Jason Bramblett Real Estate Show Podcast
Jason: Hey, good morning. You are listening to the Jason Bramblett Real Estate Show. We have some good stuff lined up for today. Hopefully you have survived the first touch of winter, I guess, if you will.
Keih: I do not think that is a touch.
Jason: I do not know.
Keith: I do not know what that is.
Jason: It is milk sandwich season here in the South, right?
Keith: I guess.
Jason: So it has started. We maybe got a little flurry. Maybe you did not. Maybe you just thought you saw, you wanted to see the snow so bad so you thought you saw it, whatever the case may be, this past week. But hey, it is finally here. I guess it is that time, right? It is Thanksgiving. It is Christmas. It is winter again. It is going to be here.
Keith: Again, I think it is just we have got spoiled because it was 97 –
Keith: -- in like the second week of October. That is what it was.
Jason: Definitely. That is true. We do have the quick turnarounds here. Who knows it could be, I can remember being at the beach in December and it is like almost 80 right here in North Carolina. It can change the great thing about weather North Carolina if you wait just a little bit it will change. There is no doubt. So anyway, we are going to dig into everybody a lot of people been asking me about new plans, new construction. What should I do? When should I get started? We are going to dig into that a little bit today. When should you build or should you even build going to just find out is that smart? Is that a good decision, bad decision? Is it right for me? Who should build my house? Should I do it myself? Should I get a, what's the right word I am looking for here? The track home-type builder, production builder, or should I get a custom home builder? What are my options out there? Then these on-site agents when you go to these open houses and things that these new construction neighborhoods who are they working for? Are they work for me that is buying the house? Are they working for the builder and all those things. We are going to dig into that. How about scams? Could I get the scammed buying a new house? Well, we are going to touch on that, and you make the determination. But who would scam anybody in the south? Nobody.
Keith: Nobody. Come on.
Jason: Nobody would do that. But we are going to talk about it and maybe a few little horror stories we have to share too, even though it is past Halloween. There is always some good drama in real estate. So we are going to dig in all that, and of course, if you got questions you give us a call at the office anytime about building a new house. It is 553-0796 or go to Jason Bramblett dot com.
Keith: I like this topic when my wife and I decided we wanted to own a home, the clear path was to go look for a home that somebody else had built and mainly because I think, to us, building a home seemed overwhelming because we did not know a lot. So this topic really interests me. Who should be looking to build and is building a smart move as opposed to just finding another?
Jason: Sure. Yeah, and it is good that you recognize that because some folks do not. They force things, if you will, that they are really not prepared for and it can be yeah, it could be a barrel of fish hooks.
Keith: I do not watch enough HGTV to build a home.
Jason: There you go.
Keith: I just do not do enough.
Jason: But the really the two kind of go hand in hand. We will dig into that. So who should really buy a new house and that is really the question at hand. The type of house is also very important in addition to it being new. So first-time homebuyers with little or no money really should lean more toward new construction or a newer house, probably not custom-built simply because in custom-built there can be a big swag in variances and cost overruns, and you make what you feel like is a little change like hey, let's move this wall 3 inches. Yeah, that can add up to thousands and thousands of dollars. So if you have a limited amount of money, custom homes may not be really the best option, but a newer house certainly is something you should consider. The other thing with custom homes is typically they require much larger deposits. Your production-type home builder, what they realize is they only build XYZ, and they do not make a lot of modifications. They do not do that because they know that house if you do not buy it will fit a lot of other people. Right? And they are not going to get stuck with this unusual, trapezoid-looking craziness that you have dreamt up in your head. It is going to be a house in which many, many, many families could move into. But if you are wanting to something much more custom, these builders will require a bigger deposit, and they should because they are custom doing this to your taste, your liking, and therefore they are adding risk, right, and that risk, well, just like everything else, they want to minimize that. How do they do that? Get more of your money. So that is why I say a custom building may not be for everyone. It can be. But here is really the key. If you do not have a down payment, if you do not have or a limited down payment, then the question really becomes is should you even be buying a house at all. The sad thing is we are already starting to see a shift in the market. We are already starting to get calls where people are upside down in their house that need to sell and it is not because the housing market has really changed a whole bunch or home values have dropped significantly. It goes back to what did you put down on the house? And typically it is nothing or very, very little. And if you put nothing down in your home and you have only been in it for 18 months, it has not appreciated enough to get you to zero. It just has not. It takes about 10% of the value of the home to get it sold in any market between real estate fees, closing costs. Buyers may need closing costs. Whatever the case may be. But to move is going to cost about 10% of the value of your home and the bottom line is the money's not there. The appreciation is not there. So you need to know that going in. You need to know before you buy. You have to have that plan to stick around long enough, especially if you put no money down. No money down means you should stay a really, really, really long time, right? If you know you are going to move in five years, you really do not want to do a 100% loan. That is just all there is to it. And you may not want to buy a new house because you have limited control as to what happens with that house price. Sometimes there are built-in price increases that the builder is doing and that could help you. The downside is you are always competing with the builder. Let's face it. If I am selling my house to Keith and Keith is like well, I could buy your three-year-old house or for the same money or just a few thousand dollars more, I can go get one brand-new from the builder with all new warranties starting at zero day one.
Keith: Yeah. Makes sense.
Jason: And your warranties are almost done and over or they are done and over. It might cost me what $5-6,000 whatever it may be. Even if it was $10,000, what does it cost you? $30 more a month to have a brand-new house that nobody has ever lived in.
Keith: It is worth it for the warranty.
Jason: It is worth it for the warranty. That is typically what we see most people would migrate to that. So you need to be careful. Here is the thing. If you are broke, you do not need to buy a house period. I guess there are no periods in life and there is no matter of facts, but this is kind of a matter of fact. After 20 years, I am going to go all in and say this. If you are broke, you need to own a house because what happens is the house owns you and you have no life. So save your money. Rent really, really cheap. Rent below your means and save money and get out of debt and save a nice big down payment or even do something even better. Maybe you only finance it for 15 years as opposed to 30. 22 years in this business. I have yet to see a short sale or foreclosure on a 15-year mortgage. Zero, not 1. Now there probably is one out there that I do not know about, but I have dealt with hundreds and hundreds and hundreds of these things, and they have all been 30-year notes. Most of them have been FHA or VA. Why? because it is the least amount of money. A few have been conventional, and none have been a 15-year mortgage. They have always been the 30-year product. So if you do not have the money, take your time, patience, relax. I know time does not wait, but you going to have to put the pedal to the medal. Work two jobs, work three jobs, save more money, whatever the case may be. But if you are not going to listen to me, which could be a few of you, and you are going to buy a house anyway, buy a newer house if you do not have money. Because you want those warranties there to protect, to provide that protection. So the great thing about North Carolina, if you buy a new home, the contractor, the builder you get the home from, is required to give you a one-year warranty as a minimum. All right from the builder. Then if you buy a new house, typically, your systems, so your heating and cooling your appliances and all those things, also have manufactured warranties, and those can typically be anywhere between three to five years. They kind of progress down, but at least you have something. Right? You have some type of warranty there, which is a good thing to have when you do not have money. What you do not want to buy is a 17 to 21-year-old house with everything original because sure as the world something is going to break, and you are the guy that is going to get to replace it like the heating and cooling system that will cost you five to seven thousand bucks. Right? And that is okay as long as you have planned for it, right? Everything else that could go initially wrong, your homeowner’s insurance would probably cover because that means something really unusual or bad happened. So the less money you have do you want to look at a newer product? You do not have to be brand-new, but it definitely needs to be a newer product because the likelihood of something going wrong is, well, less. That is just it. Just like you are preparing for your first Thanksgiving out here, right? Some of you guys are getting ready to do that. Hey, you got to use wisdom. Do not go deep fry your frozen turkey in the garage. Right? We got to have a plan and we have to have a good plan. We do not want to just jump in out of emotion, right, and that is what I see. A lot of folks do unfortunately, is making those decisions based upon emotion. So the other person really considering buying the house is the tough thing is they just can't find what they want. And we are with limited inventory out here, they cannot find what they want. They cannot find the perfect house. So what they feel like is guess what, I am going to build. I cannot find what I want. I am going to build it, and that is fine. But you need to make sure you are financially ready to do that. What I love to see, of course, 20% down in the 15-year mortgage is almost bulletproof to have any kind of economical thing that you cannot control. Derail you. But here is the other thing about real estate. You have to live somewhere, right? Yeah, most people's option is not going to be Keith, I am living in this four-bedroom, three-bath house, 2-car garage in this amazing subdivision, or I am moving under the overpass. It is one of the two. No. We are going to live somewhere. Right? We are going to put shelter out there and we are going to move our family into something. Since you have to live somewhere just stay. Time fixes most everything in real estate. Maybe you got transferred. Okay. Now I have got as the driving 10 minutes to work. I got to drive an hour. Drive the hour. It is cheaper than selling the house if you are not financially ready to do it. Right? Or maybe you are not financially ready to buy one and you are forcing yourself to buy a house. You just need to put up with the hour drive. It is not forever. It is just for a time, but you need to do it you need to sacrifice and do that.
Keith: It is called adulting.
Jason: It is called adulting. There is not even a class.
Keith: It is not any fun.
Jason: It is not. But it is the crappy decision we have got to make. Right? Yeah, it just is real, but sometimes when we force things, we do not like the repercussions. It is kind of like the conversation when your mom or dad said Keith, I told you so.
Keith: Yeah. That never happens.
Jason: That never happened, right? Yeah. So now you can look back and you have got a person that you can say hey Jason told us this might happen. We should have just kept on driving. Do not drive forever, but come up with a plan. Right? Save the money. I do not know. Have a garage sale, work the second job, whatever it is you have got to do to set yourself up. The downside with success, there is an old saying right, you will pay the price. You will pay the price of succeeding or you will pay the price of failure. It is still a price paid. What I see sometimes is folks get impatient. They push things that do not really need to happen and they end up overwhelmed. They are really kind of upside down in that house before they even got started because the new payment put such a financial burden on them that everything else became harder. Right? And believe me. I love to spend time with family. I get it if you are driving an hour or hour and a half or whatever it is to get to work and that is tough. And I know that it is, but you can make even worse financial, stupid decisions by forcing something. Here is the thing. If you make a bad decision and you can't pay the mortgage, you get to move anyway, right?
Keith: You are moving somewhere.
Jason: You are moving somewhere, and you are not moving really under your control because here is what I know for sure. When that sheriff shows up and he has got that piece of paper from the judge in his hand and says, hey we are here to change your locks because you are leaving
Keith: There is a lot better chance you are going to the overpass in those conditions then if you go on your own.
Jason: And here is the thing. They do not really like make an appointment for that or call you and say hey, on this day, we are throwing you out of your house. Not really throw you out, but lock you out of your house. Now, I will say that it takes a long time to get to that point. You have missed a lot of payments. Think about it guys. You have not paid your mortgage in five months. How many more months did you think it was going to be before you got the knock on the door? Right it is going to happen. Making good decisions, it is where we need to be in life. Like Keith said it is that adulting thing. Right? Just take your time and get a plan, and I promise you if you just put it on paper that is a big win right there. Just writing down your goals and where you want to be and we can walk you through that and we can help you through that. I do not care if you are a first time homebuyer or custom built home. We see a lot of custom build homes foreclosed on simply because the cost overruns were more than they thought. They ended up borrowing more than they thought, and they dug a bigger hole. I am not talking to folks that are out here buying hundred thousand dollar homes. I will promise you we have the same issue five, six, seven hundred thousand dollars. Really the most horrific market that we have is as far as you talk about losing money over a million. It is unbelievable how many 2 million dollar homes sell for a million? Now I know most of you do not have sympathy for those folks, but it stil affects our housing market. So we are going to do this. Well, take a quick timeout. Go pay some bills. We will be back in just a minute. But if you are thinking about building or buying a new house, do not go anywhere. We got more stuff coming up your way. You are listening to the Jason Bramblett Real Estate Show.
And we are back. You are listening to the Jason Bramblett Real Estate Show. So I appreciate you listening. Hopefully everybody's got a fantastic weekend going on. We are talking about new sale or new home sales. Should I buy one? Should I not? Should I build one? Should I not? Is it better to get a new house or an older home and all those things? How does the warranty factor in and all that? And then well then there is the other side of the coin that we need to get into Keith, and that is who is looking out for who. Right?
Keith: Well, okay. So let's just say I take your advice. My family walks into the sales center any subdivision in America. You name it. There are lots of them around here. We meet somebody. We meet a sales rep. Well, who does she work for? Is she going to represent us? Is she representing the builder? How is how does that relationship work?
Jason: A good rule of thumb, just like the quick little acid test, if you will, is whois paying her or him?
Keith: Follow the money.
Jason: Follow the money. There you go. And typically what we see is that representative sitting in that model home is, they may not be getting the salary, but if they are, who are they representing? Now inNorth Carolina, we do have disclosure rules. That should be disclosed to you before you say anything.
Keith: That seems kind of important.
Jason: It does seem important. It is so important the state of North Carolina came up with the brochure that all real estate agents are supposed to share with the public at first substantial contact. Now first substantial contact is a debated point in time. Here is the thing. You do not want to be telling anyone about your plans until you know who they are. Right? Because well just like the police say anything, you say can and will be used against you. It is just like if you were going in to negotiate you would not want to tell the other side your strategy. Right? That very well could be what you are doing. It cracks me up. But some people in the public do not feel that real estate agents are a needed service because I know I can do it myself. I bought this and that and whatever and I am a great negotiator. I know how to hold my cards and whatever. And there is some truth to that. You may not say the wrong thing. But here is the thing. Your body says everything.
Jason: And what you do not fake well is body language. Right? Let's face it. You are not going to walk into the model home like the guys on World of Poker, right, with a hood over your head and dark sunglasses on so nobody can see your cards, right?
Keith: That would be awesome.
Jason: If you do, you might get a visit from,, I do not know the sheriff right? Because that person's going to be a little freaked out. Right?
Keith: It is worth a try.
Jason: Yeah. A lot of people think oh, I can hold my cards close to my chest and I do not show it. I won't say anything I am not supposed to. Remember go back 80 years, 60, 70, 80 years, and we were entertained by television with no sound. How? Body language. And what you do not fake well is your body language. That is where the benefit of a real estate agent comes in. They are that third-party negotiator insulator that separates what? Not only your mouth, but your body language from the transaction. I do not care what you buy. If you want to buy a dump, it does not matter to me as long as you know you are buying a dump. I am perfectly fine with it if you are. If you want to buy a two million dollar amazing home, great. As long as you are perfectly fine with it and you understand what your body it does not matter to me. I am not living there so I could care less either way.
Keith: True story.
Jason: I have no emotion in that at all and you have got a hundred percent of motion in it, and there is a tremendous amount of value in me being able to insulate you from that stupidity, if you will. When you walk into that model home or you walk in to meet with that builder, then you got to realize it they were there representing the other side, and anything you say, but also what you show can be used against you from a motivation standpoint. Is that to say that those builders are crooks? No. That just says that you are really horrible at poker, man.
Keith: They are doing the job.
Jason: They are doing their job, right? They are there to get you in a house and they are there to, well, build the best house that they can and of course, there are things that we get added on to houses that we do not need. Right? There are upgrades just like your car that has 47 dials and digits that you do not even know what to do with. Right? Same situation. So if you are thinking about buying a house or building a home, go over to Jason Bramblett dot com. We will be happy to walk you through that. Everybody have an awesome weekend, and we will see you here next week on the Jason Bramblett Real Estate Show.