Home Series 1 of 8

Adrian   00:02

Hello future millionaires and welcome back to the get rich slow podcast. I'm your host, Adrian Shermer, joined by my fellow co-hosts, Rob Delavan and Lance Johnson. How's it going today, gentlemen?

Rob Delavan   00:12

Good morning.

Lance Johnson   00:14

Good morning, everybody. Good to be here.

Adrian   00:16

Today marks the start of a new eight part series. We've just wrapped up our tax special and we're moving back into the real estate world, one of my favorites and we're going to be working our way through some of the characteristics of home buyers and sellers and really just kind of an in depth look at what's going on in the market right now. Dispel some myths out there and also set some realities. So, before we dive into that, though, Rob, I know you had a bit of a success story with me that we wanted to talk about.

Rob Delavan   00:47

Yeah, in the last few weeks, the market has been very competitive in the Portland metro area and Adrian, you were working with my Senior Agent Rachel, as with a mutual client and there was a situation where there was 29 offers and we were able to get the contract for our client, the number one out of 29 and we were not the highest price. It was a fun one and it was a huge win for the clients. So, they were super happy and I believe they close in the next week or so.

Adrian   01:26

Yeah, absolutely, that so far, that's my high watermark. If you hear that out there are definitely highly competitive environments like this and when there's a super desirable property and this was definitely one of those, it was deep within the metro area, it was perfect for a family. One of 29 offers, I was told when I call the selling agent that I was a one of only two lenders who called there's little stuff like that it's just that bit of extra effort and the knowledge that that makes a difference. I had a great conversation with them short off a flight back from a trip I took and I think that did a lot to move the ball in terms of neutral, professional respect.

Rob Delavan   02:07

We'll probably build out an episode and actually talk about this one start to finish. It's actually a fun case study. But yeah, one the successful offer out of 29. That's I don't know, Lance, have you ever heard of any more than that?

Lance Johnson   02:25

You know, I think I've seen some in the 20's but not 29.

Rob Delavan   02:29

I've never seen that many. I've seen it but I've never been part of a success story with this. So, anyway, upcoming events I wanted to share with our audience. So, we are looking at a few different things coming up. But the big one is we have a ROI and Delavan Realty, April 22, sip and mingle event and those we generally do every month and that is at our office in Lake Oswego and we're looking forward to continue to promote that we will put links in the show notes down below for that and of course, references to our website and such as well as we'll also have ROI-financial.com listed below and Delavan-realty.com below and Adrian's directors mortgage website also...

Lance Johnson   03:31

I want to comment on that sip and mingle is just where clients, you know, come across people that are interested, but they're fearful of meeting people, some people don't like that, right and sometimes, it's better to have a small event where you can bring a friend, just have some fun, talk about some upcoming events with the market, Russia, whatever and just kind of mingle at our legacy office and then learn to grows, are really kind of educational events and so look at those websites and we'll have more of those on there.

Rob Delavan   04:11

And we'll link to that in the show notes and those are a lot of fun. For today's episode, we're going to be discussing the characteristics of homebuyers based on stats received from the National Association of Realtors, basically summarizing through the year of 2021. The information provided supplies, understanding from the consumer level of the trends that are transpiring and again, this is a one of an eight part series.

Lance Johnson   04:45

So Rob, the question we have is based on these statistics from the NAR, they found that 60% of recent buyers were married couples, 19% were single females, 9% were single males and nine were unmarried couples. Did you find this to be the trend with your recent buyers during this timeframe?

Rob Delavan   05:08

I did, what's interesting is, of course, we don't have a scientific sample size, with our 70 some clients that we help buy or sell house this year. But the first thing that popped out on that was, the ladies are beaten the guys, basically double, women are buying houses and guys aren't at single guys aren't and then of course, there's the whole concept of couples, married couples, there's a higher level buying power, you get an economy of scale hugely from having two income earners and now, of course, you got kids and all those expenses and that sort of thing. But this has very much been the life change intersection events, the weddings, or newlyweds, the just had a child, did have some divorce situations where we're selling. But the whole just coupling, decoupling growing families, that entire sort of thing is a huge life change intersection and people basically create their habitat around them, which is their homes, based on those things. So, very unscientifically, but yes, the statistics are there and what we see every day shows that is a huge driver, any further thoughts on that Lance?

Lance Johnson   06:45

I think there's more statistics around females versus male, females will more likely, again, I don't have the statistics, but just kind of what I've seen, I'll have clients that are single females, whether it's through divorce, or just never married and they're more likely to adopt a child than a male would and again, I don't necessarily have the statistics other than what I've noticed within my client base and so when you're adopting a child you're gonna kind of nest as you want to have that home. What I have noticed is people, younger individuals are more likely to not necessarily get married right away, but they're economically they would buy a house together and one would buy and the other would rent, depending so they'll cohabitate unmarried couples. So, I do agree with that, that they're both cohabitate, more so than actually get married right away because economically, so it's kind of and we call those dual income earner type of situations and planning, right? We're always talking about what's the vacation rental, what's the house that we buy, that we make a rental, it's just a different environment, they're more likely to buy a rental than to buy a home.

Rob Delavan   08:16

Yeah, which is really interesting and that brings up some of the characteristics or highlights in this. Were the first time buyers made up 34% of all homebuyers and 2021 and that was an increase from the previous from 2020, which was 31%. So, it's trending up. We're seeing that a lot and like you're saying Lance, there's not the old standby of okay you get engaged, you get married, you save the order of operations, that's, I believe it's turning on its head a little bit. Another statistic, which we can chew on is the same typical first-time homebuyer was 33 years old this year, which is holding steady from last year, while like a repeat buyer. Average continued to climb to an all time high of 56 years old. So, people who are buying, so the other the not 34% that are first timers, it's over 20 years later. So, there's some concepts they're older folks in their 50's and 60's are still buying and selling homes and actually at a lot higher rates than the younger ones are. So, yes, there's the concept of the rich get richer, right? The longer you've been around and making money and saving and all of those sorts of things, the better you're prepared to buy or sell a house. I'm sure there's more insight that into that too Lance that you're seeing from, especially from the financial side, Adrian, any other thoughts on the percentages here?

Adrian   10:06

No, I think that mirrors what I see as well in talking with folks, I do find it interesting that the unmarried couples are making that charge there and I do talk to a lot of folks. You know this kind of segues into the next point I was gonna make, which is that 20% of homebuyers, the primary reason for purchasing a home is the desire to own a home of their own. For first time homebuyers specifically, this number jumps to 65% and we see a lot of these first time homebuyers in an unmarried couple, I really do, I think that people are starting to push that before the marriage and maybe it's because a wedding is so expensive, on average, now that buying a house is actually a more mild prospect in a lot of ways. But it's also an investment and I think that people are waking up to these ideas, I'm sure that our audience is also, within that group, so that you're going to pass that advice on to your kids not get married as soon as you can and just start popping out kids unnecessarily. But hey, why don't you get yourself financially secure first, because babies are kind of expensive and it's only going to get harder as you work your way down that traditional pathway in life. So, I like that trend, I think it's cool and I personally was halfway big through trying to do a, I was gonna do like a series, I was like, man, my wife joins all these women, empower groups and she's a business owner, I'm very proud of everything she's accomplished. Maybe there's a way I could reach out to women and help them, own houses at a higher rate and then I ran into statistics like this and I was like, shoot, actually to help the boys out, we're two fold behind but it's that mentality, it's that I think it's a great example that you use lands, it's the nesting idea, the planning, it's setting a course for the right future for yourself and it's very smart.

Rob Delavan   11:55

Yeah, the security is a big piece there.

Lance Johnson   11:58

Well and there's a lot behind those numbers, if they were to further break them out. So, you look at those single females, how many of them got the old home or at the sale of the home that from a divorce, they're more likely to own their own, have a child, the unmarried couples, you know, you'll see the, again, you're getting, I don't want to stereotype but who's driving the unmarried couples scenario? There's a lot behind the numbers, I think that are, make it so it's actually closer than you think and for whatever reason, they just felt that way...

Adrian   12:50

And there's some others, before we move on to the next questions is, there's a few other stats here I'd like to share with you guys. 11% of homebuyers purchased multi-generational homes, typically to take care of aging parents, or because of children over the age of 18 moving back for cost savings and then there's the whole breakdown. There's a racial breakdown of 82% of buyers were white, Caucasian, 7%, Hispanic, Latino, 6% Asian Pacific Islander, 6% were black African American and 2% identified as other and that's a very interesting study on percentage of homebuyers within the population versus the actual makeup of the population in different areas and there's some disparities there, that we can dive into on a completely different episode actually multiple episodes. 89% of recent homebuyers identified as heterosexual, 4% is gay or lesbian, 2% is bisexual, 1% prefer to self-described and 6% preferred not to answer. So, you can start looking at different things there also a whole another episode where we bring on some guests that are have higher qualifications to talk about a demographics than potentially we do and then there's some breakdowns of like veterans, active duty service members, all of that sort of thing. So, a lot to unpack here and we're barely scratching the surface again, this article through the National Association realtors, that is released every year of the year summary this is 2021 will be in our show notes.

Rob Delavan   14:47

So Adrian, in the initial stages of the process from lending to purchasing and you touched on it, the homebuyers primary reason for purchasing the home was desire to own of their own but for first time buyers that number jumped was 28%. For first time homebuyers that number jumps to 65%, the initial stages of the process from lending to purchasing, what's that look like for first timers versus the folks that have owned previously?

Adrian   15:20

Yeah, it's an interesting subject because especially from our perspective, right, we think of things on the financial side of things, we look at growth of wealth and all that sort of stuff. But there's a huge push of just it being your own property to have that pride and ownership and to have something that you can modify in any way that you please, for better or worse and to take on the liability of maintenance, which does sound like a bad thing, but you're paying for that when you rent, you know, obviously, they're gonna make money off of you unless they've really ham-fisted their rental property or you've got a very, very kind landlord, who's given you a break. So, transferring that risk to yourself, but then taking on the benefits of that risk by spreading that cost out over time is a way that people take ownership of their own future so yeah, it's a really interesting statistic and I find it fascinating, that for such a high percentage, that's the driving factor just to have a place of their own, that they can call their own.

Rob Delavan   16:22

So, I dig into this a little more and actually direct this towards Lance. Lance, I know you actually help a lot of young couples that are referred I've personally, you know referred folks to you that I've been surprised at their age, they're so savvy, low to mid 20's and they're going after all of these adulting things that maybe I wasn't doing until I was late 20's or early 30's. The process, lending is obviously not super easy. You really have to have a lot of things dialed in to do that but how does that lending process for those first timers, I guess I would ask you, will you speak to how you prep people for that lending and home purchasing process?

Lance Johnson   17:15

Yeah, well, I mean, there's a whole process we go and going through planning, are they going to be putting 3, 5, 10% down? Are they putting 20% or more so that's kind of a pivotal point because there are different programs out there? Are they gonna have to rely on retirement plan savings, do they have other debt? Are the parents gonna get involved? Are they getting married, which is paid by maybe the parents and then in that wedding party, will they go on a big, you'll see some people for go there, going on a honeymoon and they'll take the money from the wedding and they'll put as a down payment on a house, so there's all sorts of options that go on and then just walking them through, working with Adrian and working with the down payment and cash flow, one of the things I tried to do is I try to get them to save that 20% I'm always talking about so that when they buy a home, they can drop their savings down to 12 and we're not really damaging their cash flow. They are used to it, you know what I mean? Like, so they're renting and they're saving 20% but now they're owning and they're maybe stretching their dollars a little bit, we can always bring, they're not paying the rent, but they're paying the mortgage, but it's a little more than the rent with property taxes, we can always adjust their savings downwards, because working with me that I'll slowly ramp it back up. Those are all techniques that kind of deal with cash flow issues, conditioning of cash flow and then, real estate is one of those things when it goes south you're kind of stuck, I often talk about, you know, some issues that you run into back in [Inaudible 19:12] which was a unique time, but not a unique time. It's happened before, but unique to us and what is the 1, 2, 3, 4 backup plans that are available, that if they're crunched and one of them lost a job, what's the risk reward and what's your backup plan to get you through that 6 to 12 months?

Rob Delavan   19:40

Okay, so, linking our previous questions in the financial advising side, Lance, it's a perfect segue. So, we're highlighting married couples since they took up 60% of recent buyers. There's a show so we're gonna pull in a little popular culture here. There's a show on Netflix called Marriage or Mortgage have either of you guys watched this?

Adrian   20:02

Yeah

Lance Johnson   20:04

My wife has watched it

Rob Delavan   20:06

So it is somewhat controversial. It brings to light two major financial decisions in a couple's life and we're gonna highlight, there was a bloomberg.com article on it, we'll put that in the show notes, the states and I'm quoting here, "well, it's obvious that the more practical move would be to buy a wealth building home, instead of throwing a party, the sensible choice doesn't always make for great TV or even real life". In that article, they're parroting a typical viewer and it's all in caps. It's "no, don't do it". So, Lance, what are your thoughts on this question? Should you invest in a fancy wedding or should you invest in real estate in the first house instead?

Adrian   20:57

I have a feeling I got a premonition.

Lance Johnson   21:01

Smart thing, but there's so many questions around it so is it one income earner is, some people have kids before they get married, or that's the reason they're getting married? My generation 55% of those people will get divorced before 60? I think the younger generation I think it's actually even higher and there's all sorts of reasons why independence of women and things like that, they're not co-dependent on men anymore. Obviously, they're willing to get house that's from previous statistics. There are so many issues that come up. So, obviously, I would look at it, can you do your cake and eat it too, when, weddings are expensive. Who's paying for it, that's, you know I haven't seen the show per se. So, I'm assuming it's, the couples have to pay for it and if they are, you know, there's going to be a bell shaped curve, you're going to get a third of them are going to lean towards finances and be smart, a third of them are going to party it up and figure it out later and then 40% is going to kind of be swayed one way or another will probably compromise. They'll take a lesser house and a lesser wedding, marriages are kind of a unique scenario, hopefully and you don't want to minimize that. So, I would probably lean people to modifying and having lesser of the fancy wedding and but still get the house.

Rob Delavan   22:47

So there was one episode where in this article it talks about the couple gleefully rolling out a ranch dressing fountain at their down wedding and COVID be damned and yeah, you're usually talking 25, $30,000 for a wedding or, you know, 20 to $40,000 for a down payment and it's fascinating. I guess it's binge worthy. I haven't watched the show. But like you said, your wife's watched it and I'm sure probably got some got a kick out of it. Adrian, you've watched it. You know, sometimes the train wreck is fun to watch, right?

Adrian   23:30

Yeah, it's the funny thing about it. It sounds so comical, but it is a decision that people make all the time and they do they do get married. I mean, we're seeing a trend line that it seems like people are buying houses more often before marriage and I'm for it. But there's also a group of people, I've had people use their gifts from their wedding and they actually ended up cash positive, which sounds wild, but especially if your parents are contributing to the actual ceremony and you're getting your gifts from your your family members and they go, give us cash, don't give us a toaster, there's no registry. They do the money dance maybe on if you've seen that, whatever it is and then they pull those funds and they do turn it into a house and so I think there's a I don't know if you need to go full ranch fountain, but there is a way to go about getting married and getting that security together and then buying a house using proceeds from that event and whatever else you might have tucked away in the process, hopefully but in my experience, your wedding will cost more than you thought it would. I don't know a single person who came in under budget surprised but that they had money leftover in the coffers at the end so your mileage may vary.

Rob Delavan   24:46

Okay, thank you guys. That's a wrap on our homebuyer characteristics for 21. Please stay tuned for our next episode in this eight part series. The next episode we'll be learning about the characteristics of the actual homes that were purchased in 21. So, until then, we appreciate you guys commenting, go to our work cited, down below references for everything we talked about in the comments and our disclosures and until next time.

Home Series 2 of 8

Adrian   00:02

Hello future millionaires and welcome back to the get rich slow Podcast. I'm one of your hosts Adrian Shermer, joined by Lance Johnson and Rob Delavan. Good morning, gentlemen.

Rob Delavan   00:10

Good morning.

Lance Johnson   00:12

Good morning.

Adrian   00:13

Today we are going to be moving into part two of an eight part series on the characteristics of home buyers and sellers. Today's focus is the characteristics of homes purchase themselves and we're going to start things off with a great success story. I know last week, we talked about being one of 29 steal no small feat. Rob, I know that you and your team were one of 14 just recently, right?

Rob Delavan   00:39

Yes, we were one of 14 offers and we were able to secure the property for the client. So, we're closing this week, I think on that one also. Yeah, definitely a success story and we can workshop that in another episode, but it was a lot of fun.

Adrian   00:57

Yeah, I want to keep going into that. But again, that's a whole episode on strategy. We've done a little bit on that, but we're gonna continue to revisit that as the market continues to change and that strategy needs to change if you want to have an accepted offer.

Rob Delavan   01:12

So upcoming events, one that we'd like to highlight is an ROI financial and Delavan Realty. What are we calling it? I believe it was movie madness, something to that effect, April 16 so we're hosting past clients, current clients and to a Pixar movie, I believe it's called something rather there's a little girl in it that turns into a panda when she gets upset. So, I'm sure it's going to be very cute and I'm sure it'll be just as much of a tear jerker as Toy Story was way back in the day. So, turning red, for promoting our websites, just wanted to make sure everything's listed down below. We have ROI-FA.com. For ROI financial, we have Delavan-realty.com and we have directorsmortgage.com for Adrian's profile there and that'll all be in the notes down below. So, this is going to be a fun one here. So, characteristics of home purchased in 2021. We're going to be discussing the National Association of realtors report that comes out at the end of every year and summarizing the previous year that report...

Adrian   02:46

[Inaudible 02:46]

Rob Delavan   02:52

Exactly and the idea is this year over year comparison and it actually goes back for decades. This was their, I want to say this was their 40th year that they've released this, which is pretty cool. We're gonna have a link to this. Specifically today we're going to be talking about characteristics of homes purchased, it is on page eight of this report and we're gonna go through get some comments from you gentlemen on this, as well as we have a few questions ready to go. Okay, so the first piece that we have here is I want to run through some of these guys. So, are these specific points, so just go ahead and comment on them as we go and tell me to hold up when you guys find interesting things here. So, 15% of buyers purchased a new home and 85% of buyers purchase a previously owned home in comparison, in 1989, 29% of buyers purchased a brand-new home. So, we're obviously half that. Building is expensive and they're not making any more land. That's my biggest comment on that.

Adrian   04:13

Yeah, they keep making people though, something's got to give.

Rob Delavan   04:19

Good point

Lance Johnson   04:21

So there is whole another episode, right there...

Adrian   04:25

Finances of making people

Rob Delavan   04:26

I think that's gonna be a lot of comments on this. So, I'll keep moving. Most recent buyers who purchased new homes, were looking to avoid renovations and problems with plumbing, or electricity at 36%. Buyers who purchase previously on homes were most often considering better overall value at 38%. Electricity and plumbing are problems, nobody likes to...

Adrian   04:53

Scary problems, you can burn them down or you can ruin a house pretty quickly with water. It's the reason that I bought new just a year ago that definitely drove my bias as well was the developments that have progressed. Look at plumbing, we've gone from copper pipes to the plastic and we've got a lot more efficiencies to, there's a lot more focused on efficiencies with new builds and people are environmentally conscious. They want their Tesla chargers in their house and they want to have a furnace that burns at 97%, 98% efficiency. So, it makes sense and, honestly, I mean, at least in my shopping, I didn't find that much of a bias and expense either. old houses still sell for good money based on bedroom count based on square footage, chunk of land that you get. It's kind of interesting how small of an impact it is to be new versus old. One of the major differences obviously, there was some of the other expenses, insurance was really cheap on my house taxes were really high. You know you've really got to map out the whole picture to decide for you.

Rob Delavan   05:59

Yeah, new homes, it does make life easier.

Adrian   06:05

Yeah, you can get some value too. You can get some sweat equity, if you buy a house. That's, I mean, I wouldn't want to buy into a plumbing problem unless I really knew what I was doing or an electrical issue and that's like a whole can of worms to unravel. But I don't know if it's got Formica countertops and linoleum floors and you feel crafty, then you might be able to build some sweat equity in a property or if you know the right people. Work is kind of hard to come by right now. I know, Rob, you've run into this a few times with clients, right? We're trying to book out stuff after a purchase and it takes what months longer than it has before, a lot of these labor jobs are well booked. So, yeah, it's a good save money, but be ready to sit, you know, hurry up and wait for the right contractor to come in and finish off that job.

Rob Delavan   06:52

In 1981, compared to 2021, 76% of homes were detached single family homes in 81 and 82% are now. So, that hasn't changed much the single-family home continues to be the most popular type of home across the country. Only townhomes are row homes at 7%. So, of course, you have the traditional big cities of New York, San Francisco, so forth, where everything's attached, but most of the country prefers not to share walls.

Adrian   07:31

We're Americans, we want our freedom, and everybody wants their own piece of the pie.

Lance Johnson   07:36

Everybody wants to own that front lawn

Rob Delavan   07:38

Yes, exactly, despite what you may hear, as people saying, oh, they don't want that anymore and density is what the drive is right? Folks are still doing it and at a higher percent than 81. So, an interesting thing, senior related housing held steady this year 14% was 16% of buyers typically purchasing condos and 7% purchasing that townhouse or row house. So, senior housing 14% You're looking at like single levels type properties, or ones with accommodation and then of course, we got the condos and and townhomes and so forth. Not a huge change there but 14% that's an interesting correlation with the aging population and so forth. Again, a whole another episode on baby boomers and different demographic...

Adrian   08:37

You hang on to that house or do you...? I mean, I love we've helped a few people in and out of the elderly communities. I think they're awesome. They're, like you're saying single family homes, there's so much more usable. I mean, my grandmother right now can't even use the top floor of her home and she just wants to stay there though. So, there is some credit to being where you're comfortable but these homes are well set up for the purpose.

Rob Delavan   09:07

So, the most people moved within or on average about 15 miles away from their previous home or rental and convenience to friends and family was the second most important factor in influencing neighborhood choice after quality of the neighborhood. This surpassed convenience to job and affordability which were more important last year, Lance I'm sure you probably have some thoughts on that especially as the pandemic has been digested.

Lance Johnson   09:44

Say the question again...

Rob Delavan   09:45

Well, so the convenience to job and affordability were the most important thing and 2020 and the convenience to friends and family along with quality of neighborhood were the number one and two for 2021. So, there's definitely been a change convenience job is becoming less important and affordability is becoming less important versus friends and family and neighborhood quality is becoming more important.

Lance Johnson   10:13

Well, we kind of saw that in 09, 10, 11 when the market took a downward turn is densification people, the way they're dealing with healthcare, because healthcare is getting more and more expensive, long term care is and even as you're seeing, like, in the Portland area, we're getting [Inaudible 10:41]. So, people will be more inclined to look for a house where they can have that ability to take care of their, you know, their parents and have another choice other than paying 6, 7, 8,000, $9,000 a month and elderly care. There's just choices and so if you can have a house that has multiple dwelling, so there's independence, but then you're close enough to take care of or hire part time. It's just it's an interesting trend that's been happening since 08, 09, 2010 and now when people are working from home, they'll go to vacation places and work. So, there's a whole shift of being close to a city where people were working or a subdivision where there's, we have Nike built these beautiful places to bring in, but like, they're just now starting to go back to working and when they're working, they're not doing five days in the office. They're doing three days, one week, two days another week. So, now, the quality of home is changing for us. Whereas we were seeing densification and multiple dwellings on one land, we're seeing a difference now.

Rob Delavan   12:13

Yeah, that's a really interesting, it's like the second year hangover from the pandemic.

Adrian   12:22

Yeah, the reality that it's going to be long term is setting in, we're seeing the shrinkage of offices, right? Bit of commercial space shrinking, people moving their offices completely out and just keeping a core staff that they need to have it on Office and I think it's a great thing, I'm sure we're going to realize the problems, we're already seeing a bit of it, right, like certain small towns that didn't have industry before are being inundated because they have natural beauty or they've got you know, cheap housing. So, there's a crunch that's happening in some of these rural areas and there's obvious downsides, but I think there's also obvious upsides of just, maybe it's alright, if some of that urban sprawl gets spread around a little bit instead of being jammed so hard and cities?

Lance Johnson   13:07

Well, I think the jamming of the cities is do the fact that you're trying to cut down that commute and then economies of scale and light rail but now with the ability to work remotely. What I'm hoping and what I think will end up happening is economies supply and demand will be created. So, go into that ghost town that was dissolved. You could go put up Google or something or have a group that has a hub, but the cost of living compared to Portland is now a lot less and you can revitalize some of these rural inner communities. I think that's kind of...

Adrian   13:54

It's an injection of money if you have a $200,000 a year tech job and make its way into a community that never would have been able to pay out salary like that, then where's that money gonna go? A lot of it's going to flow into that community might not be totally terrible.

Lance Johnson   14:10

I'd love to see some tax incentives to revitalize some of those companies now that you can work a lot easily remotely and so you could go to Montana, which has low property taxes, low income taxes, low estate taxes, work remotely and [Mixed Voices 14:35]

Rob Delavan   14:44

Okay, so buyers typically purchased I think this is probably no surprise and again, these are national numbers. Their homes for 100% of the asking price with 29% purchasing for more than asking price, I think that It speaks for itself. We know we've had a pretty hot market with in a lot of areas across the country pushing around that 20% appreciation and that typical home was purchased was 1900 square feet and it had three bedrooms and two bathrooms and the average age of the build was 1993. So, that's one of the interesting pieces that we can look at of the average age of the home you know, back in 1981 was very different. Obviously, we're from 40 years ago.

Adrian   15:39

So average 30 year old homes

Rob Delavan   15:43

So lots of insight into that is 1993 was definitely not a smart home and definitely not a efficient systems home, although maybe getting there better, for plumbing than it was in 1973, no lead paint or things like that but you're still dealing with a lot of renovation...

Adrian   16:08

[Inaudible 16:10]

Rob Delavan   16:10

But a lot of cosmetic upgrades and I don't think that's going to change anytime soon. People want to upgrade their homes and then the last piece and this is very interesting and I know I want to unpack this from a wealth building standpoint, with Lance's perspective there. So, most overall, buyers expected to live in their homes for a median of 12 years, while 18% that they were said that they were never moving. That's an interesting one so one out of five basically are saying they're never gonna visit, there's a little bit of hubris in that because we all know that our dream home today, regardless of where we're at in life is very different from our dream home, maybe 510 years ago and maybe very different from 510 years from now, depending on life stage, but 20%, so they're never moving and then of course, again, 12 years being the median. So, what are you guys thoughts on that?

Lance Johnson   17:25

Well, I think there are a lot of factors there. So, first factor is, we've often talked about the trends of interest rates. So, the 20's to the 1950's 1920's, interest rate came down and 1915 1982 is a 32 year trend upwards. So, when you look at getting out of World War Two and people bought houses, a lot of our parents and grandparents lived in the home for 30 years because interest rates are rising. So, why did they want to go buy was there enough advancements in the house that you were willing to go into a bigger home, did you really need it? You had an interest rate that was four and a half percent, interest rates went up to 18, you're doubling and tripling your price because the home values went up the size of the value and the interest rate? It wasn't really worth it or was it better just to stay in the home and make small renovation scenarios? You haven't had that since 1982, the converse was 1982, you've got a home mortgage for 14%, 18%. Interest rates are coming down...

Adrian   18:41

Why not flip into a smaller house as your nest gets smaller? Why not?

Lance Johnson   18:44

When interest rates come down, your wealth went up, your income went up and you only had to go up one and a half times your monthly payment to get into almost twice the home as interest rates came down. So, here we are now 2020, interest rates can be going up, will they go up other than this manipulation of simulating the economy, are we going to see a trend like we did in 1950 to 1982 and will those 18%, over 12 years, 12 years goes to 15 or 20 because nobody wants to give up that 2.5% interest rate? And people had bigger homes and now you're seeing tiny homes and all these shows and so material things don't mean as much and so are you seeing a different trend where smaller homes, interest rates already exist, why are they going to, I think we're back to 1950 at some point in time, potentially and I think you're going to see that number of 12 years, which is based on the last 30 or 40 years is going to trend differently.

Rob Delavan   20:05

Yeah, it'll be interesting to see. I like the crystal ball but history does repeat itself, especially when you look at what actually drives the markets, interest rates drive markets harder than actual prices do because people pay on a monthly basis and that interest rate changes that monthly payment. It'll be interesting to see also, if what wins life change versus the financial change and sure which one drives more? Oh, I need a bigger house but oh, my interest rate is so low so how did then people finance that? How do they do big renovation? So it's definitely going to be some cross winds, what we've experienced the last couple of decades...

Adrian   20:50

[Mixed Voices 20:51] upgrading and their payment would be exactly the same because they had so much equity and to be a down payment. From that first home, we had a few clients, right, that had six figure equity and maybe three to five years. That was their starter home and then that became between the lower interest rate that they were able to get at that time and the fact that they had a larger piece of equity in that next house, we're about at the same place but you're right, I mean, Lance is 100% right. Now those people are going to be kind of stuck and if you're older generation, you want to downsize. If you've got cash, you've got equity in your house and you're just going to buy that new one cash, because what's left in your big house and what you're going to sell it for is enough to get that townhome, it's not a problem for you but a lot of people are still pretty leveraged. For one reason or another, maybe they've got you know, the rest of their money tied up in investments and yeah, again, if you're at two and a half, or even three and a half percent and rates end up trending, continuing into the fours or fives, it's gonna be an expensive lunch to switch over to a smaller home. So, I think we're gonna slow things down.

Lance Johnson   21:59

I think there are some different behaviors that take place. So, less likely have somebody sells that home, keeping that 2.5% leverage. I mean, when you think about it, it doesn't make sense to sell a home, give up a 2.5% interest rate to go into another home that's bigger, whatever, more land and take a four and a half. So, what you might see is, somebody might not sell that home, but they would end up renting that home. The cash flow from the rent funds, the new home and they keep it and they build wealth that way. I think you end up seeing stuff like that I think you're going to with Airbnb and all...

Adrian   22:46

That's a great point

Lance Johnson   22:48

If you have a good location and a good view then people want to visit

Adrian   22:53

And you got the cheapest business loan ever, I mean, who lends 2.5% of businesses, right? Nobody

Lance Johnson   23:00

I just think what ends up happening is, is cheap debt investments and interest rate trends. You you come to strategies that are like water, water finds the least path of resistance to get to its lowest spot, I think in real estate evolves, where people are less likely to sell, like 1950. But in 1950, they didn't have Airbnb, they didn't have the internet and I think they just accumulate some good interest rates, don't get rid of them, but then rent them and then move on to the next smaller home. In other locations because of internet, you don't have to be tied to the city that the Nikes in or Columbia or Intel, you could be in the Bahamas and do your work if you really wanted to.

Adrian   23:52

Yeah, I've got a web developer friend right now who's in Hawaii for a stint of six or eight months depending on how lucky he is with rentals and I mean, it's really not having any negative impact on his work, probably a positive one. Honestly, he still seemed to be a bit more chipper. So, I get I get more out of workers if they were in tropical paradise, maybe.

Rob Delavan   24:17

Okay, so, thank you, gentlemen. Just to wrap this up, there are some serious trends here. This was probably a little bit more prognostication as I anticipated, but it's fun to look at this stuff and see and look ahead and see if we can't predict some of the things that are going to affect where things go so 2020, we'll do the same thing in 2022.

Adrian   24:47

Yeah, look forward to watching this episode in four or five years and see exactly how right or wrong we were.

Rob Delavan   24:53

So please stay tuned for the next episode in this eight part series. We will be learning about the home search process and the statistics that came out through the 2021 report until then appreciate you guys for listening and we'll see you next time.

Home Series 3 of 8

Adrian   00:02

Hello future millionaires and welcome back to the get rich slow podcast. We are your hosts Adrian Shermer, Rob Delavan and Lance Johnson. Good morning, gentlemen.

Rob Delavan   00:11

Good Morning

Adrian   00:13

Today we are going to continue our series on the home buying process and we're pulling a lot of this data. Once again, this is a great dataset to use, because it's real numbers from the industry, the National Association of Realtors, as a pool from July 2020 to June 2021. They recycle this every year and we're going to be looking into the home search process itself today. So, it's an important part, obviously, of what we do is helping people find homes, but how do you do it?

Rob Delavan   00:47

Right and the article, it's called the 2021 highlights from the profile of home buyers and sellers and we're specifically going to be pulling from page eight and the section on the home search process as far as the heading so and we'll have that in the show notes for letting you guys know where you can pull the detailed data and so forth. I wanted to share with you guys a success story this week. We're right in the middle of spring, ramp up hot tax or hot while we're in tax season. We're also in hot buyers season four homes. This is across the country also, of course in the Portland metro area where we primarily work. It has been hot, we had three listings go live the second half of this last week and all three of them were in contract by the end of the weekend above list price three for three this week. So, we'll see where we end up next week but that seems to be the trend at the moment so we're cooking. For upcoming events, please go to ROI-FA.com/events, we have a number of things that we're working on from little client wine events, to we have a movie theater event coming up where we're inviting past clients and so forth to come and enjoy a Saturday with rubbing elbows with us and all of our fellow folks and amongst others. So, just go to ROI-FA.com/events for that and that will also be in the show notes and lastly, for our websites, we have the ROI-FA.com Delavan-realty.com and directorsmortgage.com/AdrianShermer.

Adrian   02:42

[Inaudible 03:11]

Rob Delavan   03:03

Recap is for you, Adrian, we're on recap.

Adrian   03:07

Yeah, I apologize; I jumped into this a little too early. I'm gonna do a little reset Avery. Alright, in today's episode, we're going to be discussing, as I mentioned, the home search process. Once again, this is stats from the National realtor. So, the National Association of Realtors, this dataset is from July of 2020 to June 2021. They do this every single year; we're looking forward for the next set coming up as well. Especially as quickly as things have been moving in this marketplace, we want to get that updated data. But this is finally getting us some post COVID chunks so that we can really see how things are starting to settle. The information that's provided supplies and understanding from the consumer level, it's so it's actual trends that are currently transpiring and just as a reminder, this is part three in an eight-part series.

Lance Johnson   04:04

So, Rob, based on the statistics on page eight home search process, the first section or paragraph 41% of recent buyers first step in home buying process began online looking at properties for sale. What websites would you recommend for your buyers looking at to get a more real time look at buying houses, can you comment on that?

Rob Delavan   04:33

Yes, so where most folks go just due to popular culture at the moment there's a website that starts with a Z and it can be very frustrating. What happens is there are listing feeds from the local listing services ours happens to be RMLS.com that's the real time information as real estate brokers put it in update things and so forth, it's real time, these other syndicated websites don't always have the updated information directly or they pay for a cheaper feed, then the listing services would like and therefore, you'll see something that maybe was pending a day or two days or three days ago, often on different sites and is listed as active and it's frustrating for buyers, is, this is the perfect house and they don't know that it's been off the market for four days, they must have gotten

Adrian   05:47

That's a good one, it's not available anymore but that's a really good choice

Rob Delavan   05:52

And then building on that the other pieces is just shopping online. They're saying, oh, that house was listed for 550,000 as an example and that's totally within my budget, well, maybe their budgets up to 575 and this house actually went for 650 and that's also frustrating. So, going directly to the feeds are the armless.com, we tend to set up a direct search, that will come out as often as daily. That would be hey, here's the area and the parameters that you set up and this will give you everything that fits within those parameters. The second piece is it's actually not a website, we like to use home snap. It's an app and it started a number of years ago with this app, this idea that you could put, open up the app and your phone or your phone camera turns on and you can point it at the front of any house in the country throughout the United States and you get them immediately it'll cross reference and give you the address and all of the data on that property, including recent sales listings, all the data that they would need and valuations, which is pretty cool. What's fun about that app also is we send out a branded app to all of our clients and any realtor across the country can actually do this, they will send it out, it's branded. If the client likes it, it's a real time feed just like RMLS.com and they can flag the properties that they like and their real estate broker gets notified, hey, these are the properties that we want to see. So, that's usually the process, typically, that requires having a little bit of engagement there, Lance versus just going to the random sites that we all maybe know and love, but we kind of love to hate because it's frustrating.

Adrian   07:51

This statistic animal shocked me 41% I was like, man, I feel like everybody just jumps online and starts looking at houses, but maybe they don't consider that the real start your search. I mean, it's a hobby for a lot of people, right, just searching through various websites he was on, I think he got to just click on with what your realtors doing to you want to get that alignment. I mean, you guys use I like homespun I have a lot but the data that it lets you share, it helps you serve your customers better. So, it's a win-win in my book.

Lance Johnson   08:21

Yeah and I think it's today's nature to be on Facebook and people will call Facebook and articles nowadays. There's no quality of what's being posted on Facebook, but it's just the initial steps. So, the question is, how do you get to that initial step and then get to the right place and it's just get them to the professionals to help them with it and let's face it, 10% of the people doesn't matter what you do, they're going to be do it yourself first, but 90% need your help.

Rob Delavan   09:02

Adrian based on the stats from the NAR and this is again on page eight of these characteristics of the 2021 homebuyers, buyers typically searched for eight weeks and looks at a median of eight homes and viewed three homes only online. When it comes to the pre-approval letter process, what's important for buyers to keep in mind as they make offers and keep their pre-approval letter up to date? So there's a little bit to unpack here.

Adrian   09:30

Sure and I've got a huge bias but there's a reason that I do things the way that I do and it's experience. All my pre-approval letters have the address of the exact property we're dialing in, if you're making an offer, that's a serious proposition, you should at least have the math done correct to make sure that everything is fully dialed in. For a lot of people that's not an issue, they're not redlining themselves by going right up to the limit of what they can get a pre-approved for anything but it's still, I've had two houses that have the same value and the taxes can be $100 difference per month and that makes a big for a lot of people the monthly payment is the final selling point on the value of the house. So, making sure that the pre-approval is dialed in making sure that you're working with a lender that's reputable. There are a lot of companies that don't have the reputation for attention to detail. Oftentimes, local companies or companies that at least have a local reputation. I mean, Rob, maybe you can speak to this a bit, too, from the selling side, what's it like when you receive that pile of pre-approval letters, what stands out? I mean, I know we had a win recently, where 29 offers I was one of two lenders, the seller confided in me that actually called the seller's agent to say, hey, my people are legitimately qualified, they're serious. We took the time to actually get their paperwork and not just have them tell me what they make each year, I can tell you, I've been burned enough times by that to learn that lesson. We have to vet it and sometimes people don't even realize, oh, I wrote that off, or yes, my business made a million dollars last year, but we spent $900,000, making it that's still a great income but it's not a million dollars a year income on paper for a loan, it's a different number. So, making sure you've been run through underwriting and properly vetted as part of that process for us.

Rob Delavan   11:12

That's a question we ask a lot of the lenders on the listing side of the offers that we're actually considering, typically, if we have five or 10 offers, we're probably going to narrow it down to the couple best and best is defined in a whole lot of ways which we won't necessarily dig into the weeds on that today. I'm definitely looking on the listing side looking for typically, someone local, somebody who's going to answer the phone, that's a big test point, if they actually answer the phone, reasonably during business hours, especially even occasionally on the weekend, they'll actually answer the phone or call back quickly. That's important and then just typically looking at this from, it takes average, eight weeks, a lot of people take a lot longer and it depends on the market and the seasonality of the market right now we're in the spring side. So, things are hotter and it might take longer to find a house, just because there's more competition versus in the fall in winter for Oregon but you go to Arizona and everybody wants to buy and sell in the winter so it's also nice down there.

Lance Johnson   12:22

And I like to expand on this. I mean, there's a wow factor involved. So, in the past, meaning the last, since 09 interest rates have come down, this is we're seeing the threat, isolation and the rise and a long term rise not it rises one year and then it drops back down again. Prices are greater so you talked about 25,000, 100,000 over asking price. So, we do and we'll talk a little bit about this later in this podcast, but you get pre-approval and you have a house that goes 100,000 but it doesn't appraise okay, where's the money coming from all that kind of stuff? Can I interest rates are going up? Can the monthly payments go? So I know you talked about 29 offers on a house and you guys got it. But how many times you've been in a listing agent and you got 15 offers but the first three, were all sudden now they do the price comes in at a higher value. It's too much for them that sternum check; those first two people have bailed out because it's just too expensive. The interest rates are too expensive or they need to do a home improvement and now the home improvements now not 50,000 is 100, 125. So, there are a lot of elements right now in the pre-approval when you want that client to have the wow factors that stacked up against them. You know they come in second, third, fourth, how do you deal with that, the remodel is twice the remodel they thought going in? Yeah, that they had to pay extra but they need more cash down, then so I think the great mortgage real estate agent is really understanding and preparing that client for all those because they want the biggest house with the least amount of payment and there's a threshold that's available and those clients need to prep a little bit more so and that creates the wow when there's no guarantees there's a lot of things there's a lot of variables nowadays on that.

Adrian   14:57

All right Lance, let me ask you when should a buyer loop their financial advisor into the home buying process, what do you recommend?

Lance Johnson   15:05

So the day they're having a little get together with their friends and they're talking about moving to the next day, they're filing taxes, because it's going to help them but when you got this inclination, this dream of getting this next new house, you we should really start going through the process of what's it going to look like with all those variables I just talked about, before when interest rates are coming down, if by the time they sell the house, the interest rates came down, so the payments are a little bit less, maybe the price of the property was a little bit less and they're competing with three people, not 15 people and so now the complete opposite. So, when I talked about a threshold of cash flow and being house poor, somebody who's like looking at a 500 to $600,000 home, I might have to do 5, 550, 600 but now that $600, home comes in at 7 and got it so now it's 650, 700 and then all sudden, interest rates are not coming down because they came down, it's a little bit better. But if they get a little bit worse, there's a lot more scenarios to really know what a client's threshold and Rob and Adrian, have you been in a position where a client goes in, they want to 600,000 out how they found the house of their dreams, they were 15 people got accepted offer and then said, oh, my God this is a lot more expensive than I thought and have you ever been in a situation where they had to bail out because it's just too much and so I think the more you can run these scenarios, sooner than later, you want to create a wow factor for the client, you want it as smooth as possible. You want them to know, it's always funny to watch property brothers and be like, oh, that's gonna cost us $13,000 to redo the termite damage that we didn't know about introspection, which is interesting. That's always amazing then these events occur and that's what's happening now...

Rob Delavan   17:19

Well, of course, the fun part about that, as you know, TV is not exactly reality because we're generally able to find those things. Not all results are going to be the same for everybody in that scenario with that said it's fun to have these conversations from a financial advisor standpoint, because the way I translate that into the real estate world, Lance is you're exploring, like the tolerances, kind of the margin and you have to, as somebody who's looking to buy, or sell, or, frankly, do anything in the real estate world, build wealth, if you will, one way or the other or try not to lose, depending on everything. So, what ends up happening is if you're right up against that tolerance of just, this is as good as we can get and if interest rates change an eighth of a point, we just can't do it, we probably need to circle back around to do another lap or two, with the financial advising side.

Lance Johnson   18:32

You don't want a client to buy a house and have buyer's remorse and for property values were going up and show it to come down. So, if you had a delay 60 days to close versus 30, just because of whatever reasons or you had to do a remodel and we know a remodel takes, three months but reality six months now and by the time you get done with the six months, it's not up 10%, it's up 30%, 40%, at the end of the day, we're coming up against these different scenarios that really get people quicker to their threshold and what you don't want to do is have a family of four or five that can't play sports can't do all these things, vacation, it's all work, no play and their house poor. You just don't want to put a client in that position. Well, let me put it this way, if you did, how many referrals you're going to get.

Rob Delavan   19:34

Yeah, it's an interesting conversation just because and we've talked about this before, pulling in that financial advising, exploring those tolerances from a cash flow standpoint. The house side, like my main portion is really just going out and doing your homework but with your feet by walking through and figuring out what your dollar will get you today versus tomorrow versus yesterday and then really the financial in the lending is just because you could afford it up to that very top dollar does that really mean? Is that where you want to live or do you want to be somewhere in that middle? And I don't know, it's just been prudent...

Lance Johnson   20:22

And part of the home processes, people will say to me, like the 41% is, I started looking for a house, I'm like, online, I'm like, you're not looking at a house on, you're not really ready to buy because at the end of the day, if you're 15 to 25, potential buyers for that house, it doesn't matter. There's only one buyer, everybody else is in second place, or worse, it doesn't matter whether you are third, fourth, fifth or sixth, right?

Rob Delavan   20:50

Yeah, it does not

Lance Johnson   20:52

Nobody puts the bad pictures on and so you got to go touch and feel the house, you know and sometimes you'll look at a house and go, wow, there's potential bones and then good bones and you can do a remodel and then I think there's also, man, sometimes you just get the best pictures and what's behind the other side of the room?

Adrian   21:24

Yeah, like, where do you put the camera [Mixed Voices 21:31]

Lance Johnson   21:30

I'll have a bunch of clients go like, oh, man; we certainly found these five holes we think are ideal. I'm like, alright, the meeting after those is, how many were good. One, the rest of them were terrible, you don't see online the best ones behind the scenes and so you got to kind of touch and feel and go out and look at those properties and see right out there.

Rob Delavan   22:01

Okay, so that's a wrap on our home search process. 2021. Stay tuned for our next episode in this eight part series. The next one, it'll be episode four. We'll be learning about home buying and real estate professionals. So, that'll be interesting when you guys can put me on the hot seat.

Lance Johnson   22:21

Until then, you know, I like to do that.

Rob Delavan   22:24

You do, it's always fun, until then, thank you all for listening and we'll see you on the next get rich slow podcast.

Home Series 4 of 8

Adrian   00:02

Hello future millionaires and welcome back to the get rich slow podcast, we're your hosts Adrian Shermer and Rob Delavan.

Rob Delavan   00:09

Good morning and we're missing Lance at the basics himself today but we'll see him on the next one...

Adrian   00:18

He will be missed and today we're going to be talking about home buying and real estate professionals. This is really about the people that you work with in the industry. This is part four of an eight part series and we're going to start off with a success story. This is not my success story, but I'm excited about it. The branch that I work in, my manager, his wife specifically and another one of my co-workers both had a baby on the same day. So, we have two branch babies sharing the same birthday.

Rob Delavan   00:49

Oh, that's a win and everybody's healthy.

Adrian   00:55

Probably not sleeping, fingers and toes accounted for, sleep questionable, we'll see how it rose.

Rob Delavan   01:02

Love it so upcoming events, please go to ROI-FA.com/events. We have a movie event for clients coming up as a spring event the movie is "sing two" so that's a fun one. I haven't seen it yet. So, I guess I'm gonna watch sing two here shortly and then of course, a link to that will be in our show notes and also, our websites will be in our show notes for ROI Delavan Realty and Adrian Shermer, loan officer at director’s mortgage.

Adrian   02:04

We've got links on our site as well on the get rich slow podcast site.

Rob Delavan   02:10

And all the different places cross referencing 47 different ways. For our episode ahead, today, we're going to be again discussing home buying and real estate professionals. It's the same article that has been coming out for what was it 30 plus years now and from the National Association Realtors, there you go. 40th Anniversary Edition, not 30 sorry, I just started them a decade and it is for part of 2020 through the majority of 2021. We will also cite that in our show notes down below and the information provided supplies understanding from the consumer level of the trends that are transpiring and affecting us today. Again, this is number four out of eight.

Adrian   03:11

All right, Rob, based on the statistics in this report from the National Association of Realtors, 90%, this is actually higher than I would have guessed 90% of buyers stated that they would use their agent again or recommend their business to others. In your opinion, how important is referral based business to your brokerage?

Rob Delavan   03:34

Well, we do the vast majority of our business, in essence by referral, the personal referral is the gold standard and I don't know the platinum standard is that I just is like the ultimate honor is hey, mom needs to sell her house or buy a house that sort of thing. Like if I can work with every client's mom.

Adrian   04:00

Like that is a huge honor, I've had that before

Rob Delavan   04:04

You know insert my eight year olds like your mom joke here, right?

Adrian   04:12

[Inaudible 04:13]

Rob Delavan   04:16

But that is a big deal, so the statistic is that 90% would use their agent again or recommended their agent to others. What's funny is there's not always, they would but they don't always do that. So, that's where like having an actual relationship and being a true resource, not just during a transaction, but hey, the transactions done and now they're doing renovations or you know, if you're using TurboTax, you're not adulting anymore or you're not adulting yet, so they need tax help you frankly can't do real estate without about tax and you can't really do tax without financial advising because a big part of, like and then lending consultative. You become if you're truly earning those referrals, you don't just get somebody a killer deal. You also right become a person that sits at their financial table and that's the piece that, it's worked for us in the sense that we don't have to chase business. Thank goodness, the phone rings. A fella that I knew way back in the day, this is the long way around answering your questions of how important is it for our business? When I was in my early 20's, I was working for a bank, which I won't name and we had to make a lot of cold calls and to sell financial products that people didn't need and this fellow who was about 10 years older, who at the time, he seemed really old, he's probably like 32, he told me he said, hey, Rob, someday when you master the sales process and you're gonna figure out and this was, I had like a flip phone not you're gonna master sales by having your phone ring rather than making somebody else's ring and I'm like, oh, that's cool, how do I do that? He goes, I don't know, I haven't figured it out yet and in the couple of decades, since then, I really should call him up. I knew him in Southern California. His name was Tommy Lee and Tommy Lee, if you ever find me again, reaches out. Anyway, the less famous one and he said, I haven't figured it out yet and well, here's the thing we have figured it out yet and it's the referral process. If you build trust, that someone knows, likes and trusts you with not only their own transaction and that a good example, is mom's transaction. That's the answer and that is how I make my living. That is how important the referral is, I don't ever solicit business, I just respond to hey, can you connect and help my fill in the blank friend, family member, and business associate, whatever it is. So, that's the thing and the amazing thing is 90% of buyers would use their agent again or recommend their agent to others and the thing is unfortunately, in the real estate world and frankly, most lending, financial advising, tax, frankly, pipe fitting or electrical, there's your bottom 80%, 90% and then there's your top 5, 10, 15, 20%. At the end of the day, you really want to be working with the top 10% of whatever professional you use. So, that's the...

Adrian   08:07

That's really interesting too because anecdotally, I mean, I'm not going to throw shade necessarily, this is these are some generalizations, but I find it funny that a lot of the agents who advertise a lot and who get their clients out of basically just spending money to be in front of people or to be at the top of Google search results often don't offer the best experience the client experience, just in my anecdotal evidence, I don't have any data to back this, this isn't another thing. But it's just interesting to direct referrals. There's a reason that those workouts so often, that's the reason that my business is 100% referral base, I've done cold calls, the amount of distrust that you have to break through when you do something, you know, a process like that and it does kind of beg the question, I mean, I guess the answer is money but you know, why do you have to get clients that way is a business that doesn't advertise potentially, more, likely to be a business like yours, where the quality is high enough that they don't have to go to that well, it's possible. I'm sure there are plenty of people who do tons advertising who run excellent businesses and machines, but it is sort of interesting, the referral-based businesses kind of proved themselves to be successful.

Rob Delavan   08:07

So, I'll drop a couple other statistics on your from this assertion. So, 47% of buyers usually used an agent that was referred to them by a friend, neighbor or relative and 13% use an agent that they had worked with in the past by herself. Yet 90% of buyers would use their agent again or recommend their agent to others. So, there's some unpacking there is now remember, like a big portion of the population is not doing their second transaction. I mean, it's just typically people they're doing one and then that have the second or third or fourth or fifth transaction and many people don't do third or fourth or fifth, usually people do two or three...

Adrian   09:24

Or that 20, 30 year family gap, you have a couple kids and then you're like, well, I'm not gonna move them in school districts or whatever and all of a sudden, you're plugged in for the next two decades.

Rob Delavan   10:24

So, I mean, so there's an element of that, but it seems like 13% is probably 30% used an agent that they had worked with in the past. So, I wonder, this is again, it starts getting anecdotal and I don't have the deep dig here of what percentage is the second home, so forth? I do know that basically, in 2021 34% of buyers, were first time buyers, which basically means that, 66% of buyers were second time or more, but only 13% are using who they worked with in the past. So, there's a little bit of a breakdown. Oh, yeah, I use them again and then they don't and I think what that is, is lack of engagement and then I mean, a lot of people are moving to different areas, people are relocating. So, there's an interesting piece there and I'm sure that's something that we could explore in a future episode. Also, I will say 73% of buyers interviewed only one real estate agent during their home search. If you're using somebody for the first time and do not have a direct body of work. This real estate sale, you're hiring somebody and you're paying them 10's of 1000's of dollars to do this job, on the hope that they'll make 10's of 1000's more 1000 on your behalf in this transaction you should probably interview more than one person. Unless you have a body of work and you've worked with them before and had incredible multiple results, you should probably be interviewing more than one person. Of course, everybody's great when they sit down. Ask them about their statistics. Ask them what they do, ask for references, check out the references. I mean, anyway, I could go on and on there; I won't do that to our audience here. Okay, so the next question I have for you, Adrian is how important is a realtor relationship when it comes to the home buying process and frankly, realtor lender relationship is what I'm really looking for here.

Adrian   12:44

Yeah, absolutely, mission critical. In my book, I'm going to talk to every single realtor that I work with, if I get a client who isn't working with my favorite team, then, I want to connect with that that real estate agent, I oftentimes have meetings with them before we do our first offer, if I haven't worked with them before, you got to be comfortable. It's the same thing as the relationship that you have with your lender and realtor directly. But they should be talking in the background, we should be doing industry speak and we should be talking about you I know that sounds maybe a little creepy or scary to some people. But we need to be having a dialogue we are in this industry. We know the psychology that goes in, people get stressed out, right and there's a hand holding that needs to happen and there needs to be a unified message and some of the worst transactions that I had been part of, even when I was working as an assistant for other lenders and working my way through the career were ones where that had that communication breakdown and there's a bit of scapegoating and passing the buck that I've seen happen before and it can just be you can have like a bad realtor who just goes That's the lenders fault, you know, as a catch all to cast blame off themselves and then the lender blames the realtor and the dissonance that the client gets in that situation and the way that it makes you feel just uncertain about the ground you're standing on at that point that communication is just so key, just the ability to communicate the ability to, if my agent texts me. Worst case they're going to be hearing from me the next day. Many of the agents I work with honestly are just the result of horror stories from the lenders that they worked with. So, thank you crappy lenders. Thank you to the awful lender who pre-approved a client who had a bankruptcy less than two years ago that I got through just wasted this person's time. It's super upsetting. I mean, I literally I teared up, I got furious. There's no repercussion for this stuff, which is crazy to me, but that's the way the industry works. This way a lot of industry works like you can mess up and it can be the client who asked to eat the bill for something. So, having that communication, knowing that everything's in the right place and then knowing that certain things are gonna be taken care of, you don't have to double check on certain things and that you can call each other out. That camaraderie works really well when you can give constructive feedback. Like, hey, client wants to talk to you. So, they haven't talked to you in a little while, then pick up on the minor details and you trade that with each other and you can give just the greatest customer experience.

Rob Delavan   15:31

Yeah. So, don't play hot potato or musical chairs as a blame game. Oh, it's, you know, pointing fingers and that sort of thing. Just own it, just integrate, I've recently, obviously not with your lending team. Adrian, recently had a lender, we had some questions on the representing the buyer and they called and we're working with them and the lender said, well, you know, I can't release a whole bunch of personal information. Well, there needs to be a level of permission there from the buyer, where we can actually have a frank conversation. So, we can control the purchasing process and if we're going to be delayed on a close, we need to know why. You don't just nebulously say, oh, well, we had some lending issues. Sometimes things take a little bit longer if an appraisal in this case, it was an appraisal was just taking longer and we knew a week ahead of time that we just weren't quite going to make it on a closed date. Let's communicate early and often with the other side, because that's a negotiation piece. It's an important connection with between the lender and the real estate broker to really work hand in hand and if there is reasons for lending delay that are due to personal finances, that permission needs to be provided. Sometimes it requires a three way call that sort of thing, depending on what it is. Let's have those. Let's have that level of engagement.

Adrian   17:09

And that level of trust and I'm going to throw one more thing out there. Rob, you and I have done tons and tons of transactions together. How much have I paid you for those transactions?

Rob Delavan   17:21

I'm pretty sure it's $0

Adrian   17:23

It is illegal, dangerously illegal, I'm talking lose your license, I'm talking go to jail. I'm talking millions of dollars in fines. There are examples of this every single year, every single year someone gets caught with their hand in the cookie jar, if you have one of our professions recommend you the other profession if a lender says this is my number one realtor, if a realtor says you've got to use this lender, I've been burned by other ones too much, please use this person. It's not because they're getting a kickback because it is illegal to get a kickback. I mean, unless you're in the middle of them getting caught in fraud, but the technology is advancing it's so it's so much harder to cover your tracks with stuff like this every single year. All the workarounds have been figured out to people tried to do clever, now it's a giveaway. It's you could win a trip by giving me leads. Nope, they catch everything and they're listening on every the regulators are listening to this podcast even and it's important because it gives honesty and it keeps us to our fiduciary responsibility to pass people to a professional based on the ethics based on their performance in the past and you can't see that, we have very few reviews on websites compared to say like a restaurant, you go to restaurant for four or five times and come up with an opinion and share it with everyone online, you can be one of 10,000 reviews. Realtors and lenders often have maybe double digit reviews. So, even after years in the business, so it can be hard to look at data like that. But if you've got a direct endorsement, you can be pretty sure it's authentic and I mean, I've found myself, I probably don't even know how many times I've been on speakerphone in meetings in your office when you guys have your group meetings. But that's the kind of trust that it gets established over time is hey, let's just call, Adrian let's call the lender that we trust, based on experiences, not just fluff and just what they sold you in a meeting...

Rob Delavan   19:23

And you can still engage in trust but verify, right, one of our silly presidents over the last 30, 40 years I think and the concept is its okay to ask a question or a few follow up questions and it's okay, I recommend this person. Oh, great, when's the last time used? Could I talk to a client that used you both? Do you have a good reference for that if it's hard to dig that up? Oh, hold on let me check into that. Well, they're not ready for that question. Really dialed in team should be read for that question for that reference, what are some of the best situations that happened there? Why is this person going to bring you extra value versus say, the next person down the road? Just ask those questions. Listen for cues. If people have a hard time answering those questions, then they're probably not answering them truthfully. So, follow up questions, there's never such thing as too many questions when you're going through that process.

Adrian   20:30

So solid advice, Rob, how often do you get asked to recommend a realtor or lender to your clients and why do you feel like having the right team? You know, we're kind of touching on this, why is the right team is so important for the client?

Rob Delavan   20:48

Well, this is an interesting one. I mean, obviously, you know, as a realtor, I'm generally oddly, oftentimes putting like one of my clients; I'm always working with a team member. So, I am actually referring one of my senior brokers, to any referral that comes in, this is the worst kept secret in Lake Oregon, or in Oregon as a whole, Rob doesn't actually do a whole lot of transaction inside the transaction, I'm more strategic and then I have basically a crack team that's so much better at the job than I ever was actually providing the results. So, I'm referring that realtor of the right fit for the right person, depending on where they're at in their journey of real estate, multiple properties, one property, physical, geographic search, area, location, depending on where my real estate brokers are planted and so forth. The clients are asking for that, they don't always know. They're also always asking for lender and part of this question was actually geared towards Lance Johnson on the ROI financial side, from financial advising, they're referring all the time and they have to, just like you and I, in our lanes, we're licensed and there's fiduciary responsibility requirements and ROI financial, if you're a financial advisor, you're a fiduciary responsible person and to document that and so forth, you can in the show notes, well, you can go to their website and learn all about the disclosures and the requirements. We also have disclosures in this website in the show notes and you can link to those and there's a ton of things that they have to do, legally, ethically and worst case scenario, you go to jail if you don't do this, they have to act in their clients best interest and to do that, they have to recommend a great lender who's actually going to positively impact that client's finances and same thing on the realtor side. So, why is having the right team so important for the client? Well, the negative answer to that is if you don't you could get in serious trouble lose your ability to make a living. Hopefully, that's a big factor. But yeah, it's true. I mean, that's one side to consider on this conversation. The other side is, remember, the whole referral conversation that we had at the beginning of this is, how am I going to get great results if I'm referring a schmuck? I mean and I'm never gonna get repeat business. I put my name on the line every time I refer somebody, every time you refer somebody, Adrian, same thing. Every time ROI financial, our tax clients, our contracting side, I mean marketing, I mean, you name it, when we refer people our name is on the line and if they suck, then I don't know. Rob, he kind of sucks because he has a really, you know, crappy...

Adrian   24:14

Who trusted this idiot, it can lose business for us both and that's part of why those referrals are so powerful because now everybody's on the line.

Rob Delavan   24:17

So so don't trust idiots is I guess the answer and have a high level of connection. It's so important to have those lines of communication and those expectations and the...

Adrian   24:41

The accountability is fantastic. If you can go back to the person who referred you, if Lance sends someone my way and I do a bad job, they're going to tell Lance. Lance is going to tell me and that's, every referred client is more important than someone who just walks in off the streets just the reality of the business. I want to treat everyone has equal importance, but that weight will carry with you I started in this industry with a giant bank, one of the big ones, the United States, again, let's not name names, but two week program and I was sitting there at a desk able to originate loans. Plenty of mistakes were made in that building and I'm sure some of them on my plate. So, a lot of people feel like they have an affinity to the bank, they are with right or maybe it's even a direct referral from Uncle Bob or whatever. But there's only so many experiences that that person has to draw on referrals from your financial advisor or your real estate agent. They're getting a monthly maybe even weekly connection with this person, they're probably going to give you a better quality of...

Rob Delavan   25:47

You better believe if something goes sideways and it was something where we dropped the ball on each other's refer client we're all over each other's asses like you wouldn't believe like what the hell happened there? Doesn't happen very often but if there's a ball drop, we got accountability partners...

Adrian   26:15

It might be game over on that relationship or ideally, it's an opportunity to improve if both parties are level headed. I mean, Rob, you've helped me be a better loan officer, I can say that with certainty and it's a state of constant improvement, right and anyone who's the best at something is always improving that you never stop.

Rob Delavan   26:34

Exactly, it's just a question of engagement.

Adrian   26:45

And that's a wrap on our home buying and real estate professionals episodes. Please stay tuned for our next episode. This is part four in an eight part series. We got four more to go and then I believe next subject we might be getting into some crypto, but we're gonna mix it around we'll let you know as we move along but for more episodes to come.

Rob Delavan   27:04

Number five is it's specifically has to do about statistics within financing the home purchase so it'll be fun one, we'll be picking your brain pretty hard.

Adrian   27:14

Awesome, good data, we'll talk to you next time.

Rob Delavan   27:17

Okay, thank you.

Home Series 5 of 8

Adrian   00:02

Hello future millionaires and welcome back to the get rich slow podcast. We're your hosts, Adrian Shermer, Rob Delavan and Lance Johnson. Good morning, gentlemen.

Rob Delavan   00:11

Good morning, Lon.

Lance Johnson   00:15

I've been called a lot of different names but not Lon.

Rob Delavan   00:18

Let's just say Mr. Brilliant at the basics, not Mr. Late to lunch Lon.

Adrian   00:27

This is part five and an eight part series on the home buying process. We're going to talk about both ends of the spectrum here and Rob, let's start off with you. I'm really excited about your news.

Rob Delavan   00:39

So a quick success story for you guys is I actually sold a personal house in the last week and it's one of those things that you know clients and prospective folks and that sort of thing when real estate brokers start selling houses, the markets hot. So, we could dig into that on a whole another episode. But it was a nice episode. I mean, it was a nice situation where hot market and it was the right move.

Lance Johnson   01:07

Not only a real estate move, but it was also kind of a tax move to really kind of discuss. So, it's a good story that we can uncover some time.

Rob Delavan   01:19

Yeah, tax and frankly, it was financial planning just as much. So, there's a lot of moving parts on that one. So, we can unpack, but it was a success, sold, done.

Lance Johnson   01:34

So, upcoming events that are coming, we have the sip and mingle, that's at our legacy legal office on April 22, between 4 and 6 so people that want to come bring a friend or I think we can host about 75 people, I think there's about 50. So, we have some room to have, just let us know that you're coming, get on our website, ROI-fa.com/events.

Rob Delavan   02:03

Awesome, that'll be a fun one.

Adrian   02:09

If you guys want to find us online, you can jump on the podcast website, the getrichslowpodcast.com. It's got links to our events site, to our individual businesses sites, you can find us on there and you can contact us if you have want more information after this episode and about this episode, today, we're going to be discussing financing the home purchase based on some statistics, what we're pulling from again, we love using this as a source because it's got a wide range of information. It's very accurate the National Association of Realtors, this particular stat, we're going to be getting data from the July 2020 to June 2021. That's the latest release from them. The information provided gives us an understanding from a consumer level of the trends that are transpiring and that's really what we're going to look at zoom out of our own little world and look at big data.

Rob Delavan   03:05

Okay, so the first question, Lance, want to throw this one up to you is based on the statistics from the NAR, which is the association Realtors report that we've discussed already and by the way that will be in the show notes and disclosures and so forth for reference purposes. 29% of buyers said that saving for a down payment was the most difficult step in the process. So, just about a third of people, how can you help clients be more prepared for home purchasing?

Lance Johnson   03:41

So, that's a really good question. There are a lot of different answers to this. So, I'm going to kind of go through a couple strategies and so, it depends on the client, obviously. So, let's use an example of a Nike Intel client Columbia where they have an ESPP and some are issues or non-qualified stock options. So, when those best or they're in a position where the clients own them, a lot of times they just stay in a brokerage account that or an account with the company that works with a custodial account and they don't really have the ability to access and a lot of them don't want to sell those shares, right because there's tax well, you can move them to a brokerage account, get a margin, which is a margin loan account, but it's kind of like a HELOC to house ban you could leverage without selling to put the down payment, especially if your cash flow is good. So, a lot of these strategies I'm going to talk about are always going to be brought back to cash flow taxes and financial planning because we will prepare clients on how they would pay off that down payment or that leverage, people that have dual income earners, they both have 401K is most 401K is have loaning privileges up to 50,000 a piece, right? There are some things and not every bank, not every broker has this ability, but you can do and we want to try to get 80% down and so you can do 80% down with a little bit of leverage...

Rob Delavan   05:30

You mean 20% down, right?

Lance Johnson   05:31

Right, [Inaudible 05:36] if you can come up with that short term 20%, you're gonna get a better interest rate than if you try to do an 80-10-10 or an 80-15-5 and Adrian knows more about this, but not every broker can do, has that ability and so that, sometimes you get led in a direction that and so or you just put 5% down, but then you're paying mortgage insurance? Well and so you kind of have to look outside the box a little bit and it depends on if you're moving to the next home and you're going to make your current home or rental. So, before you put it up for market of work, put it up for rental, go get that home equity line of credit on your existing house. So, there's a lot of different ways that you can come up with things to, I don't want to say game the system, but play the system that gives you the best interest rate, which is what our job is, what Adrian's job is how do you get the loan to qualify but how do you prepare for these and then at the end of the day, we have to look at cash flow to make sure that you're not over leveraging, like happened in 0607 that you do, what would happen if you lost a job, do you have good reserves?

Adrian   07:03

I use that same term too and it's probably a misnomer, game the system, but it's just playing by the rules and you know, once you know the rules, you should take advantage of what works in your favor and you mentioned margin loans, we also have 401K loans, I see those two, that's kind of, in a way, a similar product, for lending purposes, in most products in your qualified mortgages, products, your conventional loans and your normal stuff. You don't have to count the payment on that, if there is one against your, it is part of your debt to income ratio. So, that can be a really cool way to utilize pulling money without really pulling it out of your investments and getting the benefit on both sides.

Lance Johnson   07:48

Yeah, and then there's other things where sometimes you want to get that cash in your checking and savings, two months in advance of getting qualified. So, a lot of times, that doesn't happen. So, sometimes just getting everything in order, knowing where you're going to be, finding out what would happen if one of you lost your jobs, those are all important things so that people don't get leveraged and you don't have 07 happening again and that's very important to us as financial advisors. We don't want any clients to have to file bankruptcy so that's not a good play.

Rob Delavan   08:27

And I mean, I guess what I'm really hearing from both of you on this is the key word here is prepare and this is something that you want a takeoff point. It's not hey, guess what I was thinking, Lance I'm gonna buy a house tomorrow, hey, Adrian, same thing? No, give yourself some runway.

Lance Johnson   08:50

I think you're gonna buy a house in June, you start planning January, some people don't really think about it until April comes along after-tax season and you can scramble to get things done, but it's, it's not ideal. So, it's a lot harder. So, Adrian, how do you advise your clients to prepare for the costs associated with financing a home purchase, can you comment on that?

Adrian   09:18

Absolutely, of course, we do a lot of preparation for these episodes and this is one that I had to chew on for quite a while, like most of our answers, it's a your mileage may vary thing and it really depends on each client's individual needs. But what a lot of people don't remember is that there are closing costs associated with a home loan and in a lot, you know this is a national podcast, so we have to appreciate that people are in areas that have very different taxes. I used to write loans nationally when I worked for one of the major national banks and I started in this industry and New York, for example, very high taxes. Taxes are a huge chunk of the closing costs because you're paying Paying the seller for the remainder of taxes for that tax year that they had paid forward when they paid and then you're earmarking enough funds typically in an account your account for taxes and insurance to make sure you've got enough in there your escrow account. So, in the Portland market where we have especially right in the metro where half million and up homes are not uncommon, a lot of times that's a $10,000 amount of cash that I'll recommend, because I like to typically overestimate but your mileage is gonna vary a lot.

You've got to run the math for what you're looking for and as Lance alluded to down payment is another huge factor and I have clients where we sometimes play with different ideas, Lance, I think especially you're working with as a financial advisor, your typical client has a bit more cash and reserves or they might be going for that second home rather than that first time homebuyer and that answer is just gonna be very different for each person and you even have the ability, not a lot of people know this. But after your offer is accepted, you can change the terms as soon as we come in with a larger down payment, but then midstream and say midstream, but really, in that first week, you want to kind of lock in this sort of stuff because you won't have too much movement beneath your feet but sometimes we explore those options. Another great example is people who want to improve a home, if you buy a home, especially one that's got, you're going to expand the footprint of the house, you're gonna make some sort of major renovations, you might want to have more of that cash free, so you go with a lower down payment and you're going to be paying that penalty of having the mortgage insurance on their short term.

But mortgage insurance can be cancelled and again, even sooner than it normally can. The turn times on that reduce when you make major improvements to the home that you can document. So, again, looking at the big picture and just depends on how you want to play the game. Lance again, though, very right, many people, especially when it's not their first home and they've got more capital, or they've got equity, that they're rolling from the home that they're selling, they're going from the starter to the we're going to raise our family home, then hitting that 20% mark has a lot of advantages, not having to worry about mortgage insurance and when that's going to roll off or what the market is going to do and how long it's going to take.

Rob Delavan   12:19

And you mentioned taxes and of course different states, that primarily for closing cost is property taxes to be very specific.

Adrian   12:31

We just rolled off our big kick with Sue on our last episode series. So, property taxes, homeowners’ insurance too, you know, we have people who grab coastal homes, the insurance can be much higher than, I'm in a subdivision over here, I pay less than 400 bucks a year and insurance because I can see the emergency room for my window over here. If you got a place on the coast and it's got a pool on it, you might pay 10 times what I'm paying. So, you've got to know for your specific property, how these factors are going to run in.

Lance Johnson   13:02

Yeah, when I look at your situation in a cost we refer to as deeming the system I kind of refer to is like, I'm ready to show up and I want to know if I'm playing hockey or football, I want to know what the right equipment is and you don't want to show up with hockey skates and you're gonna play football or vice versa. So, gaming is just planning. So, gaming is really referred to when you're kind of trying to strategize and backfill and you're kind of scrambling, preparation and planning is, hey, I'm the ideal outcome based on a certain set of circumstances and I'm just best utilizing the resources I have available to give me the best outcome on a product.

Rob Delavan   13:55

And I would say that's probably the biggest difference in working with someone who's typically has experience in a track record. They're buying a home and they've been working with a financial advising team for a while versus it's the same thing of what you're creating is that runway, that plan, you're really actually working towards a goal and putting a piece of that ownership that move up that move down whatever it is that you're doing. All of those things are taken into account well ahead of time with somebody who's been working with financial...

Lance Johnson   14:33

One thing is, I mean, so many, it's a seller's market. So, you know, sometimes you have to buy a new home remodel it, there's not that many contingent loans nowadays with multiple homest. So, what ends up happening is you got to get all that in place and kind of figure out and then what happens when things go south, are you prepared? Do you have a backup or served? In my 30 years I've only had two clients go into foreclosure and unfortunately, they were real estate agents and because they got over leveraged because they believe that real estate's the only way you can make money but real estate's great, but it's hard to get money out when everything goes south. So, preparation and planning is always helpful is nothing worse than watching a client really fret over and reduce their savings and they're travelling their lifestyle because their house poor, that's an awful way to go. It's just too stressful. So, we try to prevent those things.

Lance Johnson   14:51

All right, Rob, I want to pull you in as well. According to the National Association of Realtors, buyers continue to see purchasing a home as a good financial investment. How do you educate your buyers along the way to make sure that they are getting the best bang for buck?

Rob Delavan   16:05

Well, this is frankly, it's an easy one, do a good job in the purchase and you get into a price point where you know you're setting yourself up for time. That's kind of the canned response; I want to dig into it a little bit more than that. According to the 2021 highlights, which edits page 9 and it's under financing the home purchase. It specifically says buyers continue to see purchasing a home as a good financial investment. 86% reported that they view that home purchase as a good investment 86% this will be documented below and folks are saying that having a home is part of what they think is being a positive thing for building wealth over time. So, I can't argue with 86% of people. What I can do is basically set them up as well as possible in the actual purchase and part of that is everything we've talked about before on this episode, which is no the numbers have a plan, don't get yourself into a house poor situation. Know what just because you can't afford it doesn't mean you should all have these conversations with the financial advising the tax side, the lending side, so forth, that's the biggest piece of education upfront of okay, know what you're getting into, then the best bang for their buck.

When you get into an individual transaction, which that's where like you said earlier, Adrian, mileage will vary for everybody. You get into individual transaction for a specific person. You know let's say it's a client of Lance's and they're super dialed in and all of these points and then the actual property that they turn out loving is a total left field renovation, or, man, the price point is very different from the brand on or I mean, there's so many different things that can happen or that equity line didn't work out. So, what was their backup to that, getting the best bang for their buck is having contingency plans, Plan A, Plan B, plan C, if this then this and that's the piece where if you're going to get a bang for your buck, you need to have resources to tackle when that opportunity comes up. Lance, you said hey, we don't get very many contingent sales right now in the seller's market. Well, you're right, it’s a much smaller percentage, but we have gotten them and when it comes up, when somebody decides, oh, hey, I actually want to stretch because I found that perfect house but it's actually on a little bit of acreage versus not this instead of a three to five year play, this is now a 20 year play, well what's that look like?

So, just being able to hey, there's a property that hasn't been popular because the finishes just suck, like 1983 called and once it's Paisley border around the kitchen, you remember those things are right up at the top of everybody, I had one from the 70s and 80s and it's turning people off but it's a great house. So, that's the key is you have to have a plan, you have to have resources, the more resources you have the better bang for your buck you're gonna get, especially in a competitive market, which we could see a change very soon. I mean, this is spring of 2022, who knows, I mean, none of us have a crystal ball, but interest rates are in the high fours, low fives and six months ago it was very different. So, there's a lot of different things that need to be considered. But I'm never going to be able to totally wrap up with a bow that answer it goes back to mileage may vary, but I'm telling you, you're gonna get a hell of a lot more mileage out of having a plan having your taxes dialed and having your lending dialed in just being smart with your finances, which means you have that team that you're pre-educated. So, that's the long answer to a medium sized question, sorry guys.

Lance Johnson   20:53

We're on a roll...

Adrian   21:04

Lance, would you like to see us off?

Lance Johnson   21:07

So, that wraps up our financial for home purpose episode. Please stay tuned our next episode of the 8 part series in the next episode we'll be learning about home sellers and their selling experience. So, look to our websites for the visual PowerPoint for this and we'll see you next time.

Rob Delavan   21:32

Thanks so much.

Home Series 6 of 8

Adrian    00:02

Hello, future millionaires and welcome back to the get rich slow podcast. I'm your host, Adrian   Shermer and I've got our CO hosts here, Rob Delevan and Lance Johnson. Good morning, gentlemen.

Rob Delavan   00:11

Good morning, Adrian, [Inaudible 00:19]

Adrian    00:17

I appreciate that, today, we're gonna kick off with a success story. I'm really excited about this. You guys were telling me about this client you helped recently and I think it's a good one to kick us off with. So, tell me a little bit about this person you helped?

Rob Delavan   00:37

Yeah, so actually, Lance, I'll let you do this one, we titled this the Power Team of 12. I think we may have been up or down with a number, it might be more like 15 or 16 but Power team of 12 so tell us how what happen there?

Lance Johnson   00:52

It was going back, the whole idea of us getting together in different offices was to create this one stop shop for clients and Rob and I experienced the client that we actually took a client/friend that we went to Sun River with but the weekend before we went to Sun River, she was walking, I think her dog or just walking with her friend in their location and four houses down, there was an open house on a Sunday morning and so as they were walking, they stopped in it was like the beginning of the open house at 10 or whatever, on a Sunday and they walked in and my client was like, right next to her best friend, four houses down and she was already talking in the financial planning meetings of wanting to move and the house she was in was the one that was post-divorce and all that wasn't her dream home and so all sudden she walks in and she's like, she calls him up and says, hey, I remember we did all the planning. I think I found the house. She's like; I need somebody to help me make an offer because we've taken offers today. So, I called up one of Rob's team members and I think you were somewhere else Rob and one of his team members get out, ran out there, and looked at the home write up an offer literally probably got everything done an hour later. I mean, it was just amazing. She got out of it, on her way back to her house she calls me and she goes meets the clients gets showered up goes out there, hour later makes an offer on this house and obviously at that time this was at I can't remember exactly, August 21 because we went to Sun River at that time and went out there, one of maybe 15 offers they ended up getting it, she did and then the next weekend, that client Rob ourselves in Sun River are sitting by the pool and she found out that she was the winning bid and now all this stuff has to happen and she's sitting by the pool and we had to get an inspection done. So, we knew somebody there. We had to get refinancing talking about that. She was buying a home before she sold her home. She was going to do some remodeling, so there was an architect and they need to be involved and then there's [Inaudible 03:48] and the handyman and Lance Bowles Czar, there was like 12 Different BNI members and she's sitting at the pool while Rob and I are playing with our kids and tax returns were done how to get that stuff all submitted, statements were submitted from ROI financial and she's like literally doing this within a two hour, she connected with like 12 people she's like, this is unbelievable. I literally just had to say yep, go out there, talk to this group and so this team of 12 people, she's sitting by a pool, negotiating finalizing the house and then setting up the plans of selling our house and remodeling and what it all looks like and she's like, that's the easiest transaction I've ever done even though it was pretty complex, actually.

Rob Delavan   04:46

There was a lot of moving parts, she knew exactly she was prepared, you know, from a personal finance standpoint and then it was just a matter of knowing the right people and it's pretty awesome. I mean, that's like the culmination success story for everything that we've been trying to do with, all of our businesses together.

Lance Johnson   05:10

I feel like everything was planned out ahead of time and then it was just, when the right time came, we just call upon the right people and she wasn't stressed about it she was sitting by the pool, we were there, we stepped in when we needed to step in and told her to call this person and that was pretty impressive. It was the one time where, you know, from start to finish, she ended up not selling a home and then buying one that has its own stresses. But she bought she had enough equity and other monies to secure the loan, get the new house, remodel it and then sell the home at the right time to then ultimately have one home with one mortgage and a lot of moving parts, but other than supply chain scenarios which we really can't, that's not our issue but everything went as smoothly as can be and she's been happy about it.

Rob Delavan   06:22

Tremendous success.

Lance Johnson   06:23

We should have her on a podcast.

Rob Delavan   06:25

Yeah, that's what I was thinking as we describe this as let's have her on an episode and we'll just say interview her start to finish and they might need to be cut up into two or three parts because there's a lot of story. So, it's pretty cool but thank you guys for allowing us to share that and back over to Adrian   for upcoming events.

Adrian    06:48

Best place to find events that are related to our podcast and to the businesses that we're all representatives from ROI-fa.com/events. It's the portal to everything for us right now and you can find our website links as well to get to our individual businesses if you need our services. In today's episode, we're going to be discussing home sellers and their selling experience based on stats received. We use this group a lot. It's a great source of information, the National Association of Realtors, sometimes abbreviated as NAR and this uses their stats from July 2020 through June 2021. The information provided supplies and understanding from the consumer level of the trends that are transpiring and just a reminder, this is part 6 in our 8 part series on sort of housing market and these trends, Rob, I'm gonna kick it off with you, let's see here.

Lance Johnson   07:48

Yeah, just so you know the full article is on page 9 of the PowerPoint you can find section titled home sellers and their selling experience and so you can find that on our PowerPoint.

Adrian    08:05

We'll have this linked here. So, Rob, based on the statistics from the NAR article, the final sales price from July 2020 through June 2021 was a median of 100% of the final listing price, the highest recorded since 2002, do you anticipate this to continue to be a trend?

Rob Delavan   08:30

This is actually a great question because our information through the NAR in this article and so forth is you know always basically looking backwards and the short answer is to a degree, yes and from our my experience since this information came out, which was late 2021 to the beginning of 2022. We've seen continued competition, what we're really talking about is a seller's market across the country and with that medium 100% of the final listing price that means the average no matter this is across all markets in the US you're actually selling for full list price which means the dogs on the market right and this is where I'm speaking from my experience is the dogs on the market that really shouldn't sell are being offset by the ones that are great properties ready to go usually move in ready already updated and so forth that are selling for way over list price. The average being from the article here and the statistics here right at 100% and what we've found over the years or a decade and a half that I've been working in real estate is the dogs on the market that the crummy houses, if you will. They are all He's overpriced and what has been happening is the ones that are moving ready and basically the hot commodities on the market, the top 50% or more are looking at selling for way over. So, 100% is a big deal. We haven't seen that since 2002. We've always seen less than 100% but even though we've been in a increasing market since, basically 2010-11. So, yes, I anticipate this to continue. No, I don't anticipate it to continue as much as interest rates change and so forth, which we'll get into and some continued discussion in this episode. What we're really dealing with though is wow, we hit that 100% this market has been smoking hot and it really takes a dialed in buyer in a seller's market to be able to compete and that's what we've been experiencing and we're still experiencing that and this is late spring, not quite summer of 2022 at the time of recording of this episode.

Adrian    11:14

Yeah, it's a significant number of our audience who may not understand because they don't buy or they haven't yet gotten to that tier of buying and selling houses. You experience this, if you've ever tried to sell something online, right? You never sell it for what you list it for. If you go buy a car, you're not paying the sticker price on the car, there's always gonna be some negotiation down for the most part unless you're getting the big hot item of the year. Even jewellery, everything right, there's that starting price and then there's normally a negotiation down for the median to hit 100% really means high indicator of how hot iron hot this is for market.

Lance Johnson   11:50

And it will be interesting on this where we're back to when you look at interest rates, you know, you had the roaring 20s were interest rates, came down to 1950 hit its low point, a four and a half percent and rose for 30 years to 1982 and you were looking at 16, 17, 18% interest rates, then came down to April of 2013 and then bounced around and then recently we got pandemic rates right, to stimulate the economy. Now they're back up and what happened in 1950 is your grandparents, my grandparents, they stayed in their house for 30 years. As interest rates rose for 30 years why would you want to go in have an increased interest rate, increased house value and so you're moving to a bigger house but now you're paying three times the mortgage rate. So, what did they do, they stay put in their house with that low interest rate for 30 years and they just remodeled the house and expanded the house. So, it'll be interesting to see how that affects us because it'll be less homes for sale, because people are going to not want to get rid of those 2.5% interest rates and so the supply will be lower, the demand will be greater and so we interesting to see how that if we don't have a repeat scenario.

Rob Delavan   13:21

Especially with the dampening, if supply goes down and demand stays the same or increases prices go up, but we have a big dampener right now in interest rates, so it's going to be an interesting, very interesting next few years.

Lance Johnson   13:43

Okay, Rob and Adrian, based on the NAR article 46% of home sellers trade up to a larger home and 28% purchase the same size home, do you believe people are able to access more home due to low interest rates, what are your thoughts there?

Adrian    14:04

It's a resounding yes, for me for sure. I always find this data really interesting and I'm very excited to see what the next year's statistics bring to the table for us to be able to look at how the rates actually affected the real world values. But I know at least anecdotally, the clients that I've been working with a lot of people were able to upgrade and then have the same payment because they grew equity at the same time. So, they had some money to put down they didn't have to pay mortgage insurance on the second home, even if it was more home, the amount of equity that they rolled, especially over the last few years. We had a few people gaining six figure numbers over a year, which is historically not the case and shouldn't be something you expect that you're gonna buy a house and a year or two later, you're going to have six figures in equity, but it happened to some people and it gave them it really unlock the power for them to jump 5 or 10 years ahead in what would be the normal cycle of owning real estate. So, it's a tricky one, I think that the low interest rates, obviously, to me, were a huge determining factor that brought buyers out into the market as well and that was we're looking at that trend turn itself around, I've already had a few of these clients who, they want to sell the house that they bought a year or two ago, because their family changed, they've got some sort of personal event that pushes them into the next property and they're finding that the payment relative to the house is a pretty sizable jump. I've got one right now where it's it was over $1,000 a month and the house that they're trying to upgrade to was less than $100,000 more, so it's an interesting problem.

Rob Delavan   15:45

Yeah, I would agree with you, Adrian, with Lance's question here, they were able to access more home, you know, due to the low interest rates, just the carrying cost with interest rates is affected positively when the rates are lower and as they go up, the carrying cost becomes more expensive. So, I think we're gonna see some transition there. But looking at those statistics from this NAR article, almost half 46%, they traded up to a larger home, most people upsize. If half the market is doing that, then 20% purchase the same. So, really, that only leaves you my rough math is 25% less, right? Give or take and you're looking at 25% of the market downsized so you really start getting into what is the supply of homes, our homes like there's all sorts of different conclusions that you can draw from this data, the bottom line is everybody really wants to know, okay, this was happening in the past. In the future, nobody has a crystal ball, interest rates have risen, we're in the fives. Now, again, this is late spring of 2022 you know less than in the last two years, at one point we're at 2.5, give or take. So, I mean, interest rates have had more than doubled. That's definitely going to create a change in the market. So, that's where things are gonna get really interesting.

Rob Delavan   17:29

Okay, so the third question, actually, I wanted to pose this to Lance to start us off, with the rising mortgage interest rates, which we talked about going from, you know, in the last couple of years, two and a half and we're over 5% and cost of living, which is inflation. How are you advising your clients when it comes to selling their home?

Lance Johnson   17:51

Well, that's a [Inaudible 17:53]

Adrian    17:55

Get your pencils out, audience.

Lance Johnson   17:58

Yeah, there are all sorts of scenarios that come about. So, the first thing I'd say is financial planning here, are you in the future? Is this your forever home, is this the house, you're going to make a rental? You know, are you going to make this house in the Portland area a rental and you're gonna go live somewhere else in a more tax advantageous state, a more rural place, you know what I mean? So, do you have to sell the prices are pretty good right now, people can clean up a lot of debt and have make mortgage interest rates and nonevent by consolidating things. So, there is just a lot of, there's more questions than answers to this question and it really gets down to the individual person scenario of are they living in Portland and are you doing Roth conversions and are you going to move somewhere else in a more rural place and a more tax advantageous state? There's political issues now, I mean, there's all that now. So, obviously, with rising interest rates, the return that you have to receive on investments, whether it's in ROSS or IRA, how do you know you want to pay down debt and free up cash flow? When you're at 2.5%, geez, that's free money by the time you look at tax advantageous nest, depending on your situation but if interest rates go up and you're at 567 percent in the future, that's better than a bond at that right now, by paying down debt and getting your debt as low as possible. So, I just think you have to look at your performance of investments whether it's tax free or not and then really, you start to get 567 percent interest rates, you know, there's a guaranteed rate of return by paying that debt down and freeing up that cash flow. So, just depends on are you in retirement or not, where your assets are? There's a lot to that question, that's a very simple question with...

Adrian    20:21

Personal risk aversion

Rob Delavan   20:23

The fun part about that is and you said it multiple times there, you know, depends on where the clients at, I think the biggest thing is, there's an arc and a lifetime, right? So, we've talked about in this episode upsizing your house, well, we didn't really talk a lot about downsizing the house. So, it's a very different strategy, when you're downsizing the markets hot, values are way up, but interest rates are up, it's a fabulous time to downsize, if your life is conducive to that.

Lance Johnson   20:54

Right, so even though interest rates and blown up in the last you talked about from that June 21, to now so June of 2021, sorry, not June 21, interest rates were two and a half percent, coming out, remember, we got back into a pandemic, it was starting to rise it lowered interest rates and you're right, I mean, the values of properties have gone astronomical in with, there was a greater demand for homes, to either downsize or whatever change before interest rates went up and so the values of homes went up. Now the interest rates have gone up, you normally see one to two years later, the backlash of that and then all sudden, now, there's not as many buyers, there's equal amount or you get one offer and then the first weekend, you put it on the market, you know what I mean? So, it'll be interesting to see that, but when you can go from a house that you bought a client bought a house for 760 and then 18 months later, sell it for 961, it's craziness, right? You sell it and downsize or move to a more rural area or a rural area and more tax advantageous in retirement is more conducive to retirement life. Maybe you're in a position that you don't have a mortgage and all your debts are gone and that's a nice position to be going into retirement. So, it just depends on what your stay for life is. I think it's going to be interesting on this one is how it affects the corporate world. So, in one end, everybody can work remotely and on the other end, just like we experienced, sometimes people are starving for that interaction, facial interaction with people and each business model is going to be different in how they deal with taking care of clients, forcing them to move.

Lance Johnson   23:14

So Rob, you want to wrap up kind of this is your market with home sellers?

Rob Delavan   23:19

Well, yeah, so the final thoughts here are just this, I think the final thoughts on this piece are just this concept of, we're heading into change and this has been a lot of fun so far as we continue to explore this, this was number six and an eight part series. Seven and eight are coming soon and in the next episode number seven, we'll be learning about home selling and real estate professionals and the one constant right is change. So, that's what we all got to deal with.

Lance Johnson   23:57

Just as a point, I mean, our clients have benefited from a rising real estate market above average, especially for Portland area. The market has done extremely well, whether it's been propped up by stimulus and all that, a 12 year bull market run. It makes a lot easier situations for qualifying for mortgages, it's safe to say that our clients and ourselves have benefited for getting things done and it probably didn't take as much work as it will in the future. We're probably going to have to work twice as hard to get the same results for clients and in some cases, we might not get those returns going forward because we've had them in the past, so we just got to be real on setting lower expectations that are still achievable, but like it was nice for a while where house price people are getting higher house prices and higher investment prices to pay for bigger down payments and with lower interest rates and I think there's gonna be a pain point in the future of it's not going to be as easy and more planning is going to take place.

Rob Delavan   25:18

Yeah, well, thank you so much, gentlemen, for this, this was a fun one and we'll look forward to hearing from you guys on the next one episode seven coming soon.

Home Series 7 of 8

Adrian   00:02

Hello future millionaires and welcome back to the get rich slow podcast. We are your hosts, Adrian Shermer, Rob Delavan and Lance Johnson. Good morning, gentlemen.

Rob Delavan   00:11

Good morning, Adrian and good morning Mr. Brilliant at the basics, Mr. Johnson.

Lance Johnson   00:17

Good morning, y'all, good to see you guys.

Adrian   00:21

And welcome back to part seven in an eight part series, home Selling and real estate professionals is the title of this one.

Rob Delavan   00:31

Yes, episode seven of an eight part series again and this is a fun one. It talks specifically about my profession.

Adrian   00:40

And before we dive into that, I would like to talk about its kind of dressing we call it the success story, right? We often like to put a little bit of joy at the beginning of our podcasts. This one's kind of like a roundabout, it takes a while to get to the success.

Rob Delavan   00:57

Yeah, this was an interesting one. I talked about it before with our producing side and she said, Ashley, our producer, she said, okay, well, this is what I'm going to call it don't burn bridges and do your homework. Yeah, so an interesting story, it actually involves some clients that Adrian and I had worked with in the last few years and what ended up happening is they were doing their lending with Adrian and pre-approved going through starting the process and it was down to working with the Delavan Realty Team, my own company and my team and these particular buyers we're getting their down payment from a family member, I think it was an aunt or uncle or something like that who was very much pressuring them to use their realtor and hey, you're getting the down payment from him, so,  ultimately, we spent a little bit of time with them talked about our processes and I assume they talked to that other person, I don't know at what length or level, but they decided to go with that other person that was, their aunt, her uncle's, their down payment, family members, favorite person. So, they ended up going through a transaction and successfully bought a house and Adrian again, I believe you did the financing and they were able to get through a transaction and so forth. Well, I didn't hear anything from them. We just okay, hey, great, you know, no problem, we get that, you know, you have a family connection; we wish you the best of luck. Well, they ended up buying the house and we didn't hear from him for, you know, a few years, I don't know, two plus years and long story short, a member of my team Rachel, who is the person that they had been, initially talking to, hears from them and they're selling the house that they had bought back then with that previous broker and buying a new house, that house wasn't meeting their needs anymore and so forth. They're doing, kind of an upgrade, so to speak. So, of course, the first question she asked is, well, why are you calling me? Shouldn't you be using the person that you had incredible success with because they did a great job. So, this is the fun part. She's they said, oh, well, they were a little sheepish about it and they said, well, we made a big mistake and we went with this other person and there was some specific feedback that in the conversation, you had Adrian and maybe you can share that their experience when they bought that house why they said they would never ever in a million years use that person again.

Adrian   03:53

Yeah, I was sad because they actually had used Rachel's resources too, they had had her bring them out on open houses and then there was just a super minor schedule conflict and again, they had this other person and they thought, you know, they were first time homebuyers, how different could it be very different as it turns out, because the most egregious thing that this guy did, he wasn't great at negotiating and I could pick this apart in my own personal opinion. But when he told his clients, I need this commission cheque because I'm in the middle of a divorce. I was bewildered, I couldn't believe that a professional would actually tell someone they need the commission check, let alone for something like that. You know it's so personal. It's so aggressive and he wanted stuff to close and he really demonstrated to them to like, Hey, I'm not negotiating for you. I'm gonna go shooting for me. I'm negotiating for my pay cheque. I'm playing a short term game here and you know what, these people are going to come back to you with that kind of attitude and it really stung me because they did come back to re because she took the whole thing with Grace she didn't blow up on them for wasting her time and they really resulted in two transactions for her, she got to take both sides to sell and buy.

Rob Delavan   05:14

And so the moral of the story, don't burn bridges, number one and then number two, when you're working with professionals and this isn't just the realtor world, there's pretty low barrier to entry in our world, you have to take 150 hour course and pass a test. But do your homework with the people that you're working with? I mean, this is like pulling from personal experience shameless plug for you two gentlemen, but I don't work with people that are part timers in other industries, I certainly don't work with a financial advisor who just started yesterday, or does it on the side? Same thing on the lending side, I mean in my personal opinion, again, I don't know how you verify this legally so to speak, but I mean, like, you work, you want to do your homework and work with people that truly are there to serve you and have a huge reference list and past successes to backup yet their strategy moving forward. So, long story long, don't burn bridges, do your homework only work with people, I don't know. I about fell off my chair when I heard that statement of a realtor saying [Mixed Voices 06:37]

Adrian   06:47

And just hear the regret my client's voices. I mean, it was just such a sad story. But again, lessons learned, they certainly learned their lesson the hard way on their first time purchase and they won't make the same mistake again. Pulling out of that fun one, we've got our website ROI-fa.com/events is a great place to find out what is happening in our world. We do stuff all the time, jump on there to get involved in some fun stuff and to get links to our individual sites if you want to contact us and we'll find out more about what we do. In this particular episode, we are going to be discussing the home selling and real estate professionals based on stats received from once again the National Association of REALTORS from July 2020 through June 2021. We use this broker data all the time because it's highly accurate. The information provides an understanding from the consumer level of the trends that are transpiring.

Rob Delavan   07:48

Excellent and part seven of eight and for the full article as the viewers that are looking at our PowerPoint here you can see it's from page 9 of that NAR article titled home selling and real estate professionals and everything is in our works cited below and show notes.

Adrian   08:14

All right, Rob, based on the statistics from this NAR article 68% of sellers found their agent through a referral from a friend, neighbor or relative or they use an agent that they'd worked with before to buy or sell a home, how important are personal referrals to your business?

Rob Delavan   08:34

Well, that's an easy one, personal referrals and across the board, regardless of where they came from but relational referrals are the foundation of my business. I do not do basically any advertising, to try to get business any other way other than just through the myriad of personal relationships I have with buyers and sellers themselves and more importantly or well, just as important is the business relationships of all of the people that I do business with and that I end up partnering with to share those referrals across the board. So, they're the ultimate importance. We are a referral company in that is the source of our business. There's lots of different ways you can do it. I'm not saying that that's right or wrong. I'm just saying that that's how I've done business as long as I've been in real estate for the last, I don't know, 16-17 years and the reason for that and I think that's really the gist of this question. The reason for that is if I have a relationship with Lance and we're doing business with a, say a common client, the accountability for taking the utmost care of that client, whether he reached out to me or I referred it to him, same thing with you, Adrian is the strength of our relationship dictates basically the ultimate accountability is actually not just to that client, but also to Lance checking in, hey, how's it going? What's going on with that client? Did you do, we'll actually, be able to converse through, have you done these different things and over time, we figured out how each other work and the best way to serve the client that we know how. So, it's like playing high school varsity sports and taking it to the pro-level, it's not the same game, if you can bring all of these professionals to the table. And, I learned this in a lot of different ways and I would say the culmination we're always growing, but the combination of that is right now is, the fact that the three of us do this podcast, high levels of trust, high levels of expertise and we go out there and we go to war for our clients for each other. So, I'm sure you guys have something to add on that but...

Adrian   11:14

I'll stretch your sports analogy even further. I mean, you couldn't pluck some of the best players from every team, you couldn't take players and randomly chuck them together and expect the same results that you get if you have a group that practice together. So, there's a honing that happens to the more every time we have a transaction, we get a little bit better at working not just on the job that we do, but working with each other and reading that, in sales, you'll hear this thing a lot, the triangle of trust, you get that third person in there and a triangles the most rigid, solid shape and it's billed as a very important thing. But it really is for a reason, because it's, again, that accountability, like you mentioned you're not just doing the job for the client anymore. It's not a release into the hands, it's a real, there's a lot of trust that has to be established and it gets established as you repeatedly make that success for the clients together.

Lance Johnson   12:32

Are you gonna move to the next slide?

Rob Delavan   12:35

That would be helpful, okay, well, let's do another pause here, Avery and then jump right back into it.

Lance Johnson   12:44

Rob, Adrian, from a referral standpoint, how valuable is the referral relationship we all have? I think you were touching upon that...

Adrian   12:53

Yeah, mission critical. I got to say too, there's this extra layer, I was thinking about this question, we go over this stuff before we shoot and this one kind of struck me because especially with the two of you guys, I think that we've developed the kind of professional trust that I can get negative feedback from you guys and I can give negative feedback and we're not saying, when you just get to know someone and you have this professional relationship and you're passing referrals like that, it's easy to get into a mode I've had people I've worked with where it's like, we could have 10 successes in a row, we have one failure, you're a failure, I hate that this happened and I'm just gonna use somebody else because that's the method I'm thinking is going to stop failures from happening in the future and you'll watch people kind of burn their way across an industry with, I've seen realtors that use 10 different lenders in a row, I've seen the opposite direction as well and the real power comes from being able to give the constructive criticism and to go, hey, man, I think you can do this better for the client without feeling like a personal attack and being able to have the power to take that information in and go, okay, let me change my business a little bit, because you're the person I work with the most and I want to hone myself, not just for the best individual client experience, but holistically, how can we all work together towards this client goal and I think it was that last episode, you guys had this great success story with 12 different professionals all working together. A lot of that was because those professionals could communicate behind the scenes and from the clients perspective, they're not having to re-explain everything and that's some of the beauty of working with someone like you Lance, your team provides a packet of information to me and that seems really convenient to me, but it's super convenient for the customer. They had to send all that stuff to you or maybe they didn't even have to because they already have their accounts with you. So, I can just say, hey, give me their investment accounts for the last two months and boom, it's in my hands. The client often goes how much is in there I don't even you know like there's and that's such a power sign when the client is so not worried about where their money is that they can just take their hands off the wheel and go I'll just wait till you know our meeting every year to see where things updated. I get to focus on my own life, my kids my job, my passions and not have to check the account balances every week and panic. So, I think it's critically important because we can be each other's coaches in a way.

Lance Johnson   12:54

Yeah and I think we talk with our BNI group and my message is always about processes and we all win if the clients win. You start with that in mind is how can we have an impact a positive impact on our clients, everything has to be for the benefit of the client, it's almost without being said, but it needs to be said sometimes, like you talked about that success story where it was about, it was about the real estate agent, not about the client. That's not somebody, I want to have a referral scenario when they're putting their own scenarios ahead of the client and then what works, let's say you have 10, 5 closes in a month, that's a great month and then all of a sudden, now, you grow in your abilities and you have staff and then all sudden, now it's 7 to 10. That's double, that's 50% increase over and you think what works at 5 closes, doesn't necessarily work at7 and 10. If you don't have the right support staff and so as you're scaling and your business is growing, your processes have to get better and so that the client wins, right or more clients win, right? And so referrals important, you have to help people through processes and that's why I often all my members, read the book, the goal and if you can get that processes going in that interaction, that communication, we're always striving to be better at communication, it's never enough and so with that, if you can improve that the relationships become better, the communication becomes easier. They don't have to necessarily communicate directly to us, they can do it through our staff and that makes it really valuable to the client.

Rob Delavan   17:30

The only thing that I'll input into this question is, when we do refer, our names are on the line, our relationships are on the line, that can be a positive, in the sense that we know they're gonna get taken care of, because we trust each other's processes, because we've helped Hone each other's processes, through systems and so forth, like you're discussing, Lance, the flip side of that is something goes sideways. You know I mean, it's not just my reputation, it's my referral partners reputation. So, it cuts both ways and the stakes, in essence in a referral situation are actually higher, not lower. Yes, a high amount of trust from the get goes so you can start off instead of from ground floor, you can start multiple layers up because of the shared mutual trust. But man, if it goes negative, it goes negative. So, stakes are high, not-withstanding legal requirements and all of the other things that we have to do in our respective professions. So, I love this and you guys know how much I appreciate, how much you care you take with all of our mutual clients.

Adrian   18:39

Yeah, that's a cool point too because if you carry through a failure like that and you let someone show you how they respond to it because every, every business has these these points of, you didn't do what you wanted to do for a client or something came up that, you know, causes a pain point. It's how does that person react to that and again, growing that relationship as part of that.

Rob Delavan   19:11

Okay, so the last question I have actually is for you, Lance, in your opinion, why is it vital for your clients to work with real estate professionals?

Lance Johnson   19:22

Great question so, right from day one, I've always been a proponent for real estate because of my knowledge and taxes and some of the advantages of rentals and vacation rentals and commercial business owner. So, I don't want all my clients to have just stocks and bonds. Yeah, I probably would make more money but I think the world works in imbalance. Real estate is a real commodity that you can touch and feel where something you can't really touch and feel a stock or a bond and exists or a commodity when you can see gold, but not too many people have gold bullion in a safe in their house, right? So, if you believe in real estate, which I do and the benefits tax wise and so forth and so many making your wealth, then you got to go out there and it's buyer [Inaudible 20:35] and so there are things and people will go to me and they'll be like, I've been looking for houses and I'm like, oh, how many of you see and they were like, well, I looked on Zillow, looking on Zillow is not looking at houses, the point of view of all the good stuff, seeing the bad stuff and also, it's hard to determine the good bones. So, all the houses now that come on the market, they're gone within a day. So, now the question is, the next layer is, are there houses out there that have great bones and in the future and rising interest rates, you're gonna get a good deal when you can remodel that house and have a special flip like, there's all the shows that are about flipping and remodeling houses and one thing I learned about all that is you got to bring it all down to the studs and redo it, because the codes and all those things but working with a professional really goes out and helps you weigh the options of what could be. And, I often talk about the dream over here and how do you make dreams a reality and you know it, the last 30 years real estate wise is going to be way different than next 30 years and you're going to work twice as hard and make less sales, possibly, but the values will be up and they're going to really need those professionals to help kind of bridge the gap between negotiation, I think that's some of the best is you take a little bit of emotion out of it and really get down to a final point quicker and then help educate your clients about what you're going into and I think that's crucial.

Rob Delavan   22:32

And that works not just on the realtor side, real estate agent broker if you will, depending on what state you're in, but also lending, where we've probably had the most problems, in my experience over the last 16, 17, 18 years that I've been working in real estate. The most difficult hurdle has always been getting unique financial situations of individuals to fit into the box that lending typical [Inaudible 23:06] lending standards require and that's where you have to bring a breadth of knowledge of, hey, this is how it works and you have to have a team and that's the piece where that real estate professional, the lender, the lending professionals is also huge and that relationship and this isn't, you know a Adrian and Rob show. In that sense, there's an incredible amount of amazing lenders, real estate brokers, frankly, financial advisors out there, in theory, we're out of the Portland metro area, but this is a national show, I guess it's a universal show, right? anybody anywhere can hear it, the concepts don't change. You have to have what Lance said somebody who's educated who was committed to educating you at the level that you need to have to be able to know what your options are and then try to make the best choices you have based on in a given situation.

Lance Johnson   24:09

And selfishly, sometimes I think, if there was a little bit more planning ahead, for those clients, they, sometimes it's the right time to stretch yourself and then sometimes it's the right time to consolidate things. So, when the market was going up, I was always like, if your goal is to retire with no real estate, that that sometimes is one person's desire for safety and so when you get those wins, you need to take those wins off the table and pay down debt and I think a little bit of planning goes a long way when all of us wrong and so that's a selfish interest that clients should do planning, but I think the experience becomes a little bit better when we can plan out should I go for 550 home, should I go for a 650 home or a 750 home and my question is, are you starting at 750? Are you starting at 650 and then now you have to settle in on 750 because the markets hot? And those are all discussions that helps clients go through, there's nothing worse than it's kind of like never bride and bridesmaids always and you go up to bat for a house and if you're not number one and you're 2 through 25, it doesn't matter whether you're 2, 3, 4, 5, you're just not number one.

Rob Delavan   25:43

Almost first loser

Lance Johnson   25:48

It doesn't matter, that experience doesn't become a positive thing and I think, a little bit of planning on what you can afford and go for, interest rates still in the scheme of things are low. I mean, I know it's five and we haven't seen him for a while but it's still a good rate. I mean, it's as good as 2.5 but 2.5 was unique as a pandemic, when's the last time you guys lived through a pandemic?

Adrian   26:14

First for me, personally...

Rob Delavan   26:17

First for all of us I believe so.

Adrian   26:23

Well, that's a wrap for our home selling and real estate professional’s episodes. Please stay tuned for our last episode in the eight part series coming up next. In the next episode, we will be learning about for sale by owner sellers. Thanks so much for your time today, guys and thank you to our audience. As Rob said, it could be global, it could be interplanetary, I liked that idea, maybe there's someone out there listening on the other side of this galaxy.

Lance Johnson   26:51

You think the space station people are listening?

Adrian   26:53

I think so, they're looking down going, oh, maybe I should invest in some of this thing.

Rob Delavan   26:58

They need a little get rich slow, thank you, gentlemen, always a pleasure.

Home Series 8 of 8

Adrian   00:02

Hello future millionaires and welcome back to the get rich slow podcast. We're your hosts, Adrian Schermer, Rob Delavan and Lance Johnson. Good morning, gentlemen.

Rob Delavan   00:10

Good morning.

Lance Johnson   00:12

Good morning, Adrian.

Adrian   00:15

And thank you for joining us here for part eight of eight in our series on real estate. Obviously, real estate is going to be a subject we revisit a number of times, but this is focusing on some of the National Association of realtor data and how it pertains to the market in the recent year.

Rob Delavan   00:34

Excellent and you can find us on Apple podcasts, Audible, Spotify, Amazon music and probably dozens of other platforms. Also, our video streaming of this is on YouTube on our channel and I wanted to just actually ask you, Adrian, about where you're at and why and I think there might be a little bit of a success story there.

Adrian   00:59

Yeah and there's a photographic hint behind me, it might be a little difficult, even in the video to see. But behind me is the coast and it's the Nubble lighthouse, allegedly, I hear and I was raised in this town. So, this might be one of those expanded legends but the Nubble lighthouse is one of the most photographed buildings in the world, the most photographed lighthouse in the world. Just because of the way it is, allegedly, yeah. Every town has its biggest fish story. But yeah, here I am in York Maine and I'm here because of my brother's wedding and normally, if I had many of the other jobs that I had in my past, I would have had to zip out here for the wedding only I would have missed the bachelor party that happened two weeks prior, which is just last weekend now for me and I would have had to sort of position myself for I don't know, maybe a week off. You know, that's how jobs are on this part of the world anyway, you can only take so much time in a year. But I'm very fortunate because my job gives me the ability to work remotely, I was even able to help a client in the middle of the bachelor party and it was in the morning, mind you before any festivities but and I'm able to rely on a team of people who keep the machine running when I can't be there to man that controls and I know that you both have experienced this too, is that kind of fun moment where you go.

Well, I hope everything goes well and then you come back and you realize just how much work got done while you were gone and you start to question whether they actually need you there at all. But that's a good sign in the team. You know, obviously, it can't sustain forever. But to be able to take time, I'm taking a nearly month swath of time off and I'm doing a lot of work while I'm here which on the front of things might seem like a downside. But the reality is I get to chunk my vacation up instead of trying to cram everything into you know, one week of freedom. I can go okay, I'm going to work a couple days and then I'm going to have this time, I'm going to be able to have dinners with family and work during the day and it's a really freeing and beautiful thing to be able to have that much flexibility to be able to shoot video from a different place.

Rob Delavan   03:24

Same thing and actually also in Maine, which is interesting, Adrian your Maine internet glitches out there for about 10 seconds…

Adrian   03:34

I did, I think we're gonna have to edit around this actually, because I'm...

Lance Johnson   03:39

I think this is great. So, I think of this success story. If you were in Portland, you would have work would have been around the wedding, right or your personal life is around your work and you would have gone in to whatever you could go to. Now you can move your work to the wedding and still do the same thing like you were in so it's, I mean, that's the world now today is we have that advanced capabilities of doing both and it doesn't matter what town you're in, which is kind of cool, you know, in, in certain industries, right. So, like, if I'm an auto repair shop, I can't bring that you're right. But in the financial mortgage real estate world, you can do it from where ever, I think it's very lucky from a cruise ship ones.

Rob Delavan   04:27

Yeah, there you go. So, I want to point two things out number one, Lance does this in Maine for around a man two to four weeks a year because that's your family heritage home up in northern Maine and I had the distinct pleasure to join you guys for a week and a half on that a couple of years ago, which was cool. The second thing I want to point out is the balloons to glances left, we had a birthday boy this last week. I think it was what like 34 Lance...

Lance Johnson   05:01

34.

Rob Delavan   05:02

1. So, you know, maybe just add the better part of two decades to that. But hey, you know, not not a full two decades. Anyway he does get a little feisty, but we were able to celebrate just a little bit of his birthday this last week, so it's always (No audio).

Lance Johnson   05:44

What's today's podcast? You're gonna talk a little bit more about that.

Rob Delavan   05:52

So, Arian, you can edit this section out. We'll do another pause here.  Yeah. Adrian, you were gonna do events and then it'll show today's podcast. What is the next thing so okay, Avery we're gonna pause here. We're gonna pause for a few seconds starting now Avery cut it on out.

Adrian   06:17

As usual, you can find out more about what we're doing locally at ROI-fa.com/events. We've got a ton of learn and grow events coming up. We've got our summer bash in August and I know you guys have been as excited about the photos with Santa. It's a little early to be talking about it. But we're going to be doing some photos with Santa in November, which is really cool. So, you can get those Christmas card pictures out. So, it's not a bad time to start thinking about it.

Rob Delavan   06:44

Yeah, that'll be a fun one.

Adrian   06:49

In today's podcast we're gonna be discussing for sale by owners or as we say fizz bows, based on stats received from the National Association of Realtors, from July 2020 Through June 2021. The information’s provided supplies, understanding from the consumer level of the trends that are transpiring, if you want to read the full article, you can see page 9 of the NAR article. The section is titled, for sale by owner FSBO sellers and we're gonna have a full link to the article in the works cited on the show notes. So, anywhere you're watching this, check out the show notes, you can actually go and check out some of this data yourself. Draw your own conclusions. All right, Rob, let's start off with you. Based on the statistics from the NAR article 57% of for sale by owners knew the buyer of the home, what have you found, in your own experience to be true?

Rob Delavan   07:50

So, this number actually doesn't surprise me at all but it probably surprises the folks that that aren't exposed to, you know, what I, in my day to day experience have of, hey, do I try to sell the home by myself and try to save on brokerage commissions? Which, you know, my company is, you know, in that 5 to 6% range or do I try to do it myself and this 57% of for sale by owners knowing the buyer. The reason why it's not surprising is we see this all the time is we'll get the call, hey, can you sell my house, unless we can sell it to our tenants, or unless we can sell it to you know, my son and his soon to be wife or, you know, unless I can sell it to a family member or the friend or whatever and it's always an interesting conversation because I always say great, we'd be happy to help you and then end up with the responses. Okay, you want to sell to this person? What numbers have you discussed? Oh, well, we haven't but we want to give them a good deal. Okay. So, that person, whatever it is, is the recipient of a below market deal and there's some statistics that we'll talk about later in this episode, about average sales for sale by owners. This is a key component of that is a lot of for sale by owners, they just it's a private deal. They don't necessarily want or need to pay a broker and a commensurate brokerage commission to do that and it's because they're giving somebody a smoking deal. So, there's an element of that, that you know, we just we have to cover in this topic. So, yes, I have found this to be at least half the time and according to this article and for sale by owner section in this article is we're looking at okay 57%. So, over half, yeah, selling it typically to someone and they're selling it below market. So, that's the short answer and we'll I think we'll develop that a little bit more in the conversation as we continue here.

Lance Johnson   10:26

Okay, Robin, Adrian for our listeners when a homebuyer is purchasing a for sale by owner, are there any differences on the lending side of things?

Adrian   10:38

Yeah, that's a fun one who's asking that question? I think that the official response is supposed to be no, it's not different and from like, a technical nuts and bolts standpoint, no, in theory, there is no difference. They are not going to look at the contract and go, oh, we need to set an extra set of rules for you because it's a for sale by owner, nope. Same debt to income ratios, the same credit score requirements, same asset requirements, same down payments, etc, etc. There's no difference in the written rules. That said, there are differences in my experience and how smooth these transaction are. You just kind of glazed over pretty, not glazed over and you went into it. Pretty important statistic 57% of people have an existing relationship with the person they're getting into this Fizbo relation, you know, contract with, it can be messy, I do find that it gets messy a lot of the times, I end up being asked questions that are realtor questions and I very often have to tell people, it's in your best interest to not ask me this question. I am not a subject matter expert. Even if I sort of know the answer to this, you might as well ask me to do your tax return, I could probably do a tax return, I don't know that it's going to be right but I could do it and we could just cross our fingers and hope for the best and I think there's also this degree of just, you know, everyone has a different and this is where you guys become so important to me. You know, I think a lot of people get into a for sale by owner because they go, I already have a buyer, I already have a seller, whatever it is, I already have the relationship and I see a real estate professional as only someone who is finding the person to buy my house, they're the salesperson for me and the reality is that you guys are much more involved in the meat and potatoes of the legal side of things and the negotiation part more than anything. So, finding out what's important to each side and finding a middle ground and offering that barrier of, you know, if you're asking the seller directly as the buyer a question, you're gonna see their emotional reaction right away and you guys offer that sort of, okay, I'll take this to this person and then you can have the full discussion and then you can come back with just the offer. This is how business negotiations happen to, you know, you're not just sitting there spitting at each other across the table. There's a lot of foresight put into those offers in those plans. So, it's messy, it's messy is a lot of the times it is messy. Sometimes it's clean. I'm not saying you're gonna have a bad experience, just because you do one of these, but I would really come into it. You got to really have a plan.

Rob Delavan   13:18

Yeah, and from a lending standpoint, I will say this, because Lance, I know, there's some conversation we need to have on this to Linux, the single biggest thing I say, without like, you know, dogging on this situation, right. Which, obviously and full disclosure, right? Disclosure, you know, for sale by owner, there is not a real estate broker that's being paid. So, I always have to acknowledge, hey, I'm not getting paid for this job. You know, you're trying to do it yourself and I understand that there's financial benefit to myself being in the real estate industry as such that, hey, if you use the real estate industry, there's benefit to that. So, you know, you're going to the, you're going to the guy who's eaten at the table and saying, hey, hey, should we put food on your table or not, is the question, so I have to, you know, disclose that what I will say on this particular question, on the lending side of things in a for sale by owner whenever I'm approached or have a conversation or there's a possibility that they will sell to that family or friend or whoever it is, tenant sometimes is, make sure before you have any number of conversations that you get as a seller, you get a pre-approval letter that's dialed in by a reputable lender because what happens is these buyers, oh yeah, I love to buy a house and they can't or they can qualify for 400,000 when the home is a $600,000 house and you know, those sorts of things. So, that's the piece. Lance, I know you have some insight into this there’s also and, you know, I would say you talk to people about this fairly often.

Lance Johnson   15:06

Yeah, I mean, there's all sorts of things like so. I mean, we got to recognize that the internet makes everybody more knowledgeable and it gives. So, you can look up all sorts of things like I could overhaul Ford Mustang 1968 Ford Mustang and watch a YouTube video on how to redo the engine doesn't mean I have experience on doing it. It's just the internet is made more and more people have access to how to do it, if you will. You could do a heart surgery and watch a video on it or a leg hip replacement.

Rob Delavan   16:18

Hey, Adrian, the recording stopped for a second there?

Adrian   16:26

Yeah, Avery is gonna have to edit here. Lance, you said hip replacement and that's where I lost? Yes. So, we can pick up on your automotive and highly relatable, by the way, automotive?

Rob Delavan   16:37

Yeah, save and save a little bit of this Lance for Question three, because I'm going to give...

Lance Johnson   16:42

So, let me just finish out but is just, it's at the end of the day, we're here all the serve the client and when we can provide value, is the question of the value is different for when you are full service when versus like, I'll give you an example. You tip, a restaurant that you do a takeout order the same as if you got served in the restaurant, right? Okay.

Adrian   17:11

Yeah, I like that counter service or table service.

Rob Delavan   17:15

Right, well, the answer would be no, is if I'm getting a sandwich at Subway, I'm not going to tip 20% versus sitting down at fine dining where, you know, we're going to be at 20%.

Lance Johnson   17:24

And so I look at some of these sales by owner scenarios, there's still value to add because it's a complex transaction and there's buyer beware seller, beware all that kind of stuff and so the question is, you know, does that person want that feedback that value? And then at the end of the day, should you get paid for that value and I think it's just, you know, we know how to do full service and we know how to do no service, right? Don't get involved don't add value. But it's that in between where there are some partial value that needs to be given and then how do you get paid? And I think the real estate market is trying to address that, you know, there's different companies that are giving those things and you just, it's awkward, right? We know how to do full service we know how to do and there are all sorts of example, if I got half a haircut half the time if it takes half the thing, or if I'm just going to shave the head. You know what I mean? Like, there are so many examples we can give, it's tough to be I kind of use the example this falls into that. Can you be partly pregnant? And I often you often hear me talk about this. It's hard to be partly pregnant, in conversations and you just, it's either full service or no service, what's the partial service and I think there's so many examples of that, that it just it's a difficult conversation. That's all it's just, if you are going to add value, you should get paid for that.

Rob Delavan   19:07

Right, which segues perfectly into the third question here. So, Lance, I'm going to start this one with you and then this, this one gets kind of fun. Based on the stats, these fizz bows for sale by owners typically sell for less than and I got it up on the screen here now, for less than basically home sold at a medium of 260,000 in 2019, which is significantly lower than the median of agent assisted homes at 318,000. So, it's a $58,000 difference. I did the rough math napkin. It's like 18 19%, something like that. In your opinion, given those statistics and this is is national and there's always maybe slight regional changes and obviously, my West Coast and East Coast listeners are going to be like $260,000. What the hell can you buy with that? You know, nothing but hey, you know, there's the middle half of the country that that is, you know, in that range. So, in your opinion, Lance, why would you recommend your clients work with a real estate professional versus doing a for sale by owner considering those statistics and by the way, all statistics are in this article and we have at the bottom of the page.

Lance Johnson   20:35

So, many things come to mind on that. So, again, as a financial advisor, you know, some of these higher end homes, they're more complex. There's so many things that have to go behind this one statistic, right, like you know, being a financial advisor, you know, what's the average age of the home that would come to mind? So, you know, the value of the house, the bigger homes, the more complex, the ones that, you know, there's all sorts of stuff.

Rob Delavan   21:09

How many real estate transactions has this person done? I mean, yes, it's definitely an oversimplification.

Lance Johnson   21:19

So, one part of me that comes out of mind is where I think and again, I don't know what the underlying but you know, when you're going to pay 5 or 6%, for a real estate agent, generally those homes will price in that whereas if you sell by owner, so I bet there's 18 to $30,000, that are priced in to the increase that is suggesting that, hey, if I'm going to use an agent, I'm going to net out and I just think there's some of that that happens.

Adrian   21:56

I definitely heard that in the negotiations, I've had people come to me and say, well, we're chopping it down by half, you know, we're gonna split the difference.

Lance Johnson   22:05

We're splitting the difference. So, you get both get a benefit out of it.

Adrian   22:09

And you get your family to family discounts might be a factor in here, too.

Lance Johnson   22:13

Yeah, could be that, you know, the owner. So, question one was 57% to the owner of the Fit For Sale By Owner, but the sale by owner, what you're not getting is might only be I don't know what the statistic is, but might only be 20% of all the sales being sold and then add them, the 20% 50% 57%, the owner, you see what I'm saying, there's a kind of a play on statistics. It's not that 57% of the homes are sale by owners, it's 57 of the sale by owners know the owners, right, but how many of the total sales are done by so there's like all sorts of things that come in. But I do the biggest thing that I think that happens, where a real estate agent, especially in a seller's market, is that you're removing the seller in negotiation and when you're for sale by owner and it's not the you oh, you know, the owner, you're really kind of in the would you say Adrian earlier about is the initial surprise, or reaction to the negotiations really kind of...

Adrian   23:36

Emotional reaction.

Lance Johnson   23:37

Whereas I've seen you, Rob, sit there and you know, you take in a bunch of the things and you have this excuse, that excuse you have this comment to be like, you know, I have to check with the owner and whatever it allows you to do is play a poker hand and take in additional offers and you know, without showing your and you're less emotional, you can talk it through the owners get all the data, you know, whereas when they get those initial offers, sometimes they're ready to go and they're really showing their hand and I think you can bid people up against things and that's what you get paid for, right, to be a good negotiator we talked about in other episodes, I think that's a real for a selling person, I think that's a really good and that drives the price up and that's what you want to do when you're selling a home right, especially in a seller's market and then I've seen you on flip sites where you know, you're one of 20 offers and so how do you help a client distinguish and get them prepared and things like that and I think all that really adds to that difference in price is there's two It's accumulation that adds value to that and I think that's why the difference exists there.

Rob Delavan   25:07

Yeah, you know, at the end of the day, you're going to be different in your industry if you've done it for, you know, a decade or more typically unexposed.

Lance Johnson   25:20

I think it's, there's so many examples of, you can do so much and learn from the internet, but experience, it's like, you know, my wife hates to cook, you know, or you know, she's a great cook, but like, you know, it's just to be a short order cook for 10 people sometimes not that we attend, but like, it's like timing everything and when you're a cook, you kind of know when to start certain things so that the whole meal comes together, right? So, when you're a chef and same way with financial, there's like certain things I know, I would do differently with clients and finances. Like when you deal with stretching your dollars with taxes, in that experience, that I think also amounts to 10, 15 $20,000 how you set up the house, how you put certain things into a house that better sell it, like when we had this tremendous selling, you didn't have to put any money, like I'd like to see as certain statistics that talks about this house has to be 318, but then you had to put so much more into the house. So, then you had to put 20,000 so the real net number is not...

Rob Delavan   26:54

It is in two things, only its price and product and so then any seller has to it's hubris to think you can control the market, you can only react within what you can control, which is the way you pre strategically price within whatever product you have. So, the goal is minimize the inputs maximize the outputs by being strategic and you know, it's different depending on the market. We've had a seller's market for a number of years. But there was a time not that long ago, seems like forever ago, but we were struggling to sell houses and you had to bend over backwards. In fact, there was a short period of time where on the seller side, this was in the you know, 2010s, where you would actually let potential buyers spend the night in your house and experience it because you were trying to be clever and hey, if I can pull them in, if I can bake some cookies, if I can, you know, get them emotionally connected to this thing. They're more likely to buy it because there was less buyers out there than there were houses on the market. Obviously, the flip has been true. But guess what it's going to the flip side is going to happen. So, this is a fun conversation. The Fizbo thing, you know, there's a bunch of nuances. Lance, I'll let you finish this up on this. The fiduciary responsibility piece because I did ask this question about you know, you're recommending clients, whether they're working with a real estate professional versus doing it for sale by owner, you're not necessarily making that recommendation. You're saying do the math and your fiduciary responsible. You know, how do you make sure that you're doing the right thing in that way?

Lance Johnson   29:10

Well, I mean, I'm always like when it gets to real estate and you've heard me say, this is somebody might have a friend of a friend and they'll have that real estate, you know, I had a situation they gave a quote based on them and I'm like, you know, the Portland metro, I'm like, wow, I haven't seen that price and I'm like, nobody's given that low of a price on the sell the home and I get that if you lower the price, you get multiple bids and I just said to the client, I said, it doesn't hurt you. They're only looking at selling. It was a rental and I'm like, well maybe you rent it and do some remodeling. Maybe you sell it 1031 exchange it and you put some work into the house, but maybe not a lot 1031 exchange, you go meet with somebody, go look at a local area, go look at a vacation rental, you know, go look at some of those vacation rentals, like in the Sun River, Black Butte places, the coast and so forth, weigh your options, you know, take your time to do your due diligence, go meet with you, if now you have two opinions and if you need a third one, at the end of the day, you're going to pick the person you think that's going to help you solve your problem and add the most value. So, I'll do that all the time and just say, listen, there's nothing wrong with getting some data points and figure out, you know, having a plan on how you're going to go at this thing and that's the most important part is what's your game plan.

Rob Delavan   30:56

Right! Yep and that's one of the things that I appreciate is, at the end of the day, you know, I could sell houses all day long, which we do and that's why we have the strong relationship between both of you at risk of blowing smoke, both of your backsides. You know, you guys do your very best every time to be fiduciary responsible and actually give those advice items.

Adrian   31:25

Yeah, I think that's a big part. If there's one thing that I think I feel like we might have glossed over here is this also this idea of, Lance, so you brought up an example of you can work on your own car, you're right, I could rebuild a carburetor, I could, you know, change out something I've been there. I've been laying on my back, watching the YouTube videos, you know, like, I don't remember it looking like this in the video and then all of a sudden, you snap the head off a bolt and that's not in the video, he didn't snap the bolt in half. Now, I don't know what to do. I don't know how to get a bolt out of an engine cylinder head. I am screwed and now I'm in the middle of my garage and not a shop or I use the example of like a plane. Pilots get paid six figures. It's not because planes are hard to fly objectively, some planes can take off and land all on their own. They're there because when the shit hits the fan, they know what to do. They know they've got the tarp ready and so there's a component there of yes, you know, that person you're doing a transaction with and you trust them. But the job isn't just finding the seller finding the buyer making the house look pretty, there's a huge component of knowing what to do when things go wrong and I do I make that little, you know, I wince a little bit when someone says, yeah, we're not gonna do it without a real estate agent and I go, you know, there's a few, there's a number of agents that I work with, who will do it for a reduced fee, they'll do something like 1%, they're not really representing one side or the other, but they are drawing up paperwork for you and they may help with one of those pain points where you go, well, whose responsibility is it that this pipe is sheared and we can't lend on this house until it's fixed, or whatever it might be, you know, some of those objective things that can be important.

Lance Johnson   33:09

At the end of the day, it's everybody gets to choose their future and just the way it is and you got to kind of let you know, it's like watching a kid, learn new tasks. Sometimes you got to fail at something to learn the knowledge and sometimes the failure is so big that like, you're like, oh, but, you know, everybody gets to choose their life and how they want to do it.

Rob Delavan   33:37

That's actually a great way to close this. I appreciate that, as you know, it happens.

Adrian   33:45

And that is the end of this eight part series on the National Association of Realtors data that we were able to pull from this July 2020 to June 2021 dataset. We are super excited. I think I speak for the group. Right guys, are we super excited to see what the next one brings? I mean, this is a roller coaster set of yours, folks. You know, I think everyone can agree with that.

Rob Delavan   34:07

And it won't come out until the end of the fall, which is a bummer. We always wish it was coming sooner, but...

Adrian   34:12

Probably leap on this one earlier.

Lance Johnson   34:14

Yeah. It'll be interesting this year. I think it's just interesting, you know, everybody values real estate are ridiculous here in Portland, you know and so everybody was like, oh, I'm just gonna wait until the market goes down. Well, the markets are gonna go down until something crappy happens in the market and stock and bond market and then it affects the real estate and then people get laid off on businesses and then people are hurting and then you can get some good buys and so it's like, we got to get prepared. So, I'm looking forward to kind of one of our episodes, it's like, how do we take care of a down market? How do we position ourselves? Yeah, I think our next financial when it gets into real estate and stock market is, how do we take advantage of all the things that people want? Like, we don't want to keep on paying these exorbitant prices. You know, that's called inflation, right? And so something crappy has to happen in order to get good buys and I want to prepare our listeners to take advantage.

Rob Delavan   35:21

Exactly, yeah, you got to be prepared. Yeah, so we're excited about those episodes and then also, we have some more guests coming on the podcast. So, stay tuned for that. We're looking forward to and as always, here's our contact information up on the screen and it'll be in the show notes and then disclosures thereafter. Thank you all for joining us from the west coast and the East Coast York main or national. All right but yeah, I enjoyed this series guys and I really appreciate the insight throughout the whole, wow, eight episodes. So, this was a fun one. Thank you all for listening.

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Episode 52