Episode Transcript
[00:00:00] Speaker A: How can real estate agents get ahead of this and how can you help them in their business?
[00:00:05] Speaker B: Yeah, the easiest thing is twofold. One's short term, one's long term. Right now everybody wants to pay bills. Transactions are at a 30 year all time low. They just want to be able to survive. And we're seeing capitulation in the real estate business. A lot of people going out there, getting their resumes together. They're leaving the real estate business. Right now the short term focus is cash flow. How do I pay my bills, how do I get more closings? And to that, I would say work pre foreclosures. There's huge opportunity in Monopoly monopolizing a small space as opposed to trying just trying to do what everybody else is doing. It's so crowded and it's so disheartening to see agents go through training that worked five years ago when there was a lot less realtors out there. Now you have a saturated market. It's always been saturated because the barrier of entry is relatively low to be an agent. But if you're doing what everybody else is doing, it's like, how much of the same are you going to be doing? My favorite quote of all time is Peter Druckers. Nothing's more useless than doing a thing well that we shouldn't be done at all.
[00:01:06] Speaker A: Hey everybody, welcome back to Trust this, the podcast for real estate investors and entrepreneurs.
I am Joe Siegel, your host with Aspire Legal Solutions and my land trustee, the largest land trustee in the state of Florida today. We're here with John Chin of InvestorAgent.com John has an extensive experience in sales and coaching, and he's got some great techniques and processes that he uses in his business that I think that our listeners and viewers would really like to hear about. Without further ado, John, welcome to Trust this today.
[00:01:48] Speaker B: I love being here, man. I love talking to you. So take two, Take two.
[00:01:54] Speaker A: In full disclosure, this is actually the second time we're shooting this. First time we shot it, I completely chose the wrong sound source. So we didn't catch any sound on the first time around. But that was just a dress rehearsal and it was great. John and I got to know each other very well during that and afterwards. So I actually have. We'll probably have even more questions now, but John, let's get at it. Let's talk about what it is that you do and how you help real estate brokers and agents and investors out there.
[00:02:24] Speaker B: Sure. So we really specialize in the brokerage community, so there's a Lot of residential agents out there who want to learn how to personally invest themselves. They want to learn how to work with investors. They want to know how to do creative financing to close more transactions. They want to learn how to work with distressed properties. Especially now hurricane damaged houses or we're seeing a lot of them selling short of what's owed. So short sale world. So we support agents in a lot of ways that traditional real estate sales and their current training is not supporting them.
[00:02:57] Speaker A: Now we talked about that a little bit last time was the short sales and just the economy in general, because the economy is rocking and rolling along, but shelter costs are getting expensive. You know, the government shot out a lot of money people got after the pandemic ended. People got addicted to that and then they kept spending even when the money spigot turned off. And now their credit cards are going up. They refinanced their houses or they bought new houses at the height of, of the sales shortage and supply chain problems. And now they're, they're getting upside down, which I didn't think. I mean, I've not heard people upside down their houses that much since 2008 to 2012. So tell us a little bit about what the short sale market's looking like.
[00:03:39] Speaker B: Yes. So we're doing, we're focusing on short sale processing right now that's like 80% of my focus because we're seeing a lot of properties being sold short of what's owed. Especially when you talk about purchases that were sold that were purchased in like the last couple years or so with high leverage loans with low down payments. A lot of those folks, if they have to sell, they have to sell it for short of what's owed. Meanwhile you have people with equity tapping equity because their savings is already depleted and their credit card balance is already maxed out. So it's really kind of an unfortunate situation that we're finding ourselves in because everybody's feeling the pinch of inflation or more accurately, people really aren't understanding that inflation is just the weakening dollar. So when we expand the money supply because we print money that we don't have to spend beyond what we, what the government gets in taxes, we expand the money supply, dollars get weaker. Takes more dollars to buy the same stuff. Meanwhile our incomes are staying relatively flat and now everybody's suffering for it. So unfortunately we're seeing this wealth transfer from the middle class to the people who have cash on the sidelines are going to buy all these properties up later. So it's really unfortunate. So it's Almost a responsibility that we feel we have to help people with options that they didn't maybe otherwise think they had to get out from underneath their houses, net more money as the most money possible, have the least amount of damage on their credit as possible. I can tell you that according to ADAM data, if you look at nationwide foreclosure numbers, third quarter this year compared to third quarter last year are a little bit down nationwide. If you take Florida in isolation, one of the top three foreclosure states in the country as of right now, we are on track by two metrics to out do the foreclosure numbers that we saw in 2008. 2008 we had about 12,000 foreclosure sales. Statewide we're going to see probably about 13,000. This year we saw foreclosure starts, the lispendons that are recorded, which is the start of the foreclosure lawsuit that's in public records. We saw about 31,000 in all of 2008. As of August this year, we're at about 21, 22,000, according to Adam data. So we are on track now to surpass the number of foreclosures that we saw in 2008. And people don't realize that now maybe as a percentage of all the borrowers out there that have mortgages, that might be a smaller number because we just have more mortgages out there. But as far as at bats, go for agents who want to pursue pre foreclosures for short sale listings, for example, or investors who are looking for pre foreclosure deals, creative finance buyers out there, there's a lot of subject to investors, which, you know, we're not a fan of. Subject to. We do another way of loan takeovers where we partner with the sellers. But those opportunities with low equity loans where the seller's behind, those are ripe for a win win scenario with the seller and the buyers if they structure them properly. So there's a lot of tools and clubs in the bag that agents are not using. And we're leaving so much money on the table as a brokerage community that that's the opportunity for us right now. Kind of long answer your question. But right now big focus is on pre foreclosures because we see a lot of financial pain on the horizon and we want to be in front of it. We don't want it to be something we react to a year or two years from now.
[00:06:56] Speaker A: Well, and I think it goes back. I mean, everything that goes up must come down and everything that does Very well must come. I remember our run up to 2008. It was every prices were going up, sales were going up, everybody was doing great. Nobody ever thought it could absolutely collapse like an earthquake into a cavern. And what we've seen since 2012 is a steady rise. I was looking at a piece of property yesterday for a client that just on the tax records over 21 and 22, the value of his property on the tax records for market value went up 20% and 22% respectively. But then last year it slowed back down to 5.1% on the tax record. So we have seen that already, that, that pullback and I agree with you. I think that's coming. So how can real estate agents, how can they get ahead of this and how can you help them in their business?
[00:07:57] Speaker B: Yeah, the easiest thing is twofold. One short term, one's long term. Right now everybody wants to pay bills. Transactions are at a 30 year all time low. They just want to be able to survive. And we're seeing capitulation in the real estate business. A lot of people going out there, getting their resumes together. They're leaving the real estate business. So it's like right now the short term focus is cash flow. How do I pay my bills, how do I get more closings? And to that I would say work pre foreclosures. There's huge opportunity in monopolizing a small space as opposed to trying just trying to do what everybody else is doing. It's so crowded and it's so disheartening to see agents go through training that worked five years ago when there was a lot less realtors out there. Now you have a saturated market. It's always been saturated because the barrier of entry is relatively low to be an agent. But if you're doing what everybody else is doing, it's like how much of the same are you going to be doing? My favorite quote of all time is Peter Druckers. Nothing's more useless than doing a thing well that we shouldn't be done at all. And we never challenge the direction that we're getting from somebody who was successful 10 years ago, five years ago. We're just the same M.O. we're just doing more of the same. Well, if more of the same isn't paying the bills, why do we keep doing more of the same? Let's just dismiss the idea of fishing in this crowded pond where all these lines are in the water and it's kind of a bloody ocean, a red ocean. Let's go to this blue ocean. Find a pond that nobody's in and monopolize that pond. And there's no fishing lines. There's a lot less transactions to be had there in total, but there's no competition. So with that in mind, I would say that focus on pre foreclosures today because there's a lot of opportunities, a lot of. If I call, for example, I was talking to listing agents of short sales.
9 out of 10 of them don't know what they're doing. They're holding these ridiculous prices up here. They don't have professional processing in place. They're trying to be the go between the seller and the lenders. They're not going to get those sold. That's going to mean foreclosures for these borrowers, unfortunately, when all they have to do is understand what listing a pre foreclosure or short sale is about. And a lot of pre foreclosures are not short sales. Right. Most of them aren't in fact, because there's equity. So if you understand how the dynamics of distressed properties, when people start missing their mortgage payments, that's a huge differentiator today that a lot of agents aren't taking advantage of. I would say in the long term, learn how to invest in properties. If you learn creative financing, if we learn how to structure those in a way that doesn't expose the seller to risks that like subject to deals, expose them to. Now as a real estate professional, I have to be on the commission hamster wheel my whole life. I can start accumulating rental properties in a way that doesn't require me to go to underwriting at a traditional bank which because we are, we try to write off everything, it's hard for us to get loans right. Like some a W2 income earner. So if I want to bypass that whole process altogether as a barrier of entry to get a rental portfolio, I got to learn creative financing. So all of that, by the way, Selfish plug is at investoragent.com we train all of that there.
[00:11:02] Speaker A: Yeah, and I think you said a mouthful there about learn about pre foreclosures, learn about the process, learn about short sales. Learn, learn, learn. There was a lot of growth requirement there. So where do you step in with these, with these agents, with these brokerages?
[00:11:19] Speaker B: Twofold. One is we do professional short sale processing. So if an agent comes across somebody missing their mortgage payments and it's looking like they have to sell their house for less than what's owed on the property, we come as a short sale processor to try to get the seller up to $10,000 relocation money. We serve as the go between between the seller and the lender. And there's no cost to the seller. We get paid by the lender or the buyer for our processing fee. So it's a way to make the agent look better and be better equipped to get those to the closing table than if they're trying to go out there, do it themselves, or even bring in a title company to do it. Because title companies don't specialize in it. They do it as kind of a way to help get a closing. Right. But they're not contesting values. They don't know how to contest values. They don't know how to negotiate with the, with the lender. So that's kind of where we come in because we bought just under 500 short sales. So now we approach processing them with an investor's hat as a buyer. It's a different dynamic than just doing paperwork. Right. And being on hold.
So that's number one, the short sale processing when they come across that scenario. Number two is if they have a buyer and a seller that they're trying to get to the closing table with, or they're trying to structure a creative finance transaction, we do the structuring for that. The buyer pays us our fee and it's cheaper than origination fees at the bank. So it's a win, win, win. Seller wins because they net more money in total, they're able to sell their house without bleeding out their equity on price reduction after price reduction, after price reduction. The buyer wins because they get to bypass the bank and traditional underwriting in the original, the today's rates and the origination fees. And then the agents win because they get a commission they otherwise might not have had. So that's basically two ways. One is we can do the short sale processing to get closings done and we can also do creative finance structuring for buyers and sellers in a way that, as you know, I've been in the business for 29 years in a way that with my broker hat I feel good about, which I don't do feel good about with the subject to or even a traditional owner finance transaction where a mortgage is a security for that, for that.
[00:13:22] Speaker A: Do you find that there are brokerages that are more open to having you help their agents out versus other brokerages that are like the large, very compliance oriented brokerages that may be a little more reticent to have you come in talk about creative financing and short sale processing.
[00:13:43] Speaker B: That's a great question. You Would think that it really kind of depends on the owner or the broker. Most of the transactions. We deal with Keller Williams, interestingly. And in fact, the reason I have to go to Atlanta right after this is because we're training Creative Finance at an event in Atlanta for the team leader who's up there, who we helped him sell his property with creative Financing the same way I'm just talking about, he left his loan in place. He couldn't sell it. He was taking price reduction after price reduction. After he took the team leader role up there, he said to his agent, who was another KW agent in the office, he left down here, hey, can you talk to John about creative Financing? Let me try to get this sold without having to take price reductions by making it a more compelling listing with. By me leaving my loan in place and then structuring it in a way where I can partner with the buyer to help them leverage my low interest loan. So we did that, and he became one of the biggest evangelists for us. So now I have to go up there and train his agents in Atlanta on doing this.
[00:14:41] Speaker A: So earlier you pointed out that you reversed to subject to, but I hear leaving the seller's loan in place. So how do you do it? That that's not subject to, but it's still leaving the seller's loan in place. What are you doing?
[00:14:53] Speaker B: Yeah, good question. So if we talk about a subject to transaction, that basically means. Right. Giving the buyer a deed, subject to the first mortgage staying in place for the seller. We don't give the seller or the buyer a deed. We put the deed in the seller's own trust, and then the buyer and the seller cooperate together as beneficiaries of that trust. The whole time that that buyer is occupying that property through a lease, the trust doesn't give them occupancy rights. That's just beneficial interest so that they have some security about owning this control of the property.
But title stays in the seller's trust until that underlying loan is satisfied from the seller. So the trust lockboxes title to protect title. It also protects the underlying loan for the seller.
[00:15:39] Speaker A: Okay, so that's part of that creative financing that you're talking about.
[00:15:44] Speaker B: That's how we structure them. Yeah. Even if, interestingly, I got a call you want to talk about a case study that's really interesting. So I get a call from an agent, funny enough, a Keller Williams agent. Right. I know KW's popping up a lot in this. I'm not promoting KW. I'm just saying that just happened to Be that. So I get a call from this KW agent and he says, hey, I've got some friends, they live in New Smyrna. He said, I got some friends who own or finance their paid off house. And now they're foreclosing on that buyer. And this sale happened in 2019. So they owned a property in Groveland, Florida that was paid off when they moved to New Smyrna and they sold this house. They sold it to a buyer and said, yeah, well, I think it was 315,000. They got like $30,000 down and they carried the loan for 285,000. Fast forward the last year. The buyer slash borrower was the current owners weren't able to make the payments. So now they have to go through the foreclosure process because they just lien the property as their only protection, right? So they go through the foreclosure process, they get to the tail end of it, like thousands of dollars later, nine months later, they get to the tail end sale's supposed to happen and then boom, the buyer does a skeleton BK automatic stay on the foreclosure sale. So now they're kicking the can down the road. And now the seller's like, they don't want to own the property, they don't want to take it back in the foreclosure sale. They don't want to discount it from the Judgment amount of 335,000 at this point, right?
So I said, well, why don't we do this? If you cooperate with me to carry the financing longer, I'm going to fix this two ways. You cooperate with me to carry the financing longer. So we'll reset that initial 285,000 loan. I'll put $15,000 in your pocket to recover some of the cash it took to get to this point because they've been paying the taxes and the legal costs, right? And I said, let me talk to the seller, the owner of the property, because they had it listed, but listed for some ridiculous price that was unreasonable and they're trying to hold out for like 120,000 of equity that they don't have realistically, right? So I said. Then I went to the buyers and I said, hey, we negotiated with your lender to be able to get you out from underneath this thing, stop the foreclosure, release you from the judgment so that you don't have to worry about the debt forgiveness and them chasing you personally for that judgment. If it were to foreclose, for example, and you can get back on your feet. Again, a lot faster. And I can get you some cash. It's not going to be what you're holding out for, but I'll give you 40,000, 10,000 up front in your pocket. You finance the other 30,000 at $300 a month principal only payments until that's paid off in about eight years and then we'll get this thing done. And so that's what we negotiated. So I wish I had a happy ending to that story. We got the deal done. Hurricane Milton happened. Retention pond next to the property is failing and now water is coming from detention pond down the property. And I said, unfortunately, we have to back out now because of that. We do all that work for nothing. So that's not one that we have a happy ending for just yet. But there's still a way to save that. But that's like an example of I told the owners, I said the other way we're going to fix this is when we structure this 285,000 loan from you. Instead of you being in a position of risk that you were before, where you lien the property and you can only recover or cure a default. If I default on your 285, we're going to put your property into a trust. We're going to be co beneficiaries of that trust and I'm assign a promissory note with you for the 285 that is secured by control of the trust. And in the docs it says once I'm 60 days delinquent, my control goes to you automatically and then you can evict me. You don't have to go through the process of a foreclosure which they firsthand know what that's like now. Right. So even with paid off houses, we structure them the same exact way.
[00:19:22] Speaker A: Yeah, I always tell people that too whenever they're, if they're doing seller financing, I go, look, just be, get enough money that you're going to be comfortable carrying this property for two to three, maybe even five years. Because foreclosures in Florida can take forever to get done. And it's just like that. They get down to, well, we've got the sale date scheduled now, they're going to go file bankruptcy now, it's going to be held up again. It's just one thing after another in those, in those scenarios like that.
[00:19:54] Speaker B: It's great for borrowers and homeowners, it's horrible for lenders, right?
[00:19:59] Speaker A: It really is.
[00:20:00] Speaker B: Yeah, it really is.
[00:20:02] Speaker A: And a lot of people go, well, what if I do an agreement for deed, then I don't have to worry about that. Unfortunately, in Florida, an agreement for deed is just like a note in the mortgage. You still gotta foreclose it too.
So a lot of times they think they're gonna get around it with that. So I give that advice probably about once or twice a month, unfortunately. And it is expensive to foreclose in Florida as well. Even the deed in lieu can be expensive because the documentary tax. So do you find that brokers may be scared to have you come into their offices because you're also a broker? Maybe they're scared you're going to try to take their agents or take their listings from.
[00:20:38] Speaker B: Oh, that's. Yeah, that's something I'm very sensitive about. So I'm not a threat because I don't have a brokerage. I'm a broker here, but it's for property management. So we don't do any sales. I don't do listings. I don't work with buyers. In fact, if I get somebody, even a friend or a family member who says, can you sell my house or work with me? First of all, I don't use the MLS for listings. I use it for property management. So. And I don't have agents, so I refer those out. I might collect a referral fee, but I send them out. So now I'm not recruiting agents because I don't want to. I've been there, done that. Don't like the babysitting job? Not for me. So that's the last thing they have to worry about. And then secondly, we don't do sales, just property management.
[00:21:18] Speaker A: Talk about your property management. How, how many properties are you guys managing now?
[00:21:22] Speaker B: Two management companies. There's a hundred down here because we started that about a year and a half ago. And then I have 500 doors under management in western North Dakota. So I'm licensed in North Dakota as a broker, licensed down here, management company. In both places, my operators run them for me. So I have to deal with pets and toilets. And I think we were talking about this. Owning a done for you property management company with an operator in place is a cash flow joint venture with investors who bear all the risk. Yet you get 100% of the preferential treatment on your fees. So even if they lose money, you still make money as a property manager. And if you don't have to deal with yourself, to me, it's a much better way to build equity in a company, not in houses. And cash flow, that's truly passive because your operators are running the business for you. I think a lot of brokers, we might have talked about this. A lot of brokers, well, anybody who's been a landlord knows that that's the gift that keeps on giving. So they're like, I don't want to, I would never want to do that. I don't like doing it for my own houses, much less for other people's houses. But if you think about it, if there's any brokers or owners listening to me, it's an incubator for your future listings. The owners in that database of landlords become your private money lenders for addresses that you come across because they trust you to take care of houses. You have crews, you have contractors, you're obviously in a position to flip houses. You have all these advantages. And if we're seeing all these addresses, as an investor, property management company as an investor, we have now the capital to do the private loans to fund. That's why I've never, I flipped over 400 houses up and down the i4 corridor. Never once have I gone hard money or had to go outside of my private lenders, which were my landlords who wanted to fund our flips and I'd give them a nice attractive return, but it'd be a lot less cost than what I would pay a hard money lender.
[00:23:14] Speaker A: Yeah, I represent a few property management companies and I'm, I'm of that mind of I don't want to manage my own properties. Why would I want to manage hundreds of other people's properties and. But my property manager clients are some of the most secure in their business. It doesn't matter if the market goes up or down, they get paid on their commissions. And really once you've got the systems in place and the technology in place and it sort of, you know, just flows, you know, you have your problems. Of course, any business is going to have problems, customers. And in this case, you have two sides of that coin. You have the owners and the tenants. But once you've got the right people in place and the right processes and technology, they seem to just handle that in due course.
[00:24:05] Speaker B: They just 100% and you know, you're 100% right. And I think that there's this, you know, the biggest opportunity missed by residential brokers, owners, team leaders right now is tapping the database of all their agents with the fresh message about you need an inflation hedge, you need tax write offs, you want passive wealth building, you want to compliment your paper investments, your stocks, bonds, mutual funds, 401k, you want to Complement that with tangible real estate that has no middleman on Wall street bleeding you out with fees. We can get you better cash on cash returns. If they knew how to tap their database with that language. And by the way, the most important part of that language is it's a turnkey wealth building system. This is the paradigm shift they don't get. We don't sell commodities, we're not selling houses, we're selling a turnkey wealth building system in that we have property management. So when you combine the turnkey of property management professional, local property management company to handle that investment form so they don't have to adopt a second job because they, their chiropractors are attorneys or high paid executives, high W2 income earners, a lot of cases. Now you couple these houses with property management, now you have a turnkey wealth building experience. You're not just in the commodities business trying to sell cheap houses to investors who are trying to negotiate commissions prices. They're trying to make offers in 2000, like today, from 2012. You know that doesn't work. So if you want to work with high net worth clients that have other high net worth friends and coworkers and neighbors, then if you have that property management message combined with the houses that your team can find them, you don't have to chase like drastically discounted houses to work with those types of clients. We're not talking about flipper investors, we're talking about buy and hold investors who will pay market value for a price if you got the yield down. And you can couple that with the turnkey property management answer.
[00:25:59] Speaker A: Well, and I believe you mentioned you got some spreadsheets that you can share with those with your agents that you're working with to help them figure out cash flow and all these other terms that they need to figure out to show their investor buyers this will work, correct?
[00:26:17] Speaker B: Yeah. So there's a fear that agents have to know how to do sophisticated math to be able to do an ROI presentation or talk cap rates or whatever. Literally in an hour somebody can watch some videos and download our templates because we have temp plug and play templates that require zero math to show what the returns look like to a very sophisticated investor. On a short term rental, a midterm rental pad, split co living and we have the long term rental template. So whatever type of property they're looking for, we have a plug and play template where you literally just need an MLS sheet and you need a rent number or income assumptions. You plug and play and then boom, it translates. Oh and then if they're going to get financing, you plug in from their loan officer what their finance terms are and then it translates all of that into does it cash flow or not? Number one. And then if it does cash flow, what are the returns? And if it doesn't cash flow, how much does the down payment have to be for them to be able to buy this thing and cash flow?
[00:27:17] Speaker A: Well, in a way, that house becomes an annuity for two people. Number one becomes an annuity for the owner, that CPA or chiropractor who just bought it. But it also becomes an annuity for that agent who found them the property and sold it. They got the commission when they sold the property to them, but they also got. Now they're going to get the income on the management fees forever.
[00:27:41] Speaker B: Yeah, 100%. 100%. What's cool about property management too, if you consider the legacy the exit in the future, real estate companies can only sell for multipliers that reflect licenses on a wall. And you know how finicky those are, right? Agents are always moving. So what's the value of a real estate brokerage compared to a property management company is way more valuable for buyers in the future because you have management contracts out of these future income streams. So for that reason too, on the exit, you, the equity you're building in that business is a lot better than if you spent all this time like what's your exit with the real estate company? You know, there's not really too many options and you're not getting much for it when you do decide to sell it in the future.
[00:28:25] Speaker A: Yeah, I've handled quite a few sales of property management companies for brokers where they're either buying it or selling it. And the math is really easy. And yes, the multipliers are much higher. I've been in practice for 28 years. I've never once handled the sale of a real estate brokerage that's just a sale because I agree with you, it's a lot like a law firm. It's much harder to sell very few people who can buy it. And it's very personality based, you know.
[00:28:53] Speaker B: Yes, you're right.
[00:28:54] Speaker A: Personal service business, whereas the property management is more above that. That personal service business. It's, it's, it's, it's definitely got a lot more value to it. When you're going in and coaching. I know you are a big lacrosse guy. You coach lacrosse. What have you learned from your coaching and team skills in lacrosse that you bring into your coaching and working with.
[00:29:19] Speaker B: Realtors man, I'll tell you what, this is a heart question. H E A R T, not H A R D. Because my answer when we last talked is different than my answer now.
My answer now is probably, compassion as a high school coach is a very technical thing to develop yourself as a lacrosse player. And I've always been one to overachieve and want to work on my game outside of practices. It might be me getting old, it might be the generation or nominations. I don't know what it is, but it feels like today high schoolers aren't practicing outside of practice on their own, with their own initiative, and they don't have the same work ethic that maybe I had growing up. So I used to write that off as that kid is less than because they aren't putting in the time and energy. And they keep showing up and dropping the ball and disappointing their teammates and not getting playing times. Like, why would you do that to yourself? Practice outside of practice. It used to frustrate me. And then I learned that overachievers, including myself, sometimes have an insecurity and a hole in their heart that they're trying to compensate for. And they find their validation on the field or through that kind of praise, right? Or that kind of response you have when you score goals or whatever, and that's your validation. And now I've reframed that. So as it relates to real estate agents learning to grow themselves, I see lacrosse player who's not putting that extra time and energy. It could be that they don't have that same insecurity that I had. And that's not, you know, that doesn't mean I'm better than them or devaluing them or that they're less than someone else on their team. They might pour their heart and soul into something else and be obsessed about it, right? And maybe not for the wrong reasons. So it's funny now, and it's an emotional topic for me because when I'd see a little. When I'd see a kid playing lacrosse, I would always branch off, drop whatever I doing. I go say, hey, do you want to get better? And that was me out there trying to find other kids who have that same hole that I had growing up and me trying to perpetuate them, filling that hole the wrong way. Now I look at those kids and say, hey, you want to get better across? And for what reason are you trying to do that, right? You looking for approval from dad? Or is this something you just want to get good at because it's fun Right. And I put a lot more emphasis on the fun and the process now than maybe I used to, which was always about compensating for something and getting good for the wrong reason. Now it's like, hey, let's enjoy our company, let's enjoy this weather. Let's have a blast playing. We're doing this in fellowship with each other. This is your, this is your band, your band of brothers. You'll never have an experience like this the rest of your life potentially, because a lot of you aren't going to play for college and beyond. And you have no worries now. You mean they think they do like, you have no worries. Enjoy this. Right. So now I'm kind of approaching the coaching with a lot less intensity and I'm just enjoying it more and I'm helping the kids enjoy it more. Same with agents. It's like, look, if it's not something you want to do, good. Just don't tell me that. Like a lacrosse player. If you don't want to put in the work, just don't tell me you want to go division one, okay, that's fine. But don't kid yourself. Same with agents. Look, if you don't want to be an investor agent, you don't want to learn creative financing, you don't want to accumulate these different tools to help you close more transactions and solve more problems for the public, that's fine. Just don't complain to me about your production then.
[00:32:37] Speaker A: Sort of like I think getting down to the base of that is any entrepreneur, you got to find your why. Why are you doing this? Are you just doing it? Well, I'm doing it because I want to make more money. Well, that's not a really compelling reason. You've got to dig deeper into your. Your heart and your psyche to figure out your why. Why do you get out of bed in the morning? What is that for you? Why do you get out of bed in the morning?
[00:33:01] Speaker B: For me, it's self actualization.
I just don't want to leave any potential on the field. When I'm on my deathbed, I want to be free of regret.
And I've made a shit ton of mistakes, man, recently in my marriage. Yeah.
And now I'm reconciling for it. I want to make sure that I don't have any regrets. And I'm living.
I'm trying not to be as transactional, which I'm very guilty being, because I'm about like, results, results, results at any cost. F your feelings. And now I'm just like, you Know what? We're all broken kids trying to survive as adults. So carry myself accordingly, interact with people accordingly. If I can be of service for you, man, I. So for me, to answer your question, it's become the highest version of myself, the best version of myself while I'm here.
And that means being excellent at what I do. Right? It's all. It's all a canvas to me. And so whether it's work or whether it's coaching or whether it's a simple interaction or a phone call, that's a canvas to connect and be excellent. So I'm just trying to do that.
[00:34:10] Speaker A: I see that a lot with especially any people involved in sales, they've see not. They start to see life as transactional. And I was listening to John Morgan talk this morning, and one of the things he said, he said, you've got to get out of that transactional mindset where I'm buying you a cup of coffee in hopes that you will buy me something someday. And he tells the story that, you know, if you just have this abundance mindset where you are just, hey, I just give to give, you know, I don't expect anything in return for that.
And he uses a story that he. One of a case he got was this really bad case out of Jacksonville is. And he got a lot of money off of. He got over $4 million out of it. But he said that the way he got the case, the woman had lived in Lake Mary and had worked at the Bob.
The. The restaurant where he'd gone to eat breakfast on Christmas Eve. And he left her 100 tips. And she was in this very bad accident. And she said, I'm calling John Morgan. And he's like, why did you know? Why'd you call me? And she told him that story. He's like, I didn't even. He said, I didn't remember doing it. I just thought when she's working on Christmas Eve, I feel bad. So here's a hundred dollar tip.
He said, yeah, it comes around. And it may not be that direct most of the time, but if you have that, that abundance mindset, that service mindset, it. Life doesn't have to be transactional and lots more will come back to you than you're ever giving out in that regard.
[00:35:48] Speaker B: Yeah, I'd agree with that 100%, man. And there's a lot of people. The other thing that I've been very conscious of is a lot of your actions and thoughts and feelings are literally only born out of two sources.
One is love or one is fear. Every emotion is a derivative of those two root emotions. And so at a time when a lot of agents are struggling, there's a lot of fear. There's a lot of financial pain that people are dealing with right now.
A lot of agents, I've seen that. I mean, it's. It's. Especially as a man who's expected to provide these, a lot of agents just aren't doing it. You have women who've made career shifts, and it's embarrassing that now they got a license, they got these business cards paid for, signs they can't survive now. And now there's an embarrassment of having to switch gears. And everybody knew them now as an age, a failed agent. Right. So there's a lot of emotional pain and suffering right now because of where the economy is and where the market's going.
And it's real easy to get wrapped up in responding to the world through fear, out of fear. That looks like commission breath. That looks like you trying this, and then three days later you're not getting a result. Then you're switching gears to try this, and then you try this marketing. And then I'm gonna go to probate now and, oh, no, I need to build my autoresponder now. I need to do more open houses. And so when you're. You're kind of behaving out of fear, then it's not serving us. And so I would say that to piggyback on what you were saying. Yeah, it's an abundance mindset. It's also being mindful in real time, moment by moment. Is this something that's coming out of fear, or is this something that's coming out of love and abundance and peace? And so it's something I try to be mindful of myself because it's affecting me too. Right. The market.
[00:37:41] Speaker A: So do you think part of that fear, especially for realtors, is this big shift that we had with the commission structuring with the NAR settlement.
[00:37:51] Speaker B: It didn't help, so at best, it would be even. Right. No impact. Chances are it probably has an impact. So. Yeah. Especially for buyer's agents. Oh, man. It probably destroyed a lot of buyer's agents. Now you're starting to see once they took it off the MLS and there was no CO broke, now it feels like a lot of agents are running blind out there. And like, okay, this is real now because I have to now go to these buyers. But here's another reason, not for self promotion, but another reason to work for work with investors is in our world with investment properties, as you know, precedent is investors pay for deals. So it's a lot easier for me to ask for a commission on a deal that's going to have an ROI for a buyer because they're not buying for schools or where they're dentist offices or anything like that. Right. They're buying for an roi. It's very easy to throw a commission into that cash out of pocket, to say, hey, this is justified because you get ROI on this money. So because precedent is that investors pay for deals, it's not even a blip on our radar for us. Right. In fact, we're used to making more money that buyers pay for access to these deals than a traditional buyer agent commission.
So, yeah, it definitely is probably making some people nervous out there that are having a hard time adapting to getting that money out of the buyer's pockets. And it's also affecting buyers getting into houses. Right. For people that don't have a lot of cash to be able to pay for that. So, yeah, definitely impacted especially for the buyer's agents out there. And then, you know, a lot of new agents are buyer's agents. So it's definitely impacting them. But it doesn't have to. It doesn't have to. Yeah.
[00:39:28] Speaker A: I've heard a lot of it this, the stages of grief in podcasts and realtors and brokers out there talking about this. You know, I've heard the podcast of nothing has changed, everything's still the same as it was. It's just a little bit of different paperwork to it'll go back to the way it was. You know, denial, bargaining. I mean all kinds, kinds of. Every stage of grief you can think of is rippling through the industry about that settlement. And maybe by the end of the year we'll be through that and they'll deal with the reality at that point.
[00:39:59] Speaker B: That's an interesting observation. I think I saw that denial starting to happen in mid 22 when interest rates started going up. It's just because of the fall or it's just because of the end of the summer. It'll come back and like, I don't know, we're so myopic as an agent community. We only see in the 200ft of headlights in front of us. We're not like looking at everything from a 30,000 foot view and zooming out. When you zoom out, you consider things outside of our local market and our mls, like monetary policy, interest rates, you know, what are the implications then? It's the signals are there. We just choose not to See them.
[00:40:33] Speaker A: Right. And like we said at the beginning, everything's cyclical. Everything that goes up will come back down eventually. Everything moves to a median baseline over history. And Morgan Housel writes about that and talks about that in his books. It's. While you may also watch the data to see where things are heading, you've got to know what history was to know. Well, we've seen this before, and when this happened before, here's what happened. This is. This is where it led to. So knowing, oh, and I saw this in, you know, 2006, 2007, I was doing 100 closings a month, and then all of a sudden it was like just everything stopped. And you go to ten closings a month, five closings a month. And I went through that denial. It's fall. We're coming out of the season. It'll come back in January after the holidays. It didn't come back. And when you finally, you know, have that Stockbridge moment where you sit back and go, okay, this is just reality. And we have to deal with the reality that we have. And we know based on history that when this reality is happening, this is where it's going to end up. This is where it's going to go, and this is what works and this is what doesn't in this reality. But you have to get out of that. I'm only looking two weeks down the road, a month down the road, a quarter down the road. I'm planned out a year down the road, three years down the road. You know, I want to know where I want to be. And while three years down the road is a long way to plan out, you're just going to keep adjusting based on what's happening now and looking back at what happened in the past to get to that point and always keeping that in mind. So for, to a large extent, studying history is just as important as studying the data of what's going on now and the trends of where they're heading. Because the history will tell you we've been here. We've always been here before. We always think no one else has ever experienced this. No one's ever been through this before. We've always been here before. Whether it was 1790 or 1890, 1990, we've been here before. And knowing that history will get you.
[00:42:42] Speaker B: To the future, I think, yeah, 100%. And then you see the slippery slope before everybody else does. Yes, because you saw the small signals. Because it doesn't scream at you. Right. These pivots, you see little things start happening Days on market creeping, you see LP starting to go up and they go slow until they go fast, like you said. Right. Like it's a small change until it goes fast, until it's not. And yeah, you're better able obviously to anticipate that. The bigger pivots, when you can sniff out those, because you've been there. It's interesting when you, when you were speaking to, like, if you don't know where our history was, if you don't know where the average has been, that reminded me of how far off we are on home prices compared to what we've seen relative to incomes. And so, you know, we can't have conversation about home prices unless you're also talking about the incomes that support those prices. And by that measure, if you compare where home values are now to 2008 at peak at 2006, before prices started to go down and before we hit the financial crisis, we were at about five times home prices were like five times income. And then they corrected down to four times average income. Fast forward, we're at. We peaked up until interest rates started going down to about seven times average income. Now we've corrected since the middle of 22 to about six times average income. So by that measurement, we are actually in a bigger bubble now than we were in 2008. And if you look at that relative affordability, home prices now are actually because, you know, some markets are used to being at 4x income, some markets in the Midwest are used to being at 2x income, right? But if you look at where we've averaged, we are right now in Central Florida about 22% over what we've averaged in that regard. Polk County, Winter haven, they're at 28%. Greater Tampa area is at 28%. And what's interesting is there's a correlation between how far that rubber band has been stretched in those markets to days on market, year over year, price reductions and that kind of thing. So there's a direct correlation between relative affordability and what's happening on that market. The interest rates were secondary. Here's what people aren't getting. The interest rates, as we know now, you and I both know they're normal today.
It's just abnormal. If you got your license after 2009 when the Fed rate dropped to near zero. Right. They look actually high today, but historically, what is it, 20 years of the last 50, they were over 8% mortgage rates, and then even 12 of those years they were over 10%. So when you're looking at rates today, those are normal. And we think it's because the interest rates climbing since 22. It's, that was just a catalyst to reveal the real problem, which is that our incomes have been flat and everything around us has been going up by measure of weaker dollars.
[00:45:46] Speaker A: Exactly. Tom Hartman's been talking about that a lot on his show lately. This week he, he's been talking about how when his mom and dad bought their house in the 50s, it was about two times your income. His dad made about $7,000 a year and their first house was about $13,000. Fast forward to 2024. And then there are some places where actually the home prices average are 10 times higher than the average income. And he, you know, he's been pointing that out too. That's not sustainable. You can't keep doing that.
[00:46:18] Speaker B: And the only way it's sustainable is if you drop the Fed rate to zero. And mortgage rates that spread also pulls down. And you have you had this poison pill over the last 12, 14 years now with these unsustainable interest rates. It's the only reason this house of cards been up is because of, if we had, there's no way we would have been where we are now with home values if we had normal rates over the last 12 years. Impossible.
[00:46:43] Speaker A: Right, right, right. You spit out a lot of data and I heard you say Adam Attom. I know Adam, that by housing data, that is the gold standard. Do you have a subscription? Where do you get your data from? So you see the trends where, what's going on so you have something to compare it for.
[00:47:03] Speaker B: Yeah, we subscribe to Adam and then we specifically dig into pre foreclosure data in the state of Florida.
[00:47:10] Speaker A: Yeah, yeah, yeah. And housing wire. I follow housing wire and I think that they bought Adam.
So, so housing wire.com has really good analysis of data for, for housing. If you're in the real estate industry, if you don't have a housing wire subscription, at least you're, you're going to be behind the eight ball. You're always going to be surprised.
[00:47:34] Speaker B: It's a way to stay in front of everything for sure. And you know, there's what's, it's kind of a blessing and a curse at the same time. Our business affords so many ways for you to specialize that you, if you have shiny object syndrome and you just go 2ft deep and 100ft wide with doing this and trying that and trying that and like you'll never get anywhere.
You really have to niche down and go two feet wide. Pick a specialty or one area and go 100ft deep and just stay with it for a solid six months and just keep the blinders on and you'll be successful. But when you combine that specializing like that and going deep with a very narrow focus with that data that you're referencing, you'll be able to adapt a lot better than most people in our business.
[00:48:20] Speaker A: Yeah, yeah. Riches are definitely in the niches. And that, that six months you talked about. I always, I've written about this before in my newsletter of the zone of disappointment. You know, everybody thinks that they're going to just go like this, you know, straight up on a trajectory of whatever they do. But anybody who's been in business while knows that when you get into anything new, it's a minimum six months to a year of marketing, marketing, marketing, marketing, marketing in that same niche over and over before you start to see really any results. So that zone of disappointment is very long before you start to see the trajectory head up.
[00:49:04] Speaker B: I agree with you, man. I agree with you. It's funny to piggyback on that. Like the first three months of that pursuit, just write it off as you, you learning what you don't even know about that specialty, right? That, that's just you expanding your knowledge base. That circle is just getting wired and wired up, realizing what you don't even know about that space. So just dive in three months, write it off, no results. You're just learning what you don't know. Next three months are applying what you learned that you didn't know and adapting to that. And then to your point, you start to see a trickling of at least light at the end of the tunnel the next six months and then the results happen after that. You're 100% right.
[00:49:42] Speaker A: But you gotta, you gotta stick with it.
We talked before, you have a way of you, you've talked about figuring out pain points and objections and how do you, what is your process for that with. With home sellers and other folks you.
[00:49:59] Speaker B: May be selling a great question. There is a book that's like my sales bible. I had it right here. It's called Spin Selling and if you read the front of the book it says it's a methodology of selling from studying 35,000 sales calls. So it's a very data driven approach to selling. And the whole premise is S P I N is an acronym for the four types of questions. They found that very successful salespeople, the types of questions they were asking that unsuccessful people weren't asking. So that's what they distilled from all of those studies and those phone calls. And so the S questions are just surface level questions, like situational questions. So they're asking like how old's the house? It's just facts that you're surfacing with the ask questions.
The P questions are problem questions. Why do you need to sell? Well, it surfaces a problem. I just got a job in this other state. We're relocating already picked up a rent or lease up there. Now I got to carry this mortgage payment and I'm bleeding out. That's a problem, right?
The eye questions are the ones where the magic is. And that's implication question. So how long? So once I surface a problem, how do I agitate the pain around that problem? Right? Because it's a problem that a lot of people just don't want to confront as sellers. So half of the goal I see in number one, connecting and building rapport with the seller, really showing them that I'm trying to understand them, is doing a proper diagnostic. And we use the SPIN model to do that diagnostic. The I is the most powerful type of question. It's the implication or consequence question. So, okay, so you're going to be moving up there. Who's going to be watching the house while you're gone? That's an implication or consequence of not solving the problem. Who's going to be doing the landscaping when you're gone? If something happens to the house, you see all these consequence and implications. How long do you have before, how many, how much savings do you. Are you allocating in your head to be able to cover this mortgage payment while you're up there paying also a lease? How much savings, how many months is that going to be? So if I dive into those implication questions, it does to the questioning does three things actually. Number one is it's a natural way to build rapport with somebody through understanding without me being disingenuous. Because I don't, I don't talk about the weather and I'm not going to talk about sports. Right? I won't be fake about that. I want to get into me solving your problem, but I have to understand your problem. So it's a great way to build rapport. Naturally. It surfaces the information that you need to be able to solve their problem properly. Because so many agents, they just make assumptions like is a sign in your yard and throwing your house on the MLS really the best way to sell to solve this problem? It is if that's the only tool you have in your box to work with sellers. If all you can do is put a sign in the yard and throw it on the MLS and sell that house like a listing. And that's your only club. Then you're not a consultant, you're a salesperson, selling listings. Because that's your only solution, right? Well, we try to take a consultative approach. If you're going to take a consultative approach, then the third benefit of asking those kinds of questions too, outside of surfacing really deep information for me to solve their problem better, is building urgency and pain.
That's the battle people don't know that they're facing when they're talking to in any sales organization or if I'm in a listing presentation, I want to get them to sign a listing agreement with me or sign a contract. If I'm an investor, you have to agitate pain. Well, how do you do that in a non abrasive way where it's coming out of them? You ask implication questions. Implication questions. Implication questions around all the problems related to them not selling. And then in doing that now you're breaking. Here's the battle, the inertia of them doing life. You're not going to get somebody. I mean, think about how hard it is for me to pivot from thinking about being my program of going to work, having my work problems, taking my kids to sporting events, sporting event, sporting event, paying my bills, addressing my wife's needs. Like I'm on this track mentally and that's where my energy focuses. You're telling me I got to stop and make a 90 degree pivot so I can sell my house and disrupt this whole inertia of this life energy that I have and sign a listing agreement or do this X, Y and Z. I'm not going to do that until I get agitated and make it a priority because you've forced me to consider emotionally how me not solving that problem is going to affect me. And so what we've done is we've systemized what that discovery process looks like in a two page questionnaire. And it's literally just top to bottom, top to bottom, second page. I keep it on a front and back. So I keep one page and I have them in my truck, I have them at my desk. So I'm ever talking to a seller, I'm diagnosing their situation. I'm naturally building rapport through my questions. They see that by the quality of my questions, you can judge somebody just by the virtue by the quality of questions. I could sit down with you and know that you're a good attorney, you understand Trust, because you ask me questions that are just higher level related to trust than somebody else who doesn't deal with them. Right. So I build my competence through the quality of questions I ask. And at the same time, I'm agitating pain without being manipulative or abrasive so that they'll want to do business with me.
[00:55:08] Speaker A: So what's the N stand for? What's in spin?
[00:55:12] Speaker B: Need value. So once you agitated the pain, you have to hit the relief valve. Right. Because now they're all bothered. So how do I solve this? Now all the pressure, the pressure cookers up. So now I hit the relief valve. Well, if I can get your house sold in a way that you didn't have to pay a commission, closing costs, would you be open to a cash offer? Or alternatively, I might be able to turn this into an income stream for you by helping you leverage this low interest loan that you have in place. And then that's a loan takeover, partnership. Right. So it's the, It's a relief valve. But I'm glad you brought. I almost, almost missed the end. Yeah, you got, you got to lay in the plane. Yeah, you got to lay in the plane, in other words. Yeah.
[00:55:48] Speaker A: Remember, I was trained to do cross examination and deposition. So I always remember, it's like we started here, where do we end?
[00:55:57] Speaker B: And I'm one to never land the plane. So I'm glad you keep me on track.
[00:56:00] Speaker A: Well, speaking of planes, I know you have to get up to Atlanta, but before you go, our biggest we're talking about passion. The reason we get out of bed in the morning, for me, it's to help other people aspire to a better life. And in a great way, I mean, that's you. And what you've talked about today is definitely going to help a lot of realtors, buyers and sellers out there to improve their lives. But who is someone who has helped you aspire to a better life?
[00:56:30] Speaker B: My wife. No question. Because you can fool. You know, I'm a salesperson, right. I've grown up with a personality and mechanisms that protect that child that wants to impress everybody. That's compensating. But you can't fool your spouse or your partner. They know the real you. They know when you get up in the morning. They know when you honor commitments that you make to yourself and publicly. They know how you interact with people and your kids, and they know how you are when you're stressed, which is the real you. So I would say for accountability reasons, because I want to aspire to be just a better person for her because I still need to sell her. Right. I still need to be a better person for her, but I need to do it in a way that's authentic. And so for me, it's an easy My spouse.
[00:57:15] Speaker A: Wonderful. Well, thank you again for coming on. Thank you for being patient with us. And I hope that your day is great. As well as everybody else who's listened to this today. I hope you got something out of this. And until next time, Trust this. Thanks for listening to this edition of Trust this. If you got something out of it, please press like and subscribe and give us a five star review to help us reach others who can benefit from this series. Until next time, keep aspiring to a better life.
