Home Buyer Crash Course Podcast Episode
This show walks you step by step through the home purchase process and has tons of great info like how to get the cheapest mortgage, what your loan closing costs will be, what you need to know about Zillow, how to pick a realtor, how to navigate inspections, how to find property off the market and tons more. I think you’ll get a lot of value from it. Our hope is that it will help you become the razor-sharp real estate consumer that you were meant to be! Thanks for listening and enjoy!
The following is a transcript of the podcast…
Hey friends, thanks for tuning into the podcast. My name is Ryan Jenkins. I’m a real estate broker. I run a real estate brokerage headquartered in old town square, Fort Collins called Grey Rock Realty. And what a real estate brokerage is, is essentially a group of realtors that help people and realtors basically help people buy and sell real estate. And we do that across Northern Colorado. So a big part of my job is educating my clients on what to expect during their home purchase or the sale of their home, whatever the case may be. And, I like to say that we’re passionate about creating razor sharp real estate consumers. And so, you know, highly educated consumers are, they’re better prepared to tackle the market, they make better decisions, they find better properties, and they experience less stress during the buying process. And so we’ve found that podcasts are a great way to communicate large chunks of information that are fairly easy for people to consume.
So that’s why we we’re doing this podcast and we really hope that you find it helpful and you get a lot of value out of it. , as you’ll see the real estate processes as you’ll hear in this podcast, the real estate purchase process is fairly complex. And so, , this is probably gonna be an hour plus podcast. So, if you need to come back to it, obviously if you need to take notes, whatever you want to do, there’s a lot of information here. So I’m gonna give you kind of a quick outline of the different sections that we’re going to go through. The first section is financing, which is basically, you know, the mortgage process, what to expect in the mortgage process, who you should get a mortgage from, what your closing costs are going to be. We’re going to talk about all that stuff, how much money you have to put down, et cetera. The second section is going to be the search phase. So that’s, you know, once we’ve got our financing in place, we can start looking at properties, what that looks like, you know, how to navigate the search phase and what to expect. And then once you find the property that you want, you make an offer. So, the third section is going to be the offer phase. And, the fourth section, once your offer is accepted is the due diligence phase, which is the inspection period and all the different things we do to figure out if the house is right for you to buy and if there are any problems with the house. And then we do a survey, which is where we find out the borders of the property. And if there are any encroachments, we’ll talk about that. We’ll talk about the appraisal process now we’re getting towards the end of the escrow period and then we’ll talk about the, the final walkthrough of the house and then what to expect on the day of closing.
So that’s, those are the bullet points of the outline that we’re going to hit, over the next hour or so. And so let’s go back up to the top and start with financing. And a lot of times people wonder, first thing is how much cash do I need to put down on a house? And, , typically 3% is that is the kind of the traditional minim, but that’s a fairly low down payment. So with any down payment below 20%, you will pay mortgage insurance and what mortgage insurance is basically an insurance policy that you pay to the, , to a mortgage insurance company that, you know, if you’re not putting a lot of money down on a house, the mortgage company experiences more risk because if you default on that mortgage and, , you know, after closing costs and maybe the market depreciates a little bit, the mortgage company could take a significant loss because you have not put very much money down, , and the, and you’ve borrowed the majority of the purchase price of the home.
So you pay an insurance policy basically that says, and then these mortgage insurance companies insured the lenders that if he were to default, , that they would, , pay out money to the mortgage company to make them whole. So, , mortgage insurance is typically, , about 0.5% to 1% of the loan amount each year. So, , usually it’s somewhere in the neighborhood of about $2,000 a year. , and so obviously it’s a very significant expense. , and so, you know, if possible, putting 20% down on a house gets you out of mortgage insurance, you don’t have to pay mortgage insurance when you put 20% down. And so if you can, you do it because it’s money well spent, but at the same time, even though mortgage insurance is expensive, a lot of people feel that it’s worth it to pay mortgage insurance because they get to start their home ownership sooner.
You know, they don’t have to save that full 20% the majority I would say, you know, have actually done the numbers, but just off the top of my head, I would say the majority of our clients put down around 10% of a house. You know, we have a lot of clients to put down 3% we have a lot to put down 20% but if I had to guess, it’s probably somewhere around that 10% Mark. , and so the majority of our clients are having mortgage insurance policies in place. And so even though that mortgage insurance, like I said, it can be a couple thousand dollars a year, if you factor in the fact that every year you own that house, usually in year one you’re, you’re paying down your, your loan balance by about $5,000 by just making your normal payments. We’re projecting right now, you know, 2% appreciation per year in Fort Collins.
You know, I don’t think there’s, it’d be very difficult to imagine a scenario where we don’t see one to 2% appreciation over the next five years in Fort Collins. And so on top of that $5,000 of increased equity you get every year, you got another, you know, on a $300,000 house, three maybe $6,000 in appreciation that happens on top of that equity increase. So, you know, most people are going to be adding about $10,000 in equity, to a property in year one. And so, you know, a $2,000 mortgage insurance policy starts to look pretty good. , and then of course you get your mortgage interest deduction. You get, so all the interest that you pay on your mortgage can be deducted on your taxes. And so there’s another, home ownership benefit. And, then of course, just the ability to own a home.
I mean, I remember when my wife and I first bought our home, the fact that we could not get kicked out of that. I mean, usually, you know, by the time you buy a house, you’ve rented enough times and you’ve had enough instances where your lease is renewing and your landlord’s like, you’re out of here. You know, we’re selling the property or we’re increasing the rent or whatever. Just the psychological benefit of knowing that that can’t happen anymore is, is pretty huge. So those are, that’s kind of a rundown on, you know, like I said, we’re good. Insurance is expensive, but people are, seem to still be happy to pay it regardless, there are a hundred percent financing options, so there are options for people to literally buy a house with no money down.
But you know, they’re basically, there’s two different options and one is what we call a CHAFA loan. And that’s an acronym, C, H, A, F, A and that stands for Colorado Housing and Finance Authority. And they offer grants and, no interest second mortgages that allow people to get basically a hundred percent financing. And so those CHAFA programs are fairly complex. We’re not going to go into him cause there’s a bunch of income qualifications you have to, basically the best thing to do is to talk to a mortgage broker that is well versed in Chaffer loans and they can kind of walk you through everything. You can go to their website. If you just Google CHAFA the website will come up and you can kind of read about it. But you know, even kind of waiting through everything on the website, I think you’ll still have a lot of questions. So a mortgage professionals the best, the best place to go to get your all your questions answered about CHAFA.
All right, moving on. Still in mortgages. Now we’re going to talk about closing costs. How much of your closing costs going to be? And let me, let me real quick say that there are two different types of closing costs. In a real estate transaction, the seller has closing costs that they pay. The seller usually pays the all the realtor fees and the seller pays title insurance. And then for, since we’re talking about buying today, we’re going to talk about buyer’s closing costs. And those closing costs are almost all, in conjunction with, the financing that you’re getting, the cost to put a mortgage in place on a property. So people that pay cash for a property have very little closing costs cause there’s no more, there’s a lot, a lot of costs associated with getting a mortgage. So typically we tell people to budget one and a half percent of the loan amount for loan closing costs.
So let’s say we’re buying a $350,000 house. So let’s say you’re putting 10% down on that house. That’s $35,000. So, your loan balance would be $315,000, which is that 35 K minus your $350,000 purchase price. The loan amounts going to be $315,000. So one and a half percent of $315,000 is 4,725. And so, you know, your, your down payment is 35,000 grand, you’re gonna almost another $5,000 in closing costs on top of that. So basically year, the total amount of cash you’re going to have to have to close on the house is going to be about $40,000.
Now what people, which is very important to know is that closing costs, a mortgage can be structured in a variety of ways. So you’ll hear a lot of mortgage companies advertising, no closing cost mortgages. And I feel like people are like, Oh, that’s awesome. Like, I don’t want to pay closing costs. But what those mortgage companies are doing is basically they’re basically promoting what every mortgage company does is, which is give you the option of getting lender credits. Now, what does a lender credit? Basically a lender credit is the mortgage company saying if you are willing to take, to pay a slightly higher interest rate over the course of your mortgage, we will give you credits which had basically cash that you can use towards your closing costs which allows you to pay a higher interest rate in the future, but today you pay less money out of pocket to get that mortgage.
So, if you want to pay a slightly higher interest rate, you can get the mortgage company to essentially cover all of your closing costs, obviously your payment’s going to be higher. But, a good mortgage broker can help you. You know, it’s good when you’re thinking about whether or not to do this. It’s good to think about how long you might be in that home because if you’re going to be in that home for a really long time, you definitely gonna want to, if you, if at all possible, pay all your closing costs out of pocket because the lower interest rate you get, the cheaper that house is going to be over the longterm. But for people that might only be in a house for four or five years, , it might make sense for them to pay, uh, uh, for her, for the lender to give them credits so that they don’t have to pay all those closing costs out of pocket upfront and they know that they’re not going to own the home for a huge period of time.
So the increase in interest rate, and, and a good mortgage broker can tell you where the cutoff periods are. So like basically they’ll say, okay, you’re going to save $5,000 in closing costs because you’re getting this lender credit, but you’re going to pay a higher interest rate. And so your break-even date is like seven years in the future. , if that makes sense. I know it’s kind of complicated, but essentially the mortgage company is saying, , the amount of additional interest you’ll pay because of that interest rate increase will hit $5,000, which is the amount of lender credit that you’re getting in this period of time in the future. So hope I’m not getting too far off in the weeds here, but just want everybody to know that you have an incredible amount of control over the pricing of your mortgage. And so if you’re just, you know, kinda barely scraping together enough cash to make a home purchase happen, which you know, many people are, , reducing those closing costs, can be pretty attractive.
So a good mortgage professional walk you through all that stuff and that’s a big part of the value that they provide. So, now that we’re on the subject of mortgage professionals, let’s talk about who you should get a mortgage from. And typically, you know, we kind of classify mortgage lenders into two different categories. And the first one is your retail banks, which is your Chase, Wells Fargo, you know, big brick and mortar storefront that she have your checking account in most likely. And then we have wholesale mortgage brokers and wholesale mortgage brokers essentially are firms that represent a lot of times 20 plus banks that they’ll have, they’ll have relationships with. And so the mortgage brokers we find are typically in almost every case, they’re less expensive than the retail banks. The retail banks kind of rely on their big presence, brick and mortar, the fact that people are familiar with them, have checking accounts with them, and they’re like, Hey, I’m going to buy a house. They walk into their branch to make a deposit and they sit down with a mortgage person. So you know, they, their pricing is just in almost every case, not gonna be as good as a wholesale mortgage broker that, and so essentially those retail banks, they have one option. They have their, you know, their chase or their Wells Fargo product. Whereas if you go to a wholesale mortgage broker, they have tons of different loan options. And so it’s just, and it’s a lot of times it’s just a better experience. I mean, I shouldn’t say a better experience. It’s, it’s cheaper and you’re sitting down with a mortgage professional that can walk you through the closing costs, structuring of the closing costs, tell you your break even point on those lender credits, all that stuff.
You know, I think you’ll find the majority of realtors out there are not going to refer you to those retail banks. They’re going to say, this guy, you know, has been working really hard for my clients. He’s a wholesale mortgage broker and that’s going to be your best bet. But you can certainly shop around. Obviously it’s your prerogative to shop around and, but one thing I would tell you as you’re shopping, the only way to compare apples to apples as far as pricing goes with mortgage options is to get quotes from different lenders on the same day. So just take a day, you know, and, and go apply with three different people. Do it on the same day because interest rates change every day. So if you go to one guy one day and you go to another guy another day, you’re going to get different pricing. You’re not gonna be able to compare them apples to apples cause they had different rates. So dude, on the same day, and that’s how you get the best, , evaluation of who you want to use and who’s the cheapest.
All right. What do you need to apply for a mortgage? First thing is going to be proof of employment, which is the name of your employer, mailing address, phone number, just contact information for all the employers you’ve had over the last two years. And the next thing is going to be proof of income, which is in the form of pay stubs or the electronic equivalent of pay stubs that shows year to date earnings. Also, going to need tax docents, W2 statements for the last two years. All the stuff that you’re going to be getting is going to be for the last two years. That’s a period of time when you know over which mortgages are your mortgage docents are evaluated. And then if you’re self-employed, you’ll need your profit and loss statements. You’ll need, you know, business tax returns again for the last two years.
You’re also wanting to want to get bank statements. And the last two months worth of bank statements online printouts are fine for that. So, that you don’t have to have all those docents to just, to get a preapproval letter. Like you can fill out a quick application and just kind of tell the lender, you know, basic information. But in order to get like a rock solid preapproval letter where if you know, somebody were to call your mortgage broker and say, Hey, is this guy good for it? He says, yeah, I’ve looked at all of his documents. You know, we’re through the approval process, he’s good to go, that’s where you want to be. And so it’s good to gather all these documents. You’re gonna have to do it anyway, so you might as well do it right from the beginning.
Show up to your mortgage guy, give him all that stuff and you’ll be off to the races and you’d be ahead of the curve. All right, where are we now? We’re still on financing. So we’ve talked about what you need to apply for a mortgage. Next thing is you’re going to get a loan estimate from your mortgage professional. And a loan estimate essentially is going to be an estimate of all your closing costs. And it’s going to tell you exactly the amount of cash that you are going to need to purchase a home. And so, you know, based on what you’ve told them about how you want to structure it, whether you want lender credits, what’s the purchase price going to be, how much do you want to put down? This is going to be the document that kind of lists all the charges and the credits.
And, that’s what she can, that’s like, okay, now I really know like, sorta down to like, you know, a few hundred dollars what I’m going to need to, to buy a house. So, now let’s talk about like real estate commissions. A lot of times people, when they first start working with a realtor, they’re like, well, how do I pay you? What does that look like? And what Pete, a lot of people don’t realize is that, real estate commissions are built into the price of all the homes that you see on Zillow. And yet the vast majority of of properties that are online, they are offering a commission to an agent for. So essentially, if you come to a realtor and you say, I need you to help me look for a house, that realtor is never going to ask you for any money because their fee is there.
Speaker 1: (19:30)
They’re paid from the seller. And so if you buy that house, a seller has already budgeted, , uh, usually it’s like anywhere from two to 3%, , sometimes more, sometimes less. , the seller is budgeted to pay your realtor that fee in order for the benefit of that realtor to sell you that property. So there are two real estate brokers, typically on every transaction there’s a real estate broker that’s working with the seller. So a seller says, Hey, I need help selling my house. The real estate broker, , advertises the house prices house, you know, goes through that whole process, puts it online. And then so, so there’s usually, uh, you know, two to 3% commission on the selling side and then there’s another two to 3% commission on the buying side. But usually the seller pays both of those commissions. So you really don’t have to worry about, , you know, essentially you are paying your realtor’s fee by purchasing the house essentially.
So that’s not, that’s not going to be an an out of pocket expense for you. The only expense you’re going to incur is your, your down payment and your loan closing costs. So, one thing as we’re on this topic of realtors is it’s very important for you to understand who you are working with or who is showing you a house. So, you know, with the way that Zillow works and the fact that the majority of people are searching on Zillow and Trulia, people will request to see a property, they’ll push the button saying, I want to set up an appointment to see this house. But they really don’t know who the person’s going to be. That shows up to sell them that, to show them that house. And that’s a problem because, , ideally you want to start off your home search and interview a number of different realtors.
Speaker 1: (21:21)
Say, Hey, I need somebody to help me buy a house and you’re a real estate broker. Tell me what you can do for me. You should go through that process of interviewing a couple of different realtors. See here you’re comfortable with. And then, once you start to find properties that you want to see, you call that individual realtor cause you know they’re going to be your buyer’s agent. They’re going to advocate for you, they’re going to have a fiduciary responsibility to you, which means your financial, they’re legally bound to uphold your financial interest and get you the best price and terms. But what actually ends up happening a lot of times is people don’t go through that process of selecting a realtor early on. And so essentially Zillow, sort of matches them with a realtor. And a lot of times when they’re showing up at that house, they don’t know if that realtor is working with the seller or is a buyer’s agent.
It could be either. But the problem with that is that if you end up wanting to buy that house that that realtor just showed you, they may have actually earned the commission that the seller is offering. They may have earned that commission just by showing you that house. And if it’s the seller’s agent that showed you that house, they could be earning both sides of the commission. So remember I just told you that the seller offers, basically pays two different sides of a real estate commission. If, you’re being shown that house by that seller’s agent, he’s likely going to get paid twice on that deal. And that’s, you know, somewhat common practice. Sometimes people are like, I want to work with the seller’s agent because you know, they may have intimate knowledge of the house, but that has become less and less common.
And the reason for that is because the seller’s agent is usually very good friends, oftentimes has known the seller of that property for years. They have a longstanding relationship and you need somebody, you know in your corner, just like in a court of law, you got a defense, an attorney and a prosecuting attorney. You need somebody, I mean this is illegal is of legally complex transaction and you need somebody a walking you through and we’ll cut. We’ll see when we start to go through the inspection portion of this. I think you’ll understand better that you do need somebody advocating for you because if you start to run up against some difficult inspection issues or you’re trying to figure out how to price this property and what offer to make, do you want the person giving you advice? Do you want that person to be good friends or family with the seller of that home?
And yet it’s just a conflict of interest. And so, some realtors would try to navigate that situation by becoming a neutral intermediary, but that can be difficult and you can feel like, you know, this person’s not really, they’re just trained to get me to buy the house. They’re not really advocating and trying to get me the best deal. So long story, short interview buyer’s agents early on in the process. You know, some people will try to go have the seller’s agent show him that house and then try to negotiate out one, one side of those commissions or a portion of one side and a lot of agents will, some agents will take the full 6%, you know, 3% on the sell side, 3% of the buy side, they’ll take it all. Other agents might reduce their commission, maybe 1%, but , what are you really getting for that?
You know, 1% commission reduction or two, maybe even 2% me talking, you know, three to $6,000 on a $300,000 property, you need to feel, hopefully it’s worth it is what I’m trying to say because if you don’t have an advocate and you don’t understand how a real estate transaction works, and the person that’s essentially representing you is good friends with the seller and is a lot better friends with a seller than they are with you. Like, are you going to be getting a fair shake and is that small reduction in commission really worth it for you not to be represented properly. So hope that all makes sense.
Let’s kind of start to move on. Essentially kind of to recap that whole thing. Shop around with your, with realtors long before you start looking at property, get comfortable with somebody, have them start to educate you and then start looking at property. Don’t let Zillow, you know, Zillow is a huge, massive company and it’s an algorithm. I mean, they’re basically just trying to make as much money as they can by selling leads to realtors. So, a lot of the realtors that you get hooked up with on Zillow, course they’re not all bad. I mean, we’re on, we get a lot of leads from Zillow, but you’re just giving up control of who you’re working with by just clicking that button. So be aware of that. All right, let’s talk about, I think we’re kinda done with financing.
Let’s move on to the search phase. So first thing is identifying areas of interest. That’s, you know, a big part of what realtors do is help people find where they, they want to start looking. And obviously most people already have a really good idea. They’ve been searching on Zillow for months and months by the time they start talking to a realtor.
And so, they usually have a pretty good idea but I can’t tell you how many times we have started looking for one thing with a particular client and then by the end of the, the search we were, we were looking for something completely different. And so it’s just starting to like pound the pavement and get out there and look at property I think is incredibly helpful. Somebody can tell you exactly what they want, but once they sort of experienced the reality of the market, maybe what they, maybe they wanted old town and they start looking around and they’re just not getting enough house for their money. And so they switch gears and maybe they go to Midtown. That’s a very common transition that happens. People start in old town, they end up buying just outside of old town to get more house for their money.
So we’ll help you navigate that. And really there’s two, two strategies and one is just plain vanilla getting into property. I always say that there’s no such thing as time wasted when looking at property because the more homes that we look at, the more you start to get crystal clear on exactly what you want. And when you’re crystal clear about exactly what you want, you are much more decisive when the right thing comes along. And so a lot of times people will be like, Oh, I’m not sure, maybe I want to see this house. I don’t think it’s absolutely perfect. Let’s just go look at it anyway because the feedback that we’re getting from you really helps us and helps you to start to focus on what you want. Another thing we do is we, , we’ll take, we’ll go to the MLS and we’ll, we’ll take your criteria, what you, what you want and we’ll plug it into the MLS and we’ll show you everything that matches your criteria.
That’s sold in the last two years. And that is super helpful because at any given time, if you’re just looking on Zillow, you’re only seeing the things that are available right now. And especially in a market like this, when homes sell really fast, what’s you’re able to see at any given point in time is just a small section, especially if you use, you’re looking at the in the winter and there’s not a ton of stuff on the market at that time. Sometimes it can be tough to like to project and understand what is what I’m looking for realistic, how, how many of these homes that match my criteria are going to come up in the next six months. And so when we go back two years and put that in front of you and say, here’s everything that’s sold in the last two years, that can be very helpful.
And then, what we’ll do is tell clients to go through that two years of inventory and pick their top five homes or their top 10 homes, wherever they want to do. And then from there we start to kind of create a profile so you can tell us what you want, but usually people search criteria is fairly general and I think it really helps us to get granular and very specific. And when you pick from two years of inventory and you say these are the properties that I really liked the best out of everything that matches my criteria in the last two years, then we see where are those properties, what neighborhoods are you drawn to? And then from there we can start to do what we call off market, property location. And so something that’s become super important to us and our clients been absolute game changer is to get razor sharp on what they want.
Find out the neighborhoods that have those properties that match your criteria in their price range and then start doing targeted direct mail campaigns and sending out letters to people in those neighborhoods. Cause on the tax record we can get very specific with a type of home like the size, the square footage, the lot size, nber of beds and baths. We talk about that a lot on this podcast and other episodes is off market, property location. So it’s not like we’re just taking one neighborhood and sending letters to everybody in that neighborhood. We are, , looking at the tax record and seeing what size of home they have, , and what the features are and matching that up to your criteria. And then so the letters get start to get very specific and we basically just say, Hey, we got a, , a client named bill and he wants to buy a house in your neighborhood that is three beds and two bass and as a quarter acre lot.
And you’d be surprised how well that works. And so in this market, this low inventory market, you need an off-market property location strategy more than, , that’s just, you gotta have it. I mean, most, there’s so many realtors that are just relying and so many buyers that are relying on Zillow and the MLS are basically just like, I’m just going to wait until you know, the right home pops up. You gotta be proactive when you’re proactive. It just increases the amount of potential properties that you have at your disposal significantly. And when you start to get specific about what you want, you realize there really are just a handful of, of neighborhoods and places that are probably going to have what I want. And so especially like if you’re, if you’re shopping under, you know, three 50, it’s a competitive price point. There’s just a handful of neighborhoods that still have that price point available.
You need to be targeting those. We’ve talked about Greenbelt lots, like lots of backup to parks, we can target that kind of stuff. , and so basically people will get those letters and say, Hey, yeah, I am about to sell my house and if you want to come see it, come walk through. And so that is a great strategy. So as you’re interviewing realtors, ask them what their off-market property location strategy is. If it is, if they just say, well, I network with other realtors. That’s in my opinion, that’s not enough. You know, networking with other realtors is great, but all brokers do that. And that’s, you know, it is a great, it’s a strategy that should be, you know, it should be part of your strategy, but that’s very likely not going to be, it’s not, it’s unlikely that they’re just going to be talking to another broker and then boom, that broker is like, yeah, I got this house that’s perfect for your, for your client.
You need to be proactive and go out there and get it. And direct mail we found over many years of experimenting has been the best way for us to do that. So. All right. So, another thing, so we’re in the search phase, we’ve identified our areas of interest. Let’s talk about, let’s see, where do we go from here? Let’s talk about what it looks like to walk you through a property. So as we, as we’re looking at homes, we’re going to kind of evaluate, obviously evaluate the homes, features we evaluate, we look for defects, we sort of do sort of a cursory home inspection. A lot of times I like to get in the crawl space if possible. You know, cause obviously I’m not a home inspector, but I’ve been enough properties where you can get a pretty good feel for what’s going on in the house.
Obviously again, it’s not a home inspection, but uh, you should walk through that house and you should be able to have a pretty good idea of the condition. And then, , we also talk about renovation possibilities. Like, you know, your realtor should be able to tell you how much it’s gonna cost to install flooring, that property brainstorm, remodel possibilities, is this a load bearing wall? You know, kind of working through all that stuff is super helpful and that’s what you should expect as you’re walking through a property. And of course we’ll talk about pricing. Is this the price of this home consistent with prices of other homes? And the more you look, you know, by the end of your search? Our clients are typically, you know, they’re just about as educated as we are as far as pricing. And they’re, they kind of know gut instinct.
They walk through a house and they’re like, this is overpriced or this house is priced really well. So that’s a subpoint. We want to get you to where you can kind of understand pricing and it’s sort of a gut instinct. Another thing we’ll do is talk about rental income. We’ll, we’ll tell you how much the property will rent for, even if you’re not, even if it’s not going to be a rental property for you. That’s always nice to know. , we’ll talk about a VRBO and Airbnb rental options. There’s not a ton of neighborhoods in Northern Colorado that allow VRBO’s, but there are some. So we can talk about whether or not you’re in a, an area that allows that and whether that’s a possibility for you. And then, also as far as like, let’s kind of take a step back and talk a little bit about planning.
So as you are thinking about buying a house, what situation are you in? Are you, do you have to sell another property in order to buy this, this house or do you have a lease that’s expiring soon? What I’m trying to get at is the last thing that we want to be, the last situation that we want to find ourselves in is, is where you are under the gun to purchase a property because your lease is about to expire and you have to find a place to live or you’ve put your house on the market and the house is under contract and it’s closing and you’re going to be out on the street. If you don’t find a property, we don’t like those situations. It puts pressure on our clients to buy. That’s when you make poor housing decisions. You just buy the first house.
That pretty much does it for you. You need to be selective. You need to have the flexibility to be selective and so there’s a nber of different ways we can do that. We have a whole nother podcast where we talk all about the process of transitioning between your current house and a new house as far as if you have to sell your house, how do you structure that transaction or to give you as much flexibility as possible. Ultimately we try to match up those closing dates as best we can. But, short term rentals have become like a huge thing for us, a very important part of this process because if something happens and your lease expires or you’re selling that home and it closes and you haven’t found your replacement property yet, you need a place to land. And you know, obviously some people have family and friends and they can, you know, live with them for awhile, but that’s not ideal of course.
And so we have furnished executive rentals that are usually about $2,000 a month and up. And of course, I know that’s not cheap, but any more that’s, you know, closer and closer to what average rent is in Fort Collins. But, , those properties allow you to pay for one month at a time and they’re furnished so you don’t have to move all your stuff. You can basically just put your stuff into a pod or put it in. You don’t have the moving company store at somewhere moving into storage yourself and then move into that furnished rental. And then you only have to pay 30 days at a time. So you don’t have to commit to an annual lease and boom, you’re kind of you’re in a perfect scenario. You’re flexible, you can wait as long as you need to wait. And in a low inventory market like ours, that’s what you need to make a great housing decision and to find a house that you’re super excited about.
So, all right guys, we’re moving on to the offer phase. So we’ve looked at a bunch of houses, they finally find the one we want. We are ready to make an offer. So what does that look like? So first thing we’ve done is determined the value of the house. So we got to make sure that the price that we’re offering is consistent with what similar properties have sold for. And like I said before, sometimes we’re further along in the process and we start to get a gut feeling for what that is. But we always want to do a double check, make sure what we think is, you know, actual reality. So we’re going to look at sales that have occurred in that neighborhood and see where the, how the pricing is. Then we’re going to prepare an offer strategy. And you know, sometimes a houses, the offer strategy is fairly straight forward.
Let’s say it’s new construction and you pretty much are going to pay list price even though sometimes a new construction, you can negotiate the list price a little bi, depending on how long a property has been on the market, depending on, you know, the desirability of the property. Sometimes homes are listed and we’re looking at them the very first day they come on the market and there might be more than one person that wants to buy that house at a particular time. And so it becomes a competitive offer situation. , and so we have a whole podcast on competitive offer situations and how to navigate those and what to expect. , and so you can listen to that podcast. But suffice it to say, we need to formulate an offer strategy. We need to know, can we knock a little bit off the price of this house or are we going to have to pay list price or we have to pay over less price, or we’re going to have to waive some contingencies?
Are you going to have to set an expectation with the seller that we’re not going to nickel and dime them on, on the inspection? In other words, we’re not going to ask for like every small little thing on inspection. , so we’re going to help you navigate that process essentially and figure out what kind of terms we want to put on our contract and what we want to submit to the seller. And so, , usually after we look at the house and you say, yeah, this is the one, sometimes my clients come back to my office and they want to go line by line through the contract and talk about every little thing. Other times, you know, any more people are more and more going to the, Hey, just write up the offer, send it to us. We have an electronic signature program, send it to us in DocuSign and boom, boom, boom.
They just, they look over the offer kind of briefly. Everything looks good. They sign it and it’s super quick and easy. So you can do, you know, however you like to operate, if you’re super detail oriented person, you can go line by line through the offer or if you just want us to send it to you electronically, you can go have lunch. , a lot of times people are pretty tired at the end of the day of showings and they, , they want to go decompress a little bit. We’ll go back to the office, the offer, you can go, you know, grab lunch or whatever the case may be. And then you sign the offer and then we send it to the seller. A lot of times when we send the offer, we also send a picture of you or your family, especially in competitive situations. So one problem with the way real estate is done these days, there’s a lot of, there’s not a lot of contact between the buyer and the seller and we really feel that it’s important for the buyer and the seller to know who the other person is and to have some level of communication cause you’re kind of communicating through a real estate broker on each side.
So we’d like to send a letter and a picture of you with the offer. A lot of times if it’s a young family that can be very compelling if the seller of the property has also had a family in that house for a long period of time, that can really, you know, I’ve seen sellers leave lots of money on the table to sell to a young family, , versus, you know, uh, like they might turn down a cash offer, , and take a lower offer because they want, they like the story better. And so it’s always good to, to put that story in front of them and make sure they, they understand who we are and who they’re, who is buying their house. , some sellers agents have become paranoid of discrimination lawsuits. So, , they’re paranoid that somebody might discriminate on a buyer based on, you know, race or another protected class.
And so they don’t allow us to give them a picture and a letter. But, we always try just because, you know, we think it’s fine for people to know who’s buying their house. Sometimes a seller’s agent won’t present that and that’s fine if they do, but we’ll send it anyway. Okay. So let’s say that the seller has accepted your contract and now we are going to start the escrow period. And the escrow period is basically the time between you, the, the point of time when you go under contract on a house and when you close on that house in the house actually becomes yours. And the first part of that, , what we call escrow period is the earnest money deposit. So the earnest money is the, is the first portion of your down payment that you deposit into an escrow account.
Usually it’s about 1% of the purchase price. So if you’re buying a $350,000 house, we’re talking about a $3,500 check. And so you know, let’s say you’re putting, , you know, $30,000 down your first $3,500 of that $30,000 is going to be the earnest money that goes into a title company. So you’ll either give that check to your realtor or sometimes if it’s more convenient, you can just go to the title company and deposit that check and give you a receipt obviously for the check. And then that becomes the first portion of your down payment on the house. It’s important to know that if something goes wrong with the transaction, if you do an inspection, you don’t like what you find, or whatever the case may be. If your financing falls through, , you can get that earnest money back. So it’s very rare for buyers to not buy a house and also lose their earnest money in almost every situation.
If you end up not buying a house that you’re in escrow on, that earnest money comes back to you. Usually the only thing that people lose when they’re buying a house is there the cost of their inspection and potentially the cost of their appraisal. We’ll get, we’ll talk about inspection and appraisal here coming up shortly. Okay. So let’s talk about the inspection process. Basically you’re going to hire a general inspector to take four hours and go through that house with a fine tooth comb, electrical, HVHC roofing. They’re going to like if it’s snowing outside and they can’t get up on the roof, or even if they can, a lot of inspectors are using drones to fly around the exterior of a house and take super detailed pictures. Uh, they got moisture meters. They have all kinds of different equipment to evaluate the house and give you a massive report on that house and show you everything that’s wrong with it.
And it’s great for you to be at the inspection. Sometimes people show up at the very end and they kind of get the executive smary. Some people like to be at the inspection, , the whole time. It’s just the first, , time when you really get to be in the house, , alone with the realtor and the inspector and you get to like spend a lot of time. Cause usually the first showing is like, you know, 20, 30 minutes, maybe it was a really long showing. It’s an hour. This is the time when you really get to like walk around the house, spend a lot of time, start measuring, doing all that stuff. So it’s great for people to be at the inspection. You don’t have to be, you know, you’re going to get a, uh, super detailed report with a bunch of pictures.
So for some reason you can’t be there. That’s okay too. So I’m, there are some add on inspections. Most general inspectors do not do what we call sewer scopes and sewer scopes are basically they send a camera down the sewer line of the house and they check the condition of the sewer line with a camera. And usually that’s a plber that does that. It’s incredibly important. A lot of realtors are basically only scope sewer lines on older homes, but we encourage our client in every situation, no matter what, no matter how new the home is, even if it’s a brand new house, you should scope that sewer line. We’ve talked a lot about this on other podcasts. Brand new homes can have sewer lines with big problems. I mean, we’ve seen people move into new homes where the sewer line has been crushed when the house was, , when the sewer line was put in place, they, you know, the sewer lines are 15 feet underground in a lot of cases.
And so they have to dig a big trench and when they backfill it and they’re dropping rocks and dirt, that sewer line can be crushed. And so it’s always good. It’s such a, an expensive, , part of a house. You know, replacing a sewer line can be $10,000. It can be $20,000. And it’s just important to know. And even on new homes, like I said, even on homes built, it doesn’t matter when they’re built scope the sewer line, it’s 150 bucks. It’s money well spent. You can also inspect for, , Ray Don, , ASB Bestos. These are kind of like add on inspections that an inspector will kind of, we’ll talk to you about. Do you want to test for radon? Radon is a naturally occurring radioactive gas, that is kind of everywhere. But when you’re outside, it’s very, the concentrations are incredibly low. When you’re inside a house as concentrations can build up and become dangerous.
And so you need to know if there’s radon, you know, what the radon levels are. And there’s an EPA limit on radon, which basically the EPA is saying, if you’re below this rate on level, it’s safe. If you’re above it, you should take action and put a radon mitigation system in. And basically radon mitigation system creates a vacu underneath the house, sucks all the gas, all that radon gas out and expels that out the outside. And those typically cost about 1200 bucks. They’re, they’re not terribly expensive. So you’ll do all those inspections. We’ll also be looking at flood plain. We’ll be looking at building permits, we’ll be checking the zoning info to make sure the house conforms to zoning. And then once we get all the inspections done and we’re starting to look through everything and then we figure out are we going to ask the seller for repairs, you know, what, what repairs are we going to request?
What are we gonna do here? Let’s say the house needs in the house needs a new roof. And so we could go to the seller and say, Hey, you know, I know we agreed to pay this price, but, the house needs a new roof and that’s a $12,000 roof and we need you to replace that roof prior to closing or we’re not going to buy the house. So that’s what you do and you negotiate based on those inspection items. And there’s really three outcomes. , there are three options for getting repairs, completed or addressing repairs, I should say. The first one is to have the seller do the repair prior to closing. And this is what we do most of the time, but sometimes buyers want control over that repair process. They want to pick the contractor, , and they want to oversee the work that’s done, especially if it’s a complex repair.
And so in those or, or sometimes they, we don’t have a lot of time. Like maybe, you know, the, the inspection period usually occurs the first like 10 to 14 days after we go under contract. And by the time we do these inspections, we get bids for the work that needs to be done. You know, usually, uh, a house closing occurs 30 days after we go under contract. So a typical escrow period is 30 days, sometimes as much as 45 days. So if we’re already two weeks in, by the time we figure out what repairs we’re going to do, we only have another two weeks until closing. A lot of times that’s not enough time to get the repairs done, especially with the way contractors are in Colorado right now. They’re very busy and so it’s difficult to get them out there and get a repair done in two weeks.
Sowe can ask the seller for a credit in lieu of doing that repair, but we can’t just get cash. The lenders do not allow us to pull cash out of a deal. So you can’t show up at the closing table and just get a check for $5,000 to address you know, your furnace. The only way that lenders allow you to take, , to get cash from a seller is towards your closing costs. So we talked earlier about closing costs being about one and a half percent. Let’s say your closing costs are $5,000. You can, the seller can give you a credit towards your closing costs to replace that furnace. But if the repairs are over and above what your closing costs will be, , then we’re gonna have to figure out another Avenue. We’re gonna have to either reduce the price of the home or get the seller to do the repair prior to closing.
Sometimes we can have the seller put money into an escrow account, which is that title company I told you about earlier. That takes your earnest money deposit at closing. We can have the seller deposit money into an escrow account and then that money is distributed to the furnace contractor. After closing, if we can’t get that work done quickly enough and the lender won’t allow us to just pull the cash to take the cash out of the, out of the deal at closing, we can, the lender will allow us to hold that money in escrow and the lender has specific instructions to only distribute that money to that specified contractor when the work has been done. So that’s another service that title companies, provide. So hope that gives you a good feel for the inspection process. Let’s keep on moving. Let me make sure I kinda hit all of our…I, I guess one last thing to say is like, another option is to reduce the price of the house in lieu of doing those repairs.
And that certainly has done sometimes, especially on cash deals. , but for somebody that’s financing a property, just a purchase price reduction, doesn’t it? I mean, it reduces their payment very slightly, but it doesn’t actually give them cash in, in their pocket to do the repairs that need to be done. So that’s usually, kind of the last resort, something we don’t do very often. Okay. So simultaneously as we’re doing this inspection process, the title company is doing a title search. And again, this happens in the first 14 days. A title search tells you, make sure that you have clear ownership on that property. It makes sure that the seller didn’t do a big renovation project and not pay their contractors and the contractors came back and put a lien on the house. Or let’s say the seller is in a divorce and there’s a, a judgment against the seller.
They didn’t pay their child support. And there’s, and the, you know, essentially there’s a, a judgment against the seller and that affects the title of the house. So the title company, uh, that’s, uh, that’s what they’re paid to do. And that’s the seller pays the title company. And you pay the title company a call, a small closing fee, about $150. That’s part of your closing costs to do this title search and to issue you an insurance policy that basically says if anybody ever comes to you during your ownership and says, Hey, I’m a second cousin of the seller of this property and he sold this house, but I actually own a portion of it. You know, obviously the stuff is very rare, but it does happen. And when it usually when it does happen, it’s a big problem. So you want to make sure that you have insurance.
So if any, anything weird like that ever happen, you go to your title insurance company and you say, Hey, I got this problem and I have title insurance and you guys need to take care of it. And they have like every title and like every insurance company does a team of attorneys that will work for you and, and try to make that problem go away. So that’s what title insurance is. They’ll also say they’ll give you a big, , basically a, it’s called a title commitment. And a title commitment is essentially like a, a docent that shows you all the ownership interest of the property. So are there any mineral rights? Do you own the mineral rights in the property? Are there any easements? And an easement is like, let’s say your neighbor has been accessing your property and has a driveway that goes through your property.
So, and then there’s homeowners, there’s covenants for, for many properties, say, you know, you’re a part of a homeowners association and these are restrictive covenants and you can’t park an RV out in front of your property or you know, whatever. There’s, there’s tons of different covenants for different neighborhoods. So the title search tells you all that stuff and you get to read all that. And if there’s anything you don’t like, you can terminate the contract or renegotiate the contract based on what you find. Also during this, , title search, we are getting HOA docents. We’re looking at the restrictive covenants, , which I just talked about, making sure you understand what you can and can’t do with the property. And then most importantly, we’re looking at the financials for the homeowners association. This is particularly important with condominis and townhomes where the HOA is managing the maintenance of the outside of the property and the, you know, pool if there is one that grounds it’s a big job and there’s a lot of money involved in maintaining, you know, a massive condo complex.
And so we need to look at the financials and make sure that the financials are solid. You know, we need to see what the reserve fund is like. And a reserve fund is basically a big account that HOA. HOA is an acronym for homeowners association. A reserve fund is a big account that the homeowners association has in in case a big repair comes up. Like let’s say the roof is getting old and it’s a big complex in the, I mean we’ve seen roof repairs that are $200,000 on a big condo complex. So you got to make sure that that title, that that homeowners association has a big reserve fund that can cover those big repairs so that they don’t do a special assessment and a special assessment is where they go back to all the homeowners and they say, sorry guys, we don’t have enough money to do this repair.
We need to do this repair. Your homeowner’s dues are going up because of this is a special assessment. Everybody needs to give us $5,000 or whatever. Usually special assessments are not terrible. You know, there’s a small increase in the HOA fees, but sometimes they can be big and we got to know, we have seen hos that are totally insolvent, which means they are broke and we have got to make sure we’re protecting our clients to understand what they’re getting into. They’re a big portion of that, of finding that out. Also, as we go around and talk to homeowners, you know, we say, Hey, have you been to HOA meetings? Is there anything we’re not seeing? We do get to see the minutes for the HOA meetings and which are, you know, basically just to kind of a bullet point of everything that occurred in the last and all the meetings that have happened in the last two years.
We look through those minutes, but there’s been a nber of times when I’ll talk to a homeowner and find out some things that were not in the minutes and get kind of the gossip. And so that’s important to do as well. , so we’re still, so that we’ve talked about inspection, we’ve talked about title. So we’re about, , we’re about 14 days into the escrow period right now. We’re going to ask you to put your insurance policy in place. So all you need to do is call, you know, if you have car insurance through a particular company, you can call them and say, Hey, I’m about to buy this house. And they’ll ask for the address. They’ll go to a drive by. Usually they don’t actually get walked through the house, but they just kind of do a drive by and they say, yeah, we’ll insure the property.
When are you closing? Tell them your close date and that’s all you need to do there. All right, so now we’re, , we’re onto the survey portion and, , we’re usually, the survey comes back about three, three, three and a half weeks into the escrow period. So we’re getting pretty close. Let’s say we’re doing a four week closing. We’re getting pretty close to the end. We need to order the survey early on in the process because it takes, you know, two or three weeks to do a survey. What a survey is, is essentially tells you the boundaries of the property and all the structures on the property where the borders of the property are. Are there any encroachments, like, has your neighbor built his house over the property line? Sounds crazy. We’ve seen it. You know, you just don’t know what you don’t know.
A lot of people, for whatever reason, in Colorado, people are not in the practice of doing surveys on every single home. We strongly recommend to our clients every single time to do a survey because again, you don’t know what you don’t know. You know, even if it’s not a big deal, like, , the other day I had some clients buying a house and they wanted to put a fence. Uh, it was kind of on a busy street. They wanted to put a fence in the front yard and they weren’t sure exactly where the property line was. And so, , come to find out after we do the survey that the property land was well inside of where the sidewalk was. So if they were to build a fence, they couldn’t build a fence all the way up to the sidewalk. , there was going to be this, you know, strip of property in between the sidewalk and where their fence was and it just felt a little odd to them.
So those are minor things. Major things are, like I said, huge encroachments where somebody is, has a garage or you know, an actual house, a structure, a driveway that’s , over the property line and those can create sticky legal situations. And so we want to know, you know, you got to know this stuff before you buy that house because once you bought that house, you can’t negotiate. You know, you can’t go back to that seller, you know, unless it’s something they’ve covered up and you’re going to Sue them. But you really need to know this stuff because during the escrow period you have leverage. You can go to that seller and say, Hey, we found this encroachment and we need this fixed, or we need a big purchase price reduction or whatever the case may be. Or we’re not going to buy this house.
And once he closed on that house, that leverage goes away. So you need to get all this stuff figured out before you buy. Okay, so let’s see. We’ve done the survey that looks good simultaneously. , same kind of period of time. We’re about three weeks out right now from the, from the time the seller accepted our offer and we deposited our earnest money. We’re also gonna do an appraisal. And an appraisal is basically an appraiser is somebody that the bank employees to tell the bank and tell you if the price that you agreed to pay for that house is a reasonable price. So there are times when you know, especially in overheated markets, people will pay significantly more than the property is worth just to get the property under contract. The bank needs to protect their interest in loaning on this property. They need to know that they’re not loaning the borrower too much money.
So they employ an appraiser. The appraiser goes out, walks through the house, looks at comparable sales from the neighborhood and says, yes, this house is worth this amount of money and you’re good to go. Sometimes the appraisal comes back and even though we feel that the price is justified, the appraiser says, Nope, this house is worth $5,000 less than you agreed to pay. And that presents a problem because we either need to ask the seller to drop the price or we might have to bring additional money to closing in order to complete the purchase because we have those loan to value ratios. Like if you’re putting 10% down and you’re getting a loan for 90% of the house, , when the, the, that appraised value, the bank is basing that 90 10 loan to value ratio on the appraised value. So they will only loan you 90% of the appraised value, not 90% of the purchase price.
So if the purchase price and the appraise value are different, they’re not going to lend you as much money as they originally said they would. And so you might have to bring additional money to closing or you can ask the seller to drop the price. And obviously in every case, when we have a low appraisal, we do ask the seller to drop the price. But sometimes the sellers don’t agree to do that. Sometimes they agree to drop, you know, let’s say it’s $5,000, , the appraisal is $5,000 less. Maybe the seller will agree to 2,500. They’ll split the difference with you. So we’ll navigate that process. And, uh, you know, most of the time sellers will be pretty agreeable to dropping the price, especially because it’s late in the game. There’s been a lot that’s transpired. They’re very close to closing. Usually appraisal deficits are not massive.
Usually they’re like $5,000, sometimes they’re 10,000. The biggest one I’ve ever seen in my career was $30,000. And that was kind of an anomaly. Everybody’s pretty shocked about that one. So the majority of the time your appraisal deficits going to be pretty small. And so usually we can get through it, no problem. Every once in a while there’d be a, an appraisal that’s low enough to where the kind of loses confidence in the purchase and walks away and you can do that and you can’t get your earnest money back. So, all right, so we’re kind of moving, moving along. We’re done with appraisal. Now we’re going to talk about the settlement statement. So we pretty much done all of our, all of our research on the property that we need to do. And during this entire process, what has been going on behind the scenes is that your loan, your mortgage has been going through an underwriting process.
So the bank is taking your mortgage application and going through it with a fine tooth comb and very likely they’re going to ask you for some clarification. They might ask EES for some additional docents. They might ask your employer to write a letter of explanation saying, Hey, this borrower needs a letter from his employer saying that his commission income is likely to continue or, , that his employment is likely to continue. Things like that. So just to know that that’s going on in the background and that you might have to very often, , you’re having to react to some requests that your lender makes some additional documentation. If you’re a self employed person like myself. , there can be a lot of, cause your tax returns are very complex. There can be a lot of questions. It can be pretty tedious, but you know, you just gotta work through that stuff, bite the bullet and give them what they asked for.
So let’s say we have final loan approval. You know, they’ve satisfied all their requirements. Now we’re getting to, usually we get final loan approval a few days, , in advance of closing sometimes, uh, well in advance of closing, but a lot of times it happens towards the end. And so we’re going to now get a settlement statement. And the settlement statement is a docent that shows number at the very beginning of the podcast I talked about a loan estimate that you get from your lender. Well, a settlement statement is a big docent that talks about all the numbers that have gone into the transaction, what you’re gonna pay, what your earnest money deposit was, how much the lender is giving you for the loan. The title company compiles all those numbers. Prorations, you know, property tax prorations and prorating for utilities, , HOA dues, all that stuff has to be broken down in on a big grid.
And then down at the bottom spits out your, the amount of money that you need to close on that house, which we call your cash to close. And again, the loan estimate at the beginning of this whole deal, , told you an estimate of what that was going to be. Now we’re getting, now we’re telling you exactly what it’s going to be. And so once you get that number, you can get a cashier’s check or you can wire the money to the title company and then, , that’s all you need to do. And then you show up at closing and we’ll talk about, uh, what closing looks like here in a second. I want to rewind to wire transfers. There’s a lot of, there’s been a lot of talk about wire fraud lately and I just, you know, it is very rare, but it’s good for you to know and you will be signing a wire fraud disclosure, which basically tells you that it’s possible that someone could hack into a real estate broker or title company person’s account and pretend that they are sending you wiring instructions and say, Hey, you need to wire your $30,000 down payment to this account.
And you’re like, Oh, that makes sense. I’m a, I’m doing a real estate deal and I’m getting ready to close and I do need to wire money, but that could be fraudulent. So the way that we counteract that fraud, protect, protect you against that is we basically tell you first of all, never trust wiring instructions over email. You may get wiring instructions from the title company over email, but those need to be verified, , over the phone. And so, , and usually we have a two step verification process. So you’ll call the title company, get those wiring instructions. We’ll do the same on separate phone calls. You know, we’ll Google the title company’s phone number to make sure, you know, that we’re calling the right number and talking to the right person. And there’s no possibility for, for fraud to occur there. And so what we see in the email that we got, and we’re talking to the person we know, you know the rap at the title company, we’re talking to somebody we know and trust and they’re giving us the same wiring instructions.
And that’s how we verify that. So now we’re pretty much done. We’re going to go to closing. And this is kind of the celebration. This has been a long, you know, a lot of times from the time our clients start the process to the time they’re sitting at closing can be four to six months. I’d say four months is probably about the average. And I’m talking like from the first time they call us, you know, , and, and of course it, sometimes it can happen very fast in 30 days, but a lot of times it’s been a multi-month process. And so we’re finally getting to the last day and it’s, it’s a great celebration. The seller is often there at the title company, so this may be the first time you get to meet the seller and it’s a great time to talk about the house, you know.
So, essentially what happens is you come in, you’re sitting at a big table, the seller is on one side of the table, you’re on the other side. And in the middle is the title officer. And the title officer is the person that’s been putting together all your numbers. They’ve been doing the title search, they’ve been paying off the mortgage, had been doing all this stuff behind the scenes and now they’re giving you all these, a huge stack of docents to sign and they’re gonna put us particular docent in front of you, give you a brief explanation of what the docent is and ask you to sign it. If you’re the kind of person that wants to read every single line by line of every docent that you’re going to sign, you need to ask for those docents well in advance. And that’s totally fine.
You should do that. So that you, but if you were to sit there and read every single one of those docents, you’d be there for, you know, multiple days. So you need to be, need to have those docents early if you want to go line by line. But you should know that if you don’t sign any one of those docents, he can’t buy the house. So most people, most of the time people are just like, yep, you know, give me the doc, I’ll sign it. But the, the escrow officer will explain everything to you. You know, you’ll be chit chatting with the seller. You know, sometimes it can be an emotional time. I mean there’s, there’s frequently tears involved for the seller. Uh, a closing couple months ago when my clients were a young couple that were starting a family and they walked into the closing room and the sellers just stood up and just started crying and like walked over and gave him a big hug.
And that was because we had sent him that letter that I talked about earlier. I told him about who we were, told them I wanted to start a family in the house. And so that was, you know, stuff like that can happen. It can be just a really cool time. Cause again, everybody, seller and buyer realtors, everybody involved has put a lot of effort into this and it’s, it’s finally done. So you usually closings take about an hour, hour and a half at the most, and the title company or title officers coming in and out with documents and you’re kind of getting to sit there and everybody’s shooting the breeze and is happy that it’s all finally over. You need to bring your driver’s license with you. You need to bring a cashier’s check unless you’ve wired your, your down payment, you’d want to bring a cashier’s check with you.
And, that is pretty much it. You get the keys right there at the title company and you can go home and start moving in. So that is the end of kind of the, you know, what do we call this? This is the crash course, the home buyer crash course. I hope that was helpful for you. I know I kind of went fast. I’m sure you have a lot of questions. Feel free to reach out to us anytime and we’d love to answer more of these questions. I think we’re going to do another podcast where we have one of our first time home buyers in here. So we can kind of run through this whole process and have them be like, “Whoa, slow down. Didn’t catch that. Explain that.” Cause some, sometimes somebody that’s in the industry can kind of gloss over stuff. Use jargon that’s not perfectly understandable and you just need clarification questions.
So feel free to reach out. You can go to greyrockealty.com. You can text me (970) 689-0824 is my cell phone number. Please feel free to text or email. Just get in touch with us. We’d love to just talk to you about, you know, help you plan. I think planning is a critical component that people don’t, that people kind of often overlook is there is a lot of planning in this process. It is good to start many months in advance of your, of your lease termination date or your target move date. Usually we tell people about four months in advance is good, as far as timing goes, you know, a lot of people ask, should I be doing this in the summer? Certainly the majority, a huge number of properties come on of the market in the summer that will give you the biggest selecti
But, properties are sold all year long, every month of the year. And so, you know, if you can be in the market in the summer, that’s great, but sometimes buyers can find really good deals in the off season as well. So we encourage our clients to be shopping, you know, if they’re in a position to move, they should be shopping sometimes even if they’re not starting to get out there and look at properties like I was talking about. A super helpful. So thank you guys so much for listening. Hope you got some value from this. Again, feel free to check us out. Greyrockrealty.com (970) 689-0824. If you want to text us, have an awesome day. And thanks again for listening. Hope you are closer to being that razor sharp real estate consumer that you should be. And yeah, thanks again. All right guys. See ya.