Dreams to Keys: The Homebuying Game Plan

In this episode of Coffee Break Real Estate, Danny and Adam walk through the full homebuying game plan from start to finish.

We break down what happens before you even start touring homes, how to approach budgeting and pre approval, how to structure a strong offer, and what to expect during inspections, appraisal, underwriting, and closing. We also cover the most common deal killers that can derail a transaction and how to avoid them.

If you want a clear, step by step roadmap from dreaming about homeownership to actually getting the keys, this episode is for you.

Grab our free Dreams to Keys checklist by messaging us the word PLAN on social media.

Intro and outro music provided by Mahami Music ‪https://www.youtube.com/@mahamimusic

Connect with the hosts:

Danny Benjamin
@dsbexplores
www.YourAgentDanny.com

Adam Youhanna
@adamyouhanna
www.MortgageAdvisorAdam.com

Coffee Break Real Estate
Hosted by Danny Benjamin, real estate agent and expert, and Adam Youhanna, mortgage advisor

Focused on all things real estate.

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Transcript

Daniel Benjamin (00:10)
Alright, welcome to Coffee Break Real Estate, episode 2. Today we've got an info-packed agenda. We're talking about our home buying game plan, where we'll give you the roadmap to success and some mistakes to avoid along the way when you're buying a home.

Adam Youhanna (00:27)
We'll also have a free roadmap from day one of your journey until you get the keys at closing. First things first, Danny, what are you drinking?

Daniel Benjamin (00:37)
⁓ Today I just got some black coffee that I brewed in my Chicago Starbucks mug. Can't really see it, but yeah. If both of don't know, or if a lot of you don't know, both Adam and I grew up together just outside of Chicago. Adam still lives there, but I'm in sunny Arizona now. Yeah. What's the temperature there right now?

Adam Youhanna (00:43)
Nice. I see the skyline. Looks good.

Unfortunately.

It is 15 degrees with windchill at zero.

Daniel Benjamin (01:03)
Wow, all right. I was gonna say at least it's positive, but it's zero, so no.

Adam Youhanna (01:07)
No, it's zero. We're neutral.

Daniel Benjamin (01:10)
It's a nice, let's see. think it's about 70, 73 degrees here in Phoenix. So, yeah, but I'm leaving Phoenix. I moved to California soon. So we'll talk about that, but yeah. Yeah. I know. Yeah.

Adam Youhanna (01:14)
I don't want to hear that.

Poor guy. Yeah. We'll talk about that another time. All right.

Let's jump into it. Tell me first, what's a deal? Something that happened like a deal that looked great, but then it fell apart during like inspection, title, stuff like that.

Daniel Benjamin (01:28)
All right.

⁓ man. Mostly I see those during inspection. I've actually had houses under contract where things look great and you feel like the inspections can be clean. And, you know, a personal house that I was buying once had all dry rotted wood in the, in the attic. ⁓ So, you know, sometimes you, after an inspection, you go through and decide, Hey, you know,

I just want to fix these things, but with something like that, was like, nah, you know, so that was a big one. That was one where it was like, I don't even, I don't even want to see this rebuilt. I just kind of want to move on to the next house. yeah.

Adam Youhanna (02:11)
and

Let me ask you, you know, what we do at our work is we try to keep stress level down, excitement level up, but what do you do to set expectations for somebody that just goes under contract that's super excited right before they do an inspection? How do you temper their expectations for the inspection report?

Daniel Benjamin (02:41)
I think the main thing I say is, you know, I know this is an exciting moment, but nothing's done until it's done. I've seen it countless times, especially when we were on the investing side, know, things a lot of times don't go through. know, most of the time they do, but there's definitely circumstances where they don't, you know, you have inspection, appraisal, have underwriting as you know, so there's a lot of

things that can happen along the way. So I just set expectations and say, Hey, like we should celebrate, you know, cause this is a win. but you know, we still have a lot of hurdles and a lot of things to get through. this is, know, there's still a lot of hard things to do, you know, obviously looking for a house is hard, but, once you're under contract, there is a lot of steps to go through. So you just kind of set that expectation and let people know that. Hey, things can happen this, know,

where we don't close. So I like to, ⁓ what is it? or under, what's that saying? Under promise and over deliver. Yeah.

Adam Youhanna (03:32)
Definitely.

It's under promise. Yeah, there you go.

Okay. So with the client that we have right now, I know you and I working together on it and what we do is we set up kind of like checkpoints for the buyer, right? First thing is getting the offer accepted. Second thing is going under inspection, getting everything done with there. And then, you know, next steps is appraisal and getting the stuff documents over. But each thing has a checkpoint and I feel like

Daniel Benjamin (03:50)
Mm-hmm.

Adam Youhanna (04:07)
Like we let them know, we get them excited for that end goal, but we have to kind of take it step by step, you know, just like what they say, you know, how does an elephant, how do you eat an elephant? You know, one, one bite at a time, right? No matter how big or small the hurdle. So that's always good to temper. What about, let me ask you during inspection time,

A lot of people always look at the minor things, right? What do you tell them beforehand as far as the inspection report, right? Because like you said before on our last episode, you said the inspector's job is to find everything wrong with the home. So how do you kind of temper their expectations on the inspection report because there's hundreds of things that pop up on there.

Daniel Benjamin (04:44)
Mm-hmm.

⁓ well, for one is I do recommend, an inspector that, that I work with a lot. he is really good at doing that. you know, he tells people during our review, he's like, Hey, the report's going to look scary. There's a lot of things on there. He's like, during on my review, he's like, I'm just going to go over the big things. And even then, there's things he brings up and he'll say, Hey, you don't have to do anything about this, or this is really easy to fix, whatever. So.

I think having a good inspector that is not just a good inspector at looking at the house, but also someone that can communicate well with others is really good. So I use someone named Brad out here. Love him. He's really, really good at communicating. So it makes my job easier, but I'm also there during that review always either me or my partner, Paul. And we both have done a ton of remodels. So we know.

what to look for and, you know, just how to properly write out those or to let our clients know what to expect when they're going through that report. So normally you do a review in person and then they get the report later on. yeah. Yeah. Cool. Well, yeah. But also, so, before the inspection, let's back up. Let's go back to the

Adam Youhanna (05:59)
Cool. Yeah, that's always important.

Daniel Benjamin (06:09)
the beginning, right? Like someone has a dream of getting a house. And a lot of times they reach out to me first. Normally a realtor is their first point of contact. Obviously some people might personally know a loan officer or mortgage advisor like yourself and reach out to you first. But I would say more often than not, people reach out to a realtor first. My first thing that I tell them is that, you know, they want to own a home.

You know, I'll talk them through a few things, but my first question is, are you pre-qualified? Right. And do you agree that that's probably the first step in, in buying a house?

Adam Youhanna (06:41)
Yeah, 100%. That's gotta be the first thing they look at to see if they're pre-qualified or how we like to do it is a full pre-approval. doing that because then your job is gonna be, you're gonna be doing something with kind of like a blank canvas, right? You don't know which route to take. You don't know how to set up a game plan for them unless you know what they can qualify for.

or if they can qualify at that direct time, or it has to be something three, six, nine months down the road. So yeah, the first thing to do is get that pre-approval, talk to somebody like myself.

And then I will be able to relay the information to the borrower based on what they're qualified for, what the maximum amount is. And then also, I dig deep and see what their comfort zone is and kind of let them know what both are and then I relay that information to you.

Daniel Benjamin (07:38)
You said two words that are two different, you said pre-qualification and pre-approval. Just so our listeners know, what's the, is there a difference between those two and if there is, what is it?

Adam Youhanna (07:43)
Mm-hmm.

Absolutely. So a pre-qualification, what that is, is only thing that we're verifying and sometimes lenders don't even do this, is we're verifying the credit report and then we go by the verbal kind of confirmation from the borrower. So they could tell us, hey, I make 200,000 a year. I have 200,000 in my bank account and my credit score is a 750. Okay. ⁓ Well that sounds great.

Some lenders will do a pre-qualification for that and then give it to the realtor. In my eyes, I never do that because I feel like it's doing a disservice, not just to the borrower, but also to you because my job is to make your job easier. Okay, so I don't want any empty miles that you're driving. I don't want any lost time.

because you know, time is money and I don't want you wasting it unless you know exactly what's going on. So a pre-approval is everything is verified with documents. We do a credit report. We review it, whether it's a hard pull or a soft pull, depends on what kind of loan program they're looking at doing. And then we also...

Daniel Benjamin (08:55)
What's a hard pull and soft

pull? Sorry to cut you off, but...

Adam Youhanna (08:57)
So a hard pull

is not, that's a great question. So a hard pull is kind of when you get in a hard inquiry. So you get your credit pulled and then it dings, it could ding your credit score by up to one to 2%. So if you have an 800 credit score and you pull your credit, don't get scared. Your credit score might go down by eight or 10 points, which is not going to affect your interest rate that you're going to get or your qualification. If you do a soft check,

A soft credit pool is something that does not ding your credit report. Lenders and banks do not get triggered to reach out and give you a call and bother you and solicit your business. It's just literally kind of doing like an overview of your credit report and no inquiries. But sometimes there is a drawback of doing a soft credit report because I've seen soft credit reports come not detailed. And then when we did the hard check,

we saw some derogatory marks on there because of the details that the hard pool does. So depending on the borrower, we'll decide on what to do. But going back to a pre-approval. So pre-approval, they tell me they make 200 grand a year. Great. Show me your last month's worth of pay stubs. Show me your last two years of W-2s. And then you have 200,000 in the bank. Great. Send me your last two months bank statements. Once I do that due diligence right up front, it allows me to do my job better and it allows you to do your job better.

Daniel Benjamin (09:55)
I don't.

Adam Youhanna (10:18)
and have the borrower happy and well informed.

Daniel Benjamin (10:23)
All right. Cool. Yeah. So, and I do prefer that as an agent, a pre-approval is huge. Cause like you said, a pre-qual, you could have that piece of paper and it'll, it suffices for submitting offers, but I might be wasting my time, the listing agents time, the sellers time, the buyers time. If, you know, I just have a letter based off of what a borrower or a potential borrower told you instead of actual checks and balances that you've made. So.

We always ⁓ appreciate a pre-approval for sure.

Adam Youhanna (10:52)
Definitely and another thing I want to say is when you're in a multiple offer situation if you go in with the pre-qualification listing agents in my experience literally rip it up metaphorically rip up that offer and don't even look at it no matter how strong it is if you have a pre-qualification versus a pre-approval garbage

Daniel Benjamin (11:16)
Yeah, I agree with that for sure. I mean, there's a lot of things you look at with an offer and that's the strength of financing is huge. But after you look at someone's credit and income, then what do you look at next? Let's say you have a pre-approval, they're good to go. They've showed you their pay stubs and you've done a hard pull and they're good to go. So now what conversation do you have with buyers?

Adam Youhanna (11:24)
Definitely.

So once I get that done, so again, you I work in checklists, checkpoints. So I get on a video call if I'm not meeting in person with the clients, get on a video call. After this happens, we do something called a pre-approval call. Pre-approval call, we go through literally what the maximum amount they're approved for. And I show them what amount they should start searching for a home based on the criteria they gave me on their goals. So if they tell me I want to be at

$3,000 a month and I'm putting $50,000 down payment. Great. I show them on my calculator on my website. This is the amount that we're looking to be around. So I give them their max and then I give them what their goal is. And then I always ask them, what is your comfort monthly payment and what is the maximum monthly payment that you're willing to go up to. So then we know where to stretch it up to because if it turns out to be a $400,000 home,

and let's say they see a home for 420,000 that they love, right? Then I could be like, okay, hey, Joe, this is at, your monthly payment is gonna be at the max of what you're willing to pay. So if you love the home, I want you to ask yourself, is this worth it to go stretch my budget to the max to be able to get my dream home? And I leave that answer up to them.

Daniel Benjamin (12:54)
Yeah.

It's really smart. Yeah. You see a lot of people, you know, they have a max approval because, you know, the bank will lend them let's say 800 grand, but that's a good combo that I'm glad you have that conversation with them because I know some people wouldn't want to have that monthly payment for $800,000 home. So even though on paper, their max is a lot. You want to know where they're comfortable monthly to make sure that they're not thinking, hey, I could go look at million dollar houses. Right.

Adam Youhanna (13:34)
Exactly, exactly. And I literally had a conversation with somebody last week about that as well. They were able to afford 1.1 million, but based on their goals and what they wanted to spend and how much they wanted to reinvest the remaining funds that they get, they were at a $750,000 price point. So worked out great. Yep.

Daniel Benjamin (13:34)
Okay, that's smart.

Yeah, yeah, we see that a lot.

Very nice, cool. So then after that, what questions do you ask them or what's the next checkpoint?

Adam Youhanna (14:04)
So when we do, after we do the pre-approval call and let's say you go out and about looking at homes and stuff, right? Before, as you know, before the offer goes in, you and I, or the lender and realtor will kind of strategize. The reason why it's not.

for us to step on anybody's toes, but it's kind of able to use my knowledge on the financing side and your knowledge on what they're looking for in a home and kind of mesh that together to be able to put in a strategic offer, right? So sometimes somebody barely has enough down payment and closing costs to cover everything, right? So at that point we could offer full asking price or above asking price and ask them to give us some seller credits.

Sometimes that's not the borrower's pain point so we go a different route. So for example, well actually let me ask you really quick, as far as an offer goes, what kind of strategies, if you can just give me one little nugget on what kind of offer strategy you would do for a buyer, any scenario.

Daniel Benjamin (15:08)
I am. So it really depends on the scenario, I think, right? But there's a lot of what I like to call levers that you can pull. there's, ⁓ man, there's a ton. So obviously price is the biggest one. So that's usually, you know, the biggest lever that has the biggest perception, I would say. Like people look at that the most, especially sellers, but not always, right? So there's price, there's closing date.

There is earnest money. ⁓ like that one a lot. I'll get to that in a second, but there's what else can you, get your seller concessions, ⁓ commissions. There's a lot of different levers that you can pull on your offer, right? And I like to look at both the buyer situation and the sellers. That's why before I make offers, I like to call agents. I don't like to just write up offers and send an email. As a listing agent, I'll get that sometimes and I'm like, cool, that's fine.

I like to feel the situation out, right? Because you might talk to a seller that wants to close in three weeks, right? And it's like, okay, cool. Well, if you want to close in three weeks, then our price is going to have to be lower. So that's like, again, different levers you could pull. You might have a seller that wants to wait three months and you didn't know that without calling them. So I like to know the seller situation.

And also my buyer situation, right? Like the, the, the file we have open right now and we're under contract on, our buyer didn't re they're doing a hefty down payment and didn't really care about closing costs or getting credits. Right? So we didn't go in with an offer that had a higher purchase price with some credits that can help them with the money they have to come to the closing table with. they were just like, Hey, I don't really care. It's just at the end of the day, it's a net number.

So we just went with a lower purchase price, right? So I just look at, like I said, look at both people's scenarios. Obviously the seller scenario you don't know and sometimes the agent won't spill everything out. Excuse me. But a phone call with the agent really helps know what levers to pull. Earnest money, I like a lot because earnest money is mostly refundable during an inspection period. ⁓

Adam Youhanna (17:00)
That's why it's first stage, know, then it couldn't be. Then we built it. First step.

Yeah.

Mm-hmm.

Daniel Benjamin (17:21)
And it credits towards the purchase price, right? So if you have some cash, I like to go with a hefty earnest money deposit because really at the end of the day, you're not, it's not going to change much. Now, unless you cancel last minute and you don't have a contingency to cancel, then the higher earnest money becomes an issue. But really it's just the same thing. You're spending that money regardless. So if you can swing that, like doing that because

That shows that your offer is stronger, but at the end of the day, the net difference to you is not much, right? And then commissions, you know, could negotiate commissions, you know, go in with, ask for less or more. But, you know, I don't really love doing, you know, I don't love shorting people on commissions. So that's not really a lever. I love to pull, but you can.

And then financing, I mean, that's a big one, right? Like you said, the pre-approval versus the pre-qualification or cash if you're buying cash. That's like, you know, so some people might look at an offer like the highest price doesn't always win in certain situations. Sometimes it does. And, you know, I'd say most of the time it does, but not always, right? Like, yeah, it's not always like...

Adam Youhanna (18:16)
you

That was my next question I was going to ask you. Is it a myth

or fact? Highest offer always wins. Is that a myth or fact? Okay.

Daniel Benjamin (18:32)
It's a myth for sure. ⁓ Myth.

mean, you we saw it a lot and we still see it when people move here from California, right? They sell their $3 million house in California, come here and buy a million dollar house cash. Now the seller looks at a million dollar cash offer or a $1.1 million financing offer. And you know, most sellers are probably going to take that cash offer. I know when I...

flip houses, if I have a cash offer that holds a lot of weight. Because like we talked about earlier, deals fall apart. And one of the areas deals fall apart in is during the financing contingency, right? ⁓ Because their appraisal could come in lower. Or like we talked about on our last episode, the buyer can go out and buy some furniture that makes them not qualify for the loan anymore.

Adam Youhanna (19:09)
Mm-hmm.

you.

Daniel Benjamin (19:20)
Yeah, cash offers are really, really strong. But I feel like when you have a cash offer, sometimes price matters a lot less. So yeah, so it's definitely a myth.

Adam Youhanna (19:29)
Okay, so let me ask you this.

Yeah, so we got that. We got that with a lot of backup, a lot of backup ⁓ examples. So let me ask you this. So once you're under contract, is the hard part over?

Daniel Benjamin (19:36)
Yeah.

Mm-hmm.

No, definitely not. For sure not. mean, like, you know, it is hard getting under contract, right? Like it's not, not super easy, but it's not, the hard part's not over. There's a lot of things you have to do after you're under contract. You know, start with the inspection. You know, you got to review disclosures. You got to review a clue report, which is insurance claims in the last five years. You have to...

Now start working with you a little deeper, right? As you know, you got to start getting your ducks in a row, getting all your documents in for it to your lender. You got to go out and reach out to insurance agents. So I think, you know, getting under contract is definitely, you know, a win, but ⁓ it's not, I would say the hard part's not over for sure.

Adam Youhanna (20:12)
Yes.

Mm-hmm.

⁓ So I like to look at it like kind of like we're going on a road trip, right? So we kind of take turns driving you and I So first things first is you know when we're getting the documents and everything ready for a pre-approval. I'm in the driver's seat and then you're in the driver's seat once you get the pre-approval and you're out searching for a home until You know you put an offer it gets accepted get the inspection report And then after that I feel like I'm in the driver's seat

Daniel Benjamin (20:35)
Yep.

Adam Youhanna (20:55)
doing the things that I need to do. besides when I start taking over the wheel until closing, let me ask you a question because I've heard this a lot. I've heard of

people trying to like in a multiple offer scenario, let's say, let's throw a number out there of a $600,000 house. Say there's five offers on it. Somebody does an escalation clause to like 660,000 and they win the bid at 660. Okay. Then the realtor kind of informs their buyers like, Hey, let's do the inspection report and then we could try to get some money back.

after claiming some things need to be replaced or repaired? One, do you see that often? And two, are you able to negotiate for anything you want during an inspection?

Daniel Benjamin (21:51)
I do see that. wouldn't say often. ⁓ but I do see that, ⁓ you know, I think if someone's going into a contract with the intent of negotiating during inspection, obviously you do, you do negotiate a lot of times during inspection. Like, like I said, on the last episode, not every house is perfect. So there's things that come up, right? And you want those fixed as a buyer. However, if you're going in with an offer that's higher than what you actually want to pay.

Adam Youhanna (21:53)
Okay.

Daniel Benjamin (22:19)
with the mindset of, hey, I want to negotiate during inspection to get it down to where I want it. I feel like that's unethical. I don't really love when people do that. And it's usually pretty clear when people are doing that. yeah, so I don't see it a lot, but you do see it for sure. And I don't think that's a great approach. don't recommend expecting anything during the inspection period. Now...

Going back to your question, can you renegotiate anything? I mean, you can, but there's certain times where it's a slap in the face, right? Like if you have a bunch of minor things that come up on the inspection report, stuff that you probably have already seen, know, cosmetic stuff or whatnot. and then you ask for a lot of money that's not in line with how much that repair would cost. Yeah. I think that that looks really bad and can, you know, risk that can be very emotional too. It's not just factually driven. So it can get a little.

emotional where the seller might get a little upset that you're asking for that much off and this and that. no, I wouldn't say everything's negotiable. have to be, you like I said, there's things wrong that you want fixed, right? And that's completely fine. So there is some negotiation. There is some back and forth during the inspection period. But it's usually stuff that is warranted, I would say.

Adam Youhanna (23:19)
Thank

Okay, let me ask you during inspection. I remember you telling me something. I'm sorry. I can't remember. It was for an Arizona property and the property had termites. Is that common in Arizona homes?

Daniel Benjamin (23:51)
Yeah, very common. this is one thing. I obviously, yes. No, well, no, exactly. And if you come from the Midwest, like we did, you hear the word termite and you get very, very scared. ⁓ You're running. Exactly. There's a few differences in, I think the type of termite is a little different and also in Illinois and Indiana, which saw a lot of our clients, you know,

Adam Youhanna (23:53)
Okay, that's not something that people kind of know, right? Okay.

You're running.

Daniel Benjamin (24:16)
move from Chicago to here. So I deal with this a decent amount. You have to explain to them that termites are different, right? I think in Illinois, the termites you don't notice for a while. And so when you do notice them, there's a lot of damage already done. Now in Arizona, if you leave a house untreated for a really long time, it is bad, no doubt. But our termites do less damage and issues are noticed a lot sooner.

I think it has something to do with our foundations. Don't quote me on it. I've done a little bit of research on it, but, our termites here will show mud tunnels, what they're called. A lot of times you'll see them coming out of the ceiling. It's just like this like dirt like thing just coming out of the ceiling. And you see that or you'll see them along the wall, right? You'll see like, like it's literally called a mud tunnel. It's like a strip of mud you'll see on the wall. And the second you see that you call a company, they come out and treat it. It's like.

under a thousand bucks. They pretty much treat the whole exterior of your house and knock out those mud tunnels or whatever. Termites go away. A lot of times you'll get it back in the next five years. The first house I ever owned, it had termite damage when I bought it. I treated it when I first bought it. And then like five years later, I had to treat it again. So...

Termites are very common here. It's a scary word, especially for our Chicagoland buyers. My inspector, that I usually use, he's from Indiana. another thing that, yeah, Brad, Brad does a very good job at explaining that, termites here are not, you know, he says the same thing. He's like, man, when I first moved here from Indiana, he's like, you know, I thought termites were horrible, but there's a difference here for sure.

Adam Youhanna (25:31)
you.

Shout out to Brad.

You know, you could take away a lot from that. So what I took away is that an average home buyer can get deterred from buying a home if it has termites. And it's great that, you you bring that up, that it's not a bad thing and it's pretty common in Arizona homes, especially when people are relocating from other states like you did and like how Brad did. Now here, if you hear the word termites, it's done, right?

Daniel Benjamin (26:23)
Yeah.

Adam Youhanna (26:23)
It's

like, alright, cancel the deal, we're done, we're moving onwards. Another thing that came to mind was, we were talking about those mud tunnels, is that what you called them? Was it the same thing that happened in Bad Boys 2, the movie, where Martin Lawrence and them were on the attic and they were digging and then the dirt was falling on Johnny Tapia? Is that what happened?

Daniel Benjamin (26:31)
Yeah, more tunnels.

Yeah, I think that was a little different. Those are rats. Remember? That was just marsupials. That's hilarious. ⁓

Adam Youhanna (26:48)
Okay. There are rats, yeah. Marsupials. Okay. Alright, cool. Awesome. Well, that's

good to know. That's a good takeaway to have, especially on the inspection side for sure.

Daniel Benjamin (26:58)
Yeah.

Yeah, like I said, it can, you know, there are, if a house goes untreated for a long time, it can turn into something bad, but usually not.

Adam Youhanna (27:08)
Okay, awesome. So just to recap here that step by step that we just went through. So first thing is kind of having that credit and income reality check. Next thing was the budgeting, payment comfort, payment max, and then the down payment, closing cost strategy, and pre-approval, pre-qualification, offer strategy, offer approval.

Daniel Benjamin (27:09)
Yeah.

Adam Youhanna (27:33)
And then the inspections, repairs, negotiations, and then the appraisals, underwriting, and stuff like that. Cool. Awesome. Anything you want to add to that?

Daniel Benjamin (27:42)
Well, let's go into that. go up into,

yeah, so after the inspection, mean, so what's, ⁓ now you're driving was, you know, so like on our current file we have right now, inspections are done. I've kind of been in the back seat, hanging out, eating snacks. what are you working on now? So what do you have left?

Adam Youhanna (27:52)
Mm-hmm.

So honestly, with one of our things, with one of the levers that you did pull was because you were hefty down payment and you didn't request a lot of things. One thing you did was you requested a 45 day close, correct?

Daniel Benjamin (28:14)
Yes.

Adam Youhanna (28:15)
Okay. So 45 day close, just so the average person that's listening to this, 45 day close is kind of on the higher end. Usually what they say traditionally is about 30 to 35 day closing. Of course, if you need to get it done quicker, 20 days, 15 days, depending on the scenario, what type of home you're buying, it could get done. But you know, in this situation, Danny was able to get a 45 day close and I remember the listing agent was kind of pushing back on that.

Daniel Benjamin (28:29)
30.

Adam Youhanna (28:43)
But Danny is a strong negotiator and he actually got it. So the 45 day timeline gives me a lot of leeway, but luckily I didn't need it. And you know, we're going to be closing in a month from now and we'll probably have the clear to close next week. So we'll be about three and a half weeks early. But after the inspections done, once I get the AOK from the inspection, first thing I do is order appraisal. Okay.

And if it's a condo, I order the appraisal and a condo questionnaire. So condo questionnaire, I want everybody to know that when you're buying a condo, there's extra steps to take. Why? Because the lender is not just approving you as the buyer, they're also approving the HOA, the Homeowners Association.

the property management company that's running it has to run a clean condo association. Can't have zero dollars in the bank and the reserves. You can't have a huge HOA and not have the money show for it. You can't have certain things that are not passing code, electrical boxes, plumbing leaks, anything like that. So if you do and the lender sees it, they're going to be iffy on

approving this file. So you could be an A plus borrower, but if the condo association is bad, you're not going to get approved for it. And I don't want you to take it personally because it's not about you. ⁓ But yeah, after the...

Daniel Benjamin (30:07)
Lenders just trying to protect

themselves, right? Because in the event something happens, they want to make sure that there's an asset that's strong behind backing the money that are lending out, right? Okay.

Adam Youhanna (30:10)
Exactly, exactly.

Exactly.

Exactly. So imagine a borrower is putting 10 % down. Don't forget the lender's putting the other 90. So they have a much bigger risk applied to it. you know, appraisal and then we're getting all the documents in. They're called conditions. So certain things I'll name out as, you know, getting updated pay stubs, updated bank statements, the tax returns need to be shown.

Daniel Benjamin (30:24)
Yeah.

Adam Youhanna (30:39)
⁓ Homeowner's insurance needs to be purchased. So we talk with homeowners insurance agents and then we get everything ready for the three magic words that everybody wants to hear. It's called clear to close. Once those three words are said out of my mouth and sent via email, everybody starts breathing easier. It means everything is clear. Everything is ready to go for closing. Some surprises.

that I would see Danny during this is of course the home getting underappraised because as you know, go ahead. Yeah.

Daniel Benjamin (31:13)
So that brings me to a point that I was going to ask ⁓ just for so

people know, obviously, well, what is an appraisal and why does the lender require an appraisal? What's the point of an appraisal? If the seller and I agree to a price, why does the lender want to know how much the house is worth?

Adam Youhanna (31:29)
Yeah, that's a great question. So the lender remember they're taking out most of the risk. So if you're paying $400,000 for a home, buyer and seller agree to that price. The lender wants to make sure that the home is actually has a market value for that price. If the home comes back and it's appraised at $380,000, the lender is not going to approve a $400,000 purchase. Now, when that scenario happens,

The buyer has three options, right? They could say, okay, the lender's gonna say, for example, me, I would say, okay, look, the home came back at 380,000, you agree to 400,000. So you have to pay that difference on top of your down payment and closing costs. So whatever you're planning on paying, you have to pay that extra 20,000. Option two.

Daniel Benjamin (32:20)
Because I don't want to lend,

I don't want to lend that money on that, that, because I need to keep myself protected. Okay. ⁓

Adam Youhanna (32:23)
Exactly, that collateral has to be put in. Exactly,

so we need that collateral to be given up front. or that option is one. Option two is gonna be for you and the listing agent to negotiate. Say, hey, it's worth 380,000, my borrower doesn't wanna pay 400,000. So it could be another strategy for you to be like, hey listen,

Do you want to put this home back on the market and have to explain to other buyers why it came back on the market? Or can you take off that 20,000 off the price or take off 15,000 and we'll cover whatever. You're the negotiation master on that end. You could do that. And then the third option is to walk away from the deal.

Daniel Benjamin (33:08)
Okay. That makes sense. That reminds me too, the levers we talked about earlier. I mean, you brought up an escalation clause, which is if you get other offers that are higher than mine, I'll come up to match that offer or beat it. So that was one lever that I didn't mention, but you just brought up another lever is appraisal, right? Back in 2021, 2020, people were waving appraisals. So what they were saying is, don't care upfront. They were telling the seller, I don't care.

Adam Youhanna (33:09)
Those are the three options that happen.

Daniel Benjamin (33:38)
what the appraisal comes back at, I will pay this X amount, right? So that's like one of the three options you said, but talked about upfront. So that's another lever too. Or some people would say, Hey, I'll waive appraisal up to 10,000. So if they're buying the house for 400 and it comes back at 390, they'll still buy the house, right? But so they are, you reminded me of that too. Appraisal gap. you go. Yep. So, yeah, but that's a.

Adam Youhanna (34:00)
appraisal gap.

Definitely. So once

we get past, once we get that clear to close, what happens is title company starts getting all the documents together, making sure everything is balancing, which means everything that the buyer's paying and everything that the seller's paying has to match to the penny. Now while that's going on, Danny, what are you doing on your end in the background?

Daniel Benjamin (34:31)
⁓ I'm just maintaining communication, I would say for a while. It's just making sure, know, answering any questions that come up from the listing agent, from you, from the buyer. And then the big thing that we do at the end is obviously ⁓ coordinate with title. A lot of title companies do a really good job of coordinating everybody, setting everyone up for signature. But I'll review settlement statements. So I'll make sure going line by line.

making sure that our buyer is not paying too much for closing costs or closing costs are split the way they were supposed to and just making sure the settlement statement is good. And then doing a final walkthrough. So obviously at the beginning, you do a big inspection. This is like, hey, what's wrong with this house? The final walkthrough is nothing like that. It's usually just walking through the house to make sure that

It's in the same condition that it was that when we bought or when we went under a contract, right. And that's more so you're not going to nitpick stuff that you find. It's more so, Hey, is the dishwasher still working or is it still there? Like, ⁓ are, are yeah, stuff still there that was there before is the fridge still there's the washer dryer still there. If you agree to take those things on, right. is there not a hole in the roof? this like, if, know, if there's something big, which I've never seen, but,

Adam Youhanna (35:36)
Yeah.

Daniel Benjamin (35:50)
then you can go back to the seller and kind of figure things out. some people wave final walkthroughs. I'm not a fan of that. I always make sure that my buyers do a final walkthrough because especially on this one that we have right now, know, 45 day close, a lot can happen in 45 days. yeah, this house is vacant. So a lot can happen in that 45 days or even if it's not vacant, know, some stuff can break and things like that.

Adam Youhanna (36:06)
Anything, yeah.

Quick story, I had somebody in the final walkthrough discover that the home was trashed, where they cleaned out all their stuff, but they didn't clean up. another home, somebody took the refrigerator and they were not supposed to. That delayed closing by three days.

Daniel Benjamin (36:34)
Mm-hmm.

Yep, that happens. Yep.

Adam Youhanna (36:39)
either get in

the fridge back or they had to give a credit to the buyer. And after it took three days.

Daniel Benjamin (36:45)
Yeah. Yeah, I've had, uh,

yep, I've had curtains missing, uh, from a house, but, know, that's small. So we just got a Zelle for a couple hundred bucks and called it a day. But yeah, there's, you know, stuff that was supposed to be there. isn't, that's.

Adam Youhanna (36:54)
That's good.

Daniel Benjamin (37:01)
But yeah.

Adam Youhanna (37:01)
Yeah.

Awesome. All right. Next thing on the agenda, what is it?

Daniel Benjamin (37:04)
So yeah, that's pretty much it,

that's the process, right? Overall, like high level, obviously there's nuances with different deals depending on situations, but I think from a high level, that's like, that's pretty all encompassing, I would say.

Adam Youhanna (37:10)
Pretty much,

Yep.

Daniel Benjamin (37:26)
All right, next up on the agenda. during this process, we obviously already talked about some of these, but what are deal killers, right? What are things that can destroy a deal? Like, what do you see on your end?

Adam Youhanna (37:36)
wow.

Okay, so I'll talk strictly on my end. So five things. I'll give you the top five. One, a buyer getting overzealous, going to buy a new car, going to buy furniture, opening up new credit cards and going shopping. It all depends on the time of the year. You know, I've had clients open up credit cards around Christmas time so they can go shopping for their loved ones. I had a person

Literally by worth of furniture about a week before closing and they went from approved to denied. Remind you, we'd strategize that deal where they were literally right under the max threshold that they can get approved for and then that caused them to get denied. I actually had recently a borrower that was pretty smart. He had a lease coming up and what he did was he talked to his dealership and he said,

extend my lease out for a couple months until I close my, close the deal on my home. And they were like, yeah, we're fine. Because one, he said, I'm going to buy it out, but you know, extend it out for a couple months and then we'll, we'll make the adjustments later. They said, great, just so he doesn't get a hard inquiry. And just because, you know, if he buys it out, his payment's going to be probably the same, maybe higher, but you know, we don't want any, any changes or any new things to pop up like that to cause issues. Um,

Daniel Benjamin (38:46)
Can't yet. Yep.

Changes

Adam Youhanna (39:04)
Another thing is, which is a big no-no, and I want people listening now, do not put large deposits into your bank account. When I do my due diligence and I ask people, how much money do you have allocated to purchasing the home? Down payment and closing costs. If they tell me 50,000, I ask them, where is that 50,000 coming from? Is it a bank account? Is it a brokerage account? Is it an investment account? Is it a gift from a family member?

Is it from under your mattress? If it's under their mattress, right away, tell them, we are not, if you put all that money in, great, we're not able to use any of it. So don't even bother. So unverified large deposits is a big no-no. The next thing is when they're home shopping, let's say they're capped out, right? They're almost at that threshold of getting qualified, but then they start looking at a home.

that has an HOA now. So we have to throw that $100, $200 towards the debt. It's not going to help them. Or let's say they buy a home and that we're in the process of getting the homeowners insurance.

And we see that the roof is over 15 years old. So the insurance agent is going to account for that, right? Cause they're going to know this person is a new homeowner. He's going to end up filing a claim at some point. So what they're going to do is they're going to account for it and they're going to up their monthly premium or annual premium. So that could be something that can cause an issue with their approval. So that's one, two, three, fourth is having these assumptions.

Daniel Benjamin (40:20)
Mm-hmm.

Adam Youhanna (40:36)
that don't match with our guidelines. One of them could be the large deposits, right? One of them could be switching employment, right? Or they could be like, hey, ⁓ I'm making more money, why can't I switch jobs? Well, dude, you're gonna stop your job and you're not gonna start the other one for a month, which is not really a problem sometimes, but between that month, you're gonna have to do things for the new job. You're gonna have to do a background check.

Right? Fingerprints. You're going to have to go to orientation. Stuff like that. That can cause delays. And the last thing that I'm sure a lot of people do, maybe they shouldn't do up unless they're doing it up front. So I always say rate shopping. Do it in the beginning. Because someone like myself, we're trying to make the process as smooth as possible. Okay? If you

start shopping, rate shopping, do it before you get a pre-approval. Or rate shopping is let's say for example, we, you and I have been working with a buyer. Okay. And we get under contract. I give them an interest rate, six and a half and they say, okay, great. We're going in process. We're going to process. And then they go shopping with another lender and say, okay, can you beat six and a half? They're going to say, sure. I'll give you the closest.

Daniel Benjamin (41:34)
What do you mean by rate shopping?

Adam Youhanna (41:56)
thing that's lower, 6.375, okay, which is a $20 difference a month, let's say. So when that happens, that can cause significant delays in the process. can cause, it can cause that 6.375 rate to actually go up. Because let's say, for example, I did a credit report two and a half months ago. Credit reports are good for three months.

90 days, right? So let's say something happened during those three months. After that three month is out, the new lender is going to pull credit again. And let's say their 750 went down to a 710. They're not getting that same rate, right? So that's going to cause distrust factor. And it's going to have to cause the lender to do everything over. It's going to have to cause us send over appraisal transfer to go from one lender to the other.

Daniel Benjamin (42:37)
Yeah.

Adam Youhanna (42:50)
condo questionnaire if it's a condo. We have to send that over if they allow it otherwise the buyer has to reorder it. And they're expensive. They could be anywhere from you know 300 to 600 dollars. So rate shopping I would say do that upfront. And what I like to personally do is I like to go through everything in detail.

to the borrower so they know what to expect. So there's no surprises. If there are surprises, they're good surprises, not bad ones. So those are the top five things that I see. What would you say that you see on your end?

Daniel Benjamin (43:27)
honestly, so most of what we see is financing, right? So it's a lot of the stuff that, that you talked about. ⁓ you know, a lot of times people switch jobs or sometimes lose jobs, sometimes it's out of your control, right? But, ⁓ things do happen with financing mostly on my end, I say, you know, inspections, can kill a deal. but that doesn't kill like the whole file. would say it just maybe for that certain house.

Adam Youhanna (43:55)
Mm-hmm.

Daniel Benjamin (43:55)
And then

you see buyers or more sometimes or a better house coming up or something. usually it's just on our side, it's usually just inspections and all the financing stuff you talked about. I'm, I'm always letting people know the same thing that you are about, Hey, don't touch any of your finances. don't switch jobs. Don't deposit a large amount of money. Don't, you know, even paying off debt, right? Like I always tell people like.

Go with your, talk to your mortgage advisor first. Like before you do anything, even if you think it's a good idea, like it could change things that you don't want to change.

Adam Youhanna (44:31)
Yeah, I'm glad you mentioned that because that's a, that's a big deal. I have people that are sometimes they want to pay off their credit cards, but they need to have reserves, right? So let's say they need to have 15,000 in their bank account after they pay their down payment and closing costs, right? They need to have 15,000, but if they have a credit card, that's 10,000 and they use that money there, that's going to cause an issue. So I'm glad you brought that up. That's a game changer.

Daniel Benjamin (44:59)
And as far as jobs go, I know for most loans, like lenders want to see someone working for two years. Is that right, two years?

Adam Youhanna (45:09)
For the most part, yeah, two years of... ⁓

Daniel Benjamin (45:11)
Okay.

Is it at the same company,

same industry? what, what, what do lenders want to see? Cause if, you know, if you're bouncing around from job to job, does that look bad? Or is it, is it fine if it's in the same industry? I've heard different things. So I just want to see what you've seen.

Adam Youhanna (45:28)
Yeah, so switching job to job depending on what type of loan you're doing. So if you're doing an FHA loan versus a conventional loan, FHA loans, kind of have like a cap. okay, you can't switch more than three times in the last two years, right? Conventional, they kind of look at it more holistically, right? Why is this person switching jobs? Are they in the same industry? Are they moving up every time they get a new job? Or are they staying the same or are they moving down? So it all depends. Like some people could be W2,

but they're contracted, right? So they could be working with one company, let's say somebody does ⁓ IT, right? And they're working for, let's say a bank. They're at Bank of America for six months. Okay, so they're getting paid that way. Then after six months, they go to Chase. They're working there for six months. That's okay. That's nothing, that's not a big deal. You don't have to keep the same job for two years, but.

It does get more strict when you're self-employed. Self-employed means you get paid a 10.99 or you're own your own kind of business. If you're a C corp or you're an S corp, something like that, it gets more strict. And then there's also, we'll talk about this in another podcast. If you're switching from W2 to 10.99 or switching from 10.99 to W2, it could be okay.

Daniel Benjamin (46:22)
See you.

Adam Youhanna (46:45)
being less than two years and stuff. It all depends, but we'll get to that on another episode.

Daniel Benjamin (46:47)
Yeah, yeah.

Cool. Man, we've talked about a lot.

Adam Youhanna (46:52)
So what do you,

I know, you said action packed, info packed. ⁓ What do you wish, and this will be the last question I ask you, what do you wish buyers knew before they start looking at homes?

Daniel Benjamin (46:55)
Great. Yeah.

Ooh, man.

I one thing I see a lot is pictures either not doing justice or doing a little too much justice. So I always recommend people view homes. Most buyers do, but sometimes people want to put in offers without seeing them. But on this search that I was doing for our buyer, there was lots of homes that looked really, really, really good in pictures. You get there.

Adam Youhanna (47:18)
Hmm.

Daniel Benjamin (47:32)
And man, those pictures were hiding a lot of stuff, right? Whether it's smell or, you know, like damage that you didn't see. then conversely to that, there's houses that don't have really nice pictures, but you go there and you're like, wow, this house is really nice, you know? So there's a lot of that. I wish some new, you know, time is of the essence for a lot of houses.

Adam Youhanna (47:37)
It's always the case.

Daniel Benjamin (47:56)
in this market of houses are priced correctly, they're going to move pretty quick. depending on the price point you're at, if you're, you know, in Phoenix sub 400 grand, man, if a nice house pops up and it's priced good, it's going to go quick. I like to, you know, I don't want to like put, you know, rush people if they, if they're not comfortable, but also, you know, Hey, we got to move. you, if, if you find a house that you like and it's priced good. And sometimes

I'll let you know, hey, this is priced good. Like, you know, you might be dealing with other offers. Don't come in too, too low. People are always trying to, you know, especially in this market think, I could get a better price, which a lot of times you can. And I'll always submit whatever offer my clients want me to. ⁓ But I try to educate them on, this is priced very well. you know, it's priced in a...

know, or the price point is in a market where a lot of buyers are going to be after this. So we got to move quick and not really mess around and try to split hairs over a few grand or something like that. So, ⁓ yeah, I think that's a

Adam Youhanna (48:56)
Gotcha.

Sweet. Did you want

to add anything else before we wrap up?

Daniel Benjamin (49:05)
I guess, same question to you. What do you wish buyers knew before applying for mortgages? I know we talked a lot about that. Is there anything else that you could think of?

Adam Youhanna (49:12)
Oh yeah.

some things that I wish they knew.

Kind of the stuff that we talked about earlier, right? kind of like one tip that I would give is if a loan originator or mortgage advisor, the more they promise you, the more you need to be aware of their practices. Okay. If somebody tells you, I'm going to get you pre-approved in 10 minutes without showing documentation, you might want to

take what they say with a grain of salt. Not that there's not technology out there that allow you to get pre-qualified maybe or have all the information that you need in 15 minutes, but a pre-approval, unless they submit those documents to you beforehand, you're not gonna get it in 15 minutes, no matter what they say. Unless you're typically, if you're sitting down with your spouse and your spouse is sitting there sending documents while you're doing the application part, that's different. But for the most part,

If you see your mortgage advisor taking the time, doing everything correctly, educating you, empowering you on the way to a pre-approval, take that more heavily that this person is actually looking out for your best interest, not trying to make a quick buck or sell you debt. Because unfortunately, exactly.

Daniel Benjamin (50:42)
an actual advisor and not like a salesperson, right?

Adam Youhanna (50:46)
So you have a financial advisor that helps you with your investments. You have an accountant or CPA to help you with your tax returns. You have a realtor that's going to help you with your home purchase. You have a doctor that's going to help you with your health. You need a mortgage advisor to help you manage your debt, especially for your home. If you don't have somebody like that, unfortunately, it might be time to get a second opinion.

Daniel Benjamin (51:11)
That's gold. love that. It's huge. And I know you've helped a lot of people where, you weren't even, you know, like they couldn't qualify or anything, but you, you still walk them through the process and had a plan for them. Right. So, I think that's a true, like I said, advisor versus just someone that's trying to make a sale.

Adam Youhanna (51:13)
Yeah

Definitely. I I try not to give the answer no to anybody. It's either a yes or it's a not now. Right. And if it's a not now, something I do that a lot of people don't is if they're not able to get approved right now, I set up a game plan for them. Step by step game plan. What's a focus on how to divvy up their

Daniel Benjamin (51:37)
Love it.

Adam Youhanna (51:53)
kind of not responsibility but kind of allocate a percentage towards savings, allocate a percentage towards paying off debt, allocate us something towards you know getting a better job to increase income or fixing your credit report, stuff like that. So those are things that are that are taking place if somebody can't get approved now. So if you feel nervous or scared don't be discouraged. The answer is either yes or it's not now.

And if you have a good advisor, they're going to set you up for the future, whether it's three months down the road or two years down the road. Right? That's pretty much it.

Daniel Benjamin (52:30)
Love it.

Cool. All right. Well, I think we're about wrapped up here, but I do want to let people know what we've created that kind goes along with what we talked about with this game plan. We call it the dreams to keys, right? Everyone has a dream of owning a home, but we've kind of created a checklist on how to get from that to owning a home. So Adam, do you want to kind of talk about that?

let people know how they can get it.

Adam Youhanna (52:56)
Yeah,

definitely. So no matter what platform you're watching this on, whether it's Instagram, YouTube, Spotify, wherever you're at, you know, we appreciate a like, follow it and share this to anybody that you know, that's looking to, you know, buy their first home or buy their investment home, even sell their home or even refinance.

send this out to them so they can get more educated on this. more educated they are, the more confident they're going to be to make an informed decision. What this checklist is, it's going to give you three pages. First page is what to do before you even start looking at homes. Second page is what to do on it's a checklist of what to do when you're touring homes. And the third page is actually something for you.

while you're in process. It's going to give you a step-by-step game plan. It's totally free. If you want this, whatever platform you're watching this on, comment plan or DM us the word plan and we'll send that PDF doc straight to you. And that's it.

Daniel Benjamin (53:55)
Love it. Well, yeah, I guess we'll wrap things up here. And yeah, if you guys have any questions or want us to cover anything on future episodes, comment or message us and let us know. And I'm excited for the next one.

Adam Youhanna (54:10)
Let's go, two down, many more to go. Cheers. Coffee.

Daniel Benjamin (54:14)
Cheers.

Great coffee. I'll have a more sexy coffee drink next time. Black coffee is not always the best, you know, awesome. All right, Adam, I'll see you.

Adam Youhanna (54:20)
Me too. Me too. All right. That's

a wrap.