IT’S ALL OVER THE NEWS!!! We’re in a real estate bubble and it’s getting ready to BURST!!
…BUT, is that true?
Brett thinks “MAYBE”
Justin thinks “NO”
What do you think???
Check out this episode and see if we say anything smart that helps inform your thinking for yourself or your clients!
WHO ARE “BRETT & JASON” ANYWAY?!?
Justin runs one of the largest producing real estate teams in the Kansas City region while also running a successful real estate appraisal company.
He also has a long history as a professional musician, entrepreneur, and just generally brilliant human.
Brett is building a newer real estate company after years of mortgage banking experience as a loan officer, operations manager, and owner. He has had 34 different careers (slight exaggeration) which definitely makes him a jack of all trades and master of none. He can talk and act like he knows what he’s talking about on just about any topic…some of them he actually knows something about.
IF YOU HAVE ANY THOUGHTS OR QUESTIONS FOR US, LET US KNOW!
SUBSCRIBE, FOLLOW, LIKE, SHARE, RATE, COMMENT – Just do ALL of the things so you can keep up with us, our great(?) thoughts and advice, and help others do the same!!!
Brett Buffum
brettbuffum@remax.net
Justin Berry
justin@plainsparis.com
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Speaker 1:
I think , I think it’d be fun just to see if we can, let’s just see if we can do it in 20.
Speaker 2:
All right , let’s go.
Speaker 1:
Are we recording?
Speaker 2:
We’ve been recording you .
Speaker 1:
Sweet. All right . Um , well, welcome back to Brett and Justin save the world of real estate. Um , it’s been, I can’t even tell you how long it’s been since we thought we were gonna do regular basis. And now it’s been a year, six months or seven months later, which
Speaker 2:
Is pretty regular.
Speaker 1:
It’s about regular
Speaker 2:
For us every year and seven months. We’ll do it.
Speaker 1:
Yeah, I think, I , I think like all kinds of podcasts, I think I was like, ah , if we just , that was two and done, and we won’t do this anymore. But , um, and, but then the , the catalyst for the last time we got together was the crazy market. The , the escalating, you know, the rapid rise of values and how agents were behind the ball, the ball on that one. And , and , and the , the chaos on that. And now,
Speaker 2:
Now we think we’re on a cliff.
Speaker 1:
Now. I, I have been the huge trumpeter of , um , telling people and telling our sellers when we talk to them, no , don’t wait for a burst. This isn’t a burst . This is not like, oh eight. This is, this is market driven . This is, you know, there’s nothing scary in this. This is just normal stuff. And it’s, it’s crazy and it’s different, but it’s gonna level. And then maybe if you own your home thinking, you’re gonna get 20% appreciation. Well, that’s silly. You’re gonna , you’re gonna start to see it. Maybe you bought it at three 50 years. It’s still three 50. I , I , at that, I was seeing the fact that the rates are going up now. And , um, uh, we’ve, I’ve just seen enough, weird enough weirdness in our, in our neighborhoods and in our markets that I’ve gone. This is, this is insane. And we’ve, we’ve way
Speaker 2:
Weirdness, meaning to people are still behaving.
Speaker 1:
Yes .
Speaker 2:
Sure, sure.
Speaker 1:
Yeah. So basically, and we just went right through the whole mom . There’s no intro. We didn’t talk about my champagne or champagnes that we’re drinking, which I don’t understand what we’re doing, but the it’s like tastes like bubbly, honey. It’s so sweet. And it’s warm actually, too.
Speaker 2:
I , I think it’s, I think in the prior , um , conversations we’ve had, we’ve already discussed this and now , now it’s just happening. Mm-hmm <affirmative> but it’s like, when you’re doing investments, you know that you’re supposed to buy low, sell high. Right. But what is buy low ? How do you know you’re at the low? Usually it’s when there’s all these words like crash, mm-hmm <affirmative> bad news. Right ? Right. Well, so, oh ,
Speaker 1:
COVID everybody,
Speaker 2:
Everybody knows you high by low, but when they hear those panic words, they sell. Right. Mm-hmm <affirmative> so like even moving into this market, we go,
Speaker 1:
Hey, or no one buys right now. Cause they’re hearing high.
Speaker 2:
Right, right. So, or they hold onto it cuz they feel like, oh, I’ve got I’m worth blah, blah , blah . I’m you know , do what I do with what would I do with my money if I had it. Right. So the market has, you know, shot straight up and I think it’s starting to level mm-hmm <affirmative> I don’t see any signs that it’s fallen. Mm-hmm <affirmative> it is just curving instead of straight up. Right. Mm-hmm <affirmative> but there’s still people that just like they were behind the curve when it was going up and they couldn’t catch it there. Now they’re behind it as it’s going over. Um, and you know,
Speaker 1:
And so just, I want to just snag that real quick, by the way, we’re on a 20 minute time with this folks. I know it’s sad . But um, if the market itself, if we , if, if the profess and we look at market trends, we see this happening, the leveling mm-hmm <affirmative> like , like it’s supposed to be, but our industry Yahoo’s in our industry <laugh> are now Pavlov’s dog been trained. You gotta go, you gotta go over on every offer. You gotta go over. You gotta go . So then the Park’s telling us these values have leveled stop doing that . But everyone is so programmed and there’s still enough competition that, you know, you won’t win. If you don’t go play the game, which means every listing is still going way up over with all this silliness and contingency waivers. And then now that has , now that house sold for 20, 30, whatever grand over. Yes . And now the next house, it was in the market now at neighborhood. That’s the comp and we keep doing that. We keep leapfrogging, this one went over, ask , but then the next that’s the comp. So now we’re gonna go over ask . And that’s where I see that we’ve now . Now
Speaker 2:
Why is that though? Like we listed a house , um, it just closed a real quick cash deal. I don’t know. Two, three weeks ago we listed a house down on van brunt . Mm-hmm <affirmative> $65,000. So lower price point of our city. Mm-hmm <affirmative> sits on the market for a week and a half. No utilities on seller. Didn’t wanna turn the utilities on a renter, moved out. He just wants to basically dump this house. Mm-hmm <affirmative> he’s done. So we set a $65,000 price tag. I get a call from an agent and she goes, Hey , uh , do you have anything working on this? <affirmative> and we’re just happy to , we’re hungry to get this thing sold. Cause actually we thought we had it overpriced. Right. Um, comps were really showing 45 50 and we’re at 65. That’s what he wanted to try for. It’s 20, 22. Let’s go for it . Right. Mm-hmm <affirmative> so I say, oh , you know, we had some lower offers and we turned them down. I didn’t say we had full price offers and turned them down. Right . Lower offers. Okay. Well we’re gonna write you a , uh, you know, it’ll be a conventional offer with cash guarantee. Uh , we’re gonna write it for 75. Okay. Well, I look forward to seeing it. You know, I get off the phone, I looked at Tara and I’m like, she just said 75. Surely she misspoke mm-hmm <affirmative> but then when we misspeak, we we’re off by a hundred, like , oh , I sold that house for 300. Was like , it was 400. Yeah . Do that all the time. But she , um, yeah, she $10,000. And then, so she spent $10,000. I don’t know . Do the math, was it like 20% more than what she had to pay for the house? Mm-hmm <affirmative> I’m guessing, right? Mm-hmm <affirmative> 15% more. So why did that person need an agent? Mm-hmm <affirmative> and that’s, that’s the problem, you know, when everybody , uh , mad about agents getting commission and um , what it costs to sell a house and I don’t blame ’em when you think about the , uh, that the average agent you’re working with is learning with you. They’re learning with your money, right? Mm-hmm <affirmative> and that person, if , if the average agent , if , if you know, more than the, you know, more than half of the agents have only been in the business last 10 years, they only know this trajectory, then yeah. They just write blindly mm-hmm <affirmative> like, it’s a opening bid. Mm-hmm you’re not gonna get it for the opening bid. You better just, you know, right . So why do we need those agents? You know, they’re not , they’re not doing the, the industry, any service and they’re not doing that .
Speaker 1:
What do you do about that? Well , and that’s the problem. And then they’re , and they’re , they’re in the, the majority, what it , what is the stat? Right? 90%. Is it 90% of agents? Don’t
Speaker 2:
Last 5 87 .
Speaker 1:
Yeah . So 87% of agents don’t last five years. So we go up into our regular neighborhoods. We go to our twos and three, $400,000 neighborhoods or plus, and there’s five offers, six offers. And two thirds of those offers are coming from less than five year agents that are just playing the game the way they think they’re supposed to play it. And the , the two seasoned ones are going, this isn’t, this isn’t the way it should be done . But these four are gonna push it up over. And so either you walk away and go this isn’t right for you guys, because we’re playing that they’re doing this wrong or you go crap. It’s not right. But if you wanna win it, we gotta go play, keep playing the game. And we all just keep who stop playing the game. When did the game stop being
Speaker 2:
Play? It’s tough because we’re, we’re speculating. Yeah. In a market that appreciates it two and 3%. It’s easy to look back and go, well, that sold for that five , 5,000 more a year later, that’s reasonable. Mm-hmm <affirmative>. But now we’re speculating as to when this will end. I’ve been doing this a long time. And every year I felt like, oh, this is the cliff. This is the one, you know? Um , and I come from basically, you know, I , I I’m born out of the crash of oh eight. So like my mindsets, like my grandparents that were like, oh , and I was talking to that , that lady, I was listening how us with yesterday and she’s in her seventies. And she’s like, yeah, my, my mom, you know, was like, you better save that. You never know what’s gonna happen. Cuz she came as a little girl from the depression. Mm-hmm <affirmative> so like from my mindset, I , I , I still have that fear that it’s gonna happen except this time I’m I’m getting to where I’m not saying that the market’s never gonna react. I just don’t see any numbers that show that this is coming down with one caveat. The one caveat is FOMO, fear of missing out mm-hmm <affirmative> . So right now there’s a lot of people that are afraid that they’re not gonna be able to get a house and that they’re gonna miss out on this opportunity. Right. Mm-hmm <affirmative> that it’s , it’s only gonna get worse. So for them they’re speculating that the market’s gonna continue to go up. There is a lot of people, 77% . I think I saw the other day of people think that the market’s gonna is a bubble
Speaker 1:
Mm-hmm <affirmative>
Speaker 2:
Okay. So , um, there’s still enough people out there speculating that we’re still seeing multiple offers at most price points. Mm-hmm <affirmative> um, so it , it just depends on what side of the corn you’re on whether or not, if you’re, you know, if you think it’s going up, you should be in this market right now. Mm-hmm <affirmative> in fact, we were talking a year and a half ago or year and seven months ago. And the conversation was what are these people doing? Spending 20,000 over? Well, how smart are they right now? Mm-hmm <affirmative>
Speaker 1:
Oh yeah. Right,
Speaker 2:
Right. How smart are they right now? And when you look at the only person that gets hurt in real estate is the one that sells it the wrong time. It really doesn’t matter if you buy it the wrong time. It matters if you sell it the wrong time. Mm-hmm <affirmative> right . So these , um, so getting into the market again, I got into the market on my first house and I was 23 years old, 2006 , August of 2006. So two years later, the market crashes mm-hmm <affirmative> and I’m upside down 20 or 30,000 mm-hmm <affirmative> now I stay there for 12 years. That was not my game plan. Of course not very much has ever gone to plan, you know, so that didn’t go to plan. And , um, 12 years later I saw that house and that was a lot of money and uh , on don’t know, seven it’s , 2017 when I had like $130,000 in equity to , to move towards my next house. Right? I mean, hell people made that in two years now. It doesn’t seem like much, but boy, I felt I was 130 ahead and I was way ahead of most of my peers that either didn’t buy a house, let their house go to foreclosure, dumped it when it was low, buy , low, sell high, you know, they , um, they did that at the wrong time. So they sold it the wrong time. I had hard times when I went through that crash, but on the other end, I came out with equity and allowed me to be in a position that I’m in now. So when I look back and I tell somebody when’s the best time to get into real estate, you know, to buy your first property. It’s really now,
Speaker 1:
Well, it’s always now,
Speaker 2:
But if you ask me, when’s a good time to sell <affirmative> I guess , I guess now is a great time to , if you have a place to land, if you have a game plan for
Speaker 1:
It. Yeah. I mean , and I , I , that was my talking. I said that last time I think we did this where it was, Hey, I’m scared about like these rising I’m , you know, I’m gonna wait for a crash. Like that’s what we were talking about. Last time I was telling people, you don’t wait for a crash for , and you don’t wait. Like if you , if it’s time to move, it’s time to move. Like if it’s, if it’s better for your life to become a homeowner or to get a different type of house, to better your world, this is the time. And then the trick is to have a good agent who goes, Hey, everyone’s playing the game this way. And there’s a lot of failure and a lot of frustration and that game, let’s go play the game, this this way. And you know, in Europe, you , you and your team are Kings of that, of going, Hey, the , we don’t just wait for the sign to hit the yard and then get in line with everybody and then go throw multiple offers and, and have to Jack up our price with , you know , Jack up our offers. We go and get speed , work off market a lot. Or we go, we go target the house. And so that’s a whole different podcast, a whole different episode of like, you know, if, if everyone’s playing the game one way and you’re playing the game the same way you are failing your clients because you’re just , and , and you’re wasting your time. Like I don’t, I , I value my time too much to go out and see these, you know, house after house, after house, right ? Offer after offer , after offer, lose, lose, lose, you know, I’m either gonna to go win it or we’re not gonna go fight that fight, or I’m gonna go do it a different way. That’s gonna be less stressful to my clients. But the point is buy sell is it’s time to buy yet . It’s time to buy. Um , if it’s , if it’s the right time to buy the , the crash thing that I , that I’m talking about, it’s not gonna be a crash. I , I , and I don’t think it’s gonna be an explosion. Like, you know, okay, we went up 20% , you know, over two years and , or , you know, per year for two years, and now we’re gonna crash 20. Like, I don’t think that’s gonna happen. But I do think as these rates go up and they’re going up faster than expected, the probably continue that cuz they , until inflation really starts to reverse. They’re gonna keep jacking ’em up. And I was just talking to someone today who said, the last time we went through this, these rates went up. These, you know, mortgage rates went up to 10% 11 just to try . They had to keep turning the dial until it worked. And our market is not responding. Our buyers are not responding to the 5%. It’s gonna take six or , or seven or eight or whenever. But when there’s a , there is a moment where that interest rate and that crazy inflated price for that same entry level house that you know, started this whole thing in COVID was 1 75 and is now 2 75. And now 2 75 at 3% rates is way different than 2 75 at 7% rates. There is a moment where then people that first time home buyer goes, I can’t get into that house and that home and it , but it’s still that house hasn’t changed. That house is still a 1980s, cheap built , you know, cookie cutter. No one really, really loves the house. It is an entry level house. It’s my first home. And so at some point, someone bought that at 2 75 and they’re gonna stick a sign , the yard and it’s gonna sit there and then we’re gonna have the same podcast where that we had this summer, where it’s like, it’s leading the shot. And in the summer it was , you gotta lead forward because we’re screwing people up by being behind in our pricing, the , the smart listing agents. And I know you’ll be on the fronting edge of that is gonna lead the other direction and go, we can’t put our sign in the yard and expect 10 offers at 10 . The market is telling us things are sitting. Now we gotta go at 2 55 or whatever. And that guy’s like, wait a minute. I bought it 2 75, like , sorry, that’s where you are. And if you bought it in the last couple of years, you’re gonna maybe take a little bit, you know?
Speaker 2:
Yeah. So would it be such a bad thing if you saw 20% appreciation in a year and it dips the next year 2%?
Speaker 1:
N not if you had it during the whole, if you had it for the full rise, right ?
Speaker 2:
Yeah . So if it dips for two years and it pulls back out in a couple years after that you
Speaker 1:
Met at 18, which is a huge win in this market, right? Yeah.
Speaker 2:
The person that bought at the wrong time, let’s say, yeah . As long as they don’t sell it in that little, they don’t panic. So right . And they don’t go, well, I owe more on my house than it’s worth the bank can just have it back mm-hmm <affirmative> , which was a very common thing to say. Mm-hmm <affirmative> um , now keep in mind in 2006, you know, when I bought, you bought with an 80, 20 loan, you had no money down mm-hmm <affirmative> and it was really easy to get upside down.
Speaker 1:
Yeah , I did it right.
Speaker 2:
I did too. Yep . Now the average person made $56,000 in equity last year. So I think what will happen is those sellers will, they’re not losing per se
Speaker 1:
If they had it for a
Speaker 2:
Couple years , there’s a fear of loss. But if they’ve been there for a little bit, they’re okay , fine . There’s a segment of the market. That’s in a they’re
Speaker 1:
They’re mad . They’re disappointed.
Speaker 2:
<laugh> there’s a segment of the market right now. That’s in an uncertain position. Mm-hmm <affirmative> but I would say that six months ago, anybody buying that day was an , an uncertain position. And six months before that it’s always been uncertain. Mm-hmm <affirmative> um , I’ve done this a long time and every year, every month it has always been uncertain. Mm-hmm <affirmative> so as long as you’re buying something, that’s gonna meet your needs for four , eight years.
Speaker 1:
And that’s the key, the , the timeline
Speaker 2:
Where you can time that transition mm-hmm <affirmative> and then you have to ask yourself, am I ever really selling my property? Is there ever really a time where I’m not gonna own a piece of real estate, right? Cause you’re always trading in a market mm-hmm <affirmative>. So if you’d bought two years ago before, COVID, you’d be in a little bit better trading position now , cuz you’d have more equity down mm-hmm <affirmative> um, but you’re still trading in the same market. You’re just moving that equity over. So right now you buy and you put 5% down on your property. You’ve got a 5% equity stake in your property. If it doesn’t grow at all and you just paid it down a little bit. Mm-hmm <affirmative> , let’s just say it stays at 5%. In two years, you have a baby on the way you gotta raise you go, you know what? I really want that other house. It , it’s not a huge deal to move that equity. The issue comes to whether or not you can stomach the equity that you have in a two and a half percent entry straight . And now three years from now, you’re weighing moving and you’re going, eh , it’s 7%. Mm-hmm
Speaker 1:
<affirmative> I can’t get as much as I could before
Speaker 2:
Now with that being said , um, when I refind a , uh , into a 15 year note , um, four years ago and we were at three and a half and I wanna say we got, we could have refinanced a at 2%. So, and that was on a two 20, I , I , I had a note of two 20 on that property. It was a $75 difference for me to do the refi. It wasn’t worth it. Mm-hmm <affirmative> there was a big race for people to go grab that lower rate. Mm . And it only changed their payment and you know, 75, a hundred bucks mm-hmm <affirmative> and I’m like, well, divide that a , you know, divide that into the closing cost of $4,000. You’re
Speaker 1:
Gonna actually do the math .
Speaker 2:
Yeah. I don’t , I’m not that smart. <laugh> , you know , 53 months just to break even mm-hmm <affirmative>, you know, so four and a half years , you guys wanna
Speaker 1:
Feel like they got the best deal
Speaker 2:
Just to break even well , how I’ve had clients that refi and then three months later decide to sell their house. Wow . Stupid. Do I ? I don’t normally be in four years, to me, the gamble wasn’t worth it. You can take it out, stretch it over 15 years, 30 years for somebody and go , oh , you save this much money. I’d rather be, you know, in a I’d rather in that , at that time, it wasn’t worth it to me. Mm-hmm <affirmative> but um, in short , the market doesn’t have any indicators because this market is still driven by two things demand and then the cost to , to build new homes. Mm-hmm <affirmative> so a , a two by four is still eight bucks. Mm-hmm <affirmative> , you know , a sheet of plywood, still 50 bucks. Mm-hmm <affirmative> , you know, $55 when it was 17 before , um, I bought some PVC pipe the other day that used to be like seven bucks . It’s $18 for a piece of PV pipe. The fittings now are $3 a piece when they were 75 cents. So in order for houses to actually lose value and , and then not cut , come back new. Construction’s gonna have to come down and cost. I don’t see that happening. Mm-hmm <affirmative> the markets kind of dug their heels in those , those prices are where they are now. We’ve also had wage inflation. I mean, just dry . Not saying that mm-hmm , <affirmative> not saying that everybody’s had a raise, but that bottom end has had a huge raise in the last few years. I
Speaker 1:
Think that necessity, I mean,
Speaker 2:
Gas stations are paying 18, $19 an hour, you know, for somebody,
Speaker 1:
But there’s a thing there’s a thing to I’m interrupt you. But like, if we don’t sag down, if we don’t come back down in values, like yes, then it, it makes that it makes, like you said, the wage increases from minimum. All , you know, all the way up has to go up. Other wise , we have houses that are then , I mean , then again, that’s when you’re gonna have that problem. Again, people can’t afford that house at that level. And so it’s gotta slide down
Speaker 2:
And , and there’s been times like that before we call ’em the good old days. Yeah. You know , you go back , um , to pre world war II , you had the rich big, you go down Northeast and you see all those two and a half to were houses . Well , upstairs was , uh , a proper , a , uh , you know, a one bedroom apartment. They would let mm-hmm <affirmative> . So you’d show up into town, walk the streets and then say room for lead mm-hmm <affirmative> people were, were renting out rooms in their mansions, you know , mm-hmm <affirmative> um, there’s a lot of apartment blocks back in those, if you go through those old neighborhoods, you’ll see big house, big house, apartment mm-hmm <affirmative> and a apartments were normal for a , I mean, look at all New York people still live in apartments. There mm-hmm <affirmative> the American dream is to have that plot of land, which is totally attainable. Um, it might not be attainable today for everyone mm-hmm <affirmative> but that markets do. I always say that markets move like a slinky dog. Mm-hmm <affirmative> this other area pops up. And then the, as end catches up <affirmative> and that’s a strain. Usually it’s on the lower, you know, on the lower class. When , you know, in terms of finances, they’re the ones that are gonna take that, that hit more than somebody that’s got more choices. I mean, people say money doesn’t matter, but money gives you a lot of options. And those people that don’t have the money, they’re the ones that are always gonna be in that. And that’s every market. I don’t know . There’s no way of changing that. Mm-hmm <affirmative> um , a couple solutions apartments. Not, they’re not cheap either. There’s a squeeze there. No , when I was a kid, we
Speaker 1:
Move , they’re easier to build ’em faster.
Speaker 2:
Yes, absolutely . More inventory out . It’s a solution. Mm-hmm , <affirmative> , there’s a lot of people that really don’t want to own homes. It’s a lot of work. Mm-hmm <affirmative> um , when I was a kid, we moved to Plattsburgh, interest rates were , uh , like 19% and , um, or whatever it was, it was 1984 , um , 17, 18%, something like that. And U S D a had a deal. My parents were, you know, had me when they were like 18 and 19. So there they are like 21 and 22, trying to just scrape, you know, garage sales and making clothes, you know , um , outta my dad’s work clothes, you know, we moved out to Plattsburgh, which wasn’t ideal. My , my mom would drive to Liberty every day , which was a, I don’t know, 35 minute drive-in, it’s not an ideal drive-in but we had a house we Adland. And those are the types of choices that unfortunately people are gonna be in the idea that you go, Hey, I want to be in that ideal location for this price. That’s just not really an option anymore, unless you’re willing to do work. And a lot of people aren’t willing to do work. They also want the granite . They want the perfect. So I don’t buy any houses that are move in . Ready. I’m I’m an equity, you know, queen mm-hmm <affirmative> I love having equity when I buy something. So I will get , I , I don’t look for houses. I have to rebuild, but I look for paint and carpet flips. And I don’t mind moving into a house with the car . My first house had pink carpet mm-hmm <affirmative> and I saved $30,000 because some guy had bad taste and wallpaper and carpet. And , uh, it was totally a , you know, it was a fine house. Mm-hmm it was a lake house . And you air , you know , you air , you Airbnbed this lake house . You would’ve thought it was great, but it was ugly for where I lived. Mm-hmm <affirmative> and , um , you know, but you know, it saved me. I made a lot of money because of it. So there’s ways around it in this market. It’s just, is there a way to win the house of your dreams without getting into a bidding war and competing? There’s only so many great houses, even in a , in , in other markets, great houses, people, you know , there’s multiple offers on great houses. So right now you really have to like, go, well, you have a couple options, you buy a house and you pay for it. And then you do it the hard way you find one off market. Like we do mm-hmm <affirmative> and in your patient, mm-hmm, <affirmative> one of the hardest things I have. As soon as somebody has a preapproval, they have permission to buy. I I’m holding them back on . Just let me get letters out the door. Mm-hmm <affirmative> but it’s hard to hold them back there. They’re anxious. There’s a lot of anxiety. Am I gonna miss out? Mm-hmm <affirmative> fear of missing out. It’s pushing them. It’s like , it’s gonna be okay. Cuz even if the rates change , I’m gonna get you a better buy. Right ? You can expand your proximity and trade payment for drive time. Mm-hmm <affirmative> there’s you , you wanna go look in Lawson? Mm-hmm <affirmative> it’s a fine neighborhood. Mm-hmm <affirmative> it’s an extra 20 minute drive to work, but right . You can buy a house on land, you know, with big yard. Mm-hmm <affirmative> for 200,000. That would be 350 here. Right ? Right , right. So you can trade 20 minutes of , of your life a day. Mm-hmm <affirmative> for, I don’t know, 200 bucks a month in payment or you can , um , I forget the last one.
Speaker 1:
<laugh> I like how there’s
Speaker 2:
A fifth one.
Speaker 1:
We , we , we had the challenge today of like, we’re not gonna do an hour. We’re gonna do 20 minutes. We’re gonna be locked in when the bell goes off, closing thoughts, bell went off. I showed everybody the fifth one . Got it. And Justin decided it’s story time. We’re gonna talk. We’re gonna , you’re gonna sit on granddad’s leg and we’re gonna tell full story at 20, at past due
Speaker 2:
The fifth one is you buy something that you know is not a forever home, but it puts you into the market. Okay . So a lot of, you
Speaker 1:
Know, take something it’s not ideal. I ,
Speaker 2:
I have clients that waited for the perfect house. I , I can tell you when we had one last year where the builder built a great example, the builder built the wrong house. I mean, it’s not what they , what they asked for. And the builder was really trying to push them out of the contract to keep the, or to give them the earn . He was giving the earnest money back. He was trying to push ’em out of the contract. We can keep the house cuz he knew that the cost had went up so much. He could resell the house for $50,000 more mm-hmm <affirmative>. So we had to tell them, unfortunately, that if you walk away from this house, the builder wins. If you stay there two years, you beat the capital gains. And we resell this house and reenter the market you’re up 50,000 plus whatever equity happens. Mm-hmm <affirmative> now the house. There’s nothing wrong with the house. It’s just not the house they wanted. Right. Patio. Wasn’t the way they wanted the elevation. Wasn’t the way they wanted the master closet that they paid for. They didn’t get the done the way they wanted mm-hmm <affirmative> it wasn’t right. Um , now somebody else would walk into that custom home and it’s just a home there’s custom homes are only custom homes for the person that had a custom built mm-hmm <affirmative> after that, it’s just a home <affirmative> . So are going to grudgingly live in a brand new house for two years so that they, they win and entering the market. Like we said, as long, it all depends on when you sell, when you cash out, as long as you’re trading in the market , you’re fine. So getting into the market and writing it no matter where it goes, as long as you’re able to trade for something else, it’s fine. I have clients that set out in the middle of COVID and they dumped their house at the beginning, which we would’ve said was good advice who would’ve thought the market was gonna do what it did. Um, they decided to dump. They’re gonna live in an apartment, wait for the market to crash. Look , look where they’re at right now, trying to reenter the market a hundred thousand dollars behind and higher interest rate. Um, so I would just say, if you want to own a house, you know, those are your five options mm-hmm <affirmative> and I would , I would recommend getting something that you could afford and it’s temporary knowing you’re gonna trade it at a later date. Mm-hmm <affirmative> but setting out and trying to put your money in the coffee can to raise enough money to someday beat the market. I don’t see how it’s . I don’t think I don’t see how
Speaker 1:
It’s possible. And that’s the point and of , of this is I’ll try to put a bull , a bow on it. Like what , what’s the point of having the podcast? What , what are we tell ? Who are we talking to? Realtors or , or buyers? Uh , or sellers? Both .
Speaker 2:
I think Matt’s listen on the other side of the wall.
Speaker 1:
Yeah. Ours listening. But uh <laugh> um, but uh, the end result is, again, like Justin’s saying, if you need to buy a house, you wanna buy a house, you need to sell a house. You , you wanna sell a house. You’re , you’re a realtor. You’ve got clients that need to want to buy it . There’s never, there’s never a time, a good time to just sit out and wait. Like that’s that doesn’t work for. So all kinds of reasons. Right . But I do think my idea that, Hey, I , so I , I looked at this house, I’m not gonna tell a story, but you know , I look at a house in an area that people in Kansas city would know. And I went, you would look at that and go, that is no more than a $200,000 house all day long. And it went on the market last week for two 70 and I’m like, and it will probably go for two 90. Right. And I’m like, we are in a tricky spot right now. That’s
Speaker 2:
All relative to how you perceive value. But what , what is value?
Speaker 1:
I’m putting a bow on it. Mabo . Yeah. Sorry. So the point is to whether you’re a realtor or you’re in the market, I think is, is now more , it’s always right. It’s always better to be, to do things for the right reasons, the right way. You know, doesn’t matter what the market’s saying, what your friends are saying. And if you’ve got a good agent, if you’re a good agent, if you’re rep representing your people, well, if you’re not just like going 60 over on a house that you know, shouldn’t be doing that just cuz you think you’re supposed to win as opposed to doing a little extra work and going and finding the house that’s off market that you don’t have to do that and take that back on. You know? But I , I like I had a , you know , one of our agents was talking about this 20 over offer the other day or to me and asking me my opinion. And I said, if, you know, if the cash isn’t, if the is spending the cash over, over value , isn’t gonna hurt them. If, if, if, if, if all the contingencies you’re waiving, aren’t gonna hurt them. And if they are confident that their life is stable to where this, this will be a house, they can stay in for three to five years. Okay. Like that . But that should always be a metric. You know, like you show , you should never be getting into a house and feel like your life’s kind of unstable and you might have to sell real fast. That’s never a smart move, but now more than ever, I, if I was buying, if I was a buyer in this market and I bought a house playing these and these jumping values, and you think there’s a possibility you might have to get out in a year cause of your job or a lifestyle change or whatever you could take, you could take that hit. Because like Justin said earlier, in the , in the episode, the person who’s had the house through the 20%, 30% increase in value. If they have to sell it a little bit less than a year than they would’ve a year ago, whatever, that they’re way up, who cares, but someone who gets into the house right now, if you gotta get out of that house, I think there’s a very real possibility. We will have a couple of year period of at least a level off, if not, maybe a sag down neighborhood dependent, how dependent, you know, whatever. And you could get stuck taking a little ticket in the shorts on that in the short term .
Speaker 2:
So I would clarify my comments to say, I was talking about the market, but within the market, I’m still picky on where I would buy a property and what I would buy mm-hmm <affirmative> I’m you still have to be okay with the worst possible outcome, Dennis curtain mm-hmm <affirmative> . And one of the smartest things I heard him say was that, you know, he makes a decision. He has to look at it and go, what’s the worst possible thing that can happen. And can I live with that? Mm-hmm <affirmative> and then if he can live with it, he takes the risk mm-hmm <affirmative>. So if you’re looking at, I don’t know the certainty in a year, it’s not the right time to buy, right? When we look at, is it the right time to buy and get into real estate? It all depends on whether or not you are gonna hold real estate or you’re gonna day trade mm-hmm . This is not for day trading right now. Mm-hmm mm-hmm and um, you have to have an exit strategy and in any market, especially if we’re looking at where’s the market gonna be in two years, you wanna make sure you’re in a market that is still attractive. When there’s lots of choices, you gotta remember a lot of people right now aren’t used to lots of choices. Mm . Um, I have a lot of experience when there was a lot of choices and I go, well, that neighborhood, you couldn’t move it. When that neighborhood had a house for sale mm-hmm <affirmative>. If they were near the same price point, that one had to be competitive to even get an offer. Because for new near the same payment, you could go over here. Right? And we don’t see that right now. Most agents don’t have experience with that. They have experience with low demand or high demand, low supply, and it’s gonna go to where it’s even balanced. And they’re not gonna understand that mm-hmm <affirmative> . So you want somebody that’s able to look at a property, knowing the history, the historical context of where this market, if it went that way, whether that house would might set in , in competition. I don’t want to sell anybody a house that they’re gonna call me in three years. And I go wish you didn’t buy that. Mm-hmm <affirmative>, that’s an uncomfortable situation actually from a financial situa or , you know, financial position. I’m cutting my arm off to sell somebody a house that will be hard for me to sell later or, or even impossible. Right. Right . Uh , I , I make money selling houses, not letting ’em go back to banks. Mm-hmm <affirmative> so I don’t wanna put anybody in that position because I care about them. Mm-hmm <affirmative> and it doesn’t make sense financially, but you wanna make sure that you’re working with somebody that understands , um, that, and that looks at a property. You’d be surprised how many people I have that wanna look at a house and I go, there’s no insulation in these wall. I know you’re trying to stay within your payment. Mm-hmm <affirmative> but wait until you see your heat bill mm-hmm <affirmative> like, I’ve got a 3,500 square foot house and my heat never breaks 200. And I know I have an apartment that, you know, until I got it back and got it , got it fixed. That was over $200 a month just for the right. Mm-hmm <affirmative> that’s the difference between how they were building apartments in 1973 and how they built a good house in my neighborhood in 8, 19 87. Right? Mm-hmm <affirmative> but you have to have somebody that goes, oh, this is cute. Versus somebody you wanna have somebody that’s like, yeah, it’s cute. They put lipstick on a pig and you’re gonna be doing this, this and this. Cuz you gotta be able to have the reserves for the , the maintenance and afford the utilities. Right? So you wanna make sure you have something that’s safe for you in the , in the short term , if you can afford your Dreamhouse and you plan on being there 20 years, it really doesn’t matter what the market does.
Speaker 1:
No, no. And if you’re happy, yeah. If you’re happy with your payment and you love the house who cares what the market’s doing, you’re not, you’re not there for, like you said, you should never get into real estate as a day trader. If it’s your primary home, if that’s not , if you’re an investor and you think you can work that market and you’ve gotta game play the game and you might take it in the short, but if you’re buying your primary house, you’re buying it for cuz you’re gonna love it. You think you’re gonna be there for a long time. And as long as it’s serving your needs and your payment work for you, it’s great.
Speaker 2:
There’s one quick point.
Speaker 1:
There’s no quick point
Speaker 2:
77% of people right now think that the market’s in a bubble. Right. But what is a bubble? It’s an oversupply. Yeah. So we don’t have an oversupply of housing right now.
Speaker 1:
No . Well we have an , we have an undersupply of yards and signs and yards. We have a lot of houses.
Speaker 2:
They’re not setting vacant. I know I’m not , I’m not driving down the street looking for
Speaker 1:
Its a lot of people want to sell. They’re just not selling. Cause they don’t have great agents getting in front of ’em telling ’em that they should be and how they can maximize the market.
Speaker 2:
There’s a lot of people in places that want to be in different places and they can’t get there. So there’s still a lot of demand, low supply. Can the market crash? Yes. Is it gonna come from inventory and be a bubble? No. Um , and I’m not smart enough to know the rest of the market, but let’s say that the whole economy crashes does it really matter what you’re holding at that point? Oh,
Speaker 1:
If it really all goes to hell, it’s all
Speaker 2:
Doesnt matter and we’re gonna get into that conversation again. The only, the only houses that foreclosed in the last crash had mortgages on ’em right . So if we’re gonna get into the conversation of having, you know, avoiding risk, then you should just save money and buy houses , cash, but that’s not feasible either. Um , so you have to play the game. You have to get in there and get dirty and then be okay with the worst possible outcome. Me, it was working as a cuz I got it . I got my house when I was an appraiser, just got my license, the market crashes this whole like , um , if I just make it there, my , I get my license in the mail. I’m gonna be an appraiser. The mortgage is only five appraisals a month, you know, cuz like $1,800 a month. And I was 23 with the hell was I thinking? Right? But then I bounced and I, I, you know, was working at bars at , you know , late at night selling alarms during the day I had like four and five jobs at a time to survive. Right. Mm-hmm <affirmative> it was the worst possible outcome and I did it. So
Speaker 1:
You have to away my own moment. You go
Speaker 2:
Ahead. No, I’m just saying you have to well you’re cuz you did it.
Speaker 1:
No, I’m just listening to your stories.
Speaker 2:
<laugh> just saying though that you , you have to be okay with that worst possible outcome . Yeah. And I didn’t sell in the bad time. Right. I had to do a lot of stuff I didn’t want to do. Right. It’s not it wasn’t roses.
Speaker 1:
Yeah . And in the bad time I , I wasn’t able to hold mine. I , I had to let it go cuz I , I bought way over my skis and I was just, I thought I was doing an investment deal.
Speaker 2:
Me too. I thought two years, I’m gonna flip this thing and be way ahead.
Speaker 1:
Yes . So I , but I was at a way higher price point. Now I was in sales . I know it’s
Speaker 2:
We , we both know what it’s like to lose at hop .
Speaker 1:
Yeah. The , the , the long story short of our 20 minute segment, that’s now 40 minutes. Um, or whatever it is . Um, I , the end result of all of, of all of our episodes are always gonna be, you know, be smart, be educated, make wise choices for you. And whether it’s you, if you’re a realtor for you and your clients, or if you’re the , if you’re the clients you’re buying make , make a good decision for you and your
Speaker 2:
Family, that’s a tagline. You’re gonna have to shorten it up.
Speaker 1:
Yeah, no , it’s not a tag, but it’s like, I mean , like Justin said, we can’t, you can’t predict anything, but you make prudent choices. That’s best for you. And I think for, if we’re talking to the , to the realtors, cause I feel like that’s our , that’s a huge, that’s our market. Um, just, you just be better for your clients. I mean, know these tricks, know these angles, know these ideas, know how , about how to go off,
Speaker 2:
Watch the media. The media’s not telling the full story. Not , not that I’m anti-media but if read the article, don’t read the headline. And if you get into the articles, they just state that this can’t go on forever. I’ve been reading ’em all week, right ? I’m like, oh, let’s see a fed. Some fed member says this and I click on it. Uh , well we know we can’t go on forever. Well, of course we know we can’t have 18% depreciation forever. That doesn’t mean what the headline says, which the fed says the market’s gonna crash .
Speaker 1:
I was talking to an agent today, again, the same thing . And I said, I , you know, Are the buyer, the clients of these markets, we can’t expect anything, but that you’re watching headlines and listening to your friend as a water cooler. Yeah . And you don’t understand the market and you get wound up and you have anxiety and you , and , and, and you , you , you have high stress. It’s I don’t have tolerance for the agents who are supposed to know better. Our job is to be in control of the situation, educate our clients and understand these market variables and understand how to, how to explain these to our clients so that they make wise and good choices. And it’s not out of fear and they’re not making that offer out of like FOMO or I just, you know, I think so many, so many agents are just letting, they just let their clients dictate the proceedings and the clients say I gotta have, and they go, okay, well, if you gotta have, we gotta write this offer as opposed to, why do you have to have, and maybe it’s not this house, it’s that house over there. We don’t have to go 60 grand over and wave all the contingencies. So I think it’s just, again, you know, realtors be better at your jobs. Take really good care of your clients and be the advocate that they expect you to be and take that stress and anxiety off of them. Because they’re just listening to their friends who had some horrific experience or they’re watching, they see a headline on Fox news and they’re like, oh, it’s the sky’s falling, but they don’t understand any of it. And they didn’t actually read the article or watch the , the whole thing. Um, it’s our job to be above and be better than that. And if you’re, if you’re thinking about buy and selling and it’s the right time to buy, sell, then go buy , then buy or sell, but work with someone that’s that knows what they’re doing and has the experience to actually handle the right handle it right for you cuz you you’re not supposed to know all the ins and outs.
Speaker 2:
It’s a sad thing. Our industry is really like Amway for houses. You know, we have agents come in and we go, Hey, sell to your friends and family. Mm-hmm <affirmative> call, call your people, call people, call your people. Mm-hmm <affirmative> there’s very little training. Oh yeah. And I think most, most , um, I don’t know , maybe the , the public doesn’t , we don’t have the best image in the public’s eye. You know, we’re like right. One step above insurance salesman , you know, I think we’re right underneath coroner mm-hmm <affirmative> but <laugh> but um, it’s, it’s a disservice we’ve done to ourselves by turning the industry into an Amway product. Or we just say, you can pass this test, which believe me, if you pass the test, it does not tell you how to do the job. No , but now you have that license, go call your mom and get her to sell her house. And that’s what most , uh , real estate brokerages models run off of. And there’s not a whole lot of education on finance and on they’re they’re they’re not, I mean, it’s unfortunate our industry that most people are selling houses and talking about fiduciary obligations yet have very little understanding of finances mm-hmm <affirmative> and it’s unfair for the client. You know, I’m looking at hiring an SEO person for our company. So I’m studying the hell out of SEO that way . I know what questions to ask when I, right, right. And they average person doesn’t know that much about real estate and they think they do cuz they’ve, they’ve had a few experiences and they’ve, they’ve done it, but it’s been, I mean, try to do a job you did 10 years ago and sit down and remember how you even log into your computer. It’s you don’t remember what you used to do. They don’t either. They have a feeling they do. Um, and now they’re interviewing somebody mm-hmm <affirmative> now whoever they’re setting down with knows more about real estate than they do on that day, but that person doesn’t necessarily know anything about anything. Mm-hmm <affirmative> you know what I mean? Mm-hmm <affirmative> and that’s a disservice that our industry does by not spending enough time on those tools to make you knowledgeable as a resource versus how to knock a door. Here’s a script here’s, here’s how to talk your grandma into making this move. Right . And that’s why we do these types of things to educate not only, you know, not only , um, the consumer who may be listening to this, but more likely agents that are gonna be listening
Speaker 1:
And shameless plug, you know, we’re with Remax and not every Remax office is the same, but you know what, Remax as a whole, it has a reputation for reason. Uh, you know, and , and , and so when you pick a , a company that’s, that’s tried true, been around established has great track. Record has great numbers, has great production. There’s a reason that happens because they’re, they’re , they’re hiring the professionals, they’re doing trainings, they’re doing conferences with extended trainings. You know, if you go to your, your, your neighbor, your cousin, your aunt works at mom , Paul Realty down the street, you can almost guarantee they are not getting trained. They are not getting the experience. They are not having the , the , the power of numbers that ,
Speaker 2:
Or especially the brokerages now that are moving into like virtual spaces, right . To where you never
Speaker 1:
The eye , the eye realtors or
Speaker 2:
Whatever. Yeah. You never even see another professional. No , but there you are in your living room, you sell four houses a year, but you have your pulse on the market. Mm-hmm <affirmative> I mean, you know, and on our team, you know, we’ll , we’ll touch a hundred houses this year , uh , you know, over a hundred contracts this year. Mm-hmm <affirmative> the average agent sells for .
Speaker 1:
Right.
Speaker 2:
Right. So it’s not that I am , uh , you know, that I know more than somebody else. It’s just that I’m currently touching that much per you’re a broker of an office touching how many files a month.
Speaker 1:
Yeah , not enough, but yeah ,
Speaker 2:
<laugh> ,
Speaker 1:
There’s more than
Speaker 2:
An eight there’s frequency of data and it’s hard to be an expert on something when you only touch, you know, three things in the spring and one thing in the fall mm-hmm <affirmative> and you go, oh , I know what’s going on. Trust me, trust me. Trust me. It’s a disservice to the , to the client, disservice us to the industry to claim, to be a professional or an expert, and yet not have enough frequency. Right. And , and even if you’re not touching that many files being in an atmosphere where you’re setting in , in physical meetings and you are able to walk the halls. I mean, I can’t tell you how many conversations I have a day. Yeah . Of look at this appraisal, that’s gone this way or, oh , won this one or I lost this one or
Speaker 1:
A major office.
Speaker 2:
And yeah . So not only am I touching physically responsible for a hundred, 120 , you know , uh , sales this year, not to mention contracts and lost contracts, right.
Speaker 1:
You’re learning from the experience of all this high
Speaker 2:
Look at all the osmosis I pick up here mm-hmm <affirmative> . If I was hiring an agent, those would be things I would look at. Are they physical office? What’s their day job. Mm-hmm, <affirmative>, you’d be surprised how often day job is not real estate agent.
Speaker 1:
That’s
Speaker 2:
Terrible . Yeah . And they’re , you know, now that we’re getting to these huge, you know, or the average price points, you know , pushing 400,000 in a lot of these markets being off, let me grab my calculator here. But , um ,
Speaker 1:
No, no, I’m not a calculator. Average Remax agent 16 track X is a year, by the way. Not for,
Speaker 2:
As an industry.
Speaker 1:
Yes . An
Speaker 2:
Industry is only going out to Remax.
Speaker 1:
No, it’s not. But , uh , but uh , if you’re not with Remax, you should get into it. And if you ,
Speaker 2:
But if your agents off by 3%, that’s $12,000 in your pocket. And you know, you might find some guy that’ll do it for a discount, but if he’s off by $3,000, where are you at? You know?
Speaker 1:
Right. No, no.
Speaker 2:
So
Speaker 1:
Bare bones, bare bones, get you bare bones, bare bones experience , bare bones cost gets you bare bones experience, bare bones, value, bare bones results.
Speaker 2:
There’s a , somebody said once, you know, free with headaches or I don’t know fair without.
Speaker 1:
Right. Right.
Speaker 2:
So, you know, we charge the same rate as the, you know, the meat of the market , you know , um , with more experience than most agents have. I don’t charge more for that. Right. Um, probably charge less, right ?
Speaker 1:
It’s the most, most important investment you have most valuable invest . You have, it’s worth, it’s worth you. It’s worth you in investing in quality, but make sure you’re investing in quality cuz in our industry you can pay the 3% or the 6% on listings or whatever. And be it mom , Paul Realty getting zero knowledge and experience or you can pay the same thing and have , and have quality. And then that that’s not necessarily agency to agency, that’s person to person. You gotta interview, you gotta know who you’re getting and what you’re getting. So anyway, well, Hmm . I don’t have the idea. How long was that? I’m sure. I’m sure. I’m sure it was , uh , all liquid or audio gold audio and , and liquid and video gold. Thanks for
Speaker 2:
That’s about 1,612 bars.
Speaker 1:
That’s for bars. There you go .
