- Speaker #0
All right, another episode of Millennial Money Matters with Kelly Turner.
- Speaker #1
And Eric.
- Speaker #0
And we have an exciting episode today where we have our first guest. I want to welcome Jonathan Archer to the podcast. Jonathan, you want to introduce yourself?
- Speaker #2
Hello, everyone. Jonathan Archer here. I work on the Margaret Wilcox team at William Ravis Real Estate here in Glastonbury. I am, I think I'm an elder millennial.
- Speaker #0
You are an elder millennial. We're actually all technically elder millennials.
- Speaker #2
Yeah.
- Speaker #0
Younger millennials, we're here with some vibes for you.
- Speaker #1
Yeah, learn from us. and our wisdom,
- Speaker #0
right? Dumb stuff that we've done. Well, we're here today to talk about something that Jonathan knows a lot about. Jonathan and I work pretty closely together often on this topic, and it is home buying, how to buy a home.
- Speaker #1
Yeah, it's the easiest process of all time, right? You just go there, you go, oh, there's a house I want, and you click the one-click buy button, and you have a house, right? You have a house. That's what happens.
- Speaker #0
cart on Amazon.
- Speaker #2
Overnight delivery. Yeah.
- Speaker #1
Two days. I'll pay extra for that one day. Well,
- Speaker #0
and honestly, what's really, I think, hard for millennials is five or six years ago, it kind of was like that. Right, Jonathan? You decided you wanted to buy a house. You got pre-qualified for it by a mortgage person. You went the first weekend. You found five houses you liked. You made an offer on one and you owned it.
- Speaker #2
Yeah. You'd look at five. You'd make an offer, probably under ask too, with all your contingencies and a nice timeline. And seller, you know, maybe negotiate a little bit, but you got a house within a day.
- Speaker #0
Where are we now?
- Speaker #2
Where are we now? Let's see. So you want to go look at houses this weekend? Well, there's two that fit in your budget. One's already in multiple offers. They were due two hours ago. the next one has an open house. So we got to get in line, you know?
- Speaker #0
And this is why millennials cry themselves to sleep every night right here. No, this is the stuff though, that I think is probably one of the hardest parts about this market is if you are not in the know, if you are not hanging out with people who've recently bought houses, talking to financial advisors, mortgage people, realtors, things like that, you don't know this, right? You don't know it. And you might be asking your dad like, Hey, I want to buy a house. And And dad is telling you how to do it. And it's not the right information. Yeah,
- Speaker #1
you got to come in there hard and negotiating, right? Go under asking, all that stuff. You have no idea.
- Speaker #2
Do you love that? Gosh, well, my dad bought a house in 72. And my uncle's coming to the inspection. Yeah, I think, like you said, surround yourself with people in the know. Whether it's just your accountant, your lawyer, your financial planner, if you have a friend that's in the mortgage, insurance, or real estate and financial industry services, go befriend them. Have a cup of coffee. Just ask them questions. We love to talk. talk shop. Like if you are just starting out or you bought a house maybe 10 years ago and you don't know what the market's like, you have a lot of questions, just go talk to them because we're full of info and the information's free.
- Speaker #0
Right. It's free. You hear that?
- Speaker #1
Well, what do you do with all those Zillow people that just spend hours and hours on Zillow before they even talk to anyone?
- Speaker #2
Zillow is a great tool to kind of get a snapshot of the market. But there's very limited information out there on these public sites like Redfin, Homes.com. So if you do see something of interest, reach out to someone you know. And if you don't know a lender or a real estate agent, ask your family and friends because I'm if I were a betting man, everyone knows a couple of them. Yeah. So reach out. I mean, you can get, you know, better information often quicker, and it's going to be way more accurate than whatever Google searching you're going to do to try and, you know, look at the sellers, how much they have left on their mortgage, all these silly questions, you know.
- Speaker #0
Absolutely. Well, and I think for millennials, we are the Google generation, right? We just want to Google everything. And so we don't necessarily want to go talk to people. And that's where a lot of misinformation happens is that we get our information from the Internet. And the Internet is great for some things, but real estate is hyperlocal. It is what real estate looks like in one town versus 20 minutes away could look very different. What it looks like the next state away can look very different. So generalized information on the housing market is very detrimental to buy-in. Do you agree with that?
- Speaker #2
I would. Getting someone local instead of, you said, clicking a button on a Zillow to just contact some random person. If anyone doesn't know how Zillow works, all the realtors are basically signed into Zillow. And when you click that button, it kind of machines it. and guns out to the world, and whoever picks up the phone first is kind of the winner, and you're going to be inundated. Please don't do that.
- Speaker #0
They could be 45 minutes away from the town you want to buy in.
- Speaker #2
They could be an hour and a half away from that town you want to buy in. They know nothing about Glastonbury or West Hartford, or they could sell no houses a year and just not be in the market and not understand what's going on and all the machinations of that.
- Speaker #1
Well, why don't we kind of... Give everyone a full picture, right? Okay. So let's say I'm millennial or younger, even let's say I'm looking to buy a house. I have never gone through this process. Where would you say you start?
- Speaker #0
So I'm a lender. So I say me.
- Speaker #1
All right, let's go at it. Who wants to say, why would you say, why would you say a realtor versus a mortgage program?
- Speaker #0
It doesn't really matter. Yeah. Okay. People either stop. start with the lender first or start with the realtor first. But both of that, you're going to land in the same place because I'm a lender. I'm going to prequal you and give you to a realtor. If you start with a realtor, they're going to kind of do their own prequal with you. It's not the financial prequal. It's the, are you really ready to buy a house conversation? And then they're going to send you to a lender.
- Speaker #1
So I think the right answer is go to your financial advisor first. You guys both failed.
- Speaker #0
Correct. Go to your financial advisor. Also a great stop.
- Speaker #1
Yeah. Cause I think at the end of the day, like I've gotten that thing for some time where clients have been like, Oh, Hey, I bought a house or I put an offer down. I'm like, well, we didn't discuss this at all. You know? Like, yeah. Cause Because I think it all works best when you have a team around you and all three of us are communicating at the same time saying, okay, let's run the numbers in the model. Let's see what you can afford so you're not wasting Jonathan's time shopping at all these houses way out of your price range. And you go, oopsies, I guess we wasted six weekends. And John's like, yes, we did.
- Speaker #0
I drove around.
- Speaker #1
He's laughing because I'm sure that never happened to him. Gas is not free, right?
- Speaker #2
Yeah, where is that down payment coming from? You're like, we're going to have to source that from one of your retirement accounts or something.
- Speaker #1
Yeah, right.
- Speaker #0
That is like. Stop number one, millennials. Stop number one is assessing your readiness. How ready are you to actually buy a house? If you're in the, I like looking at houses on Zillow and I like going to open houses on the weekend, but I'm not ready to pull the trigger. Okay. You're not quite ready yet. If you don't know the answer to questions like, where's your down payment going to come from? Where is your earnest money deposit going to come from? What kind of house do you want? Have you and your partner discussed purchasing a house? If any of the answers to this are like, I don't know or no, you're not quite ready yet. It doesn't mean you can't start. So I always tell people on the lending side, my favorite time to talk to a buyer is one year out, one year out from purchasing your home. Okay. So if you think you want to buy a house in 2026, I want to talk to you right now in 2025, because there are things that we can do in the next year to make you as ready as possible. Where my life struggle is, is the, um, my thing just stopped.
- Speaker #1
Yeah. The, the whole, my, uh, oh yeah, my, uh, my rent is up and, uh, my lease is up in two months. What are we going to do? Yeah,
- Speaker #0
exactly. And that's like the, the big life struggle that I have is, uh, people aren't prepared yet, but then we have the flip side where they come to me and they're like, oh, we want to. want to buy a house. We found a house. Our lease is over. Let's do this. And then I go run credit and we've got a 520 credit score. I say, hey, you need $25,000 to make this happen. And you have $15,000. We're just not ready. So it's kind of finding that middle ground of are you financially prepared enough to do this? Are you mentally prepared to do this? And I think in this market, and you can probably speak to that, Jonathan, is I do tell people, everybody up front, I'm like, are you mentally prepared for this? You are not going to make an offer and get it accepted.
- Speaker #2
Yeah. emotionally prepared to psychologically prepared. Yeah. I had some friends reach out to me a couple weeks ago and said, we think we want to start the process. And I said, All right. You know, where are you in the process? We said, we're literally just starting. We don't we don't know what to ask him what to do. I said, All right, let's meet for lunch. So we met for lunch. I said, All right, well, where are you thinking? And we started, you know, talking about towns and stuff and commutes and that said, Okay, if you can envision, you know, the house that you think you wanted, and they were realistic. And I said, Well, have you spoken to a lender yet? No, no. Okay. Well, what do you think's in your budget? Well, we don't know. We don't know. So I gave them the name of a lender and, you know, they contacted them and someone, you know, and, you know, they're, you just need to find out what you can spend because, you know, the towns we're looking in are, you know, a competitive, most towns are right now, and such a wide range of prices. And for people that don't know the process or don't even know what they really want or what you can afford, I mean, you're at a standstill. It's check.
- Speaker #1
Well, so I'm on those lines. So how do you help walk a client through? Okay, because I'm sure a lot of them come to you with grand ambition and say, okay, look, I want a pool. I want a three-car garage. I want four bedrooms. I want to walk in closet. I want to walk in whatever. And then you say, okay, look, based on your budget, we've got to go from over here and narrow it down to something a little tighter. What's that process like?
- Speaker #2
You know, most people are very receptive to it. You know, I ask people to pull up the needs and wants, and most people are pretty realistic with it. But when you start saying, you know, oh, I'd really love 3,500 square feet with a three-car garage and a renovated kitchen, and we know the budget's $500,000, it's just not happening.
- Speaker #1
Yeah, it's like, what's the tradeoff here? Are we moving towns? Are we? Yeah.
- Speaker #0
Sometimes that is the conversation, right? Like, are we going to switch towns? The other piece that I think is really hard for people is if you ask the average consumer, millennial especially, who've never bought a house before, what is the monthly payment? on a $500,000 house, people have no idea. Now, I don't blame them for having no idea. There's not a great way to know.
- Speaker #1
Well, especially you've taught us your rate is your rate, right? So if you look on Google and then type in the Google machine, they'll give you a rate and say, oh, that's my credit score. That's what the rate is. So that's what I'm going to get, right? Yeah. Well, it's not that that's not the case.
- Speaker #0
Zillow, like at the bottom, because everybody goes to Zillow, has this like estimated monthly payment and people just like look at it and they don't actually look at it. It'll show like 50% down, like all of these parameters that are not your parameters. And it's designed to make the payment look low. So that way you reach out to one of their preferred realtors to say, yes, I want to see the house. So it's like a bit of a game. So I always start with clients backwards. And I say, what is the monthly payment maximum for you? Tell me what that number is. And then I will tell you what purchase price goes with that. Because if I just tell people, yeah, you qualify for $750,000. That's great. Well, that's like a $5,000 a month payment. Do you want that? Do you want that? And people, oh, absolutely not. That won't be. Of course, let's back you in. Okay. Based on the town you want to live in, what that tax rate is, all of the financials, you want your monthly payment to be $3,000 a month or less. Here's your, right? That's 485. Here's your maximum sale price. And I try to back people into the number that way. Because the problem with giving people their full qualification amount, I always tell people, I'm going to attach it in an email, in a separate document. You can open it if you want to open it. But it is the trying the wedding dress on that's outside of your budget. You are going to want that one. Right. Okay. When you see that the government says I can give you $750,000, you want that one. That's the house you want. And you will just, every time you go to look at houses, you're going to move up the Zillow like slider.
- Speaker #1
From my experience, if you're going that route, you are going to be house poor. I'm just telling you right now. All right. So let's say we get, we get the numbers down. We're kind of ready to go. We start looking. So John, my question to you is we're looking around the houses. Now, outside, you're obviously not a home inspector. And obviously outside of looking, making the house look pretty and feeling at home. Like what are some of the things you're, you're telling your, your buyers to look out for when you're walking through a home?
- Speaker #2
So, and it's always with first time home buyers, you know, they're, they've got stars in their eyes because it's such an exciting new process and their hopes are so high before we dash them. I, you know, I, I'm a, I've, I've owned a couple of homes I've been in. I couldn't even tell you how many homes I've helped people buy and sell and been into, but. I am grilling that place from the moment I pull in that driveway. I'm looking at roofs, gutters, trim windows. So I'm dissecting it before they've even noticed that the ceiling has water stains all over it or that the floors need all refinishing. So what I'm telling buyers to look out for is keep your eyes open. You might see some really lovely staging. It's going to be like, oh, I can so envision myself living here. I'm like, just look at it as. could you really envision yourself living here see it smell it feel it walk around do these spaces make sense for you does this you know just the way this door opens makes sense for you and the garage is all the way over there you know none of these things make sense so um it the first couple visits to houses with with millennial buyers usually these first time home buyers it's fun But they very quickly become, you know, their eyes open. They're like, ooh, so this is a $350,000 house. Maybe we should see what $450,000 gets us.
- Speaker #0
What happens too, I think, is the real estate trick photography life. And that, I think, is always like a brutal blow to first-time homebuyers where they see a house online and they're like, this is the house. This is so beautiful. I want it. And I look at listings all day long and you look at listings all day long at this point. And I can spot those from a mile away. I'm like, oh, the bed is in the corner diagonal across the room. No one actually does that. Why? Because that room is very small.
- Speaker #2
That's another reason why you want, you know, lenders and agents that are active in the market that actually go and see these houses. So, you know, we see a lot of houses. during the week as agents. And I get to go to these houses. You know, if you could scratch and sniff these MLS and Zillow photos, you would never look in the house. So when someone comes to me and says, oh, I saw the new house, you know, 123 Main Street. I'm like, I was in there yesterday. We ran screaming out of there. Oh, why? What's wrong with it? Well, there's only so much you can tell from a photo. You know, those rooms look huge. I'm like, it was nine by nine. And it smelled like, you know, something died in there. there. So that's, again, we get back to that, working with an agent or a lender, we go into a lot of houses. You guys attend open houses, we host them. I'm showing houses all week to people that, again, we got to go see that house. And I'm like,
- Speaker #0
Yeah. Flip side too, especially if you're working with people that are very hyperlocal to your town is like, I'll have somebody be like, Hey, I have a house. I want you to price up. I'm like one, two, three main street. And they're like, how did you know? Like, cause I priced up for 17 people already. That's how I know. Um, it's going for. highest and best by 2 p.m. because I've already been told that by four agents and it has flood insurance. So just keep that in mind. And people are like, how did you know? Because there's not a lot on the market right now.
- Speaker #1
Yeah. Inventory's tight. You're going to know that. Especially that's when the relationship within the community helps too, because I'm sure you guys are always talking to each other. You always run across paths with all that stuff. So you're always knowing what's going on and what's not.
- Speaker #0
Yeah. So once somebody looks at a house, Jonathan, right, they like look at a house and they decide that's the one. What is what is making an offer look like?
- Speaker #2
Gosh, the actual machinations of it. Yeah.
- Speaker #0
Yeah.
- Speaker #2
Give people a little bit. It's not as scary as it sounds, you know, making an offer. You know, we put we put all these forms in front of you. There's disclosure forms from the brokerage. There's the actual, you know, five page offer, depending which contract you're working with and all these seller disclosures we have to read through. So you're going to sit down with your agent and you're going to read through, firstly, the seller disclosures. You know, big one is inclusion, exclusion, what's staying with the house, appliances, lighting, etc. Then you've got a state disclosure where the seller fills out. It's basically like a report card, age of the roof, age of the water heater. Have you had any problems? And as long as there's no red flags to anyone, you sign off that you've read it. Then you start, you know, looking at the actual terms of what an offer is on a house and starts off with price. And to give you an example, if you're in Glastonbury and you see a house that's priced at $450, uh, And we're told there's multiple offer. Your offer is not starting with a four. It's probably starting with a five. And that's just this particular market.
- Speaker #1
Can I just jump in for one second? So how do you know how many offers are? Does the other real estate agent tell you or you just kind of slip them a 20?
- Speaker #2
So, you know, when we're working with sellers, we actually have to ask if we can even disclose if there's presence of offers and then if we can also disclose how many offers. And most sellers, I would say, they're like, yeah, of course, you know, tell people there's offers. Can I tell people how many? Yeah, sure. Maybe it'll make it even more competitive. And that's from the seller's perspective. And it's really helpful on the buying side to say, all right, well, there's only two offers on the table. So, you know, I know we're going to write a good offer. So we're going to stay in competitive. If you hear there's 23 offers on the table, knowing my clients, if I know them really well, I say, let's not put our hat in this ring. You're just going to be disappointed. But if it's your first rodeo, I'm like, let's write it so you know what to do. And that's fine. We're going to go through the whole process. And in 24 hours, we're going to get the call that says we didn't get it or an email or a text. And I just want you to know what that's like, because that is the nature of this market right now for a lot of people. Yeah. Not everyone.
- Speaker #1
Get those battle scars. Yeah.
- Speaker #2
Yeah. You got to learn a little bit, you know?
- Speaker #0
Yeah. And I think the contract, people are always scared of the contract. And that is, again, we're having a lender and a realtor who have a good relationship who can discuss what that contract is going to look like together. Because a lot of times the realtor will call me and say, hey, here's what we're thinking, right? Does this work on the lending side? Because sometimes it's how fast can you give me a mortgage commitment? Can you give it to me in five days? That can help being competitive. How fast can you close this, right? The average real estate closing in Connecticut is 46 days right now. We average, like, I think my average right now is 21 days. Show off. Yeah, I am. I am a show off. It's 21 days. But some of that is due to where I'm lending, that I lend a lot in competitive towns. Connecticut is a fast-moving state. State, Glastonbury is a fast-moving area where... Time matters. You work with a lot of sellers as well. For some sellers, they just want this over with.
- Speaker #1
Let me answer this then. Obviously, price is going to be the number one. Outside of price, what would make an offer more competitive versus another one? Let's say, this is $10,000 more, but I took yours because...
- Speaker #2
Because you're cash and not a mortgage. That's number one.
- Speaker #1
That's number one. Okay, what else? Is there a hierarchy of how this goes? For me,
- Speaker #2
it's inspections.
- Speaker #1
Okay.
- Speaker #2
And, you know... As buyer's agents, we usually don't advise that people waive inspections, not their first time out, unless that's a laundry list. Are the seller's disclosures complete? Do we know that the water heater, the furnace, the AC, the roof, do we know the ages of these things? Is the home well-maintained? Is there evidence of that? And if you either have the monetary resources or the know-how to really be a homeowner and what it's going to take to put in, or you have family that's in the roofing or a cousin that's an HVAC contractor and you're comfortable waiving the inspection because you know how to fix a leaky sink or you can do a little minor electrical work. That's different. But you've got a lot of first-time homebuyers that are coming from rentals or still living with parents and they're like, who do I call for this? I'm like, you call a plumber. Do you not know that? So inspections is huge. So the quick little anecdote, we had a house a couple years ago in Glastonbury. We received 44 offers. I believe this was in 2020. God,
- Speaker #1
were you even trying to listen?
- Speaker #0
I wrote so many pre-requests. I know exactly what it is, Jonathan. And I wrote so many pre-requests to the point where I think I texted you and I was like, you're going to see my name 14 times.
- Speaker #2
The cars were literally up two street blocks. We had neighbors looking out the windows. I had to stand out front of the house with an iPad because it was still kind of COVID high times. And we had to check people in because we were only allowing five or six groups at a time. And there was just a line. It looked like Cellulita on a Friday night. And when we got those 44 offers, the seller said, all right, they're all on a spreadsheet. Let's look at the ones that are cash. Got down to eight. All right, let's look at the ones that are inspection-free. Got down to four. And those four were so similar. We're like, well, anyway. But yeah, that's kind of how the sellers look at it. They're like, all right, who's cash? That's one step out of the way. Who's no inspections? So we're going to get to that finish line.
- Speaker #0
Do earnest money deposits make a difference?
- Speaker #2
Absolutely. I think the bigger number, that healthier number, especially the higher you up in purchase price, or even if it's a low purchase price, if you have the funds to put down, put it down. It shows commitment. It shows some skin in the game. It's just sitting in your escrow. It's part of your down payment. If you terminate over inspections or if you can't get a mortgage, those funds come back to you. But if you're going to be putting down, let's just say you're putting $100,000 down on a home. If you've got the $50,000 sitting there, just put it in escrow. It's not going anywhere.
- Speaker #1
What was that called again? It was an earnest?
- Speaker #0
Earnest money deposit. Mortgage people call it an EMD.
- Speaker #1
So you just put that right in there and didn't tell anyone what it was.
- Speaker #0
We call it an EMD, which confuses people. It's called an EMD. And that's the money that when you're essentially giving the contract over, you're giving this money over to say. This is my skin in the game. I'm not only going to sign this contract, but I'm also going to give you this money to hold while we go through the whole process.
- Speaker #2
It's just like if you were buying a car, that they want a deposit to hold the car. We need a deposit to basically take that house off the market while you do your inspections and get your mortgage. And if you default in your contract. But anyway. But yeah, so people call it EMD, earnest money deposit. They just call it a deposit. We call it escrow because it sits literally in what we call an escrow account. A lot of millennials go, I don't know what the hell escrow is. I'm like, well, let me explain what escrow is.
- Speaker #0
Tell you what it is. Yeah. And it's, that's one of the ones that I think if you're getting outdated information, right? You're talking to dad who bought a house 10 years ago. They're like, oh, we put $500 down as your EMD. And we're like, no,
- Speaker #1
no, not anymore. So, all right. Why don't, since you brought it up, what is escrow? Why don't you walk people through what that is?
- Speaker #2
So you, you, you hear it in TV and movies a lot. Like, oh, I'm an escrow for a house. So what it simply means is you're under contract and you've put money into this escrow. It's an escrow account that's held at the brokerage level, usually at the brokerage level. And that money just sits there. And it's either coming back to you if you terminate or it's going to be put into a check to your attorney for closing.
- Speaker #1
Okay. And this is when they have the offer is accepted. When the offer is accepted. You're not just throwing it right in there and be like, hey, we're throwing an escrow right now. No, you don't do that. Okay.
- Speaker #2
Yeah. If you come to terms and the seller accepts your offer, then you get funds over into that escrow account.
- Speaker #1
Okay. Why don't we walk through that then? So we get the funds in escrow. What's the next step after that? So you're in escrow, you get the funds, everyone's clapping. Yay. We did it.
- Speaker #2
We got to get the contract lender that day.
- Speaker #0
So usually that day I get an email with a copy of the fully executed contracts, the contract that everybody has signed. It has all my dates on it. And a lender is date driven. Okay. So everything I do is based on dates and I have generally two dates that I need to meet. My first date is my mortgage commitment or mortgage contingency date. That is the date that we... owe generally the seller a letter from the lender saying the mortgage company is committed to giving this mortgage and this is the conditions we have to satisfy to get it cleared to close. Those conditions have to be minimal. They generally cannot be things like you still need an appraisal. No one wants to see that on a mortgage commitment. All funds generally have to be accounted for. So if you need $100,000 to close, those have to be accounted for. And your general credit underwriting must be complete. So your income, your assets, that stuff's done. Generally, what we're waiting for is often title work from the attorney, which we'll talk about. But title work is usually outstanding on a mortgage commitment. Homeowner's insurance is sometimes outstanding on a mortgage commitment. And then small things like your earnest money deposit actually has to clear your bank account for the lender. And we have to get that updated statement. And so that could sometimes take two weeks. right so like even though it's happened it might take us a little bit of time to actually get the correct documentation but that's our first thing is mortgage commitment now yeah so is that when i mean it's been a while since i bought a house but is that when you get that big mortgage document that i have to review as the buyer and say there's all these line items of things i'm like well what is this what is this what is this so that actually happens before that way before that way before that you guys just skipped a step i did all right so that's your disco that's part of the actual mortgage process so that's called your uniform residential banking disclosures we
- Speaker #2
call i call it the cd
- Speaker #0
so cd happens at the end oh we're talking about the le okay the le the loan estimate so as soon as you go under contract we are gonna make your uniform residential mortgage loan disclosures um the this is the documentation that you're going to sign that essentially says you're in the process for a mortgage it doesn't and that's and that's where i
- Speaker #1
had some questions as a buyer and i was like well do i need this like so what are the things that you could like kind of like all right maybe you don't need that but you should definitely have this on there title insurance you No. All right. So to me, title insurance is like, all right, I'm not an attorney. The attorney's doing the title search for me. Why do I need to buy insurance when this person's doing the search?
- Speaker #0
What's on the loan estimate is we are essentially estimating. All of the costs that could be associated with your loan. Okay, it's a disclosure. And we are always clear with people that this is not a bill of goods. This is a disclosure where I'm disclosing potential fees. So I disclose things like what taxes we think you're going to pay, your appraisal fee, tax, transcripts that we have to order from the IRS. I put estimated attorney's fees on there. So all the things that I think you're going to pay to your attorney. And then it kind of has like a bottom line. Like this is about what we think you're going to bring to closing. So that's the loan estimate. That includes things like title insurance. So title insurance is when we order title from your attorney. And Connecticut is an attorney-closed state. Not all states are attorney-closed. Some states are what's called title-closed. That could be a whole episode amongst itself. But here in Connecticut, title-closed state, the attorney's office is going to do a title search. And what they're looking for are liens or encumbrances, a big word, on the title.
- Speaker #1
You guys are just making up all these kind of terms here. Words.
- Speaker #0
There's so many words. And they're looking to make sure that no one is owed money, okay, on your house. Your taxes are paid. If you have an HOA, it's paid. Every contractor who's worked on your house is paid. And they're going to essentially stamp it and say, yeah, nobody's owed money. And that insurance that you're paying for is ensuring that title is clean for you. You pay for two policies as a buyer. One is for you, the buyer, and then you actually pay one for the bank, the lender, okay?
- Speaker #1
They don't pay for that. That's cool. No,
- Speaker #0
they don't pay for that. That's part of what you're paying. Because we're giving you a lot of money. That's what you have to remember what the lender is. Oh,
- Speaker #1
thank you so much.
- Speaker #0
We're trying to give you a lot of money to borrow. But yeah, we estimate all those fees. You sign that. We then kind of kick off the mortgage process, collect all your docs, send you to underwriting, and then I get that mortgage commitment.
- Speaker #1
Okay. All right. So now we're at that point. Then what happens? Because we're almost at the finish line, right?
- Speaker #0
Actually, yes. At that point, you're pretty close. During that window, generally, you've had your home inspections.
- Speaker #2
Oh, yeah. You're on a whole other wavelength than me. I'm like, we still have to go through home inspections. We have to negotiate those. We have other things to do. Yeah,
- Speaker #0
this is just the one.
- Speaker #1
Well, let's go because I remember the home inspection was kind of a thing for us.
- Speaker #0
The bank and the realtor are sort of running in two parallel tracks that do have some crossover. But there's only three spots that we really cross over and it's the appraisal. the mortgage commitment and the clear to close. Other than that, what's happening kind of on the realtor side and what's happening on the lender, we are communicating with each other.
- Speaker #1
Yeah. Well, I'm sure the offer is part of that process too. We're both talking back and forth on it.
- Speaker #0
I don't generally care what happens in the home inspection.
- Speaker #1
Well, you hope it's okay, right? So they have to close the loan, right? I'm serving.
- Speaker #0
As close as I am. I don't want to see it. I don't care about it. All of those things, but they're kind of running parallel. So I'm doing stuff on my end and then you, the realtor, are doing stuff on your end. And we're kind of just checking in with each other.
- Speaker #1
Gotcha. Okay. So we'll go back to John's court here. All right. So we're doing the inspection. There are points where you could actually get out of this contract if you really wanted to, right?
- Speaker #2
Yeah. Yeah. I'm calling back doors. But yeah. So if you were the lucky winner of a multiple option, you could get out of this contract. offer situation where you're, you know, 50 or $100,000 over asking, you know, you know, we do the the escrow, like we talked about, we get the contracts over to the lender right away, so they can start working on your mortgage application. But within your first, you know, two weeks, you're going to do a home inspection. And you know, again, your lender, your agent is going to give you names of people to call that they like working with that are trusted that are reputable. And you're going to do your home inspection, it's going to last for a couple hours, they're not cheap. You know, I think a basic, basic, basic home inspect. inspection maybe runs five or six hundred dollars the average I see is about a thousand and a larger the house the more time the inspector is spending there so I've seen I've seen three thousand dollar inspections they're going to test your well water if you have well water then you need a septic company to do a pump and inspection if they're septic on the property uh it's it's it's quite the process um when those results come in which is usually you know 24 to 36 hours after your inspection you go over that with your agent, you go over that with your partner if you're buying a house with someone else, and you discuss, you know, all right, is the house in good shape? Or is it so far gone we couldn't possibly move forward with this? And...
- Speaker #0
If it's not bad shape, but there's still some things you want to discuss with the seller, you and your agent will come up with a list of what we'll call remedies. And you say, all right, well, the house had high radon in the air and water. So we're going to ask that you either credit us at closing for that amount of money to install those remediation systems, or you're going to do it before closing. And you negotiate back and forth. And usually a seller says yes to something like that. But if you get into a situation where the seller says, you know, I'm not going to be giving any credits on this. You know, it was a multiple offer, blah, You can, as the buyer, choose to terminate that contract for no penalty. You are out that inspection cost, but you get your escrow, your EMD, your deposit back. And that is your choice. So that's one way to get out. If you move forward, on the other side, you're working with your lender on the mortgage approval process. On my end, with real estate, the bank's going to order an appraisal.
- Speaker #1
Yep.
- Speaker #0
That appraiser is probably going to contact the listing agent though, not the buyer's agent, and they're going to go and meet. And that's just to make sure that the bank is lending you an appropriate amount of money for the home you're buying. So if you're buying a $300,000 house, even if you're paying $400,000 for it, that they're not lending you $750,000 for this two bedroom cape. So they do that and make sure everything is in alignment. Hopefully the appraisals go through, the house appraises for what you're buying it for, if not more. If it appraises under, that's a whole other topic we can cover on a different show. And really, that's it. Those are the two things that, you know, we're really going for is inspections and financing.
- Speaker #1
Now, during inspections, should your dad come and then point out all of the, oh, you got to ask the seller to paint this room. The paint has some smudges on it or looks like that roof needs to be redone.
- Speaker #0
I would advise, you know, unless your parents are footing the bill. or helping you foot the bill, maybe leave it to the day you close to show them the house. We love parents. They're great, but they're looking out for their kids' best interests, and they're going to cut that house up more than I would with my eye. And they may not think it's appropriate for you, or they're going to be in the inspector's ear the entire time, and that two-hour inspection is now going to be four hours, and it's just draining. So we usually say just the buyer and their agent and the . only the people that are buying it.
- Speaker #1
Yeah. We, I will tell you my experiences. If I see a house fall apart in inspections, probably 25% of the time, it's like outside influence, right? Especially in this market, it's somebody else came to the inspection. And I had one that there was a parent and they were freaking out about the age of the hot water heater. And the inspector kept saying that like, It's fine. It's in perfect working order. It was like eight years old. It wasn't that old. Yeah. And there was rust along the bottom. And that was what the parent was really hung up on. And apparently at some point, a sump pump had failed in the house. Water had gotten in. It was groundwater. It was not related to the water heater. They had installed a sump pump. Everything was fine. But the rust on this water heater was like driving this guy crazy and convinced his daughter to terminate over it. And here's the long range effects. This is a fun story. This was in 2021. She was buying a house when rates were 3%. This was a $350,000 house. It was very affordable. We terminated. This was in 2021. It's 2025. She has still not purchased a house. Now that 3% rate is a 7% rate. That $350,000 house is a $450,000 house.
- Speaker #0
Did her budget go down too? Her affordability?
- Speaker #1
Affordability went down significant. We were looking at $1,500 a month mortgage payments. We're looking at $3,000 a month mortgage payments now.
- Speaker #0
For a $2,000 water heater.
- Speaker #1
For a $2,000 water heater. And I tell a lot of borrowers this story that you have to think about the long-term effects of some of this stuff. And you also have to be prepared that you're going to be a homeowner now.
- Speaker #2
Yeah, you're not going to go to a house, even if it's brand new, where it's perfect and you don't have to do a darn thing. Good luck.
- Speaker #1
Yeah, there will be things you have to pay for. Or even like sometimes people get really hung up on like there's algae on the roof. You guys know I'm married to a roofer, right? Algae on the roof is not a death knell for a roof. Sometimes you just got to like get a there's special cleaner. There's a press spray.
- Speaker #2
Yeah, you spray it.
- Speaker #1
Spray it. They power wash it off. It's fine. But that I've had parents, this roof is in terrible condition. And the inspector is like, it's actually fine. There's a tree overhanging it. It's algae. So
- Speaker #0
Buyers talking to their friends. Oh, my friend had a septic 20 years ago when she bought a house. It failed. I'm like okay but this one's not failing and we're fine and we're getting credits for the repair so that the life is longer it is it is so funny how people get in their own heads they start googling um you really gotta speak with the professional you've hired right but i mean even that case that's something where you could have at least instead of just flat out terminating be like all right well can you guys give us a credit or something like that we're like okay now i've got the 2000 you probably won at this point but you
- Speaker #2
know at least like try step a before you just go nuclear with this stuff anyway because you know, you could ask, they're most likely not going to terminate when you ask them to fix something, right? On the buyer side, on the other side, right?
- Speaker #0
Almost everything in the real estate transaction with regard to inspection is fixable. I would say 98 or 99% of things are fixable, be able to remediate, give you money for it. I mean, nothing's the end of the world. And what you have to remember as a buyer, just think about the, I always say, think about the other side, whatever side you're on. So as a buyer, think about the seller. If you terminated, the seller either has to fix that or disclose it to the next person. It's going to be their problem. So like you, you have them on the line. Like, Hey, by the way, did you know your roof's leaking? No. Well, I want you to fix it. Well, I don't want to fix it. All right. Well, we're terminating. They have to tell the next person that their roof's leaking or they have to replace it. So it's like the problem exists for me and it's going to exist for you and the next person. So let's, let's just get this done and let's get to the finish line.
- Speaker #2
So what things do they have to disclose at an inspection? Cause, um, I mean, I'm kind of curious cause my house that I actually ended up buying had like two inspections prior to me and then. We never heard anything about how they came out. Is that normal? Or are they supposed to disclose something only that's like egregious?
- Speaker #0
Yeah. Actually, I was having that conversation today with a couple sellers. And you do have to disclose material facts. Material facts being something that would influence someone to not buy or buy a house. In this one instance, what was the material? Oh, they had rain on in the water and air. And we said, look, if it's not this buyer, it's going to be the next one. The problem still exists. And while you're living in the house, maybe you should get those things taken care of. And it's not a great deal of money. But if we were to terminate, we now have to disclose to the next people. We know there's radon in the water and air. That's a material fact. That's a health and safety issue.
- Speaker #2
Right.
- Speaker #1
OK. OK, we go through inspection. We have mortgage commitment. Now what?
- Speaker #0
Now we wait.
- Speaker #1
What are we waiting for?
- Speaker #0
We are waiting for the seller to pack. Right. And then the lender works with the attorney. Like we mentioned in Connecticut, you do need a real estate attorney to close real estate. It's not as expensive as you think. It's about $800, $850. It's usually a flat fee. And we will also recommend you attorneys we enjoy working with. So please ask us for our referrals. You sign off on your closing disclosure. Your CD. Your
- Speaker #1
CD.
- Speaker #0
So the CD is going to go to there's three versions of it if I'm not mistaken there's a buyer version a seller version and then a combined version so as a buyer you're going to receive your cd and it says you know this is all the money that you're outlaying at closing including your down payment and this is what your your figures are going to look like this is where all your dollars are going the seller gets one on the opposite side and saying this is all the money that's coming in however we have to deduct for all this and then the attorneys put the two together and they come up with a final one that's got credits and debits on both sides that's a three day
- Speaker #1
Three days. You have to sign your CD. The buyer has to sign their CD a minimum of three business days prior to closing. That's the TRID rule.
- Speaker #0
That is TRID. TRID,
- Speaker #1
truth in lending.
- Speaker #0
The reason I drink. Yeah. Three days is required. You can't speed it up. So if you wanted to close on Monday, but for some reason the CD didn't come until Friday, unfortunately, you're not closing on Monday.
- Speaker #1
Yeah. And really, and the hard thing with the CD too is that three days prior to closing, we actually aren't always ready. to, by we, I mean the lender and the two attorneys, because you have to remember that there's multiple parties involved in coming up with this number. We are sending you one. It's still kind of an estimate three days ahead of time, because there will eventually be things like oil adjustments if you have oil, right? Or sewer adjustments, water adjustments that aren't often known until 24 hours before.
- Speaker #2
A big tax adjustment. They're like, oh, well, they paid it for this and they got a refund. I'm like, oh, I need an extra $6,000 for this closing. Thanks for telling me to do before.
- Speaker #1
I estimate that for my borrowers ahead of time. I would like to tell you, if you were working with me, you would have known that already, but there's a lot of lenders that don't put that on there because it's not technically a part of the mortgage. They don't put it on, but I put it on because it could be a big, a big.
- Speaker #2
Yeah. Well, we're lucky we have the money, but you don't, some people may not.
- Speaker #0
Yeah. We got a little surprised when we were buying our first house closing costs. And as a realtor, you know, being in the business for so long, you know, I should have known, well, I don't handle the finances. You know, when. whenever a client wants to talk to me about money, I'm like, this is between you and the lender or you and your attorney. Like, I don't want to know your financial position. In any event, we were buying our first house and, you know, I was acting as my own agent. Silly, stupidly, probably shouldn't have. And the lender came to us and said, all right, well, here's your, you know, we got our, what is it, the LE or whatever? And he goes, oh yeah, here's, I'm like, this amount is $12,000 more than my down payment. He goes, yeah, that's your closing costs. I'm like. So I just got to go find 12 grand in my bank account? He's like, yeah. He's like, you have it, right? I'm like. Yeah, but I wanted to redo my kitchen. I wanted stuff.
- Speaker #1
I want that money. Yeah.
- Speaker #2
I don't want you to have it.
- Speaker #1
The closing number two is that a lot of people will call the lender and be like, yo, what do I got to bring to closing? That number does not come from me. That number comes from your attorney in Connecticut. So your attorneys who will give you the number. You're not going to write separate checks out. So people ask me that a lot too. Like, oh, do I need to check for the lender, for the attorney? No, you're right. One check or one wire. It will all go to the attorney and the attorney is who's going to cut the checks to all the people who need the monies. Not me. Don't write me checks.
- Speaker #0
Who do I make the escrow out to? Oh, yeah. Kelly and John. Kelly and John.
- Speaker #2
The foundation. Yeah, that's a red flag. If they say that, move.
- Speaker #0
Run away.
- Speaker #1
Now, when do you get your keys, John? Because I get that question a lot. Because people either think they get them earlier or later. When do you get your keys when you're buying a house?
- Speaker #0
All right. So you're asking me to order the next step. So after you sign that, you're going to plan what's called the final walkthrough of the property with your agent. And that's to make sure that the house is still in the same condition as it was when you bought it. No damage from the cellars moving out. It's either the night before or the morning of your closing. And it only takes like 30, 45 minutes. You make sure, you know, toilets flush, they don't leak. You've got hot water. Windows weren't cracked. Floors and walls weren't damaged. And the house is there. And there's usually a set of keys and garage door openers on the counter. You don't get those right away. I know it's fun. And, you know, on social media, we post photos with the sold sign and the keys. But fortunately, you don't get to hang on to those keys. So the agent is either going to hang on to them or they're going to go to the attorney. And then, you know, shortly thereafter, you're going to head to your attorney's office. You're going to sit with them for about an hour. You're going to sign all this paperwork and sign your life away. And even then, you may not get your keys. Why is that? So you don't get your keys until your deal is what we call funded. Yep. So the mortgage lender has to send, you know, let's say they've got to send that $400,000 to the attorney. And until that hits the attorney's account, and even then, it still has to go and they have to, like the buyer's attorney has to send it to the seller's attorney. So it's wire, wire, wire. And until everyone has their money, we don't call it funded. So sometimes those wires don't hit until 435 o'clock and it's a little scary. You might not get those keys till Monday.
- Speaker #1
It totally can be.
- Speaker #2
But don't close on a Friday.
- Speaker #0
Don't close on a Friday, please.
- Speaker #1
Well, and the other thing too that can be hard is where your funding is coming from. So like, if your lender is in California. and you're buying a house in Connecticut.
- Speaker #0
At two o'clock in the afternoon. Yeah,
- Speaker #1
there can be a delay or really the issue is in the morning a lot. If you're like going to close at 8 a.m. and you have a California lender and they won't fund the night before, they're not open at 8 a.m. So it can be a delay. But yeah, once that's funded, the house is yours. The house is yours. It's yours. You can move in that day.
- Speaker #2
Your problem now.
- Speaker #1
It's your problem now. So I think for most clients, the big message here is there's a lot of steps involved. There's multiple parties involved. There's attorneys. There's financial advisors. There's lenders. There's realtors. But having a team that you trust and having a team that you're comfortable asking those questions, what is escrow? What is an appraisal? How do I get one? I need an attorney. Who do I use? Is very, very important because you have to be very transparent with all of these people.
- Speaker #2
Yeah. I would say don't be afraid to ask questions too. Cause if you're, this is especially the first time going through it. I mean, even, you know, I've been through it a couple of times and I was like, wait, I totally forget this. What is this again? Ask the questions, right? I mean, that's what you guys are here for. And that's why you guys are getting paid money to help people guide them through this process.
- Speaker #1
A hundred percent. And I think that like, even if you're, if you bought a house before, I feel like every time you do it, you're a first time home buyer again. Um, because things just change so much between the. you know, I've been a lender for 11, almost 12 years now. And like, if I think back to when I started until now, how much the housing market has changed, how much lending rules have changed, how many different loan parts, like everything is so different and we are, we keep up on it, right? Those of us who are doing this every day, we keep up on it. I don't expect the average client to understand, even if they're a second time home buyer, even if they're a third time home buyer, I don't make the expectation that they know what they're doing.
- Speaker #0
I think, um, And sometimes in our profession, though, we do forget because we do do this every day, most of us seven days a week. We're so ensconced in it, in the verbiage, the vocabulary. Now, what is escrow? And the process. Sometimes we forget to slow down and handhold. Lately, that's kind of been one of the things I've actually been trying to focus on is just get back to it's not just buyer and seller. Like this is John and Lisa who are buying their very first home because they're expecting their first in nine months and we've got to get them a house. Or they're selling. selling mom and dad's house because mom passed away. These are real people. These are real memories and properties. So getting back to that and hand-holding and saying, all right, well, the next process is we're going to get the deposit. Those buyers are going to do their inspections, or we're going to do our inspections. So breaking it down sometimes for people is great. And I think some people are afraid to ask questions because, like, well, it's a stupid question. Like, you don't know. There's no stupid questions. I'm the wealth of knowledge. Ask me. Please ask me. But yeah, like you said, it's important to have that team. So when I'm interviewing sellers and buyers all the time and they're interviewing me, I say, well, we need a lender. All right. Well, here's two names to start off with. Why don't you interview them? Give them a call. Go out to coffee. Same thing for agents. If you're looking to go meet an agent, you don't know one or you've been recommended. I've recommended a couple on Facebook or my family. Go meet them for coffee. We're happy to meet you, you know, because we may not click with you. We may not be the right fit. It's like dating, you know. Our personalities may not match or you may not like, you know, X, Y, and Z about this person. So, you know, find someone you want to work with and someone that you can trust and talk to easily and that you're not going to feel stupid asking a question. Like, there's no dumb questions.
- Speaker #2
Yeah, if they're making you feel stupid, it's probably the wrong person.
- Speaker #0
Exactly.
- Speaker #1
Just vibes.
- Speaker #0
Dummy. It's all.
- Speaker #1
clients all the time when I'm like, okay, here's the deal with your, because if they come to me first, I'm sending them to real estate. I'm like, here's the deal with the realtor. You're either going to vibe or you're not going to vibe. I'm going to refer you people that I suspect you're going to vibe with. But if you don't, I don't want you to use them.
- Speaker #2
Well, you're going to be spending a lot of time together in a very short window, right? So you want to make sure you click.
- Speaker #1
Well, and the realtor, not that I want to say I'm not important as the lender. I'm my, my big noggin is important when I'm being the lender, right? It's, do I know this stuff? Am I on top of your things? I don't want to say my personality is less important, but a client is generally dealing with me over the phone, over email. I need to be able to explain things to them. They need to be able to understand the way I explain things. But they don't necessarily have to, I don't want to say like me, but like. again, your interactions with me are more limited. You need to be able to walk into a house with your realtor, look them in the eye and be like, nope, nope, this is not,
- Speaker #2
this is not cut out here.
- Speaker #1
Especially because now with recording in all of these houses, right, that everybody's got cameras and nests and rings, you can't be as open as you once were when you're, you know what, you cannot walk into a house like this house smells like dog poop. Uh, this is terrible because the seller can probably hear you. So your realtor needs to be able to recognize your like eye signals of like, get me out right now. Or I love this one.
- Speaker #2
So as you're saying, your realtor should have a scramble technique where they just scramble all the cameras for half an hour. No one knows what you're saying.
- Speaker #1
Right. Because they sometimes you you got to get out. But I again, I also think you don't want to show your cards. If you love a house, you want to be able to, like, again, make the eyes at your realtor. Like, this is it for me. I'm not going to say it out loud because I don't want the seller to know that yet. But like, this is my house. You better figure out how to get me in this one.
- Speaker #0
I love when we're leaving the house, locking the door up, and there's a ring doorbell. And they're like, well, what do you think we could offer? I'm like, doorbell, doorbell. I'm like, why don't we go talk about it over coffee? Or let's let the next showing in. It is funny. You do have to be careful what you say in these houses, yeah. But again, that relationship with your agent where you can just look at it and be like, okay, we're not going to waste any more of the seller's time. Let's get out of here.
- Speaker #1
Well, and the relationship between your realtor and your lender is also so important because a lot of lenders, so there's a hierarchy of real estate, right? Right. Generally, the realtor is kind of like top dog. The lender usually comes right after them. So there's a lot of lenders that don't want to disappoint realtors. Right. Because we want their business. And so they sometimes feed realtors like it's great. Everything's fine. Everything's great. And things are not great. Things are burning down. Right. You want your lender and your realtor to have a completely open relationship because there are solutions to things. But only if everybody's honest. We need the client to be on. And I always tell people, like, there is nothing you can lie to your lender about. Like, your life is laid bare to us. I know what you'd be buying your Dunkin's for. I know your sheen habit. I know whatever. What habit? Sheen. Sheen. Online shopping. Oh,
- Speaker #0
sorry.
- Speaker #1
We're going to go back to the TikTok episode from right before this. I know that you buy the things on the TikToks. I can see all of it. I see, like. you know, sometimes some stuff people are spending money on on the internet. I'm like, that's a little, that's a little saucy.
- Speaker #0
Did you know your husband bought a sports car and is storing it in another town? Yeah.
- Speaker #1
We know all the things. So the more transparent you are with me and the more transparent I have the ability to be with your agent, the smoother this transaction is because sometimes we have to brainstorm, right? Clients sometimes throw us like for that where I had a client that I saw the money in their account. I saw their EMD. I'm like, there it is. We confirmed that that was the money they were going to put as their deposit. And then we went to make an offer and I'm like, okay, I need to see the bank account. with the $30,000. You're like, oh, I don't, I don't have that $30,000 anymore. What, what do you mean? I already paid you that 30,000. Where did the money go? Oh, I, my dad needed it and I lent it to him. You know, we'll have to come up with something else. And I'm like, no, your loan doesn't work anymore. I have to be able to call the realtor and be like, okay, here's the deal. Yeah. The poop has hit the fan. Here are my three solutions. Let's talk through them on the ones that you think we can sell to the seller to make this transaction still happen. But again, if I'm a lender that doesn't want to do that or doesn't have the relationship. relationship or isn't willing to be transparent, that's transactions that go south real fast.
- Speaker #0
Yeah.
- Speaker #2
Well, I think that was a very thorough explanation of first-time homebuyers. So, John, can you do us one more favor and tell us how we can find out more about you in case people want to know?
- Speaker #0
Absolutely. Best way is to call me or text me. I love text. Millennial right there. Millennial. 860-713-9000 is my cell phone. I'm right here in Glastonbury. I grew up here. So... Very, very active in the town and I know it very well. So if you're looking in this area, hit me up.
- Speaker #1
Awesome. And we'll put his contact in the show notes.
- Speaker #2
Absolutely. Well, thanks for listening, everyone. See you next time.
- Speaker #0
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. This guest and their company are not affiliated with or endorsed by LPL Financial or Advisors Business.
