From Buyer Agency to Buying Power: A Conversation with Ben Hart 🤝💰

Welcome back to the Ben Revak Mortgage Podcast! 🎙️

Today I'm joined by not only an outstanding REALTOR®, but also a great friend, Ben Hart. We're talking about everything first-time homebuyers need to know—from the best way to get started, to avoiding common mistakes, and how to put yourself in the strongest position possible before you ever step foot into a home.

One of the biggest topics we cover is buyer agency and why it's so important to have that relationship in place before you start touring homes. It's about making sure you have someone in your corner who is legally committed to protecting your interests, advocating for you, and helping you make informed decisions every step of the way.

We also dive into financing and buying power. Whether you work with Ben and me or another trusted lender and REALTOR®, our goal is the same: to make sure you're set up with the most buying power possible so you can confidently compete in today's market. At the end of the day, this is a business—but it's a business built on trust, relationships, and doing what's best for our clients.

If you're thinking about buying your first home, or you just want to understand the process a little better, this episode is packed with practical advice to help you start your journey with confidence.

Let's get into it!

Transcript

SPEAKER_02 0:00

Built on trust, fueled by kindness, powered by provider. Welcome to the Ben Reback Mortgage Podcast.

SPEAKER_01 0:11

But I know you do work with a lot of first-time buyers. What's the big difference between somebody that you see who's like, I'm ready, and you kind of get a sense like maybe they're not, versus someone who's like, I'm ready, and you're like, Yes, you are. Like, let's go look at houses this weekend. How do you tell the difference?

SPEAKER_00 0:29

Like, great question. I think it's super important to define and get that distinction between buyers, especially the first-time buyers, because you can end up spending a lot of time on your own and wasting a lot of time with the client if you don't properly qualify them. I think a few things I look for are are they willing to sit down and have a conversation with me as a buyer consult and be able to set expectations on what's their timeline, what are they looking for, what do they potentially think their budget is, what locations are they interested in, and what are some of the must-have features of the home that they want. And I think the second critical thing is taking the time to meet with a loan officer and taking the time to, even if it's just having an initial conversation about here's the process, here's the steps, here's the information the loan officer is going to need in order to process a pre-approval for you. I think just a willingness to those couple meetings with me as potential agent and with a potential loan officer, show that they're serious and that they're willing to make the steps to put them in a position to move forward.

SPEAKER_01 1:42

Like I'd want to know what my payment is, how much cash I have to bring to closing, what my interest rate could be, like, and it that makes a lot of sense. How do you flush that out then? Like when you have somebody who's like, I want to go see these seven houses on Saturday, and you haven't even met them yet. Like, what does that conversation sound like? Because that doesn't sound like an easy conversation.

SPEAKER_00 2:00

For sure. And I think it's become more of a common conversation that I've had to have because we are starting to see more leads come in through some online streams with Compass's partnership with Redfin. Sure. So we're getting leads that we don't know who they are. They're contacting us for the first time to request a showing to see a property. So in those instances, a lot of my questions go back to, you know, I saw you had interest in this specific property. Is that correct? What do you like about it? And then typically from there, I take it into, are you pre-approved yet? And if yes, okay, understanding who that is. If not, great. I have resources I can give you and connect you with some great recordable people. And then I also have the buyer agency conversation with that because in Wisconsin, we can't show homes to a client without having signed buyer agency. Yes, you can do a showing agreement with them. Yep. But in my opinion, having a showing agreement for a potential buyer is not in their best interest. I can't give them my opinion, my recommendation, or any guidance regarding the potential condition of the property unless it's a factual disclosed piece of information. Interesting. Or I also can't give them any information regarding what I'd suggest on offer terms, a price, you know, what may or may not spend the offer for them. So if they don't take the time to sign a buyer agency and have representation, it's not in their best interest to start seeing homes either, because they're not going to get the information they need in order to make an informed decision.

SPEAKER_01 3:33

So you as a fiduciary, when you are under agency with a buyer, that's actually a different legal like scenario than if you just sign a showing agreement. Correct. So you're not acting as a fiduciary with a showing agreement. Where by law, once you are under buyer agency, you have to act in the client's best interest. Correct. Wow. That's I didn't realize that. I didn't know that was the nuance to it.

SPEAKER_00 3:56

So as with a showing agreement, that potential buyer is a customer, and technically you're an agent of the seller at that point. Sub agent of the seller. Because you have no agency abruptly with the buyer. I didn't know that. So you, like I said, you cannot give your opinion on the potential condition of the home. You can only disclose factual information that is available from the listing, the agent's private remarks, the condition report. You can't insinuate or sure.

SPEAKER_01 4:28

You can't really like help them, like, hey, like I see this thing in the foundation that isn't disclosed, but it's a red flag for me. You can't have that conversation.

SPEAKER_00 4:37

I more so would have to say, you know, there's some things that are concerning. You'd have to have a professional come in and take a look. Got it, got it. Versus if I have a signed buyer agency agreement where I'm the fiduciary to that client, I can definitively say, hey, I've run into this exact same situation on other properties with other clients. Here's how that panned out, here's what happened.

SPEAKER_01 5:01

Dang. So it really is in everybody's best interest to find, I guess, as a buyer, then the best advice that I would give is find a find a good agent that you trust, get under buyer agency with them, and then let them trust them to guide you through the process. Because they do this every day. Absolutely.

SPEAKER_00 5:17

And if, for instance, there is a personality conflict and that buyer doesn't particularly end up liking the agent or it doesn't seem like it's a great fit, that's totally fine too. A buyer agency can be terminated at any time by either party. So it's not permanent and there's no need to feel.

SPEAKER_01 5:35

Can I ask you about that? Do you guys have that written into yours? Because I I've heard, and I don't know if this is true, but I've heard that horror stories from other agents saying that they were helping in a buyer who had signed an agency agreement with another realtor, wanted out to work with this agent, and that other agent wouldn't let him out. Is that possible? Or is it does it vary by brokerage, or is it like that's a good question? How does that work?

SPEAKER_00 6:01

I think it overall it can be extremely complicated when you get into situations like that where someone doesn't want to relinquish you know the control or the legality of that agreement. Um so I think in instances like that, it's best to have conversations with the broker of you know each firm or move it up a level, who's ever involved, and it could take a little bit of you know mediation and kind of back and forth. Got it. Um but you know, as long as it's shared in writing that a client wants to or the agent wants to terminate, sure, um, that's fine. And it does have to be signed by a broker, um, a supervising broker within the firm to you know completely cancel. That's the same for like a listing contract. You have to have a supervising broker signed to cancel that too.

SPEAKER_01 6:52

Okay, that makes sense. As a buyer, then I I should really just do my due diligence on who I want to work with first. And once I'm under agency, then I know I'm working with someone who's a fiduciary, which means they have to act in my best interest financially.

SPEAKER_00 7:06

Not even just financially, all facets of it. So I have to act in your best interests when I'm negotiating for you. I have to act in your best interests when I'm just simply communicating with other listing agents or other people who are involved in the plague system of buying. Um, and you know, that also gives me the ability to draft offers and documents on your behalf as part of the transaction and really be able to facilitate the whole the whole deal. Without that, it's a lot more complicated if you are just a customer in transaction because in the end I don't have I don't have agency, we don't have an agency agreement together to move forward with. So it's oftentimes there you're constantly checking in, getting approval and and like feedback versus when I'm your agent, I you know, I'm hoping you trust me to take full reins over the transaction and bring you in at critical moments to make sure that you feel great about continuing to move forward. Yeah.

SPEAKER_01 8:12

Yeah, well, I and that is, you know, that's part of the reason that I love working with you is because you and I work together so closely. Like buyers don't see the behind the scenes work that you and I put in to make sure everything is structured correctly, whether it's as simple as timelines for contingency dates and what's possible, you know. Like, for example, we're going on into a holiday weekend. You know, normally if you write like a 10-day appraisal, that's no problem at all. But if you write a 10-day appraisal and it's accepted yesterday, and then I don't get the offer until Friday at four, well, now we're, I mean, we're looking at Tuesday before we can even order an appraisal. So it's like some agents don't communicate that proactively, but like when when we work together, it's like, I mean, I talked to your partner last night at 9 15 about a deal that they're working on a counter with. And it's, you know, time is of the essence, and real estate doesn't sleep. And so keeping that communication open like constantly is really vital. But um, which kind of leads me to a question about um pre-approvals. You said like one of the two checkpoints to tell if somebody's serious is are they willing to talk to a lender and figure out what those loan options are like, um, or if they qualify. And then would you show somebody a house without a pre-approval letter?

SPEAKER_00 9:28

Good question. Yes, I would. Yeah. For the right person, yes, I could. I would say I've mainly done it with referrals from past clients or or friends or you know, referrals from family. People I, you know, at least have a good good instinct on yes, I can trust them, and yes, you're not trying to stab us. And I feel like when when a friend or family member recommends a potential person for me to work with, they also have a little bit of skin in the game because they put their name on the line to recommend me. So there's a little bit more of a accountability gap, I think, there that that people want to uphold. So yes, I will do it. Usually it's only I'll probably only go out twice to show a client who's not pre-approved homes. Sure. I'm not gonna spend, you know, multiple weekends of time or three, four, five different sessions of showings to take that client out. Because at the end of the day, if you're not pre-approved, you truly have no idea what your budget is and what home could could work and fit with your lifestyle and what makes sense. Because I've gone out on showings with clients who thought they wanted to purchase in the you know 275 range, they get pre-approved, they're pre-approved up closer to 400. And now we're looking at homes that are 350 plus, um, or vice versa. I've you know started with some clients who were like, we'd love to look at a home and you know the 400 plus price point, and then they get pre-approved, and it's like one, unfortunately, either now isn't the time because you need to work on you know your employment history or build up income, or honestly, based off of you know your budget, your debt-to-income ratio, you really are only pre-approved for 350. So we need to restructure and re-evaluate expectations on what the home search could look like based off of an actual pre-approval, actual numbers, and not just how people think they may or may not be able to afford.

SPEAKER_01 11:36

Yeah, but it's definitely a balance because you don't want to just say no and not have a chance to meet a new client and build some trust and kind of feel out is this going to be a good positive win-win for us to work together. Correct.

SPEAKER_00 11:47

But yeah, speaking of that, I just met a new client uh a few weeks ago. He requested to see a $700,000 home in Greendale. And when I had the initial conversation with him, he was not pre-proved yet. Um, but I felt it was worth taking on the risk to meet this potential client. He has a property that he'd need to sell in order to um, you know. And luckily he's in position two where it sounds like he doesn't necessarily need to sell with home sale content or buy with a home sale contingency. But it's like, okay, I'd love to show you a few options so you can help refine locations you're interested in, what features you do or don't want with home, and then we can I can set you up on a collection and then start making progress forward and get you to a point where you are ready to have a conversation with a lender and get pre-approved. For that instance, I felt like the buyer was well qualified and was in a position where they're serious about trying to find the next home for him and his family. So I I felt like it was worth taking.

SPEAKER_01 12:51

So it's a little bit of a judgment call. 100% just to feel out like, hey, is this yeah, that makes sense. Yeah, it's similar in my world, you know. When the I tell everybody, just call me, like, let's just talk through your situation on a high level and figure out where to go from there. And in in my experience, that conversation is the best investment of everyone's time. Because if somebody like I had a conversation um late last week, uh guy wants to relocate from Michigan to Wisconsin. He works remote, but his employer said if you move to Wisconsin, you can no longer be employed. It's something to do with licensing. He can't live in Wisconsin, even though he's fully remote. Sure. I don't know why, but that's what they told him. So the problem is when you go through underwriting and you're relocating, that's one of the pieces that we have to get for underwriting is something from the employer stating that you're allowed to like this move won't affect your income.

SPEAKER_02 13:41

Sure.

SPEAKER_01 13:41

And so we know that's gonna come up. And so he's kind of put in a spot where he can either find a job ahead of time and get an offer letter because we can we can close within 90 days of that new start date with just the offer letter. So that would be one way he could go at it. The other way he could go at it is because they have housing here, they have a place that's family-owned that they can live in. They could move, then he could find a job, and then he's not as much of a rush. And then he can take his time to find the right house. So it it really turned into like a 15-minute conversation about how that all works. By the end of it, he's like, wow, this is amazing. Like, I don't, you know, we might not even need a loan then because his he's gonna sell his place in Michigan, get home sale proceeds from that, he's getting a gift from family, depending on the house. He may end up just paying cash when the time comes. So it's uh and he felt a whole lot better about it because logistically he didn't even he had no idea what he's working with, you know. Right. So, and and uh very likely I won't get a loan out of that deal, but that's okay because that agent now knows exactly what they're working with, so they can take that buyer and make a smooth process from start to finish. And that's how I see my role fitting in with your role is we're all trying to figure out the most efficient way to move people towards their goals, and the only way to do that is through talking to people. And so if you're not available to like show them one house and make that initial connection, or like in my world, pick up the phone and call someone back promptly and get them the resources and the answers they need in the moment, but you know what that's the whole point. Like, we're here to help people, right?

SPEAKER_00 15:11

So sometimes people need that little push, or or they're in their mind, their first step is having the conversation with me about an interest in seeing a property.

SPEAKER_01 15:24

It always is like okay, literally, nobody calls me first, man. No one calls the lender first. They want to see like the homes of the sexy, they want to go out on a car ride, they want you to bring them Starbucks or whatever. You bring them uh go ride or up where we get some goodie bags. Uh, they don't ever want to talk to me. I'm always the last one to know. Homeowners insurance is probably the last one to know, but I'm the second to last one. Sure. And it's all good. It's just the way that that the industry flows naturally. So I think meeting people where they're at is super important.

SPEAKER_00 15:56

Absolutely. And I think going back to your point about having a conversation with people and being a resource, I think you do a phenomenal job at that. Well, thanks. I can think back to in December when I had clients looking to buy a condo in Bayview, and they called you, they had a home to sell in Lake Geneva. And I remember yes, they're very nice. Yep. Yes, awesome people, awesome people. Um, but they had a conversation with you about different options they could potentially, you know, go into as far as loans. They needed something kind of in the interim to be able to buy now and you know sell their property at some point in the next few months, and then to be able to pay off that the mortgage that they just took out for the new property. Um, and after having a conversation with you, you know, you put out all the options for them on the table and you were honest with them and told them that you know you were not the best option for them, that there was an alternative that worked better for their situation. And they were super appreciative of the honest conversation and just the feedback of, you know, here's what are your options, and this is really what's best for you and your situation.

SPEAKER_01 17:06

We don't make any money in situations like that, which is okay. Like, I'm not, you know, if I tried to early on in my career to try to split off like the money make I've seen anyone who's successful does this. Like you differentiate the money that you're making in your career from what you're actually doing, which is helping people. Right. And focus on helping people, this part of it takes care of itself. And in in that case, what the the the nuance behind it was they had a bunch of money in retirement, but they didn't have quite enough to do what we call asset depletion. Because for a conventional loan, asset depletion allows you to spread that chunk of money out over 210 months. That can be considered monthly income. Wasn't quite enough. They needed a little bit more. There's some local lenders that I work with that can do that over 84 months. Sure. So it takes that monthly income from potential retirement and just jacks it up like so much higher. So the qualifying is so much higher. And that's what those folks needed. So the other caveat was they needed to pay the loan off kind of quickly. And so if they just pay it off when as soon as the condo sold. So they needed to, they needed to get in and out quickly. They needed to qualify first, which they needed that specialty portfolio product. And then when we do a loan, if it's not kept for six months, we get what's called an EPO, an early payoff. So being a hundred percent commission, it would be like if you sold a home and then the person didn't like it, and they got, or let's say they they're married, they buy a house, and then shortly after closing, one of they find out that their spouse is cheating on them and they file for a divorce and they go to sell the house like two months later. Yeah, you have to go back and give back your 100% of your commission on that sale. That's how it works in lending. If the loan is paid off within six months, we have to we get a bill in the mail. Yep. I've already paid taxes on that money. They don't care. I gotta write them a check. Right. And so that that's called an EPO. And there's different in different products and investors have different timelines for those EPOs, but generally it's six months. So they have to make six payments on time. Otherwise, I get a bill in the mail and I gotta pay back everything we earned on that loan. So, in a case like that, it's not in my best interest for the business to do that loan either. Even if we could have, it didn't make sense. Honestly, those are one of the toughest conversations to have to explain to somebody because the the reality of it is we're not just doing it for free, we're actually losing money because we're paying our whole team to do all the work, knowing that we're gonna have to pay all that commission back. And so it's and it's an awkward conversation. It's much less awkward now that I've been in the business for as long as I have. But when I was first starting, it felt very awkward. But the way I've approached it is just be totally honest with people. Like, this is how it works. I don't I don't make the rules, I don't agree with it even. I I'd love for it to not be a thing, but that's how it works. And here's what I would recommend instead. You know, if you use a local bank or credit union, they'll do it as a portfolio loan that doesn't get sold. The commission the loan officer makes is next to nothing. So even if that bank pulls that loan officer's commission out of their paycheck, maybe it's two, three hundred bucks. It doesn't affect anybody. The loan's never sold, there's no third parties, and like it's just so much smoother. And so in cases like that, that's usually where I will recommend somebody do their loan at because it just makes more sense for them. If I was to do it, we essentially have to charge at closing at least our cost to manufacture the loan, which would you know, people don't realize how much it costs to actually create a mortgage. There's a lot of I mean, our credit bureau bills on a monthly basis are almost forty thousand dollars.

SPEAKER_00 20:39

Oh wow.

SPEAKER_01 20:40

It's absolutely nuts. And so that all gets built into, you know, we don't charge a credit report fee. So that's part of our operating costs that has to come from somewhere. We're also very competitive on rates, so we don't have these huge margins. So we try to run really lean on the business side, but it doesn't, you know, it kind of forces us to be to tell to tell the kind truth when we run into cases like that where somebody wants to pay the loan off within two, three months of closing, it's we're probably not the best fit for it.

SPEAKER_00 21:07

Sure. And that's totally fine. I think there's a lot of there's a lot to be said for a loan officer who's willing to say, you know, I'm I hear what your situation is, here are your options, and based off of that, I can honestly tell you I'm not the best option. Like there's a lot to be said for someone that's willing to do that, and that's you know, just one of the reasons why I just really appreciate working with you and what you know, what experience you offer to the clients that I introduce you to. So it's it's it goes a long way to say the least, because I talked with other loan officers who will sit there spinning their wheels, like, oh we c we can do it, we can do it, you know, we'll we'll figure it out.

SPEAKER_01 21:48

They don't know that you know. Right. 'Cause you you've been around long enough, you talked to enough lenders, like you Like sure you might be able to, but is this really the best option for the client?

SPEAKER_00 22:00

And what position are you potentially putting you and your business and team in by taking this on? So it's a yeah, it's a good kind of gut check overall. If are you working with someone who's willing to say that they're not the best option?

SPEAKER_01 22:16

I have that conversation a lot, to be honest. Like I um I think part of it too is like I really want to be the first call. And so I want to have resources. So when someone calls and they have a situation, I hate saying no. I'd much rather say I'm not the best fit. Here's two other people I talk to them. So I've built a referral network of other loan officers that I trust that I can and I know the service they give is I don't want to say it's better than mine because my goal is to be the best. Surprise. But I like to I like to say that they give a great experience. Sure. And so I feel very comfortable recommending them to someone if we're not the best fit for that situation. So Ben, I know you work with a lot of first-time buyers. When you have somebody come to you and say, Hey, I want to see this house, but to be honest, I'm not really like, should I be renting? Should I be buying? I don't really know. Like, what advice do you give somebody who comes to you in that situation?

SPEAKER_00 23:09

And I think that's almost like the age-old question for people, especially in their you know, 20s to 30s, yeah, is should I continue renting or should I finally buy something? And I think it comes down to a lot of different factors. Um, one of them mainly being I would say lifestyle and also, you know, do you plan to stay where you are for at least a year or two? Yeah. Um, because a lot of times people who are renting, who are younger, you know, may have relocated to a specific area and they don't necessarily know if they're gonna stay there for you know one to two more years. Um so I think that's a key question. Like, do you plan, do you like where you are and do you plan to stay here for you know the near future at least? And I'd say at least, you know, one to two years. Sure. Um off of that, I then you know talk about some of the you know unique benefits of owning a property. I think the biggest one I talk to people about is the potential to gain equity. And I think at our market where we have still have a low inventory, you know, 10 years now, um, especially for the price points of first-time buyers. I mean, the inventory for first-time buyers is in some markets under a month of supply. So what's a balance? Three and a half? A balance would be closer to four. So it's wild. We're still in most part strong seller markets for a lot of the first-time buyers, so you know, under the $350,000 price point in some of the main hotspots around Milwaukee. Um, so some of the things I talk about with people who are renting now is you know, here's the potential growth opportunity with buying a property. And I think a big thing I point out too is did your rent payment go up this year? Did it go up the year before that? Yep. Have you or have you seen projections of what it's going to go up to when you have to resign for this upcoming term? And I've seen some of my friends have seen rent increases, you know, close to 20% of 25% of their rent. So that could be like an increase of anywhere from $300 to $600 a month just to rent the same place that they've lived in. So I think it's something to be said to say one, your mortgage payment will not increase for your principal interest. Yes, there's a chance that your tax bill could slightly go up. So that potentially could slightly increase your payment. Yeah, so there's a chance your homeowners and turns could slightly go up. Yes, that could be a slightly increase to your payment. You're not going to see a annual increase of 20%. Whenever your landlord decides they need to make that, yeah. So you're not going to see that on an annual basis with your mortgage payment. So that helps set more of a fixed cost around your housing expense, which is typically people's largest expense that they take on. Um, and two, you have the opportunity to gain equity while you're making that payment. Um, so that I think is can be pretty eye-opening for people. I know some other things that come up when I'm talking with people who are renting and who are interested in potentially buying is um, you know, how much how much money do I need to purchase? And I think that's also a fully loaded question, too, because um there's so many options anywhere from no money to a lot. There's so many options for people to find the funds in order to purchase. And uh, in a lot of times, people don't realize that it's a you need a lot less than a lot of people think. Yep. The minimum down payment for a conventional mortgage is three percent. Yep. Um, you know, FHA is three and a half percent. Um, also, I think two for younger buyers going the route of getting a non-occupying co-borrower could be a strong option so that you can use, say, your parent, family member, relative, you know, their income and credit profile to qualify. Minimum down payment there is five percent. You can get gift funds from yes. So I and I mean Wisconsin also has WIA. So the Wisconsin Housing and Economic Development Association, they have down payment assistance programs. I've had clients who were renting and friends of mine who were renting who were able to find out about that program and buy in the past year, versus they would have had to spend probably the next three to five years trying to save that same amount of money for a 5% down payment as they would have if they just knew about the options in the program. So, and in that amount of time, for someone to think that, oh, I'm gonna have to save $15,000, $20,000 to be able to buy, yeah, well, okay, how long will do you think that'll take you? And typically it'll take longer than well, it always does, because then your car breaks down. Sure. Yep. Correct. So, okay, if it's gonna take you three years to save the down payment funds that you think you need when you potentially could get it as a gift, or there's a down payment assistance program available, all that time, all those three years that it took you to save $15,000, you could have gained $45,000 in equity. Yep. So what are you really saving by waiting and by saying I'm going to just take this on myself and not not look at options and just think I'm just gonna save my way to the down payment, which could take you know, it could take you years. You're missing out on the equity gain, which in the Milwaukee area is around 7% a year. That's in value appreciation.

unknown 29:07

Wow.

SPEAKER_00 29:07

Yeah. You're missing out on that. And then you're also potentially missing out on the ability to buy at that price point. You're never going to see the price today. It's very unlikely you'll see the price of a home today in a year. That same home will not be priced the same as it was today. So you're paying more, and you just missed out on a significant amount of equity gain just because you didn't understand the options that were available or didn't know about them.

SPEAKER_01 29:38

Yeah, and the nice part about um all those options are you know what it costs to figure it out? Yeah, nothing. I guess literally nothing.

SPEAKER_00 29:47

I guess.

SPEAKER_01 29:50

You know, the we do we're we're similar in this. We work for free a lot. We work for free. We only get paid if a deal closes. And so our goal is to make sure that people are educated and they can make educated decisions and that they know what all their options are because it might not be the right time for somebody, but until they figure out what the numbers truly look like, how can they know? Right. Like, you gotta you gotta do the work to figure out like what are you getting into, and then this makes sense. And I'd say, you know, there's a there's a chunk of people, like maybe one in 10, not even that, but somewhere around there, one in 20, that we do all the math, and they're like, gosh, this this is gonna cost more than I was expecting. I don't want to buy. And usually it's folks who are in a good rental situation where they're way below market, you know. Like they got a three-bedroom somewhere for $800, yeah, with a private landlord and they've the landlord has never raised their rent in 10 years, and you know, and it's situations like that, like if you can ride that out for a while, that that's great. But you know, when that ends, then what kind of a market are you getting into? Just be prepared for it. Because at least you know now, like, hey, this is how great my situation really is. It's gonna come to an end someday. Whether that landlord decides to sell or they realize, like, hey, my taxes have gone up again, I need to uh raise rents. Yep.

SPEAKER_00 31:10

So or or come down to that that renter and their lifestyle situation no longer works.

SPEAKER_01 31:17

They grow the house, they start a family, they need the two bedrooms, they have two kids, they need graduates.

SPEAKER_00 31:28

I've had a client my first year in real estate who was like that was a referral from one of my first clients that I worked with as a buyer. Um, they had been renting their whole life, they were in their like 50s and had grown children in their 20s and had been renting their whole lives, never thought that buying was an option. And they had a landlord who changed management companies multiple times. Their lease that they had changed multiple times within the same year. And it just got to the point where between the lease changes, awful neighbors, and you know, getting complaints about where they're parking and just really stupid shit, to be honest. They were like, We've done we need to buy something. And they were able to find something for a little bit more than what they were paying for rent, and now had the complete freedom to do whatever they wanted about hanging things on the walls, decorating and painting, and not having to worry about who they're you know, parking, whose parking space are they close to today. So it totally changed their world that they were able to find an option that worked for them to buy and get out of the endless cycle of lending.

SPEAKER_01 32:42

Yep. Because it truly is. Like you look at equity growth in home equity, and then you look at property appreciation, then you look at the cost of debt over time, and through inflation, debt becomes cheaper over time.

SPEAKER_00 32:56

Yeah.

SPEAKER_01 32:57

So it's like you're making when you buy a house or a condo, you're making money on three, at least three different significant spectrums that are just natural components of our capitalist market. Like it's it's tough to lose in real estate in the long term.

SPEAKER_00 33:14

Right. In the past, well, in the history of real estate markets being tracked, the market has been down at a national level like four years total out of the last 75 years.

SPEAKER_01 33:27

I believe it, 100%. And even you look back at the 2008 blip, and that's really what it was. It was a small blip. If you're in the moment and you own a bunch of properties and you're over-leveraged, you probably went and got ruined, you know, she went bankrupt. But for your average person, like even though the market's down, you still need a place to live. Right. You still need a roof over your head. And so just because somebody says you can't sell your house today for what you paid for yesterday, does that mean you don't need a place to live? No. And what's gonna happen in two years? We're gonna be right back to where we were, if not higher. And that's exactly what happened. And so anyone who could weather that storm, they came out just fine. It's like, you know, it's like you you watch your 401k every day. Yeah, you're gonna be like, this is terrible. It's that's the market's down 13%. Yeah, but since you since you started it, you're up 35. Like it's that's just the way markets flow, is it's not always up. It's there's a variance and it comes down now and again. So 100%. See in the long term, I think is is vital.

SPEAKER_00 34:29

Big picture is critical for real estate. And I think there's a couple things with that. One going back to your point about the crash in 2008, 2010. Um, I actually had a client who I helped sell 13 of his properties in his portfolio last year. You tell me that that's a wild. So he bought, I think he told me he bought eight or nine of those back in the time of the crash. Like after the crash. Yeah, like I think 2011, 12, he bought about nine properties in the Milwaukee area. Wow. He paid less for those eight or nine properties than he did to buy his suburban back in 2020. And they he was able to sell them for like a you know, 12-fold increase on value than what he paid for. Yeah, that is wild.

SPEAKER_01 35:20

Yeah, you know, everyone says timing the market versus time in the market, right? But when you get both, that's what you end up with. Sure. You got lucky on timing, and you know, I I bought my first one in August of 2010. Uh a little duplex, and I still have it, and it's paid off, and it's probably the best investment I'll ever made in my life. Sure. I mean incredible. I mean, I probably paid $130 for it, maybe. And I'd say it's worth what $280, maybe $300, depending on the day. Yeah.

SPEAKER_00 35:52

So it's wild. Yep. I think it's one of my favorite phrases that you just said is time in the market is better than timing the market. I think that, and that's also something I talk to a lot of first-time buyers about is well, you know, I'm waiting for the crash, or I'm waiting for this, or I'm waiting for interest rates to go down. And then it's like, well, you know, based off of our local market, we still have extremely low inventory. We still have extremely high buyer demand. We're seeing five, 10, 15 plus offers on properties in the first-time home buyer price point. We're still seeing a ton of growth in our economy and construction and building and businesses bringing headquarters and offering Wisconsin's growth. Correct. We have a lot of natural resources too, which is huge.

SPEAKER_01 36:41

The state just bad, I didn't realize this until about two weeks ago. So a buyer told me, and I didn't double check it, so it might not be true, but I believe it is. Wisconsin changed their tax code. So seniors over like 65 or 62 and a half or something, there's no income tax up to $75,000 in income. Oh, wow. In Wisconsin. No state income tax. Which is why they're I think they're trying to compete with Florida. Sure. But so that's another buyer pool now that Wisconsin is trying to become you know a place that people look to. So it's 100%. We demand is not going away.

SPEAKER_00 37:15

Right. So with that being said, if you're trying to time the market, with everything we're looking at, all the factors, values are just gonna continue to go up here. Yep. So trying to time it where you're buying at a low lull and with pricing or buying at the lowest interest rate possible, what is that really costing you? I mean, even like looking at interest rates now compared to the beginning of the year, we're almost, you know.

SPEAKER_01 37:42

I was listening to a podcast this morning uh from a uh Housing Wires chief analyst. Um he was saying how in his forecasting, like realistically, rates could be could be up to eight percent. That's a very reasonable range based on his forecast, depending on how things with inflation play out. So, you know, we just came off of a recent low, like six just before Iran, we were in the low sixes. Like I locked one, I think, at five, eight, seven, five. I'm in that it was a perfect loan, perfect situation, there, best possible, right? But you know, now we're already back to six, six, two, five and nobody knows. Right. We could go higher, we could go lower. I don't know. I wish I knew.

SPEAKER_00 38:26

And but in that amount of time, people are paying more for houses now. Oh, yeah, 100% in January or 100% they thought that they're gonna continue to trickle down to. So I think it goes back to you can always refinance, or you can always look at an alternative option for a loan that you had to start, but you'll never be able to pay what the price was yesterday. You can't turn the clock back.

SPEAKER_01 38:51

Right.

unknown 38:51

Yeah.