Sheepdog Podcast Episode 2: Buying a home

In the second Sheepdog financial podcast we have Erica Anderson. Erica is the owner and broker of Team Anderson Realty located in Holly Springs. Erica is an expert in buying and selling real estate. Listen as she talks about some of the local and national trends affecting home buying. Then gives good advice on how to buy a home, how to sell a home and the value of using a provider such as an agent or home inspector. I hope you enjoy Erica’s advice and expertise.

Listen to the episode at this link. 

Read the Transcription here.

Intro:                                     00:09                     Welcome to Sheepdog Financial. You will get answers to your financial questions. Learn to plan for your financial future and have the type of life that people dream of brought to you by Trisuli Financial Advising, a fiduciary financial advisor practice focused on military members and their finances. Your host of Sheepdog Financial is Scott Vance. Hello and welcome to Sheepdog Finance podcast. Today we have Erica Anderson on the show.

Scott Vance:                       00:40                     Erica is the owner, and a broker of team Anderson Realty. Her business is located here in Holly Springs, North Carolina. Erica is an expert in buying and selling of real estate. Listen, as she talks about some of the local and national trends affecting home buying, she then gives some good advice on how to buy a home, how to sell a home, and the value of using additional providers such as an agent or a home inspector. I hope you enjoy Erica’s advice and expertise. Welcome Erica.

Erica Anderson:                01:07                     Hi. Thanks for having me. So good to be here.

Scott Vance:                       01:10                     Yeah, I can’t wait to talk with you. So first, why don’t you give us a little bit of a background as to who you are and how you got here.

Erica Anderson:                01:17                     Well, I’m a third generation real estate agent and a graduate of the University of Central Florida. My bachelor degree has an emphasis in marketing. After I got my degree in 2008 I joined a team in Cary, North Carolina at Keller Williams Realty. I was an administrative assistant until April of 2009, when I got licensed. I am a Dave Ramsey ELP, a certified luxury home marketing specialist, and I started my firm about four years ago, but overall I’ve been in real estate for over 10 years now. I work along with my father as well, whose been a licensed agent since 1982.

Scott Vance:                       02:04                     Oh, that must be awesome working with your father?

Erica Anderson:                02:07                     It is. I really, really enjoy it and, my aunt is actually my office manager as well, which it’s been fabulous.

Scott Vance:                       02:16                     It’s keeping it all in the family. I guess that’s kind of a double edged sword at times, I bet?

Erica Anderson:                02:21                     Well, I only choose the best family members. I wouldn’t hire everybody in my family, I’ll put it to you that way, but I hire the best ones, or have the best ones on my team.

Scott Vance:                       02:32                     That’s great. So we’ve talked a little bit, so you’ve been here in Holly Springs for quite a while, so you’ve seen some of the changes. So I guess some of my first questions revolve around an overview of the real estate markets, both at the local level here in Holly Springs, which for my listeners that aren’t familiar with Holly Springs, it’s basically blown up the last 10 years. So the local trends as well as some of the future trends, if you could speak a little bit to that.

Erica Anderson:                02:57                     Yeah, well as a whole, not just in Holly Springs, with the whole triangle area, it’s been dubbed the mini Silicon Valley of the east coast. And because of that, because of all the tech companies that have come in and pharmaceutical plants as well, I think as a whole, we kind of live in a bubble. Even when I started during the economic downturn, there was still business people were buying and selling. The market did not crash like it did and the other parts of the country and it was relatively stable and since then it has only grown substantially. Holly Springs is interesting because it had almost delayed growth so it’s just outside Cary and Apex, North Carolina, but right now there is a lot of commercial properties being built up like the block at main and a lot of stuff. The downtown they’re starting to turn it into an actual downtown with more commerce and shopping and restaurants, which is pretty cool.

Erica Anderson:                04:00                     Then you have the main Holly Spring Shopping Plaza, which came in a few years ago and they have the movie theater, and the other shops as well, Target, a lot of anchor businesses that are back in there. And Holly Springs, there’s just so much in value, so much bang for your buck compared to say Cary, even parts of Raleigh like inside the beltline and Apex that the growth is, is just steadily increasing. So I think that Holly Springs and the Triangle Area is really good, but I had a really interesting conversation with the seller, and I kind of agree with him, the last two years were a sooner spring market than historically from what I’ve experienced, which means that we started having a lot of interest and, peak buyers starting to look in January versus historically, just after the new year. I would say February, March is when it used to be big,

Erica Anderson:                05:05                     and then after the new year, the last two years, is when I saw it started getting busier then. Anyways, I kind of feel like the market as a whole is a little sluggish. I really think that part of that is because they raised the rates, and the markets in general, they don’t like uncertainty, and we have a lot of tariffs, and I think that they’re trying to lower the rates again to spur the growth. My seller made a really interesting point that the baby boomers are retiring, so their spending cycle is scaling back and the millennials aren’t buying. Approximately, I think it was 80 or 84% polled, contribute the fact that they’re not buying to student loan debt, which I thought was really interesting. We do have a lot of national debt as well, I think it’s around $22 trillion. I don’t think that there’s a crash coming, but I do think there’s going to be a little bit of a market reset, especially while we’re negotiating trade deals with the other countries. Luckily in the Triangle Area, I think we’re going to be spared from anything dramatic.

Scott Vance:                       06:18                     Yeah, the external factors are huge with this current administration and some of the changes coming down the pike with interest rates. I think, like you said, specifically the Triangle Area continues to be like at the top 10 list of areas to move to. I just read an article yesterday listing top 10 places to move to, and the top 10 places to move from, and of the top 10, it was like two or three were the Triangle Area to move to. So, I think even in a downturn, with that growth, we’ll continue moving along.

Erica Anderson:                06:55                     Yeah, I would agree with that for sure.

Scott Vance:                       06:57                     Yeah, in fact, the interest, like you talked about Silicon Valley, Apple was just looking recently at coming here. I guess ultimately they’re not going to come, but just being on that [list].

Erica Anderson:                07:10                     Yeah, I was really hoping for that, but we did get Amazon, they have a distribution center that came in ,so that’s good.

Scott Vance:                       07:18                     Yeah. All the international, or large companies that are coming here just bodes well to future growth. So talking a little bit about the environment that we’re looking at, going forward, we’ve got a lot of my listeners are military folks, so let’s talk a little bit about some of the advantages and disadvantages of buying a home. A lot of them will be first time buyers, so if we just talk a couple of advantages or disadvantages,

Erica Anderson:                07:50                     Just buying a home in general?

Scott Vance:                       07:53                     Yeah, so some of the advantages, tax advantages, of buying a home and then also a home kind of ties you to an area. That’s kind of what I was thinking about.

Erica Anderson:                08:09                     So what I would say is, if they’re first time home buyers NC housing has a first time home buyer tax credit, and I’m not sure entirely of all the details, but what I’ve been told is they can get upwards of between, I think it’s $100 and $150 a month in value that they can either get a lump sum back in taxes or they can have it less taken out of their paycheck. So it just kinda depends on the route that they go, but there is a first time home buyer credit that should be for the life of the loan. That can always change, so I never guarantee anything like that. Even the lenders really don’t, but it should be. Even a hundred dollars a month for say five years, that can add up really quickly.

Erica Anderson:                09:00                     As a whole, I always tell people when they’re going to buy versus rent, and they’re concerned about being locked down, there’s always risk involved when you’re making an important purchase like a home, or purchasing a property in general, but you can always rent your home out. Worst case, the rental market is huge. So if they purchase a property that doesn’t need a lot of work, and that it would be pretty self sufficient if they moved away and rented it, that’s always an option. The buyer always just has to intend to live in a property. Things happen, so even if they purchase a home and say get a job transfer six months later, that’s still okay, they can rent it out. They’re not, you know, they weren’t doing any type of fraud in that situation.

Erica Anderson:                09:52                     Now a home buyer wouldn’t want to purchase as a rental in the guise of you know, first time home buyer, first purchase, getting a really great rate. So they should keep that in mind as well that they could rent it. I wouldn’t purchase it as a rental because that’s 20 to 25% down, but purchase it in the mind that if something happens, let’s say the market turns, and you can’t sell it, worst case scenario, you can rent it because when the markets do turn, there’s always more renters than buyers and I think that that’s pretty important to keep in mind. Now expenses, there’s always a roof, the HVC, the hot water heater, but they can get a home warranty. Third Party home warranty that the seller pays, cost approximately between $600 and $700. They can have their real estate agent ask that the seller pay for that.

Erica Anderson:                10:44                     That can be part of the negotiation, and if they do, usually you just go through the home warranty company. You pay, say a $75 fee and they have one of their vendors come out and repair or replace. Now if they have a 1982 HVAC and they get a home warranty on it, there could be a little bit of a fight with a warranty company to replace a unit. They probably will have the buyer bear most, or all of that expense. It just really depends. So you want an agent that’s going to do due diligence for them and if they have a home that say 15 years old where the A/C units functioning perfectly, they have a home inspection stating that it was operating as intended, considering normal wear and tear, then if something happens they can pay, you know, $75 fee, and maybe a $100 or $200 towards the repair but not have not bear the incredible expense of replacing a whole unit.

Erica Anderson:                11:44                     Keep in mind when you’re buying a home, a first time home buyer especially should, that shingles generally last five years less than their shingle…. You know, if you have a 25 year roof, expect to get 20 years out of it. If you have a 20 year roof, expect to get 15 years out of it. And I’m not saying that you can’t get the full 20 years, but you’re probably going to have situations, or you’re gonna have some leak. The vent boots on a roof need to be replaced approximately every 10 years, so that’s important to do, to keep in mind. But as a whole, as long as you do not get an aged out roof or the buyer is prepared for that expense in the near future, then they have that in mind. A hot water heater is approximately $500, they can always spend more than that, but as a whole they get that home warranty,

Erica Anderson:                12:36                     usually the hot water heater, the HVAC is covered with that. Not a roof, but you know if there’s any type of storm damage, that’s what homeowner’s insurance is for. I think it’s more convenient to own a home and get repairs on, and sure there’s more of a liability with expenses and risk involved, but as a whole, when you are renting and you’re calling a management company, I hear a lot of people say that they’re dissatisfied and the turnaround time for repairs and the quality of the repairs themselves because usually those companies are not hiring the best people to make repairs. So I think there’s a convenience factor with being able to call somebody immediately if you have a plumbing problem or an HVAC problem and not have to wait on, uh, the landlord or a management company, just somebody in the middle to get those things done.

Scott Vance:                       13:27                     Yeah, so you made some good points there, that North Carolina tax credit with some of my tax clients have that, um, that’s a pretty steep credit. Now, each state is a little bit different. Um, but it’s basically it’s a federal program that’s administered by each of the states. Uh, and that tax break, like you said, I mean, it was easily, I’m thinking through my, I probably have about five or six clients that have it and they probably get about, oh, probably about $150 or $200 a month worth of credit back from that program. Um, and that’s like, like you said, for the life of that loan. Um, so that’s really a good deal. The one thing you have to be careful with that is if you do sell within a certain number of years, you are limited. They’re gonna want to recapture some of that.

Scott Vance:                       14:07                     Yeah. Yup. So, yeah, so that those tax credits are excellent to take advantage of for buying your first home. Um, or just any old primary home. The other thing to keep in mind too, when you do turn it into a rental is for tax perspective. If you live in it the prior two of the five years, any appreciation is not taxed. Um, and for military folks, if you’re on orders and you have to move before those two years are up, you get a special, uh, exception to that rule, uh, make sure you talk with a tax person about that. Yeah, yeah. Yeah. There’s a couple of special exceptions. One is military. One I think is divorce and one is sickness. Um, so yeah. Yeah, yeah, it’s all helpful. That’s all good. Helps military gets some tax breaks. Um, and I know a lot of military folks, um, you know, accumulate houses over many moves and rental properties. Um, have you ever dealt with anybody as far as being a landlord, any recommendations around that? I know I use, for instance, my rental properties. I use a management company.

Erica Anderson:                15:15                     I like management companies, if you’re going out of state. If you live like, you know, I mean, and that would be the situation for a military, uh, buyer. I prefer that because they take what between 8 and 10%. They usually take the first month of rent and I believe between 8 and 10% of the rental payment. And they coordinate receiving payments, distributing that monthly payment to the homeowner, and then making sure that if there are any issues with, with things that need to be fixed, that they have their own vendors go out and coordinate the repair of that. I think it’s convenient. I personally have rented myself when I owned locally and it was still a headache because my tenant actually got ran over and killed by a car and it was just kind of, yeah, there’s definitely unforeseen things that occur with the rentals that every buyer should consider before they take that on.

Scott Vance:                       16:17                     Yeah. I’m, I’m an advocate of a management company. I have a property out in Colorado and they take 10% like you said, but a, there’s no nothing on me. It just comes, the payment comes to me. Every year they send me a statement, makes it really easy. Um, and then I also…

Erica Anderson:                16:33                     They’ll evict them too, right?

Scott Vance:                       16:34                     Yes. Yeah. That’s the next big thing. Cause I own some here in North Carolina and I have one kind of similar to you. I had a woman in there that, I mean she was a great tenant, but she ended up dying in the unit and I was, I was, as she was getting towards the end, I was really afraid I was going to have to walk in there and find her. Ultimately she went to the hospital. So, but uh, but yeah, there’s some definite times being a landlord… Okay. Well, so now we’ve talked a little bit about buying or owning a house. Can you talk a little bit about some of the credit and the financing factors that we have to think about?

Erica Anderson:                17:06                     For a military buyer or just the first time home buyer in general?

Scott Vance:                       17:10                     Oh, so there’s a, there’s a couple of different programs. There’s obviously the first time home buyer,

Erica Anderson:                17:14                     FHA, Conventional.

Scott Vance:                       17:17                     Yup. And then I can talk a little bit about the GI bill, um, if you need.

Erica Anderson:                17:20                     Yeah. So just in general, the different types of loans that they can get is that, or what I’ve been seeing with my clients. So there’s a lot of the FHA loans are really good for people that are a little over in their debt to credit ratio, you know, higher that pretty nice program about three and a half percent down and they are more lenient too with the credit. So if the credit is a little bit lower or I think if you had maybe a bankruptcy, you can actually get a loan within three years after the three year period of it being discharged. Yeah. And there’s a lot of people because of the financial crisis that utilize the FHA program just because of that. And I think that you can get FHA financing up to, it’s like $287,000 or something like that. And after that, then you have to pay the difference out of pocket.

Erica Anderson:                18:23                     I believe, and I could be wrong, because I’m a little rusty in my exact numbers, but it’s just a good program. So if you’re not, you know, a jumbo loan or anything like that, that’s good as well. And then there’s a conventional program. There are government, you can go as low as, I believe, 1% for conventional, if you use a government program to down payment assistance and I think FHA as well can be even less than three and a half percent. But conventional products as a whole is usually between, you know, 5% and up. And then there’s mortgage insurance, private mortgage insurance, unless you are putting 20 plus percent down. I, I like to run the numbers a whole bunch of different ways because homes are appreciating in the area relatively quickly and you don’t necessarily have to put 20% down to reach 20% equity sooner than most buyers are probably expecting.

Erica Anderson:                19:19                     So I like a good lender that will crunch numbers and just see is it better to be a little bit liquid especially if the buyers a little concerned about the market or perhaps needing to potentially move away in the future and float the mortgage payment while they’re trying to find a tenant or sell it and then have another payment as well. And then there’s USDA, which is 100% financing and that’s in the rural areas. The map changed I’d say about a year or two ago, so there’s a lot less USDA coverage in this area, but they’re still out there. Most of Wake County is not USDA eligible. A lot of Johnston, Harnett and other areas outside the cities are, and it’s a great program. I have somebody right now that’s purchasing with me, from that area, and they’re getting the USDA a hundred percent financing and every, I guess this the same for most government programs, but every county has a, you know, an income limit. They have to keep that in mind. You can’t make $500,000 a year and get a hundred percent financing. It just doesn’t work that way. So there’s other details involved. But as a whole, there’s a loan type for everybody. And of course VA, which VA is incredibly popular. They have the ability to utilize that.

Scott Vance:                       20:48                     Yeah, the VA loan is a good deal. I’ve done, I bought a home on that 0% down. You do pay a fee upfront, the VA funding fee. Yeah. But yeah, it’s really handy. No private mortgage insurance like you would pay with traditional loans if you’re below that 20%.

Erica Anderson:                21:04                     And the rates are really low.

Scott Vance:                       21:05                     Yeah. Yup. Yeah. Yeah. So it really works out well. Um, now for those who get, you do have to go through a traditional lenders, but they just administer the program. So, um, you do have to meet some of the, if I understand correctly, some of the underwriting requirements that traditional loan would have to minus the 20% down or the initial down payment.

Erica Anderson:                21:28                     I think that that’s the same for any type of loan program that really, even FHA and USDA, you don’t have to go through underwriting and they’re sometimes, you know, an additional step involved.

Scott Vance:                       21:38                     Yeah. Yeah. And then for people that are trying to get their credit straight, um, some of the things I would tell them is, is not to be applying for multiple types of credit as you’re going through that process. Um.

Erica Anderson:                21:50                     Oh yeah

Erica Anderson:                21:53                     Don’t buy a new car.

Scott Vance:                       21:53                     Yeah.

Erica Anderson:                21:53                     Don’t take out that equity line of credit, don’t do anything like that.

Scott Vance:                       21:59                     Yeah. I know people sometimes also worry about when they shop around for loans, but so as long as you shop, I think within 30 days of different lenders, they count that as one inquiry on your credit report inquiry. So that’s where you don’t get hit. So if you’re going to apply with a couple of different lenders to kind of see what works good for you, you kind of want to do it within a 30 day window to help protect your credit.

Erica Anderson:                22:24                     Good point. I like that.

Scott Vance:                       22:27                     Okay. So we’ve talked a little about financing. Obviously things happen, sometimes people can’t pay. Um, have you worked with anybody that couldn’t pay or how they handle that situation?

Erica Anderson:                22:38                     Yeah, I’ve had short sales and I have had situations where the seller was in default and they came to closing with, you know, a couple thousand dollars or they broke even. The one thing to really consider if a buyer is defaulting, you probably should, if you have any equity in it, sell it really soon because the banks and the institutions have a lot of fees that they roll in that you will be obligated to pay and they can change week to week. I had a seller where we were going to break even, but he was maybe gonna make a little bit of money but then there was like a $3,000 fee because they took them to court or they were going to and he had to bring money to closing that he wasn’t expecting, but that was outside of my control and I can’t see every single thing that the bank is doing behind the scenes.

Erica Anderson:                23:37                     The only thing I can do is the minute they say I need to sell it is try and get it sold as quickly as possible and to try and get a pay off and have that updated pretty frequently. I would say every two to four weeks while it’s on the market or under contract, just to make sure that the seller can bring that additional money to closing because in the event that they cannot and they can’t sell it, then they could be in breach and then there could be a whole bunch more legalities involved with that when they have it under contract.

Scott Vance:                       24:07                     Yeah. I’ve worked with a couple clients that are having trouble paying and one thing I’ve seen a lot, and this is the one piece of advice I would give, is not to hide from it. You may avoid the mail, you may avoid the sheriff come knock on your door, but they’re going to get you eventually, and you’re better off dealing with it up front and it’ll save you more money that way. As painful as it is.

Erica Anderson:                24:28                     Yeah, absolutely. A lot of people when they are confronted with stressful situations that they tend to kind of put their blinders on and they don’t face it and then it turns into a big ugly monster in the background that they will eventually have to face. And there is a lot more involved. If you face it early on and you don’t push it to the side, you can usually tackle that if you have the right people in your camp. And I think that that’s really great advice for people in that situation. And then of course if you are more than, I think it’s three months late on your mortgage payment and you are in the foreclosure process, and you don’t have any equity, you can always petition for a short sale. And I really don’t enjoy selling them and I don’t enjoy having buyers buy them.

Erica Anderson:                25:12                     But I have had situations, especially with the credit unions and the smaller banks where they’re relatively smooth and seamless, but larger national banks can be a nightmare. There’s a bit of a disconnect with say Wells Fargo or Bank of America. I almost think that there might be incentive for them to go into foreclosure and they’re not as incentivized to do a short sale. I mean that might just be speculation on my end, but they just don’t seem to be very motivated. A lot of times buyers will go under contract with the short sale. The seller says, yes, I’ll accept this amount, but the bank comes back after an appraisal and they want much more money, almost retail value of a home that’s in better condition than the current one is. It’s better to avoid that at all costs and sell it quickly. But if you must an experienced agent who knows short sales and can navigate that for you is great and then use a short sale attorney when you’re coordinating this process and a good agent will have connections with that.

Scott Vance:                       26:16                     Yeah. Using those specialists helps a lot along with that advice of not digging, not ignoring it, getting somebody that’s specific to that area. While it may cost a little bit more upfront it will probably save you a lot of money on the backend.

Erica Anderson:                26:29                     Yeah, and headache. You know, there’s stress involved with those types of things. It’s just not worth it.

Scott Vance:                       26:36                     Sure. We’ve talked a little bit about sad stuff. How about some advice you could give to people that are buying their homes? So probably one of the first things is how to go about finding themselves a good agent to buy a house that’s good for them.

Erica Anderson:                26:49                     Well, what I do is I would definitely do due diligence. I would have you check reviews. Reviews are important to me because some of these websites, agents don’t have profiles and some of the websites are so popular that they should have profiles. And I think a really good indication of an agent that’s doing volume and is competent and is relevant and in the current market is somebody that has their profile on many various websites. They do not have to be paying to be, you know, have a service but just have a competent updated profile with their bio, and a headshot. You want an agent that clearly has attention to detail and is doing something like that, and then I would also look at the reviews. They might have Google reviews or reviews on Zillow, or Realtor.com or anything like that.

Erica Anderson:                27:43                     Even Angie’s List has reviews for real estate agents. So I would check out the reviews, and every once in a while you’re going to get a bad review on somebody’s rating. I would not discredit an agent that has one bad review because there’s a lot of people that are disgruntled and they’re more likely to write a review than those that are very satisfied with the service. It’s just challenging to get reviews in general, so if you see a negative review, read it and then see if that agent has responded to that negative review. I think that’s important because that shows their level of professionalism. You cannot make everybody happy, you’re not going to always be the perfect fit for a client, and you just want to know that the person that you’re gonna work with is professional.

Erica Anderson:                28:31                     I love seeing, if they’re not an older agent who’s been in the business for 20 years, I like seeing somebody that has a degree. I just think that there’s a level of professionalism with people that it doesn’t have to be a four year degree, but just some sort of trade degree or some sort of schooling because I feel like that will set that agent apart. If they have 20 years of experience and have no degree, then by all means that that’s a great feat in and of itself. So as a whole, just check out the reviews, look at their profiles, see if you’re connecting to what they say and then call them or email them and set up an interview. Ask them how long they’ve been doing it, how many homes they’ve closed in the last 12 months, and as a first time home buyer, a second time home

Erica Anderson:                29:19                     buyer, ask some questions like what they do that sets them apart from other agents, where they work, and where they operate. I’m actually a member of five MLSs, so even though I’m located in Holly Springs, I have listings in Fayetteville, in Rocky Mount, I mean just everywhere, honestly. So people shouldn’t just assume that I’m only working in Holly Springs. I have agents all over the area. So it’s important to find the best agent and not just a local agent. Local is good, but there are some areas that really just do not have great agents in the area. So consider going a little outside the area to find the right agent as long as that agent is familiar with the area and willing to go and work for you in the area that you’re looking at.

Scott Vance:                       30:09                     Sure. So in addition to the MLS, I know when I searched for homes I kind of look ahead of time on, um, was it Trulia, I think, or Zillow, that’s what it is. Does that comparable to the MLS or what are you looking at that? Is that a good way to get a kind of an approximation of what people would be looking at for certain neighborhoods?

Erica Anderson:                30:30                     So it is popular, I will say that I have heard that Zillow’s estimates are 40% accurate within 10% of the price. So don’t look at the estimates, I guess what I’m trying to say because there just external factors that a computer cannot calculate. They don’t, you know, there could be three foreclosures in a community and they’re using the foreclosures as comps toward the subject property. Zillow is very easy to navigate. That’s why it’s the number one search engine. They do a lot of marketing campaigns. They own Trulia as well. They’re the same, essentially the same company. I think Zillow is fine to look at. Just keep in mind that not all real estate firms syndicate to Zillow. Most do. Not all, not all do. And a lot of times Zillow makes, properties that are in pre-foreclosure look like they’re for sale and the contingents and pending properties, which means that they’re in their contract still look active. So if you have a good agent, it is better just to go off the MLS search itself because it’s going to be more updated.

Scott Vance:                       31:46                     Okay. Yeah. Good information. I didn’t know that they kept stuff that was already sold, or not sold, but under contract, on their website.

Erica Anderson:                31:56                     They do, but it’s kind of challenging. People see pending and contingent, but they don’t really understand what that is. And so just having an agent sending them a direct search, I remove contingent and pending when I’m doing a search for a buyer. And if I always say, if you see something that’s not on my list, send it to me because I’ll research it. But nine times out of 10 it’s because it’s already under contract.

Scott Vance:                       32:19                     Okay. And then so talking about buying homes, for sale by owner or FSBOs, do you recommend that buyers look at that route or are there some traps there?

Erica Anderson:                32:32                     Buyers in general, I don’t hate for sale by owners. I think that for sale by owners are shooting themselves in the foot because they historically sell significantly less than working with an agent. I actually just had an associate or somebody that I know outside of this area and the home appraised for 20,000 or 30,000 more than they were under contract for. And the seller was the for sale by owner. So the buyer got a great deal. But the seller trying to save about $6,000 in commission lost $20,000 to $30,000. So keeping that in mind, you can find a good deal. It can be challenging for an agent to work a for sale by owner because we have to communicate with both sides. We have to present the offer, we have to inform the seller on the process and everything like that.

Erica Anderson:                33:29                     I wouldn’t rule it out. A lot of times the for sale by owners get inundated with phone calls from agents, trying to get them as a listing. So they get disgruntled. They can be harder for us to coordinate it’s showing. I wouldn’t rule them out, but I would ask the agent, that the client is working with, what they think about it. If they have an agent that writes off for sale by owner completely, my opinion is they’re being lazy so they need to reconsider who they’re working with. I always try and call a FSBO to see if they’re willing to work with a buyer’s agent and if they are, I try and gather as much information as I can. I’m always willing to show them. I’m always willing to take that step. But if it takes me 10 phone calls and I’m not getting returned phone calls, I would say move on.

Scott Vance:                       34:22                     Yeah. I’ve had clients talk about going and selling their home for sale by themselves and I always advise against it. You know, you save a little bit of money but I think you end up losing more in the end. I tell them (my clients), I used to change my oil on my car growing up, but now I pay somebody $30 because it would take me a weekend and a bunch of curse words and buying a new tools I don’t have to do it. So, I think it’s better.

Erica Anderson:                34:52                     Oh yeah. It’s all about leveraging your time. You cannot be everything to everybody. And honestly, the amount of money saved, if you find a really good person to market your property, it’s not worth it. Because it cost me over a thousand dollars to put a listing in the MLS and that is, that’s basic expenses and I’m putting all that risk up front. If I don’t sell that property for how much a seller is wanting and willing to pay for it, I eat that expense. So I bear that risk. I pay for that upfront. And if the seller doesn’t want to sell it for less than they’re willing to sell it with an agent, then that’s my risk. And I don’t see, if you listed with an agent and you want X amount because you were using an agent and the agent feels comfortable with that amount and they feel like it’s supports market value, then what do you have to lose? And you just are leveraging your time. You’re making everything more streamlined. You have somebody as an advocate working for you. When I’m representing a buyer with a FSBO, it’s easy for me to say, offer less due diligence and less earnest money because I’m working in the buyer’s best interest. Whereas if I was listing agent, I would advise a client to make sure that they’re getting enough money, so that if the buyer walks away, they have a little bit more skin in the game than the average person.

Scott Vance:                       36:12                     Sure. Yeah. So speaking a little bit about buying homes, how about home inspections. Some people I’ve seen talking say that you should have a home inspection. Some people say you shouldn’t. New homes, some say that you don’t need it. Um, where are you at on home inspections?

Erica Anderson:                36:28                     So I always recommend a home inspection. There are so, okay, technically an agent needs to recommend every type of inspection under the sun and home inspections in general I think are almost non-negotiable. You need to account for a $400 to $500 expense for a home inspection. There are things such as foundation issues and fungal growth in the crawl space, water intrusion issues that I think are very important too, even if the sellers not willing to make the repairs, for the buyer to be aware of them. And I have had many, many, many buyers save so much money, four or five, $6,000 by doing a home inspection and finding a substantial issue that really was not easy for even the agents and notice. And then I really, especially in North Carolina, I really recommend termite inspections with the home inspection because subterranean termites. I want to say there’s like at least 14 colonies on an acre, of subterranean termites in the state of North Carolina, on average.

Erica Anderson:                37:32                     And it could be more than that, but that kind of blew my mind. And I even have a termite issue in my own office because it’s a 1935 farmhouse. The importance of having a competent company inspect is number one. And using a real estate agent that has people, I like home inspectors and vendors that cause deals to fall apart because I know they’re doing a good job and you know, of course the seller would love a home inspector that’s a little bit more lax than not as attentive in terms of attention to detail, but I like them. I mean I would rather the deal blow up and know that the buyer’s buying a sound property than not. There’s also radon tests that are important. Uh, and surveys, property surveys are great because there can be easements that you’re unaware of that aren’t even visible from the front or backyard.

Scott Vance:                       38:27                     Yeah, I had a home inspection on a home I almost bought, and the inspector found out that the person, the people that owned it ,were taking the stuff to make fake wood to try and hide the termite damage. So they were trying to like hide that and he found that , and gave us a good reason to back out and not even deal with the rest of the headache that might’ve come with that.

Erica Anderson:                38:53                     I had an agent tell me locally that there were, there was a buyer that bought a home or the home inspector notice that there is a false wall built in the attic to hide damage. A completely false wall that looks like a legitimate wall. And it was a fake wall that was put there by the seller to deceive the buyer about damage. And that blew my mind. And that right there told me that, most people are inherently good and they’re not deceptive, but you can never be too careful and what is four or $500 to find something like that.

Scott Vance:                       39:31                     Yeah. Even if the inspector doesn’t find something like that, they always come back with recommendations on little things to fix. So if you do buy it, it’s a good place to start.

Erica Anderson:                39:40                     New construction, I’ve never had a clean new construction home inspection. And when people don’t get them with new construction, it just makes me unhinged, because you know, there might be a one year warranty as a whole, but a lot of things like roof issues are not necessarily going to show after a year, might be two, three, four years down the road. And I’ve just seen some really sloppy work done and things missed by the local inspectors before they get their CO and during the inspection process. So people rely so much on the builder and the local inspectors that they’re really inundated with new construction builds and they’re just humans just like everybody else. And having another set of eyes is very important.

Scott Vance:                       40:23                     Yeah, that’s, I would advocate always to have a home inspection. Um, so speaking a little bit about new homes, do you prefer new or old homes?

Erica Anderson:                40:32                     Me personally or just as an agent?

Scott Vance:                       40:35                     Well, for working with your clients, do you see an advantage to newer homes? I think there’s probably an advantage if you have some choices that you could make upfront as opposed to an older home where you’ve got, you know, basically what you’re buying is what you’ve got.

Erica Anderson:                40:52                     I’ve found that most spec homes, which means that homes that are built already with a buyer can’t make choices. They’re more likely to be motivated to give the buyer a better deal because they have sitting inventory that’s costing them holdover costs. And I see, you know, if they’re actually doing a spec home or not a Spec home, but at pre-sale they can, they can choose all the finishes that they want. And that can be, I mean it can get kind of expensive when you go into the design center, but as a whole you can choose things like the foundation type. Do you want a basement? Do you want granite or quartz in your kitchen? Do you want the upgraded, you know, the gourmet kitchen? Do you want certain things? So I think that the flexibility of new construction is really nice. They’re relatively smooth in terms of contract to closing.

Erica Anderson:                41:39                     But I get into it with the superintendents because there’s usually too few superintendents working these new construction communities and things are missed so it’s good to have another set of eyes and people that are used to seeing where they cut corners. And I’ve had to be an advocate for my buyers countless times where I just call people out for being unprofessional or not having the house ready. And I’m talking about significant stuff. I’m not saying, you know, a little nail hole here and this and that. I’m talking about filthy property where we’re doing a final walk through and the door hinges not set properly in a pre hung door. Just stuff like that where I had to really just kind of get on the individual, the superintendent and tell them that that was just not acceptable and they would have just closed and they were pressuring the buyer to just accept it the way it was and that it would be done later.

Erica Anderson:                42:38                     But I made them write it down, hold them accountable. I like new construction. I also really love resale because usually the lots are a little bit more spread out. You know, you’re not on top of your neighbor, you have more mature landscaping, you have sometimes not all the time a better construction quality overall, but you can get accustomed built product with new construction as well. So there are pros and cons to everything. You’re usually paying top dollar for a new construction home compared to resale. So you want to consider that as well. If you buy one, two or three or four years old, you still have an almost new product. It’s just like buying a car that’s from a lease, you know, three years old, you pay half. That’s not the percentage that you save when you’re buying a house, but you could save 30,000, 40,000 possibly more if you buy a home that’s a couple years old versus brand new. So there’s just a whole bunch of factors and the agent that the buyers using should be aware of this and brainstorm with the buyer to see what’s the right fit for them.

Scott Vance:                       43:45                     Yeah, like you said, I can see a lot of advantages both ways. You know, buying a resale, it’s not brand new grass, it’s not brand new bushes out front, but you probably can figure out some of the drawbacks and things that are bad on it as opposed to a newer home where everything is brand new and it’s kind of hard to figure that out. But then also it is a newer home. Um, and then also the reduced costs. So talk a little bit about cost. Do you have any recommendations as far as how a buyer should negotiate the cost or that they ultimately pay?

Erica Anderson:                44:22                     Closing costs and down off the purchase price?

Scott Vance:                       44:25                     Yeah, the purchase price and all that. Sometimes the sellers will pay for closing costs

Scott Vance:                       44:31                     or things like that.

Erica Anderson:                44:34                     So if the home is just listed, it’s zero days on market or it’s one day on market, you’re seeing 20 million people at the home during your showing, chances are you’re not going to get seller to pay closing costs. You might even go 20,000 over list. It just depends on the market that you’re in. You need your agents to navigate it. But I like to write a letter. You know, if you have a multiple offer situation, a little letter about why the buyers love the property, that can make a difference. If it is an investor selling a property, forget about the letter. They are numbers. There’s no feelings involved. It’s just like a builder. For the most part. It’s a business transaction. It’s going to give them the most and who’s going to give them the smoothest closing. Your loan type is going to be really important, and I will say that the VA buyers can be at a disadvantage when you’re in a multiple offer situation.

Erica Anderson:                45:26                     If they’re not putting a good chunk of money down as if it were conventional loan. Some VA buyers, put 10 – 20% down and there’s not an issue with the appraisal, but when it’s a hundred percent financing, I have found that if we get these multiple offers situation, the VA appraiser are held to a higher level, more strict standard, and I hate to say this, but some of the worst comps in the community, and I’m not saying that they shouldn’t, but it makes a lot of deals fall apart and they just have a liability if they don’t, and they have to be conservative with their appraisal. So you need an agent that if you are a VA buyer in a multiple offer situation, let’s say you’re putting 5% down, your agent needs to go to the listing agent and saying, look, this is a VA buyer.

Erica Anderson:                46:18                     This is somebody who is working with a local lender or a lender that I have used in the past and they always get me to closing and this VA buyer is putting 5% down or 10% or 20% or whatever it is. And so they are essentially like a conventional buyer, just using the product of the VA loan. That could be a real advantage. So if you want, if the property has been sitting on the market, let’s say it a spec home, I just had one in Carey and we ended up negotiating. I told them, I said, ask for everything, ask for closing costs, ask for money off price, ask for blinds in the property because new construction doesn’t usually have blinds, they don’t have window screen. And this one happened to have a refrigerator, but I said ask for everything. And then when you go to the builder and you presented, or the seller, you see where they want to be, where they want to land.

Erica Anderson:                47:12                     I actually asked for a fence too. I mean why not? Because you just ask for everything because most times they don’t want to lower. If it’s in a new construction community, they don’t want to lower the comp value but they’ll give you concessions. They’ll do the closing cost, they’ll do the blinds, they’ll do the French door refrigerator, they might even do a fence for you and all those things add up. And so I went in and we negotiated, ended up being $15,000 off list price. We got $5,000 in closing costs. We got windows screens and we got a couple light fixtures switched out because you know if it’s new construction they have the ability to do a little bit more. They’re more used to having certain things requested. And then if it’s just a resale seller and it’s been on the market a little bit, have the agent run the comps because you need to know is it on the market because it’s overpriced, is that on the market because it just doesn’t show well or is there another factor involved?

Erica Anderson:                48:07                     Is five 40 going to be in the backyard, you know, is there a highway that’s going to be built in the near future, or close by the affecting the resale value or the current property value? There’s just so many things. I always say go in and ask for a little bit of everything within reason. You don’t want to insult. You can be a little bit more aggressive with the builder and with an investor because they just care about numbers. With the seller unless they’re incredibly motivated, you have to tread a little lightly with your tactic and what you’re asking for.

Scott Vance:                       48:42                     Yeah, I had heard that VA home buyers are sometimes at a disadvantage in a hot market, um, because of the additional requirements placed on them. So we spoke a little about buyers. What about sellers? What can you say about people that are about to sell their homes, some recommendations there? Staging? I’ve seen like 3-D videos, things like that.

Erica Anderson:                49:04                     What I do or what I personally do is I have a network of people. I’m actually a Zillow premier agent and a premier agent direct and I have a 3-D tour that I can do on all my listings and it’s paired with Zillow but Zillow is the number one search site. So we do 3-D tour and before the property is photographed, we’ve prepped the home so we can do it ourselves or there can be a stager that comes in. Now my father has a background in interior design and staging in Boca Ratone. He used to have an interior design company, and so he has an eye that most real estate agents do not in a lot of real estate agents have to rely on, say, an actual professional stager, which I think is great because if you don’t have the eye, that the stager does, don’t, don’t try and be the stager, don’t try and save some money.

Erica Anderson:                49:59                     So either have a stager come in, a professional stager, you know, it’s usually about $300 for two hours of their time and it could go up if you’re actually using their services for light staging. We actually offer staging ourselves. So I have warehouses of, it’s kind of soft staging. I have a lot of art. I have table, chairs. Uh, I do have one bed that is kind of on a bed frame and it’s a mattress. It has actual bed linens, but it’s not heavy staging. It’s not sofas. It’s not anything like that. I’ll do a dining room table, I’ll do plants, I’ll do little things like that. But as a whole you need the agent or the stager to come through. You need to declutter, you need to depersonalize and you need to get your home prepared because you’re competing with new construction and you’re competing with model homes.

Erica Anderson:                50:50                     So you go in and you neutralize the property and you have it all prepped for pictures. You need a professional photographer and the agent of course needs to be competent enough to use a professional photographer to take these pictures. If you have a really nice lot, you might use, the agent might use aerial and drone photography to kind of get a really good vantage. If you’re on a hill and where you’re looking up from the street at the home. The drone photography can be really nice because then the main picture doesn’t look like you’re looking up Mount Everest, deterring future buyers. Then you need a professional video and then we do the 3-D tour on top of it with the video. And then aside from that, I think I do not like outdoor fliers. They get wet. They just are not something that I think is a good representation of the home because even a little dew in the morning can just kind of make it wet and soggy.

Erica Anderson:                51:53                     So I like to do indoor folders that are professionally printed on a stand. And I think that if people want to see the home, they will call us on the signs. They will schedule an appointment and then they can get an indoor folder or they will call us and we’ll capture the lead. Either get them in the home or send them the information so that they can see it in a really nice format on a computer or in a nice folder. And as a whole, I think sellers need to make sure too that they price it appropriately.

Scott Vance:                       52:24                     Yeah, that whole selling process can be daunting. Um, and the help with staging is a huge thing. I know from my experience in selling my homes. So any other advice for sellers as far as selling a home?

Erica Anderson:                52:38                     I think a lot of sellers need to understand that our job as the agent is to get it out there in front of everybody. So I do social media paid campaigns, I have it featured on Zillow, I have it on all the social media, I have it, you know, just in the eyes of even local agents. If your home is, has been staged and prepped properly, the marketing is excellent and superior to, you know what the other agents in the area do and your home is sitting, it is going to be the price and a lot of sellers need to stop blaming the agent, that it’s the agent’s fault. Now sometimes it is the agent’s fault. They’re not doing a good job. But a lot of times those sellers didn’t hire the right person for the job to begin with. So I always say if the marketing’s right and you have too many showings and no offer or you have very little showings or no showing, that’s a reflection of the price.

Erica Anderson:                53:33                     And even the smallest amount over market value I have seen in my career, buyers will not make the offer. They just, for whatever reason, they just don’t like to, if you price it appropriately and you hold on your price, that is the best way to get an offer and to get it sold. It is not good to overprice it, test the market and have those days on market. Just reflect that it’s overpriced and you just have to have a really grounded reality in that every one to two weeks, if we don’t have an offer, we need to drop the price. It doesn’t have to be $20,000. It doesn’t have to be dramatic. It could be even $1,000 so you need to just keep it refresh and you need to hit it until you get that sweet spot.

Scott Vance:                       54:22                     Well. Good. Thanks for all that. That’s been good information. As we close out, do you have any final advice that you’d like to give to listeners as they’re thinking about buying a home, selling a home or renting a home or anything with a primary home?

Erica Anderson:                54:35                     I would just recommend that you speak to a really good lender and you speak to a competent real estate agent and just brainstorm and figure out where you want to be, where you need to be in the whole process from contract to closing. And if you find, if you’re a seller and you find a good agent, have that agent set realistic expectations for you, because a lot of agents will kind of feed a little fluff, and you know, get you all in the field, but you need somebody that’s just going to tell you how it is in a very professional manner. But I’m the kind of person I like to be direct and I don’t like to tell people that I can give them more than I think I can for home. And sometimes I don’t get a listing because I’m not telling them that they should overprice their home. But I think that if buyers and sellers go to their agents, get a really professional, competent agent and ask them for their experience and have them help guide them, they will find that they will get an overall much smoother, more professional, more incredible experience for the home buying and planning process versus somebody that is blindly doing it. You just really need to professional in your camp. That’s on the lending side too, because you do not want somebody that’s west coast when you’re east coast and vice versa because the time difference.

Scott Vance:                       55:57                     Yeah. All good advice. Well, thank you Erica. Uh, and for my listeners, I want to get a hold of you. How could they get ahold of you?

Erica Anderson:                56:03                     So you can go on my website, it’s teamandersonrealty.com/. Of course you can also call me and you can even text my number is (919) 610-5126 and you can find me on Instagram and Facebook at team Anderson Realty.

Scott Vance:                       56:22                     Well, thanks again Erica. It’s been good time

Scott Vance:                       56:24                     and good information.

Erica Anderson:                56:25                     Yeah. Well thank you so much for having me and it was a pleasure speaking to you. Been fun.

Scott Vance:                       56:30                     Thank you.

Scott Vance:                       56:34                     I hope that you enjoyed the show, and the advice that Erica has shared. If you would like to contact Erica, check out her website at www.teamandersonrealty.com and I will link to it in the show notes. If you found this episode interesting, feel free to share it with friends and subscribe to hear more. I would love to hear your feedback and suggest topics that you’re interested in listening to. Thanks for listening.