April 15, 2024 • 10 mins
Jack & Joe talk to realtor Steve Lamothe (Elevate Realty) about the tumultuous real estate market, as well as the coming changes to agent commissions.
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Speaker 1 (00:00):
Everybody's got to live somewhere, and man, is the market
in turmoil. It's Armstrong and Getty extra large.
Speaker 2 (00:06):
Because four hours simply.
Speaker 3 (00:10):
This is Armstrong and Getty extra large.
Speaker 4 (00:14):
I've been looking forward to this conversation because I am
actually Iril looking for a house.
Speaker 1 (00:21):
Longtime friend of the Armstrong and Getty show, Steve Lemathy
runs Elevate Realty Group in Northern California, and we thought
we had talked to him about the topsy turvy real
estate market and the recent court decision and to changees
and commissions and that sort of thing. But Steve, how
are you?
Speaker 3 (00:34):
I'm doing great? How are you guys?
Speaker 4 (00:36):
Is it just my observation as a guy looking for
a house or is some things crazy right now?
Speaker 3 (00:43):
Well? I'm they're pretty crazy.
Speaker 2 (00:45):
I mean, I think that if you've been a home
buyer in the market this year, you're probably scratching your
head wondering, you know, what's going on? Why does it
feel like the sky's falling? But the real estate market
is so hot and so competitive.
Speaker 4 (01:00):
Right, both things happening at the same time. Interest rates
are sky high. Every house I look at, it's like
a stream of people going through there, like they're I
don't know, they're handing out prizes or something. It's crazy.
Speaker 1 (01:11):
So what are the main factors at work why such
an odd market these days?
Speaker 2 (01:14):
The primary driver of that feeling of everyone is wanting
to buy a home right now is just the severe
lack of available inventory or the number of homes for sale.
Right So, you know, in twenty twenty four, we're probably
seeing about fifty percent fewer homes than we saw, you
(01:35):
know in twenty twenty two.
Speaker 3 (01:37):
Okay, wow, half easily half maybe more this year. Wow.
Speaker 2 (01:42):
Honestly, So if you're going to buy eggs and you
know you have half the number of eggs left, but
the number of buyers is still the same, it's going
to feel like there's a rush on eggs, right. So
ultimately that that driver currently is us There are so
many owners that have I think it's the status About
(02:04):
seventy percent of owners have interest rates under three point
six percent, So you know, that is locking down all
the owners that would trade up or trade down or
make these lifestyle changes. That's just simply not happening. And
you know, I think a lot of people had hopes
this year that interest rates would come back downing going
(02:27):
to happen.
Speaker 3 (02:28):
Yeah, I've been.
Speaker 2 (02:28):
Saying for a long time, and in fact, I think
on our last conversation we talked about that, but there's
just no evidence I would say that that's going to
happen this year or even next year.
Speaker 4 (02:38):
Right, Oh my god.
Speaker 1 (02:40):
I was just going to ask, do you have any
even rough guestimate how long it's going to take that
situation to shake out? I mean, because if interest rates
go down, it would be like till everybody who owns
a house dies because they're not going to downsize for
the same money.
Speaker 3 (02:56):
Right, we could all retire to the Bahamas.
Speaker 2 (02:59):
If I knew the answer to that question, you know,
I would guess that, you know, my speculations, interest rates
will never be in the threes again. Of course, there's
some there's some calamity going on, and no one's going
to buy during that calamity anyway. So I think that
when you know, if we look back to twenty nineteen,
(03:19):
interest rates were five and a half percent at the
end of twenty nineteen, and the Feds we're going to
raise rates four times in twenty twenty, and then COVID happened, right,
So if we look back to the past, we were
headed to six six and a half percent anyway, and
I think many people forget that, and so I would
say interest rates at seven percent is actually probably where
(03:41):
they should be. So if rates come down, you know,
another one percent down to five and a half to
six percent, I think we'll start to see that problem
really start to loosen up a bit. Like people's payments
would go up. They would leave a three and a
half percent mortgage for a five percent mortgage, but not
seven and you know, the payments double or triple when
(04:03):
when interest rates are seven percent, you have to be
very motivated to want to leave that.
Speaker 3 (04:08):
Yeah, so they have to sell, right, like.
Speaker 2 (04:11):
They have to financially sell, or they're getting a job relocation.
You know, there's a lot of reasons that people move
outside of just I want a pool or I want
a bigger house, right.
Speaker 1 (04:23):
Right, right, Okay, So let's turn to the change in
the way commissions are gonna work going forward. All No,
nobody's sure exactly what's going on National Association Realtors with
the settlement with the government that's going to shake up
the whole. It's always five percent, always six percent, being.
Speaker 4 (04:39):
Called the big world, being called the biggest change in
real estate in many decades.
Speaker 1 (04:43):
Yeah, what do you make of.
Speaker 2 (04:44):
All of it, Steve, Well, this is just a proposed settlement.
We'll start with that, right the judge, Do us approve
all that? This is not a new case that's been
fought like this has been waged for two or three
years now, and many brokerages have settled. I think, in
a nutshell, what I would recommend is the headlines are
the headlines, and they're trying to create let's just call
(05:08):
it fear, anxiety or animosity. The fact of the matter
is that, especially in California, commissions have always been negotiable.
In my fourteen year career, honestly, interviewing with buyers and sellers,
I don't think I've ever had a buyer or seller
not ask me what the commission rate is and negotiate
(05:30):
over that. Right, So you know, the proposed rule change
just will require brokers to eliminate what is being offered
in terms of commission on the mls. So it's just
a rule change. I think overall, the conversation of commissions
should ultimately drive more negotiating power for people.
Speaker 3 (05:52):
So I think.
Speaker 2 (05:53):
Commissions will start to come down as they have for
the last five or six years. I think it's just
going to accelerate that conversation. So no drastic change, no
drastic stavings.
Speaker 3 (06:04):
For buyers or sellers.
Speaker 2 (06:05):
I think it will just continue to be better for
consumers and it will continue to drive I think, more
professionalism and then better costs in the end for buyers
and sellers.
Speaker 4 (06:17):
More professionalism. That's interesting, Yeah, so fewer.
Speaker 1 (06:20):
People who just stick listing up on MLS and hope.
Speaker 2 (06:24):
I mean, if you look at the statistics, like eighty
percent of the agents that are licensed today, there's one
point six million of them will not be in business
within twenty four months.
Speaker 4 (06:35):
So if we eighty percent, you said.
Speaker 2 (06:38):
Eighty percent, yeah, eighty percent will will be in and
out within twenty four months. So that eighty percent, so
a million agents are out there working with their friends
and family typically right like three or four people a
year will if the vast majority of the sales are
being done with people who are not professionals or in
(06:58):
the business or like, sit down and explain how commissions work.
Speaker 3 (07:03):
It's no wonder that there's.
Speaker 2 (07:04):
A giant settlement that's happening when you know the vast
majority of people aren't treating this like a professional business, right,
And so ultimately the people that I know, you know,
the top thousand agents in the country, we've always sat
down and presented how commissions work and the buyer and
the seller chooses them. But that's not the standard for
(07:25):
all the agents in the marketplace. So I hope that
you know, this will drive more professionalism and just the
talk of this is going to create a reason for
consumers to go out and interview multiple agents rather than
just working with their friend, family or coworker who got
their license a year ago.
Speaker 4 (07:43):
Gotcha interesting, that's really interesting.
Speaker 1 (07:45):
So, just out of curiosity, the easy Come easy Goo agents,
do you have a derogatory nickname for them you'd like
to share?
Speaker 2 (07:58):
I would you call them fly by night agents?
Speaker 3 (08:02):
Right?
Speaker 4 (08:03):
You know, there's got to be some sort of seed
dwelling bottom sort of something or other.
Speaker 1 (08:08):
Yeah, you don't have to answer, right, Yeah, I'm just
wondering entirely.
Speaker 4 (08:12):
I gotta believe there's no he's a she's a there's
a word, but you won't say it on the air.
Speaker 2 (08:16):
And I understand why it's so bad that when I
meet new people, I do not tell them that I'm
a real estate sales person. I might say, like, I'm
a real estate investor. Or, I own properties, but I
don't go out and say, you know, I'm a real estatey.
Speaker 4 (08:29):
We have the same thing in our profession with with
the The exact same thing happens in our profession with
disc jockeys, Like everybody was a disc jockey at some point,
and so you don't want to say you're on the
radio because they lump you in with all those fly
by night disc jockeys.
Speaker 2 (08:46):
Especially with all the podcasters nowadays and reel makers.
Speaker 3 (08:49):
I would imagine, right, I.
Speaker 1 (08:51):
Have a computer and a microphone. Yes, well this is
this is interesting, Steve. I'm glad we reached out for
your perspective. Anything else that's burning in your mind you
wanted to share before we let you go, I would.
Speaker 2 (09:02):
Just say, you know, at Elevate, we've been focused on
providing a commission menu and options for nearly ten years,
and it was for this very reason, right, we wanted
to present all the options and let the customer choose
their you know, their commission rate and their their service.
Speaker 3 (09:21):
Right.
Speaker 2 (09:22):
So you my recommendation to people out there who are
who are interested in buying and selling, you should absolutely
interview two or three agents, and that way you can
see just how much value you're getting for whatever commission
that they're ultimately charging you. And you should expect in
command to know what am I getting by working with you. Yeah,
(09:45):
this is not just a I'm open you know, the
agents don't just open doors. And if that's it, then
yes they are way way way overpaid.
Speaker 3 (09:52):
I've had that kind Now I'll work with that person.
Speaker 4 (09:54):
Thanks for opening the door for me. Here's fifty dollars
or hover much money you get right, Yeah?
Speaker 3 (09:59):
No, yeah, that's you know.
Speaker 2 (10:01):
So I would highly highly recommend you got to interview
multiple agents and then command from them, you know, show
me what you're you know, show me what I'm getting
for for whatever commission rate that's being set, both as
a buyer and a seller. And I think that's very
important moving forward.
Speaker 1 (10:20):
Steve Lamoth, Elevate Realty Group, Steve, interesting stuff.
Speaker 3 (10:23):
Thanks absolutely, thank you.
Speaker 4 (10:25):
I meant to ask him if there's a handy mnemonic
for remembering it's like lefty lucy righty tidy for wrenches?
Is it by low sell high or buy high sell?
I just never can remember which it is, and that's
how I get myself into trouble.
Speaker 2 (10:36):
Wow extra large
Everybody's got to live somewhere, and man, is the market
in turmoil. It's Armstrong and Getty extra large.
Speaker 2 (00:06):
Because four hours simply.
Speaker 3 (00:10):
This is Armstrong and Getty extra large.
Speaker 4 (00:14):
I've been looking forward to this conversation because I am
actually Iril looking for a house.
Speaker 1 (00:21):
Longtime friend of the Armstrong and Getty show, Steve Lemathy
runs Elevate Realty Group in Northern California, and we thought
we had talked to him about the topsy turvy real
estate market and the recent court decision and to changees
and commissions and that sort of thing. But Steve, how
are you?
Speaker 3 (00:34):
I'm doing great? How are you guys?
Speaker 4 (00:36):
Is it just my observation as a guy looking for
a house or is some things crazy right now?
Speaker 3 (00:43):
Well? I'm they're pretty crazy.
Speaker 2 (00:45):
I mean, I think that if you've been a home
buyer in the market this year, you're probably scratching your
head wondering, you know, what's going on? Why does it
feel like the sky's falling? But the real estate market
is so hot and so competitive.
Speaker 4 (01:00):
Right, both things happening at the same time. Interest rates
are sky high. Every house I look at, it's like
a stream of people going through there, like they're I
don't know, they're handing out prizes or something. It's crazy.
Speaker 1 (01:11):
So what are the main factors at work why such
an odd market these days?
Speaker 2 (01:14):
The primary driver of that feeling of everyone is wanting
to buy a home right now is just the severe
lack of available inventory or the number of homes for sale.
Right So, you know, in twenty twenty four, we're probably
seeing about fifty percent fewer homes than we saw, you
(01:35):
know in twenty twenty two.
Speaker 3 (01:37):
Okay, wow, half easily half maybe more this year. Wow.
Speaker 2 (01:42):
Honestly, So if you're going to buy eggs and you
know you have half the number of eggs left, but
the number of buyers is still the same, it's going
to feel like there's a rush on eggs, right. So
ultimately that that driver currently is us There are so
many owners that have I think it's the status About
(02:04):
seventy percent of owners have interest rates under three point
six percent, So you know, that is locking down all
the owners that would trade up or trade down or
make these lifestyle changes. That's just simply not happening. And
you know, I think a lot of people had hopes
this year that interest rates would come back downing going
(02:27):
to happen.
Speaker 3 (02:28):
Yeah, I've been.
Speaker 2 (02:28):
Saying for a long time, and in fact, I think
on our last conversation we talked about that, but there's
just no evidence I would say that that's going to
happen this year or even next year.
Speaker 4 (02:38):
Right, Oh my god.
Speaker 1 (02:40):
I was just going to ask, do you have any
even rough guestimate how long it's going to take that
situation to shake out? I mean, because if interest rates
go down, it would be like till everybody who owns
a house dies because they're not going to downsize for
the same money.
Speaker 3 (02:56):
Right, we could all retire to the Bahamas.
Speaker 2 (02:59):
If I knew the answer to that question, you know,
I would guess that, you know, my speculations, interest rates
will never be in the threes again. Of course, there's
some there's some calamity going on, and no one's going
to buy during that calamity anyway. So I think that
when you know, if we look back to twenty nineteen,
(03:19):
interest rates were five and a half percent at the
end of twenty nineteen, and the Feds we're going to
raise rates four times in twenty twenty, and then COVID happened, right,
So if we look back to the past, we were
headed to six six and a half percent anyway, and
I think many people forget that, and so I would
say interest rates at seven percent is actually probably where
(03:41):
they should be. So if rates come down, you know,
another one percent down to five and a half to
six percent, I think we'll start to see that problem
really start to loosen up a bit. Like people's payments
would go up. They would leave a three and a
half percent mortgage for a five percent mortgage, but not
seven and you know, the payments double or triple when
(04:03):
when interest rates are seven percent, you have to be
very motivated to want to leave that.
Speaker 3 (04:08):
Yeah, so they have to sell, right, like.
Speaker 2 (04:11):
They have to financially sell, or they're getting a job relocation.
You know, there's a lot of reasons that people move
outside of just I want a pool or I want
a bigger house, right.
Speaker 1 (04:23):
Right, right, Okay, So let's turn to the change in
the way commissions are gonna work going forward. All No,
nobody's sure exactly what's going on National Association Realtors with
the settlement with the government that's going to shake up
the whole. It's always five percent, always six percent, being.
Speaker 4 (04:39):
Called the big world, being called the biggest change in
real estate in many decades.
Speaker 1 (04:43):
Yeah, what do you make of.
Speaker 2 (04:44):
All of it, Steve, Well, this is just a proposed settlement.
We'll start with that, right the judge, Do us approve
all that? This is not a new case that's been
fought like this has been waged for two or three
years now, and many brokerages have settled. I think, in
a nutshell, what I would recommend is the headlines are
the headlines, and they're trying to create let's just call
(05:08):
it fear, anxiety or animosity. The fact of the matter
is that, especially in California, commissions have always been negotiable.
In my fourteen year career, honestly, interviewing with buyers and sellers,
I don't think I've ever had a buyer or seller
not ask me what the commission rate is and negotiate
(05:30):
over that. Right, So you know, the proposed rule change
just will require brokers to eliminate what is being offered
in terms of commission on the mls. So it's just
a rule change. I think overall, the conversation of commissions
should ultimately drive more negotiating power for people.
Speaker 3 (05:52):
So I think.
Speaker 2 (05:53):
Commissions will start to come down as they have for
the last five or six years. I think it's just
going to accelerate that conversation. So no drastic change, no
drastic stavings.
Speaker 3 (06:04):
For buyers or sellers.
Speaker 2 (06:05):
I think it will just continue to be better for
consumers and it will continue to drive I think, more
professionalism and then better costs in the end for buyers
and sellers.
Speaker 4 (06:17):
More professionalism. That's interesting, Yeah, so fewer.
Speaker 1 (06:20):
People who just stick listing up on MLS and hope.
Speaker 2 (06:24):
I mean, if you look at the statistics, like eighty
percent of the agents that are licensed today, there's one
point six million of them will not be in business
within twenty four months.
Speaker 4 (06:35):
So if we eighty percent, you said.
Speaker 2 (06:38):
Eighty percent, yeah, eighty percent will will be in and
out within twenty four months. So that eighty percent, so
a million agents are out there working with their friends
and family typically right like three or four people a
year will if the vast majority of the sales are
being done with people who are not professionals or in
(06:58):
the business or like, sit down and explain how commissions work.
Speaker 3 (07:03):
It's no wonder that there's.
Speaker 2 (07:04):
A giant settlement that's happening when you know the vast
majority of people aren't treating this like a professional business, right,
And so ultimately the people that I know, you know,
the top thousand agents in the country, we've always sat
down and presented how commissions work and the buyer and
the seller chooses them. But that's not the standard for
(07:25):
all the agents in the marketplace. So I hope that
you know, this will drive more professionalism and just the
talk of this is going to create a reason for
consumers to go out and interview multiple agents rather than
just working with their friend, family or coworker who got
their license a year ago.
Speaker 4 (07:43):
Gotcha interesting, that's really interesting.
Speaker 1 (07:45):
So, just out of curiosity, the easy Come easy Goo agents,
do you have a derogatory nickname for them you'd like
to share?
Speaker 2 (07:58):
I would you call them fly by night agents?
Speaker 3 (08:02):
Right?
Speaker 4 (08:03):
You know, there's got to be some sort of seed
dwelling bottom sort of something or other.
Speaker 1 (08:08):
Yeah, you don't have to answer, right, Yeah, I'm just
wondering entirely.
Speaker 4 (08:12):
I gotta believe there's no he's a she's a there's
a word, but you won't say it on the air.
Speaker 2 (08:16):
And I understand why it's so bad that when I
meet new people, I do not tell them that I'm
a real estate sales person. I might say, like, I'm
a real estate investor. Or, I own properties, but I
don't go out and say, you know, I'm a real estatey.
Speaker 4 (08:29):
We have the same thing in our profession with with
the The exact same thing happens in our profession with
disc jockeys, Like everybody was a disc jockey at some point,
and so you don't want to say you're on the
radio because they lump you in with all those fly
by night disc jockeys.
Speaker 2 (08:46):
Especially with all the podcasters nowadays and reel makers.
Speaker 3 (08:49):
I would imagine, right, I.
Speaker 1 (08:51):
Have a computer and a microphone. Yes, well this is
this is interesting, Steve. I'm glad we reached out for
your perspective. Anything else that's burning in your mind you
wanted to share before we let you go, I would.
Speaker 2 (09:02):
Just say, you know, at Elevate, we've been focused on
providing a commission menu and options for nearly ten years,
and it was for this very reason, right, we wanted
to present all the options and let the customer choose
their you know, their commission rate and their their service.
Speaker 3 (09:21):
Right.
Speaker 2 (09:22):
So you my recommendation to people out there who are
who are interested in buying and selling, you should absolutely
interview two or three agents, and that way you can
see just how much value you're getting for whatever commission
that they're ultimately charging you. And you should expect in
command to know what am I getting by working with you. Yeah,
(09:45):
this is not just a I'm open you know, the
agents don't just open doors. And if that's it, then
yes they are way way way overpaid.
Speaker 3 (09:52):
I've had that kind Now I'll work with that person.
Speaker 4 (09:54):
Thanks for opening the door for me. Here's fifty dollars
or hover much money you get right, Yeah?
Speaker 3 (09:59):
No, yeah, that's you know.
Speaker 2 (10:01):
So I would highly highly recommend you got to interview
multiple agents and then command from them, you know, show
me what you're you know, show me what I'm getting
for for whatever commission rate that's being set, both as
a buyer and a seller. And I think that's very
important moving forward.
Speaker 1 (10:20):
Steve Lamoth, Elevate Realty Group, Steve, interesting stuff.
Speaker 3 (10:23):
Thanks absolutely, thank you.
Speaker 4 (10:25):
I meant to ask him if there's a handy mnemonic
for remembering it's like lefty lucy righty tidy for wrenches?
Is it by low sell high or buy high sell?
I just never can remember which it is, and that's
how I get myself into trouble.
Speaker 2 (10:36):
Wow extra large
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Joe Getty
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