Speaker 1: Everybody's got to live somewhere, and man, is the market
Speaker 1: in turmoil. It's Armstrong and Getty extra large.
Speaker 2: Because four hours simply.
Speaker 3: This is Armstrong and Getty extra large.
Speaker 4: I've been looking forward to this conversation because I am
Speaker 4: actually Iril looking for a house.
Speaker 1: Longtime friend of the Armstrong and Getty show, Steve Lemathy
Speaker 1: runs Elevate Realty Group in Northern California, and we thought
Speaker 1: we had talked to him about the topsy turvy real
Speaker 1: estate market and the recent court decision and to changees
Speaker 1: and commissions and that sort of thing. But Steve, how
Speaker 1: are you?
Speaker 3: I'm doing great? How are you guys?
Speaker 4: Is it just my observation as a guy looking for
Speaker 4: a house or is some things crazy right now?
Speaker 3: Well? I'm they're pretty crazy.
Speaker 2: I mean, I think that if you've been a home
Speaker 2: buyer in the market this year, you're probably scratching your
Speaker 2: head wondering, you know, what's going on? Why does it
Speaker 2: feel like the sky's falling? But the real estate market
Speaker 2: is so hot and so competitive.
Speaker 4: Right, both things happening at the same time. Interest rates
Speaker 4: are sky high. Every house I look at, it's like
Speaker 4: a stream of people going through there, like they're I
Speaker 4: don't know, they're handing out prizes or something. It's crazy.
Speaker 1: So what are the main factors at work why such
Speaker 1: an odd market these days?
Speaker 2: The primary driver of that feeling of everyone is wanting
Speaker 2: to buy a home right now is just the severe
Speaker 2: lack of available inventory or the number of homes for sale.
Speaker 2: Right So, you know, in twenty twenty four, we're probably
Speaker 2: seeing about fifty percent fewer homes than we saw, you
Speaker 2: know in twenty twenty two.
Speaker 3: Okay, wow, half easily half maybe more this year. Wow.
Speaker 2: Honestly, So if you're going to buy eggs and you
Speaker 2: know you have half the number of eggs left, but
Speaker 2: the number of buyers is still the same, it's going
Speaker 2: to feel like there's a rush on eggs, right. So
Speaker 2: ultimately that that driver currently is us There are so
Speaker 2: many owners that have I think it's the status About
Speaker 2: seventy percent of owners have interest rates under three point
Speaker 2: six percent, So you know, that is locking down all
Speaker 2: the owners that would trade up or trade down or
Speaker 2: make these lifestyle changes. That's just simply not happening. And
Speaker 2: you know, I think a lot of people had hopes
Speaker 2: this year that interest rates would come back downing going
Speaker 2: to happen.
Speaker 3: Yeah, I've been.
Speaker 2: Saying for a long time, and in fact, I think
Speaker 2: on our last conversation we talked about that, but there's
Speaker 2: just no evidence I would say that that's going to
Speaker 2: happen this year or even next year.
Speaker 4: Right, Oh my god.
Speaker 1: I was just going to ask, do you have any
Speaker 1: even rough guestimate how long it's going to take that
Speaker 1: situation to shake out? I mean, because if interest rates
Speaker 1: go down, it would be like till everybody who owns
Speaker 1: a house dies because they're not going to downsize for
Speaker 1: the same money.
Speaker 3: Right, we could all retire to the Bahamas.
Speaker 2: If I knew the answer to that question, you know,
Speaker 2: I would guess that, you know, my speculations, interest rates
Speaker 2: will never be in the threes again. Of course, there's
Speaker 2: some there's some calamity going on, and no one's going
Speaker 2: to buy during that calamity anyway. So I think that
Speaker 2: when you know, if we look back to twenty nineteen,
Speaker 2: interest rates were five and a half percent at the
Speaker 2: end of twenty nineteen, and the Feds we're going to
Speaker 2: raise rates four times in twenty twenty, and then COVID happened, right,
Speaker 2: So if we look back to the past, we were
Speaker 2: headed to six six and a half percent anyway, and
Speaker 2: I think many people forget that, and so I would
Speaker 2: say interest rates at seven percent is actually probably where
Speaker 2: they should be. So if rates come down, you know,
Speaker 2: another one percent down to five and a half to
Speaker 2: six percent, I think we'll start to see that problem
Speaker 2: really start to loosen up a bit. Like people's payments
Speaker 2: would go up. They would leave a three and a
Speaker 2: half percent mortgage for a five percent mortgage, but not
Speaker 2: seven and you know, the payments double or triple when
Speaker 2: when interest rates are seven percent, you have to be
Speaker 2: very motivated to want to leave that.
Speaker 3: Yeah, so they have to sell, right, like.
Speaker 2: They have to financially sell, or they're getting a job relocation.
Speaker 2: You know, there's a lot of reasons that people move
Speaker 2: outside of just I want a pool or I want
Speaker 2: a bigger house, right.
Speaker 1: Right, right, Okay, So let's turn to the change in
Speaker 1: the way commissions are gonna work going forward. All No,
Speaker 1: nobody's sure exactly what's going on National Association Realtors with
Speaker 1: the settlement with the government that's going to shake up
Speaker 1: the whole. It's always five percent, always six percent, being.
Speaker 4: Called the big world, being called the biggest change in
Speaker 4: real estate in many decades.
Speaker 1: Yeah, what do you make of.
Speaker 2: All of it, Steve, Well, this is just a proposed settlement.
Speaker 2: We'll start with that, right the judge, Do us approve
Speaker 2: all that? This is not a new case that's been
Speaker 2: fought like this has been waged for two or three
Speaker 2: years now, and many brokerages have settled. I think, in
Speaker 2: a nutshell, what I would recommend is the headlines are
Speaker 2: the headlines, and they're trying to create let's just call
Speaker 2: it fear, anxiety or animosity. The fact of the matter
Speaker 2: is that, especially in California, commissions have always been negotiable.
Speaker 2: In my fourteen year career, honestly, interviewing with buyers and sellers,
Speaker 2: I don't think I've ever had a buyer or seller
Speaker 2: not ask me what the commission rate is and negotiate
Speaker 2: over that. Right, So you know, the proposed rule change
Speaker 2: just will require brokers to eliminate what is being offered
Speaker 2: in terms of commission on the mls. So it's just
Speaker 2: a rule change. I think overall, the conversation of commissions
Speaker 2: should ultimately drive more negotiating power for people.
Speaker 3: So I think.
Speaker 2: Commissions will start to come down as they have for
Speaker 2: the last five or six years. I think it's just
Speaker 2: going to accelerate that conversation. So no drastic change, no
Speaker 2: drastic stavings.
Speaker 3: For buyers or sellers.
Speaker 2: I think it will just continue to be better for
Speaker 2: consumers and it will continue to drive I think, more
Speaker 2: professionalism and then better costs in the end for buyers
Speaker 2: and sellers.
Speaker 4: More professionalism. That's interesting, Yeah, so fewer.
Speaker 1: People who just stick listing up on MLS and hope.
Speaker 2: I mean, if you look at the statistics, like eighty
Speaker 2: percent of the agents that are licensed today, there's one
Speaker 2: point six million of them will not be in business
Speaker 2: within twenty four months.
Speaker 4: So if we eighty percent, you said.
Speaker 2: Eighty percent, yeah, eighty percent will will be in and
Speaker 2: out within twenty four months. So that eighty percent, so
Speaker 2: a million agents are out there working with their friends
Speaker 2: and family typically right like three or four people a
Speaker 2: year will if the vast majority of the sales are
Speaker 2: being done with people who are not professionals or in
Speaker 2: the business or like, sit down and explain how commissions work.
Speaker 3: It's no wonder that there's.
Speaker 2: A giant settlement that's happening when you know the vast
Speaker 2: majority of people aren't treating this like a professional business, right,
Speaker 2: And so ultimately the people that I know, you know,
Speaker 2: the top thousand agents in the country, we've always sat
Speaker 2: down and presented how commissions work and the buyer and
Speaker 2: the seller chooses them. But that's not the standard for
Speaker 2: all the agents in the marketplace. So I hope that
Speaker 2: you know, this will drive more professionalism and just the
Speaker 2: talk of this is going to create a reason for
Speaker 2: consumers to go out and interview multiple agents rather than
Speaker 2: just working with their friend, family or coworker who got
Speaker 2: their license a year ago.
Speaker 4: Gotcha interesting, that's really interesting.
Speaker 1: So, just out of curiosity, the easy Come easy Goo agents,
Speaker 1: do you have a derogatory nickname for them you'd like
Speaker 1: to share?
Speaker 2: I would you call them fly by night agents?
Speaker 3: Right?
Speaker 4: You know, there's got to be some sort of seed
Speaker 4: dwelling bottom sort of something or other.
Speaker 1: Yeah, you don't have to answer, right, Yeah, I'm just
Speaker 1: wondering entirely.
Speaker 4: I gotta believe there's no he's a she's a there's
Speaker 4: a word, but you won't say it on the air.
Speaker 2: And I understand why it's so bad that when I
Speaker 2: meet new people, I do not tell them that I'm
Speaker 2: a real estate sales person. I might say, like, I'm
Speaker 2: a real estate investor. Or, I own properties, but I
Speaker 2: don't go out and say, you know, I'm a real estatey.
Speaker 4: We have the same thing in our profession with with
Speaker 4: the The exact same thing happens in our profession with
Speaker 4: disc jockeys, Like everybody was a disc jockey at some point,
Speaker 4: and so you don't want to say you're on the
Speaker 4: radio because they lump you in with all those fly
Speaker 4: by night disc jockeys.
Speaker 2: Especially with all the podcasters nowadays and reel makers.
Speaker 3: I would imagine, right, I.
Speaker 1: Have a computer and a microphone. Yes, well this is
Speaker 1: this is interesting, Steve. I'm glad we reached out for
Speaker 1: your perspective. Anything else that's burning in your mind you
Speaker 1: wanted to share before we let you go, I would.
Speaker 2: Just say, you know, at Elevate, we've been focused on
Speaker 2: providing a commission menu and options for nearly ten years,
Speaker 2: and it was for this very reason, right, we wanted
Speaker 2: to present all the options and let the customer choose
Speaker 2: their you know, their commission rate and their their service.
Speaker 3: Right.
Speaker 2: So you my recommendation to people out there who are
Speaker 2: who are interested in buying and selling, you should absolutely
Speaker 2: interview two or three agents, and that way you can
Speaker 2: see just how much value you're getting for whatever commission
Speaker 2: that they're ultimately charging you. And you should expect in
Speaker 2: command to know what am I getting by working with you. Yeah,
Speaker 2: this is not just a I'm open you know, the
Speaker 2: agents don't just open doors. And if that's it, then
Speaker 2: yes they are way way way overpaid.
Speaker 3: I've had that kind Now I'll work with that person.
Speaker 4: Thanks for opening the door for me. Here's fifty dollars
Speaker 4: or hover much money you get right, Yeah?
Speaker 3: No, yeah, that's you know.
Speaker 2: So I would highly highly recommend you got to interview
Speaker 2: multiple agents and then command from them, you know, show
Speaker 2: me what you're you know, show me what I'm getting
Speaker 2: for for whatever commission rate that's being set, both as
Speaker 2: a buyer and a seller. And I think that's very
Speaker 2: important moving forward.
Speaker 1: Steve Lamoth, Elevate Realty Group, Steve, interesting stuff.
Speaker 3: Thanks absolutely, thank you.
Speaker 4: I meant to ask him if there's a handy mnemonic
Speaker 4: for remembering it's like lefty lucy righty tidy for wrenches?
Speaker 4: Is it by low sell high or buy high sell?
Speaker 4: I just never can remember which it is, and that's
Speaker 4: how I get myself into trouble.
Speaker 2: Wow extra large