Latest / Fully Disclosed: Real Estate in Real Life / Episode 4: What did my agent just say? Decoding the real estate terms you’ll hear but may be embarrassed to ask about.

Transcript

Episode 4: What did my agent just say? Decoding the real estate terms you’ll hear but may be embarrassed to ask about. · Fully Disclosed: Real Estate in Real Life

• 0:03
  Speaker 1: Welcome to Fully Disclosed Real Estate, Real Life, an NP
• 0:06
  Speaker 1: Dodge Council Buffs podcast created and produced by real estate
• 0:09
  Speaker 1: agents who live this stuff every day. We're pulling back
• 0:11
  Speaker 1: the curtain on the deals, dilemmas, and details nobody warns
• 0:14
  Speaker 1: you about. Before we get into it, a quick disclosure.
• 0:16
  Speaker 1: This podcast is for general information and entertainment only, not legal, tax, financial,
• 0:21
  Speaker 1: or individual real estate advice. Listening doesn't create an agency
• 0:24
  Speaker 1: relationship and the views shared by our hosts and guests
• 0:27
  Speaker 1: may not represent NP Dodge. Now let's get Fully Disclosed.
• 0:33
  Speaker 2: As is, contingencies, earnest, escrow, and move-in ready can all
• 0:37
  Speaker 2: sound like another language if it's your first dip in.
• 0:39
  Speaker 3: The real estate waters.
• 0:40
  Speaker 2: We're getting into the weeds to translate the terms and
• 0:43
  Speaker 2: explain why they matter. Welcome back to Fully Disclosed. I'm
• 0:46
  Speaker 2: Tracy True.
• 0:46
  Speaker 4: I'm Reba McWilliams.
• 0:49
  Speaker 2: I'm Amanda Ebrill.
• 0:50
  Speaker 4: And I'm Teresa Hurt. We're with MP Dodge and Council Plus.
• 0:54
  Speaker 2: So we're going to start off just by talking about
• 0:57
  Speaker 2: getting going with buying a house. The first thing that
• 1:00
  Speaker 2: we always tell them to do is to go talk
• 1:02
  Speaker 2: to a lender first, get a Pre-approved, get pre-qualified. And
• 1:06
  Speaker 2: a lot of times I feel like a lot of,
• 1:07
  Speaker 2: you know, people don't always know what that means, especially
• 1:10
  Speaker 2: if this is the first time they've done this.
• 1:12
  Speaker 3: I mean, we take these things for granted because we
• 1:13
  Speaker 3: do it.
• 1:13
  Speaker 2: All the time.
• 1:14
  Speaker 5: Yeah.
• 1:15
  Speaker 3: But if they've never done this before, it's as gibberish
• 1:17
  Speaker 3: to them. They don't know what we're talking about.
• 1:19
  Speaker 2: You guys being newer to the field, have you guys
• 1:22
  Speaker 2: had to explain.
• 1:23
  Speaker 3: That to anybody yet?
• 1:24
  Speaker 6: Yeah. Yeah.
• 1:25
  Speaker 5: I think that a lot of the times when you
• 1:28
  Speaker 5: hear that term pre-qualified can mean the same thing as pre-approved.
• 1:34
  Speaker 5: But qualification is you're just starting the conversation. And pre-approved
• 1:39
  Speaker 5: is you've met with the lender. You know what you
• 1:41
  Speaker 5: can afford.
• 1:43
  Speaker 6: Yeah, you can afford.
• 1:44
  Speaker 5: Yes.
• 1:45
  Speaker 2: So pre-approved, you've put in the application and the lender
• 1:48
  Speaker 2: is like, yeah, it looks like you're good.
• 1:50
  Speaker 3: They've gotten through underwriting.
• 1:51
  Speaker 2: There should be, you know, they've cleared away like any
• 1:55
  Speaker 2: of the things that could hang them up in the
• 1:57
  Speaker 2: lending process.
• 1:59
  Speaker 4: Right. Most of it anyway. They should have.
• 2:00
  Speaker 2: Not to say that snacks can't still happen, but. They're
• 2:03
  Speaker 2: going to look at that and they're going to see
• 2:04
  Speaker 2: that as someone that, you know, they've already gotten down
• 2:07
  Speaker 2: into the process a little bit.
• 2:09
  Speaker 3: So they know that this one is a safer bet.
• 2:11
  Speaker 6: And the buyer can be more confident that they can.
• 2:15
  Speaker 2: Get that house.
• 2:16
  Speaker 3: Right.
• 2:16
  Speaker 4: Exactly.
• 2:16
  Speaker 3: It's good for both sides.
• 2:18
  Speaker 6: Buyers sometimes get nervous to get pre-approved just because, you know,
• 2:22
  Speaker 6: they're worried about their credit. But it's always best to
• 2:26
  Speaker 6: know what you can be approved for.
• 2:28
  Speaker 2: One of the things that we've talked about in a
• 2:30
  Speaker 2: previous episode was, you know, people will stall. instead of
• 2:33
  Speaker 2: going and talking to the lender because sometimes they think
• 2:35
  Speaker 2: that they can't.
• 2:37
  Speaker 4: Yes.
• 2:37
  Speaker 2: Or they stall on even looking for a house because
• 2:39
  Speaker 2: they think that they can't qualify.
• 2:41
  Speaker 3: And you don't know until you go talk to someone.
• 2:43
  Speaker 2: You might be really surprised because it's not 20% down anymore.
• 2:47
  Speaker 4: And when you get pre-qualified, you also, the lender will
• 2:51
  Speaker 4: help you, guide you like, hey, you need to do
• 2:53
  Speaker 4: these certain things or get things paid off or, you know,
• 2:56
  Speaker 4: stuff like that too to even make it.
• 2:58
  Speaker 6: If they can.
• 2:59
  Speaker 4: Yeah, and if they have time.
• 3:00
  Speaker 2: Well, and if they... if they go into the lender
• 3:03
  Speaker 2: and they find out that they aren't qualified, then that's
• 3:05
  Speaker 2: when the, yeah, the lender will step in and just
• 3:07
  Speaker 2: be like, okay.
• 3:08
  Speaker 3: Let's you, you can, if we get these things cleaned
• 3:11
  Speaker 3: up and then they forget to go.
• 3:13
  Speaker 6: Yes.
• 3:13
  Speaker 2: I had a buyer not too long ago that we,
• 3:16
  Speaker 2: we worked with his financial situation for like a year
• 3:19
  Speaker 2: and then he was ready to go. And so sometimes
• 3:23
  Speaker 2: when they come to us, it's not always that they're ready.
• 3:25
  Speaker 2: Sometimes they need help getting ready. So it helps to
• 3:28
  Speaker 2: walk them through that.
• 3:29
  Speaker 3: And then, figuring out the whole pre-qual and pre-approval thing.
• 3:32
  Speaker 2: One of the questions that I've had come up with
• 3:34
  Speaker 2: one of my buyers was the term move-in ready.
• 3:37
  Speaker 3: They see that on the listing.
• 3:39
  Speaker 2: And I never even considered that there would be confusion
• 3:42
  Speaker 2: over that. Like it hadn't even crossed my mind. He
• 3:44
  Speaker 2: asked me, does move-in ready mean that we can just
• 3:47
  Speaker 2: sign the papers and move in?
• 3:48
  Speaker 6: Nope.
• 3:51
  Speaker 2: I just, I hadn't even like thought of that being
• 3:54
  Speaker 2: a question.
• 3:55
  Speaker 6: And like if it's vacant, sometimes it just seems like,
• 3:58
  Speaker 6: you know, the house is already empty. Mm-hmm. It's ready
• 4:01
  Speaker 6: just to bring on all your furniture.
• 4:03
  Speaker 3: Right.
• 4:04
  Speaker 4: They're going to take their things out, and you're going
• 4:06
  Speaker 4: to be able to bring your things in and set
• 4:07
  Speaker 4: it up the way you want. It may be freshly painted.
• 4:11
  Speaker 4: The sellers may think it's ready for them, but then
• 4:14
  Speaker 4: the buyers get in, and they have a different perspective of, oh,
• 4:17
  Speaker 4: this is not, you know. What's moving ready for.
• 4:20
  Speaker 5: One person is not moving ready for the next person.
• 4:22
  Speaker 4: Exactly.
• 4:23
  Speaker 5: I think it's, in a good way, I think about
• 4:25
  Speaker 5: it as the seller's done everything everything that they feel
• 4:29
  Speaker 5: is central to get their house.
• 4:30
  Speaker 4: Exactly.
• 4:31
  Speaker 5: Great.
• 4:32
  Speaker 6: Have you guys ever had like people say, no, I
• 4:34
  Speaker 6: don't need an inspection because it's not ready.
• 4:37
  Speaker 4: Oh yeah.
• 4:38
  Speaker 5: Yeah.
• 4:39
  Speaker 2: And I still, cause you can have an old house
• 4:41
  Speaker 2: that's moving ready because they've done all kinds of updates
• 4:44
  Speaker 2: to it and things like that.
• 4:45
  Speaker 3: But, or it could have been a flip.
• 4:48
  Speaker 6: Yep.
• 4:48
  Speaker 5: Yeah.
• 4:49
  Speaker 3: And the levels of flip as we know are different.
• 4:53
  Speaker 2: And so, yeah, so it, People see move-in ready, and
• 4:56
  Speaker 2: that brings up a really good point because I don't
• 4:58
  Speaker 2: know if they necessarily consider.
• 5:00
  Speaker 3: The fact that it depends on.
• 5:02
  Speaker 6: Like there's no problems.
• 5:03
  Speaker 2: What one person's idea of move-in ready is versus another one. But,
• 5:06
  Speaker 2: I mean, even with brand-new builds, people are still doing
• 5:09
  Speaker 2: inspections on them.
• 5:10
  Speaker 6: Yeah.
• 5:11
  Speaker 2: You know about that.
• 5:12
  Speaker 4: And you should because you don't know what's underlying or
• 5:15
  Speaker 4: what they've maybe cut corners. Hopefully they haven't. But you
• 5:19
  Speaker 4: can find things still on a brand-new home.
• 5:22
  Speaker 2: And on the flip side of that, then you see
• 5:24
  Speaker 2: as is, which I think is completely opposite of moving
• 5:26
  Speaker 2: ready in some ways.
• 5:28
  Speaker 4: I view it completely opposite. I would say.
• 5:31
  Speaker 5: It's the seller up front telling you, this is what
• 5:33
  Speaker 5: you're getting.
• 5:33
  Speaker 4: I'm not fixing anything. Yeah. And there may be things
• 5:36
  Speaker 4: that they know are wrong or, you know, maybe not
• 5:39
  Speaker 4: major and maybe they are. It could be an estate sale,
• 5:42
  Speaker 4: and they're like, it's as is. The kids don't want
• 5:44
  Speaker 4: to do anything, or the family doesn't, or whomever. They're
• 5:48
  Speaker 4: ready to get rid of it. As is, you're buying
• 5:50
  Speaker 4: it as is. You put an offer in, this is yours.
• 5:52
  Speaker 3: The seller may.
• 5:52
  Speaker 2: Not have the funds to do the repairs either.
• 5:55
  Speaker 6: Exactly.
• 5:56
  Speaker 3: They just need out of that house.
• 5:59
  Speaker 4: Get it sold.
• 6:00
  Speaker 3: Sometimes it means that there's too much.
• 6:02
  Speaker 2: That needs done, that it wouldn't.
• 6:03
  Speaker 3: Make financial sense.
• 6:06
  Speaker 2: The proceeds would not outweigh what they would have to
• 6:09
  Speaker 2: spend to bring it up.
• 6:11
  Speaker 3: Or something, you know, it might not make financial sense
• 6:13
  Speaker 3: for them.
• 6:13
  Speaker 2: To try to bring it up.
• 6:14
  Speaker 4: And maybe they've tried to go in and start flipping
• 6:16
  Speaker 4: it and all of a sudden they can't afford to
• 6:18
  Speaker 4: do it or whatever. So pretty soon it's like, okay,
• 6:21
  Speaker 4: we're selling it as is because we didn't finish it.
• 6:26
  Speaker 6: Um, also like as is, um, some people might think
• 6:30
  Speaker 6: that it doesn't need any more work, you know? And
• 6:33
  Speaker 6: then some people are like, Oh, I want to knock
• 6:35
  Speaker 6: down this wall.
• 6:36
  Speaker 4: To make the kitchen bigger.
• 6:37
  Speaker 3: And that, again, falls into one person's idea.
• 6:40
  Speaker 4: Everybody's perspective. Exactly.
• 6:43
  Speaker 5: Personally, I think if it says as is, it's the
• 6:45
  Speaker 5: seller up front not hiding anything.
• 6:48
  Speaker 4: Right. This is what I have.
• 6:49
  Speaker 5: This is what is for sale.
• 6:51
  Speaker 4: I can't do anything else. And it should be on
• 6:53
  Speaker 4: the property disclosure, too, saying, hey, this and this and this.
• 6:57
  Speaker 4: And maybe it isn't anything wrong. Maybe somebody walks in and.
• 7:01
  Speaker 5: They're like, this is actually moving ready for me.
• 7:04
  Speaker 6: But the states, though, they don't do the seller's disclosure. No.
• 7:09
  Speaker 2: And there's always kind of like, I always have mixed,
• 7:12
  Speaker 2: there's mixed opinions on that, on how much they should
• 7:14
  Speaker 2: actually say on the seller's disclosure when it is an estate.
• 7:17
  Speaker 2: Because there's times where, you know, the kids were helping
• 7:20
  Speaker 2: take care of the parents, being the executor of that estate.
• 7:23
  Speaker 2: They have a.
• 7:23
  Speaker 3: Relationship with the person who was living there enough to know.
• 7:27
  Speaker 2: Some sinks.
• 7:27
  Speaker 4: Yeah. What happens? Like we put a new refund. So,
• 7:30
  Speaker 4: you know, try to document some of that if they
• 7:32
  Speaker 4: know that stuff.
• 7:33
  Speaker 5: Yeah.
• 7:33
  Speaker 6: The receipts. Yeah.
• 7:35
  Speaker 4: And receipts. Have as many of those if possible. And
• 7:38
  Speaker 4: at least so the buyers can look at some of
• 7:40
  Speaker 4: that stuff and kind of feel at ease on some
• 7:43
  Speaker 4: of it if they know things have been done.
• 7:46
  Speaker 2: I want to go back to what you said a
• 7:48
  Speaker 2: little bit ago about how you think as is could
• 7:51
  Speaker 2: be a deterrent basically.
• 7:52
  Speaker 3: For some people to even go look at a property.
• 7:54
  Speaker 5: Yeah.
• 7:54
  Speaker 2: And their idea of what might need work versus somebody
• 7:58
  Speaker 2: else's is obviously subjective.
• 7:59
  Speaker 5: Yes.
• 8:00
  Speaker 2: Although as is tends to be a little bit more
• 8:03
  Speaker 2: of a disclosure because that means that that person is
• 8:06
  Speaker 2: not willing.
• 8:07
  Speaker 3: To fix anything.
• 8:08
  Speaker 2: You're coming and looking and you're making an offer with
• 8:10
  Speaker 2: the understanding that they are not going to do any work.
• 8:13
  Speaker 5: You can ask, but they're not going to do it.
• 8:15
  Speaker 4: But then a lot of times you go in and
• 8:17
  Speaker 4: say you get an offer and somebody wants to do
• 8:19
  Speaker 4: a home inspection. Well, That's for the buyers, so they
• 8:24
  Speaker 4: know what's going on there, what's underlying. And then, again,
• 8:27
  Speaker 4: the sellers have it as is. Do they fix or
• 8:30
  Speaker 4: do they not fix?
• 8:31
  Speaker 3: That's just it.
• 8:32
  Speaker 2: So if you are going to do an inspection on
• 8:34
  Speaker 2: a property that's marked as is, then you already know
• 8:37
  Speaker 2: they're not going to be fixing the things.
• 8:39
  Speaker 4: That they found in that inspection. I think that's for
• 8:41
  Speaker 4: the buyer's knowledge to know what they need to fix. Exactly.
• 8:43
  Speaker 6: Right.
• 8:44
  Speaker 3: And I don't... Exactly.
• 8:45
  Speaker 2: I don't think that should dissuade someone from doing an inspection.
• 8:48
  Speaker 2: I think that they should do their due diligence.
• 8:50
  Speaker 4: Oh, absolutely.
• 8:50
  Speaker 2: You have to... kind of go into that knowing already
• 8:53
  Speaker 2: and being in that mindset.
• 8:54
  Speaker 4: That there are things that they're going to pull out
• 8:57
  Speaker 4: and you're going to go hmm so and.
• 8:59
  Speaker 2: They're not going to get fixed no yeah like this
• 9:01
  Speaker 2: is what it is exactly as far as negotiating if
• 9:04
  Speaker 2: they already know that there's the house is going to
• 9:07
  Speaker 2: need these repairs and the seller is not going to
• 9:09
  Speaker 2: do it then that could be a place where you
• 9:12
  Speaker 2: start talking about closing costs so that they can keep some.
• 9:14
  Speaker 4: Of their cash in their pockets To help with those things.
• 9:17
  Speaker 4: To help with those repairs. Absolutely.
• 9:19
  Speaker 2: And then, you know, people get cold feet with those
• 9:21
  Speaker 2: inspections too. So if it is an as-is thing and
• 9:24
  Speaker 2: it ends up, the inspection turns up more than they
• 9:26
  Speaker 2: thought it was going to, and then they decide to
• 9:28
  Speaker 2: walk away from that, then, of course, like we as agents,
• 9:31
  Speaker 2: they've already paid their earnest deposit.
• 9:33
  Speaker 3: So now we have to, like, try to figure out
• 9:35
  Speaker 3: how to get their earnest back.
• 9:36
  Speaker 2: And usually now your inspection contingency is going to be
• 9:39
  Speaker 2: a little bit different if it was for your own
• 9:40
  Speaker 2: purposes too.
• 9:41
  Speaker 6: Sometimes buyers think that the earnest deposit is, like, additional
• 9:45
  Speaker 6: to what they're paying for the house.
• 9:48
  Speaker 4: Or part of.
• 9:49
  Speaker 6: Part of.
• 9:49
  Speaker 4: Some of them think it's part of their, like, I've
• 9:51
  Speaker 4: got to put my certain percentage down on my home.
• 9:54
  Speaker 4: That comes out of that, right?
• 9:55
  Speaker 5: Yeah.
• 9:56
  Speaker 4: Well, no, this is a good faith.
• 9:58
  Speaker 6: Yes.
• 10:00
  Speaker 4: I'm interested in this home and i want you to
• 10:02
  Speaker 4: know i'm serious about it yeah skin in the game
• 10:05
  Speaker 4: that's what i said exactly yeah yeah that's the perfect
• 10:08
  Speaker 4: well and.
• 10:09
  Speaker 3: The amount of earnest you put down.
• 10:11
  Speaker 2: Also literally it's in the game that shows how serious
• 10:14
  Speaker 2: you are yes yeah about this house.
• 10:18
  Speaker 4: And again, some people don't have a lot to put down,
• 10:20
  Speaker 4: so they may not, they're still serious, but it may
• 10:23
  Speaker 4: not be a large amount or whatever. It depends on
• 10:26
  Speaker 4: each circumstance.
• 10:27
  Speaker 2: Do you have an amount that you typically like recommend
• 10:29
  Speaker 2: that they put down like a certain percentage or anything?
• 10:32
  Speaker 4: I do what I always tell them, you know, you
• 10:34
  Speaker 4: can go any amount.
• 10:35
  Speaker 5: Yeah.
• 10:37
  Speaker 4: The more you do possibly would show a little more
• 10:39
  Speaker 4: seriousness to the sellers.
• 10:41
  Speaker 3: But I've heard some agents recommend, like, 1% or 2%.
• 10:43
  Speaker 6: 1%.
• 10:44
  Speaker 4: Yeah. Or 1% of it, yeah.
• 10:47
  Speaker 5: I think if somebody's really serious, though, they're going to
• 10:49
  Speaker 5: put enough.
• 10:50
  Speaker 4: Down to show that.
• 10:51
  Speaker 6: Right.
• 10:52
  Speaker 4: Oh, absolutely.
• 10:53
  Speaker 3: Well, it shows that seller some seriousness.
• 10:56
  Speaker 6: A lot of buyers think that, I mean, earnest deposit
• 10:59
  Speaker 6: can be just cash. Hand over cash.
• 11:01
  Speaker 4: No, no, not cash.
• 11:03
  Speaker 2: That also, so like with the cash to closing, but
• 11:06
  Speaker 2: that's where that earnest deposit comes in. They get credited
• 11:09
  Speaker 2: for that at closing.
• 11:11
  Speaker 4: Goes back to the buyer in their closing. Supposing everything
• 11:13
  Speaker 4: goes in. Yeah, definitely.
• 11:16
  Speaker 3: I think that you had brought that up earlier. They
• 11:18
  Speaker 3: think that that's an addition.
• 11:19
  Speaker 5: Yeah, they do.
• 11:20
  Speaker 6: A lot of them do, yeah. Or that they need
• 11:22
  Speaker 6: to bring it when they're making the offer.
• 11:25
  Speaker 3: So that brings up a good point, too. So you
• 11:27
  Speaker 3: pay your earnest deposit when your offer is accepted.
• 11:30
  Speaker 2: So if you make an offer and they don't accept
• 11:32
  Speaker 2: your offer or they counter, you're not paying that until.
• 11:36
  Speaker 4: That offer is accepted. So I get asked a lot about.
• 11:42
  Speaker 2: Pending the word pending so I'll have buyers send me
• 11:45
  Speaker 2: listings that are pending and they will send me this
• 11:48
  Speaker 2: listing and be like can we go look at this
• 11:50
  Speaker 2: right okay well let's talk about what that means or
• 11:52
  Speaker 2: they'll ask what it means or is this pending contingency
• 11:55
  Speaker 2: because that's another one of those things that I feel
• 11:57
  Speaker 2: like we completely take for granted.
• 11:59
  Speaker 4: Well they ask me like why does this say pending
• 12:01
  Speaker 4: in here what does that mean yeah well that basically
• 12:04
  Speaker 4: means They're under contract with the sellers. They've both signed.
• 12:07
  Speaker 6: Yes.
• 12:08
  Speaker 4: However, there can be other circumstances where it's pending and
• 12:11
  Speaker 4: it says upon contingencies.
• 12:14
  Speaker 2: The seller has signed an agreement to sell their property
• 12:19
  Speaker 2: to a buyer. They've accepted an offer and everything is
• 12:22
  Speaker 2: signed and they're going through the steps now. So like
• 12:25
  Speaker 2: the inspections and appraisals and all the.
• 12:27
  Speaker 3: Things to get it to closing.
• 12:29
  Speaker 2: If nothing happens, then it's going to close.
• 12:32
  Speaker 3: They marked it with a contingency.
• 12:34
  Speaker 2: So that contingency basically just means that the offer was
• 12:36
  Speaker 2: contingent upon this or this or this happening. It could
• 12:39
  Speaker 2: be inspections.
• 12:40
  Speaker 6: It could be the buyers trying to sell their house.
• 12:43
  Speaker 2: It could be them trying to sell their house. And
• 12:46
  Speaker 2: so when you have those situations, it's a lot more
• 12:49
  Speaker 2: likely that they might take a backup offer.
• 12:51
  Speaker 6: And some people get their hopes up. Oh, I can
• 12:54
  Speaker 6: go look at the house. And even if it's under
• 12:57
  Speaker 6: contingency and accepting backup offers, but then... If it actually closes,
• 13:03
  Speaker 6: then you.
• 13:04
  Speaker 4: But the actuality of, hopefully it's moving forward on that end, but,
• 13:09
  Speaker 4: you know, your chances are kind of.
• 13:11
  Speaker 2: If it's just pending, that might be a cash buyer,
• 13:13
  Speaker 2: and they're just waiting for the title work to be done.
• 13:16
  Speaker 3: And so if that's the case, I mean, telling them
• 13:18
  Speaker 3: to go look at that house is probably, I mean,
• 13:20
  Speaker 3: it's probably a waste of.
• 13:21
  Speaker 4: Time to look at it at that point.
• 13:23
  Speaker 6: Repairs.
• 13:24
  Speaker 2: Yeah, I mean, if it's pending inspections, that listing agent
• 13:28
  Speaker 2: will typically tell you, I'm not worried. And then at
• 13:31
  Speaker 2: that point you got to weigh out, is it even
• 13:33
  Speaker 2: worth the time to go look at it and have
• 13:35
  Speaker 2: them fall in love.
• 13:35
  Speaker 3: With this house? It's not going to.
• 13:38
  Speaker 4: Probably not going to happen. Well, okay.
• 13:39
  Speaker 2: So I have a question though.
• 13:41
  Speaker 6: Some people put on the contract though, if it's still
• 13:44
  Speaker 6: pending contingencies and they want to put an offer in,
• 13:48
  Speaker 6: but they word it so that if it falls through
• 13:52
  Speaker 6: or if they can still accept other ones or they
• 13:55
  Speaker 6: can go to other houses.
• 13:56
  Speaker 5: Yeah.
• 13:57
  Speaker 3: So I think, you mean on if they put in
• 13:59
  Speaker 3: a backup offer?
• 14:00
  Speaker 6: Yeah.
• 14:01
  Speaker 2: We have to make sure that we put the verbiage
• 14:02
  Speaker 2: in there to make sure that if something else comes up,
• 14:06
  Speaker 2: that they have the freedom to get out and go
• 14:09
  Speaker 2: put an offer on something else.
• 14:12
  Speaker 4: Sometimes a 24-hour right of refusal or something like that.
• 14:17
  Speaker 2: So basically, it comes to a head where they say, basically,
• 14:21
  Speaker 2: we need you to make a decision now.
• 14:23
  Speaker 4: You have 72 hours. You either can get the funding
• 14:25
  Speaker 4: and move forward, or we're going to You're not, you know,
• 14:29
  Speaker 4: basically we're going to go on to the next offer.
• 14:31
  Speaker 5: Right.
• 14:32
  Speaker 6: With the sellers, if they wanted their house sold faster
• 14:36
  Speaker 6: and they found somebody else, can they pick that buyer
• 14:39
  Speaker 6: that can just buy and no problems contingency?
• 14:43
  Speaker 4: When they're under contract with a contingency or with the
• 14:46
  Speaker 4: right of refusal? Is that what you're saying?
• 14:48
  Speaker 6: But the contingency is on the other buyer, the first
• 14:51
  Speaker 6: buyer first. You mean like.
• 14:53
  Speaker 2: If their first offer had a contingency and their second
• 14:56
  Speaker 2: offer didn't?
• 14:57
  Speaker 4: Just a second offer committed, it's cash, and they're under contract, though,
• 15:02
  Speaker 4: with the first one. You have to wait the 72 hours.
• 15:04
  Speaker 2: They have to wait until that contract falls through or
• 15:07
  Speaker 2: until that first writer fees.
• 15:09
  Speaker 6: Okay, so the seller cannot just be like, yes, I'll
• 15:12
  Speaker 6: take that one.
• 15:13
  Speaker 3: Yeah, like, oh, a better offer came in.
• 15:15
  Speaker 4: They still have to give that first buyer the chance
• 15:17
  Speaker 4: to fulfill their commitment. But that has to have.
• 15:20
  Speaker 3: Been in the contract when they accepted that offer.
• 15:22
  Speaker 2: So typically, if you have an offer come in, and
• 15:27
  Speaker 2: it's your first offer, or the first offer that you
• 15:30
  Speaker 2: are going to take seriously, and you say, okay, this
• 15:34
  Speaker 2: is a decent offer, this will work, but we want
• 15:37
  Speaker 2: to leave ourselves open in case something else comes, something
• 15:40
  Speaker 2: else better comes.
• 15:41
  Speaker 3: Along, then you might do that.
• 15:43
  Speaker 2: We're going to take backup offers with a 72-hour right
• 15:46
  Speaker 2: of refusal. And so that way, if that better offer
• 15:49
  Speaker 2: does come in, they can go back to that first
• 15:51
  Speaker 2: buyer and say, okay, we had another offer.
• 15:54
  Speaker 3: You have 72 hours to remove your contingencies and move forward.
• 15:59
  Speaker 2: Quick interruption.
• 16:01
  Speaker 3: Fully Disclosed is created by the agents at NP Dodge
• 16:03
  Speaker 3: and Council Bluffs.
• 16:04
  Speaker 2: So a quick word from NP Dodge, which is us.
• 16:08
  Speaker 4: The agents in our office help people buy and sell
• 16:10
  Speaker 4: throughout Council Bluffs and Southwest Iowa.
• 16:13
  Speaker 2: So if you hear something that makes you realize you
• 16:15
  Speaker 2: may need an actual real estate agent, because this podcast
• 16:18
  Speaker 2: cannot legally do that for you.
• 16:20
  Speaker 1: Find NP Dodge on Facebook or Instagram or check the
• 16:23
  Speaker 1: show notes for our office information.
• 16:25
  Speaker 4: Okay, commercial over.
• 16:27
  Speaker 1: Now back to it.
• 16:28
  Speaker 2: So I think another thing that people get hung up
• 16:30
  Speaker 2: on a lot is the appraisal and not really understanding
• 16:33
  Speaker 2: the difference between, well, appraisal and assessment and, like.
• 16:36
  Speaker 3: A CMA, what we do.
• 16:38
  Speaker 6: Mm-hmm.
• 16:38
  Speaker 2: Because, you know, so as far as, like, the appraisal,
• 16:43
  Speaker 2: do you get a lot of questions about.
• 16:45
  Speaker 3: What that means when you're working with people?
• 16:48
  Speaker 5: So the appraisal goes in. It's going to appraise the
• 16:52
  Speaker 5: home for what the lender will give you. Mm-hmm.
• 16:55
  Speaker 4: Assessment.
• 16:56
  Speaker 5: Somebody's coming to look at the outside, sometimes the inside
• 17:00
  Speaker 5: of the value.
• 17:02
  Speaker 4: Kind of give a generalized value. Because they're trying to
• 17:04
  Speaker 4: get the tax value for the county taxes.
• 17:07
  Speaker 3: That's what your property taxes are based on.
• 17:09
  Speaker 5: CMA is your real estate agent looking at what's pending,
• 17:12
  Speaker 5: what's sold, the same similar homes to.
• 17:16
  Speaker 4: Give you an idea of what your house is.
• 17:19
  Speaker 2: We're kind of giving them a generalized snapshot in time
• 17:22
  Speaker 2: of what that value is. Where is that appraiser?
• 17:24
  Speaker 4: They have certain criteria they look and go through.
• 17:29
  Speaker 6: Like before the appraisals, I've had people say like on.
• 17:32
  Speaker 3: Zillow, my house says it's worth so much. Yeah.
• 17:36
  Speaker 4: The system.
• 17:37
  Speaker 2: Yeah. AI generated valuations are a whole other thing too.
• 17:41
  Speaker 2: AI has not been inside your house.
• 17:43
  Speaker 5: Yep.
• 17:43
  Speaker 4: Yes.
• 17:45
  Speaker 2: It does not know what is going on inside your house.
• 17:47
  Speaker 5: No.
• 17:47
  Speaker 6: True. True. Like the updates inside. Yeah.
• 17:50
  Speaker 2: Well, and even some of the ones that I've been on,
• 17:52
  Speaker 2: they have the numbers of bedrooms and bathrooms like incorrect.
• 17:55
  Speaker 6: Yes.
• 17:55
  Speaker 2: Because they're going off of old stats. They were just
• 17:57
  Speaker 2: like on the county side or something like that.
• 18:00
  Speaker 6: I think that for us, when we do the comparable
• 18:03
  Speaker 6: market analysis, it's more like local to that house. We
• 18:09
  Speaker 6: do neighborhoods in our town.
• 18:11
  Speaker 2: We know exactly which neighborhoods to pull our comparables from.
• 18:15
  Speaker 3: I feel like, again, like AI doesn't know how to
• 18:17
  Speaker 3: do that.
• 18:17
  Speaker 5: No.
• 18:18
  Speaker 3: People get hung up, I think, when they're looking at houses.
• 18:21
  Speaker 2: They'll look at the.
• 18:22
  Speaker 4: Assessed value.
• 18:23
  Speaker 2: They'll look at the assessed value on the assessor site,
• 18:25
  Speaker 2: and then they think that that's all the house is worth.
• 18:26
  Speaker 4: So why is this house that much higher or whatever?
• 18:30
  Speaker 2: Like, your market value is not based on your assessment,
• 18:32
  Speaker 2: but your assessment is based on market value.
• 18:34
  Speaker 4: Right.
• 18:36
  Speaker 6: Exactly.
• 18:36
  Speaker 2: Like, after COVID, everything got reassessed because the home values
• 18:39
  Speaker 2: went up so much, so everybody's assessments went up. So that's...
• 18:42
  Speaker 2: I use that as, like, an example of that. The
• 18:44
  Speaker 2: next thing that comes across when you're doing the transaction
• 18:46
  Speaker 2: that is homeowners insurance.
• 18:49
  Speaker 2: I think people get that confused a lot because we
• 18:51
  Speaker 2: always are, of course, recommending warranties.
• 18:53
  Speaker 4: Right. So homeowners insurance, everybody has to have it. So
• 18:58
  Speaker 4: you have to have a policy in place for when
• 19:00
  Speaker 4: you close. But then a home warranty, say somebody goes
• 19:04
  Speaker 4: in and they know the appliances and stuff are a
• 19:07
  Speaker 4: little bit older. They just want a little backup for
• 19:09
  Speaker 4: that first day of first year.
• 19:11
  Speaker 2: It definitely can be like a useful negotiating piece too.
• 19:14
  Speaker 6: Absolutely.
• 19:15
  Speaker 2: And, you know, we have also talked about how, like,
• 19:18
  Speaker 2: say that you go and you show your buyer a
• 19:19
  Speaker 2: house that has a very old air conditioner or something,
• 19:24
  Speaker 2: you know, and then, but it works fine.
• 19:27
  Speaker 3: You know, it's been working for 15 years.
• 19:30
  Speaker 2: It works really well. And the inspector points out the
• 19:34
  Speaker 2: fact that this air conditioner.
• 19:35
  Speaker 3: Is old, and so the buyer is freaked out.
• 19:38
  Speaker 4: And, but the seller is like, it works. It gives
• 19:41
  Speaker 4: them assurance that. hey, we're covered for that first year.
• 19:45
  Speaker 4: So as a.
• 19:45
  Speaker 2: Seller, they could just say, you know what, we're not
• 19:48
  Speaker 2: going to replace that air conditioner, but we will get it.
• 19:50
  Speaker 3: A home warranty for you.
• 19:52
  Speaker 4: Yeah, for one year. It gives them a little peace
• 19:56
  Speaker 4: of mind. And with that, not everything is covered. Say
• 19:59
  Speaker 4: the furnace does go out, it had something underlying, it
• 20:02
  Speaker 4: may not cover it too. But, you know, if it's
• 20:05
  Speaker 4: something that it's worked great and all of a sudden...
• 20:07
  Speaker 4: It's just not.
• 20:09
  Speaker 2: I think that those warranties are a good thing to
• 20:10
  Speaker 2: look into. We have the different warranty companies usually have
• 20:14
  Speaker 2: their reps that you can call and ask questions before
• 20:16
  Speaker 2: you do it and just see if it's going to work.
• 20:19
  Speaker 2: I think the other thing that I get asked about
• 20:22
  Speaker 2: a lot is escrow. I've been getting that a lot
• 20:23
  Speaker 2: lately because it can mean different things, and it means
• 20:26
  Speaker 2: different things here in Iowa.
• 20:27
  Speaker 5: Yes.
• 20:29
  Speaker 2: Than it does. So when you guys were going through
• 20:32
  Speaker 2: like all of your education and everything, you guys, you know,
• 20:35
  Speaker 2: went through that more recently than us. So was that
• 20:39
  Speaker 2: one that you kind of had to wrap your head
• 20:40
  Speaker 2: around because it means so many different things?
• 20:42
  Speaker 4: It's hard. Cut that out.
• 20:45
  Speaker 5: It's so many different things.
• 20:47
  Speaker 4: Well, in a lot of states, things go into escrow.
• 20:49
  Speaker 6: Yes.
• 20:49
  Speaker 4: You're going into escrow. And that's how they kind of
• 20:52
  Speaker 4: say going into pending.
• 20:53
  Speaker 5: Right.
• 20:54
  Speaker 3: That's what I was just going to say.
• 20:55
  Speaker 4: That's because I've heard like I've got fees. people that
• 20:58
  Speaker 4: have moved to other states and they're like, well, we're
• 21:00
  Speaker 4: under escrow.
• 21:01
  Speaker 2: We're in escrow.
• 21:02
  Speaker 4: Have you guys ever watched the.
• 21:04
  Speaker 3: Show Gilmore Girls?
• 21:05
  Speaker 5: Oh, yes.
• 21:06
  Speaker 2: I love that show. When Luke's sister's husband comes in
• 21:10
  Speaker 2: and he's like, I'm in escrow. He's all excited. But
• 21:15
  Speaker 2: of course, that's based.
• 21:17
  Speaker 4: In the Northeast.
• 21:19
  Speaker 2: Here, we don't say we're in escrow. Here, we just
• 21:22
  Speaker 2: say we're under contract. It's just so funny how in
• 21:26
  Speaker 2: You know, in other places it can mean different things.
• 21:28
  Speaker 2: Here we say we're under contract. We're not in escrow.
• 21:30
  Speaker 2: So like say your inspection comes back that they need
• 21:33
  Speaker 2: repairs and your seller is going to set aside money
• 21:37
  Speaker 2: instead of making the repairs. They're going to just like
• 21:39
  Speaker 2: set aside money.
• 21:40
  Speaker 4: Or it couldn't get done before closing. Then they take
• 21:43
  Speaker 4: some of that money, put it in escrow to cover,
• 21:45
  Speaker 4: and it's usually above and beyond it.
• 21:48
  Speaker 2: Like 1.5 times the quoted amount of what it would
• 21:52
  Speaker 2: cost to repair that.
• 21:53
  Speaker 4: In case it's a little higher than they predicted.
• 21:56
  Speaker 2: Put it into an escrow account, and then whatever they
• 21:59
  Speaker 2: don't end up using goes back to the seller.
• 22:00
  Speaker 4: Yes.
• 22:01
  Speaker 3: We also escrow.
• 22:02
  Speaker 2: So where I see this the most, though, is obviously
• 22:05
  Speaker 2: from the lender. And because the lender keeps that escrow
• 22:09
  Speaker 2: account for taxes and insurance.
• 22:10
  Speaker 4: Yes, yes. So when they make their payment, it's escrowed in,
• 22:15
  Speaker 4: that they can make those tax and insurance with your
• 22:18
  Speaker 4: monthly payment every month. And then the monthly payment can change.
• 22:22
  Speaker 3: Because the taxes and the insurance can change.
• 22:24
  Speaker 6: Absolutely.
• 22:25
  Speaker 4: Yeah, especially if you've got a new bill. You don't
• 22:28
  Speaker 4: have taxes high the first year, and then all of
• 22:30
  Speaker 4: a sudden, okay, it's going to hit you a year
• 22:33
  Speaker 4: or so. Yeah.
• 22:35
  Speaker 6: And sometimes it's kind of confusing because you think that, oh,
• 22:39
  Speaker 6: I have to pay my taxes, I've got to have it,
• 22:40
  Speaker 6: but actually escrow is going to take care of that.
• 22:44
  Speaker 4: As long as you have that going on. Because some
• 22:47
  Speaker 4: people don't want to do that. Once the initial loan,
• 22:51
  Speaker 4: you can change that at some point.
• 22:53
  Speaker 5: Yeah.
• 22:55
  Speaker 4: Pay your own taxes instead of having it escrowed out.
• 22:58
  Speaker 2: Some people opt to not do the escrow account with
• 23:00
  Speaker 2: their lender. They opt, yeah, just to pay their own
• 23:02
  Speaker 2: taxes and insurance, you know, twice a year.
• 23:04
  Speaker 4: Separately, yeah.
• 23:05
  Speaker 3: I guess if anybody has any questions or other topics.
• 23:10
  Speaker 2: That they want us to cover, again, that email address,
• 23:13
  Speaker 2: fullydisclosedre at gmail.com is there. We would love to hear
• 23:17
  Speaker 2: from you. If you found us on Spotify or YouTube,
• 23:22
  Speaker 2: we'd love to have you hit subscribe or like or
• 23:24
  Speaker 2: Just let us.
• 23:25
  Speaker 3: Know you're here.
• 23:26
  Speaker 2: That would be awesome. And you can follow us on
• 23:28
  Speaker 2: our socials at NPDodgeCouncilLefts on Facebook and Instagram.
• 23:33
  Speaker 3: So I think we're fully disclosed for today.
• 23:36
  Speaker 4: See you next time.