Speaker 1: You're listening to KFI AM six forty on demand.
Speaker 2: I am justin Worsham.
Speaker 3: For those of you that are long term KFI listeners,
Speaker 3: you probably may recognize my name. Back in I think
Speaker 3: it was twenty fifteen, I got the job as the
Speaker 3: board op for the Bill Handle Show in the morning.
Speaker 3: I did that for a couple years, and then management
Speaker 3: at the time felt I made the show sound too silly,
Speaker 3: and so I looked for another gig and Gary and
Speaker 3: Shannon were kind enough to have me on their show.
Speaker 3: So Wednesdays from eleven thirty to noon, I am on
Speaker 3: their show talking parenting. But that is not what I
Speaker 3: am here today to talk to you about. That is
Speaker 3: my little bit of my background in radio. But what
Speaker 3: I'm here to talk to about we're doing a real
Speaker 3: estate Southern California real estate talk show. So when I
Speaker 3: left radio, I got my I had my real estate
Speaker 3: license in twenty thirteen because I wanted to get into
Speaker 3: property management. I did that for about four years. That's
Speaker 3: actually how I saved up for the house I bought
Speaker 3: in Bourbank, California. Anybody out there, especially if you're here
Speaker 3: for the entertainment industry, look into property management. It's a
Speaker 3: great way to find affordable housing. In most cases, you
Speaker 3: could live for free in a place, and I was
Speaker 3: maybe putting twenty hours in a month managing that place,
Speaker 3: and I was getting a free twenty one hundred dollars
Speaker 3: a month apartment.
Speaker 2: It was awesome.
Speaker 3: When radio did not look like a good option for me,
Speaker 3: I thought that real estate would be a backup. Like
Speaker 3: I'm sure most realtors out there who are listening can
Speaker 3: agree to. Very few people grow up going I want
Speaker 3: to be a realtor when they're in elementary school, and
Speaker 3: it actually became the career that I loved, and it's
Speaker 3: something that I wish I had done since I was twenty.
Speaker 3: So I got my license to twenty thirteen, started me.
Speaker 3: I was a real a full time agent. In twenty eighteen,
Speaker 3: got my broker's license, and now I own and operate
Speaker 3: my own real estate brokerage here in southern California. And
Speaker 3: the first thing I wanted to talk about today, we're
Speaker 3: going through questions that I get a lot as a realtor,
Speaker 3: and so I'm hoping that you guys will find this
Speaker 3: interesting because these are kind of ranked in the most
Speaker 3: common questions. The biggest one that comes up now is
Speaker 3: that there's a misunderstanding about how realtors, particularly realtors that
Speaker 3: are representing a buyer, get paid in this market. A
Speaker 3: lot of people think that there was a law change.
Speaker 3: There was no law change. It wasn't a legal change.
Speaker 3: Everything is exactly the same from a legal standpoint. What
Speaker 3: happened was that there was a settlement made with the
Speaker 3: National Association of Realtors due to a class action lawsuit
Speaker 3: that originated in Missouri, and they settled for I think
Speaker 3: is somewhere around four billion dollars.
Speaker 2: That's irrelevant.
Speaker 3: What was happening in those states is that the listing
Speaker 3: agreements that sellers were signing did not disclose that part
Speaker 3: of the commission they were paying their realtor to sell
Speaker 3: their house was going to their competitor, the buyer's agent,
Speaker 3: and so they weren't aware of that. In California, we've
Speaker 3: always had that, But part of the settlement was we
Speaker 3: had to remove the commission, or what we call in
Speaker 3: the real estate industry the cooperation element, from our multiple
Speaker 3: listing service or mls. So no longer when I list
Speaker 3: the house can I say I'm going to give this
Speaker 3: buyer's agent two and a half percent. That's not how
Speaker 3: it works anymore. So then now people believe that they
Speaker 3: have to pay their buyer's agent, And in most cases,
Speaker 3: that's not what I'm seeing, at least in the market,
Speaker 3: not what I'm hearing from any of my friends in
Speaker 3: the industry either. Everything is basically functioning exactly the same
Speaker 3: way it was before, only now a buyer's agent has
Speaker 3: to have a conversation with a buyer ahead of time
Speaker 3: to explain this, where before you never really did that,
Speaker 3: or at least most of us I would argue didn't.
Speaker 3: And you also have to have a buyer representation agreement
Speaker 3: in place, and that's because I can't just go pick
Speaker 3: a house that's available and put it on the market
Speaker 3: to try to sell it. I have to have a
Speaker 3: contract with that seller. And this new change means that
Speaker 3: when you're representing a buyer, I can't just go out
Speaker 3: and show them houses and expect to be entitled to
Speaker 3: a commission. So I need to have an agreement in
Speaker 3: place between the two of us. And now they've even
Speaker 3: streamlined even better, and it's getting better that you put
Speaker 3: in the contract what your buyer's agent is going to
Speaker 3: get paid for. Instance, I usually ask about two and
Speaker 3: a half percent. In my experience, that's about the most
Speaker 3: that you get. We're not supposed to talk about like
Speaker 3: commissions and break it down because it seems like we're
Speaker 3: rigging the industry. But I'm just giving you averages here,
Speaker 3: not making any kind of suggestions or saying that these
Speaker 3: are hard lines. This is just general blanket statements. And
Speaker 3: so I submit an offer, and in some cases a
Speaker 3: seller might come back and say, I'm not going to
Speaker 3: give you two and a half percent, but I'll give
Speaker 3: you two percent, And that's up to you as the agent,
Speaker 3: and you and the buyer and everybody I have had
Speaker 3: on the listing side. Recently, I had an agent who
Speaker 3: submitted an offer and they said that they wanted my client,
Speaker 3: the seller, to pay three percent. When I presented that
Speaker 3: to the seller, the seller was like, that seems a
Speaker 3: bit high. I gave him the rite info. I said,
Speaker 3: based on averages that I've seen, yeah, that's high. Usually
Speaker 3: on the higher end it's two and a half percent.
Speaker 3: So my seller countered back and said, we'll give you
Speaker 3: two and a half percent, but we're not going to
Speaker 3: give you three. The agent said, I've been working with
Speaker 3: these guys for a long time, so I think I'm
Speaker 3: entitled to three percent, And with all due respect to
Speaker 3: that agent, what I told him is like, well, I
Speaker 3: will take that to my seller, but I believe that
Speaker 3: that's not my seller's problem, right, my seller should not
Speaker 3: be paying you for the time that this buyer took
Speaker 3: to find a house. So that's to me. An added
Speaker 3: benefit of this change is that sure should there's now
Speaker 3: there's this added layer of negotiation, which was actually the
Speaker 3: intent of the lawsuit. They just wanted everything to be negotiable.
Speaker 3: I also think that their intent was that they thought
Speaker 3: realtors are the reason why housing is so unaffordable in
Speaker 3: general in other places, and I just I think that's insane.
Speaker 3: I just don't see how realtors have that much of
Speaker 3: an impact on the housing market, and I would love
Speaker 3: to find out more. If you disagree with me, you
Speaker 3: can go ahead and hit the talkback feature on the
Speaker 3: iHeart app and send me a message about that. I'm
Speaker 3: also looking to see if you're hearing from people who
Speaker 3: are leaving California or you left California. I want to
Speaker 3: know why, because we're going to be talking about that
Speaker 3: a little bit later on Also I'm going to talk about,
Speaker 3: because this is the next big question that I get,
Speaker 3: is that the impact that the fires have had that unfortunate, horrible,
Speaker 3: horrible incident that we had in January. There's a lot
Speaker 3: of belief, much like other things, like when the pandemic happened.
Speaker 3: Everybody was like, this is going to be the thing
Speaker 3: that changes the housing prices in southern California, and so
Speaker 3: far we're not seeing it. So when we come back,
Speaker 3: I'm going to talk more about why I think that
Speaker 3: the fires are not going to have the impact that
Speaker 3: most people out there trying to buy a home and
Speaker 3: live that American dream in southern California, they're not going
Speaker 3: to see those prices come down the way that they would.
Speaker 1: Hope you're listening to KFI AM six forty on demand.
Speaker 3: When I was a kid in elementary school, I wanted
Speaker 3: to be a stand up comic. I was fortunate enough
Speaker 3: to work the road for like seven years, but when
Speaker 3: I got into middle school, Oh, I wanted to be
Speaker 3: a radio shost That would be such a fun gig, right,
Speaker 3: And so at least I'm getting to try it out
Speaker 3: for two hours today, and then we got two hours
Speaker 3: again next Sunday from two to four, still talking Southern
Speaker 3: California real estates. I feel like it's going Okay, did
Speaker 3: one segment.
Speaker 2: The real test is yeah, in school grade school, was
Speaker 2: your citizenship excessive talking? Oh, yes, for sure. Yeah.
Speaker 3: I always I'd always got good grades, but never had
Speaker 3: satisfactory citizenship.
Speaker 2: It was always us.
Speaker 3: Everything was unsatisfactory as far as my behavior in the
Speaker 3: classroom perfect. So now I want to talk about the
Speaker 3: other question I get a lot is the fires. And
Speaker 3: what I believe this comes from is if you're out
Speaker 3: there and you're trying to buy a house in southern
Speaker 3: California right now, it just sucks like there's nothing, there's.
Speaker 2: Nothing good about it.
Speaker 3: I hear from clients when I'm helping them find a
Speaker 3: house all the time that they're like, who pays this
Speaker 3: much money for a house? When I started in real
Speaker 3: estate and kind of my home area of Burbank, that's
Speaker 3: where I live, the median house price was around nine
Speaker 3: hundred and fifty thousand dollars and now it's one point
Speaker 3: four million dollars and it is insane. Don't get me wrong,
Speaker 3: it's crazy. And so everybody likes to try to find
Speaker 3: these things they're hoping, they're dreaming that something is going
Speaker 3: to change that. And we're going to talk about affordability later,
Speaker 3: but I want to lead into what I think is
Speaker 3: going on behind these fires, and I think what really
Speaker 3: started this whole thing, in my opinion, is that as
Speaker 3: soon as they happened, there were a lot of reality
Speaker 3: TV stars that are on these like real estate shows.
Speaker 3: I think the million dollar listing guys, I think they
Speaker 3: do pretty well, but most of the other shows that
Speaker 3: I've looked into, I could go in the MLS and
Speaker 3: I could look and see what they do in production,
Speaker 3: and it's not a lot, so they're very good being
Speaker 3: television people. But I saw a lot of people being
Speaker 3: good at being reality TV stars and saying this is
Speaker 3: going to change the market.
Speaker 2: My phone is blowing up. And maybe it's.
Speaker 3: Because I help what I would consider to be more
Speaker 3: middle to upper middle class clientele, and I'm not a
Speaker 3: luxury agent. The most expensive house I've sold so far
Speaker 3: was a five million dollar, humongous, beautiful place in Tarzana,
Speaker 3: and then from there it's usually around one to one
Speaker 3: point two million on average, So maybe that's why. But
Speaker 3: I think all of this started because the overregulation of
Speaker 3: the insurance industry by the state of California. They were
Speaker 3: trying to make it a thing where insurance companies were
Speaker 3: charging the same for everybody, regardless of their risk assessment,
Speaker 3: and they thought that that would make it more affordable
Speaker 3: for people to get insurance for their homes. And I
Speaker 3: think they also thought somehow that that would somehow make
Speaker 3: it more affordable, like I think they thought that that
Speaker 3: was part of the reason why houses cost so much more.
Speaker 3: They love to I've noticed they love to blame other industries.
Speaker 3: They don't want to blame the legislation. They don't want
Speaker 3: to blame like I've heard from developers, it's fifty thousand
Speaker 3: dollars before just to get start the process of doing
Speaker 3: a development or making a building, before you even put
Speaker 3: a shovel in the ground. And they have all these
Speaker 3: impact survey or environmental impact survey, so you have to
Speaker 3: do all these studies, and it just it doesn't help
Speaker 3: when they get overregulated in that way. So in California
Speaker 3: to fix that, because then what started happening.
Speaker 2: The first one I heard was State Farm.
Speaker 3: They were the first one to start saying, we're not
Speaker 3: writing policies in California anymore, and so they came up
Speaker 3: with the California Fair Plan, So it's a subsidized fire
Speaker 3: insurance policy.
Speaker 2: And I looked into it.
Speaker 3: Only twenty two percent of the structures in the Pacific
Speaker 3: Palisades Fire and only twelve percent of the ructors in
Speaker 3: the Eton Fire were actually covered by the California Fair
Speaker 3: Plan for Palisades.
Speaker 2: That's they're estimating.
Speaker 3: That's four billion dollars in costs to replace those properties
Speaker 3: or in damage, and the Eton Fire at seven hundred
Speaker 3: and seventy five million, So sixteen thousand structures were lost
Speaker 3: during those fires. Horrible tragedy. I hope I'm not being
Speaker 3: insensitive to it in any way. Not my intent at all.
Speaker 3: What I want to do is just look at it
Speaker 3: from just a strictly numbers. They take the emotion out
Speaker 3: of it, take the trauma out of it. There's an
Speaker 3: organization that I found in preparation for the show called SKAG.
Speaker 3: It's the Southern California Association of Governments. The best way
Speaker 3: I could describe it, it's as if the counties of
Speaker 3: Southern California decided to form their own un and they
Speaker 3: get together and they share resources, they share information and
Speaker 3: they make plans for all of us that live here
Speaker 3: in southern California. It includes Imperial County, Los Angeles, Orange Riverside,
Speaker 3: San Berdino, and Ventura.
Speaker 2: Back in March of twenty twenty one.
Speaker 3: They adopted what they call the six cycle of the RHNA,
Speaker 3: and that's the Regional Housing Oh man, I'm blanking on
Speaker 3: that s assessment. It's basically what they said is, these
Speaker 3: are the amount of new houses that we need to
Speaker 3: bring to the market in order to meet the growing demand.
Speaker 3: And right now they have a projected plan in order
Speaker 3: to meet the demand. Again, this is just to meet
Speaker 3: the demand that they see of one zero point three
Speaker 3: million housing units by twenty twenty nine. There is no
Speaker 3: way that the loss of sixteen thousand units and those
Speaker 3: horrible fires is going to come close to meeting their
Speaker 3: projected demand. The other added fact is that when you
Speaker 3: dig a little bit deeper and you look into it,
Speaker 3: because of just the limit of land availability, legally they
Speaker 3: only could do about four hundred thousand of those one
Speaker 3: point three million units that are needed. That's our bigger
Speaker 3: issue here, that's the problem. That's why even with these
Speaker 3: high interest rates. I looked into it too crazy appreciation
Speaker 3: in both Orange County and in Los Angeles County. That's
Speaker 3: not what's supposed to happen. When the interest rates went
Speaker 3: up a couple of years ago, it's supposed to drop
Speaker 3: the prices. That's what's supposed to happen. And we didn't
Speaker 3: see it happen. And everybody's like, why, why, Why isn't
Speaker 3: this happening? And I really believe it's because we still
Speaker 3: don't have enough houses car The California Association Realtors also
Speaker 3: commission to study. I tried to find it because I
Speaker 3: saw a webinar on it like two years ago and
Speaker 3: I was fascinated by it. They did this webinar where
Speaker 3: they researched major markets all over the US, and what
Speaker 3: they found is that if you live in an area
Speaker 3: of high population density or high desirability. It's important to
Speaker 3: note that high population density or high desirability, so it
Speaker 3: doesn't even have to be dense with a lot of people.
Speaker 3: It's just if this is a place people want to
Speaker 3: live and the primary housing option is in the larger
Speaker 3: percentage is what they call R one, a residential essentially
Speaker 3: a single family home, the home that you grew up
Speaker 3: in right, not an apartment building, not a condo, not
Speaker 3: a town home, just a single family, standalone home across
Speaker 3: the board. Those areas have an affordability issue, So you
Speaker 3: have to be able to build up. You have to
Speaker 3: go up. You can't have a ton of houses there.
Speaker 3: You can't do these large swaths of single family neighborhood.
Speaker 3: Anybody who's flown into lax or a Hollywood airport in
Speaker 3: Burbank and you look over the La basin, it is
Speaker 3: just a ton of single family neighborhoods. And that's where
Speaker 3: in my experience, everybody wants to be able to live
Speaker 3: in a single family home. Nobody wants to live like
Speaker 3: they're in New York. Only New Yorkers are fine living
Speaker 3: in condos that I've seen. They like the building living
Speaker 3: and a lot of cases sometimes even single ladies, they
Speaker 3: make it. They feel like it makes them feel more safe,
Speaker 3: they feel more connected to the people, and they're enclosed
Speaker 3: and I don't know, it's like a warm blanket that
Speaker 3: covers them. So my opinion that there is not going
Speaker 3: to be an impact on a housing or the cost
Speaker 3: of housing from the fires. Unfortunately, honestly, I know that
Speaker 3: this may not be popular amongst people who already own
Speaker 3: their homes, and maybe even some realtors. Although if you're
Speaker 3: a relter and you don't like the fact what I'm
Speaker 3: about to say, I would love to have a conversation
Speaker 3: with you. I would love for there to be of
Speaker 3: housing correction. I would love for prices to drop, because
Speaker 3: the affordability here in California is just it's awful. It's awful,
Speaker 3: and I do plan to talk about that in the
Speaker 3: next hour. I want to talk more about what it is. Why,
Speaker 3: like what can we do to make houses more affordable?
Speaker 3: And I mean to give it to you in a
Speaker 3: Nutshell'll dig it into a deeper later on. We just
Speaker 3: need more houses. It's not realtors. It's not the cost
Speaker 3: of insurance, it's not natural disasters, it's none of that.
Speaker 3: It is basic supply and demand. And for whatever reason,
Speaker 3: the legislators can't wrap their mind around that.
Speaker 2: That's the easiest way to fix it. You have to
Speaker 2: find a way to make.
Speaker 3: It easier for developers who build new construction homes to
Speaker 3: make money doing it, and they will fix your problem
Speaker 3: for you.
Speaker 2: Why.
Speaker 3: And that's the other thing with these fires, The thing
Speaker 3: that was blowing my mind and that's what I started
Speaker 3: to talk about with the insurance stuff, is that when
Speaker 3: these insurance companies started looking at the way things were
Speaker 3: going in California and they were running the numbers, they
Speaker 3: started to say, we're not writing new policies. And that's
Speaker 3: because the entire function of their industry, the way that
Speaker 3: they make a profit, is assessing risk. And so I'm
Speaker 3: sure that they didn't know to the day, or they
Speaker 3: didn't know when it was going to happen, but they
Speaker 3: had a very strong idea that something was going to
Speaker 3: go horribly wrong for their industry, and they didn't want
Speaker 3: to get caught up on it. They wanted to mitigate
Speaker 3: that risk as much as they could. And so that's
Speaker 3: why they stopped writing policies in California, because they knew
Speaker 3: something was going to happen. And we should have looked
Speaker 3: at that as like a canary in the coal mine.
Speaker 3: We should have said, oh, maybe there's something wrong with
Speaker 3: the way we're handling homeowners insurance in the state of California.
Speaker 2: Maybe it shouldn't be that regulated again.
Speaker 3: If I would love to hear from you, hit that
Speaker 3: little microphone on the iHeartRadio app and I want to
Speaker 3: hear the talkback. I want to know if you left
Speaker 3: California or you know someone who left California. I want
Speaker 3: to know why, and I also want to know where
Speaker 3: you went, where you're going let me know. We're going
Speaker 3: to be talking about the difference. You hear what advertise
Speaker 3: you see them on television. When we come back, we're
Speaker 3: going to talk more about these what I call wholesalers.
Speaker 3: These are great people who give you the option of
Speaker 3: like I'm just going to pay you cash for your house,
Speaker 3: no contingencies, know nothing, and I'm going to make it
Speaker 3: as easy as possible for you to sell your house
Speaker 3: versus using someone like me, a realtor. We're going to
Speaker 3: talk about that more when we come back.
Speaker 1: You're listening to KFI AM six forty on demand.
Speaker 2: This is justin Worsham.
Speaker 3: We're talking southern California real estate. If you're just joining us,
Speaker 3: I'm a licensed real estate broker, former KFI board op
Speaker 3: and producer and just general I just was listening at
Speaker 3: last promo. I have an unhealthy I think love for
Speaker 3: Gary and Shannon, like I just think they're just they're
Speaker 3: They've done a lot for me, so I got a
Speaker 3: lot of love for them, but I just I think
Speaker 3: the world of them.
Speaker 2: They're great people and I just love their show so much.
Speaker 3: Robin, I understand we had somebody who was nice enough
Speaker 3: to take advantage of the talkback Can we hear that?
Speaker 2: Can you help me with that? Please?
Speaker 4: Hello, great idea for a show I would like to know.
Speaker 4: Is it true if you house is on the market
Speaker 4: for more than sixty days, you as the buyer lose
Speaker 4: all your negotiating tactic.
Speaker 3: Thank you, that's a great question from Kathleen. Thanks for
Speaker 3: using the talkback feature. If you also have a question,
Speaker 3: I would love to do that. So if you're listening
Speaker 3: on the iHeartRadio app and you have a question, hit
Speaker 3: that microphone in the top and it lets you, I think,
Speaker 3: leave like a twenty five second voice clip that you
Speaker 3: could send us as a voice memo and we get
Speaker 3: to listen to it.
Speaker 2: Now. I'm going to guess that probably much.
Speaker 3: I hope it's not coming through, but I would be
Speaker 3: lying if I didn't say I was a little bit nervous.
Speaker 3: I'm weirdly enough, I'm nervous because I felt like I
Speaker 3: would be more nervous when I don't know if I
Speaker 3: told you this when I first started the show the
Speaker 3: first time I ran the board Robin, You'll get an
Speaker 3: amusement out of this. The first time I went to
Speaker 3: just hit the first button to fire into the lead
Speaker 3: of the show, I blanked on all of the training,
Speaker 3: had no idea. I thought I forgot everything how everything worked,
Speaker 3: and I almost passed out and got lightheaded.
Speaker 2: And I have zero of that right now.
Speaker 3: I almost feel weirdly too comfortable, which it brings its
Speaker 3: zone sets of nerves. But I think, Kathleen, the reason
Speaker 3: you're asking your question about sixty days negotiating for a buyer,
Speaker 3: what you meant is as a seller. And here's why
Speaker 3: I'm gonna say that. I'm gonna answer both ways, just
Speaker 3: to be fair. If you are a buyer and you
Speaker 3: are looking at a house that has been on the
Speaker 3: market for sixty days. Last time I checked, the average
Speaker 3: days on the market in California were twenty eight during
Speaker 3: the pandemic at its peak, it was like six to
Speaker 3: seven half of the homes in California during like twenty twenty,
Speaker 3: twenty twenty one in California, the entire state, we're selling
Speaker 3: in less than a week. It was crazy times. And
Speaker 3: now what's hard is that when you help sellers, they're
Speaker 3: not used to it. Like, I have a listing right
Speaker 3: now in Burbank that is priced below any other three bedroom,
Speaker 3: two bath home in Burbank, and it's We've been on
Speaker 3: the market for two weeks now, and I'm telling my
Speaker 3: seller now is not the time to be nervous because
Speaker 3: they're used to the old market. So if you have
Speaker 3: a house that's been on the market for sixty days
Speaker 3: and you are the seller, I would argue, yes, you're
Speaker 3: probably losing some of your negotiating power because you don't
Speaker 3: have a lot of offers that are coming in. If
Speaker 3: you are listing your house, always trust your agent, right
Speaker 3: because there's a reason why you have that relationship.
Speaker 2: There's a reason why they're there.
Speaker 3: So I wouldn't necessarily feel comfortable arguing with them about
Speaker 3: your circumstance because I don't know it. But let's say
Speaker 3: you were my client and you had a house somewhere
Speaker 3: in the LA area or even Orange County that had
Speaker 3: been on the market for sixty days and you've had
Speaker 3: zero offers. Usually your first issue is you got a
Speaker 3: price issue. That means you're overpriced. Now, what happened with
Speaker 3: the interest rates when they came up in Oh, I'm
Speaker 3: blanket on the air, I want to say it was
Speaker 3: twenty twenty two. I think that's when the March of
Speaker 3: twenty twenty two is. Want to say the rates jumped up.
Speaker 3: The biggest segment of the market that was impacted were
Speaker 3: condos and townhomes because they are the lower priced option.
Speaker 3: So if you were somebody who was looking for a
Speaker 3: four to six hundred thousand dollars condo or town home
Speaker 3: in southern California, a lot of your competitors or competition
Speaker 3: got priced out of the market.
Speaker 2: They just couldn't afford it anymore.
Speaker 3: I was helping a young couple and they were capped
Speaker 3: out at four to twenty five, and so we were
Speaker 3: trying to help them find a two bedroom condo up
Speaker 3: in Canyon Country, Anna Clarita area, and if the rates
Speaker 3: ticked up another half a point, they're like, we can't
Speaker 3: buy a house anymore. So now what's happening in that
Speaker 3: segment of the market is if you have a condo
Speaker 3: or a town home, it's stacking up. And so, just
Speaker 3: like I've said before, it's basic supply and demand economics.
Speaker 3: The more supply, the more town homes and condos that
Speaker 3: keep adding to that area. Then that means that there's
Speaker 3: more supply than there are people looking to buy it,
Speaker 3: and so naturally the price just kind of comes down.
Speaker 2: So I'm going to flip it.
Speaker 3: Though, So as a buyer, if the place has been there,
Speaker 3: I feel like it gives you more negotiating power because
Speaker 3: chances are at that point. I usually recommend clients do
Speaker 3: about twenty thousand dollars no more than that below list
Speaker 3: to start a conversation. But the better way to do
Speaker 3: it is to have your realtor pull comps on it.
Speaker 3: Comparable market analysis. We call them comps for short. It's
Speaker 3: when they look for houses that are similar to the
Speaker 3: house that's on the property.
Speaker 2: They call that the subject property.
Speaker 3: A good realtor is using the same kind of criteria
Speaker 3: that an appraiser would use to assess the value on
Speaker 3: the property for a loan if it was under contract
Speaker 3: or an escrow. So you're going to look at that
Speaker 3: to see is the house overpriced, and then try to
Speaker 3: find it. Very rarely do I come across houses when
Speaker 3: I'm representing buyers where the seller just has like an
Speaker 3: unreasonable Like by unreasonable, I mean crazy unreasonable, like hundreds
Speaker 3: of thousands of dollars above where it should be. Sometimes
Speaker 3: what you'll see is a flip will sometimes have that
Speaker 3: because they probably they just underestimated the construction or rehab
Speaker 3: costs when they were flipping and updating the house.
Speaker 2: If you don't know what a flip is, it's where
Speaker 2: you buy what we would.
Speaker 3: Call distressed home, a dump, a fixer, just something that
Speaker 3: probably most people wouldn't want to live in unless that's
Speaker 3: all they could afford in southern California, because it's so
Speaker 3: impossible to find something affordable, and you buy that and
Speaker 3: then you renovate it, you fix it, and then you'd
Speaker 3: sell it for more. So you see that where usually
Speaker 3: it's like the builders like I just have to get
Speaker 3: this to cover my nut, Like this is what I
Speaker 3: need to get out of this house in order to
Speaker 3: pull that off.
Speaker 2: So I don't think and then I guess.
Speaker 3: The one thing I want to just clarify too is
Speaker 3: negotiating tactics.
Speaker 2: I just want to be clear, like I don't.
Speaker 3: Think you should you shouldn't go into buying a house
Speaker 3: like offering high I've had a lot of signs that
Speaker 3: come up as a listing agent where people come in
Speaker 3: and like, we're just going to offer high and then
Speaker 3: we're going to talk them down. The other thing that
Speaker 3: buyers love to do is they love to come at
Speaker 3: me and say, here's the thing. We're going to counter
Speaker 3: back with the lowest number, and then they'll come back
Speaker 3: with the highest number. And I mean this with all
Speaker 3: the kindness and love in my heart, but you are
Speaker 3: not the first person to think of that. That is
Speaker 3: not how negotiation traditionally works in real estate. I'm not
Speaker 3: saying it never worked. I'm just saying that your odds
Speaker 3: of success with that are very little because what I've
Speaker 3: seen happen more often than you get that number you're
Speaker 3: looking for is now you've just made that seller angry,
Speaker 3: especially now where technically we should be trending for prices
Speaker 3: coming down, and all we're really seeing is houses are
Speaker 3: taking longer to sell. So if you got a seller
Speaker 3: as an idea of what they should be getting in
Speaker 3: their mind, and now they're not going to get that
Speaker 3: price and they're just sitting there or they're already in
Speaker 3: a frustrated headspace, and now you want to come in
Speaker 3: and offer them eighty to one hundred thousand less than
Speaker 3: what they haven't listed for, especially if there's comparable sales
Speaker 3: that have happened within the last ninety days that would
Speaker 3: support their listing price and their value, then that's gonna
Speaker 3: make them angry. Think of what how you would feel
Speaker 3: if you were selling the house. It's interesting to me that, again,
Speaker 3: when I help buyers, how little they can see the
Speaker 3: other side. Everybody is so focused on just getting themselves,
Speaker 3: and every once in a while you have people who
Speaker 3: are like, even if they're getting a deal, I've been
Speaker 3: fortunate enough. In the last month, I got one property
Speaker 3: for a client in North Hollywood that it was seventy
Speaker 3: five thousand dollars below market value, and it came in
Speaker 3: sixty thousand dollars. The appraisal came back sixty thousand dollars
Speaker 3: more than list and that usually means that that's how
Speaker 3: good a deal that they got. And I'm like, I'm
Speaker 3: a pretty good agent. I like to think I'm a
Speaker 3: good one. I'm not saying that to brag. That doesn't
Speaker 3: happen all the time. This is just a circumstance where
Speaker 3: I had some listing agents that were using an old
Speaker 3: model for pricing that just didn't work.
Speaker 2: So Kathleen, I hope that answered your question.
Speaker 3: If anybody else has a question, please use that talkback feature.
Speaker 3: Also again, shoot me a message if you want. I
Speaker 3: want to know if you know somebody who's leaving the
Speaker 3: state of California. I want to know why hit me
Speaker 3: up on that talkback and I didn't get to it.
Speaker 3: So we're gonna We're gonna go back. We're gonna talk wholesalers,
Speaker 3: these people that offer to pay cash for your house.
Speaker 3: You could stay there as long as you want, You
Speaker 3: could leave as much stuff versus using a realtor, which
Speaker 3: one makes more sense.
Speaker 1: You're listening to KFI AM six forty on demand.
Speaker 3: Justin worshow me here with you talking Southern California real
Speaker 3: estate got tons of people are hitting the talk back,
Speaker 3: and as far as I could tell, not one of
Speaker 3: them is my mother yet, So I'm really I'm gonna
Speaker 3: take that as a win.
Speaker 2: Richie. Just take note.
Speaker 3: If any of them are named Cheryl, that's my mom
Speaker 3: and we should definitely prove that first, because she's probably
Speaker 3: just trying to make me look good. But I love you, Mom,
Speaker 3: and thanks for definitely will thanks I appreciate. So I
Speaker 3: didn't get to talk to this in the last segment.
Speaker 3: But it's something that comes up a lot for sellers.
Speaker 3: So you see probably you've srobably seen television ads, you've
Speaker 3: heard them advertise here on KFI.
Speaker 2: I call them wholesalers.
Speaker 3: These are companies, people, well whatever you want to call them,
Speaker 3: who are offering to pay cash for your house, non contingent.
Speaker 3: What that means is they're saying, I will buy your house.
Speaker 3: I don't need to get it inspected, I'm not worried
Speaker 3: about it getting an appraised appraisal for the value of
Speaker 3: the home, and I don't need to get a loan.
Speaker 3: I'm just going to buy it. And what they also
Speaker 3: do is they say, here's the thing. And traditionally in
Speaker 3: this market, it's about a twenty one to thirty day
Speaker 3: s grow on average. Some of them go a little
Speaker 3: longer if a seller needs more time to be able
Speaker 3: to find a new place. But they're saying, we could
Speaker 3: wait three months, four months, you could pick the day
Speaker 3: that you move out.
Speaker 2: You can also leave all of your furniture or trash.
Speaker 3: Whereas the standard purchase agreement in the state of California
Speaker 3: requires that a home be at least broom swept, but
Speaker 3: you could literally just pack up and leave in any
Speaker 3: junk that isn't a keepsake or whatever. You could just
Speaker 3: walk out and to me, in my opinion, there's only
Speaker 3: really one downside to that, and it's that usually they
Speaker 3: can't find a way to make it cost effective for you,
Speaker 3: like they can't make you as much as a realtor can.
Speaker 2: And I want to emphasize this.
Speaker 3: I mean usually I have in at least three different instances,
Speaker 3: I have had sellers come to me and say, so
Speaker 3: and so is offering me this amount to sell my house. Right, So,
Speaker 3: when I look at that amount, and when you account
Speaker 3: for the commissions that they would have to pay, which
Speaker 3: is in this market usually not hard fast. Again, there
Speaker 3: is no way of setting commissions, no legal requirement for commissions.
Speaker 3: They are all up for negotiations. But traditionally a seller
Speaker 3: is still paying three to six percent or I'm sorry,
Speaker 3: it's five to six percent in commission for a sales
Speaker 3: price that I look at it and go, if it's
Speaker 3: about a five percent difference in price, it doesn't make
Speaker 3: sense for you to use a realtor. So, but there's
Speaker 3: also data that shows before the realtor's light their pitchforks
Speaker 3: and torches and descend upon Burbank to find me.
Speaker 2: There's also research that says that if you use.
Speaker 3: A realtor versus trying to sell your home by yourself,
Speaker 3: so we call them fizzb as realtors for sale by owners,
Speaker 3: and you usually get thirty percent more on the sales
Speaker 3: price of your home than if you sell it yourself.
Speaker 3: So a realtor will get you thirty percent more. So
Speaker 3: they're making you more than what you're paying them in
Speaker 3: the commission.
Speaker 2: So what do you do? How do you know what
Speaker 2: the right thing to do?
Speaker 3: Is? The right thing to do is to talk to
Speaker 3: these companies. I would recommend you do it in this order,
Speaker 3: because if you talk to a realtor and then they
Speaker 3: start to list your house and you put it on
Speaker 3: the market, in most cases, at least as far as
Speaker 3: I know, those companies kind of go away. They're not
Speaker 3: interested in doing that. They're interested in just making you
Speaker 3: one offer and saying this is what we'd like to
Speaker 3: give you for your house, Take it or leave it.
Speaker 3: So I would start with those companies. I would find
Speaker 3: those places that you're seeing advertise on the television. I
Speaker 3: would make note when you see them. I would google them.
Speaker 3: I would listen to the companies that advertise here on
Speaker 3: KFI and get their number and call them and just
Speaker 3: see what's your offer there. Then I would recommend that
Speaker 3: you talk to at least three other realtors. And you're
Speaker 3: going to have to use your gut on this. Because
Speaker 3: I had a listing appointment in Tuluca Lake recently, which
Speaker 3: is up in the San Fernando Valley, and it was
Speaker 3: a woman whose father had passed away, had a house
Speaker 3: that just as it was right there, was probably worth
Speaker 3: about one point two million dollars. And the son was
Speaker 3: very excited. So this would be the grandson of a
Speaker 3: technically the owner right he was inheriting the house. He
Speaker 3: was excited because he had heard from a few realtors
Speaker 3: that he could rent this house this house out for
Speaker 3: ten thousand dollars a month if he updated it. Now,
Speaker 3: when you look at the data, it had been done.
Speaker 3: But when I got in there, and this is how
Speaker 3: I lose a lot of my listing appointments is to
Speaker 3: be honest, I'm too honest. I'm just like, this doesn't
Speaker 3: make any sense. I said, well, who is going to
Speaker 3: be able to afford ten thousand dollars a month, like, yes,
Speaker 3: it's happened, but their anomalies. Also, those houses sit on
Speaker 3: the market for at least three or four months because
Speaker 3: the market share of person who's looking for that house
Speaker 3: is so small. It's not a large group of people
Speaker 3: that are like, you know, what I need is a
Speaker 3: ten thousand dollars a month rental, because technically what we
Speaker 3: look for is realtors, and what we recommend, the industry recommends,
Speaker 3: is that you make at least three times anywhere from
Speaker 3: two and a half to three times whatever your rent is, right,
Speaker 3: they want that in monthly income. So you're looking for
Speaker 3: somebody who makes thirty thousand dollars a month to rent
Speaker 3: your ten thousand dollars a month home. People who make
Speaker 3: thirty thousand dollars a month and are not looking to
Speaker 3: buy a home are not planning to stay here for
Speaker 3: very long. So now you're kind of running what I
Speaker 3: would say is a glorified airbnb, which is not an investment.
Speaker 3: Airbnbs are not an investment. That is a business. You're
Speaker 3: starting a business because you've opened your house up.
Speaker 2: You're the house you own, and you're making it into
Speaker 2: a hotel.
Speaker 3: There's maintenance costs, you have to have it clean, you
Speaker 3: have to get furniture, like all of those things are
Speaker 3: what you would find in a hotel.
Speaker 2: And that's not an investment.
Speaker 3: Having a vacant property that you then rent out for
Speaker 3: years at a time, I would argue that's an investment
Speaker 3: because it could sit there passively. I have an property
Speaker 3: in Apex, North Carolina, because I wanted to see what
Speaker 3: it was like to invest out of state. This sounds
Speaker 3: like I'm bragging nowt I swear this is I'm just
Speaker 3: talking off the cuff like I would at any open house,
Speaker 3: But I just I wanted to see how is it
Speaker 3: better to invest in real estate outside of California. And
Speaker 3: so far, my experience has been great. I've never even
Speaker 3: stepped foot in this house. I treat it like you
Speaker 3: would a stock. It's no different than buying Tesla or whatever.
Speaker 3: Procter and Gamble in my opinion, I'm just I put
Speaker 3: money in there and then I make a little bit
Speaker 3: back off of it each time. So going back to this,
Speaker 3: you want to talk to realtors and go with your
Speaker 3: gut to see like something in your gut is going
Speaker 3: to tell you, especially if everybody is saying the same thing,
Speaker 3: you're going to know if you're being sold. There's lots
Speaker 3: of different types of realtors. I don't like that we
Speaker 3: get hit with this like stereotype that we're all just
Speaker 3: basically use car salesman who sell houses. Don't get me wrong,
Speaker 3: I've come across them. They exist out there. I have
Speaker 3: one who's a dear friend of man. Shout out to Brian.
Speaker 3: He looks like a used car salesman. And I love
Speaker 3: this guy dearly, and I hope he doesn't hear me
Speaker 3: say this. He looks like a used car salesman. He
Speaker 3: talks like a used car salesman, but he's a great realtor.
Speaker 3: He cares about his clients, but he's not a used
Speaker 3: car salesman. So you want to make sure that somebody's
Speaker 3: looking out for your best interests and not their own.
Speaker 3: And I think, I really, I have faith in you.
Speaker 3: I think you could figure that out. You could suss
Speaker 3: that out, and then you look at all the data. Traditionally,
Speaker 3: most people when they're looking for a realtor, they take
Speaker 3: the first person they were recommended. And don't get me wrong,
Speaker 3: when that comes my way, I'm very happy about it.
Speaker 2: I love it.
Speaker 3: But I also feel very confident that those people I
Speaker 3: know I'm going to take care of it. I know
Speaker 3: how I operate, I know that I'm looking out for
Speaker 3: other people. But I've had I've had flat out conversations
Speaker 3: with other agents that you could just tell that they
Speaker 3: don't really care about the people they're helping. It's just
Speaker 3: about the commission bottom line. And that also, I don't
Speaker 3: think makes them horrible people. I know it's scary and
Speaker 3: I know it's unnerving to buy a house, but I
Speaker 3: really feel like the same thing can happen with a car.
Speaker 3: You go in and you have all of the best
Speaker 3: intentions of buying a car and somebody sold you something
Speaker 3: that later on you found out isn't good. But statistically,
Speaker 3: more often than not, people buy cars that they enjoy
Speaker 3: for a very long time. I feel like it happens
Speaker 3: a lot more that way than it does that they
Speaker 3: get hosed, And so far, in my experience, the same
Speaker 3: thing goes with shopping for a house and looking for
Speaker 3: looking that kind of stuff. Oh man, this isn't so bad.
Speaker 3: I think I'm doing good. I feel I feel pretty
Speaker 3: good about it. Thanks Robin, appreciate the thumbs up.
Speaker 2: I haven't. This is We're gonna.
Speaker 3: Try this for two weeks and either either you could
Speaker 3: tune in and you could hear the train wreck and
Speaker 3: maybe that's exciting, or I do okay, or maybe it's
Speaker 3: how it's it feels like it's going right now. It's
Speaker 3: fair to Midland, and hopefully that's not boring enough. Most
Speaker 3: people love a good train wreck, I must say. I know,
Speaker 3: that's all I'm kind of waiting. What's really gonna go
Speaker 3: wrong is if something really bad happens in the world.
Speaker 3: I don't want that to happen, just because I don't
Speaker 3: want anything bad happen in general. But that's where we're
Speaker 3: gonna see me flummox. I could talk real estate like
Speaker 3: I was at an open house before this, just talking
Speaker 3: for hours talking to people about the show. It's hard
Speaker 3: to get me to shut up at an open house.
Speaker 3: I love talking. I geek out about numbers, and I
Speaker 3: love this job so much. But let's see we got
Speaker 3: We're still no. We're gonna pivot because I've been asking
Speaker 3: you about what you're gonna do people who are lead
Speaker 3: in California now going into or two of our fantastic
Speaker 3: show here, I want to hear some real estate horror stories.
Speaker 2: People love to share some horror stories.
Speaker 3: I got a couple if you don't have any, that
Speaker 3: I will share at the very end of the show,
Speaker 3: which is going to come up right before four o'clock.
Speaker 3: But now when we come back, we're going to talk
Speaker 3: about why are people leaving the state of California and
Speaker 3: is it enough to affect prices.
Speaker 2: We'll talk about that
Speaker 1: Later on KFI AM six forty on demand