We have some great guests this week! Tune into find out what's going on with interest rates, financial planning for your future and so much more.
Dave Burnett: This is the Idaho Real Estate Buzz. I'm Dave Burnett with Thom Dallman, the co-owner, designated broker of Core Group Realty. Coregrouprealty.com, that is the website you can go to right now. Unless you're driving, of course. That's the website-
Thom Dallman: Pull over, if you're going to do that.
Dave Burnett: I always like this, Thom, it's a great thing to do on a Sunday morning. You get up and just log on and check and see what's going on in the real estate world. I'm not in the market to buy a house, but I still like to do it to see what's out there.
Thom Dallman: It's always good to keep tabs on the marketplace and see where it's going and what's happening out there. I personally like to do it because I like seeing the newer stuff and seeing what new things are going in. I usually will turn on HDTV and watch the remodel shows, and I'm sitting here looking at stuff.
Dave Burnett: Yep, absolutely. And Core Group is so user friendly. Not only do you have Core Group's properties that you deal with directly, but also through the website you have access to the MLS to look at a bunch of different houses out there.
Thom Dallman: Yep. You have access, if you just want to be curious and see what you can get for over $1 million, you can go on there and look at that, to just seeing what's available in the downtown area, what's new and upcoming in condos-
Dave Burnett: Or, if you're wondering, "That house in the start of my subdivision, I wonder what they're asking for that?"
Thom Dallman: The house down the street, yeah. Exactly. Everybody knows that their nosey neighbors love to explore that stuff.
Dave Burnett: Okay, you just called me a nosey neighbor, so thank you very much.
Thom Dallman: Well, I didn't say you specifically, but-
Dave Burnett: It is a good website and that is coregrouprealty.com so check that out and find out more information about what's happening with Core. One of the things going on, you have a new listing you want to share.
Thom Dallman: Yeah, check out the featured listing page to look at our listings. We have a great listing that just came on this weekend, it's at 2511 W. Teano Drive, in Meridian. This is in that Bridge Tower Crossing Subdivision, so it's a great, amazing location right there in the middle of Middleton.
Dave Burnett: One of the hottest places in America.
Thom Dallman: Right? Or Meridian, I don't know why I said Middleton. Meridian, sorry. One of the hottest places, there are so much happening in meridian these days, and so many people gravitating to it 'cause they're just, yeah, they're just so much there. This house, in particular is a four bedroom, three bath with a three car garage. It's 2,725 square feet, built in 2004. It's got all kinds of great amenities like granite countertops, kitchen island, gas fireplace, and stuff like that.
But one of my most favorite features about this house is that it has a, not just a large bonus rec room, it has a large hidden bonus rec room.
Dave Burnett: What do you mean by hidden?
Thom Dallman: It's hidden behind a book case. You literally open a book case and walk into this bonus room. It's a secret entrance.
Dave Burnett: Oh, I've always, since a kid, I've always wanted a secret passage way.
Thom Dallman: Gosh, me too.
Dave Burnett: Or a secret room like that you open a book case and bam, there's your secret room.
Thom Dallman: I was fortunate enough, the very first house that I ever bought here in Boise, had a secret room. It was just a small, little storage room, but you literally went into your coat closet and pushed on the back wall and it opened up into this secret little hidden cubby where we could put all our valuables and stuff like that, that we didn't want out.
Dave Burnett: That is amazing.
Thom Dallman: But yeah, when you run across these homes that have the fun hidden book cases. There was a home that we had seen, many moons ago, that we thought about buying, that actually had a hidden slide, it went from the upstairs room down into a bonus room in the basement. Through a secret book case, that was in the wall. You just opened up this book case, and there was a slide that went all the way down. I was like, "God, I always love a house like that."
Dave Burnett: I think it has, and for me, a secret room has, the home I grew up in was built in the 1890s. It was a very old home, and they had a laundry shoot that went from the second floor all the way to the basement, and as kids, we used to go up and down that.
Thom Dallman: Oh my.
Dave Burnett: Oh, I know. It's amazing we didn't die, but it was, kids don't try that at home, but it was kind of like a secret passageway, we could sneak out of the house, and your parents never even knew it. So-
Thom Dallman: Oh, you were one of those kids, huh?
Dave Burnett: Oh yeah, it was. But having a secret room, I don't know, to me it's just, it's that Mrs. Green with a candelabra in the secret room. Just fascinating.
Thom Dallman: Exactly.
Dave Burnett: Again, where is this house?
Thom Dallman: So, 2511 W. Teano Drive in Meridian. Four bedroom, three bath, three car garage, like I said. 2725 square feet, and it's coming on the market at $380,000. Has a fire pit, fully fenced, central vacuum equipment, an extra office space as well. Jetted tub, just a great property to check out if you're in the market.
Dave Burnett: So, if I want to go see it, do I have to call an agent here at Core Group to go see it?
Thom Dallman: If you want to get in today, yes. Give us a call. But, if you want to, we also are having an open house tomorrow, Sunday, from 11 to 2.
Dave Burnett: Nice. The secret room will be shown.
Thom Dallman: And the secret room will be, I guess, open for anybody to check out.
Dave Burnett: I may have a plan for tomorrow, now. I might swing by and take a look at that.
Thom Dallman: Exactly, do it. Do it.
Dave Burnett: And the nice thing is, and we talked about it earlier, it's in Meridian, which is one of the fastest growing and hottest communities, not just in Idaho, but in the nation.
Thom Dallman: Oh yeah, oh yeah.
Dave Burnett: It's amazing.
Thom Dallman: It's ranking up there, just like everywhere else in Idaho. Just keep's ranking high on all the lists of affordability, great place to live, with so many people moving into town and the demand still being up, yeah, it's a great community.
Dave Burnett: It is fascinating to me, I think I moved here in the valley in 1988. Which, is not that long ago, but seems like a long time ago, and I think the average price of a home was between $100,000 and $150,000 at that time. Back in that, I remember when I was looking for a home, they said, "Well, you're going to pay somewhere between $100,000 and $150,000 for a nice home. 2,000 square feet." But the price of homes has continued to go up.
Thom Dallman: Yeah, we're at all time highs right now for home prices. Just, January's numbers just came out in Aida County. The median home price is at 200, just right below $280,000.
Dave Burnett: Wow.
Thom Dallman: $280,000 yeah, last year January's median home price was at $240,000, so we're almost $40,000 above what we were last year. That's how much the market has grown in our area.
Dave Burnett: Now, one of the things I'd like to point out, because everyone's going "Yeah, see, there's that real estate bubble." When we went through this before in 2008, 2009, part of the problem was they were giving loans to, pretty much it was a mirror test. They held a mirror under your nose, and you created steam, they'd give you a loan.
Thom Dallman: Exactly.
Dave Burnett: Things are not that way, there are qualifications for getting a loan now.
Thom Dallman: Exactly. There are very regimented guidelines to the loan process, so it's not an easy, it's easy to get a loan, as long as you qualify, but you do have to qualify. You have to go through the process, you have to prove that your credit is good, that your income is correct. They do that verification nowadays. No, the home pricing that we're experiencing right now is due to the lack of inventory. We talk about that all the time. We're at, January's numbers once again came out and we're still at 1.7 month supply. That means if we don't get another home listed, we're going to run out of homes to sell in a month, almost a month and a half.
Dave Burnett: Everybody gets to go on vacation.
Thom Dallman: Yeah, so, last year, in 2017, it was at 2.1. When you look at, back in history, our market where we want to be to have a really fair, even market is around that 5 to 6 month supply. It's truly a seller's market and the fact that there's very little on the market, but there's still a high demand, our sales for January were more than 2017's. We're at 605 sales, versus 547 in 2017. We definitely have a huge demand. We have buyers looking.
For example, we have I know particularly, we have a buyer that's looking in Eagle, for a home, with a swimming pool. That's a hard find in a regular market, let alone this low inventory. So, FYI, if there's anybody in Eagle that has a home for sale, that they are thinking about selling, with a pool, we have a buyer for you.
Dave Burnett: It is something to really think about. If somebody is in the position that they want to downsize, or upsize. If they're wanting to move to another area, if they're wanting to just move out of Boise and move out to Middleton or Star, it is a great time to do it.
Thom Dallman: It's a great time to do it. It's a great time to just talk to someone. I will give an example. This week, I had a listing appointment with some friends of mine, because they were considering moving from south Boise, out pretty far south Boise, but thinking about maybe moving downtown somewhere, and so as we went through the whole process of evaluating what their home is worth, how much equity they have in it, and then also what they could get, what the qualify for now, we connected them with one of our preferred lenders to get them pre- qualified and see what they qualify for.
At the end of the day, it made more sense, and we discussed this, it made more sense for them to just refinance and stay in their house. So, it's not, we're not here to just push you into buying a home and selling your home. We're here to really consult with you and find out what the best option is. That's what I love about the team work that we have with our lenders. They have that same philosophy. They're not going to push you into buying a home. We're going to sit down with you and have an open discussion about what is the best practice.
Dave Burnett: Well I think for any business, it is just smart business for longevity because you don't want a one time customer, when somebody, the average person, whatever, five or six years, you want them coming back in six years because they were satisfied with the service they got.
Thom Dallman: Well, not only coming back, but telling people, "Hey, gosh, you should go to Core Group. We met with them and they didn't push us. They gave us a direction to go that was a fit for us." It's not just about the return client, it's about the word of mouth and being an advocate for us out in the marketplace.
Dave Burnett: Very good. We're going to continue on the other side. We talked a little bit about the finances. We're going to find out a little bit more what's happening with loans, what's happening out there if you're looking for a mortgage and about pre qualifying. I'm going to talk about all that as we continue. This is the Idaho Real Estate Buzz. He is Thom Dallman with Core Group Realty, who brings you this show each and every week. Find out why you get more with Core.
Dave Burnett: This is the Idaho Real Estate Buzz. I'm Dave Burnett. He's Thom Dallman, co-owner, designated broker of CORE Group Realty. Coregrouprealty.com that is the website for you to go to find out all things real estate, or you can call 208-933-7777.
Thom, it's a great day to buy real estate as things are going well.
Thom Dallman: Always great to buy real estate as far as I'm concerned.
Dave Burnett: Well, you think about it, it is a good investment.
Thom Dallman: It is. It's a great-
Dave Burnett: Some people will want to put money in the stock market. It can be volatile at times.
Thom Dallman: Exactly.
Dave Burnett: But, over the long haul, traditionally real estate has done very well.
Thom Dallman: Exactly. Most people who invest in real estate usually gets some kind of a financial return on their investments. Obviously depends on situations and stuff like that, but, yeah, it's a great investment. Especially if you intend to put that money into something long term.
Dave Burnett: Very good. As a matter of fact, Ron Wieczorek is with us again today, from Eagle Home Mortgage, to talk about home loans. Just a little bit Ron, we'd kind of like to talk about the marketplace because there's been so many things that have happened over the past couple of weeks.
Ron Wieczorek: Right. Not just the past couple of weeks, but the past couple of years, but more notable over the past couple weeks. We've seen a lot of market movement. Whether it's been in stocks, whether it's been in bonds, which can directly the mortgage rates and to that end, has affected the mortgage rates. We've seen them go up quite and bit and you'd be naïve to think that the rates were going to stay as low as they were. Historically, you guys in this room have probably seen interest rates maybe even double where they're at today. Even at low rates that can impact anybody's affordability on a new home, what they're looking for now, and how to adjust to what they're looking at.
If you're on the fence to buy a home, what better endorsement to get out there and find that home, to put an offer on it, and finally pull the trigger with interest rates maybe on the rise, maybe continue on the rise. We always talk about our crystal ball, I don't have one. I wish I did, I might not be sitting here with you guys today if I did, but we don't know what's going to happen in the market. It's kind of been surprising how fast these things can move on us. Anybody that has money in the stock market will know that they've had a volatile couple days, even week, where they saw ... You're afraid to log into your iPhone or computer or however you get your news and however you get your feed or on the radio, but you're just kind of ... you're in a limbo spot.
I think it's, more than anything, it's pushing people off the fence that maybe were hesitant before. They start seeing that if they were approved for a certain amount, maybe it wasn't what it was two or three months ago, so they have to reevaluate the plans and take a harder look at buying because leasing and renting is going up as well at the same time as well.
Dave Burnett: Oh, yeah.
Ron Wieczorek: You're in a situation where it's still cheaper to buy a home than it is to rent, depending on the square footage and what type of property you buy.
Thom Dallman: We still have so many people moving into town that's affecting that supply out there with inventories continuing to be low.
Dave Burnett: Let me ask you this question, Ron. At Eagle Home Mortgage, do you have people that have been sitting on preapproval numbers for a while, does that happen?
Ron Wieczorek: I can almost set my clock to when I going to hear from some folks seeing if their preapproval's still good and where the rates are and what that affordability looks like. Unfortunately that conversation, over the past week, was a little less than it was a week ago with the rate shift like we have had. I don't want to scare anybody, the rates are still excellent. It's just when you're on the fringe and you can by, at least in underwriter standards, barely fit into a bucket, then you're going to less fit into that bucket with any kind of ... even a marginal adjustment in rates is going to do that. To answer your question, yeah, I have a lot of folks that I've been ... One comes to mind. I won't name names. It's been two years now that we've been updating the preapproval every four or five months because credit's good for 120 days. We've been updating the preapproval and still waiting for that unicorn. It's not coming along.
Thom Dallman: That perfect property.
Dave Burnett: Let me give you my thimble full of economic knowledge that I have, because some people wonder why did the interest rates go so low. For the government, when we went into that recession, they kept dropping the interest rates to stimulate the economy. Now that the economy is doing well, they've got to raise it back up because the economy is cyclical. If it goes down again ... If we're at 3% loans, there's nowhere to go, so they got to get back up again so that if they have to they can drop it again.
Ron Wieczorek: Right, and you're battling a few things in there, it's not only the government stimulus, it's ... You have inflation comes into the mix and that a lot of times we'll see. Anytime I see the word inflation, I get scared. I start checking the rate sheets to see what happened that day just because that can have a great impact on the rates. But, you're right. After we saw the housing crash, we saw that the rates hit all times lows just to kind of stimulate that. People were losing equity, people were losing their houses. I read an article this morning that since 2011 that appreciation is up, and this is the United States, not just the Valley, but up 48% since 2011. The income's only up 15% so you do the math.
Thom Dallman: Yeah, right.
Ron Wieczorek: You mentioned your home being a great vehicle as an investment, and what we see a lot of people doing is just not buying a home, we see a lot of people taking money out, equity out of their house to maybe get them out of ... you know, life happens. You didn't prepare for your son or daughter going to college and you have to pull some money out. You maybe want to put new cupboards in or update the house, or maybe you have been shopping and you didn't find anything you really loved and then you go back and say, "Maybe I do love this house." And you do some updates. That's where that equity can come into play.
Thom Dallman: Just had some clients do that this week. They explored their options and the final decision was, you know what, "We love our house enough to just stay here. We're going to just refinance, get some equity to pay off some of our major bills that we just accumulated, then fix up the house with the rest of it."
Dave Burnett: Let me throw this out there, that is, now that we've given all this scary news. There is a way-
Ron Wieczorek: That's what I was trying not to do, actually.
Dave Burnett: Here's a positive. There is a way for you to get more for your money, and that is perhaps, move a little bit further out than you were thinking.
Ron Wieczorek: I think Thom can speak a lot more to that.
Thom Dallman: Yeah, yeah. There's a lot of the rural areas that have so much development going on. The prices are maintaining and doing well, so you can get more for your money if you're looking at areas like Kuna, Star, Middleton, Gem County, just areas like that.
Dave Burnett: When you say rural, we're not talking Adrian.
Thom Dallman: Yeah, I'm not saying-
Dave Burnett: You're talking Middleton and Star, cute hotspots.
Thom Dallman: Hotspots that are growing right now and have some great development happening in those areas and stuff like that. Especially places like Kuna that just have amazing school system right now and have so many people moving out there and so many new homes and stuff life that that it's just developed into this great community where people just have such respect and admiration for their community out there and love for each other and their neighbor. I'm not talking about living in corn fields, obviously, but these beautiful small towns that still have the small town feel but still accessible to ... they're making everything so accessible to Boise. It's a 15 minute drive, 20 minute drive from most places in the Valley.
Dave Burnett: Ron Wieczorek is with us with Eagle Home Mortgage, so if somebody's preapproval value may have been $200,000 six months or a year ago, are they looking then at trying to buy a home for $180,000 maybe, something like that?
Ron Wieczorek: Without exact numbers, that sounds about right, but at the same time we have seen it ... even though it's not as much as the appreciation ... We have seen incomes in the Valley increasing so it might still be 200. You know, you get a dollar an hour raise and that can equate to that $200,000 even with the rate shift, could be 200,000 still. It's not until you sit someone like me and take a look at the whole picture and say, okay this went up, rates went up, but your income went up, your spouses income went up, you're getting this other form of income. You actually might approve for more. It's not all doom and gloom. I'm not trying to scare anybody, but you want to know where you stand. It's kind of my point on that.
It's those kind of reevaluations, because you might not think of it, when you get a raise, how much it can impact. It's part of your everyday life.
Dave Burnett: Or you get some of your debt paid off.
Ron Wieczorek: Exactly. You throw that into the mix and then also you're looking at, wow I can afford a little more. It's not always ... Even with the rates going up, that number is still climbing.
Dave Burnett: But the rules still apply.
Ron Wieczorek: The rules still apply.
Dave Burnett: Preapproval. You've got to get that done.
Thom Dallman: Exactly.
Ron Wieczorek: I want to piggyback off what Thom said before I get into the preapproval part, because I think we have some time. Thom talked about a 15 minute drive. I think a lot of us in Boise have been spoiled with our commute times. I lived in Jacksonville for over eight years and Jacksonville by land mass ... might check how old I am, but it was the largest land mass city in the United States. It may still not be that, but it was at the time. Long story short is I had a 45 minute drive from my house to the parking lot downtown, then I had to walk 10 minutes to get to work. I got to work and everyone was like "You're so lucky. I can't believe you're that close. What do you do with the rest of your day?" I got to Boise, and I live on the outskirts just a little bit, and I had a 15 minute drive and everyone's like "Man how do you do it?" It really puts it in perspective. We're growing up at an alarming rate. Boise is, and the Valley is as a whole. As part of that growing up, it's just embracing that that commute's going to be just a little bit longer. And infrastructurally-
Thom Dallman: We're still so far away from where major cities are, where it's an hour to two hour drive to some places.
Ron Wieczorek: I laugh, because I look at the 2000 ... because the census is every ten years. You look at the 2010 census and, if you go on the USDAs website and look what still is considered rural area, there's parts of Meridian that are rural area and I'm like, that is not rural. I think once the ... If we get to 2020 and some of those places out in Kuna, Middleton, are considered rural. I think we'll laugh in 2030 and say, "Remember when that was rural?" I really think that's so close on horizon that the more that we embrace it, we won't be that far out if we just stretch out just a little bit right now. You're beating the rush to the other places that are even further out, even further out, because that's on my road map, that's on my radar.
Dave Burnett: But, all of that, you get that right down there again, you talk about those rural areas, there's loans that you have there at Eagle Home Mortgage that apply to that with great interest rates and terms available that are still available in places in Ada County.
Ron Wieczorek: That's absolutely true, and if you get on the USDA website and I usually do it when I have a client in my office or on the phone, and we'll take a look at the property address that they're looking at and we'll say, this still ... because that'll open the door on some type of loan programs. It allows for a little less down payment, and there's a lot of properties even that aren't rural that allow for a less down payment options, but that's one that comes to our mind quite often. That's why I mention it, because I do it so often, and do talk to clients and we look at what is still considered rural, but it opens up the play book of what we can do for that client that maybe doesn't ... Maybe used that money to pay off debt and didn't think they'd need money for a down payment, or as much money for a down payment. But are well qualified for a mortgage, it's just that they chose to put that money towards paying off debt and that's responsible in itself. That doesn't mean it should disqualify you from buying a home because you fit the other profile. There's no reason you should have to rent when you've been responsible and did things to better yourself or better your position.
Dave Burnett: You want to find out if you can get preapproved or get yourself qualified to find out more information about that home loan you can call Ron Wieczorek with Eagle Home Mortgage. What's your phone number, Ron?
Ron Wieczorek: It's 208-869-9154.
Dave Burnett: And if you're driving right now, ... I can't remember that, just go to coregrouprealty.com or call CORE Group and find out more information about Eagle Home Mortgage, an equal opportunity lender, and how you can get that all taken care of. We'll continue on the other side. This is the Idaho Real Estate Buzz, being brought to you by CORE Group Realty. Find out why they say you get more with CORE.
Dave Burnett: This is the Idaho Real Estate Buzz with Thom Dallman, the co-owner, designated Broker of Core Group Realty. CoreGroupRealty.com, that is a website. 208-933-7777, that is the phone number to call to find out all things real estate. You know, Thom, one of the things we talk about, when it comes to real estate there's two things: The home you own, sometimes very personal, very emotional. Sometimes you buy an investment property and it should be an unemotional investment.
Thom Dallman: All by the numbers, at that point.
Dave Burnett: Exactly. But I do want to talk a little bit about the financial aspect of owning a home. It is the biggest transaction, unless I win the lottery, it's the biggest transaction I'll ever make in my life.
Thom Dallman: Exactly. And, a lot of people, it's their biggest transaction and the biggest investment that they'll-
Dave Burnett: Yeah.
Thom Dallman: ... put their money into and stuff, as we always talk about. It's so important to have your trusted advisors helping you with that process if you're going to have that amount of investment into something.
Dave Burnett: Yeah, and so we decided at this point, let's have Max Wilson in. Max is with Northwestern Mutual. Max, welcome to the show.
Thom Dallman: Thank you for being here.
Max Wilson: Good to be here, thanks for having me.
Dave Burnett: We want to talk a little bit about, with all the economic, I guess I'll call it chaos, at least-
Max Wilson: Turmoil.
Dave Burnett: ... sometimes the news makes it noisier than it really is but, with the stock market going up so high and now, and it is a correction, going back down, but then you have the price of gold, it was through the roof for a while and then it was down, real estate, the price of homes ... Okay, we're talking about my money here. Let's talk a little bit about investments and perhaps real estate, and is it a good investment and what kind of investment. I'm positive it's always a good investment, but maybe what kind of investment it should be.
Max Wilson: Yeah. I think there's always a place for real estate in somebody's portfolio, whether it's just their personal residence or they're wanting to buy an investment property or something through like a real estate investment trust where they're pooled with other investors. It's an asset class, and nobody should have all their money in one place. So being diversified is-
Dave Burnett: Coffee can in the backyard. (Laughter)
Max Wilson: ... you know it's not going to go anywhere.
Thom Dallman: I think it's important to remember like I always kind of say, maybe our agents are not the right fit for you, maybe the lenders are not the right fit and stuff like that, maybe real estate isn't the right investment for your risk factors and stuff like that. So that's why I really wanted Max here, is to kind of talk a little bit about that and the importance of determining how much risk you want to have into what kind of investments and how you want to diversify and stuff. I'm not a "you have to buy a house, you have to buy a house!" type of person, it's very important that if you're investing in something, invest in something you're comfortable with.
Dave Burnett: Maybe the question would be "When is real estate a good investment?"
Max Wilson: Well I think home ownership is a good thing for most people, I'm a big proponent of home ownership, you get a lot of benefits of home ownership. I have rental properties myself, so I do see the value in having rental properties but I also put money in other places, and working with clients it's really about asking them questions, understanding where they're at, what they're comfortable with, what their goals are, and then figuring out if one avenue versus another is the best fit.
In my position it's about having a good team with me to be able to say "Hey Thom," somebody that you can talk to if you're interested in investment real estate, here's kind of the high level of how it works, but Thom is going to be the expert or the person to talk to. There's great resources around here in the valley, like Mountain West IRA if someone is looking at self-directing funds that they have in an investment account, like a retirement account that they can go buy actual tangible, physical property with their retirement account. Sometimes that's the right thing if they understand it, but it's just understanding what the options are, if it's the right fit for them and then how to do it.
Dave Burnett: Let me ask you this, especially since you are a rental owner, as far as an investment goes what is some of the upside to that? Obviously the price or value of the home inflating is the big benefit, but there's other benefits as well.
Max Wilson: Yeah, and I think especially where we live here, there's about 40,000 people that move here every single year, and so we've been the benefactors of people moving in with real estate prices. I bought real estate at a good time back in 2004, I bought real estate in a bad time in 2007, and the nice thing about the purchase that I made that was kind of a bad one, was I turned that into a rental property and it's worth more than I paid for it, it wasn't for a while but somebody else is taking care of the mortgage during that time frame and you sit there and get to experience the decrease in the principal on the note that I have there, and you get the house appreciation. Plus there's tax benefits with regard to it.
So, you get to appreciate that property, you get to write off expenses associated with it, so you can think of it as a retirement account that somebody else is funding for you, and if you leverage it with debt then you're not taking any money yourself to do that, so I think that leveraging, if you're comfortable with that and you understand it, is a great resource to be able to utilize.
Dave Burnett: Some of the risks that go with it though, and that is if you go cyclically through another market slowdown and crash as it were, you have the chance of perhaps going backwards.
Max Wilson: Correct.
Dave Burnett: As any investment really.
Max Wilson: Yep, and it's timing.
Thom Dallman: And it's one of those things where I think it's important to think about the longevity of how long you want to keep your money in these investments, when you're going to retire, things like that, and I think that's where it's beneficial to have a financial advisor be able to walk you through that. What is your long term plan? What is your 20 year, 30 year plan? When do you plan on retiring and pulling this money out and stuff like that. I think that's really the key important factor to keep in mind when you're going to meet someone, is to be able to talk about stuff like that.
Dave Burnett: I guess one of the key words in listening to you talk, Thom, one of the key words is the word "plan." So many people don't have a plan or don't have a clue. Is that correct?
Max Wilson: So I've done this for 12 years and I could probably count on two hands how many people I've actually met with that have a plan, have a written plan in place and have a strategic direction in what they're going. It's unfortunate that that's the case, but most people don't take the time just to sit down and start to prioritize what they do-
Dave Burnett: I'm going to do it tomorrow-
Max Wilson: That's good!
Dave Burnett: ... sure, I'll do it tomorrow. If somebody wants to get started on a financial plan, whether it involves real estate or not, what are the steps I need to take to get a plan put together.
Max Wilson: Well, the first thing you should probably do is find somebody that you can trust. I encourage people to find somebody that's credentialed, that's tenured, that understands what they're doing. Trying to find somebody with the right moral compass is probably the toughest thing to do, but-
Dave Burnett: How do I do that? Do I talk to friends? Do I look for ... how do I find that?
Max Wilson: ... I'd probably start with friends. You can look online these days and find a lot of information about a lot of people, but being a certified financial planner - that's the same as working with a CPA if you're going to do taxes, or working with somebody that's passed the bar if you're working with an attorney, which I think are important things, but unfortunately a lot of times people do just go talk to a friend and their neighbor. (Laughter)
Dave Burnett: So, if you're going to talk to a friend, get a referral from your friend for somebody who's qualified, don't just go talk to Billy down at the bar.
Thom Dallman: I think if you're getting referrals I think it's important to make sure that you ... right now everything is online, so it's important to go online and research that referral. That's what everybody is doing these days, is researching the referrals that they get to see what other people are saying, not just trusting one person, but going online and actually seeing what people are saying.
Dave Burnett: How's this for a crazy thought? If I'm looking for a financial planner, if I see that Thom was pretty well put together and kind of has a good direction and knows-
Thom Dallman: Well ... (laughter)
Dave Burnett: Thom who do you use for financial planning.
Thom Dallman: Yeah.
Dave Burnett: You try to pick people that look like they've got them self put together, and I think if we're being honest, I think everybody knows, some people you can't take their word for it, other people appear to be pretty well put together. Is that kind of the way to start maybe?
Max Wilson: Yeah, I love what I do, I've seen a lot of things both good and bad in the time that I've done this, and unfortunately there's a lot of bad that comes with it, just like anything else, so I think just doing your homework, doing your research, making sure that you've got somebody that you feel like knows what they're doing and interview them. It's the same as anything else, set a 15 minute time frame and that's what I usually do, is I'll tell people we'll talk for 15 minutes on the phone, we'll see if it's a good fit, allow you to ask questions you want and then if it's a good fit we'll move forward, if not then maybe what you're doing is good and there's no changes you need to make.
Dave Burnett: Now I have Max right where I want him. (Laughter) Max is with us from Northwestern Mutual. You say ask those questions. What are the questions I should be asking my financial planner?
Max Wilson: The main questions that I would ask is just a little bit about their history, maybe why they chose to do what they're doing, their education level, what their philosophy is when it comes to planning, are they doing comprehensive planning, if there's a better opportunity to go talk to Thom because there's a better fit and invest in real estate versus invest with that person, that they're open and honest to tell you "Hey I'm not the right fit for that, this is who you need to go talk with." Sometimes their benefits of their employer are the best thing for them to utilize and they are not in a position to use a financial planner at that point in time. Again, I think just understanding their process, their philosophy, how they get compensated for what they do, is everything aligned, where if you do better they do better, if you don't do as well they don't do as well. What are their conflicts of interest? If I refer somebody to Thom, is Thom going to pay me on the back end, or am I really just referring to Thom because he's the best guy?
Thom Dallman: Yeah, exactly.
Max Wilson: So I think understanding all those conflicts of interest with somebody-
Dave Burnett: So don't be afraid to ask questions.
Max Wilson: ... Nope, no. I always tell clients that any question that I ask them, they should be able to ask me the same question back. It's gotta be transparent, it's gotta be open, there's gotta be accountability in that relationship, otherwise you're gonna have potential issues.
Dave Burnett: Very good. You had a question?
Thom Dallman: No! I was waiting for you to ask one! (Laughter)
Dave Burnett: You looked at me, I thought maybe you had a question there! Max Wilson is with us with Northwestern Mutual, we're talking about getting that financial plan put together and whether it involves real estate as an investment, whether it doesn't. Now, when somebody comes to you, I would assume people will come to you and say "Alright Max, I've got all this stuff here. I've got this in savings, I've got this in 401(k), I've got this handful of Bitcoins."- (Laughter)
Thom Dallman: Oh, Bitcoins.
Max Wilson: Gotta have the cryptocurrency.
Dave Burnett: ... "And I have this rental property." Is that where you as a planner then go alright, let's sit these out and see what's the best fit, is that what you do?
Max Wilson: Typically a first meeting I'm going to sit and ask them questions for about 45 minutes to an hour, just to really understand their situation, lay everything out on the table, and then there's probably some follow-up stuff that we need to get, whether it's things from the accountant, attorney, benefits for their employer, statements.
We take all that, we put it together in a plan, and then we'll get back together next time and show them what that looks like based on what they're doing and then give them suggestions on things that they could do that might benefit their goals, whether they're short-term, long-term, personal, professional, financial, and then at the end of the day if they want to move forward with any of those things, whether we're doing it, they're doing it, somebody else is doing it - at least they've got a plan and a strategy to accomplish those things, and then we review that regularly and make sure that we're on track to accomplish those things and help them, from an emotional standpoint with the investment side of things, understanding that investments are investments, they can go down from time to time, and what's the strategy when those things happen, because the average person underperforms general inflation when it comes to investing because they make emotional decisions, and it's interesting to see.
Right now there's been tons of inflows into the stock market since it's gone up, and most people have kind of missed the boat with regard to that big run, but like last week on Thursday you saw the average person took money out, which is an unfortunate thing, because we've had-
Dave Burnett: That's not the time to do it.
Max Wilson: ... No, and we've had four straight days of an up market since then, but most people - not most people, but the people that make emotional decisions took those out on Thursday last week, which ...
Dave Burnett: Very good. Some financial planners will tell you ... mine told me "Just turn the TV off. Don't even listen to them." (Laughter)
Thom Dallman: I just wanted to really throw out really quick too the reason why Max came into my head as a really good topic here is because someone had contacted us through listening to the radio show, and asked the question "I've got this inheritance that I'm coming into. Should I just go ahead and pay off my home loan?" and so forth, so that to me was a question that I didn't want to answer for them. I'm not an expert at financial planning, so that's why I referred them to Max, because I know Max could help them with that, but it's important to know that if you have questions like that, you can call us, and if we don't know the answers or we're not the right people we'll get you to the right people and stuff like that. We always talk about we've been here in the community for almost nine years now, and we know a lot of people out there, so it's really important if you have questions to ask someone so that you can get them to a person. Sorry I just had to throw that out there!
Dave Burnett: No that's good, because that is a question, and the thing is there's not a set answer, it's not yes, it's not no, it's dependent on your situation-
Thom Dallman: Let's talk about your situation and your planning.
Dave Burnett: ... And that's where Max can help you out. Max Wilson with Northwestern Mutual, thank you for stopping by.
Max Wilson: Thank you, appreciate it.
Dave Burnett: This is the Idaho Real Estate Buzz, being brought to you by Core Group Realty, find out why they say "You Get More With Core."
Dave Burnett: This is the Idaho Real Estate Buzz with Thom Dallman, the co-owner and designated broker of Core Group Realty, CoreGroupRealty.com, that is a website for you to go to to find out all things real estate and what's happening with Core and really in real estate all around the valley. You have blogs up on there. You have the listings up there of homes, access to the MLS. You got a little bit of everything there on that website.
Thom Dallman: Yeah, we've got all kinds of great, useful information out there, including our service provider lists of all the people, trusted advisers, that we use on a regular basis that we've built great rapport with and relationships with and stuff.
Dave Burnett: That's a good thing.
Thom Dallman: That's a good thing.
Dave Burnett: Really, when you're looking sometimes for a service, it's just pointing at the phone book and hoping.
Thom Dallman: Right.
Dave Burnett: This way at least you know that this somebody that Core Group has had a relationship with and has had experience with, so it's that first referral, as it were.
Thom Dallman: Exactly so.
Dave Burnett: One of the things we want to talk about, and maybe it's something you have on your referral list, and that is when you get a home, you really need to have, above and beyond what's required by the bank, but you need an inspection of it.
Thom Dallman: Yeah. An inspection is super important. You just never know what you're going to encounter with a house. I know a lot of sellers who have lived in their houses for a long time and just have gotten so accustomed to it, but they don't really think about going into crawl spaces or into attics or things like that and assess the condition of the house and stuff. The inspection process is one of the key components when it comes to figuring out the safety and soundness of your home.
Dave Burnett: But it doesn't apply to older used homes.
Thom Dallman: Oh, gosh, no. New construction. Let's remember that right now. A quarter of our home sales is new construction. We have new construction happening right and left, and it is so super important to have that inspection during the, even with a new construction, and if ...
Dave Burnett: Which doesn't seem ... It's new.
Thom Dallman: Yeah.
Dave Burnett: Shouldn't it all be good?
Thom Dallman: Yeah, it should be good, you would think. One of the most common comments that I hear is, "Well, the city comes in and inspects it when they do, to make sure that it meets codes." The thing to remember about that is, A, they come early on in the process. For example, plumbing. They come to check plumbing for code. They come when the house is framed and check to make sure the plumbing is all in and that it's directed to the right spots and stuff like that, but a lot can happen during construction towards the end of the process and stuff like that.
I can personally attest to the fact that one of the first houses that I ever had built for me, me and my partner, we had an inspection done towards the end, and they found that the master toilet had disconnected at some point during the process after it met code.
Dave Burnett: That couldn't be a problem at all, could it?
Thom Dallman: No, no. Unfortunately, the construction crew was using that toilet, because it was hooked up. Water was running and everything, so they just assumed that it was all working well. They had no idea, because after they've got to that point in the process, it's not like they're having to go down in the crawl space and stuff like that.
Dave Burnett: I'll tell you exactly what happened. Somebody forgot to use the glue to glue those pieces together and ...
Thom Dallman: Possibly.
Dave Burnett: The inspector probably came along and went, "Yep, all looks good." Then since it wasn't glued, it just fell off.
Thom Dallman: It just fell off, yeah. There's a perfect example of something that, it met code and it met, it got through the Certificate of Occupancy phase and stuff like that, but it wouldn't have been caught, and we would have been living in a house with sewer for who knows how long it would have taken until...
Dave Burnett: Who knows what kind of mold and other problems that could have developed.
Thom Dallman: Oh, exactly. Exactly.
Dave Burnett: Let alone the odors. Holy cow.
Thom Dallman: Yeah. Speaking of mold, we have a situation that's raised recently where we've, I had a client ask me, "Should I do some inspection on this new construction?" I told him my experience, that we did it. Come to find out, it's a week or two before we're going to close, and there's a whole bunch of mold in the crawl space that has developed over the ... It's winter and we've had kind of a dry winter, but it was being framed during that week that we had that crazy rain for almost a week straight. I believe that was in December, so, yeah, moisture got down there somehow. It got trapped in there.
Dave Burnett: Without that inspection it might not have been caught.
Thom Dallman: Exactly. Without that inspection, it would not have gotten caught, and who knows how long that would have gone without being noticed.
Dave Burnett: Till somebody started getting sick.
Thom Dallman: Exactly. Exactly.
Dave Burnett: Wow.
Thom Dallman: Yeah. Another perfect example, I had some clients purchase a town home, and the inspector went through, and one of his things on his report was that there was no way to get the filter out of the furnace. We encourage everybody to change their furnace every quarter, and he said, "The only way that you could get to the furnace to replace the filter is to actually remove the closet door that it's in."
Dave Burnett: Wow.
Thom Dallman: We had to go back to the builder and say, "Hey, do you mind replacing this door with bi-folds so that we can get it in there." There's little things and there's big things, and there's things that inspectors catch all the time in these new constructions, that it's important to have it done.
Dave Burnett: What's the average cost, or maybe you don't have a figure for me, but if I were to say, "What is it going to cost me to get my home inspected?"
Thom Dallman: The cost varies depending on inspectors, depending on area and stuff like that, square footage of the homes. Typically, you can expect anywhere between 250 to 400 dollars for a home inspection.
Dave Burnett: Which really is a good peace of mind.
Thom Dallman: When you think about it, that's inexpensive, a little peace of mind that will work for you.
Dave Burnett: I guess you just don't think about it with new construction, though. If I'm buying an older home, yeah, I want somebody to give me an assessment, but I guess when I'm thinking new construction, like you said, the building inspectors are going to come around and take a look at it and sign off on it, but that doesn't necessarily mean it's going to be livable.
Thom Dallman: Exactly. Depending on the builder, depending on the situation, the builders are reliant on their supervisors and tradesmen and stuff like that. It's not typical for a builder, himself or herself, to go through and crawl a crawl space and stuff. It really depends on which builder and stuff like that that you go with.
There are some that do that. There are some builders that are actively involved and do that, making sure that everything's in its place, so that's why I always say it's important for you to really interview your builder, get referrals, ask that builder, "Hey, can you tell me some of your past clients that have purchased homes and give me their contact information to maybe ask them how the house is holding up and stuff like that?" Without an inspection you're really at the mercy of the builder. The builders and his crew are doing what they do and stuff.
Dave Burnett: I guess, and let me tread carefully in on this one. In today's world, people are in such a hurry to get things built, because there's such a demand, whether it's the guy laying tile, whether it's the painter, whether it's the roofer, they're under pressure to get the job done to move onto the next one, so sometimes, purposely or not purposely, a corner might be cut that could wind up costing you in the end.
Thom Dallman: Oh, for sure. I think that's a key point too is to remember that even though these people come in to check to make sure that they're up to codes and stuff, codes don't apply to those small, little cosmetic things that may eventually run into some trouble down the road, caulking not being in place around windows, window frames and stuff like that. Just little things that could cost you money in energy and efficiency and stuff like that are going to be things that the inspectors will catch.
Some of the common things that we've seen would be like hose bibbs, where they didn't caulk around the hose bibbs into the crawl space, so the ability for access from water, for water to get into the crawl spaces and stuff like that, just little minor things that you would think would be just not a problem but could eventually.
Dave Burnett: Not only water, creatures.
Thom Dallman: Creatures, yeah, right?
Dave Burnett: Mice can get in there and get into the crawl space of your house, and I know that just from, I had a faucet, a hose bib, that was not caulked.
Thom Dallman: Exactly.
Dave Burnett: Mice will get in there.
Thom Dallman: Yeah. Yeah.
Dave Burnett: They're amazing little creatures.
Thom Dallman: They really are. Yeah, I read an article because I'm always reading articles and trying to see what's happening out there in the real estate world, and I ran across this article that talked about foundation issues in new construction. Just little things that can lead into big problems if foundations aren't done just right and stuff like that. They do have to meet codes, but sometimes those code inspections don't catch certain things.
One of the examples that they gave was a house that the foundation was built, the house was built, and come to find out, they didn't put venting in for the crawl spaces.
Dave Burnett: Oh, my.
Thom Dallman: It said that when the inspector went down there, it was literally moisture dripping, because it was such a confined, closed space, and sealed up space, that moisture had built up and just kind of made its own little ecosystem down there.
Dave Burnett: If you're looking for somebody to do inspection, is that something that's on your vendor list, preferred vendors?
Thom Dallman: We have a couple of preferred vendors there on there. We've brought both of them on to our radio show here several times. AAD Inspections as well as Idahome Inspections, both great inspectors. They know what they're doing and are great referrals for you guys to use.
Dave Burnett: I guess it comes down to, it's similar to going to the doctor. Don't not go to the doctor because you don't want to hear what's wrong. You need to go to the doctor. Don't ignore your house.
Thom Dallman: Exactly.
Dave Burnett: One of the things my dad always taught me was, "Never ignore a squeak, because a squeak's going to become a problem."
Thom Dallman: Yep, for sure.
Dave Burnett: Make sure you get that done. You can check that out. Easy to do. Just go to the website for Core Group, which is CoreGroupRealty.com. If you can't remember that, call 208-933-7777. Just start dialing sevens, talk to the folks at the desk, and they'll refer you to the website as well.
Thom Dallman: Yep.
Dave Burnett: Thom, thank you once again. Another great week to get out there and buy a home, so we encourage you to do that and look into it. This is the Idaho Real Estate Buzz being brought to you by Core Group Realty. Find out why they say, "You get more with Core."
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