12 Jan Ep. 25: Erica, A 1st Time Home Buyer
In this episode Adam interviews Erica, a St. Louis Realtor Podcast listener who used the Hermann London Real Estate Group to buy her first home! Adam asks Erica how she felt during each step of the process and finds out if there is anything he can do to be a better Realtor.
Email questions to PODCAST@HermannLondon.com
1:20 Coming soon listings are selling houses above asking before they are listed
2:10 Go to HaveUsOver.com to get your home prepared before you list it
2:36 Hermann London will be going to the Ronald McDonald House to cook for needy families
3:10 Adam introduces Erica, a listener of the podcast who just used Hermann London to buy her 1st home
4:26 Hermann London’s goal is to make real estate experts out of their clients
4:55 The steps to buying a house
5:10 How did Erica find Adam and Hermann London Real Estate Group
6:00 What research did Erica do before contacting Adam
6:56 How did the 1st meeting between Erica and Adam go
7:55 How did Erica decide where to live and what kind of house she wanted
9:16 How did the pre-approval process go
11:19 Did Erica use any down payment assistance
12:58 How did the looking for homes process go
14:48 Who chose what houses Erica wanted to look at
17:08 How did Erica know when she found the right house
18:20 Did Erica bring a devil’s advocate to look at the house
19:00 Erica would look up some of the sellers on social media
19:50 What was the most surprising thing about looking for house
21:29 Could the looking for houses process been better
22:05 What gave Erica the confidence to make an offer
25:55 What inspections did Erica get and why did she have to do them on 2 different houses
28:08 How did negotiating inspections go
30:22 How much money did Erica have to bring to closing
30:55 Why is Erica still looking at houses
31:32 Did Erica make her roommate sign a lease
31:55 Was all the closing paperwork overwhelming
32:18 How did cleaning the house go
34:08 Will Erica hire movers
34:50 Do neighbors bring pie
35:55 Adam quizzes Erica to see if she has in fact become a real estate expert
39:02 Who lives under Erica’s roof
39:25 When is Erica at her best
40:38 What is Erica’s favorite podcast
41:03 What is Erica’s guilty pleasure
41:49 Who is Erica’s mentor
42:20 Was Erica nervous to be on the podcast
Adam-Welcome to the Hermann London Real Estate Group’s St. Louis Realtor Podcast live from the rooftop of The Hermann London Real Estate Group right here in beautiful downtown Maplewood, Missouri. Today is a very special day for several reasons. Number one, this is podcast number 25, which I think is a big milestone for us. Joey and I have been on this journey for 25 episodes now and additionally it is special because of our guest. Our guest is somebody that’s gone the full circle of being a listener of the podcast, to a client of Hermann London and bought a home, and is now a guest on the show. Before we jump into that I have a couple announcements. Today’s topic is all about the first time home buyer process.
I want to make a note that as of April 12th, 2016, these coming soon listings are a big deal. We are working with a lot of buyers and we write contracts with multiple offers. I just got off the phone with somebody that accepted an offer above asking, all cash, and prior to the people even seeing the home. Listings that come on the market are selling really fast so coming soons are a really big deal. I’ve got two properties under contract right now that I helped the buyer’s find before the homes were even listed. That is one of the values of using a Realtor. A lot of us talk to each other and we talk about the listings coming up so if you have a Realtor that is intune with that maybe you don’t have to compete as much.
I also wanted to mention HaveUsOver.com . We’ve been doing a lot of radio ads and talking to a lot of home sellers. If you are thinking about selling your home, have us over to get your home prepared to get the most out of your home when it is time to sell.
We’ve also had about 5 new people join the team in the last month and I’m excited because we’ve got some deals working.
The Hermann London team will be going to the Ronald McDonald House to go cook for needy families. It is a great team building event and it is great to help out people who are in some of the worst situations imaginable.
The last update is that we’ve been doing a lot of training with our agents to make sure they are up to date with all the new hot things going on in the market.
Now we are going to jump in to what everyone is tuned in for; a podcast about the first time home buyer process. I already introduced Erica, but Erica, say a little something about yourself.
Erica-Hi. I’m Erica and I’m a first time home buyer. I just closed on Friday.
Adam-Do you have any questions for me before we get started?
Erica-No. I know everything. Just get to it.
Adam-I broke the process of buying a home into a bunch of steps and I’ve got some questions prepared for you for each step. The goal here is that anyone who is listening that hasn’t bought a home will hopefully listen and learn from you and see that it’s not that hard and it will give them the confidence to buy a home.
Erica-I think it’s great because I felt so dumb when I started this whole thing. I didn’t know anything, especially about mortgages. All I knew is that there are for sale signs in yards.
Adam-Our goal at Hermann London is to educate our clients and at the end of the deal they feel like real estate experts. We will test you at the end because I prepared a little quiz for you.
Erica-That is terrifying.
Adam-If you pass I’ll feel like I’ve done a good job but there is no prize. Okay, I’ve broken it down into several steps; contact your agent, meet your agent, get pre-approved, look at houses, make an offer, get inspections, negotiate inspections, close, clean, and then move in. We are going to get started with contact your agent. I already know the answer to this but how did you find me?
Erica-Full disclosure; my boyfriend is Joey the producer and he is right here.
Adam-Did you get that copy of the buyer’s guide before we met and did you read it?
Erica-I glanced at it.
Adam-That’s what we would call a slow no in the business.
Erica-I speed read it.
Adam-I’m hoping to get any sort of feedback from you today so we can know how to make the process better.
Erica-I referenced that guide several times and I had it saved on my desktop at work.
Adam-What other sort of research did you do before you met with me?
Erica-I love the website Reddit and there is a real estate subreddit that I got even more involved in throughout the process. There are a ton of first time home-buyers on there asking questions and there are experts who answer questions like lenders, appraisers, and agents.
Adam-Then we met. How did that meeting go?
Erica-It was great. You made me feel comfortable.
Adam-I didn’t mean for this podcast to be an advertisement for me. I want it to be informative. What kind of stuff did we talk about?
Erica-We talked about what I wanted to look for in a house like price. You got me set up on the MLS.
Adam-We asked what you wanted. Was that meeting overwhelming because sometimes we talk about a lot.
Erica-As a regular listener of the podcast it felt like I already knew you and I was hanging out with a friend.
Adam-How did you decide what area you wanted to live in and what kind of house you wanted? You already knew that when you came in.
Erica-It was easy for me because we’ve lived in Dogtown for the last year and a half and I love Dogtown. I wanted to be as close to Forest Park as possible so I knew that’s where I wanted to be. As far as price range, I knew I wanted to pay less on my mortgage than I was paying in rent.
Adam-Did you already know what type of house you wanted or did you figure that out as you went?
Erica-We figured that out as we went because I like a wide variety of houses. As we got farther along it seemed like Joey really preferred houses with finished basement so that’s were we ended up.
Adam-So he could have a podcast editing studio down there?
Erica-Possibly, or an ebay office.
Adam-It seems like I need to get into that topic off the air. What could we have done differently about that meeting?
Erica-Not really anything.
Adam-Then you got pre-approved. Did you do that before or after we met?
Erica-I had a phone conversation the day before we met.
Adam-How many lenders did you talk to?
Erica-I was a slacker but I only talked to one mortgage broker because I felt like I could trust the guy because he was recommended by you and Joey.
Adam-I’m sure we also recommended that you talk to more than one lender.
Erica-I’ve heard that it’s possible to get a lower rate but sometimes it’s better to have a lender that is going to be timely and reliable.
Adam-There is a see-saw of having a really great buying experience and how does that match up with the long term of actually paying the mortgage. Was the pre-approval process intrusive?
Erica-The hard part for me was getting over my fear of talking on the phone. This whole process has made me a lot more phone friendly. I had so many long conversations with my lender and realtor. There were a lot of personal questions about finances but I expected it. You do have to be prepared for that if you’re the type of person that doesn’t like to give out that kind of information you will have to get over it.
Adam-People yell that they shouldn’t have to give out that kind of personal information but the lender could say they don’t have to give them $100,000 then. Did you use any down payment assistance programs?
Erica-No, I went with a 3% down on a conventional loan. I think you have to have really good credit. I also had to take a $75 home buyer’s course that the lender paid for. It was really good course and I would recommend it.
Adam-Your lender was John Charlton, the guy we have on the show a lot. Is there anything you would have done differently for the pre-approval process?
Erica-Everything went so smoothly and I really enjoyed working with those people so I would probably do it the same way again. I’m happy with my rate and I could have gotten a little bit lower one if I had gone with Quicken Loans but I’ve heard terrible things about them.
Adam-Was there anything you found out later in the process?
Erica-The day before I closed they said it is the lowest rates since a year ago but I locked mine in.
Adam-You couldn’t have done anything about that anyway. Then the looking at houses process started. You did some some of that with me and then did some with our Realtor, Shannon St. Pierre and then you finished with Shannon. How many houses did you look at per meeting?
Erica-The first time there were 7 and after that it was 5 every time.
Adam-What is a good amount before you started to feel overwhelmed?
Erica-I could have done more. I could do 10 in a day if there were 10 I wanted to see. Even the bad ones are fascinating.
Adam-Can you believe someone lives like that! How many did you see in total?
Adam-Were you figuring out what you wanted in the beginning?
Erica-The first day was a lot of stuff that had been on the market for a while and there were a couple that just came on the market that weren’t right. They didn’t have finished basements or whatever. The ones that had been on the market for a while were there for a reason.
Adam-The first showings were important in helping you figure out what you wanted.
Erica-I had never been to an open house before.
Adam-Who chose what houses to look at?
Erica-I chose after you got me set up on the MLS and I would get emails whenever a new house came on the market. It was exciting every time I got an email. I would compile a list and send it in and say I want to see these this weekend. After we went through the ones that had been out for a while we had to go see houses the day after they came on the market so as not to miss out. Since I started looking in January it has really heated up.
Adam-Oh, it’s hot. When we start with a buyer we do a date day where every Thursday we go look at houses but if they are selling too fast then you go the day of. Who drove you around to look at houses?
Erica-The days we saw a bunch the agent picked us up and drove. When we would see one we would meet there.
Adam-I was wondering if the listener knew how this worked.
Erica-I honestly didn’t know. It was easy that we lived in the neighborhood that we were looking in. Shannon picked us up and then we drove a block away.
Adam-I’ve got Shannon working with some other buyers and she is driving all over the place and she couldn’t be here because she is in Ellisville today. How did you know when you found the one?
Erica-We found what we thought was the one that was a century old 1/2 story shotgun house with a-frame bedrooms upstairs. I put in an offer that got accepted but it didn’t end up working out after the inspections came back.
Adam-Because it was a money pit?
Adam-And then you kept looking and found the one?
Erica-Yeah. It was the nicest house we had seen. It came on the market the day before, we were the first ones to see it, and we got it.
Adam-Once you saw the house you knew it was it. Did you bring a devil’s advocate like your dad, brother, best friend, uncle, or cousin?
Erica-No one volunteered to do that.
Adam-A lot of people bring a devil’s advocate. Every time I’m buying a house I bring my brother and he shows up with a flashlight and really looks at all the details. You didn’t bring anyone like that?
Adam-I guess Joey was that. I guess you didn’t really need someone like that because you got your inspections. We’ll talk about that in a second. You sent me an email earlier today and you said you would look the seller’s up and you knew if they had cats, what their financial situation was, and what their favorite colors were? Tell me about that.
Erica-Social media makes it very easy. You see their name on the contract and then you look them up on Facebook.
Adam-You only looked up the people you had a contract with, not every house you went to. Is it creepy for you to talk about what you were able to find?
Erica-I couldn’t find out that much.
Adam-When you are looking at houses, how could the process be better and were there any surprises?
Erica-There was a specific house that was interesting because we showed up and the old lady was still there because her Realtor didn’t call her. She showed us around and it was the craziest house I’ve ever seen. Shannon agreed. It also was a shotgun style but it hadn’t been updated and it had been in her family for over 100 years. You got into the attic through the bedroom closet and there was a bedroom up there.
Adam-You had to enter the bedroom through the closet!
Erica-It was a super narrow little staircase in the closet. At one time there had been 8 kids all living there at once. The basement also had a tiny narrow staircase down and there was another kitchen down there with another bedroom. It was crazy and probably no one will ever be able to live there.
Adam-Could the looking for houses process been better? You said you could have looked at more.
Erica-There just weren’t enough to look at. I do not like the open house process. There were too many people and you couldn’t really look at things closely. It was so crowded.
Adam-Then you found the one and you made an offer. What gave you the comfortability to make an offer on this house and sign all those papers?
Erica-My nativity? I was signing electronic documents I was signing so it didn’t feel real.
Adam-Did you feel like you were described what they said?
Erica-I read everything that I signed. I didn’t blindly sign it.
Adam-Some buyers are afraid to take that step of making an offer because they are afraid of what that means.
Erica-I was ready and I was under a little bit of a time crunch because our lease was ending soon.
Adam-Did you negotiate the price?
Erica-We negotiated. We offered $10,000 under what they were asking. Shannon ran comps and told me what price made more sense. It had just came on the market the day before though. They countered $5,000 below and we accepted. Our end price was actually the price I was going to originally going to offer.
Adam-You were originally going to offer the price you got it for but you Realtor told you to go lower?
Adam-You know your offer had a bunch of contingencies. How did you get comfortable with those?
Erica-That buyer’s guide you gave me and Reddit. I read, educated myself, and talked to the Realtor.
Adam-Did you ask the seller’s to pay any part of your closing costs?
Erica-We asked for $3,000 and they accepted that.
Adam-So you actually got them down $8,000. Now you’ve got an accepted offer and it’s time to do inspections. What inspections did you get?
Erica-I got radon, general building, termites, and sewer lateral line. It’s been so long that I forgot.
Adam-Did the same person do all 4 inspections?
Erica-They hired someone for the sewer but the same guy did the other three.
Adam-How much did all these inspections cost?
Erica-It was $720 and I had paid that twice because I got the inspection on both houses.
Adam-You told me that you were glad you got that inspection on the first one otherwise you would be paying a million times more. Did you go to the inspections?
Erica-Yes. I wanted to have more time to spend in the house in general. It is kind of crazy to see a house for 20 minutes and then decide to live there.
Adam-How long did the inspections take?
Erica-The first one was 2 1/2 hours and the second one was 2 hours.
Adam-Same inspector both times?
Adam-Did you learn anything that you want to share or would you do anything differently?
Erica-I would be less lazy and walk around with him the entire time. I walked around a little but then figured I could read the report later. I stayed the entire time to look around and see what kind of stuff will need to get done.
Adam-So you would be more involved if you were to do it again?
Erica-Yes but you feel like you are a puppy dog just tagging along. I’ve got no problem with reading a full inspection report.
Adam-You got the report the next day read over it and then it became time to negotiate the inspections. Oh, baby. The second negotiation. Was there a lot? What did you ask for?
Erica-It was a bunch of little stuff like installing a carbon monoxide detector, tightening the toilet, clearing the sewer of roots, and some other stuff. We gave them a list and they agreed to do all of it.
Adam-It was a lot different from the first house you put an offer in on. These people had actually done a lot of maintenance and kept their house up. They gave you everything you asked for?
Erica-Yeah. I was surprised. No negotiation at all.
Adam-What are they going to do, refuse to install a $20 carbon monoxide detector? Is there anything you would have done differently for negotiating the inspection process? I feel like we have to fast forward a year to really find out the answer to that question. What if one of your windows don’t open?
Erica-That actually happened! One window won’t stay open.
Adam-Check to see if that is on your report.
Erica-I don’t think it is but I will check.
Adam-Just so the listeners know, you were communicating with your lender the whole time and sending him everything. He asked you for your report card like it was second grade. You promised you got all A’s.
Erica-The weirdest thing is that when I was 18 my mom opened a checking account with me and her name is still on it for some reason. The lender needed a note from my mom to make sure it was okay to use the funds. It was easy enough.
Adam-It is time for closing. Did you know in advance how much money you were going to need to bring to closing?
Erica-Not at all. I knew in general but they did not tell me until the evening before closing.
Adam-That is weird. That used to be the norm but things have changed with the new rules but I never understood why they couldn’t get this figured out ahead of time. You had to go to the bank and get a cashier’s check?
Adam-Why are you still looking at houses? I hear you are still looking at the emails we are sending you.
Erica-I like seeing what’s out there and I think I will eventually rent out the house I bought and get a new one. I’m really fascinated with buying a house that is a little run down, fixing it up, living in it for a while, and then moving on to the next. I like the idea of saving a sad house and fixing it up.
Adam-Did you make your roommate sign a lease?
Adam-Maybe you don’t need to.
Erica-I trust him.
Adam- There are pros and cons. You probably have more control now if you don’t make him sign a lease. If you want to kick him out now you can.
Adam-I know that was an awkward question. Any information other first time home buyers should know about closing? Did they come in with a stack of papers for you to sign?
Erica-It’s not as bad as you think it’s going to be. It helped that I had really good people around me. Finding a great Realtor and lender is important to making the process go smoothly.
Adam-After the closing and the property funded you got the keys. Was it dirty?
Erica-It was so dirty. It was really bad. I cleaned the entire kitchen and the refrigerator was bad. It might have been a mistake to ask for appliances because we don’t own any. The refrigerator was terrible. If I could do it over…
Adam-It’s dirty or it doesn’t function?
Erica-It was dirty but I cleaned it. It took forever.
Adam-I love/hate talking about this because everyone’s definition of dirty is different.
Erica-That’s what Shannon said during our final walk-through. I asked if they were going to clean more before closing.
Adam-If they are nice.
Erica-I asked if we could tell them to clean more and she said that people have different definitions of clean.
Adam-I’ve had that conversation with her. We ask people to have the home broom-swept and they don’t do a good job. We ask to have the home professionally cleaned and then they say their aunt is a professional cleaner. No one is ever happy. Sometimes the seller does an amazing job cleaning but the buyer comes in and cleans it anyway. They want their bleach to go over your bleach.
Erica-We talked about hiring someone to clean but we didn’t trust that they would do it right.
Adam-It’s always a big debate and we haven’t come up with a solution for it yet. How do you measure cleanliness? Then it came time to move in.
Erica-We haven’t moved in yet.
Adam-I’ll change the context of my question. Are you going to hire movers?
Erica-We’re going to try it without movers since we live so close. We are going to make as many trips as it takes. We are going to borrow my mom’s van.
Adam-Are you going to paint?
Erica-We are still painting. One of the bedrooms was painted for a 6 year old girl so it needs to be painted over. I’m really excited that I bought paint today.
Adam-Have your neighbors brought you pie?
Erica-Are they supposed to?
Adam-I don’t know. I’ve never met anyone that has had that happen.
Erica-I haven’t met any of the neighbors yet. I must be unapproachable. Joey has met a bunch.
Adam-That’s because you are inside working and he’s outside just hanging out. Have you done your change of address yet?
Adam-If they mail you a coupon to Lowe’s, make a copy of it and use it at Home Depot because they honor competitor coupons.
Adam-If you are going to spend $500 on paint you may as well get $50 off.
Erica-I joined the paint perks club for Sherwinn Williams and I got 10% off my can of paint today.
Adam-Scam artist. Are you ready for your quiz?
Adam-This is my 5 random questions that I came up with to find out if you are a real estate expert.
Erica-Only 5? If I miss 2 I fail.
Adam-Yeah. After this I’ll ask my standard 5 questions that I ask everybody. What is radon?
Erica-It is a gas that comes from the Earth and it lives beneath your house. It is odorless, tasteless, and it can give you cancer.
Adam-Ding ding ding ding. What is an anti-tip device?
Erica-It goes on your stove and it keeps you from crushing you to death.
Adam-That’s right. If the stove door is open and your baby stands on it, it makes it so the stove doesn’t fall and close on them. What is a short sale?
Erica-A short-sale is when someone owes more on their mortgage than what they can sell it for so they need the lender to help them sell it? They sell it and the bank has to approve it? It can take a long time so it’s weird that it’s called a short-sale.
Adam-They sell it for short of what they owe. You were on the right track. I’ll give you that one. What are the 5 main contingencies in an offer?
Erica-Inspections, appraisal, financing, and…what are the other two?
Adam-You had to call and make sure you could get…
Adam-You also want to make sure that you got a copy of the seller’s disclosure.
Erica-I didn’t know that was a contingency.
Adam-A lot of people waive that because they’ve already seen it ahead of time.
Erica-That is exactly what happened. I read the seller’s disclosure when we looked at the house.
Adam-How did your Realtor get paid?
Erica-They were paid by the sellers.
Adam-Did they ask you for money at any point?
Adam-That’s great. Do you have any hot tips for the listeners?
Erica-I feel like we covered a lot.
Adam-I’m going to jump into my 5 questions. I appreciate you being here. Thank you very much.
Erica-Back at our first meeting I said we should do a podcast.
Adam-Who lives under your roof?
Erica-My boyfriend, Joey, and my cat, Morty.
Adam-Where are you your best?
Erica-I’m my best when I’m not at work. When I’m with Joey and we are having an adventure because I can be as silly as I want.
Adam-What is a recent adventure?
Erica-We went to Castlewood State Park. We like going on walks to places.
Adam-Did you do the river scene trail?
Erica-We did. We walked along the river and it takes you up the cliff.
Adam-Did you bring Morty?
Erica-We’re kind of weird cat parents because we wish we could bring him everywhere like a dog but it’s just not possible for him to go on hikes with us. We do bring him to my parents all the time and when we house sit. I would never leave him for an entire weekend.
Adam-Enough about the cats. What is your favorite blog or podcast?
Erica-I didn’t know you would ask me the normal questions. Comedy Bang! Bang! is my favorite podcast. It is a comedy podcast where people come on as characters.
Adam-What is your guilty pleasure?
Adam-Do you have a favorite show?
Erica-I could watch HGTV forever and ever. I would say Fixer Upper is my favorite but there is this new show called Good Bones and it’s a mother/daughter rehab team and they are in Indianapolis and I love it. I’m really close with my mom so I love that they have this close relationship together. I wish my mom was into that stuff. Maybe she will be.
Adam- You will have to send her a link to this podcast episode. Who is your mentor and how have you thanked them?
Erica-If you had asked me in college when I considered myself a writer I would have said my professor, Dr. Bayer, but I haven’t talked to him in a long time. It is kind of sad.
Adam-Have you thanked him?
Erica-Maybe I should.
Adam-Any final comments?
Erica-This was so much fun. I wasn’t really nervous for it. It was easy.
Adam-We thank you very much for being here and we thank Joey. I guess we will wrap up the show. Look forward to future episodes where we are going to dive deep into specific topics. If you have a topic you would like us to tackle, send us an email at PODCAST@HermannLondon.com .