March 2020 Real Estate Update With Coronavirus & Uncertain Times Ahead with CEO Steve Rider

Stephanie Lindamood: (00:00)
Hey guys, it's Stephanie. Thank you for tuning into the glam life of real estate podcast. Today's bonus episode was a little bit unexpected, quite frankly, we've seen a lot of change here in the last few weeks. If you're listening at a later date, this is March, 2020 we do have the election this year, which we've been mindful of in our market of real estate, but we've also got another thing that's come up. We've got the coronavirus and that has been disrupting some things from a travel going out, um, grocery stores, schools or canceling school for about two more weeks after spring break just to try to help the spread of the virus. And so there's a lot of fear. There's a lot of questions, there's a lot of uncertainty. And what I wanted to do was try to bring some information to you guys. I've got an expert on that's going to really help us walk through what's going on, what we've seen in the past, drawing some parallels and just giving some good sound advice.

Speaker 1: (00:53)
Because, you know, a lot of times it's just getting through the fear, it's getting some good education on what's going on and how to handle it. So I do have C writer on the call here in a second. He is the CEO of the writer elite group out of Phoenix, Arizona. They're the number two team with Keller Williams and Steve, my business partner and I do work closely and hand in hand. So I wanted to have him on to share his experience and also to recap a conversation that Gary Keller just aired for the KW team and just kind of give his thoughts and insight on some things regarding the real estate market and the industry as a whole. So stay tuned for that. Um, again guys, this is to be helpful. This isn't to, you know, fearmonger or to try to spread any doubt or fear in the marketplace. I just thought it'd be good to have some acknowledgement of what's going on, but then also some benefits and some things that you, silver linings that we're not thinking of. So stay tuned and we're going to get to the show with Steve.

Speaker 2: (01:55)
You're listening to the glam life of real estate podcast where we talk about everything from productivity tips, social media strategies, business hacks, and more to get ahead of the curve and crush it as a real estate sales professional. Whether you office out of a model home or your car where leopard print and high heels never go out of style. Here's your host, top producing real estate agent, social media strategist, and for baby mama Stephanie Linda mood.

Speaker 1: (02:27)
All right guys. So today we are here on the podcast. Thanks for joining us. I've got Steve rider with me and Steve's been on the showed before, but we wanted to get back together with just all the change that we've had here in the last few weeks. Talk about the real estate market, talk about what we're seeing with interest rates. Give you guys some advice, whether you're looking to buy or sell yourself, whether you're a real estate agent or new home sales professional in the market. Just to kind of bring some news your way from our perspective. Um, we just had a, uh, recap call with Gary where he went through some information and Steve's going to break it down for us. So Steve, thanks for being on the call today at short notice and welcome and kind of kick it off by telling us what you thought of Gary's recap today.

Steve Rider: (03:10)
Oh, thank you for having me. Boy, I tell you, there's no better time to actually get together, create a little camaraderie, calm the fear, and let people know what's truly going on. And I think Gary did an excellent job on his recap. Uh, the nice thing about Gary is Gary and I have both been in the business about 42 years. He's 62. I'm 61. We got in the market at the same time. We've both experienced four years, uh, four and downs. So I'm more than happy to recap that for you today, Stephanie, and let you know truly what's going on to the best of my ability.

Speaker 1: (03:48)
Awesome. So we've got two groups of people that we want to talk about today in addition to some other things. We've got buyers, we've got sellers that are looking to either get in the market, if they're already under contract, trying to figure out if they should proceed. What are your thoughts on that? And um, just talk to the people out there that we're looking to buy or sell a property this year.

Speaker 3: (04:09)
Perfect. So, um, one of the things that Gary says is, uh, when's a good time to buy? An answer's always when's a good time to sell? The answer's always because the markets are cyclical. They're either going up or they're going down. And so if the market is going down and you're selling a $300,000 house, it goes down by 10%, that's 30 grand. But if you're moving up to a $400,000 house and it goes down by 10%, it dropped by 40 grand. So you actually make money even in a downmarket. And the same thing works in reverse. So, um, if you're a buyer and you're buying a new home or a seller that needs to sell your old home and then buy a new home now is absolutely the best time to buy. And let me give you three specific reasons. Number one is the interest rates have never been better in the history of the United States and with this stimulus, we're only going to stimulate the economy better. So just in the last six to seven months, we've gone from 4.75 to at least three and a quarter, and you may see 2.75 with that type of a dip, one and a half to 2% your purchasing power has gone up by anywhere from 80 to $100,000 Holy cow. Yeah. So if you were looking six months ago or a year ago when you were looking at a $400,000 house, you can now qualify for a $500,000 house.

Speaker 1: (05:45)
That's great. And what I tell him, I've been telling my sellers the last few weeks is the benefit is as rates have gotten lower. If I'm pricing a home, let's say at 300,000 right? The sellers don't have the pockets to come down like a builder would and just reduce the house by 30 grand to get it sold. With rates coming down, it's allowing us to get in front of a new group of people that maybe they were only approved up to two 50 now they can totally afford that $300,000 home. So I think that's a positive for sellers from the standpoint of, I think a lot of this have [inaudible] in our minds of is this another Oh eight and I love for you to give us your feedback on once you go to the other two items here on the three reasons of why to buy now or sell now. Um, how this looks like a weight or if it does or doesn't see you, because I think that's what is most in people's mind is are we going to have the same kind of issue with real estate that we did back then? But I'll, we'll get to that in a second. Let's get to your second point on. Um, why is a great time to buy herself?

Speaker 3: (06:43)
Okay. So another reason, and this all is going to interact back to Oh eight, because history always repeats itself. So if you're a student of history, you'll absolutely have a handle on what's going on. So let's talk about between Oh seven to 2010 it was about a three year turn down and new homes actually where the safe Harbor, if you're a ship in a storm, always the best thing to do is pull into a Harbor. Where can you find calm waters? Ride out the storm. A storm in a recession is 18 months to three years. I say 18 months because this is very similar to nine 11 only time in the history of the United States where we stopped aviation stop flights for almost 10 days. We're thinking about doing it now and people are freaking out. But we did it in two families in one.

Speaker 3: (07:40)
So this has happened before and short term, uh, panic or fear is typically 18 months and longterm economic downfalls are about three years. So, so whether this is a three year or an 18 month turndown, we're still in the safe Harbor. If you're buying a new home, new homes in the peak of the crisis only dropped by about 25% in value. Resale homes dropped, at least 50% reason being is new homes have to be built so you have a lag time, you have construction costs, do you have permit costs? You have things that builders can't change, so they don't raise prices and they may give some incentives away in the downturn, but they don't drop their prices very often. And more importantly, when people buy a new home, they put in real upgrades. They put in landscaping, they put in window coverings, they completely do everything that the new home needs.

Speaker 3: (08:49)
That raises the value. So the new home becomes a safe Harbor and you're in an energy efficient home in the long run, and we'll talk about this next, when there's a downturn, you need to go to a budget, you need to be brutal with your budget or hundred dollars a month is just moving into a new home. That's the savings monthly with your total housing costs with electric and water and sewer and trash. That one thing, and then maybe cut cable from two 50 down to 50 and go with Hulu and live streaming. All of a sudden you're saving six to $700 a month. That's over $10,000 a year with those two simple cutbacks. So there's never been a better time to buy a new home than right now.

Speaker 1: (09:50)
So when we look at Oh eight how do you think this is different? Because I remember back in a way, I mean it was hard to sell. Sellers were under water. Is that going to potentially happen? And let's, let's roll it back a little bit to one thing that Gary said in the, in the live stream today was we had a recession coming. So in a sense, me, my husband, you I'm sure have been preparing for a pullback for a while now. We felt like it wasn't going to happen in 2020 because a lot of things don't usually change too much in an election year. But we've been thinking, okay, we need to stockpile some cash. We need to have some steaks in the freezer. That kind of, not literally, but more literally now than ever. Um, so we've been thinking this, every session was coming, but we haven't necessarily been thinking it's going to affect real estate that much, like Oh eight. Would you agree with that or has it changed with this new health crisis scare?

Speaker 3: (10:41)
So buyers are still gonna buy and sellers are still gonna sell. People still are going to migrate, whether it be locally, uh, regionally or nationally. So that's going to continue to happen no matter what. If you don't need to sell, then don't bother right now. But don't forget the interest rates are better. So your purchasing power is better. And now there'll be a few more homes on the market so you'll have a little bit more choice. So short term effect is nothing but great longterm effect. Again, we go a year, maybe two years in an economic turndown. It's going to affect the bank slightly. It's going to affect our globalization slightly. But we've been on such a run in such a terror for the last 10 years that everyone has made more profit. So at the end of the day, a small adjustment is only good for the economy, which is why it's happened. So this or something else would have happened, but this just happens to be it. It's a virus. You need to practice the safety of Stan, you know, six feet away, wash your hands, avoid large groups. Other than that, this too shall pass.

Speaker 1: (11:59)
Talk to me real quick and we're not loan officers guys, but we do know enough to make us very dangerous but also very helpful. Um, a lot of people out there, especially our renters and even I've got sellers I met with all weekend that were thinking they have to put down 20% to avoid mortgage insurance because of the rates being so low. Talk to me about if you don't have 20% and still do a conventional loan, let's say with nine 10% down, my understanding is the mortgage insurance is nominal compared to how it used to be from the standpoint of it's just not that big of a deal. If you don't have your 20% it's okay. You can still make a good buying decision, still get a great loan and the mortgage insurance is more nominal than it was in the past. Can you talk about that at all?

Speaker 3: (12:42)
You bet. So, uh, the benefit of mortgage insurance is that you don't have to come up with as much down payment. So if you take what you would typically come up with a 20% down payment and go with a 3% down payment, FHA throw in the amount of money that you didn't put down and calculate that in, throw in the $50 a month that you having to pay for insurance. And you're right about where you would have been with 20% down a year ago. So again, right now you can leverage into a home better than any time in the past. Now we also, Stephanie have some really good, um, uh, programs that have come into the market for any buyer that's been turned down in the last six months to a year that would like to buy a new home. They can reach out to you at this point and we can get them into that brand new home or into that resale that they wanted to buy within 18 months to three years.

Speaker 3: (13:48)
And if we do go into an economic stall, they can buy the home today, lock in their prices, and whether they buy it in 18 months or three years, they're still going to get an absolutely phenomenal deal. So now is the best time in the history of the United States with I buyers and um, the money that's flooded into the marketplace, you can have sellers that if they want the convenience of no double move and they want to stay put for a 10 to 12% convenient convenience fee, they don't have to put their house on the open market. So whether you're thinking of buying a home or selling a home, so many things have changed that you need a full time professional, especially today because a lot of realtors are going to get out of the market. They're not going to be educated. The key is education and a downturn. The more you know, the more you can help. And here to help. That is our primary goal.

Speaker 1: (14:54)
So we talked about buyers and sellers, we talked about interest rates, we talked about if you are renting and maybe haven't really been paying attention too much to where rates are at newsflash that are very, very low and you don't have to put down 20% to have a great loan program. So just putting that education out there so you guys have as much information at your fingertips. Let's switch gears a little bit and talk about the sales professionals and the real estate professionals that are in the market that are in real estate, whether they work for a home builder. Let's talk to new home sells management. Their management teams I'm sure have a lot to deal with right now. The real estate agents out there, the brokers, what advice do you have for them as we go into some uncertain times, we're going to come out of it. Absolutely. I'm definitely want to put a positive spin on it, but I think it's also prudent to acknowledge what we're facing so that we don't, you know, just walk around with sunshine and lollipops and just kind of acknowledge what's going on. But how some best practices to get through it. Cause I know you've been through a lot in your long career, Steve.

Speaker 3: (15:55)
Absolutely. And that's the, this is the way we should in this podcast is how do we help our fellow sales agents, whether they be new home sales agents, whether they be full time licensed real estate agents or new home management. So here's the first thing. I'm going to be brutal. You need to cut your expenses, cut your expenses personally as a family personally as your own personal budget. Cut out everything that you don't need and that will help you from a consumption standpoint. It's something you should do on a regular basis. But if you haven't practiced it, take out your monthly bills and just start red lining wherever you can. If you haven't used the product or service in the last two months, cut it out. So the first thing you need to do is cut expenses. The second thing you need to do is to make sure that you're frugal in the way you eat, the way you spend your money.

Speaker 3: (16:57)
Obviously at this particular time, people are going to stay out of a movie theaters and stay out of restaurants. But this is a lifestyle that actually saves you money. Not only does it save the virus from spreading, but it saves you money. So practicing these things have been the things I've been practicing for the last two years. It's like a forced diet. Yes, it is. So now here's the next thing for the new home builders and the new home industry, you need trained professionals to go out and talk to your clients. Your potential customers need knowledge. They need.

Speaker 1: (17:39)
So unfortunately, where Steve was recording, they were having a really bad rainstorm. So his wifi connection got kicked off. But basically we chatted after we hung up on our zoom call. Basically what he was trying to let everybody know when they're in the builder world is we need to have trained professionals, licensed agents that have been there, done that day in and day out working with your clients because your clients need to be led through this process. I had four appointments this weekend and all of them, I spent two and a half, three hours with walking them through the process, talking about value, educating them on what's going on. A couple of them were disappointed with value, but we still got to where they wanted to be as far as they still want to move. They still want to Uplevel wherever they're living and I showed them how to do that.

Speaker 1: (18:26)
Even if they weren't making what they thought they needed on the home or they thought they wanted on the home. They understand we're on the same team, but we had to have the conversation and the way I have that conversation is listening over 350 homes in my career. There's a lot I've seen and unfortunately if you're an agent just starting out, you're not going to necessarily have that experience to have those conversations. That might sound brutal, but the reality is if you're going in for heart surgery, you want the doctor that done the most surgeries and right now if you've got clients that have homes to sell and uncertain times, you guys want to partner with agents. Just like your loan officers. They can walk a client through the process. They can explain what's going on. They can explain the benefits, it can explain with reality of what's going to happen so that they feel comfortable.

Speaker 1: (19:10)
I had a client Sunday night, I was at their house till nine 30 I didn't get home till 11 and you know what? They looked at me and they said, we're not going to interview anybody else. We choose you because we know you're being honest with us. You're not telling us what we want to hear. It really sucks. We're going to lose X amount of dollars because of their situation, but we trust you and we know that you're going to do the best for us even if it means we're not getting what we want but we are hiring you because we believe in what you are telling us and we know that you're being honest and we value that and so I just want to highlight that that was Steve's last know on as sales professionals, how can you insulate yourself? He said cut your expenses, live a frugal lifestyle and work with a professional as far as your business because if your deals start to decline, you want to make sure that the ones that you are writing and the customers that you are working with are set up for success as far as buyers and sellers.

Speaker 1: (20:03)
Just to recap what Steve said, he said the three reasons to buy and sell now are because the lower interest rates right now, the way the interest rates have dropped, increase your buying power as a consumer anywhere from 80 to a hundred thousand dollars. That is huge. Guys. Doesn't mean you have to go out and buy that much more home. Just think about the savings you would have on your monthly payment, but if you did want to, that is going to be your buying power. Now, number two, new homes are the safe Harbor. Whenever we have any kind of economic downturn and prices do decline, new homes decline much less than the pre-owned market, 25% versus 50% and Steve's example. So when you do buy a new home, you're yourself on the value. And then the third is going to be similar to what he educated and advise the new home sales professionals with on cutting expenses and being leading a more frugal lifestyle.

Speaker 1: (20:59)
With your budget in mind, when you do purchase a new home, your energy efficiency is going to rise dramatically, which in translation is going to lower your utility bills. So again, if you are buying a new home, you've got to look at the cost of ownership from the standpoint of, you know, are the maintenance fees lower? Is the home insurance lower? A lot of times homeowners insurance goes down on a new home compared to a pre-owned home. Even if the new home is more expensive because it is a new home, your maintenance fees are going to go down for a few years. You know you're not going to have to replace that AC unit that you might have to do if you're in a 15 year old home, so your maintenance fees are going to go down, your energy efficiency bills are going to go down, your homeowners insurance will likely go down and you look at all that.

Speaker 1: (21:40)
You make a couple more changes in your budget and you've insulated yourself from a financial standpoint. So I hope this was valuable to you guys today. Again, the spirit of this episode is to be able to shed some objective, honest, transparent light on the situation. But there is some benefit and there is opportunity and there is silver lining in the storm. And we wanted to highlight that as well so that you guys can go make good informed decisions. If you're looking to Uplevel your home, if you've got a growing family, if you're looking to cut your expenses now as a great time to still make those things happen, the world still goes on. Be safe out there, use that hand sanitizer, practice social distancing, do all those things. But at the end of the day, you're home. You want to be where you love and if you're going to spend more time there, if this is a long drawn out process, you definitely want to be in a place that you enjoy and we want to help make it happen for you. So if you're in the Dallas area, you can follow me on social at miss Stephanie Lindamood. Um, give me a call if there's anything I can do to help. We do offer our builder programs with lease assistance. And with getting you into a new home, C's out of Arizona, you can follow him. He's at Steve, writer, writers, R, I. D, E. R. and then if you guys just have any general questions, find me on LinkedIn, find me on Instagram. I'm around and hope you guys have a great day and we'll talk soon.