What it Takes to Win a Bidding War on a Home - Competitive Home Buying

If you've ever wondered how to make your real estate offer as a home buyer the one that sellers can't refuse in a bidding war, then buckle up for an enlightening journey with Aaron Morrow and Bryan Laflamme. Together, we peel back the layers on the complexities of the Seattle housing market, from earnest money negotiations to the ins and outs of seller's disclosures. We're not just talking shop; we're handing you the keys to understand the legal intricacies that could make or break your next property venture. Whether you're a first-time buyer or a shrewd investor, the expertise shared in this episode might just be the missing link to your real estate success story.

Hold onto your hats because Brian's Appraisal Protection Program is revolutionizing the way buyers approach the market, and you're getting an exclusive look. Say goodbye to appraisal anxieties and hello to a newfound confidence in your offers, regardless of how hot the competition gets. This episode doesn't just cover the basics; we're also tackling closing date negotiations, rent-back agreements, and debunking common myths surrounding FHA and conventional loans. It's a masterclass in strategy and agility, aiming to leave you equipped to navigate the nuanced dance of real estate transactions with finesse and foresight.

Finally, we turn the spotlight on the often-overlooked forms and inspections that are critical to safeguarding your investment. From navigating the mandatory to the optional, and knowing when to stand firm or strategically waive certain contingencies, you're getting a full download on the paperwork that powers the purchase. And as for inspections? We dive into how they can be much more than just a checkbox on your to-do list, potentially saving you from costly surprises down the road. When you're done with this episode, you'll walk away with a toolkit brimming with actionable insights that could put you ahead of the curve in any real estate scenario.

👋 Considering a move to Seattle, Washington or its dynamic suburbs like Tacoma, WA & Bellevue, WA? Dive deep into what living in Seattle and its neighboring areas truly feels like.

Explore through neighborhood vlog tours, and city pros and cons videos, and get unmatched insights into relocating to the Greater Seattle area! Transition confidently with guidance from a native Realtor® who's eager to help you settle in your perfect home! 🔑

Whether you are moving in 9 days or 9 months, give us a call ☎, shoot us a text 📝, or send us an email 📨 so we can help you make a smooth move to the greater Seattle, WA area!

Aaron Morrow Realtor Serving (King, Peirce, & Snohomish counties)
📱Call or Text: 206-451-3771
📨Email: aaronmorrow@livinginthegreaterseattlearea.com
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This is my Intro to every Podcast and YouTube video 

This is my Outro to every Podcast and YouTube video 

Transcript

Speaker 1: 0:18

Hey everyone. It's Aaron Marr here, local realtor in the greater Seattle area. Again, we've taken a couple of weeks off. I don't know if you call that a season. We did like 12 episodes on our live, took a couple of weeks to reset, had a couple of different things going on with Brian and I with our schedules, including my wife had wisdom teeth extraction going on and my kiddo just kept getting a different couple of different illnesses going on. I got it, my family got it. Sister lives next door, neither here nor there. We're back for another session and I'm here to talk, especially since the market has gotten hotter. I'm going to bring Brian back in here, but we're going to start talking about how, what you could do to make your offer the most competitive if you find yourself in a multiple offer situation. Let me bring Brian to the stage here. Brian, welcome back.

Speaker 2: 1:10

You copy drinking my coffee.

Speaker 1: 1:12

You got your coffee, Everyone. If you hear anything outside of Brian's window to demystify the situation, they're working on de-graffitiing Tacoma right now.

Speaker 2: 1:23

Somebody decided to show off their art skills and just say it wasn't for everybody, it was definitely an interpretive piece.

Speaker 1: 1:32

Yep, I definitely saw it and it definitely looks interesting here. Let me figure out. Hold on, brian, do you mind talking just for a second while I figure out what's going on with why Instagram isn't working? Yeah, give me one second.

Speaker 2: 1:47

We're going to talk today about what some strategies for negotiating in your to put yourself in the best position, and what happens if a deal kind of goes south in the middle of a transaction like during an inspection or appraisal or something like that and how to negotiate through those things, especially in a market like this. I was just doing some research, as I want to do, and we have gone up in mortgage purchase activity this year to a place where we are currently just below. We're 11% below the amount of mortgage purchase application activity we had at this time last year, 45% lower than we were this time two years ago, and we are over 40% lower in mortgage purchase application activities. So people like submitting loans to purchase houses. We are over 40% lower than we were in 18, 19, 20, 21, 22 and then we're 11% lower than we were in 23. So demand continues to diminish with these higher rates, which is going to push supply up a little bit, but what that means is the demand on the sidelines.

Speaker 2: 3:01

We saw a tick up in rates, a tick down in rates and a skyrocket of mortgage purchase application data. So we went from a number of 125, which is kind of there's a whole lot of things that go into how they calculate this number and how this algorithm is set out. So let's say, for some perspective, at the height of the market in 2020, 2021, the mortgage purchase application data was at. Their number was 348. So I'm not going to bore you with what zero means and what 1000 means, but just for perspective 348.

Speaker 2: 3:38

At the beginning of this year that number went down to 134. From 348 to 134, we spiked up to 174, down to 128, we're back at 148, we are still 11% below where we were last year when we had some of the lowest purchase application activity on record. What that means, but the spike up before that, when rates had gone down from October into January, we saw mortgage purchase application activity really spike up and we've talked about that on this show. Currently, 55% of the market last year was first time home buyers. It's normally 32 to 33. Housing, where I can know, with an article showing 55% of the market last year was first time home buyers 97% of first time home buyers financed their house. They don't like the perfect pickash, so they are incredibly interest rate dependent. As rates tick down a bit, we've seen them rush back into the market.

Speaker 2: 4:33

So inventory is climbing a bit over last year, still coming from historic lows. So it's like the Talos Midget competition again. But as it ticks up with higher interest rates, that is going to be sucked off of the market if any move down in interest rates.

Speaker 1: 4:48

You just said the Talos Midget competition.

Speaker 2: 4:51

I'm glad that's what you're talking about. It kind of is right. The bar is so low you will trip over it. The short is Talman competition.

Speaker 1: 5:01

The shortest Talman competition. Okay, oh man, I hope I don't have a big enough following that we get canceled brain.

Speaker 2: 5:09

Okay, I'm not saying there's anything wrong with being a little person. No, I'm kidding, but they're not tall by definition.

Speaker 1: 5:19

Yeah, no, of course. Anyways, I don't know why I'm so wrong. This is good. I think I'm going to tend to do it. Let's move on. Yeah, this is great. No, fantastic, brian, okay, fantastic.

Speaker 1: 5:33

Well, based on everything that Brian talked about, like I said, I'm going to lead you guys into going over. We're going to go over the nuts and bolts of what makes up like kind of the purchase and sale agreement in at least in the Northwest and the West. So if you're looking to buy a house in the greater Seattle area King Pierce, noamish counties there's other counties involved, but these are the ones I work in, so all of these are going to have to do with you. Now I'm not going to bore you with the nitty gritty details, all the rewritten, rewritten real estate jargon. We're not going to touch that. You can read this stuff on your own terms.

Speaker 1: 6:09

But I'm here to go over the stuff in the contracts that sellers are looking for that could help you get a leg up in your offer.

Speaker 1: 6:16

If you're up against the wall against, you know, like 20 other buyers and you really want to home, you know if that's the strategy you're looking for.

Speaker 1: 6:25

If you're a buyer, that's like I don't want to play games or get into a bidding war, that this, this video is not really for you, because you need to go watch one of my other videos and how to avoid getting into a bidding war and look for the other houses that are either off market or have been sitting.

Speaker 1: 6:41

But if you are like I found the house and I want it, but there's 20 other people vying for even one other person, this is how to show you everything you can do in your offer to get a leg up on the other person. So we're going to go over and Brian is going to give me some dialogue from a lender's perspective to tell you guys what is also from the financing perspective, what could also be risky to you know, because we always tell clients. You know our job is to educate you on what the pros and cons are, what you could do, put into a real estate contract, and inform you on what you're doing, because, at the end of the day, what you're putting at risk is what's called earnest money when you're making an offer and earnest money Right there.

Speaker 2: 7:31

This is the first really important vocabulary word of the day.

Speaker 1: 7:34

Yes, so let's, let's talk about it Right. So earnest money is kind of I always explain it to my first time over is like it's like a security deposit when you're getting into our rental. So it's like the money that you will put with the title and escrow company, the same company that's in charge of transferring home ownership from buyer to seller. They hold onto it till we tell them contractually what to do with it in writing. And there's only three things oh, go ahead, go ahead.

Speaker 2: 8:06

E earnest money is incredibly important because it also caps the damages that you can incur from the seller if you don't act in good faith. So there are two options, if I'm not wrong, on page one of the contract sellers election of remedies or earnest money Right.

Speaker 1: 8:21

I'll bring it right up here. Yeah, you can either do right here by default. So online item eight I'm bringing it right in here on the first instance sale agreement with my buyers. We never choose the other option. No, I said every even on there. Yeah, if I don't do anything you know, what.

Speaker 2: 8:40

Yeah, you're. You tell me what you want 10 years.

Speaker 1: 8:42

I've been doing this for 10 years. I've we never checked this, because Checking this gives the seller the right to all power go after your earnest money and sue you.

Speaker 2: 8:53

Best case scenario. If it's seller election of remedies that they, then they only take your earnest money, but there's money's on there not that any of you would act in bad faith all of our best friends watching these lives, but right, like I don't know why it's on there. Nobody in their right mind would ever check that box.

Speaker 1: 9:08

Right, no, so like, even in the most competitive circumstances, this isn't something that a seller is looking for you to check. Like if you're in a, if you're in an offer where there's like if any of you have been following my stories that crazy bidding war that just happened in Bellevue where the house sold for a 150% from list to soul price.

Speaker 2: 9:31

You guys later in the sixes and sevens.

Speaker 1: 9:35

Even in that situation even in that situation where the house was listed at 875,000 and it sold for 1.3 million and 5,000, that situation I can guarantee you. No one was checking that box and the seller was like, oh, that's my person I'm going after. Seller isn't looking after this. This is like low on the totem pole. Seller's not carrying after this. Because if you structure your offer right, a seller you. A seller is looking for other stuff in the offer for strong earnest money.

Speaker 2: 10:07

And that we talk about some strategies around earnest money too.

Speaker 1: 10:10

Yeah, and we're definitely gonna go over that. I actually have a checklist here. It's like a writing, a strong offer checklist here. I've simplified it. I don't want to like show off, like my dietary version. Yeah but this is kind of just like a breakdown here, and we've kind of updated it.

Speaker 1: 10:27

We were constantly like tweaking it and adding some stuff there's yeah a few things that we can like add in here, including, like Negotiation of compensation, either on buyer side commissions or seller side commissions to you. Sometimes that can sweeten the pot for people, but in, by the way, anyone I forgot to mention this is multi-streamed right now. We have a lot of people that are watching on Instagram, facebook, linkedin, tiktok and clapper right now. So if you're watching on some of the platforms where you can only see me, most people can see everything right now. But if you're on like clapper, go to YouTube right now.

Speaker 2: 11:05

So you don't want to see me, you don't. You don't want to see me.

Speaker 1: 11:07

Oh, you want to see the yeah but you want to see the screen so we can go over this. That's 100%. Yeah. So we're good, we're definitely gonna go over this information and but you know what, since we're talking about it, why don't we go over some earnest money stuff? So this is the biggest one that you can do now.

Speaker 1: 11:25

I this is one I get so nervous on to do with earnest money, but this is this is written in here, it's been checked you could decide to do what's called a Full release of earnest money to the seller. It's such a power move to just say, mr, mrs Seller, I'm so confident and strong in our offer that will close on your property that one of the things I'm Negotiating is not only a large sum of earnest money, but I'm just giving it to you. Here you go Now. Here's the thing, though, as a buyer. Here's the main reasons why I, as an agent, stay like that. In your toolkit of things that you're gonna do like this is your nuclear option, because, like, your earnest money is like your only Poker chip or your your negotiating thing that you have if you give it all away to the seller up front. Um.

Speaker 2: 12:27

Yeah there's.

Speaker 1: 12:28

There's nothing stopping that seller.

Speaker 2: 12:30

If you do not close, if your lender cannot close your deal For any reason on your closing date, there is nothing stopping the seller from just moving on from the sale or have found a different buyer within that time frame and just getting that house under contract with a different buyer Especially you gotta have, you gonna have a really, really good relationship with your lender and yeah, I'll be have this post-appraisal.

Speaker 1: 12:58

Yes, yeah, yeah. Now there are a couple of things that you could do to Maybe not do such a what I would consider a ball or move like this there are. There are some other things that you could do where you make the earnest money non refundable but not released. So that wording would look like basically saying the earnest money is non refundable, you're not gonna get it back, but at least it's tied up with escrow. Still, this, it's not in the seller's hands, so you still have to, in writing, have everything checked out. The seller doesn't just have Bernie made off with with your, with your earnest money and then have no recourse of trying to just Get it back in the event that the seller Doesn't perform on you. Yeah, they, they, they just made off with your earnest money, you know. So, like that is a small inherent risk, um. So there, this is the most risky thing you can do with earnest money, but it is a power move, so it's it's worth discussing all the pros and cons of doing it there was.

Speaker 2: 14:12

If you do this, you must do it with a suitcase filled with cash and you must slide it over to the seller. Or you meet them at the airport with, simply Like, the same suitcase, but theirs is empty. Yours is full. You set down the full one, pick up the empty one. They pick up the phone. You have to do it very double a seven, like if you're gonna release your earnest money, that's the we don't, that's just the law like, that's just what the law says. You have to be double a seven style.

Speaker 1: 14:35

Just just the law. You just got to slide it under the table. No by the way we're. I'm gonna disclose, by the way, anything that I'm sharing with you right now. I have not, you have not hired Brian or I right now as giving you legal real estate advice, so I'm just throwing this out here.

Speaker 2: 14:52

You are taking your we just gave you that suitcase trick for free, is what he's saying? We gave you the airport suitcase.

Speaker 1: 15:03

What I'm saying is the verbiage I'm showing you is a recommendation. You have to Make sure that when you are being properly represented by your buyer's agent or your real estate attorney, to make sure that the language that you are using in your contracts have been ran by either them or their Managing broker. Don't just take what I have here, because I am throwing this out here. I am not gonna be held liable if you're just snapshotting language I'm giving you right now.

Speaker 2: 15:34

I'm not liable if you don't double a seven year earnest money.

Speaker 1: 15:37

Yeah, exactly. So this is one power move that you can do with your earnest money. You can either make it non refundable or release it early. A few things that we've done with negotiating tactics, with with sellers. In the event, there's been several deals where, like I've worked with some home buyers that unfortunately, when they've decided that they're gonna work with a bank that is notorious or not closing on time and the bank doesn't close on time.

Speaker 1: 16:08

In that event the seller or the buyer, to keep the deal going, had to Negotiate some of like a release of their earnest money to the seller in exchange for an extension of time To keep the contract and okay, I'll just say that that's reasonable.

Speaker 2: 16:29

That's reasonable. Hey, I didn't perform on this part of the contract, so it's gonna cost me to now renegotiate.

Speaker 1: 16:36

Right, that makes sense. The buyer did not perform.

Speaker 2: 16:38

Yeah, and you release it or you make it non-refundable. It still comes back to you if you close. So you're saying I'm still confident I can close, but for a little bit extra assurance and some insurance on my side towards you, Mr or Mrs Seller, if I don't, if I can't make this happen, you can keep my earnest money.

Speaker 1: 16:57

Now, in everything that we're talking about with earnest money, you can do any combination of some buyers. After coaching them through this, they decide they say, hey, aaron, what we want to do if we know we're in a multiple offer situation Because what I do for my clients to put them in the best position possible is I research the crap out of the multiple offer situation will probably be in so the house that they like I mean. I will really quickly run you through a two minute scenario of like the type of situation we go through. We first have researched the type of house they want to get. I've made sure that there's most likely a good chance that it can go with the type of financing they want.

Speaker 1: 17:45

Before they've even seen it and I'm like, okay, house checks out, let's go see it in person. Clients fall in love with it. They're like, aaron, we want it. Okay, let me do some recon. Follow up with the agent Turns out four other offers coming in. They're reviewing offers on next Wednesday Awesome, okay. So I'm getting as much info out of the listing agent as I can.

Speaker 2: 18:11

I am this agent's high school counselor? Hey, was this person? Somebody told the truth Normally.

Speaker 1: 18:15

what kind of I am working with the listing agent as good as I can, and I believe in being honest and upfront with the listing agent as much as I can. So, then, they are divulging as much as they will with me win, win scenario.

Speaker 1: 18:30

And then because if it comes down to apples and apples it's my, if it's my, if it's my offer against 20 other offers and mine is like in that one or two position. But then we have this really good relationship going with clear communication. That agent is going to feel confident, confident moving forward with us because we had our ducks lined up, we had our lender reach out to the agent. That agent feels comfortable, comfortable, confident in our clients financing. Our client has their financing lined up. Folks, everything that you're doing when you're crafting these offers, it's an art form.

Speaker 2: 19:08

You have to have. It's not just highest price wins, it really is. An highest price with a really difficult agent on the other side means you may not get to closing and if you do, you're going to be bloodied and bruised and have come down in price, like a listing agent knows that. And they're still protecting their client even if they don't take the highest offer, because the experience and knowing that it's actually going to happen because nobody gets anything, the seller doesn't get any- money.

Speaker 2: 19:33

the buyer doesn't get to move any house If the agent stands in the way, it doesn't get the deal closed and doesn't meet your expectations, and some people really just think the more of a hard as I am, the better negotiate, or I couldn't be further from the truth.

Speaker 1: 19:47

Exactly, and unfortunately, the, the there's so many situations that we find ourselves in where the other, there's other agents that are just getting in the clients way.

Speaker 2: 20:01

So I see a lot.

Speaker 1: 20:04

Yeah, yeah, I do see it a lot too. So, with that being said, what I was going to just say about the earnest money a couple of things that you can do after figuring out, like how much you're offering with the earnest money some clients decide that maybe they do like a partial, some earnest money is nonrefundable. I have a lot of clients where I feel a lot more comfortable, where maybe they negotiate. Some of the earnest money is nonrefundable after a certain timeline is met. So, for instance, the appraisal has been satisfied. You know that's a good. That's a good area where, if you're confident in the lender you're working with and you're confident in your financing, then it should be a smooth sailing ship from there. Once you know that the appraisal is going to go through, which we have, just that's kind of a nice plug in for a bonus. Anyone that's sticking to the video? Oh wait there's more.

Speaker 1: 21:02

Yeah, yeah. Brian is going to have a really cool thing to talk about with what he's doing with his company with appraisal.

Speaker 2: 21:10

We've got some really good appraisal protection insurance If you're really, if you're worried about the property not appraising and how that might affect you and how much money you'll have to come out with closing or how much you're paying like up or down Mortgage. Math is not regular math, you guys. So we're going to bring you through our appraisal insurance strategy.

Speaker 1: 21:26

Cool, so we'll get back to that real quick, though Let me take you through this. And we spent a lot of time on earnest money, but you know what? It's super important to understand what you can do with earnest money, because it's the biggest thing, as we've shown you. It's worst case scenario. It should only ever be the thing that you are losing in a deal as a buyer If you've done something you are not supposed to do. That's the worst case scenario. You should never be in a situation where you're ensued by a seller.

Speaker 1: 21:59

But so I say should right If you're working with someone like myself and Brian or a reputable you know a roulter, you've. You've been educated properly. There should only be two things that happen with that earnest money. Either it goes towards any of your upfront costs at closing, or if you actually owe less at closing than that earnest money amount is, you should get a refund back at closing. Or if you leave the deal in a way you're contractually allowed to, which all of knock on wood my desk is wood. If you leave the deal in a way your contractually allowed to, you get the earnest money back.

Speaker 1: 22:46

Contractually speaking. There's nothing in the contract that has a. There's nothing that the seller has a leg to stand on. Now the seller, both parties have to sign and agree to who releases it to. But even if the seller took you to arbitration, there's no way they would win Because it's just crystal clear there's no, there's no, like if you acted in good faith and in one of the contingencies that Aaron puts in your offer was not met, you are allowed to back out of the contract.

Speaker 2: 23:15

Yep, your earnest money returned. Now the seller may drag your feet on that.

Speaker 1: 23:19

And if the seller is trying to hold on to it in bad faith and take you to arbitration, they're going to get more fines on them in arbitration and loose. And I've actually seen it happen not to my buyers, thankfully, but some other people's buyers.

Speaker 2: 23:34

Can they put their house on the market when they're in arbitration for previous contract?

Speaker 1: 23:44

You know what? That's a good question. I never came across that. I'd have to ask my bro.

Speaker 2: 23:47

Let's look it up. Yeah, let's look it up and we'll put it in the notes.

Speaker 1: 23:50

I do know, I do know a buyer, and if a buyer is in arbitration they can still go under contract on new properties, because that makes sense their previous earnest money is just tied up in escrow still, but they can still buy something else. But good question, we should. We'll look it up and I'm going to even pin Brian's. I'm going to answer his question on YouTube in the comments. So or Brian might be looking up why I'm doing this, right now?

Speaker 2: 24:19

Nope, I'm not good on that. I need a professional.

Speaker 1: 24:21

Okay, we'll look it up later, yeah, anyways. So sellers disclosure form. So this is a form that most sellers have to fill out. There are certain circumstances where a seller or a property does not have to fill this out. Primarily, if the property is in a state sale, they do not have to fill this out, but anytime they're exempt from it. But 99% of the properties, if they're not in a state sale, they're gonna have to be filling this out.

Speaker 1: 24:59

And what's what's going to happen is this is just a form, as you can see here. There's like 100 questions on here and the seller has to answer yes, no, don't know or not applicable. And this is an important document because it just it tells you know it's the seller answering in good faith, their their honest knowledge of what the condition of the property is Right. So what's good about this form is at the bottom here. For a buyer, there's three lines here that you can sign here. Line one gives you the option to basically it's acknowledging that you received this document, and if you just sign line one, you actually get three business days to review it and back out if you don't like something on it, to improve your offer, like one thing that you can do to make your offer stronger is you could also sign line two where you're acknowledged that you've received this and you're waiving your right to back out due to anything on this form.

Speaker 1: 26:05

So I have a lot of clients that sign option two because they read through it they're like, okay, that's cool. I never recommend a client signing option three, because what option three will do is it basically takes the seller off the hook for actually being honest on this form and giving you a completed document. So signing line three basically doesn't help you if you have to take the seller to small claims court after after closing on the property. This is one of the biggest pieces of documents that you'd use right after closing on the property If you found something wrong with the property that the seller didn't disclose properly to you and you needed to use this in court. So line one and two signing both of these, it helps improve your offer by basically saying look, I'm serious here. I want your property. I'm not going to take three days to review this and back out on it, but why is that a seller?

Speaker 1: 27:08

Well, anytime you have a contingency in place in your offer where you as a buyer are allowed to back out on them, it's not good to the seller because the more things you have in your offer where you can back out on them, anytime a buyer backs out on a seller, they have to put their house back on the market Anytime they've tied up their property. Where they've taken their house off the market and put it back on the market. Most of the time it hurts the seller financially where the large majority of the time they are going to have to sell their house for less money than they would have originally gotten with the first buyer. It's always in the seller's best interest to find the right buyer the first time around and get the transaction completed the very first time with the first buyer. It's very rare that a seller will get more money with the second or third buyer than they would have gotten if they found the right first buyer under contract.

Speaker 2: 28:08

Mark Twain said it's something among the lines of a lie is halfway around the world before the truth puts on its shoes, or something like that, and what that means is that rumors spread fast.

Speaker 2: 28:18

And so if a house has been off the market a couple of times, well, other agents are going to make their own conclusions about why, and it could be true or false.

Speaker 2: 28:25

Maybe they took buyers who didn't have good financing approvals, or who lost their job, or ended up finding out they had a baby and wanted to move back home with to be near their parents. There's a could be a million reasons that don't have anything to do with the property, which is why this having not taking the full three days to review something like this you don't really need three days to review allows a seller to understand that you are one serious and to the expedience of your review means that if they do have to put it back on the market, they can get it back on right away. So it doesn't. Rumors are spread about. Well, once they kind of got into this house and maybe they did an inspection and maybe they praise, or maybe, maybe, maybe, maybe, maybe, and that's why this house came in or came back on the market, so we're going to go with the lower price.

Speaker 1: 29:06

For sure, 100%, Yep, Absolutely. With that being said, so I think we've covered seller's disclosure form, what you can do with that. I have a few items to mention just on. The person's can say I'll agree with me alone, which is form 21. This is the form, real quick as you can see here. There is a lot to this form. And just to kind of show you guys here, all of this stuff here is stuff that I as a router fills in and then all of this stuff I do not touch.

Speaker 1: 29:35

This is like the pre written Washington state real estate jargon that's written by the Northwest and West attorneys. I always tell my clients to read through it, but I go over with my clients but we just don't manipulate it. That being said, there are a few things that I'm going to point out here that you could help with your contract here. So we kind of covered what to do with earnest money. It's kind of just a general standard in the area, that minimum customary amount. Again, there's no set standard here. A lot of people do 1% as like a pretty standard average as what you know earnest money. But you could always offer more if you're in a competitive situation. And one new thing that they recently did I think a year ago is. They updated this where it used to be. It was just always two days here, and now you can always, you can, you can negotiate, so I always have clients by two days you mean, like how long the buyer has to put it into yes

Speaker 1: 30:48

grow. So if you have, if you have, if you're a client that you have everything lined up and you're like, hey, aaron, I could deposit as soon as we go under contract the next day, when, if we, if we go under contract, like on Monday, tuesday, I'm ready to talk to escrow and get it, get it going. You can put it one day here, and that that could help you. Because every small thing that you're doing in these offers, if you're if this, if the listing agent is crafty at what they're doing and they're looking, if they work like our team and they have a whole Excel spreadsheet to go over every single offer with their clients on what all the all the good pros and cons of every offer, because sometimes you might have a deal where literally the only difference came down to that. You know, these are things that you can be doing, so it's just these small differences that could make a difference in your offer.

Speaker 2: 31:51

I would say, every small edge you can get, get, take it, because, like you said, and they come down to just the same price, same closing costs, same closing dates, same sort of financing or whatever. But if you can, just like you know, single, single, single, double, and you got a good ending going. Right Little things Same with same with.

Speaker 1: 32:12

I always recommend, just by default use the same title and escrow company that the, the listing agent in the the seller, are recommending. Don't make it hard on the seller if they already have title opened with someone I go with who they're recommending. That's kind of basically like what people do around here as the standard. Now again, if you're not a multiple offer situation, that's different. If you want to use your own title and escrow, that's fine. Now what I would always recommend as an asterisk have your agent. If it's not a well known title and escrow company, have your agent. Just double check, make sure they're reputable, right? I'm just going to throw that out there, cause sometimes you have it where, like it's titles with like a well known title company, like either well, I'm not going to throw out names, but like one of the well known big names, and then all of a sudden you get this escrow company that's not even like with an attorney company, but or like but it's like this weird mom and pop company that you've never heard of.

Speaker 2: 33:10

We've had a lot of problems with that sort of thing.

Speaker 1: 33:13

I need to look into that for you, because maybe they're going to be biased and hold onto that. So with that also.

Speaker 2: 33:20

Right, yeah, you don't know, as a buyer, anything about us, bro. How could you? You do this twice, five times in your life? Aaron does this every single day. We do this every day like a difficult, maybe not difficult, but maybe wonderful people. But if they're too small and too slow, we can.

Speaker 2: 33:37

We've had problems where their situations like no, we can't close today because it's in a different county. Right, I don't understand what that has to do with anything at all, like get a carrier or e-record, or like there's a million other ways you can do it, or you know, hey, it's just the two or three of us here. We can't get to your guy, your buyer's, closing documents for another three days. Well, our closing date is in four days and they have to schedule their own work schedules in the family. Listen to Aaron on when he talks to you about what. Just go to have a company, because while it may seem like they're all the same, they absolutely are not. And if it's a company that just it's going to maybe throw some wrenches in there later on. Save yourself that.

Speaker 1: 34:18

Things to just look into. But obviously, if you're trusting the realtor that you're looking into and know that they're looking into you know, have them look into it. But these are just general advices. Use in general if you can trust your realtor and they're saying, go with the escrow company title and escrow that the seller's using. Again, it's just one. What we're trying to do is make the offer like what's the easiest offer in a pile of offers for the seller to be like you, I'm picking you right.

Speaker 2: 34:49

Yeah, give them an easy yes and give them enough yeses to where they're just continually saying yes to all the terms of your own.

Speaker 1: 34:57

Make it where they don't have to. Here's one thing, I have even put this in here but make it where there's no needed any sort of extra initials. So, like another thing work with an agent that we don't need to send any housekeeping items back and forth that need cleaned up or anything, because sometimes listing agents and sellers they will literally, if there's two offers on the table that are like the exact same, but one they meant the same thing as the other person but it actually just needs a counter offer to be clarified they're going to go with the other offer that didn't need clarified because they didn't need to send it back to get the buyer to initial something to clarify it. So we need to send that contract right the first time squeaky clean, no additional initials needed. Don't miss any of your signatures. Like send it perfect the first time. So the seller's like you made this simple for me Everything signed, it's good to go. Yeah, anyways, right here. So this is another thing. Where was I?

Speaker 2: 36:06

right here.

Speaker 1: 36:07

Okay, so we talked about Strongest Possible earnest money, talked about title and escrow, right here, twenty one, thirty day closer. Sooner, I actually had this on my form twenty one. This has been part of my checklist, but I've had this in here for years. I've started like seeing hey, if you can find a lender that can do less than thirty days, brian, my guy over here, he's done two weeks before folks, I'm not ten days, two weeks yeah.

Speaker 1: 36:32

He's done two weeks. So if you can find a lender, that can now. I wanted now if Brian said he could do ten days, I'm not going to put that in the contract like what we would probably do to give him a buffer.

Speaker 1: 36:42

I would put like fifteen because I don't want to you know, what I mean, but it even that if, if Brian was like Aaron, I could do ten days on this. My buyer's solid. They've got all their ducks lined up in a row. We're ready to go. If we put fifteen on that contract, I guarantee you will be like the best financial. You are going to be the best financial offer. As far as a closing date, now, the only thing that might be more competitive against you is if there's cash offers. But I'm not talking about any other sort of like on pricing or any other things. I'm just talking about merely on how many days to closing, right. So if you find a lender that is is good at what they do you get your ducks lined up with that lender. Final lender that can tighten up the closing date for you Any, any time that and be a participant in that.

Speaker 2: 37:46

As a buyer, you have to participate, you've got to be available. You've got to realize that you're buying a house. There's a lot of times or people will ask us for money and then forget that they did, I think. But you got to remember you're buying a house, have a lender who's proactive and then match that proactivity yourself.

Speaker 1: 38:01

Right, absolutely, yeah, 100%. So if you could put 15 on here, great, put it, because that's going to look super in, let's. Let's just touch on it real quick anytime. The shortest closing on top of everything else, that's a lot of aspects for most sellers. That is what a seller is looking for. Most sellers like that. Now, there are some sellers. This is the thing. This is why you gather intel, because when you're working with a, a realtor like me, I'm trying to find out what the seller wants, because there are some sellers out there that do want either a longer closing or alternatively, yeah, we're going to do that quite often.

Speaker 1: 38:45

Yeah, or alternatively, they want a quick close so they can have the cash, but they want what's called rent back, or they want to have possession after closing.

Speaker 2: 38:56

So allowing possession after closing is something that you can do, and I think that is an incredibly strong negotiating spot in this market where people are really worried about hey, I can sell my house fast, but I may not be able to buy a house quite as fast.

Speaker 1: 39:12

How low inventory?

Speaker 1: 39:13

is so basically what you're doing in layman's terms is you are contractually turning your seller into a renter once you become a landlord. So it's extremely powerful in a deal, and I've had so many buyers win deals where they weren't the highest offer, where the seller took their deal because they offered them this and that was way more worth it to the seller than getting even twenty thousand dollars more in the property because of how easy it was to get it. Now we're not just talking about offering five more days to move out, we're I'm talking about buyers who have offered sellers an extra like two months to get out of their, to find another property and get out Now. With that said, there's a couple of ways you could structure it, depending on how crazy the deal is. You can. Everything's negotiable on those. So you could either structure it where it's a free rent back, where, like, literally, you are charging nothing to the seller. Now the main con to that is you are footing your bill on your mortgage.

Speaker 2: 40:27

Utilities.

Speaker 1: 40:27

Now and the utilities? Yes, now, brian, correct me if I'm wrong here you, your first mortgage payment typically doesn't start for a month, right Till the month after you've closed, right?

Speaker 2: 40:40

Yeah, there's a couple ways that that can work. If you close the very beginning of the month, you can have a thing called an interest credit, so you have a little bit less closing costs. And then you're so, say you close the very beginning of April, since that's coming up, your first payment can be due then in May. Or if you close a little bit later, say the middle to the end of the month, say you close a month from now, april 15th, your first thing was not actually due until June and it's not due until June 15th. Like June 1st to June 15th is your grace period before you get any sort of late fee. After the 15 or after the 30, after 30 days late, then then it gets reported to credit, but after the 15th you just have a late fee. So you really have. If you close in April 15th, you have 60 days until that first mortgage payment is due with no penalty to you.

Speaker 1: 41:21

Which is awesome. And, by the way, just to give you a small correction, brian, there's, without modifications to it, the, the renter, the seller, does agree to pay the utilities.

Speaker 2: 41:31

All right, this is why we have you.

Speaker 1: 41:34

Yeah, at least you want to have to pay the utilities. Here is the small inherent risk to this and I always go over the pros and cons with my virus. Right, there is always an inherent risk that because you become a landlord, they become a tenant. What happens if they? They leave the place a little trashed once you leave, right? Well, now you're dealing with a situation where you might have to take the seller to a small claims court on how they left your property right, because there's not I mean now, I mean it's in here. You know they're not going to make any improvements or alterations to the property, including painting during the term in the room. There's a lot of stuff in here that we could read through that try to help protect you on this. But there is always an inherent risk where someone is living in your property you own it. Now they don't own it anymore, right? Most of the time I will let you know it works out. It's fine, you know. But I think things you want to keep in mind is get a feel for the situation and who, like the type of sellers are, before you're throwing this in your office. You know what I mean. So things you might want to look out for.

Speaker 1: 42:54

Okay, when you're going through a property in, I'm not like this isn't profiling or anything like that, but like get a good sense of when you're walking through the property that you're going to make an offer on. You walk through the properties A lot of the times. People leave their photos up. Just you as the home buyer. You get your own feeling for how comfortable you are with the seller and, based on talking to the agent the listing agent, the type of vibe they are you can tell.

Speaker 1: 43:34

You can make your own conclusions or decisions on if you're comfortable with this type of seller being the type of person you want to take that risk with. If the seller leaves a lot of stuff I'm not I'm gonna throw out there, sometimes there's like more like a hoarder or packrat. That's probably a property that's a little bit riskier to do a long rent back on, unless you want to just be like hey, I'm assuming this property with all of the inherent junk, no matter what they leave on it. Another situation you might get yourself in is if you get in yourself in a situation where you've taken possession of the property, though with a hoarder or a packrat, there could be that small risk that the person does not leave the property after the rent back's done.

Speaker 2: 44:27

There's inherent risk in all of this?

Speaker 1: 44:29

Yeah, yeah so.

Speaker 2: 44:30

I'm just throwing this out.

Speaker 1: 44:31

You're gonna throw it in the trash Now, not to get down a rabbit hole with this. The very large majority of home buyers that do this it's fine, right, but you just have to keep. You have to be knowledgeable and not just us generally do this. I've had three buyers that have done this recently in the last couple months worked out totally fine, but these are just things that they look at this holistically before they make this decision. I'll put it into the raw front. Okay, so we're gonna move on from that. If anyone has any questions, feel free. Guys, I see a lot of people watching, so if you have any questions, throw them in the chat and we'll be chatting with you.

Speaker 2: 45:14

Some of the things we're talking about here are ways to negotiate outside of just purchase price. So you have to find Aaron talked about the, the, the recon that he does and the research that he does to find the seller's pain and pleasure points and then have those kind of in holster. So you, you want to lead, of course, with the carrots. We'd love to give you this, we'd love to give you this, we'd love to give you this. I have things go south, you, you retain the stick, but negotiation is really about getting everybody most of what they want and right, you know, understanding what position you are in and the negotiation so that more appealing and easier you can make it for a seller to say yes, the more likely you are obviously doing that offer, even if you don't have the highest price.

Speaker 1: 45:56

Absolutely Okay. One last thing on this form, real quick, before we move on to financing. Contingency is right here Information verification period, one thing that you can do to just tighten up your offer, and I'm glad that they updated this form on this, because they made it a lot more crystal clear Before you're having to cross out this prewritten legal jargon down here and I didn't like crossing anything out down here. Now it's negotiator. Oh uh oh. I think I lost Brian for a sec. I will wait to see if he comes back. Oh, brian, I lost you for a sec. What did you say?

Speaker 2: 46:33

Alright, let's just say it does really, really feel shady when you got a slide of contract over your buyer and a bunch of it's crossed out.

Speaker 1: 46:39

Yeah, I know, I'm not being.

Speaker 2: 46:40

It's just. I have to like, I know, I know, I know how this looks to.

Speaker 1: 46:44

So this do you still apply? Let me see if it's still in here. Item W right here yeah, so this used to be like we were cross, like a lot of clients were like to make their offer better. They used to just cross this out like. This doesn't exist anymore, it's like um.

Speaker 1: 46:59

So this applies to item W down here. So you either by default you get um, you can say how many days you get. It used to be by default, it's just in there. You had 10 days. It was written in. You had 10 days to verify the accuracy of the listing info. So basically anything that was in that the, the listing agent put in the the listing. It was to allow you to basically verify the information was accurate. So if you found a like uh, oh, that was you know like or that listing in seller was definitely not showing that off properly, uh, you could back out of your deal and get your earnest money back due to this form.

Speaker 1: 47:46

Now, if you do some of your research quickly, upfront, on all of that listing items, it takes more work for your buyer's agents, but happy to do it if we're in a multiple offer situation to help improve your offer. Um, go in baller like and what everyone. You know what serious buyers are doing in multiple offer situations. They're saying this is satisfied. I don't. I don't need 10 days to back out on you on this, because sellers get nervous on this. They're like, hey, we're pretty sure we filled that out pretty properly, but there might be some people that try to get out on technicalities on that.

Speaker 1: 48:26

For no, you know. You know so because here's the thing. There's some just a few bad apples on both sides. That sounds bad on both sides of the aisle, you know, when it comes to buyers and sellers, right? So you know, in that regards, that's one thing that you can do to improve your offer and by default, with talking to my home buyers, most of my home buyers decide in multiple offer situations after viewing the listing properly together, we, they, they decide to wait for that or satisfy that. Okay, moving on to financing. All right, this is where a lot of input is going to come from Brian, and it's going to be interesting getting a lot of his take on it. So, 22 a, I know conventional financing strongest possible. We have this on here, though, but it's kind of a little misnomer. We throw this out.

Speaker 2: 49:17

It is not. It is kind of please, if any agents are listening right now. An FHA or a VA or a USDA buyer is not any less qualified than a conventional buyer. In fact, we get more deals to closing with FHA than we do with conventional because the guidelines allow for more people. They're not less qualified. The money that you get at the end, mr Seller, mrs Seller, mr or Mrs or Mrs Listing Agent or Mrs Listing Agent, is the same color green, it doesn't matter. This is one of my biggest pet peeves.

Speaker 1: 49:52

We have this just because it's the easiest to not have to fight against and explain away in a multiple offer situation when we're talking to the way. However, I will throw this out here I'm such an advocate for all of my other types of loan products and I win multiple offers situations so many times on all those other loan types. So, like I am never like Brian knows me, my huge you know, like I would probably I would say my profile of home buyers I work with it's probably like 38% conventional and then, like the rest is spread out between FHA, va. You know the rest of them.

Speaker 2: 50:32

If you have some worries about your property appraising yeah, conventional appraisals won't stick with your property, so that's a thing. Okay, if you have some worries about? Yeah, I mean, there's some chip paint. You know, like people there's an old school thought that the FHA appraisal process is so difficult that they're going to pick your property apart. You have to do a whole bunch of, like little tiki tech things. That is not the case anymore. Conventional appraisals have gotten much more conservative and FHA appraisals have gotten much more liberal and they've met nearly in the middle.

Speaker 2: 51:04

Now there are some things on FHA that are important, but like it is, so it's such a I don't. It's just. It's so frustrating when it's one and another and someone says, well, it's conventional, I'm going to take the conventional because it's a better profile buyer. You have no idea. They give no idea. A lot of the times.

Speaker 1: 51:24

It's so frustrating when it comes down to that. So that's why what we do to combat that is and I like that we're having this open dialogue about it, because anytime that I'm working unfortunately, anytime I have an FHA, VA, USDA, anytime I'm representing or putting forth any of those offers with those types of financing, you best believe I am packaging that and selling it so well.

Speaker 2: 51:55

When it comes to a multiple situation, Can I give you a little, a little insight, info on VA appraisals too.

Speaker 1: 52:02

Yeah, go ahead.

Speaker 2: 52:03

So the VA appraisal process it takes the longest, they have the longest to complete the appraisal. They have 10 days to get assigned to appraisal appraiser and then 14 days to complete it. So there's some times where it takes a while to get it and that can make everybody antsy.

Speaker 1: 52:15

Oh my gosh, the appraiser is not in the, appraiser not in the longer it's not in, the more they think there's going to be a problem with it?

Speaker 2: 52:19

I don't know why, but it's human nature.

Speaker 2: 52:21

Are you still there? Did I lose you? Okay, the VA is the only financing type that will tell you whether or not the appraisal is going to come in low. Before they send it to you and give you a chance to make your case for the purchase price that you're in contract for, they will send you and say, reach out to Asselin and say, hey, we don't think we're going to get to value on this. Can you please contact the agents and have them send the comps that they use to get to this price? That's awesome. And if it still comes in low, if the appraiser is like, actually I look at these differently in the agents, look at these, for whatever reason we can then contact the VA directly and say, hey, we think that this is a low. This appraisal appraised value is lower than it should be. Here's what the veteran thinks. Here's the comps. Are you guys okay with raising the value?

Speaker 2: 53:12

And we have had a lot of success with low appraisals, coming up to that value appraisals and coming up to bridge the gap between what it was and what the purchase price is, and that is with no other loan type, no other loan type than VA, which makes it so much more secure and a lot of agents have no idea about. A lot of lenders have no idea about that. There's a lot of times that we have one deals because we are able to, with integrity, present our case about we think this appraiser is wrong and then have the VA agree with us and say you know what? Yes, we do, because appraisal is just people like, they make mistakes and they have their own biases and you're dealing with the public. So that's something about VA loans that people are. They're like oh, I don't know that. The appraisal that's going to be so rough. Actually, it's the best part of all the appraisal processes for every loan type. Sorry, I'm going to be on it.

Speaker 1: 54:04

I absolutely love it. Hey, ryan, say it one more time because you buffered, say it's the best.

Speaker 2: 54:11

Oh, it is the best appraisal situation of all of. With comparing all loan types and all appraisal situations, it is the best for the seller by far.

Speaker 1: 54:23

Awesome. You heard it from Brian folks and he's like one of the top lenders in the state. By the way, not to a Tuesday.

Speaker 2: 54:32

Well, ashley is, I'm just pretty new in a podcast for now.

Speaker 1: 54:41

Okay, so this one is super easy, but like it's kind of the first to go, Like it's a no-brainer If you're in a multiple offer situation, you're not going to win.

Speaker 1: 54:51

If you're a buyer asking for closing costs, Like it's just it's not going to happen. Like if you have joined a multiple offer situation and you're a buyer that's like well, here's my offer, but I need you to pay my closing costs, Unless I will say this okay, if you increase your purchase amount to offset asking for the closing costs, I have buyers have win. They win multiple offer situations. That way, If the multiple offer situation isn't so crazy where it would bring the purchase amount so high up that it's just dogpiling offers in there, where it just doesn't even make sense for the seller to run the numbers on it, Like unfortunately, like there's sometimes been situations where, like they've been, like I've had listing agents call me up and be like Aaron, honestly, I have 40 offers, yours was somewhere in the middle of the pack and I didn't want to even bother running the numbers of the final count on it because of that, because of the closing costs.

Speaker 2: 55:58

So love the transparency. Thanks for the feedback, man. Now I can go back to my buyer and let them know.

Speaker 1: 56:03

Yep, exactly, and that's the thing I always so I track this stuff. So after winning or losing every offer, it's a game After I'm always calling the listing agent and emailing to figure out where we were in the pack, back in the stats and figuring out nitty gritty details on what we did to improve. And this is what I do with every client to help them.

Speaker 1: 56:28

They don't win the first deal or the second, they're getting the third one, you know what I mean Like every time, so well, not going to wait, but if they keep taking my advice and we keep making those incremental improvements, you know Okay. So then right here, okay, yeah, so we said this. Or raise purchase price if contributions are needed. So we talked about that Like that is a, that's a strategy you can do. If you need the contributions, you can raise your purchase price to cover that. Keep in mind, some sellers get super nitpicky on this. Some listing agents get super nitpicky on this and they come back to me and say Aaron, there's a buyer's agent compensation, there's a seller's agent compensation. Let's just say they're charging. In this specific transaction example it's 6%. They're saying, aaron, now you're, now you're, you've gone from 500,000 to 520,000 to cover the difference. But that 6% amount is now on a different amount, right, because it's it's now, it's covering so nominally different.

Speaker 2: 57:57

I need $10,000 more in the cost yeah. So 6% to 10,000 is not the reason I'm not raising the specific money.

Speaker 1: 58:03

Right, right, you can either have a buyer, so you can, either as a you can either do the math and calculate out that that penny amount to like make the cover of the difference right Of that nominal difference. Or sometimes what I do for my clients, just to be nice, is I just I put in the contract that the compensation is based on the. I will put in that the compensation is based on purchase price minus concession. Just to be super nice and like, have it be super simple, so they don't want the math and then, and then it's like then it wasn't anything for them to complain about, for the seller to like then it's a non issue. You know what I mean. So these are things I'm doing with my clients to help them and go above and beyond on the buyer side to help them win deals. You know what I mean. Okay, let's talk about this.

Speaker 1: 59:01

So 22a, let's go to it real quick. I'm sure you see this all the time and this is the financing contingencies. So there's two things you can do on this form and it's all negotiable folks. So you could either do a or b here and a lot of people, if they're in a non competitive situation, they owe it. You know it's in the buyer's best interest, okay. And if you're, if you're above that or really you really want to be protected through your whole transaction, you're going to put, if you're, a 30 day close, you're going to put 30 days here. But if you're a serious buyer and you want the seller to actually like go under contract with you, you're probably going to leave this blank and I'm I'm trying not to go into like a whole other, like getting into a crazy rabbit hole on this, because sometimes I could take 15 or 20 minutes explaining this form right here with clients but basically leaving this blank after 21 days.

Speaker 1: 1:00:14

It gives the seller the opportunity to request for you to give your financing and then you have three days to get back to them whether or not you're going to do it. And after three days, if you say yes, I'll do it. Moving forward, that's fine, we move forward, everything's good. If you don't do it and you you say no, I'm not doing it, the seller can either move forward with you still or the seller has the right to back out on you. Now, if the seller backs out on you, you still get your earnest money back in that situation, but it's that it's one of the only opportunities, aside from negotiation of appraisal, that the seller can back out on you and get out of it on you basically, or if something goes wrong with the VIN inspection. Those are like the three areas that the seller can, in theory, proactively doubt of the deal on you.

Speaker 1: 1:01:15

So, yeah, and what you would do. I always have clients, we always check. Well, not as if you're waiving your financing contingency. Your appraisal contingency hasn't happened. If you're not wanting to agree for the appraisal to be, it's not smart to also waive the appraisal contingency. So you're supposed to have your appraisal contingency survive if your financing is waived.

Speaker 1: 1:01:46

So there's that one. It's going to make your offer stronger and, like you know, we're working with someone like Brian and like, let's say, assuming we have a. Let's say Brian's like hey, aaron, we're closing in 21 days, awesome, fantastic, this is a proper well, what we would do in that situation? Brian's like hey, we're pre underwriting, you're good to go, you're solid. There's no guarantees in life. Don't lose your job. You know. What we would probably do as a ball or move is you could say automatic waiver or anything after a certain time. So you could maybe make that like after 15 days into the 21 day contract. So the final week it dropped out. Now here's here is the main risk of doing this is that means that final week if something happens to your financing after that, in that final week period, sell or get your money.

Speaker 2: 1:02:49

So let's talk about this for a second. You have a financing contingency because you want to protect yourself against unforeseen things that happen, which would then preclude you from getting financing. Like Aaron said, changing like losing your job that's a big deal. Now, if you have a crappy lender and they didn't do a good job in the first place, that's not a. That's not a. Did I lose you guys again?

Speaker 1: 1:03:12

No, I'm here Okay.

Speaker 2: 1:03:14

Yeah, if I. Every time you get still I get worried that I lost you. If, if you have a lender who doesn't verify things up front issues of pre approval letter. However, you were never pre approved before you went into contract and property that is not the waiver. Financing contingency that's on, that's on your lender, for you never. You never really qualified for it, but the financing contingency saves you and your earnest money from unforeseen circumstances. The waiver of this now things out of your control May happen to you where you can no longer finance this house before closing. Well, you've now. You've lost your earnest money. So it is like pay attention when you and Aaron are sitting down going over this about the pros and cons of this.

Speaker 1: 1:03:57

Yeah, exactly 100%. Good, so these are things that you can do now. I just covered this a little bit.

Speaker 2: 1:04:06

Folks, if this is a four-hour podcast.

Speaker 1: 1:04:11

This, yeah. So, like everything we're covering in this, like we're trying to condense this, this is probably gonna be our longest. It's gonna be. We're gonna be finishing this at an hour and a half once we're done, but it's Everything that we've been talking about. Each item could be talked about for over 35 minutes 40 minutes. So if you want to get with us after or whatnot and talk about your situation and each of these things, these are things that I talk about my clients. We have a whole discussion about Crafting the perfect offer, when we're putting the offer together and we go over all of that together. So I'm just keeping you posted on how that works, okay. So, moving on from how, what you can do with your financing contingency to make it look better, um, you also Can do one thing in here.

Speaker 1: 1:05:04

One new thing that they've been doing they just added this form last year is in place of a financing contingency. So let's say you're like, hey, I know my financing is gonna go through. Or like I don't, I don't, I'm just, I like gambling. Um, you could do in a prezel addendum instead of a financing addendum. So what that means is basically you're making your offer contingent upon just the appraisal, not the financing Uh, risk gear. I don't see that many people doing this when they have even strong financing, um, but Some people have been doing it, so that this is an optional form that they've thrown in here to protect you and the.

Speaker 1: 1:05:52

The reason why they throw this in here Is two things it it protects you for an appraisal if you have strong financing and you want to just show the seller you have strong financing and risk it. Or it protects cash buyers that want an appraisal Contingency, because most of the time, if you're a cash buyer, by default, if you're not throwing it in here, you have no appraisal done or an appraisal protection in the purchase and sale agreement. So that's why they made this form, just Not to go down a rabbit hole on that. But there's that form that, okay, 22d.

Speaker 1: 1:06:26

This is the optional clauses form real quick. So we'll go through this real quick to skim this. This is like the the don't sue your agent or the listing, for if there is a measurement in correction of what the property measurement is, no one actually measured the property. So, um, you can read through that on your own. But here's one thing that you can do to um, this is an easy form to not check. So, especially if the property is vacant? Uh, not checking to make the seller clean the property is an easy one, like cleaning yourself after after you move into it now If it's vacant?

Speaker 2: 1:07:07

you've seen it, yeah.

Speaker 1: 1:07:09

Yeah, you've seen it. You know like you're probably gonna.

Speaker 1: 1:07:11

Go like that yourself anyways, to know that it's clean the way you want it cleaned. You know now if it's like, if you're super concerned, like again pack that hoarder A lot of stuff, you want to make sure they got it out of there, maybe still check it. But, like, this is one of those like you're doing stuff to make it easy for the seller to accept your offer. So this is one of those things that you're just making easy on the seller to accept your offer Versus other people that make is making it harder on them to uh, during their sale process. Um, let's see here, was there anything else on this form that I wanted to point out? Uh, let me double check my checklist here. Oh, but nope, that was it Okay. And then 22ef. So I don't have this in here, but, um, that's fine.

Speaker 1: 1:07:56

22ef is the evidence of funds addendum. So if you are a strong offer where you are either a cash buyer or you are providing a lot of money down or this is actually a good idea to do, even if you have a little money down, like any time, you're trying to make your offer look better, um, not only providing the proof of funds, as far as the pre-approval letter from brian or the lender you're working with, but providing proof of funds as far as here's proof of my down payment, that helps your offer. So, if you're like providing that upfront, showing the seller not only is my lender vouching for me saying that I have it, but like here's a copy of my bank statement don't forget to read Numbers on it or anything, or um, you know anything like that, anything that you can show the proof of funds that they actually do exist, that does help. Uh, show proof that you have it and that's going to improve the seller feeling good about your offer, right? Um 22j is the um.

Speaker 1: 1:09:09

What this is is a uh, lead-based paint form. I don't want to get into this one too much. Most buyers just waive this one by default. This could be like a whole another video and maybe I'll just even make a youtube video and pin the comment and say go to that and watch it sometime. Um, but just Uh, if you're a buyer that's in a multiple offer situation, probably read through it, look into the pros and cons on it, but probably, um, don't eat paint. Um okay.

Speaker 2: 1:09:42

You can learn anything from this podcast is don't eat paint, because if you do, you'll end up being on a real estate lending podcast in your future.

Speaker 1: 1:09:49

Okay, um, it's man right, I can make a whole video on why this opens up a can of worms if you go ahead with a Lead-based paint addendum. Um, okay, so form 34 by. Oh, we already talked about this, so we already did that ahead of time. So we're already done with that. We talked about the release of earnest money, so now we're down to inspections.

Speaker 1: 1:10:12

Okay, so I am a huge Advocate for home buyers doing a home inspection, like, do a home inspection, get a home inspection, know what the condition of the property is. Don't buy a property if you don't know the condition of the property. That being said, times are tough y'all. Like this is getting crazy out there, and especially what we are seeing during pandemic level um Competition and it's heating up, like in certain pockets, like in Bellevue, with craziness. Um, we're seeing areas where, like buyers are waving their home inspection left and right.

Speaker 1: 1:10:49

To combat this, what you can do, there's a couple of options. If you're a home buyer that's like I am not Waving my home inspection. Like I will have a home inspection, I need to do it. I'm not that buyer. That's insane enough to take that risk, which I advocate for you. I get it, don't right. There's a couple things that you can do. Um one, it's the most common. Most of the time the seller will let you do what's called a pre-inspection. So you fill out a form. It's the 35p here when you are. You, as a buyer, can pay for your own home inspection up front. So you do At inspection. Brian, you still with me, by the way. Yeah, okay, cool. See, that time you looked like you were present.

Speaker 1: 1:11:34

Um anyways you do the home inspection up. You do the home inspection up front, uh, and then you make your offer based on Already what you know about the property. Now here's the kicker, though. So some buyers are like, oh man, I didn't like what I found out in that home inspection. So some buyers are like, can I try to negotiate some stuff? And it's like you can, but like, if you're in a multiple offer situation, you're not, your offer is not going to win, because the seller Is now going to basically say, well, I don't want to accept this person that is coming to me with an offer, with a list of things that they're asking me to repair, versus these three other offers that have their inspection waived. You know, so it's a double-edged sword. So you might be in a situation where you do a pre-inspection and you just find out that that property wasn't for you and you're walking away from it.

Speaker 1: 1:12:25

Um, the biggest drawback to doing home inspections, or the biggest drawback that a lot of buyers faces, they, you know a home inspection, an individual one. They're not that expensive, you know. They're between a few hundred 600 bucks. There's the role of home inspectors out there. Like I know there's a lot. There's some home inspection companies out there that charge, like I've seen, over a thousand dollars for home inspections, like just a general home inspection out there.

Speaker 1: 1:12:55

Um, I'm not going to give my opinions on that, uh, but uh, brian, what do you think? Anyways, not going to give a hot take on it, but you can find really good home inspectors that charge sub five or that do just as great a job as those companies that are doing the $1000 that I know do a great job. And then there's a lot of home inspectors that do what's called a? Um, a big ticket item pre-inspection. So they'll take a couple hundred bucks off the price of the home, the regular full meal deal Home inspection, where they just check the big ticket items. They're just checking the stuff that you would seriously want checked. You know we're talking about foundation, electrical, plumbing, hvac, structural I said I guess foundations roof roof.

Speaker 1: 1:13:43

You know, yeah, all that stuff, um, you know, and that that one like two, three hundred bucks, you can find someone that does that, but even that can add up right. So, um, some buyers have gotten savvy and they'll bring, like a friend that's a contractor. So like, just like, there's things that you can do to like, try to get savvy and figure out the condition of the home up front, because if you get the permission, you get this form signed, you get someone in there and you block out an hour time period to Get that thing inspected before you make your offer. That's the pre-inspection. Um, let's becoming more common, and this was very common.

Speaker 1: 1:14:24

Our team actually does this by default. We actually provide a home inspection on every one of our listings. Um because we want a buyer that we want. We. It's in our seller's best interest to go under contracts with a buyer that has already done their inspection. Um to not back out on them. Um Is we provide a home inspection as a seller to the buyer.

Speaker 1: 1:14:48

So and this is becoming more common, you'll see this where there's um some sellers that have paid for their own home inspection or the agent pays for it. However, whatever their deal is with their listing agent, um, the, the seller or listing agent is providing a home inspection To, uh, any buyer that might be interested in seeing the property. Usually it's they'll provide it after the buyer has seen the property. You know, either an open house or a showing, um, and that could be another way of looking through those. Now, what I usually do with those is like with my buyers are like hey, aaron, have you heard of this company? Like, is it well known? It's trusted. So like I'll give my honest opinion on if I've worked with that inspection company before or you know how well, how well the, how how detailed the report is. So that's another way. That's another thing that you could be doing with the home inspection. Um, if you absolutely are like I can't do a pre-inspection where I won't do it and I'm not willing to accept the sellers inspection and I'm not just going to gamble and wave my home inspection, I get off, I get it. One thing that you can do to make your offer a step above everyone else, that's just Doing a standard home inspection contingency. Because, again, I am not advocating waving your inspection. Folks Like I'm a big Proponent of doing those home inspections. You can, um, put on a form 34 that your home inspection is just what, like you could put language in there that it's a pass fail.

Speaker 1: 1:16:23

Home inspection meaning, like you would say, like the buyer will not ask for any repairs. I always add. I always add To that, though. I say Except for what the lender might require after the appraisal, because then I want to make the lender the bad guy, not us. Just in case there's an appraisal work order, you know, if the appraiser is calling out a work order that needs done. Now it's a condition upon the loan, not Not what the buyer was necessarily asking for. This needs to get done in order to go through. Brian, you got, take on that.

Speaker 2: 1:17:05

Always get a home inspection, even if the contract's not contingent upon it. It is the.

Speaker 2: 1:17:10

Not only are you gonna find out some big things that might be wrong with your property, but if you never owned a home before, you're gonna find out where the air filters are, where the water shut off is or the gas shut Is. The maintenance you have to do one at home. So even if I do not recommend waving pass fail great yeah, you're an adult making your own choice still get it, because it's gonna teach you a lot about the house.

Speaker 1: 1:17:32

Yeah, I mean it's that you're gonna say it's the best 500 bucks I spent. Absolutely this half a million dollar property I bought, or a million.

Speaker 1: 1:17:43

Yeah you're on the east side buying these million or Million-dollar homes 500 bucks, even if you're paying that six times, like come on right, that's gonna save you. I've seen $70,000 foundation issues you know like that you wouldn't have known about because you don't know. They're not visible when you're just walking through the home. You know Mm-hmm. So those are things that we advocate for. But this is, those are tools in your toolbox about how to go about the inspection, what you can do in a few different things that you can do to make your offer look better With the home inspection, and what you can do. So talk with your agent about different ones that you can use, and Different ones are gonna win the deal depending on what particular offer you get into.

Speaker 1: 1:18:34

And I, like I said, I recon every time and figure out which one might be the best course of action depending on the Multi-offer situation you're getting yourself into. So, that being said, I think the last one we're gonna talk about. Okay, this is another big one. I don't like clients just offering in a multiple offer situation. I don't like them offering an arbitrary amount above the list price if the seller said this is what I wanted for this, this is what I was advertising to try to get multiple offers. Like you as this as fire, as a savvy buyer, like, let's say, the house was listed at 500,000. I'm not advocating for a buyer to be like I'm just gonna offer 600,000, but just like, like you are.

Speaker 2: 1:19:26

First of all no, of course not. We have been going over all day other ways that your offer can be strong outside of just price. So I hope that you guys got what Aaron just said. We don't just come in at the highest price. All the time we come in we find the pain and the pleasure points of the person on the other side, so that we can give them as much pleasure points as possible to get them to want to say yes. And then, once we're in contract, we're all in the same team going towards the same goal. But yeah, don't overpay for a house just because you're overpaying?

Speaker 2: 1:19:54

you know you may have to go up to 600, but like you also may not have to.

Speaker 1: 1:20:01

Yep, exactly. So the last thing I'm covering before, brian got his bonus and then we were piecing out folks, because this is.

Speaker 2: 1:20:08

I'm gonna have to go fast guys.

Speaker 1: 1:20:10

Yep, is the escalation clause. So this is my favorite form. So the escalation clause allows you to bid on the home. So you as a buyer are allowed to go in there and say, okay, this is my starting price, this is my maximum I'm offering and these are my increments. I'm bidding on it and you, as the seller, if my offer wins, you have to prove it to me that the other by presenting to me the other real offer that I Beat. So now I can read through it and it's a homework assignment for them, so they have to fill this out and then we have Time to fact check and make sure that was good.

Speaker 1: 1:20:52

Um, if the sellers some sellers are like no escalation clauses, guys, that's weird. Like anytime a seller is like I don't want escalation clauses, they're saying I don't, I truly don't want the highest and best on my house, like it's a weird thing and some it's it's a weird push. So I push back on it every time because here's the thing submit the escalation clause still, because if you're truly the highest and best, are they really not gonna take your offer just because they had to do a little and work? You know, I don't know. So I've won a couple of these, even when the agent said we're not gonna look at the escalation clause, so, anyway, so I'm throwing it out there because this allows you to not leave money on the table, because it basically says I'm only beating the other guy by whatever your increment about it. So if you said I'm only gonna, I'm only willing to beat the other guy by 5,000 or 10,000 increments, then at least you knew you didn't leave that crazy extra money on the table where you're like I've just offered 100k above list price for no reason. You know. Now you know you didn't leave money on the table, so I'm throwing that out there. This is an awesome, powerful form to use on how to win in a multiple offer situation and it's the form, it's like that band-aid you slap in there before you submit the offer because you're dealing with a Basically a silent auction where we assume that, no matter how much good communication we did, the listing agent I always assume will never get back to me and we're just gonna find out if we want to lose.

Speaker 1: 1:22:33

Like assume they're not gonna give us another chance to improve our offer. Like assume we're just we got one shot to make the best offer possible and see it. What happens. A lot of people don't play games around here anymore. So that's it. That's what I got for you, brian, real quick. Sorry, I know this was in that. Give us your real quick, your real quick. What's that product that you got for us?

Speaker 2: 1:22:57

And then you could be so this is our appraisal protection insurance plan. I gotta come up with a better name for it, but here, let me.

Speaker 1: 1:23:06

Let me remove this right now. Oh, brian removed himself. Okay, folks, what? What a tease Brian. Oh, oh, man, guys, okay, so what Brian was gonna show you, just in case he doesn't come back into the room before I Log this off, just in case he doesn't come back and maybe we'll throw this on. The next one Is he has like an appraisal protection program and I might boss this really badly, but he has a product where it's really cool, where it basically protects the buyer and it would look really good for the seller, where, basic, I think this the buyer pays for it a little bit in their program. He can explain a little oh, here Is he's. He's back. Let's okay, you're back. I was like Brian, what's going on?

Speaker 1: 1:24:09

Okay, um, cool let me get rid of this. Stop my screen and then add yours in here.

Speaker 2: 1:24:16

Yep, okay, all right, so let's go over there you go.

Speaker 2: 1:24:21

This is our appraisal protection program and I wanted to highlight how mortgage math is not a regular math. Okay, two plus two equals Apple sometimes. And the scenario that I'm going to give you guys is somebody that's buying a house $600,000 and then putting 20% down. This works as long as you're putting 10% down on a conventional loan, and what we're guarding against is a low appraisal. So you can put in what Aaron went over the 22 ad, the additional deposit for a low to praise a little appraisal and it not actually cost you anything. So these numbers are principles only, not offered to lend, and it can work for anywhere from 10 as long as you're putting 10% Down. And I want you to take a look at this. So if his person's Buying a house of 600 and they're putting 20% down, their monthly payments going to be 3880 and they catch the clothes as 130 681 Down payment plus closing costs. So let's say the appraisal comes in $40,000 low. Well, because we have a Laflane group, our math and magicians, we're able to look.

Speaker 1: 1:25:18

Look at the terms of your loan even though your your loan to value is less.

Speaker 2: 1:25:23

Than 80% that you have before. This is somewhere around 85% if it came in $40,000 low. So you have the same purchase price, you have the same interest rate. Your payment is $24 and 50 cents higher. Your money due by closing is almost the exact same. Now this is an appraisal that came in $40,000 low. So a lot of people will say, hey, if the appraisal comes in low, I don't want to put down an extra 40 grand. Well, you don't have to Now. I'm not recommending that you overpay for house ever, but if you're an adult who has all the information in front of you and you make a decision, then you're gonna make a decision and so just and the appraised value is not the new comp when somebody goes and buys the next your neighbor's house, your sales prices in this comp. So what if it comes in 10% lower, $60 grand lower, and you're at almost 90% loan to value?

Speaker 2: 1:26:15

Well, you can see here that you have the 600,000 purchase price, the same interest rate your payment is almost exactly the same cut in fact a little bit cheaper, and your money due by closing it's just a little bit more. So you have a dollar payment higher than the 40k low appraisal and right around the same money due by closing. Now this came in $60,000 below purchase price. You're not writing a $60,000 check over five years. You're actually only spending $4,700 more in cost. Then you would if the appraisal came that come in at value and the interest that you're paying over the first 15 years is almost identical. So you're paying about $7,000 more an interest over 15 years. So you're paying less than $500 a year More an interest over the first five years because you're financing a little bit more.

Speaker 2: 1:27:05

If you want to find out exactly how we do this, all of our contact information is in everywhere that air post this. But what I wanted to show you was mortgage math is not regular math and if you are putting at least 10% down on a conventional loan, don't be afraid to put an additional deposit Addendum to make your offer stand out. If you're worried that the appraisal may come in a little bit lower, take that worry off your plate that you're gonna have to come in dollar for dollar with that difference if you're Conventional loan, at least 10% down. We have in a double flame group this appraisal protection program which would make your mortgage look like this your payment is the same, it's a $25 difference. Your money do by closing is the same. Your mortgage looks exactly the same to you. The way that we're able to Work out how this happens, we're happy to go over with you personally Because it can get a little bit in the weeds, but I just want to give you the overarching principle view of what this looks like little appraisal of 40 kid.

Speaker 2: 1:28:00

Well, there's a 60 by 60 K. You're still having the same payment. You still have the same money. Do by closing pretty.

Speaker 1: 1:28:11

Thank you so much for your patience. Thanks for everyone coming on. Brian, this was the best turnout, by the way, so getting past that work really had everyone. Just Thanks so much for everyone coming by. Brian's gotta go. I gotta go If you want to watch the work.

Speaker 1: 1:28:29

Clear version. Everyone saw buffering because my T-Mobile tower was hit by lightning. By the way, the crystal clear HD version is recording of this is gonna be on YouTube. Go to my YouTube channel. Go watch this. So playback pause, rewind. All that good stuff, all right again. Realtor Irmorrow, local realtor grace, seattle area, king Pierce no Amish counties, buyers and sellers, brian, the flying group, all of Washington, parts of Oregon. We're all of Oregon now.

Speaker 2: 1:28:55

Oh, we're gonna Mississippi, and you'll just say Okay, see you guys later oh.