Darlene Root: Someone Moved The Real Estate Cheese

I sat down with the incomparable Ms. Darlene Root, whose 45-year dance with real estate has been nothing short of a masterclass in navigating the market's ever-changing rhythms. She wove her tale from an impromptu start at 19, guided by parental skepticism, to a seasoned investor who tunes out the mainstream static for the clear notes of mentorship. Darlene harmonized her love for music with her real estate ventures, a symphony of passion and pragmatism. And as she shared, so did I, revealing my own vocal voyage to achieve a dream against the odds—proving that our personal and professional lives can indeed crescendo together.

The episode crescendos further as we discuss the meticulous choreography behind a successful wholesaling business. From my own seminar beginnings to Darlene's seasoned strategies, we lay out the essential steps—targeted marketing, empathetic negotiations, and the cultivation of buyer relationships—that elevate wholesaling from a side hustle to the main event. We strip back the curtain to reveal personal struggles, driving home the real-life impact of our actions on those we serve in the industry, and the moral imperative of integrity that should underscore every transaction.

As the finale approaches, we pirouette through the current challenges shaking the real estate stage—from the NAR lawsuit sending shockwaves through the profession, to the evolving script that agents and wholesalers must adapt to amidst market fluctuations and economic tremors. Our dialogue leaps into the future, contemplating strategic decisions like obtaining a license and forming alliances with the appropriate brokerages. It's a compelling exploration of the real estate's dynamic landscape, underscored by the wisdom of Darlene and the experiences that have shaped my own journey through this complex, ever-shifting world.

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Transcript

Speaker 1: 0:01

Hey guys, welcome to the Titanium Vault. I'm your host, RJ Bates III, and today I'm sitting down with someone with over 40 years of real estate investing experience, which is an awesome honor for me and also for you guys. Ms Darlene Root, how are you doing today?

Speaker 2: 0:18

I am fabulous. As a matter of fact, I am in my 45th year in this crazy industry and I've seen some changes happen. But ooh, change is coming. Somebody's going to be moving the cheese Right.

Speaker 1: 0:32

First of all, I don't know that I believe this. You don't look like you're old enough to have been in this for 45 years, so what did you do? Get started when you were born. I did right in the womb.

Speaker 2: 0:44

In the womb. I was 19 when I got started and it was quite by accident and I was on another podcast. I did not know why I got started in this business. I mean, I can remember back to the age of 19. But I thought my parents put my sister up to having me take the licensing exam because they were afraid I was just going to be some, you know, starving artist. I was a musician, wanted to be a musician, and my sister dispelled that myth about a month ago, sitting here on my sofa. She said no, mom and dad thought you were stupid and they thought you were going to fail the test. And I said well, why did you even think to take me? She said, well, it was a buy one, get one free sale and she couldn't pass up the sale, so she dragged me into getting my real estate license. It's a true story. That's amazing. That was the beginning of my career as a real estate. At that time a real estate agent, at that time a real estate agent. And so, just to put a little color on what was going on in the 1970s is we were going into our second recession of that decade, 1975, we had a recession. We figured, hey, we did that so good, we're going to do it again, we're going to repeat. And so I had no clue what a recession was.

Speaker 2: 2:02

I think sometimes I like just being the dumbest kid in the room. So if you watch TV, turn your TV off. Turn off mass media. They're just not doing you any favors. Little useless trivia you'll only get here. I haven't had my TV on in six years. Wow, I do not watch television at all. I watch a documentary here and there, and my friend came to visit me and we watched a football game because the Lions, my home team from Michigan they were in the game. But I do not get my news from mainstream media at all. So you know, everybody's like. They're rearranging the deck chairs on the Titanic. You know, listen to your mentors, listen to wisdom. They're not getting the news from the TV either.

Speaker 1: 2:52

I love that. Well, I will say I don't watch a lot of TV. I definitely don't get news from the mainstream media, but I couldn't go without sports. I have to watch my sports. So TV's on every night. It's playoff season. Maybe you know I'm watching NHL NBA every night. So real quick question about the music career. You were hoping you were going to have you said Deep South before. Were you planning on going to Nashville? Were you going to be a country and Western singer?

Speaker 2: 3:23

I actually was, which is interesting. My musical kind of genre is a little bit of gospel mixed with a little bit of twang, and I'm from Michigan, go figure. And I did. I had designs on doing that. I really wanted to be in the industry. I enjoyed the stage and the funny thing is is being in real estate. I still got to live that dream of being on the stage. I just performed with a bunch of groups and performed at night, and it seems to be a common thread with people in this industry that they're also musicians. So I think that's the qualifier right there. You're not going to be a musician, you can't play in this pool.

Speaker 1: 3:59

So to steal my partner's saying side note nation, she loves doing side note nations. So before we carry on, I promise you we're going to talk about real estate and we're going to have a great conversation. But several years ago I was a member of InvestorFuel and Mike Hambright's wife gave us all a book and it was a bucket list book and you were supposed to write down all of the things that you want to do in your life. So I took it way too serious and I decided, for every day for a year, I was going to write down things that I wanted to create or do for my bucket list, and one of those things that I wrote down was is I wanted to record and release a song.

Speaker 1: 4:42

Now here's the thing I cannot sing on any level. Okay, it just does not sound good. When I sing in the car, I think I sound like the singer, but I have recorded myself and it is not like it is horrible, okay. So I came to grips where I was like I really don't think that I could record anything. I don't think there's enough auto-tune in the world to make it sound good. Okay, but I do have a song that I am releasing very soon and it will be on Spotify, it will be on Apple Music and it will actually be me on there with a band and I get credit for it because I helped them write it. So I don't actually sing, but I helped them write the lyrics, put it together, and so I found a loophole where I can go check it off my bucket list. It's like hey, I I wrote a song, I released the song, so good for you, too bad.

Speaker 2: 5:40

I didn't know that I could have been the do-up girl in the background. You know, there you go. I don't know, it's a little bit different style it's got a heavy metal rock with some rap in there.

Speaker 1: 5:50

Not sure it's called the King Closer. The only thing I'm waiting on is the album artwork, and then we're going to be releasing it. All right, let's get back to real estate. Good for you. That's my Cassie side note nation. All right, so you got started when you were 19.

Speaker 2: 6:13

You got started as a real estate agent. When did you become an investor and how did that kind of come about? Yeah, so I went into real estate, my very first mentor in real estate. This is how we learned right? So everybody has all their CRMs and they're sending out post cards and they're cold calling and they're doing all this was my training.

Speaker 2: 6:28

Now you guys have to remember we did not have cell phones, we did not have fax machines, we did not have copy copy machines. Back in the day we had sticky notes, we put everything. So I said, well, what do I do? And he handed me a phone, a landline and a desk with no chair and said here's a phone book, start dialing. And I went where's the chair? He said, no, I want you to dial until you really feel like you want to sit down, because that's when you're going to go out and start door knocking. You can sit in your car, Kid, you not? That was my training. I said so. Who do I start calling? He goes. My last name at the time was Fitzgerald he goes. Go through all the Fitzgeralds. That way, when you talk to the person, you'll say, oh my gosh, I have the same last name and that is your rapport builder. That was my training Hand to God. That's exactly how.

Speaker 1: 7:19

Oh, that's amazing.

Speaker 2: 7:21

And so when I was 19, I looked all of 12. No one was going to list their house with me. I did get a few people that probably felt like I was the Girl Scout cookie and felt sorry for me and said we'll list our house with you. One of the entertaining things about that is, back in 1979, not a lot of women were in this business, it was predominantly male, and so I think some of the women were like, oh, she's sweet, you know, let her in. And so that was how I got my foot in the door and all my listings were like Fitzgerald, fitzgerald. So then I asked my broker at the time. I said Nova, how do you make your money? Because he was always driving a really fancy car and wore a good, great suit. And he said I'm a real estate developer and investor. And I said what does that mean? And he said well, I buy other people's homes. I thought we lived in houses for free. I had no idea there were mortgages on them. I just figured I have a roof over my head. So he said if you want to be a real estate investor, meet me back here at the office on Saturday and I'm going to have you tear down a house because he was going to develop it. And I said, well, that would be fun. So I'm going to fast forward through all the shenanigans that went on with this.

Speaker 2: 8:37

Suffice it to say me and a bunch of friends got together. We were going to work for a case of beer that was going to be our payout. We started tearing down this house. It was the wrong house. No way, true story. He pointed. And I said, okay, novi, what house? And he pointed and there were three houses on that and our office was a house. He said that house right there. No, no problem. It started and it just did not feel right. Cops came, owner came home and then nobody had to pay to have that house repaired. So if you're looking for a coach, their methodology can't be point. They have a better plan than pointing you to tear down the wrong house. So that's actually how it got started.

Speaker 2: 9:24

I thought it was when I said well, what house did you really mean? He leaned me over and he went that one and it was this shack, rj, you could have taken it down in 22 minutes, flat and stacked up the wood. So I got a really good lesson and I said are you going to fire me? And he said, no, I've invested too much money in you. I'm going to teach you the ropes. He was my first real estate mentor and then I went back. Then, you know, you did your. You didn't have zoom meetings to learn stuff. You actually physically had to get in the car and go to an event. I learned how to wholesale and when I learned that I jumped in feet first. Never list Well, I can't say I never listed and sold a home after that, but wholesaling was my go-to. It was perfect for me. I didn't have any money, so that was a perfect like what. I can just flip contracts, I'm all in. So that was my start to my humble beginnings way back in the 1970s.

Speaker 1: 10:20

So what was different about wholesaling? Obviously, marketing was different and things like that. But was there anything different as far as, like, assignments, double closes? Was the paperwork, was the process different?

Speaker 2: 10:35

back then where I just happened to go to the house to list, it stuck my sign in the lawn and I said, well, you know I can purchase it. I went and grabbed the sign out of the lawn, stuck it in my trunk and, as I'm leaving the property, a guy pulled up and said I just saw a sign there Is that house no longer for sale. And I said, well, why Were you going to buy it? He said yeah, I go for for sale. And I said, well, why were you going to buy it? He said, yeah, I go for. How much? And I did the contract, sold it to him, did it on the trunk of my car.

Speaker 2: 11:12

It was super simple back then. We didn't have the regulations that we have now. People didn't get their nose out of a joint because somebody was making a buck. Fast forward now, regulations and so forth, and we're probably going to talk a little bit about what's coming down. But it started to change, mark. You had a market, a lot of people getting into the industry. Now I'm fast forwarding to mid nineties, early two thousands. That's really when the cheese started to move, when people were getting a little bit irritated. That you know, wholesalers were making money and, hey, we can make a lot of money in this business. But then you, the greed factor, kicked in. Of course, social media came online and the rest is now recorded history. Everyone's flashing checks and driving Lambos and, and you know, chest pumping, thumping, and, and so it is changing the dynamics of things a lot.

Speaker 1: 12:05

Yeah, I always tell the story of, uh, the gentleman who stood in front of the room. I wouldn't say he taught me wholesaling. He was the salesman that they put on stage at the seminar uh, hotel seminar where I learned what wholesaling was. And you know his pitch was go to the back of the room at the end and that's where $65,000, that's why I swiped.

Speaker 1: 12:30

But when he was standing up there he was, you know, early 60s, late 50s white hair, super fit, wearing leather pants I swear he had to put baby powder on his legs just to get the pants on and he's bragging about his amazing house on camelback mountain and in phoenix and his expensive cars and he's like, not done all of this with pieces of paper. And it's hilarious because when I look back at it, it was like everything he said did not mean anything to me. It was not the pants, it was not the house, it was not this or that, it was just can you just please teach me how to wholesale? Yeah, I want to do it, I know I can do this, but what is it to teach it to me? Uh? And I always look back at that moment and I'm like I wonder how many houses that guy actually wholesaled Because, look at it, it's like I don't think that he was actually as successful as he said he was, and that was 2014.

Speaker 1: 13:39

I mean you're talking about that was already 30 plus years after you had been in this industry. So before we get into what's happening today, in 2024, I do want to ask you, as someone that's been doing this for 40 years, what advice would you give to the people to be able to sustain a wholesaling business? Because everyone wants to just use wholesaling as, like, a starting block and, yes, I think I think I personally disagree with that. I'm like wholesaling could be a business, created as a business and and live in that as a business. Why?

Speaker 2: 14:17

you've done it masterfully, yeah you've done it masterfully thank you yeah, yeah, but treat it like a business. That's the number one. Treat it like a business because in any business you're constantly having to market. However you're teaching it, however you're doing it, you're either marketing or cold calling or doing whatever it is you're doing and it's so easy to find sellers. Now it makes me crazy that people are buying all these expensive tools when there's a few tools you need in your tool shed right, and you don't want necessarily the lowest hanging fruit. You want to go where the tribe is not going, where the herd is not going, and I know you teach your students and your clients very well not going, and I know you teach your students and your clients very well. I think a lot of it is mindset. And so when we're dealing with a seller and this is going to come in a conversation that we're going to talk about not only the NAR settlement but also what's going on in all things wholesale when you're dealing with a seller, you're dealing with someone who is operating out of their amygdala. I do a little bit with neuroscience in the brain, so bear with me when I get all geeky on you guys. They're in fear, fight, flight, freeze or fawn. They're having the D's, as I call them, disease dog poop, that's, landlords who no longer want their property. Death, divorce. There's a litany of things. You already know this. When you're dealing with someone in that frame of mind, in that state, they're in their sympathetic nervous system and in their amygdala.

Speaker 2: 15:54

And I had the joy of actually going into foreclosure when I lost a business. I zigzagged out of real estate for a nanosecond and opened up a frozen yogurt business. How hard can that be? Right? You want gummy bears on that. That was in July. I forgot we had February and nobody came. So we lost everything. They towed the cars away and our house went into foreclosure. I negotiated with the bank back then. You could do this. You can't do it now to take less and let me stay there. And this is a first lien position. Second lien got pretty much wiped out, but the first lien they negotiated with me. But I knew where I was mentally and emotionally at that time. I was not governed in any of my decision-making processes at that time, just lost a business, total bunches of money, my life savings at the time, and now they're towing the car away.

Speaker 2: 16:54

People are not thinking clear. You have to meet them where they are and I shared this with you earlier. We're going back to using an affidavit of understanding with our sellers. We already know they are not in a governed state of mind. This is not the time to take advantage of people.

Speaker 2: 17:12

This is a people business. First, money comes, not even secondary. It's a people business with your first tier and that's your seller. Your second tier are the people that you're dealing with on a day-to-day basis, meaning your end buyer. Don't screw them over. You screw them over once they're not coming back, so give them a discount. You'll make it up on the other one. And then, thirdly, obviously it's a money business.

Speaker 2: 17:36

Don't forget to pay your taxes, which my first mentor, the guru on the front of the stage. He forgot to pay taxes and wound up in Leavenworth. So you have to pay your taxes, guys. So leave money for that. Get an affidavit of understanding. I can just. However you want to facilitate this, I can get them that.

Speaker 2: 18:00

But is that seller under the influence of any drugs, alcohol, either prescribed or not? That would alter their decision making. If they're not in a place to make a decision, get up and leave, because it's going to come back to you as an exhibit A in front of a judge at some point in your career, your career. So if that seller decides, hey, I was taken advantage of, and you said, no, I explained it. I explained to you that I'm going to get a discount on this because the property is in disrepair, they're not going to remember what they had a conversation about. They're using the wrong part of their brain. They're not in a governed state. If you have an affidavit of understanding that you can show the judge and say no, they understood that I am buying it at a discount and they're happy with the amount that they're making. And they don't care if I sell it to someone else and make a profit, as long as they're getting what they feel they wanted at that time.

Speaker 2: 19:00

Make sure they're not under the influence. A lot of people, when they're in a distressed situation, they're using recreation drugs, recreational pharmaceuticals, whether prescribed or not. Make sure when they're signing that paperwork they're not under the influence. And then, third, what we did is in our affidavit it's a many-point bulletin kind of thing. So in our affidavit it's a many point bulletin kind of thing they initial make sure you have them initial every point, not just sign the bottom that you read all of this to them. They're going nope, I'm not intoxicated. Yep, I'm happy to make X amount of dollars. I understand that I'm selling it and I'm under duress and you're going to make a profit. Make sure they understand that that's going to be your saving grace as your cheese gets moved, with not only the new NAR thing but also with the wholesaling regulations coming down the road.

Speaker 1: 19:53

I love that advice and you know this talks about limiting our liability as a business, like you said at the beginning of that. You know, hey, treat this like a business. A couple of things that you said there. You know you have to constantly be marketing. I think this is one of those things that we see with wholesalers is that they start marketing and if they get an early taste of success with marketing, they're good with it. The moment that there's not consistent success with it maybe if it's just one campaign, one direct mail campaign, one list, cold calling, whatever it is they pull the plug and just stop doing that marketing and then they want to go to something else. These are consistent things that I've seen over my decade. I'm sure you've seen time and time again where it's like guys, what are we doing? Pepsi doesn't stop running ads just because one time it dips a little bit, because they know that there's going to be a peak on the next campaign. So I think that's great advice.

Speaker 1: 21:02

Yesterday I did a live live I think you caught part of it where I was talking about the six counterintuitive principles for wholesaling and I went on a little bit of a rant about realtors, and I know so you're both an agent and an investor.

Speaker 1: 21:21

You have been for all these years and and I'm like the, the guy that gives realtors a hard time I mean it's just I. I'm not very high on them, I just be honest. And it's not because I just don't like them, it's because of two things my experience and then also the lack of training that I think realtors actually receive. Um, I think it's one of the lowest barrier of entry careers that you could get into. That's a fact. I mean it's two weeks of courses and like a handful of tests. You know what I mean it's like and now you're licensed, you're the professional. So one of the things that we got brought up yesterday was is I said I don't think that realtors are concerned about the homeowner. I think that they are concerned about their commission more than anything. So my question to you is is do you agree with that and do you think that's potentially why this NAR settlement is coming down?

Speaker 2: 22:22

And I don't know if I'm still frozen. Can you hear me? I can hear you just fine.

Speaker 1: 22:26

I think it might be just on our end, so Okay, great. So the question was again, because I was more concerned about logging back in if I had gotten.

Speaker 2: 22:40

Actually, let me do something real quick. Let me remove you. I think we're okay.

Speaker 1: 22:43

I think it's on our side. If not, you've got a really beautiful look on your face.

Speaker 2: 22:51

Thank you.

Speaker 1: 22:52

You're a trip, okay. So my question was, or my statement that I made was is I believe that realtors the majority, not every single one is just concerned more about locking up a listing agreement or a buyer's rep agreement so they can get their commission than they are actually taking care of the homeowner, whereas wholesalers we actually have to be concerned about what that seller's problem is and we have to solve it. And I got some pushback in my comments. So, as both, what do you think about that statement and do you think that that could potentially be part of the impact of this NAR lawsuit that's coming out?

Speaker 2: 23:36

Boy. Great insight. Rj, here's wearing both hats right Broker, real estate agent or licensee and an investor. So the difference. Let's clear up some definitions, just for the sake of argument. A real estate licensee is not necessarily a realtor. I am not a realtor. I'm going to use Woody Allen. I think said it best back in the day. He was a comedian from back in the day.

Speaker 2: 24:02

Any club that would want me as a member I don't want to be a part of. So I feel the same way about the Real Estate Association. It is a policing. It didn't start off that way, but it is an over-regulation, in my opinion, that you have to do certain things a certain way. Your broker has to belong to the association and then you can belong. If they're not there, you can't.

Speaker 2: 24:26

As an agent. I am a broker and an agent non-realtor. I maintain my real estate license for a couple of reasons. I figure I got it in 1979. I probably have one of the oldest real estate licensing numbers out there. It starts with a zero and then I got my broker's license in 97. It does make things easier if I'm getting a referral fee. So I will say that when I got into the industry it wasn't regulated so much by NAR National Association or our local association.

Speaker 2: 24:59

Michigan is the state I'm from. It was policed a little bit more heavily by your peers. We held each other to a higher standard. We called each other out if things were not good and your broker 86'd. You got rid of you if you weren't playing nice in the sandbox. Now, just like California, in 1973, every third person had a real estate license. Times are a good, and when times are golden, people are riding that gravy train and if you can basically fog a mirror or have a pulse, you can now get a real estate license. It's cheapened, the brand and there isn't enough quality education from the local brokers to to and we do have to take continuing at every year, but it's usually a joke. There isn't enough quality. Like this is buyer's agency. This is how you fill out a contract. Good, we learned that in pre-licensed law. What I want to know is One second Darlene, because you talked about that continuing education.

Speaker 1: 26:07

Okay, I'm just going to throw this out there. I've watched my partner have to do that every year for like eight years. Okay, it is no different than defensive driving. None, taking it online and it's literally like watch this video. She plays the video and then goes and does something for an hour and then the video is over and you go take the test as many times as you need to take it until you pass.

Speaker 2: 26:30

And then it's over.

Speaker 1: 26:33

You've continued your education.

Speaker 2: 26:36

It's a joke Now. I and my peers don't do it that way. We do take it through an attorney and the subjects are a little deeper and there's a little bit more interaction, and it's used as a networking thing too. Let's not forget we do need to network with the people we're in industry with, because that's where you're gonna know are they investor-friendly agents or are they just banging it out and getting commission and going and watching their son play t-ball while they're writing up a contract? The professional standards became weaker when NAR's voice became stronger. That's an opinion. That's not. I can't find statistics on that. But we have this.

Speaker 2: 27:17

I call it the union that will back us up and that really ruined the face of what's going on. You get too many people, too many cooks, in the kitchen that spoil the stew. They get in real estate because it looks like easy money. What part of the brain are they using? They're using their limbic system. They're using their hippocampus, the happy camper part of the brain. I'm going to make a boatload of money. This is going to be a blast. Or I'm getting in because I need the money. That's a more of an amygdala. I need the money. I have to make the money. Then they get in and they actually have to what? Pick up the phone? No, you're kidding, I thought I was just wholesaling contracts, right? Well, you have to talk to people. If you don't, if you're doing it just because you want to, you know, make big fat checks and you're not learning it to actually create a business out of it, you got into the wrong business. This is just like any other business. If you're selling widgets, you're going to run it like a business. If you're doing wholesaling, you're going to be held to a different standard. Because, let's face it, a lot of brokers and other licensees don't really like what we do. Why Fear they have? Fear that we're taking something off their plate.

Speaker 2: 28:31

Brokers are usually behind the agent's decision not to work with an investor Wearing a broker's hat. Now I'm paying errors and omissions. If I had agents which I don't, it's like an adult daycare. I don't want to have a bunch of agents, good grief. You have a bunch of agents running rogue doing their own thing, x-ing out contracts. You can't police 200, 300 agents. Most real estate brokers are not investors either. They may have a house here and there that they rent out, but they're not doing contracts. So a confused mind says no. If the broker doesn't understand it and they're not willing to educate themselves, they're going to tell every one of their agents don't do it. There could appear to be a conflict of interest.

Speaker 2: 29:19

So, as a broker, if I had a bunch of agents and they're off wholesaling it, you're listing, you're the fiduciary for that seller. As the fiduciary, you're doing what's in their best interest. Now, of course, the buyer's agency came along and now we have the whole NAR thing. That's the fallout of that. But back in the day you had a single purchase agreement and you were representing that seller and the buyer knew it. But the seller was okay to pay the commission because you brought the buyer to the party. So now you have buyer's agency.

Speaker 2: 29:55

What hat are you really wearing now? Because now you become the buyer in the transaction of where you may have listed that property or could have listed the property to get them the highest and best in the shortest period of time or a timeframe that made sense for them. That's going to be the argument. Did you act in fiduciary for that seller? This is for the agents and the brokers. That's a really big question, because if I got you under contract or I came to your door under the auspice that I was going to market the property to the highest pool of buyers, to get you highest and best. And now I'm inserting myself as a buyer, but I already know your pain. I'm using that pain kind of against you, and so now I become a dual agent and now I'm not even buying the property. And now I'm not even buying the property, I'm selling the paper to someone else. It could have it could smell of breaching a fiduciary if it's not done correctly, hence the affidavit of understanding.

Speaker 1: 31:06

Okay, so I love that explanation and thank, thank you for bringing just a massive amount of evidence to everything that I say. I mean, here's my point on this, darlene. Everything you just said screams to every realtor, agent, licensee, broker whatever you want to say, all the different names that that profession has, because you know y'all have associations and all these different things. Recently widowed lady with a 1975 interior house that is highly distressed Like, because now you're looking at it and it's like well, on one side you've got the fiduciary side where you need to get her as much money as possible, but you're really having to have a conversation with her about the fact that, yes, you are in a $300,000 neighborhood but your house, ma'am, is probably only going to go for $150,000.

Speaker 1: 32:20

And what does that mean? That means your commission is half of what it could be in that neighborhood because your dollars and cents is based off of what it sells for. So but to a wholesaler, to us that's a very that's an everyday thing. We have that conversation, we have no problem, we move on and we make our money and we solve that person's problem. The other side of this is is that is a more difficult property to sell on the MLS, to sell on the MLS Whereas in reality realtors, agents, licensees, they're not used to actually like selling properties. They're used to getting listing agreements signed, having photos taken and the property selling itself on the MLS. Would you not agree?

Speaker 2: 33:08

with. That Cheese is moving because it's not going to be like that in the near future. So why?

Speaker 1: 33:13

why? Why is that the case? Because you and I are on the exact same thought wave on this. Why is that the case? Why are properties not going to sell themselves anymore?

Speaker 2: 33:23

Yeah, so history is repeating itself. Been doing this since 1979. I've been through countless. Is it politically correct to say corrections?

Speaker 1: 33:33

Can 1979, I've been through countless. Is it politically correct to say corrections? I think so. We're not a politically correct channel over here.

Speaker 2: 33:37

Shit's about to hit the fan. There you go. It is going to correct. Will it crash? I don't know. If I had a crystal ball, I probably would be hanging out with you right now because you're fun. If I had a crystal ball, I'd say, okay, move your cheese. Cheese is getting moved. This way, everybody shift. Right now we don't know because a couple of things are happening that didn't happen back in the corrections gone. You know, the 2008 was predatory lending and the one before that was SNL fallout and the one before that. It's always going to be something that the market will change.

Speaker 2: 34:10

There's a unique positioning right now, two things that are very unique about this. One is that we have a inventory shortage and we have people moving in with their parents because they don't want homeownership or they can't afford homeownership. So we have a couple of can't move because can't afford it or don't want to move the baby boomers. I am one got our mortgages dirt cheap. Now 3% is still pretty dirt cheap for those of you who took advantage of a 3% mortgage. They're not moving because even to go lateral in a in a price range, they're going to pay more because of the interest on the mortgage. So that's another unique thing.

Speaker 2: 34:57

The third thing is is now you have the NAR settlement. That's going to change the face in an interesting direction, because two people actually it was five, it was, I think five or six couples decided that the commissions were. They were disadvantaged because they were a seller and had to pay both sides of the commission when the co-op agent clearly represented the buyer. In that, that is going to change things up a little bit too. You're going to see a glut of real estate agents who basically have been riding this gravy train for the last umpteen years. This is probably the longest run of an up market that I've seen in my career. What goes up must come down. All they had to do was go, list it, put it on the market, sell it, lather, rinse, repeat every single day. Now it's going to become work. They didn't even have to take halfway decent pictures. Some of these pictures like do Polaroid cameras still exist.

Speaker 1: 35:56

Those are really bad.

Speaker 2: 35:58

So now, what are they going to have to do? They're going to have to work because now the prices may come down. You and I talked about this and I've talked about this with colleagues. Will the prices come down because the expense to sell the property on the surface looks like it might come down because the seller is not paying an exorbitant amount of commission? It could. But buyers getting into the market now Buyers getting into the market now 66% of our population in the United States. They don't even have three months worth of rainy day funds saved, not the way it was back in the day. They can't afford the down payment right now. So if they can't afford the down payment because they don't have enough money to, you know, their loan to value, it might come down lower, but they don't have the down stroke. It might keep things a little bit weird, like who's going to pay that buyer's commission? If the buyers have to shell it out over and above the down payment, I don't think you're going to get a lot of movement.

Speaker 1: 37:11

No, you're not. You're going to see a renter's market. It's going to be a very, very strange time. A couple of different things. You talked about this generation. It's a very weird generation that doesn't want homeownership. They're completely okay with renting. They feel like that's the smarter way to do things. So that's one weird thing. The inflation I mean you talked about they can't afford. They don't have 30 days of rainy funds. I mean they can't even afford milk and eggs. It's ridiculous how much just everything has gone up as far as inflation goes. The interest rates we're artificially lowering them because Sleepy Joe's got to get reelected. Right. What happens come December? I guarantee those interest rates go right back up, right.

Speaker 1: 38:02

Right now they're saying, oh, they're going down. It's like, well, of course, of course they're going down. We can't be that stupid, right America? We're not that stupid. Please tell America, we're not that stupid.

Speaker 2: 38:12

Please tell me this audience is not that stupid. Yeah, so we have another cheese moving. So this is like a whole charcuterie platter right here. Right, hang on, we need some salami on here. So the Sleepy Joe, and it doesn't really matter what administration comes in. Correct? Doesn't really matter what administration comes in. Correct Because it's artificially lowered right now. But can it go or? I'm sorry, it's where it actually needs to be. They were artificially lowered to stir up the economy. Now they're eking up a little bit. Now they're eking up a little bit.

Speaker 2: 39:06

My experience after an election doesn't matter which government gets in, who's the administration, it's went to a reported high. Reported a 15.8%. I saw them as high as 22.8%. Brand new, licensee, brand new in the real estate business creative financing. A lot of wholesaling was done. We cut our teeth in that era because we were resilient. We didn't have a gravy train mark at least I didn't coming into it. We learned how to be resourceful. But we also worked with the other players in the game, even investors. Everyone played in the sandbox. Investors were respected amongst agents and vice versa, and so that great divide needs to be. You know, that was like the parting of the Red Sea. We need to come together and work harmoniously in tandem with real estate agents and with investors. There needs to be some education around that, like how do we do that? I'm going to tell you how we're going to do it, darlene.

Speaker 1: 40:18

Okay, the handwriting's on the wall. I mean everything that you just said I completely agree with. Okay, and here's how we're going to end up playing together. They're forcing wholesalers to become licensees. The regulations are coming down across the board where it's hey, if you want to wholesale in South Carolina, you've got to be licensed. If you want to wholesale in Nebraska, you've got to be licensed. So, state after state after state is going to make us become licensed. Guess what? We're not going to be working together, we're just going to become one in the same.

Speaker 2: 41:00

Well, let me, let me shed some controversy on that, okay.

Speaker 2: 41:04

I'm going to be the contrarian on this. Only because I'm licensed, I realized that if you're selling more and this is Michigan if you're selling more and this is Michigan if you're selling more than five properties per year, you need a real estate license. If you're engaging in the transaction of selling real estate, the key word here is real estate. When you're wholesaling, you're not selling real estate, guys, you're selling paper because you're not closing on that deal. That's where people, that's where wholesalers got in trouble as they were marketing. I'm wholesaling this property. Change your language, guys, and change the way you do business. I'll have a workaround for that. If you become a licensee and I love your thinking on that let's all go get our licenses.

Speaker 2: 41:47

If you are with a broker who has the fear of the powers that be and is not part of an investor coalition to make investing great again, they are still going to say no, because you're not acting in the fiduciary capacity for that seller. You're going into that understanding and you're going to have to start splitting some of your fees with that broker. What's the workaround? Investor agents, become brokers and work with wholesalers and have them in your fold. Just don't belong to the MLS. You don't need to. If you need to put that home on the market through an MLS situation, refer it to a licensee. I am a broker and I would not belong to NAR. I love investors. I know how to play nice in the sandbox because I are one.

Speaker 1: 42:41

I hear you on that. Listen, we're America. You cannot take the capitalists out of us, no matter how much they want to make us a socialist society. We're just not. We're capitalists here. There's going to be brokers that look at this and say there's a massive opportunity. I want these guys that are going out and are generating 30, 40 contracts a month. I want that coming into my brokerage a month. I want that coming into my brokerage Because, at the end of the day, where I think wholesalers beat realtors every single day is that we are marketing consistently so much better than real estate agents and realtors. I think we beat them on our marketing side. We're talking to more sellers every single day than they are.

Speaker 2: 43:33

And for the very reason licensees got into the industry because everything was wine and roses. And now shift is happening. Right, it's changing, Cheese is getting moved, the challenge with it. And NAR doesn't set the standard. For you know license law, it's your state. I'm licensed in the. I live in Florida but I'm licensed in the state of Michigan. Right, state licensed law.

Speaker 2: 43:58

You have to act in the fiduciary capacity. What's the workaround? No-transcript.

Speaker 2: 44:11

The seller put the property in a trust. They were the beneficiary. I was the investor beneficiary. As soon as checks were sliding across the table. I now own beneficial interest in a trust that owns the property.

Speaker 2: 44:25

Is there a transfer of real estate here? No, it's all anonymity. It's all done under the table. Then I can sell that beneficial interest to the end buyer, a rehabber. He can buy my beneficial interest. No transfer of real estate. Zillow doesn't know what happened. There are no tax pop-ups If I sell the property or if I instruct the trustee to sell the property to Mr and Mrs Jones. There's only one transfer of real estate. There isn't a wholesale transaction. That happened there. So we are resilient. We will make it work. I stopped using that method because I didn't need to any longer, but it's going to come time to do that again. You're just going to find a different tool in the tool shed to get around the bureaucracy, just like land contracts. Now we have interest rates that are usurious. You can't charge more than this, and if they do, you now have to go through an RMLO and just zig. When they zag, just create a new pathway. Some of it is, I'm glad of the regulation, some of it is a little bit overreaching.

Speaker 1: 45:30

I think so and here's my thing and my take and I'm curious to see how you feel about this With the wholesale regulations that are coming down. You know I do video, I go live all the time there's people on the comments. I mean, a month ago, when it was like Virginia happened, oregon happened. It was like every day there was a new state that was coming out with a new regulation.

Speaker 1: 45:57

People were in mass panic and it was funny because I was like how many of you guys are in Virginia? How many of you guys are in Oregon? Why are y'all panicking, like, why are we worried about what? Oregon's always been crazy and it's still going to be crazy, okay, why are we worried about this? Who do you think that's hurting? Why are we worried about this? Who do you think that's hurting? Because I think almost everybody. The initial reaction was it's hurting the wholesalers, right. But I looked at it and I said I feel like this is going to hurt the homeowners more than anybody. So I'm curious your take Long term, when these regulations say when we finally get done with them, and say all 50 states have regulations because eventually they're all going to jump on board, right? Um, let's just assume all 50 states go crazy and we all have some sort of regulation two, three years after that. Who's impacted the most? Is it the the realtors? Is it the wholesalers? Is it the homeowners? What, what do you see happening?

Speaker 2: 46:53

homeowners. Homeowners are going to get shafted. In this one we're buying distressed property. We're not buying this lovely granite countertop, new wood floor. We're buying things that still have paneling on them. I have a friend who just texted me a picture Paneling. It was like 1970s. I wonder what's behind there. We're buying homes that Mr and Mrs Jones and their 2.5 kids and a dog. They're not going to live in it. Back in the day we could do that. A buyer would put sweat equity into it. Buyers want to move in, hang up their coat and call it a day. They're off to play pickleball. That's here. They're not going to buy things that need work.

Speaker 2: 47:34

It's going to hurt the seller because in the long run the seller is going to list the property with an agent who could care less, does not know how to market that property. Market's changing a little bit. Interest rates are going up, inflation is through the roof and that's a topic for a different day. And now the seller is caught because they have a distressful situation. They need to it's foreclosure. Let's call it a pre-foreclosure. Michigan meter's running. They need to get rid of that bad boy in a New York minute because otherwise it's going to go to foreclosure and they're going to lose the whole ball of wax.

Speaker 2: 48:09

We come in and we save the day. A agent is not going to do that. They're going to, oh yeah, put it on the MLS and we're going to attract the most buyers. No, they're not going to be able to pull up with cash. They're not going to be able to get a mortgage because the value of the property hear this, agents? The value of the property is not the same. The now value is not the same as the ARV value, and a lot of people are that's how they're listing it, arv value, and a lot of people are that's how they're listing it.

Speaker 1: 48:42

Arv value, maybe take off a couple bucks, then the commissions have to get paid. Sellers are going to get the shaft on this one. I'm with you on that and here's the like. You're right on the realtor side of things, but on the wholesaler side of things, you know, what I see is is that, no matter what, we are resilient, like you said, we'll do the trust route, we'll do the double close route, we'll find a way. We're still going to exist.

Speaker 1: 49:01

But what this did was is it eliminated competition? And when competition is eliminated from a marketplace and I don't think any of these people that are making these rules and these laws and these regulations understand this it's very clear that they don't understand how the economy works. Is that hurts the consumer? It hurts the people at the end. Because what happens is is if I am at a home in Fort Worth, texas, I know without a shadow of a doubt that there's a thousand more wholesalers coming to talk to that homeowner and I've got to get it locked down right now, and so I'm going to do everything I can to do it. But if I talk to a homeowner in South Carolina right now, I'm like you know, south Carolina has got some pretty strict regulations. I might be one of only two people you can even talk to yes, out of licensed realtors and I know licensed realtors don't do a good job solving your problem- so what happens?

Speaker 2: 50:02

My price goes down Absolutely. It's going to be adjusted accordingly. Who set the regulations? Who had the fear? Success leaves clues. Follow the chain all the way up. Who stood to benefit from making the regulations? Certainly not the homeowners, certainly not the wholesaler. Could it maybe have been the brokers? Could, yeah?

Speaker 2: 50:26

I'm going to say that there was fear. I hate to shoot myself in the foot. I'm not shooting me in the foot, I'm just a broker, because now that the cheese is moving and the market's correcting and agents are bailing, they're going to lose that desk fee. It depends on what type. If you're, if you're, you know, brand X, you're getting paid irrespective, but agents are going to go. I'm not paying two grand a month, I'm not making any deals and you won't let me real estate invest because you have fear. And even I do purchase a property, still have to give you part of that franchise fee or whatever that fee is, because you're going to get feed up the yin yang. So factor that in If you guys decide to go get your real estate license and you put it with big box broker, that big box broker has to pay their overhead.

Speaker 2: 51:17

They're going to want you to enjoy part of that, the convenience fee. If you go to a boutique broker, it might be a little bit different. Make sure the broker you go with is an investor as well. Interview the people. So it was.

Speaker 2: 51:31

The regulations were set by fear. Always there's fear, but there's also greed, because on the other side of fear there's greed. The greed was how do I benefit broker, big box broker by bringing more investors into my fold. I know that there is a plethora of them. I'm going to get desk fees, franchise fees. What's the answer? Don't go to a big box broker, go to a boutique broker. So if you feel like you really need to get your license, you also have to follow the state license law. Could it appear that you're taking advantage of that seller? And that's where we go back to that affidavit of understanding. Making sure that you have your belt and suspenders Just in case the belt falls off. You have the suspenders there to keep your pants up, because it's going to get even more stringent because of what just happened with NAR and the regulations about wholesaling.

Speaker 1: 52:33

Yeah, it's interesting times. I mean, I would have to say it's probably outside of a couple of those recessions. It has to be some of the most interesting times you've seen over your 45 years, Wouldn't you agree?

Speaker 2: 52:46

I think the most. This is definitely interesting. Yeah, because of the advent of the internet. Social media access to so much access. Yeah, it's definitely speaking loud and clear through a megaphone. Back in the day, social media access to so much access yeah, it's definitely speaking loud and clear through a megaphone. Back in the day, we didn't have access to this kind of medium, right, we did not know what was going on until after it went on and we didn't have a voice. It's just sit down, shut up, buckle up, you're going for the ride and here's a regulation. I think people are a little bit more savvy and they're willing to speak their voice, just like Rhonda and Scott Burnett in Missouri who said no, nara, we're taking you down to the tune of $418 million. Now they did it.

Speaker 2: 53:30

What's to say? A seller isn't going to use that same thing down the road. That's where brokers have fear, so I'm going to set you off. You're all going to go rogue and then we're going to get sued because some seller said I got taken advantage of. Think of both sides.

Speaker 2: 53:45

Look at the drawbacks and benefits of the entire thing and shift your presence accordingly. Don't do things in your own name. I don't like LLCs. I have an S-corp because I do have a broker's business, but I do everything in trusts. If you were to run my name, do a Google search. You're not going to find me very much because everything I do do is under the radar. Very quiet, I lead a quiet life. Keep quiet, don't wave your flag. Investors, get together, decide who's going to be the broker, who's going to be the agents, and understand that if you are an agent, you can't become a broker depending on your state. In Michigan, it's three years. Line yourself up now. Build the arc before the flood. Line yourself up now with user-friendly brokers who also have an investing component. There are tons of them out there. They even hold classes to teach real estate agents how to become investors. It's not a oh no. The sky is falling, it's okay. It's cloudy out, it may rain. We're just going to put the umbrella up, figure out a new path and plan.

Speaker 1: 55:01

I mean, on that note, I had to say if you chose to get into this business and you didn't think that this day was coming, then you didn't really think too long before you got into real estate. I mean, it's always going to go like this and for a lot of us we've been lucky to just be on this right. So it's about time for a little bit of this craziness to go on. Last question, then we'll wrap up. You're not big on NAR, obviously, but Jerry Norton has been very outspoken about the fact that wholesalers need some form of representation. As far as putting together an association of wholesalers so we can stand up and we can lobby for ourselves and say, no, we actually do great things for our communities and we do have a place in this market, what are your thoughts on that? I mean, you're one of the most seasoned wholesalers that I know out there. Should we have some sort of representation at the table?

Speaker 2: 56:09

Yeah, the best time to do it was 20 years ago. The second best time to do it is now, I think, just like the National Association of Realtors. Look, it was a club that was made for men, believe it or not. If you don't know the history of NAR, it was. I think it founded in 1908 or 1918. And it was to unify men. Talk about discrimination there, right, because women were not in the industry. Then they changed the moniker to say men and women, blah, blah, blah, and to set standards, and so everybody will play nice in the sandbox.

Speaker 2: 56:40

I think investors need the same thing, whether it's wholesalers or investing around the clock, because look, even note buyers, of which I am now if you're going to buy a note now, I have to make sure that that buyer went through an RMLO. Or if I'm going to sell vis-a-vis seller financing, because I wear many hats in the real estate investing game Regulations are always, always, always going to happen. Now is the time to put Jerry's spot on. We need a voice to say this is what we really bring to the party. If the seller didn't have us and we'll show case in point if they did not have us, they would have been out in the cold, gotten ripped off.

Speaker 2: 57:21

There has to be some sort of policing I hate that word, but some policing to keep the standards high. Not every real estate investor. I call them new ruse, those who've done three deals and now all of a sudden they have a product, or douche and ears. Call them douche and ears Doucheapreneurs. I think is what I called it the other day. We have to have our own policing thing. Let's raise the standard for each other. Stop screwing people over and let's do good. Let's do good in this country.

Speaker 1: 57:55

Absolutely Well, darlene. Thank you so much for you know, sharing an hour's worth of wisdom, knowledge and also something that I'm extremely passionate about. I'm just I'm not trying to pat myself on the back here, I just I want to make a point in this because I hope, if someone listened this long, they have their own podcast or if they want to have an event, to understand something. Darlene is an amazing entrepreneur. She's amazing at what she does to be able to sustain a business for 45 years. I don't need to talk to her about being a woman. I want to talk to her about being an amazing entrepreneur real estate investor, licensed agent, broker all the things that she is.

Speaker 1: 58:52

I get so tired of when my partner gets asked to do something and she doesn't get to showcase her experience and her knowledge and the wisdom that she has over being a entrepreneur for 14 years, and she has to talk about being a woman and what is it like to be partners with such a strong male. It's like, what are we doing right now? Like no. I love this interview with you, darlene, because very little of it had to do with anything outside of just facts. Real estate investing Like this is what we're doing. Let's move the needle, let's try to be better. I love that, and I just want to bring up that point because sometimes they get so annoyed with. Because here's the thing, darlene, it is a fact there are not very many women inside of real estate investing that put themselves out there. So at times I struggle with finding strong women to be able to interview, but when I do, it's like, should I really be talking about the fact that she's a woman? I don't think so, so I just want to bring up that fact. I love the fact that you just came out here and you did your thing, just like anybody else. So thank you, guys.

Speaker 1: 1:00:08

If you enjoyed today's interview, make sure to leave Darlene a comment on YouTube. Again, remember, we only accept five-star reviews around here. If you didn't like today's interview, for whatever reason, that's okay. I have a solution for you. You go to Steve Trang's podcast, real Estate Disruptor, and you leave him a three-star review and you let him know that RJ sent you. Okay, but if you like today's interview, you leave us a five-star review. All right, guys, that's all we got for you. We'll see you guys next week. Thanks, guys, fun.