Real(ty) Talk
Real(ty) Talk
Real Estate Dynamics with a Power Duo
Get ready for this weeks episode! Sal Abolohsseini owner of Streamline HOme Lending shares his professional journey from Loan Depot to founding his own company, offering insights that beautifully intertwine their personal and professional lives.
We then dive into key real estate topics, including the dynamics of interest rates, changes within the National Association of Realtors, and the ongoing challenge of buyer affordability. Explore historical comparisons between the 2008 financial crisis and recent economic shifts post-COVID-19 and dicover how interest rates have evolved and what influences mortgage rates today. We also discuss the vital role of seller concessions in today’s market and how seller cooperation can significantly impact property sales. Plus, stay informed on regulatory updates that streamline transaction processes and the importance of educating agents to better serve their clients.
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what's going on with her hair? I was kind of fixated on her hair.
Speaker 2:He was the hair drew him in.
Speaker 3:Welcome back to your favorite podcast on the planet, on the universe around the world Realty Talk podcast. We talk all things real estate single family, multifamily, commercial lending, purchase, investment, buy side. We have a really special guest today. I'm excited, so I'm your host, Paul Hanson. We've got the queen of the closing table, Suzanne, and we have Sal Abel-Husseini.
Speaker 1:Nailed it yes.
Speaker 2:Got it. Fun fact we're married. So for those of you that don't know, so yeah, so what's really great, I think, with all of our partnerships, and really cool and such a nice addition, is that we're all integrated in the business somehow.
Speaker 2:And so you know I own Innovate Realty, run Innovate Realty. Paul takes primary on Bye Bye House, Sal takes the lead on Streamline Home Lending, so that's his company. But we all work together in some capacity. And yeah, today we just kind of wanted to talk through I know there's a lot of chatter around where rates are right now. We've been talking NAR changes, how that affects affordability for buyers, but I know you've got some questions before we dive into that.
Speaker 3:I think in a previous episode we actually talked about this. So generally, our weekly updates are always just straight into business, and this is the way that this began, which is okay, we want to talk about interest rates and NAR and let's get right into the meat and potatoes. But before we do that, I mean personally I don't even know some of these questions. But how did you guys meet? How long have you been married? We got to hear from you. It can't always be me.
Speaker 1:Okay, okay, yeah, you're the guest. You're the guest.
Speaker 3:If you know the answer.
Speaker 1:Yeah, yeah for sure. No, it's actually a good story because, you know, at the time I remember I went out the night before and I remember just trying to stay home I was exhausted, I was tired and I got a buddy who was going out A group of buddies were all going out and I remember them calling me hey, we're coming to your place because I had a place. So mine is like the pre-party spot, after party.
Speaker 1:Why they're calling me, we're on our way, don't come over, I'm tired, I'm staying home. And they said just one drink. So of course they convinced me to stop by to have a drink. And then, of course, now I'm in their car, we're heading out. Yeah, so we head out and then, uh, from there, I remember, uh, suzanne's friend had a wig on and it was uh, it was a big wig, and I just remember like she standed out because this huge wig and my buddy was just like what's going on, like with her hair. I was gonna of fixated on her hair.
Speaker 2:He was the hair drew him in. It was.
Speaker 3:Is that, like your friend would always wear wigs?
Speaker 2:We would. You know we should have a wig talk one day. But yes, she would periodically wear wigs, but she has beautiful long curly hair. Okay, so you know you don't always want to, just you. Sometimes you want to try something new. But you don't want to cut your beautiful long curly hair so throw a wig on it, and yeah you know, try something new I mean, really, that's how it all kind of started.
Speaker 1:You know, he came over, uh started talking with her and then, uh, I think I was kind of like wingman right started talking with her and then, uh, I think I was kind of like wingman, right well.
Speaker 2:So he all of a sudden he's like drinks on me and he's ordering drinks and doesn't have a job in school.
Speaker 1:This is your friend yeah and then he's like exactly so, like you know, when the bill comes, like hey heads up. So yeah, I'm in school poor sal.
Speaker 2:okay, I'll get the bill Like not interested in that situation at all. I'm learning a lot, so when we go out, just ask for a stream light Credit card.
Speaker 1:I will see if you have a school ID. I'll take a look and otherwise we could fund it.
Speaker 2:Yeah, yeah. So yeah, I think we started talking because they, you know, his friend was kind of infatuated. I would say with my friend.
Speaker 1:And so it was just like we were both like your friend or the wig.
Speaker 2:I think it was the wig.
Speaker 1:Man, it might have been the wig. Yeah, it might have been the wig. Did they end up dating? No, no.
Speaker 2:Nothing ever, but we did.
Speaker 1:Yeah, no.
Speaker 2:Nine months later.
Speaker 1:Yeah.
Speaker 2:Sal is really great at lead follow-up. Yes, so he followed up with me for a very long time.
Speaker 1:Yeah.
Speaker 2:And yeah, several months, yeah, nine months, to be exact.
Speaker 1:Yeah, we actually did not go on a date until like nine months later. Really, yeah, I think I gave up twice and I was like follow up. I and I was like follow up. I remember at one point I'm like that's it, I'm done, and then she actually followed up and then I was like okay, okay, and then, but at some point we were actually able to hang out.
Speaker 3:How long have you guys been together?
Speaker 1:So now it's been.
Speaker 2:So that was 2012. That was the beginning of 2012.
Speaker 1:Yeah.
Speaker 3:Yeah, it's been quite some time but Wow, time flies, 12 years, quite some time, but I got married in 2017. Oh, okay, and have you had streamlined home lending through that whole phase?
Speaker 1:No, so at the time I was working for Loan Depot, a retail direct lender so five years on my own now. Oh cool, so at the time, yeah.
Speaker 2:Yeah, that was part of the story that I didn't tell. As well is we weren't really out. You know, we were doing some, had a marketing company and doing some things and so our interest was like networking with people. And so one of the my friend asked his friend do you own a business? You know she's thinking this is like could be a working together yes, got it and his answer was I don't own a business but he does, and Sal gave me his Lone Depot business client yeah, you start streamline home lending in 2017 no 2020, 2019, so 2019, uh when?
Speaker 1:it's when I went out on my own and it's actually a good story. I'll touch on I so I was with loan depot on the retail side for nine years.
Speaker 2:Wow, and so um how many years in the?
Speaker 1:industry. So I've been in the industry for 20 years now. Oh, wow, and so so you started when you were 12.
Speaker 2:Yeah, pretty much it feels like it yeah.
Speaker 1:No, I was 20 years old when I started the industry, which is pretty young for jumping at that time, especially 20 years ago. I think now we're seeing a younger generation coming into the industry by the time. I remember by far being the youngest and it was good. But you know, I got to a point in my career was like I remember I wanted to get out, do it on my own and when that time came I remember Loan Depot didn't want to let me go and they kind of said, hey, you know we want, you know they bought I mortgage a big purchase company, uh nationwide, and they said, let's, let's have you meet some of the branches, uh some of the top companies, and kind of show you what we could do on the purchase side. Because I let them know like I want to focus on purchases.
Speaker 2:that was like my big thing because I would say the long depot historically, before I mortgage. They were primarily refined yeah, like 99.9 percent.
Speaker 1:They they only touch refis and, matter of fact, when they did purchase loans, they really didn't understand it. Most loan officers, I would say matter of fact, when the president or someone in the company had a personal referral, they actually reached out to me to do the purchase loans. Um, so I did quite a bit of purchase loans for the company and I just knew that's something that I really, really enjoy is getting families into homes. So I wanted to focus that on that, but do it on my own, because I knew with, you know, a company like Loan Depot they're focusing on, like you know, conventional FHA, va, not some of the out of box stuff. Guidelines might be a little strict and I'm like, all right, so I want to have all products. I want to be able to make sure I get every single deal done, not like here's my box, do you fit in it, type of thing. Yeah, um, so you know.
Speaker 1:But I was, you know, even though I had a plan. I was like you know what, been here for a long time, respect everyone. I do want to, I want to take a look at everything and not come in there like, no, there's not a chance. I actually want to look at it open-minded and give it a shot. So I actually met them a few more times afterwards but in the end, banking on myself, I felt was like the best decision because, man, there's been so many scenarios I'm like, yeah, there's no chance that deal would have got done. Um, if it wasn't for, you know, our other investors to get really creative and find solution. Um, I mean, I feel like Homeland we just closed on is a great example.
Speaker 3:Yeah, I was just going to say that that you know, we've gone through a couple of transactions where I mean, you know, without getting into the gory details, we look at it on paper and it's like, oh, uh, you know this is going to be difficult, Right, Right, and you guys always get it.
Speaker 2:So we're like so yeah, there you go.
Speaker 1:Yeah, and I think that's what's kind of great about like the full circle, the scenario where you know streamline, look at your guys' deals that are coming in and like bring it up, homeland, that we took a look at it on a cross qualification to see you'd make sure there's a loan there with the other lender. And we take a look at it like here's our concern. We don't feel like we don't have a home for it, jumbo at 5% down, and this is our, our concern and we and we understand that the lender was super confident over there know the deals are gonna get done, so you guys accept it and you know a couple weeks later all of a sudden there's a struggle um so what you're saying is you're the guy to call for these really hard, ugly, difficult deals is that?
Speaker 1:is that what you're raising your hand for? I'm I would say that for the easy and the difficult just bring them all.
Speaker 2:Okay, okay, yeah got it yeah if you want the deal done.
Speaker 3:Okay, that's awesome. So your business structure, I mean, essentially, you like all deals, you like the complex ones, but you like the easy ones. What's today like? I mean we're beginning of August, mid-august 2024. I mean, I imagine sorry to rewind a little bit before I ask that question Launching in 2019, probably somewhat stressful, I mean, the market's good, but it's not like on fire like 2021. Right, but I imagine getting through 2019 and 2020, I guess 2020 was probably terrifying.
Speaker 2:Initially.
Speaker 1:Yeah, I would say at the start of it yeah, it was definitely a scary point. When you get into it, it's like oh okay, yeah, is this the new norm? It's kind of this is a lot longer than they said. They said two weeks, yeah, you know, now it's been two months, right, yeah? So yeah, there's always, were you considered essential as a as a lender. Were you like yeah, An essential business. Yeah, yeah, man are we I think you were.
Speaker 2:I know real estate agents were so.
Speaker 3:I don't know if investors were. No, I don't think that's essential but yeah, yeah. But you started this venture right and you've got people on payroll and you've got you know a business where you're you know putting food on the table for people and then COVID hits and it ends up, I imagine I don't know. You tell the story. Was it crazy stressful?
Speaker 1:I mean being in the industry for 20 years, seeing the market in 2008,. I felt that I was very lucky to join the industry prior to that and very fortunate to kind of see the really tough times and for myself, I never left the industry to that. And very fortunate to kind of see the really tough times and for myself, I never left the industry. You know, like I remember all my friends are in it, all were out of the industry, change industries doing something completely different, yeah, but there were definitely not a loan officer doing loans. And here I am still you know, it, but not just doing it.
Speaker 1:I was actually still successful Not that I'm killing it in 2009 and 10, right but I was still successful. I was still able to afford my bills. And I was like, oh, this is a career. Like at first I wasn't sure Is this a phase? How many years? Like, what's the game plan? What am I saving up for? What's the game plan? And then I come to realize like, no, this is a career, this is something I actually really enjoy doing. And then touching on purchases that felt even better than refinancing. So just kind of getting families and people into homes obviously feels amazing.
Speaker 1:So when 2020 happened, you know, I already had my nest egg. I already knew like, hey, having a business, I need to have funds and be ready to be prepared for the good and tough times. Yep, um, I nobody imagined COVID coming in and pausing things. That's a very difficult, stressful time, but I was prepared to get through the tough time. So I knew I was going to be okay. I was able to, like, have meetings, everyone be calm, we have a game plan, you know, and talk about little things.
Speaker 2:I think when you live through the 2008,. Cause I was also in lending in 2008 and that is when I left lending in 2008. So, uh, or 2009.
Speaker 1:So I think, if you can, if you make it through that point, you're like nah nothing's going to be that bad because you know it was, it was pretty brutal yeah, yeah, and so, and it was and I don't want to say it was short-lived, but uh, 2008, that, that, uh, that hangover, if you will, felt a lot, definitely lasted a lot longer for things to pick up compared to what, what we felt in 2020. Yeah, because then, all of a sudden, a couple quarters later, you know, you started seeing people like, oh, this is kind of the new norm, code is not going away.
Speaker 3:Yeah, you know, start putting money, start buying things, yeah, and then, uh, we started seeing rates dropping, which created a refinance frenzy, if you will so well, I I you know I'm super fascinated by rates in the market and, um, if you're okay to talk a little bit about that now, like yeah I mean, if you're okay to talk a little bit about that now.
Speaker 3:Yeah, I mean I remember vividly growing up. My dad told me the first house he bought he had like a 17% interest rate. You know, that's in the 70s, right After COVID or during COVID 21, 22, rates go all the way down to like I guess the lowest they were is like two and a quarter or two and a half.
Speaker 1:Yeah, so 30-year fix, two and a quarter 15-year fix, like 1.8%.
Speaker 3:It's like free money, it really is Essentially yeah and where we're at today. I guess three weeks ago we were just north of 7%, right, and then it's kind of been ticking back. Last Friday they got down below 6.5 and we're kind of right around that now. Is that right?
Speaker 1:Yeah, I mean as of today, 6.35% Interest rates. On Friday were half a percent higher. They dropped half a percent in one day. So as soon as that unemployment rate came out we're like, oh OK. So then we just saw the interest rates drop down, the bond drop down. So I think in our near future we're just going to see the interest rates trickle down a little bit.
Speaker 3:Yeah, historically, the math that I understand is that a 30-year fixed mortgage generally pivots from the 10-year treasury rate right and so by 175 basis points. So if the 10-year treasury is at 2% then we should see a 3.75%, you know, 30-year fixed mortgage, and the last year and a half we've seen something closer to like 200 or 225, or at one point 250 basis points above the 10-year, and I think the 10-year topped out just shy of 5%.
Speaker 1:And I feel that's one thing that majority consumers are definitely not aware is that they do not need to wait for the Fed to reduce the rate. This has already taken place. So to me right now, if I was a first-time homebuyer, I would try to purchase a home prior to that Fed meeting, because to me that's when the rest of the world is going to probably know rates have come down and guess what Open houses are going to start picking up. That's your competition, really right? So it's like you want to try to buy the home before all that competition comes, because ultimately you're probably gonna pay more for the property.
Speaker 3:Yeah, I have a. I don't know if it's an unpopular opinion and I think it might offend some people not in this room, but just like generally, what I'm really afraid about right now is that you know, our last major recession in 2008, 2009, was tied to the mortgage-backed security and failure of underwriting and lenders were doing 100%, and so we saw those foreclosures and banks failed and that's ultimately what sent the stock market into a major recession. And I guess my fear is trying to figure out how to say this and not be offensive. But do you think the average American consumer will not correlate those two? Because there's a fair argument right now that demand is still very high.
Speaker 3:A 6% or a 7% interest rate on your 30-year fixed mortgage is not that expensive. People are really still hung over from a 2.5% or a 3% mortgage. Pricing in most markets that we operate in hasn't really corrected, so affordability is tough. But I mean, if the stock market sees a major decline, there is an argument that real estate stays flat or even still goes up. Do you think that the average American consumer will have confidence to buy when they see that news around the stock market?
Speaker 1:I will say that it's always going to be scary when you purchase a home. It is the most expensive investment of their life majority of consumers so there's always going to be that being, you know, being nervous, being scared, and it's absolutely understandable. And I don't, and I will say that, yeah, maybe majority won't feel great. I mean, I have that a hundred percent confidence versus purchasing something that's a lot more cheap, a lot cheaper. But you know, ultimately, knowing the way the loans are regulated now, you should definitely have the confidence because we're over-regulated. That 100% financing with no verification of income, no credit score required, etc. That's long gone Now that we're not just regulated, overly regulated. Everyone has to have good credit, got to have a decent down payment, decent down payment. They got a whole healthy amount of income to qualify and that DTI is, they're like, very strict on that.
Speaker 3:So if you're, whatever it is you're qualifying for is gonna be affordable we have a fair number of people that listen to the podcast that probably have never purchased a home before. Can you talk a little bit more, because we've thrown out a lot of terminology? So, dti, if you've never bought a house before, what does that process look like?
Speaker 1:So basically let's just talk about DTI really fast. Dti is your debt to income ratio, so essentially it's your income versus your obligation for housing. And another thing they'll also look at is not just your housing but total expenses, such as credit cards, student loans, auto loans, et cetera. So they look at everything both sides of things and there's rules and the rule of thumb I would just like to say use 50%. So if your income is $5,000 a month, then that means that your mortgage payment essentially cannot be over $2,500.
Speaker 3:And is that income gross or is it net of taxes?
Speaker 1:So it's gross. But if you're self-employed then if you have write-offs, they're going to use your adjusted gross income, but if you're W-2'd, they will use your gross versus your net and to answer your question there. And so the consumer, you know when they're getting qualified they're going to gather, you know, their pay stubs, their W-2s, if they have a down payment, they gather their bank statements and essentially connect with their lender, show them, have them calculate the income, take a look at credit, and the loan officer's job is to determine what they feel is what they can qualify for and put them into the right program and show them exactly what they can be approved for, what they felt that they should be comfortable paying per month and all that kind of good stuff.
Speaker 3:But rates, I mean related to that. Rates make a massive impact in that whole equation, right? Because you know, in the last five business days or seven business days, we've seen, basically you know, if you're buying a house with a $5,000 payment a week ago, it now is 20% cheaper, essentially, with the right reduction right so our team right now is that we're kind of scrambling right now because we want to update all the clients of what's been happening.
Speaker 1:Yeah, on the interest rates, because that has increased their purchase power, right, you know a lot ofvals. We're showing them their max budget where they can go up to, and then we also want to know exactly what they feel comfortable paying and then showing them that as well, so they just have a couple of options to kind of gauge where they can buy, what they feel comfortable buying, to see what kind of home they can purchase. But when that increases, we want to show them that we don't want them not to be educated and find out. You know, in september, when the feds cut the rates and it's more, there's more news on it like, oh hey, streamline, can I increase my purchase power?
Speaker 2:like I want them to know now, for reasons that we discussed before yeah, I think that's an important point because you know we look at it from a savings perspective, but it's also, you know, an affordability thing. Now they can actually get maybe a into a different home, even a different caliber of home, based off of that lower interest rate or previously, if they just weren't able to qualify yeah, something in the area they live in at all, yeah right right, right, absolutely yeah, you know I'll go ahead I was just gonna say can you walk us through what like a rate buy down would be or other programs that might adjust the payment or create some affordability for a buyer today?
Speaker 1:Yeah, so a lot of consumers will hear something called the word, called points, and points essentially is something that the buyer's going to pay to buy down the interest rate. So if the client's qualifying for a 6.99% interest rate and maybe they could obtain 6.5% by paying two points, and two points is 2% of the loan amount, so you know, and that's something the buyer can come out of pocket for, or that's something that they can request the seller to pay for with a seller credit, so they can negotiate that into the deal.
Speaker 1:Exactly exactly and this is something that we've done quite a bit on, since the interest rate's been going up and helped bring in affordability is buying down the interest rate. One thing that was really neat and created a lot of buzz was a temporary rate buy-down, and what that basically means is that we give the client a fixed rate for 30 years, but we discount the note rate for the first year or the first two years. So, for an example, we do a 2-1-1 buy down and so the interest rate instead of being 6.99, now it's actually going to be 4.99 for that first year, then it goes to 5.99 for the second year, and then it goes to 5.99 for the second year and then it goes to the note rate for the remainder of the life of the loan. The client is still qualified on the note rate, so there's not going to be a situation with affordability your DTI exactly got it so, again, like we're, you know, regulated and they're making sure your buyers are still not qualified on that lower teaser rate.
Speaker 1:right, they're qualified on the higher rate, but it helps them bring that affordability Because, at the end of the day, we all know that interest rates are high because of inflation, and inflation is not forever. Interest rates are going to come down. So it allows them to have that affordability to simply refinance to that lower interest rate permanently.
Speaker 2:And what's cool is, right now, with interest rates think you know, you said it the other day to all of our agents here but what you do a 2-1 buy down right now you could potentially get a rate at 3.9% right now. That's amazing. So so for buyers, I think the message is you know inventories still, but there aren't a lot of buyers necessarily in the market. I think not all buyers have this information yet and it's important that they do make a move now, before it turns into a 2021 situation with multiple offers. It turns into a 2021 situation with multiple offers If interest rates drop into the fives or low fives. The gloves are off, yeah.
Speaker 3:I agree with that. I think it's kind of one of the takeaways that I'm having from this conversation and we touched on in the last episode. We interviewed Franco.
Speaker 2:Agent F.
Speaker 3:Agent F, yeah one of our top producing agents. But I guess for me, you know if you're a listener that's never purchased a home before it's not really just about, you know, selecting a great agent. It's really about selecting a great lender that communicates really well with that agent and the selling agent, because that trifecta, that relationship, you know cool minds will find a way to get a deal done, absolutely so yeah, I mean I have a ton of confidence in your business. I mean we've done a lot of loans with you guys and you know if you're on the sideline.
Speaker 3:I know a great agent and I know a great lender.
Speaker 1:I'll put a link in the comments.
Speaker 2:Yeah, 100% yeah, I think it's a good point because I think so many times you know, especially in escrow, I as an agent I always took it upon myself to, you know, kind of manage that transaction and make sure that everything goes smoothly. But there's a huge part of it which is your buyer's lender.
Speaker 2:And sometimes you know there are so many lenders out there. Honestly, and like you touched on with Loan Depot, loan Depot is a great company. They've done a ton of business but they really focused on refis. So you know, having someone with experience through the purchase transaction is it makes such a difference in closing on time. And yeah, it's just night and day in the experience too for the consumer. I think that's, you know, such a huge part of it is making sure that when you buy a house, you feel good. When it closes you don't feel like, whew, that was stressful. I think you know that's I mean at Innovate. I think that's one thing that we really try and focus on. I know you do too. It's about a positive experience.
Speaker 3:Absolutely so.
Speaker 3:I, you know, I'd love to pick your brain just a little bit on, and I know some of this is kind of opaque for all of us because things are changing daily.
Speaker 3:But we're at the beginning of August now, and mid-August we have all these NAR changes and so we could touch on those briefly.
Speaker 3:But I'm super intrigued to understand what that looks like from a lender's perspective, because the changes that I think are very real in all of our businesses are that, if you are now listening to sell a property, our understanding today is that there's a place on the MLS where you're going to be able to disclose what you're offering in terms of a seller concession and then, if you're representing, if you're an agent or if you're a buyer, before you get into escrow you're going to have to actually, before you view the property, you're going to have to consummate an agreement of you know.
Speaker 3:Hey, I'm a buyer and I'm willing to pay my buyer's agent X amount of dollars, regardless if the seller is contributing anything. So how is that going to change this whole dynamic of qualifying for the property? Because previously, or the way it functions today, the seller's really paying the buyer's agent commission but that's really getting wrapped into the purchase price of the home and it's getting financed right, right. And so, under these new changes, is it possible that a buyer is going to be qualifying for less or buying a lower valued house to be able to purchase in the event that the seller isn't contributing that credit or that commission?
Speaker 1:Well, I mean it comes down to to me is the property or the seller? Or the seller? Because if the seller is not willing to play ball with the buyer agent to cover some of their commission, if they're a first-time home buyer and they only have 3% down payment, they don't have enough money to also pay for their buyer agent fee then that property may not be meant for them, unfortunately, or I mean that agent and that seller might lose out on a deal because they're not.
Speaker 2:you know, they're not putting that forward you know it's interesting.
Speaker 1:So, you know, I feel like we're going to see where it goes, but I feel like I think some sellers are going to learn fast that probably you need to keep it like it was before. It's just now that it's disclosed, right, there's a number on the contract, you know. So I feel like maybe there's a, you know, essentially, I just feel like you guys are getting regulated right and like we were in 2008 and 9, like you guys were kind of feeling what we felt before. So it's not a bad thing. It's just now. It's a change, right, so you're going to adjust and pivot to it and I know it's going to be more work, more discussing and all that.
Speaker 1:But you know, essentially I feel that the seller can still pay. If they want to have, you know, all buyers be available to them, not just the ones that are selling, that have the money because of their equity and how much money they've made in the last year, five years. They also want the first time home buyers, et cetera, to bid against their home as well. Then they probably need to play ball a little bit.
Speaker 3:Yeah, yeah. And so what I hear you saying is that if the seller is contributing that concession, then it's going to be pretty seamless and it will flow just like it was before. In the event a seller is not offering a concession, let's say I'm a buyer, I hired Innovate and I said, hey, I'll pay two and a half percent of this million dollar purchase.
Speaker 3:So I'm on the line for a $25,000 payment to my agent. Let's say that the seller is not willing to contribute that concession. Now I'm going to be on the hook to either renegotiate or just pay that out of my pocket, which could affect essentially affordability, right?
Speaker 1:Because if I'm already at the very top of what I qualify for, and now I have to bring another $25,000 down that's not going to get wrapped in, it can't get tied into the loan. Unfortunately, there's not a way to tie that money to the loan, so that could put them in a situation that that property may not be for them, unfortunately, so that we we could.
Speaker 3:There's definitely going to be situations like that, I'd imagine well, I think I don't know the data points, but, um you know, we actually discussed this last week at this mastermind with other agents. You know, look, most agents, when they get their start in the industry, start focusing in areas where there are challenge listings, canceled listings.
Speaker 3:Foreclosures NODs yeah, yeah you know, and FISBOs for sale by owner. For sale by owners take a longer time to sell for a lot of different reasons, but I imagine we'll see something similar with these changes, which is if you have a seller that's not offering any concessions, it's going to be a stickier, more complicated transaction to get done Ultimately. Ultimately, that house might sell for a lower number, especially if it sits on market for a long time. I mean we're in the camp at buy-buy house. I mean I'm happy to say it publicly. I think a sophisticated, non-emotional seller will offer and try to make it as clear as possible because they want to cast a broad net, get all of the possible buyers and brokers to see the asset, to get it to move quickly.
Speaker 2:Well and I think it comes back to something that we've talked about quite a bit is agent education as well, because we're really setting the tone with our clients the same way we always would. So our clients, you know, as a listing agent, our sellers, rely on us to tell them hey, what do you think makes the most sense in this situation? So you know it's important for agents to be able to articulate what it could mean if you don't offer concessions. You know it is a possibility where they have to walk away from the home. You know it is a possibility where they just can't afford it. And so you know, depending on the pocket that you're in and the price point, I mean it's, it is a real thing. But education is key because, at the end of the day, you know you want to get as many people to your home as possible, and that message comes from us. You know the message starts with us. So making sure that we're providing accurate information to our clients, I think, is more important than ever, right?
Speaker 2:yeah, right, exactly, but so on that note, um, I know that there are some guidelines about seller concessions. So if the seller is providing a concession for commission, how does that factor into the loan that you're providing?
Speaker 1:so that was actually a huge win that they are allowing um the seller to pay for the buyer agent and not be included in the percentage allowed of seller concession.
Speaker 1:What I mean by that is that, like there's programs so give an example if they're going conventional financing and they're putting less than 10% or less down, you know they could only receive seller credit of 3%, and so that buyer agent needs two or three percent. Essentially they're already used up all their seller credits allowed. But what they pass is saying, hey, we're not going to include that formula in this, so any credits that are being received to pay the buyer agent will not be included. So this way the buyer agent need or, excuse me, the buyer needs additional credits such as closing costs, or you know they're receiving credits from lieu of repairs or whatever the case. The case is they're like no, we're tapped out, we're like that's not the case. So to me that's a huge win because that's putting the buyer in a position where they could buy the home. It is an option for that seller to cover the buyer agent's fees.
Speaker 3:Yeah, one of the other rumblings that I've heard is that the conforming loan limit by county is going to increase, which is an easy way for them to also massage that number. To qualify Absolutely and we've seen that drastically over the last even five years right In Orange County, southern California, I think a conforming loan limit in 2020 was like $770,000. Yeah, and today we're at like $1,050,000 or $1,060,000. Yeah, exactly. So that buyer can bring 3% down and qualify for $1 sixty where you know, five years ago was seven, seventy.
Speaker 1:That's actually a really good point, I see. I can see that it's always like it's always going to continue to increase while the home values continue to increase, right, but I feel like what you're talking about. I think it's a good point that we could see that increasing essentially to cover those fees. End of the day, I just feel like the housing market's so important for the economy that there's always going to be a fix. There's always going to be an adjustment. They're going to pivot one way or another.
Speaker 2:I mean it's kind of like that dream program that came out in California, right, it's like, okay, it's really difficult right now to afford homes. Like we got something for you. So, I do think that you know there will be creative solutions in the future as all of this unfolds.
Speaker 3:I would be reminiscent if I didn't ask so. Obviously you guys are both wildly successful in your individual careers and as partners and everything. What about, like your daily routine, or both of your daily routines? I don't know if I can ask you that before, suzanne. What do you guys do that makes you so successful and so focused and driven to you know, create businesses and go down that entrepreneurial pathway?
Speaker 2:I think what's good is that we're both on the same page. I think what's good is that we're both on the same page. So, you know, there are times where for me, I think you know where things are difficult for me, but I know that you know I have support from him emotionally to, you know, allow me the opportunity to focus on my business, and vice versa. So I think, you know, for us, having a real partnership and being able to, you know, fill those gaps when maybe one is really, you know, starting a new business and diving in and investing a lot of time and hours, I think you know, having that support from my partner, I think you know, really enables me to be successful and I think, you know he would kind of say the same thing.
Speaker 1:Yeah, absolutely no, she nailed it again. No, no, absolutely I feel that. And then you know communication. I feel like communication is everything, because you know when she needs something. And then communicating, what can I do to carry that for the rest of the day? What do we need to do? Right, to adjust?
Speaker 2:So, but yeah, yeah, but you know, having the same goals, I think is really important too, and the same long-term vision, but too, and the same long-term vision, but I think both of us just like you, wake up very early in the morning and get what we need done done, and then the rest of the day is focused on how we can be better for our agents, for our loan officers and for our business as a whole our agents, for our loan officers and for our business as a whole, and then, of course, making sure that we still have time to go to the Spain house, too. That is definitely a thing.
Speaker 3:We normally ask guests about their most exciting and then their worst real estate experience. I think we're coming close on time, so we might have to invite you back. I'd be intrigued to hear if your worst and most exciting experience is similar to hers.
Speaker 2:It's going to be the same thing.
Speaker 3:Yeah.
Speaker 1:You know, yeah, there's no way you can top the Spain story.
Speaker 2:It was so stressful.
Speaker 3:Today was a lot more focused on rates and streamline, but I'd love to hear more about that. I'd also love to hear just more about, like your general routine, I think a lot of our you know listeners we've got we get a lot of feedback about you know what. What is it that you guys do, you know, on a daily basis to enhance your focus and, you know, be focused on the business and, you know, create what you're doing, and so we'd love to hear about that, you know, on your side.
Speaker 2:Part two. I'd be happy to come back.
Speaker 3:Yeah well, congratulations on your business. Thank you so much for the support you provide to us and, you know, for all the information.
Speaker 1:Well, I appreciate you guys and thanks for having me on All right.
Speaker 3:That is the end of the episode. Check back next week.
Speaker 2:See ya.