Ready to unlock the mysteries behind the real estate boom and what it means for your wallet? Join me, Rowena Patton, with my esteemed colleagues Keith and Mike Bryant as we dissect the market's pulse and offer you actionable advice for navigating the ever-evolving landscape of home buying and selling. This episode isn't just a rundown of statistics; it's a treasure trove of stories, experiences, and a dash of superstition that will guide you whether you're signing off on your dream home or listing your property.
This week's conversation wanders through the maze of home inspections, the balancing act of a shifting market, and the challenging climb of home prices that have left many buyers gasping for air. We scrutinize everything from the suburban squeeze in Naperville to the nuances of earnest money and due diligence, offering you a map to avoid the pitfalls of stigmatized listings. Our Certified Pre-Owned home program is the compass you didn't know you needed, promising sellers a smoother voyage by sidestepping the usual repair headaches.
We wrap up the show with strategic insights for those looking to sell in a fluctuating market, stressing the importance of timing and preparation—as well as a whimsical nod to real estate rituals. The evolving trends and our innovative CPO approach could revolutionize your selling experience, maximizing your home's value with little upfront cost. With heartfelt thanks to Keith and our listeners for enriching the dialogue, we're eager for you to join us again next week for more plain English discussions that translate the complex world of real estate into valuable wisdom for your next move.
Ready to unlock the mysteries behind the real estate boom and what it means for your wallet? Join me, Rowena Patton, with my esteemed colleagues Keith and Mike Bryant as we dissect the market's pulse and offer you actionable advice for navigating the ever-evolving landscape of home buying and selling. This episode isn't just a rundown of statistics; it's a treasure trove of stories, experiences, and a dash of superstition that will guide you whether you're signing off on your dream home or listing your property.
This week's conversation wanders through the maze of home inspections, the balancing act of a shifting market, and the challenging climb of home prices that have left many buyers gasping for air. We scrutinize everything from the suburban squeeze in Naperville to the nuances of earnest money and due diligence, offering you a map to avoid the pitfalls of stigmatized listings. Our Certified Pre-Owned home program is the compass you didn't know you needed, promising sellers a smoother voyage by sidestepping the usual repair headaches.
We wrap up the show with strategic insights for those looking to sell in a fluctuating market, stressing the importance of timing and preparation—as well as a whimsical nod to real estate rituals. The evolving trends and our innovative CPO approach could revolutionize your selling experience, maximizing your home's value with little upfront cost. With heartfelt thanks to Keith and our listeners for enriching the dialogue, we're eager for you to join us again next week for more plain English discussions that translate the complex world of real estate into valuable wisdom for your next move.
This is the Plain English Real Estate Show with your host, rowena Patton, a show that focuses on the real estate market in terms you can easily understand. Call Rowena now. The number is 240-9962 or 1-800-570-9962. Now here's the English girl in the mountains, the agent that I would trust, rowena Patton.
Speaker 2:Good morning and welcome to the show. Last week we had Rene, our vice president, from California, and this week we have our vice president of assisted living, cpo from Illinois. Good morning, keith. How are you doing this morning?
Speaker 3:Good morning. It's bright and sunny. It's fantastic. I'm doing well. How are you?
Speaker 2:How warm is it there this morning? It's kind of chilly here.
Speaker 3:Well, Illinois, we're always a balmy 32 degrees.
Speaker 2:A balmy 32 degrees. Well, that's better than minus 32 degrees, right.
Speaker 3:We've been there as well. Yes, for sure.
Speaker 2:So we've got two vice presidents in the room. We've also got Mike Bryant, who's the VP for South Carolina. Good morning, Mike.
Speaker 4:Good morning.
Speaker 2:And, of course, mike and Keith Anro in WNC area. So we've got Illinois, we've got South Carolina and we've got good old WNC here this morning talking about the cash CPO offer, which is excellent, of course, for assisted living, but it's also excellent if you are thinking of selling your house. It doesn't have to have any problems with it. It can be absolutely perfect. I know we all think our homes are absolutely perfect and sometimes when you have the inspection there's a few items on there. How many items do you see on an inspection report, keith?
Speaker 3:I usually tell my clients to expect to pay roughly 1% of the overall sale price and inspection item completions.
Speaker 2:I love that. So here and I know in many other areas we're looking at 40 or 50 items on the inspection report. So in other words, you go contract, the buyers do perform an inspection and there are 40 or 50 items on the inspection report. Would you say that's fair for your area, Keith?
Speaker 3:Yeah, I would say that's really fair. I mean from small little GFCI fixes to like roof and bolt, so you just don't know what's going on with your house until until the good old inspection happens and how many sellers do you have say to you my house is perfect, there's nothing wrong with it at all I've never run into one that never said their house is perfect what about you, mike?
Speaker 2:do you see the same thing?
Speaker 4:yeah, it's pretty much the same thing. I mean, they always know their things, but they're not going to outwardly identify them until you find them.
Speaker 2:You know what I like to say. So what's on your honey-do list? You know if it's a couple. What's on your honey-do list? All those things that you've been talking about doing for the last gosh sometimes 20 years right and that you know really tells you the things that you know could be improved on your home, which often are the things that can have that added value in there. So with our program you don't have to fix anything, you don't have to pay for the inspection. You'll know I've been running, or you've been listening to me for 12 years talking about certified pre-owned and how important it is getting that inspection, getting the appraisal, offering a home warranty when you're thinking about selling your home, especially when the market gets more competitive, which in most areas of the country is doing now. How about in Illinois, keith? Are you seeing those multiple offers still?
Speaker 3:Yeah, we still have very low inventory here we do too.
Speaker 2:However, we've gone from. You know what used to be gosh a year and a half ago now, right, mike, year and a half ago having multiple offers, where you would list your home and we'd have two or three offers on it in the first week or two, whereas now, mmm, it might sit for a while, depending on where it's at and how well it's priced, just like any market, you know, whatever you're in, but those multiple offers have. It might sit for a while, depending on where it's at and how well it's priced, just like any market, whatever you're in. But those multiple offers have calmed down.
Speaker 3:So you've not seen any calming, keith. Well, I mean, sellers have tried to really push the market on price, so those houses are sitting. You know, I mean buyers really want to buy, but they're obviously still very smart consumers. But on the home that's priced correctly and in really good shape. Those houses are flying off the market.
Speaker 2:Right, right Gosh, like in many places, and it's quite rare here now to see those multiple offers. And I know from you, know the networking groups that we're in, that is, in most places in the country. I know that we've also got Chip, who's our VP in New York, he's in Syracuse, he's also still seeing multiple offers, but there are very few places at this point and we know that's going to change and it changes everywhere. It's just it's coming a little later to you, which is wonderful, keith, good for you. Not so wonderful for the buyers, of course, you know.
Speaker 3:No, I think we're ready for it to kind of move back to center a little bit.
Speaker 2:Yes, absolutely, and with our program we're able to come in. You're able to get the majority of your equity within 12 to 14 days. And then we come in. We use our funding partner's money to fix the well. They pay for the inspection, they pay for the appraisal. Anything on the inspection gets fixed, and then any other items really the honey-do list. Then we move on to the honey-do list. Maybe you've got formica, so we'll put you know granite countertops in, or quartz countertops even better, sorry for all those of you who've got granite but quartz is just better.
Speaker 2:What do you think, Mike? You do a lot of construction.
Speaker 4:I think it's a flip of a coin 50-50. The granite is still pretty desirable.
Speaker 4:Well, it's still desirable, and if you've got granite in your house, you wouldn't take it out and put quartz in it's half and happening, but the last thing listing agent wants to hear is all the things the seller wants to prepare the house for before they put it on the market. The listing agent wants the listing there. It says if someone's looking now, you don't want to miss them so you can do stuff as you go or they're going to have to redo so much anyway is right you know, clean it up, straighten up and make it easy to show is the main thing.
Speaker 4:So the last thing you want to hear is well, it would take us a month to do this.
Speaker 2:In six months' time. We'll just be ready in October when we're going into the winter market. But not only that. Even though we're hearing Keith today say there's still multiple offers, I suspect that your days on market have gone up a little, keith. Am I right? The market is starting to shift.
Speaker 3:Yes, I mean in the hotter markets around Chicagoland. I mean it's still doing really well. But you know, what we were seeing before was like every market was hot.
Speaker 2:Yes.
Speaker 3:If you were, you know, in Naperville, just outside the city, or maybe Aurora or some other areas, everything was really hot. Well, now those other areas, like more of the a little bit further out from the city, are cooling down quite a bit, yes, but the ones that are getting closer to the city they're still pretty hot. But we do see a change coming here, probably within the next, probably eight, 12 months.
Speaker 2:Right and most markets crested around the country. And the great thing is, if you're listening, today, not many agents will tell you this, because they just want you to think that the market's always going to go up and up, and up, and that's not the case. It hasn't been the case since 1860, when good old Clément Jugler set out the outline for the economic cycle, and the housing market follows the economic cycle. What goes up must come down. I mean, we know that. We know the roller coaster. It goes up, it comes down. Now, over time, houses go up on average 2% to 5% a year. However, they can go down a whole lot too, in most places in the country. Last time around, in 2008, the last time this happened, we went down over 30%. Do you know what the? Were you in real estate then, keith? I'm sure you were.
Speaker 3:Oh yes, In 1999. That was definitely a roller coaster in 2008, 9, 10, 11.
Speaker 2:Right, right, did you see a doubt? So I got in in 2007. So I decided to get into real estate when it crashed. Do you remember the cycle before that?
Speaker 3:Yeah, I mean we were always seeing like a nice progression of three to five, sometimes 6%, on home increases, but during that one period of time, right before the crash, I mean we were seeing just massive increases in homes, which is what caused the crash, but never saw anything like 2008. I hope that we don't see anything like that ever again.
Speaker 2:Do you know what the average was that it went down that time around?
Speaker 3:in your market. It's depending on area, but yeah, about 30, 35 percent, sometimes 40 percent in some areas. Wow it was pretty hard.
Speaker 2:Yes, it was 32. And generally, depending on we have listeners all over the country depending, the amount that it goes down is directly linked or correlated with how much it's gone up. So if you're in those hot markets where it just, you know, ballooned and got completely overpriced, that tends to go down more. It's really interesting to me that I got in in 2008, 2007, which doesn't seem that long ago the average house price here was 178 000. It's now 450 000 and you look at that time frame, of course for those of you who are 22, that seems like ancient times, right, because you were a teenager then. For For those of us who are not in our 20s, of course that's nobody around the table today. Or Keith, of course Keith's very, very young. That 2008 doesn't seem that long ago, really does it?
Speaker 2:And how much do we think that wages have increased during that time since 2008, if at all, with inflation and everything else? Not much, right? I think we'd all agree not much. So how have we gone from the average price point at $178,000 to $450,500? It's all the same people. How are they able to afford the houses? They were struggling when the average price point was $178,000. You know there were still people that couldn't get qualified.
Speaker 4:It's a combination of 3% interest rates and then the COVID surge on the inflation. So that was a double whammy. Now we're coming. Now we're in the post-COVID hangover. So we're seeing every market has a medium range and the medium range in desirable areas is going to continue to be strong. But if you're in the upper range for any price range, that's where the adjustment really hurts. If you went from a 3% jumbo million dollar loan to seven, I mean, that's a whole different ballgame.
Speaker 2:Yeah, you can only imagine. So we look at the average price point and it's about an extra $800 to $1,000 a month. That's a lot of money. Imagine in those higher price ranges when you're talking about an extra $3,000 to $4,000 a month. That's a lot of money. Imagine in those higher price ranges when you're talking about an extra $3,000 to $4,000 a month. Oh my gosh, I hadn't thought of it like that. And you're right, Mike. So the toughening, the tightening, comes at the top first. So anything over here, it would be about $750,000, $700,000, something like that. So we're really talking about the luxury market. Where would that be for you, Keith? Where are things starting to get where only 5% of your population there can afford them? What would that luxury market look like for you?
Speaker 3:Oh gosh, if I were to just go back to 2008 and just take Naperville for an example, if you pulled like a million-dollar plus home in naperville in 2008, you'd probably see eight houses okay, uh now if you pull a million plus that's, that's becoming the norm.
Speaker 3:Um, wow, so that's really increased. I mean we went from probably an average price point of like $325,000 in Naperville to right now you can't get much of a home for under $600,000. So it's really been a shocker to a lot of people that are used to Naperville years ago. Now they're coming back into the market in Naperville and they're saying, hey, let's see houses for $600,000 or $700,000. And seeing what they're seeing, they're like it's not what they expect at all, because those houses need a lot of work.
Speaker 2:Well, again so you've doubled, which is we've done about a 2.5 times the price it was then, and most of these people are not earning 2.5 times what they were earning then. So we're looking at the average family. So what's the average household income? Something like 60, probably here 70, something like that $60,000. So we haven't gone. I mean, let's put that into real terms we haven't gone to 120 plus that. We haven't gone to $150,000, because that's what that would look like in terms of houses have gone up 2.5 times. Salaries have not gone up to 150 from 60, have they in most cases? In some cases they have, but most of them they haven't. And it's the same for you, keith.
Speaker 2:So you've got you know you've got maybe a couple coming back to the area. Maybe their, their kids, are still there and they want to come back to the grandkids, or something like that. Or or the kids are coming back. You know the kids have been off at college, started their lives. They're coming back to be by mom and dad so they can help with the kids. You know they're in their 30s or 40s now and they're coming back on. What used to be $325,000 is now $600,000. It's crazy, like how can they possibly afford that, especially the newer families?
Speaker 4:Well, the earnings that we gained in a decade were maybe 10 or 15 percent on wages and that's been completely wiped out by inflation. The average household expenses now have consumed that. So basically income has been flat yeah.
Speaker 2:I even find. So you know I never not that I'm bougie or anything like that, but I never used to go to the grocery store and check the price of ketchup or whatever. And I find myself now. So I just moved and my fridge is empty, which is great. It was all cleaned out. He did a deep clean on the house and there's no basics in there. There's no ketchup, there's no mayo, there's no mustard, and I found myself actually looking. I'm so sorry. If you're listening, you think this is ridiculous, probably, but I find myself looking at the store brands because they're, you know, they're half the price and why not? It's probably all the same stuff, white labeled anyway. But it's become so ridiculously expensive that now I'm looking. But I still buy those free-range eggs because they just taste better.
Speaker 4:I just cut back on food and stocked the bar.
Speaker 3:Ever since COVID, I think everybody's done that.
Speaker 4:The liquor stores here have all doubled in size with inventory.
Speaker 2:There's probably some truth in that, actually. Yeah, well, I think that's a whole other show. So, yeah, how do we?
Speaker 4:we get onto liquor and eggs and ketchup must be me use of the dollar as housing right now is going through a very big challenge, especially the properties that need remodeling seem to be the the ones that are sitting. So, yes, this program is absolutely timely. I mean, this is probably the best market for the CPO that I've imagined, because right now, if it needs a remodel and folks are relocating, we're seeing a migration of people from the urban to the rural and we're kind of in a unique spot being in the mountains of western North Carolina, because there's not a lot in the region like this. So if the house needs a remodel and they're moving, they don't have six months to line up contractors and they want to move in somewhere. So if you make it move ready, it's, it's gonna, it's gonna sell within two weeks well, the interesting thing is, even if it doesn't need a remodel, you know they.
Speaker 2:They bought over a thousand last year and even if it doesn't need a remodel, they're buying flips all the time, because you're often in a situation where maybe you don't want showings. Who wants showings? First of all, it's so. I had, so mike has taken on the vp role for south carolina and we had lunch yesterday to discuss it and it just so happened there were a couple of realtors sitting in there that that that mike knew, mike knows everybody and they. We explained the idea to them and they're like why would you list any right, mike? They said why would you list any other way? Why would anybody list any other way when you can list this way and have no showings?
Speaker 2:Um, you, two-thirds of our sellers are getting more than with a traditional listing or an old-fashioned listing. And you know the things are fixed. You're going to most likely. Well, when we say things fixed, it's not necessarily remodeling. We're going to do the inspection. You don't have to pay for the inspection. That's how I've been helping you since 2007 when I launched CPO Experts.
Speaker 2:Those of you who are not familiar with that, maybe you're joining from Keith's market today and listening. We have been running CPO experts since 2007. That's where we were encouraging you, as the seller, to pay for the inspection and the appraisal and do the home warranty and yes, that's almost a thousand dollars and the repairs and the repair and the repairs correct or at least disclose them. But the reason being is is that magic 1% that Keith was talking about? You're going to pay 1% to 2% in repairs. They're going to come back at you, especially in this market where the buyers are going. You know what. We'll pay a little bit more because we're so tired of missing out on houses. We want this one. The inventory is low and we're going to pay a little bit more. Guess what happens most of the time they're going to come back at repairs and try and get that money off. Are you seeing that, keith?
Speaker 3:Yeah, super overinflated inspection item credits at closing. I mean, I have some stories that it's like you know, for a GFCI, which is literally you can pay 15 at a hardware store, for you know, people are asking for 200, for you know, for a repair or replacement or credit for the six that they need right.
Speaker 2:So now you're at 1200 just for the gfcis just for the gfcis.
Speaker 3:They haven't even gone into the uh, you know, onto the meat of the bone when it comes to, like, the major repairs that may have to happen with the house. So, yeah, I believe, I believe that, uh, you know, because people are, in essence, they're, they're they're paying more than they wish to, you know, to get the, get the home, they're, they're wishing to get the uh, you know, a much larger credit, uh, to offset that absolutely so in your market key.
Speaker 2:So here we have a thing called due diligence. That due due diligence can be zero to $1,000, to a little bit more sometimes. What are you seeing, mike, on contracts for due diligence?
Speaker 4:It's not as predominant as it was Two years ago. You had to put $5,000 to $10,000 in a significant purchase to even get a contract accepted, because there were multiple bids on almost everything. To even get a contract accepted, because there were multiple bids on almost everything. And now not so much the remodel stuff, because that's the hardest to sell. But it has to be move-in ready. As long as they can move in it, they don't mind the remodel as much.
Speaker 2:The $1,000 in due diligence is what goes to the seller here, keith, and regardless of whether you finalize the contract, they're going to get that $1,000. Like Mike's saying, when it was in multiple offer it was more like $5,000. And it's like an insurance policy for the seller whereby you're giving them money to basically take their house off the market for six weeks or four weeks. And then there's the thing of earnest money, which every market has in the USA. So earnest money you're putting down, you know $,000, 10,000, 15,000, whatever you're putting down In Florida. For us, when I lived in Florida, it used to be whatever you weren't getting a loan for. Because why not? Right? If you're going to put 20% down, why not take that 20% and put it in earnest so that when you close, everything's taken care of, unless it's enormous in interest rates or whatever. You might lose $40 in interest, but it just makes it much cleaner, do you?
Speaker 3:have due diligence, Keith, or is it just earnest money in your market? It's just earnest money? I wish that we did have due diligence money, because we do have a lot of people in those markets where they don't know if they're going to get a house or not. They're writing multiple offers on multiple homes. Yes, so we may tie up our listing for three or four days and within the five-day attorney approval period which I'm not sure if you guys use attorneys there or not yeah, we do.
Speaker 3:A lot of people will try to get out of the contract, because now they've tied up two or three houses at that time and then they choose one and then the seller's out all the other offers. So we have to go back and try to get all the other offers. So, yeah, I've. I've been saying for years that the due diligence, uh, number, uh, that people should have actual skin in the game, because let's face it we all know that earnest money is uh, it's hardly ever yeah it's nothing so and it's coming all over the country slowly but surely.
Speaker 2:Due diligence is creeping in. So watch out for that. If you're in other markets and I think most of us agree it's a good thing basically gives the sellers something. You know $2,000, $3,000 for taking off for the period of time. But the great thing about CPO certified, pre-owned or cash CPO or assisted living CPO or bank CPO or any of the other CPOs we have it's all about that full market value cash offer, not a 70% cash offer. A full market value cash offer is that we don't have to worry so much about the due diligence fee or money down or anything else, because that home is going to be bought and you are going to see due diligence creeping in all over the place.
Speaker 2:There's skin in the game. So, keith, for your example, where you don't have due diligence and people are pulling out easily, what you've got then is a stigmatized listing. That doesn't happen. Well, it doesn't not happen. Let me back up a little bit. Cpo Homes a traditional listing is going to drop out. Actually, I had an agent the other day tell me 40%. So we've tracked it at 32%, 33%. It's going to drop out about a third of the time. What that means is you're going to sell your house. It's going to go under contract. Imagine, in Keith's market. There's not even any due diligence. Here it might only be 500 or 1,000. If those buyers find another house, they're going to say, see, ya wouldn't want to be, ya don't want to be in your house, and off, they've gone to the next house. So house and off, they've gone to the next house. So it's very, very easy for buyers to move on.
Speaker 2:The problem there is now you've got a stigmatized listing. Now, what we mean by that is Keith, I'm sure you've experienced this, mike, I'm sure you've experienced this. Everybody and their dog calls you from all over the country. What's wrong with the house? Why did it fall out? Why didn't they want it? People want. That's why when you see sale or Black Friday, you see everybody rushing in wanting something right and they're on a stampede and trampling each other to get it. People want what other people want. When it's a castaway, or it's thrown away because there's something wrong with it, it's a stigmatized listing, or it's thrown away because there's something wrong with it, it's a stigmatized listing. Those listings get less traditionally than statistically, not traditionally than homes that sell first time around. Does that make sense Would?
Speaker 4:you both agree with that. Yep, I agree.
Speaker 2:It's kind of like people who brag about the fact they passed the real estate test the first time instead of taking three times to pass it. Now, does that matter? Does it? Does it mean that you're a dingbat because you didn't pass it the first time around? No, it just might be well, you might be a dingbat, but it really means that maybe you don't test well, or maybe you weren't that interested in getting your real estate license and you just kind of throw you know all kinds of reasons. It doesn't really mean. Does it mean that it's a bad house because buyers were dingbats and they bought a new car? Or they, you know, they, I don't know they're buying from another market where they haven't even seen the house or seen the area it was in. And finally they're coming in and they're seeing it and going oh, I don't know if we like the area. Well, we don't know. But that's not the point. A stigmatized listing is a stigmatized listing. It is going to make less money for you. So don't risk that. Don't risk the fact that it's going to drop out a third of the time.
Speaker 2:Use our cash CPO program. They will pay for the inspection, they will pay for the appraisal. At least you'll have knowledge. Then, heck, just get a quote on what will pay you for it. I see all these cash offer people actually saying oh you know, call in to find out what we'll offer you, we'll offer you your full market value. So if you're a FISBO and you've had some great research done or maybe an appraisal or something else, or maybe you're just thinking about listing your home and you've had an appraisal done, for whatever reason unless it's a refi we'll come into that in a second. Refis tend to be a little bit lower because it's the bank's asset. If you've had an appraisal done because you want to do this properly, or you're a FISBO and you've had the appraisal done, that's the amount we will pay for your home.
Speaker 2:So it's not this. You know we're not out there buying unattractive homes. Or you know, doing the big box offers where they might even give you up to 80%, our sellers get 90% to 120% of what you would with an old-fashioned listing. There are no showings, everything's fixed. You don't have to worry about two weeks later now. The inspection's been done, nobody's slept and everybody's at each of the throats about a GFCI. You said you had a story on that one. It doesn't have to be the GFCI, but where this has been going on for you, keith, especially when you have no due diligence, because that makes it even scarier because they can walk so easily. What kind of stories have you got where the inspection request has come in and, um, you know, people get, get their uh panties in a wad yeah.
Speaker 3:So I mean we, we see, we see all kinds and there's obviously very legitimate inspection requests. So I had a team up in Michigan and obviously my team in Illinois and it was so different from state to state. From Michigan it was the agent and the agent negotiating inspection items and we only focused on major inspection items, whether it be furnace or mold or the roof or cracking foundation or whatever it may be major inspection items. Here in illinois they throw everything against the wall and see what sticks. So we get everything. We don't like the color of the paint. We need you to repaint it because my uh uh my wife's allergic to green yeah something, or you know a crack in the driveway.
Speaker 3:that's a normal crack in the driveway, so everybody throws everything at the wall here in Illinois to see what sticks, which is annoying to the seller.
Speaker 3:And we have to reclaim everything to the seller. So the fact is, with Cash CPO, that eliminates that conversation and the fact that we've already done everything, that Cass CPO has already done everything for the home and make it certified pre-owned, it not only makes the home more desirable but it also for the buyer it makes them feel more comfortable on the house that they're buying. So this eliminates a lot of future discussions and a lot of stress and anxiety.
Speaker 2:Well, it's the reason why CPO cars have been around for a very long time Certified pre-owned cars every dealership has them. You get about 6% more for a CPO car. Why, if you're buying a car, what do you want to do? Just buy it off one of the I don't want to get sued by social media here but one of the marketplaces on social media or on the internet? Or do you want to go to your certified pre-owned dealership whereby, should something go wrong with the car, they'll put it right for you? And that's where this idea came from back in 2007.
Speaker 2:Things were falling out at a clip for me. I was a new agent. Quite frankly, I didn't know what I was doing. Nobody come back and sue me from that first year, because I said that, because I was very carefully monitored, obviously. However, we very much more carefully monitor our agents that come in, that's for sure, into our team, and it was miserable. And I thought why are these houses dropping out Two things the appraisal and the inspection.
Speaker 2:So why not take for 450, 500, 600 bucks? Why not take the inspection off? Now the sellers out there, keith, who are saying well, that's just silly. So, keith, has these buyers come in and they're squabbling about GFCIs or a crack in the or a green wall. Obviously, we would just sort this out and have a conversation. Can you explain to people who haven't sold a house in a while how those conversations go? Are they really easy? And everybody goes? Oh, yeah, no, we weren't too worried about the green walls or the crack in the driveway. How long does this get extended out? What kind of money are we talking about? Frequently, yeah.
Speaker 3:So I mean kind of going all the way back to my beginning days where we didn't do these negotiations by phone or by email. We actually sat down at the office where a buyer was in one room and a seller was in the other one, and then they'd walk out, they'd shake hands and everybody was. You know, they were all happy. Today there's a faceless buyer and a faceless seller and what happens is when a letter like that comes across, it immediately upsets the seller. The seller believes that the buyer is a crook. They want to pull the listing. They don't want to sell it to them, the listing, they don't want to sell it to them.
Speaker 3:When in actuality, it's the buyer getting an inspection where the attorney tells them hey, let's just throw everything against the wall, let's see what sticks. It makes the sellers really upset. They will talk and talk and talk and talk. About what? $500 worth of items. I just closed a listing a few months ago where we closed on the 28th of the month and the home inspection was open until the 24th of the month. So that meant that buyer or seller could walk out of that transaction at any point, all because of $500 worth of that they could not agree upon. So, guys, he's not kidding.
Speaker 2:Keith, you are not kidding, are you? And this is frequent, you have to understand this. Emotions are so high in a real estate transaction I would say 75 percent of the time that these kind of conversations. Keith is not exaggerating here. Mike, would you agree with that?
Speaker 4:agree with that. I had a closing blow up over a mailbox. What? The guy took the mailbox and the buyer's like where's the mailbox? He said I took it. He says I want it back. He says no, they got an argument over it. And the agent's like we'll get you a mailbox. No, I want that mailbox. That SOB took my mailbox and he made the guy come back and put the mailbox back in the ground.
Speaker 2:And sometimes sellers get very upset with that it was an ego match. And it happens frequently.
Speaker 4:It was hysterical.
Speaker 2:I had an $800,000 home in Hendersonville that would be $2 million now in a very I can't mention the neighborhood, but very nice neighborhood there and they personal property it's another one that comes up. So they wanted this particular. It was a little bench at the end of the little ottoman at the end of the bed and they wanted this particular. This is an $800,000 house. They wanted this ottoman and the seller said, no, that's been in my family, we need that ottoman, which is, you know, perfectly fine. They said, well, we're, well, we're not closing then. And it took two and a half weeks to negotiate over an Ottoman in this $800,000 house with views. That was absolutely gorgeous historic home over an Ottoman at the end of the bed. Guys, we are not kidding. We could literally do 10 shows on this right.
Speaker 5:Did they close?
Speaker 3:Yes, oh easily.
Speaker 2:We could literally do 10 shows on. In fact, we probably should do one, because I don't think you'll understand how hot and heated it gets over the silliest things. In fact, we'd love to hear from you, 828-240-9962, if you've got a silly story over what people were arguing about, or if you're calling from Mars 800-570-9962. Give us a call and tell us your silly stories. Cash CPO takes this off the table. Not the personal, actually, yeah, no personal property too. Now, why is that important? Because you've no idea how stressful this is when you've got to the point where now there's going to be an owner of this beautiful home and now it's in jeopardy for 250 or maybe five thousand dollars. You know it's, it's a, it's a multi-hundred thousand dollar transaction, and now it's in jeopardy for for anything from five hundred dollars, like you said, keith, to a few thousand dollars. It makes no sense whatsoever.
Speaker 2:This goes off the table because we've got it all prepped. It's just the same as imagine going to buy a car. It's all dirty on the outside, the windshield's all ucky and not very nice and the inside's got cigarette butts and French fries. Come on, whose car doesn't have French fries under the seats? Let's be honest. Let's be honest. So or you take that same car and you clean it up, you take the French fries away, or you send little Sophie dog in and she gets under the under everywhere and eats everything up. That's been there for three years and now it's clean and you polish and shine it all up. How much more do we get for that car? Just by the looks of it, we have Richard on the line. Good morning Richard. How are you this morning?
Speaker 5:I'm great. How are you guys?
Speaker 2:Fantastic and you have a question for us today. I hope you are.
Speaker 5:I'm great I do. We put our house on the market several years ago and had an interesting thing happen. We decided to go ahead and do a pre-inspection and take care of everything. Well, one of the things that the inspector noticed we had Brazilian cherry hardwood floors throughout the house, anywhere that we had an area rug. He lifted up the area rug and, because Brazilian cherry darkens with light, it showed light spaces and he took pictures of all of that and put it in the inspection. What would a seller be expected to do about a situation like that?
Speaker 2:I love that question and it's so funny because Brazilian cherry darkens, whereas most floors and good job putting those down, by the way, most floors actually lighten. Well, no, I guess they lighten around the rug, so that makes sense. It would be darker under the rug whatever kind of wood you've got. So cash CPO would take that off the table because we'd come in, you'd get the majority of your equity within two weeks and we would refinish those floors Right. We would get to get them to a situation where you wouldn't see any of those spots and also we would have inspected your home and all of that and our funding partner takes care of all of that. You wouldn't have spent any money to do it and they'd have put the other 20 or 30 things right on the inspection report and then we would have relisted it and two-thirds of the time you'd have gotten more than you would have gotten with that traditional listing.
Speaker 2:So when you say what's the the seller expected to do in an old-fashioned listing where we haven't gone in and put all that right from the get-go, absolutely the seller well, you know, the seller doesn't have to do anything, is the point. However, the buyer can say it depends on the market right. So if they've got maybe a couple of other houses that they've been to see, they've probably. Let's be honest, are you in this market, richard? Are you in the western north carolina market or was this somewhere else? Yes, it's buncombe county, buncombe county. Okay, so in buncombe, and you said a couple a couple of years ago, so the market was pretty hot well it was, and then it died off.
Speaker 5:We ended up not selling, but I suspect within the next three years or so we will be selling to downsize.
Speaker 2:Got it OK? Well, the first thing, first off, if you go the cash CPO route, you can stay in your home for up to 90 days, which is more than most buyers will give you. So think about that, get us in early so we can talk about what needs doing and then, just, you know, get ready to get ready. If you. The only thing I would, you know, raise a flag on there is that we did crest in this market about a year and a half ago, which means that for the next three and a half to five and a half years, the market's likely to decline and then it goes back up again. It's a seven to ten year cycle. So if you're thinking about selling in three years, you may want to put it off for seven to ten years. Now, if you want to sell um, you know if that's a too long a cycle for you. Think about we've got july 4th coming up. Do you have family coming in? We do, okay, so you've got family coming in for july 4th. Think about your home in three and a half years time. Does that same home work for you when you've got the family coming in? Think about thanksgiving in 10 years time. Does that same home work for you when you've got a family coming in, in other words, if it doesn't think about selling it.
Speaker 2:Now I'm not. I'm not one of those agents you know that. You've probably listened to me before that is pushing you to sell your house and get out. At this point I am because we've already crested right. So last time we went down 30%. Maybe this time what's your gut feel on the rough value of your house? About $900,000. $900,000. Okay. So if we go down just 10%, we're talking about $90,000. If we go down 20%, we're talking about $180,000. That's a lot of money and that's in three years' time when you're thinking of selling. So you know you may want to sit down with your significant others and you know your family and go. Do we actually think about this now and right size now? So that would be my advice to you don't worry about those flaws and everything else.
Speaker 2:Um, you know, give us a call. Eight to eight. You know where to get me, rowena patton, just google me. I'm all over the flipping place. Um, give me a call, let's. Let's come in and take a look and we're not going to push you at all. We'll just show you the economic cycle and where you're likely to be at when you're thinking about selling. So sorry, you called in, richard, about the. You know the light and dark spaces into your rugs and I gave you a whole other story, but that's where it's important, because you're thinking about selling your home.
Speaker 2:Those buyers probably backed out using the excuse that you know what do we do with these Brazilian cherry floors? It sounds fantastic, by the way. I'd love to see them and take a look at those floors. We've done so many remodels. Mike here, who's my business partner, also has done a gazillion more than me remodels and we'll be able to tell you, you know, what we can do with those flaws realistically, so the next buyers don't back out, because let's not have you have that stigmatized listing again. That would not be good, right? So give us. Thank you, of course. Of course you have a fantastic day. You doing anything fun for the rest of the day oh, we're just traveling around in western north carolina.
Speaker 5:I do have one funny story to tell you, sure it's. I appreciate all that information and it goes to show how important it is to get a great realtor. The last time we listed, our house did not sell. I don't know if you've ever heard of this, but our realtor suggested we get a little statue of St Joseph and bury it upside down on the property somewhere and I just thought that was the most ridiculous thing I'd ever heard of.
Speaker 2:I've heard it many times from realtors actually, and you know, whatever you have faith in, works is all I can say the power of the mind is very powerful.
Speaker 2:All I would say to that is all of the things that you feel are very powerful, get a great agent behind you and, quite honestly, do some preparation, whether you go with us. We're the only ones that we launched Cassie CPO across the country. In fact, the book's on amazon now. Just go search rowena pattern on amazon. Um, it starts delivering in a week. It's on there already. It's been on there for 90 days. We've got one week left. It's all about cash cpo. Um, you can search me on amazon and find that it shows the program. We launched it nationwide. We've got 1200 agents doing it.
Speaker 2:Whether you use us or not for that program, richard, I want you to think about getting the inspection Now. If you do it yourself, obviously you'll have to pay for all this yourself. Get the inspection, get the appraisal, get the preparation done first. That's why CPO cars sell, because the preparation's been done and we're all happy to pay a little bit more because we're getting something that's not a lemon. I want your buyers to trust you, richard. I want you to have that inspection out there where they look at richard and they trust richard because those items have been done. So I really want you to think about that. It's not magic. We don't have to bury anything upside down, we just prepare properly from the get-go. Does Does that sound like it makes sense?
Speaker 5:It does. I'm so glad I called. I got so much great information. I didn't even know about what you're talking about, with changes in the market over time, so I think next time we decide to sell we're probably going to contact your team. I think that would make a lot more sense. I really appreciate all the information and learned a lot from listening to you guys.
Speaker 2:Well, that's great, richard, and quite honestly, give me a call now. I don't mind that you're selling in three years. I've got people I've been working with for 17 years. Give me a call now. I will come in and take a look and we can put it out three years. I have no problem with that at all. But we can sit and do it one-on-one and look at your house and you know, see what it really needs. You have a fantastic day, my dear and um. I hope to see you soon and take a look at those floors and the rest of your beautiful house wonderful, thank you so much.
Speaker 2:Of course you have. Of course you have a great one Bye-bye. So, keith, I want to bring you back in here and ask you isn't that just such a common question that you get from people who are thinking about selling their homes? And also just to follow up on that, richard had no idea that the market had crested here. And even in your market, keith, in Illinois you're seeing the cresting starting out in the more you know rural areas. You said, but that is coming soon, so you've got a relatively short window, the next 12 months to, if you're thinking about selling your home, because it's going to be seven to ten years before we get those values again. That's really important. What do you think to that?
Speaker 3:yeah, I, I think so. I mean, you know it's funny. I went out, um, you know, I've been trying to figure out an easy way to explain to those that aren't in real estate every single day how this program works. And I was out with a gentleman the other day and he's a very straightforward gentleman and he says so let me ask you, keith. He says so what you're telling me is, compared to the other agents that we're interviewing, you're going to pay me to list my house. Then you're going to partner with me to improve my house without me having to pay anything, and then I'm going to walk away with a good chunk of the profit of the improvement of my own home. Bingo, basically, yes, he said, well, where do I sign? So I'm like, okay, I mean, he put it very simplistically, but very simplistically, that's what it is, but it does eliminate a ton of problems and frustrations for the seller. I do think it's going to be a new wave of real estate and how real estate can and should be done.
Speaker 4:Good.
Speaker 5:Lord.
Speaker 4:The best part is when they ask what the catch is, you say there isn't one.
Speaker 3:Yeah, there's not a catch.
Speaker 2:So you know, Mike is an old-fashioned guy. He's been doing real estate for 30 years, and I mean old-fashioned in a nice way, because he's close enough where he can punch me. But I mean, and you know, when we talked about this in the beginning, you said you do what.
Speaker 2:Like wait and then what? It didn't compute and yet you have so much knowledge and so much experience in real estate. But but once you see what this actually does. So we have keith on the line here, who's our vice president in illinois and for cash cpo, and he's talking about a man that he he was discussing listing his home with the other day, and I just want you to repeat for us, keith, what he said to you, because that was incredible. So just repeat for us what he said to you when he was trying to explain it in or clarify or mirror back to you what you told him this program does.
Speaker 3:Yeah, he simplified it way better than I ever could have, but I am going to use it for now on.
Speaker 3:He just basically said he said I've interviewed other agents and you're going to tell me that you out of all the agents that I've interviewed are actually going to pay me to list my house, and then you're going to partner with me to improve my house. So my home value goes up to where now I share in the majority of the profit of the sale of my home and I have to invest nothing, and that's correct I would.
Speaker 4:I would make one change in that to tweak it, if I may. Don't ever tell them the value is going to go up. Just say you're going to maximize the value because you're saying it's going to go up. Just be careful of that one, because some people will hold you to it.
Speaker 2:Well, that's true. That's why two-thirds make more. Now you know. Then people go. Well, what's the worst-case scenario? Ninety-nine percent, right% of worst case scenario is actually 90%. But again, what sellers don't realize is the difference is you get that money within the vast majority of the equity in two weeks. That means you can buy another house, you can go into assisted living, you can pay off your spouse, on and on and on. You could be siblings.
Speaker 2:Pay off your debt. You could be siblings, pay off your debt. You could be siblings that are fighting over mom and dad's health. Of course, that never happens, does it? But you've got the majority of the equity within within two weeks and then we're going to maximize the value of the house where mike's correct and, at the same time, vast, absolute vast majority. Worst case scenario do not get less than 90%. Now, 90%, oh well, what about the other 10%? Well, here's the thing In a cresting market, which we're going to see for the next three to five years in Keith's example, it's probably going to be more like four to six years right, the values are going down.
Speaker 2:So you list your home. It takes much more, much longer without cash CPO. It takes longer than usual to sell, which is already happening. It's already happening to Keith as well in Illinois. So you've got all those mortgage payments.
Speaker 2:You can't move on. You can't go and make an offer. Most people can't. Some people have cash to go and buy a house somewhere else. Most people can't move on to be by the grandkids or wherever they want to go, because they're making a contingent offer. Most sellers aren't going to accept a contingent offer.
Speaker 2:This gives you a way to move on. Whatever you're moving on to, whatever the next chapter is, maybe, like Richard who called in, you're right-sizing or down-sizing. I don't like to call it down-sizing because I don't know. I'm much happier in a smaller house than I was in a big one, so I don't think it's downsizing. It doesn't sound very good, so it's right sizing. So whatever you want to do, this allows you to do it, so it just makes a lot more sense.
Speaker 2:However, do it the traditional way, the old fashioned way. You stick your house out there. It might take six months to sell. Heck, when I got into real estate, some things were taking a year to sell. That's why we have these things called expired listings. We're seeing probably 10 a day now. I was seeing one a day just six months ago and, um, you know, you don't. You don't want it to expire.
Speaker 2:That's a stigmatized listing. That's not good either. We're talking about the old-fashioned way to do it. Now. Not only that, you're paying that mortgage payment and at the end of the day, over that time, you probably will have reduced the price. You're only getting 90% anyway. Right, our average used to be 92, 93%. Whereas you can take your money now, get everything fixed. Your house is going to shine because everything's fixed. Who isn't going to want to buy your house? This is a no-brainer guys. Hours drop out 7% of the time. A traditional, old-fashioned listing. They drop out over 30% of the time. That's a stigmatized listing where you get less money, right? I mean somebody give me a reason why not to do it this way. I mean it.
Speaker 4:Well, we were talking about this yesterday at lunch and two seasoned brokers were sitting there and by the time we were talked about in 10 minutes, we had an audience just they're like how do we do this?
Speaker 2:Yeah, and they were like, well, that can't be the case. Oh, you can't do that, we're doing it. You know we've closed on five in the last couple of months through this process and they're not distressed homes, guys, you can be a luxury two million dollar home where you think everything is absolutely perfect. This works, you know you'll. You'll get that big chunk of equity get you out. Half the deal, frankly, is getting you out of the house. Maybe you've got dogs, kids, spouses that are noisy, you know. Maybe they play the piano all the time, who knows? And anything. To wrap us up there, keith, can you believe we got through a whole show again, like we always do every week. We're in our last two minutes.
Speaker 3:Yeah, I was just going to say if homeowners only you know could see the amount of buyers that we work with and what the buyers are saying about every home out there, they would understand that if they went through this program and their home got updated or fixed and repaired, and of just how desirable that would be to the majority of home buyers that are out there, they would not have a clue. Because we see a lot of you guys know this we see a lot of head scratchers out there and if they bump into a CPO home, I guarantee you those houses are going to sell first because that's what buyers want. And if we start just thinking about it, common sense wise, we we understand that this is not a head-scratcher, this is a no-brainer.
Speaker 4:It's also what brokers want.
Speaker 2:It's what brokers want. The brokers will show the houses. You know. I mean, if you're a buyer agent and you only get paid on commission, well, that's the whole of the show too. Then you're going to show these homes first, because 30% of the time the deals that you do all that paperwork for. And you know, you've been working with your buyers for years. Sometimes They've come back in the summer and then the spring, and then the summer again and then the spring, and finally you found that house. You've done all the paperwork, all the energy. You bought them lunch 19 times. Which house would you? I mean? Just which house?
Speaker 2:Is it right for the buyers to go for? House A or House B? House A is cash CPO, a certified, pre-owned house. House B is not. So for the buyers, why risk it? If they're both kind of equal, why would you risk it on House B? Nobody would right, nobody would. It doesn't make any sense. And obviously for the buyer agent they're going to say listen, this house is all tickety-boo, it's clean and nice and lovely. Why wouldn't you go for that one? It's more likely not to fall out. More likely not to fall out. Is that a double negative?
Speaker 1:You all know what I mean Less likely.
Speaker 2:Less likely. There, you go Less likely. Keith, we love you, thank you for getting up early.
Speaker 4:Good hearing from you, Keith.
Speaker 2:Yeah, great to have Keith on the line from Illinois. Great show guys. Thank you so much, really great job, and thank you for Richard as well for calling in and helping us explain all that. See you on the show next week.
Speaker 1:This has been the Plain English Real Estate Show with Rowena Patton. Visit Rowena and post your questions at radioashvillecom or call her at 828-210-1648.