WWW: Today we have Broker/Owner/Realtor of
Pickwick Realty, David Wealcatch, with us. Thank you, David, for taking the
time to discuss what real estate currently looks like in Baltimore. Can you
tell us generally what the home buying process entails for a first-time home
buyer? You have young people, people in Pickwick, who have never looked into
buying a house. What should they expect?
David Wealcatch: Thanks so much for having me. It’s
always enjoyable to talk about something that I’m passionate about. So, I’ve
been in this business for almost 15 years and the home buying process right now
is a bit different than it has been in the past due to the low inventory and
surplus of buyers. Houses are selling quickly so buyers need to be prepared to
act quickly when they find the right one. The first and most important step is
to get pre-approved for a loan with a mortgage lender. That way, you know what
the numbers look like, and you can be ready when a house comes up that you want
to put an offer on.
WWW: What does it mean to be pre-approved?
DW: In order to make an offer on a house, at
least in Maryland, you have to show proof you have the financial means to
purchase the house. You demonstrate proof by showing that you have the funds
for a cash offer or through “pre-approval.” We can connect you with a lender,
who will go through your finances, understand your financial capabilities, and
help you determine the price point you can get pre-approved for. It is best to
reach out to a real estate agent prior to the pre-approval so the agent can
help you start that process, but some people only reach out following
pre-approval. Either way is acceptable.
WWW: Would it be fair to say that pre-approval
means that the bank is agreeing to lend you a certain amount of money toward
the purchase price?
DW: Yes. Usually, they’ll lend you 80% of the
purchase price, but it can go up to 97%. There are several different programs
within the mortgage world that one could take advantage of, depending on how
much money they have to put down and what kind of monthly payment they are
looking for. A good lender will help borrowers find their financial “sweet
spot” and advise them accordingly.
WWW: So once someone gets their pre-approval,
what’s the next step?
DW: The next step is looking for a house.
That means hiring a real estate agent to help you go out there and keep eyes
for you, keep the pulse on the market, and notify you when something comes up
which fits your criteria. The seller pays the agent fees, so a buyer has
nothing to lose by having an agent to represent them. Next, we arrange to look
at the houses that seem feasible, and that segues into writing an offer when
the right house comes up.
WWW: What things do you recommend that people
look for when they want to buy a house?
DW: Part of our process when we meet new
clients is determining what is important to them in a house. Everyone has
his/her own necessities and preferences, and we try to get a good grasp on what
those are. When people walk through a prospective house, we tell them to
visualize themselves living in that house and make sure that it has practical
features to suit their style of living. At this stage, the minor details are
much less important. Next, we advise the buyer on how much the house is worth,
and what kind of repairs or issues they will probably need to deal with, so
they have an idea of costs they may incur at the onset. But mainly, the buyers
should decide if they can envision themselves living there.
WWW: You mentioned that next comes the offer
stage. Can you walk us through what that looks like, especially in this hot
market?
DW: Once the buyer decides to put in an
offer, this entails drawing up a full written contract with the price and terms
they would like to include and is based on their feelings and our advice. It’s
a full 30- to 40-page contract that the buyer signs as a unilateral contract
which is then submitted to the seller to review and consider. The offer is
submitted along with the pre-approval letter discussed earlier and a copy of a
deposit check, which shows good faith and demonstrates that this is a serious
offer.
If the seller
signs the contract, the contract is now binding. People sometimes ask us if
they can get out of the contract later. The short answer is no. A buyer should
never go into a contract with the thought that they can get out if they change
their mind, however, a buyer is protected by whichever contingencies are
incorporated in the contract. The two most common contingencies are financing
and home inspection. We always recommend that our clients get a home
inspection, and financing will depend on your financial situation.
Until recently,
the process has been that you put in an offer, you have a conversation with the
seller, and you hope to come to an agreement at some middle ground. In this
market, the process is a little different and more difficult. People need to
think faster and decide faster if they want to make an offer. They also must
decide what their best offer is going to be and submit that, because there is
rarely a second chance. You will likely get one shot, so you have to make a
quick, sound decision. We try to advise buyers on what that number might be.
WWW: Alright, so what does the closing process
look like?
DW: Once you’re in a binding contract, the
next step is to get the title company and the lender to start working on the
deal. The title company’s job is to search the chain of title and make sure you
are provided with a clear title to the property at the time of closing. The
lender begins the process of approving the loan. The next step is scheduling
inspections. If anything unexpected is found during the inspections, there may
be negotiations following the inspection. After we cross that bridge, the rest
of the process is relatively smooth sailing. There’s an appraisal, which is
part of the financing contingency, and we will guide the rest of the process
until the closing.
The contract
period typically spans 30 to 45 days. At the end of that period, a couple of
days before closing, there is a final walk-through for the buyer to ensure that
the seller cleared out the house properly and left it in the same condition as
day one. Next comes the closing, the transfer of the property from the seller to
the buyer. That’s facilitated by the title company. The lender transfers the
loan dollar amount to the title company, the buyer brings their portion, the
seller receives their proceeds, and the transaction is complete.
WWW: And then you own your house.
DW: Correct, however, there are many ways to
structure and customize a transaction to fit everyone’s needs, but that’s
pretty much the process.
WWW: Great! So anyone looking to buy a house
now has a primer on what that will look like. You mentioned that there is very
little inventory now in the frum
market. Can you talk about what trends you’re seeing, and if you think there
will be more inventory coming up? How do you think it’s going to be looking in
the future?
DW: Actually, I don’t know how the market
here compares to all other markets, but the shortage of properties is
definitely not just in the frum
community. Right now, it seems to be happening everywhere and definitely seems
related to COVID. People who wanted to sell their house were not able to sell
it for a period of time, and there were tons of people looking to move during
COVID. Many people felt cramped or were working from home. They wanted to move,
and that drove up the number of buyers looking for homes.
There were several
months of almost nothing on the market. We are just starting to see houses
coming up, but because of the number of buyers out there, every house is going
fast. We’re seeing multiple-offer situations and listings going for well over
the asking price, which were rarities before this. It used to happen on very
desirable or under-priced houses or in very specific situations, like homes in
top school districts. Right now it seems the number of buyers is driving the
market way up, so it’s hard to say what the future is going to look like.
WWW: Do you see or anticipate or hear any
rumors of new neighborhoods opening up for the frum community?
DW: It’s interesting that you ask that. And
the answer is yes, somewhat. We’ve been talking about this for a while,
especially over the last few months when we were struggling to find houses for
our clients. There have been a number of clients asking us about moving beyond
the existing neighborhoods, where others may join them eventually. But it takes
the right person to be the first, or the first few, to get out there. I’ve
recently been in touch with somebody who is heavily involved in another
community outside of Baltimore, and is looking to form a similar,
satellite-type community here. We’ve driven around together, looked at different
areas, and are in discussions about how it can be done. Recently, we found an
area that we think has good potential for this, but there are still many
aspects that need to be considered.
WWW: Any hints on where the area might be, or
is it too preliminary?
DW: Too preliminary unfortunately. We’ve
looked at several places. There’s one area that we are considering. Based on
the way the housing is set up and the possibilities there, it might have the
ability to turn into what we’re envisioning. There have been many people who’ve
expressed interest in this. It’s not going to appeal to everyone, and even for
the people who have expressed an interest, it’s going to depend on who is
involved, and what type of crowd is going…. But we definitely hope to make something
of it.
WWW: I’ve heard rumors that the Greengate
neighborhood may be coming within the Eruv. Have you heard that rumor? And if
it’s accurate, what will that do to prospective home buyers?
DW: I’ve definitely heard that rumor as well.
After hearing indirectly from the Eruv committee, it sounds like they are not
sure whether it’s possible at the moment, but are trying to see if they can
make it happen. In the past, we were told that extending the Eruv that
direction was not going to happen due to a halachic issue concerning property
that is owned by someone who is not willing to give consent, although this,
too, is indirect information. At this point, we don’t have a clear
understanding of what will happen. Actually, some people have already moved there,
even without the Eruv. If the Eruv is extended to that area, it will definitely
increase the number of people willing to look there and will probably change
the neighborhood to primarily those from the community.
WWW: Thank you very much for all of your
guidance and insight into the home buying process and what that is going to
look like in the future. If anyone needs a real estate agent, they should
absolutely reach out to David at Pickwick Realty. Thank you very much for
joining us!
