Episode 3 – Advice and Tips from Mike Crowley with Spokane Home Buyers
This is Listen Up Home Buyers. The only podcast offering Home Buying advice and tips from true buyer agents and now here’s your host Victoria Ray Henderson.
Victoria Ray Henderson 00:10
I’m very happy to have Broker and Owner of Spokane Home Buyers in Spokane, Washington. As our guest for today, his office of 4 brokers has been representing buyers only since 1997. He’s active locally, statewide, and nationally and promoting Realtor’s Professional Standards. He’s taught over 50 First Time Home Buyers classes for the state of Washington. Welcome Mike Crowley.
Mike Crowley 00:33
Victoria Ray Henderson 00:34
How are things going in Spokane? What’s the market?
Mike Crowley 00:37
It’s been a crazy couple years, getting a lot of mention nationally where short drive from Seattle, which short as 4 or 5 hours. So we have an air force base here, we have a new medical school. We have several big hospitals, and quite a few colleges. So people are moving to Spokane, and I don’t have anybody moving out of Spokane. People leave Spokane it’s usually reluctantly and it’s either a family or job situation. But mostly it’s people moving here for families or jobs. It’s pretty crazy stuff.
Victoria Ray Henderson 01:12
Yes, I’ve been through Spokane a couple of times and it’s just so beautiful there. I mean, if you’re an outdoorsy person, that’s a incredible place to live.
Mike Crowley 01:20
Yes, it’s got a river running through it. Lots of lakes, I could be on a lake in 30 minutes, if I wanted. You can be skiing within an hour, snow skiing in the winter time and mountain biking, hiking, I can within two minutes from my door, I can be on trails where you don’t even know the city is close by.
Victoria Ray Henderson 01:39
Fantastic. So, when people are coming in looking for their homes, whether it’s condos or single family or whatever? Are you finding that you’re having to compete with a lot of other buyers?
Mike Crowley 01:49
Yes, I think it’s been almost two years since I’ve written an offer on a single family home that wasn’t multiple offers. So you meet your clients? And they say, well, gee, why don’t we start here when we write an offer? And the answer is we don’t start somewhere, we write the best offer we can and we hope we get it, get it because they don’t come back and counter an offer if you’re not stronger than the other offers.
Victoria Ray Henderson 02:11
When you’re sitting down with someone the first time. What’s that conversation? What are you talking about?
Mike Crowley 02:16
I tell them, we only get one bite at the apple and a lot of realtors lose their clients because they lose the home and the client saying my realtor failed to get it for me. But I’m pretty good at letting the buyers know that it’s their responsibility, what they’re willing to pay for a house and they have to make that decision on that price and only they can come up with that price and if they don’t get it, we turn around and we started the next house. So in our market, I always I’m really clear that I’ve never seen a multiple offer situation where the home sold for less than less price. So if a home listed at $300, and they want to write the offer for $280. I smile, I tell them we’re just practicing then, and we do it. But for the most part, I think a little bit over 10% seems to be getting the homes in the multiple situations. So $300,000 homes usually selling close to 330, 335.
Victoria Ray Henderson 03:08
Yes, and how do you prepare someone for that? I mean, it’s like they’re jumping into the rapids. So how do you prepare a buyer, especially a first time homebuyer for that scenario?
Mike Crowley 03:20
I remind them that adding money on top of the mortgage a lot. I know buyers out there that can barely replace a hot water tank if it goes up but they’re willing to overpay a home $15, $20,000 and I try to explain to them that that’s not good. It’s my clients that have lots of money with lots of resources that are the ones are saying Nope, we’re not going to pay too much for a house and there’s a reason why they have more resources and other people because they make better buying decisions. So it’s really easy to throw it on top of the mortgage and say, it’s only an extra $6 a month for every $1,000 and maybe it’s even $4 a month for every $1,000. But it adds up and if you have to sell that home in a couple years, and you pay too much. It’s not just $4 a month, it’s $4,000 or $6,000 or $8,000 more than you should have paid for the house.
Victoria Ray Henderson 04:07
And for people who are not sure what you mean by throw it on top of the mortgage. Can you explain that a little bit?
Mike Crowley 04:14
Yeah, I think they look at it and says Gee, if we pay 315 instead of $310,000 for the home, it’s only 20 more dollars a month. But it is $5,000 more that you owe on that house and if you have to sell shortly, that’s $5,000 less you get out of it when you sell it and it’s expensive to sell a home. It costs about 9% in our market to sell house.
Victoria Ray Henderson 04:35
So when first time homebuyers come to the table and they don’t have a lot of cash, what are some of the strategies that you’re using in that scenario?
Mike Crowley 04:44
Oh my gosh, it’s so hard to beat a cash offer. So you know, for some of my first time Home Buyers in a lower price range, if I have a client that’s trying to buy a home under $200,000 in Spokane, it’s going to be a three, four or five month effort and it’s going to be seven or eight different houses we write offers on and we’re going to lose to the cash buyers there’s always somebody willing to pay cash when you have eight 910 offers on a house. So there’s really nothing I could go to it. Most of the sellers in those scenarios are sometimes out of town sometimes their investors– I can’t go and play with them and say look at my sweet first time Home Buyer. She is pregnant, she’s about to have a child, let them have their house, it’s money to them. For them to say the certainty of a lot of realtors worry about homes not appraising, but with a cash offer. They don’t have to worry about it not appraising?
Victoria Ray Henderson 05:34
Yes, you know, when you’re working with first time homebuyers, you’re also probably talking to them about loans and the right lenders, tell me a little bit about what you’re saying to them about that process.
Mike Crowley 05:43
I really encourage them, actually, I’m probably the worst realtor in the world for you to have a lender that’s going to rely on me, not very good at talking people into a particular lender, and I want it to be the buyers choice what they offer for a house, I want it to be their choice who they choose for a lender. However, I do have three or four lenders and I give them the names and I encourage them that I really, really want to use a local lender and I’m not hesitant to throw out three or four names of lenders, I do not want them to use and that seems to help.
Victoria Ray Henderson 06:18
OK, you know, and you bring up a really good point that I have this conversation all the time, because I’m working in the Washington DC area, and someone will say, this online lender promises me a really great rate and that online lender, you’re not even sure if you’re going to get the same person every time. Talk to me about how you explain to them about that online lender?
Mike Crowley 06:38
You know, whether it be an online lender or a lender that just has a bad reputation, I say the same thing. It’s like, you need to choose who you’re comfortable with. It’s your money and if somebody is getting — You know, I just have somebody that closed a 15 year 3% interest rate on their house, it’s hard for me, locally, they could have only gotten like three and maybe three and a half, maybe three and a quarter. The good news is it went well. But what I do is I warn him, I say we will close this loan, regardless of who you use, because you are well qualified. But when problems come up, and they’re sitting down in California, or Colorado or Florida, I’m not very good at solving them for you and that’s usually part of my job. So when the problems do come up, they don’t look to me as it’s my responsibility.
They accept the fact that the reason they can’t get into their house on the weekend that we promised them was because they chose a lender that wasn’t local, because they usually do close. There were obstacles, because there’s nobody to go beat on the door and complain to
Victoria Ray Henderson 07:34
And here’s the thing about— Recently I’ve had a couple of people go with lenders who were out of the area, they didn’t understand the jurisdictional denims. They didn’t understand the rules with the condo associations. Long story short, one client, we had to delay settlement for four days and the worst part about it and our client understood, our buyer said, “It’s because I chose this guy who didn’t understand that I’ve got a certain amount of condo docks, I’ve got to go through and they needed things on their end that they weren’t getting”. But my point that bothered me was when that happened, I noticed that this particular online lender started throwing everybody under the bus. Except for them, they would not take responsibility for the fact that they were the reason we were delaying settlement.
Mike Crowley 08:17
Of course, yeah, nope and I had that just a week ago, also trying not to use lenders names here, but we all heard of them. I’ll give you another example: Here in Washington, we have two different situations, we have the west side, which is where Seattle is where earthquakes could happen. They have a warmer climate, they have termites over there and things like that. Here in eastern Washington, we don’t have a probability of earthquakes and we don’t have termites. Because our winters are too harsh. They really don’t survive here. It’s possible. But in 27 years, I think I’ve come across them twice. But if somebody uses a lender over on the other side of the state, all of a sudden the appraisal comes back and they say, Oh, we need a full pest inspection on the house and we need earthquake straps for the hot water tank and all of a sudden, are we’re asking the seller to do things that the only reason they’re being asked to do them is because the lenders not familiar with this side of the state, and those things aren’t normal requests.
Victoria Ray Henderson 09:12
And you make an excellent point that can apply variations of that theme all over the country, which is why we keep telling people please choose a local lender who’s actually right where you’re buying the property.
Mike Crowley 09:20
And it doesn’t hurt if the lender even though they’re not supposed to have communication with the appraiser with regards to the property. I mean, don’t forget these lenders play golf with these appraisers. They have lunch with these appraisals, they run into these appraisers throughout our town our size. It doesn’t hurt to have a reputation with the people you’re doing business with.
Victoria Ray Henderson 09:39
Tell me a little bit about when you were talking about people moving to Spokane, and there’s obviously a lot of medical stuff in school. Are they commuting out of Spokane to work anywhere else? Or are they staying right in the city most of the time?
Mike Crowley 09:51
I think they’re staying here. We’re not quite close enough to Seattle where people are willing to fly there every morning and fly back. That’s usually people are willing to do that in some communities but not here. So I think people are working and living here and then their commutes. I do have somebody who’s about to have a 40 minute commute, which is x, which is awfully high for Spokane usually a commutes. 15 to 20 minutes if you have a long commute here.
Victoria Ray Henderson 10:17
Oh, my goodness, that’s beautiful. Oh, my goodness and DC, middle of the day, it can take you 15 minutes to go from McLean to Bethesda.
Mike Crowley 10:27
Yes, it’s awful there.
Victoria Ray Henderson 10:27
Yes, it can be pretty rough. Tell me about one of the more recent transactions you’ve had where you felt like you really provided your buyer client with some good representation and why that extra mile made the difference.
Mike Crowley 10:42
I think mostly my advice is talking them out of a transaction, I think that’s where my value comes in more. A lot of realtors are afraid to talk about school districts or crime statistics or the condition of the home. I’m pretty forward with my clients, they say tell me about the schools. They all tell them about the schools. They ask about the neighborhood or the neighbors. I think my value comes in my willingness to share anything I’m I don’t have any secrets with my clients and I think they appreciate that.
Victoria Ray Henderson 11:11
So you are pretty transparent.
Mike Crowley 11:13
Yes and you know, some realtors, if you were to be with your realtor and says, What do you think are the rough? The answer they’re taught in their classroom as well. I’m not a professional home inspector but if we buy the house, we’ll have one for you and my answer is, as I’ve been on, I don’t know, hundreds and hundreds of home inspections. I can tell them if the roof is old or new, maybe something in between, I can’t but I certainly have an opinion on it, and so I don’t want them to go spend $500 on a home inspection to find out the roof only has two years left on it when I knew that when we were standing out in front of the house.
Victoria Ray Henderson 11:40
I like that so much about the way you work because we do the exact same thing where we are and I feel like again, you’re absolutely right. We’re not home inspectors. But Good grief. We have been on hundreds and hundreds of home inspections. If I’m just standing there keeping my mouth shut. I’m not doing a good job.
Mike Crowley 11:59
Yes, I think we get paid well, for what we do. We should do what we can for our clients.
Victoria Ray Henderson 12:06
Yes, absolutely. Getting back to how you compete with other people when you’re writing an offer. Could you tell me a little bit more about what you do? For example, where we are? Sometimes do a pre-contract home inspection. Is that something that is in kind of your bag of tricks?
Mike Crowley 12:22
No. Part of that is in Seattle, they do that they basically inspect the home prior to any offers coming in, might be three or four different inspectors that do it but not here, you know, our price points significantly less than yours. So when we’re talking about it, 250 to $350,000 transaction, the buyer is reluctant to spend 4 or $500 to have a home inspected when they don’t even know if they’ll get it.
Victoria Ray Henderson 12:51
Yes, I can understand that.
Mike Crowley 12:53
However, one of our strategies that’s worked really well and I learned this on a forum with neighbor years ago, was, I call it the petty clause is we are in a multiple offer situation, we’re telling the sellers that our buyers are willing to be responsible for up to the first one or $2,000 of anything that comes up on the home inspection and that takes that uncertainty away from the seller, because when they have multiple offers, they can look for offers, and they know what they are dollar wise, they know as much as they can about you know the loans and stuff.
What they don’t know is how a buyer is going to respond after they inspect this 20, 30, 40 year old house and if we take it off the table that this buyer is not going to come and ask you to replace one or two windows because the seals are cracked or have the chimney cleaned or have the hot water tank replaced. Because it’s old, it takes that away from them where they understand this buyer is ready to go and it doesn’t take all the responsibility away from the seller because if something significant comes up, we want our buyers to be able to walk. But we also want our buyers to be responsible to say you know what, if we can get this house, we’re not going to be petty with the home inspection. We are ready to close.
Victoria Ray Henderson 14:02
Do you often come across sellers who do a home inspection before they put the house on the property or on sale?
Mike Crowley 14:09
Victoria Ray Henderson 14:09
Mike Crowley 14:11
You know, that’s their home inspector and there’s we probably have 2530 home inspectors in our market here. There’s probably 12 or 15 of them, which I don’t really care what their opinion of the house is. I’m still going to have somebody I trust and respect to it.
Victoria Ray Henderson 14:26
Yes, but I guess I’m looking at it from the perspective if I was selling my home, I think I’d want to know what was wrong with it. I wouldn’t want to wait around until the Home Inspection to get the shock of my life.
Mike Crowley 14:35
I don’t think sellers want to know what’s wrong with [inaudible 14:37] as soon as they do that home inspection. By law, they’re required to do everything they know there might be something that they can’t afford to fix.
Victoria Ray Henderson 14:43
Mike Crowley 14:44
They might not want to know about the mold in the attic, it’s going to be discovered.
Victoria Ray Henderson 14:48
Mike Crowley 14:49
They may not want to know about it, but there’s a home inspection for 100 year old home can have a laundry list of 45 items to do and only five of them might be important but all of a sudden the seller feels I have to fix all of these or I have to disclose them on that might be a little exhausting.
Victoria Ray Henderson 15:03
Yes, it’s interesting. We we do have sellers here in the DC area that will do a home inspection. I don’t consider it a replacement for the one that our buyer will do. But I do love the fact that they’ve tried, they are offerings.
Mike Crowley 15:20
I think it’s nice when they do it. Just don’t look at me and say, you don’t have to do a home inspection. We already had one done and I’ll just kind of say, “Yes, it’s nice of you. I’m glad you did that. But we’re going to do one also”. The best advice I think I give my clients that they always remember is I say, “Ee can be in a hurry to buy a house, or we can be particular, but we usually can’t do both” and I prefer my clients to be patient. I tell them I’m not in any hurry. I don’t have to sell your house this week to pay my bills, and I don’t have to sell you one next month to pay my bills. So we do it on their schedules, and they always realize that they never feel like I’m hurrying them and that’s important. Like I said earlier Realtors when we work hard we do get paid for what we do and we get paid well for it. So don’t be afraid to ask your realtor to work for you.
Victoria Ray Henderson 16:06
Yes, I agree with you. 100% Mike, Mike Crowley, broker and owner of Spokane Home Buyers in Spokane, Washington, active locally, statewide and nationally and promoting realtors professional standards. Thank you so much for joining me.
Mike Crowley 16:20
Thanks Victoria. Have a great weekend.
You’ve been listening to Listen Up Home Buyers. The only podcast offering Home Buying advice and tips from true buyer agents.