WEBVTT - Everybody's Gotta Live Somewhere!!!

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<v Speaker 1>Everybody's got to live somewhere, and man, is the market

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<v Speaker 1>in turmoil. It's Armstrong and Getty extra large.

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<v Speaker 2>Because four hours simply.

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<v Speaker 3>This is Armstrong and Getty extra large.

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<v Speaker 4>I've been looking forward to this conversation because I am

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<v Speaker 4>actually Iril looking for a house.

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<v Speaker 1>Longtime friend of the Armstrong and Getty show, Steve Lemathy

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<v Speaker 1>runs Elevate Realty Group in Northern California, and we thought

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<v Speaker 1>we had talked to him about the topsy turvy real

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<v Speaker 1>estate market and the recent court decision and to changees

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<v Speaker 1>and commissions and that sort of thing. But Steve, how

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<v Speaker 1>are you?

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<v Speaker 3>I'm doing great? How are you guys?

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<v Speaker 4>Is it just my observation as a guy looking for

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<v Speaker 4>a house or is some things crazy right now?

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<v Speaker 3>Well? I'm they're pretty crazy.

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<v Speaker 2>I mean, I think that if you've been a home

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<v Speaker 2>buyer in the market this year, you're probably scratching your

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

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<v Speaker 2>feel like the sky's falling? But the real estate market

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<v Speaker 2>is so hot and so competitive.

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<v Speaker 4>Right, both things happening at the same time. Interest rates

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

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<v Speaker 4>a stream of people going through there, like they're I

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

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<v Speaker 1>So what are the main factors at work why such

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<v Speaker 1>an odd market these days?

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<v Speaker 2>The primary driver of that feeling of everyone is wanting

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<v Speaker 2>to buy a home right now is just the severe

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<v Speaker 2>lack of available inventory or the number of homes for sale.

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<v Speaker 2>Right So, you know, in twenty twenty four, we're probably

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<v Speaker 2>seeing about fifty percent fewer homes than we saw, you

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<v Speaker 2>know in twenty twenty two.

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<v Speaker 3>Okay, wow, half easily half maybe more this year. Wow.

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<v Speaker 2>Honestly, So if you're going to buy eggs and you

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<v Speaker 2>know you have half the number of eggs left, but

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<v Speaker 2>the number of buyers is still the same, it's going

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

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<v Speaker 2>ultimately that that driver currently is us There are so

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<v Speaker 2>many owners that have I think it's the status About

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<v Speaker 2>seventy percent of owners have interest rates under three point

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<v Speaker 2>six percent, So you know, that is locking down all

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<v Speaker 2>the owners that would trade up or trade down or

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<v Speaker 2>make these lifestyle changes. That's just simply not happening. And

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<v Speaker 2>you know, I think a lot of people had hopes

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<v Speaker 2>this year that interest rates would come back downing going

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<v Speaker 2>to happen.

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<v Speaker 3>Yeah, I've been.

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<v Speaker 2>Saying for a long time, and in fact, I think

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<v Speaker 2>on our last conversation we talked about that, but there's

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<v Speaker 2>just no evidence I would say that that's going to

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<v Speaker 2>happen this year or even next year.

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<v Speaker 4>Right, Oh my god.

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<v Speaker 1>I was just going to ask, do you have any

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<v Speaker 1>even rough guestimate how long it's going to take that

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<v Speaker 1>situation to shake out? I mean, because if interest rates

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<v Speaker 1>go down, it would be like till everybody who owns

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<v Speaker 1>a house dies because they're not going to downsize for

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<v Speaker 1>the same money.

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<v Speaker 3>Right, we could all retire to the Bahamas.

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<v Speaker 2>If I knew the answer to that question, you know,

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<v Speaker 2>I would guess that, you know, my speculations, interest rates

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

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<v Speaker 2>some there's some calamity going on, and no one's going

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<v Speaker 2>to buy during that calamity anyway. So I think that

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<v Speaker 2>when you know, if we look back to twenty nineteen,

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<v Speaker 2>interest rates were five and a half percent at the

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<v Speaker 2>end of twenty nineteen, and the Feds we're going to

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<v Speaker 2>raise rates four times in twenty twenty, and then COVID happened, right,

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<v Speaker 2>So if we look back to the past, we were

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<v Speaker 2>headed to six six and a half percent anyway, and

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<v Speaker 2>I think many people forget that, and so I would

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<v Speaker 2>say interest rates at seven percent is actually probably where

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<v Speaker 2>they should be. So if rates come down, you know,

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<v Speaker 2>another one percent down to five and a half to

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<v Speaker 2>six percent, I think we'll start to see that problem

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<v Speaker 2>really start to loosen up a bit. Like people's payments

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<v Speaker 2>would go up. They would leave a three and a

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<v Speaker 2>half percent mortgage for a five percent mortgage, but not

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<v Speaker 2>seven and you know, the payments double or triple when

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<v Speaker 2>when interest rates are seven percent, you have to be

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<v Speaker 2>very motivated to want to leave that.

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<v Speaker 3>Yeah, so they have to sell, right, like.

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

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<v Speaker 2>You know, there's a lot of reasons that people move

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<v Speaker 2>outside of just I want a pool or I want

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<v Speaker 2>a bigger house, right.

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<v Speaker 1>Right, right, Okay, So let's turn to the change in

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<v Speaker 1>the way commissions are gonna work going forward. All No,

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<v Speaker 1>nobody's sure exactly what's going on National Association Realtors with

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<v Speaker 1>the settlement with the government that's going to shake up

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<v Speaker 1>the whole. It's always five percent, always six percent, being.

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<v Speaker 4>Called the big world, being called the biggest change in

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<v Speaker 4>real estate in many decades.

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<v Speaker 1>Yeah, what do you make of.

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<v Speaker 2>All of it, Steve, Well, this is just a proposed settlement.

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<v Speaker 2>We'll start with that, right the judge, Do us approve

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<v Speaker 2>all that? This is not a new case that's been

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<v Speaker 2>fought like this has been waged for two or three

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<v Speaker 2>years now, and many brokerages have settled. I think, in

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<v Speaker 2>a nutshell, what I would recommend is the headlines are

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

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<v Speaker 2>it fear, anxiety or animosity. The fact of the matter

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<v Speaker 2>is that, especially in California, commissions have always been negotiable.

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<v Speaker 2>In my fourteen year career, honestly, interviewing with buyers and sellers,

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<v Speaker 2>I don't think I've ever had a buyer or seller

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<v Speaker 2>not ask me what the commission rate is and negotiate

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<v Speaker 2>over that. Right, So you know, the proposed rule change

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<v Speaker 2>just will require brokers to eliminate what is being offered

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<v Speaker 2>in terms of commission on the mls. So it's just

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<v Speaker 2>a rule change. I think overall, the conversation of commissions

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<v Speaker 2>should ultimately drive more negotiating power for people.

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<v Speaker 3>So I think.

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<v Speaker 2>Commissions will start to come down as they have for

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<v Speaker 2>the last five or six years. I think it's just

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<v Speaker 2>going to accelerate that conversation. So no drastic change, no

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<v Speaker 2>drastic stavings.

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<v Speaker 3>For buyers or sellers.

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<v Speaker 2>I think it will just continue to be better for

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<v Speaker 2>consumers and it will continue to drive I think, more

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<v Speaker 2>professionalism and then better costs in the end for buyers

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<v Speaker 2>and sellers.

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<v Speaker 4>More professionalism. That's interesting, Yeah, so fewer.

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<v Speaker 1>People who just stick listing up on MLS and hope.

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<v Speaker 2>I mean, if you look at the statistics, like eighty

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<v Speaker 2>percent of the agents that are licensed today, there's one

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<v Speaker 2>point six million of them will not be in business

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<v Speaker 2>within twenty four months.

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<v Speaker 4>So if we eighty percent, you said.

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<v Speaker 2>Eighty percent, yeah, eighty percent will will be in and

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<v Speaker 2>out within twenty four months. So that eighty percent, so

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<v Speaker 2>a million agents are out there working with their friends

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<v Speaker 2>and family typically right like three or four people a

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<v Speaker 2>year will if the vast majority of the sales are

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<v Speaker 2>being done with people who are not professionals or in

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<v Speaker 2>the business or like, sit down and explain how commissions work.

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<v Speaker 3>It's no wonder that there's.

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<v Speaker 2>A giant settlement that's happening when you know the vast

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

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<v Speaker 2>And so ultimately the people that I know, you know,

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<v Speaker 2>the top thousand agents in the country, we've always sat

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<v Speaker 2>down and presented how commissions work and the buyer and

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<v Speaker 2>the seller chooses them. But that's not the standard for

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<v Speaker 2>all the agents in the marketplace. So I hope that

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<v Speaker 2>you know, this will drive more professionalism and just the

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<v Speaker 2>talk of this is going to create a reason for

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<v Speaker 2>consumers to go out and interview multiple agents rather than

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<v Speaker 2>just working with their friend, family or coworker who got

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<v Speaker 2>their license a year ago.

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<v Speaker 4>Gotcha interesting, that's really interesting.

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<v Speaker 1>So, just out of curiosity, the easy Come easy Goo agents,

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<v Speaker 1>do you have a derogatory nickname for them you'd like

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<v Speaker 1>to share?

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<v Speaker 2>I would you call them fly by night agents?

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<v Speaker 3>Right?

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<v Speaker 4>You know, there's got to be some sort of seed

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<v Speaker 4>dwelling bottom sort of something or other.

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<v Speaker 1>Yeah, you don't have to answer, right, Yeah, I'm just

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<v Speaker 1>wondering entirely.

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<v Speaker 4>I gotta believe there's no he's a she's a there's

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

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<v Speaker 2>And I understand why it's so bad that when I

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<v Speaker 2>meet new people, I do not tell them that I'm

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<v Speaker 2>a real estate sales person. I might say, like, I'm

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<v Speaker 2>a real estate investor. Or, I own properties, but I

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

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<v Speaker 4>We have the same thing in our profession with with

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<v Speaker 4>the The exact same thing happens in our profession with

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<v Speaker 4>disc jockeys, Like everybody was a disc jockey at some point,

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<v Speaker 4>and so you don't want to say you're on the

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<v Speaker 4>radio because they lump you in with all those fly

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<v Speaker 4>by night disc jockeys.

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<v Speaker 2>Especially with all the podcasters nowadays and reel makers.

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<v Speaker 3>I would imagine, right, I.

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<v Speaker 1>Have a computer and a microphone. Yes, well this is

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

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<v Speaker 1>your perspective. Anything else that's burning in your mind you

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<v Speaker 1>wanted to share before we let you go, I would.

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<v Speaker 2>Just say, you know, at Elevate, we've been focused on

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<v Speaker 2>providing a commission menu and options for nearly ten years,

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<v Speaker 2>and it was for this very reason, right, we wanted

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<v Speaker 2>to present all the options and let the customer choose

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<v Speaker 2>their you know, their commission rate and their their service.

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<v Speaker 3>Right.

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<v Speaker 2>So you my recommendation to people out there who are

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<v Speaker 2>who are interested in buying and selling, you should absolutely

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<v Speaker 2>interview two or three agents, and that way you can

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<v Speaker 2>see just how much value you're getting for whatever commission

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<v Speaker 2>that they're ultimately charging you. And you should expect in

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

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<v Speaker 2>this is not just a I'm open you know, the

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

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<v Speaker 2>yes they are way way way overpaid.

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<v Speaker 3>I've had that kind Now I'll work with that person.

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<v Speaker 4>Thanks for opening the door for me. Here's fifty dollars

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<v Speaker 4>or hover much money you get right, Yeah?

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<v Speaker 3>No, yeah, that's you know.

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<v Speaker 2>So I would highly highly recommend you got to interview

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<v Speaker 2>multiple agents and then command from them, you know, show

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<v Speaker 2>me what you're you know, show me what I'm getting

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<v Speaker 2>for for whatever commission rate that's being set, both as

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<v Speaker 2>a buyer and a seller. And I think that's very

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<v Speaker 2>important moving forward.

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<v Speaker 1>Steve Lamoth, Elevate Realty Group, Steve, interesting stuff.

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<v Speaker 3>Thanks absolutely, thank you.

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<v Speaker 4>I meant to ask him if there's a handy mnemonic

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<v Speaker 4>for remembering it's like lefty lucy righty tidy for wrenches?

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<v Speaker 4>Is it by low sell high or buy high sell?

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<v Speaker 4>I just never can remember which it is, and that's

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<v Speaker 4>how I get myself into trouble.

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<v Speaker 2>Wow extra large