JASON BRAMBLETT RADIO SHOW PODCAST
Jason: And good morning. Tuning in. This is Jason Bramblett live today coming in the studio. Hope everyone is off to a great Saturday morning, enjoying the lovely weather we have. We were just discussing in the studio that we believe that we have some false information that Seattle is the wettest place on earth. I think Greensboro, North Carolina has now, or the Triad has now taken over the number one spot. We shall see.
But all things are heating up in the Triad. Even with the rain attempting to put the real estate fire out, if you will, things are cooking. So, if you are in the market, thinking about selling your house and or buying one, there are some things that we need to discuss today. Things that we need to talk about. One is how to handle these multiple offer situations. How do we, if I am a buyer, how do I ensure that my offer is going to rise to the top. How do I know that I am going to get the house, right? If I am buying one, and I am in that competition, how do I make sure that that is happening?
What are the things that we can do to position ourselves? And also, for a home seller, is the highest offer the best offer? So, we are going to dig into that as well and take a look. So, your questions, you can give us a call. We are live in the studio. (336)553-0796. You can go to our Facebook page. It is Jason Bramblett Real Estate. Post a question there, and of course, any time you can go to Jason Bramblett dot com. Shoot your emails over. We will do our best to answer those as quickly as possible. Remember Facebook Live folks, you are 45 seconds behind time, so we will answer your questions as soon as we get time there.
So here is a question we get a lot. Should I take the highest offer? Now logically, everybody is like duh. Of course, you want to take the highest offer. Right? It only makes sense. It is the highest. It is the best. Right? Well, there are lots of things to consider in the real estate world that may or may not, well could disprove that theory that the highest is the best offer. Many things to consider before you look at the top line is how is the buyer purchasing the property. Are they financing the property? What type of loan are they getting? Is it a government-backed loan? Is it a first-time homebuyers’ loan? Are they needing closing costs assistance? Who is coming in behind to double check on is the value right? Is there going to be a bank appraiser? Right? Of course, there would be if they are getting a loan.
And here is the question. Does that bank appraiser agree with that price? And if they do not, well, there becomes some issues. There become some questions. You would think that hey, I have got a buyer that is agreeing to buy my house. I have got a seller that is agreeing to sell at a certain dollar. What else do we need? Well, why would we even need this third-party person? Why would we need this appraiser to step in there? And the reason being is because unfortunately, well, we have had some crises in real estate. Right? And these are protections not only for the consumer, but also for the bank who is lending the money. Right? The bank is the one that is sticking their neck out there. The bank is the one that is taking on risk, especially when those loans are getting up to 96% loan-to-value, or even 100% loan-to-value. So, meaning essentially the buyer has nothing in the deal. They may have an appraisal cost and maybe a little bit of some down payment money or not even down payment money. Maybe they just have the costs of home inspections and those things. There is not a lot of skin in the game, if you will.
And so, the bank wants to verify and make sure that the risk that they are taking is in line with what the guidelines are. And so, here is what we have. We have a situation where the seller agrees, the buyer agrees, but the bank may not necessarily agree with the value. And then we have an issue. So as a seller, I have got to ask myself the question if this house did not appraise, what can happen?
Well, there are a few options. The first option is the seller always has the opportunity to lower the price to the appraised value. Now depending on the situation, that may not be an option for you. Of course, the buyer also has the option to bring the difference, the money, in cash. Right? They can bring added down payment to the closing and make up the difference. The other thing that could happen is the buyer and the seller could actually split the difference. Okay? Or the deal could just blow up. That is always a possibility too. That happens. And so, obviously we do not want that to happen. You want the deal to stay together. You want to sell the house and the buyer wants to buy. And so, we have to think about that. So perhaps sometimes we look at the cash offers. Now, the cash offer may be a better deal for the owner even if it is not the highest price. And why would that be? Well, there may or may not be an appraisal involved.
We already know that the person, once they give us a verification or proof of funds, they actually have the money. They have the cash. It is sitting in the bank. All they have to do is show up at the closing, which is a great option when you have a cash purchaser. The other thing that you could consider is the seller could take a second mortgage back on the property for the difference. Now, that would probably have to be subject to the bank approving it and or the buyer obviously agreeing to it. But in certain situations, that may be something that is a very realistic thing. It is a very realistic thing for all parties to work that out.
So, you have got multiple options. The seller could lower the price. The buyer could pay the difference in cash. They could split the difference. We could look at potentially a second mortgage for the seller to take back a second mortgage for the difference. But then looking at the terms. And that is another key thing that we look at. Not only is perhaps the offer, maybe it is $5,000 less in price, but if the likelihood of it going through is considerably higher, and the seller is motivated. Let’s say the seller is having to leave the state, and they are moving wherever. California. They are moving 1000 miles away. It could be that just having the closure, having the assurance that that house is sold, and it is not something they are going to have to deal with. That could be worth $5,000 to certain people. That could be worth, for some, it may not be worth anything. They just want the higher price. But for some, if you look at what a mortgage costs the owner for a vacant home to sit, a few thousand dollars adds up really, really quick. So maybe if the house is not sold and the deal falls apart, and it sits empty for three months, that $5,000 looks like a pretty good deal out there. And then, of course, you have got the added risk of nobody is watching my house. You have the added risk of vacant home insurance, which is ridiculously expensive. I have had vacant home insurance that has been as much as $700 a month on a property. So, it is not your typical real estate, and vacant home insurance is very, very costly.
And then there are things that could just happen. You could have a leak in the house, and nobody is there to know. Right? So, you factor in these variables. You factor in these things and this is what you look at. Your risk assessment to decide is this a good idea? Should I take a little less for my house to have the assurance to know that it is done. And then when I leave North Carolina, I leave the house. It is done. It is over, and somebody else owns it.
So, these are things that we have got to take a look at. Usually, there is a pretty clear winner. Sometimes in a market like this where we have multiple offers, we are starting to see where these highest and best offers are becoming more frequent. So, we have got to talk about those things.
Now, if I am a homebuyer and I want my offer to stand out, what is that I have got to do? What is it that, outside of just the highest price because you may be willing to go to the top of your financial qualification, but that does not necessarily mean that it may not be the highest offer. The other thing is just because you may not qualify to go to the pinnacle or to the top, and that may be a consideration why you do not get the house, other terms within your offer could make you the better one or the one that stands out. So, it is not always about price. And this is where an experienced real estate broker is key because they can help you see around corners. They can share with your things that they have done in the past to help you get that home. Right?
One thing with buying a house, the big, huge factor that we look at is how long do you plan on being in the home. That question right there determines really whether you even need to own a house right now. And what we can look at is appreciation over years. We know that in the Triad market we have had a lack of appreciation in the past decade. So, the shorter amount of time that you plan to own, price becomes key because you might be having to bring a check with you if you go to sell a house in less than five years. You need to have a plan for that. It is kind of like you can bring your down payment when you buy it, or you can bring your down payment when you sell it. But if the market does not appreciate, this is the situation that you are going to find yourself in.
The other thing is if you plan on being in there for let’s say 20 years. Well, if you are going to be in the home for 20 years, all the rules change. If you did a 15-year loan, guess what? You will be able to sell the house at any price in 20 years because it will not have a mortgage on it. Meaning it does not matter. It is paid for. You could sell it for a dollar. You could give it away to charity. You could do whatever you want with it because it is not encumbered by a mortgage.
So, there are a lot of factors that we got to look at. But presumably, let’s just say you financed it for 30 years and you are going to be there for 20. Well, hopefully, in 20 years, it is going to be worth more than you paid. That is the goal. Right? There is no guarantee because there are a lot of folks that bought homes in 2006 and sold them in 2016 and they were not even worth as much as they paid for them 10 years later. All across America we saw that. So, there is no guarantee. Most of the time, 20-year cycles though we would see somewhat of an increase there. And a lot of it has to do with how much you improved the house.
Here is another trap that we have of homeowners. We buy the house. Everything is great. But everything changes in 20 years. What was cool today is going to be absolutely out of date, worthless, nobody is going to want it. Example, this is a little bit more than 20 years, but shag carpet. Not a lot of demand for shag carpet. It is not something we see a lot. It is not one of the drop-downs that we have when you are looking for a home. Would you like shag carpet? Or blue bathtubs. Not another big seller. Now we have homes with blue bathtubs and green bathtubs and all those things, but it is not the pique desirability. They have what? They have played out their time. Their time is to be replaced now. This is why we have companies out here like the Re-Baths and the different companies that can-do overlays and change the look for a fraction of the cost of gutting out the entire bathroom. But what is interesting as us homeowners, we can be kind of pound foolish in that we can over-improve our homes with somehow, we have bought into the fact that just because I put 30, 40, $50,000 in my home, I am going to get it back. There is absolutely no guarantee.
Some of the items that we invest in actually have no return. You could argue and say a roof. Well, you cannot really sell a house without a roof. Nobody is looking for one with a leaky roof. Right? Could it help you sell the home quicker? Certainly. Could it some add value? Probably. Is it going to add $10,000 if it costs you $10,000? Not at all. Same way with granite countertops. We have seen granite come down in price so much that it is not what it used to be. I jokingly talk about diamonds. Look, if you can buy them at Walmart, they are not as precious as you think. Right? People have tricked us in to spending money on things that may or may not make sense, especially from a financial standpoint. But this home-buying strategy, we have got to look at the number of years. Now there are other things that we are going to get into. There are other things we are going to talk about. We are going to dig into that. We are going to do this. We are going to take a quick time out. When we come back, if you are thinking about buying a house and you are in the market and in this competitive market, stay tuned. Come back here. Triad Real Estate 911 will be back here in just a minute.
And welcome back everybody. Triad Real Estate 911. Your host Jason Bramblett. So, before the break we were talking about multiple offer situations. How to handle that. Whether I am a seller or a buyer, we have got to have a meeting of the minds. Right? We have got to have an agreement in order to take things and move them forward. We have got to have a good deal for all parties, and then we have this other piece which is the bank. And that is kind of where we left off is having the bank.
The bank comes in. They have this appraisal and maybe it does not go exactly as we thought. And we have got to have a couple different options. Or perhaps you are the buyer and you have just reached the pinnacle of what your approval is. And now you are looking for options of how can I make this offer more appealing to a seller even if I cannot maybe reach their pinnacle price? Maybe I cannot get all the way to the top, but I could get within a few thousand dollars. What can I do to ensure that my offer, if you will, rises to the top? What could I do?
A couple of things. So, in North Carolina, we have what we call our due diligence fee and a due diligence period. And basically, this is what you are doing. You are paying for the right to be able to walk away from the deal and you are also compensating the seller for taking the home off the market for a certain period of time. Now, if you think about just from a logical standpoint, if I gave more money and shortened the time, that is actually better for the seller. I am compensating him maybe at a high level for taking the home off the market for the shorter period of time and maybe that is how I can win. Maybe that is how I can get my offer to rise to the top.
I will give an example. We have had offers come into our office with $3-5,000 in deposit money, a non-refundable deposit called a due diligence fee. And maybe that timeframe is only 15 days or 21 days or whatever the case may be. It is whatever you can negotiate, but the seller has got a great incentive to really look at your offer to see that hey, this guy is serious. He has put down an above average amount of money and shortened the amount of due diligence time.
Now as a homebuyer, you need to make sure that you can do all of your due diligence within the period of time that you have asked because the seller is not obligated to extend that. So do not just go in there ten days and think hey, I am good. He accepted my offer. Then I will ask for more time. It does not work that way. He can, but he may want more money. Right? So, if you have tapped out the money and he is not willing to extend the time, again, this goes back to where an experienced real estate broker walking you through the steps, walking you through what can be done, what makes sense.
Now some people may say well that is crazy. $3,000 and I only get credit for that if I buy the house. That is true. It is a risk. However, there are certain situations where I have had homebuyers not really care about the risk because they are going to buy the house no matter what because there is an emotional reason. It could be within two blocks of their grandkids, and it is the only house for sale, and they have been looking two years. They are probably just going to do whatever they have got to do. Right? Regardless of the condition of the home because maybe they can fix it up themselves.
Maybe it is a piece of property that is so unique that you have been looking for it for a considerable amount of time, three, four, five years, and it finally comes up on your radar. And not only are you willing to take a substantial risk with a high due diligence fee, maybe you are also willing to pay even above market value for the property. There are lots of reasons that people buy real estate. And one thing that HGTV and some of these wonderful shows that we have out here have kind of warped our thinking is you have got to remember when you own a house it is not really doing anything for you other than providing you shelter and a great place to raise your family should you chose so. Hopefully, when you go to sell it, you will sell it for more money than you paid and or more money than you put in it. But there is no guarantee.
And so sometimes these shows forget to leave out a part of like hey, in order to really make money in real estate, you have to buy what is called investment property. Investment property is property that I own that other people pay for. I do not pay for it. So, if I am looking at a balance sheet, the home I am living in, it is a negative. It is costing me something to be there. If I look at the rental home that I own that someone else is paying for, that is a positive. That is an investment. That is what we want to, that is a little bit of what those shows leave out. They miss some of those things, especially on those flip-flops and everything else that is out there.
You want to buy the right home that fits your family’s budget also goals and safety and everything else. One additional thing that you can do as a buyer to clean up your offer is just remove any additional terms that are not necessary. If you can pay your own closing costs, do that. That obviously nets the seller more money. If you can afford your own home warranty, buy your own home warranty. Okay? Remove some of this. Get rid of some of the toys. Get rid of some of the personal property. Refrigerators, washers, and dryers and those things. I have seen everything from tractors to four-wheelers to trampolines to you name it. So, maybe you remove some of those things.
Now if you are in communication with the other side of the deal and talking with the listing agent, you may find that in the example before, the owner is moving all the way cross country, and if you would buy or include in your offer the trampoline, the tractor, the four-wheeler, it would sure make my life easier because I do not want to move them all the way across the country. So, this is where good communication is essential in that you want to find out maybe it is a huge benefit to the seller for you to take on some of these things, so he does not have to deal with them. We have won many offers in those situations where we did exactly that. So, just something to think about out there.
Okay, so a couple of new things we have rolling out. New tools. How about some free stuff? Everybody likes free stuff. Last time I checked, free is a good price. It is a good opportunity for some. So, if you are wanting to keep up with the value of the home you purchased regardless of when it was, we have a free app that we can share with you now. It will let you put in, actually we can set it up for you. We do not need anything other than you tell us who you are and your address, and that is it. We will send it to you once a month. It comes out. It is a free service. We pay for it. It does not cost you anything, so if you are in Brickbrae Farm in Winston-Salem or Henson Farm in Summerfield and you just want to keep up with what is going on in the neighborhood, we can set it up to once a month it is going to deliver you the market demographics, every property that has been listed for sale, under contract, and closed, and you can just kind of keep a running idea of where your equity is at. Is your house appreciating? Is it time maybe to consider selling? If you follow a trend line and you start to see hey, my house is worth more than it has ever been in the last three years, we have been thinking about selling. Maybe it is time we think about doing it now while it is at the top. This snapshot will show you this and all you have to do is go to Jason Bramblett dot com, top right corner. Little envelope up there. It is the email envelope, the email icon, click on that, shoot us an email. We just need your address, your name, obviously your email address so we can send that over to you. And just put in the subject line Market Snapshot and we will get that set up for you. It is no cost to you. It will not be any cost for as long as we have it. This is not a hey it is free for one month and then it is $100 a month after that. None of that. We are going to take care of it. But if you just like to keep up with what is going in and around your neighborhood, it is a phenomenal tool that we provide to you at no cost. So, you can dig into that. Jason Bramblett dot com. Click on that icon, that email icon in the top right corner.
The other thing we have for you complimentary, free tickets. You can pay for them if you want, but if you just want to get in touch with us we will save you $10. The Greensboro Ideal Home Show is coming up March 29th through the 31st. And if you have never been, it is absolutely worth a couple hours of your time. You will probably need three to five hours just to kind of even touch a little bit of it. It is usually that big. But there are vendors from all over everywhere. All over the US that come in to present their products. So, if you are thinking about remodeling or you just want to see what is new, upcoming in the home world, this show will have it. Especially all the change, electronics and different things. Home speakers and that stuff. You will not see any blue bathtubs there, but you will see how to get rid of one. Okay? You will not see shag carpet, but you will see some other flooring options for you and lots of different materials that are coming.
So, if you go to Jason Bramblett dot com, click on that same email icon, top right corner, we will send you those free tickets. It is coming up. It is March 29th through the 31st. So, Friday and Saturday you have got the longest amount of time, 10am to 8pm. Sunday is a little abbreviated from 11 to 5. But if you would like to be our guests, we would be happy to send you there. And so, you can just shoot that over to us.
We have got one Facebook Live question. We are going to get that and asking about cottages being a good investment. And they can be. It all comes down to location, location, location. So that is an excellent show topic, and we will address that next week.
But if you would like to be our guest at the home show, just get in touch with us. Go to Jason Bramblett dot com, click on that icon, and we will get you some free tickets to go out there on us. You have just got to, now if you buy something, that is on you. But I will get you in the door anyway. So, if you are out and about, Steeplegate Trinity area, come see us. We are going to be there doing a live Open House tomorrow from 2-4 on English Pride Road. And if you have any additional questions, you can go to Jason Bramblett dot com. Shoot us a message. We will be back with you. Everybody have an awesome weekend. Stay dry. We will be back here next week. See you then.