April 6, 2025 • 33 mins
Get ready for some essential updates on commission regulations that could impact your next real estate move! We're diving into the fascinating ways wildfires have shifted the dynamics of the real estate market, revealing what it means for buyers and sellers alike. Plus, we’ll take a closer look at the pros and cons of selling to a wholesaler versus the traditional route of partnering with a realtor. You'll want to hear some eye-opening cautionary tales from the field that could change your perspective! And don’t miss our exploration into the enticing factors driving many to leave California in search of fresh opportunities—it's a trend you won't want to overlook!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
You're listening to KFI AM six forty on demand.
Speaker 2 (00:04):
I am justin Worsham.
Speaker 3 (00:06):
For those of you that are long term KFI listeners,
you probably may recognize my name. Back in I think
it was twenty fifteen, I got the job as the
board op for the Bill Handle Show in the morning.
I did that for a couple years, and then management
at the time felt I made the show sound too silly,
and so I looked for another gig and Gary and
(00:29):
Shannon were kind enough to have me on their show.
So Wednesdays from eleven thirty to noon, I am on
their show talking parenting. But that is not what I
am here today to talk to you about. That is
my little bit of my background in radio. But what
I'm here to talk to about we're doing a real
estate Southern California real estate talk show. So when I
(00:50):
left radio, I got my I had my real estate
license in twenty thirteen because I wanted to get into
property management. I did that for about four years. That's
actually how I saved up for the house I bought
in Bourbank, California. Anybody out there, especially if you're here
for the entertainment industry, look into property management. It's a
great way to find affordable housing. In most cases, you
could live for free in a place, and I was
(01:11):
maybe putting twenty hours in a month managing that place,
and I was getting a free twenty one hundred dollars
a month apartment.
Speaker 2 (01:17):
It was awesome.
Speaker 3 (01:19):
When radio did not look like a good option for me,
I thought that real estate would be a backup. Like
I'm sure most realtors out there who are listening can
agree to. Very few people grow up going I want
to be a realtor when they're in elementary school, and
it actually became the career that I loved, and it's
something that I wish I had done since I was twenty.
(01:39):
So I got my license to twenty thirteen, started me.
I was a real a full time agent. In twenty eighteen,
got my broker's license, and now I own and operate
my own real estate brokerage here in southern California. And
the first thing I wanted to talk about today, we're
going through questions that I get a lot as a realtor,
and so I'm hoping that you guys will find this
(02:01):
interesting because these are kind of ranked in the most
common questions. The biggest one that comes up now is
that there's a misunderstanding about how realtors, particularly realtors that
are representing a buyer, get paid in this market. A
lot of people think that there was a law change.
There was no law change. It wasn't a legal change.
Everything is exactly the same from a legal standpoint. What
happened was that there was a settlement made with the
(02:22):
National Association of Realtors due to a class action lawsuit
that originated in Missouri, and they settled for I think
is somewhere around four billion dollars.
Speaker 2 (02:29):
That's irrelevant.
Speaker 3 (02:30):
What was happening in those states is that the listing
agreements that sellers were signing did not disclose that part
of the commission they were paying their realtor to sell
their house was going to their competitor, the buyer's agent,
and so they weren't aware of that. In California, we've
always had that, But part of the settlement was we
had to remove the commission, or what we call in
(02:50):
the real estate industry the cooperation element, from our multiple
listing service or mls. So no longer when I list
the house can I say I'm going to give this
buyer's agent two and a half percent. That's not how
it works anymore. So then now people believe that they
have to pay their buyer's agent, And in most cases,
that's not what I'm seeing, at least in the market,
not what I'm hearing from any of my friends in
the industry either. Everything is basically functioning exactly the same
(03:13):
way it was before, only now a buyer's agent has
to have a conversation with a buyer ahead of time
to explain this, where before you never really did that,
or at least most of us I would argue didn't.
And you also have to have a buyer representation agreement
in place, and that's because I can't just go pick
a house that's available and put it on the market
to try to sell it. I have to have a
(03:35):
contract with that seller. And this new change means that
when you're representing a buyer, I can't just go out
and show them houses and expect to be entitled to
a commission. So I need to have an agreement in
place between the two of us. And now they've even
streamlined even better, and it's getting better that you put
in the contract what your buyer's agent is going to
get paid for. Instance, I usually ask about two and
(03:56):
a half percent. In my experience, that's about the most
that you get. We're not supposed to talk about like
commissions and break it down because it seems like we're
rigging the industry. But I'm just giving you averages here,
not making any kind of suggestions or saying that these
are hard lines. This is just general blanket statements. And
so I submit an offer, and in some cases a
seller might come back and say, I'm not going to
(04:17):
give you two and a half percent, but I'll give
you two percent, And that's up to you as the agent,
and you and the buyer and everybody I have had
on the listing side. Recently, I had an agent who
submitted an offer and they said that they wanted my client,
the seller, to pay three percent. When I presented that
to the seller, the seller was like, that seems a
bit high. I gave him the rite info. I said,
(04:39):
based on averages that I've seen, yeah, that's high. Usually
on the higher end it's two and a half percent.
So my seller countered back and said, we'll give you
two and a half percent, but we're not going to
give you three. The agent said, I've been working with
these guys for a long time, so I think I'm
entitled to three percent, And with all due respect to
that agent, what I told him is like, well, I
will take that to my seller, but I believe that
(05:00):
that's not my seller's problem, right, my seller should not
be paying you for the time that this buyer took
to find a house. So that's to me. An added
benefit of this change is that sure should there's now
there's this added layer of negotiation, which was actually the
intent of the lawsuit. They just wanted everything to be negotiable.
I also think that their intent was that they thought
realtors are the reason why housing is so unaffordable in
(05:23):
general in other places, and I just I think that's insane.
I just don't see how realtors have that much of
an impact on the housing market, and I would love
to find out more. If you disagree with me, you
can go ahead and hit the talkback feature on the
iHeart app and send me a message about that. I'm
also looking to see if you're hearing from people who
are leaving California or you left California. I want to
(05:46):
know why, because we're going to be talking about that
a little bit later on Also I'm going to talk about,
because this is the next big question that I get,
is that the impact that the fires have had that unfortunate, horrible,
horrible incident that we had in January. There's a lot
of belief, much like other things, like when the pandemic happened.
Everybody was like, this is going to be the thing
that changes the housing prices in southern California, and so
(06:09):
far we're not seeing it. So when we come back,
I'm going to talk more about why I think that
the fires are not going to have the impact that
most people out there trying to buy a home and
live that American dream in southern California, they're not going
to see those prices come down the way that they would.
Speaker 1 (06:24):
Hope you're listening to KFI AM six forty on demand.
Speaker 3 (06:29):
When I was a kid in elementary school, I wanted
to be a stand up comic. I was fortunate enough
to work the road for like seven years, but when
I got into middle school, Oh, I wanted to be
a radio shost That would be such a fun gig, right,
And so at least I'm getting to try it out
for two hours today, and then we got two hours
again next Sunday from two to four, still talking Southern
California real estates. I feel like it's going Okay, did
(06:52):
one segment.
Speaker 2 (06:53):
The real test is yeah, in school grade school, was
your citizenship excessive talking? Oh, yes, for sure. Yeah.
Speaker 3 (06:59):
I always I'd always got good grades, but never had
satisfactory citizenship.
Speaker 2 (07:03):
It was always us.
Speaker 3 (07:04):
Everything was unsatisfactory as far as my behavior in the
classroom perfect. So now I want to talk about the
other question I get a lot is the fires. And
what I believe this comes from is if you're out
there and you're trying to buy a house in southern
California right now, it just sucks like there's nothing, there's.
Speaker 2 (07:23):
Nothing good about it.
Speaker 3 (07:25):
I hear from clients when I'm helping them find a
house all the time that they're like, who pays this
much money for a house? When I started in real
estate and kind of my home area of Burbank, that's
where I live, the median house price was around nine
hundred and fifty thousand dollars and now it's one point
four million dollars and it is insane. Don't get me wrong,
it's crazy. And so everybody likes to try to find
(07:46):
these things they're hoping, they're dreaming that something is going
to change that. And we're going to talk about affordability later,
but I want to lead into what I think is
going on behind these fires, and I think what really
started this whole thing, in my opinion, is that as
soon as they happened, there were a lot of reality
TV stars that are on these like real estate shows.
I think the million dollar listing guys, I think they
(08:07):
do pretty well, but most of the other shows that
I've looked into, I could go in the MLS and
I could look and see what they do in production,
and it's not a lot, so they're very good being
television people. But I saw a lot of people being
good at being reality TV stars and saying this is
going to change the market.
Speaker 2 (08:21):
My phone is blowing up. And maybe it's.
Speaker 3 (08:24):
Because I help what I would consider to be more
middle to upper middle class clientele, and I'm not a
luxury agent. The most expensive house I've sold so far
was a five million dollar, humongous, beautiful place in Tarzana,
and then from there it's usually around one to one
point two million on average, So maybe that's why. But
I think all of this started because the overregulation of
(08:48):
the insurance industry by the state of California. They were
trying to make it a thing where insurance companies were
charging the same for everybody, regardless of their risk assessment,
and they thought that that would make it more affordable
for people to get insurance for their homes. And I
think they also thought somehow that that would somehow make
(09:09):
it more affordable, like I think they thought that that
was part of the reason why houses cost so much more.
They love to I've noticed they love to blame other industries.
They don't want to blame the legislation. They don't want
to blame like I've heard from developers, it's fifty thousand
dollars before just to get start the process of doing
a development or making a building, before you even put
a shovel in the ground. And they have all these
impact survey or environmental impact survey, so you have to
(09:32):
do all these studies, and it just it doesn't help
when they get overregulated in that way. So in California
to fix that, because then what started happening.
Speaker 2 (09:41):
The first one I heard was State Farm.
Speaker 3 (09:42):
They were the first one to start saying, we're not
writing policies in California anymore, and so they came up
with the California Fair Plan, So it's a subsidized fire
insurance policy.
Speaker 2 (09:53):
And I looked into it.
Speaker 3 (09:55):
Only twenty two percent of the structures in the Pacific
Palisades Fire and only twelve percent of the ructors in
the Eton Fire were actually covered by the California Fair
Plan for Palisades.
Speaker 2 (10:05):
That's they're estimating.
Speaker 3 (10:06):
That's four billion dollars in costs to replace those properties
or in damage, and the Eton Fire at seven hundred
and seventy five million, So sixteen thousand structures were lost
during those fires. Horrible tragedy. I hope I'm not being
insensitive to it in any way. Not my intent at all.
What I want to do is just look at it
from just a strictly numbers. They take the emotion out
(10:28):
of it, take the trauma out of it. There's an
organization that I found in preparation for the show called SKAG.
It's the Southern California Association of Governments. The best way
I could describe it, it's as if the counties of
Southern California decided to form their own un and they
get together and they share resources, they share information and
they make plans for all of us that live here
(10:50):
in southern California. It includes Imperial County, Los Angeles, Orange Riverside,
San Berdino, and Ventura.
Speaker 2 (10:55):
Back in March of twenty twenty one.
Speaker 3 (10:57):
They adopted what they call the six cycle of the RHNA,
and that's the Regional Housing Oh man, I'm blanking on
that s assessment. It's basically what they said is, these
are the amount of new houses that we need to
bring to the market in order to meet the growing demand.
And right now they have a projected plan in order
to meet the demand. Again, this is just to meet
(11:20):
the demand that they see of one zero point three
million housing units by twenty twenty nine. There is no
way that the loss of sixteen thousand units and those
horrible fires is going to come close to meeting their
projected demand. The other added fact is that when you
dig a little bit deeper and you look into it,
(11:40):
because of just the limit of land availability, legally they
only could do about four hundred thousand of those one
point three million units that are needed. That's our bigger
issue here, that's the problem. That's why even with these
high interest rates. I looked into it too crazy appreciation
in both Orange County and in Los Angeles County. That's
(12:02):
not what's supposed to happen. When the interest rates went
up a couple of years ago, it's supposed to drop
the prices. That's what's supposed to happen. And we didn't
see it happen. And everybody's like, why, why, Why isn't
this happening? And I really believe it's because we still
don't have enough houses car The California Association Realtors also
commission to study. I tried to find it because I
saw a webinar on it like two years ago and
(12:22):
I was fascinated by it. They did this webinar where
they researched major markets all over the US, and what
they found is that if you live in an area
of high population density or high desirability. It's important to
note that high population density or high desirability, so it
doesn't even have to be dense with a lot of people.
(12:43):
It's just if this is a place people want to
live and the primary housing option is in the larger
percentage is what they call R one, a residential essentially
a single family home, the home that you grew up
in right, not an apartment building, not a condo, not
a town home, just a single family, standalone home across
the board. Those areas have an affordability issue, So you
(13:05):
have to be able to build up. You have to
go up. You can't have a ton of houses there.
You can't do these large swaths of single family neighborhood.
Anybody who's flown into lax or a Hollywood airport in
Burbank and you look over the La basin, it is
just a ton of single family neighborhoods. And that's where
in my experience, everybody wants to be able to live
in a single family home. Nobody wants to live like
(13:27):
they're in New York. Only New Yorkers are fine living
in condos that I've seen. They like the building living
and a lot of cases sometimes even single ladies, they
make it. They feel like it makes them feel more safe,
they feel more connected to the people, and they're enclosed
and I don't know, it's like a warm blanket that
covers them. So my opinion that there is not going
(13:48):
to be an impact on a housing or the cost
of housing from the fires. Unfortunately, honestly, I know that
this may not be popular amongst people who already own
their homes, and maybe even some realtors. Although if you're
a relter and you don't like the fact what I'm
about to say, I would love to have a conversation
with you. I would love for there to be of
housing correction. I would love for prices to drop, because
(14:09):
the affordability here in California is just it's awful. It's awful,
and I do plan to talk about that in the
next hour. I want to talk more about what it is. Why,
like what can we do to make houses more affordable?
And I mean to give it to you in a
Nutshell'll dig it into a deeper later on. We just
need more houses. It's not realtors. It's not the cost
(14:29):
of insurance, it's not natural disasters, it's none of that.
It is basic supply and demand. And for whatever reason,
the legislators can't wrap their mind around that.
Speaker 2 (14:39):
That's the easiest way to fix it. You have to
find a way to make.
Speaker 3 (14:43):
It easier for developers who build new construction homes to
make money doing it, and they will fix your problem
for you.
Speaker 2 (14:50):
Why.
Speaker 3 (14:51):
And that's the other thing with these fires, The thing
that was blowing my mind and that's what I started
to talk about with the insurance stuff, is that when
these insurance companies started looking at the way things were
going in California and they were running the numbers, they
started to say, we're not writing new policies. And that's
because the entire function of their industry, the way that
they make a profit, is assessing risk. And so I'm
(15:11):
sure that they didn't know to the day, or they
didn't know when it was going to happen, but they
had a very strong idea that something was going to
go horribly wrong for their industry, and they didn't want
to get caught up on it. They wanted to mitigate
that risk as much as they could. And so that's
why they stopped writing policies in California, because they knew
something was going to happen. And we should have looked
at that as like a canary in the coal mine.
(15:32):
We should have said, oh, maybe there's something wrong with
the way we're handling homeowners insurance in the state of California.
Speaker 2 (15:38):
Maybe it shouldn't be that regulated again.
Speaker 3 (15:43):
If I would love to hear from you, hit that
little microphone on the iHeartRadio app and I want to
hear the talkback. I want to know if you left
California or you know someone who left California. I want
to know why, and I also want to know where
you went, where you're going let me know. We're going
to be talking about the difference. You hear what advertise
you see them on television. When we come back, we're
going to talk more about these what I call wholesalers.
(16:05):
These are great people who give you the option of
like I'm just going to pay you cash for your house,
no contingencies, know nothing, and I'm going to make it
as easy as possible for you to sell your house
versus using someone like me, a realtor. We're going to
talk about that more when we come back.
Speaker 1 (16:18):
You're listening to KFI AM six forty on demand.
Speaker 2 (16:22):
This is justin Worsham.
Speaker 3 (16:22):
We're talking southern California real estate. If you're just joining us,
I'm a licensed real estate broker, former KFI board op
and producer and just general I just was listening at
last promo. I have an unhealthy I think love for
Gary and Shannon, like I just think they're just they're
They've done a lot for me, so I got a
lot of love for them, but I just I think
(16:43):
the world of them.
Speaker 2 (16:44):
They're great people and I just love their show so much.
Speaker 3 (16:48):
Robin, I understand we had somebody who was nice enough
to take advantage of the talkback Can we hear that?
Speaker 2 (16:53):
Can you help me with that? Please?
Speaker 4 (16:55):
Hello, great idea for a show I would like to know.
Is it true if you house is on the market
for more than sixty days, you as the buyer lose
all your negotiating tactic.
Speaker 3 (17:08):
Thank you, that's a great question from Kathleen. Thanks for
using the talkback feature. If you also have a question,
I would love to do that. So if you're listening
on the iHeartRadio app and you have a question, hit
that microphone in the top and it lets you, I think,
leave like a twenty five second voice clip that you
could send us as a voice memo and we get
to listen to it.
Speaker 2 (17:27):
Now. I'm going to guess that probably much.
Speaker 3 (17:29):
I hope it's not coming through, but I would be
lying if I didn't say I was a little bit nervous.
I'm weirdly enough, I'm nervous because I felt like I
would be more nervous when I don't know if I
told you this when I first started the show the
first time I ran the board Robin, You'll get an
amusement out of this. The first time I went to
just hit the first button to fire into the lead
of the show, I blanked on all of the training,
had no idea. I thought I forgot everything how everything worked,
(17:52):
and I almost passed out and got lightheaded.
Speaker 2 (17:54):
And I have zero of that right now.
Speaker 3 (17:56):
I almost feel weirdly too comfortable, which it brings its
zone sets of nerves. But I think, Kathleen, the reason
you're asking your question about sixty days negotiating for a buyer,
what you meant is as a seller. And here's why
I'm gonna say that. I'm gonna answer both ways, just
to be fair. If you are a buyer and you
are looking at a house that has been on the
market for sixty days. Last time I checked, the average
(18:18):
days on the market in California were twenty eight during
the pandemic at its peak, it was like six to
seven half of the homes in California during like twenty twenty,
twenty twenty one in California, the entire state, we're selling
in less than a week. It was crazy times. And
now what's hard is that when you help sellers, they're
not used to it. Like, I have a listing right
now in Burbank that is priced below any other three bedroom,
(18:39):
two bath home in Burbank, and it's We've been on
the market for two weeks now, and I'm telling my
seller now is not the time to be nervous because
they're used to the old market. So if you have
a house that's been on the market for sixty days
and you are the seller, I would argue, yes, you're
probably losing some of your negotiating power because you don't
(18:59):
have a lot of offers that are coming in. If
you are listing your house, always trust your agent, right
because there's a reason why you have that relationship.
Speaker 2 (19:07):
There's a reason why they're there.
Speaker 3 (19:09):
So I wouldn't necessarily feel comfortable arguing with them about
your circumstance because I don't know it. But let's say
you were my client and you had a house somewhere
in the LA area or even Orange County that had
been on the market for sixty days and you've had
zero offers. Usually your first issue is you got a
price issue. That means you're overpriced. Now, what happened with
the interest rates when they came up in Oh, I'm
(19:31):
blanket on the air, I want to say it was
twenty twenty two. I think that's when the March of
twenty twenty two is. Want to say the rates jumped up.
The biggest segment of the market that was impacted were
condos and townhomes because they are the lower priced option.
So if you were somebody who was looking for a
four to six hundred thousand dollars condo or town home
in southern California, a lot of your competitors or competition
got priced out of the market.
Speaker 2 (19:51):
They just couldn't afford it anymore.
Speaker 3 (19:53):
I was helping a young couple and they were capped
out at four to twenty five, and so we were
trying to help them find a two bedroom condo up
in Canyon Country, Anna Clarita area, and if the rates
ticked up another half a point, they're like, we can't
buy a house anymore. So now what's happening in that
segment of the market is if you have a condo
or a town home, it's stacking up. And so, just
like I've said before, it's basic supply and demand economics.
(20:15):
The more supply, the more town homes and condos that
keep adding to that area. Then that means that there's
more supply than there are people looking to buy it,
and so naturally the price just kind of comes down.
Speaker 2 (20:26):
So I'm going to flip it.
Speaker 3 (20:27):
Though, So as a buyer, if the place has been there,
I feel like it gives you more negotiating power because
chances are at that point. I usually recommend clients do
about twenty thousand dollars no more than that below list
to start a conversation. But the better way to do
it is to have your realtor pull comps on it.
Comparable market analysis. We call them comps for short. It's
when they look for houses that are similar to the
(20:48):
house that's on the property.
Speaker 2 (20:49):
They call that the subject property.
Speaker 3 (20:51):
A good realtor is using the same kind of criteria
that an appraiser would use to assess the value on
the property for a loan if it was under contract
or an escrow. So you're going to look at that
to see is the house overpriced, and then try to
find it. Very rarely do I come across houses when
I'm representing buyers where the seller just has like an
unreasonable Like by unreasonable, I mean crazy unreasonable, like hundreds
(21:12):
of thousands of dollars above where it should be. Sometimes
what you'll see is a flip will sometimes have that
because they probably they just underestimated the construction or rehab
costs when they were flipping and updating the house.
Speaker 2 (21:24):
If you don't know what a flip is, it's where
you buy what we would.
Speaker 3 (21:26):
Call distressed home, a dump, a fixer, just something that
probably most people wouldn't want to live in unless that's
all they could afford in southern California, because it's so
impossible to find something affordable, and you buy that and
then you renovate it, you fix it, and then you'd
sell it for more. So you see that where usually
it's like the builders like I just have to get
(21:47):
this to cover my nut, Like this is what I
need to get out of this house in order to
pull that off.
Speaker 2 (21:52):
So I don't think and then I guess.
Speaker 3 (21:54):
The one thing I want to just clarify too is
negotiating tactics.
Speaker 2 (21:57):
I just want to be clear, like I don't.
Speaker 3 (21:59):
Think you should you shouldn't go into buying a house
like offering high I've had a lot of signs that
come up as a listing agent where people come in
and like, we're just going to offer high and then
we're going to talk them down. The other thing that
buyers love to do is they love to come at
me and say, here's the thing. We're going to counter
back with the lowest number, and then they'll come back
with the highest number. And I mean this with all
(22:21):
the kindness and love in my heart, but you are
not the first person to think of that. That is
not how negotiation traditionally works in real estate. I'm not
saying it never worked. I'm just saying that your odds
of success with that are very little because what I've
seen happen more often than you get that number you're
looking for is now you've just made that seller angry,
especially now where technically we should be trending for prices
(22:43):
coming down, and all we're really seeing is houses are
taking longer to sell. So if you got a seller
as an idea of what they should be getting in
their mind, and now they're not going to get that
price and they're just sitting there or they're already in
a frustrated headspace, and now you want to come in
and offer them eighty to one hundred thousand less than
what they haven't listed for, especially if there's comparable sales
(23:03):
that have happened within the last ninety days that would
support their listing price and their value, then that's gonna
make them angry. Think of what how you would feel
if you were selling the house. It's interesting to me that, again,
when I help buyers, how little they can see the
other side. Everybody is so focused on just getting themselves,
and every once in a while you have people who
are like, even if they're getting a deal, I've been
fortunate enough. In the last month, I got one property
(23:26):
for a client in North Hollywood that it was seventy
five thousand dollars below market value, and it came in
sixty thousand dollars. The appraisal came back sixty thousand dollars
more than list and that usually means that that's how
good a deal that they got. And I'm like, I'm
a pretty good agent. I like to think I'm a
good one. I'm not saying that to brag. That doesn't
happen all the time. This is just a circumstance where
(23:48):
I had some listing agents that were using an old
model for pricing that just didn't work.
Speaker 2 (23:52):
So Kathleen, I hope that answered your question.
Speaker 3 (23:54):
If anybody else has a question, please use that talkback feature.
Also again, shoot me a message if you want. I
want to know if you know somebody who's leaving the
state of California. I want to know why hit me
up on that talkback and I didn't get to it.
So we're gonna We're gonna go back. We're gonna talk wholesalers,
these people that offer to pay cash for your house.
You could stay there as long as you want, You
could leave as much stuff versus using a realtor, which
(24:15):
one makes more sense.
Speaker 1 (24:17):
You're listening to KFI AM six forty on demand.
Speaker 3 (24:21):
Justin worshow me here with you talking Southern California real
estate got tons of people are hitting the talk back,
and as far as I could tell, not one of
them is my mother yet, So I'm really I'm gonna
take that as a win.
Speaker 2 (24:34):
Richie. Just take note.
Speaker 3 (24:35):
If any of them are named Cheryl, that's my mom
and we should definitely prove that first, because she's probably
just trying to make me look good. But I love you, Mom,
and thanks for definitely will thanks I appreciate. So I
didn't get to talk to this in the last segment.
But it's something that comes up a lot for sellers.
So you see probably you've srobably seen television ads, you've
heard them advertise here on KFI.
Speaker 2 (24:56):
I call them wholesalers.
Speaker 3 (24:58):
These are companies, people, well whatever you want to call them,
who are offering to pay cash for your house, non contingent.
What that means is they're saying, I will buy your house.
I don't need to get it inspected, I'm not worried
about it getting an appraised appraisal for the value of
the home, and I don't need to get a loan.
I'm just going to buy it. And what they also
do is they say, here's the thing. And traditionally in
(25:19):
this market, it's about a twenty one to thirty day
s grow on average. Some of them go a little
longer if a seller needs more time to be able
to find a new place. But they're saying, we could
wait three months, four months, you could pick the day
that you move out.
Speaker 2 (25:33):
You can also leave all of your furniture or trash.
Speaker 3 (25:36):
Whereas the standard purchase agreement in the state of California
requires that a home be at least broom swept, but
you could literally just pack up and leave in any
junk that isn't a keepsake or whatever. You could just
walk out and to me, in my opinion, there's only
really one downside to that, and it's that usually they
can't find a way to make it cost effective for you,
(25:57):
like they can't make you as much as a realtor can.
Speaker 2 (26:00):
And I want to emphasize this.
Speaker 3 (26:02):
I mean usually I have in at least three different instances,
I have had sellers come to me and say, so
and so is offering me this amount to sell my house. Right, So,
when I look at that amount, and when you account
for the commissions that they would have to pay, which
is in this market usually not hard fast. Again, there
(26:24):
is no way of setting commissions, no legal requirement for commissions.
They are all up for negotiations. But traditionally a seller
is still paying three to six percent or I'm sorry,
it's five to six percent in commission for a sales
price that I look at it and go, if it's
about a five percent difference in price, it doesn't make
sense for you to use a realtor. So, but there's
(26:46):
also data that shows before the realtor's light their pitchforks
and torches and descend upon Burbank to find me.
Speaker 2 (26:53):
There's also research that says that if you use.
Speaker 3 (26:56):
A realtor versus trying to sell your home by yourself,
so we call them fizzb as realtors for sale by owners,
and you usually get thirty percent more on the sales
price of your home than if you sell it yourself.
So a realtor will get you thirty percent more. So
they're making you more than what you're paying them in
the commission.
Speaker 2 (27:16):
So what do you do? How do you know what
the right thing to do?
Speaker 3 (27:19):
Is? The right thing to do is to talk to
these companies. I would recommend you do it in this order,
because if you talk to a realtor and then they
start to list your house and you put it on
the market, in most cases, at least as far as
I know, those companies kind of go away. They're not
interested in doing that. They're interested in just making you
one offer and saying this is what we'd like to
give you for your house, Take it or leave it.
(27:39):
So I would start with those companies. I would find
those places that you're seeing advertise on the television. I
would make note when you see them. I would google them.
I would listen to the companies that advertise here on
KFI and get their number and call them and just
see what's your offer there. Then I would recommend that
you talk to at least three other realtors. And you're
(28:00):
going to have to use your gut on this. Because
I had a listing appointment in Tuluca Lake recently, which
is up in the San Fernando Valley, and it was
a woman whose father had passed away, had a house
that just as it was right there, was probably worth
about one point two million dollars. And the son was
very excited. So this would be the grandson of a
(28:21):
technically the owner right he was inheriting the house. He
was excited because he had heard from a few realtors
that he could rent this house this house out for
ten thousand dollars a month if he updated it. Now,
when you look at the data, it had been done.
But when I got in there, and this is how
I lose a lot of my listing appointments is to
be honest, I'm too honest. I'm just like, this doesn't
(28:43):
make any sense. I said, well, who is going to
be able to afford ten thousand dollars a month, like, yes,
it's happened, but their anomalies. Also, those houses sit on
the market for at least three or four months because
the market share of person who's looking for that house
is so small. It's not a large group of people
that are like, you know, what I need is a
(29:04):
ten thousand dollars a month rental, because technically what we
look for is realtors, and what we recommend, the industry recommends,
is that you make at least three times anywhere from
two and a half to three times whatever your rent is, right,
they want that in monthly income. So you're looking for
somebody who makes thirty thousand dollars a month to rent
your ten thousand dollars a month home. People who make
(29:25):
thirty thousand dollars a month and are not looking to
buy a home are not planning to stay here for
very long. So now you're kind of running what I
would say is a glorified airbnb, which is not an investment.
Airbnbs are not an investment. That is a business. You're
starting a business because you've opened your house up.
Speaker 2 (29:42):
You're the house you own, and you're making it into
a hotel.
Speaker 3 (29:45):
There's maintenance costs, you have to have it clean, you
have to get furniture, like all of those things are
what you would find in a hotel.
Speaker 2 (29:51):
And that's not an investment.
Speaker 3 (29:52):
Having a vacant property that you then rent out for
years at a time, I would argue that's an investment
because it could sit there passively. I have an property
in Apex, North Carolina, because I wanted to see what
it was like to invest out of state. This sounds
like I'm bragging nowt I swear this is I'm just
talking off the cuff like I would at any open house,
But I just I wanted to see how is it
(30:12):
better to invest in real estate outside of California. And
so far, my experience has been great. I've never even
stepped foot in this house. I treat it like you
would a stock. It's no different than buying Tesla or whatever.
Procter and Gamble in my opinion, I'm just I put
money in there and then I make a little bit
back off of it each time. So going back to this,
you want to talk to realtors and go with your
gut to see like something in your gut is going
(30:33):
to tell you, especially if everybody is saying the same thing,
you're going to know if you're being sold. There's lots
of different types of realtors. I don't like that we
get hit with this like stereotype that we're all just
basically use car salesman who sell houses. Don't get me wrong,
I've come across them. They exist out there. I have
one who's a dear friend of man. Shout out to Brian.
He looks like a used car salesman. And I love
(30:54):
this guy dearly, and I hope he doesn't hear me
say this. He looks like a used car salesman. He
talks like a used car salesman, but he's a great realtor.
He cares about his clients, but he's not a used
car salesman. So you want to make sure that somebody's
looking out for your best interests and not their own.
And I think, I really, I have faith in you.
I think you could figure that out. You could suss
that out, and then you look at all the data. Traditionally,
(31:16):
most people when they're looking for a realtor, they take
the first person they were recommended. And don't get me wrong,
when that comes my way, I'm very happy about it.
Speaker 2 (31:23):
I love it.
Speaker 3 (31:24):
But I also feel very confident that those people I
know I'm going to take care of it. I know
how I operate, I know that I'm looking out for
other people. But I've had I've had flat out conversations
with other agents that you could just tell that they
don't really care about the people they're helping. It's just
about the commission bottom line. And that also, I don't
think makes them horrible people. I know it's scary and
(31:44):
I know it's unnerving to buy a house, but I
really feel like the same thing can happen with a car.
You go in and you have all of the best
intentions of buying a car and somebody sold you something
that later on you found out isn't good. But statistically,
more often than not, people buy cars that they enjoy
for a very long time. I feel like it happens
a lot more that way than it does that they
get hosed, And so far, in my experience, the same
(32:06):
thing goes with shopping for a house and looking for
looking that kind of stuff. Oh man, this isn't so bad.
I think I'm doing good. I feel I feel pretty
good about it. Thanks Robin, appreciate the thumbs up.
Speaker 2 (32:17):
I haven't. This is We're gonna.
Speaker 3 (32:18):
Try this for two weeks and either either you could
tune in and you could hear the train wreck and
maybe that's exciting, or I do okay, or maybe it's
how it's it feels like it's going right now. It's
fair to Midland, and hopefully that's not boring enough. Most
people love a good train wreck, I must say. I know,
that's all I'm kind of waiting. What's really gonna go
wrong is if something really bad happens in the world.
(32:38):
I don't want that to happen, just because I don't
want anything bad happen in general. But that's where we're
gonna see me flummox. I could talk real estate like
I was at an open house before this, just talking
for hours talking to people about the show. It's hard
to get me to shut up at an open house.
I love talking. I geek out about numbers, and I
love this job so much. But let's see we got
We're still no. We're gonna pivot because I've been asking
you about what you're gonna do people who are lead
(33:00):
in California now going into or two of our fantastic
show here, I want to hear some real estate horror stories.
Speaker 2 (33:05):
People love to share some horror stories.
Speaker 3 (33:07):
I got a couple if you don't have any, that
I will share at the very end of the show,
which is going to come up right before four o'clock.
But now when we come back, we're going to talk
about why are people leaving the state of California and
is it enough to affect prices.
Speaker 2 (33:21):
We'll talk about that
Speaker 1 (33:22):
Later on KFI AM six forty on demand
You're listening to KFI AM six forty on demand.
Speaker 2 (00:04):
I am justin Worsham.
Speaker 3 (00:06):
For those of you that are long term KFI listeners,
you probably may recognize my name. Back in I think
it was twenty fifteen, I got the job as the
board op for the Bill Handle Show in the morning.
I did that for a couple years, and then management
at the time felt I made the show sound too silly,
and so I looked for another gig and Gary and
(00:29):
Shannon were kind enough to have me on their show.
So Wednesdays from eleven thirty to noon, I am on
their show talking parenting. But that is not what I
am here today to talk to you about. That is
my little bit of my background in radio. But what
I'm here to talk to about we're doing a real
estate Southern California real estate talk show. So when I
(00:50):
left radio, I got my I had my real estate
license in twenty thirteen because I wanted to get into
property management. I did that for about four years. That's
actually how I saved up for the house I bought
in Bourbank, California. Anybody out there, especially if you're here
for the entertainment industry, look into property management. It's a
great way to find affordable housing. In most cases, you
could live for free in a place, and I was
(01:11):
maybe putting twenty hours in a month managing that place,
and I was getting a free twenty one hundred dollars
a month apartment.
Speaker 2 (01:17):
It was awesome.
Speaker 3 (01:19):
When radio did not look like a good option for me,
I thought that real estate would be a backup. Like
I'm sure most realtors out there who are listening can
agree to. Very few people grow up going I want
to be a realtor when they're in elementary school, and
it actually became the career that I loved, and it's
something that I wish I had done since I was twenty.
(01:39):
So I got my license to twenty thirteen, started me.
I was a real a full time agent. In twenty eighteen,
got my broker's license, and now I own and operate
my own real estate brokerage here in southern California. And
the first thing I wanted to talk about today, we're
going through questions that I get a lot as a realtor,
and so I'm hoping that you guys will find this
(02:01):
interesting because these are kind of ranked in the most
common questions. The biggest one that comes up now is
that there's a misunderstanding about how realtors, particularly realtors that
are representing a buyer, get paid in this market. A
lot of people think that there was a law change.
There was no law change. It wasn't a legal change.
Everything is exactly the same from a legal standpoint. What
happened was that there was a settlement made with the
(02:22):
National Association of Realtors due to a class action lawsuit
that originated in Missouri, and they settled for I think
is somewhere around four billion dollars.
Speaker 2 (02:29):
That's irrelevant.
Speaker 3 (02:30):
What was happening in those states is that the listing
agreements that sellers were signing did not disclose that part
of the commission they were paying their realtor to sell
their house was going to their competitor, the buyer's agent,
and so they weren't aware of that. In California, we've
always had that, But part of the settlement was we
had to remove the commission, or what we call in
(02:50):
the real estate industry the cooperation element, from our multiple
listing service or mls. So no longer when I list
the house can I say I'm going to give this
buyer's agent two and a half percent. That's not how
it works anymore. So then now people believe that they
have to pay their buyer's agent, And in most cases,
that's not what I'm seeing, at least in the market,
not what I'm hearing from any of my friends in
the industry either. Everything is basically functioning exactly the same
(03:13):
way it was before, only now a buyer's agent has
to have a conversation with a buyer ahead of time
to explain this, where before you never really did that,
or at least most of us I would argue didn't.
And you also have to have a buyer representation agreement
in place, and that's because I can't just go pick
a house that's available and put it on the market
to try to sell it. I have to have a
(03:35):
contract with that seller. And this new change means that
when you're representing a buyer, I can't just go out
and show them houses and expect to be entitled to
a commission. So I need to have an agreement in
place between the two of us. And now they've even
streamlined even better, and it's getting better that you put
in the contract what your buyer's agent is going to
get paid for. Instance, I usually ask about two and
(03:56):
a half percent. In my experience, that's about the most
that you get. We're not supposed to talk about like
commissions and break it down because it seems like we're
rigging the industry. But I'm just giving you averages here,
not making any kind of suggestions or saying that these
are hard lines. This is just general blanket statements. And
so I submit an offer, and in some cases a
seller might come back and say, I'm not going to
(04:17):
give you two and a half percent, but I'll give
you two percent, And that's up to you as the agent,
and you and the buyer and everybody I have had
on the listing side. Recently, I had an agent who
submitted an offer and they said that they wanted my client,
the seller, to pay three percent. When I presented that
to the seller, the seller was like, that seems a
bit high. I gave him the rite info. I said,
(04:39):
based on averages that I've seen, yeah, that's high. Usually
on the higher end it's two and a half percent.
So my seller countered back and said, we'll give you
two and a half percent, but we're not going to
give you three. The agent said, I've been working with
these guys for a long time, so I think I'm
entitled to three percent, And with all due respect to
that agent, what I told him is like, well, I
will take that to my seller, but I believe that
(05:00):
that's not my seller's problem, right, my seller should not
be paying you for the time that this buyer took
to find a house. So that's to me. An added
benefit of this change is that sure should there's now
there's this added layer of negotiation, which was actually the
intent of the lawsuit. They just wanted everything to be negotiable.
I also think that their intent was that they thought
realtors are the reason why housing is so unaffordable in
(05:23):
general in other places, and I just I think that's insane.
I just don't see how realtors have that much of
an impact on the housing market, and I would love
to find out more. If you disagree with me, you
can go ahead and hit the talkback feature on the
iHeart app and send me a message about that. I'm
also looking to see if you're hearing from people who
are leaving California or you left California. I want to
(05:46):
know why, because we're going to be talking about that
a little bit later on Also I'm going to talk about,
because this is the next big question that I get,
is that the impact that the fires have had that unfortunate, horrible,
horrible incident that we had in January. There's a lot
of belief, much like other things, like when the pandemic happened.
Everybody was like, this is going to be the thing
that changes the housing prices in southern California, and so
(06:09):
far we're not seeing it. So when we come back,
I'm going to talk more about why I think that
the fires are not going to have the impact that
most people out there trying to buy a home and
live that American dream in southern California, they're not going
to see those prices come down the way that they would.
Speaker 1 (06:24):
Hope you're listening to KFI AM six forty on demand.
Speaker 3 (06:29):
When I was a kid in elementary school, I wanted
to be a stand up comic. I was fortunate enough
to work the road for like seven years, but when
I got into middle school, Oh, I wanted to be
a radio shost That would be such a fun gig, right,
And so at least I'm getting to try it out
for two hours today, and then we got two hours
again next Sunday from two to four, still talking Southern
California real estates. I feel like it's going Okay, did
(06:52):
one segment.
Speaker 2 (06:53):
The real test is yeah, in school grade school, was
your citizenship excessive talking? Oh, yes, for sure. Yeah.
Speaker 3 (06:59):
I always I'd always got good grades, but never had
satisfactory citizenship.
Speaker 2 (07:03):
It was always us.
Speaker 3 (07:04):
Everything was unsatisfactory as far as my behavior in the
classroom perfect. So now I want to talk about the
other question I get a lot is the fires. And
what I believe this comes from is if you're out
there and you're trying to buy a house in southern
California right now, it just sucks like there's nothing, there's.
Speaker 2 (07:23):
Nothing good about it.
Speaker 3 (07:25):
I hear from clients when I'm helping them find a
house all the time that they're like, who pays this
much money for a house? When I started in real
estate and kind of my home area of Burbank, that's
where I live, the median house price was around nine
hundred and fifty thousand dollars and now it's one point
four million dollars and it is insane. Don't get me wrong,
it's crazy. And so everybody likes to try to find
(07:46):
these things they're hoping, they're dreaming that something is going
to change that. And we're going to talk about affordability later,
but I want to lead into what I think is
going on behind these fires, and I think what really
started this whole thing, in my opinion, is that as
soon as they happened, there were a lot of reality
TV stars that are on these like real estate shows.
I think the million dollar listing guys, I think they
(08:07):
do pretty well, but most of the other shows that
I've looked into, I could go in the MLS and
I could look and see what they do in production,
and it's not a lot, so they're very good being
television people. But I saw a lot of people being
good at being reality TV stars and saying this is
going to change the market.
Speaker 2 (08:21):
My phone is blowing up. And maybe it's.
Speaker 3 (08:24):
Because I help what I would consider to be more
middle to upper middle class clientele, and I'm not a
luxury agent. The most expensive house I've sold so far
was a five million dollar, humongous, beautiful place in Tarzana,
and then from there it's usually around one to one
point two million on average, So maybe that's why. But
I think all of this started because the overregulation of
(08:48):
the insurance industry by the state of California. They were
trying to make it a thing where insurance companies were
charging the same for everybody, regardless of their risk assessment,
and they thought that that would make it more affordable
for people to get insurance for their homes. And I
think they also thought somehow that that would somehow make
(09:09):
it more affordable, like I think they thought that that
was part of the reason why houses cost so much more.
They love to I've noticed they love to blame other industries.
They don't want to blame the legislation. They don't want
to blame like I've heard from developers, it's fifty thousand
dollars before just to get start the process of doing
a development or making a building, before you even put
a shovel in the ground. And they have all these
impact survey or environmental impact survey, so you have to
(09:32):
do all these studies, and it just it doesn't help
when they get overregulated in that way. So in California
to fix that, because then what started happening.
Speaker 2 (09:41):
The first one I heard was State Farm.
Speaker 3 (09:42):
They were the first one to start saying, we're not
writing policies in California anymore, and so they came up
with the California Fair Plan, So it's a subsidized fire
insurance policy.
Speaker 2 (09:53):
And I looked into it.
Speaker 3 (09:55):
Only twenty two percent of the structures in the Pacific
Palisades Fire and only twelve percent of the ructors in
the Eton Fire were actually covered by the California Fair
Plan for Palisades.
Speaker 2 (10:05):
That's they're estimating.
Speaker 3 (10:06):
That's four billion dollars in costs to replace those properties
or in damage, and the Eton Fire at seven hundred
and seventy five million, So sixteen thousand structures were lost
during those fires. Horrible tragedy. I hope I'm not being
insensitive to it in any way. Not my intent at all.
What I want to do is just look at it
from just a strictly numbers. They take the emotion out
(10:28):
of it, take the trauma out of it. There's an
organization that I found in preparation for the show called SKAG.
It's the Southern California Association of Governments. The best way
I could describe it, it's as if the counties of
Southern California decided to form their own un and they
get together and they share resources, they share information and
they make plans for all of us that live here
(10:50):
in southern California. It includes Imperial County, Los Angeles, Orange Riverside,
San Berdino, and Ventura.
Speaker 2 (10:55):
Back in March of twenty twenty one.
Speaker 3 (10:57):
They adopted what they call the six cycle of the RHNA,
and that's the Regional Housing Oh man, I'm blanking on
that s assessment. It's basically what they said is, these
are the amount of new houses that we need to
bring to the market in order to meet the growing demand.
And right now they have a projected plan in order
to meet the demand. Again, this is just to meet
(11:20):
the demand that they see of one zero point three
million housing units by twenty twenty nine. There is no
way that the loss of sixteen thousand units and those
horrible fires is going to come close to meeting their
projected demand. The other added fact is that when you
dig a little bit deeper and you look into it,
(11:40):
because of just the limit of land availability, legally they
only could do about four hundred thousand of those one
point three million units that are needed. That's our bigger
issue here, that's the problem. That's why even with these
high interest rates. I looked into it too crazy appreciation
in both Orange County and in Los Angeles County. That's
(12:02):
not what's supposed to happen. When the interest rates went
up a couple of years ago, it's supposed to drop
the prices. That's what's supposed to happen. And we didn't
see it happen. And everybody's like, why, why, Why isn't
this happening? And I really believe it's because we still
don't have enough houses car The California Association Realtors also
commission to study. I tried to find it because I
saw a webinar on it like two years ago and
(12:22):
I was fascinated by it. They did this webinar where
they researched major markets all over the US, and what
they found is that if you live in an area
of high population density or high desirability. It's important to
note that high population density or high desirability, so it
doesn't even have to be dense with a lot of people.
(12:43):
It's just if this is a place people want to
live and the primary housing option is in the larger
percentage is what they call R one, a residential essentially
a single family home, the home that you grew up
in right, not an apartment building, not a condo, not
a town home, just a single family, standalone home across
the board. Those areas have an affordability issue, So you
(13:05):
have to be able to build up. You have to
go up. You can't have a ton of houses there.
You can't do these large swaths of single family neighborhood.
Anybody who's flown into lax or a Hollywood airport in
Burbank and you look over the La basin, it is
just a ton of single family neighborhoods. And that's where
in my experience, everybody wants to be able to live
in a single family home. Nobody wants to live like
(13:27):
they're in New York. Only New Yorkers are fine living
in condos that I've seen. They like the building living
and a lot of cases sometimes even single ladies, they
make it. They feel like it makes them feel more safe,
they feel more connected to the people, and they're enclosed
and I don't know, it's like a warm blanket that
covers them. So my opinion that there is not going
(13:48):
to be an impact on a housing or the cost
of housing from the fires. Unfortunately, honestly, I know that
this may not be popular amongst people who already own
their homes, and maybe even some realtors. Although if you're
a relter and you don't like the fact what I'm
about to say, I would love to have a conversation
with you. I would love for there to be of
housing correction. I would love for prices to drop, because
(14:09):
the affordability here in California is just it's awful. It's awful,
and I do plan to talk about that in the
next hour. I want to talk more about what it is. Why,
like what can we do to make houses more affordable?
And I mean to give it to you in a
Nutshell'll dig it into a deeper later on. We just
need more houses. It's not realtors. It's not the cost
(14:29):
of insurance, it's not natural disasters, it's none of that.
It is basic supply and demand. And for whatever reason,
the legislators can't wrap their mind around that.
Speaker 2 (14:39):
That's the easiest way to fix it. You have to
find a way to make.
Speaker 3 (14:43):
It easier for developers who build new construction homes to
make money doing it, and they will fix your problem
for you.
Speaker 2 (14:50):
Why.
Speaker 3 (14:51):
And that's the other thing with these fires, The thing
that was blowing my mind and that's what I started
to talk about with the insurance stuff, is that when
these insurance companies started looking at the way things were
going in California and they were running the numbers, they
started to say, we're not writing new policies. And that's
because the entire function of their industry, the way that
they make a profit, is assessing risk. And so I'm
(15:11):
sure that they didn't know to the day, or they
didn't know when it was going to happen, but they
had a very strong idea that something was going to
go horribly wrong for their industry, and they didn't want
to get caught up on it. They wanted to mitigate
that risk as much as they could. And so that's
why they stopped writing policies in California, because they knew
something was going to happen. And we should have looked
at that as like a canary in the coal mine.
(15:32):
We should have said, oh, maybe there's something wrong with
the way we're handling homeowners insurance in the state of California.
Speaker 2 (15:38):
Maybe it shouldn't be that regulated again.
Speaker 3 (15:43):
If I would love to hear from you, hit that
little microphone on the iHeartRadio app and I want to
hear the talkback. I want to know if you left
California or you know someone who left California. I want
to know why, and I also want to know where
you went, where you're going let me know. We're going
to be talking about the difference. You hear what advertise
you see them on television. When we come back, we're
going to talk more about these what I call wholesalers.
(16:05):
These are great people who give you the option of
like I'm just going to pay you cash for your house,
no contingencies, know nothing, and I'm going to make it
as easy as possible for you to sell your house
versus using someone like me, a realtor. We're going to
talk about that more when we come back.
Speaker 1 (16:18):
You're listening to KFI AM six forty on demand.
Speaker 2 (16:22):
This is justin Worsham.
Speaker 3 (16:22):
We're talking southern California real estate. If you're just joining us,
I'm a licensed real estate broker, former KFI board op
and producer and just general I just was listening at
last promo. I have an unhealthy I think love for
Gary and Shannon, like I just think they're just they're
They've done a lot for me, so I got a
lot of love for them, but I just I think
(16:43):
the world of them.
Speaker 2 (16:44):
They're great people and I just love their show so much.
Speaker 3 (16:48):
Robin, I understand we had somebody who was nice enough
to take advantage of the talkback Can we hear that?
Speaker 2 (16:53):
Can you help me with that? Please?
Speaker 4 (16:55):
Hello, great idea for a show I would like to know.
Is it true if you house is on the market
for more than sixty days, you as the buyer lose
all your negotiating tactic.
Speaker 3 (17:08):
Thank you, that's a great question from Kathleen. Thanks for
using the talkback feature. If you also have a question,
I would love to do that. So if you're listening
on the iHeartRadio app and you have a question, hit
that microphone in the top and it lets you, I think,
leave like a twenty five second voice clip that you
could send us as a voice memo and we get
to listen to it.
Speaker 2 (17:27):
Now. I'm going to guess that probably much.
Speaker 3 (17:29):
I hope it's not coming through, but I would be
lying if I didn't say I was a little bit nervous.
I'm weirdly enough, I'm nervous because I felt like I
would be more nervous when I don't know if I
told you this when I first started the show the
first time I ran the board Robin, You'll get an
amusement out of this. The first time I went to
just hit the first button to fire into the lead
of the show, I blanked on all of the training,
had no idea. I thought I forgot everything how everything worked,
(17:52):
and I almost passed out and got lightheaded.
Speaker 2 (17:54):
And I have zero of that right now.
Speaker 3 (17:56):
I almost feel weirdly too comfortable, which it brings its
zone sets of nerves. But I think, Kathleen, the reason
you're asking your question about sixty days negotiating for a buyer,
what you meant is as a seller. And here's why
I'm gonna say that. I'm gonna answer both ways, just
to be fair. If you are a buyer and you
are looking at a house that has been on the
market for sixty days. Last time I checked, the average
(18:18):
days on the market in California were twenty eight during
the pandemic at its peak, it was like six to
seven half of the homes in California during like twenty twenty,
twenty twenty one in California, the entire state, we're selling
in less than a week. It was crazy times. And
now what's hard is that when you help sellers, they're
not used to it. Like, I have a listing right
now in Burbank that is priced below any other three bedroom,
(18:39):
two bath home in Burbank, and it's We've been on
the market for two weeks now, and I'm telling my
seller now is not the time to be nervous because
they're used to the old market. So if you have
a house that's been on the market for sixty days
and you are the seller, I would argue, yes, you're
probably losing some of your negotiating power because you don't
(18:59):
have a lot of offers that are coming in. If
you are listing your house, always trust your agent, right
because there's a reason why you have that relationship.
Speaker 2 (19:07):
There's a reason why they're there.
Speaker 3 (19:09):
So I wouldn't necessarily feel comfortable arguing with them about
your circumstance because I don't know it. But let's say
you were my client and you had a house somewhere
in the LA area or even Orange County that had
been on the market for sixty days and you've had
zero offers. Usually your first issue is you got a
price issue. That means you're overpriced. Now, what happened with
the interest rates when they came up in Oh, I'm
(19:31):
blanket on the air, I want to say it was
twenty twenty two. I think that's when the March of
twenty twenty two is. Want to say the rates jumped up.
The biggest segment of the market that was impacted were
condos and townhomes because they are the lower priced option.
So if you were somebody who was looking for a
four to six hundred thousand dollars condo or town home
in southern California, a lot of your competitors or competition
got priced out of the market.
Speaker 2 (19:51):
They just couldn't afford it anymore.
Speaker 3 (19:53):
I was helping a young couple and they were capped
out at four to twenty five, and so we were
trying to help them find a two bedroom condo up
in Canyon Country, Anna Clarita area, and if the rates
ticked up another half a point, they're like, we can't
buy a house anymore. So now what's happening in that
segment of the market is if you have a condo
or a town home, it's stacking up. And so, just
like I've said before, it's basic supply and demand economics.
(20:15):
The more supply, the more town homes and condos that
keep adding to that area. Then that means that there's
more supply than there are people looking to buy it,
and so naturally the price just kind of comes down.
Speaker 2 (20:26):
So I'm going to flip it.
Speaker 3 (20:27):
Though, So as a buyer, if the place has been there,
I feel like it gives you more negotiating power because
chances are at that point. I usually recommend clients do
about twenty thousand dollars no more than that below list
to start a conversation. But the better way to do
it is to have your realtor pull comps on it.
Comparable market analysis. We call them comps for short. It's
when they look for houses that are similar to the
(20:48):
house that's on the property.
Speaker 2 (20:49):
They call that the subject property.
Speaker 3 (20:51):
A good realtor is using the same kind of criteria
that an appraiser would use to assess the value on
the property for a loan if it was under contract
or an escrow. So you're going to look at that
to see is the house overpriced, and then try to
find it. Very rarely do I come across houses when
I'm representing buyers where the seller just has like an
unreasonable Like by unreasonable, I mean crazy unreasonable, like hundreds
(21:12):
of thousands of dollars above where it should be. Sometimes
what you'll see is a flip will sometimes have that
because they probably they just underestimated the construction or rehab
costs when they were flipping and updating the house.
Speaker 2 (21:24):
If you don't know what a flip is, it's where
you buy what we would.
Speaker 3 (21:26):
Call distressed home, a dump, a fixer, just something that
probably most people wouldn't want to live in unless that's
all they could afford in southern California, because it's so
impossible to find something affordable, and you buy that and
then you renovate it, you fix it, and then you'd
sell it for more. So you see that where usually
it's like the builders like I just have to get
(21:47):
this to cover my nut, Like this is what I
need to get out of this house in order to
pull that off.
Speaker 2 (21:52):
So I don't think and then I guess.
Speaker 3 (21:54):
The one thing I want to just clarify too is
negotiating tactics.
Speaker 2 (21:57):
I just want to be clear, like I don't.
Speaker 3 (21:59):
Think you should you shouldn't go into buying a house
like offering high I've had a lot of signs that
come up as a listing agent where people come in
and like, we're just going to offer high and then
we're going to talk them down. The other thing that
buyers love to do is they love to come at
me and say, here's the thing. We're going to counter
back with the lowest number, and then they'll come back
with the highest number. And I mean this with all
(22:21):
the kindness and love in my heart, but you are
not the first person to think of that. That is
not how negotiation traditionally works in real estate. I'm not
saying it never worked. I'm just saying that your odds
of success with that are very little because what I've
seen happen more often than you get that number you're
looking for is now you've just made that seller angry,
especially now where technically we should be trending for prices
(22:43):
coming down, and all we're really seeing is houses are
taking longer to sell. So if you got a seller
as an idea of what they should be getting in
their mind, and now they're not going to get that
price and they're just sitting there or they're already in
a frustrated headspace, and now you want to come in
and offer them eighty to one hundred thousand less than
what they haven't listed for, especially if there's comparable sales
(23:03):
that have happened within the last ninety days that would
support their listing price and their value, then that's gonna
make them angry. Think of what how you would feel
if you were selling the house. It's interesting to me that, again,
when I help buyers, how little they can see the
other side. Everybody is so focused on just getting themselves,
and every once in a while you have people who
are like, even if they're getting a deal, I've been
fortunate enough. In the last month, I got one property
(23:26):
for a client in North Hollywood that it was seventy
five thousand dollars below market value, and it came in
sixty thousand dollars. The appraisal came back sixty thousand dollars
more than list and that usually means that that's how
good a deal that they got. And I'm like, I'm
a pretty good agent. I like to think I'm a
good one. I'm not saying that to brag. That doesn't
happen all the time. This is just a circumstance where
(23:48):
I had some listing agents that were using an old
model for pricing that just didn't work.
Speaker 2 (23:52):
So Kathleen, I hope that answered your question.
Speaker 3 (23:54):
If anybody else has a question, please use that talkback feature.
Also again, shoot me a message if you want. I
want to know if you know somebody who's leaving the
state of California. I want to know why hit me
up on that talkback and I didn't get to it.
So we're gonna We're gonna go back. We're gonna talk wholesalers,
these people that offer to pay cash for your house.
You could stay there as long as you want, You
could leave as much stuff versus using a realtor, which
(24:15):
one makes more sense.
Speaker 1 (24:17):
You're listening to KFI AM six forty on demand.
Speaker 3 (24:21):
Justin worshow me here with you talking Southern California real
estate got tons of people are hitting the talk back,
and as far as I could tell, not one of
them is my mother yet, So I'm really I'm gonna
take that as a win.
Speaker 2 (24:34):
Richie. Just take note.
Speaker 3 (24:35):
If any of them are named Cheryl, that's my mom
and we should definitely prove that first, because she's probably
just trying to make me look good. But I love you, Mom,
and thanks for definitely will thanks I appreciate. So I
didn't get to talk to this in the last segment.
But it's something that comes up a lot for sellers.
So you see probably you've srobably seen television ads, you've
heard them advertise here on KFI.
Speaker 2 (24:56):
I call them wholesalers.
Speaker 3 (24:58):
These are companies, people, well whatever you want to call them,
who are offering to pay cash for your house, non contingent.
What that means is they're saying, I will buy your house.
I don't need to get it inspected, I'm not worried
about it getting an appraised appraisal for the value of
the home, and I don't need to get a loan.
I'm just going to buy it. And what they also
do is they say, here's the thing. And traditionally in
(25:19):
this market, it's about a twenty one to thirty day
s grow on average. Some of them go a little
longer if a seller needs more time to be able
to find a new place. But they're saying, we could
wait three months, four months, you could pick the day
that you move out.
Speaker 2 (25:33):
You can also leave all of your furniture or trash.
Speaker 3 (25:36):
Whereas the standard purchase agreement in the state of California
requires that a home be at least broom swept, but
you could literally just pack up and leave in any
junk that isn't a keepsake or whatever. You could just
walk out and to me, in my opinion, there's only
really one downside to that, and it's that usually they
can't find a way to make it cost effective for you,
(25:57):
like they can't make you as much as a realtor can.
Speaker 2 (26:00):
And I want to emphasize this.
Speaker 3 (26:02):
I mean usually I have in at least three different instances,
I have had sellers come to me and say, so
and so is offering me this amount to sell my house. Right, So,
when I look at that amount, and when you account
for the commissions that they would have to pay, which
is in this market usually not hard fast. Again, there
(26:24):
is no way of setting commissions, no legal requirement for commissions.
They are all up for negotiations. But traditionally a seller
is still paying three to six percent or I'm sorry,
it's five to six percent in commission for a sales
price that I look at it and go, if it's
about a five percent difference in price, it doesn't make
sense for you to use a realtor. So, but there's
(26:46):
also data that shows before the realtor's light their pitchforks
and torches and descend upon Burbank to find me.
Speaker 2 (26:53):
There's also research that says that if you use.
Speaker 3 (26:56):
A realtor versus trying to sell your home by yourself,
so we call them fizzb as realtors for sale by owners,
and you usually get thirty percent more on the sales
price of your home than if you sell it yourself.
So a realtor will get you thirty percent more. So
they're making you more than what you're paying them in
the commission.
Speaker 2 (27:16):
So what do you do? How do you know what
the right thing to do?
Speaker 3 (27:19):
Is? The right thing to do is to talk to
these companies. I would recommend you do it in this order,
because if you talk to a realtor and then they
start to list your house and you put it on
the market, in most cases, at least as far as
I know, those companies kind of go away. They're not
interested in doing that. They're interested in just making you
one offer and saying this is what we'd like to
give you for your house, Take it or leave it.
(27:39):
So I would start with those companies. I would find
those places that you're seeing advertise on the television. I
would make note when you see them. I would google them.
I would listen to the companies that advertise here on
KFI and get their number and call them and just
see what's your offer there. Then I would recommend that
you talk to at least three other realtors. And you're
(28:00):
going to have to use your gut on this. Because
I had a listing appointment in Tuluca Lake recently, which
is up in the San Fernando Valley, and it was
a woman whose father had passed away, had a house
that just as it was right there, was probably worth
about one point two million dollars. And the son was
very excited. So this would be the grandson of a
(28:21):
technically the owner right he was inheriting the house. He
was excited because he had heard from a few realtors
that he could rent this house this house out for
ten thousand dollars a month if he updated it. Now,
when you look at the data, it had been done.
But when I got in there, and this is how
I lose a lot of my listing appointments is to
be honest, I'm too honest. I'm just like, this doesn't
(28:43):
make any sense. I said, well, who is going to
be able to afford ten thousand dollars a month, like, yes,
it's happened, but their anomalies. Also, those houses sit on
the market for at least three or four months because
the market share of person who's looking for that house
is so small. It's not a large group of people
that are like, you know, what I need is a
(29:04):
ten thousand dollars a month rental, because technically what we
look for is realtors, and what we recommend, the industry recommends,
is that you make at least three times anywhere from
two and a half to three times whatever your rent is, right,
they want that in monthly income. So you're looking for
somebody who makes thirty thousand dollars a month to rent
your ten thousand dollars a month home. People who make
(29:25):
thirty thousand dollars a month and are not looking to
buy a home are not planning to stay here for
very long. So now you're kind of running what I
would say is a glorified airbnb, which is not an investment.
Airbnbs are not an investment. That is a business. You're
starting a business because you've opened your house up.
Speaker 2 (29:42):
You're the house you own, and you're making it into
a hotel.
Speaker 3 (29:45):
There's maintenance costs, you have to have it clean, you
have to get furniture, like all of those things are
what you would find in a hotel.
Speaker 2 (29:51):
And that's not an investment.
Speaker 3 (29:52):
Having a vacant property that you then rent out for
years at a time, I would argue that's an investment
because it could sit there passively. I have an property
in Apex, North Carolina, because I wanted to see what
it was like to invest out of state. This sounds
like I'm bragging nowt I swear this is I'm just
talking off the cuff like I would at any open house,
But I just I wanted to see how is it
(30:12):
better to invest in real estate outside of California. And
so far, my experience has been great. I've never even
stepped foot in this house. I treat it like you
would a stock. It's no different than buying Tesla or whatever.
Procter and Gamble in my opinion, I'm just I put
money in there and then I make a little bit
back off of it each time. So going back to this,
you want to talk to realtors and go with your
gut to see like something in your gut is going
(30:33):
to tell you, especially if everybody is saying the same thing,
you're going to know if you're being sold. There's lots
of different types of realtors. I don't like that we
get hit with this like stereotype that we're all just
basically use car salesman who sell houses. Don't get me wrong,
I've come across them. They exist out there. I have
one who's a dear friend of man. Shout out to Brian.
He looks like a used car salesman. And I love
(30:54):
this guy dearly, and I hope he doesn't hear me
say this. He looks like a used car salesman. He
talks like a used car salesman, but he's a great realtor.
He cares about his clients, but he's not a used
car salesman. So you want to make sure that somebody's
looking out for your best interests and not their own.
And I think, I really, I have faith in you.
I think you could figure that out. You could suss
that out, and then you look at all the data. Traditionally,
(31:16):
most people when they're looking for a realtor, they take
the first person they were recommended. And don't get me wrong,
when that comes my way, I'm very happy about it.
Speaker 2 (31:23):
I love it.
Speaker 3 (31:24):
But I also feel very confident that those people I
know I'm going to take care of it. I know
how I operate, I know that I'm looking out for
other people. But I've had I've had flat out conversations
with other agents that you could just tell that they
don't really care about the people they're helping. It's just
about the commission bottom line. And that also, I don't
think makes them horrible people. I know it's scary and
(31:44):
I know it's unnerving to buy a house, but I
really feel like the same thing can happen with a car.
You go in and you have all of the best
intentions of buying a car and somebody sold you something
that later on you found out isn't good. But statistically,
more often than not, people buy cars that they enjoy
for a very long time. I feel like it happens
a lot more that way than it does that they
get hosed, And so far, in my experience, the same
(32:06):
thing goes with shopping for a house and looking for
looking that kind of stuff. Oh man, this isn't so bad.
I think I'm doing good. I feel I feel pretty
good about it. Thanks Robin, appreciate the thumbs up.
Speaker 2 (32:17):
I haven't. This is We're gonna.
Speaker 3 (32:18):
Try this for two weeks and either either you could
tune in and you could hear the train wreck and
maybe that's exciting, or I do okay, or maybe it's
how it's it feels like it's going right now. It's
fair to Midland, and hopefully that's not boring enough. Most
people love a good train wreck, I must say. I know,
that's all I'm kind of waiting. What's really gonna go
wrong is if something really bad happens in the world.
(32:38):
I don't want that to happen, just because I don't
want anything bad happen in general. But that's where we're
gonna see me flummox. I could talk real estate like
I was at an open house before this, just talking
for hours talking to people about the show. It's hard
to get me to shut up at an open house.
I love talking. I geek out about numbers, and I
love this job so much. But let's see we got
We're still no. We're gonna pivot because I've been asking
you about what you're gonna do people who are lead
(33:00):
in California now going into or two of our fantastic
show here, I want to hear some real estate horror stories.
Speaker 2 (33:05):
People love to share some horror stories.
Speaker 3 (33:07):
I got a couple if you don't have any, that
I will share at the very end of the show,
which is going to come up right before four o'clock.
But now when we come back, we're going to talk
about why are people leaving the state of California and
is it enough to affect prices.
Speaker 2 (33:21):
We'll talk about that
Speaker 1 (33:22):
Later on KFI AM six forty on demand
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