Home Buyers: Answers from an Agent
For this blog, we sat down with local real estate agent, Robin Godeaux. The housing market can be very difficult to navigate. These days it seems even harder. We thought asking questions from a local agent would be a helpful perspective.
Q: How important is it to have a real estate agent on your team?
A: One bonus, it’s free to work with a real estate agent. Agent fees are paid by the seller.
· We have access to homes before they even reach the market. We can check the MLS listings and match our buyer to a home quickly. This helps the buyer not have to fight multiple offers which can save you money, especially with homes going for $5,000-10,000 over asking.
· We communicate with other realtors in the area constantly. So we can reach out to another agent and see what homes may coming on the market that will match our buyers needs.
· We also understand the market and problem-solving along the way. As you go under contract, there's so many things that we run into. Every situation is different, so you never really kind of know what to expect. But as those problems arise, there's always a solution and we work really hard to make sure that our buyers and our sellers are protected throughout the process because things can go awry really fast. So to have that professional behind you, fighting for you, working for you, it's definitely beneficial.
As a buyer, there's really no reason why you should not have a real estate agent in your corner because there are multiple perks for that.
One thing I didn’t realize until I got into the business is the emotions involved. You're talking about people's homes, their safe spaces. Whenever you're buying a home, you're dealing with a seller who is probably very emotional because they are selling their home where they've made all their memories, where they've raised their children, where they've entertained all their friends and family.
This is one reason having an agent in a ‘for sale for by owner’ transaction is important. More than likely there's a reason why they don't want to use an agent. Most of the time it's because they don't want to pay a realtor commission. And you can get involved in all of those emotions from the seller. And if you don't really know how to handle that or deal with it, you're probably never going to be able to get to that closing table. That’s another reason, to me, that having a real estate agent is beneficial. You have someone fighting for you and representing you and negotiating for you.
Q: So can you kind of explain the basic home buying process?
A: Yes, absolutely. To keep it simple, the first step whenever I have a buyer call me and they say, "Robin, hey, we're thinking about wanting to buy. What is the first step? What do we need to do?"
GET PRE-APPROVED - The first thing that I always ask, are you getting a loan to buy the house or are you paying cash? Most people are going to be getting a loan. So I always ask them if they've gotten pre-approved and if they have a particular lender that they're going to be working with.
And if they haven’t, I have some contacts that I work with. I usually try to send two or three. It depends on their needs as well. If they are military and they want to use a VA loan, then there's particular lenders out there who specialize in VA loans. I'll kind of direct them in a couple of different avenues. I'll let them make the phone calls and decide who they want to work with. But in this market, there is no seller that will look at an offer without a pre-approval letter.
If we're going to start house shopping and you fall in love with the house, there's not much time before that house will probably have multiple offers. So I always tell my buyers to have all their ducks in a row, and have their pre-approval. Once I know what price range we can shop in and then we can give it a go and go hard and find the house that they want.
A lot of times they'll send me the houses that they like. I'll set up the showings and we can start shopping. Say they fall in love, and they're ready to put in an offer, the first thing I'll ask them is how much money do you have on hand? Do you need all of your money that's in your account to go towards the down payment? Can you afford to pay closing costs?
Normally, I would say on about $160,000 house they would need about five to six thousand dollars in closing costs. If they don't have that much then we can always ask the sellers to pay that. Whenever they're ready to put in the offer, we'll discuss those things. I also tell them that they will need about $2,000 in upfront costs throughout the under-contract process.
INSPECTIONS - Once you go under contrac, your inspection period, or due-diligence period, will start. There's about a 10-day period, sometimes it can be more but the average is about a 10-day inspection period. And the buyer can back out for any reason whatsoever during that period. That's your time to do your inspections on the home. The Inspector will only point out possible issues. They won't diagnose anything. If he suspects there's an issue with the roof or the foundation or if it might have termites or just different problems with the home, he will recommend getting a professional to come look at the house. If you do your inspections early in the process, then you still have time to call in specific professionals for inspections if needed.
An inspection can cost anywhere between $375 -$500 depending on the size of the home, if there is a crawl space under the home or if there are multiple structures on the property.
If you do your inspection and you find out that the house is too much work or has too much costs involved, you can back out and you're not in breach of the contract and you'll get your deposit back.
UPFRONT COSTS – Three up front costs: inspection, deposit and appraisal fees. Your deposit, which will be needed within about 72 hours after going under contract, will be anywhere between $500 to $1,000 dollars. That's basically your good-faith deposit to let the seller know that, yes, I do want to pursue purchasing this home. At that point, the sale is pending and the home comes off the market. They stop showing and they stop accepting other offers. So its letting the seller know that you're serious about purchasing the home.
A termite inspection is usually $75.
If you move past inspections, you go back under contract and you're locked into the contract after your due diligence period.
Your appraisal would be next. Depending on the lender, that fee can vary anywhere between $500 - $700. Some lenders don't require it until at closing and it will be part of your closing costs. Some lenders require it upfront before they order the appraisal.
So those are your three things: your deposit, inspections, and appraisal fees.
Then come the closing, which is your down payment and closing costs.
CONTRACT – The contract is conditioned on inspections, appraisal, and financing. So as a buyer, those three things are the only reason why you would be able to get out of the contract and get your deposit back. If the inspection is not to your liking and you don't like what you find in this house, you can back out as long as you are within your inspection period time frame.
Let’s say you're under contract for $200,000 but the house only appraises for $180,000 and the seller refuses to sell for $180,000. If you don't have the money to pay the $20,000 at closing then basically means your financing is falling through and you no longer have to buy the home.
The three things that would allow a buyer to back out of the contract is inspections, appraisals, and financing.
Q: If something substantial if found during inspection, could the price be renegotiated at that point?
Absolutely. When you make an offer on a home, it's basically based on what you can see. If you can see there are issues with the flooring, are holes in the walls, the roof is significantly old or damaged and would need to be replaced, you can make your offer based on that. If there's anything you find in inspections, you can definitely renegotiate the price.
We’ve also had buyers, instead of negotiating the price, they'll either ask for money to make the repairs or ask that the repairs be made. If it's something that the sellers can do themselves they'll have to provide pictures that it was fixed or receipts from a professional.
I like to recommend that the buyers ask for the money so that they can make the repairs in a way that meets their standards. If you leave it in the sellers hands, it may not be done the way you would want it done.
Q: I think there's a lot of people that might enter into a contract on a home and not think about what all could be potentially wrong with it that you couldn't see.
Right, and inspections are not required. But I would never, ever, ever recommend to a buyer not to have an inspection done. It’s is well worth the $375 - $400 that you are going to spend to save you money down the road if anything goes wrong. Pay a professional to do it.
Q: You talked a little bit about how to make an offer in that process. Can you elaborate on that a little bit?
Basically, of course, you go look at your house and then we run comps, which is basically looking at other comparable homes in the market to see if the house that we're looking at is overpriced or not. There are some sellers that are adamant about getting a certain dollar amount for their house and there are some agents that will agree. We want to make sure that our buyers are protected, that they're not overpaying for a home. The appraiser will pull the comparable properties and look at that for you if you're using a lender. If you're going to pay cash for a house, nobody's requiring an appraisal so you don't know if you're overpaying for a house or not. Another reason why having a real estate agent on your team can be helpful. They can pull those comps as well.
The comps can help you know if you need to negotiate your price. Are they already priced low? Do we have the option to ask them to cover all your closing costs? Could we maybe shoot a little bit higher, and you still have some equity in your home? Every situation is different. Every seller is selling for a different reason. Sometimes, it's for financial reasons, sometimes it's for a move. They may have equity in their home that gives them some wiggle room and may help you get a better deal. Sometimes, they haven't been in the home long, so they have no equity and can’t really negotiate.
Agents work very closely with the listing agents to find out as much as they can up front to know where we need to be with our offer. There's really a lot that kind of goes into it. Of course, you don't want to go in too low and risk upsetting the seller where they don't want to work with you.
And like we discussed earlier, your inspections may give you a place to negotiate. Asking them to come off the price or asking them to fix certain things. You don't want to beat them up too much in the beginning because you still want them to work with you during the inspection period or with other things that may come up. I try to educate my buyers on the fact that we're going to try to get the best deal for you, if this is the house. But It's two totally different spectrums. The seller wants top dollar and then the buyer wants a deal. When it comes to putting in the offer, we'll try to get you the best price upfront but keep in mind there may be more negotiating to come.
Q: So when you say comps, you all are looking at the price of other properties in that same area to get an idea of what other properties are going for?
A: Correct. We look at sold properties and what they actually sold for. You can have a house that's on the market for $250,000, but that doesn't mean that's what it will appraise for, or what it will sell for. We look at properties that are comparable. Say you have a $250,000 home, but it only sold for $210,000. We'll probably price ours closer to the $210,000 mark, if it's super, super comparable. We look at square footage and things like renovations. Has one been updated and another hasn’t? We look at all of those different things to kind of get an idea of how to price it. The listing agent actually should have kind of done all of that for the seller upfront, but as a buyer's agent, we'll always double-check those comparable properties just to make sure.
Q: I find a lot of people, when they're buying a house, don't think about things like a homeowner's association and that the home they're looking at may not just be a property. It may actually be part of an association, which comes with fees and things like that. What's your experience with that?
A: A lot of my buyers will come to me, and pretty much already know if they want to be in a neighborhood that has an HOA or not. A lot of them will automatically just think, "I don't want to be somewhere that has a homeowners' association because I don't want to be told what to do. I want to live in my house. I want to be able to do whatever I want to do in my yard. I want to be able to build whatever I want to build," which I totally get it. Other people will say, "I definitely want to live in a neighborhood that has an HOA because the HOAs are there to keep property value up, so you never have to worry about someone coming in and painting their house next door to you hot pink or trashing up the front yard or just different things. You don't have to worry about that."
They also keep the neighborhoods up and taken care of. If you have a neighborhood that has a community pool or boulevards or a park or something like that, the HOA is there to help maintain those things as well.
HOAs are the homeowners' association. It's usually someone that lives in the neighborhood elected President to oversee it all, and then each member of the neighborhood or the community will pay a certain fee, either monthly, twice a year or yearly. They can vary anywhere between $60 - $400 a month. It really just depends.
If the home you like does have a homeowners' association fee attached, I would definitely run that by the lender that you're working with because that can definitely factor in to your monthly note. I always refer back to the lender when it comes to that. But if it is one that is paid monthly along with your house note, a lender will definitely take into consideration how much an HOA fee is to make sure that the buyer still qualifies for that particular home.
Q: Considering some HOAs can have restrictions on things like structures and things like that around your home, would it be beneficial or is it possible for a buyer to try to sort of see what those rules are before they buy? Would someone be willing to share that with them?
Absolutely, yes. Those actually should be attached to the listing that normally only realtors have access to. So if you are shopping on Zillow or Realtor.com as a buyer, you're probably not going to see the bylaws attached to that particular listing. The bylaws and restrictions will be uploaded on each listing in the MLS along with the property disclosure, which has all of the sellers' information they've disclosed about the property. They'll have the flood disclosure, the lead paint disclosure, and the sewage disclosure if the house has a septic tank. The lead paint disclosure is usually only on houses that were built before 1973.
That's another reason why it's beneficial to use an agent, because we have access to all of that for our buyers.
That's such great information to have. Knowing all of those things going in gives you a better idea of what owning the home is really going to cost you besides your mortgage.
Absolutely. And the restrictions as well. You can get into some neighborhoods where you're down to the style of the mailbox, what colors you can paint your home, where you can park, if you can leave your garage door open at any time or not. If your garage door is open for more than an hour a day, they can come and flag it. It can get really, really crazy, and the bylaws can get very lengthy in some of these neighborhoods. So that's why we like to put that up on the listing just to see. It works for some people, and it doesn't work for some people.
Q: Another thing I think people do a lot of times when they're looking for a home is they get caught up in things like looks and square footage. But there's really a lot more that a buyer should be thinking about besides that. What kind of things should they look for?
A: Right. Whenever I have a new buyer and I don't know anything about them yet, I have a particular set of questions that I'll always go over and ask them. I cannot start sending you homes until I get an idea of what you want. Some people know exactly what they want and some people don't.
I'll start with asking how many bedrooms and bathrooms they need, which is usually three bedrooms, two-bath. Sometimes a four-bedroom is an absolute necessity. Sometimes they just need an extra room if they work from home and they need an office. So I'll start with that.
The next biggest thing is location. Some people just say, "I just want to be in the outskirts of Lafayette." But that could mean Youngsville-Broussard or Rayne Crowley. I ask, "Why do you want to be in that location?" "Do you just want to be in the country?" or, "Do you want to be in a particular school zone?" or, "Do you need to be in the outskirts because it's closer to your work?"
I'll kind of break it down a little bit further because that kind of helps me understand the buyer's needs and wants, and understand where they really want to be for their drive to work, etc.
I also ask about square footage; there's usually a big range whenever it comes to square footage. I find out their minimum and start with that.
We find out the number of bedrooms and bath, square footage and then price point and location. Then as we start searching, I'll always tell them, as we kind of learn more of what you want and what you like, and you can kind of see what's out there in that price range.
Then we can kind of start narrowing it down more to things like fenced-in yards, or if they want a pool or a shop or office.
We can also consider things like, say they wanted a fourth bedroom, but when looking at the four bedrooms, they are tiny. Maybe it makes sense that you have a three bedroom house with an office or a three bedroom house that you can add on because you can't make bedrooms bigger. So we can tweak the search as we go along. But those are really the four main things that we start with is location, price point, bedrooms and baths, and square footage.
There's just so much to think about when you buy a home. It can be so overwhelming. That's why people like you are handy to help folks make it through that process.
And then there are flood zones to consider as well. The 2016 flood really freaked a lot of people out. I feel like we're kind of starting to get away from that a little bit. But I do have a lot of buyers that will ask, "Did the house ever flood?" And if it did, often they don’t want anything that ever flooded. There's a few things that I cannot filter out whenever I do searches, and that is one of them. I really hope one day that is something that we can filter on. For now, as we do our searches, I will always look up addresses the buyer is interested in to for flood zone status.
And when I say not in a flood zone, I mean a flood zone that requires flood insurance. There are four different types of flood zones.
Flood zone X does not require flood insurance. That doesn't necessarily mean that the house won't flood because there were a lot of homes in flood zone X that did flood for 2016. But flood zone X is the only zone that a lender will not require flood insurance or for you to carry flood insurance. It would also be the cheapest because the higher elevation means less risk.
Flood zone A, which is a little bit more at risk of flooding, but your flood insurance would be the cheapest of required flood insurance. You can still carry flood insurance if you want.
Flood zone AE, which is higher risk and where your flood insurance starts to go up.
The last one is a Floodway. And basically, that is going to be probably really expensive flood insurance, and it may be difficult to even find an insurance company to cover that, to write a policy in a floodway.
Whenever you're getting preapproved for a home, you always want to check to make sure-- if it's in a flood zone that's going to require flood insurance or not. You want to make sure you're still qualified with that as part of your note.
Even though you buy a home in flood zone X, the flood maps are constantly changing so you just kind of have to be prepared for those types of things.
Q: Before we go, is there anything you'd like to share with our listeners about yourself and about your team?
Yeah. Absolutely. I am with The CJ Group at Keller Williams Realty, and on our team at The CJ Group-- we have about 17 agents that work with us on our team. So whenever you hire me as an agent, you're not only getting me, but you're getting my entire team that helps work for you. We network together-- not only with just the members on my team, but I network with all agents across the board of all brokerages. So whether or not you see a home for sale by Latter & Blum or by Dream Home Realty or any other brokerage, I can show you any house on the market. My real estate professional career is not just solely with Keller Williams. Whether it is land, whether it is commercial, whether it's with any brokerage that has it listed, I can help you buy anything that is literally real estate.
We do have our own commercial real estate agent, Rusty Steel. He is actually part owner of The CJ Group. So if we have someone that wants to purchase a business, or if they have a business that they want to sell and it's zoned commercial, you have to be specialized in commercial real estate. We partner with Rusty for those transactions. He does residential and commercial. He is definitely amazing to partner with. I've done multiple commercial deals with him, and I have him in my back pocket.
We have so much real estate experience on our team. We have agents that have been in the business for over 20 years. We have new agents coming on. So literally, any type of transaction that you would be interested in, we have the knowledge and the expert. If I don't know the answer, I know exactly who get the answer from and can get the job done for you.