LIVE 07_09_25 - The Housing Market Continues To SHIFT In Favor of BUYERS

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Happy Wednesday, Welcome to
another week of the Educated

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Home Buyer Live with Mr. Josh
Lewis and myself here to update

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you on the economy, answer your
mortgage and real estate

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questions, have some fun while
we're doing it.

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Josh, what's the big change from
last week to this week?

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Well, since we don't.
Since we don't.

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Well, we have the 4th of July.
It's Huntington Beach's national

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holiday.
It's the Smith family national

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holiday.
We got to spend some time with

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The Smiths.
You, you probably, we need to

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get some video of you getting
all of the moms and wives in

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their 4th of July clothes going
down the giant slip and slide

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that you have in your backyard.
That was, that was most

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impressive.
I think it was the kids, the

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peer pressure from the kids got
them all to do it.

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But it was it was a good 4th.
There you go.

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So happy to be with you guys
once again.

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Tonight, we're going to talk
about the housing market

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shifting a little bit more in
favor of buyers.

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We're going to take a look at
charts as we always do, kind of

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update you on inventory,
everything that's happening out

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there in that world.
But while we're doing that, it's

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always helpful if you guys start
putting questions in the chat

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now.
That way, when we're done, we

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can just flow right into it and
make the most of the hour that

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we have here.
For those of you may be joining

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us for the first time, this is
something we do every single

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Wednesday at 5:00 PM Pacific
Standard Time.

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Sometimes we're a little bit
early.

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Never late Josh, never late,
only early.

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But this is about four years in
the making here.

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So we've answered a lot of
questions and hope to continue

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doing that with you guys.
So with that Mister Lewis, shall

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we shall we dive into some
charts and and see what's what's

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happening in the world of real
estate?

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So big news this week is active
inventory jumped quite a bit and

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it's now sitting at 853,000
homes, which is up 31% from

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where we were last year.
And now we're at basically at

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the low levels that we saw back
in 2019.

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So kind of, you know, depending
on where we're headed over the

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next couple of months or what
happens over the next couple of

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months, inventory is likely to
continue growing at least for

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the next couple of weeks, you
know, where, where, where we are

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at the moment with rates and
that sort of thing.

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So let's take a look at Orange
County and Huntington Beach.

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So Orange County sitting at 4882
listings, I didn't move the

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charts to the back so you could
actually see the the

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percentages.
So it was basically up less than

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1% for for Orange County
inventory.

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I think last week we're at like
4860 something this week

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Huntington Beach sitting at 281.
It was actually down a little

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bit this week, just over 1% last
week I think we were like 286 or

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287 somewhere in that ballpark.
So inventory, you know, pretty

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stable for the most part, not
seeing big increases in either

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direction.
OC Jeb was up .43 and Huntington

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Beach was down 1.78.
Just so you have the numbers.

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There you go.
There, there you go.

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And you can, well, I can't, we
can't do it on the fly.

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We have to reimport the charts.
But active inventory, this is

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something I like to look at.
This just shows, you know, where

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we are today versus where we
were back in 2019 with regard to

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inventory.
So anything that's a brownish

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color basically still shows the
inventory is down.

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If it's white, it's pretty
neutral.

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And any sort of green means
inventory has grown since that

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2019 level.
It's actually higher now than it

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was back in 2019.
So you can see the concentration

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here.
You know, much of the Midwest,

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the Northeast is, is still
brown, still below those 2019

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levels.
But you know, you got Texas,

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Florida, some parts of I don't
even know what state that is,

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Josh, that would be like
Nebraska somewhere in that

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ballpark, Mexico, I.
Didn't know what you were

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looking at.
I was gonna throw out Kentucky.

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I was going with Kentucky.
Kentucky.

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But anyhow, that gives us an
idea of what's happening.

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And then there's another look at
a similar chart.

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So this again shows the shift
from 2019 to 2025, but just puts

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it in actual numerical
perspective and you can see

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which states are still
performing the, the worst.

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I mean, the inventory hasn't
increased versus what is back to

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those pre pandemic levels and
and getting buyers a lot more

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options out there in the market.
So I think at the moment, Josh,

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if I read it correctly today, I
think there's 10 states that are

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back above 2019 levels as a
whole.

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I think that came through from
Rezi Club.

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So we're most of.
Us see them there it's those

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it's those green states right
right through you got 12345678

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right there.
Yeah, you got one at zero.

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I don't know if they're counting
that one.

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Oregon's at 0.
So once you've, you know, you

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factor in some of those you're,
you know, pretty neutral for for

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some of those states.
So 10/12/13, somewhere in there,

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pretty close to where they were.
National, national, national,

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single family, new listings.
I never say national on that.

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So I was confused there.
So down a little bit week over

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week, which is not really what
you want to see, but a lot of it

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has to do with the holiday.
But the idea is that the peak in

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new listings are here and that
they should continue declining

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from this point forward.
But we'll see next week when we

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get a more regular week with
regard to data because of the

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holidays actually playing into
those numbers and weekly pending

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sales over last week actually
down again 66,967 compared to

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last year, just over 67,000
again holiday week.

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All of that stuff plays into
that data.

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It's not really something that
you know worry about pay

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attention to at this time just
because of of where those

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holidays fall week wise compared
to say a year ago.

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Now when we look at total
pending sales, 396 this year

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versus 381 last year, basically
just showing euro year, year

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over year growth.
And again the, the, the idea is

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to just pay attention to to what
happens over the next couple of

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weeks as things normalize with
without the holidays in their

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properties with price reduction
sitting at 40.6%.

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So we saw a small uptick from
last week.

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Now this is something we often
talk about Josh and I like to

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throw this chart in there just
to give people an idea of

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delinquency rates.
This is on 1st mortgages and the

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the average they're going back
to what what is that Josh 2000

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and. 2004 on the left. 2004 was
at 4.13% the average, whereas

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right now we're sitting at 3.2%.
We saw a small tick down in in

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the latest reports there, but
again, delinquencies still

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sitting there really, really low
levels.

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Share of the 100 largest market
seeing annual home price

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decline.
So about 30% of of the the

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largest markets out there have
some sort of price decline.

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Josh, the only reason I brought
this chart in here is basically

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to compare, just show you, you
know, compared to what a bubble

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in the housing market looks like
to where we are now completely

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different.
And even a price decline at this

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level is, you know, a decline
could be 1%.

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It's we're not talking big
numbers and by any means.

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And then the spread we've been
talking about this, you know,

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spread again staying pretty
pretty much where it's been, but

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I think it's sitting at 2.37%
this week compared to which was

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a small decline from where we've
been over the last week or so

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It.
It should compress if and when

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we get a decrease in interest
rates.

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There's still definitely some
concern among MBS investors as

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to what happens if we ever get a
drop in rates.

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So we're elevated and they're
not paying premiums.

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So you're having a little blow
out there in the spread.

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And this chart here is something
I just found interesting, so I

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threw it in here.
Just share of county population

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born in the current state of
residence.

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So basically, you know, the the
darker blue is these people were

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were born in these areas and
still live there.

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So you can kind of see where
those areas are much of the

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Midwest leading into South and
kind of the Northeast there.

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Whereas, you know, you look on
the western part of the state

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very, it's, it's a lot less
still a good percentage of the

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people were born there, still
live there, but not nearly as

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much as as you know, the central
part of of the United States

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there.
Good news, Josh, Fannie and

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Freddie now are allowing Vantage
scores versus the FICO score.

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We're going to do an actual
podcast on this in detail to

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tell people what this means, you
know, in a lot more detail with

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the actual people from Vantage.
But what does it mean in in a

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shorter version?
This is far and away the biggest

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news of probably the year in in
mortgages, but in mortgage and

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real estate it's big.
So we don't know the timing.

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They would supposed to be
sometime within the next year.

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The current FHFA director is
expediting this, wants it happen

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sooner rather than later.
And you go, great.

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So we have a different credit
score model.

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Why does this matter?
A lot of times you guys do

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credit monitoring with Credit
Karma, some of these other tools

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and you're like, why is your
score so much lower than mine?

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It's the difference between a
Vantage score and a credit score

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with with FICO, the lower the
score is, the bigger the

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discrepancy.
So we're hoping in the next 12

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months this gets rolled out the
sooner the better.

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Because we did that an interview
with back in 2022, I think it

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with the, the folks at Vantage
score.

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And at that time they said 37
million more Americans, like 10%

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of Americans who currently have
no credit score will have a

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score under Vantage that don't
have a score.

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So, and despite what Dave Ramsey
says, very, very hard to get a

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mortgage without a credit score.
The minimum you're going down to

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manual underwriting and having a
much tighter underwriting

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process.
So of those 37 million people

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who will now have a score, a
third of them are mortgage

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ready, 620 plus credit scores.
You got 9,000,000 more Americans

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that can qualify and get an
automated underwrite.

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The biggest thing with that,
it's a big win for underserved

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communities.
People of color

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disproportionately have lower
credit scores or are more likely

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to not have scores.
So by pulling them in, they also

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are more likely to have
alternative credit.

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This takes into account on rent,
utility bills, other things that

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will give you a score and give
you a higher score.

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So some groups of people who are
less likely to use credit are

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more likely now to have scores
and have better scores.

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So all of those things really,
really important.

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And we'll get more details and
bring those details to you as

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they come about.
Jeb, you the the next slide

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here, you can see you had the
slide here previously about

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delinquency rates.
We get a lot of questions about

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wall.
Hey, with student loan repayment

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restarting, isn't that going to
cause grief and trouble for

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homeowners?
And what we see some people

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default on their mortgages.
So this gives you an idea.

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Less than 30% of FHA borrowers
have student loans, less than

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20% of Virginia borrowers.
The GSE is so Fannie and Freddie

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a little over 15%, portfolio
loans a little over 15%.

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So less than 20% of borrowers
even have student loans.

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So we don't know what percentage
of student loan borrowers are

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going to be struggling, but less
than 20% are impacted.

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So this will show you current
who, no percentage of borrowers

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who are currently passed due on
their mortgage payments.

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So FHA, it's about 9% for all
borrowers, it's a little bit

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over 10% for those with student
loans.

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VA, it's under 4%, a little over
4% for those with student loans,

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Fannie, Freddie loans, 1%
default rate still under 2% for

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those with student loans.
So overall defaults are two 2

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1/2% and it jumps up to about
four 4 1/2%.

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So is there an impact?
There absolutely is an impact.

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Some people with large student
loans who just thought about or

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bought into the idea that they
were never going to have to

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repay them are going to have
issues with that.

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So I don't think this makes a
widespread difference in home

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prices, but it's important.
Jeb, we are going to be doing,

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we get recorded today.
So we will go live in the next

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10 days or so with an episode of
the podcast on buy downs,

225
00:12:22,040 --> 00:12:24,520
temporary buy downs, permanent
buy downs, how to allocate

226
00:12:24,520 --> 00:12:27,400
concessions from sellers,
whether it's a builder or a

227
00:12:27,400 --> 00:12:32,240
reseller.
But this shows you prior to 2007

228
00:12:32,680 --> 00:12:35,440
they weren't being used at all
or 2022.

229
00:12:37,440 --> 00:12:42,120
Yeah, no, no, 20/20/22 July.
Prior to that when rates spiked,

230
00:12:42,360 --> 00:12:45,840
there was almost no buy downs
being done. 21 buy down, one O

231
00:12:45,840 --> 00:12:51,280
buy down 321 and they had gone
up as high as five, 5 1/2% of

232
00:12:51,280 --> 00:12:53,720
loans and about 3 1/2% right
now.

233
00:12:53,720 --> 00:12:57,320
So still the vast majority of
borrowers are not resorting to

234
00:12:57,320 --> 00:13:00,000
buy downs, which I think is the
right decision, but they do have

235
00:13:00,000 --> 00:13:03,160
a time and a place and we have
that coming up here in the next

236
00:13:03,160 --> 00:13:06,520
10 days or so.
On the podcast, you guys always

237
00:13:06,520 --> 00:13:10,160
ask who, who's able to buy,
who's doing this in this market?

238
00:13:10,160 --> 00:13:13,680
So the average debt to income
ratio, if we go back to the

239
00:13:13,680 --> 00:13:17,800
middle of 2021, it was at the
under 38%.

240
00:13:17,840 --> 00:13:21,480
And now with rates higher, home
prices higher or over 40%.

241
00:13:21,480 --> 00:13:27,720
So we've seen about a two 3%
increase on on the average back

242
00:13:27,720 --> 00:13:30,840
end DTI.
So definitely everyone is

243
00:13:30,840 --> 00:13:33,080
feeling that stress.
So what are we having?

244
00:13:33,080 --> 00:13:35,040
We're having people that are
able to accept a higher debt to

245
00:13:35,040 --> 00:13:37,800
income ratio.
And we've also seen from 2019

246
00:13:37,800 --> 00:13:42,320
credit scores were down around
725 up now in 2025, we're up

247
00:13:42,600 --> 00:13:46,680
7:40-ish.
So better credit score, better

248
00:13:46,680 --> 00:13:49,080
credit qualified borrowers
accepting a higher debt to

249
00:13:49,080 --> 00:13:51,520
income ratio.
So talk about the economic news

250
00:13:51,520 --> 00:13:53,920
we had in the last week.
Last week Jeb was abbreviated

251
00:13:53,920 --> 00:13:55,200
week so it should have been on
Friday.

252
00:13:55,200 --> 00:13:57,160
Thursday we got non farm
payrolls.

253
00:13:57,600 --> 00:14:00,600
They were expecting about 1:30.
We got 147.

254
00:14:00,600 --> 00:14:04,960
We'd had a week ADP jobs report
on Wednesday market did not like

255
00:14:04,960 --> 00:14:08,240
this bonds absolutely sold off
there.

256
00:14:08,880 --> 00:14:11,880
We saw a drop down in the
unemployment rate.

257
00:14:11,880 --> 00:14:15,520
When you see this isn't really a
big deal other than being

258
00:14:15,520 --> 00:14:17,640
vultures in the mortgage
industry and those of you who

259
00:14:17,640 --> 00:14:20,360
want a mortgage want lower
interest rates, it would be

260
00:14:20,360 --> 00:14:22,320
beneficial to see this tick
higher.

261
00:14:22,360 --> 00:14:25,760
Until it ticks higher, we're not
likely to see rates go

262
00:14:25,760 --> 00:14:28,920
appreciably lower and we're
seeing this kind of move

263
00:14:28,920 --> 00:14:31,400
sideways and it actually take
down .1%.

264
00:14:32,080 --> 00:14:35,680
Wanted to show that with rates
down over the last six weeks

265
00:14:35,680 --> 00:14:39,080
before they jumped up an eighth
to 1/4 over the last week.

266
00:14:39,280 --> 00:14:43,520
We were down 3/8 to 1/2 percent
over the last six weeks.

267
00:14:43,800 --> 00:14:47,080
This shows you going back to
2021, we had a lot of mortgage

268
00:14:47,080 --> 00:14:48,760
applications.
The mortgage purchase index was

269
00:14:48,760 --> 00:14:51,440
very, very high.
We saw a steady slide all the

270
00:14:51,440 --> 00:14:54,760
way down till the the start of
2024 where they just kind of

271
00:14:54,760 --> 00:14:56,400
went sideways at a very low
level.

272
00:14:57,040 --> 00:15:00,960
As rates have dropped here in
2025, still elevated, still

273
00:15:00,960 --> 00:15:02,600
above what people want to see
them at.

274
00:15:02,840 --> 00:15:05,640
We have seen purchase
applications increase and we had

275
00:15:05,640 --> 00:15:08,840
those released today, a 10%
increase week over week when

276
00:15:08,840 --> 00:15:12,200
rates had hit the lowest level.
There is pent up demand out

277
00:15:12,200 --> 00:15:14,240
there.
When people see rates come down,

278
00:15:14,240 --> 00:15:17,360
see a more manageable debt to
income ratio, people do want to

279
00:15:17,360 --> 00:15:20,000
step in.
So looking forward next week,

280
00:15:20,000 --> 00:15:22,480
Jeb, we have CPI.
Trueflation tracks this pretty

281
00:15:22,480 --> 00:15:24,200
closely.
It tracks it well in advance.

282
00:15:24,200 --> 00:15:27,440
There's a high correlation over
the long haul, but a big dip a

283
00:15:27,440 --> 00:15:30,920
week over week from 2 point O3
to 1.66%.

284
00:15:31,240 --> 00:15:34,520
If we were to see some of that
picked up in next week's CPI

285
00:15:34,520 --> 00:15:37,400
report, you could see an
improvement in interest rates

286
00:15:37,800 --> 00:15:40,560
with Fed funds.
We are now, after the the jobs

287
00:15:40,560 --> 00:15:44,120
report last week, seeing a 93%
chance that they do nothing in

288
00:15:44,120 --> 00:15:46,440
July, which is kind of what
we've always expected, but

289
00:15:46,680 --> 00:15:48,400
markets kind of coming to accept
it.

290
00:15:48,760 --> 00:15:52,320
Still no change over the rest of
the year expecting 2 cuts, a

291
00:15:52,320 --> 00:15:55,960
September cut and a December cut
for 50 basis points.

292
00:15:57,000 --> 00:16:00,880
Jeb, we we had a a very, very
high performing video on the

293
00:16:00,880 --> 00:16:03,600
podcast this week.
Trump is wrong about mortgage

294
00:16:03,600 --> 00:16:06,320
interest rates and what we're
talking about is he came out a

295
00:16:06,320 --> 00:16:09,240
few weeks ago saying Powell's an
idiot and he called him was a

296
00:16:09,240 --> 00:16:11,960
moron.
He used very not nice words for

297
00:16:11,960 --> 00:16:14,880
Powell said he should be
dropping rates 2 to 3%.

298
00:16:15,160 --> 00:16:19,240
So we go through and say, cool,
if they did that, if Powell woke

299
00:16:19,240 --> 00:16:22,080
up tomorrow and said Trump is
right, I am dumb, I need to drop

300
00:16:22,080 --> 00:16:24,520
rates 2 1/2 percent.
What would it mean for mortgage

301
00:16:24,520 --> 00:16:26,200
rates?
So about 25 minute episode

302
00:16:26,200 --> 00:16:27,760
giving you the full
breakthrough.

303
00:16:27,760 --> 00:16:30,200
It's had a lot of views.
People have enjoyed that.

304
00:16:30,200 --> 00:16:32,760
So if you haven't seen it, go
out to the podcast The Educated

305
00:16:32,760 --> 00:16:35,040
Homebuyer on YouTube and check
that out.

306
00:16:35,040 --> 00:16:40,080
I think it's a valuable video.
Yeah, and you know, for those of

307
00:16:40,080 --> 00:16:42,960
you who are waiting for interest
rates to come down, waiting for

308
00:16:42,960 --> 00:16:46,440
the right opportunity, you can
go to jebsmith.net/rate Watch

309
00:16:46,840 --> 00:16:51,760
and fill out your information.
And if and when, if and when

310
00:16:51,800 --> 00:16:54,520
rates come down, we can reach
out to you so that you don't

311
00:16:54,520 --> 00:16:58,520
have to monitor them every
single day like Josh and I do.

312
00:16:58,720 --> 00:17:03,200
You can just stay updated and or
just stay patient and we'll,

313
00:17:03,320 --> 00:17:04,960
we'll update.
Into that race is the key part.

314
00:17:05,480 --> 00:17:07,680
But I did want to start and say
thank you guys.

315
00:17:07,680 --> 00:17:10,720
We hit 7000 Subs on the educated
home buyer channel, so we

316
00:17:10,720 --> 00:17:13,119
appreciate that.
We appreciate you guys showing

317
00:17:13,119 --> 00:17:17,280
up and supporting that Channel
and Josh and I's vision of

318
00:17:17,319 --> 00:17:20,720
educating and, and helping
create more home buyers out

319
00:17:20,720 --> 00:17:23,280
there that actually understand
the process and know what

320
00:17:23,280 --> 00:17:27,280
they're getting into and how to,
to, to, to, to go through the

321
00:17:27,280 --> 00:17:28,960
process.
A lot of you guys call and give

322
00:17:28,960 --> 00:17:30,800
feedback and repeat what we've
said.

323
00:17:30,800 --> 00:17:34,720
And to be completely honest, a
lot easier to work with than

324
00:17:34,840 --> 00:17:38,040
than the average home buyer out
there just because you guys are

325
00:17:38,200 --> 00:17:41,120
actually doing your homework
and, and know what's going on.

326
00:17:41,120 --> 00:17:43,400
So we appreciate you.
So, you know, just wanted to say

327
00:17:43,400 --> 00:17:45,880
thank you for that.
And if you haven't subscribed,

328
00:17:46,360 --> 00:17:49,920
please consider doing it.
So, Josh, we don't have a lot of

329
00:17:49,920 --> 00:17:51,680
questions at the moment.
We've got a lot of comments on

330
00:17:51,680 --> 00:17:53,960
my beard.
So far we've got well, 22

331
00:17:53,960 --> 00:17:57,280
comments on my beard.
Chris would probably the biggest

332
00:17:57,280 --> 00:18:00,640
supporter of of of the.
Beard definitely.

333
00:18:00,640 --> 00:18:02,880
The biggest supporter, maybe the
shell, but the beard.

334
00:18:03,680 --> 00:18:06,520
And so, you know, I'm doing a
hike in October, Josh.

335
00:18:06,520 --> 00:18:08,960
I told my wife I'm not going to
shave until after the hike.

336
00:18:09,920 --> 00:18:11,800
And then I sit.
And then she was like, there's

337
00:18:11,800 --> 00:18:13,160
no way you can do that.
Come on.

338
00:18:13,800 --> 00:18:15,840
I think she's probably right.
But, you know, we'll see.

339
00:18:15,960 --> 00:18:17,960
We'll see.
I say get the pants back and do

340
00:18:17,960 --> 00:18:20,640
what you want.
I mean, she said go for it.

341
00:18:20,640 --> 00:18:22,720
I said I don't know if I could.
So I don't know who has the

342
00:18:22,720 --> 00:18:24,360
pants.
I have the pants.

343
00:18:24,360 --> 00:18:25,480
I just don't know if I can put
them on.

344
00:18:26,480 --> 00:18:29,840
Juliet, same thing.
But what do we got here?

345
00:18:29,840 --> 00:18:32,920
We got Makai.
Makai says how are student loans

346
00:18:32,920 --> 00:18:34,880
calculated into debt to income
ratio?

347
00:18:34,880 --> 00:18:40,760
Do you buy?
Do you go by your actual payment

348
00:18:40,760 --> 00:18:43,120
if you're on a plan or is it
calculated based on the loan

349
00:18:43,120 --> 00:18:44,400
amount?
What if your payments are

350
00:18:44,400 --> 00:18:46,200
deferred?
The loan amount has absolutely

351
00:18:46,200 --> 00:18:49,600
nothing to do with it.
If you're deferred or in

352
00:18:49,600 --> 00:18:52,440
forbearance and it shows a 0 we
I.

353
00:18:53,080 --> 00:18:56,080
So if it shows a 0 on your
credit report, it can be

354
00:18:56,080 --> 00:18:58,040
deferred.
It can be in forbearance, you

355
00:18:58,040 --> 00:19:01,560
can be in an IBR, an income
based repayment plan with a true

356
00:19:01,560 --> 00:19:05,800
$0.00 monthly repayment.
Some loan programs will accept a

357
00:19:05,800 --> 00:19:08,160
0 IBR, but we do have to
document and we do have to get

358
00:19:08,160 --> 00:19:11,480
your documentation from the
servicer that shows it's 0%.

359
00:19:12,280 --> 00:19:14,720
So depending on the loan
program, they're going to count

360
00:19:14,720 --> 00:19:17,240
if you're in deferred or
deferred or in forbearance.

361
00:19:17,240 --> 00:19:19,720
So we've got a zero payment.
They're going to take the loan

362
00:19:19,720 --> 00:19:22,640
balance and you're going to take
either 1/2 percent or 1%

363
00:19:22,640 --> 00:19:27,520
depending on you're looking at
Freddie and FHA will take a half

364
00:19:27,520 --> 00:19:29,920
percent.
Fannie will require 1%.

365
00:19:30,160 --> 00:19:32,680
VA is kind of the most
reasonable out of all of them.

366
00:19:32,680 --> 00:19:39,080
It's 5% a year, so 5% / 12.
It's like point O 433 on the

367
00:19:39,080 --> 00:19:40,960
monthly.
So they're going to come up with

368
00:19:40,960 --> 00:19:44,160
a pseudo payment for you.
So your best case if you're

369
00:19:44,160 --> 00:19:48,240
deferred or in forbearance is to
get into repayment, get an IBR

370
00:19:48,400 --> 00:19:51,320
payment, preferably a 0 so you
don't have that increase.

371
00:19:52,040 --> 00:19:54,360
The thing that I always tell
people is make sure we have a

372
00:19:54,360 --> 00:19:56,360
plan, make sure we're being
strategic with this.

373
00:19:56,520 --> 00:19:59,400
If you're not in an industry
where you're going to be

374
00:19:59,400 --> 00:20:02,480
eligible for public servant loan
forgiveness, kicking the can

375
00:20:02,480 --> 00:20:06,080
further down the line just makes
it worse and worse and worse for

376
00:20:06,080 --> 00:20:08,480
you want to get into repayment
at some point, that's going to

377
00:20:08,480 --> 00:20:11,240
make those things go away.
And preferably you are in some

378
00:20:11,280 --> 00:20:14,360
type of PSLF that that you would
be eligible for forgiveness at

379
00:20:14,360 --> 00:20:15,880
some point.
All right.

380
00:20:16,120 --> 00:20:19,720
Thanks for that.
And I believe we've actually

381
00:20:19,720 --> 00:20:22,640
done an episode on student loans
on the podcast too in in some

382
00:20:22,640 --> 00:20:24,240
details.
So if you have questions there,

383
00:20:24,240 --> 00:20:26,200
you can head over to the podcast
and check that out.

384
00:20:27,080 --> 00:20:29,760
Should give you a little bit
more guidance on that at the

385
00:20:29,760 --> 00:20:33,120
moment.
You know, there's, you know, 40

386
00:20:33,120 --> 00:20:36,240
plus of you watching and very
few questions out there.

387
00:20:36,240 --> 00:20:39,880
So if you're not interested in
asking a question, how about

388
00:20:39,880 --> 00:20:42,480
letting us know where you're
located across the United

389
00:20:42,640 --> 00:20:44,320
States?
Whoa, Josh.

390
00:20:44,400 --> 00:20:46,840
I'm I'm yelling your your voice
at you.

391
00:20:46,880 --> 00:20:51,680
I was trying to find for Makai.
I was trying to find the correct

392
00:20:51,680 --> 00:20:55,400
episode there together.
Heather's in Inglewood.

393
00:20:55,400 --> 00:20:57,920
We got pop keys stopping in as
well.

394
00:20:57,920 --> 00:21:00,120
Thank you guys for being here
every weekend supporting the

395
00:21:00,120 --> 00:21:02,960
show.
If you guys don't ask questions,

396
00:21:02,960 --> 00:21:05,920
Josh and I don't know what to
talk about because we, we, we

397
00:21:05,920 --> 00:21:09,160
talk so often we are literally
we don't even hang out anymore

398
00:21:09,160 --> 00:21:11,440
because we see each other so
much in the office.

399
00:21:11,920 --> 00:21:13,600
We used to hang out outside of
the office.

400
00:21:13,600 --> 00:21:15,400
Now there's nothing to even
talk.

401
00:21:15,520 --> 00:21:17,560
So we.
We used to hang out and then Jeb

402
00:21:17,560 --> 00:21:20,800
had three kids.
So he's at football, soccer, the

403
00:21:20,800 --> 00:21:25,720
library, open house library.
Well, one of your one of your

404
00:21:25,720 --> 00:21:27,400
children is studious, The other
two.

405
00:21:27,400 --> 00:21:28,080
We'll see.
We.

406
00:21:28,160 --> 00:21:30,520
Just don't work.
Well, I mean the library

407
00:21:30,840 --> 00:21:33,560
possibly with his mom, but Jeb
doesn't go to library.

408
00:21:33,560 --> 00:21:35,600
I don't go to library.
Bro you're you're I don't have

409
00:21:35,600 --> 00:21:37,600
the firm library activities, I
library card.

410
00:21:38,480 --> 00:21:43,960
Cleburne and Little Rock.
We got Ollie, Ollie in New

411
00:21:43,960 --> 00:21:47,880
Jersey, Mckay's in Tampa.
So we're, we've got the, you

412
00:21:47,880 --> 00:21:51,000
know, part of the East Coast
covered there.

413
00:21:51,560 --> 00:21:52,960
We have a lot of listeners in
Tampa.

414
00:21:52,960 --> 00:21:56,680
We are able to help 234 buyers
every year in that Tampa area

415
00:21:56,680 --> 00:21:58,600
from the show.
Good stuff.

416
00:21:59,640 --> 00:22:05,400
And we got a buyer in the
Houston area actually that's put

417
00:22:05,400 --> 00:22:07,680
in an offer.
Josh, did she get her offer

418
00:22:07,680 --> 00:22:08,520
accepted?
Do we know?

419
00:22:09,360 --> 00:22:12,200
I do not know.
I need to follow up on that and

420
00:22:12,200 --> 00:22:14,440
it may be a couple of days
because something we haven't

421
00:22:14,440 --> 00:22:17,000
dealt with in a long time.
The offer that she's making is

422
00:22:17,040 --> 00:22:20,480
on a home that is a short sale.
So we don't just have the buyer,

423
00:22:20,480 --> 00:22:23,840
the seller accepting the offer,
then gets accepted, and then it

424
00:22:23,840 --> 00:22:27,880
cruises on to the lender to
accept the offer.

425
00:22:28,200 --> 00:22:29,560
So, so let's talk about that for
a second.

426
00:22:29,560 --> 00:22:30,480
We don't have a lot of
questions.

427
00:22:30,480 --> 00:22:32,120
Let's let's go over what a short
sale is.

428
00:22:32,120 --> 00:22:35,840
So in theory, a short, a short
sale happens when somebody's

429
00:22:35,840 --> 00:22:38,600
looking to sell their property
and they owe more on it than

430
00:22:38,600 --> 00:22:40,800
it's actually worth.
They don't have enough equity to

431
00:22:40,800 --> 00:22:45,000
either cover the compensation or
the, the, the payoff, you know,

432
00:22:45,000 --> 00:22:46,640
after everything's out, they
don't have enough to cover the

433
00:22:46,640 --> 00:22:50,320
balance on the, on the loan.
And therefore they have to sell

434
00:22:50,320 --> 00:22:52,920
it basically at a loss.
And, but in order to do that,

435
00:22:53,160 --> 00:22:56,440
you've got to get the lender's
approval and the servicer has to

436
00:22:56,440 --> 00:22:59,920
agree to it and say, yes, we're,
we're allowing you to sell this

437
00:22:59,920 --> 00:23:02,320
home for X.
Now, back in the day, how these

438
00:23:02,320 --> 00:23:04,400
work is it was pretty
cumbersome.

439
00:23:04,400 --> 00:23:08,600
I mean, it, it took, you know,
weeks, months to get a short

440
00:23:08,600 --> 00:23:10,040
sale approved.
There's a lot of paperwork

441
00:23:10,040 --> 00:23:12,680
involved.
You as a homeowner had to

442
00:23:12,680 --> 00:23:16,800
submit, you know, pay stubs and
documentation just kind of

443
00:23:16,800 --> 00:23:19,480
showing a hardship and not being
able to make up the difference

444
00:23:19,480 --> 00:23:22,520
in in all of these other things
that that happened at the time.

445
00:23:23,000 --> 00:23:26,000
It's been so long, Josh, since
I've done a short sale.

446
00:23:26,000 --> 00:23:28,280
I don't even know what the
process looks like today.

447
00:23:28,280 --> 00:23:30,960
So I don't know if it's any
simpler.

448
00:23:30,960 --> 00:23:35,040
I have to believe it is.
I just don't know by how much it

449
00:23:35,040 --> 00:23:37,720
is and you know and and how
quickly you get an answer.

450
00:23:38,240 --> 00:23:42,680
Everything's better and and more
tech savvy than it was because

451
00:23:42,680 --> 00:23:46,040
we're talking in 2007, 2008.
The last time you saw a wave of

452
00:23:46,040 --> 00:23:49,600
these was almost 20 years ago.
So not that mortgage servicers

453
00:23:49,600 --> 00:23:52,800
are on the bleeding edge of
tech, but I used to remember

454
00:23:52,800 --> 00:23:55,280
they would say it would give you
a list of documentation that was

455
00:23:55,280 --> 00:23:57,520
like triple what you would need
to qualify for a mortgage.

456
00:23:57,520 --> 00:23:58,760
And they wanted you to fax it
in.

457
00:23:58,760 --> 00:24:02,320
And then magically they never
got your fax 43 times.

458
00:24:02,720 --> 00:24:04,560
They would never receive it or
we got it.

459
00:24:04,560 --> 00:24:06,280
We didn't get everything we
needed.

460
00:24:06,720 --> 00:24:11,360
So should be a a secure portal
now or you're uploading and you

461
00:24:11,360 --> 00:24:14,080
can see what's uploaded and you
can prove that it was uploaded,

462
00:24:15,120 --> 00:24:17,040
but you have to show a hardship.
They're not just going to go,

463
00:24:17,040 --> 00:24:18,320
hey, you know what?
This house sucks.

464
00:24:18,320 --> 00:24:20,680
I want out of here and I don't
want to pay you back what you

465
00:24:20,680 --> 00:24:24,120
owe me.
And at that point, what the the

466
00:24:24,200 --> 00:24:28,000
the bank has to do is make a
decision what is they're they're

467
00:24:28,000 --> 00:24:31,400
not necessarily accepting a
short sale or approving a short

468
00:24:31,400 --> 00:24:35,280
sale to help you as the seller
out there looking for a win win.

469
00:24:35,280 --> 00:24:38,000
You're saying, hey, I was
eligible for this loan, I

470
00:24:38,000 --> 00:24:40,320
qualified for this loan, I
intended to pay for this loan, I

471
00:24:40,320 --> 00:24:43,160
can no longer afford it.
And the bank has to go, OK, you

472
00:24:43,160 --> 00:24:45,560
can't make the payment and you
don't want to live there.

473
00:24:45,560 --> 00:24:48,200
So you're not asking us for a
modification to find a way for

474
00:24:48,200 --> 00:24:52,080
you to live there.
What is the way that we minimize

475
00:24:52,080 --> 00:24:54,240
our loss?
And if you have $200,000 of

476
00:24:54,240 --> 00:24:56,560
equity in the house, they're
probably going to look at it.

477
00:24:56,560 --> 00:24:58,840
And you're not asking for a
short sale, but they're going to

478
00:24:58,840 --> 00:25:01,440
look at it and go, fine, you
don't want a modification, you

479
00:25:01,440 --> 00:25:03,760
don't want to pay us, We're
going to foreclose.

480
00:25:03,760 --> 00:25:05,920
And that's the most money to us
in this situation.

481
00:25:05,920 --> 00:25:08,840
There's no equity there.
So they have to say, how do we

482
00:25:08,840 --> 00:25:11,960
mitigate our loss?
What is the cheapest way out of

483
00:25:11,960 --> 00:25:14,360
this?
And this is a $250,000 house.

484
00:25:14,600 --> 00:25:17,320
So we're not talking to 8 or
$900,000 loan.

485
00:25:17,560 --> 00:25:21,080
The loss severity is fairly
minimal on a percentage basis.

486
00:25:21,080 --> 00:25:23,520
It will be large.
I don't think they owe a ton

487
00:25:23,520 --> 00:25:24,680
more.
This isn't an area where the

488
00:25:24,680 --> 00:25:27,720
home price dipped a lot.
It was someone bought when when

489
00:25:27,720 --> 00:25:30,480
prices were a tiny bit higher in
that part of Texas and they put

490
00:25:30,480 --> 00:25:33,120
very little down and then they
were behind on the mortgage.

491
00:25:33,120 --> 00:25:35,360
So with arrearages, penalties,
all that.

492
00:25:36,040 --> 00:25:39,760
But in essence, what happens is
you make the offer, the seller

493
00:25:39,760 --> 00:25:42,280
goes, this is great to me, I
want to get out of here.

494
00:25:42,280 --> 00:25:44,920
And then at that point, they and
their realtor have to present

495
00:25:44,920 --> 00:25:47,200
that to the lender.
The lender has to approve it and

496
00:25:47,200 --> 00:25:49,400
determine that yes, this is the
most we're going to be able to

497
00:25:49,400 --> 00:25:51,080
get out of this.
There you go.

498
00:25:51,080 --> 00:25:52,800
And we had a follow up question
on it.

499
00:25:53,200 --> 00:25:55,440
Mike asked can you get an FHA
loan on a short sale?

500
00:25:55,440 --> 00:25:57,520
Yeah, you can do any type of
financing on a short sale.

501
00:25:57,520 --> 00:26:01,080
The, the, the sale process
doesn't dictate what type of

502
00:26:01,080 --> 00:26:03,040
loan you can get on, on a
property.

503
00:26:03,040 --> 00:26:05,480
In that case, like even a
foreclosure, one of those

504
00:26:05,480 --> 00:26:08,640
properties assuming the
property's financeable condition

505
00:26:08,640 --> 00:26:12,520
wise in any sort of financing
is, is fine in in those

506
00:26:12,520 --> 00:26:13,920
conditions.
So you should be good to go.

507
00:26:14,560 --> 00:26:21,000
All right, Josh, this is well,
we've got a couple things here.

508
00:26:21,000 --> 00:26:25,360
I'm trying to see if we got.
Mean mean Boy, 69, checking in

509
00:26:25,360 --> 00:26:28,760
from Puerto Rico.
Puerto Rico we got Roux and

510
00:26:28,880 --> 00:26:33,640
Virginia we've got, we've got
some new names coming in here,

511
00:26:33,640 --> 00:26:35,240
some some new areas that I'm
seeing.

512
00:26:35,240 --> 00:26:39,800
So good stuff.
All right, let's see there was 1

513
00:26:40,080 --> 00:26:44,960
here Josh that Anna Bear says,
how do you have no cost

514
00:26:45,000 --> 00:26:47,560
refinancing?
Is it just rolled into the new

515
00:26:47,560 --> 00:26:50,080
loan?
That is one option, but.

516
00:26:50,160 --> 00:26:52,960
Well, it's not a no cost loan at
that point, if you're paying the

517
00:26:52,960 --> 00:26:56,160
cost and rolling it into the
loan, it's no out of pocket, but

518
00:26:56,160 --> 00:26:59,280
it's not a no cost loan.
So if we're talking a true no

519
00:26:59,280 --> 00:27:01,400
cost loan, Jebs gone through
this before.

520
00:27:01,400 --> 00:27:03,760
He's done it a couple times on
on his current home just since

521
00:27:03,760 --> 00:27:05,600
buying a year and a half two
years ago.

522
00:27:06,120 --> 00:27:08,680
You are accepting a slightly
higher interest rate and the

523
00:27:08,680 --> 00:27:10,840
lender says, hey, we're going to
make more in interest over the

524
00:27:10,840 --> 00:27:13,040
life of this loan.
We will give you a credit at

525
00:27:13,040 --> 00:27:16,840
closing and that can cover some
or all of your closing costs.

526
00:27:16,840 --> 00:27:20,200
So a no cost loan is basically
taking a slightly higher

527
00:27:20,200 --> 00:27:23,800
interest rate to get enough
money from the lender to cover

528
00:27:23,800 --> 00:27:26,440
your closing costs.
On a refinance, we can negotiate

529
00:27:26,440 --> 00:27:29,760
the closing costs down with
title and escrow much lower than

530
00:27:29,760 --> 00:27:33,120
it would be on a purchase.
So the bigger your loan, the

531
00:27:33,120 --> 00:27:36,800
smaller a credit that you need
or so a smaller increase in the

532
00:27:36,800 --> 00:27:39,880
interest rate to get you that
same credit to cover the cost.

533
00:27:39,880 --> 00:27:41,840
But if you're rolling it into
the loan, if someone tells you

534
00:27:41,840 --> 00:27:43,640
they're rolling it into the
loan, they're telling you

535
00:27:43,640 --> 00:27:45,960
there's no out of pocket cost,
they're not telling you there's

536
00:27:45,960 --> 00:27:47,920
no costs.
Good stuff.

537
00:27:48,240 --> 00:27:53,080
Makai followed up with a
question on someone suggested

538
00:27:53,080 --> 00:27:54,840
looking into rent to own home
purchase.

539
00:27:54,840 --> 00:27:57,200
How does that work and why would
anyone do it?

540
00:27:57,200 --> 00:28:05,240
So a rent to home, rent to own
purchases are typically not seen

541
00:28:05,240 --> 00:28:09,440
in appreciating markets because
there would be no benefit to the

542
00:28:09,440 --> 00:28:12,240
seller or there would be less
benefit to the seller in those

543
00:28:12,240 --> 00:28:15,040
scenarios.
Rent to owns are great in

544
00:28:15,600 --> 00:28:20,120
sideways moving markets and
declining markets because it

545
00:28:20,120 --> 00:28:24,400
allows the seller to essentially
sell the home at today's price

546
00:28:26,040 --> 00:28:29,920
and get paid at some point in
the future for for whatever that

547
00:28:29,920 --> 00:28:32,440
price is agreed upon.
Now how it typically works is

548
00:28:32,440 --> 00:28:35,360
there's an agreement with the
seller in what you expect to pay

549
00:28:35,360 --> 00:28:37,920
for the home, But every single
month you make your rent

550
00:28:37,920 --> 00:28:41,640
payment, you're in theory paying
more than that rent payment.

551
00:28:41,640 --> 00:28:45,520
So say your rent payment's $3500
a month, maybe the agreement is

552
00:28:45,520 --> 00:28:49,480
you pay $5000 a month and that
$1500 that you're paying in

553
00:28:49,480 --> 00:28:54,200
addition get set aside to go
towards the down payment so that

554
00:28:54,200 --> 00:28:56,680
you can end up buying that rent
to own property.

555
00:28:56,680 --> 00:29:02,560
So it's a little difficult to
explain and and go over in in

556
00:29:02,560 --> 00:29:04,760
great detail and in kind of a
limited time.

557
00:29:04,760 --> 00:29:06,840
I've done a video on it where
you can kind of walk through it,

558
00:29:07,400 --> 00:29:09,240
but they're not as easy to come
by.

559
00:29:11,080 --> 00:29:13,920
And typically when does it work
for a buyer?

560
00:29:13,920 --> 00:29:15,360
I think it's the more important
question.

561
00:29:15,600 --> 00:29:19,240
It works for a buyer when you're
trying to lock in a property

562
00:29:19,280 --> 00:29:22,760
that you like and you think that
the property could be worth more

563
00:29:22,760 --> 00:29:26,520
in the future or you're in a
position where you're trying to

564
00:29:26,520 --> 00:29:30,360
get your credit or something
else in order so that you can

565
00:29:30,360 --> 00:29:32,720
finance that property at some
point later on.

566
00:29:33,440 --> 00:29:37,080
But rent to owns are, I don't
know, they're, they're far and

567
00:29:37,080 --> 00:29:38,880
few between, at least in my
experience.

568
00:29:38,960 --> 00:29:42,440
Josh any.
It's everything that you said is

569
00:29:42,440 --> 00:29:44,080
correct.
But when you're in the market

570
00:29:44,080 --> 00:29:48,200
where they're prevalent, largely
many times they're used by

571
00:29:48,200 --> 00:29:51,360
investors to sell a property
that they're having a difficult

572
00:29:51,360 --> 00:29:54,560
time selling.
And they're also designed to set

573
00:29:54,560 --> 00:29:58,640
the buyer up to fail because
what they do is say, hey, this

574
00:29:58,640 --> 00:30:01,600
property would rent for 2000,
we're going to charge you $2500

575
00:30:01,600 --> 00:30:04,880
a month.
In 12 months, that excess 500

576
00:30:04,880 --> 00:30:06,000
bucks, we're going to set it
aside.

577
00:30:06,000 --> 00:30:08,920
You'll have 6000 for your down
payment and closing costs.

578
00:30:09,560 --> 00:30:12,520
And what happens is people
default, they move, they don't

579
00:30:12,520 --> 00:30:15,520
exercise their option to
purchase and they got to rent a

580
00:30:15,520 --> 00:30:18,760
property for $2500 a month
instead of $2000 a month.

581
00:30:19,000 --> 00:30:20,360
Yeah.
And, and there's usually a time

582
00:30:20,360 --> 00:30:23,800
frame on it that, hey, it's,
it's, you know, you know, you

583
00:30:23,800 --> 00:30:26,160
have to purchase it by this
date, at which point you don't

584
00:30:26,160 --> 00:30:29,440
then you, you know, risk losing
whatever you've paid into it.

585
00:30:29,440 --> 00:30:32,320
So it's it's, it benefits the
seller more than it does the

586
00:30:32,320 --> 00:30:37,920
buyer in those scenarios.
We have here, Josh.

587
00:30:38,480 --> 00:30:41,680
Got anything?
In Puerto Rico mean boy 69 has a

588
00:30:41,680 --> 00:30:44,880
question is trying to buy a home
with Fannie Mae but they keep

589
00:30:44,880 --> 00:30:47,080
canceling my offer.
The realtor says that they don't

590
00:30:47,080 --> 00:30:50,400
want to go lower than ask but
the area is not the price that

591
00:30:50,400 --> 00:30:53,880
they ask.
What can I do?

592
00:30:54,520 --> 00:30:57,400
Maybe And then it didn't, we
didn't finish the thought there.

593
00:30:57,560 --> 00:31:00,360
So if you're still here, mean
boy, jump in and, and, and

594
00:31:00,360 --> 00:31:02,040
finish that thought.
So we know exactly what we're

595
00:31:02,040 --> 00:31:03,520
looking at.
But if you're trying to buy a

596
00:31:03,520 --> 00:31:05,360
home with Fannie Mae, I don't
think you're saying you're

597
00:31:05,360 --> 00:31:08,600
getting Fannie Mae financing.
It may be a bank owned Fannie

598
00:31:08,600 --> 00:31:11,560
Mae property that you're trying
to purchase and they don't want

599
00:31:11,560 --> 00:31:15,200
to go that low.
And they're like any other

600
00:31:15,200 --> 00:31:16,960
seller.
They they have an idea.

601
00:31:16,960 --> 00:31:18,760
I mean, Jeb, you have
perspective on this.

602
00:31:18,760 --> 00:31:23,200
You sold hundreds of of homes
that were bank owned by Fannie

603
00:31:23,200 --> 00:31:25,960
or Freddie back in the day.
What does that look like?

604
00:31:25,960 --> 00:31:28,720
What happens if if the property
is just sitting and they're not

605
00:31:28,720 --> 00:31:31,360
accepting offers?
Yeah, and I don't even know that

606
00:31:31,360 --> 00:31:33,400
that's what he's saying.
I mean, it could be hey, I'm

607
00:31:33,400 --> 00:31:35,680
getting a loan with Fannie Mae
and I'm putting in offers and

608
00:31:35,680 --> 00:31:38,080
the sellers not accepting it.
But let's just answer your

609
00:31:38,080 --> 00:31:40,160
question.
You're, it basically what

610
00:31:40,160 --> 00:31:43,360
happens is you know that when
when the bank puts a property on

611
00:31:43,360 --> 00:31:47,720
the market, that's a foreclosure
before they or when they put it

612
00:31:47,720 --> 00:31:50,680
on the market, they've done some
sort of market research, right?

613
00:31:50,680 --> 00:31:53,720
And so that typically means an
agent has gone out and given

614
00:31:53,880 --> 00:31:56,400
their opinion of the value of
that home.

615
00:31:56,400 --> 00:31:59,320
In some cases, multiple brokers
have given their opinion of the

616
00:31:59,320 --> 00:32:01,480
value of that home.
Now, that doesn't necessarily

617
00:32:01,480 --> 00:32:03,880
mean that was where the bank
prices it at, right?

618
00:32:04,000 --> 00:32:06,560
We give them an idea.
Sometimes they go higher than

619
00:32:06,560 --> 00:32:09,360
that depending on what they're
trying to accomplish.

620
00:32:09,360 --> 00:32:12,200
But what I will tell you is
banks aren't in the business of

621
00:32:12,200 --> 00:32:14,560
owning real estate or holding on
to real estate.

622
00:32:14,560 --> 00:32:18,080
So if it's in a market that
where it where it is priced high

623
00:32:18,080 --> 00:32:20,480
and days on the market are
adding up, there's a high

624
00:32:20,480 --> 00:32:23,520
likelihood that they're going to
adjust that price closer to

625
00:32:23,520 --> 00:32:27,200
market value as time goes on.
But it has to be something

626
00:32:27,960 --> 00:32:29,400
that's supported by comps,
right?

627
00:32:29,400 --> 00:32:32,320
They don't just lower the price
because they're getting offers

628
00:32:32,320 --> 00:32:34,320
lower than the purchase price.
It there has to be something

629
00:32:34,320 --> 00:32:36,680
there to support it.
So hopefully that provides you a

630
00:32:36,680 --> 00:32:38,680
little bit insight.
Now, if it's, you know, a

631
00:32:38,680 --> 00:32:44,600
seller, not a bank not willing
to negotiate similar thing for

632
00:32:44,600 --> 00:32:49,000
the most part, maybe it's just a
seller that has, you know, their

633
00:32:49,000 --> 00:32:52,840
expectations are incorrect.
You know, they think their home

634
00:32:52,840 --> 00:32:55,360
is worth more because of XY or
Z.

635
00:32:55,760 --> 00:33:01,240
And so it's, you know, again,
having a realistic seller is, is

636
00:33:01,240 --> 00:33:05,560
not always realistic.
And so there's, there's got to

637
00:33:05,560 --> 00:33:08,440
be some data provided there to
be able to help support your

638
00:33:08,440 --> 00:33:09,760
decision.
But at the end of the day, that

639
00:33:09,760 --> 00:33:12,880
only works if the seller's
willing to, to do that.

640
00:33:12,920 --> 00:33:15,800
So, but if you have more
clarification, put it in there,

641
00:33:15,800 --> 00:33:17,280
we can we can discuss it
further.

642
00:33:18,680 --> 00:33:20,440
All right.
I'm not even going to try this

643
00:33:20,440 --> 00:33:22,320
person's name, but this is a
good question for you.

644
00:33:22,560 --> 00:33:25,480
Is it true that at the end of
the year you can get more

645
00:33:25,480 --> 00:33:27,720
incentives?
I want to buy in Jacksonville,

646
00:33:27,720 --> 00:33:30,360
FL or should I wait until the
end of this year?

647
00:33:30,720 --> 00:33:33,600
And I'm thinking we're probably
talking about new constructions,

648
00:33:33,600 --> 00:33:36,240
We're saying incentives, we're
not talking seller concessions.

649
00:33:36,880 --> 00:33:39,360
But from that perspective, on
the builder side, how's that

650
00:33:39,360 --> 00:33:41,280
work?
I mean potentially, right.

651
00:33:41,280 --> 00:33:44,560
I mean that there are fiscal
year ends to to these different

652
00:33:44,560 --> 00:33:47,000
companies out there.
They're not always the end of

653
00:33:47,000 --> 00:33:49,200
the year though, right?
It depends on when their fiscal

654
00:33:49,200 --> 00:33:53,040
year end is, maybe it's July or
June or whatever.

655
00:33:53,040 --> 00:33:54,680
So you got to figure out what
that is.

656
00:33:55,080 --> 00:34:00,680
But I mean, I would say that,
you know, the slower times of

657
00:34:00,680 --> 00:34:04,960
the year, like for for Southern
California, that time is, you

658
00:34:04,960 --> 00:34:07,680
know, around the holiday season,
that's typically the slower time

659
00:34:07,680 --> 00:34:11,159
of the year.
And so I would say that there's

660
00:34:11,560 --> 00:34:14,440
better opportunities out there
in those markets because if a

661
00:34:14,440 --> 00:34:17,159
seller has a home on the market
during that period of time, that

662
00:34:17,159 --> 00:34:19,360
shows they're a serious seller
for the most part.

663
00:34:19,360 --> 00:34:22,600
Because anybody that's willing
to sell a home when when there's

664
00:34:22,600 --> 00:34:25,600
holidays and families and all of
that stuff, primarily talking

665
00:34:25,600 --> 00:34:28,080
about existing construction,
that tells me that they're

666
00:34:28,080 --> 00:34:31,800
serious and probably needing to
do something more so than

667
00:34:31,800 --> 00:34:33,840
somebody that says, hey, listen,
I'm just going to pull it off

668
00:34:33,840 --> 00:34:36,280
and wait until the spring until
the market comes back.

669
00:34:36,280 --> 00:34:38,880
So I understand the logic behind
it.

670
00:34:39,800 --> 00:34:44,320
I don't necessarily think that
that logic always works, but I

671
00:34:44,320 --> 00:34:47,520
do see that there could be
opportunities just depending on

672
00:34:47,520 --> 00:34:49,920
what you're looking at.
I would say talk to a local in

673
00:34:49,920 --> 00:34:53,440
in that market and just try to
see what you know, what's out

674
00:34:53,440 --> 00:34:54,600
there.
But I think markets like

675
00:34:54,600 --> 00:34:58,200
Jacksonville, at least based on
the data that I've seen,

676
00:34:58,200 --> 00:35:00,320
inventory has increased
substantially.

677
00:35:00,320 --> 00:35:03,280
It continues to grow.
It's a slower market.

678
00:35:03,280 --> 00:35:05,920
So the longer something sits,
probably the better opportunity

679
00:35:05,920 --> 00:35:09,120
you have.
So Jeb, Paul Menendez has a good

680
00:35:09,120 --> 00:35:11,000
question here by the House
August of last year.

681
00:35:11,000 --> 00:35:13,760
I have 7% believe there will be
an opportunity to refi into a

682
00:35:13,760 --> 00:35:16,360
low 5 soon.
That would be aggressive if we

683
00:35:16,360 --> 00:35:18,600
got a low 5 soon.
I hope you are correct.

684
00:35:18,600 --> 00:35:21,400
It would make my life much much
better.

685
00:35:21,760 --> 00:35:24,760
But in terms of saying for a
refi, when should I contact a

686
00:35:24,760 --> 00:35:28,000
lender 3 months out?
Well the question sort of

687
00:35:28,200 --> 00:35:30,600
implies that you know when rates
are going to drop.

688
00:35:30,600 --> 00:35:33,440
The problem is you don't.
Last year from July through

689
00:35:33,440 --> 00:35:36,600
September we got a percent and a
half little bit more than a

690
00:35:36,600 --> 00:35:39,320
percent and a half drop in rates
and it came and it went.

691
00:35:39,320 --> 00:35:42,120
A lot of people missed that
window because they were waiting

692
00:35:42,120 --> 00:35:43,560
for it to get into the low
fives.

693
00:35:43,880 --> 00:35:49,680
If you have a 7% on a four
$500,000 loan rate of 6 1/4

694
00:35:49,680 --> 00:35:52,440
would with a no cost loan would
would make sense.

695
00:35:52,720 --> 00:35:58,560
So what we always say here is
get do this.

696
00:35:58,560 --> 00:36:02,880
Just get on the rate watch.
Jeb, how in the world, why will

697
00:36:02,880 --> 00:36:04,480
this thing not get off the
screen?

698
00:36:05,840 --> 00:36:08,480
There we go.
So if you get on the rate watch

699
00:36:08,480 --> 00:36:11,800
there, we've had people been
there for 7-8, nine months and

700
00:36:11,800 --> 00:36:15,000
nothing because rates have not
really dipped significantly

701
00:36:15,000 --> 00:36:18,400
since last fall when they
started spiking back up in

702
00:36:18,400 --> 00:36:20,760
September.
But with that, we have the rate

703
00:36:20,760 --> 00:36:22,600
watch list.
We can reach out to you and let

704
00:36:22,600 --> 00:36:26,600
you know when rates get there.
We can set a strike rate to say,

705
00:36:26,600 --> 00:36:30,000
OK for you, you are not willing
to do anything until rates get

706
00:36:30,000 --> 00:36:32,360
to 5 and a quarter.
So it may be longer for you.

707
00:36:32,880 --> 00:36:35,160
It will be longer for you to to
get a phone call.

708
00:36:35,160 --> 00:36:37,200
But we can go through that.
We can run the numbers and and

709
00:36:37,200 --> 00:36:40,440
determine what does it really
take to make it make sense.

710
00:36:40,440 --> 00:36:43,880
We have a buyer who came from
the show two years ago, just

711
00:36:43,880 --> 00:36:46,320
talked to them a couple days ago
and we set the strike rate and

712
00:36:46,320 --> 00:36:50,560
now we know as soon as it hits
that level, this is when we step

713
00:36:50,560 --> 00:36:55,040
in and do the refi.
All right, good stuff, Anna,

714
00:36:55,040 --> 00:36:56,760
Josh, just.
I disappeared.

715
00:36:56,760 --> 00:36:57,760
I bounced.
I'm out.

716
00:36:58,880 --> 00:37:02,040
So Anna has a question says what
would you do as an agent trying

717
00:37:02,040 --> 00:37:06,120
to help your client buy a home
but do the location and budget.

718
00:37:06,120 --> 00:37:08,920
Due to the location and budget
cannot find a suitable property

719
00:37:08,920 --> 00:37:14,280
shortening timeline to move to.
Well, you really only have a

720
00:37:14,280 --> 00:37:16,360
couple of options.
Your first option is to be

721
00:37:16,360 --> 00:37:18,240
patient and wait for something
to pop up.

722
00:37:18,680 --> 00:37:22,560
Your second option is to broaden
your horizons a little bit.

723
00:37:23,040 --> 00:37:26,360
Open up your search criteria,
add a couple more cities in that

724
00:37:26,360 --> 00:37:32,400
maybe you wouldn't work first
considering and or you change

725
00:37:32,400 --> 00:37:35,760
your non negotiables or some of
the things you're looking in the

726
00:37:35,760 --> 00:37:39,040
property to add more
opportunities to that list.

727
00:37:39,880 --> 00:37:42,320
If neither of those are
something you want to do, the

728
00:37:42,320 --> 00:37:45,800
third option and something
that's definitely doable is have

729
00:37:45,800 --> 00:37:52,160
your agent try to generate a
potential opportunity in the

730
00:37:52,200 --> 00:37:53,520
areas that you're looking,
right.

731
00:37:53,520 --> 00:37:56,240
If you know what neighborhood
you're, you're trying to buy in,

732
00:37:57,120 --> 00:37:59,880
there's there's a way of sending
out letters, potentially door

733
00:37:59,880 --> 00:38:02,120
knocking, just doing some
different things in order to try

734
00:38:02,120 --> 00:38:04,240
to generate business in those
markets.

735
00:38:04,240 --> 00:38:08,160
And that's always an option, not
always effective, but it's, it's

736
00:38:08,560 --> 00:38:11,320
an opportunity or a potential
opportunity to add something

737
00:38:11,320 --> 00:38:13,440
else to the plate.
But that's it.

738
00:38:13,440 --> 00:38:15,320
I mean, it's, it's really about
time.

739
00:38:15,320 --> 00:38:20,280
I mean, you know, time is will
probably allow more

740
00:38:20,280 --> 00:38:23,920
opportunities to come there, but
there's a high likelihood that

741
00:38:24,040 --> 00:38:26,160
because you're looking for
something that's super specific,

742
00:38:26,160 --> 00:38:27,960
there's also somebody looking
for that as well.

743
00:38:27,960 --> 00:38:32,160
So you know that that creates
competition and the potential

744
00:38:32,160 --> 00:38:35,880
for, you know, driving higher
prices and that sort of thing.

745
00:38:35,880 --> 00:38:38,320
So I think the best option is
probably trying to find

746
00:38:38,320 --> 00:38:42,160
something off market.
Jeb, As someone who represents

747
00:38:42,160 --> 00:38:43,880
sellers, Steve Park has a
question.

748
00:38:43,880 --> 00:38:48,000
He's heard that cash buyers have
about a $20,000 price advantage

749
00:38:48,000 --> 00:38:50,880
versus loan buyers on $1,000,000
house.

750
00:38:50,880 --> 00:38:53,600
Do your sellers?
Are they willing to give up

751
00:38:53,600 --> 00:38:56,760
$20,000 if someone pays cash for
the home instead of getting a

752
00:38:56,760 --> 00:39:00,440
loan?
No, in fact, we, I've had

753
00:39:00,440 --> 00:39:03,720
multiple cash offers recently on
a couple of different properties

754
00:39:04,000 --> 00:39:08,440
where we also had loans and all
of them we accepted loans over a

755
00:39:08,440 --> 00:39:11,040
cash offer.
Some of the cash offers were

756
00:39:11,040 --> 00:39:14,840
super aggressive thinking they
had some sort of like, you know.

757
00:39:14,840 --> 00:39:16,200
Magic.
It's magic money.

758
00:39:16,520 --> 00:39:20,880
Some, you know, that it did
something that that the other

759
00:39:20,880 --> 00:39:23,480
money wouldn't do.
But what I will say is cash

760
00:39:23,480 --> 00:39:26,360
doesn't, I mean, when does cash
have an advantage?

761
00:39:26,360 --> 00:39:27,400
I think it's the better
question.

762
00:39:27,400 --> 00:39:31,120
Cash has an advantage when the
seller needs a super quick close

763
00:39:31,120 --> 00:39:36,160
for some reason and or there's a
potential issue with maybe an

764
00:39:36,160 --> 00:39:38,560
appraisal where you're thinking
there could be an appraisal

765
00:39:38,560 --> 00:39:40,960
issue.
Outside of that, cash holds no

766
00:39:40,960 --> 00:39:44,160
advantage at all.
It's the same money to the to

767
00:39:44,160 --> 00:39:46,080
the the seller at the end of the
day, right?

768
00:39:46,080 --> 00:39:47,960
They're not getting cash.
They're getting a wire into

769
00:39:47,960 --> 00:39:51,480
their bank account, so.
And think about that, Jeff, what

770
00:39:51,480 --> 00:39:53,880
what you just said is the most
important thing at the close of

771
00:39:53,880 --> 00:39:56,880
escrow.
If you wire money into escrow

772
00:39:56,920 --> 00:39:59,920
and someone else gets a loan and
their lender wires the money

773
00:39:59,920 --> 00:40:02,480
into escrow, the seller doesn't
know the difference.

774
00:40:02,480 --> 00:40:04,880
The money gets wired into their
account all the same.

775
00:40:05,200 --> 00:40:08,160
Right now, I mean, in fact I've
got a cash deal right now where

776
00:40:08,160 --> 00:40:10,000
it's a cash deal consistency
have been released.

777
00:40:10,200 --> 00:40:12,960
We're supposed to close on
Monday and now we're not going

778
00:40:12,960 --> 00:40:15,120
to close on Monday.
And it, it has nothing to do

779
00:40:15,120 --> 00:40:18,400
with the cash.
It has to do with the buyers

780
00:40:18,400 --> 00:40:20,560
being out of the country and
some other things here.

781
00:40:20,560 --> 00:40:23,600
So it's like, just because it's
cash doesn't mean it's a smooth

782
00:40:23,600 --> 00:40:25,760
process.
And it makes the deal that much

783
00:40:25,760 --> 00:40:28,000
easier.
It that you can also have issues

784
00:40:28,000 --> 00:40:31,200
and hiccups even with cash.
So it's important as a real

785
00:40:31,200 --> 00:40:34,560
estate agent that you explain
that or are able to explain that

786
00:40:34,560 --> 00:40:38,320
to a potential seller.
Because in my conversation, like

787
00:40:38,320 --> 00:40:40,520
I've, I've mentioned this many,
many times, it's one of the

788
00:40:40,520 --> 00:40:43,200
things I asked sellers is like,
what's important to you in this

789
00:40:43,200 --> 00:40:45,960
process?
I will tell you 9 times out of

790
00:40:45,960 --> 00:40:50,160
10, it is putting the most money
in my pocket, like getting the

791
00:40:50,160 --> 00:40:54,800
highest price, that that's the,
the, the, the most important

792
00:40:54,800 --> 00:40:56,000
piece.
So if you're cash and you're the

793
00:40:56,000 --> 00:40:59,360
highest price, congratulations.
But if you're cash and thinking

794
00:40:59,360 --> 00:41:02,880
you get some sort of deal, then
in most cases that that's not

795
00:41:02,880 --> 00:41:03,720
going to work.
So.

796
00:41:05,280 --> 00:41:07,840
So I think your theory is
debunked is what I'm saying.

797
00:41:09,640 --> 00:41:12,280
Mean mean boy came back with
some clarification.

798
00:41:12,280 --> 00:41:16,080
I said the house is from home
path so it's is if any May bank

799
00:41:16,080 --> 00:41:17,800
owned property.
The realtor told them that it

800
00:41:17,800 --> 00:41:22,240
needs 25,000 to rehab so I need
to go FHA 203 K.

801
00:41:22,520 --> 00:41:25,880
They're asking 280, but I'm
offering 2:50 to add for the

802
00:41:25,880 --> 00:41:27,600
repairs, but they keep saying
no.

803
00:41:28,120 --> 00:41:30,440
In your experience, Jeb, again,
every market's different.

804
00:41:30,440 --> 00:41:32,000
Fanny may be doing different
things now.

805
00:41:32,240 --> 00:41:35,520
They wouldn't bring a property
to market that needed $25,000 of

806
00:41:35,520 --> 00:41:37,000
repairs.
They would do the minimal

807
00:41:37,000 --> 00:41:40,320
repairs to make it financeable
or a buyer could walk in and

808
00:41:40,320 --> 00:41:42,080
deal with it.
Well, we also have to remember

809
00:41:42,080 --> 00:41:44,840
that was 12 years ago, 13 years
ago, right?

810
00:41:44,840 --> 00:41:47,720
When I was selling those.
The last one I think I sold was

811
00:41:47,720 --> 00:41:50,960
in 2012, maybe 2011, somewhere
in that ballpark.

812
00:41:52,320 --> 00:41:55,240
So back then we would rehab
them, we would make them

813
00:41:55,240 --> 00:41:57,920
financeable.
So there were no issues.

814
00:41:57,920 --> 00:42:02,000
So I is, is the question, it
needs 20 to 20 to $25,000

815
00:42:02,200 --> 00:42:05,680
because cosmetically it sucks
and it just needs that.

816
00:42:05,680 --> 00:42:08,240
Or is it it to, in order to
finance it?

817
00:42:08,240 --> 00:42:12,040
It needs 20 to $25,000 because
that's a two different things.

818
00:42:13,200 --> 00:42:16,080
And, and if Fannie Mae has the
property, my guess is Fannie Mae

819
00:42:16,080 --> 00:42:18,080
will finance it.
I, I've never seen a property

820
00:42:18,080 --> 00:42:20,480
that Fannie Mae has that they
wouldn't finance their

821
00:42:20,640 --> 00:42:23,440
themselves.
So I don't know.

822
00:42:23,440 --> 00:42:27,200
I, I, I think there's probably
some room in that price.

823
00:42:27,200 --> 00:42:31,240
I just can't tell you how much,
but I would say just keep your

824
00:42:31,240 --> 00:42:34,280
eye on it.
And you know, the bank again

825
00:42:34,280 --> 00:42:35,960
isn't in the business of holding
on to property.

826
00:42:35,960 --> 00:42:38,480
So at some point they'll,
they'll understand and, and have

827
00:42:38,480 --> 00:42:40,480
to make an adjustment or someone
will buy it.

828
00:42:40,480 --> 00:42:45,040
One of the two.
All right, young has a question.

829
00:42:45,400 --> 00:42:49,920
Would I have a problem qualify
for a mortgage as AW2 tech

830
00:42:50,160 --> 00:42:52,520
contractor.
I just left my tech job of four

831
00:42:52,520 --> 00:42:56,760
years for a contract to excuse
me to.

832
00:42:59,520 --> 00:43:02,760
Contract to higher role that
pays 20,000 higher role.

833
00:43:03,200 --> 00:43:04,600
So let's just think of it this
way.

834
00:43:04,600 --> 00:43:06,800
Contract to hire equals
temporary.

835
00:43:06,800 --> 00:43:09,160
You are a temp employee.
There you go.

836
00:43:09,200 --> 00:43:11,960
Until you are permanent you are
most likely to have a problem.

837
00:43:11,960 --> 00:43:16,600
The only reason why I say most
likely is if your contract to

838
00:43:16,600 --> 00:43:21,520
hire with the actual company and
your pay stub just shows your

839
00:43:21,520 --> 00:43:25,960
role and your pay rate.
Many loans are many borrowers

840
00:43:25,960 --> 00:43:28,320
who have salary income.
We don't need a verification of

841
00:43:28,320 --> 00:43:32,320
employment.
But what I can say is 90% plus

842
00:43:32,320 --> 00:43:35,200
of the time when we see
something like this, either the

843
00:43:35,200 --> 00:43:40,760
employer name, something on the
the pay stub is a giveaway that

844
00:43:40,760 --> 00:43:42,720
this is not a permanent
position.

845
00:43:43,120 --> 00:43:46,080
So if the underwriter is aware
that this is not a permanent

846
00:43:46,080 --> 00:43:50,240
salaried full time position, you
will need to wait until you have

847
00:43:50,240 --> 00:43:54,040
full time income because one of
the things that an underwriter

848
00:43:54,040 --> 00:43:56,760
needs to determine is
continuance of income and a

849
00:43:56,760 --> 00:43:59,480
contract a higher position.
We don't have a guarantee that

850
00:43:59,480 --> 00:44:02,440
you're going to be getting that
job because if you did have a

851
00:44:02,440 --> 00:44:04,880
guarantee, they would already
make you full time.

852
00:44:04,880 --> 00:44:07,160
Now all.
Right, good stuff.

853
00:44:07,840 --> 00:44:12,960
Question here says, do you feel
like it's more common now than

854
00:44:12,960 --> 00:44:15,680
it was two years ago to get the
seller to pay for closing costs?

855
00:44:15,680 --> 00:44:19,200
We are saving 3% plus closing
costs in the Central Valley.

856
00:44:19,200 --> 00:44:22,200
Yes, I do think it is way more
common now for a seller to pay

857
00:44:22,200 --> 00:44:25,080
concessions than it was, I mean,
hell, even six months ago.

858
00:44:25,400 --> 00:44:27,880
And I think as time goes on,
that's probably going to

859
00:44:27,880 --> 00:44:30,600
increase as long as mortgage
rates stay high.

860
00:44:30,600 --> 00:44:33,800
So this is what a more
traditional market feels like,

861
00:44:33,800 --> 00:44:37,480
guys that, you know, prior to
the pandemic, we, you know, you

862
00:44:37,480 --> 00:44:40,320
could ask a seller to pay for
some closing costs.

863
00:44:40,320 --> 00:44:41,760
You could ask him to give some
credits.

864
00:44:41,760 --> 00:44:45,360
And it wasn't crazy when the
market flipped and sellers had

865
00:44:45,360 --> 00:44:47,200
all the control, that kind of
went out the window.

866
00:44:47,200 --> 00:44:49,960
But now it's back.
And it's, it's something that

867
00:44:49,960 --> 00:44:51,960
we've seen pretty much my entire
career.

868
00:44:51,960 --> 00:44:54,400
It just it it hasn't been quite
as common over the last couple

869
00:44:54,400 --> 00:44:56,560
of years.
Even Jeb, we were talking about

870
00:44:56,560 --> 00:44:58,680
that offer that we put in
yesterday for the buyer in

871
00:44:58,680 --> 00:45:02,640
Texas.
They went in five over asking,

872
00:45:03,080 --> 00:45:06,880
asking for a $5000 credit unit
seems a little off for that

873
00:45:06,880 --> 00:45:08,840
market.
But the price had just been cut

874
00:45:08,840 --> 00:45:13,160
$25,000.
So we're like it went way below

875
00:45:13,160 --> 00:45:15,680
all of it was priced near the
comps and probably wasn't

876
00:45:15,680 --> 00:45:17,120
selling because it was a short
sale.

877
00:45:17,400 --> 00:45:20,320
They went super low.
We need the $5000.

878
00:45:20,320 --> 00:45:22,680
We want the bank to approve that
short sale.

879
00:45:22,920 --> 00:45:26,240
So I I would say that's common.
Most of my first time buyers.

880
00:45:26,240 --> 00:45:28,480
Depending on where you are in
the country, that's 200,000,

881
00:45:28,480 --> 00:45:31,640
that's 400,000, that's 600,000
in Southern California might be

882
00:45:31,640 --> 00:45:35,520
$1,000,000.
But those, those buyers, they're

883
00:45:35,520 --> 00:45:38,480
getting concessions because for
most people they're like you.

884
00:45:38,480 --> 00:45:41,560
Hey, I was able to save up my 3,
three and a half, 5% down

885
00:45:41,760 --> 00:45:44,520
another ten, $20,000 for closing
costs is tough.

886
00:45:44,880 --> 00:45:48,200
So we're getting that.
And what I'm seeing is the

887
00:45:48,200 --> 00:45:53,000
buyers that are buying 1.5 to
$2.5 million properties, in most

888
00:45:53,000 --> 00:45:55,480
instances, there's not a huge
amount of demand for those,

889
00:45:55,480 --> 00:45:57,720
those folks because they
generally have the money, it's a

890
00:45:57,720 --> 00:45:59,720
move up buyer or they've saved
up a bunch of money.

891
00:46:00,000 --> 00:46:02,480
They're negotiating on price.
So whether it's the seller

892
00:46:02,760 --> 00:46:06,360
giving some flexibility on price
or concessions, I would say

893
00:46:06,360 --> 00:46:10,080
7080% of the transactions that
I'm seeing right now absolutely

894
00:46:10,080 --> 00:46:11,600
are getting that.
All right.

895
00:46:11,600 --> 00:46:13,280
Good stuff.
Question from willing.

896
00:46:13,440 --> 00:46:17,000
Would a broken AC pass an
appraisal or come back subject

897
00:46:17,040 --> 00:46:19,560
to SO I think it would pass an
appraisal.

898
00:46:19,560 --> 00:46:23,360
I don't think ACS aren't
mandatory in properties in order

899
00:46:23,360 --> 00:46:27,000
to live.
They're nice to have and

900
00:46:27,000 --> 00:46:29,280
especially if no one knew about
it definitely wouldn't come

901
00:46:29,280 --> 00:46:33,320
back.
But Josh, in any issue with AAC

902
00:46:33,320 --> 00:46:35,880
that doesn't function being an
issue?

903
00:46:36,040 --> 00:46:38,920
The only world that I could see
it, let's say you're in the

904
00:46:38,920 --> 00:46:43,680
market like Phoenix where it's,
it's August and it's 120�� like

905
00:46:43,680 --> 00:46:45,480
you and I, it's easy to say,
hey, that's not a health and

906
00:46:45,480 --> 00:46:48,440
safety issue.
But when they have blackouts and

907
00:46:48,440 --> 00:46:51,480
stuff you hear especially for
older people I I could see

908
00:46:51,480 --> 00:46:54,800
someone asking about it but I
don't think you would you would

909
00:46:54,800 --> 00:46:57,040
have an issue or a problem 9
times out of 10.

910
00:46:57,800 --> 00:47:01,160
All right, guys, if we're
providing any value at all, we

911
00:47:01,160 --> 00:47:03,720
answered your question.
You show up here because you

912
00:47:03,720 --> 00:47:06,560
want to make fun of us.
Either way, do us a favor, hit

913
00:47:06,560 --> 00:47:08,560
the like and subscribe if you
haven't done so already.

914
00:47:09,080 --> 00:47:13,640
Help support the channel and
keeps us motivated to to

915
00:47:14,160 --> 00:47:16,880
enlighten you guys with the real
estate content.

916
00:47:17,160 --> 00:47:20,040
How's that?
All right, let's see.

917
00:47:20,520 --> 00:47:24,200
Mean Boy came back and said they
don't want to repair it because

918
00:47:24,200 --> 00:47:26,440
of Trump's new orders.
They're selling it as is here.

919
00:47:26,600 --> 00:47:28,400
So where are you located?
Where was Mean Boy located?

920
00:47:28,400 --> 00:47:32,120
Puerto Rico.
Puerto Rico, All right, I, I,

921
00:47:32,520 --> 00:47:34,880
that seems crazy to me that
they're basing it off of a

922
00:47:34,880 --> 00:47:37,920
Trump's new orders.
But let's we'll go with it.

923
00:47:38,000 --> 00:47:40,440
We'll go with your your
explanation there.

924
00:47:42,960 --> 00:47:45,480
The thing that I would say
whenever I hear things that just

925
00:47:45,480 --> 00:47:50,440
sound a little off, we have to
talk to your realtor.

926
00:47:50,480 --> 00:47:53,160
I mean, there are a lot of just
shitty Realtors out there and

927
00:47:53,160 --> 00:47:54,920
they don't know what they're
talking about.

928
00:47:54,920 --> 00:47:57,560
That will make up the craziest,
lamest explanations.

929
00:47:57,880 --> 00:48:00,440
So a lot of what you've told us,
again, I don't know, you may be

930
00:48:00,440 --> 00:48:03,840
dealing with the best realtor in
Puerto Rico, but it was based

931
00:48:03,840 --> 00:48:06,240
off of they say it's 25,000 to
repair.

932
00:48:06,480 --> 00:48:08,880
We're not getting countered.
We're not getting an offer

933
00:48:08,880 --> 00:48:11,440
accepted and they're telling us
it's because of Trump's orders.

934
00:48:11,560 --> 00:48:13,720
When I hear that my crazy alarms
are going off.

935
00:48:13,720 --> 00:48:18,120
So doesn't mean I'm right, but I
would, I would be, I would be

936
00:48:18,120 --> 00:48:22,000
wary that you are.
It's like talking through a can,

937
00:48:22,000 --> 00:48:23,000
right?
You're not talking to the

938
00:48:23,000 --> 00:48:25,680
seller, you're not talking to
Fannie Mae, you're talking to

939
00:48:25,680 --> 00:48:29,160
your agent and you are relying
on the fact that they're getting

940
00:48:29,160 --> 00:48:31,080
you accurate information.
And I'm telling you, there's

941
00:48:31,080 --> 00:48:32,600
some things there that sound a
little off.

942
00:48:33,560 --> 00:48:36,840
All right, Cesar has a question
for you, Josh.

943
00:48:36,880 --> 00:48:39,960
And in fact, we answered this
question in next week's episode

944
00:48:39,960 --> 00:48:43,800
that comes out on Monday where
we talk about red flags in the

945
00:48:43,800 --> 00:48:45,680
housing market.
In fact, Josh and I don't

946
00:48:45,680 --> 00:48:49,000
necessarily agree on where home
prices are going.

947
00:48:49,920 --> 00:48:53,680
So Josh, the question is, do you
think home prices will go down?

948
00:48:53,840 --> 00:48:55,760
And maybe we shouldn't even
answer the question because

949
00:48:55,920 --> 00:49:00,320
again, we don't agree on this.
We did an entire episode on it

950
00:49:00,520 --> 00:49:02,840
comes out Monday.
I would say Caesar, check the

951
00:49:02,840 --> 00:49:05,640
episode on Monday, the podcast
and listen to it.

952
00:49:06,200 --> 00:49:08,600
We have a different just because
it's neither of us think the

953
00:49:08,600 --> 00:49:10,800
housing market's going to crash,
but we do have a difference in

954
00:49:10,840 --> 00:49:12,440
opinion on where prices are
going.

955
00:49:12,720 --> 00:49:15,640
And it's, it's a 20 minute
explanation versus US buzzing

956
00:49:15,640 --> 00:49:18,040
through in two or three minutes.
It would be short and pithy and

957
00:49:18,040 --> 00:49:20,520
you would be like, thanks, I
don't really feel enlightened.

958
00:49:20,520 --> 00:49:22,240
But 20 minutes, we can enlighten
you.

959
00:49:22,800 --> 00:49:25,840
There you go.
All right, all world

960
00:49:25,840 --> 00:49:28,120
construction.
I'm in the construction field

961
00:49:28,120 --> 00:49:31,160
and I'm wondering if the big
beautiful bill will help me make

962
00:49:31,160 --> 00:49:34,600
more money, especially with
immigration situation out here

963
00:49:34,600 --> 00:49:37,520
in Southern California.
What do you guys think?

964
00:49:37,520 --> 00:49:39,880
So is it going to help you make
more money?

965
00:49:39,880 --> 00:49:42,880
So in construction world, what
do you need to make more money?

966
00:49:42,880 --> 00:49:45,240
You need people wanting to do
construction.

967
00:49:45,920 --> 00:49:49,840
In my experience, I will tell
you I am surprised every time I

968
00:49:49,840 --> 00:49:51,920
go out with how much
construction is being done all

969
00:49:51,920 --> 00:49:54,720
the time.
Like every house has something

970
00:49:54,720 --> 00:49:56,520
going on.
So seems like you guys are all

971
00:49:56,520 --> 00:50:00,600
doing fairly well in general.
But like what fuels

972
00:50:00,600 --> 00:50:02,880
construction?
Lower rates, right, people, more

973
00:50:02,880 --> 00:50:07,200
expendable income people having,
you know, money to to throw

974
00:50:07,200 --> 00:50:09,880
around.
So interest rates staying higher

975
00:50:10,080 --> 00:50:13,120
impacts you a little bit more so
on that side.

976
00:50:13,120 --> 00:50:16,160
But if interest rates could come
down, that could allow people to

977
00:50:16,160 --> 00:50:18,880
do cash out refinances, do a
couple of different things to

978
00:50:18,880 --> 00:50:22,240
free up some, some, some cash
for, for buildable and

979
00:50:22,240 --> 00:50:23,640
construction and that sort of
thing.

980
00:50:23,720 --> 00:50:26,720
But when it comes to the big
beautiful bill, Josh, there's

981
00:50:26,720 --> 00:50:30,480
nothing directly related in
there that I think personally, I

982
00:50:30,480 --> 00:50:33,520
mean, I may be missing something
here that that benefits you so

983
00:50:33,520 --> 00:50:36,120
much on that side outside of
some of the tax benefits that

984
00:50:36,120 --> 00:50:41,400
you could get as a, as a
potential self-employed, you

985
00:50:41,400 --> 00:50:43,440
know, business.
Owner, We've talked about this

986
00:50:43,440 --> 00:50:46,680
before, like with the
immigration situation.

987
00:50:47,000 --> 00:50:49,560
What were we saying?
People were saying, well, home

988
00:50:49,560 --> 00:50:51,560
presses are going to go through
the roof because all these homes

989
00:50:51,560 --> 00:50:53,440
are getting built by illegal
aliens.

990
00:50:53,440 --> 00:50:56,200
And you're like, really?
I don't think big national

991
00:50:56,200 --> 00:50:59,000
builders are are taking those
types of risks and they're not

992
00:50:59,000 --> 00:51:00,760
letting their subcontractors
take that risk.

993
00:51:00,760 --> 00:51:03,240
But we have talked about it that
for us here in Southern

994
00:51:03,240 --> 00:51:07,880
California, many of the skilled
contractors are undocumented.

995
00:51:08,200 --> 00:51:11,160
So from that standpoint, many of
them aren't taking jobs.

996
00:51:11,400 --> 00:51:12,840
Yeah.
I mean, this sounds dumb to

997
00:51:12,840 --> 00:51:15,040
compare this because it's not
exactly the same thing.

998
00:51:15,040 --> 00:51:16,720
But you got some odd jobs at
your house.

999
00:51:16,720 --> 00:51:18,360
You can't go to Home Depot
anymore.

1000
00:51:18,360 --> 00:51:20,960
Those dudes are like, I ain't
hanging out at Home Depot ICE.

1001
00:51:21,080 --> 00:51:23,120
Comes to home.
My wife went to Home Depot

1002
00:51:23,120 --> 00:51:24,760
yesterday.
She said there were no people in

1003
00:51:24,760 --> 00:51:27,400
the parking.
Which is shocking, like in in

1004
00:51:27,440 --> 00:51:30,200
1520 years, like you, you need
some work done around your

1005
00:51:30,200 --> 00:51:30,960
house.
You need help.

1006
00:51:31,120 --> 00:51:34,000
I can't do it myself.
We would roll, roll down to to

1007
00:51:34,000 --> 00:51:35,760
Home Depot, get as many guys as
you need.

1008
00:51:36,000 --> 00:51:38,080
And sometimes it's just pure
brute force labor.

1009
00:51:38,240 --> 00:51:41,360
Some of those guys actually knew
you would have to talk about it.

1010
00:51:41,360 --> 00:51:43,440
But all I'm saying is definitely
harder.

1011
00:51:43,440 --> 00:51:48,080
So do I think the local kitchen
and bath renovator who he's here

1012
00:51:48,160 --> 00:51:52,120
documented and is a citizen or
or here legally, could he have a

1013
00:51:52,120 --> 00:51:54,920
couple of guys that he knows and
trusts that are really good that

1014
00:51:54,920 --> 00:51:56,240
work?
Absolutely.

1015
00:51:56,480 --> 00:52:00,880
So the demand for those services
is low because of the things

1016
00:52:00,880 --> 00:52:03,040
that Jeb was talking about, low
disposable income.

1017
00:52:03,040 --> 00:52:04,760
The economy is not doing great,
rates are high.

1018
00:52:04,760 --> 00:52:07,440
People aren't doing cash out
refinances to pay for a new

1019
00:52:07,440 --> 00:52:10,040
kitchen or bath.
But if there's less of those

1020
00:52:10,040 --> 00:52:12,840
people doing the jobs, it could
be great for you from that

1021
00:52:12,840 --> 00:52:15,600
perspective.
I don't know that anything in

1022
00:52:15,600 --> 00:52:20,120
this budget bill is is short
term positive for real estate

1023
00:52:20,120 --> 00:52:23,960
mortgage contracting, but in
your situation, if there's less

1024
00:52:23,960 --> 00:52:27,480
competition, less skilled labor,
the cost for that labor goes up.

1025
00:52:28,080 --> 00:52:29,600
Agreed.
Mike.

1026
00:52:30,120 --> 00:52:34,440
Does short sell take longer to
close due to both parties having

1027
00:52:34,440 --> 00:52:36,840
to make a deal?
And the answer is typically yes,

1028
00:52:36,840 --> 00:52:39,200
Yeah, it.
I mean, I bought the house that

1029
00:52:39,200 --> 00:52:42,040
I bought in 2012.
That particular property took

1030
00:52:42,040 --> 00:52:43,720
about six months to get the
short sale done.

1031
00:52:44,960 --> 00:52:47,840
You know, depends on where that
person is in the process.

1032
00:52:47,840 --> 00:52:50,280
Typically you can't start the
short sale process till you have

1033
00:52:50,280 --> 00:52:52,760
a qualified buyer willing to
make an offer.

1034
00:52:53,800 --> 00:52:57,640
That's when the process kind of
really starts and then it kind

1035
00:52:57,640 --> 00:53:00,920
of goes through the channel.
So it's probably not six months

1036
00:53:00,920 --> 00:53:04,040
today, but it's I would
guarantee you it's more than 30.

1037
00:53:04,320 --> 00:53:05,920
I just don't know what that time
frame looks like.

1038
00:53:07,560 --> 00:53:11,560
All right, let's just go back
and briefly touch on this, Jeb.

1039
00:53:11,560 --> 00:53:14,120
So Paulman is I'm hoping for low
fives by the end of the year.

1040
00:53:14,120 --> 00:53:16,040
So let's just say is it
impossible?

1041
00:53:16,160 --> 00:53:18,760
It's not impossible, but let's
say what would have to happen.

1042
00:53:19,360 --> 00:53:24,640
We're at 6.8756.75 for the best
qualified borrowers right now,

1043
00:53:24,640 --> 00:53:27,280
today.
So to go down a percent and a

1044
00:53:27,280 --> 00:53:32,440
half, the lowest that we've hit
is about 5.75 S high fives in

1045
00:53:32,440 --> 00:53:35,480
the last so since mid 2022 in
the last three years.

1046
00:53:36,000 --> 00:53:39,160
So we would have to have the
lowest rates in over three

1047
00:53:39,160 --> 00:53:40,960
years.
You would have to have a 10 year

1048
00:53:40,960 --> 00:53:44,040
treasury under 3%.
We've hit massive hard

1049
00:53:44,040 --> 00:53:46,240
resistance every time it's hit
3.6.

1050
00:53:46,440 --> 00:53:49,360
We have to go all the way to 3%
and you would have to have the

1051
00:53:49,360 --> 00:53:51,760
margins compressed which Jeb
showed the chart of the margins,

1052
00:53:51,760 --> 00:53:55,240
top of the show margin between
10 year treasury and a 30 year

1053
00:53:55,240 --> 00:53:57,960
fixed would have to get down to
about two, two and a quarter.

1054
00:53:58,200 --> 00:54:01,400
So you'd have to see margin
compression there of 1/4 percent

1055
00:54:01,560 --> 00:54:05,400
and you'd have to have 140 basis
point drop in the 10 year.

1056
00:54:05,600 --> 00:54:08,920
It is highly unlikely, not
impossible, You would have to

1057
00:54:08,920 --> 00:54:11,680
see a serious weakening in the
economy to see continued

1058
00:54:11,680 --> 00:54:14,200
decreases in inflation.
We saw that Trueflation is

1059
00:54:14,200 --> 00:54:16,840
telling us that inflation is
still trending down despite the

1060
00:54:16,840 --> 00:54:18,600
tariffs positive for interest
rates.

1061
00:54:18,600 --> 00:54:20,520
Good for your hope for a lower
interest rate.

1062
00:54:20,760 --> 00:54:22,640
But we also looked at last
week's jobs data.

1063
00:54:22,800 --> 00:54:26,560
We're not seeing an increase in
unemployment, a decrease in

1064
00:54:26,560 --> 00:54:28,720
jobs.
And last week on the show, we

1065
00:54:28,720 --> 00:54:31,240
showed the chart that shows what
is replacement level for jobs.

1066
00:54:31,240 --> 00:54:34,160
How many jobs do we need to
create each month for

1067
00:54:34,160 --> 00:54:37,600
unemployment to stay level, to
not get worse, to not go down?

1068
00:54:37,880 --> 00:54:41,320
And it's only, according to some
people's educated calculations,

1069
00:54:41,320 --> 00:54:44,640
like 86,000 jobs, we created 140
last month.

1070
00:54:45,000 --> 00:54:49,160
So without both of those things
happen, inflation moderating and

1071
00:54:49,160 --> 00:54:52,160
the jobs market getting worse,
you are not going to see rates

1072
00:54:52,160 --> 00:54:53,960
in the low fives.
Could it happen?

1073
00:54:53,960 --> 00:54:55,880
It could, but both of those
things are going to have to

1074
00:54:55,880 --> 00:54:59,600
happen to see it.
There you go, Jay Castle says.

1075
00:54:59,600 --> 00:55:05,480
How do or where do loan officers
pull credit rates, credit

1076
00:55:05,480 --> 00:55:08,760
reports basically saying that
he's between 6:10 and 660 with

1077
00:55:08,760 --> 00:55:11,800
three bureaus, but they're
telling him he's closer to 580.

1078
00:55:11,800 --> 00:55:16,480
So Josh, you're using a FICO
model that is basically pulled

1079
00:55:16,480 --> 00:55:20,520
through the mortgage world.
It's it's FICO, but we talked at

1080
00:55:20,520 --> 00:55:23,520
the top of the show that Vantage
is going to be coming out here

1081
00:55:23,520 --> 00:55:27,480
within the next probably 12
months or so, which could help

1082
00:55:28,120 --> 00:55:30,200
on that front.
But I don't know how do you want

1083
00:55:30,200 --> 00:55:32,640
to answer that.
So for a mortgage, you have to

1084
00:55:32,640 --> 00:55:37,480
pull all three bureaus, Trans
Union, Equifax, Experian, each

1085
00:55:37,480 --> 00:55:39,520
one of them has slightly
different information about you,

1086
00:55:39,520 --> 00:55:40,960
which is why they have different
scores.

1087
00:55:41,360 --> 00:55:44,920
They each use a very, very
similar FICO model on the data

1088
00:55:44,920 --> 00:55:49,560
that they have in their record.
When you say that your, I have

1089
00:55:49,560 --> 00:55:53,040
between 6:10 and 660, it tells
me you're using Credit Karma,

1090
00:55:53,680 --> 00:55:57,080
one of these other models, and
they are using Vantage scores.

1091
00:55:57,080 --> 00:56:00,960
Vantage scores skew higher and
the lower your credit score, the

1092
00:56:00,960 --> 00:56:03,680
more it skews high.
So if people are pulling it and

1093
00:56:03,680 --> 00:56:08,120
it's 580, it's 580.
So that six 10620 on Credit

1094
00:56:08,120 --> 00:56:11,200
Karma is, is worthless.
If you're looking at your credit

1095
00:56:11,200 --> 00:56:14,840
card and it says hey, your
scores are 622 and it'll say

1096
00:56:14,840 --> 00:56:17,360
Vantage score on there.
If you want to track, if you

1097
00:56:17,360 --> 00:56:21,200
want to monitor at home, to my
knowledge, myfico.com is the

1098
00:56:21,200 --> 00:56:24,520
only one that will give you the
actual mortgage models and

1099
00:56:24,520 --> 00:56:27,120
they're like 40 bucks a month.
So it's more expensive than the

1100
00:56:27,120 --> 00:56:29,800
others because that data is more
expensive for them to get.

1101
00:56:30,040 --> 00:56:33,480
And they will actually give you
the models that you're going to

1102
00:56:33,480 --> 00:56:35,920
be seeing when you go talk to
someone like me.

1103
00:56:37,000 --> 00:56:38,360
Yeah, I would say save your
money.

1104
00:56:38,360 --> 00:56:40,720
You don't need to see that.
Just, you know, talk to

1105
00:56:40,720 --> 00:56:42,720
somebody, have them run.
Your How in the world are you?

1106
00:56:42,840 --> 00:56:44,520
You just say hey, get in your
car and drive.

1107
00:56:44,520 --> 00:56:47,200
Hope you get where you're going.
If you're not monitoring it, you

1108
00:56:47,200 --> 00:56:49,000
don't have any hope of getting
where you.

1109
00:56:49,080 --> 00:56:52,000
Get your get your credit report,
figure out what you need to work

1110
00:56:52,000 --> 00:56:54,080
on, work on it, and then have it
pulled at some point.

1111
00:56:54,080 --> 00:56:56,280
I don't know I would I.
Would people that are capable of

1112
00:56:56,280 --> 00:56:58,400
doing that Jeb don't have 580
credit scores?

1113
00:56:58,400 --> 00:57:00,000
Well, they probably.
Don't have 40 bucks a month

1114
00:57:00,040 --> 00:57:00,360
either.
Well.

1115
00:57:01,040 --> 00:57:03,200
If you don't have 40 bucks, why
are we trying to buy a house?

1116
00:57:03,560 --> 00:57:06,360
Well, that's fair.
So I, I don't know.

1117
00:57:06,360 --> 00:57:08,440
I, I just, I would.
Yeah, I don't know.

1118
00:57:08,520 --> 00:57:11,920
I, I see how people spend a lot
of money on credit reporting and

1119
00:57:11,920 --> 00:57:13,400
keeping up to date on that sort
of thing.

1120
00:57:13,400 --> 00:57:15,640
And I don't know, I don't see
the value in it, maybe because

1121
00:57:15,640 --> 00:57:18,440
my credit's not bad.
But anyhow, just me.

1122
00:57:19,880 --> 00:57:22,120
It's that time, Josh.
It's that time to answer another

1123
00:57:22,120 --> 00:57:23,600
question, and I don't really see
one.

1124
00:57:24,520 --> 00:57:26,800
Victor has a comment here, so
let's just throw Victor's

1125
00:57:26,800 --> 00:57:28,920
comment up and we'll end it on
this one unless someone comes

1126
00:57:28,920 --> 00:57:30,720
up.
Well, of course someone falls

1127
00:57:30,720 --> 00:57:33,040
with a good question of that,
but Victor says, I know older

1128
00:57:33,040 --> 00:57:35,560
people complain that they used
to pay 10 to 15% interest back

1129
00:57:35,560 --> 00:57:37,280
in the day, but I feel like
homes were nowhere near the

1130
00:57:37,280 --> 00:57:39,480
price of today's homes.
Homes are two to three times

1131
00:57:39,480 --> 00:57:42,720
more expensive today in real
terms, 100%.

1132
00:57:42,720 --> 00:57:45,760
They're actually like 10 to 15
times more expensive.

1133
00:57:45,920 --> 00:57:49,280
If you say the median priced
home in 1982 when rates were 18%

1134
00:57:49,280 --> 00:57:52,840
was like $80,000.
The medians for I guess he's

1135
00:57:52,840 --> 00:57:54,440
right.
I was thinking California prices

1136
00:57:54,600 --> 00:57:57,680
400,000 so it's 5/5 times more
expensive.

1137
00:57:58,160 --> 00:57:59,880
But if you look at
affordability, affordability

1138
00:57:59,880 --> 00:58:02,240
today is very similar to where
it was in 1982.

1139
00:58:02,440 --> 00:58:06,560
The biggest difference is we
could come down from 18%

1140
00:58:06,560 --> 00:58:11,200
interest rates fairly quickly
and easily. 6% to 4% doesn't

1141
00:58:11,200 --> 00:58:14,360
increase affordability a ton and
for all the reasons we talked

1142
00:58:14,360 --> 00:58:15,760
about a million times here on
the show.

1143
00:58:16,000 --> 00:58:19,440
Unlikely to see a major
correction in home prices from

1144
00:58:19,440 --> 00:58:22,400
where they're at due to the
nested equity that everyone has

1145
00:58:22,400 --> 00:58:23,920
and the ultra low interest
rates.

1146
00:58:24,120 --> 00:58:25,400
Yeah, I mean, another reason,
right?

1147
00:58:25,720 --> 00:58:29,240
You know, talk about how, how
did home prices get so much

1148
00:58:29,240 --> 00:58:31,120
ahead of where they were wages
of increase?

1149
00:58:31,120 --> 00:58:33,720
Like there's different things
inflation, there are different

1150
00:58:33,720 --> 00:58:35,040
things that are factored in
there as well.

1151
00:58:35,040 --> 00:58:38,080
It's not just home prices
increasing that much and

1152
00:58:38,080 --> 00:58:41,520
affordability just skyrocketing.
There's things that play into

1153
00:58:41,520 --> 00:58:45,160
that affordability piece and
interest rates can help it, but

1154
00:58:45,520 --> 00:58:48,360
home prices aren't likely to, to
move substantially.

1155
00:58:48,360 --> 00:58:50,720
I, I saw a chart, Josh, I wish
I'd always saved it.

1156
00:58:50,720 --> 00:58:52,880
And I see it occasionally and I
never do it.

1157
00:58:52,880 --> 00:58:56,520
And it, it always talks about
where prices would need to go,

1158
00:58:56,520 --> 00:58:59,960
rates would need to go and wages
would need to go in order to get

1159
00:58:59,960 --> 00:59:03,360
back to the affordability levels
that we saw in like 21.

1160
00:59:03,600 --> 00:59:05,520
And it's just like the numbers
are crazy.

1161
00:59:05,560 --> 00:59:08,760
It's like, you know, home prices
would need to drop by 50%.

1162
00:59:08,960 --> 00:59:11,240
Interest rates would need to
drop by. 4.

1163
00:59:11,240 --> 00:59:13,120
Percent.
It's like it's like crazy.

1164
00:59:13,560 --> 00:59:15,400
Anyhow, there's one more
question here that I'd like to

1165
00:59:15,520 --> 00:59:18,000
to answer here and I've been
talking a lot about it recently

1166
00:59:18,000 --> 00:59:19,720
and that's what is an assumable
mortgage.

1167
00:59:19,880 --> 00:59:25,320
So an assumable mortgage is a
mortgage that the bank has said

1168
00:59:25,320 --> 00:59:29,720
that someone else can take over.
FHA allows assumable mortgages,

1169
00:59:29,760 --> 00:59:33,880
VA allows assumable mortgages.
Some adjustable rates have

1170
00:59:34,080 --> 00:59:36,800
assumable mortgages, but
primarily FHA and VA.

1171
00:59:37,040 --> 00:59:40,880
And what it does is it says, hey
listen, if you can qualify for

1172
00:59:40,880 --> 00:59:43,960
this mortgage, then you can
essentially take it over.

1173
00:59:44,520 --> 00:59:47,920
The problem is you've got to
come up with the difference

1174
00:59:47,920 --> 00:59:50,680
between the balance of what that
person owes on the home

1175
00:59:50,680 --> 00:59:53,200
currently and the list price of
that property.

1176
00:59:53,480 --> 00:59:56,600
An example, I have a property in
Aliso Viejo.

1177
00:59:56,600 --> 01:00:00,200
The list price on that home is
$1,035,000.

1178
01:00:00,640 --> 01:00:06,960
The the seller has a $550,000 VA
assumable mortgage.

1179
01:00:07,160 --> 01:00:11,480
So at at 2.75% by the way
payments like 2400 bucks a

1180
01:00:11,480 --> 01:00:13,680
month.
If you wanted to assume that

1181
01:00:13,680 --> 01:00:17,040
property, that mortgage and take
it over, you could assuming you

1182
01:00:17,040 --> 01:00:19,760
qualified.
But here's the caveat.

1183
01:00:19,920 --> 01:00:24,760
You would need to bring in
$485,000 in cash and keep the

1184
01:00:24,760 --> 01:00:28,960
first mortgage or you would have
to get a second mortgage behind

1185
01:00:28,960 --> 01:00:32,120
that first mortgage.
And Carrington, the the servicer

1186
01:00:32,120 --> 01:00:34,440
on the first says, hey, listen,
we will allow you to do a

1187
01:00:34,440 --> 01:00:37,520
second, but you've got to have
at least 20% down of your own

1188
01:00:37,520 --> 01:00:39,920
funds.
So now you got a 550.

1189
01:00:40,040 --> 01:00:42,680
I don't know that the servicer
can can layer on.

1190
01:00:42,680 --> 01:00:45,960
Guidelines like that, that's
that's according to them, that's

1191
01:00:45,960 --> 01:00:49,480
what they've said and we've.
FHA has a servicing handbook.

1192
01:00:49,520 --> 01:00:53,520
And that came from Jet GPT.
I would, I would love to to look

1193
01:00:53,520 --> 01:00:54,960
at it.
Here's a flip side, Jeb, I got a

1194
01:00:54,960 --> 01:00:57,400
crazy one.
Freddie, long time listener to

1195
01:00:57,400 --> 01:00:59,160
the show here that helped during
COVID.

1196
01:00:59,520 --> 01:01:01,440
One of the best success stories
we've ever had.

1197
01:01:01,600 --> 01:01:03,040
He's going to be getting
married.

1198
01:01:03,040 --> 01:01:05,080
They're looking to buy a bigger
home together to start their

1199
01:01:05,080 --> 01:01:06,800
family.
And he reaches out last week.

1200
01:01:06,800 --> 01:01:08,720
He goes, hey, what do you know
about the sumable loans?

1201
01:01:08,720 --> 01:01:10,440
We're looking at this house.
We really like it.

1202
01:01:10,760 --> 01:01:13,800
It has an FHA loan that can be
assumed.

1203
01:01:13,800 --> 01:01:16,720
And I look at it and like it's
789,000, they're asking like

1204
01:01:16,720 --> 01:01:18,360
850.
They were putting 20% down

1205
01:01:18,360 --> 01:01:20,640
anyway, so it worked because
they're going to put 20% down

1206
01:01:21,040 --> 01:01:25,800
and look at it FHA at 5.75%.
And I'm like, that's not really

1207
01:01:25,880 --> 01:01:27,920
beneficial for you.
Like once you factor in the

1208
01:01:27,920 --> 01:01:29,960
mortgage insurance, the
conventional loan you're getting

1209
01:01:29,960 --> 01:01:33,320
is a very similar interest rate.
So to go through, jump through

1210
01:01:33,320 --> 01:01:35,840
the hoops of, of getting
approved in July and drag this

1211
01:01:35,840 --> 01:01:37,280
out.
So it was interesting.

1212
01:01:37,280 --> 01:01:40,080
I haven't seen a whole lot of
people bragging about their

1213
01:01:40,080 --> 01:01:44,320
assumable 5.75, but from their
perspective they're like what's

1214
01:01:44,320 --> 01:01:47,600
lower than the current rates and
someone could possibly have that

1215
01:01:47,720 --> 01:01:49,560
size of a down payment.
Sure.

1216
01:01:49,560 --> 01:01:52,240
Now they're they're great
opportunities when it's the

1217
01:01:52,240 --> 01:01:54,640
property that you wanted and you
have the money to make up the

1218
01:01:54,640 --> 01:01:57,120
balance because it makes sense
if you have to get a second

1219
01:01:57,120 --> 01:01:59,920
mortgage once you start doing a
blended rate because of where

1220
01:01:59,920 --> 01:02:02,160
the second rate would be, the
rate would be on that second

1221
01:02:02,160 --> 01:02:05,880
mortgage.
It's not nearly as enticing as

1222
01:02:05,880 --> 01:02:08,560
it was when you were just
looking at that 2.75%.

1223
01:02:08,560 --> 01:02:11,560
So with that said guys, I hope
you found some value tonight.

1224
01:02:11,560 --> 01:02:13,360
If you haven't done so already,
make sure you hit the like and

1225
01:02:13,360 --> 01:02:15,560
subscribe.
Go check out the episode we did

1226
01:02:15,560 --> 01:02:17,520
on Trump not understanding
mortgage rates.

1227
01:02:17,520 --> 01:02:19,160
It's on the Educated Homebuyer
channel.

1228
01:02:19,880 --> 01:02:22,000
But until next week, make sure
you buy right, borrow smart, and

1229
01:02:22,000 --> 01:02:23,120
build wealth.
Adios.

1230
01:02:23,480 --> 01:02:25,440
Amigos.
Thanks for listening to The

1231
01:02:25,440 --> 01:02:28,760
Educated Homebuyer.
Want to connect with us or to a

1232
01:02:28,760 --> 01:02:31,800
local expert in your area?
Please reach out at the

1233
01:02:31,840 --> 01:02:36,680
educatedhomebuyer.com/expert if
you found any value today.

1234
01:02:36,920 --> 01:02:39,200
Please be sure to rate and
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1235
01:02:39,200 --> 01:02:41,920
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1236
01:02:41,920 --> 01:02:45,320
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1237
01:02:45,320 --> 01:02:47,160
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1238
01:02:47,480 --> 01:02:48,680
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