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Here’s a glimpse of what you’ll learn:
- Why California home insurance costs could impact your mortgage approval
- How the FAIR Plan and rising premiums can change your buying power
- What LA County’s upcoming cooling rules mean for landlords and rental properties
- How a low appraisal can increase your loan-to-value ratio and affect financing
- Why appraisal errors should be challenged before accepting a low valuation
- How unused roof space can become an opportunity to add value and offset costs
In this episode with Fred Glick
Could your home insurance actually derail your mortgage approval?
California’s insurance crisis is creating a new challenge for homebuyers, with rising premiums and limited coverage potentially affecting the numbers lenders use to approve your loan. In this episode, Fred Glick of Arrivva breaks down why getting insurance figured out before you make an offer is becoming just as important as getting pre-approved for a mortgage.
Fred also dives into surprising appraisal problems, LA County’s upcoming cooling rules, and how unused rooftop space could become an opportunity to add value to your property.
Resources mentioned in this episode
- Fred Glick on LinkedIn
- Arrivva
- Arrivva Mortgage
- Rhino
- Michael Chien on LinkedIn
- Rhino for Arrivva Clients
Fred Glick CADRE#01507615 (00:00.512)
Uh-oh, visual effects unavailable. 9750 W F R E. That’s right, kids. We’re getting goofy on this. There we go. Cool, huh? Anyway.
Drew Hendricks (00:15.599)
Show us your shirt.
Drew Hendricks (00:22.183)
Hit us up in the comments if you want one.
Fred Glick CADRE#01507615 (00:24.174)
Yeah. If you’re actually l listening to this podcast, that would be awesome. So just just ping us and we’ll send you a shirt. We need your address and your size, but yeah, it’s kind of nerdy stuff. But anyway, there you go.
Drew Hendricks (00:34.823)
That’s a cool I like the Jimmy Buffett.
Drew Hendricks (00:43.367)
I like it. Ninety seven fifty F W F R E.
Fred Glick CADRE#01507615 (00:47.438)
W F R E. We fixed real estate. So yes, we are actually here to talk real estate.
Drew Hendricks (00:53.669)
Yes, what is the latest in the wild and woolly world of real estate and insurance from what
Fred Glick CADRE#01507615 (01:00.396)
Yeah. So as you probably know from hearing me and Michael from Rhino, I’ll give him a quick plug. Rhino insurance forward slash arriva. Michael specializes in properties that may have difficulty getting insured.
in California. So he’s been very busy. but Arinda is kind of the epicenter of the insurance crisis. And and well, there’s fires there, lots of them. And in order to get insurance, people had to get fair plan. And now what’s happening, fair plan is going up by like 30%. I mean it’s it’s crazy. But the good news
Drew Hendricks (01:33.361)
How so?
Drew Hendricks (01:37.127)
Mm-hmm.
Fred Glick CADRE#01507615 (01:52.263)
Is the industry’s actually coming back and writing policies now because things have changed. So KPIX TV did a whole rundown of this. But if you’re looking in Arinda, be really careful. And we’ve told everybody on every deal in California to get your insurance pre-approved for the house because the insurance people have a computer, centralized database for every house.
And it knows where it is, so it knows what kind of rating to give it, which means you’re gonna get fair plan or not fair plan, and you know, so they have a whole rating system. don’t quote me on it, I have no idea. but the idea is get comfortable with the insurance before you put an offer in.
Drew Hendricks (02:36.433)
Mm-hmm.
Drew Hendricks (02:42.843)
Okay.
Fred Glick CADRE#01507615 (02:42.995)
And this thing in Arinda, you know, it might open some doors and Michael can broker anything, you know, from perfect A
quality down to you know the the quote unquote on insur the fair plan stuff because it’s not just fair plan you get you have to get this other insurance fair plan only covers bad things happening that cause fires that’s it everything else liability etc not covered so you need to get a separate policy
Drew Hendricks (03:07.207)
Mm-hmm.
Drew Hendricks (03:11.175)
Mm.
Fred Glick CADRE#01507615 (03:13.932)
So I can talk about this stuff to them blue in the face, but don’t lose your deal because you get surprised the insurance at fifteen thousand dollars a year when you thought it would be three thousand dollars a year, and now your mortgage qualification is blown because they use your actual dollar amount for what you’re going to pay for insurance. Although they in the beginning kind of use a ballpark number, but when they have the actual policy, they have to run it through and make sure you’re
Drew Hendricks (03:35.131)
Fred Glick CADRE#01507615 (03:42.476)
debt to income ratio still works. So something to think about. Get it done in advance. Yeah. Not for procrastinators.
Drew Hendricks (03:49.024)
absolutely.
Drew Hendricks (03:54.866)
So transitioning from fair plan over to the new law in LA about cool the cool from the fair plan to the cool plan.
Fred Glick CADRE#01507615 (04:01.496)
Cool plan, call it.
Yeah, the cool plant. So starting January one, two thousand twenty-seven, when it’s probably the coldest in Los Angeles, the
Landlords in the unincorporated LA County, so it’s the whole county, not just the city, have said you have you can’t let the temperature of an apartment go above 82 degrees. So you have to give people quote unquote cooling capabilities. That doesn’t mean they’re gonna be installing air conditioners all over your place. That can mean
Drew Hendricks (04:28.935)
But
Fred Glick CADRE#01507615 (04:40.854)
And one of the things that I really like, especially w if there’s high ceilings and you’re on the top floor or it’s a house, you get a roof fan. These roof fans are great. It’s louvered and then the fans above it and the louver’s open and the fan sucks out all the hot air.
Drew Hendricks (04:49.511)
Mm-hmm.
Drew Hendricks (04:58.439)
Mm-hmm.
Fred Glick CADRE#01507615 (04:59.242)
It’s amazing. I mean I I just sold a house out in Northridge that had this grand entranceway that’s probably twenty-five feet high. And I s and then the staircase going up to the second floor with it. And I told the guy who was buying it, I said, dude, put in that that fan. It’s going you’re not gonna need to run air conditioning because it gets hot in the valley, obviously. so whatever method
Drew Hendricks (05:08.305)
Mm-hmm.
Fred Glick CADRE#01507615 (05:27.682)
There is that’s gonna work for you. Talk to your landlord, make arrangements, but they have to do it. Not that it’s gonna be that hot in January, but gives them time to put stuff in so when March and April roll around it’ll be cooled off.
Drew Hendricks (05:42.096)
I can I can pitch for the full whole house fan. We’ve had one for we’ve had one for ten years, maybe even longer. It is a it’s like a big four foot wide fan that’s sitting in the center of our house. But the other thing that it does, and we leave it on for a few hours every night, and it does suck all the hot air out, but it also sucks all the hot air out of this the attic. ‘Cause the attic retains the heat. So the house the ambient temperature of the house cools down much rapidly at much more rapidly at night.
Fred Glick CADRE#01507615 (05:44.767)
yeah, that’s right.
Fred Glick CADRE#01507615 (06:01.676)
Hmm.
Drew Hendricks (06:11.299)
And then the next day, since the since the attic is not already preheated up to ninety five degrees, it’s whatever it’s outside, the house stays a lot cooler.
Fred Glick CADRE#01507615 (06:12.374)
Right.
Fred Glick CADRE#01507615 (06:21.376)
how many degrees do you think you’re saving or wi with or without it or not saving, but what’s the difference? Aver average.
Drew Hendricks (06:26.481)
Well, it really depends. I mean it de it depends on how if if if it’s a hundred if it’s a hundred degrees outside, the coolest your house is gonna get is a hundred degrees inside. But being by the coast here, I mean it’s very rare that we drop it w it’s very rare we stay above seventy at night. It has to be like right in the middle of September that we’re gonna be at eighty five degree night. But the cooler the you you can get it to the exact outside temperature pretty quickly.
Fred Glick CADRE#01507615 (06:42.584)
Right.
Fred Glick CADRE#01507615 (06:52.236)
Hm. Wow, pretty cool. Cool stuff there, kids.
Drew Hendricks (06:58.737)
So it works it works real good in in tandem with with like other other methods. And the one thing is just cooling down all the timber. So you have all the two by fours, all the joists, everything up in your attic just retains heat. And the only way to get rid of it, it’s not air conditioning in your house because you still have that heat barrier. It’s just basically cooling the cooling the wood down or the stucco or whatever you’ve got that’s heated up.
Fred Glick CADRE#01507615 (07:04.184)
Gotcha, gotcha.
Fred Glick CADRE#01507615 (07:22.094)
Nice. Nice. Okay.
Drew Hendricks (07:26.513)
So wholly wholly endorse that. Just make sure you have enough vents. That’s my other thing. Cause we I have to say our roof fan greatly degraded when we redid our roof and the roofers put in vents that were not whole house fan vents. So it wasn’t sucky as much air because we they went with the more elegant looking ones. So you need to r you re really need to have a company that understands the venting of the fan. Otherwise you’re you’re forcing a lot of air through a very small area.
Fred Glick CADRE#01507615 (07:31.787)
And power.
Fred Glick CADRE#01507615 (07:54.999)
It it’s like having Bob Vila here, you know?
Drew Hendricks (07:57.288)
Sir Home home improvement tips. Staying cool.
Fred Glick CADRE#01507615 (08:02.094)
There you go. It’s it’s it’s you know, we we fixed real estate and he fixed the house. You know. He yeah, we help you before you move in, he helps you after you move in. There you go. No, we’ll keep we’ll keep getting this kind of stuff when we see the things that make sense. so talk about making sense of things. I had an appraisal that came in a hundred and fifty thousand dollars.
Drew Hendricks (08:09.255)
Those are my tips.
Fred Glick CADRE#01507615 (08:30.034)
Under the sale price. And this wasn’t a crazy auction lunatic thing. There were only two bidders. Yeah, it went over asking, but not too much. And I decided to, for the first time, take, and by the way, it wasn’t a problem because my clients were putting enough money down, so the appraisal didn’t matter. And maybe the appraiser knew this.
Drew Hendricks (08:55.463)
Mm.
Fred Glick CADRE#01507615 (08:56.552)
’cause they have a copy of the contract, so they know the mortgage and the and the loan amount. So he became super conservative or whatever. So for the first time I threw this into AI.
Drew Hendricks (09:09.287)
Uh-huh.
Fred Glick CADRE#01507615 (09:11.758)
And I checked what the AI did. He just made all kinds of states mistakes, contrary things, like in one place where he said, Well, I’m gonna add value because of this. Another house had it, he said, I’m subtracting value because of this. Nothing made it didn’t make sense. So
Drew Hendricks (09:12.389)
Would.
Fred Glick CADRE#01507615 (09:34.347)
If you have issues with your appraisers that come in, your clients get a copy of it by law, they or you can put it through the AI and say, What’s the deal? And the problem if you want to appeal an appraisal is you can only appeal the value. And you have to do it with three new comps. So, you know, and then you have to justify those comps.
Drew Hendricks (09:46.855)
Mm-hmm.
Fred Glick CADRE#01507615 (10:03.628)
But here the guy made actual mistakes. Now the lender, I pushed a little bit and I told them I wanted these mistakes shown to their appraisal management company and also to their internal appraisal review people. They said okay, but I haven’t obviously they’re not gonna like report back to me because whatever. But if you got the problem, push it. And it can
Drew Hendricks (10:19.398)
Mm-hmm.
Drew Hendricks (10:25.275)
Mm-hmm.
Fred Glick CADRE#01507615 (10:32.282)
you know, you can ask them to do an outside review by someone, a desk review of the appraisal, especially within the lender. The lender has the underwriter even can look at it. That’s part of the underwriter’s job. They look at the appraisals. But you can have it audited in addition to the underwriter looking at it. ‘Cause you know, the underwriter looks at it but maybe misses these little things that come up.
Drew Hendricks (10:46.663)
Mm-hmm.
Drew Hendricks (10:56.592)
Mm-hmm.
Fred Glick CADRE#01507615 (10:58.444)
You know, one of these days the underwriters will be putting all of this in AI and finding the mistakes and I I don’t know where the lenders are at with that. We’re trying to build our own LLM of our guidelines from our lenders just so we can figure it out and throw it in there. but we’ll see. So that’s kind of the future. But if you have an appraisal problem, if you have something, say something.
Drew Hendricks (11:12.487)
Mm-hmm.
Drew Hendricks (11:16.582)
Mm-hmm.
Drew Hendricks (11:25.477)
Yeah. What what type I mean without disclosing anything, what kind of errors was did did it identify? I mean hundred and fifty seems really lund fifty seems like a big discrepancy.
Fred Glick CADRE#01507615 (11:32.683)
Fred Glick CADRE#01507615 (11:37.324)
Well yeah, price of the house was in the high ones. I i i it was a whole bunch. I I don’t have the sheet in front of me. I could probably
Drew Hendricks (11:44.294)
Mm-hmm.
Drew Hendricks (11:48.551)
So it wasn’t like a seven hundred thousand dollar house that are like, No, this is only five fifty.
Fred Glick CADRE#01507615 (11:51.649)
No, no. It was it was close to two, so but they were putting enough down, it didn’t matter. Because pricing is based on your loan to value, based on the lower of appraised value or sale price.
Drew Hendricks (11:55.815)
Mm-hmm.
Yeah.
Drew Hendricks (12:06.481)
Mm-hmm.
Fred Glick CADRE#01507615 (12:07.508)
So if you’re at a 80% loan to value and the appraisal comes in 10% low, you’re now at a 90% loan to value. It’s not they’re not going to do the loan. You’re just going to get the rate based on a 90% loan to value. That’s that’s the only change. So
Drew Hendricks (12:27.047)
‘Cause usually ne like a c new home or a you know, a a home purchase, they the price you’re willing to pay for it is really the price of the home versus refining you may think your house is
Fred Glick CADRE#01507615 (12:34.944)
A tho a thousand percent. A thousand percent. And I and the theory is the lender is giving you a thirty-year mortgage. They’re gonna be with you for thirty years. So the day you close the house could be worth five thousand more or less.
Drew Hendricks (12:45.745)
Mm-hmm.
Fred Glick CADRE#01507615 (12:54.094)
And then six weeks later it could be worth, you know, two thousand more or five thousand less. you don’t know. The value keeps changing. So yeah, you gotta go from somewhere, especially to established pricing. If you’re putting a low amount down, it’s more risk and need PMI and all that stuff, I understand. But they get so hung up on it. And you know, you could charge a premium for over a hundred percent loan to value loans.
Drew Hendricks (13:23.633)
Mm-hmm.
Fred Glick CADRE#01507615 (13:24.034)
Yeah, i i people are gonna make make they’re gonna make the payment or they’re not.
You know, that’s really what it amounts to. Even if they’re if they’re underwater, they even bu just by a little bit, they’re not gonna give the house away and lose you know, th it it takes a little time to build some equity. You know, you’re down in Florida. the yeah, you it’s crazy you’re giving away these condos that were worth, say, three hundred thousand that are worth a hundred thousand now because they didn’t collect reserves in advance and the new Founding May rules, which we talked about last week came out.
Drew Hendricks (13:39.142)
Mm-hmm.
Fred Glick CADRE#01507615 (13:58.993)
Well, you know, yeah, I’m sure there’s gonna be foreclosures because you know, why bother? It’s never gonna come back because you you don’t have the money to put up for the reserves. So these buildings are I don’t know, they’re gonna be made into hotels or motels. Convert them back from converted motels into condos and then back. Yeah, exactly. Screw the rules. Let’s just do that instead. I I don’t know. I mean, there’s an idea for somebody.
Drew Hendricks (14:08.4)
Mm-hmm.
Drew Hendricks (14:18.179)
See it could go the opposite way.
Fred Glick CADRE#01507615 (14:27.906)
But yeah, it’s God, you must be asleep by now, everybody. I’m putting myself to sleep with all this stuff.
Drew Hendricks (14:33.382)
No.
Well let’s let’s go back to something interesting. A clo well, this was very interesting, but talking about cooling down the roof, cooling down the house. We were talking earlier about that before the show, about that grocery store in Germany that is doing something on their roof, which would probably have a a a environmental impact on the below ’cause it’s insulating.
Fred Glick CADRE#01507615 (14:57.322)
Okay, Erwan, are you listening? This is the easiest thing you can do to make even more money. And by the way, there’s a thing with Erwan now, they’re starting to buy their buildings. They bought the one in Santa Monica for like some ridiculous price. But dudes, you build it up from the roof and you plant stuff.
You plant things like salad stuff so people can have fresh salad and it’s all year round. And they just got it from upstairs fifteen minutes ago and it’s out on the shelf. You cut down on the transportation to each store. You try to do it at each store. I mean it’s it’s not practical, but
Drew Hendricks (15:40.731)
Mm-hmm.
Fred Glick CADRE#01507615 (15:41.739)
Any other grocery store, it’s time to start thinking about this. Yes, you gotta reinforce and you build pillars and and you build as a separate structure. And I’m I’m not here to as an architect to tell you what to physically do. But the the thing is you have to be able to make money from this. You can’t you can’t lose money. And it’s yeah.
Drew Hendricks (15:58.22)
that’s a good
You could double your square footage. You’ve got your whole retail space and you’ve got a whole planting space up top.
Fred Glick CADRE#01507615 (16:06.924)
And this is in Germany where it’s not exactly warm around the clo around the the yeah, I don’t know, October. Well, they’re getting drunk in October. October till March. I mean, forget it, you can’t grow anything. So this is a one-shot summer deal. So they they do 900,000 bags of salad on the roof. And they sell it downstairs. Like, hello.
Drew Hendricks (16:22.311)
Mm-hmm.
Drew Hendricks (16:30.022)
Well
Drew Hendricks (16:36.295)
That’s amazing.
Fred Glick CADRE#01507615 (16:37.57)
Yeah, yeah, it’s just super idea.
Drew Hendricks (16:39.503)
A store by us has a beehive on the roof and they sell the honey that comes from the beehive. And well yeah and you need and you need the bees to pollinate the whatever you’re growing up there anyways.
Fred Glick CADRE#01507615 (16:44.46)
Yeah, there you go. Same theory.
Fred Glick CADRE#01507615 (16:50.378)
Exactly. I mean ho you know, cities could have what amounts to a farmers market literally on buildings they owned.
There’s so many places this can go. Or if you even own own a building and you’re able to sublease it out to somebody to grow on the building. All these buildings, all that happens is the sun beats down on it and ruins the roofs. Let’s let’s grow something on the roofs. And you put you know, water and power and you can have timers for the water, you know, and if you need to too much sun, you cover it.
Drew Hendricks (17:16.039)
Yep. Mm-hmm.
Drew Hendricks (17:32.603)
Condos can turn their roofs into a community garden.
Fred Glick CADRE#01507615 (17:34.67)
Condos. There’s the way to make up some of your reserves. See how it all ties together. So we will post the links to all these things so you guys can click on them. the roof thing and the insurance, the arinda thing. we will and and and the
Drew Hendricks (17:42.343)
Yeah.
Fred Glick CADRE#01507615 (18:03.224)
cooling off in LA. So all those three things. We got the links.
Drew Hendricks (18:06.156)
yeah.
Drew Hendricks (18:10.503)
Everyone’s good.
Fred Glick CADRE#01507615 (18:12.428)
That’s it. So
Drew Hendricks (18:13.521)
That i i is it? I think it is. I mean I could probably think of something. But right now I’m gonna think of closing. This has been the latest episode of We Fixed Real Estate and it is now yeah, it’s close enough. It’s happy hour. I’m off to go get a beer. I need one.
Fred Glick CADRE#01507615 (18:16.716)
I think it is.
Fred Glick CADRE#01507615 (18:32.216)
Cheers.
Drew Hendricks (18:33.16)
Cheers.