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Speaker 1: Everybody's got to live somewhere, and man, is the market

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Speaker 1: in turmoil. It's Armstrong and Getty extra large.

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Speaker 2: Because four hours simply.

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Speaker 3: This is Armstrong and Getty extra large.

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Speaker 4: I've been looking forward to this conversation because I am

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Speaker 4: actually Iril looking for a house.

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Speaker 1: Longtime friend of the Armstrong and Getty show, Steve Lemathy

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Speaker 1: runs Elevate Realty Group in Northern California, and we thought

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Speaker 1: we had talked to him about the topsy turvy real

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Speaker 1: estate market and the recent court decision and to changees

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Speaker 1: and commissions and that sort of thing. But Steve, how

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Speaker 1: are you?

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Speaker 3: I'm doing great? How are you guys?

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Speaker 4: Is it just my observation as a guy looking for

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Speaker 4: a house or is some things crazy right now?

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Speaker 3: Well? I'm they're pretty crazy.

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Speaker 2: I mean, I think that if you've been a home

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Speaker 2: buyer in the market this year, you're probably scratching your

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Speaker 2: head wondering, you know, what's going on? Why does it

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Speaker 2: feel like the sky's falling? But the real estate market

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Speaker 2: is so hot and so competitive.

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Speaker 4: Right, both things happening at the same time. Interest rates

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Speaker 4: are sky high. Every house I look at, it's like

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Speaker 4: a stream of people going through there, like they're I

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Speaker 4: don't know, they're handing out prizes or something. It's crazy.

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Speaker 1: So what are the main factors at work why such

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Speaker 1: an odd market these days?

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Speaker 2: The primary driver of that feeling of everyone is wanting

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Speaker 2: to buy a home right now is just the severe

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Speaker 2: lack of available inventory or the number of homes for sale.

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Speaker 2: Right So, you know, in twenty twenty four, we're probably

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Speaker 2: seeing about fifty percent fewer homes than we saw, you

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Speaker 2: know in twenty twenty two.

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Speaker 3: Okay, wow, half easily half maybe more this year. Wow.

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Speaker 2: Honestly, So if you're going to buy eggs and you

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Speaker 2: know you have half the number of eggs left, but

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Speaker 2: the number of buyers is still the same, it's going

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Speaker 2: to feel like there's a rush on eggs, right. So

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Speaker 2: ultimately that that driver currently is us There are so

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Speaker 2: many owners that have I think it's the status About

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Speaker 2: seventy percent of owners have interest rates under three point

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Speaker 2: six percent, So you know, that is locking down all

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Speaker 2: the owners that would trade up or trade down or

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Speaker 2: make these lifestyle changes. That's just simply not happening. And

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Speaker 2: you know, I think a lot of people had hopes

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Speaker 2: this year that interest rates would come back downing going

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Speaker 2: to happen.

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Speaker 3: Yeah, I've been.

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Speaker 2: Saying for a long time, and in fact, I think

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Speaker 2: on our last conversation we talked about that, but there's

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Speaker 2: just no evidence I would say that that's going to

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Speaker 2: happen this year or even next year.

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Speaker 4: Right, Oh my god.

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Speaker 1: I was just going to ask, do you have any

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Speaker 1: even rough guestimate how long it's going to take that

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Speaker 1: situation to shake out? I mean, because if interest rates

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Speaker 1: go down, it would be like till everybody who owns

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Speaker 1: a house dies because they're not going to downsize for

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Speaker 1: the same money.

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Speaker 3: Right, we could all retire to the Bahamas.

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Speaker 2: If I knew the answer to that question, you know,

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Speaker 2: I would guess that, you know, my speculations, interest rates

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Speaker 2: will never be in the threes again. Of course, there's

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Speaker 2: some there's some calamity going on, and no one's going

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Speaker 2: to buy during that calamity anyway. So I think that

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Speaker 2: when you know, if we look back to twenty nineteen,

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Speaker 2: interest rates were five and a half percent at the

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Speaker 2: end of twenty nineteen, and the Feds we're going to

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Speaker 2: raise rates four times in twenty twenty, and then COVID happened, right,

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Speaker 2: So if we look back to the past, we were

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Speaker 2: headed to six six and a half percent anyway, and

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Speaker 2: I think many people forget that, and so I would

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Speaker 2: say interest rates at seven percent is actually probably where

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Speaker 2: they should be. So if rates come down, you know,

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Speaker 2: another one percent down to five and a half to

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Speaker 2: six percent, I think we'll start to see that problem

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Speaker 2: really start to loosen up a bit. Like people's payments

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Speaker 2: would go up. They would leave a three and a

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Speaker 2: half percent mortgage for a five percent mortgage, but not

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Speaker 2: seven and you know, the payments double or triple when

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Speaker 2: when interest rates are seven percent, you have to be

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Speaker 2: very motivated to want to leave that.

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Speaker 3: Yeah, so they have to sell, right, like.

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Speaker 2: They have to financially sell, or they're getting a job relocation.

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Speaker 2: You know, there's a lot of reasons that people move

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Speaker 2: outside of just I want a pool or I want

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Speaker 2: a bigger house, right.

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Speaker 1: Right, right, Okay, So let's turn to the change in

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Speaker 1: the way commissions are gonna work going forward. All No,

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Speaker 1: nobody's sure exactly what's going on National Association Realtors with

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Speaker 1: the settlement with the government that's going to shake up

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Speaker 1: the whole. It's always five percent, always six percent, being.

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Speaker 4: Called the big world, being called the biggest change in

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Speaker 4: real estate in many decades.

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Speaker 1: Yeah, what do you make of.

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Speaker 2: All of it, Steve, Well, this is just a proposed settlement.

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Speaker 2: We'll start with that, right the judge, Do us approve

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Speaker 2: all that? This is not a new case that's been

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Speaker 2: fought like this has been waged for two or three

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Speaker 2: years now, and many brokerages have settled. I think, in

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Speaker 2: a nutshell, what I would recommend is the headlines are

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Speaker 2: the headlines, and they're trying to create let's just call

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Speaker 2: it fear, anxiety or animosity. The fact of the matter

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Speaker 2: is that, especially in California, commissions have always been negotiable.

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Speaker 2: In my fourteen year career, honestly, interviewing with buyers and sellers,

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Speaker 2: I don't think I've ever had a buyer or seller

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Speaker 2: not ask me what the commission rate is and negotiate

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Speaker 2: over that. Right, So you know, the proposed rule change

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Speaker 2: just will require brokers to eliminate what is being offered

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Speaker 2: in terms of commission on the mls. So it's just

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Speaker 2: a rule change. I think overall, the conversation of commissions

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Speaker 2: should ultimately drive more negotiating power for people.

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Speaker 3: So I think.

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Speaker 2: Commissions will start to come down as they have for

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Speaker 2: the last five or six years. I think it's just

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Speaker 2: going to accelerate that conversation. So no drastic change, no

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Speaker 2: drastic stavings.

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Speaker 3: For buyers or sellers.

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Speaker 2: I think it will just continue to be better for

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Speaker 2: consumers and it will continue to drive I think, more

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Speaker 2: professionalism and then better costs in the end for buyers

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Speaker 2: and sellers.

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Speaker 4: More professionalism. That's interesting, Yeah, so fewer.

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Speaker 1: People who just stick listing up on MLS and hope.

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Speaker 2: I mean, if you look at the statistics, like eighty

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Speaker 2: percent of the agents that are licensed today, there's one

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Speaker 2: point six million of them will not be in business

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Speaker 2: within twenty four months.

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Speaker 4: So if we eighty percent, you said.

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Speaker 2: Eighty percent, yeah, eighty percent will will be in and

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Speaker 2: out within twenty four months. So that eighty percent, so

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Speaker 2: a million agents are out there working with their friends

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Speaker 2: and family typically right like three or four people a

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Speaker 2: year will if the vast majority of the sales are

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Speaker 2: being done with people who are not professionals or in

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Speaker 2: the business or like, sit down and explain how commissions work.

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Speaker 3: It's no wonder that there's.

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Speaker 2: A giant settlement that's happening when you know the vast

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Speaker 2: majority of people aren't treating this like a professional business, right,

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Speaker 2: And so ultimately the people that I know, you know,

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Speaker 2: the top thousand agents in the country, we've always sat

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Speaker 2: down and presented how commissions work and the buyer and

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Speaker 2: the seller chooses them. But that's not the standard for

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Speaker 2: all the agents in the marketplace. So I hope that

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Speaker 2: you know, this will drive more professionalism and just the

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Speaker 2: talk of this is going to create a reason for

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Speaker 2: consumers to go out and interview multiple agents rather than

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Speaker 2: just working with their friend, family or coworker who got

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Speaker 2: their license a year ago.

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Speaker 4: Gotcha interesting, that's really interesting.

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Speaker 1: So, just out of curiosity, the easy Come easy Goo agents,

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Speaker 1: do you have a derogatory nickname for them you'd like

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Speaker 1: to share?

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Speaker 2: I would you call them fly by night agents?

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Speaker 3: Right?

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Speaker 4: You know, there's got to be some sort of seed

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Speaker 4: dwelling bottom sort of something or other.

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Speaker 1: Yeah, you don't have to answer, right, Yeah, I'm just

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Speaker 1: wondering entirely.

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Speaker 4: I gotta believe there's no he's a she's a there's

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Speaker 4: a word, but you won't say it on the air.

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Speaker 2: And I understand why it's so bad that when I

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Speaker 2: meet new people, I do not tell them that I'm

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Speaker 2: a real estate sales person. I might say, like, I'm

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Speaker 2: a real estate investor. Or, I own properties, but I

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Speaker 2: don't go out and say, you know, I'm a real estatey.

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Speaker 4: We have the same thing in our profession with with

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Speaker 4: the The exact same thing happens in our profession with

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Speaker 4: disc jockeys, Like everybody was a disc jockey at some point,

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Speaker 4: and so you don't want to say you're on the

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Speaker 4: radio because they lump you in with all those fly

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Speaker 4: by night disc jockeys.

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Speaker 2: Especially with all the podcasters nowadays and reel makers.

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Speaker 3: I would imagine, right, I.

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Speaker 1: Have a computer and a microphone. Yes, well this is

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Speaker 1: this is interesting, Steve. I'm glad we reached out for

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Speaker 1: your perspective. Anything else that's burning in your mind you

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Speaker 1: wanted to share before we let you go, I would.

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Speaker 2: Just say, you know, at Elevate, we've been focused on

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Speaker 2: providing a commission menu and options for nearly ten years,

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Speaker 2: and it was for this very reason, right, we wanted

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Speaker 2: to present all the options and let the customer choose

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Speaker 2: their you know, their commission rate and their their service.

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Speaker 3: Right.

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Speaker 2: So you my recommendation to people out there who are

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Speaker 2: who are interested in buying and selling, you should absolutely

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Speaker 2: interview two or three agents, and that way you can

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Speaker 2: see just how much value you're getting for whatever commission

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Speaker 2: that they're ultimately charging you. And you should expect in

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Speaker 2: command to know what am I getting by working with you. Yeah,

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Speaker 2: this is not just a I'm open you know, the

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Speaker 2: agents don't just open doors. And if that's it, then

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Speaker 2: yes they are way way way overpaid.

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Speaker 3: I've had that kind Now I'll work with that person.

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Speaker 4: Thanks for opening the door for me. Here's fifty dollars

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Speaker 4: or hover much money you get right, Yeah?

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Speaker 3: No, yeah, that's you know.

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Speaker 2: So I would highly highly recommend you got to interview

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Speaker 2: multiple agents and then command from them, you know, show

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Speaker 2: me what you're you know, show me what I'm getting

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Speaker 2: for for whatever commission rate that's being set, both as

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Speaker 2: a buyer and a seller. And I think that's very

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Speaker 2: important moving forward.

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Speaker 1: Steve Lamoth, Elevate Realty Group, Steve, interesting stuff.

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Speaker 3: Thanks absolutely, thank you.

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Speaker 4: I meant to ask him if there's a handy mnemonic

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Speaker 4: for remembering it's like lefty lucy righty tidy for wrenches?

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Speaker 4: Is it by low sell high or buy high sell?

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Speaker 4: I just never can remember which it is, and that's

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Speaker 4: how I get myself into trouble.

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Speaker 2: Wow extra large