How to Buy a Short Term Rental in Galveston: The Contract Process Explained

Avery Carl [00:00:02]:
Hey guys, welcome to the Short Term show special episode series. 10 episode deep dive on the Galveston and Crystal Beach, Texas markets. Couple notes before we dive in. If you guys are looking for current income and current prices of properties in this market, you can get all of that info on our website@theshorttermshop.com you can set up searches just like you do on Zillow or realtor.com all those places and we do have all the income data as well, so be sure to check that out. Also make sure you check out our other special episode series. So we have 20 markets that we operate as real estate agents in and we have 10 episode series just like this one. On all of those, make sure to check out the short term show as well as the short term rental management show and be sure to join our Facebook group. It’s called short term Rental Long Term Wealth.

Avery Carl [00:00:47]:
Same title as my book. Now let’s go ahead and dive in foreign. Hey guys, welcome back to another episode of the short Term show special episode series on the Galveston and Crystal beach markets. Today we’re going to talk about the contract process. So there’s a lot of content out there about what to look for in a house and how to manage short term rentals, all that. But there’s very little about what the contract process actually looks like and that varies a lot from state to state and it can definitely cause some friction and some uncertainty and make you nervous if you don’t really understand what the process is and what things look like. So we are going to go through that today. So you understand when you go to make an offer with your agent exactly what to expect.

Avery Carl [00:01:39]:
And to help me do that, I have the top agent of not just the short term shop, the top agent in the entire market, in the Galveston Crystal beach market. Kelsey Arduin to help me do that. Hi Kelsey. So today we’re going to talk about the contract process. So let’s say we found a great house. We think we want to make an offer on it. So, so let’s talk about what the terms of the contract are. So you know, we’ve come up with a price that we’re going to offer.

Avery Carl [00:02:04]:
We’re putting that in the contract. So the first thing that we’re going to have to do is send in our earnest money and decide how much that is. Sorry, I just hit my mic. It probably made a noise. So what is the standard earnest money amount in this market? We’ll start there.

Kelsey Ardoin [00:02:19]:
So to address what you said before, I am the top agent in terms of buy side in Crystal Beach. So. So just to be accurate, in terms of earnest money, 1% is very typical. Nobody really wants more than that. And that earnest money is refundable as long as, like, let’s say you were to get out of your contract. If it was for a contractually allowable reason, then it should be refundable.

Avery Carl [00:02:45]:
Okay, so we’ll talk about that more in depth in a minute. So earnest money in Texas is refundable if you terminate under one of the contingencies, which we’re going to talk about in a minute in some states that there’s an extra charge, an extra deposit that’s not refundable. So want to make that clear. It is refundable under certain contingencies that we’re going to talk about in just a second. How long do you typically have to send your earnest money in before you’re past the deadline?

Kelsey Ardoin [00:03:11]:
Three days. So let’s say you get under contract on like a Monday. You’ve got Tuesday, Wednesday, Thursday by end of business to get it in, because that’s when title can actually accept it. That’s the same thing for option money that we’ll talk about here in just a little bit. If you were to get under contract, let’s say on a Friday, then your option money would be due. You normally would have three days. So you’d have Saturday, Sunday, and then Monday. But let’s say Monday is a holiday.

Kelsey Ardoin [00:03:44]:
Say it’s Memorial Day or something and the title company is closed. You would then be able to pay it on Tuesday.

Avery Carl [00:03:51]:
What. What’s option money?

Kelsey Ardoin [00:03:53]:
Option money is a fee that you pay in to have the unrestricted right to walk away were you to not want to move forward with the property. So this is what a lot of people would refer to as your inspection period. But it doesn’t. You don’t have to conduct an inspection or have an inspection reason for terminating. So option money is not refundable because you’re. It’s a fee that you’re paying for the right to walk away for any reason.

Avery Carl [00:04:26]:
Okay, so is the option money separate from the earnest money?

Kelsey Ardoin [00:04:30]:
Yes, but you can pay it all at the same time. So like let’s say it was $5,000 of earnest money and $250 would be a very standard but like low on the low end for an option period. So you could pay the $5,250 all in one, say, check to the title company. And that is if you don’t pay the option money within the three days provided. Same rules as the earnest money, then you do not have an option period, meaning you do not have the unrestricted. You’re forfeiting the unrestricted right to walk away. And typically you have 10 days. Some people find that to be short.

Kelsey Ardoin [00:05:11]:
And that’s okay. It really isn’t. You can get an inspector to come out very quickly. You can get a report within 24 hours. It really is sufficient. You just need to be on top of reviewing the report and deciding what’s important to you to. To get fixed. So everything has to be fully negotiated through the end of that time period.

Kelsey Ardoin [00:05:35]:
So in your 10 days, by 5:00pm Central Standard Time on that 10th day, whatever negotiations you’re going to get, is it.

Avery Carl [00:05:43]:
Okay, hang on. Let’s back up just to the deposits again really quick.

Kelsey Ardoin [00:05:48]:
Okay.

Avery Carl [00:05:48]:
Into all that in a minute. So I’m confused now. So earnest money is different than option money?

Kelsey Ardoin [00:05:53]:
Yes.

Avery Carl [00:05:53]:
Yes. Do you have to do option money?

Kelsey Ardoin [00:05:56]:
No, it’s optional.

Avery Carl [00:05:58]:
Okay. So if we’re doing earnest money only, then we have just a regular inspection contingency. And if there’s something wrong with the inspection, we terminate, get our earnest money back. But we can’t terminate for any.

Kelsey Ardoin [00:06:08]:
Oh, no, no, no. So let’s say. Let’s say it’s the height of the market. It’s super crazy, and you’re desperate to have this house. I don’t think I had anybody. I don’t recommend people do it. And I don’t think I had anybody offer where they waived their option period. That is your inspection time period.

Kelsey Ardoin [00:06:26]:
So if you offer without an option period or you don’t pay in a timely fashion your option fee, then you cannot back out for an inspection reason or any other random reason. Like the house isn’t as blue as I thought. It’s very liberal. But if you don’t pay for it or select it, that’s not a contingency in the contract that you can use to get out of it.

Avery Carl [00:06:47]:
Okay. So you still have to pay earnest money even if you select that option money thing. Okay. And is the option money refundable if you terminate for.

Kelsey Ardoin [00:06:57]:
No.

Avery Carl [00:06:58]:
Okay.

Kelsey Ardoin [00:06:58]:
So there’s just a fee that you pay to tie up the property.

Avery Carl [00:07:02]:
Okay.

Kelsey Ardoin [00:07:03]:
You can pay them together. So you’re not just like spending extra money on a wire or something like that, but you. They serve two separate functions. One is the earnest money is to demonstrate that you’re serious and so you’ve got some skin in the game. The option money is your right to tie up the property for 10 days without being obligated to purchase it.

Avery Carl [00:07:24]:
Okay, so you’re basically paying for your inspection contingency. But now let’s talk about is the option money due in three days also or is that due. So option money. Okay, so you pretty much, you always want to be checking that option box and getting that option period. I can’t think of any reason that would be a good idea not to do.

Kelsey Ardoin [00:07:43]:
I can’t either and I don’t recommend it. I’ve specifically told people not to do it and it’s a default on my contract. So some things stay the same. That one is, that’s one that stays checked unless somebody somehow told me not to and I represent them and if they don’t want that, I would advise against it. But I represent them, of course.

Avery Carl [00:08:05]:
Okay, good deal. So now let’s talk about the contingency itself. What? So your option period is technically like your inspection period, but where that differs, I think, correct me if I’m wrong, from other states is that in Texas, in that option period period, you can terminate for any reason you want. You can go outside and say it’s raining, I’m going to terminate this contract and get your earnest money back. Whereas in.

Kelsey Ardoin [00:08:28]:
No, no, I’m saying like, yeah, you don’t have to have a real reason. You can just say, never mind. Okay. You can just say, never provide like a fake reason.

Avery Carl [00:08:36]:
Gotcha.

Kelsey Ardoin [00:08:37]:
I changed my mind. You. It’s called the unrest. It’s the unrestricted right to walk away.

Avery Carl [00:08:42]:
Okay. So you can terminate for any reason. Whereas in other states in your inspection period, sometimes or in a lot of states, you have to have like a reason from the inspection that you’re going to terminate for. So this is pretty cool. If you are a nervous buyer, then Texas might be a good place for you because you won’t have to worry about losing a bunch of money by changing your mind in that option period.

Kelsey Ardoin [00:09:05]:
I find it to be very buyer friendly. Cool.

Avery Carl [00:09:08]:
And so you kind of mentioned this earlier. Do. So we get our inspection at some point during this 10 day option period and we start negotiating. So do we have to be. Do we just have to turn in our first notification of hey, these things we want to be repaired or get money off for by that 10 day. We just have to send our objections by then or we have to be fully negotiated and done by that 10 day everything.

Kelsey Ardoin [00:09:31]:
It’s a, it’s a day, it’s a deadline. So while it is liberal and that you could walk away, it is a hard deadline that you have to have everything negotiated by the end by 5:00pm Central Standard Time of that last day of the option period.

Avery Carl [00:09:47]:
Okay, so what happens if you aren’t quite done, like, because I see a lot of people, you know, we’ll get to like 6pm on the last day of the option period. Does it expire at midnight or does it expire at close of business at.

Kelsey Ardoin [00:10:00]:
Like 5 or 6?

Avery Carl [00:10:01]:
5. Okay, so let’s. Okay, it expires at 5pm that’s important to remember because some states it’s midnight, guys. So if you’re getting under contract in Texas, it expires at 5pm on the 10th day. So if we’re, say we’re at noon on the 10th day and we don’t quite have an answer yet, we’ve sent our last response to the seller and we don’t know if they’re going to see it or respond to it by five, what happens?

Kelsey Ardoin [00:10:24]:
So I want to back up really quickly. So I said 10 days because that’s about as long as it’s standard to ask. You could ask for more, but 10 is like the most you were commonly going to see. It’s what’s default in my contract. Seven is a little bit shorter. Like if you know there’s another, you know, offer out there or you’re just trying to make it seem like you’re asking for less. I would say anywhere between five and 10 days would be an okay amount. I would not want to write one for more than 10 days.

Kelsey Ardoin [00:10:55]:
So it is flexible. And then you asked, what would I do? I’ve had a situation where the. It took a while. Like let’s say an inspection happened and we need a further investigation. Like let’s say you, you know, it happened like over a weekend or a holiday. Inspector couldn’t get in. And now we’re on day six of the option period. Assuming there’s 10 days, you get the report back hopefully that same day.

Kelsey Ardoin [00:11:21]:
But then you need to get a H VAC person to come and check out the AC system. They get in. You talk about, you think you get a quote for the work. It just eats up some time. That can happen. That’s why getting your inspection done in the earliest part of your inspection period is really important. So you have enough time so you’re not down to the deadline, down to the wire. But I’ve actually done it this way where I’ve sent an amendment.

Kelsey Ardoin [00:11:46]:
Well, actually I’ve sent a termination and I’ve sent a amendment changing the price or listing out repairs that would need to be done. And I’m like you, you can accept either one. You can either. Like if it was really down to the wire, I’ve, I’ve done it that way. I was like, you can take the termination or you can agree to these repairs. So I know that we’re covered and that they can get out during as per their option period.

Avery Carl [00:12:10]:
Okay. And let’s talk a little bit about before we move on to other. Well, let’s. Well, okay, I just went a thousand different places in my brain and I’m actually going to stay exactly where we are. So pardon me, but anything else that we need to go over in terms of the option period, option money, anything about that?

Kelsey Ardoin [00:12:30]:
One thing I would say is that for all of my buyers, I give them a buyer’s guide during our intro call. And I get way ahead of this because I know that most of my people are buying either from out of the area or maybe they’ve moved or whatever. They maybe never done a transaction in Texas. So I make sure that. Or Maybe it’s been 10 years and they don’t remember how it worked last time. So I make sure then cover all of these things. And in my buyer’s guide, it describes all of these things that we’re talking about and in order of the transaction. So at the top it’s going to be what house to look for.

Kelsey Ardoin [00:13:05]:
What are you looking for? How do you analyze it? You know, and then, you know, we’re going to get into contract things like option money and earnest money and how to negotiate your inspection. What are we, you know, are we going to ask for stuff about some superficial scratch or are we going to be asking for real stuff that’s broken and is important for the house to function. Gotcha.

Avery Carl [00:13:26]:
And when you, when you go to terminate during your option period, so say you just can’t come to an agreement or there’s just too many things or you decide you don’t want to buy it. Is it. Do you automatically get that earnest money back from the title company or does the seller have to sign a document saying they agree to release it?

Kelsey Ardoin [00:13:44]:
If it’s a. It’s not automatic. People can contest it. But there are things. Well, okay, if it’s within the option period, it should be that you get it back, Pete, you do. So the termination is a one way. You sign it and you’ve terminated the earnest money. Is.

Kelsey Ardoin [00:14:04]:
Does require earnest money. Release form does require both signatures from the buyer and the seller, but it does state in the contract that you get it back. And it, it clearly states that you’re owed it. But I, as an agent, it’s not my job to negotiate the release of earnest money. I haven’t had it happen where people argue about earnest money and I’ve done plenty of deals. But it does happen on occasion that people don’t agree about an earnest money release and they have to get a lawyer involved.

Avery Carl [00:14:36]:
Yes, that’s exactly what I was kind of getting at. Because you can’t as an agent negotiate the release of earnest money. So just so everyone is aware, it can happen. Even though if you’re well within your contingencies, a seller can just like be pissed off and say, well, I’m not signing this. Even though we all know they’re wrong. The only person at the end of the day who can decide who gets earnest money in a dispute is a judge. Even if it is very clear that you are well within your rights to terminate. No, you can’t just call the title company and convince them.

Avery Carl [00:15:11]:
It doesn’t work like that in any state. So and the seller, usually what will happen when I’ve been in earnest money disputes is that eventually the seller cools off and says, all right, fine here, let’s move on with our lives. I’ve never seen it actually have to go to court in 5,000 deals that the short term shop has done. So it, it probably won’t ever go that far. But just know sometimes they will like give you a little static about terminating if they feel that you’re being an idiot or something. Whatever they, you know, whatever they think, it doesn’t matter. Eventually you’ll probably get it back with the court. But every now and then you will get a little pushback from a mad seller.

Kelsey Ardoin [00:15:50]:
So two things on that. There is actually a provision within the contract that says if you send an earnest money release demand. That’s what it is is a demand for the earnest money. When you send that earnest money release and the seller doesn’t respond within like 14 days, then the title company is actually allowed. Like if they don’t dispute it, they don’t say, no, I’m not giving that. They don’t respond at all. The escrow officer is allowed to distribute the earnest money back to the buyer. Oh.

Kelsey Ardoin [00:16:22]:
And is released. And it specifically says in the contract that they’ll be released of liability.

Avery Carl [00:16:27]:
Okay. Because that is a little different than other states.

Kelsey Ardoin [00:16:30]:
Normally they’re mad and so they do say something back. But it’s possible that if they just are ghosting you, there is a provision within the contract that says the, the escrow officer can release it on their own. I have found that time heals a lot of wounds. And if the, if the seller goes on to sell the house and the money was somehow in dispute, usually you can kind of hit up the title company later on because they’re really not supposed to have those funds. If the, if the seller. If the seller doesn’t accept the funds, it can’t just sit in escrow for infinity. They’ll do like an audit. You’ll do an audit.

Kelsey Ardoin [00:17:08]:
So the money has to leave. The money has to go somewhere. So either it has to get refunded back to the buyer or the seller accepts it. And when the seller accepts it, they’re releasing the buyer of all liability, meaning you cannot be sued for specific performance. That means making you buy the house, making you go through, fulfill your end of the bargain of buying the house like you said you would if they accept the earnest money. So sometimes it’s kind of a limbo situation where it can sit for a while. And if they go on to sell the house, they can’t sue you for not buying the house because they don’t own the house anymore. So they can either decide it’s not a big deal anymore because I already sold the house and give you your money back, or they can accept it and you know, you’ll never be sued for it.

Avery Carl [00:17:50]:
Gotcha. Okay. That makes a lot of sense. And I think this is really good stuff to make sure that buyers understand. Let’s talk about furniture for a second. So how do you address. When a property is coming fully furnished? Do you have to do like a separate bill of sale or can you put it right on the contract?

Kelsey Ardoin [00:18:05]:
In Texas, there’s a non realtor multi item addendum. And probably for the first year and a half, and it was like a. I don’t know if it’s a Trek or a Texas Realtors form. I think it’s a Texas Realtors form. And you could, you would put a checkbox in the additional forms and list it. Probably in the last six months, I switched to doing a bill of sale that operates outside of the contract because occasionally a lender would get their, you know, knickers in a twist on it and they, they didn’t want it. And then it. You kind of end up in this weird limbo where you already said that you plan on buying the house with all the furniture, and then you have to, like, take it back.

Kelsey Ardoin [00:18:48]:
And then you have to hope that they are. Are fine with saying, like, oh, yeah, they’re not going to Buy the furniture after all. But the reality is that they are. So I, I, we do a bill of sale outside of the contract. Now I do as standard just to avoid sidestep that whole issue.

Avery Carl [00:19:05]:
Yes, because it can become an issue.

Kelsey Ardoin [00:19:07]:
I don’t want it to become an issue.

Avery Carl [00:19:09]:
Right.

Kelsey Ardoin [00:19:10]:
I think it could blow up a deal. And so we just avoided entirely on the off chance that somebody doesn’t like it. And I know with lending tightening up, that was when I first saw it happen. Lending was kind of tightening up and investors were getting nervous about the idea of the furniture, which is removable from the property, being removed, moved after closing, and suddenly the house is not, they think, worth as much as, you know, like the loan on the property or something like that. So there’s a nervousness around it, but there’s not a, there’s not a huge difference in price. People don’t want to come down and remove a whole house full of furniture out of their beach house. And it’s usually beachy furniture. So it’s like, what are they going to do? Go replace their couch at home?

Avery Carl [00:19:57]:
And it’s, yeah, I found that that works well. Like when people try to say, oh, Well, I want 50,000 for my shitty furniture that’s been, you know, in here for two and a half years and it’s beat up if you tell me, okay, we don’t want it. Like, we just don’t want the furniture. Instead of trying to negotiate the price of the furniture, just say, okay, that’s fine, we don’t want it. If you play a game of chicken with them like that, you are probably going to win as a buyer because Kelsey’s right. Like, who has time to go get a whole bunch of furniture out and then try to sell, sell it independently. And then nobody wants to do that. So that’s my pro tip too.

Avery Carl [00:20:31]:
Just tell them you don’t want it. If they’re not including it in the sale price and they want to try and like bang you up for a few grand, just tell them, I don’t want it. You’ll probably end up with it for free.

Kelsey Ardoin [00:20:41]:
And I would say so. There’s two things here. So generally speaking, in this market, the houses are furnished. Unless it’s a new construction and furnished unfurnished. There’s good and bad things about it. So if it’s completely unfurnished and you’re working with a blank slate, and when you go on day one and you move your couch in, guess what, there’s a spot to put your couch. If it’s furnished and you’re getting rich. Like you don’t want to use 50% of the furniture.

Kelsey Ardoin [00:21:07]:
Then you get to move somebody out halfway and then move you in. So there’s. I really, I caution people when they’re buying and I comment about it in my walkthrough videos. Like if something looked way better in pictures than it does in person. Like if the couch looks really worn out because the pictures could be from, you know, a year ago, I point out, like, you know, that’s not going to be something you keep. I would say genuinely look at a picture of a room and ask yourself, what will I keep in this room? So you can run your numbers in a realistic way. Like if you like the bed but the nightstands and the lamps are like apartment size, you’re probably not keeping that. So be realistic about what you’re going to do when you get in there.

Kelsey Ardoin [00:21:47]:
Awesome.

Avery Carl [00:21:49]:
There was one other thing related to oh, disclosure. So what is a seller required to disclose on a property in Texas that they have not been living in? So it’s either an investment or a second home. Do they have to do the whole extensive disclosure thing or do they just say, oh, we haven’t lived in. There’s like an exemption form for that if they haven’t lived in it.

Kelsey Ardoin [00:22:08]:
There is. If you’ve personally owned it, then you have to do one. Regardless if it’s a second home or, or you it was a primary residence. It’s the exact same disclosure. There’s a. So track is the governing body of Realtors in Texas. They have a more bare bones version of the form. Seller’s disclosure form.

Kelsey Ardoin [00:22:30]:
Texas Realtors has a more in depth version. You’re only required to produce the TREC version of the form. I find the most sellers and their agents use the Texas Realtors form, which is the more comprehensive one. And it’ll, you know, it’s lots of checkboxes like is it a gas or electric stove? Is there, you know what kind of AC system it is? And then you check if it’s, you know, you write in how many units it is. What floodplain, like what is it in a flood zone? If so, which one? Has it had previous flooding of the property? Have you had insurance claims? It’s. It’s pretty extensive.

Avery Carl [00:23:12]:
Okay, good to know. So they have to disclose everything.

Kelsey Ardoin [00:23:14]:
Yes. And there’s an additional form. So if you check. Yes. So at least half the properties in the area are on a septic system. And if you check that you have a septic system, then you Additionally have to fill out a form. Now a lot of times because they’re second homes and these people aren’t really maintaining them a lot of times themselves or they bought it two years ago and they haven’t had to do anything with it. A lot of times they don’t know a lot of things about their house or about their septic system.

Kelsey Ardoin [00:23:43]:
So seller’s disclosure only contains the information that the seller knows. The seller doesn’t know, they can’t disclose it. So that’s all right. Good and bad things about a seller’s disclosure.

Avery Carl [00:23:55]:
All right, so let’s move on to the financing contingency. So how long is that? So if you get denied by the lender like the day of closing, maybe you didn’t realize that you should not have financed a new car, but you did and now you no longer qualify. Do you get your earnest money back?

Kelsey Ardoin [00:24:12]:
So there’s a, in the third party financing addendum, which is like a supplemental form. It’s checked off on the contract to make sure it’s included. I add that and there’s two parts on there within that third party financing form. It gives a number of days. I would say up to 21 is considered normal. I do 17. So you have 17 days for you as a person to be approved to borrow money by your lender, which I think is plenty of time, especially if you’re submitting your documentation ahead of time and you know, feel free to ask your lender to, if you’re very serious, ask to get pre approved. That means you’re getting fully underwritten as a borrower ahead of time before you even get under contract.

Kelsey Ardoin [00:25:01]:
And then you asked, oh, within that same form, it’s assumed unless you complete a different form. I do that the house must meet appraisal. So it has to at least appraise for. They call it property approval. But what it means is it’s appraisal contingency. So if you were under contract at 500 and the property. We don’t have appraisal issues really, if it came back at 490, you’re not obligated to buy that house. Now a lot of times you can meet in the middle.

Kelsey Ardoin [00:25:35]:
So let’s say that were to happen, you would have. You’re not obligated to buy it and you would get your earnest money back. You should in that situation. But it, you know, same thing applies before. It’s not automatic, but you should get it back. You can meet in the middle or not by the house or you can come out of pocket for the 10k above. So that would look like if the seller wouldn’t agreed and you were dead set on buying that house, that would look like you coming to closing with an additional 10k out of pocket to pay for the house. I haven’t had that happen, but that’s what it would look like.

Avery Carl [00:26:08]:
Okay, so three things. Well, four things could happen. Seller could come down to appraised value. That’s the most ideal option.

Kelsey Ardoin [00:26:15]:
Yes.

Avery Carl [00:26:16]:
You could come out of pocket all the extra up to the contract value that it didn’t appraise by not ideal. Or y’ all could meet somewhere in the middle. 3 or 4. Could you terminate the contract?

Kelsey Ardoin [00:26:26]:
You can just say, look at an appraise. Never mind. And sometimes that financing contingency, like if the. I’m sorry, that appraisal contingency, occasionally that is used to terminate something when you didn’t want to buy it, because it’s usually like the longest contingency.

Avery Carl [00:26:44]:
Okay.

Kelsey Ardoin [00:26:44]:
I haven’t had to do that, but it has.

Avery Carl [00:26:46]:
Okay. So all that’s pretty straightforward. Let’s talk about your. All right, so let’s say we’ve made it through our inspection. We’ve made it through our appraisal, it appraised, and we’re coming up on closing, and there’s what’s called a final walkthrough. You guys have final walkthroughs in Texas, right?

Kelsey Ardoin [00:27:05]:
Yes.

Avery Carl [00:27:05]:
Okay. There are two people who can do a final walkthrough. And let me back up and explain what a final walkthrough is. So sometimes it’s called a final walkthrough. Sometimes it’s called a final inspection. What it is, is it’s the opportunity for the buyer to walk through one last time and make sure the property is in the same or better condition as it was when you went under contract or when it was inspected. And it’s not typically a time. I think a lot of people see that word final inspection and think that it’s a time to go try and find more things that are wrong with it and try to get that price down.

Avery Carl [00:27:36]:
That’s not what it is. It’s just to make sure that it’s in the same shape. And who can do that final walk through for a buyer? Kelsey.

Kelsey Ardoin [00:27:44]:
So if you were to come into into town and you wanted to do the final walk through, let’s say, the morning of closing, I can take you to the property. I can walk you through the property. You can say, oh, yep, it all the furniture that was here when I Saw it the first time or in your video is here. Oh, yeah, I can see that they fixed the. Whatever it might be that we asked for during the repairs and okay, let’s go over to title and close. A lot of. Most of the time people don’t close in person. Mostly people end up closing remotely and then coming into town after.

Kelsey Ardoin [00:28:20]:
But you are well within your rights to do so and I’m happy to accommodate you. I can’t just go to the property for you and say, oh yeah, here’s a video. And look, they fixed the this and they fixed that. I’m not a home inspector. I can’t tell you that I am not qualified and that I’m. My errors and emission insurance doesn’t cover that.

Avery Carl [00:28:41]:
Yeah, well, I mean, I can tell a story about a mistake that I made when I was new because a lot of times buyers will say things like, oh, well, my agent in Ohio walked through for me, no problem. Well, your agent in Ohio put. Put themselves at a big liability. And a lot of people don’t realize that because you’ll say, oh, well, can’t you just walk through and make it, make sure it’s the same? So I did that one time when I was new, walk through, took a video for the, for the buyer, sent it to him, he was happy with it. And a few weeks later he called me, wanting to come after me because there was some squishy floor around the toilet of one of the bathrooms that, you know, I didn’t walk over there and sit on the toilet. I just videoed. Everything looked the same to me. And you know, I, there’s, there’s really no way I could have known that or to even look for that because I’m a real estate agent.

Avery Carl [00:29:28]:
I’m not a home inspector. So that is the kind of thing you want to avoid by having yourself or your home inspector go do that walkthrough for you. The same home inspector who did the inspection the first time. So they know what to look for and make sure that things are fixed.

Kelsey Ardoin [00:29:42]:
Or how they’re fixed.

Avery Carl [00:29:45]:
But your agent is not that person because we just are not trained and licensed in any sort of inspection or contracting or anything like that.

Kelsey Ardoin [00:29:55]:
The other thing I would say is that in the absence of. Or if they don’t want to spend the extra money for an inspector to come through, they can’t hire somebody like a cleaner or a handyman. So let’s say in preparation for closing, they’re very close to closing and they’ve been talking to say, three Cleaners. I often like to tell people, look, go hire one of them. Pick your favorite of the three, the one you were thinking about hiring to clean the house. Go send them on this errand. And as long as the seller is okay with a cleaner accessing the property, which they usually are, then it’s not typically an issue and it tests the cleaners communication skills. Did they show up? Did they do what they said they were going to do? It’s kind of like a dry run with a cleaner without any level of commitment of that you’re hiring them for this job.

Kelsey Ardoin [00:30:42]:
It’s almost like a job interview, like a very mild. You can send them to do. When they do the walkthrough, they’re just taking a video and you may ask specific questions of them. And you can also ask them, you know, even to do like an inventory of specific things.

Avery Carl [00:30:57]:
You could. Or that could backfire if, if like you’re depending on somebody new that you don’t know. And then they don’t show up and it’s the final walkthrough and then it, and then it delays closing. So that could go either. I could see that wouldn’t do that the day before.

Kelsey Ardoin [00:31:10]:
I would say if you know that closing is coming up, do it a couple, at least a couple of days before. And if they don’t show, then you can hire. Go to number two cleaner on your list. Give yourself time for these things like don’t, don’t wait till the last minute for inspections, walkthroughs. You just put yourself in a bind and yeah, can backfire for sure, 100%.

Avery Carl [00:31:31]:
All right, so let’s move on to closing. So where I see some people get tripped up is they’ll get a big U Haul full of stuff that they’re bringing and they plan on closing and staying in the property that night, the day of closing. So what can go wrong with that?

Kelsey Ardoin [00:31:47]:
In Texas it is a bad idea to show up. Let’s say they want to like close. They want to show up at 2 o’ clock on a Friday and they’ve got all their stuff and they have no plan to stay elsewhere. They’re planning on occupying the property when they leave the title company if they close it, you know, they, they come and they sign the paperwork at 2. I do a really comprehensive job of making sure that all the ducks are in a row. But things inevitably can go wrong. Finding out ahead of time what your lender will allow. So are they going to same day fund? Are all of the funds from the lender Sitting at the title company waiting for just the signature, or is there a whole process that has to take place? And if it’s a whole process, how long does that take? My recommended way of doing it is if you would like to show up on Friday, especially if it’s like say after hours on Friday to occupy the property, close remotely on Wednesday, give it early on Wednesday, give it three days to fund, and it won’t take that long.

Kelsey Ardoin [00:32:52]:
But you’ll know for sure that when you show up on Friday or you’re flying in, that’s even worse than driving. You’re flying in on Friday that you do have the couch that you’re. You plan to have arrived. All these different pieces that are all have to come together just right, that you won’t have a couch arriving at a house that you don’t actually own and don’t have access to even put in the garage because you don’t have the keys. And we’re not doing any funny business where you get the keys before it funds not.

Avery Carl [00:33:20]:
Yeah. So you have to make sure that it’s funded. You don’t get the keys before it’s funded. So if you screw around and you’re trying to come in and close, you know, on a Friday and at 4 o’, clock, you might have some problems. So I 100 agree. Close remotely, know that it’s closed, and then drive in and do all your stuff. Because I’ve seen people not have a place to stay all weekend and they’re really upset and there’s like, it’s not their fault necessarily, but it’s just you, you got to make sure, you got to give yourself some buffer time for like, oh, did the wire get there on time? Did this and that happen? You know, there’s a lot of people that it has to go through. So you wire it to the title company, the title company wires it to the seller.

Avery Carl [00:34:00]:
There’s just a lot of steps. It’s not just like, oh, we’re closed, it’s mine now. So keep that in mind.

Kelsey Ardoin [00:34:05]:
Yeah, you don’t just sign on the dotted line and it’s yours. So one, so there’s some process stuff and then some stuff you do on your end to make sure it’s not your fault. So you don’t get to control everybody and everything, but you can control you. So let’s say you’re planning on closing on Wednesday. Well, by Tuesday morning you should have a settlement statement and you should have, you should fully understand you’re good with cash to close. And by Tuesday morning, you should be sending the wire so that can for sure get there by Wednesday. And of course, call, call the publicly available number for the title company and double check that the wire instructions that you’ve received are correct. Just so you don’t end up in some kind of wire fraud scam.

Kelsey Ardoin [00:34:46]:
You don’t want to go through all this energy and effort just to get scammed out of your money and then everything really will be messed up. But wire your funds ahead of time. And then a process thing I do is usually about a week out from closing, when we’re starting to hear we’re about to get clear to close. That’s when I start asking, you know, I get title and lender and Amity, my transaction coordinator, all in one email. And I’m saying, hey, what do you need to close? What’s the process? Are we funding on digital documents? What kind of turnaround do we need? Just finding logistically making sure that it’ll go smoothly and like the seller is expecting. So if I know they’re flying in on Friday, hoping to occupy, that kind of gets escalated with me that, you know, getting all those ducks in a row and making sure everybody knows that that’s the goal.

Avery Carl [00:35:37]:
Right? Yeah, that makes sense. Make sure everybody is on the same page all the time. And I think that this episode will really, really help. And I think that’s about all the time we have. So, guys, if you want to buy a property with Kelsey in this market, you can email us at agents the shorttermshop.com and we’ll connect you with her. Or if you just want to hang out with us some more and maybe you’re not quite ready to buy, but you want to keep learning, you can do that. In our Facebook group. It’s called Short term Rental, Long Term Wealth.

Avery Carl [00:36:03]:
Same title as my book right behind me. Or also you could join one of our weekly Q and A’s and you can sign up for that at STR Question. We’ll catch you guys later.