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JB: Good morning and welcome to Real Estate 911 with your host Jason Bramblett. I am JB, and for the next thirty minutes we are going to be talking all things real estate. We are live in the studio on this Saturday morning, and we invite your participation. Give us a call. The number here in the studio is 336-553-0796, 553-0796. We say good morning to the man who has always got a plan, Mr. Jason Bramblett. Good morning to you.
Jason: Good morning, good morning. And the plan is do not get rid of that snow shovel yet.
JB: Is this not crazy? I am done. I really am. It is usually kind of cute to get that late snowstorm or weather, but okay, I am over it.
Jason: Yeah, definitely.
JB: You now the robins are sitting out there with their little suitcases and they are ready to go back.
Jason: That is exactly right.
JB: You cannot do anything about it.
Jason: You cannot, but the good thing about North Carolina is you just sit around for a couple of hours and it will melt.
JB: If you do not like the weather, just wait twenty minutes.
Jason: That is it. Just like the weather, real estate is kind of all over the place, too.
Jason: Yah, but it is not cold. It is kind of hot.
JB: That is good.
Jason: It is good. It is an interesting time. We have got the pitfall of a low inventory right now. That has frustrated some of our home buyers out there we are talking with. We are going to dig into that a little bit, and maybe you are listening and think well hey, if there is no inventory, maybe I should sell my house. Maybe you should.
JB: Maybe you should.
Jason: Maybe. We are going to get into that. This question comes up with low inventory. We see these owners attempting to sell their homes these days, which we have not seen in years and years and years. We get calls and the question is should I buy directly from an owner? Is it worth it? Can I save money? What is the big, what is the good, bad, and different? Sort of break that down a little bit and talk about is it a good idea. Is it not? I am sure everybody will so interested to hear a real estate guy’s opinion of that, right?
JB: That is right.
Jason: Absolutely. But it might be different than you think. So, you will just have to stay tuned to figure that out. Digging in to that. Multiple offers and man, all that and all your HGTV non-reality beliefs being squashed and more right here, right now.
JB: I like it.
Jason: Yes, sir. So, let’s dig in, man.
JB: Alright. Well, Jason, let’s dive into this barrel of fish. So, can I save money buying directly from an owner or not?
Jason: When the market heats up, we get this every year, but this year more often than not, or more so this year. Maybe, if it is your mom. It is always a possibility. I do not know. Maybe not. I do not know. I have seen some moms and dads sell houses to kids, and I am like, wow, you guys are coming out good on this one.
JB: That is right.
Jason: I think it is like hey, we have done taken care of you for twenty years, and I am going to get a little bit back.
JB: That is right. I like it.
Jason: But there is an amazing perception of saving money by buying real estate from the owner. And it is not just real estate. It is a lot of different things and a lot of different venues or products that people have the perceived thing that they are going to save money. So, we are going to break that down. But the interesting thing in the twenty years that I have been watching this, I rarely see any savings at all. At the end of the day, I just do not see a lot of benefit either way. We are going to dig into that. As a matter of fact, I have found that most people who purchase directly from an owner actually overpaid for the house, especially if you did it moving from out of state.
Jason: Yeah, it is something about that. We carry our beliefs with us based upon our circumstances that we are in, right?
JB: That is right.
Jason: So we have had folks, and this has been years going back, but our market, let’s just face it, has not been that great for a long, long time. But we have had people moving from other places where the market was really, really hot, and you would put a house on the market and it was gone in minutes. I have seen them come into this market and maybe approach a For Sale By Owner, and the For Sale By Owner is doing it because he is so far upside down he cannot afford to pay two cents to anybody to get the house sold, and he is still going to have to write a check, but then these out-of-state buyers come in and well, they just pay whatever they got to pay because their perception is everything is going up, and they do not have that knowledge. I have been seeing that over that years and it is, unfortunately, they do not realize they overpaid until they go to sell it. And of course, in the last ten years, our market was still dropping. But anyway, having done hundreds of short sales over the years, it is interesting the things that I see in common. One of them is a lot of them were approached directly from the owner. The other one is they were all thirty-year loans. I have done hundreds of these things, and in twenty years’ time, I have never seen a fifteen-year mortgage go in default for, ever, I mean, on anything. But these thirty-year loans, and most of them are FHA and VA, so a little bit of money down, and then the market shifts and then you are upside down, and then you end up having to do a short sale because you got transferred to wherever. Tennessee. But the interesting thing is when folks did a fifteen-year loan, they just did not have that issue. There is a little wisdom for you. If you would, with interest rates so low right now, and everything that we are hearing says that they are going to go up, maybe it is a good time to refinance. Not necessarily to get a better rate. How about to lower the term? That is still a good idea.
Jason: Even if you had a thirty-year loan and three point two five, and you refinanced to a fifteen-year at four percent, you still come out ahead. Even though that rate is higher, you just reduced the amount of years tremendously. If you need some help with that math, I will be happy to walk you through that and or certainly one of our lender partners. Dave Held with Caliber will be glad to run you through that. He has been a guest here on the show often, and he can help you with that math. But it is good math because it gets you equity in your home, and then you get to stay if something goes bad. Or you get to get rid of it. Either way. Anyway, be careful if you are moving here from out-of-state, or anywhere from out-of-state and you are not dealing with someone who can guide you through the local real estate market. I am sure some of you guys are like, well duh, Jason, of course you think it is stupid to buy directly from an owner because that kind of cuts you guys out. Well, actually, I kind of look it as you can do surgery on yourself, right?
JB: Right. You know how that goes.
Jason: I do not necessarily think it is the same or advisable, right? Or you could pull your own teeth. Right. I do not recommend these things, and there are certain things I do not recommend. Working through a sales person, dealing, here is where the breakdown is, and here is where we lose focus sometimes. There is the perception that we are going to save this tremendous amount of money in this real estate commission. The problem is it is one pool of money and two people fighting for it. That usually does not work out well. Sometimes we have got to get southern with and we have just give people word pictures. If we had one biscuit, JB
JB: You are talking my language.
Jason: Exactly. If we have got one biscuit, we are going to save, somebody is going to save something, right? Well, you could split it in half. Right? But you are still getting half and half, right? Is anybody really saving though? It is a neutral. It is an even. I could chop it three quarters one way and twenty-five percent the other way, right, but then somebody is getting more and somebody is getting less.
Jason: Because it is the same biscuit. It is not necessarily a win-win all the way around, and most owners have the perception that I am going to net more money because I do not have to pay a real estate agent. But then the buyer comes along and says, huh, you do not have a real estate agent, therefore, guess what? I can offer less because this person is not involved. Therefore, I want to put the money in my pocket. The problem is it is the same biscuit. It does not work, right? So, we have this perception of well, because I did not pay, I won. No. Most of the time the math still works out not so much that you did. You just discounted the house and passed that along maybe the buyer or maybe the, anyway. It is an interesting conundrum that, and again, it is just this perceived thing that some of our owners and buyers get into, but in actuality, no, it does not happen. We have talked, I have used this word picture a lot. Doing this yourself is kind of like painting your house. We have talked about painting your house. Some of you absolutely, ninety-nine percent of you should never, never, never, ever, ever, ever paint your house because there is a difference between painting and then schmearing color on a wall. Most of you got the second part down. It is the, maybe you even got the right color. It is the application part where you kind of fell off the wagon, if you will. So just as I have said before, there are certain things, you should not operate on yourself. You probably should not pull your own teeth, and most of you should not paint your home. Let’s face it. If you go to DC, the kids, what do they call them, finger paintings, yeah, they do not put those in the museum. They are cute. They look good on the refrigerator for Grandma and Grandpa, but no so much. The quality is different, right?
Jason: And that is the thing. So, the reason that we typically see this failing it is just pool of money, and it is just too tough. You cannot have both winning with the same thing. The buyers will typically say to me or the question I get is they kind of figured this out. The sellers are a little slower, but the buyers figured this out a little quicker. They will just kind of scratch their head like well, if there is no agent involved, and I get, if I buy from the seller, am I really getting any kind of deal? Well, in theory, I guess you could say you are getting a little bit of savings perhaps. But do you know all the pitfalls to look for in looking for a house? Do you have another set of eyes? Right? And that is why it is always important I think to have a third party in there because it can keep you from overpaying. It is interesting. These are not my stats. You can pull these up from a hundred different places. You can pull them up on Zillow, Realtor dot com, the National Association of Realtors, all these different places. But these big think tank companies they have money to spend on lots of surveys and lots of different things, and one of the things that they track and they look at is how much money does somebody really save in selling their home. And actually what they found out is they do not save anything. Traditionally, a real estate broker, whether it be commercially or residentially, will actually get someone sixteen percent more for their property than doing it for themselves. That is pretty significant.
JB: It is. You start doing the math on that, that is crazy.
Jason: Yeah, that is a little bit more than I am going to save a little bit here and there. Again, that is not my numbers. That is all these people who have got more money and more time than me to run all these surveys.
JB: That is right.
Jason: I can just do simple math and look at closing statements and go, yeah, you lost, you won, and that is it. But these bigger companies, they have got the time to spin the wheels, and that is a nationwide statistic. I am sure somebody is out there that has a great story to tell me how they just killed it and saved everything and made a whole bunch of money. There is always those, too. And good for you if you did. But for most people, it just does not work out that way. I have had people where they priced their house wrong. I remember I had a lady call me to let me know they were not going to need our services. I was like okay, I understand. What happened? She goes, well, we just sold it ourselves. It is not hard. It is not like you are a PhD, Jason, give me a break. You took a stupid test and got a license.
Jason: I mean, come on, what do you pay, like fifty dollars a year to have that stupid thing? It is not rocket science to sell a house.
Jason: And then three weeks later she calls me and says is there a legal way to break a contract? And I am like well, yeah, if everybody agrees to do it you can mutually get out of it. But I said what is the problem? She goes, oh, well, we sold the house and they just got their appraisal back, and it appraised for $22,000 more than the contract price. I said wow. Well, you know what the good news about that is? She is like what? I said, you did not have to pay any real estate commission. But the problem was that real estate commission was a heck of a lot lower than that twenty thousand dollars.
JB: That is right.
Jason: So sometimes you can do it yourself, but you can do it wrong. I am not saying that is the case all the time, but I have had many of those phone calls over the years. The other thing, too, is most people do not deal with face-to-face negotiations too well, and they breakdown. Hence, we have this thing called Facebook, where all these superheroes live that are saving the world, and they will just tell you how it is.
JB: Everybody is ten foot tall and bulletproof.
Jason: Exactly. But they will not do that at the job. It is amazing how powerful you can be on Facebook, right?
JB: Oh yeah.
Jason: Maybe we should have a real estate negotiation Facebook page. Maybe that is it. Everybody can get on there and tear each other up, right? It is different when you are face-to-face and things change. Having that confrontation up from when it is your personal property makes it tough. Having that third-party negotiator in there can be hugely beneficial because well, let’s face it. We do not have the emotion in that. We are going to dig into a few more things. We are going to pay some bills. We will be back in just a minute. You are listening to Triad Real Estate 911.
JB: Stay with us. (in/out music) Welcome back. You are listening to Real Estate 911 with your host Jason Bramblett. I am JB. Jason, we are reading inventory levels are down all over the country. It appears that the Triad has also fallen into a low inventory situation. What should our listeners wanting to buy a home do right now?
Jason: It is very interesting everything I am reading. This is the new normal for like the next three years.
JB: Oh really?
Jason: And I do not see anything that is going to push that inventory up, especially here in the Triad. So nationwide, we are kind of in the same thing. So, if you are waiting for the perfect house to hit the market, man, you are not alone. Right now, we are seeing six to ten buyers for every home that is available. That is kind of crazy.
JB: Yeah, it is.
Jason: What happens when, that sounds great and that is exciting, and then there is the other side of that yeah, there is a dark side to multiple offers, and it is not everything you may think it is. So, you have to be prepared for multiple offers, and this is a learning curve for buyers and sellers because paying above list price for a house does not necessarily means it is great because it may not appraise. Right? If you are paying cash, let her rip, buddy. It makes no difference. I just have not found a lot of people that pay cash that usually go up. Something about in the perception of cash is discount. I am paying you cash, I should get a better deal, right? That is just kind of how we are ingrained as Americans.
JB: I do not know why, but it is.
Jason: It is the way it is. There are some major roadblocks that you kind of got to get through mentally, and this is where a true professional agent can actually help you get through to get a house because there is going to be some competition. You need someone to help you structure your offer so that you can win. It is an art form, and also there has to be a strategy behind that. Most people would say well, Jason, duh. You just offer the most. Are you kidding me? Yeah, well, not so much. No, I am not, and you actually could be wrong. Unless you are paying cash. If you are paying cash, then nobody really cares. Nobody is checking behind you. It is your money. Do what you want. Unfortunately, there are these things called banks. And when you go to get a loan from them, they actually do care. That is why they have appraisals. You thought the appraisal was there to protect you. Wrong. It is there to protect the bank because that is the deal. You have heard of this golden rule. Those that have the gold, rule.
JB: I like it.
Jason: So just because you are willing to pay considerably more for the house does not mean the folks over at the bank are going to sign up for the ride with you.
JB: That is right.
Jason: That is good because we do not end up with what maybe happened last time when the market decided to crash. When they decided that if you could breathe air, we would give you money. Therefore, hopefully we have learned our lesson, maybe not. We do have some protections in there. And here is the thing. I know most people would be like well, you know Jason, it is only one hundred more dollars more per month. I can afford this, so let’s just go up on the price. It is not that big of a deal. I will go out to eat one less time a month and I will have that extra hundred dollars. Well, the problem is that extra hundred dollars is about forty thousand bucks, and just because you want to pay an extra one hundred a month does not mean the bank is going to be willing to give you forty grand more than the asking price. Right?
JB: That is right.
Jason: You have to look at the risk reward. What the bank will do is they will let you pay that difference all day long. They think that is a good idea as a matter of fact.
JB: Yeah, they like that.
Jason: As long as it is your money, who cares?
JB: That is right.
Jason: The problem is most of the people buying out here right now do not have anything called money. They have got credit, they have really good credit. They have a little bit of money, but then they have this puppy called Sallie Mae kind of following them around, and Sallie, she got teeth. She is going to be with them for a while. She is a long-term pet. They have got to get that thing off their back eventually, get those student loans taken care of, and that does hinder some of your buying power for sure. That is a frustration that we see. Just because you can qualify to pay that extra one hundred dollars does not mean the bank is going to loan you above the asking price. So, you need to be prepared for them. This is a frustration we see for buyers and sellers because money is cheap, and it is not a big deal. For a few hundred bucks, you can borrow a lot of money. It has been that way for a while. But the bank has to have those safeguards in there to make sure that they are not sticking their neck out too far, and this is where the deals start to fall apart. Owners get excited. They will jump all over, oh this is the highest offer. Let’s go with this. The problem is is it going to stick. Is it really going to go through?
Jason: Or in three weeks when we get the appraisal back, are we going to be right back to the drawing board? Maybe there was another offer with different terms, different type of appraisal, different type of loan that could have netted you more money. That is where we dig in and that is where we really can show you through experience that sometimes you have just got to look at all the moving parts of the offers. That is the key thing. That is the key thing.
JB: Well, Jason, I know that you are looking to add some to your inventory of homes. Where are the buyers looking to purchase right now?
Jason: Right now, JB, we cover 37 cities and towns all across the Triad. So basically, if you hear my voice, we have got people looking to buy or sell in your marketplace. Right now, we have more people looking to buy because there are just not as many homes. So, if you pretty much hear my voice on the radio, we need to talk because we need to show them your house. Right?
Jason: Especially in the four hundred thousand and up range. Right now, we have got a shortage of four hundred to a million. Man, we definitely want to talk to you because we have folks that are on our website crawling every day, looking in these price ranges and it is just kind of slim pickings. So, if you are in a six, seven, eight hundred thousand dollar house, even up to a million, over a million, meh, we get some, not so much. But in that four to eight hundred thousand range right now is hot. So, if you have a home in that price range, and you are thinking about selling it, pretty much anywhere from Bermuda Run to Mebane to Asheboro to the Virginia line, we want to talk to you. We have got hundreds and hundreds of people flooding our website saying hey where are all the houses at? We need to connect you guys. Also, personally, myself, we are adding to our inventory. So, I am looking to purchase pretty much anywhere in the Triad. So, if you have got a home that is a great house and you are just like you know what? I really just do not want to deal with this whole showing and dealing with people and strangers walking through my house and all that. Give us a call. I am in the market to purchase homes pretty much anywhere in the Triad, and I would like to take a look at yours. I do not buy homes with wheels, so if you have wheels on it, not me. But single-family house, apartments, we would love to talk to you. You can reach me at the office. It is 553-0796. If you have a home in that four hundred to eight hundred thousand dollar range, and you are considering selling it, give us a call because we do have hundreds and hundreds of people flooding our website looking for a home probably just like yours. We just need to connect you guys and get everybody moving in the right direction. So, you can reach us at the office. Again, it is 553-0796 or go to Jason Bramblett dot com. We will be back next week unless we get snowed in. Otherwise, we will be here.
JB: You said the word. Do not say that word.
Jason: I reprieve it. Everybody have a great weekend.