The #1 Home Buying Mistake First-Time Buyers Are Making Right Now

Uh, Patriot Nation, what is the single biggest mistake you can make once you've already been preapproved? You know, you you're engaged with an agent, you put a contract out at the home which has been accepted. So, now you're in the contract. What's the single biggest mistake you can make going forward? And the answer is, if you haven't guessed, it's the inspection report and the mismanagement thereof and the consequences that come with that. So, in this video, we're going to talk about, hey, what is an inspection report? Why is it so important to you? And if you mismanage it, maybe it blows up the entire transaction before you even get to the finish line. So, the inspection report is huge. Watch this video all the way through. You're going to want to share with family and friends who are maybe thinking about buying a home, cuz this is a big one. Like I said, as I always say, let's kick off this rodeo right now. Hi folks, I'm Kevin Fe. the mortgage patriot on your side, nestled here in the Hill Country above San Antonio, Texas, serving all you proud Texans and all you great folks all around the country. Another great one. Why is that? Because the inspection report. The inspection report is huge in terms of the challenges that await first-time home buyers. It's also the biggest reason why deals blow up. As we talk about this, you're going to see what the inspection report looks like and how it can scare you. But what we're going to do in this video is we're going to turn that on its ear and we're going to make it something not to be feared, but something to actually look forward to so that you can use it as a negotiation against the seller to drive a better deal. So don't fear the inspection report. Look forward to it with all this problematic nature. And I'm going to show you through the video how all this can be used for your best purposes. Hit the like and subscribe if you would please. It really brings up my YouTube content to the forefront. like here's a good video on negotiating, how to negotiate like a pro where I talk and a little bit about the inspector report and how to use it as a second negotiation as we're going to explain here. So, let's get into that content right away. Okay, let's talk about what an inspection report actually is. And that's when you have an inspector, a licensed home inspector comes out to your home, the home that you're trying to purchase, and they spend about three hours at least going through everything. And I mean everything. They turn on every light. They turn on every water spigot. They run the dishwasher. They open up every latch on your window and raise the window up and down. They peer into every crevice of the home. They go into the attic. They check wiring. They check plumbing. They check the foundation all around in and out. They check the roof. They do a lot of work. It's a big report. It's usually about comes out about 35 to even I've seen it was five 75 pages long with detailed pictures picture of every little crack and fissure and non- workinging spout and loose wiring and so forth. It's a big report and it gives you at the end of the day a a summary of all the deficiencies in the home and you're going to want that because obviously you want to you know you don't want to guess about it. You want to be able to step into the home. You want to know if you're going to be facing any immediate problems. But having said that with the inspection report, it also scares a lot of people and it makes them potentially want to walk away. That's what we're going to talk about how to avoid all this and how to turn this inspection report into an asset for you. Okay, let's get into how this works in the real world. Once you get under contract, the very first thing you do is you order an inspection report. You don't even deliver the earnest money deposit. You have three days for that. So, the very first thing you do is you get that inspe inspection report scheduled and have them come out there and hopefully get their report back as soon as possible. In every contract, certainly in the state of Texas and every state, you have an option period, usually 7 days to about 10 days. You want to have somewhere in between that time to get that report back and to review it properly and then to renegotiate. What do I mean by that? Well, again, because we talked about the report being so detailed, it's going to outline all the deficiencies of these homes. Don't let that scare you because I promise you, every home, whether it's 10 years old, 20 years old, 50 years old, have many deficiencies that are going to be cited by the inspection report. Don't let that scare you. Use it instead as a means of renegotiation. So, for example, if there was potential, you know, water stains on the interior of the ceiling that came from the roof that is now fixed, but maybe it is, maybe it's not, or there's something going on in the attic that's still occasionally dripping and causing a stain on the interior ceiling. Something's got to be fixed there. Or there's some faulty wiring from an old fuse box that's no longer in code. That's a safety issue. Or maybe it's a sewage line that's that's backing up or not flushing properly. All these things need to be fixed and it's going to be either your dime or the seller's dime. And guess what? We don't want it to be your dime. So, you negotiate that with the selling party. And how do you do that? Well, you say you get a running list of items that let's say there's five items that you need to fix. And it might cost $6,000 to fix all these items. And you go back through the use of your agent, someone like myself, uh to the selling party, the seller's agent, and say, "Here are some things that need to be fixed." because the lender is going to require somebody to fix this, buyer or the seller. So, the seller probably needs to address this. And they could do one of two things. They can either come off the price by $6,000 in our example, or they can hire their own contractors to knock out the work. And then they send you the results of those invoices and show that the work has been done. Again, you don't get scared by the by the report because it will scare you. you use it as a second round of negotiation to get the repairs that you want done so you don't have to fix them once you move in on your own dime. Hopefully that makes sense. So when you negotiate and try to get uh better concessions or a better price during the option period through the use of the inspection report, you can't be, you know, you got to be strategic about it because there's three categories typically that inspection report is is is subdivided in. You have the safety issues that are flagged by the inspector. you have highly recommended items to be fixed and then you just have suggested items. Now, they might use different language across those three, but those are the three categories. And in a negotiation, a lender is only going to compel the buyer or the seller to fix just the safety items. They're not care. They're not worried about the the color of the of the tile or the fact that maybe there's a little bit of crack, you know, in the the garage foundation, which doesn't really, you know, matter at all, for example. They're not worried about. They're only worried about safety issues, which are roof, foundation, wiring, plumbing, and things like rotted wood or missing rails on an outside deck or termites. Those are safety issues. So, those are things you really negotiate for. Now, the type of financing that you acquire is going to also alter or dictate what types of fixes are necessary. For example, an FHA loan, which most first-time home buyers choose because there's advantages to it, requires more stringent fixes than a conventional loan. So, if there are problems with the foundation, for example, that are cited by the not only the inspection report, but by the appraiser, the lender is going to say, "Sorry, we cannot do this FHA loan until this foundation is fixed." And you as the buyer through someone like myself as the agent will then use that as a negotiation. Go back to the selling party and say, "Hey, sorry. You know, no can do. This is going to be a problem not just for us, but for anybody. If we walk away, you're still going to be left with this problem no matter who tries to buy this house. So, you might as well fix it for us because we're here. We're under contract." And because a lender is going to compel the seller or someone to fix that foundation. In a conventional loan, that's not the case. So let's just say for example this the seller just won't capitulate at all but you really really want this house. One strategy would be after you through the negotiations before you walk away you can we can strategize with the loan officer also myself someone that knows what they're doing and say hey well let's just switch this to a conventional loan because the conventional loan underwriter will not require you to fix the foundation at least right away. Hopefully that makes sense. Before I get into a uh a good summarizing example for you, a real life example, uh look at this please. webinar.theort mortgage.com webinar.theort mortgage.com. What is that? That is my ongoing Thursday evening webinar where I cover for first-time home buyers a road map from start to finish from pre-approval to getting the keys. Everything you want to know from how to negotiate the best deals while you're under contract like we're talking about today. What's the best down payment program in Texas? How do you slash your closing costs so you can write the smallest check? All kinds of things you're going to learn in this. It it takes it's about a 50-minute webinar. We have a lot of fun. We cover a lot of ground and I give you all kinds of examples of real life forms and so forth. So, you'll feel very comfortable as you buy your first home. So, meet me, join me at 700 p.m. Look on webinar.the mortgage.com when the next Thursday uh webinar is showing up and I'll see you there. Let's look at a all-encompassing summary example uh of how to use the inspection report. Let's say you have under contract about a $300,000 house and your current seller concessions inside that offer that's been accepted is now is $6,000. Okay. Now, day one, like I said, you have now ordered the inspection report. They come out day two, you have the report back to you at day three, and you're reviewing it. You have about four days. You have a 7-day option. Four days to review that inspection report. and you get with your agent, someone like myself, or even your loan officer can give you some tips on this, and you go over the safety items, right? The the highest category and things that a a lender might compel somebody to fix. And let's say foundation issues and you've got some missing planks on a on a deck outside and you've got GFCI plugs that aren't installed in your master bath in your kitchen and you have some smoke detectors that are missing. Those are all safety items that need to be fixed. So, let's say that and so you present that in a formal letter to the through your agent to the listing agent. The listing agent will take that to the seller. They'll say, "Hey, you know, these are going to have to be fixed. The lender is not going to do a loan without them, at least of the FHA loan." And then, uh, the seller's either going to say, "Okay, we we got to do it or we're not." If they they do say they're going to do it, great. Uh, they'll fix it. And then you get those invoices once again showing that the work has been done to your and to your satisfaction. You'll have a final walkthrough and make sure those things are done properly. But if they if they choose not to do it, at least do the work, but they'll give you concessions. Now you can raise let's say your $6,000 concessions to maybe $10,000 of seller concessions and lower your price from 300 to say 295. You know, whatever that balance is that makes you feel good like you've gotten compensated for the work that's going to have to be done for those items that we mentioned that are safety items. If that all falls through and the seller says, "I'm not moving a dime, we've got a price that you agreed on and we've got seller concessions we agreed on. We're not going to fix anything." Well, then you've got two options from there. You can either walk or you can try to convert to a conventional loan like I mentioned, which doesn't have quite the restrictions and it won't compel you to for for example, to fix the foundation because a foundation might be, you know, functioning as intended is is just going to need work at some point. So, switching financing types will alleviate some of these issues. That's just one option for you. But again, you can always walk away. But a good and experienced agent or a loan officer like myself in both cases should be able to help you walk through all this and navigate this whole inspection report challenge because again, they're going to those reports are going to scare you. Do not walk away from them. Use them to your advantage always. I hope all this made sense to you. Check out the webinar.theort mortgage.com. And by the way, I'm going to give you all these people that that do attend to that uh webinar, but you're going to get my free ebook, which is the ultimate first-time home buyers roadmap. I'm going to start start to finish. I'm going to cover everything I do in the webinar, but even more so with more detail. But come to the webinar. We'll have fun. And I'm Keagen, the mortgage patriot on your side. Make it a great one. END OF TRANSCRIPT