The Blue Button Broadcast

The Accunet Mortgage & Realty Show 2-2-25

• Accunet Mortgage

Share episode
Speaker 1:

The following program. The ENT , mortgage and Realty Show is paid for in full by ENT mortgage, LLC and equal housing lender consumer access.org number 2 5 5 3 6 8. The advice and opinions expressed during the Academic Mortgage and Realty Show are solely that at the hosts and guests of ENT mortgage, LLC, and not WTMJ or Good Karma Brands.

Speaker 2:

Welcome to the Accu Net Mortgage and Realty Show, getting you inside information on buying, selling, and financing your home with expert advice from Anette Mortgage and Realty. And now, here's Brian Wicker and Tim Holdman.

Speaker 1:

Welcome to the Accu Mortgage and Realty Show. The , uh, early February edition. I'm Brian Wicker, licensed real estate broker with Aedt Realty Advisors, and also the majority owner of Aedt Mortgage, where my individual N-M-L-S-I-D number is 2 5 9 6 1 0. I'm here today with my Sonin Law . Tim Holdman. Tim, what's your N-M-L-S-I-D number ? Good morning,

Speaker 3:

1 5 9 3 1 4 6 .

Speaker 1:

Alright , thank you. Tim Holdman , senior loan consultant. So , uh, Tim, lots of topics to talk about today. We had a treasure strove of economic reports that at the potential to

Speaker 3:

Impact Yes , indeed, mortgage rates

Speaker 1:

This week. Um , got a , uh, quick look at Wisconsin Home affordability based on home sales and median prices statewide. I've got a story about an inspection fall through in , uh, Illinois, which is a little bit of a different animal compared to , uh, Wisconsin plus a divorce related refi. That was quite interesting this week. Do you have any stories to share?

Speaker 3:

Yeah, you know , uh, uh, just a , a little , uh, teaser for some of the stories of customers I talked to this week. Um , helping a home buyer refinance his ex-girlfriend off of the mortgage and title. Ah huh . So, just a couple , uh, unique , uh, details about that. 'cause they were never legally married , uh, when they bought the home, nor anytime thereafter.

Speaker 1:

We can pull those two topics together, the divorce related and the , um, couple that's not legally married. Yeah, that's cool.

Speaker 3:

<laugh> , right? Yeah. And then , uh, a first time home buyer buying a very interesting three unit property. Uh , not many of those out there and some of the , uh, interesting property condition related details that have gone into that one. So. All

Speaker 1:

Right , cool. So we've got lots to talk about today. Let's start out with the economic reports and potential mortgage rate moving , uh, numbers that came out. Uh, remember for mortgage rates to come down, we need either inflation to keep coming down towards the fed's 2% target and or we need the job market or the economy , uh, to cool off. So last week, right , the Fed had a meeting, first of all on Wednesday and , uh, that was kind of a big nothing burger because they did absolutely nothing and everybody expected them to do nothing and they didn't see anything surprising. So check that one off the box dodged a bullet, maybe nothing really happened. Uh , then on Thursday , uh, we got the , um, gross domestic product , uh, and the gross domestic product report for the fourth quarter. The last four , uh, three months rather of 2024, showed that the economy grew at a 2.3% annualized rate. Okay. And the economists were expecting 2.5. So a little bit of a miss on the low side. Also down from a 3.1% , uh, growth rate in the third quarter , uh, just by the way, for all of 2024, the American economy, 'cause that's what the gross domestic product measures in a very complicated way, is all the goods and services that people bought. It's a little more complicated than that, but on a year over year basis, the American economy grew at a 2.8% clip in 2024 versus 2.9 in 2023 .

Speaker 3:

Yeah . So pretty much right in line

Speaker 1:

Hanging in there. Yep . Consumer spending, remember drives most of the gross domestic product. It's like two thirds of the entire economy is based on what you and I and all of our listeners spend money on. Right . And that was up a robust 4.2% on an annualized basis in the fourth quarter. So, so, you know, that one kind of had the potential to make rates a little better, and I guess maybe it did a smidge better.

Speaker 3:

A smidge. Yeah. Smidge did make 'em didn't , didn't make 'em worse. So that's good.

Speaker 1:

That's right. And then on Friday we got the Fed's favorite gauge of inflation, the personal consumption expenditures index that measures inflation based on what consumers are actually spending their money on versus the consumer price index, which is just what are the prices of this whole huge basket of goods regardless of what people are buying. And so the PCE index , uh, came in and showed us that , uh, on a year over year basis , uh, prices were up 2.6%. Um , oh , you know, lemme make sure I got that right. It's , uh, two point, yeah . 2.6% on a year over year basis. And then if you strip out the , uh, food and energy, which the Federal Reserve likes to do, that came in at 2.8% Right. Where the market's expected.

Speaker 3:

Yep . Matched expectations. Exactly. So , uh, literally a big nothing burger for mortgage rates again. Yeah.

Speaker 1:

Uh , despite all that though , we did get a little bit better here this week compared to last week , uh, by a smidgen. Let me tell you where we ended the week. Uh, if you wanted a $250,000 30 year fixed rate loan to , uh, buy the median sales price home in southeast Wisconsin of 3 35 , uh, low overhead AC unit could give you a 6.875 rate.

Speaker 3:

There you go. With

Speaker 1:

An ap . Yeah. So that's a smidge lower with a 6.91 a PR . Or if you , um, wanted to pay no points and have accurate pay for $600 of your closing costs , that would be 6.99 with an a PR of 7.004. By the way, your net loan cost then would be like about $950. Or if you wanted to get that trophy 6.375 rate with an a PR of 6.61, you'd have to fork over $7,300 Yep . In total loan cost . So that's an overall improvement , uh, from last week, I'd say the closing cost Yeah . On a 6.99 rate , about a thousand dollars lower than they were last, last week. So better than a sharp stick in the eye. Next week on Friday, we have the jobs report, which is the next economic report that has the potential to , uh, move the market. Alright . When we come back from this first break, let's talk about , um, home affordability in our fine state. You are listening to the Accident Mortgage and Realty Show on AM six 20 WTMJ

Speaker 2:

Home buying advice from the guys who know it best. This is the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1:

Welcome back and thanks again for hanging out with us. Uh , I'm Brian Wicker, the elder. That's , uh, Tim Holdman, senior loan consultant at ACU Mortgage over there, the younger, taller mortgage . Good

Speaker 3:

Morning

Speaker 1:

Guy on the show today. Hey , you

Speaker 3:

Got more hair than I do though.

Speaker 1:

Well, that's true. Okay,

Speaker 3:

<laugh>.

Speaker 1:

Um, we , uh, now have the statewide home sale members from the Wisconsin Realtors Association for 2024. And , uh, I want to talk about that in, in the context of affordability. So, first of all, let's just say that statewide, there were just over 67,500 homes that changed hands in 2024 with the help of, of a licensed member of the Wisconsin Realtors Association. That's 4.75% more sales than the year earlier. Yep . A little more than 3000 more home sold. Um, but let's put it in further perspective. If you look at the four years, Tim preceding the Covid pandemic. So if we look at 2016 through 2019, okay . Um , uh, and remember I just said 67,500 was the number for 2024. Do you think that home sales were 10,000, 15,000 or 20,000 units higher during that period? Hmm .

Speaker 3:

Uh, I'll go 10,000 higher. Okay.

Speaker 1:

Good. Guess it was , uh, 15,000 ish. Ah ,

Speaker 3:

Should have picked the middle. All right .

Speaker 1:

Yeah, yeah. You know, right . Go for the middle <laugh> . So there was about 83,000 homes each year that sold. Then I was looking at this chart at the WRA site, and I looked back at the housing crisis time and , uh, during the housing crisis from 2008 through 2010, we had an average of only 45,000 homes sold . Wow. Statewide. Think about that. Yeah. So it's all the , you know, when you're looking at comparisons, it's all , well , what are you comparing to, by the way? The peak was 91,000 units sold in 2021. Alright , so what about median sales price? The median sales price , uh, clocked in at 310 grand statewide. That's up 25,000 American dollars from the year earlier, which is an 8.8% increase. By the way, in the five counties Southeastern Wisconsin area, the median sales price increased 8.1. So kind of similar. Okay . Yeah. Um, what do you, what do you think statewide the median household income is? Do you want me to give you multiple choice?

Speaker 3:

Uh , no. I'll, I'll take a stab in the dark here. So it's a statewide median income household. Yeah . Yep . Uh , I'm gonna go with 72,000 a year.

Speaker 1:

Wow. You and you didn't cheat, did you ? No , I not <laugh> 74,631

Speaker 3:

All

Speaker 1:

Dollars. Okay . That comes out to right around $6,200 gross per month tax . And by the way, tax , that was for the year, most recent year available 2023. Okay . Alright . So if you take that $6,200 a month in income and you say, all right , now you're gonna go out and you're gonna buy the median and priced home at $310,000. And the way the realtors do this is they use 20% down payment and I use the 6.993 year fixed rate and I assume $6,200 of property taxes. That's a big assumption. Right. 'cause that's a big component. Yeah. And I used $1,500 for annual homeowners insurance that would give you a total principal interest, taxes, and insurance payment to buy the median priced home of $2,300 a month.

Speaker 3:

Oof . Yeah.

Speaker 1:

That comes out to 37% of that median household's gross monthly income, which is a little on the high side.

Speaker 3:

Oh, for sure. When you're thinking about, it's like that's not your take home pay. It's like you have state and federal income tax, and then you have deductions for , uh, health insurance, which is a big one. And then, you know, socking away money into a retirement account, which a lot of people are doing. Right . So really, it's even higher than that percentage of , of their take . Yeah . For historical , we get to use the gross , use

Speaker 1:

The gross income, and we should also say that , um, that's a very approvable , uh,

Speaker 3:

Oh absolutely.

Speaker 1:

Income ratio. Right? Yep . We could run that all the way up to, you know, into the forties mm-hmm <affirmative> . Technically, I guess all the way up to 49%, 49.9

Speaker 3:

<laugh> most likely. Yeah .

Speaker 1:

And , uh, so anyway , so 37 percent's a little on the high side , uh, habitat for Humanity. Uh, FHA hud, they all like to use the benchmark of 30%. If you want an affordable housing payment, you know, you should pay 30% of your gross income Rent .

Speaker 3:

Yeah . Rent . And you can afford to live rent . Yeah .

Speaker 1:

Correct. Or, or your total housing payment. Now, we don't include utilities in that. Mm-hmm . That's just principal interest, taxes and insurance that the way the conservative financial guru Dave Ramsey recommends you spend no more than 25% of your gross income on your housing payment. But that's kind of hard to do, I think in today's world. Now, to afford the median price house and have that be just 30% of the income you'd need to make $92,000 year . Right. So, kind of a gap there. But if we look at southeastern Wisconsin, where the median price is higher at 3 35 in , uh, $335,000 in last year, the median income in was in southeastern Wisconsin is a lot higher. It's 102,400. Okay. So there , when you pencil everything out, sure. The payment's higher at 2,780 bucks a month. But because the income is so much higher, we're right at 29% Sure.

Speaker 3:

Uh ,

Speaker 1:

Yeah . So very , you know , right , right on the dot for affordability

Speaker 3:

Right in line. Yeah.

Speaker 1:

Alright. Hey, so there's your little look at, you know, it all depends on where you're living, I guess, and what the , you know, what your income is relative to the house you're buying, you know, is where it ultimately comes down to. But Yeah .

Speaker 3:

And we help , we , well, and I'll just say real quick as a PSA, it's like, this is what we focus on when we talk to our customers, Brian, is what do you qualify for? Yes. But what do you actually want to afford? Right. Because sometimes there's a disconnect there. So if someone tells me that their monthly house payment goal is no more than $2,500 a month, I'll run through the math with them and show them, you know, what amount of house , uh, gets them in line with their monthly payment goals . So yes, it's important to determine what you qualify for, but we're not gonna just make you do this on your own to figure this out. This is just part of what we do to help people with. Yeah.

Speaker 1:

Just because we say you can't afford it from a mortgage standpoint doesn't mean you could or should or, you know, want to. Exactly.

Speaker 3:

Yep .

Speaker 1:

Alright. When we come back, let's talk about , um, helping people refinance either after divorce or after they break up with their significant other and they weren't married. You're listening to the Accu Mortgage and Realty Show on Wisconsin's radio station. AM six 20 WTMJ, getting

Speaker 2:

You into the home of your dreams. Here's more of the Accu Mortgage and Realty Show with Brian Weer on wtmj.

Speaker 1:

Welcome back and thanks again for joining us this morning. Uh, Tim , uh, we're gonna talk about , um, divorce related refinances and then also, well , what happens if you bought a home with somebody that you're not married to? Right. And then you break up. Why don't we , uh, start with that version of things? Sure. And , uh, kick it over to you.

Speaker 3:

All right . Well, the, I think the key difference is, is that normally when you're married to someone and then , uh, get divorced and then, you know, one party decides to keep the property. 'cause you know, there's one version where that you decide to sell the property Yeah . And both parties go somewhere else. Um, but if one person wants to keep the home, then they need to refinance that existing mortgage to get the ex-spouse off of that mortgage and also simultaneously remove them from title of the property as well. Right, right. Uh , I have a , a past customer where I helped him and his , uh, life partner, girlfriend, whatever you'd like to call it. Uh, they bought a home together probably about four years ago. And actually I first spoke with him about this whole refi scenario like about a year ago. 'cause you know, they had broken up, she had moved out, he was still living there, and they were trying to figure out like, okay, you know, does he even want to keep the home? What would that look like? They had a bunch of ongoing verbal discussions about what a fair buyout amount would be for her. Yeah . So he comes back to me about a month ago and said, yeah, you know, I'm , I decided to keep the property. I wanna move forward with refinancing to get her the, the buyout amount that we agreed upon and kind of, you know, move forward with this whole thing. I said, sure, sounds great. So, you know , he qualified for the mortgage, no problem. We lined up the numbers so that , uh, he's, you know, buying her out for the equity amount that they had agreed on. And we get the initial approval back from underwriting. And they actually were asking for a formal buyout agreement where if , if this was a divorce situation, that would obviously be included in the marital settlement agreement. Right, right. But they didn't have that marital settlement agreement 'cause there was never a marriage. The reason that this is actually to their benefit to, to put together a , a buyout agreement and the title company's gonna help them put this together, is that it actually has some bearing on the transfer tax amount. Oh, really? So, yeah. So if there is no formal buyout agreement, the state will calculate the transfer tax based on the fair market value of the property. And in this case, through , uh, the appraisal and some other agreements that they made, they were actually using a a different value amount, you know, for their buyout agreement for her. So if they didn't get this buyout agreement, the transfer tax was actually gonna be about $600 higher , uh, than if we get the formal buyout agreements in place. So, you know, in the grand scheme of things , 600 bucks is in the end of the world. But at the same time, if you can avoid paying $600 more in transfer tax just for putting together a pretty simple document , uh, that is the way to go. So really that's the only key difference that I think is worth mentioning, is that if you are, you know, buying out an ex, you know , uh, girlfriend, boyfriend, partner, whatever, a lot of the nuts and bolts are the same. But at some point, you'll actually still need to put pen to paper and put together a , a written buyout agreement of what the other party is receiving, you know, as part of the refinance. Well, and

Speaker 1:

That kind of makes sense too, just from a closure standpoint. You know, you would think that , Hey ,

Speaker 3:

This , you know, you would , you would want that in writing. Yeah. <laugh> , you know , they're , they're very amicable about everything and, you know, they had , they had agreed verbally , uh, on , on it. But yeah, I think it's, you know, it's prudence to get that document no matter what.

Speaker 1:

Well, and you know, I, I've had situations where it has not been amicable. Right. You know , and , and so, you know, the, the unmarried couple can stay at loggerheads because there's nothing that can force, you know, the other party to cooperate. Right . Whereas in the situation of a marriage Yeah. We have a whole court system , uh, that , uh, you know, comes in and , and , and is the, you know, enforcer if you will, or

Speaker 3:

Yeah. They're , they're the straw that's stirring the drink. Yeah, yeah,

Speaker 1:

Yeah. And , and you end up with a written agreement. So when we come back after , um, the bottom of the hour here , um, I've got a story where somebody called me this week , um, not a past customer, but somebody who knows us well and , uh, had their divorce decree. I mean, literally just came in the email stamped by the court , uh, on Monday and it's like, okay, now I need to refinance and remove my ex-spouse from the mortgages and from title. And they started out , um, saying, Hey, he had called his current loan servicer. Uh , Mr. Cooper a big loan servicer. 'cause he has a VA loan. He's a, he's a veteran. Um , no long . Yeah. He's a veteran. And so it's like, oh , you know , think about doing a VA loan and Okay, I thought through that and when we come back I'm gonna tell you why we decided not to go the VA route and some other interesting things about the divorce settlement that come into play. And we'll do that right after we turn it over to the WTMJ Breaking News Center.

Speaker 2:

Don't break the bank to get into a house. Back to the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1:

Welcome back. I'm Brian Wicker, the , uh, majority owner of ACU net Mortgage. That's Tim Holdman over there. Uh , senior loan consultant and my son-in-law. Thanks for filling in today, Tim. Appreciate it.

Speaker 3:

My pleasure. We got sickness rolling through the David and Christie Wicker household. So it's just one of those things. It's STI the season. Okay ,

Speaker 1:

There you go. So , uh, we're talking about , uh, divorce related , uh, refinances. And my story is that , uh, the person had their completed divorce , uh, decree and marital settlement agreement all wrapped up stamped by the court fresh. And now they wanted to proceed with the refinance process. And it's important to say you can't do the refinance when you're in the midst of a divorce because we don't know how things are gonna shake out in terms of, you know, liabilities. So in this case, great news. It's all, you know, taken care of. And so we always have to get a copy of the divorce decree and the marital settlement agreement. And in this particular one, you know, one of the questions we ask, we should maybe just point out that it's typical for one party if there are kids to have to pay child support. Right . And then no kids in this case where the kids are adults. And so in this case then the next question is , um, maintenance. Mm-hmm <affirmative> . Separate maintenance. We don't call it alimony in , in uh , Wisconsin, we call it maintenance payments. And so interestingly, if you have to pay child support that counts like a car loan or any other monthly installment debt and it impacts your debt to income ratio because hey, here's another thing you gotta pay. If it's maintenance, oddly enough, we can subtract it from the , uh, borrowers, we can subtract that amount from their gross income and then calculate that to income ratio. And that is almost always a better

Speaker 3:

Better. Yeah, for sure. You

Speaker 1:

Know, especially like if it's big, if you have a high earning , uh, client or homeowner, you know, let's say they're making 20 grand a month and they gotta pay their ex-spouse, you know, five grand, that's a lot. On a percentage basis it's uh , yeah .

Speaker 3:

25, 20 5% percent .

Speaker 1:

Yeah. That's boom. But if you subtract it from their income, oh, now I just have to work with 15,000, that is a much more favorable treatment for sure. The third alternative, which is the case in my client's case, was a lump sum settlement. Oh . So instead of paying his ex-spouse x dollars a month for the so many years, they came up with a number, a few hundred thousand dollars. So it's not a small number and he's gotta pay that to her by early April and,

Speaker 3:

And no ongoing monthly, you know, maintenance or support of any kind. Yeah . So just kind of a one and done

Speaker 1:

Is one and done . But in the eyes of the mortgage world, that is still a liability. It is something, yeah . He owes , um, his ex-spouse. So we have to document, you know, how are you gonna pay that?

Speaker 3:

Yeah. Where's that money gonna come from? Yeah .

Speaker 1:

Where is that money gonna come from? And in this particular case , uh, it's gonna come from a cash out refinance on a commercial property

Speaker 3:

Oh.

Speaker 1:

That our client is part owner in. And, and that should be wrapped up in just a couple of weeks. The process is going, but it's like, oh , you're not gonna believe this client, but you know , I'm gonna need a copy of the mortgage and the note and the closing statement Yep .

Speaker 3:

Yep . To

Speaker 1:

Show where that money came from and then that's not all. Um , and also thinking this through with him , I said, great, you're this company which he's not a hundred percent owner of is gonna get this several hundred thousand dollars loan proceeds or is the company gonna actually pay your ex-wife? That would be kind of weird. Yeah . You know , he's gonna, you know, pay it so the money's gonna come outta the company into his personal bank account and then he is gonna pay the , uh, the ex-spouse off. One other complication I thought of, 'cause I am a business owner, it's like, well what is your accountant gonna say that disbursement of cash is? Yeah . Because it can kind of only be two things. It's either a distribution of equity or it's a loan. I think the accountant is gonna say it's a loan from the company to him.

Speaker 3:

Sure. Is what , and then are we , are we forced to use some sort of monthly liability for that? Yep . Something they call , we gotta be careful .

Speaker 1:

So, so you know, this is always in the, there's more than meets the eye. 'cause from this person's standpoint, it's just like, it's really easy. I wanna do simple this refinance, I'm gonna get this money, I'm gonna pay the lump sum. And you , he's been very cooperative and understanding, but it's like, yeah, these are the devilish details mm-hmm <affirmative> . That , uh, go into it. So we're gonna have to document all of that in order to say, okay, see that liability there for several hundred thousand dollars, it's taken care of. Um , and then interestingly in this particular case , um, the expo wasn't actually on title. Oh,

Speaker 3:

Interesting.

Speaker 1:

Okay. But , uh, we are gonna have to document through an agreement, kind of like your unmarried couple that she's been paid in full. Right. Yeah . Because we wanna make sure that there's not this potential lien, you know , 'cause if she doesn't get paid, she could come after him and get a lien placed Right. As

Speaker 3:

A second lien. Is she , is she on his current , uh, mortgage? Yes. That that , yes . Oh, okay.

Speaker 1:

Got it. Yeah . So that's why he wants to consolidate everything and get a little bit lower payment. Alright . Those , those are some of the interesting Oh wait, we didn't talk about the most important thing. The VA loan. Ah , alright . Yeah . When we come back, we'll just cover that quickly before we move on to some other stories. But hey, he started out thinking he wanted a VA loan. Why didn't we go that route? You are listening to the Academic Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2:

Important home buying questions and answers you can count on. This is the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 1:

Welcome back. Uh , thanks again for hanging out with us , uh, today or whenever you're listening to your podcast of our show, which we appreciate very much. So , uh, Tim, we were talking about a divorce related refinance and the initial call was, Hey, you know, I was talking to my existing servicer, Mr. Cooper about refinancing my VA loan and kind of just wanna know what you think. And so I'm thinking about that and I'm going, okay, we're taking cash out 'cause he wants to pay off a first and a second mortgage. Okay. And then take some cash out to pay off the credit card bill. Sure. Uh , which is not small that he used to pay his attorneys. Uh, and , and so it's like, okay, well if we're gonna do a cash out refinance on a VA loan, you're gonna have to pay the VA funding fee, which on second use, and I double checked to make sure he wasn't disabled. Because if you're disabled then you get a waiver on the VA funding fee and that was not the case. Mm-hmm <affirmative> . He'd have to pay 3.3% of the loan balance, which is almost 10 grand

Speaker 3:

Just for the privilege of getting a new VA loan.

Speaker 1:

Yeah. And now would the rate be a bit lower than a conforming loan? Yeah , but I'm not , it's, that's a hefty price , uh, you know, to pay. And of course, did Mr. Cooper bring that up?

Speaker 3:

No ,

Speaker 1:

Absolutely not. No. Did not bring that up. So we, we pivoted and said, you know what? We're gonna do regular conforming , uh, cash out refinance.

Speaker 3:

And , and there may have been other reasons I, I don't think your customer situation applies, but, you know, for a customer that has a lower credit score or maybe is , uh, digging into a lot of the equity that they have in their home, there may have been other reasons why a VA loan still would've been the best execution. But I'm assuming your customer had excellent credit and has a large amount of equity in the home, you know, where they're not. Uh , yeah. So in that case, it's like, yeah, the , the conventional rate might be a bit higher, but you're not incurring an extra $10,000 fee that you either have to pay or roll into the loan, which

Speaker 1:

Is, that's substantial . Which you'll never get substantial.

Speaker 3:

No. You're just paying interest on that. And even if the rate's lower, your loan balance is starting at 10 grand higher. So that's kind of counteracting that lower interest rate.

Speaker 1:

That's exactly right. So, you know, that's why it's good to have more than one tool in your toolkit and For sure . And acknowledge to , uh, point out the pros and cons of , uh, each approach. Um , oh, by the way, we also got an appraisal waiver on that boom refinance. Oh boom . We're lending him not even 60% to the value of his home. And so that was nice. Saved him $475

Speaker 3:

<crosstalk> speeds up the process too and

Speaker 1:

Yeah , exactly. Speeds up the process. Alright . Um, had a , some customers in Illinois get an accepted offer , uh, two weeks ago. And , uh, what's interesting in Illinois, the home inspection provision in the Illinois offer to purchase is a lot faster.

Speaker 3:

It's like, oh ,

Speaker 1:

Okay . Five business days. Whereas typically in Wisconsin, I think the, the default is 15 calendar days.

Speaker 3:

Yeah. I'd say 14 or 15. Yeah. Sometimes

Speaker 1:

They do it faster, but , um, and the other interesting thing is to say about Wisconsin versus Illinois. In Wisconsin, the offer to purchase has a typical provision. Says if my inspector finds defects, two things, it's very common for the buyer to say, I am giving you the seller the right to cure those defects. Mm-hmm <affirmative>. And it also states right in the offer to purchase that this buyer has to give the seller a copy of the inspection report.

Speaker 3:

Right.

Speaker 1:

In Illinois, it specifically says the buyer will not give a copy of the inspection to the, to the seller. And , and it's interesting, it's also an attorney state by the way. So attorneys get involved. Yeah . And then if , if, if the , uh, buyer decides within five business days that there's a problem with the inspection or kind of really for any other reason, attorney review is what they call it, they can cancel the deal and get their earnest money back.

Speaker 3:

Boom. Okay . Without even showing the documentation to the seller of what their issues were

Speaker 1:

Spec specifically is like, we don't wanna even see it. And you know, the reason that why that's kind of a big issue is especially if the realtor gets a copy of the inspection report, they'd probably be smart not to touch it. Um, yeah. And you know , I don't know if the seller knows all the problems. They have a duty to disclose the problems

Speaker 3:

If they're aware the

Speaker 1:

Property . So , so in Illinois they're kind of really helping the seller remain , uh, oblivious to the problems with their home. And I I , I didn't wanna get a copy of the inspection report either.

Speaker 3:

No.

Speaker 1:

But in the text I said, yeah, we have plumbing , uh, electrical and roof.

Speaker 3:

It's like , oh , those are big. Those are big ones. Yeah.

Speaker 1:

Other than that, yeah. The only other thing you left out is foundation, but <laugh>

Speaker 3:

Yeah. True. Those are some big problems. So , you know, so I'm assuming are, are your buyers walking away Yeah . From this , uh, purchase? Yeah. So the , the sellers are gonna put this house back on the market and, you know, if they get other buyers who are maybe not getting an inspection or Yeah . Uh , something like that. Uh , they, that that whole transaction could go off without a hitch for the Yeah . Different

Speaker 1:

Buyers . Yeah . If don't have your Right. Right, right. Which in the , you know, and I'm thinking these are first time buyers, I'm thinking, man , it's kind of gut wrenchingly disappointing when it's like I had to pay and I don't know what they paid for their inspection, let's say $600. It's like, really you had to pay to find out everything that's wrong with this product that you're trying to buy and

Speaker 3:

Mm-hmm <affirmative>. Just to find out that you didn't wanna buy it <laugh>.

Speaker 1:

Right. That's just , it's just one of those things that's true about the real estate world. Alright . When we come back, let's talk about your first time home buyer buying the three unit that has some interesting home inspection issues. Indeed , you're listening. Yes , indeed . To the Indeed at Mortgage and Realty Show on AM six 20 WTMJ.

Speaker 2:

Find a place to call home without the headache. This is the Accu Mortgage and Realty Show with Brian Wicker on WTMJ.

Speaker 3:

Welcome back to the Acue Mortgage and Realty Show. I am senior loan consultant Tim Holdman, joined by chairman and majority owner of Anette , Brian Wicker. Uh, Brian, your story about your Illinois home buyers reminded me about a , a customer of mine , uh, that is a first time home buyer buying a three unit property up in kind of the middle of the state of Wisconsin Dodge

Speaker 1:

County. I think you told me off the air Dodge County.

Speaker 3:

Yeah . Dodge County. Yep . Three

Speaker 1:

Unit is kind of rare. I mean, the most we can lend on is a four unit property. Right . And so he, he is gonna occupy one of the units, correct?

Speaker 3:

Absolutely. Yep . And , uh, <laugh> , this, this property , uh, the issues with it were very apparent and clear , uh, even from just viewing the listing. So this is isn't a situation like your Illinois home buyers where they had to get an inspection to find out their , uh, their issues with the property. The, they mentioned that the roof is fine, but likely at the end of its useful life, I think was the verbiage they used . Oh boy . And then , uh, in one of the three units, they said the plumbing was currently turned off , uh, because of a plumbing issue with a shower head in that unit. So this customer of mine is referred from his dad, who's a past customer of mine. So the , the dad is very actively helping his son and they're both tradesmen very handy. And , uh, one of the units, the unit that my buyer will occupy when he buys a home is , has been fully remodeled. And then the other two units need a lot of TLC and , you know, including the one where the plumbing wasn't working. So they're going in eyes wide open. You know, I even , I , I knew he was interested in this property before he even made an offer. So we had a lot of conversations about the condition. I said, Hey, you as a borrower, you're totally approved, you're great, great income, excellent credit score, you got all the right stuff. But the flip side of every coin is the property needs to be in Yeah. Acceptable, livable, yeah. Acceptable, livable, livable condition, no safety issues. He's getting a conventional mortgage, so not FHA, so don't have to worry about some of the weird FHA intricacies like chipping paint or, you know, cracked windows or rotting wood or anything like that. But I said, you know, at a minimum the plumbing needs to be working in all three units, right? Yeah . Because when the appraiser walks through, they're gonna be aware of that and they're gonna say, this needs to be fixed prior to closing. And they said, absolutely. We've gotten permission from the seller. We know the, the specific plumbing repair is gonna cost around 1500 bucks. Wow . We're gonna go in and we're gonna do that. But they said, you know, Tim, we, you know, we don't know what other maybe bigger issues the appraiser might point out until they walk through the property. And I said, absolutely. We , we just don't know. And even when we get the appraisal report back, it has to get approved by underwriting. And that's really when we know for sure that we're good to go. So we were talking through the timing of things and what we decided on, which I think is definitely the smartest execution, I said, don't go and do that repair prior to the appraiser walking through. We're gonna let the appraiser know that the plumbing isn't done in the third unit and we're gonna ask them to complete the appraisal subject to that plumbing issue being fixed and then the plumbing being working when they do a return visit. But that way we'll get the appraisal report and know if the appraiser called into question or made comment of any other issues with the property that they have may have noticed. Right. Like a crack cracking a foundation wall or a hole in the roof. Who , or something like that. Yeah. Who knows. Right. Do

Speaker 1:

We have the appraisal report back yet?

Speaker 3:

Yes, we got it back. And <laugh> , we, I looked through it with Jason Hanson, our, you know, senior underwriting or approval manager at ANet . And , uh, aside from the plumbing issue, the appraiser didn't call anything else into question with the property. Wow . Actually now it's still in underwriting. It hasn't been reviewed or approved yet. So that is the, the big hurdle we're still waiting on. But this way I think it, it mitigated the risk of the buyers in a, a very smart way where that way if , you know, if they didn't spend $1,500 on a repair and then some other big deal breaker issue comes up Yeah . Where they comes up Yeah . Where they don't buy the property, but then they Yeah . But then they repair the property for the seller that, you know, that they're not gonna buy. So it , it's looking good right now, but , uh, this

Speaker 1:

Is definitely, and there were presumably other comparable closed sales of three units. 'cause that would be the other thing that would worry me.

Speaker 3:

There were the , the , the comps were actually all , uh, I think within five miles or less of the subject property. I mean, it was , it was pretty, pretty good. Came in just a couple hundred dollars above the agreed upon purchase price. Sure . So at , you know , at a sufficient value. And , um, yeah, it's looking like it's gonna go through fine, you know, knock on wood, pending the review from underwriting obviously. But , uh,

Speaker 1:

And it's gonna cost them an extra 150 bucks to send the appraiser back out there, but well worth it. Yes . In the overalls scheme of things. All right . Good job.

Speaker 3:

Absolutely. Yeah.

Speaker 1:

Alright , well that's all the time we have for today's show, folks. Thanks for joining us. Remember, if you were somebody you know would like help buying a home or refinancing, we would love to help you. We're passionate about what we do and , uh, we think we're pretty smart about it. All anybody has to do to get started with either rock solid, guaranteed pre-approval or a refi checkup is to click on that blue button@ette.com. You've been listening to the Nette Mortgage and Realty Show on a six 20 wtmj. The proceeding was a paid program. Advice and opinions expressed during the Accu Net Mortgage and Realty Show are solely that of the hosts or guests of Accu Net Mortgage and Accu Net Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.