On this episode of Real Estate Launchpad, Jonathan is joined by the Rebel Broker, Robert Whitelaw. With 30 years of real estate under his belt, Robert explains why it’s meaningless when an agent claims to be a top 1% listing agent, why people are fleeing the state of California, how recent credit rating changes have made it possible for unqualified people to purchase and rent homes, and much more! He shares his experience with the last market crash and gives insight into where the real estate market is heading. This is an episode you don’t want to miss.
Why homes don’t sell and the best ways to maximize the sales price of your home
With 30 years of experience as a realtor, Robert says the main two reasons homes don’t sell are price and the lack of individualized and aggressive marketing. You need to be in front of the right people – people who may want to buy! Conversely, Robert also shares insights into maximizing the sales price of your home. You need to ask the right questions of the realtor who may be listing your home – meet with more than one realtor. Find out how many homes they have listed and sold in the past year. What were the original listing prices, and what did the homes actually sell for. Lastly, look at the average days on market for said realtor compared to other homes in the market. By simply asking to see data, you will be able to maximize the sales price of your home!
The rise of for sale by owner listing in the current real estate market
Robert and Jonathan agree that they have both seen a rise of for sale by owner listings in the current real estate market. Robert explains that when the marketplace gets to a certain level of craziness with lots of homes selling, you begin to see more homes for sale by owner. The perceived value of a realtor is not appreciated, and people can get away with not using a realtor because homes are selling quickly. In the current real estate market, you – the owner – can post on websites such as Trulia or Zillow and have access to buyers without paying an agent. Be sure to listen in to hear Jonathan’s take on for sale by owner, too!
Reasons for a real estate market correction
Robert sees a correction in the real estate market soon, and he gives several examples of why the market could soften in his home of Santa Clara County in California.
- Taxes. In California, some homes have over one thousand dollars a month in taxes as well as special assessments. Looking at the political landscape of California and the idea of “welfare for all,” it isn’t hard to imagine how this could be funded: additional incomes tax and special assessments on properties.
- 50% of people living in California want to leave the state. 80% of Robert’s clients are moving out of state.
- The laws in California are not extremely business-friendly, causing industries to consider relocating.
- The pension problem – there are economic problems in front of people.
- The subprime lending market – banks giving loans to under qualified buyers.
The false inflation of credit scores and the effect on the real estate market
Banks need business. The current issue with lending is banks making it easier and easier for people to borrow money. In the past year, the way of calculating credit scores changed. Things like water bills and phone bills can now positively affect your credit, while medical bills don’t count against you. This has an artificial boost in people’s credit scores. The ability to qualify for a home loan is often based on your credit score, so with scores jumping, more people can obtain a mortgage. This is not only an issue for home loans but also landlords. Many times, credit scores are used as a basis for whether a person can afford to rent an apartment or home. They share with the landlord if a tenant is trustworthy. So, this inflation of credit scores has crippled the ability for a landlord to get a read on if tenants are financially able to pay rent.
In This Episode Robert Whitelaw says…
- [1:53] Who he is and what he does
- [8:55] Reasons homes don’t sell
- [11:20] The best ways to maximize the sales price of your home – what good brokers do
- [19:41] The rise of for sale by owner listings
- [24:18] Robert’s take on different markets
- [28:38] Why the market is currently nuts
- [30:56] Reasons for a market correction in the future
- [40:55] False inflation of credit scores – the reasons and problems
- [47:44] Why there are more defaults in such a hot economy
- [50:27] Comparing the current market to the 2005-2007 period
- [54:18] Where the market goes from here
Resources Mentioned In The Episode
- Jonathan@MultifamilyLaunchpad.com – Learn to be an asset manager and Investor
- Bellwether Enterprise(sponsor) – contact Will Oldham email@example.com
- www.RealtyTrac.com– Track Foreclosures