13. DEMYSTIFYING THE ESCROW PROCESS

Planning to buy a home in the Sacramento region and want an elite agent and lender team in your corner? Reach out below to work with us today, and make sure to hit subscribe so you never miss a dose of real estate reality! 

Get ready for a fully educational breakdown of what actually happens after you find the house you love. If you've ever wondered what your real estate agent and lender actually do behind the scenes, this is the episode for you. We explain how your dream team (your favorite Sacramento agent, Amanda, and resident lender, Leni) works together to protect you, negotiate on your behalf, and clean up the messes before you even see them.

In this episode, we break down:

• The Big Three of Offer Writing: How we strategically use price, contingencies (loan, appraisal, inspections), and fee negotiations to make your offer stand out.
• The Timeline Strategy: Why closing on the 1st of the month versus the 28th can make a massive difference in your out-of-pocket costs and daily interest.
• Seller Credits Explained: How paying a slightly higher purchase price in exchange for closing cost credits can keep your hard-earned cash in your pocket.
• A Real-Life Success Story: We look back at one of our very first deals together where diving deep into the neighborhood data and writing an aggressive, strategic offer beat out the competition—even when the listing agent doubted us.

Grab your coffee (or your Real-tea!) and join us as we translate the heavy real estate jargon into plain English.

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Connect with Leni Lopez (Your Lender Bestie)
Instagram: @leniyourloanofficer
Ready to talk lending or get preapproved? Email her team: leni@hawkinshl.com
Website: LopezNguyen.com
Mortgage Loan Officer
NMLS 1366630/225910
Hawkins Home Loans, Inc.

Connect with Amanda (Your Realtor Bestie)
Instagram: @exploresacliving
Email: amanda@exploresacliving.com
Website: Exploresacliving.com 
Curious about buying or selling in Sacramento County or beyond? Schedule a no pressure call: calendly.com/amandafreemanrealtor
Amanda Freeman | eXp | DRE 02150573

Transcript

SPEAKER_01 0:00

Welcome to Realty Check, the podcast about the real lives of agents, lenders, and moms who do it all. We're here for the honest conversations behind the business, the family, and everything in between.

SPEAKER_02 0:09

Let's get into it.

SPEAKER_01 0:10

I don't think I've ever broken a bone.

SPEAKER_02 0:11

You've never broken a bone? I don't think so. Isn't there like the broken bone theory?

SPEAKER_01 0:15

Yeah, like we're aliens or something. Is that it? No. I thought the broken bone theory is like if you haven't broken a bone, you're like not human or something.

SPEAKER_02 0:22

I think the broken bone theory that I heard was like, if you haven't broken a bone, it's because life has been hard on you in other ways. So breaking a bone. Like, I don't know. It was like this weird thing. It was like pretty sad.

SPEAKER_01 0:34

Oh, because I thought it was like, you're not of this world or something. You are bone of this world. You are this world. Amanda. Master Amanda Freemas. Jesus Christ, Linice. Of this world, girl. Hi guys. Welcome back to Realty Check. Hey, hey, hey. I realized that we stopped actually introducing ourselves. Wow, we should do that. I know. I was like, wait, I don't think our names are stated in our intro. And so for people who are new and listening, they're like, who are these chicks? I know. We just jump right in. We really do. Hi, everyone. I'm Lenny Lopez.

SPEAKER_02 1:11

I am your resident mortgage loan officer.

SPEAKER_01 1:14

And I am Amanda Freeman, your real estate bestie in the Sacramento County area. Woop woo.

SPEAKER_02 1:21

Welcome to Realty Check. This is a podcast where we say what's on our mind. We go on all of our little tangents. And sometimes, just sometimes, we talk about the real estate industry.

SPEAKER_01 1:34

Like today. We like to educate every once in a while. And today is one of those days.

SPEAKER_02 1:41

It is one of those days. Before we get into that, okay. Amanda.

SPEAKER_01 1:44

Yes. Crying, thriving. How are you doing? Okay, so summer break is upon us. And um we, our family, had my husband's uncle is a seasoned ticket holder to Giants, the baseball team. And he offered us um four tickets to a game that he was unable to attend. Yeah. And so this week, my husband took the day off for a Thursday day game. And we and took the kids to their first baseball game. Oh my god, I love this so much. It was so fun. It was so fun. And it's it was really funny because once they, once we were told like, that we were gonna get these tickets and that we were gonna go. I said to the kids, I was like, wow, I really thought that like triple A was gonna be your first official baseball game that we were gonna go and see the Rivercats, and it's the smaller stadium. I was like, your first game is gonna be an MLB game, which of course they have no understanding of what that means. And like, but um, it was so cute. Okay, so we're uh we we leave, we get breakfast on the way to the bay, we get to the stadium, like pretty much I think we were parking during first pitch. So like we were just you know a tiny tiny bit running behind, but that's okay. Um, and um, so we get there, we walk into the stadium, and for Oracle Park, they've got like these big ramps that you can walk up to get to the different levels, yeah, like huge ramps. And so not very many people were on the ramps because the game had already started. So we're walking up these ramps, the four of us, and is sitting next to me, and he's like, Oh my gosh, mom, we really had a baseball game. This is my first game, this is the best day ever. This is so exciting, and his eyes got all big, and it was just like it was so good, and then just the best. I know our seats were great, and Jack brought his glove just to maybe catch a ball, which two sections over, a ball landed in our on our level, but not it wasn't close enough for us. Yeah, um, but my husband bought him a um a game used ball from like two games before, so it was from the same, what do you call it? Not series, same season series? Season? No, like the same uh team that you're playing against. Okay, yeah. It is a series. Yeah. I don't know. What do I know about baseball? Um, so it was like the same, it was Giants versus A's game, uh, but it was two games prior. So it that's really fun. And it was just, it was great. It did take three and a half hours to get home. So it was a full, full, full day. Wow. Uh going to a middle of the day game, and we left our house at 9.30 and got back at like, I don't even know, seven. Wow. Something crazy. Barely in time for bedtime. Yeah, but okay, so one thing I will say though is we um we've started playing this new game as a family. Yeah, your game. And it was really fun to play on the drive. So we're playing the license plate game. But it's not like, I don't know, growing up the license plate game was like find every state on a nice license plate. No, this is a numerical license plate game. So you start with zero, and it's, you know, the uh far right. Far right, and then you work your way up. So you start zero, one, two, three. So um I'm at 11. Oh, you you're still playing it? Yes. Yes, I love that. You got me to start playing. Yay! Okay. I I kind of um regretted getting you playing after I did it because I was like, uh oh, she has ADHD. I hope that she is driving. Driving well and not getting distracted while trying to do it.

SPEAKER_02 5:34

You don't know me. You don't know me?

SPEAKER_01 5:38

I feel hurt and seen at the same time. Um, so when we started out, Michael's like uh a good 15 points ahead of me. Wow. But it's not really fair because he works in a fleet department, and so he can just go out into the yard and walk the rows and see if he can find the numbers. And he's like, Yeah, when it's exempt license plates, then you know they don't have letters, so I have more opportunities for it to get the right number. Oh my gosh. Um, but so he was about 15 ahead of me. I think now he's about 10 ahead of me. I was stuck on 28 for five days. I did not find 28 until so we live in Sacramento. We until we were in the city of San Francisco, like literally two blocks away from the park was when I found after that whole drive of looking. So 41 now. 28 is a uh a tough one to find. Um, I made it all the way up to, well, right now I'm at 45. I think I got up to 43 that day. So 28 to 43 during that drive. With 28 taking the whole first half.

SPEAKER_02 6:53

Jimmy Christmas.

SPEAKER_01 6:54

Okay. I know. Anyway, so that's that's that's how I'm doing. I'm doing great. It's it's summer. What about you? How are you doing? Crying, thriving? Where are we at? You know what? I'm always crying, but we have kind of a thriving moment.

SPEAKER_02 7:08

Please tell. All right, so uh on my Instagram, I got a message, and I really gotta fix this feature because in my Instagram for my business, it separates my primary from like requests. Um, and so I saw that there was a request in there, and I don't know why.

SPEAKER_01 7:30

I I just kind of most of the time those requests are people trying to sell you something.

SPEAKER_02 7:34

Yes. Yeah. And so I didn't open it for like a day. And then finally I was like, oh, it's gonna bother me seeing that little mark right there.

SPEAKER_03 7:42

Yeah.

SPEAKER_02 7:42

So then I opened it and it wasn't a spam, it was someone who messaged me, and they said, Hey, I met you at an event over a year ago. Okay. Uh, I'm looking to buy a house nail and wanted to see if we could talk. Okay. I know. And so right before this, actually, we had our first phone appointment and we got to kind of go over like the nuances of home buying, kind of like the the more general, like what to expect, who covers what, and things like that. So I I'm always really appreciative of when someone meets me in the wild in non-business modes at that, and like feels comfortable reaching out to me.

SPEAKER_01 8:21

So it speaks to uh relationship build base based business too. Yeah. Like you found them in real life, or you know, you connected with them in real life, they followed up on social media, all of the different modalities all work together to make it happen and get you a client that you're aligned with.

SPEAKER_02 8:40

Yeah, so that that was really cool. So amazing. Um, it really warms my heart because I always wonder because I'm a little bit of a silly goose. I don't know if you guys can tell. Why? From how I act on here. A little bit of a silly goose. And so I'm always like, oh man, like they probably people are probably like this lady's weird.

SPEAKER_01 8:57

Um, but I'm weird in the best way. Don't get me wrong. In our household, we call we call that you are a weirdo McTirdo. I'm a weirdo McTirdo. Michael say to my kids, who is the most who is the weirdo McTirdo in this house? And then the kids are raising their hand fast as they can. Me, me, me, me, dad. I'm the weirdo McTirdo. Oh, I love that so much. We're weird in our house. So And that's why I'm friends with you. This is this is why we can't. Exactly why I'm friends with you. Yeah. So, Manna, what are we talking about today? Oh my gosh. Okay, educational episode. We're gonna go through the escrow process. So What is escrow? Escrow is once you put an offer on a house, that process to get the house in your name.

SPEAKER_02 9:44

Ah.

SPEAKER_01 9:45

I don't know. I feel like I just butchered how to explain escrow. But like it is the process of um all of the paperwork, all of the people working together. Now there's an actual, we'll be talking about what an escrow company is. Yeah, two different things. Two different things. But the escrow itself is the process. So, like all ha keeping track of all the deadlines and all of the things. So we thought we would deep dive because knowledge is power, and it can be a little bit elusive to be like, okay, I don't understand. Like, well, first of all, we hear all the time like, why do we even need a real estate agent? Yeah. What do they even do? They just write an offer. I found my own house. I don't even know why I need an agent. Um, so escrow, the escrow process is the majority of the reason that you want an agent.

SPEAKER_02 10:38

Absolutely.

SPEAKER_01 10:40

So the easy part is finding the house that you want to get. The escrow process is the would be the complete headache if you did not know what you're you're doing. So it's it's the piece that you want a professional on your side. That's where your pro your agent is um making their worth known. But if they're doing a good job, it still feels like your agent isn't doing anything because they're hiding all of the crap that's going on behind the scenes. Like if it look if it seems like it's going really smooth, your agent is probably the reason that it seems that way.

SPEAKER_02 11:16

Something that Amanda and I figured out that we aligned on really quickly in our working friendship was that we both agree that it's better to come to someone when there's a problem with solutions at hand. Yes. And that's something that both of us really enjoy doing is that problems are always going to arrive. Nothing is going to ever happen, quote unquote, perfectly. Correct. No two escrows are exactly the same. Correct. And so our job is to take these little headaches, these little hiccups, these little forks in the road. And our job is to find a solution so that when we come to you and say, hey, this is what happened, but here's what we can do. That's our job. That is our whole thing. Yeah. So, yes, exactly what she said. Sometimes it makes it look like there's nothing happening, but it's because we are cleaning up the mess before you can even see it.

SPEAKER_01 12:04

Yep. Yep. And uh, and we thought this would be especially cool to talk about because what an agent does and what a lender does during the escrow process is completely different. So it will be very eye-opening and an in-depth explanation of all of the things during the escrow process. Yay!

SPEAKER_02 12:24

We're doing it.

SPEAKER_01 12:26

And I think we said that we would start with house identified, and then it's time to put our offer in. Yes.

SPEAKER_02 12:35

Does that sound like that sounds right? So this is you. You, congratulations. Whether you knew or not, you are buying a home now. Yay, you found it.

SPEAKER_01 12:43

Congratulations on finding your home. Well, wait, wait, wait. You're not buying it yet. Because a lot can happen during the escrow process. You gotta make sure that the negotiations are done right. You can, my friend. You gotta make sure that all of the deadlines are taken care of. Let me throw my dog out into the backyard. Go play.

SPEAKER_02 13:00

Amanda told me I smell good today. Doc is obsessed. AKA means I took a bath right before coming over too.

SPEAKER_01 13:10

I guess I need to take baths more often. The smell of soap. Um, okay, so I feel like this part is um kind of me heavy.

SPEAKER_02 13:21

So I can take kind of you heavy, but I I actually will say that when you find a home you like, loop in your loan officer. Correct. Well, that was gonna be part of what I just said. Okay, okay. So sorry. You get into you.

SPEAKER_01 13:34

Please, please, please. So when you find with your agent, you're gonna find your house and you're like, okay, this is it. Like, I want to put an offer on this house. So when it comes time to put an offer on your house, putting your best foot forward, your best uh offer forward is what your team is there to do. Right.

SPEAKER_02 13:59

So absolutely.

SPEAKER_01 14:00

So there's a couple of pieces that are important when you are writing your offer that your agent will walk you through. And the thing that your agent better do is uh before you write an offer, I certainly hope they are reaching out to the listing agent to see what is important to the seller. Yes. Because it's not always getting the highest price that is the most important or the only piece that's important to the seller. Sometimes it is, but sometimes it's also, hey, we're moving across the United States, and so we would like to stay in the house three weeks past close of escrow. And they want that written into the offer, possibly, the seller does. Or um, so so there are one, two, three, four. Oh, I guess that's the same. Three, I say three things that when you're writing an offer that you want to look for. So one is price.

SPEAKER_02 14:51

Okay.

SPEAKER_01 14:51

You want your price to be, you want to make sure that you are um paying a high enough price that you get the house, yes, but you are not overbuying for a home.

SPEAKER_02 15:03

Absolutely.

SPEAKER_01 15:04

More often than not, when it is kind of a seller's market, I will encourage my clients to do escalation clauses. So it'll be like, hey, we're gonna offer, like, if I if I know that that there's going to be multiple offers, like, hey, we're gonna offer this much money or 2,000 above your other highest competing offer up to this price point. That way, you know, if if the other offers are crappy, you're still getting it for a good price. But you're competitive if so that you don't like lose out on a home. So that's like price is the first one. Um, and then the other two are where we're pulling in the lender as well. Those are contingencies and who pays for what. Yes. Uh, and so uh after your agent talks to the listing agent, they should also be connecting with your lender. And really making sure that everyone was on the same page. I always will reach out to my lending partner, my client's lender, and say, like, hey, because number two is contingencies, contingency for the loan, contingency for the appraisal, and contingency for inspections and insurance, but that's kind of like tied into the other three. But the three are loan, appraisal, and um inspections. And so to make your offer more or less appealing to the seller, the default is 17 days. You have 17 days to do everything that you need to do to make sure that your loan is gonna close, or that your appraisal comes back right, or that you've done all the inspections that you want to do and you've reviewed all the reports and you've done all of all of the research on the home that you want to do. 17 days, that's standard. But to make the offer more appealing to sellers, sometimes you're gonna wanna cut that down. I you might say, Hey, can we do 10 days for appraisal and 12 days or 14 days for loan contingency? And so I am reaching out to my lending partner and I'm saying, This is this is what this client is thinking to make their offer more um more appealing. Is this something that is doable? Because I certainly don't want to put an offer together that is not even doable and have you say, Well, what do you no, we actually needed we needed 25 days. We couldn't do the standard 17 days, we needed 25 days because of all this stuff over here. So, really making sure that uh it's um uh feasible, which I think you can talk a little bit more about that piece.

SPEAKER_02 17:32

Yeah, absolutely. So, even on the other side, you know, with appraisals, for instance, you know, you could have someone reach out and say, Hey, my client is wanting to write this offer and they want to do a 10-day loan appraisal contingency. Well, that means that we need to get and we need to do all these things that we have the report back and reviewed and they feel comfortable with it within 10 days of getting this offer accepted. Quick. Now, if we're in a heavy buying season where appraisers are really busy, that might mean we have to pay a $200 rush fee. So it's me making sure that the client knows that, hey, with signing this with this contingency, we may or may not have to pay an extra $200. Are you comfortable with that? And that's what your lender is doing is advising you on how these decisions, what the repercussions are gonna be, good or bad. Right. Right? Or even like, hey, this client wants to close in 21 days. Well, is closing 21 days best, or is closing in 23 days when it's the first of the month better? Right. Those are the things that your loan officer is gonna advise you on.

SPEAKER_01 18:37

Why would it be better to close on the first instead of the say 28th?

SPEAKER_02 18:42

That's a great question. So we are currently at the end of June right now, uh, while we're recording this. And so if a client was to be in contract and be closing on their house at the end of this month, usually that means that they would skip their June payment because we're at the end of the month. We would skip the July payment, okay, the interest would interest for those days are actually included in your loan. And then your first actual mortgage payment wouldn't be until August 1st. Well, that's nice. It's nice. Whereas let's say your agents, your real estate agent and your mortgage loan officer spoke about this and they said, Hey, clients gonna have to move out of their house, their apartment, and their apartment lease ends on this date they want more time to clean it up or XYZ. Well, then I might say, Hey, I think we should close on July 1st. Okay. Because if we close July 1st, we skipped July's mortgage payment. We skipped August mortgage payments, and your first mortgage payment isn't till September.

SPEAKER_01 19:42

So it's not like date to date specific, it is calendar month to calendar month.

SPEAKER_02 19:49

It's calendar month to calendar month, but also interest per day also is a factor too, right? Okay, and so when you get a home loan, you think that, oh, I have an interest rate of 5%. Well, that's 5%, and then you pay it monthly, right? Well, the interest isn't calculated monthly, it's calculated daily. And so that's something to consider. So if your client is really, you know, worried about how big their loan amount is or if they're at the top of their loan amount, or things like that, that's also something to consider is the daily interest.

SPEAKER_01 20:19

Would that be a situation where maybe end of the month, like the 25th or the 28th, might be better, yeah, better because of the daily interest rate?

SPEAKER_02 20:26

And again, that's something that's why I feel like whenever you're going to write an offer, you should be tying in your loan officer.

SPEAKER_01 20:34

Well, this is why it is dream team. It is not client against the world, it's not agent doing all their crap on their own. Not at all. It needs to be a lender and an agent that can work together and educate and guide you in a very succinct fashion.

SPEAKER_02 20:55

Yeah. Or let's say on the other end, you know, maybe I've discussed this with the real estate agent, but again, it varies from house to house. The client is really interested in having some kind of seller credit cover, some fees, which is the third thing for the negotiations, who pays for what?

SPEAKER_01 21:13

Yes. Oh, seller credits. Yeah, seller credits.

SPEAKER_02 21:16

So sell so when you you probably can speak on this more, but who pays what? So on top of seller credit, what else can be negotiated?

SPEAKER_01 21:24

Yeah, so this third piece of negotiations when we're putting our offer together is who pays for what? So often that's escrow fees, um, that is home insurance fees, that is um asking for credits. That these are all things that we can there are uh like norms in the field. Sure. So like in a typical market, maybe fees are 50 50 for escrow fees. But if it's gonna be a Competitive housing market, perhaps the buyer agrees to pay all of the escrow fees. Or maybe it's a really strong uh it's a really strong buyer's market. Did I just say did I just say buyer's market twice? If it's a seller's market, you might want to pay for the uh escrow fees. Yeah. If it's a buyer's market, then you might be able to say, because maybe you're the only offer on the table, actually, I want you to cover this, this, and this.

SPEAKER_02 22:30

And those fees can mean something, right? So for instance, owner's title insurance, that can sometimes be $800 and sometimes that could be $1,900. Yeah. And so deciding who's paying that means something.

SPEAKER_01 22:42

And so as Lenny mentioned, one of the other fees is uh credit. So it could even be like, hey, I'm willing to um pay the escrow fees or or no, no, no, let's say this. I'm willing to give you uh a higher purchase price seller, but in order to get that higher purchase price, I need X amount of seller credits in return. So it's it's more like seller's bottom line is going to be at that lower price, but you're just playing with the numbers a little bit to benefit the buyer and their financial situation at the closing table.

SPEAKER_02 23:22

Yeah, absolutely. So you can talk a little bit more about that. Yeah. So for instance, let's say a home is selling for $375,000. But the home, according to your real estate agent, could be worth more.

SPEAKER_01 23:33

Oh, that's an important piece, too. Is this this all ties in again? This is why having an agent and a lender, like these are the things behind the scenes that you're like, oh, I don't need an agent. I don't need, you know, like I don't need a good lender. Like, okay, so yes, this is an important piece. Is it the home? You can't just be like, I'll pay $450 for this $350 home. If it doesn't appraise, then don't get to do that.

SPEAKER_02 23:58

No, also the listing agent's gonna say, this home's not gonna appraise for that. This offer is nothing. Exactly. Okay, sorry, yes, tangent. For instance, home is listed for $375,000. Your real estate agent has been meticulously looking at what's been pending in that area, what off what has been sold in the recent few months, meticulously looking at your home, comparing it to others, and they say, Hey, you know what? I think this home listed for $375,000, I think it could appraise for $410 or higher. Well, you're looking at this home and you're like, well, you know, I really want this house, but my closing costs are gonna be an extra $13,000. Yeah. I on top of my down payment, I don't know if that's something I'm willing to cover. And then they're like, okay, well, what we could do is we could ask, we can say, hey, we'll buy this home for $400,000,000 rather than $375. But we're gonna ask for a $15,000 seller credit. So that could mean that the seller is still, you know, $375 to $400,000, $15,000. They're still same bottom line, same bottom line net. But the difference is this means that you, as the buyer, are just coming in with your down payment and no closing costs. Yeah.

SPEAKER_01 25:28

Again, not all markets is this possible. Nope. These are things that when you have a team that is very tuned into the market, actually, um, our first client that we work together, this is exactly what happens. Yes. Uh, our very first client, I won't say names because you know, client confidentiality or whatever. But uh our very dogs. We love you dogs. Um, there's a hint, there's a clue. Um, okay. So he and I were searching, we were looking at homes for a while, and it was kind of a seller's market, honestly. Yeah, but it was. It was a seller's market. We lost out on a couple of offers, we were having to be super competitive, and we were getting uh outbid by cash offers. Uh so we found a house that the dad was the listing agent and the son was selling the house. The dad didn't live in Sacramento, he lived like up the hill. The dad hadn't done a deal for like five years. I remember this. The dad took pictures on his phone.

SPEAKER_02 26:42

Yep.

SPEAKER_01 26:43

So the client and I to our benefit. To our So the client and I, we were, we were, we had just toured a home in South Sacramento. It was like I was a little bit worried about the foundation of the home. Yeah. Like the floors were wobbly. He he and I were like walking the floors of the house, and I was like, don't, I don't, I don't know about this. I don't know about this. Um, and so we were sitting at the little uh kitchenette dining table, and um we we were both scrolling homes on our phones to be like, what else is out there? And right then this home popped up and he's like, look, this one just came up, and I said, You want to go see it right now? And so we went and we saw the house. It was gorgeous, it was so nice. The pictures look no justice. If I like, if like the client was like, You wanna, I I want to go see this, I was like, Yeah, okay. Like, I it doesn't look great, but let's let's see what it looks like in person. Yeah, it was phenomenal. Fresh paint, huge yar, like so much. It was just like fantastic. So this home had just come on the market. So we put an offer in, and I uh for this particular one, we decided uh through our negotiations um that like it was worth more than they were offering. Yes. Absolutely. And and I knew because we had lost out on a few homes in that same neighborhood, like around the block, and I knew what those were going for, and I know what they knew what they were pending for, and all of these things.

SPEAKER_02 28:23

So This is why I love her, by the way. She is a data person through and through. So she is again looking at these things to make sure that this is possible.

SPEAKER_01 28:32

So we presented an offer that was a very strong offer and favored the seller. But again, it was a seller's market. But we were like, we we want this house. Yeah, let's get a very strong offer in from the listing agent. Called me and he's like, I don't think it's gonna, what do you you think you really think it's gonna appraise for your offer?

SPEAKER_00 28:52

But also our contingencies. Do you remember our contingency? I know. I wasn't sure if you wanted me to say that on the I I don't know.

SPEAKER_01 28:57

I don't I don't know. We uh we we waived a con an appraisal contingency.

SPEAKER_00 29:02

We did.

SPEAKER_01 29:03

I that's the one time I've ever waived an appraisal contingency. Because I, I mean, almost always you want that absolutely that safeguard. Yes. But in this instance, I knew again, we I knew it was going to appraise for more than what it than what our offer was listed at. It was going to easily, easily appraise for what we were offering. Uh and the listing agent didn't believe me. And he's like, I just don't think it's gonna appraise for that. And I was like, okay. It's our risk. Yeah, and and he's like, Are you prepared if it doesn't? And I said, mm-hmm, mm-hmm. We certainly are because it's going to. Yeah. Like, it's not gonna be a problem. Um and what do you know? It appraised. He got the house. Yep. We s we we locked in our offer. I'm pretty sure a couple of other people were in the process of writing offers, but ours was accepted before they could get in because we were that quick, because we were that focused on the details. Yes. Um and the client got us all our credit. And they got us all our credit. Yes. This is like case in point. Like, this is like the prime example of um why all of this is important.

SPEAKER_02 30:17

Yes, this is all super important. Again, this is Amanda, me, and the client working hand in hand this entire time. The whole time. And we are going over what what are the ramifications of each change to this offer with this client. This was our first deal together.

SPEAKER_01 30:32

This was when I was like, oh, this girl good. Oh, I want this girl. I want this girl to be my partner. So partner in crime. Um, it was amazing. It was so good. Um, gosh, we're like 10 minutes into the episode and we haven't even entered escrow yet. You know, sorry. We're part of our but but this is an important piece of the whole process and understanding. Um so yeah, so that's you know, we we do all of this stuff again to the client. Hopefully, you are either feeling very educated through the process or you're feeling very confident with your team and their recommendations. And um, and so you submit this offer and then offer accepted. Yay! Yes. Now we're officially now.

SPEAKER_02 31:22

Does an offer always get accepted right away? No.

SPEAKER_01 31:27

Sometimes there's some negotiating back and forth. Yeah. Sometimes there's some counteroffers, sometimes there's a call out saying, hey, we got multiple offers, do your highest and best. And so we might tweak some of those again, price, contingencies, and who pays for what. Those are the three things that we are playing with for offers, counter-offers, negotiations, all of that. Absolutely.

SPEAKER_02 31:48

And sometimes there's those little tiny nuances like, hey, the seller really loves their fridge and they want to take their fridge. So they might put that in the in the hundred percent. So usually it's a chandelier. But yes, fridge could also be. It could be a fridge, it could be washer-dryers, it could be a chandelier, it could be something like that that maybe, or maybe listing that they want to keep their soul, their uh, their um security cameras, different things that sometimes get listed. I've seen on an offer that the client wanted to buy the chickens, okay? So anything is up for grabs. So, congratulations. Through all of that, your offer is now accepted. You are in contract to buy a home.

SPEAKER_01 32:31

And this is when the escrow process officially starts.

SPEAKER_02 32:34

This is when all the shot clocks start.

SPEAKER_01 32:36

Yes, yes. So as soon as I receive a ratified contract, which means all parties have signed, all parties have agreed, everything's like we're doing this, then I'm sending out a welcome email. And the people that are, or my TC is getting the welcome is sending out the welcome email. What's a TC? It is transaction coordinator, so they are helping me with all the paperwork stuff, back end paperwork stuff. So they have the checklists, my checklist, and the brokerage checklist, and they're making sure that all of the documents that are needed to purchase this home are getting filled out correctly, getting filled out on time and keeping everyone on track with deadlines. So this isn't someone that the buyer is talking to.

SPEAKER_02 33:19

This is like a little fairy on the back end.

SPEAKER_01 33:21

And they're not even they're not paying, like I pay. This is a benefit to me as the agent. So I am paying for a transaction coordinator to make my life easier. Um, I there are some there are some agents that will have the buyer pay for their TC, but I don't agree with that philosophy. This is a benefit to me. The the agent could technically do all of this back-end stuff on their own. And so the buyer should not be paying for the TC, in my opinion.

SPEAKER_02 33:48

Cold Hard Truths from Amanda Freeman.

SPEAKER_01 33:50

So the welcome email. Uh it I'm including the transaction coordinators, I'm including the agents, I am including the escrow officer, I am including the lender. The buyer is not on this email. No. This is introducing all of the professionals to one another and making sure that everyone knows that I'm saying, like, hey, this is who the lender is, this is who um this is my TC, so make sure that you CC them on everything because they need all of the documents, etc., etc. Yes. Hi. You wanna you wanna come say hi to all of our pupils? No, he's not, he's he's not, he's not. Okay, go hide in the room for another 40 minutes.

unknown 34:44

62.

SPEAKER_01 34:47

Did you hear him? He just said he found 62. He is that's where he is on the licensed plate game. He just found 62. What a jerk. I know. I'm over here on 11. No, I just finished 11. I'm on 12. Did you even write it down? Like, this is chaos to me. Did you even write it down? What do you have it written down somewhere? What am I supposed to do? Take pictures while driving? No, but when I see when I get somewhere, I up I pull up my notes app and I update.

SPEAKER_02 35:11

Yeah, that smells that sounds really smart. Well, all right. So, anywho, so you're sending this out. I love this email. I need this email. Does every real estate agent send this email? No. Do I wish they did? Absolutely. This email is super important because the thing is, the shot clock starts, but I can't do anything until I know who the other professionals are.

SPEAKER_01 35:34

Right. That's great. You escrow starts and you don't even know that escrow has started or who you can contact. No contact information for anyone.

SPEAKER_02 35:41

No, so sometimes, so on the on the offer, on the purchase contract, yeah, there is a spot for you to fill in the listing agents and the buyer's agents contact information with their address, their phone numbers, their emails. There is a spot. There's also a spot for you to possibly say who Esker was with. Those are not always filled out for me. Not often. And so what do I rely on? I rely on people telling me. And most of the time, the good agents read their minds. Oh my gosh.

SPEAKER_01 36:12

We were in contract? How not? How can I?

SPEAKER_02 36:14

Yeah, I do I do hear that sometimes. I do deal with that sometimes. You tell me sometimes. Oh, but anywho, so so that email goes out, and again, the shot clock started, but until we know who the other parties are in this transaction, nothing can be done. Yeah. Escrow doesn't even know that the shot clock started until someone tells escrow.

SPEAKER_01 36:31

That's right. That's right. And and so that's the first email is this welcome with the professionals. There's also an email going out that's the client uh connecting them to the escrow officer of who's helping. Uh sometimes the lender is included in that email, I think, too. Yeah. Yeah, yeah, yeah. Because you need everyone that's kind of just saying, like, hey, this is our side. So the first is all of the professionals involved in the process, and then you send out another email with the client to say, like, hey, this is our team. This is our side for escrow. But I will say we need to talk a little bit about what escrow even is. Yes, yes.

SPEAKER_02 37:12

Tell us a little bit. And escrow differs on where you're at. So we live here in Northern California. So in Northern California, the escrow office and the title office, one thing. Yes. We go down to SoCal, and that's two different. Catherine, how's it go down there? Those are two different offices, right? Yeah. So, so escrow and title. So escrow is the is the referee, I would call them. I think that's a good, yeah. So they are a third party. They are whoever neutral, they are neutral third party. They are who the money is being handled to through. They are the ones who the contract dates are being followed through. They are the ones who's figuring out the county taxes, city taxes, things like that. Anything that's needed that was decided upon in the contract. Their job is to make sure that this contract is followed to fruition. Yes. And title's job, which is again in Northern California, that is the same company. Title's job is to make sure that title is transferred properly, that there it's a clean title, that there's no liens being transferred from one owner to the next owner. It's their job to make sure things are being done above board for that.

SPEAKER_01 38:19

Maybe make sure that the person who is selling the property is actually the person who owns the property. Yeah, absolutely.

SPEAKER_02 38:25

You know, sometimes, you know, you have deaths that happen. So sometimes it's their job to make sure that the person selling has the authorization to sell, either for the person or maybe for the company or for the trust.

SPEAKER_01 38:36

I will say when I'm the listing agent or when I am a buyer's agent working with a listing agent, it is so beneficial to have the listing side. And in in Northern California, it is uh customary for the seller and listing side to be the people who decide uh on the uh who's gonna be the escrow uh company. Uh so it is so helpful as the buyer or even doing it as on sale side to have escrow pre-opened because then the escrow team can get started on all of this type these title searches before we even have an offer. So if there are any issues with transferring of title, we can already be working on that as the seller. Yeah. Or we already know that the title is coming in clean or we already know what the issues are when we submit our offer.

SPEAKER_02 39:31

Absolutely. Those things are really important because they are not instantaneous things. When they are searching and pulling these records, it takes days. And again, we are working against the shot clock. So if you have a shot clock, and again, sometimes you write an offer with a short contingency or short close of escrow. If that's the case, it's better to know these title issues from day one rather than finding them out seven days in.

SPEAKER_01 39:52

Well, because then you're not gonna be able to close on time. And then everyone's gonna get frustrated and feel like everyone else is at fault.

SPEAKER_02 40:01

Exactly. Another thing that happens during this time after you connect is earnest money deposit.

SPEAKER_01 40:06

Yes, big one. Big one. It's like the I think both of us are probably chatting to the client about it like immediately of hey, next on deck is earnest money deposit. So this is your initial little money that gets deposited into escrow to say, like, hey, we want this house. Hey, look, we have money. Hey, we actually mean it. Like, we want to follow through with this contract. And so that typically needs to be submitted within three days. Again, part of the contract that has been written and agreed to will say what the how long you have. But uh typical is three days.

SPEAKER_02 40:44

And again, this money doesn't go to the seller, it's not being held in the seller's pocket, it's being held by that referee, that third party, that escrow company. Yep. And another thing to know is you want to talk to your lender about where this money is coming from. So your earnest money deposit, it should be by funds that have been checked and seasoned by your lender. The reason why is those funds are going to be used at closing. This money doesn't just disappear, it's being held there so that if something happens, if your contingencies aren't being met to either side, you guys can back out, you get your money back. But if that money isn't properly vetted by your lender, that money could potentially not be used at closing.

SPEAKER_01 41:27

So, can uh say my parents want to uh want to help out with earnest money deposits. That's amazing. Can uh can I just have them transfer the money into my bank account? Please don't do that.

SPEAKER_02 41:40

Please don't do that. That is another thing that really matters. Again, this is why talking to your lender is super important. Think of us as like your priest and you're gonna do your confessional. I want you to tell me everything, okay? No part of what you're doing financially right now needs to be hidden from me, okay? I'm gonna help you figure out how to make it kosher. So, so the thing is when you're getting a gift from a family member, if it's sent into your account, I still need to see two months of seasoning from both accounts. So that means that it's coming into your account right now. Your parents just sent you money that you're now going to send out for your house. I'm gonna need to see it in your account. Okay. And I'm gonna need to see it in your parents' account for two months. Why? Why? Because the government wants to know where this money came from. Oh. Yeah. They gotta make sure this isn't mattress money. They gotta make sure that this isn't money that was gotten through nefarious actions and things like that.

SPEAKER_01 42:39

Okay, but okay, so if that's not what I should do, then how should I handle it if my parents because like that happens, right? Parents want to help with down payments.

SPEAKER_02 42:49

It happens all the time, and I will tell you, it's happening more and more often right now, I think, because we're having that giant transfer of generational wealth currently happening. Yep. And so right now that's the right way to do it, please tell us. The right way to do it is I'm gonna have a gift letter written up. It's a gift letter saying that this is not a loan. No one is loaning you this money, you're not paying it back. They are gifting this money to you to purchase this home. Okay. And then after getting this gift letter, and now having escrow opened and having the escrow company established, I will have that money transferred directly to escrow. So then you don't need to see my parents' bank statements? No, because it's a gift.

unknown 43:30

Huh.

SPEAKER_01 43:31

So it can be done f nefariously, but it just has to be done nefariously. Behind the scenes. Don't I hope not? Don't tell me that. Okay. That's what I don't want to know.

unknown 43:41

Okay.

SPEAKER_01 43:42

Okay. Got it. Got it. Okay. Mob money needs to be hidden, is what I'm hearing over here.

SPEAKER_02 43:46

If your mom is a mobster, okay, please don't tell me that. I hope your mom isn't a mobster. And I hope she's gifting you money. She's gifting you money, okay? Okay, great. These are all what-if situations. None of this has happened, okay? No, no. Okay. Okay, so your earnest money deposit goes in. Again, this earning money deposit isn't money lost. This is money going towards your home purchase. It'll probably be subtracted from your down payment. Yeah, net, or like you get a minus it from your final uh amount owed. Yeah, right. Or if you're using Cal HFA or a down payment assistance program that's going to cover all your down payment and closing costs, you can get that earnest money deposit returned back to you at the end of closing.

unknown 44:27

Okay.

SPEAKER_01 44:28

Curious question. What's up? Uh can you use that money? So, like in that scenario where it could be Returned back to you. Can you just put that down towards your loan, or would you need to get it back first and then put it down like towards principal or something? Um, that's a great question.

SPEAKER_02 44:48

I hope you tell me that beforehand. Okay. And the reason why is if we're gonna do that, then I'm gonna edit what your loan amount is while we're in escrow. Okay. But if you're deciding at the very last minute, probably not gonna happen. And I'm just gonna tell you to remove it from your loan amount like by paying the more towards the balance later on.

SPEAKER_01 45:05

Okay, okay. Yeah. So it's possible, but we need to have a game plan ahead of time. Always gotta have a game plan. Yeah. Imagine that. So then uh the other shop clocks that have started are all these contingencies. Yeah. So you loan appraisal and inspections.

SPEAKER_02 45:21

You and I both have contingency shop clocks. Uh-huh.

SPEAKER_01 45:23

So what are inspections that contingencies that could possibly so as soon as we uh are under contract, everything's signed, I am it as the buyer, if you have uh inspectors that you really love and that you want to use or that you've heard great things about, then we can use inspectors. But because I'm a professional in the field, I have access to uh professionals that I have good and bad experiences with. And so I can recommend that we use specific inspectors that I trust to do a really solid job on looking over the home for you. And so uh most often my clients will ask to go with my recommendation. And so these are all things that I will, whether it's your guy or my guy or some other guy, uh, I will schedule all of these for us. And so, home, pest, roof, these all need to be scheduled. These are like non-negotiables for me. Home inspection, unless you're buying a new build, all homes are gonna have something wrong with them. The home inspector Even new builds. Well, even new builds, yes. But the home inspector is there to uh to show you the ugly. To like, let's see this house in all of its ugly form. Let's see worst case scenario, let's make this house look super undesirable. As undesirable as we possibly can.

SPEAKER_02 46:44

Fine tooth comb, big magnifying glass. They want to show you every single impurity.

SPEAKER_01 46:50

Because not that you're going to ask for everything to be fixed because you're buying a home that's not new. So that's not realistic. But you just want to have an idea of the quality of the home that you are getting and what might be coming up short-term, long-term. Yeah. Uh as issues. Like, is the water heater have another 15 years to it? Or can I expect that to bust in the next two years? Uh, roof. Is the roof gonna be insurable? It like what does the roof look like? Yeah. All of these things. So home, pest, roof. These are like, oh, and pest is um, it's not pest like we're looking for rat droppings. Pest is uh wood destroying uh organisms. Um W D O wood destroying organisms. So that is like dry rot and termites, those are the things that they're looking for. And uh they there are different categories for pest inspections. You have section one, which means this is a current issue. Typically, depending on the market, again, everything I have to you have to caveat of depending on the market, but typically sellers will be willing to take care of section one issues because those are like now issues.

SPEAKER_02 47:59

They're also currently there are also issues that could hold up your loan. So whether it's you purchasing or someone else.

SPEAKER_01 48:05

Yeah, yeah, yeah. So like an FHA loan, those things or VA. Or VA. Mm-hmm. So Section one things often need to be taken care of, or the seller is willing to take care of them. Uh section two means like, hey, this is preventative. This is like, hey, the the bathtub is leaking a little bit. Probably want to get a new gasket there and get it fixed, but it's not like it's a oh my god, the whole house is about to flood if this tiny little leak in the in the bathtub.

SPEAKER_03 48:36

Yeah.

SPEAKER_01 48:36

So that that's section two for your pest inspection. So home, pest, roof. Now, depending on what those um what those reports show, or depending on what we see during our walkthroughs. Now, I'm not I'm not an inspector, but sometimes I'll see some electrical wiring and I'll be like, you know what? Let's get an electrician out there before the home inspector even says, like, hey, this panel is really not a great one. Like you should get uh an electrician out here.

SPEAKER_02 49:06

There's also some electrical panels that aren't warned that aren't uh insurable by home insurance companies.

SPEAKER_01 49:12

Yes. So these are all like it all plays in. But so some secondary inspectors that we may or may not use or get checked, HVAC, and this these secondary people is more of so your um home inspection, their their home, your home inspector is not gonna give you um uh uh uh cost. Yes, thank you, cost for fixing different things. Pest inspector will for their stuff, or they'll say, or they'll uh say can to send it to someone. But for for the section one and two stuff, they'll give you cost for that. Roof inspector will give you cost to replace uh two tiers of roof inspectors, the ones that you want to use for uh negotiating with the sell side, and then the one that you want to actually use for uh for getting the work completed.

SPEAKER_02 50:02

100%.

SPEAKER_01 50:05

Some some companies charge uh a lot more than they should, which is great for negotiating with the seller, but maybe not so great when it comes to actually getting it replaced. So these secondaries they will have costs uh as far as telling you how much to fix these things or uh to give you the uh health of these things. So you've got HVAC, electrical, plumbing, sewer or septic, foundation, sometimes, pool, and then some clients uh uh it's really important to them to get mold inspections done. I see. Yes.

SPEAKER_02 50:41

And something to keep in mind is you are getting all of these inspections for you. You are buying these.

SPEAKER_01 50:46

Yeah, what's important to you? Yeah, yeah, yeah.

SPEAKER_02 50:48

You these are for you to look at. These are things that you are not sharing with the listing side unless you choose to for a reason.

SPEAKER_00 50:55

These are also things that I do have to at the end, though. At the end. Yeah, like yeah. You most I it's yeah, oh see, these are things I don't know.

SPEAKER_02 51:03

These are also things that are not shared with your appraiser, which is another type of contingency.

SPEAKER_01 51:09

So while I'm doing inspections on my real estate agent side, what are you doing? Scheduling, yes, scheduling. You're doing something at exactly the same time, you're not waiting for these inspections to get done, especially if we're on a uh short contingency period. So, what are you doing on your side while I'm doing this over here? Absolutely.

SPEAKER_02 51:26

So after kind of reversing a little bit. So after Amanda sends out the welcome email introducing all of the different professionals together, I'm getting the escrow contact information. And as soon as I get that, I am sending an email to the escrow officer saying who I am and what I need. I'm telling them I need wire instructions. I'm telling them I need the preliminary title report. I'm telling them I need a copy of the earnest money deposit and uh and their that wire transfer as soon as that happens. I'm also requesting fees. These fees are going to be based off of the contract and offer that was set, the ratified contract. Okay. So these vary depending on the home. These vary depending on the escrow office that's opening it. And so again, what you decided, who was covering what, what was 50-50, I'm getting a breakdown of all of those fees. I'm getting that, and with that information, I'm creating something called your initial disclosures.

SPEAKER_00 52:22

Initial disclosures.

SPEAKER_02 52:23

Okay. Your initial disclosures are just that. They're initial. Sometimes your loan is locked, most of the time, and sometimes it's not. If them, if we're currently on a downtrending interest rate market, it's probably not going to be locked. Kind of just depends. But, anyways, the initial disclosures are just that. They're initials. So they're going to be based off of your home insurance quote, they're going to be based off the initial fees, they're going to be based off of potentially what your close of escrow date is, all of that information.

SPEAKER_01 52:49

So I can't take this number as Bible.

SPEAKER_02 52:52

This is not Bible. This is nowhere near Bible.

SPEAKER_01 52:55

Okay. Okay.

SPEAKER_02 52:56

Is it at least like it gives us a general idea though, right? Absolutely. Okay. And again, that's why I do not send these out until I get fees. Okay. So, not that it affects you guys, but it does affect me. There's certain fees that are zero tolerance. Meaning that if I put the wrong number, whatever the difference is, I have to pay that.

SPEAKER_03 53:16

Ooh.

unknown 53:17

Yeah.

SPEAKER_02 53:18

So personally, I like these fees to be as accurate as possible. Not only for my own sake, but for your sake, so you have an idea, a really good idea of what it's going to cost you to buy this house. Okay. Um, so getting those initial fee, initial disclosures out. The initial disclosures start everything on my side. So once I get those fees, once the initial disclosures go out to you and they are signed, finally I can start doing things. So the initial disclosures, they start a shot clock for seven business days. So after initial disclosures are signed, the fastest I can close is seven business days. So if for some reason you are in a highly competitive market where the seller really wants to sell this house as quickly as possible, getting those initial disclosures signed so that we can potentially close in 10 days is really important. Or 10 business days is really important.

SPEAKER_01 54:08

So what happens if um like an agent doesn't tell you that you're in contract for like three or four days into escrow? Yeah. But if you what if there is no welcome amount?

SPEAKER_02 54:19

She's saying this because this happens to me quite a bit. Um so yeah, that that happens definitely. Um apparently some people get contracts and get ratified contracts on Thursday and don't send them to me until Monday. What? And so we lost wild me. We lose a few days. It's wild. And I'm like, great, thank you so much for sending this to me. Please send me escrow contact information. And then I have to wait a few days to get escrow contact information. So we've just lost essentially ten days.

SPEAKER_01 54:48

So and and and the seven-day shot clock hasn't even started yet.

SPEAKER_02 54:52

Seven-day shot clock has not even started yet, folks. Great. Yes. So um initial disclosures have to be signed seven days. Like I said, seven.

SPEAKER_01 55:02

So this is like another example of why who you work with really matters. Really, really matters. The agent and the lender, and making sure everyone's on the same page and and talking throughout the whole process.

SPEAKER_02 55:14

The whole process, please. So on top of that, I can't get the appraisal ordered until the initial disclosures are signed. Right. Okay. So let's say you you opted to have shorter 10-day loan and appraisal contingencies. There's no way I'm gonna get that appraisal contingency out if we have not signed initial disclosures and ordered the appraisal. Okay. Right? So the appraiser is a third party as well. An appraiser is not of my choosing. I cannot choose an appraiser, nor do you want me to, right? Because that's how we go down the slippery slope of what happened in the 2000s. Right.

SPEAKER_01 55:45

So Say Say more.

SPEAKER_02 55:47

Yes. So back then it was the wild, wild freaking West. And I, as a lender, could be like, hey, buddy John, my favorite appraiser, who I send all my business to, who I help generate most of your income. I have a home that my client wants to buy. I need this home to appraise for $550,000. It's gonna appraise for $550,000, right? Wink wink nod nod. And they say, mm-hmm, it's appraising. So now we have this fictitious market of homes appraising for values that they may not have before. So now, because of those issues that arise, you cannot do that. It is sent to an appraisal agency company, essentially.

SPEAKER_01 56:28

This is a a good regulation. This is the type of good regulation that we want to see.

SPEAKER_02 56:35

Good regs, good regs, best for you, the consumer. So now it goes to an appraisal company who then essentially it's like a management company. So appraisers are all uh self-employed. They get can get um jobs essentially from this appraisal company, and they are like randomly sent out. So it's like there, there's okay, you get this one, you get this one, that you get this one. Okay. So sometimes I work with appraisers, I know, because we all work in the same industry. Sometimes there are people I've never made in my life. Yeah. And so, anyways, they go out and they do an inspection on the home. They do a completely different inspection than the inspections that your guys doing, right? So this appraiser's going out, and depending on your loan, they're looking for certain things, right? So if it's an FHA loan, we can't see dry rot, we can't see active pest. Um, which I had this happen for a home in in um in Elk Grove. This client wanted to purchase this beautiful home. It had a detached garage that had active pests. The home did it, but the garage did, and that affected it. It that affected their FHA purchase. Uh-huh. So again, these are things that why getting as a as a listing agent, if you're listening, thinking about telling your client to get those inspections done ahead of time, really important.

SPEAKER_01 57:52

Now, there's a little bit of gray area sometimes when you tell me to appraisers too. Okay, right? So, like, not gray area when it comes to dry rot or things like that, but let's say I have a client. This is another one of our first clients we've ever had together.

SPEAKER_02 58:11

I know exactly which one you're gonna talk about.

SPEAKER_01 58:13

FHA. Uh-huh. No dry rot, no peeling paint, cracks in the driveway.

unknown 58:20

Yeah.

SPEAKER_02 58:21

Yeah, cracks in the driveway can actually be a huge factor too. So but some so some, I'm just gonna say it.

SPEAKER_01 58:30

Yeah. Some appraisers and stickers. Like I was gonna say anal, but yes, okay. Sure. Sticklers, sticklers, more appropriate word. Uh some appraisers, they're gonna be like any crack in the driveway. This is a tripping hazard, which makes it a safety hazard, which means that it's not, it has to be taken care of in order to um to get this loan. Yep. In order to appraise for FHA. And and honestly, at the heart of it, the whole purpose for these regulations for FHA is to make sure that a buyer who is getting their first home ever isn't a lemon. Isn't getting a lemon. I totally get that.

SPEAKER_02 59:33

That is that is at the heart of it. At the heart. That is what it's meant to do.

SPEAKER_01 59:38

But also, when you're buying a not new home, it's not a new home. It's like, it's not, it's it's used. Yeah, there's gonna be cracks in the frickin' driveway.

SPEAKER_02 59:49

Like absolutely. Or I had a client buy um in Oakdale and shout out one of my hometowns uh buy in Oakdale, and they wanted to use an FHA. Um, and there were a set of stairs that had no rails going outside. Okay. It was like a door. Okay. And most stairs need handrails. Yeah. Was it how many steps was it down? I don't remember. Okay. But I knew that I was like, oh, I think this is gonna be an issue. Okay. But I was like, hey, we can try our best to go FHA. This is this is especially important for clients who could do either. To do either, that's exactly it. Oh, sorry, sorry, you're good.

SPEAKER_01 1:00:27

Did I steal your good?

SPEAKER_02 1:00:29

So sometimes I'll talk to clients and be like, hey, you want to buy this house. You want to do FHA because FHA is offering you a lower interest rate and your monthly payment is lower. But you love this house. So if this home can't appraise for FHA, we can move to conventional and this is what your monthly payment is gonna be. Are you cool with that?

SPEAKER_01 1:00:45

If so, let's still move forward. And as the agent, with your permission, I can talk to the listing agent about this as well and say, like, hey, I we're gonna move, we're our offer is FHA, but we are prepared to switch it to conventional if something happens during the appraisal process.

SPEAKER_02 1:01:04

Makes you look stronger.

SPEAKER_01 1:01:05

Yes.

SPEAKER_02 1:01:05

And so that's exactly what happened. We we went to the the real estate agent went and said, Hey, we know that this might be an issue. We're gonna try. Okay. And so we tried. And happened to be that that appraiser did not call that out. And so it's really the luck of the draw of what appraiser you get.

SPEAKER_01 1:01:22

Going back to our client, they also did not uh call out the driveway. No, it passed. It passed by a by like a miracle, because that was it was a lot.

SPEAKER_02 1:01:30

It was probably but that's that's out of our scope, okay? Not our scope. Not our approver, not our purview. Yeah, yeah. Um, and so I am working to make sure that the appraisal is set to come in on time. So when we I request it and they're saying, hey, we're backlog on appraisers right now, and I'm like, oof, we're not gonna get it on time. I'm updating my agent and I'm updating my client to be like, hey, in order for us to meet contingency, this is what we need. Or I'm saying, hey, we are gonna get it in time, and we can potentially, because you got this is maybe I'm overstepping here, but sometimes I can get appraisals, appraisals back really quickly within like five days. And now your client also has the inspections back, right? And the inspections have issues. Well, if since I was able to get your loan underwritten super quickly, and since I was able to get your appraisal done super quickly, sometimes you can go and say, Hey, I'm willing to remove all these contingencies if we're willing to give the client this for these issues, right?

SPEAKER_01 1:02:30

Yeah, well, that's and that's a little bit that's the next thing to go into, but I did have a question for you before before we chat about that. Um can you remove your loan contingency before the appraisal contingency? Oh no. Oh, tell more. No, no, you can't. Why? Well, I thought they were separate things. Yes. And I thought that like the contingencies were separate things.

SPEAKER_02 1:02:59

Yes.

SPEAKER_01 1:03:00

Okay.

SPEAKER_02 1:03:01

So why why can't I I say with this kind of hesitation because technically, yes, if you're willing to come in with the difference. Okay. So for instance, if you're buying a home and the appraisal comes back with a ton of issues and are and we've already removed loan contingency, these issues that the appraiser pointed out could make your loan not work anymore.

SPEAKER_01 1:03:30

So would you say that the loan is the umbrella and uh the appraisal is underneath the loan umbrella? Absolutely.

SPEAKER_02 1:03:41

Okay. Yeah, I would definitely say that. Um, so so I would say that it's most important for us to figure out that stuff. Like you absolutely the appraisal is heavily, heavily affecting the loan. The loan is contingent on the appraisal. Now, let's say you have a client who's willing to put a crazy amount of money down on a home, no matter what. Like I've had a client who wanted to put down like four, like $300,000 before on a home. So if it came under appraisal, it wasn't that big of a deal. It wasn't an issue. Okay. So so that's why I said no. Because for most people, you want to have your appraisal in before your loan contingencies are moved.

SPEAKER_01 1:04:21

But I mean there are those nuances. But I mean, in that case, wouldn't you just be probably waiving your your appraisal contingency anyway? Or just like it's a moot point, right? Like essentially they're I agree. Okay.

unknown 1:04:35

Okay. Yeah. Cool. Yeah.

SPEAKER_01 1:04:38

So, so as you said, uh after we have we have our appraisal. Um, so sometimes the inspection contingency is uh like you're doing all of these, it's your next time to negotiate with the sell side. Yes. Is once you have all of this back in. Um, you're only gonna do it once. You really need all of the data and all of the information, you need all of your inspections. You should only be doing it once. I guess there are situations where like if the appraisal is taking forever, maybe you would negotiate your inspections before, and then, you know, if then the appraisal came in low, you would negotiate again. But usually, usually you have all of your information, you know if it's gonna appraise, or if you need to uh ask for a lower price point, or ask for or be willing to pay the difference. But this is when we do something called a repair request. Uh and so we have all of our information, all of our we're we're saying that we're willing to release our contingencies. Uh usually we're getting ready to release all of our contingencies. And so we are negotiating with the seller depending on the market. Uh we're either, you know, saying, okay, we're okay with everything that we found and discovered and uh we don't want to back out of this deal, or we're trying to get a little something back from the seller. So it could be repair requests. So it could be saying, hey, we need this dry rot fixed before we close. Or we could do something called a we could do credits, which is um, I'll just say from the agent side, I prefer credits when possible over having repairs done because the seller typically gets to decide who does the repairs and what quality. And like as the buyer, I feel like you're giving uh there's a lot that can be um not up to up to your bar. Yeah.

SPEAKER_02 1:06:44

I will I will also say that whether you're deciding on a change in purchase price versus seller credit can also affect your approval. So on my end, we use something called. AUS. It's an automated underwriting system. So on top of having your real person, there's an automated underwriting system that's working as well. Well, we've had a deal that dealt with this as well. Yeah. So sometimes if you change the purchase price, whether it be higher or lower, that can affect your approval and can change whether you need an appraisal or not. Appraisals are not always needed on my end. And so sometimes it's better to choose the seller credit route rather than the purchase price changing. I learned that the hard way.

SPEAKER_01 1:07:26

Sorry, Liddy. I learned it the hard way, but I I sure as heck didn't forget it.

SPEAKER_02 1:07:31

We've we hey, you know what? We moved through. We did. We didn't get screwed. Oh God. But yeah, so along with the going back to the contingencies, along with the loan and the appraisal contingency, another big contingency is insurance. So here in the Sacramento Valley, you know, we deal with usually some flood when you look at like Natomas and other things, but we're not really dealing with fire and things like that. That would be more once you hit uh El Dorado Hills. Which I deal with. So I've had clients who get pre-approved for homes and we are in contract and I request, I always, as soon as we get a contract when I request fees, I request a home insurance quote on your not all I have learned, unfortunately, that not all lenders do that.

SPEAKER_01 1:08:18

Not all lenders help clients with the home insurance piece, and I'll be here and I'll be like, okay, great client. Okay, so we have home insurance figured out. You figured that out with the lender, right? And then they'll be like, what? No, the lender never said anything about home insurance. I don't get that. And then I'm panicked because we I don't know. I I have stopped, unless it's with Lenny, I have stopped assuming that a lender is talking to their clients about home insurance.

SPEAKER_02 1:08:43

But as a lender, I don't get that.

SPEAKER_01 1:08:44

Sorry, I'm gonna get really angry here. Please do.

SPEAKER_02 1:08:47

Because give us a hair. How do you know what the monthly payment is if you don't know what the home insurance quote is? How? I I would like you to tell me because it can vary. I have a client in the foothills and they're are in contract for a home. It's $350,000. Not that expensive of a home, quote unquote, for the area. Yeah. Yeah. But then we have the home insurance, and that quote came at $5,000 for the premium. Jesus. And do you know what the California Fair Plan came back?

SPEAKER_00 1:09:21

What?

SPEAKER_02 1:09:21

Over $10,000. I was gonna say, holy cow. Over $10,000. So as the loan officer, when I send you out your initial disclosures, I have that quote in so that you can see what those potential numbers are. If not, I'm shell shocking you and telling you that your payment is a thousand dollars more a month. Yeah. That's that's huge. Also, now you might not qualify for the home. So now what affects your loan contingency. Right.

SPEAKER_01 1:09:49

So in California, for the for the purchase, I'm just gonna jump in for just a second here. For California, the California uh residential purchase agreement, you have these um the these contingencies, right? You have the home, the loan, the inspection. In California, they have made a separate line item for home insurance that you can cancel the contract based solely on you not you getting your quotes for home insurance and being like, I don't like these quotes. So it can be separate. It used to be included in the inspection contingency. Like you would kind of it'd be one of those things, and maybe you could probably even kind of do it in the loan contingency, but now it's it is its online item where you can, if if you need to have longer to check home insurance and be able to back out of the contract just based on if you can get it and the quotes that you're getting.

SPEAKER_02 1:10:43

Yeah, absolutely. And this is also why at the very beginning of the process, when I'm sending out, so I'm sending out emails when when Amanda's sending out emails, she's sending out that welcome email. And as soon as she sends that welcome email, I'm getting bombarded. I'm sending an email to escrow asking them for fees. I'm sending an email to my insurance guy so that he can get me a quote. And I'm also sending an email to the buyer's agent and the listing agent and escrow saying, hey, this is what I read as the contract. Also, I need you to tell me a little bit of information. Is the home being held in a trust? Is the home, uh, does the current home have flood or fire insurance? I'm asking all of these questions. I'm asking if the home has septic. I'm asking these questions not because I'm nosy, but because that's going to affect what I do further. Yeah. Right? Because I haven't had this home underwritten by an underwriter yet. The underwriter hasn't told me it needs fire insurance. The underwriter hasn't told me it needs flood insurance. But if I know that the current seller needed flood insurance, that lets me know this home probably is going to need flood insurance.

SPEAKER_01 1:11:43

Yeah. And it's helpful to know who they have flood insurance through. Yep. Uh, especially if they made a claim. Yep. Because that particular insurance company is going to be higher for the buyer because the claims stay with the house, not the person. Absolutely. So uh if only one company is willing to insure a particular house and a claim has been made on that house, it it can really make insurance astronomical.

SPEAKER_02 1:12:15

Absolutely. So, again, there's just so many pieces to this moving. And as she mentioned, the loan contingency is almost like the umbrella of all these other contingencies within my side.

SPEAKER_01 1:12:26

So um, so that's so you know, just touching back on the repair request versus credits, we get that all squared away. And then on my side, so everyone's agreed, we've gone through second round of negotiations, we've made any changes to who's paying for what or whatever the terms are. On my side, it's time for me to step back and relax. Yeah. To me, it's smooth sailing until it's it's the closing table and I get to help my client sign and give them the keys. Absolutely.

SPEAKER_02 1:12:59

Not for you though, not for me. Not for me. Uh I'm still working on if the home has solar, I'm trying to get solar figured out and transferred over with escrow. Um, if there's HOA, I'm trying to get everything cleared with the HOA.

SPEAKER_01 1:13:12

Oh, let me just backpedal real quick. So with the inspections and negotiations, that is also the time where we are removing contingencies. So this is why I'm saying that on my side, it's green light because we have told the sell side, we will make it to the closing table. We, we, we're not, well, I guess we we're not saying we'll make it to the closing table. We are taking away, we are saying that we are confident enough that we're making it to the closing table that we don't need these different contingencies.

SPEAKER_02 1:13:43

And we're also saying that if we don't, this earnings money deposit is yours.

SPEAKER_01 1:13:47

Correct. So this is like a this is a crucial time where everyone has agreed if you have a good team, like your lender, like I you have to trust your lender that they believe that we can make it to the closing table because you are risking your earnest money deposit if not.

SPEAKER_02 1:14:07

So for Amanda, she has ordered her inspections, she got those back, I got my appraisals back, I got my my loan approval back. And what I do with the loan approval is I look at it, and there's different types of conditions that happen on loan approvals. There's senior underwriting, there's regular underwriting, things like that. I'm looking at that and seeing, okay, these are major issues, so I need to get these cleared and figured out before I can tell you it's okay to remove loan contingency. Or I'm saying, okay, I just need to get the client to do this very stupid little thing. Or I'm saying, hey, no, hey, underwriter, actually, you don't need this document because that circumvents this, or you don't need this because of this. I'm I'm your bodyguard. My job is to make sure that you're only sending over what's needed. My job is also to make sure that this is a go-ahead. So we get an we get your initial disclosure signed, we get all this ran. I get this thing called your closing disclosure out. Your closing disclosure is just like your initial disclosure, but a little more accurate. Your loan is locked, you have things more tied up, we've figured out who your home insurance for sure is, we've gotten that all buttoned squared away. The closing disclosure, there's a three business day rule. So if your closing disclosure is signed on a Tuesday.

SPEAKER_01 1:15:22

And this is like when you are signing, these are the things that you're signing. It's part of your packet that you're signing. Absolutely. So like when you're like, uh, and the other thing I will say is in what's common in our region is uh mobile notaries. Yes. So I actually don't typically attend uh client signings because they will meet you in their home. Well, that's final documents. We're on closing disclosures right now. Oh, okay. Yeah, no. Okay, so this is different. Okay, tell me. This is different. Okay, so closing disclosures. This is this can still be done via DocuSign.

SPEAKER_02 1:15:54

This is still done via DocuSign.

SPEAKER_01 1:15:56

Okay, okay.

SPEAKER_02 1:15:56

So closing disclosures go out. They're more accurate. Again, these are not your final, because again, escroll, I love you guys. Sometimes you guys change things from me on the last minute. But closing closing disclosures are more accurate. Again, we have your insurance figured out, we have a lot of things figured out, we have your loan locked. Closing disclosures have three business days. After your initial closing disclosures are signed, your not your initial, your closing disclosures are signed. We have to wait three business days before you can sign your final documents. Okay. So if you sign your closing disclosures on a Tuesday, that's Tuesday, Wednesday, Thursday. Wait. You guys don't do day zero? It's well, kind of, I guess it is, because it's Tuesday, Wednesday, Thursday, and you can sign your actual documents on Friday. Okay, okay.

SPEAKER_01 1:16:45

So I know it's in the world of real estate, the day zero is always like because like when you sign your purchase agreement.

SPEAKER_02 1:16:53

Yeah, what day one is the next day.

SPEAKER_01 1:16:55

Day one is the next day, so it's usually like one extra day then if you're counting.

SPEAKER_02 1:16:59

We could count it that way too. So if Tuesday is day zero, okay and two, then Wednesday, Thursday, and then Friday, you're going to be a side. Friday is day three, and you can sign. Okay. Okay, okay. Yeah. So same, same. Okay. So same, same. Just making sure. Same, same. So if you're wanting to close by a certain date, knowing that your closing disclosures are signed, again, initial disclosures, seven business days, closing disclosures, three business days, these dates really matter. Signing your documents when your loan officer sends them to you, or if you have questions, immediately asking your loan officer so they can go over them with you.

SPEAKER_01 1:17:29

Wait, what about a bank that only works eight to five Monday through Thursday and half day Friday?

SPEAKER_02 1:17:34

People ask me.

SPEAKER_01 1:17:35

They say, Why should I work with you?

SPEAKER_02 1:17:38

Well, not only do I think that I'm very good at my job, I'm also available. So when you wanted to put in that offer initially and your bank is closed because um it's a three-day weekend. And you can't get that pre-approval letter. You can't get that pre-approval letter from them until Tuesday. What do you think that seller's doing when they're reviewing offers on Monday? Not looking at yours. So who's going over what your potential month monthly payment's going to be based on the new interest rate since you were pre-approved a month ago?

SPEAKER_01 1:18:07

Sorry, I just have to think about I like for in very particular certain circumstances, banks make sense. But more often than not, I'm like, no, that does not make sense.

SPEAKER_02 1:18:22

Or you're getting your closing disclosures. And again, you have every right to be as educated as possible in this decision. And when signing these documents, even though they're not your final, you deserve to be treated with respect. And so that means me making time to meet with you. Not everyone else has the luxury of working from home or you know, working um, you know, flexible jobs. And so me being able to meet with my client after 5 p.m. so that I can go over them with their with them and their spouse is super vital. So I I think it's important. Yes. And so I'm able to go over these with you. You sign them. Again, three business days have to pass before we can sign your final. So again, you get your closing disclosures out. Again, you might have a few more items I need from you. Like I need proof that your earnest money deposit came out of the bank statements that we initially sub, we initially submitted as your assets. Those are little things that we can easily show. Sure. So those I'm not gonna wait, I'm not gonna be like, hey, hold up, you can't give loan contingency removal yet. That's gonna be something I'm okay with removing. Yeah. Because I already have the wire, I have proof that it came out of that account. Right, right. So there's things like that, right? And so we get all that. Finally, after all of the conditions are met from the underwriters, they give me something called clear to close. Clear to close. Sometimes, most of the time for me, clear to close comes way before you are ready for it. And so which is amazing because you are so fast. I love putting hot potato. I don't want anything waiting for me. I don't want anyone being like, oh, well, just waiting for Lenny. That oh, that hurts my body. I want you to be like, oh, you sent me something. Here you go. That's what's needed. I'm waiting for you. So I don't want anyone waiting on me. So as soon as I I try my best to get clear to close as quickly as possible.

SPEAKER_01 1:20:15

And sometimes it's like days. You get it in like days, and I might as well get it. Wait, wait, wait, wait, Lenny, wait, slow down.

SPEAKER_02 1:20:24

I had an uh appraisal waiver, uh, and we had clear to close in like literally like two days. That's amazing.

SPEAKER_01 1:20:34

And so, like then I just like you have to put you in a holding pattern, and you're like, I know, and I'm getting ready and blame there. Can we close herly? Can we close girls? But you know what? Great. We're we're ready. At least you're ready, right?

SPEAKER_02 1:20:46

Ready, we have clear to close, everything's everything's done on my end as long as you don't do anything bad.

SPEAKER_01 1:20:52

Please don't go buy a couch or a car on the show.

SPEAKER_02 1:20:55

Don't go to RC Willie and open a new line of credit and buy a whole new bedroom set. Okay. They're getting a new house. I know you're getting a new house. Wait until you close. Yeah. Wait until everything's funded. Don't wait until signed. I'm not saying wait until you sign your documents. I'm saying wait until you fund and record. So a lot of people think that as soon as you sign those notary papers, you're getting your keys right then. Is that what happens?

SPEAKER_01 1:21:20

No, typically not.

SPEAKER_02 1:21:21

No. Because we have to record and we're recording with the county. Every county's different. Some counties need to have those papers by a certain time in order to get it out the same day. Right. And sometimes you don't meet it. And so depending on when they record, meaning that with the county, that home is legally yours now, that's when you can get the keys.

SPEAKER_01 1:21:40

So it's signed. Well, I feel like I'm gonna skip a few things here. So please, uh, if if I'm missing things, but really it's you sign those those final documents, uh, we send them to escrow, then escrow tells the lender this is how much money to wire. To wire. Yep. The lender sends the money to escrow. Escrow confirms that they received the money, okay. Then escrow sends the uh once they have the then they send that notification to the county of transferring title, and then the county goes back to escrow and says, great, we received it. We've we've transferred the title, and then that's when we get the keys. Yes. Okay.

SPEAKER_02 1:22:21

Now you might be thinking, well, I don't want people waiting on me either, Lenny. I'm gonna send all you you sent me the initial disclosures or the closing disclosures. I'm just gonna start wiring my funds now. Please don't do that. I appreciate your eagerness to get this done, but again, things can change. Yeah. So depending on when we are set to close escrow, that interest daily could change. Other things could possibly change, different fees could change on escrow's side. I do not know the exact amount. So instead of having to get multiple wires sent over, wait until I tell you, hey, this is your final number, send it now.

SPEAKER_03 1:22:58

Yeah.

SPEAKER_02 1:22:58

And when I send that, please send it that same day if possible. Really, really important again, because if we have clear to close, you've signed with the notary, and you wait two more days to send over your funds to for escrow, that could change numbers again, because we're waiting to record until we have those funds. Right. So listening to us every step of the way.

SPEAKER_01 1:23:23

This also goes back to the very, very first where we're writing the offer. Yeah. Is we're we need to be looking at the calendar of when are we going to be closing. Yes. Is it going to be a three-day weekend over a three-day weekend? Is it so like, yeah, we said that we could close in 14 days or 21 days, but that ends up being on a Saturday. So the next business day isn't until Tuesday. Uh, so now, you know, again, it's not 21 days, it's 24 days. Absolutely.

SPEAKER_02 1:23:49

Or on the other hand, let's say you really want to take that three-day weekend to move into your new house. Yeah. Having your lender be prepared and ready prior so that you can get docs potentially signed and recorded before that weekend. Crucial. Yep.

SPEAKER_01 1:24:02

Yep. So see, okay. Can I just say what's up? I'm like really proud of us. Like, I don't know. I just feel like doing this, doing this podcast episode, I just feel like reiterates, first of all, that we're both the shit and that we know what we're doing. And how great of a team we are. Because we're able to, like, even just chatting about it, we're pinging it back and forth, and we're like, yeah, and then we're doing this, and then we're doing this, and then this is when we're talking to each other, and this and that, and we really vibe really well. We do are a dream, a good dream team. I love working with you. I told you that multiple time.

SPEAKER_02 1:24:41

Also, yeah, I mean, I know that we took some notes, but like, if you're watching this on YouTube, these are my notes. Yeah, it's like one or two words, very minimal. Because the thing is, we live this yeah, daily. We know what we're talking about. This is not us just following what Chat GPT told us to say. This is literally what's coming off our domes from our experience. Yeah. And I love that. I love that too. And it's and it's ever changing, right? Again, we say this is like what an escrow looks like, but it's a build your own adventure, like one of those books. Do you remember the build your own adventure books? That's exactly what an escrow is. It's gonna change depending on what's decided or what you decide to do or what happens with the appraisal. Every step's gonna change it. So this is your experience. So making sure that you have a team that's willing to move with those ebbs and flows and be there explaining to you every minute. Crucial. Yeah, super crucial.

SPEAKER_01 1:25:36

And I'm so happy that I have you as someone to refer to. Same, same, same, same. And I feel like we did a really good job explaining the escrow process. Yay! And took all the time that now my battery is is red. And so I'm gonna start freaking out here, even though it probably has a good amount of time before we lose video feed, but we do not want to lose this episode.

SPEAKER_02 1:25:57

No, thank you guys all so much for coming and listen to our next episode. I think it's gonna be a funny one. I'm pretty sure.

SPEAKER_01 1:26:03

Love my kiki section sessions with you. All right, bye guys. Thanks for being here.

SPEAKER_02 1:26:07

That's Realty Check.

SPEAKER_01 1:26:08

Real wives, real estate, and the conversations most people do not want to have. We'll talk soon.