Mark McGoldrick on Navigating Market Hesitancy, Leveraging Home Equity, and Strategic Real Estate Decisions

In today's episode, Gary's conversation with Mark McGoldrick, Executive Vice President of Sales for Howard Hanna Mortgage, promises to equip you with the insights you need to help buyers and sellers make informed decisions.

Mark’s expertise illuminates the rising tides of home equity from 2019 to 2024, juxtaposed against the stubborn challenges of affordability still plaguing many buyers. As the American economy demonstrated unexpected resilience in 2024, fewer rate cuts shifted the dynamics and perpetuated a housing market recession. Mark encourages homeowners to reevaluate their current situations, especially as we head into 2025's uncertain terrain.

We explore the high stakes of waiting in the real estate game—could holding out for lower interest rates actually push potential buyers into higher purchase prices? Through engaging anecdotes and personal experiences, we underscore how real estate can be a significant tool for wealth accumulation. We also dissect the current market dynamics, where high interest rates and limited inventory create unique challenges for both buyers and sellers. Discussions about adjustable-rate mortgages (ARMs) shed light on their role today, with lessons drawn from the 2008 financial crisis still resonating.

In our final segment, we guide you through home financing options, highlighting creative programs like the Buy Before You Sell and the Buy and Borrow Bundle initiative. Mark shares strategies for leveraging home equity to enhance financial flexibility, whether through HELOCs or reverse mortgages. With insights on future trends, we arm agents with the knowledge they need to be well prepared in the 2025 real estate market. 

Chapters

• 0:01 Real Estate and Mortgage Market Analysis
• 13:41 Real Estate Waiting Costs
• 23:04 Current Market Dynamics and Home Equity
• 30:53 Leveraging Home Equity for Financial Flexibility
• 40:08 Home Financing Options for Buyers/Sellers
• 52:14 Real Estate Affordability and Future Trends

Transcript

Gary: 0:01

Welcome to Reality Podcast. I am your host, gary Scott, today, mark McGoldrick. How are you today, mark?

Mark: 0:09

Gary, fantastic. Saw a Panthers game yesterday.

Gary: 0:15

That was less than spectacular but the company was great and a big week ahead with the holidays coming up, Good stuff with the holidays coming up, good stuff, well, and then you and I then tuned in at 425 for a game that went our way. While this is a reality podcast focused on the real estate industry, from time to time I and we have been accused of going down the sports lane, and so us Philadelphia Eagles fans are feeling pretty good today, albeit having been a fan of the Philadelphia Eagles for every bit of 54 of my. However many years I have been around. I have also lived through some of the worst of times, so I'm enjoying this particular Monday but, most importantly, having you on as a guest. So we're excited, mark.

Gary: 1:11

Executive Vice President of Sales for Howard Adam Mortgage, and one of the things that we know about Reality Podcast is everybody wants to talk about the real estate market and, really recently, the mortgage market, so we're going to talk a little bit about, you know, kind of what we saw in the rearview mirror. We're really going to talk about what you and I think may happen in 2025. Really, what I wanted to do, I'm going to throw up a fact or a market moment. As our Chief Marketing Officer, stephanie Riley, just said, I have to focus on market moments like key data, home equity from 2019 to 2024 is up 73%. Is that an accurate data point?

Mark: 2:14

I've heard a few things, but I think that's right on top of there, 40% of homes in America have no mortgage on them. So if you think about not that many years ago for you and I call it a dozen or so years ago where all we were talking about was underwater homes and shadow inventory and, honestly, the impact of people who wanted to sell because we had, in some ways, too much inventory out there, but in other ways, the wrong inventory because some people who wanted to sell couldn't because they were underwater. Now we've got all kinds of equity in America a lot of wealth, but some affordability challenges because you still got to pay your bills month by month and that isn't really a wealth decision. For a lot of folks, that is a cashflow decision.

Gary: 3:10

So, anyway, I think one of the things as I said, I just recently walked out of a meeting with our marketing team and one of the fundamental questions that I think we're going to begin asking every single homeowner in 2025, mark, is are you in the right home? Are you in the right home? What an important, impactful question and what an answer might be. Well, I've got 2.5% interest rate. I didn't ask you if you have the right interest rate. I asked you if you are in the right home. You, if you have the right interest rate, I asked you if you are in the right home.

Gary: 3:49

And so what I think our listeners would love to hear from you is you know a little bit of kind of what happened in the mortgage business in 2024. And then, what was the cause and effect to the housing market? And then, really, you know, as you look into your crystal ball, what are some of the things that everyone needs to be thinking about, everyone needs to have an awareness about. You put the economy and the mortgage business into kind of a layman term where the Asian population and the consuming population you've simplified a very complex series of numbers, so let's take a little look back in the rearview mirror, and then we will jump into 2025.

Mark: 4:43

Sure. So you know, if you think about, if we were sitting here this time last year, we had just gotten some of the lowest inflation numbers we'd seen in years, in fact, lower than they are today, which is part of a part of our challenge too. But if you were looking at trend lines, the trend line was really moving fast in terms of driving down inflation. There were some concerns about the job market that were going on out there and that's going to be something that pushes rates down because, quite frankly, it was partially a bet on at least a real softening of the economy, if not a recession. But there were some folks betting on a recession this time of year, this time last year. So we were sitting here looking at a 2024 that the prognosticators were betting on seven rate cuts. So if Jerome Powell does what we expect him to do, the markets factored in a 97% chance in a couple of days that the Fed will lower a quarter percent. That would have meant that we got three, not seven, and we really got all three at the back end of the year September, november and December. So there wasn't really a rate impact throughout the year. In fact, for the first half of the year, there was a negative rate impact because the Fed hadn't moved and, more importantly, they hadn't moved because the economy didn't go the way it was supposed to go, or projected to go is probably a better term. So the good news is, man, america's economy is strong. I was actually out with a few English guys who've got some connections to other businesses in the Eurozone and the thing they kept saying is we would give anything for the American economy. It's a diverse economy, there's a lot of cash flows, gdp is growing and, god knows, we've got our warts and all to deal with, but it's really been a success story. With that success story, the Fed feels less need to drive down interest rates, which, if you're looking across the economy, is, in a lot of ways, the right things to do.

Mark: 6:54

The challenge is we in housing are particularly oppressed by that. We've been in a recession for three years. The economy hasn't, but real estate, in a very real sense, is coming up on a three-year anniversary of being in a recession. So I think we're more measured today. We've seen some wins and some losses.

Mark: 7:15

In terms of where the rates are going, we've had some momentary glimpses. If you go back to 2023, we saw 8%. If you go into 2024, we saw a rate in the fives for a minute and I mean a minute, like four days out of the 365 days and we've seen what's happened. And because affordability is such a regulator of real estate right now not always the case, but today it's the case those interest rates are driving ups and downs. So when we look at mortgage applications, when we look at home sales, we look at builder permits, rates are down. People are feeling good and they're moving forward and rates are up and they're tapping the brakes. So I think we go into 2025 with a more measured response. In some ways good ways, because the economy is doing pretty well.

Mark: 8:07

Still some geopolitical and domestic political uncertainty that I think will play out in the early part of the year and then, you know, just kind of go from there. But we're coming up on a big day and we can talk more about this if you'd like to. But you know there is a total expectation that the Fed is going to lower rates by a quarter point. I think that's a foregone conclusion, probably not even a market mover. It's the words that they say afterwards about what their projection is for 2025. That'll really be a market mover and we'll get a sense of where they are. A lot to be learned this week, as as some of the words unfold from Jerome Powell.

Gary: 8:51

So just what we know is Mark and I are recording this and I've become very transparent in the day of recording to the day of listening. You know, because I think everything is a perspective. Somebody could be listening saying, hey guys, like this news is already out and we know what happened and we know what Powell said, and so today is Monday, december 16th, and so you know you're going to be listening to this podcast kind of between Christmas and New Year's, you know. Thinking about so what Mark just alluded to will have already happened. Thinking about so what Mark just alluded to will have already happened. The other thing that's going to be we've got a little a new twist to Reality Podcast today.

Gary: 9:31

I think many of you know Mark and I go back to 1998. We both joined this firm gosh within two months of each other and Mark and I laugh oftentimes about Pat Riley's bold, courageous. I'm going to hire a 33 and a 35 year old from Wilmington, delaware, and from Philadelphia, pennsylvania, to Pat Riley's decision, or we wouldn't be sitting here today. But Mark and I have talked about this. So every question or two I ask Mark, mark gets to ask me one back. So I always say that's a violation of podcast interview protocol. Mike Staver has asked me questions. Eric Zimmerman has asked me questions when I wasn't prepared. Now I'm not necessarily prepared for the questions you're going to ask, but we're going to have a little fun. Today we're kind of getting into the holiday spirit and we're excited that this year we will have produced, I think, 32 reality podcasts and just great guests, hugely informative. We're going to talk a little bit more about that, but I'm going to toss the ball back to you to ask me a question.

Mark: 10:52

Well, you know, since we were talking about our long history together, which God, I don't know what we're up to, is that 26 years? That's a long time and either Pat Riley's highly informed or misinformed decisions we're not sure he waffles on which ones they are but you know, since you talked about that, you know it's been, it's been a few years. If you could go back to 98, summer of 98, and knowing what you know now, any advice you'd give the little bit younger Gary Scott as he embarked on his career at Allentate.

Gary: 11:29

Yeah, you know, first of all, it's a great question and, yes, that's one I'm probably not appropriately prepared for, you know, but I think you know the best advice and today I have 32, 33 and 42 year old children, so I've been giving that advice, often much to their chagrin and often when they haven't asked for it. But, you know, I think I think the key is that and it's really held true to time and that is relationships, trust, risk and a little bit of luck, you know, and I and I think that when you combine that, I think that's really when I think about the decision that I made to come down here. You know, number one, I trusted Pat. Number two, you know, I had some confidence in myself, some confidence in myself. It was a risk, you know, I left a very good comfortable, but I also think that the ability to hold on to relationships and I think my biggest advice to all young people today is don't forget, that is the greatest capital that we have in this world, and social media has changed things and the ability to stream whatever we want to stream when we want to stream it. And but I think the older I've gotten and the more I think back to 26 years ago relationships, trust, a little bit of risk. And then you know what, mark, sometimes we've got to be in the right place at the right time. You know, I think coming to Charlotte, north Carolina, in 1998 was the right place at the right time, you know, and I think we did it with the right company, alan and Pat, and I think we you know it was. I think you know those would be the four things trust, relationships, a little bit of risk and a little bit of luck. But I'm also reminded that luck is really defined by the intersection of preparation and opportunity, and I think that is really another takeaway for the young people. Thank you for that.

Gary: 13:41

All right, let's go back to mortgages. So I'm going to ask you to walk through a slide that you showed last week the cost of waiting. You know, I started out earlier by saying are you in the right home? That would be to somebody who owns a home. Then the other person rents and they're worried about buying.

Gary: 14:05

Either I don't have enough money or the interest rate, or I'm paying attention to the noise or the news. I get confused between the noise and the news. They sound like similar words and I think this concept of the cost of waiting is very hard for people to grasp, understand and then change their mindset to do something different. So, to the best of your ability, without the slide, walk our listeners through it, because our listeners are going to be talking to folks that rent. Our listeners are going to be sitting with people over the holidays and after the holidays talking to them about their housing needs in 2025. And I rest assured people are going to hear I'm going to what? Wait till rates come down? I mean, the challenge with them being predicted to maybe come down the second half of the year is well, I'm going to wait. You know I think Pat uses the term often you know the paralysis by the analysis. So help us understand why waiting is more expensive than waiting for the interest rate.

Mark: 15:13

Right. Well, you know we're in an interesting time. So interest rates, as I kind of led off with, are driving some of appreciation rates. So rates go down, appreciation rates go up, rates go up. Appreciation rates slow down a little bit and I'll put that to the side because I think that's going to be an important piece to bring back in. But you know, as Gary described, I talked about a slide at a realtor meeting two weeks ago because really I think people need to have a full grasp and in this case it's really people who today don't own a home.

Mark: 15:50

There's some similar type of conversations for people who do own a home, but the people who are sitting on the sidelines, who are truly missing out on that appreciation, have the most to lose these days. So you think about the impact of an interest rate and I think at the time I used a $500,000 house just because it makes for easy math. So if we look at a $500,000 home and we think, all right, today rates are 7%, which here we were, two weeks ago the rates were at 7%. Today the rates are at 7%. Who knew that? In between we got as low as 6.5% and that kind of thing happens, but rates are about 7%. So if I go hey, really, 6.5% is the right number for me and I sit on the sidelines and let's say it takes a year to get to that place. And if you look at I think you know the Case-Shiller Index that we in the real estate industry use a lot, ran about five and a half percent last year. The FHFA Index, which is a little different because it's only Fannie Mae and Freddie Mac type houses, which takes away the large jumbo houses, ran just under 5%. So if we just were to call it an even 5%, if you wait a year to buy a $500,000 house and appreciation is 5%, that means that house is $525,000 next year. It's 5% more expensive.

Mark: 17:14

So if we think about waiting for that because we're waiting for a half a percent drop in interest rate, what's the impact to that? So the impact to that is so, first off, my mortgage amount's a little higher in a year because the house cost a little bit more, right, so that comes into play, but I do have the benefit of lower interest rate. So, again, without the benefit of the slide, what I would tell you is you know, at the end of the day your payment is going to save you less than $500 a year. Unfortunately, you were foregoing $25,000 in wealth and in equity to do that. And we kind of extrapolated it out and said you know what, if you even waited, like two years and you got all the way down to 5%? So at this point you're probably saving about $4,000 a year. So it's real material savings and I don't want to discount that because cashflow is important for folks. Problem is now you've got two years at 5% so you've probably left 50, $55,000 worth of equity on the table and paying more for that house. That is now the seller's wealth, that $50,000 plus, not your wealth. So I think about us, gary.

Mark: 18:25

So you and I we both moved to the Charlotte region in 98. And I think both of us were pretty excited about the potentials for the Carolinas and neither of us knew holy cow what it could have been. So we've gotten some equity over those years and I think about what percentage that is of my net worth that I didn't have to work for, I didn't have to get up early for, I didn't have to make savvy decisions on it just kind of grew, and there were years where it grew a lot, there were years that it grew a little. There were a couple of years in the middle there where it probably went backwards a little bit, but at the end of the day, it is significant amount of net worth that at some point I hope to leave to my kids and get them started in their lives. So it's really meaningful.

Mark: 19:11

And when you are an owner, those kind of things just happen, and they happen at different paces, but the pace with which residential real estate grows is variable. The fact that it's been nothing but growing we had a moment from 2008 to 2010 where it didn't. I think there was a moment in the 60s where it didn't, and other than that, it's a really really good rate of return. So those are the things that are super important to make sure that we connect to our customers and let them know that there's reasons why you'd wait for an interest rate to go down and there's reasons why you'd want to move forward. But there's really great wealth generating ability if you can move forward sooner rather than later, because the likelihood of a house is going up for a lot of different reasons is really really high. So you'll pay more.

Gary: 20:02

So I think over a course of a 10-year period, the average home is appreciating what? 4% to 6% a year on average. Right, and to your point, yeah, from 08 to 12 was probably the anomaly. You take those out. And then, from 08 to 12 was probably the anomaly, you take those out and then maybe you take the last three out which were, you know, historically high. You know, at the end of the day, and, Mark, you know, here's the other thing. You know what percentage of the wealthiest people in the world either started or very early in their career. Real estate was an integral part of that wealth and you know you think about the primary residents. I've shared this analogy a thousand times, but I don't think I've done it in a podcast 2024. So I'm going to do it.

Gary: 20:57

And you know, as Mark knows and some of the listeners know, I grew up in a real estate family and so my family got in the real estate business in 1961. And so when my father was selling homes in this neighborhood in Wilmington, delaware, called Graylin Crest, built by a local, really great reputation builder guy named Gray Magnus, so my dad was selling houses at $9,900 a house, brand new. My first listing in 1986 was Graylin Crest $9,200. 92.9. Within the last six months I saw that listing 1202 Fawn Road was listed by a former colleague of mine, great guy, great friend, mike McCullough, at 489.9. So I called Mike. I said is that the same 1202 Fawn Road that Bill and Jane Johnson owned back in the? And he and I got laughing, you know, but think about that. Now I'm not suggesting that in 2024, you buy it and that same appreciation happens. But what we know is that that that couple my dad sold a house to at 9900, they sold it at 20,000, and then they bought it 40,000. And next thing you know, in 2015, you know they've got equity, they got a million dollar house they don't know any money on and they've just leveraged it and leveraged it.

Gary: 22:27

And the other thing you said is in the real estate industry or when you own real estate, you are making money in most years while you're doing your job. That has nothing to do with the house. And so you know I was again, I was with marketing earlier and they said what do you think the keys to 25 are? I said it is a great time to buy and sell. Now. I know month supply of inventory creates the perfect opportunity, but as a seller, I've created this great equity. As a seller, there's less inventory, so fewer things to choose. As a buyer, there's more inventory than there was, and as a buyer, maybe some of the higher interest rate that you discussed might be keeping some buyers on the sidelines, and I think that we all have to remember why we buy real estate, and so I do think it's a great time to be a buyer and a seller.

Gary: 23:33

And I understand. If I sell, where do I go? I'm not suggesting that I'm not aware of some of the nuances and challenges. You know, one of the questions that you and I have not discussed so and then I'll let you throw one back to me is you know where are where's the world in the adjustable rate mortgages? Right, you know, because I do think in the last 18 months there was a little run at one time when it got to seven and three quarters and we hit that eight number that became new again or revisited again. So where do we sit in the rate and the percentage of loans today being done in an adjustable environment?

Mark: 24:13

Yeah, it's a really interesting time, gary. So adjustable rate mortgages are just like what they sound, so the rate adjusts over a period of time. Now, typically what they'll do is they'll be fixed for a period of time maybe three years, five years, seven years, 10 years and then after that they adjust and historically those rates are lower. For two reasons. One is as a buyer you're taking more risk. So if I get a rate that's a little bit better and I think all right, I'm willing to trade off my risk in seven years that I may not be able to get a rate like that for a rate that's lower today. The second reason is usually we've got a yield curve that's steep. So as you borrow money for one year, it's cheaper than five years, and if you borrow money at five years it's cheaper than for 10 years. That just makes sense. So the financial institution or bank it wants a better return because they're going to give you their money for a longer period of time.

Mark: 25:11

We have had what's called an inverted yield curve for a couple of years now, because the economy is a little bit jacked up. Yield curve for a couple of years now because the economy is a little bit jacked up, and it means that rates on short terms frequently these days are actually higher than long-term rates, because an investor might go. Long-term, I think inflation is going to be under control, I think the business environment will be better, so I think, long-term, we're going to be good. But boy, what's right in front of me now six months, 12 months, 24 months away, is a little bit scary. So we've had this odd situation. It doesn't happen a lot. It is almost always a predictor of a recession, so it's one reason that a lot of financial prognosticators have said, hey, we think a recession is coming is because we've had this inverted yield curve. What it does in the mortgage market, though, is it makes adjustable rate mortgages less attractive, because, for a financial institution that puts that on their books, they don't have that yield curve where they make a lot more money on the long term than they do on the short term, to give discounted rates, and it's a bit unfortunate, because, as we look at affordability options, what can we do to help somebody get through this moment in time where rates have spiked up?

Mark: 26:19

Adjustable rate mortgages aren't really that great of a tool in our tool belt, because the rate differential just isn't a whole lot. Sometimes it's small enough and if you're a person, if you're somebody who works for, say, General Electric and you live in a house for two, three years and then you're going to another state or another country, you might go hey, whatever the differential is, I'll take it, because I'm not going to be in this house in five, seven, 10 years. However, most of us aren't like that. So there's some risk return and for most folks the return didn't offset the risk. So last time I looked Gary, our adjustable rate mortgages making up about 6% to 7% of all mortgages that were being done now. So they'll come a day where that is a much better financial decision. But right today, for most people who are viewing their house as more of a long-term place to be, place to stay, place to live and investment, they've liked the security of the fixed rate, even at the 7% numbers.

Gary: 27:22

So today it's 7, 30-year. Fixed that relative adjustables in the fives right.

Mark: 27:30

So actually probably now most of the adjustables are six or north of six. These days it just isn't a whole lot of incentive. Again, if you're sure you're going to be out of there, every little bit might help. But in the absence of that, with some uncertainty, most folks just are passing on it.

Gary: 27:45

So for our listeners who were not in the real estate industry in the 7, 8, 9, 10, and 11, one of the terrible dynamics was I bought a house in 03, 04, 05. I got an adjustable rate at 1.78, right, because interest rates were five, five and a half still good. And then I got this incredible appreciation. And then I did what I went out and borrowed on that, and then my 178 became 478 and then it became 578. And then my appreciating home values went down, and I know anyone in the business understood that. But it's really the delta between what was a 30-year fixed end and an adjustable created this frenzy of adjustable rate mortgages at a time when none of us thought our home values would do what they did. And so I think we learned these valuable lessons from history, and I think you know, whether it's the mortgage market or whether it's Jerome Powell, or whether it's the housing industry you know we all you know that 08 to 12 is a four-year period of time that you know felt like it was eight years, not four years for those of us that were in the business. But boy, we learned a lot. And I think the other thing is you know nothing about our market today looks anything like the market then, and so you and I get asked all the time bubble, bubble, bubble. Well, you know, there's 600,000 listings today. There were 3 million listings. Then We've had double-digit appreciation for three years. We had double-digit depreciation back then. We had adjustable rate mortgages with a 3%, 4%, 5% gap. Today it's not even worth 7%, so not 7% of the total loans.

Gary: 29:34

Shift gears a little bit. We just talked a little bit about equity and 73% growth. I want to talk a little bit, mark, about some of the programs that you we have that are not only advantageous for buyers but sellers but also homeowners. So I'm going to stay where I am. I built this incredible equity. Tell us a little bit about you know kind of the program from home equity line of credit for a remodel or pay down. You know, the other thing you talk about all the time is and I'll let you share about the debt. The credit card debt in this country is really a problem and so is there a way to use home equity loan at whatever percent? I'm going to let you share versus I think you said credit card debt the other day or interest rate got up into the high 20s, into the 30s and it's just growing and growing and growing. So talk a little bit about home equity line of credit, what that looks like, why someone would do it and how you and our firm can help people achieve that.

Mark: 30:46

You know, gary talked about all the growth of equity over the last few years and it has been remarkable. So it is an asset. It's an asset we can tap into a few ways, and one of those ways is with an equity line. So what's nice about an equity line is it is a second mortgage, so it sits behind your first mortgage, and the advantage today is that means you don't have to refinance your first mortgage to get the equity in the second mortgage, because a lot of people are sitting with mortgages in the high twos and the threes and the fours and they don't want to release that. There are other times where you would want to release an old loan and wrap it all together, but today more people are interested in home equity lines so they can keep the first mortgage off to the side and hold that great rate that they got a few years ago. The equity line then comes in behind it and it's typically what we said. It's a line, it's a line of credit, so meaning that you pay interest on the amount you borrow. And well, not just the amount you borrow, but the amount you borrow and use. So if I borrowed $100,000 behind my first mortgage and I only used $20,000 of it. I would only pay interest on the $20,000, not the $100,000. As opposed to a mortgage loan where you're going to pay interest on the full balance of your loan there. So it provides some folks with some flexibility. It provides some people with some safety nets, right, so it could be a renovation that you want to do on your house. It's a swimming pool that you want to pool in. It also could be hey, I want to help my kids fund their college education. And student loan rates are awfully high Because, though mortgage interest rates are high, they're still the lowest interest rates a consumer can get, so it's all relative. So if you've got your home equity line at 7.5% and your credit card at 30%, it is a really, really easy decision to make. So you tap into that equity line, you can pay off these high interest rate credit cards, and then what you can do is, if you are somebody who can afford those high interest credit cards, you just pay the amount you were paying and you'll have that loan balance down in no time. Or, if that's putting a pinch on you, it just buys you a little bit of breathing room to get yourself settled. You got to have some discipline, because running that credit card back up to a high balance didn't do you any good. But those are the kind of things that we walk through and talk through with people because it is a blessing and a gift.

Mark: 33:23

The amount of equity that folks have been in their house for even just a few years two, three, four, five years have some equity that they can tap into to do some other things with it. It's also, you know, the thing I think about is it's a safety net, and I go back to those 2008, 2010 periods of time when people may have had a personal challenge. They lost a job, they're being paid less, whatever it might be. That's a hard time to go get a loan right, so they didn't have access to the things that would just help them cash flow for a little bit of time while they work their way through things. So the time to get a equity loan if you don't need it is when you don't need it. You can sit on it, it costs you very little to have and it's there in case there's an emergency, in case there's something unexpected. It's a way to. For me, you just sleep a little bit easier, so that's one way to tap into it.

Mark: 34:21

There are reverse mortgages for folks who start to be in their 60s where you can tap into equity. But that could be a conversation, a whole podcast conversation, so I won't get deep into that. But if people have some interest seniors in tapping into that there's some opportunity for folks to be able to do that. And then one of the things that we're seeing in terms of looking at new homes because I'm a person who's probably not in the right home anymore, so I had a number of kids, I have a house that's too big for what I need today and I've also got one of those 2%-ish mortgages. So you got this push and pull, but at some point we'll think about doing something different and so people are moving to different houses.

Mark: 35:08

It may be moving up, it may not be moving up, but using that moment in time to think about your finances. So if you are somebody with a lot of consumer debt that is really expensive, we're seeing people put less down on their new house, use that cash to pay off some other debts that are high interest bearing, and we can even accelerate the payback of the mortgage loan so that at the end of the day, you end up at the same place. If you want to be, or if you just want some relief from some really stress and strenuous payments, you can get that as well. So it's a really good reason to have a really sharp loan officer on your side just going hey, let's look at the whole picture, not just buying this house to find out the right debt strategy. And if you work with a good financial planner and somebody who's looking at the debt strategy, it's really a game changer for a lot of our move up buyers or even move sideways buyers.

Gary: 36:03

So you know, you bring me to this concept of you know having a team as a user, right? You talk about financial planner. You know, have your mortgage expert, have your real estate trusted advisor, because they're all related and I think too often and again, this is a real estate podcast, not a long-term financial planning podcast, but I do think they're all interrelated and I think you have to have your financial planner understand the real estate component and the mortgage component and the tax component, because a good financial planner is going to recommend a diversified portfolio. Right now we're coming off 2024 where if you have money in a 401k, you're feeling pretty good and we've had a little appreciating at a lower rate than we had before. So this year the stock market did better than the real estate market. Two years ago we all were darn glad. Whoever had real estate was glad they were in the real estate market. But I think the other thing in this is I was trying to think as you were talking. You talked about home equity line of credit to help education, and so I'm going to. You know, one of the things I don't know if we'll get to at length today is but even with higher interest rates, don't let that scare you away from buying an investment piece of real estate.

Gary: 37:29

I think there's a real mindset that says, well, the numbers won't work. Well, the numbers will work. The numbers may work. I'd say they will work, but they may work because rents have gone up. So you have to really kind of peel the onion back. But here's a little bit of advice, if possible.

Gary: 37:47

I got this from a great friend of mine, great mentor of mine, and every time he had a kid and he had the same amount of kids as you had, which is a lot and every time he had a kid he bought a house, an investment property, and that was his 529. So think about this. Not everybody can do it, I understand that, but if you can, I have a kid and I buy a house within the first two years of that child For 16 years. Somebody else is paying the loan. I'm getting appreciating Mark talked about it earlier While I'm sleeping.

Gary: 38:23

I'm making money while I sleep. And now all of a sudden, if I put down $30,000, $40,000, $50,000 on, say, a 200,000, let's say I put $50,000 down on a 200,000, and I'm not diminishing that, that's not easy. So I don't want anybody to misunderstand that hey, that's a lot of money, but sometimes we put $11,000 or $12,000 in the $529,000 and think about it. So again, our goal is always Mark that one thing or two things or three things come out of the podcast, and so can you leverage real estate as an investment for college education, can you do it for retirement, and just think about all of those things. I violated our two questions to one rule. I've asked you five, but it is the exclusive benefit of being the host, so toss one back to me.

Mark: 39:17

You got it, so I'll ask a little bit of a selfish question. So I'm a mortgage guy right, and been in the mortgage business a lot of years and obviously, well, our greatest partnership we have is with realtors. So you know, think back to your selling days, gary, and what, when you think about your best partner on the mortgage side, what was it about that person that made them the right partner for you and probably, even more importantly, the right partner for your clients?

Gary: 39:52

Response time yeah, and they did what they said they were going to do. When they said they were going to do it, I'd like to have given this incredibly complex gosh they understood the inverted yield curve Like I didn't. Like I remember I was working with you and Kara to buy a house and, like one of the things that I did do early, like in my entire selling careers, I controlled the transaction. Mark and Kara, we're going to meet with the loan officer tomorrow and that loan officer is Becky Abel and Mark would say, well, I have a friend, that's fine. We're going to meet with Becky Abel tomorrow and you don't have to sign up anything. But I think that that's what I do. That's part of me and I did it and you know again, I think that's a little bit of an old school, different time, but it was about when I called Becky. Becky called me back and here's the other piece kept me informed every step of the way. I didn't have to call is the appraisal done? I didn't have to call and say and remember this this is way before. It's a lot easier now and I'll get the platform wrong, but way back when getting all the docs to the mortgage company was really brutal. Like you couldn't go online to pull up my bank statement. You could. You know I couldn't connect all of my statements to this platform and then they knew everything. Like it was hard. And I think that they you know, the great loan officer then is no different than today Kept me informed every single step of the way and, last and certainly not least, they made sure there was never a surprise at the end and they knew that I was good with a problem. If they told me about the problem the minute it became a problem, I could have lived with that. What I couldn't live with is I'm going to solve this and 10 days later they didn't solve it. And then I lost 10 days of nurturing my buyer, educating my buyer and giving you know. I think the key is, you know, the best service I could have given back then to my buyer and seller was only as good as the great service I got from my law officer. And again, you know it's so interesting, as you and I have been doing this a long time.

Gary: 42:23

I've never had that question asked and I really. It's a great question. It's exactly the same today, mark. It is no different. Like we can talk about that platform we can talk about. I can close in 30 days Heck, we used to put 75 days right. But that is just the fundamentals. And whether you're in the real estate business, the mortgage business, the title business or the insurance business, those tried and true relationship-driven customer service, creating an experience of excellence is more important today than it was then. So, love, love, love the question. I'm not going to let you ask a second one, so I'm going to go back to you. I mean, you can in a little bit.

Gary: 43:08

So we talked about the home equity line of credit. I think we've got two or three other really great programs that I think sometimes, mark, fly under the radar. Right, because we're in the moment in time, and I think one of the challenges is also one of the great opportunities, which is the majority of us think that mortgage programs are exclusively for the buyers. We've got programs that are benefits to the seller so that they can become a better seller and attract more buyers. You want to just walk through some of the programs that you have access to that our listeners out there need to put, they need to fill their tool belt going into 2025.

Mark: 43:58

Yeah, and I think finding the right program to help a seller become a better seller also helps that seller become a buyer, because most often they are. And when you go back to 2008 to 2010 and all the challenges that were there, the reason the challenges were there is we were in a credit bubble and a lot of these sellers really hadn't been qualified to buy their house, so we had sellers who weren't buyers predominantly. Now almost all of our sellers are, in fact, buyers, so those you know, that whole intertwined piece of finance comes into play. The one that always comes to mind is probably you know how things will work in my world. So, as I said, we've probably got a little bit more house than we need today, and my wife probably has three to 10 to 50 houses on her mind at any given time that she drives around and says, boy, if that one gets a for sale sign, that's the one and that's what happens. So all of a sudden, it's hey, 123 Main Street is available. Hasn't been sold in 20 years. I've had my eyes on it. I love that house, I've been in that house, it's close by, we don't have to move far. But now I got to sell a house right.

Mark: 45:15

So what has gotten a lot of attention from us or with us, gary, lately has been our Buy Before you Sell program. So this is where we lend people money based on the equity in their former home to buy a new home if they don't have the time or are concerned that they don't have the time to get their old home together, get everything out, get kids moved, whatever it takes, new school, all that type of stuff, and for a period of time they're comfortable carrying both houses at the same time. So it allows somebody to be responsive. It has been really helpful when we've had some highly attractive houses on the market or when we're in that frothy time where you know if you didn't buy a home in 11 minutes, you were late to the game. So I think you know there's those houses that you look at and go well, that thing that's going to move fast. We know that's an attractive place to be. This provides some folks some options and it goes back to that counseling role that we take. So the option may not be the right one for everybody, but if you're in that position or if you think you could be at some point, it's got to be just that right house for us to make a move, but that right house comes for sale. We can deck that up ahead of time and if nothing happens, nothing happens. You know there's no cost to the consumer but they have a plan to know that if I got to move fast, I can move fast and we're ready to go. So you know, I'd encourage people to think about that Even me, somebody in the business. While you kind of know what it is, I had to just spend some time putting it down on paper and going all right, this is what it really looks like, if that magic moment ever happened. So I think that's a big piece of it.

Mark: 47:10

I think people should know that low down payments are possible for folks. I mean a lot of times, especially in the first time home buyer mentality. It can be something geez. In the first-time homebuyer mentality it can be something geez. You know, the house I love is $400,000, so 20% down would be $80,000. I feel like I'll never get there.

Mark: 47:33

But there are plenty of options for people with low down payment loans. There's amazing options for those folks out there who have served in our military. The Veterans Administration puts together an amazing option with no money down for our veterans at a really, really competitive interest rate. That is a game changer for a lot of folks. So it provides an opportunity to housing where maybe they otherwise wouldn't have. So we look to those low down payment pieces. We look for the buy before you sell. We use sometimes people's home equity and home equity lines to provide another way to get a buy before you sell and do what we think of as a bridge loan, which is bridging you from one house to another when the timing is really really tight.

Mark: 48:12

And I think something that just is about service more so than about product, but it really has an advantage is just we've really honed ourselves to have an ability to move fast.

Mark: 48:23

So if our customer in fact this just happened on Thursday a customer came to us and said I got to close before the end of the year, so Thursday is what December 12th, and they want to close before December 31st.

Mark: 48:38

And back in the day you talked about 75 days to closing.

Mark: 48:42

You and I have seen it all we know that we can get people to closing in two to three weeks if they need to do that.

Mark: 48:48

A lot of folks don't. They don't even necessarily want to do it because they want prep time, but if, for whatever reason, you need to do that, we can put you in a competitive position to be able to do that, to offer that to a seller, and maybe that if you're looking at a house that's been on the market for a while, or you go through it and you don't see any furniture in there so you know that they've moved on, that speed may be a real competitive advantage, especially if you've got multiple bids on houses, which happens these days a lot. So just you know, to me it's getting to a really good loan officer early and just exploring all options and working through some questions, and a good loan officer will have good questions for you to get you thinking about what might be. How can we position a more competitive place? How can we take advantage of some products that are out there that are good for consumers? So that's what the great loan officers do is pull all that together.

Gary: 49:41

So buy before you sell is basically I'm now a cash buyer.

Mark: 49:45

You're a cash buyer.

Gary: 49:47

And in the euphoria of price, the house you want and multiple offers, I'm going to separate myself because I'm only going to take care of one. I'm going to put my buy in a bucket, my sell in a bucket. I'm not going to put them both in the same bucket. So I think that's really important. We're going to talk about two more programs that we have. Talk to me a little bit. Share with our listener the loyalty. You've got a loyalty function because I buy today at six and a half, six and seven eighths and in a year rates are at five and a half, six and seven eighths. And you know, in a year rates are at five and a half. You know I want to refi. We've got a loyalty program. Just share real quick that program, mark.

Mark: 50:27

Sure, we call it our loyalty lend program and really all it is is is our acknowledgement that, hey, if you look back the last 10 years or so, rates are historically higher than they've been Now. If you look back further than that, rates are about on average, where they've been. But anybody who's bought a house in the last 10 years saw a rate that was lower than they're probably seeing today. But it might be the right time to buy. To your point, am I in the right house? All those things are in play. So what we want to do is make sure that person knows that we're with them for the whole life cycle of their homeownership and in this case we'll pay $1,000 of their closing costs for refinance if and when the time comes where refinance makes sense for them. So what we do is we do some analysis and we have conversations with them and find out.

Mark: 51:20

You know, what would be the right moment for you to refinance. So you know we bought your house at seven. You're thinking of you're going to be in there for five to seven years. So if the right time came in and the right rate was six or five and a half, we make note of that and we track it so that we can continuously have conversations with you like, hey, we're starting to approach. That Is anything. Has anything about your financial picture changed in the last year? Is there anything else we want to think about? Because we're getting near that rate and if so, we're party to the transaction, because we're going to contribute a thousand dollars towards those closing costs so that you get the benefit of that lower rate and we appreciate you being at a client at a time where rates were a little bit higher. So you know, I think that that's just. It makes people feel secure that when the moment comes where there's a better day, interest rate wise, they've got a partner working with them.

Gary: 52:14

So, last and certainly not least, buy and borrow bundle. We talk about housing affordability. We talk about interest rates, you know, waiting for it to come down. We talk about the millennial the first time home buyer Our company kicked off back in August and creative and positive opportunities for homebuyers and our real estate professional to provide a housing affordability lift. How about real quick? What is it? How have we done with it? And then I'll ask the age old question is it going to last forever? But that one, we all know the answer nothing lasts forever. So, real quick, what is BNBB? And how have we done so far here in the Carolinas and how has the enterprise done? And then, how can we continue to take advantage of it as agents and consumers?

Mark: 53:17

Yep. So the buy and borrow bundle, what it is is, it is an offering from the Allentate organization. We are an integrated company, so we have a mortgage company, insurance company and a title company to just try and wrap our arms around this. As Gary says, control the transaction and help the consumer control the transaction. So with the buy and borrow bundle, if you've bought a house through an Allentate realtor and you use our mortgage company, howard Hanna Mortgage Services, we will contribute a half a percent of your closing costs towards however you want to use it for, closing costs. So what is a half a percent? So easy math. We'll go back $400,000 loan would have $2,000 in a half a percent of closing costs. For us, the average amount we're contributing towards closing is right, around $1,700. Towards the closing costs, it amounts to about 20%. So if you're thinking, all right, what does that mean? To me as a buyer? It's about 20% of your total closing costs. So you may use that and say, hey, instead of paying $5,000 in closing costs, I'm going to now pay $3,500 in closing costs and just take that as cash that we use towards your closing costs so you can save your own cash. Or you could say, hey, I'm going to take that half a percent and I want to buy down the interest rate. So the interest rate was 7% and if I put that extra half a percent there I could get 6.875 or 6.75% and the loan officers will shop that around and try and find the best opportunity for you and how you can spend that money. You could pay part of mortgage insurance or all of mortgage insurance, depending on where you are, depending on how much you've put down on the house, if you put less than 20% down. So the truth is it's your money. You use it the way you see fit.

Mark: 55:15

So we've been providing this half a percent of closing costs since late July Enterprise-wide. We have, or are approaching $2 million across the Howard Hanna Enterprise towards this Locally here in the Carolinas. We've got over a half a million dollars contributed and I think what I love about it is the whole package, which is hey, we know you're buying a house at historically challenging affordability times, so we're going to participate in that upfront to help you with your affordability. Then, should the market get better and rates go down and you can take advantage of a refinance, we're going to participate in that as well. So we're with you the whole time so that you can feel comfortable that buying today is still the right thing to do, because we're going to help with that affordability piece. And we didn't talk a lot about this.

Mark: 56:10

But as rates come down, what we've seen is a lot more buyers enter the market and I'm sure for anybody watching or listening that would just make sense right. Rates come down, mortgage payments go down, more people enter the market. So what does that do? It drives up value of the homes because now there's more demand into the same amount of supply. So we're pulling some people forward, I think, who are taking advantage of a sale price that today is lower than it'll be tomorrow or next year or two years down the road and that sticks with you Once you bought that house for what you bought it, that stays with you. The rate will move around, the market environment will move around, but you will have locked in that purchase price and that can't go anywhere for you. So it's our way of participating in this moment in time where affordability is a challenge.

Gary: 57:02

Yeah, I think it's super exciting that we've been able to do it. One of the questions Mark and I always get asked is is this going to last forever? And that is when we give our answer. Nothing lasts forever. However, I think it's critical to any buyer you're working with today to get them to sign that and to sign up and take advantage of a closing cost credit. I think the number one thing is it's about 20% of your closing costs. There I can wrap my head around it.

Gary: 57:40

I'm going to give a little preamble to a program we'll talk about early next year, which we're really going to reintroduce, a program that was here four or five years ago called the Money-Back Guarantee. So think about Mark's buy and borrow bundle. I save money. Think about buy before you sell. I become a cash buyer. Money Think about buy before you sell. I become a cash buyer. Think about loyalty lending for a refi. Money back guarantee is for that event that is unforeseen and I buy a house and I've got to make a change in life. We put our money where our mouth is. More details to follow. So, mark, we got time for two questions One for you, to me, and then I get to close. One more details to follow. So, mark, we got time for two questions one for you to me, and then I get to close, one for me to you.

Mark: 58:25

So I'm going to give you one and a half questions. So the first question so if you think out five, 10 years, gary, anything on your mind, you know we talked about looking back and kind of advice we'd give our younger selves what the real estate market has to hold five, 10 years out, yeah.

Gary: 58:44

So I think obviously, if you go back over 39 years, it's cyclical. I think the next five years, while I think there's going to be a fair amount of change in our industry, I think it's going to be a really great time to be in our business, but I think it's also going to be a great time for the consumer to change their current status in the market and anybody, any buyer who is a renter, or the next generation coming up. I always love the next generation because they don't remember two and a half percent Like I can't wait for them to get a little older, right, because what we say, the demographics are absolutely in our favor. We clearly need a lift on inventory. So I think the next five years if I could go out five more, I'd be probably on squawk box tomorrow.

Gary: 59:32

But here's, what I know is that our industry is constantly changing and what I know is there's always a new competitor thinking that they can do what we have done for many years better and better and better. And I still and this is probably the old school in me I think buying real estate, selling real estate, requires more than an app or technology. I think it requires human touch. So I don't think we go away. I think years five to 10, we may do it a little different the next five years super excited.

Mark: 1:00:13

So the half question who's in the Super Bowl this year, gary?

Gary: 1:00:18

So I think we're going to see the Philadelphia Eagles and the Buffalo Bills, and I think that the Philadelphia Eagles are going to be able to stop, I think, the ultimate MVP, josh Allen Albeit. I think it will be a tall task, but I don't know whether that's who I hope is in it or who I think will be in it. I actually think it's a little bit of both. So there's my sports prediction for the day. I think that's an excellent prediction by the way.

Gary: 1:00:44

It might be a little bit of a homer, but that's okay. Mark McGoldrick, love, love having you on podcast on reality always great takeaways. One piece of advice that you give real estate agents, loan officers, really anybody in the workforce what is the one piece of advice you give everybody as we go into 2025 that they can incorporate into, maybe, their business plan?

Mark: 1:01:14

Yeah, I think the word that comes to my mind, gary, is engage. So engage with people and be engaging. So you know, be engaging by, if you're a mortgage loan officer, bring value. You know, know these strategies, know your programs, know to help make, how to help make people wealthier. But then all the knowledge in the world if you don't engage doesn't matter, you're locking it up. So it's the holidays, so we find ourselves at cocktail parties, at holiday parties and people want to know what's going on. They're fascinated by the real estate market because most people have a lot of their net worth wrapped up in there. So know what you're doing, be engaging, be fun, don't take yourself so seriously and just enjoy. We are really blessed to be in a great market and a great business and, you know, with a lot of people who are interested in what, what we do. So engage.

Gary: 1:02:11

Awesome, awesome. It's interesting, I'm an acronym guy and I came up with care in 2025. Right C is be consistent in everything you do. A is attitude takes you a long way. R is you got to be resilient because just when you think you got it, something's going to come get you. And then my E in care is engage. Oh, okay, engage, so be consistent. Attitude means so much Resilient when the world doesn't seem to be going your way. Engage, stephanie Gossett said it best Everybody wants to know about our business. Thank goodness we don't sell vacuum cleaners. Thanks for being with me. Great to see you, great to hear you and, as always, to everyone out there listening, we appreciate you. Take care.

Mark: 1:03:02

Appreciate it.