The Benefits of Pass/Fail Inspections and Working With Private Lenders – Nick Kalte

On this episode of The Closing Table, we sat down with Nick Kalte!

To watch the full episode, check it out on YouTube below. In the meantime, here’s a summary of the conversation…

Here’s what you missed from Nick Kalte…

The conversation began with a this or that icebreaker on fenced yards, closing costs, and more. Nick then introduced himself as a massive dork beyond the realm of real estate. His unwavering passion for Star Wars is clear, as he enthusiastically attended a special event celebrating May the 4th.

Serving the Metro Detroit tri-county area, Nick shares that it is currently experiencing a highly competitive real estate market with limited inventory. Many individuals express concerns about the relatively high prices, emphasizing the importance of finding the right lender, realtor, and securing an accepted offer with a favorable mortgage. Despite the rising demand driving prices upwards, the key lies in possessing strong negotiating skills and understanding the factors that contribute to a desirable home and mortgage package. Hence, it is important to collaborate with an experienced realtor who is well-versed in navigating such challenging cases.

When it comes to working with private lenders, Nick expresses his extensive experience collaborating with credit lenders and banks, acknowledging their exceptional expertise in the field. He highlights the remarkable programs they currently offer, which prove to be invaluable amidst the rising interest rates. In order to cater to buyers’ needs, creativity is essential, and Nick emphasizes the significance of providing outstanding programs or plans that also give back to the clients. He further addresses the impact of recency bias stemming from the fluctuations in interest rates.

When questioned about the situations in which he would encourage a client to utilize a private lender, Nick explains that if a private lender offers a fantastic program that aligns with the client’s specific circumstances, it is definitely worth considering. He recognizes that sometimes opting for well-established companies can provide appealing benefits, while at other times, smaller credit unions or banks may be more flexible and better suited to adapt to the client’s unique situation.

In seller’s markets, appraisal guarantees have gained significant popularity. Nick defines an appraisal guarantee as the practice of offering to pay above the appraised price of a property, in addition to the down payment and closing costs. He emphasizes that appraisal guarantees have become a crucial factor in the negotiation process, particularly in scenarios where a home is listed for $200k, but multiple offers are received. If a buyer offers $220k with an appraisal guarantee, and the home’s appraisal value is only $200k, a gap is created. The buyer is then committed to paying above the appraised value to secure the property. As buyers aim to strengthen their offers and stand out in competitive markets, this also provides sellers with reassurance that the transaction will proceed smoothly despite potential appraisal discrepancies.

Pass/Fail inspections are also gaining popularity in the real estate market. Nick explains how a pass/fail inspection works, revealing that it is essentially an agreement between the buyer and seller that no repairs or negotiations will take place, and the buyer will determine if they like the property and decide whether to proceed or back out.

He goes on to explain that even in cases where a seller receives multiple offers on their property, they will still evaluate which offer will bring them to the closing table. By using a pass/fail inspection, buyers can make their decision within a specified time frame, allowing sellers to move forward with a buyer who is genuinely interested in closing the deal. Nick also reveals that he is an advocate for this practice because it helps secure the buyer’s offer while still allowing them to perform due diligence through an inspection.

Kevin then raises a question about how Nick would handle representing a buyer if he agreed to the terms he discussed for representing the seller. Nick responds by explaining that if he were representing the buyer, he would have a conversation with them about the importance of standing out in a competitive market. He would emphasize that unless the buyer is willing to provide an appraisal guarantee, their offer may not be as compelling. However, if the buyer doesn’t have the capacity for an appraisal guarantee, Nick would suggest the option of a pass/fail inspection to appease the seller and increase the chances of their offer being accepted. He highlights the benefit of the pass/fail inspection, which allows the buyer to still conduct an inspection and make an informed decision, while also showing commitment to the seller’s terms.

When asked about the significance of the seller’s reason for moving on buyers’ decision-making, Nick underlines its importance, particularly if it is relevant to the market conditions. Buyers often inquire about the reason, as it helps them form a clearer picture and understand why the house is being sold. Nick considers it essential to guide buyers, instilling faith and trust in the home based on the explanation provided. In terms of key legal information and rights that buyers and sellers should be aware of during the real estate process, Nick highlights the contingencies outlined in the contract. He finds it necessary to reiterate the details of the purchase agreement, ensuring that both parties understand their rights regarding appraisals, inspections, and other pertinent aspects.

The conversation wraps up with Nick discussing the content that has motivated or inspired him, which is “The Big Short” which he believes is one of the greatest movies of all time. Nick explains that it has had a profound impact on him and the movie, based on the true story of the 2008 financial crisis, offers a compelling narrative that delves into the complexities of the housing market and the individuals who foresaw the impending crisis.

Check out Nick Kalte:

https://www.facebook.com/nick.kalte

https://www.facebook.com/NickKalteRealtor

https://www.instagram.com/nickkalte_realtor/

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