Off the Record: Portland Real Estate Insider
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Off the Record: Portland Real Estate Insider
Navigating the Home Inspection Contingency Period
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00:00:04:22 - 00:00:22:10
Joe Reitzug
Welcome to Off the Record Talking Real Estate with Joe and Makayla. If you're interested in the Portland, Oregon real estate market and want the unvarnished inside scoop. You've come to the right place. Thanks for giving us a listen, Okay. Welcome, everyone, to the show. Hi Makayla. How are you?
00:00:22:12 - 00:00:26:12
Makayla Mast
Hi. I'm good. How about yourself?
00:00:26:13 - 00:00:37:06
Joe Reitzug
I'm doing well. We've got the sun out, and it's later in the week. It's Thursday today. So people are through the grind of the week, and it's pretty happy. As far as I can tell.
00:00:37:06 - 00:00:41:04
Makayla Mast
I feel ready for the weekend. I'm seeing Bill Burr tonight.
00:00:41:04 - 00:00:47:17
Joe Reitzug
Bill Burr. I'm so excited. Hilarious. I told you that we saw him probably three or four years ago, right?
00:00:47:18 - 00:00:50:00
Makayla Mast
Where did you see him that time?
00:00:50:00 - 00:00:52:00
Joe Reitzug
Like, we saw him in the Schnitzer.
00:00:52:05 - 00:00:52:23
Makayla Mast
Okay.
00:00:53:01 - 00:01:00:13
Joe Reitzug
And there's some stuff that you're going to go. that's not politically correct. But he makes it funny and he pulls it off.
00:01:00:13 - 00:01:01:22
Makayla Mast
Kind of on their way to do comedy.
00:01:02:02 - 00:01:09:10
Joe Reitzug
Yeah, he's a professional. His commentary about him and his wife's real relationship is hilarious.
00:01:09:15 - 00:01:11:10
Makayla Mast
my gosh. I'm so excited.
00:01:11:16 - 00:01:13:03
Joe Reitzug
it's very, very good.
00:01:13:05 - 00:01:31:03
Makayla Mast
We saw it. We're seeing him at the Moda and we saw Dave Chappelle. They're like a year, maybe two years ago now. But it amazes me they have to take your phone. Every single person in the audience, they take your phone and lock it up. So it takes forever to get in the venue. So I think we're going to get there like an hour early to avoid that.
00:01:31:06 - 00:01:33:05
Joe Reitzug
How would I scroll when things are slow?
00:01:33:06 - 00:01:36:02
Makayla Mast
I know.
00:01:36:08 - 00:01:40:01
Joe Reitzug
He's good. He's 2 hours of nonstop hilarity.
00:01:40:03 - 00:01:42:14
Makayla Mast
I love the openers too. I think there is surprising.
00:01:42:16 - 00:01:53:12
Joe Reitzug
Yeah. Yeah, they do. So our topic today is one that a lot of people, I think are going to have probably read the title and have been like, What are they talking about?
00:01:53:13 - 00:01:54:11
Makayla Mast
Yeah, who cares?
00:01:54:15 - 00:02:15:06
Joe Reitzug
Who cares? But this might be and you mentioned this earlier, this might be one of the most important pieces of the sales transaction and one that I don't think people fully appreciate and understand. So that's why we wanted to dive into this a little bit today. And what we're talking about is once you get your home sale pending, so you've accepted an offer, right?
00:02:15:08 - 00:02:39:09
Joe Reitzug
What next? And when you work with us in the livPortland team, we get you a timeline, show you all the time periods, everything that's going to be happening and when to expect it and all that type of stuff. But the first usually ten business days are when the home inspection happens, right? And the home inspection, that's itself is something that we'll probably do a podcast on here fairly soon.
00:02:39:11 - 00:03:03:12
Joe Reitzug
Today we want to talk about that contingency period. So the sale is contingent upon some things, the home inspection and appraisal, your financing going through if it's being financed and the home inspection is one of those items that if you're a home seller, you're like, okay, great. They're going to look at our home and maybe they have a few repairs and then we move on to closing.
00:03:03:12 - 00:03:22:02
Joe Reitzug
Everything's great. If you're a buyer, the buyer's like, Okay, now what do we do? We got the offer accepted. Yeah, we're going to own a home. wait a second. You want to get an inspector, don't you? yeah. We definitely want to get inspected. And who do you know? We give them a couple of inspectors to talk to, and they pick the one that fits best for them.
00:03:22:04 - 00:03:32:03
Joe Reitzug
And then it's the day of the inspection. And then all these things happen, and there's repairs and negotiations and all this type of stuff. And it can be a little bit overwhelming, don't you think?
00:03:32:05 - 00:03:37:07
Makayla Mast
It can get a little squirrely because you never really know what you're going to find in that inspection.
00:03:37:09 - 00:03:41:23
Joe Reitzug
And in 29 plus years of doing this, people, they always find something.
00:03:42:04 - 00:03:44:12
Makayla Mast
yeah, even a new construction. It's their job.
00:03:44:14 - 00:03:52:11
Joe Reitzug
That always cracks me up that we have clients on the selling side that are like, no, my house is no, they're not going to find anything.
00:03:52:13 - 00:03:57:00
Makayla Mast
When's the last time you've been in your crawlspace? Personally, I've never been in my crawlspace.
00:03:57:00 - 00:03:58:07
Joe Reitzug
or on your roof.
00:03:58:10 - 00:04:00:00
Makayla Mast
Not speak to these items.
00:04:00:01 - 00:04:11:12
Joe Reitzug
Right. And we do have a lot of our clients who have immaculate homes. I mean, absolutely immaculate. But there's portions of your home, like you just said, that you never, ever go to right.
00:04:11:14 - 00:04:12:04
Makayla Mast
Where we think.
00:04:12:04 - 00:04:12:11
Joe Reitzug
About.
00:04:12:11 - 00:04:19:10
Makayla Mast
Where we live. It's a pretty damp environment and it's pretty common to have mold in your attic, which people don't know about.
00:04:19:13 - 00:04:20:18
Joe Reitzug
Water in your crawlspace.
00:04:20:18 - 00:04:24:19
Makayla Mast
Right. Rodents in the crawl at all par for the course.
00:04:24:21 - 00:04:45:05
Joe Reitzug
You know, shingles that are damaged, all sorts of different stuff. So things do come up. And how you handle that and how you negotiate that from both a buyer side and a seller side makes a ton of difference. And this is one of the pieces that I think people don't truly appreciate having a real professional on their side.
00:04:45:05 - 00:04:55:18
Joe Reitzug
We have other brokers on the other side of transactions all the time, and there are a ton of great ones here in Portland. There's also some that just I feel bad they don't represent their clients very well and.
00:04:55:18 - 00:04:57:18
Makayla Mast
They're not coaching their client well.
00:04:57:20 - 00:05:18:16
Joe Reitzug
And there's some things that are just you can't accept and you can't live with. We'll talk about it here in a bit. So that's the process that we're talking about here today, the home inspection and the contingency that goes along with it. Let's talk about timing ten days, it's in the contract. A lot of buyers and sellers don't read the contract 100% through.
00:05:18:16 - 00:05:43:13
Joe Reitzug
It's understandable. It's like a million pages, but it's almost always in less specified otherwise business days. Right? So if you have ten business days to do to get things taken care of with your contingency, those are business days. And a lot of people don't understand that the weekend holidays, those things are not counting days. Your deadline is extremely important.
00:05:43:16 - 00:05:53:23
Joe Reitzug
We send that to all of our clients the day that they get their offer accepted or, you know, the next morning or whatever the case may be. But you need to know when that deadline is. And why is that?
00:05:54:04 - 00:06:09:20
Makayla Mast
Because when you're at risk of accepting the house as is. So after that ten day period, if you didn't get an inspection for whatever reason, or you decide that you don't want to ask or negotiate for any repairs, you are accepting the home as is. You might not want to do that depending on what you find in.
00:06:09:21 - 00:06:44:23
Joe Reitzug
International and typically what happens and I've seen this more than I can count on my my fingers right now, where an agent either forgets about it or screws up the date or just doesn't know what they're doing. And let's say we're representing the seller, they're representing the buyer. It's incumbent upon the buyer to either have repairs negotiated by your deadline, which is usually 5:00 of the last day of your contingency period or terminate.
00:06:45:01 - 00:07:05:08
Joe Reitzug
Right. The three things that can happen is getting a written agreement on what's going to happen, mutual agreement by both parties. The second thing is you don't like the property, You can't come to agreement. You terminate the sale. Right. The third thing that can happen now and it happens automatically if if the other two are taken care of or executed.
00:07:05:08 - 00:07:25:12
Joe Reitzug
The third thing is you've just bought the home as is. And I can't tell you how many times over the years I've had to text or call a broker representing the buyer saying, Hey, it's the last day of your inspection period and we don't have this agreed to, What are you guys doing? I don't know. I thought maybe we'd meet tonight and get back to you.
00:07:25:14 - 00:07:32:13
Joe Reitzug
Can you imagine? ridiculous. Well, no. Your clients are accepting the property as is as of 5 p.m..
00:07:32:13 - 00:07:33:20
Makayla Mast
Right. Sorry about your luck.
00:07:34:00 - 00:07:41:03
Joe Reitzug
Right. The other option is they get an extension of the time period, but that needs to be done by both parties with their needs. Time.
00:07:41:08 - 00:07:56:08
Makayla Mast
I think that's what people don't understand is as from a seller's perspective, they kind of get to sit back and relax at this point, right? Like they've gone through all the steps, they've listed the property, they've done everything they're supposed to do in order to get an offer. Now it's the buyer's job to do the legwork, so that's on them.
00:07:56:08 - 00:08:16:06
Makayla Mast
And as a buyer's agent, as soon as we get mutual agreement, the second I text the buyer saying, Congratulations, they went with your offer. I'm texting our inspector to get some things set up because personally I like to deal with it within the first few days rather than the last couple hours I just mentioned, because it's not fun to have a rat race at the.
00:08:16:06 - 00:08:39:16
Joe Reitzug
And we have a couple that we recommend just so people can feel comfortable and make the choice themselves. But getting those folks scheduled right away is absolutely critical. And from the buyer's point of view, you want to have that inspection done as quickly as possible because things are going to come up, like we said, and you want to be able to have time to process right.
00:08:39:18 - 00:09:04:09
Joe Reitzug
Okay. This home that I love so much that I was so looking forward to has a lot of things wrong, or maybe has one major item that's wrong or whatever the case might be. But going out and getting bids to find out how much that's going to cost so you can make the requested bid or make the requested repair with the seller takes some legwork and takes getting professionals in there to see what's going on.
00:09:04:11 - 00:09:16:02
Makayla Mast
Luckily, we do have a lot of those professionals in our back pocket and a lot of these guys, they know it's a real estate transaction with me, so they know that they need to get in there and get us a quote quickly. But still, like you said, it takes some time and like work.
00:09:16:02 - 00:09:42:10
Joe Reitzug
It's not ideal to just say, we want the seller to do X, Y and Z, right? We want a new roof, we want a new furnace, we want whatever the case may be. That's great. And you can ask that. But if you're not providing some information as to why those things are necessary and how much that cost, highly unlikely that the seller is just going to write you a blank check and say, You want all that, You got it.
00:09:42:10 - 00:09:50:13
Joe Reitzug
Here you go. Here's 15,000. Here's $30,000 out of our proceeds. No problem at all. That's typically not going to happen.
00:09:50:14 - 00:10:12:19
Makayla Mast
No, they're not usually happy to fork that over. I always coach our buyer clients to really use this time to take pause. You know, we've talked about this before. You get so excited, you are already envisioning yourself in this home. But I think it's important to take a minute and review the items. You know, not saying just pull out if there's too much to deal with because we can still negotiate a lot of those items.
00:10:12:19 - 00:10:25:16
Makayla Mast
But think about it. I mean, if they're saying the roof has five years left, are you prepared to spend that amount of money in a couple of years to get the roof done? Is that worth your investment? And it's all things to consider.
00:10:25:16 - 00:10:28:21
Joe Reitzug
So let me ask you, you're are roofing specialists in that Portland team.
00:10:28:21 - 00:10:30:12
Makayla Mast
It's always on the top of my mind, Right?
00:10:30:12 - 00:10:37:06
Joe Reitzug
I know you live and breathe roofing and gutters, by the way.
00:10:37:08 - 00:10:39:14
Makayla Mast
Tell you all about it. You know.
00:10:39:16 - 00:10:52:02
Joe Reitzug
In all seriousness, now you're you are the most knowledgeable person on our team and the most knowledgeable person I know about these things. So my question to you is, what's the what's the average cost for the average house for a brand new roof?
00:10:52:04 - 00:10:53:20
Makayla Mast
Yeah, around 20,000.
00:10:53:23 - 00:11:01:14
Joe Reitzug
Yeah. Yeah. And it depends on how many layers are on the roof already. And remember, folks, if there's already three layers on it, you can't put any more.
00:11:01:14 - 00:11:02:20
Makayla Mast
No, that's legal.
00:11:02:22 - 00:11:05:15
Joe Reitzug
Yeah. I need to put a third layer on anymore.
00:11:05:17 - 00:11:09:20
Makayla Mast
I have no idea. I should ask. See, I'm not. I don't think so. I think.
00:11:10:01 - 00:11:11:21
Joe Reitzug
You know where to go to get these answers that I.
00:11:11:21 - 00:11:36:01
Makayla Mast
Do too. As my expert. And that's something I considered when I bought my house. My house is a single level, 1200 square feet. You know, think about if you're the contractor trying to replace this thing, If you have a ginormous home that's super steep, it's going to take more people to get that work done. Right. And the bigger the home in general, the more materials it's going to cost to replace.
00:11:36:01 - 00:11:51:18
Makayla Mast
And then if your house is super old and you know the roof hasn't been replaced in a long time, or maybe they have a lot of layers on top, the wood underneath can potentially be rotted out. And then when they have to replace that, that can be even more expensive.
00:11:51:18 - 00:11:54:00
Joe Reitzug
We've just made this terrific podcast.
00:11:54:02 - 00:11:56:06
Makayla Mast
See, we just you got me in the weeds of it.
00:11:56:11 - 00:11:58:20
Joe Reitzug
I know. I knew I'd get you all fired up about it.
00:11:58:20 - 00:12:01:06
Makayla Mast
It is funny though, when I'm standing with a client, she.
00:12:01:06 - 00:12:03:05
Joe Reitzug
Can talk roughing people.
00:12:03:07 - 00:12:19:10
Makayla Mast
It's true. It's funny when I'm standing on my client who's like older than me and they they expect me to know things about the home. I would hope. But it's funny when we take like a step back to look at the they're like, Wait, why? You actually know what you're talking about? You sound like some old man.
00:12:19:10 - 00:12:51:14
Joe Reitzug
I can't tell you how many times I've been in front of a house looking at it with either the owner or buyer. And I'm like, I wish I had Mikayla here. I need to face my partner real quick. My colleague will know exactly what needs to happen with this. Right. So anyways, the point being, if the average cost is $20,000 and they say it's a 20 year old dress, typically these go between year 23 and 25, you got to consider that right?
00:12:51:16 - 00:13:15:11
Joe Reitzug
Because whatever you don't get taken care of repair wise, upfront, you're inheriting that because then you own the home and you can't go back to the previous owner and say, I guess I changed my mind about that roof. That's a big ticket item. And when I bought it from you two years ago, it was fine. But that thing is not fine now.
00:13:15:13 - 00:13:37:05
Joe Reitzug
You can't do that now. Yeah. So something to consider. So let's talk about if you're the home seller, so accept it. Offer average is ten business day contingency. Great. Okay. You know, we'll just wait for them to have a home inspection. There's a couple of things that homeowners need to know, and that is make sure your crawlspace is available.
00:13:37:06 - 00:13:53:02
Joe Reitzug
Make sure in the garage or wherever your electrical panel is that that's accessible attic. If you've got a closet that accesses the attic and you've got seven boxes in there, five feet deep, all sorts of stuff, the inspectors will leave.
00:13:53:04 - 00:13:54:00
Makayla Mast
They sure will.
00:13:54:00 - 00:14:13:03
Joe Reitzug
They sure will. And that is the worst call they get. Well, we had to reschedule the inspection because they couldn't get access to the crawl space or the attic That's bad or, you know, the electrical panel or the hot water heater in the furnace are behind something. So make sure that all systems are available.
00:14:13:03 - 00:14:36:14
Makayla Mast
And Speier is paying that person to be there. I've represented a buyer before, and we were standing in the home having the inspection. I think the buyer was not there. It was he didn't have a ladder and he couldn't get into the attic because they didn't. So I don't provide access or let us know. And I just I remember like begging the inspector to just climb up the washing machine and he was like, No, I'm not standing on the scene.
00:14:36:15 - 00:14:38:21
Makayla Mast
I got you. I got you. Come on.
00:14:38:21 - 00:14:40:07
Joe Reitzug
Yeah, I know.
00:14:40:09 - 00:14:44:07
Makayla Mast
But anyway, they are here. Yeah. So they had to come back and that was.
00:14:44:09 - 00:14:48:04
Joe Reitzug
Most of the guys we work with are they get it done.
00:14:48:06 - 00:14:49:21
Makayla Mast
Right. That was an old inspector.
00:14:50:02 - 00:14:52:21
Joe Reitzug
Yeah. Yeah. Anyways, anyways.
00:14:52:21 - 00:14:53:21
Makayla Mast
Make sure to provide.
00:14:53:21 - 00:15:21:06
Joe Reitzug
Access to make sure to provide access. The other thing and we've got a lot of pro tips in here, so we'll point those out. Pro tip is if you're the homeowner, you're selling your home inspections done. You know, be in communication with your broker about how things went. Now usually what happens is the inspection is done. They get it either that night or the next day and they start looking through it and, my gosh, there's this this night.
00:15:21:06 - 00:15:44:21
Joe Reitzug
Okay, great. They need another day or two to figure out what they're going to ask for. Maybe they need to get a bid. How serious is that as the homeowner and as the broker representing the homeowner, it's critically important to try to get a jump on whatever the most important items are. So we always reach out like, I just had a text before we started filming here about a home inspection that was done on a property we're representing.
00:15:44:21 - 00:15:59:20
Joe Reitzug
And I had reached out to him earlier in the day to just say, Hey, how'd it go? Any major items we need to get on top of to start getting bids so that we can all be on the same page with things. And he got back to me and just said, Yeah, no really good inspection. We knew this home was going to need a rough.
00:15:59:20 - 00:16:22:14
Joe Reitzug
We knew this home had a sewer line issue. So those things we ran out, got bids for right away and in fact we already had bids set up before the home went sale pending because we knew those things were going to be a problem. The seller disclosed them and all that sort of good stuff. But the reason I'm saying this is if you wait too long, then you're going to have to extend that contingency period.
00:16:22:14 - 00:16:44:12
Joe Reitzug
And sometimes that can cause your closing to be delayed. Right. And we all know that delayed closings can affect movers, your next spot, all sorts of stuff. And you really want to avoid that. So pro-tip get on it early. Make sure that if there are major items, even if you don't have the repair addendum in hand, go ahead and find out how much those things are going to cost.
00:16:44:13 - 00:16:46:19
Makayla Mast
It's also just nice not to be blindsided.
00:16:46:23 - 00:17:05:13
Joe Reitzug
All right. Percent, 100%. And it helps where sometimes our sellers are like, Nope, my house is great. And bang, there's $20,000 worth of in a repair work. So being able to kind of step into that and say, well, they did find this and this, but you know, we're going to go out and get bids. We're going to find out.
00:17:05:15 - 00:17:22:15
Joe Reitzug
The other thing I would caution is and we're kind of all over the place with this right now, but I think this is all good information is the inspectors are professional home inspectors. They are not licensed electricians. They're not licensed roofers. They are not licensed plumbers.
00:17:22:17 - 00:17:23:08
Makayla Mast
A special.
00:17:23:11 - 00:17:45:00
Joe Reitzug
Pass bachelor's. Most of these guys are really, really good. The ones we deal with. Wow. Amazing professionals. But they're just giving an opinion of, hey, you should have someone look at this or this doesn't look right or yep, I'm guessing this is not code right here. So it's kind of an outline. And then we bring the professionals in, right?
00:17:45:00 - 00:18:02:10
Joe Reitzug
So if you're a buyer, don't get too fired up about the inspection. It is what it is. Let the process go through the different steps. If you're the seller, don't be offended. Yeah, it is what it is. And a lot of times some of the things that are called out in the inspection, these guys will call things out even if they don't need to.
00:18:02:10 - 00:18:03:23
Joe Reitzug
Sometimes because they're not sure.
00:18:04:01 - 00:18:04:15
Makayla Mast
Yeah, and.
00:18:04:15 - 00:18:12:02
Joe Reitzug
You're sure to air on the side of that could be a problem. All right. Professional goes out there and says now not a problem at all. Always something to consider.
00:18:12:02 - 00:18:23:05
Makayla Mast
It happens a lot with pest activity in the crawl because a lot of times it can be like old activity that they noticed. It's easier to get pest specialists out really quickly and reevaluate for us.
00:18:23:07 - 00:18:47:22
Joe Reitzug
And it always comes down to we have some clients. So obviously this is a very emotional process, right? It's your home or it's the home that you're buying and people get really emotional in it and it's hard sometimes to take a step back and say, okay, hey, how important is this repair or this issue that's going on? B, How much is it really going to cost?
00:18:48:04 - 00:19:08:22
Joe Reitzug
Let's get a professional opinion on that, because I know in my mind when I hear things outside the real estate world, I'm like, that's, you know, my car. Something happens with my car and it's like, that's ten grand right there. Or five grand or whatever the case may be. And you take it in there like now actually, yeah, 950 bucks or something like that.
00:19:09:00 - 00:19:23:21
Joe Reitzug
So don't get too worked up about it until we get the information from the professionals. How important is it? How much does it cost? Is it something that we need to include in the repair addendum, or could we possibly get a credit to have it done after the fact?
00:19:23:21 - 00:19:41:19
Makayla Mast
Also, I think it's worth mentioning that mostly only really appropriate to be asking or negotiating for items that are health and safety related. So seller is not going to cover the cost of new paint or probably even things like a new dishwasher. If the dishwasher is running a little funky and.
00:19:41:22 - 00:19:51:18
Joe Reitzug
The systems are in good condition and are working, or if there's not something that's a health or safety issue, a lot of times it's going to be tough to ask for that. Right, Right.
00:19:51:20 - 00:19:59:12
Makayla Mast
And then that's when we evaluate, we say, how much is it going to cost to fix if you really think it needs to be fixed and then we go from there.
00:19:59:14 - 00:20:22:15
Joe Reitzug
Yeah, you know, one one thing I'm thinking of that, you know, is an esthetic is like the exterior paint. The exterior paint is peeling a buyer could look at that and go, okay, if I buy this home, I'm going to have to repaint this home because I don't want it looking like that. So a lot of times you'll be able to get away with saying, Yeah, the house needs painting, let's get some beds.
00:20:22:15 - 00:20:32:10
Joe Reitzug
Maybe it's in the dead of winter when you really can't paint a house or get a credit for, you know, $12,000 or whatever the cost of it is or whatever you negotiate.
00:20:32:11 - 00:20:37:16
Makayla Mast
The thing about paint, too, is if it's peeling, then the water can be damaging the siding.
00:20:37:18 - 00:20:38:12
Joe Reitzug
Good car.
00:20:38:13 - 00:20:41:04
Makayla Mast
So that's health and safety.
00:20:41:06 - 00:20:42:05
Joe Reitzug
Legal eagle.
00:20:42:07 - 00:20:45:06
Makayla Mast
I should just quit and become a contractor.
00:20:45:09 - 00:20:51:01
Joe Reitzug
No, I thought you're going to say quit and become an attorney. Pretty in pink?
00:20:51:02 - 00:21:01:21
Makayla Mast
No, I think. I think I'm going to get a pink helmet and become because I really think I am one in my head. I really think I know what I'm talking about.
00:21:01:21 - 00:21:19:23
Joe Reitzug
You really do know what you're talking about with the staff. But, you know, as far as bids go, a lot of people will say, well, we'll just get a bid for the roof and see what it comes to on the bigger ticket items. McKayla I feel like we always want to bids minimum. Yeah, right. Because it's something that a lot of people don't talk about.
00:21:19:23 - 00:21:51:19
Joe Reitzug
We have a huge bulk of contractors and professionals that we've worked with over the past 29 years and all these folks are great. But even if, you know, you took two of our favorite contractors and had them better job, it's going to be different. Totally. And sometimes drastically different. Right? So it's always good to get multiple bids because, you know, as a buyer, a, you want to make sure it's going to be quality work, but as a seller, you want to make sure, yeah, we want to get the work done in a quality way, but I don't want to pay ten grand over, right?
00:21:51:19 - 00:21:53:16
Makayla Mast
It's not time to overpay now.
00:21:53:16 - 00:21:57:20
Joe Reitzug
It's not the time to overpay. So multiple bids is always a super helpful thing.
00:21:57:21 - 00:22:05:01
Makayla Mast
How about negotiation? So what happens after we get all of our quotes? We have a couple different items. How does that work?
00:22:05:01 - 00:22:33:05
Joe Reitzug
Well, we sit down and we look at what it depends on Are we representing the buyer and the seller Buyer. Buyer. Okay. So if we've had our inspection, we've identified the things that we think are critical for us to move forward and we've gotten the bids a lot of times what we'll do is we'll sit down and categorized those as, okay, most important, down to least important, and then maybe throwing a couple of either other items, as would be nice to have.
00:22:33:07 - 00:23:04:03
Joe Reitzug
Pro-tip always include the more things than you actually want because it gives the seller an opportunity to say, No, we're not doing numbers 12 and 13, but we'll do one through 11, right? When in fact you wanted one through ten, right? Yeah. So this is true from a seller's point of view. We would sit down, look at the repair addendum with the bids that came along with it and say, okay, these things are X, Y, and Z.
00:23:04:03 - 00:23:26:05
Joe Reitzug
Yeah, we get it. Those need to be done. Health and safety or deferred maintenance items that just need to get taken care of at numbers A, B, and C here. We're just not seeing that. Or there's always the case where X, Y, and Z equal up to this huge amount of money and you just don't have the wherewithal to do the other items.
00:23:26:07 - 00:23:39:10
Joe Reitzug
And if you do those, it will. If you do X, Y and Z, it will increase the value of the home in a way that maybe the buyer will be okay with not having A, B and C done. I probably lost 95% of the people.
00:23:39:10 - 00:23:43:17
Makayla Mast
Do you think you mostly got it? But it was a little, little convoluted. Okay.
00:23:43:19 - 00:23:44:20
Joe Reitzug
Yeah.
00:23:44:22 - 00:23:46:22
Makayla Mast
It's a process we wanted people.
00:23:46:22 - 00:23:51:06
Joe Reitzug
Just know it was worth it. It wasn't.
00:23:51:07 - 00:24:00:09
Makayla Mast
I think we're just trying to make people aware that it's a process and it's a part of the transaction that people don't think about when they think about buying or selling a home.
00:24:00:09 - 00:24:01:11
Joe Reitzug
But yeah.
00:24:01:13 - 00:24:02:21
Makayla Mast
It's worth being educated.
00:24:02:21 - 00:24:11:13
Joe Reitzug
Over. It is worth being educated over. What are some of the other considerations? McKellar Like how how does a credit work? Tell us how a credit works.
00:24:11:13 - 00:24:34:04
Makayla Mast
A Credit works. I really like a credit, actually, because it's, you know, a lot of times if there are several items that the buyer is asking for, contractors usually can't schedule that work to be done within the time of our sale, Right? So sometimes it's like we're closing in two weeks or three weeks and we can't get on the schedule to do a sewer line, bed or repair in that amount of time.
00:24:34:04 - 00:24:55:02
Makayla Mast
So what will happen is we'll get all of our quotes, we'll add them all up. We've negotiated with seller, they've agreed to do X amount of work and then at closing the seller will credit that amount to the buyer and buyer gets to go home with that money and schedule the contractors on their own and take care of that work on their own time.
00:24:55:04 - 00:25:22:10
Joe Reitzug
So Mr. and Mrs.. Mr. and Mrs. Seller, a credit to you means no contractors tromp into your house 90% of the time. You can have those repairs paid for through a credit that is taken out of the proceeds from your sale so you don't have to write a check out of cash on hand. Yeah. Which is. Yeah, there are instances where a credit credit does not work.
00:25:22:12 - 00:25:48:08
Joe Reitzug
Now, if you're getting financing, especially FHA, USDA, VA, those loans are very stringent upon. They're not going to let you do like a hold back or a credit for certain things, like a new roof or a sewer line, repair certain things. They're going to be like, no, we can't close the sale until those major features are taken care of in the home, which is understandable.
00:25:48:13 - 00:25:54:17
Joe Reitzug
Yeah, If you know, if the buyers are putting zero down or are 3% down or something like that, they're like.
00:25:54:19 - 00:25:59:03
Makayla Mast
Let's just make sure they're lending on a home that's not going to fall apart next week.
00:25:59:06 - 00:26:06:08
Joe Reitzug
Exactly. Exactly. What items would you consider a priority to get done before closing?
00:26:06:10 - 00:26:20:18
Makayla Mast
I think probably Roof and any major structural issues which we don't see too often. Well, a lot of times they'll flag siting have a you know, majority of the siding needs to be replaced or repaired sewer line. That's a big one.
00:26:20:20 - 00:26:43:17
Joe Reitzug
Yeah. You know, one of the things that we probably should talk about here is the implications of losing a sale. So if you're a buyer, yeah, bummer. We thought we had the house and we either didn't like the inspection and had to terminate or we couldn't get things negotiated with the seller in a way that was agreeable. That's, you know, that hurts.
00:26:43:17 - 00:26:57:01
Makayla Mast
It does hurt. Yeah. But chances are it's a blessing in disguise because the last thing you want to do is be sweating all of this money and put all your savings or most of your savings into a house and then have major repairs. And it's like one year.
00:26:57:03 - 00:27:22:17
Joe Reitzug
Yeah. And if you're a seller, there's different implications because what's happening during this process is all this what they call in the courtroom discovery. Right? So you're finding out all these things about your home that you did not know before. And in the state of Oregon, you're required to fill out a what's called a seller's property disclosure statement, which list all the important factors that you know about your home and its value.
00:27:22:17 - 00:27:42:18
Joe Reitzug
And once you start getting all this information on different things that you didn't know about before, you got to go back and amend your disclosure statement to say, Well, when we originally filled this out, we didn't know about the roof, we didn't know about, you know, the water in the crawlspace. So you go back and you, you know, make the changes on that.
00:27:42:18 - 00:27:57:20
Joe Reitzug
And there's an addendum where you can write what you're doing to address that. But that's part of the process. And sometimes that can hurt you down the road as far as your next buyer or when you do eventually get it sold, where that stuff is, just there. Yeah, you do address it.
00:27:57:20 - 00:28:01:04
Makayla Mast
You're going to have to prepare yourself to pay for that at some point or another.
00:28:01:04 - 00:28:09:10
Joe Reitzug
And nine times out of ten, whatever you just agreed not to do for this buyer, the next buyer is going to ask the same exact thing.
00:28:09:10 - 00:28:27:09
Makayla Mast
Right. And going back on the market doesn't look great, to be honest. You know, it happens sometimes. We just went through this. That's not the end of the world. There are certain things we can put in the private remarks for the other brokers to see on the listing that say this house isn't falling apart. Chances are we can come to an agreement with somebody else.
00:28:27:09 - 00:28:34:12
Makayla Mast
But adding to your market time and showing that you went off the market, now you're back on isn't ideal. It's not going to help you get top dollar right.
00:28:34:14 - 00:28:59:15
Joe Reitzug
Let's talk real quick about best practices. I would say a pre market inspection, right? If you're a seller, not a bad idea. Now it's four or five or $600, right? Sometimes a little bit less depending on what type of inspection you have. More like six, $700 now for pre inspections. No kidding. As you can tell, Mikayla handles most of that side of our business.
00:28:59:17 - 00:29:00:17
Joe Reitzug
No, no kidding.
00:29:00:17 - 00:29:02:08
Makayla Mast
Yeah. Okay.
00:29:02:12 - 00:29:24:07
Joe Reitzug
But that peace of mind of knowing what needs to get done with your home can be very valuable because you can go ahead and address those things. You can also provide that inspection report to a buyer. And there may be instances where a buyer says, you've got your home inspection. That was done. They look up the inspector five star, great reviews.
00:29:24:07 - 00:29:45:11
Joe Reitzug
Trust this guy. I'll use that as my inspection. Yeah, it happens quite a bit. But also it gives another counterpoint. And I've noticed this, that when inspectors know that another inspectors recently looked at it, they're a little bit more cautious and saying, well, this is wrong or that's wrong. They're like, this could be you might want to get a professional look at it, this, that and the other.
00:29:45:13 - 00:29:53:06
Makayla Mast
So which really helps because if an inspector sways a buyer a certain way, that could scare them off completely. And maybe it's not even that big of an issue.
00:29:53:10 - 00:30:30:02
Joe Reitzug
Right. Exactly. Last item before we go is the one thing that with all of this that is really what spins the wheel and gets things going. Are the contractors involved when you agree, you know, it's hard to do anything without understanding how much something cost and being able to get it repaired in a timely fashion. And if you don't have relationships with a lot of different contractors, if you don't know who the good ones are, if you don't know a little bit about how they operate, what works, what doesn't work, you can really get at a disadvantage.
00:30:30:02 - 00:31:00:22
Joe Reitzug
And that's why I would recommend all of you out there who are thinking about selling a home to include some questions in your interview to prospective brokers about do you have a list of contractors that you work with or that you know of? And if they say, I've been in the business this amount of time and I know all these guys, but do you have a list or in our case, we have a book, So we have a book that we provide all of our clients that has how many pages in 20 pages over 20.
00:31:01:00 - 00:31:01:22
Joe Reitzug
20 some pages.
00:31:01:22 - 00:31:14:04
Makayla Mast
And we update it quarterly. Yeah, because we don't want to send you to someone with a bad number or someone who is no longer in business or someone who doesn't do those services anymore. So we're yeah, we're on top of that guy, right?
00:31:14:06 - 00:31:38:21
Joe Reitzug
But having those relationships and having that is critically important in this process because the brokers that don't, they end up getting bids that aren't great, right? Or you have to just hope you get lucky with some of the people that you can get out there or whatever, and it can cause a real issue. So when you're interviewing brokers, make sure that they have a written list of the contractors that they work with that is critical.
00:31:38:21 - 00:31:40:06
Makayla Mast
I couldn't agree more.
00:31:40:08 - 00:31:48:07
Joe Reitzug
And we've got good ones. I'm so happy with the people that we work with. We've developed a really cool community with all of them and they are fantastic.
00:31:48:09 - 00:31:49:03
Makayla Mast
They're on it.
00:31:49:09 - 00:32:03:03
Joe Reitzug
They are on it for us and that that's important. So that is everything you need to know and more people about home inspection contingency and everything that goes in there. I hope it's been helpful.
00:32:03:03 - 00:32:05:03
Makayla Mast
Yeah. This episode.
00:32:05:03 - 00:32:08:05
Joe Reitzug
I've learned a little bit mostly about Russ from the.
00:32:08:05 - 00:32:22:10
Makayla Mast
Camera. I always learn a lot from you, so this is good. Good for me too. This episode idea was born from Mrs. Stephanie, Reitzug. when we were in the middle of a hiring negotiation last week.
00:32:22:12 - 00:32:27:09
Joe Reitzug
So she said, You guys should do a podcast on this, this is crazy.
00:32:27:09 - 00:32:29:06
Makayla Mast
This is exhausting, right?
00:32:29:07 - 00:32:32:07
Joe Reitzug
Yes, they could do movies. We should write a screenplay.
00:32:32:09 - 00:32:35:09
Makayla Mast
All right. Well. yeah. So, yeah.
00:32:35:11 - 00:32:37:19
Joe Reitzug
I need Will Ferrell as the lead role.
00:32:37:20 - 00:32:38:14
Makayla Mast
Of course.
00:32:38:14 - 00:33:04:02
Joe Reitzug
Because it would have to be a comedy. I'm sure they've already done it. Isn't it called The Money Pit? Did you ever see that Michael Douglas No War of the Roses or something like that? Yeah, it's all good. Anyways, if you want more information or if you'd like to get a copy of our book, our referral book is what we call it, which is all of our professionals and contractors that we've worked with over the past 29 years that we highly recommend.
00:33:04:04 - 00:33:11:16
Joe Reitzug
Go to our Web site livportland.com and you'll be able to find our referral book there and download yourself a copy. That's all I've got for today.
00:33:11:18 - 00:33:13:01
Makayla Mast
That's thanks to.
00:33:13:07 - 00:33:16:14
Joe Reitzug
All right. Thanks, Makayla. Thanks, everyone. Have a good day.
00:33:16:16 - 00:33:29:13
Makayla Mast
Thanks for joining us today. If you're interested in finding out more about Joe, myself or the livPortland team, you can go to livportland.com. Thanks for giving us a listen and see you next time on the Off the Record podcast.