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Artificial intelligence versus human how much does it cost to buy a home · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_00: Question of the day comes in from a longtime listener.
• 0:04
  SPEAKER_00: Carl wants to know what the total costs are incorporated into purchasing a residence.
• 0:10
  SPEAKER_00: And it's a great question, and let me lay that out to you.
• 0:13
  SPEAKER_00: Now, of course, you can find all these resources at Santa ClaritaOpenhouses.com.
• 0:18
  SPEAKER_00: When somebody wants to purchase a house, there's a different price set besides the listening price, the out-of-money expenses for people that are using financing versus people that are using cash.
• 0:29
  SPEAKER_00: Cash is less expensive because you don't have the financing costs associated with getting a loan to buy real estate.
• 0:36
  SPEAKER_00: So if you happen to be a person that has the wherewithal to purchase real estate for cash and you've talked to those around you and you believe that's a good idea, then you can step forward and make purchase.
• 0:48
  SPEAKER_00: However, a couple things with cash, usually those residences that are being sold for cash aren't subject to appraisal.
• 0:56
  SPEAKER_00: That's a choice you have as a real estate buyer.
• 0:58
  SPEAKER_00: If you're purchasing with cash, you can say whether or not you want your purchase to be contingent on an appraisal or not.
• 1:05
  SPEAKER_00: But with cash, you're going to have to pay for that appraisal through a different source, maybe hiring an independent appraisal firm to look at the real estate.
• 1:14
  SPEAKER_00: For those of you that are financing, your costs of purchasing a residence is are going to include various things above and beyond the cost of getting a loan.
• 1:24
  SPEAKER_00: Usually lenders just account, you know it depends on the lender, your credit profile, lots of different things, but you can expect to pay maybe a point or one percent to get you a loan.
• 1:35
  SPEAKER_00: So if you want to borrow half a million dollars,$500,000, in some cases that might cost you$5,000 to do so.
• 1:44
  SPEAKER_00: That's just to get the loan.
• 1:46
  SPEAKER_00: Other costs to purchase real estate is also going to include your escrow fee and your title fee.
• 1:53
  SPEAKER_00: The seller has their escrow fee and their title fee.
• 1:56
  SPEAKER_00: If you're using cash, you're still gonna have that escrow fee and title fee, but you don't have that financing or loan fee that a buyer that needs to borrow money is going to have.
• 2:08
  SPEAKER_00: So these are those costs that you're gonna have above and beyond the actual listing price or the price you've agreed to pay.
• 2:15
  SPEAKER_00: Now, beyond that, you can move into other things that you're going to have to spend money on.
• 2:20
  SPEAKER_00: And it's also going to depend on how your loan is structured, the type of loan.
• 2:27
  SPEAKER_00: So if you have, let's say, a loan that requires less down payment, in some cases, those lenders want to secure up front more money so they can pay a year's worth or six months' worth of certain things.
• 2:41
  SPEAKER_00: Usually a year's worth of something a lender wants to get money for you for at the very beginning.
• 2:46
  SPEAKER_00: If you're using financing and the financing is less than 20% down, and they're going to what's called impound your account.
• 2:54
  SPEAKER_00: So every monthly payment's going to include your taxes for that particular month.
• 2:59
  SPEAKER_00: Instead of waiting and paying property taxes twice a year, which is typical here in Los Angeles County, California, they pull it out a little bit every month.
• 3:08
  SPEAKER_00: But up front, they want six months' worth of taxes.
• 3:12
  SPEAKER_00: That's known as you make your payment.
• 3:13
  SPEAKER_00: Your payment that's going to include that payment if that account or that mortgage happens to be impounded.
• 3:20
  SPEAKER_00: So besides those property taxes, also home insurance.
• 3:24
  SPEAKER_00: If you have less than 20% down, or if the loan requires, usually the lender's going to want a year's worth of home insurance, whatever that amount is.
• 3:34
  SPEAKER_00: Back in the day, it was$800,$900 for a single family residence as in most places here in Santa Clarita.
• 3:40
  SPEAKER_00: That number, of course, has gone up.
• 3:42
  SPEAKER_00: It's going to be very residence dependent, or if it's a condominium or townhome complex, it could have different insurance requirements.
• 3:50
  SPEAKER_00: But insurance is going to be mandated by the person, entity, the bank that's loaning you the money.
• 3:57
  SPEAKER_00: So they might want six months of your property taxes up front and then a year's worth of your home insurance, property for a year up front as well.
• 4:09
  SPEAKER_00: So these are additional monies you're going to be bringing in to purchase.
• 4:12
  SPEAKER_00: And it depends on what those amounts are, how much those cost, but these are other items.
• 4:17
  SPEAKER_00: Also, so before you even get into getting to the closing table or finishing the transaction, you're going to have other expenses coming out of your pocket within the deal.
• 4:27
  SPEAKER_00: Now, of course, these out-of-pocket expenses, the closing costs, all of those items should be known up front by you, by your real estate agent.
• 4:36
  SPEAKER_00: They should inform you, hey, listen, Jack, you're going to have these particular costs.
• 4:40
  SPEAKER_00: The lender should be involved in that educational process.
• 4:44
  SPEAKER_00: And it's going to be very house or real estate dependent on what you're going to be paying.
• 4:50
  SPEAKER_00: Condominiums and townhomes, things with homeowners associations might have more fees depending on what's required.
• 4:57
  SPEAKER_00: And that could be more fees typically that come from the seller's side or more fees that typically come from the buyer's side.
• 5:04
  SPEAKER_00: But it's going to depend.
• 5:05
  SPEAKER_00: All of these numbers should not be a secret.
• 5:08
  SPEAKER_00: And in your process of purchasing real estate, you shouldn't be shocked.
• 5:12
  SPEAKER_00: They should be stuff, they should be items that are discussed with you and laid out carefully for you up front in some kind of a document that you can see.
• 5:22
  SPEAKER_00: So ask for that.
• 5:23
  SPEAKER_00: What is this going to cost me to buy this particular house?
• 5:26
  SPEAKER_00: What kind of money do I need to bring in?
• 5:28
  SPEAKER_00: What kind of money can I am I able to get from you, Mr.
• 5:31
  SPEAKER_00: Linder?
• 5:32
  SPEAKER_00: Am I able to maybe get contributions from an agent from the other side from whatever?
• 5:36
  SPEAKER_00: But all these, all the in here, most of them are negotiation points.
• 5:40
  SPEAKER_00: Some of them are going to be very hard set and fast, but it's definitely worth asking the question: is this fee something I can negotiate with you or is this the way that it is?
• 5:50
  SPEAKER_00: And explain to me why both fronts.
• 5:52
  SPEAKER_00: Doesn't hurt.
• 5:53
  SPEAKER_00: And that, ladies and gentlemen, that question does keep people on their toes.
• 5:57
  SPEAKER_00: Alright, so moving into these particular other items that I was talking about, these aren't financial or closing cost items.
• 6:05
  SPEAKER_00: These are out-of-pocket expenses at the time that the service is given to you.
• 6:10
  SPEAKER_00: It's going to include your home inspection fee.
• 6:12
  SPEAKER_00: Also, your appraisal fee.
• 6:14
  SPEAKER_00: Remember, I talked about with a cash buyer, the appraisal isn't going to be dependent on that transaction, but it can be chosen.
• 6:22
  SPEAKER_00: If you're financing real estate, most odds are that it's going to require an appraisal and you're going to be paying for that.
• 6:29
  SPEAKER_00: And what does that cost?
• 6:31
  SPEAKER_00: $5,$600,$700.
• 6:33
  SPEAKER_00: It's going to really correspond to size and where you are.
• 6:36
  SPEAKER_00: But that's kind of the going rate.
• 6:37
  SPEAKER_00: Home inspectors, about the same.
• 6:39
  SPEAKER_00: $5,$6,$700.
• 6:41
  SPEAKER_00: Depends on the size of the property.
• 6:43
  SPEAKER_00: So those are out-of-pocket expenses you're going to have at the time of service.
• 6:46
  SPEAKER_00: There could be other items that you'll have to pay for, but more than likely those items are going to be much smaller.
• 6:53
  SPEAKER_00: These are the bigger ticket items as you're coming in to the process.
• 6:57
  SPEAKER_00: If you have other inspections are going to do, let's say the home inspection calls out the roof and says, oh my gosh, you know, there's with it, I would rather feel more comfortable with you having a roof inspector go out.
• 7:08
  SPEAKER_00: Well, if you if your turt doesn't know a guy or know a person that'll just go out and do it and inspect it for nothing, you might have to pay that cost.
• 7:16
  SPEAKER_00: Same thing with pest control and termite.
• 7:18
  SPEAKER_00: That's another cost,$80 to$100 to pay for that inspection as well.
• 7:22
  SPEAKER_00: So those are kind of the things you jump into escrow, you have your home inspector, the appraisal, and a pest inspector that's going to be looking at the termite issues.
• 7:30
  SPEAKER_00: Those typically aren't negotiable numbers, they're point of sale payments, you know, Venmo sorts of things.
• 7:37
  SPEAKER_00: And that's usually what you pay as you're in escrow.
• 7:40
  SPEAKER_00: Prior to paying anything out of pocket, my suggestion is a home buyer that kind of now be what can I expect to pay when buying a residence field and jumps into this.
• 7:52
  SPEAKER_00: Make sure before you start spending anything, at least from the outside, this is the house you want.
• 7:58
  SPEAKER_00: Go talk to the neighbors.
• 8:00
  SPEAKER_00: Go talk to the folks that live across the street.
• 8:02
  SPEAKER_00: If it's a condomini or townhome, go talk to the people that are living next door.
• 8:06
  SPEAKER_00: If it's something that has shared fences, shared walls on the property, which is very commonplace here in Santa Clarita, Greater Los Angeles, San Fernando Valley, you're going to have a fence that kind of belongs to both the neighbor.
• 8:19
  SPEAKER_00: That's something that you want to investigate, especially if the fence is dilapidated.
• 8:24
  SPEAKER_00: If you're looking at your property, this property that you're at, and you see large trees that are growing.
• 8:30
  SPEAKER_00: They're so beautiful, but they're coming from the neighbor's yard, and their canopies are covering your backyard.
• 8:36
  SPEAKER_00: If that happens to be some kind of seed-bearing tree or massive leaf-bearing tree or a pine tree, and everything looks nice and pristine and clean right now, probably dollars to donuts, it's not going to be that way whenever this thing blossoms and blows up and becomes wonderful, a wonderful shade provider.
• 8:56
  SPEAKER_00: Also, there's going to be a bunch of junk in your yard from the tree.
• 9:00
  SPEAKER_00: Are you prepared for that?
• 9:02
  SPEAKER_00: And then find out in whichever area neighborhood you live in if that's something that could be controlled through some sort of an enforcement mechanism, maybe by the homeowners association, that they could have the neighbors come and clean up whatever debris might be dropped on your property.
• 9:17
  SPEAKER_00: But if you purchase it without doing those investigations, at least door knocking the neighbor's house to see who and what they're about, it's going to fall back on you because you didn't do that necessary step before spending money at the very beginning of the escrow process.
• 9:33
  SPEAKER_00: These are really, really critical things, and by hiring a brilliant, well-qualified, knowledgeable real estate expert is a lot better than just hiring somebody out of a box.
• 9:44
  SPEAKER_00: There's that.
• 9:45
  SPEAKER_00: Have a fantastic week.
• 9:46
  SPEAKER_00: This is what it's going to cost to purchase real estate in a nutshell.
• 9:51
  SPEAKER_00: Every situation's a little bit different.
• 9:53
  SPEAKER_00: Costs, of course, are going to be different depending on purchase price, location.
• 9:58
  SPEAKER_00: And in addition, there's other little nuances within this process because some properties carry different fees with them.
• 10:06
  SPEAKER_00: In the ways of homeowners associations aren't always the same amount.
• 10:10
  SPEAKER_00: You have Melaruz and extra supplemental taxes, special taxes that be part of the regular tax base, and those amounts are going to vary too.
• 10:18
  SPEAKER_00: It could be, and here's something else with regard to costs, maybe a homeowners association increases every six months or a year.
• 10:26
  SPEAKER_00: What is that cap?
• 10:27
  SPEAKER_00: What does that look like?
• 10:28
  SPEAKER_00: If your homeowners are a member of a homeowners association that goes up a lot often, that might price you out eventually, so be wary.
• 10:37
  SPEAKER_00: In addition, if there's extra taxes in the form of Melaruz, you should know that going in.
• 10:42
  SPEAKER_00: And then the question is, how long are they going to last?
• 10:45
  SPEAKER_00: And is there any way to figure out if they're actually going to end?
• 10:48
  SPEAKER_00: That might be cool to know, especially if you're purchasing a property like I sold recently that the Melaru's was coming up on its end date.
• 10:56
  SPEAKER_00: How for sure is that going to cancel?
• 10:59
  SPEAKER_00: What does that look like?
• 11:00
  SPEAKER_00: And what are the additional savings that homeowners are going to have?
• 11:03
  SPEAKER_00: When the Melaru's finishes, property prices tend to go up a little bit because now they don't have those extra taxes assigned to them.
• 11:11
  SPEAKER_00: Good to know for a buyer interested in real estate and sellers that are living in areas that have Melaruz that are getting close to coming to an end.
• 11:18
  SPEAKER_00: I'm Connor with Honor.
• 11:20
  SPEAKER_00: We'll talk to you in the next one over and out.