to look back at years past and see how it's performing now compared to five years ago.
Shawna: Yeah that would be a great thing to have if you are going to sell your property. I think that would be very reassuring to any buyer to see a consistent testing.
John: And again homeowners who are taking that responsibility on themselves and having that well water tested yearly should take the next step and keep it on record. That way future sell of the home they can always transfer these documents to the potential buyer.
Dave: Well if you own the home and you're showering in it and drinking it I would think you would want to have it tested fairly regularly. Now when someone is looking at the Multiple Listing does it say right on it if it's a well and septic?
Shawna: Yes it does.
Dave: OK so that's very clear. So the agent should be very quick to point out the fact that this is a septic system, this is a well system. Are there areas I guess outside of the cities that it's fairly common for being well and septic?
Shawna: Yes certainly when you get outside the city services you're going to be on well and septic but it's surprising how many are still within the city limits as well.
Dave: Hm. Should I as a buyer be concerned about well and septic other than just taking the precautions we just talked about?
Shawna: You know that's kind of a personal thing. I would not be concerned about it. I personally prefer well water because I'm not real fond of the taste of chlorine. But every well is unique and you do want to test it and make sure it is good fresh water so it's kind of a personal preference.
John: And again, depending on the buyer's loan application coming to the table on any listing that does have septic or well, that loan application is going to have a built-in test on that well.
Dave: I was going to ask that, if the bank or the lender is going to require that to be assessed because let's face it, they're the one buying the property.
Dave: So that will be required to be done.
Shawna: Most lenders will require the septic to be pumped before they transfer ownership of the property as well.
Dave: OK so septic is pumped, water is tested, you're good to go in to there. Interesting. I guess I've always thought of when I'm thinking about wells I don't know if you guys know this, we live in a desert.
Shawna: We do live in a desert!
Dave: It's a high desert but we live in one! So wells have been something I've always been kind of thought "Hmm, I wonder if that's a good idea or not, we're in the high desert after all" but I guess if the water's that low my water coming through the system might be low as well!
Shawna: Well you know we are in a high desert but I understand in a lot of areas the water table's actually fairly shallow here. You get up in to the Emmett valley there's problems with ground water seepage in certain areas. So I don't think that you normally have to go as deep as you might think for a high desert area.
Dave: Very good. Shawna and John thank you so much for sharing with us. If somebody has questions about wells, about septic and properties they can contact you here at CORE Group Realty and just go over a little bit what we've talked about as well?
Shawna: Absolutely! We'd be glad to talk to anybody and then like John mentioned there are great resources out there online to go right to the source and get really good information.
John: Idaho Department of Water Resources!
Dave: 933-7777 is the phone number to call coregrouprealty.com is the website to check out as well guys, thanks so much for joining us and it's a great time, it's a really great time to sell a home right now with inventory so low, it's also a great time to buy homes as well and you can do it at CORE Group Realty. We'll be back again next week hopefully Thom will get himself healed up a bit and will join us again here on the Idaho Real Estate Buzz on 580 KIDO.
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