Jason Bramblett Real Estate Show Podcast 

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Announcer: And now you can talk to Jason Bramblett live.

Jason: Good morning, Triad.  This is Jason Bramblett, your host, and you are listening to the Jason Bramblett Real Estate Show.  Sitting in the hot seat with me today is Mr. Mikell Montgomery, pushing all the buttons.

Mikell:  Good morning, Jason.  Everything good, sir?

Jason:  Everything is great.

Mikell:  Awesome.

Jason:  Making it happen as we usually do.  23 minutes of absolute real estate radio bliss coming at you live right here, and well, it is back.  The rain.

Mikell: The rain.

Jason:  It is back.  It is here. But that is okay. We are going to do our thing.  We are going to dig into all things real estate today. We are going to dig into you, your questions, what is going on.  What is going on in the Triad? We have got some good stuff happening, so there is a shift taking place that we are going to talk a little bit about today. I have been reaching out to some of our brokers throughout the state and different folks that are in our network and just chatting it up to see what is going on in your neck of the woods.  What do you see? Do you see anything different? And here are some things we are starting to hear. Starting to hear about some upside-down homeowners, which is not something that is news to, not great news for anybody. Certainly, we have had our share of it right here in the Triad. But interesting enough, this conversation was coming out of the Triangle. It is coming out of the Raleigh markets, which has been one of the hottest real estate markets in the last decade in the entire United States, but all things will hit a peak.  Right? Everything eventually gets to the top, and that is kind of what we are seeing in Raleigh.

Mikell:  Now, when you say upside down homeowners, exactly what is that?

Jason: Well, upside down is a term for uh oh. Upside down is not where we want to be.  Upside down it is also known as underwater or my favorite new one, this is a generational thing is what the what. I learned that the other day from one of our millennial newbies at the office is what the what.  I do not get it, but I am going to try to get it.

Mikell:  You used it correctly.

Jason: I did.  Okay. Good, good, good. I hope that does not mean anything really, really bad.  I guess I should have asked that first. It is kind of like some of those little texting whatever, what do you call those things, Mikell, when you text, like the little short –

Mikell:  Like a text Ebonics, I guess.

Jason:  Yeah, I do not know, but I do not know there are certain things that you do not want to put out there.  Right? They might what you might not think they mean.

Mikell:  Very true.

Jason:  Like LOL.  I got that one down.  One thing, too, talking about this generation, I actually spoke this week at UNCG to some of their, the college athletes over there, which is always awesome.  I enjoy it. I love kids that want to win. I love kids that want to push themselves, and they even volunteered to come, which is amazing. So they actually showed up and I was not there by myself, which was even better.  But it was good. It was fun. It was interesting to see kind of where their thought process is at because I do not hang around a lot of college kids. It is neat to hear their questions and how their brain is working and how they are thinking and just a different way of looking at things, and boy, optimistic.  Very optimistic. They have not been jaded by society yet. Have not had that door slammed in their face.

Mikell:  Yeah.

Jason:  So we talked about sales and professionalism and sales professionals and all these different things.  So UNCG, probably most colleges, you cannot get a degree in sales. It is actually not a curriculum in which they offer.  But I asked everyone who was majoring in sales and of course, no one raised their hand because they are like no, not me. But in actual reality, and what I shared with them is everyone is in sales.

Mikell:  Correct.

Jason:  All, all little wheels in the cog are in sales because you may be a CPA, but if there is not a sales department behind you, you are what you call an unemployed CPA.

Mikell:  Unemployed.  Yes.

Jason:  Sales is in all things.  And if you are a smart CPA, you are going to support your sales people and help them sell –

Mikell:  Absolutely.

Jason:  -- and tell everybody you know how wonderful the company is that you work, and make sure, even though you may not be the title of sales person, you do not want to have the title of unemployed CPA –

Mikell:  No.

Jason:  -- bookkeeper, door opener, whatever it may be.  It does not matter. We are going to get focused back on real estate, but it is just fun to get out there and hang out with some young folks and different things.  But real estate, upside down, underwater, all these terms that nobody wants to hear. We are going to dig into that. The other thing, too, is do not forget about the Greensboro Home Show.

Mikell:  Yeah.

Jason:  Wow, we gave away, so I announced it on the air.  We gave away a little over 200 tickets.

Mikell: Wow, that is amazing.

Jason:  If you do not get one, I am sorry.  We are out. There is nothing I can do.  You will have to spend your ten bucks instead of my ten bucks at the door.  It is a great show. Lots of vendors. Lots of stuff. You can go to the Greensboro Coliseum website. It has a vendor list on there and what booth they are at and all that stuff.  I am sure they have got maps once you get there as well. But I think it is ten bucks to get you in the door today. We will do it again next year. We had a great turnout. I appreciate everybody who raised their hand and said hey, yeah, we would like to go check it out. We will be there, kind of cruising around today.  Hanging out. You may run into me, may not. I do not know. We will see. I may hide. I have not decided. But it is raining. There is no better place to be. Go figure out what you can spend money on to spruce up your house because there will be just a couple hundred thousand ideas you will get there, I am sure.

Mikell: Wow.

Jason:  It is a pretty cool event, so you definitely want to check that out. All right, so you mentioned upside down. Let’s dig into that.

Mikell:  So are we really back to that upside down term?

Jason:  Yeah, let’s –

Mikell:  Is it that bad?

Jason:  Let’s hope not.  Let’s hope not. It is interesting.  There is something happening. There is something I am starting to see.  I am starting to get more and more calls from not only people listening to the show, from folks that are in the community.  I did short sales during this downturn. We helped and assisted a boatload of banks and credit unions in the Triad with their short sales. Doing the best we could do to salvage as much of the equity and or as much of the loan as we could for the banks.  It was rough. I do not even know how many of them I worked with, but they all still remember because they all still call. And so, we are getting referrals from lending institutions again. It like hey, Jason, can you help this person. Hey, can you help this person out?  Which is good, yes, we do like to help people. It is a tough, tough battle with short sales. I hope it is one that it does not become its own little cottage industry as it did once before. Basically, here is what happened. We slipped right back into those lovely 100% loans again, and the banks needed to peddle their product.  What is their product? Money.

Mikell:  Money. Yep.

Jason:  Who likes money?  Everybody. And so, it is an easy, easy sale.  Let’s see. There are the terms. We are going to give you exactly what you want. You will have to come up with absolutely none of this stuff yourself, no money at all. We will do a 100% loan, and here is what our agreement is.  You will just pay us back as agreed, but then something happens. And something that is agreed does not happen, and now we have got this problem because there was no down payment. There was no nothing. Unfortunately, gosh, like it makes just about as much sense as the lotto, in my opinion. Me and Mikell were talking about that before the show.  But it is just, the math does not work. Here is the thing. And part of it is because it is government math, and government math really does not ever work. Here is the deal. When you are getting a house, getting any type of loan, you need to look at your length of ownership. How long are you going to be there? That is such a key and vital thing.  And it is something that we do not look at. When you have got banks pushing money at 100%, why, they have government pressure. Make more loans, get people in houses because it is your right as an American. It is my right to own a house. No, it is not. It is your blessing?

Mikell:  Yeah.

Jason: That is what it is. I was going to say privilege, but that is the wrong word, too.

Mikell:  It is.

Jason:  Actually, it is just a good old-fashioned blessing to own a home anywhere.  One of the things that, so I am going to get on my soapbox for a minute because I have got the microphone, and nobody is shutting it off right now. But one of the things that I think we should, really all the money and things we look at for schools, we used to do field trips, right, and you would go do something.  I think everybody ought to go to a, let’s go somewhere where it is a little different living than it is here. Maybe let’s go to South America or South Africa or Zambia or let’s go see what it is like when you live in a 8x8 tin, I cannot even call it a house. It is just a –

Mikell:  Like a hut?

Jason:  Yeah. Maybe a hut is the right word. With a dirt floor and no running water, and one light bulb for the entire street.  And you are subject to all elements. Where your shelter is the squash bush plant –

Mikell:  Yeah.

Jason: -- that you have grown over the top of your hut to try to keep some of the rain out.  Right? So it is a huge blessing to own a home. I think if we got more people out of the country to see what it was like everywhere else, it would change a lot of things.  It is interesting. The greatest number of people that are succeeding in America are not from America. Not from here.

Mikell: That makes sense.

Jason:  Very interesting. Some of the greatest sales people I know in real estate, some of them have been in the country less than three years.

Mikell:  The reason why though is because they have the experiences that you just talked about.

Jason:  That is it.

Mikell:  And, us as Americans, we compare our lives to social media.

Jason:  Yeah, that is right.

Mikell:  That is what it is.  

Jason:  Or even compared to your neighbor.

Mikell:  Yes.

Jason:  I will not even go there.  We will save that for another show. Opportunity, and we have lost sight of that in this ridiculous word called fairness.  When you have come out of a very unfair environment, and you see the opportunity that is here, man, Katie bar the door, buddy, because I am telling you what.  They are wide open, and they see that opportunity and they jump all over it. We need to look around as citizens of our great country here and get to work. That is another thing that some people could do.  Just get to work.

So we are going to get back to the real estate show now. Here is the thing.  It goes back to length of ownership. Okay? It is key. How long you plan on being in the house really needs to dictate how long the terms are.  Just because the bank said yes does not mean the math works. Right?

Mikell:  Right.

Jason: And here is the thing.  Most people are doing broke people math. It just does not work, and you have got to either learn the math, get counseling, get wisdom. Okay?  And that may, more than likely, be from somebody outside of that is trying to loan you the money.

Mikell:  Yes.

Jason:  One of the things our company does, we have a third-party system in which we price check all of our homes. Why? It is a big deal.  The price that you get for your house is a big deal. 60%, maybe not exactly, within 5%, 60-something, 55 to 60% of the houses that are on the market do not sell the first time.  Most of those prices were brought up by two people. Either the owner or the real estate agent. Well, why are they so wrong? Here is why? The worst thing you can do is get the price of your home from the person that is trying to get your business.  

Mikell:  Okay.

Jason:  Right?

Mikell:  Yeah.

Jason:  Kind of makes sense?

Mikell:  It makes sense.

Jason: Which number are you going to like better, Mr. Mikell?  You want the $400,000 number or the 375 number. I like the guy that gave me the $400,000 number. He seems smart, and so I will hire him even though he is clueless, and your home is not anywhere near worth $400,000.  And then what happens? It does not sell. It expires. You hire somebody else that tells you the truth or gets you the right number or you get an appraisal, or you do something to justify the number other than going on a whim, and lo and behold, it sells this time. Why?  It was not because number two agent was not any smarter than number one. It is just number two agent had the right price. Right?

Mikell:  Gotcha.

Jason:  It is just simple math, and it is simple terms, and so one thing that we do is we always get a third-party opinion.  Why? We want it to be right. I do not want any of my agents, I want them to be skilled and be able to look and see and come up with a number, but I do not want them making the final decision.  We are going to fact check it with a third party to make sure that we are in line because the last thing we want to do is fail one of our clients with the wrong math.

Mikell:  True.

Jason: Because they are the ones that ultimately pay is the seller.  Because one thing that you will never ever get back on the market is the first month, which is the most critical month.  You always get more for your house on day 17 than you do day 190. Period. Because you cannot get back the first 30 days, no matter what. And something new hitting the market and that energy that is behind that, you cannot re-duplicate it 45, 60, 70 days later.  Day one is day one. It is like I said. Zero is still a number. Right?

Mikell:  Right.

Jason:  Day 17 is still day 17, and you will get a much better price for your house if it is sold quickly. Things that sell quick usually bring a really good price. Things that sit around and kind of like scummy water on a pond, not too attractive.

Mikell:  No.

Jason:  Not too many ducks floating in scummy-water ponds. Right?

Mikell:  Very true.

Jason:  There is a reason why.  So the same thing can happen with your house. It can get stale.  People can look at it. What is wrong with it? What is going on? Why is it sitting here?  All these different things. Sometimes it is not price. Sometimes you can have your house priced right.  It is just ugly. And that is a whole thing we have got to work through, too. And that is a different conversation that we have got to have.  So lots of different stuff. But we are going to dig into this. Here is what we are going to do. We are going to take a time out, go pay for, I have got to pay for all these tickets we gave away. Right?

Mikell:  Right.

Jason:  Let’s do that.  We will pay some bills. Take a quick time out.  We are going to come back in just a minute. We are going to continue the upside down, underwater topic and some of your emails when we get back. (in/out music)  And welcome back to the Jason Bramblett Real Estate Show. Your host, Jason, here live. Sitting in the hot seat is Mikell Montgomery pushing all the buttons, making stuff happen today.

Mikell: Yes, sir.

Jason:  So we were digging in.  We were talking about financing your house, potentially being upside down, under water.  All these amazing terms. So here is the deal. The longer you finance, the longer you need to stay in the house. Okay?  That is the A number one key thing you need to figure out. In the Triad, in my opinion, if you are going to finance a home for 30 years, you need to make a 10-year commitment, and the reason being is because if you look at the math on a 30-year mortgage and you make the minimum number of payments on time as agreed, it is going to take you about 10 years to get to zero. To get to zero meaning when you go to sell it, you will not have to write a check.  Okay?

Mikell:  Okay.

Jason:  Now, I know there are some real estate expert that says, Jason, no, no, no, no.  Wait a minute, man. You forgot one important factor. Appreciation. Yeah. Right.  Go back ’06 to ’16. You do the appreciation on that decade. Right? Appreciation in my opinion is like buying lottery tickets.  There is no guarantee. There is absolutely zero guarantee. There is no law. There is no nothing that says your house is going to go up in value.  There are lots of reasons why. One, economics (interruption) – that will wake you up.

Mikell:  Sorry about that.

Jason:  That is alright. Going back into the timeframe and going back into here is the reason why you have got to look at the timeframe.  The shorter amount of time you are going to stay, the more money you have got to put down. And the reason being is because of the interest on the house calculated. You have got to look at that amortization schedule. This is where you sit down with a professional.  This is where you sit down with someone in the mortgage business that can walk you through and walk you through that. And you cannot hedge your bets or look for guarantees of appreciation. Think about what has happened in the past. People that bought a home in the last cycle, if you will, in that 2002, 3, 4, and 5, they paid the most that they could possibly pay, and then from ’06 to ’16, they grudgingly got back some of their equity.  And some of them, we still have properties that we are looking at from ’06 that are still under water.

Mikell:  Wow.

Jason: And it is 2019.

Mikell:  Wow.

Jason:  And some of them are just maybe to zero.  Maybe. If you do not look at that, it is kind of like you are dead before you even get started.  You do not even know what hit you. So you have got to look at the math. So if you plan on being in the house, and this is what we teach is five years or less, man, we really have got to scrutinize this thing.  Okay? If you are three years or less, do not even buy a house.

Mikell:  Right.

Jason:  That is coming from a guy who sells them every day.  But I am telling you, if you know you are going to be in a house for less than three years, just rent.

Mikell:  And you were saying this last week saying do not put yourself in a predicament where you are going to have to write a check just to get free.

Jason:  That is right.  Absolutely. Here is something interesting. I talked about short sales at the beginning of the show. I have done a lot.  Hundreds and hundreds and hundreds of them. I have looked over every type of situation, mortgage that there is. Every type of bank. Every type of loan. Here is the interesting thing that if you even track foreclosures at the courthouse, in all the years of a decade that I did short sales essentially and helped folks in their situation, not one, not one out of hundreds and hundreds and hundreds and hundreds, maybe even close to a thousand, not one of them was on a 15-year loan.

Mikell:  Wow.

Jason:  Okay. So think about that. They were all on a 30-year payback schedule.  Some of them were interest only. Some of them were adjustable rate. Some of them were fixed, but they were all on a metric of a 30-year amortization schedule. Zero were on a fifteen.  There is a lesson right there. If you can swing it, and as cheap as money is right now, anything and everything you can do to refinance your house to a 15-year loan, you ought to be jumping all over it because it is, one it is half the time.  Half is good. Right?

Mikell:  Right.

Jason:  And the interest savings is unbelievable. It is going to be for most people, if you just bought your house in the last couple of years, you are probably going to save $100,000 in interest.

Mikell:  Wow.

Jason: That is a pretty good lick.

Mikell:  Yeah.

Jason: And your payment is probably going to be somewhere, obviously, it depends on how much was borrowed, but it is going to be, I would say on a $250,000 loan, you are looking at a 3-$400 more per month payment.  And you are like well, Jason, that is 3-$400 per month. Come on. I know. So get your bank statement and your Venmo and all these other cool little gadgets we have got that we spend money with, and write everything down that you are spending money on, and I will bet you most people in this country can find 3-$400 a month of convenience, lifestyle things that you may want to consider cutting out. Like convenience stores. $2.99 for a bottle of water, and you can go to any big box and buy 50 of them for three bucks.

Mikell:  True.

Jason:  Right?

Mikell:  It is very true.

Jason:  A soda at the gas station.  Whatever. It adds up. We pay a lot for convenience. Why?  Because we do not plan anything. Hey, guess what? You are going to be hungry tomorrow. Promise.  You might want to go ahead and think about what you might want to pack for lunch. Right?

Mikell:  True.

Jason:  Oh you mean you could pack a lunch and take it to work?  What? Yeah. You actually could. You could make a sandwich a lot cheaper than you can go anywhere else in town and buy one, and here is the really cool thing.  If you do that long enough, you will not have any bills and you can just go eat anywhere you want all the time, any time, and it is not big deal.

Mikell: I feel bad.  I just did delivery yesterday.

Jason: Well, hey, you have got to splurge every now and then.  Look, let’s do this. We got an email in, Mikell, let’s see if we can dig into that real quick. We have got a minute and a half maybe.  Let’s see if we can answer Joe’s question.

Mikell:  Okay. It says from Joe Moore.  It says I have a 18-acre farm estate, and I have a few people that tell me my land value is too high for the size of the home.  Basically, I may not be able to sell the property because it may be too hard to finance. Is there any truth to this?

 

Jason:  Oh yeah, so Joe is in that wonderful situation where he has probably got a house that is an old farm house of some kind. Maybe 1500-2000 square feet, and he is in the area where land values went up because they put a brand-new school over there. Spent about $100 million, and lo and behold, land values go up because people want to be in that area.  So what happens is you can get upside down a little bit in your home, your land value can exceed your home. And the banks look at ratios and percentages, and this percentage is a little out of tune. But we are out of time, unfortunately Joe, so you are going to have to get back with us. Go to Jason Bramblett dot com. Give us a call at the office, 553-0796.  Hey we hope to see you at the home show today, guys. Everybody have an awesome, awesome weekend. We will be here next week, live ready to go.