Hot Housing Market Do's and Don'ts

Transcript

hi everyone welcome to pink mic legal confessions i'm stephanie garces donat I hope you're doing well today uh thanks for joining me today we're actually talking about something really important um actually something that maybe is a little bit new to some of you um some of you know real estate some of you don't but we're here talking about real estate transactions today specifically in this market it is a hot hot market right now and um really what we're trying to focus on is making sure that sellers and buyers are aware that the housing market really is leading itself to high pressure situations where individuals are not really getting the benefit of leisurely looking for properties and taking the time to like look through uh their options and stuff like that right now it's just like it's crazy uh to even try to get an offer accepted and so what i've been hearing um time and time again is is that so uh especially right now so i want to just welcome all of our viewers back to pink mic legal confessions as always i'm stephanie garces owner of garces law firm here in paletine illinois where we help parents secure the legacy and help you prepare for the unexpected so one of the biggest things we're going to cover today is the housing market it's wild wild out there and right now it is so hard so hard to get your dream home if you want to call it that um homes are being purchased above asking price people are really going at it in the bid wars bidding war is trying to get their offer accepted and you know a lot of people are having trouble a lot of people have been saying you know is this going to last is going to be the same way forever um i hope not because for those of you that are selling um it's good for you if for those of you that are buying it's not great for you um and i understand both sides of this right houses are flying off the shelves while the buyers are trying to just make sure they get their offer accepted and you're competing with crazy offers people are uh bidding way more than the property is worth which we'll talk about that in a little bit um but also there's like appraisal situations that come up you overpaid for a house which is actually going to appraise um even people waving contingencies all of that is really um these situations that are leading up to potential problems i think um really in the in the market but it's good in a way too so uh today we're going to share a lot about that so really the topic today is is um hot market for real estate do's and don'ts right housing market is something that is is quite um quite interesting because everyone is like buzzing about it so um the now two year long pandemic is amongst us right and it's really changing life and i don't want to jinx us but i've been hearing through the grapevine that there might be some uh more cases on the rise which i think is what the news tells us every day anyway but um for you know for those of us that know um that know that you know this is really part of our life now and for many of you um that are out there buying it's really accelerated decisions to relocate uh start a family in a new environment uh purchase a home that's better suited for your needs than what you have um some people have even gone to selling their house for an amazing price um a price that maybe you didn't wouldn't have gotten you know three four five years ago um people have always said oh well my neighbor sold it for this much and now i'm selling it for you know twice that so that is happening a lot and it's just interesting to me because i think the pandemic has really given the housing market a big push um for more competition um definitely it's a seller's market right now where the sellers can take their time really to uh take whatever offer they want i've even seen people um list their homes um you know a little bit higher initially than normal and hoping that they get an offer that surpasses their expectations so um this is happening now and for those that are buying and selling a home there's a few important things i want you to consider so in today's topic like i said i told you i was covering the do's and the don'ts but i really want to talk about some of the stuff that we see in our as attorneys on our side but also um professionals in the industry can agree with me that you always number one want to start early starting early um is never a bad idea really in anything right early bird gets the worm but when it comes to real estate um unless you have a cash offer for a property which hey some of us do and some of us have the luxury right to um to put in offers where you maybe can use some cash saved up or um you can even weigh the contingency because you don't really want to do an inspection of the home some of us can do that but make sure that if you are you know not doing a cash offer for most of us you want to give yourself plenty of time to find negotiate and purchase the right property for you um this can be done obviously by looking at all the inventory in the market and by the way speaking of inventory my understanding is that there isn't much inventory right now which is again not great for buyers but nonetheless you definitely want to see what inventory is out there so starting early is always good it's never a bad thing the other thing you may consider not doing it's a big don't is you don't want to get your heart set in a specific property i mean i think a lot of us can relate when i say that we tend to have this idea of our perfect home where we think about what we want what we've dreamed about we want to make sure that you know we get as close to it as possible but keep in mind with this market you definitely don't want to be in a position where you are so set on a property that you don't get it and then your entire search is over so just something to talk about because a lot of times it's so easy um in a market like this to fall in love with something and maybe in fact it's not the best thing to fall in love with because um you're not going to get it anyway so i hate to break it to you but there are bidding wars which we'll talk about in a little bit but in a market like this you just want to have this attitude of you know um keep it open keep it flexible um be willing to compromise on certain things to avoid being caught up in this the emotional bidding war really that sometimes leads um you know to to people fighting over a home over the property but keep in mind too that bidding wars by the way while they're healthy in the sense that you could uh get the home that you want if you can really negotiate certain things you also want to make sure you don't get it over your head i mean there is such a thing as being house broke um so in other words you know you you enter into um buying a house at a certain property price and that purchase price is much higher than you anticipated you don't want to go over your budget because if you do that you might actually be housebroken you can't really manage the payments on the monthly mortgage so i definitely don't want that for you nobody wants that um you know it's all about keeping up with the joneses sometimes but you do want to make sure that you're doing the numbers and punching those numbers to make sure that what you're actually offering is something that is within your your budget right the last thing you want to do is to be in a home where you think you can afford it and it turns out you're pretty tight on money so who wants to do that nobody um so another thing too is a big do an obvious it's kind of obvious because it's like you know this if you've been looking for homes but you definitely want to get pre-approved this means you go with a lender you go and check your financing financing options so the big thing with this is that you want to make sure you're working with reputable lenders people that actually know what they're doing these are individuals that for the most part um you know they they work for mortgage companies now keep in mind there are banks that do lending there's a lot of lenders out there but you definitely want to make sure that you're up in the know if you will on what your options are i mean there's so many financing options and there's a lot of even uh you know down payment assistant programs first-time homebuyer types of loans or ones that potentially you can put a little bit bigger of a down payment and have shorter payments over time there's so so many options so make sure that in the seller's market you are getting pre-approved uh most realtors um for the most part my understanding is they don't even show the property if you don't have a pre-approval which makes sense because they want to make sure that they vetted the person that they might be um you know negotiating maybe on behalf of their client to um to another buyer you know they want to make sure that the the seller says okay is this person pre-approved yes they are for this amount because if you don't do that then that's a problem right for the for the seller but typically buyers you want to get pre-approved because you want to make sure that you're actually showing up with all your ducks in a row um and so you don't want to show up without that very important um keep in mind too that uh sellers in this market and it's every market they're always going to ask are you approved for this amount especially if you get an ability more especially because keep in mind the bidding war you might actually go above your budget but make sure that you're keeping in mind what you're actually pre-approved for because the last thing we want to do is um you know the last thing you want to do is put yourself in a position where you're negotiating something that clearly is not in your pre-approval so just something to keep in mind with that um and the pre-approval obviously for those of you that don't know is for people that are getting financing they're getting a mortgage if you have cash well it's a little bit different there's a little bit of a vetting process for that if you are buying cash typically the seller sales realtor will ask for your financials to make sure you actually can afford the house and the price that you're paying it so just make sure you have your ducks in a row and you should be okay another thing that you don't want to do is you don't want to confuse your wants versus your needs and i say this because before starting your search you want to create a list of some of the things you need for example i absolutely need a master bedroom that has a bathroom in it or i absolutely need a basement i can't have a house without one or the opposite you absolutely can't have one with a basement and make sure that you're you're wanting that and needing that um sometimes you need it because maybe you have someone that maybe can't go up up and down the stairs or perhaps you prefer not to have a second floor it's just an example but needs are must-haves and that really impacts your quality of life and it's something you really cannot compromise on so that's really a need um when i say a once uh this i think all of us want um a ton of things and you know when we're talking about wants these are more areas that you can take it or leave it you don't absolutely need to have it to buy the home you can always do it yourself maybe take on a renovation project for example or you want to add a fence because you want to make sure you have some privacy those are things you can add you don't absolutely need to have them and so i make sure i tell people when they're considering um buying or you know a property for the first time you want to make sure that your needs are already listed and you're very clear with the realtor that you're working with for example on what is it that you want and what is it that you actually need because two different things um now some of you may be watching and say well we have clients or i have a client or i am a client who needs and wants a lot well of course everybody wants the moon the sun and stars but what happens with that is that you end up really losing out on great properties because keep in mind there are properties that are maybe a hair behind what you actually want but perhaps it has what you need and so that's just a great way to really see a vision in some of these properties especially if you're living there or perhaps looking to to renovate or flip the place a lot of these properties out there they always have potential as long as you can identify a need versus a wand so just something to keep in mind um you also want to rank those needs and wants um for those overachievers out there do it from order of priority a lot of people like to you know kind of identify what is it that we actually need and what's critical to us do we absolutely need two bathrooms and three bedrooms at the minimum do you need a pool well everybody wants a pool maybe not everybody but do you need a pool is that a requirement you know to have the kids running around in the pool i don't know but but the point i'm trying to make is you want to definitely identify which one is which so definitely something to keep in mind um something else you want to do is you want to be patient i think this is one of the most underestimated things that we discuss um all the time when it comes to to anything that you're doing that's a big investment um i always talk a lot about on the show um your investments working really hard for that investment the money that you have you want to protect it you want to make sure you're actually making the right financial decision but it requires patience so you want to make sure that you're patient and what you're doing in a market like this inventory is scarce it is not all over the place as it used to be before so it might take months um even weeks really to find the right home some people even look for more than a couple months and for those of you out there that say well i've been looking for a couple months haven't found anything be patient because you may actually be surprised as the market starts to turn and the weather gets a little bit better at least in the chicagoland area you might actually have some new inventory you can take a look at and for a fair price another thing you want to consider that's a don't on my list is you don't want to demand unreasonable terms from the seller or the buyer now for those of you that are sellers you may think well i have an upper hand in this market i can demand what i want maybe maybe that's true but you definitely want to make sure that you um you know in this volatile market you want to make sure you have options sellers have options um and so do cash buyers right it's it's a it's almost like a competing um competing uh areas and two arenas that i think everyone has a leg up to some degree um but you definitely want to consider a position for all parties that makes sense one that um would actually you know make sure you strike a deal with somebody i always have this saying of you want to be reasonable with your requests you want to make your offer really easy to understand very clear and make sure the terms are pretty straightforward if you negotiate something up front put it in the contract even if it's you know you're leaving the pool behind for us because we're going to use it you want to put that in the contract if you're not doing an inspection because you just decided not to do one you want to put that in the contract you know the list goes on so you definitely want to make sure that you're consulting with both your realtor and your real estate attorney to make sure that everything that you want and your desires are included in the contract even things that are verbalized i want to um really talk about this for a second because a lot of times things are done with a handshake right sometimes people will say well they're going to be leaving the patio furniture because they don't want to take it with them to florida um and the seller will say yeah i'm leaving it behind i'm not taking the pool table they can have it right so those things are verbalized a lot not always in the contract although you know if you are working with the right professionals your real estate attorney and realtor will be able to really include that in your contract make sure that's not missed because we do communicate with the realtor make sure that everything that was said maybe not um not formally in the contract is included in there even if it's said later so it's good to include then and have straightforward terms and assuming that you are in the same page as the other other side well the buyer or the seller may not really care because it was already agreed to anyway but for formalities you definitely want to make sure the terms are straightforward and clear another thing you do want to do is you want to make sure you have all your financial documents in order and when i say an order i really mean in order meaning you've already found your taxes you have your tax returns ready you've contacted your accountant you've checked into all the things that you need to provide and you want to do so in a timely fashion so when it comes to a start of any transaction be ready to provide those right away i always tell clients that are asking me i really want to close i really want to close well if you're a seller we have to wait for the buyer's loan so we may be telling the buyer and buyers attorney i should say we may be checking in with them hey how's the loan going you know has everything been provided and the flip side of that is on the seller the buyers side they're going to you know want it to close as well so we usually say to them make sure that you're actually providing the documents necessary in order to do the closing and to make sure you actually qualify and so tax returns income statements all of those of you who are self-employed you have to get tax records for your business and by the way total side note if you're taking out a loan in your business that's a whole nother conversation but typically there are corporate documents that do need to be provided in addition to your tax returns so just keep that in mind so that you know um you know the time frame and typically you're looking at a two-year time frame for those of you that are self-employed so that is something that you want to make sure is ready and the people that you're working with will be able to provide this for you but um for business owners though uh i told you i just talked about this you do corporate documents and all of that to qualify but it is difficult to qualify and so for those self-employed borrowers the people that work for themselves sometimes the lender asks for more information um more proof of income if you just started a new business a lot of people don't know this but you have to be employed for at least two years to be able to qualify for a mortgage so that's a fun fact i always like to tell people in case you are thinking of going off on your own and doing a business or you already have a business you do have to wait a little bit of time so um some lenders depending on how your um your finance your financial option is structured sometimes lenders may require even a higher down payment depending on the financial status and the length of the business and again this is just continuing off of if you take the loan out in your business as opposed to your name some people do that it's totally fine just depends on how you want to take on the debt so another thing i like to point out is a don't is you want to sell your home well you don't always want to sell your home to the first person that comes along and what i mean by that is sometimes people sell their home um just for sale by owner to the first buyer that comes along so in my experience you definitely don't want to just list your home without being fully informed i mean for those of you that do sell your home without a realtor there's definitely statistics out there that'll show you you don't actually make as much as you could is if you work with a reputable local realtor and this is important because someone who's a realtor is going to have an idea of the comps in the in the market so what are the houses going for in your particular area with square footage and and bedrooms and the like so that's what their niche is and they're able to kind of get you the best bang for your buck in a market like this one it's always a good idea to have a reputable professional who's a real estate professional that knows what is your house worth and what are willing people willing to pay for it so sometimes selling it on your own while you may say oh i'm going to save money on the forefront you may not necessarily be making as much as you could have if you would have went and used someone that actually knows the comps in the market so you may be underselling your home which is really not good for the sellers it's not something you want to necessarily do out at the gate keep in mind by the way realtors do offer free consultations for the most part there's a couple people that charge but not many um where you can actually do a free consultation and get an analysis of what your house would be worth if you listed it so something to keep in mind and by the way um the savings and a few commission dollars really may not be worth it if you really aren't getting bang for your buck especially in this hot market so the other thing you may want to consider doing which is a do on my list is you definitely want to tell like your family your friends colleagues that you're in the market to sell and the reason this is a very important is because people in the um general community right um they know people that want to live where you live um it's just it's a coincidence but everyone knows someone that may be moving to your area for the schools or for work so it's always good to spread it just word of mouth because you never know who knows somebody else so with an inventory being at a really an all-time low prices keep going up and so you never know who may be in the market to buy so socialize your goals with your friends your family and really be open to a discussion if the opportunity arises that someone may be interested in buying your home another thing i'd like to point out is you don't want to sell or purchase a home without a real estate attorney and so time is of the essence when we talk about terms of contracts signatures that need to be put on these on these contracts to make them binding so getting things done quickly and without legal help is never a good idea i always use the analogy of jumping out of a plane without a parachute that's just not a good idea it's poor planning and at the end well you know how the end ends but what i'm trying to get at is that you want to make sure that you have the right help the right team and someone that knows contracts really well we do old contracts every single day so for us any contract you throw at us for real estate we've seen it before we definitely are familiar with the terms of what should and should not be in there so if you don't have an attorney that's licensed in the state you're selling or purchasing and watching over the process you can always you know ask for a referral at least try to get someone to look at it so make sure things are not overlooked while an attorney is not required i should say for real estate transactions in every state it's always always highly recommended and it's never a bad idea because investing you know in an attorney may actually save you in the long run and so it costs less for you to think about um about this sort of thing and actually hiring an attorney then some of the ramifications that could arise if you don't so you definitely want to protect your interests and your transactions especially right now because you are probably making the most important sale or purchase of your life so there's a lot of money to be had with real estate now for those of you that are just joining me my name is attorney stephanie garces donat i'm the founding partner of garces law firm in palestine illinois and we help individuals and couples create their legacy plans secure their financial futures and build wealth through real estate so we also help protect these real estate transactions from the outset from the moment you sign this contract and in communications with the other side who you want to purchase or sell from and beyond we even help with people that have sold the home and how they want to protect their their money from the from the sale or a buyer that just purchased the home now it's an asset so we do help people from the beginning of the real estate transaction throughout and even after after you're already done with it we're here to help you with all of that so today we're talking about the hot housing markets do's and don'ts and keep in mind i have you always joining me on tuesdays at one o'clock central time for pink mike leo confessions as we share tips and guidance to anyone looking for some legal guidance to parents children's and now home buyers or sellers now i know many of you have questions about some of the things we've done in the show specifically to this market and to this topic because um a lot of people that are watching on our network actually are in the business of real estate so i do encourage anyone having questions to drop them below because there's always interesting conversations that take place of of what's happening out in the field what the articles are saying and really where this is heading so it's really great to to have people joining us and watching us so thank you all who are liking and posting and sharing this video as we speak so one of the questions that we got um while we're sitting here which is actually a really really solid question is the bidding war what exactly um is it and and what is it time to just throw in the towel and bow out this is a great question so bidding wars typically arise when there's multiple offers is the word that you hear it basically means that there's multiple buyers that are wanting the same property from the seller and there's more than one competing offer so typically what happens is sellers will ask for final and best which means whoever has the best and final offer um that's still considering um putting the offer in to buy the property submits it and so then the seller gets to review those and decide who is the best fit for the sale are they going to go with someone who's a cash buyer are they going to go with someone that maybe has a little bit of a higher purchase price but has financing i mean the list goes on so the amount of um things that can happen with the bidding war is a lot um a lot of times you're looking at just people competing with very different terms i've seen people even say i'm going to pay the difference in an appraisal meaning if the property doesn't appraise out we're going to agree to pay the difference and so there is a an addendum basically a supplemental document that does stipulate to that so there's so many terms and different types of contracts that the seller gets and they get to choose from that so a bidding war really comes down to multiple buyers with different terms all of which are competing and the seller decides what is is the best now when is it actually time to bow out well the question um is a good question but i think it's just the answer is specific to the person so in my opinion it's a good thing to bow out when you've already reached your budget you're at your cap your max and all the terms that you have um are out there you want to bow out at that point assuming that it wasn't accepted because you cannot go higher you should not go higher right then you're actually comfortable with that's not very good plan especially if it's if it gets accepted you're accepted so um i would say try as much as you can you don't want to bow out right away you definitely want to bow out once you've already laid all your cards and your chips on the table and and you didn't get it you know i think it's okay to move on at that point but bidding wars are really common i mean if anyone has has dealt with them before um feel free to comment as you're watching this but i know plenty of clients that will come to me and say yes this is the fourth house that we got accepted on after being rejected three times before that so this is really common and i know um some of my real estate professionals watching are cringing when they say this because they've been running around all over town trying to get their offers accepted just to find out it's a bidding war and they lose and these terms by the way they're crazy i mean people are putting way more money out there than before so to think that um bidding wars are going away i don't know but it's definitely happening so that's a great question another question i got is is it appropriate for us to contact the sellers directly well the answer to this is that it depends i mean for the most part sellers have a realtor if they have a realtor you have to contact you know their realtor because or your realtor contacts their realtor but typically there's representatives involved if it's a for sale by owner situation where the seller is really selling it on their own then in that case yes you can contact them because they don't have a realtor maybe they don't have an attorney so in that case it's usually fine but for the most part it would be from realtor to realtors is usually the appropriate way to contact them someone asked do we have to work with a realtor to purchase a home that is an excellent question uh short answer is no you don't have to better answer is you probably should because if you do not know the market which most of us are not uh realtors right you want to make sure that you're working with professionals that do understand what houses are worth in this in this market and what is really a competitive offer i mean someone that is in the space of purchasing and helping helping purchasers and helping sellers will have an idea of what kind of offer you can make for a particular home they'll have inside information as to are there other competing offers are there not is there anything more we can actually offer the seller or vice versa can what can the seller accept what should they accept what are things that um can make a buyer um give us more favorable terms if we represent the seller so you definitely um don't have to work with someone but it's highly recommended um for the reasons actually i mentioned earlier why you should probably hire a real estate attorney if you're doing a sell or a purchase um of a property make sure that everything transfers properly and there's no issues or liability to you uh another uh kind of second way into the other question is why should we work with a real estate attorney and um that question is is one i get often and i mentioned before is you want to make sure that when you're working with a real estate attorney you're working with them because you're protecting your interests at the end of the day we work for the client we are not in um any way connected to the other side we represent your interest so making sure you're protected in that sense uh your transaction the money you've worked really hard for uh making sure you're not actually getting charged things and fees and and getting the appropriate money that you're you're owed from the seller or perhaps even um there's no weird fees in the title cost that you're actually actually paying at the closing these are all things that come to light outside of the legalities um we also want to make sure that everything that you're supposed to be giving or getting in a transaction is actually done so we do make sure to represent you zealously and make sure that you're advocated for because it's really our job so it's always always a great idea because that way you have someone that that actually is you know the third party biased uh person it's a bias to you but independent i should say of the seller and whatever the transaction is that's going on we can make sure that your interests are protected so can we hire a real estate attorney uh before a deal is actually proposed um yeah you know what that's that's a great question because uh before making an offer a lot of people do ask for uh an attorney to look after um after that contract or she before the contract is signed um we do offer those services we don't have any problem doing that uh many times though uh at least in illinois there is a time frame of five business days where we get to review what you signed so many people call worried about should i sign this is it legal is it binding well if you submit an offer and it's accepted it is a binding contract but the good thing is you know you could definitely hire us before so we can actually walk you through what the contract means what are certain clauses are they favorable to you or not and that's really valuable i think a lot of people get nervous and it's okay to be nervous because if it's your first time selling your first time buying you don't want to get in the jam so that's why we're there to help you so you can definitely hire us before making the offer it doesn't have to be after you make the offer so just something to keep in mind and you're super due diligent you can always contact us before i actually prefer when people contact me ahead of time because it allows us to really get to know you and understand what's the best um way to protect your transaction what are the expectations from both of us so i i personally like that another question i get a lot is do you offer a fixed retainer for your time or is it built hourly yeah that is a wonderful question for real estate transactions it's always a flat fee it's fixed meaning it's a one-time fee for our work so you do not get charged hourly and that's typically the nature of the work if there's something else for example if you need us to do corporate documents because you have a corporation and maybe we need corporate documents for the purchase or the sale we also do those on a fixed fee so there are other things that we can do for you that are fixed fee which is great because it's predictable it's transparent and there is no miscommunication on what exactly is the final bill you'll get the fee out the gate and that way you know what the fees are so who doesn't like transparency um the other thing is that we always get asked and i love addressing this question because right now with everything going on is appointments how are we meeting with people so we're meeting people virtually um we do offer on-site visits as well so when people ask do you offer the online and do you offer in person well we offer both because we have the luxury of doing so so luckily we do have our own setup here where you could come in the office and make an appointment no issue with that if you rather stay at home in your pajamas and do a consultation i won't judge you i don't care that's totally fine but i have had people show up in their pajamas because that's just the kind of people we are it's whatever you're comfortable with we'll make it accommodate you we'll make it happen so it's really not um super hard for us to do that and it's it's really out of the comfort your own home so we do offer both though if you want to come in person we welcome you here and if you have any questions about you can always reach out and as always to contact us you can always call my office or text us we do offer texts outside of just calls for those of you that are too busy to make a phone call we can definitely set you up with a consultation for free it's 30 minutes and we can help you in all the on all the areas i discussed so as always i'm so thankful to have you guys watching our show and being loyal viewers i see people liking and always sharing these videos so it always makes me happy that we can use our platform for pink mic legal confessions and really share some of our knowledge and so thank you so much for the excellent questions today and also just these continued support that we get from our community and from our our referral partners and colleagues so with the craziness of the real estate market as i mentioned before i strongly strongly encourage you to consider hiring a reputable real estate lawyer to assist you with your transaction not just someone that does this once in a while someone that does this every day and that's what we do we do this every single day so for us we can do it in our sleep buying and selling real estate as an investor or even a individual that's just buying or selling for the first time is really different than you know any other transaction you've done so there's implications and pitfalls and considerations that we have along the way and we do our best to make sure to show you the process and guide you in that so i invite you to join me here next week on pink mic legal confessions same time same place and feel free to share this recording with any friends or family you have to make sure that they can be informed as well so i hope everyone's doing well today and stay dry because it's very rainy so stay well and we'll see you next week