A few years back, I was a first time home buyer. Soon after purchasing that home I ventured down the rabbit hole that is obtaining my real estate brokers license. I deal a lot with first time homeowners and I LOVE it. I love it because I get to pass on what I have learned (Yoda would be so proud). So… what have I learned?
+INSPECTORS ARE HUMANS, TOO
Even though we sign waivers and they do their best to explain that they aren’t the end-all be-all, that they don’t make guarantees, I wish more emphasis was put on that. The inspection process is the hardest part of the transaction, aside from the appraisal. Usually it’s one or the other that presents issues. The truth is, your inspector ISN’T going to catch EVERYTHING. Why? Because he/she isn’t superhuman! They don’t have x-ray vision to see what’s hiding behind the walls, they aren’t structural engineers, pest control, or general contractors.
Inspectors are a trained, second set of eyes, meant to take a thorough look at the major components of a property. They’re not there to make guarantees or to catch absolutely everything. Are there bad inspectors out there? YES! Full disclosure, our’s was great and I continue to send clients his way, but we ended up with a mold and moisture issue in our basement. He would have never known unless he pulled back the trim and or cut through the drywall.
Long story short - it is IMPOSSIBLE to know absolutely everything there is to know about a home until you’ve lived in it, at least for a few months. But! An inspector can let a buyer and agent know if the buyer would be in imminent danger by purchasing/moving into the property. And that is their primary purchase. Are the walls caving in? Is the roof falling in? Does the plumbing and heat work? That’s what we rely on their trained eyes for.
+CASH TO CLOSE
We’ve all heard about the down payment, maybe you’ve heard of escrow, and you’ve probably heard the term “closing costs”. Well, ‘cash to close’ is all of that wrapped into one. It’s the total amount you need to bring to the closing table to close the deal. During the buyer consultation we (as did my agent - shout out Megan Ferris!) explained the cost of buying a home. There is the inspection fee, the appraisal fee, etc. But then there is ‘cash to close’. This wasn’t something that necessarily tripped me up when we were buying, but I have had it come up with my own clients - the realization of the full amount of money one needs to bring with them to closing. That number can be daunting! Especially if you don’t know what makes up that grand total!
So what’s included in that grand total?
-Down Payment (3%-20% is typical, if not more)
-Closing costs (1%-3% of the purchase price)
-Loan Origination Fees
-Taxes
-Discount points/prepaids
-Title fees
-First installment of homeowners insurance premiums
-HOA fees (if applicable)
With that, the way the market is right now, I am advising all of my buyers to be prepared to pay for their own closing costs. The market is so competitive - sellers are having the opportunity to review multiple offers when listing their home. This means they have the opportunity to go with the one that means they’ll net the most money from this sale. Seller paid closing costs cuts into their bottom line and from what I’m seeing, buyers are having a harder time having that covered.
+LENDERS & LOAN PRODUCTS ARE NOT ONE-SIZE-FITS-ALL
There are SO many loan products out there. Really, buying a home in today’s time is definitely attainable for most. But did you know that a conventional loan at company A could look different from company B? Although their industry is heavily regulated, there are differences! Differences in interest rates, loan products, closing costs amounts. It’s like a hamburger - you can get one almost anywhere, but we all know that McDonald’s is going to taste different from Burger King, which will be different from Wendy’s. The meat will be there, the buns, the typical fixings… but each place will have their own ‘spin’ on this classic! (I haven’t had lunch with and love burgers. Roll with it.)
Though I have my preferred lender to work with and recommend my clients to, ultimately I believe my clients need to find the right lender for them! We loved the lender we used, we had a great experience and this observation is in no way a reflection of the service/product we received from him. But as I began working in the industry my eyes were opened to how many options and products are out there! I try to educate my buyers to the best of my ability but always include this caveat. Meet with a lender or two or three to find the right fit for you. They all will be similar but one might be able to offer one product, and another a different product, and a good agent and or lender will find the right fit for their client ;)
Alight, I’m going to go eat a burger now. Happy house hunting!
In the spirit of full disclosure, I am an FPG agent and our Social Media Coordinator. I grew up in Northern Indiana and am a proud Indiana University Alumni (Hoo-Hoo-Hoo-Hoosiers!). I’m a boy mom for life and constantly chasing messes (when I’m not breaking up fights!) and truly love serving my community by way of real estate. I get to meet and help so many amazing people around town! It has been an awesome career. Now as the brokerage’s Social Media Coordinator, I get to brag about how awesome our city and people are. Win win.
My husband and I were referred to FPG when we returned home to Indiana. I was drawn to their way of doing business and when I was offered an opportunity to join them the choice was easy! If you’re thinking of a career in real estate, or one with Ferris Property Group, we’d love to talk.
-Kate Sowles
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