LIVE! A Real Estate Agent and a Mortgage specialist analyze the market

Tell you what, Kevin, I'll let you get a twofer here. Christy, you want to sit down and you want to sit in my spot? Because y'all can— I mean, y'all, you, the two of you could probably be more interesting than any question I can ask. Well, come on. Kevin will treat you right. Yeah, yeah, just don't hit me. Yeah, just don't touch anything.

Don't touch anything.

That's right.

All right.

Come on in, man. It's been a while since I've seen y'all.

It's been a minute.

Yeah, I mean, I've seen you on Facebook, right? Because you've been selling houses. All right, so yeah, you go ahead and get up on the microphone kind of like I am. Yeah, don't, don't be afraid to move it if you need to. So man, things are, uh—

He told me not to touch anything.

Uh, yeah, you can touch that. Yeah, there you go. Just don't touch any buttons.

Okay.

There you go.

Don't push any of his buttons.

Man, what a weird, weird time to be trying to buy a home. Now, selling a home, on the other hand, has there ever been a better time in your lifetime that you've been doing realty that there's been a better time to sell a home?

I don't think so. This is it. Now is the time.

I mean, people are, people are nuts out there.

They're crazy. They will knock you down.

Yeah, so I mean, you had— did it— wasn't it you that I saw a post that said something about you had like 23 offers on a home and something like 12 of those were cash or something like that? Is that—

Yes, so, but that particular That is happening on all homes. That particular one was an investment property. Okay, of course investors, they typically come with cash, but so do people from California.

So, and it's insane. In fact, I was— we were talking with Freddie earlier. Are people going after private investors for cash in order to have the cash to put down on a home? Or they just genuinely have cash in their pocket to do this with?

That I am not sure of.

Maybe because there's so many ways to get cash these days, right? But I mean, you're needing $300,000, $250,000— those aren't even available, right? So $300,000, however much, that's a lot of cash if you don't just have that, right?

Well, keep in mind they've just sold their property in California.

For a beaucoup amount of money.

For a whole lot of money. And so they can come down here and take that equity and buy an entire house with it.

Right, man. Wow.

So, wow.

Joel, Joel, what are you seeing over here as far as, uh, this stuff goes? I mean, you're busy, right?

Yeah, on the mortgage side of things, we're ridiculously busy. So ever since COVID we've been doing a lot of refinances, but, uh, recently it's been a purchase market. I have several buyers pre-approved that keep getting outbid. I mean, whether it's a cash buyer or whether they just don't want to chase over 110% or whatever they think it's worth, it's crazy. So there's a lack of inventory right now for sure.

Yeah. So how are you— I mean, because I know y'all work very, very closely together on a lot of— and let me just put this out there. A good realtor already has a mortgage lender in their back pocket. I mean, if you don't— if your realtor is saying, well, I gotta go find a mortgage person, find a new realtor. I'm just gonna say that. Y'all got a great relationship. How do you coach your clients right now on being prepared to actually own a home? I mean, how to buy a home right now, because it's insane buying a house. Selling, that's awesome, but, but buying a home, what are you telling them they're having to do?

Is that for me or for Chris?

Either one.

Well, I mean, my pre-approval process is pretty straightforward. They have to have a credit check and income verified. Good luck if they're self-employed, right? That's a whole other set of criteria, right? But as far as income, assets, and credit, you know, liquid assets for down payment, I do a thorough job of pre-approving them. I don't want anything to pop up later to where It could ruin a relationship or cause them to forfeit earnest money. Right. But even then, you have to set expectations. I mean, it's like, hey, you may not get the first house you put a bid on, and work with your realtor. And, you know, we have 100% financing loan where I work. And, you know, it's 100% or whatever's lower, the sales price or the contract price or

the appraised value. So fortunately, we haven't had to worry about it appraising recently. But it's always something where I refer them back to the real estate agent, like, well, work with your realtor. See, you know, if you can put together a competitive bid, maybe ask for full list price, pay your own closing costs, whatever it has to occur for you to be able to be a competitive offer because they may have 20 offers on the table.

Oh man. So Christie, I mean, you're on the front lines of this. Joel, you're on the back end, right? Once this is all done, I mean, the pre-approval and then you hand it off to Christie, right? So Christie, what are you telling your clients?

Well, Joel made a really valid point in that you really have to set that expectation. Um, and, and let them know what's ahead. And so, um, I'm really big on, uh, be patient, not paying more for a house than what it's worth because, you know, we're, we're in a market right now that isn't gonna last forever.

And so this is not sustainable.

You know, we don't— what you don't want to happen, we don't have a crystal ball. We don't know what's gonna happen. in a year, we don't know what's going to happen with, with our own personal job, right? So the last thing you want to do is spend more for a home than what it's really worth, and then a year later, God forbid, you lose your job or something happens, or maybe you get transferred somewhere else and you've got to sell your house. You don't want to be in a house that you're upside down in, right? So, um, you know, I think it's really important that, that they be educated that, you know, there's ramifications on paying too

much for a house.

Let's not get overly Yeah, because we're like in an opposite place of what was happening back in 2005, 2006, 2007, where you were being, you know, someone who's making $40,000 a year being approved for $400,000, $500,000, right? That's just not happening anymore, first of all. I mean, their banks are really cracking down on what they're actually going to lend on, right? But on top of that, I, you know, just because you qualify something for something still even today does not mean that you can necessarily afford it.

Right.

Yeah, and that's, I mean, that's a, that's a big deal to kind of coach people through because their eyes become real big, right? They're like, oh, we only really thought we needed 3 bedrooms, but 4 would be great.

Right.

Right. And so, or, or this neighborhood would be so much better than that neighborhood. And then you're talking about price increases. And, and then, I mean, how many people are you having that are having to come to the table with cash? To complete the deal right now?

So my last 5 transactions over the last month, all buyers. Only one came with cash, but that was her intent anyway. It was an investment property. All of them appraised over what they paid.

Oh, great.

But that is, Being patient. And, you know, it is having a good agent because there's different techniques to be able to get in. You know, there is something to be said about it's all who you know. So, you know, it's a relationship business. You don't have to pay more than the home is worth. The agent on the other side wants that house to appraise.

Sure.

So, you know, if you're— you may not get the first house that you put an offer in on. And, you know, a lot of my clients, we lost 3, 4, 5 houses, you know, but there is always another house. Yeah. So, you know, just be patient and wait for that right house to come because it will. You know, yeah, don't get desperate. Don't fall into the trap.

Yeah, so we actually had looked into maybe purchasing something at one point, and we were basically being told because of what we were looking at that, I mean, our house was gonna have to be pretty much sold before we could get into something else. I mean, It's being in a good position to buy as well. I think it's one of the things I really learned is, you know, maybe you want to move, but you hadn't listed your house yet. Well, there's a lot of things you have to do in order to get there, right?

That's— you're absolutely right. And, you know, so people who have approached me on selling their house, you want to be completely transparent and let them know, like, you need to know, first of all, your house will probably sell pretty quickly. But where are you gonna go? What, you know, we've, we've, we don't want to be in a position where we're having to just take something that wasn't really what we wanted.

Yeah.

But guess what? I've got to be out of my house. I've got to move.

Right.

Um, so, you know, is renting an option? You know, you, there, you really have to look at the whole picture.

Yeah.

Of selling your house. Um, you know, it is a great seller's market and, and if you're open to potentially renting for a little while until you can find exactly what you want, you know, or, you know, you can always do a leaseback.

But I mean, a lot of people are buying a house because they want to get into the house though, so sometimes leasebacks just don't work, right? But, but even still, I mean, you know, we, we went through this very thing where it's like, okay, we have a pretty nice camper, so how long can we be a camper family, right? Like But because, you know, you get into a year-long lease and it's like, well, what if I find something between now and then?

That's true.

Then I got to get out of the lease. If I do a 6-month lease, typically it's going to be more expensive. If I do a month-to-month lease, goodness gracious, what are you thinking, right? So there's just so much of this stuff to kind of consider. Is this the right time? Because here's the other thing that I think is something that's really interesting is This, it isn't sustainable forever. And then when the market fluctuates, you might not get as much for your house if you're selling it, but then you turn around and buy something, you're not going to pay as much either.

That's right.

So again, I, I really value what you said about being patient, and because a year from now, um, you might not get as much for your house, but you may not have to pay as much for that dream house and the, um, the competitiveness might be a little bit easier to actually get that one that you really want.

That's right. And you get what you want. I mean, the whole, the whole idea of selling your house is obviously that you want something different, right? Um, so the last thing you want is to get in this desperate situation of feeling like, well, we just, we just have to find something, you know, and we're going to be homeless. Um, and guess what? The rental market is tough right now also because so many people have had to do just that, right, is rent, because they can't find what they're looking for. Um, in fact, even finding places to put the camper has been a struggle. Yeah, I've got somebody who moved into their camper, they got the last space. Um,

so that also, you know, plus we're going in the summertime, right? So—

Yes. Yeah, it's gonna be hot. Yep. Yeah, it's a— it's an interesting time for sure.

It is.

So, but I mean, it's probably a fun time for you. I mean, you've never— I mean, things are not stale.

Nope.

Around your house, you're busy.

Not at all. No, it's—

it is.

It's a good time.

Yeah. And Joel, I mean, you're finding your— I mean, I've talked to a couple of brokers recently and they were saying, man, I'm just so slammed. With, with stuff. Are you, are you finding that to be the case?

Absolutely. I mean, everybody wants to get in before the prices go up even more, at least in their mind. They're worried about inflation, trying to take advantage of low interest rates, uh, relatively low sales prices, trying to find a home. Oh, it's on the market today, it'll be gone tomorrow. I need a pre-approval letter in the next 5 minutes. Um, so yeah, we're extremely busy.

Yeah, yeah, absolutely. And how— let me ask this. How long is a pre-approval letter valid for?

So, I will do a pretty thorough pre-approval. I'll look at not just the credit, but the income and the assets. Typically, it's good for 90 days, but really, I like to refresh it every 30 days if possible. But really, it's good for 90 before I have to pull a new credit report. refresh pay stubs and things like that.

Okay, good, awesome. What else do we need to talk about?

Well, I thought I was just hearing you guys talk. Let me throw this out here for a second, devil's advocate. Um, inventory is tight right now, supply and demand. You guys were talking about, hey, possibly waiting, prices might be lower a year from now. Um, from my side, I listen to different, um, People try to forecast the future. That's always a little dicey. But you never know. Um, one gentleman, he's pretty well known in the mortgage circles. His name is Barry Habib. I was on a conference call with him a few weeks ago, and he was telling me their prediction is the next 4 to 5 years is going to be pretty much straight up. He says there is no housing bubble,

and because of the supply and the demand side of things, Just the cost of the materials, whether it be lumber, which I heard you talking about earlier with the home inspector.

Oh, it's insane.

And also another factor is just demographics. You have first-time homebuyers representing a source of new demand on the market, right? As opposed to what we talked about already being a trade-up buyer to where they're buying one but they're also selling one, right? So it's a net wash. But your first-time homebuyer, the average age of a first-time homebuyer is 33 years old right now. These millennials are moving out of mom and dad's basement, or in Texas we don't have basements, but you know, it's a cliché. And they're buying their first home.

Yeah.

And they are creating more demand than there are available homes on the market right now. Wow. And he was just looking at birth— this guy's like a statistician, and he was showing me the charts and the birth rates and the projected number of first-time homebuyers who are going to be buying their first home in the next 3 to 5 years. And yeah, I mean, there are many people who feel like there is no housing bubble and it's just going to get a lot more expensive before it comes back down.

Wow, that's— well, that's actually good to know because, um, I'm glad to hear that because I think a lot of people that I've been— that I've heard from at least have said, look, it's not sustainable. But if that's the case, then it still wouldn't hurt to save for a year, um, if you can save. Some people aren't good savers, some people are spenders. So if you're a spender, you're looking to get in something, I mean, at the end of the day, call your realtor, call Christy over here, call Joel, figure out what you got to do to get into what you really want and start the process. Because you said no matter what Even if you say, you know what, I'm ready to go, I've made up my mind, I'm ready to go,

it may just be that you have to put an offer in on 2 or 3 or 4 or 5 different homes before something actually pops, right? So being patient, maybe that even though I'm ready, I've made the choice, it could be 4 or 5, 6 months down the road before you find something. So maybe, maybe you're right, don't wait.

And that's it. I mean, that's really where where the patience comes in is, is be patient even if you're out there looking. So, you know, all of my last clients have all been first-time homebuyers, to Joel's point.

Yeah.

Um, and, and, you know, and they're ready. But so be patient in the looking process. Don't, don't feel like this is the last home on the market, we need to bid $30,000 over because I want to get it. You know, bid what the house is worth. Joel made the point, you know, maybe you're gonna pay closing costs, or maybe, you know, you can throw little things in there to make the deal a little sweeter. Yeah, without spending $30 grand more for the house.

Sure.

And so there are other avenues to take than paying more for something than what it's worth. worth to get that deal. And you know what, if you don't get it, be okay with that. Be okay with it wasn't meant to be, there's another house, let's keep looking, because we will find one.

Yeah, don't overcommit, right? Yeah, definitely. Cool. Well, thank you guys very much. It's been awesome. Yeah, hope you're enjoying the afternoon. If you are listening right now, come on out. And yeah, we'll see if we can find someone else who— actually, the Homeowner Show is done. At this point, you need to come out here. But, uh, thanks for tuning in, and we'll be here on Tuesday with a new episode. So see you later. See you later.