Real Estate Happy Hour Show - Episode 38

Watch the Real Estate Happy Hour Show - Episode 38

The Most Magical Hour in all of Real Estate....It’s time for the Real Estate Happy Hour Show. On today’s show, Episode 38, Collier Swecker and David Arnette are talking about why Home Buyers should always use a Realtor when Buying a home | Where are the Safer Stock Investments | Update on Mortgage Interest Rates. Oh and we can’t forget the Conference Championship College Football picks! Join us every Thursday at 4pm for the live show on Facebook Live or watch or listen to the Real Estate Happy Hour on replay or podcast.

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Collier: All Right! Welcome to the Real Estate Happy Hour!

David: We are back again, we are a little bit early this week so, hopefully you guys can adjust to that plus we got such an audience out there on the replays of the podcast, I guess it doesn’t matter.

Collier: It doesn’t matter when we go and push! You, you’re from an Eastern town so hey!

David: Yeah, we’re kind of a big deal no matter how you look at it.

Collier: Absolutely! Well Funky Cole Medina going on.

David: Funky Cole Medina, that takes you back, Tone-Loc!

Collier: Old school! Hey, that dude had it going down didn’t he?

David: What is Tone-Loc up to nowadays huh? Who knows?

Collier: Spending all that money.

David: Well man, today we’re gonna have a little, a little talk about some Christmas tree shortage huh?

Collier: Hey, ain’t that the craziest story? I mean who knew? You know we talk every week about the housing cri, not just the housing crisis, financial crisis of 2008, story out there talking about why right now in 2018 there is a shortage of real Christmas trees and a rise in the number of artificial Christmas trees, and it all relates back to the financial crisis.

David: And that’s because people did, they didn’t replant enough during that time, hence the crisis.

Collier: They didn’t have the mo, farmers didn’t have access to money, they didn’t have certain things and people weren’t buying, on the flip side to that people weren’t buying.

David: Yeah.

Collier: And so, there’s a 10 year gestation period for these trees and hey boom! There we go who knew?

David: Yeah.

Collier: The Christmas trees were gonna be.

David: This year.

Collier: Having a problem.

David: This year we’re suffering because.

Collier: It’s, it’s a terrible thing!

David: Of the financial crisis of 2008 who knew?

Collier: I mean, I, I, I, I suppose if you’re into the artificial stuff and you sell those you’re loving it.

David: Yeah, absolutely and those sales’ll be up, so how was, how was Thanksgiving?

Collier: Man!

David: Hope everybody enjoyed it.

Collier: It was! It was good! I had a, family’s we stayed in town did you? No, you left.

David: Yeah, we went just to Lake Wedowee.

Collier: Lake Wedowee? The big lake!

David: Yeah, yeah.

Collier: Man, had a lot of good times and then of course you know, the big game, hey Robin! You know the wrong team won the Iron Bowl of course.

David: That was a big game, it was entertaining first half and I think you know, Auburn played well to start with, but.

Collier: (Laughter).

David: Alabama’s just too strong huh?

Collier: Then when it got real, they played normal.

David: And speaking of that, so we’ve got some conversation about Gus’ contract huh? Look at it.

Collier: Wow! I mean.

David: Are they trying to keep him, are they trying to make changes?

Collier: You know, I mean, this is, this is cra, you know this is just such a real world getting an insight in who really runes these schools?

David: Yeah.

Collier: The money runs a school.

David: Absolutely.

Collier: With no question and the idea that 31 million dollars was a deal for potentially?

David: And the contracts and the wins right?

Collier: Right, right, you gotta win too.

David: The contracts with SCC, the, the TV contracts out in Texas, I mean that’s a big deal in, in, for the Texas Long Horns, but yeah money drives all of this stuff and, so now are they talking to Bob Stoogs at Oklahoma or are they?

Collier: He says no, but then you know we start, they start getting what do they call it? Tailgate? When they’re following all the airplanes, tail the members.

David: (Laughter).

Collier: To find out who’s what, where and why?

David: Yeah.

Collier: And who’s lying?

David: And in order they’re just trying to set Gus up for a tough year next year, I don’t know there’s a lot of, lot of stories out there.

Collier: That’s the biggest speculation on everybody’s part.

David: And I’d hate it for Auburn because it sounds to me from what I’ve heard, the little bit that I’ve heard, it sounds like you’re waiting on some, you’re waiting on something to fail rather than.

Collier: Just getting with it.

David: Excited about building something a new year, a new team.

Collier: Absolutely and I think the other thing to think about is I want a couch you know, I think we do have a basketball coach at Auburn in Bruce Pearl, that is phenomenal.

David: True.

Collier: Right? And he’s a player’s coach, you know I love it, you know Auburn stayed within 6 of Duke and his response afterwards there is, there’s no more victories right? All Gus Manzano always says is we’re gonna get better next week, I promise you that right? But he said that for 30 years now you know, we’re waiting for that 1 week to happen so.

David: Yeah so, it sound tough.

Collier: As a porcupine.
?David: What other coaching changes we’ve got? We got a.

Collier: Hey Karen!

David: Big coaching change in Atlanta.

Collier: Oh, the big school! The Georgia Tech!

David: Can you believe it?

Collier: Your school?

David: You know we’re sad to report that after 11 years, Paul Johnson is retiring.

Collier: That’s right.

David: So, that means that Georgia Tech will now be without the daunting.

Collier: A quality head coach?

David: The daunting triple option offense.

Collier: Oh! Moving back!

David: (Laughter and hand clapping).

Collier: Wow! Although I will tell you this, if you watch Alabama a few weeks ago in citadel what gave ‘em trouble? They actually went to the Georgia Tech coaches and got some advice on how.

David: Yeah, yeah, they run the, they that office well, can it win enough games in major college football, I don’t think we’ve seen that very much but.

Collier: It’s crazy! Now, moving over to real estate.

David: Yeah.

Collier: You and I were talking about this earlier about you know, equity in homes almost 50% of homes in America now have more than 50% equity in ‘em.

David: That’s a big number, but you think about it we came out of the, the tough period 8, 2008, 2009, when we had a lot of problems, a lot foreclosures, a lot of repurchasing, so we’ve been 10 years past that so people that have been in their house that whole time have been making payments, right?

Collier: Ro, well the very fact that 30% of all home owners in America, don’t even have a mortgage at all.
?David: Yeah.

Collier: Right? So, that is massive number in my head I guess, I guess I’ve always just run with the idea that there was a lot less than that, I mean and then beyond that about 17.9% how we get to these numbers is, then we take the number of people with a mortgage.

David: Right.

Collier: That do have a mortgage and then how many of those are under 50% and that’s about 18% of those without mortgage are under 50% so, you end up close to 50% but wow! Interesting number out there because I think a lot of folks, that’s one reason why we’re not two thousand and eight again.

David: Yeah and I think the, I think the banks are not as interested in the equity lines and those second mortgages that made a lot of changes, even the tax write-offs you.

Collier: Hold on, you’re telling me y’all are helping, y’all are preventing us from making mistakes on our own.

David: Well no, what I’m saying and the reason why these changes happened is ‘cause banks lost money on ‘em.

Collier: Oh!

David: It’s not about.

Collier: Oh, I didn’t think of that too.

David: Yeah, yeah.

Collier: The flipside of that.

David: It, you know.

Collier: Yeah.

David: Believe what you want, but it’s not about them wanting to make the right decision, it’s, what’s college football about? Money.

Collier: Money (in unison with David).

David: What’s banking about?

Collier: Money.

David: Money, second mortgages you know, a lot of banks lost money on ‘em right? When a house forecloses, what gets paid off first? The first mortgage.

Collier: Well absolutely.
?David: What gets left out? The second mortgage so, when you lose enough money on a certain product line you’re not as interested in it, so I think you know, that’s also gonna help the situation because they’re not as interested in this anymore.

Collier: Isn’t that, it’s just fascinating that all that plays together ‘cause it how, well I should say this is as the world turns right? I mean in the sense of, it’s y’all, for selfish reasons the bank don’t wanna offer these loans but, on the flipside of that it’s helping the average home owners stay out of that, prevent us them from.

David: Yeah.

Collier: The problem you’ve not talked about though, is the easy access to capital that they have, people have other credit cards and other mad means if they only have to stop getting say, we’d be in a lot better shape.

David: You’re, you’re right, you’re right but you know again we get back to the economics of the situation, the pendulum will swing back in the favor of those becoming profitable again because let’s say you know, with these numbers at least 50% have 50% equity.

Collier: Yeah.

David: So let’s say, if you’re a bank you extend a second mortgage only up to 70% of the value of the house, that’s a pretty safe loan right?

Collier: Should be.

David: So it, that’s 1 way that they could, that it would make sense to get back into that business a little bit, if they can make sense for the consumers as all rates rise, those equity lines are gonna rise and.

Collier: They’re making more money when they do loan.

David: Right and, but, they’re also not as attractive to borrowers ‘cause you know, as, as our regular mortgage rates rise to 5%, equity lines might get to 6, 7.

Collier: That’s crazy.

David: And people are not gonna wanna hear that.

Collier: ‘Cause y’all still using the Libor rate for those?

David: Yeah, a lot of ‘em still, still would use that a lot.

Collier: Now, has that moved up just as the regular?

David: Yeah, but a lot of ‘em also use prime rate, which is tied to that Fed funds rate, so when.

Collier: Directly.

David: That Fed funds rate moves up that prime rate moves up, which is a lot, a lot of equity lines tied to that as well.

Collier: That’s fas, it’s all, man just so much, so many moving parts here.

David: Yeah, and, and speaking of rates I thought it was interesting, just this past week I saw an 18, I think I texted it to you, an 18 month CD.

Collier: Yeah.

David: At 2.7 APY, I think that’s the highest I’ve seen lately, now obviously that’s not a big, that’s not a big rate, that’s not a.

Collier: If you’re parking money for.

David: Yeah.

Collier: You know, say you won’t pay somebody’s tuition next year and you need it to be somewhat.

David: Yeah, it’s guaranteed.

Collier: Accessible.

David: And it’s guaranteed, you’re not gonna lose any money on a 2.7 C.

Collier: Yeah, you’re gonna be right with interest.

David: Yeah so.

Collier: I mean with.

David: With inflation.

Collier: With inflation (in unison with David).

David: Yeah, so it’s just interesting that those rates are moving up that you’re gonna see that, they’re gonna work together with mortgage rates.

Collier: Absolutely!

David: So, these investment rates are gonna move up, but also along the lines of current interest rates, unchanged this past weeks still 30 year fixed average on Fretting, Mac, Mortgage Market Survey, 4.81% on the 30 year.

Collier: Wow!

David: Four point two five on a 15 year fixed.

Collier: Well that’s going up a little bit, ‘cause I just remembered 2 weeks ago we were at 3 point, very high 3’s at some point on that 15.

David: Ok.

Collier: I mean I think, I, you, hey you wouldn’t know ‘cause you were in.

David: (Laughter), yeah.

Collier: On a boat.

David: Yeah, I wasn’t, wasn’t here a couple of weeks ago but, I know last week they were the same so.

Collier: Well we were doing this while you were gone, I mean that’s what’s crazy about this market we went up and then, I remember David saying “We’re probably not gonna get to, we were probably will be going to 5, well right as you said that and you leave, right back down.

David: Yeah.

Collier: And now we’ re back up so, in other words it’s just like the stock market, it’s moving up, down, up, down.

David: Yes, yeah and, and I think mortgage applications you know, with, with this you know it’s only been a couple of weeks, but with rates leveling off to some degree mortgage applications have ticked up a little bit, so some people, buyers are still out there taking advantage of the interest rates that are available now, seeing a little bit of a slowdown in the rise

Collier: Well that’s, that’s interesting.

David: Yeah absolutely, also this week the big topic I really wanna talk about was is, it’s kinda like, real estate contract basics ok? Sales contract basics and the, the way this comes up for me anyway, these, these are kinda the things that you deal with all the time.

Collier: (Laughter).

David: ‘Cause this is really a real estate agent’s job, but sometime I’ll have it for sale by owner or, or a buyer.

Collier: You do, you get ‘em.

David: A buyer that wants to buy for sale by owner ok?

Collier: Sure.

David: So, they’ll call me with these questions.

Collier: Ok.

David: And obviously, if there’s not a real estate agent involved then.

Collier: Shame on them, that’s what I say!

David: Yeah, but it falls on me but they’re so, they’re, they get, they’re concerned about it.

Collier: But they think no, what they’re really thinking is that you’re just gonna fill in the gaps?

David: Yeah.

Collier: ‘Cause I, I listened to attorneys when I was a closing attorney, I saw it too, they’re just think that you’re gonna jump in, oh! He’ll protect me and the problem is just like you are IN your job, we, we have set, I mean we have things we’re doing, we’re not used to doing, I’m not used to being in the mortgage business.

David: Right.

Collier: I know a little bit more than the average bear, but I don’t know, I wouldn’t know where to go to go get.

David: Yeah, yeah.

Collier: Like what button to hit.

David: Yeah, to get it done.

Collier: Yeah.

David: Right.

Collier: Yeah, right.

David: So, you’re still, you’re still negotiating on your own in this situation even you know, I’ve been doing it, doing this for 13 years I could coach through writing a contract but you know, there’s still negotiations there, I’m not talking to the seller there’s still things to come up during the process we’re gonna talk about some of these things. But, I’m not there every step of the way I’m just kinda giving you a little bit of advice, I’m giving you a, a small percentage of the advice and the help that a, a real estate agent is actually giving you, I’m doing a very small percentage of that.

Collier: True.

David: Yeah, but a couple things I wanna bring up you know, talking about closing cost.

Collier: Ok, yeah.

David: Ok so, a lot of times we negotiate those right?

Collier: Absolutely.

David: When we have the, when we have the buyer, you and I’ll talk, we’ll figure out something to take or to mount, to put into the contract where we ask the seller for help with the buyer’s.

Collier: The contribution.

David: Closing cost right?

Collier: Yep.

David: This a very confusing, it sounds easy but it’s very confusing, I know a lot of buyers on their own would get confused by this, what are my closing costs?, what re the seller’s closing costs? But, a couple of things that are split are the attorney and title.

Collier: Well at least here in Birmingham, now I see Ashley Miller, Ashley Miller, he’s an agent in Auburn that is not the case in Auburn, the, the seller only pays just a deed prep fee, all the attorney fees go on to the buyer, so it’s very local, but you know and I love talking to agents here in Birmingham, I go well, well, well how did this start when you split ‘em right? And no one has an answer, that’s the way we do it, well all right you know.

David: Yeah.

Collier: But then you’re correct, I wasn’t saying you were incorrect it’s just that.

David: Yeah.

Collier: It’s different everywhere.

David: And I think it’s interesting, like let’s say that you want to get 5,000 dollars help from the seller for your closing cost through the buyer’s closing cost, but the seller’s got this half attorney title and maybe they’ve got a whole more to it we’ll get to that in a second, so maybe they’ve got a thousand dollars give or take for round numbers, let’s say the seller’s got a thousand dollars well if you’re not clear about what that 5,000 dollars includes, they may think they’re including their thousand.

Collier: Oh, happens all the time.

David: You know, then we’re, then we’re off and then we’ve got an argument where.

Collier: And we’ve got an argument late, we’ve got an argument late in the game, where.

David: It’s misunderstood.

Collier: We’re too late really.

David: ‘Cause there’s nobody there that is negotiating on their behalf.

Collier: Yeah.

David: That knows the business in and out like a real estate agent.

Collier: So actually, Miller’s talking about, I mean what we just said that, that it’s different jurisdiction to jurisdiction, well not jurisdiction that’s my legal days, area to area, market to market.

David: Yeah and that’s another reason why.

Collier: Well, you need a professional right?

David: Yeah.

Collier: ‘Cause if I’m going down there, thinking I’m going to Auburn and I’d go hey Ashley, who’s done (inaudible) here in Auburn, he’s done work for my family.

David: Yeah.

Collier: He’s a phenomenal realtor in Auburn, if you’re down there don’t go expecting, you need to know your closing costs are ‘cause if you move from Birmingham to Auburn and you think you know what? I don’t need Ashley, I know everything there is to know.

David: Yeah.

Collier: I know that.

David: You’re gonna miss?

Collier: A split attorney title.

David: Yeah.

Collier: Guess what, you just, as a buyer you just doubled you bill.

David: Yeah.

Collier: And you didn’t even see it coming and you didn’t know how much to ask for, because a lot of times you might still use David up here and David doesn’t know what they.

David: Right.

Collier: What those customs are in, in Auburn.

David: In Auburn (in unison with Collier), yeah because we can do the loan in Auburn, but we’re NOT real estate agents so we don’t write contracts in Auburn.

Collier: Absolutely! And, and the you know, talking about this too, as a buyer when you’re going out and you’re asking for these closing costs, the reason you work stra, directly with the lender and you kinda say, he says “Well, it’ll be around 5,800”, do I go to 6,000? Maybe, maybe not, I got to my guy and he may say hey look, let’s ask for 55 hundred, 5 thousand so, you can cover the difference because every dollar, every one dollar that I go asking for it’s a dollar more potentially that the deal doesn’t get done.

David: Yeah so let’s say, we’re and, and we work a lot on estimates out front obviously, because we don’t know exactly what the costs are gonna be and we hash all those out during the process, but let’s say we, we get 6,000 from the seller, but at the end of the day our exact number is 5,800 and that 200 dollars is gone.

Collier: Gone.

David: You’re not getting that back.

Collier: Not getting it back.

David: Yeah, it’s off the table.

Collier: So, you’re not, you’re not leaving anything, you’re not getting anything and that’s what we tell the sellers all the time because we see it, on occasion you’ve seen it, these buyers’ll come in asking on our listings for 10,000 dollars and closing costs assistance. Well, I don’t know what loan they’re getting but whatever it is it’s not gonna happen, where you gonna have 10,000 on the, a 140,000 dollar house, just not gonna happen.

David: Yeah and that’s, that’s nothing.

Collier: And the lender’s not gonna lie with too, folks remember this the lender is gonna max out the amount of these concessions.

David: Yeah, depending on the loan program that you are, are utilizing there are caps and limits on the amount, typically a percentage of purchase price that you’re allowed to get back from the seller.

Collier: So, you, know those numbers right? If you don’t know those numbers you’re not representing yourself well.

David: Yeah, I mean you know, there’s details on the mortgage side just like there’s details on the real, real estate side that realtors deal with every day, mortgage people deal with every day.

Collier: And you know David, you know the other thing is just ‘cause I know it like I’ll give you an example, there are times you know I’m a licensed attorney in 3 states! But, there are times in my life I’ve never had a family lawyer or anything like that, don’t get me wrong but, I’ve had to go hire an attorney for some reason or another right? It’s because sure I passed the same BAR exam, but they have specialties that I.

David: Right.

Collier: I don’t have right? Could I, could I do it? The way I look at it, I could drive my car, I could steer my car with my feet right? I could lay back.

David: Yeah, it’s possible.

Collier: It’s possible, PROBABLY not something I should do.

David: Wouldn’t be driving as well.

Collier: No, no! I meant that I can triple task good but.
David: All right, next item is a survey this is something that comes up a lot, we don’t require ‘em ok?

Collier: C’mon a survey, a boundary survey.

David: Yeah, yeah so.

Collier: Not a sorbet for beers.

David: It’s another item and these are just kinda highlights that I’ll give to people about a contract, because they’re, they’re typically, there’s a lot of questions around ‘em so we go ahead and address ‘em up front, so when you’re and see this is the other part that you’re not well served because as a buyer, you’re going into this negotiation with a seller buying a big you know, buying a house which is a huge financial commitment, not knowing exactly what all is in the contract, but word under the survey, so the survey is the boundary lines of the property right?

Collier: Yeah.

David: It’s negotiable, we don’t need it if you get a new one that’s fine you can get one at closing, after closing, the seller may a lot of times have a copy of it.

Collier: Now, one thing to keep in mind when you’re talking about a boundary survey is that unless you have a new survey, there will be an exception on the title policy for anything that would be affected by a current survey, a fence line that would’ve been found had they done a survey so, you do lose some of your protections there but if you’re in a platted subdivision and you wanna take a risk, I would not take a risk if I was out with ache reach.

David: Yeah.

Collier: It’s just here’s the thing, I see people getting so cheap over 500 dollars, but yet they’re spending 480 thousand dollars.

David: Oh yeah.

Collier: On a house and you’re like what are you doing? You know.

David: We’ve seen people walk away for 2,000 dollars in pricing on 3 or 4 hundred thousand dollar houses right?

Collier: Oh absolutely!

David: Yeah.

Collier: And you know, I, and you may be getting the title insurance in a minute maybe, I don’t know if you are or not but actually this here this is interesting, in Auburn when we’re talking about title insurance, there’s 2 types of title insurances there’s loan, lender’s policy that you guys require don’t blame ya, ‘cause you’re putting the majority of the money out there to protect it, if there’s any incumbents on title and then there’s an owner’s policy, in Auburn up here generally  it, the default is everybody gets an owner’s policy right? It’s just what you did.

David: Yeah, even though it’s optional.

Collier: In Auburn everybody doesn’t get one I believe, at least they didn’t use to unless they’re asked at closing right before do you want one so, that’s another area where if you don’t ask that realtor down in Auburn proactively, up here we’re just gonna do it.

David: Right.

Collier: Down there they’re not gonna do it, unless you ask for it.

David: And that’s another, another cost, closing cost is typically between the buyer and seller right? The total cost of.

Collier: If we get, if we get, if we get a lender’s policy and a.

David: Yeah.

Collier: And an owner’s policy.

David: Yeah so, another thing that is typically split is that title insurance so it’s good to know that going in, what those sellers closing costs.

Collier: Absolutely!

David: Are gonna be, now some, some of these things, another, another thing to know on it, new construction right?

Collier: Oh, I didn’t think about that yeah.

David: new construction a lot of times, the title insurance and the attorney figure not split.

Collier: Well ‘cause they’ve written them into their contracts, so you gotta know and that’s the other thing when you’re using an agent that, well the best thing you can ask him is do you have experience with this builder right? Because you know Francis, we’ve closed with signature homes gobs of times, we know that contract very well right? It’s a different contract than we’re used to.

David: Yeah.

Collier: But and guess what? Hate to tell you but the signature homes’ contract is gonna protect one party in there and it’s signature homes.

David: Yeah.

Collier: And I don’t blame ‘em, because they’re saying.

David: Absolutely!

Collier:  Do you wanna buy our house?

David: Yeah.

Collier: If you do, you play by our rules now you don’t have to buy our house.

David: Right.

Collier: But so.

David: Right and if you don’t have anybody on your side with knowledge of the business.

Collier: That’s right.

David: You could be at a disadvantage.

Collier: Why are they not paying you know, we talked about too with a lot of the lender credits and a lot of these new home construction, where they’re paying a portion, one thing I learned when I got out of Parks and Law was you know, when you’re in a development and building houses one thing you taught me way back then was the lenders still might be able to do something here, they’ll honor something that the builder met right? Because the builder’s price stands some of these discounts, if you don’t know to go ask for that discount from that builder right?

David: Yeah.

Collier: Right? So if they were gonna buy down a whole point, what was probably happening as promotion was the builder was putting up a half a point, I can probably still get him to pay that half a point

David: Yeah, yeah.

Collier: Even if you don’t use his wonder.

David: He’s there, he’s there to get it priced in you know, some of it, some of them write that in so they can have that relationship with the lenders so, they can know that the, the borrow was good when the lender says the borrow was good, but, but yeah there’s definitely things to know there and, and speaking about the attorney and title, so who’s, in this situation if we’ve got a buyer and a seller and no agents involved, who’s picking the attorney?

Collier: (Laughter), you know it’s usually a cluster.

David: Who’s picking the attorney?, who’s picking the title?

Collier: It’s usually, well I went to church and I asked so and so and they said to use so and so, and they’re not gonna use Alabama Hammer for closing.

David: Oh yeah or I know somebody.

Collier: Yeah.

David: Somebody that knows somebody, so if you’re the buyer and you’re, the seller knows somebody (very short pause) what are you gonna ask that title insurance company? You have no idea.

Collier: No that’s, you’re right about that, I mean.

David: You’re just signing paperwork.

Collier: And it’s nothing like he, you just wanna have some you know, either you don’t talk about this as well, you get to the inspection phase right? Which inspector should I use?
What drives me bananas are these real estate agents that give a laundry list of, of that looks like this of people like 40.

David: Of home inspectors.

Collier: Of home inspectors, 20 home inspectors and they telly Suzy pick one!

David: Yeah.

Collier: Then what do I need you for?

David: Right.

Collier: We tell ‘em, Hey! These are the 2 that we recommend the most because they’ve done our clients well. At the end of the day, that’s why they’re hiring us for is to have an opinion and that’s why they call it risk management, if you’re, if you’re a realtor listen to this and you’ll know what that means, I mean.

David: Yeah.

Collier: There is risk if you get outta bed.

David: Certainly.

Collier: And if you get hurt and you miss work, you call the Hammer.

David: Certainly yeah, and there is risk if you.

Collier: Hey!

David: You’re a home inspector.

Collier: Dolly Parton.

David: Yeah.

Collier: Kimberly, Bedotville has made it.

David: She is here!

Collier: Yes!

David: Thank you for joining us! And Tandy Matthews just joined in, but yeah that, that’s a big deal, another, another item, don’t see a lot of mistakes here but prorations ok? Prorations on the taxes, the property taxes, just something to understand buying a house we’re gonna pay all, we’re gonna settle all the taxes at closing day so, whatever the seller owed they’re gonna pay him up and then you’re gonna take over.

Collier: That’s the HOA do’s, usually.

David: Yeah.

Collier: Now here’s another thing on HOA do’s, if you haven’t called the, the closing attorney what they are ‘cause your realtor will, he may or may not know to do it so, don’t get to closing when you’re representing yourself and go WHY is it not on here? ‘Cause you didn’t tell him ‘cause you were dumb and didn’t know.

David: Yeah exactly, now a lot of times, hopefully the lender will catch it ‘cause we, you know that’s part of.

Collier: Well hopefully.

David: Something that, that will catch but.

Collier: Absolutely.

David: You know, squaring all that stuff up there’s another, another item, home warranties, home warranties are negotiable and they are getting expensive aren’t they?

Collier: They are, they’re, they’re creeping up it’s one of those things where (laughter), it’s slowly and then you look, and then you blink and they’re now a hundred dollars more.

David: Well yeah and I think the home warranty, I think is being used by sellers as a little bit of attractive on the property because hey, this gives you a year ok? And now you’re buying this house, you don’t know the whole, everything about it but, here’s a year where I’m, you know you’re guaranteed to get things fixed relatively easily because of the home warranty, if you wanna renew it after that go for it.

Collier: Well you know and this is something that Wes, it’s really Wes not Leslie, but Wes Grier is saying that you know, he’s in Florida.

David: Yeah.

Collier: That, that a lot of this stuff and he’s talking about an HOA disclosure, a lot of this stuff should have, be disclosed and if you’re not utilizing that disclosure you are now violating the law.

David: And I tell you, one of the, one of the toughest things to do lately is to verify these HOA fees, is to get somebody to, to, to give us something in writing stating what the HOAs are.

Collier: Well because you know, Tom, Dick and Harry are the ones now running the HOA and we don’t have their phone number.

David: Yeah, yeah, it doesn’t seem like they take it very seriously and it’s a, obviously a big deal for us, when, when we need ‘em.

Collier: What The Hammer said.

David: (Inaudible) said I closed on a Rosemary beach house and was never told of a 3% assessment the POA charges all buyers until I was at closing.

Collier: Right, I mean.

David: (Laughter).

Collier: Talking about setting someone up.

David: Yeah, that’s a, that’s a big, that’s a huge fee that.

Collier: I mean, why was that not disclosed?

David: That is, yeah.

Collier: I mean are we trying, here’s the problem, somebody was trying on that deal to not tell somebody, so it would turn them off or turn.

David: Yeah exactly.

Collier: It kinda happens right? They didn’t, they won’t mess up their deal but guess what they did, they now messed up a potential lawsuit ‘cause they didn’t know who they were dealing with.

David: They didn’t know they were dealing with The Hammer.

Collier: (Laughter).

David: You know, speaking of surprises and expenses is, is redemption bond, I don’t’t want to get too far off this, this topic.

Collier: Well, explain what a, a redemption bond is.

David: A redemption bond is on a foreclosure if you’re still on the right of redemption and there’s some other caveats too, but the seller should know one once required it should bring it up, I’ve seen this come up way too late in the game, 2, 3 weeks in of the process and now we’re talking about redemption bond?

Collier: And listen, and a redemption bond what it does is it allows the title insurance company to actually issue a policy because in Alabama we have a well theoretically, right now still a one year right of redemption, newer properties a little bit less but, let’s call it a 1 year right of redemption. In other words, the buyer can come and get their house back, by paying everything back and getting everything right with the bank, they can come get it even from a genuine buyer and that right of redemption bond covers the lender and so the lender’s it doesn’t really cover the lender, it covers the title insurance which title insurance is required by the lender so, you can’t buy the house without the title insurance:

David: Yeah, you’re gonna to make, you have, if you redeem the property you’re gonna have to come back and make the lender hold for that.

Collier: Absolutely.

David: For that, what the lender is getting on.

Collier: Yeah.

David: The property.

Collier: Yeah absolutely.

David: And it’s 1% of the purchase price, which is an expensive fee, we deal with you know, percentages all the time on these purchase prices, it’s like Mike Loken’s was talking about the 3% and I’m assuming this is on the 3 million dollar house we’re talking about the 3% of the 3 million, that’s a huge number and that’s a big surprise, and that’s what reminded me of the redemption bond.

Collier: I mean, I mean, it’s something that should’ve been covered at the time.

David: Yeah.

Collier: And it goes back to what Wes Grier was saying about a disclosure, because that should be in hand prior to even remotely getting the final hood out.

David: Yeah I’m telling you, we’re in the business of, of no surprises ok? We wanna have these.

Collier: Yeah, right.

David: Conversations up front before or right at contract, so the buyer knows everything going on.

Collier: Whether good or bad.

David: The buyer doesn’t wanna walk into a 1% or a 3% fee, surprise fee.

Collier: 3%?

David: At closing.

Collier: What’s that amount? What’s that? Is that a 30 thousand right? I mean right? No.

David: Could be more than that.

Collier: Oh, it is sorry.

David: Yeah, well it’s a lot.

Collier: All right 300 out there? I don’t know.

David: Big number.

Collier: I didn’t go to Georgia Tech, you did.

David: So, nobody wants to walk in on that so anyway, next one is we talked a little bit about home inspection, so you know around the home inspection, you not only have a pick in the home inspector but you’ve got a repair request, yeah 90 thousand, in Florida these disclosures are required purchase agreement.

Collier: Yeah so, so, so, right, so that’s a good point because if you go and you Google, in his case Florida real estate contract I guarantee you what you’re gonna find is not every addendum that goes with it, it’s gonna be the bare bones contract.

David: Yeah.

Collier: And you think man, I’ve covered everything I got, only problem is under Florida, in that case real estate law in what now every lender is gonna say we require, it’s not gonna be in there.

David: Yeah and along the same lines, anything specific to the property you know, you’re talking about specific to the area, realtors are gonna know, realtors are gonna know to ask questions specific to the property, like septic tank inspections things like that, that the seller may or may not offer that information to ya.

Collier: Wow.

David: Yeah.

Collier: Yeah really.

David: Right, if you’re going without somebody but that brings up the home inspection, home inspection is a huge and sometimes one of the biggest reasons I’ll push people to a real estate agent, it’s because if anything comes up in a home inspection and you’re gonna go, you’re go negotiating repairs with the seller?

Collier: Well, we’re gonna talk about it because.

David: That’s a tough.

Collier: We need to decide what’s important.

David: That’s a tough part of the process isn’t it?

Collier: Absolutely! It’s, it’s a pivotal moment because we have got to, I tell the sellers look, if you’re, we need to fix anything that if you stayed in the house it was dangerous, it was hazardous, it was electrical, plumbing, those type of things need to be fixed, but if it’s merely cosmetic and you’re trying to change the house because remember, when a buyer is buying that house they’re, they’re writing a contract as they saw it, on that day that they were looking at it, I don’t, I think that this is not a time to rebuild the house.

David: Yeah, yeah.

Collier: Lead base paint, talking about lead base paint I mean right, that’s another one that’s federally required! That’s a federal Government that, that if you’re on your own and you sell, as a home seller and you don’t offer that lead base paint disclosure, now I think it’s kinda silly now.

David: Yeah.

Collier: Because if you went ahead and painted over that lead base paint by now and then I mean, then you ‘cause you remember they’re afraid that you’re gonna eat it.

David:  Right, yeah.

Collier: ‘Cause I always had a problem eating paint.

David: Yeah.

Collier: You know but, it doesn’t matter if I think, I think paying taxes is silly but I gotta do it.

David: But, that’s part, that’s part of living here huh?

Collier: Yeah.

David: So next, next section that I usually highlight is the termite, you know that’s pretty standard.

Collier: You guys require this.

David: A wood infestation report you know, at some, a lot of times we don’t require it, but there are certain loans and sometimes maybe FHA loans in certain areas of the country because of the termite.

Collier: We, we have a lot of termites here.

David: Yeah so, sometimes FHA loans in, in areas like this require it, but sometimes on other loans we don’t require it, but it’s always good right? To have it looked into.

Collier: Look, it’s cheap now.

David: It’s of no expense.

Collier: It’s 300, we, we have a deal with a local company here, 300 dollars we get a wood infestation report and a bond.

David: Yeah.

Collier: Easy.

David: Yeah, very good idea to do it but another, another section that we need to hide, we talked a little bit about this, selection of the attorney, who’s gonna pick the attorney, the attorney, a lot of times the attorney’ll do title so that’s a big deal and the last one that comes up to earnest money, where does that check go?

Collier: Yeah well, earnest money and that’s a big one because so much of the earnest money, if a buyer does not necessarily trust a home buyer.

David: Yeah.

Collier: I mean, a seller.

David: Yeah, a seller (in unison with Collier).

Collier: To hold money that is really theirs ‘cause remember earnest money is still the buyer’s until something is done with it, is it returned to the buyer? Is it closed on or is it sent to a court?

David: Yeah so, so, if let’s say you back out after home inspection because y’all are arguing over a roof.

Collier: Yeah, the right day one.

David: So, you guys are arguing on a roof.

Collier: Absolutely.

David: And now, now that the contract, you backed out and the contract is, is, is cancelled on bad terms, we got a bad attitude between each other right?

Collier: Bad attitude.

David: Who do you want holding the earnest money check? The seller that, that?

Collier: They may have spin it.

David: That now you’re arguing with or a neutral attorney?

Collier: Well I would say this, if you really want protection this is one area where I say you want an agent because the, the, I assume in Florida it’s the same, but in Alabama is going under you wanna be under license law? You wanna be under the law pertaining to contracts and real estate earnest money? It has its own separate law, in other words we have protections in there, that’s one of the reasons why we have pushed back against these builders holding the money right? Because we don’t have the same protections, the consumer doesn’t because we’re instructed by the real estate commissions we only have 3 options, you give to the court, you’re closing the house or they mutually agree, if you give it to that seller.

David: Yeah.

Collier: It doesn’t and just so you know, it doesn’t matter what’s in that contract ‘cause regularly, the Law supersedes anything in that contract right? See ya Slocum! (laughter), he’s gonna see Bob Stoogs in Oklahoma.

David: Yeah.

Collier: I bet you are.

David: Tell him to come on down to Auburn.

Collier: Yeah, please come.

David: Yeah so that’s it on that, so moving on, I wanted to you know we got, we got the stock section.

Collier: Hey! You got it, stock time! Wes Grier listen up!

David: So listen, I read an article in Money magazine this month actually just read it recently, so right now it’s harder to find bargains in this market because of how, how, how.

Collier: You’re talking about bargains in the stock market.

David: Yeah, bargains in the stock market because the economy is on a tier so stocks are doing well, which means a lot of people are buying ‘em, which means the prices are higher so it’s harder to find a deal, right now they’re saying that stocks are averaging 24 times past 12 months profits ok?

Collier: Ok.

David: Which historical averages about 17, so we are expensive.

Collier: Ok.

David: Let’s say stocks are expensive in general, now we’re.

Collier: Which is the thing, they’re cheap and they’re gonna keep going up.

David: I wanna, I wanna talk real quick about this, but this also says that August lasts, this past August, the bull market became the longest bull market in history ok? Beginning nearly 10 years ago in the wake of the 2008 financial crisis, so what, my opinion on that is that right now if the market is expensive ok? If the market is at a temporary top let’s say, then there is a greater chance right now of it going down than it going higher right?

Collier: Oh! Sure.

David: And if, if the market pulls back then that’s a good buying opportunity.

Collier: Every time it pulls back.

David: Now in 2008, when it was a bot, when it just got killed there were greater chances for going up right? Than going further down.

Collier: Yeah.

David: So maybe right now, this is a theory of mine, maybe right now be a better time to build up a larger cash position.

Collier: Yeah.

David: In your portfolio rather than just keep plowing the same amount of money into the market.?
Collier: Well, I, first of all I agree 1 thousand percent where you are on that, I would say couple that with also saying though I would go looking some of these closed in funds that pay like you know, I’m a big fan of them Pemco funds right? That are pay, that are throwing off a dividend of nearly 8% annually that pays it monthly, they annualize it and then every month you get some ‘cause you know, I got one that I looked the other day you know, when we erase the years games I was still up 8% right? Because of that dividend in other words, I, I’m not so sure that’s not also a play to take if you wanna go half into cash, I still want money invested in the market.

David: Yeah, yeah and so what I’m saying and I know we’ve said it many times, that investing in the market is about time not timing and here I am talking about time.
?Collier: Yeah well.

David: Ok so.
?Collier: That’s what dollar cost averaging comes from.

David: Yeah so, you gotta kind of do this on your own, you gotta do your own homework, make your own decisions obviously, but I’m just saying that right now may be a better idea to build up more cash so let’s say, if you, if you had intentions to put 3, 4, 5 thousand dollars in the market a month every month.
?Collier: Wow!

David: So.
?Collier: Kinda like Wes Grier here right?

David: So, rather than doing that maybe putting 3 thousand in cash, 2 thousand in the market.
?Collier: Well.

David: That’s all I’m saying.
?Collier: Well, I’ve been putting you know just in case you know, folks asked me one time where are you parking money? Marcus Bank is one, Capital, I like diversifying ‘cause they have good bonuses it’s like Discover Bank great bonus there you know, they give me 200 dollars for just shifting money over there, but they’re paying a 2%, 2.1%.

David: Yeah.
?Collier: Right? So find these banks, online banks, he say, says banks 10 thousand a month.

David: There you go!
?Collier: That’s good!

David: Yeah so I mean, I it’s just an idea you know? Could be way off but, I think yeah I go back to, I remember what happened in 2008, 2009 and what rings to me and this is an extreme example, was, was the cash that Warren Buffet plowed in a GE and AIG and he made an absolute killing.
?Collier: Yeah but let’s talk about this too, you did not say cellular positions.

David: No.
?Collier: That is a crucial part of this whole process that you, that you’re not, you, you, you’re invested in Netflix I know that right? You’re not gonna sell your position in Netflix.

David: Nope.
?Collier: ‘Cause Netflix is a solid company.

David: Yeah, the other thing to think yeah, yeah, that’s a whole other conversation, the other thing to think about is you get capital game till then if you sell, if you sell a winner right now you’re gonna get hit and get not only are you gonna miss future games, but you’re gonna pay cap games right? So yeah.
?Collier: Absolutely.

David: I think just building up a cash position, it’s still maybe so, so when the market does pull back you can put more in.
?Collier: Well and if you go look at, if you’re in your 401k, you’re in a retirement account of some kind and you’re, you’re putting you know we put in every week we’re buying at Amanda’s 401k, every paycheck certain amount is taken out, well even though we’ve been putting good funds we’ve bought one fun I love, which is a TR-VCX, T real price, blue chip fun, great, great scot fun one of the best, the things is its range from 100 dollars a share to 115, we’ve bought probably at every one of those numbers this year, so what did that do? That allowed me to dollar cost average down and in 10 years, he won’t make a hill of beans difference really, other than the fact of I made a little bit extra money because.

David: Yeah.
?Collier: It pulled back and I bought.

David: Yeah, and in 10 years what I’m telling you may not amount to much of a difference either, but it’s something to think about so I wanted to bring up a couple of these stocks that I pulled out of Money magazine.
?Collier: Hey, I love this one!

David: Some good buys right now, they’re trying to find some good buys.
?Collier: This is a good one.

David: Annheiser Bush, symbol BUD right now 77.
?Collier: BUD bar!

David: Dollars a share, so Annheiser Bush ok, a couple things that I picked out of this interesting, Brazil is the second largest market, I just think that’s interesting to me for some reason.
?Collier: They’re topless and they like beer.

David: That’s right, now they’re losing share right now to craft beers, they just bought SAB Miller which had a lot of debt so but, they acquired another beer brand they’re a cheap, cheaper beer company, I think when and if economies turn right?
?Collier: People love beer.

David: They’re gonna, they’re gonna trade beer but they’re gonna shift their purchasing to cheaper beers, the craft beers are gonna suffer when the economy turns right?
?Collier: When it turns bad.

David: Yeah.
?Collier: Oh yeah.

David: Bud, Bud is still gonna sell beer.
?Collier: Bud has always sold and will continue.

David: The craft beers will struggle, so that was interesting, Black Rock BLK this one man, at 423 dollars a share, their asset manager.
?Collier: Yeap, they buy a ton of housing.

David: Yeah investors pulled out a net 3.1 billion, I think it was the first, the, the third quarter of this year ok? It was the first net outflow since 2015 so along the same lines, of shifting money right?
?Collier: Ok.

David: What, a little bit like we just talked about put our 3.1 billion in the third quarter.
?Collier: And what are they doing with that money?

David: Now, the article didn’t say where that money is going.
?Collier: The question is, is it distribution or is they’re holding on to it for future?

David: Yeah, but the investors are, are changing, changing their game whatever, now they manage more than 6 trillion dollars.
?Collier: Yeah.

David: That’s a lot of money!
?Collier: Yeah they invested heavily in Atlanta, I know that, now Wes Grier’s talking about Budweiser and he’s talking about.

David: And them B tours in Jacksonville?
?Collier: Yeah I mean, just talking about all the different you know they’re not making money on it, but people are gonna spend extra money I assume.

David: Yeah.
?Collier: To not only drink beer, but let’s take a tour.

David: Yeah, yeah so, next one is Intel INTC, 48 dollars a share, recently they’ve had trouble keeping up with PC sales, they’re a chip maker.
?Collier: Yep.

David: Ok? So they’ve had, they’ve had trouble keeping up with PC sales, one thing I found is interesting is recently they acquired Mobile-I ok? Mobile-I was a company that was big into driverless cars and these guys we’re anticipating a 3.7 billion dollar boost to revenue by 2025.
?Collier: That’s crazy.

David: Yeah, so a whole other business for Intel.
?Collier: I know where to guess.  

David: Last one, is Hanes brand’s HBI.
?Collier: Hanes, hey! Tightie whities!

David: Yeah, right, right tightie whities.
?Collier: Gotta a bunch of ‘em myself.  

David: Sixteen bucks a share right now, this is, they lost the Target contract, would you think it’s a huge deal.
?Collier: I would think it’s massive.

David: If you, you know a retailer as big as Target you lose business with them, man that’s only 6% of their overall revenue.
?Collier: Get out of town!

David: So, the, the article’s saying that there was an overreaction by investors to that, a 32% of their sales are international.
?Collier: So, where are we now? What, at 16 dollars a share?

David: Sixteen dollars a share.
?Collier: What are we looking at? Is it throwing off a dividend?

David: I’m not sure, I didn’t check that.

Collier: This guy.

David: Great question, great question.

Collier: I mean it’s a great brand, it’s a great American brand, am I right?

David: Yeah, yeah.

Collier: It’s better than the Fruit of the Loom ‘cause I always thought those dudes were creepy, a Fruit of the Loom fruit?

David: Yeah, a little bit yeah.

Collier: I mean I’m like, there you get my underwear and you’re a big grape walking around you know?

David: (Laughter).

Collier: Yeah, I gotta mention it seemed weird to me, all right moving on.

David: All right, we got our college football picks.

Collier: A bad week.

David: Conference Championship Weekend.

Collier: Auburn’s play no sorry, no, no.

David: No?

Collier: No, not that.

David: Georgia Tech.

Collier: No.

David: No?

Collier: Not familiar, but Memphis!

David: Memphis plus 3 versus UCF.

Collier: Man, UCF this is a trap game against the spread isn’t it?  

David: You know I hate to see Milton McKenzie go down, I think it was last week.

Collier: Nasty wasn’t it?

David: Yeah, nasty injury, hate to see it, that guy had a good, good attitude and heart, but tough player, really had, had UCF do some great things, obviously the program’s gonna lose some steam, some momentum with his injury, but I think they’re still gonna win this game.

Collier: Nope, plus 3 take Memphis you’re gonna get.

David: Ah!

Collier: A front line winner.

David: Ohio State minus 14 versus North Western.

Collier: Buck eyes, easy.

David: Buck eyes are gonna roll, UAB plus one and a half versus MTSU, I think one of my, pretty sure one of my old buddies use to work with David Brown still in the business, I think he played football in MTSU.

Collier: Uh oh!

David: So hopefully, he’ll.

Collier: Raiders, I think.

David: Give UAB plus 1 and a half, what are you thinking?

Collier: I am going, look it’s been a great season for UAB, this MTSU team’s good, they’re not gonna, MTSU is gonna win the game.

David: MTSU huh?

Collier: Yeah.

David: Ok.

Collier: Yeah but, what a great season for UAB.

David: I’m sorry Mitchell, I hope Mitchell’s not watching.

Collier: He’s not here yet!

David: Texas plus 7 and a half.

Collier: That’s what happens, that’s what we did at 3.

David: Yeah (laughter).

Collier: (Laughter).

David: Texas plus 7 and a half versus Oklahoma.

Collier: Uh, wow huh? I mean this is, if I was putting real money on this what a tough, which Oklahoma team shows up, they have no defense.

David: And now that Bob Stoogs is coming to Okla, Auburn.

Collier: Auburn, yeah! Absolutely.

David: (Inaudible) Texas.

Collier: I’m going to Oklahoma, they’ll, they’ll win the game.

David: All right, Alabama is listen, the smallest line a year minus 13 and a half.

Collier: (Short sigh).

David: Versus Georgia.

Collier: Man, this same ship should be far wider, go dogs in more ways than one that dogs cover don’t win the game!

David: No way, Alabama is gonna.

Collier: Dogs! Go dogs!

David: They’re gonna pull out in the third quarter to a place of one series in the fourth.

Collier: Now hey, hey look, Georgia is peaking at the right time, look what they did to Georgia Tech

David: Man, we could not stop them once.

Collier: That’s my point.

David: I think they averaged 7 yards every time they thought about touching the ball.

Collier: Their biggest thought is Toop!

David: Yeah, 7 moving on.

Collier: It’s like Techno Ball back in the day.

David: (Laughter).

Collier: And then Bo Jackson goes all the way.

David: Yeah, there’s just dragging our players down too.

Collier: Well, that’s it man! That’s gonna be the last football until Bowl time.

David: Oh man! That’s upsetting. ?

Collier: Basketball!??David: And we can, we can talk about some NFL I guess.??Collier: Ah, nah!

David: Nah??

Collier: No NFL, but anyway hey! Don’t forget to go like the Facebook page when you search for the Real Estate Happy Hour.

David: We’ll be back next Thursday, we might do it early again next Thursday.

Collier: Well, we’re gonna be at 4 o’ clock.

David: Maybe.

Collier: Maybe, the other thing! Podcast, go download the podcast is getting a blitz, it’s blowing up! Wherever you can find good pod.

David: That’s right.

Collier: Apple podcast, Google podcast, Stitcher, what’s the other one we are on the nose? All of ‘em, just go there Pandora.

David: Yeah, just go there.

Collier: I mean, we’re everywhere you wanna be!

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