How ADUs Are Changing California’s Housing Market With Fred Glick and René Pérez Jr. Of Arrivva

Here’s a glimpse of what you’ll learn: 

• Delve into California’s new Bill SB 1211 which paves the way for expanding accessory dwelling units (ADUs) on multifamily properties
• Explore what the new ADU law means for property owners and investors
• Unpack the crucial steps that follow signing a home purchase contract. Learn about escrow deposits, inspection deadlines, and the mortgage process
• Want to close your home purchase quickly? We’ll reveal strategies to expedite the process
• Know why Fannie Mae and Freddie Mac can’t get married for real estate’s sake in a light-hearted discussion with real-world implications
• Find out why $1 million is not the usual standard limit separating jumbo from regular loans, despite common belief
• Learn how Arrivva challenges industry norms with a flat fee structure that prioritizes client savings
• Discover how being fully underwritten pre-approved can give you a competitive edge in today’s market
• Get tips on how to navigate competitive listings, and make the most of late fall buying

In this episode with Fred Glick and René Pérez Jr.

Join Fred Glick and René Pérez Jr. of Arrivva as they dive into the latest developments in real estate with a focus on the new bill concerning Accessory Dwelling Units (ADUs). Tune in as they explore the potential impacts on the real estate market, investor opportunities, rental prices, and challenges.

The discussion also addresses privacy concerns, mortgage processes, and the critical steps from signing a contract to closing. Additionally, Fred and René provide valuable insights on market trends, tips for purchasing during off-peak seasons, and how to navigate the housing market effectively on the We Fixed Real Estate podcast.

Resources mentioned in this episode

• Fred Glick on LinkedIn
• René Pérez Jr. on LinkedIn
• Arrivva
• FastGrowingTrees.com
• Fannie Mae 
• Freddie Mac
• Conforminglimits.com
• Inspectify

EPISODE TRANSCRIPT

[00:00:00] Fred Glick: Come on, screw it up, Drew.

[00:00:01] Drew Thomas Hendricks: Yeah. Let’s, blah. Got Fred here. Got René here, two views of the San Francisco bridge. No, that’s not it.

We are on We Fix Real Estate.

[00:00:11] Fred Glick: We sure are.

[00:00:12] Drew Thomas Hendricks: We’re fixing my conversation. I’m going to be a smooth talker now. We are going to discuss ADUs. Gavin Newsom just came out with a new bill today, or maybe it was yesterday, that said that you can expand the amount of ADUs that are allowed on multifamily units.

Fred, how does this impact the real estate market?

[00:00:32] Fred Glick: Well, let’s say you own a four-unit apartment building just for fun, and there’s plenty of space in the back. We don’t have all the rules of how much space you need and things like that. So the devil will be in the details sooner, but this is the overall picture of this.

So they say you can build now from 2 to 8 additional ADU units, you can convert garages, you can convert carports. This is something totally new. And it’s Bill 1211 if you all want to look this up. And it looks like you’re going to increase the number of rental units is pretty much it because this is for multifamily property.

It also doesn’t say if you need to own or occupy one of the units or it can be a whole investor. So this could be a boom for investors at statewide. Now, what I don’t know is something important. Last year, the California lawmakers passed a bill that will allow you as a homeowner to basically make an L-shaped lot if you have it and have room in the back, put it in an ADU, then you’ll be able to do it as a two-unit condominium and sell off the second unit.

It’s great. Small unit, I don’t know, five, six, 700 square feet, can sell it off as an ADU. You have a condo. It sounds great. Here’s the problem. Each and every city must pass this same bill. That’s what’s built into the bill. So it sounded great. Not 1 single city I know of has even taken it up. So I don’t know if this is going to be the same thing where each city has to approve it, or it’s just going to go in.

I haven’t done that research, but just saw the headline a little bit of info. I thought I’d pass it on, but it’s going to increase the number of rentals and then bring down the rental prices. Maybe, hopefully. Or piss off the neighbors that you’re building additional units. You know, it’s one of those things that sound great, but in practical reality, it may either never happen or be an issue. So, you know, we try in California to progress, but you know, the NIMBYs still have some control and the politicians are, you know.

[00:03:03] Drew Thomas Hendricks: I thought this was like the third ADU-type bill that Newsom’s passed. Like there was the multifamily one that just came out and then there was the one that never kind of got the legs.

But before that he expanded, he reduced the barriers to people building ADUs across the state, making it easier.

[00:03:23] Fred Glick: I don’t remember off the top of my head, but, you know, that’s the goal here is these ADUs are absolutely the future of California to solve the housing crisis. Whatever housing crisis you want to say there is between rentals, sales, prices.

There’s many housing crises.

[00:03:41] René Pérez Jr.: A lot of what that means really is that in the big scheme of things, the single-family house with the big backyard is going to always be more competitive, and it’s going to be more of a rarity, right? It’s going to, it moves towards the idea that we no longer have a big acreage in a property we buy, right?

And you see that in places like San Francisco, right? A lot of places don’t have a backyard. You see a full-size property that’s like, oh, full lot sizes, 3500 square feet. San Carlos, 4500 square feet, and it’s right next to your house. So it’s like, oh, you’re buying a 4 million home. And oh, great. There’s an ADU, but that means I have no backyard. Right?

So that just increases the price for the big lots. And if there’s a builder, I mean, builders, whenever they see land that’s, you know, anywhere between 16, 000 square feet lot to a 20, 000 square feet lot. It’s like, oh, we can divide it. And now we have 2 properties that are, you know, at a 8k lot size range, and you can build 2 family, single-family houses in that lot, right? So, that all just kind of trickles down to the idea, right, of no backyard.

[00:04:58] Drew Thomas Hendricks: That is a trend with like people don’t like landscaping. We’re going to get into landscaping in a bit, but there’s a housing complex right near me. There’s a 20, 26 houses are being built.

And every one of those houses is being built with an ADU.

[00:05:12] Fred Glick: Wow, that’s interesting.

[00:05:14] Drew Thomas Hendricks: Yeah, it’s the first time I’ve ever seen a construction do the ADUs right off the bat.

[00:05:19] Fred Glick: That’s pretty smart of them. I mean, because people are going to eventually do it anyway. So what’s the difference? Might as we’ll get it done now, you’ve got the guys on site, you can order, you know, larger quantities, get a better price allegedly. And yeah, keeps more guys employed quicker. So very cool.

[00:05:38] Drew Thomas Hendricks: It adds value to the property. If you’re looking for an ADU.

[00:05:42] Fred Glick: For sure. I’m sure they figured out they’re going to make more money by offering that as a package because they have the profit on the ADU plus the, in addition to the profit they had on the single family, which is the only thing they thought they were going to get.

[00:05:56] Drew Thomas Hendricks: Once they get their marketing up right now, they’re just putting roofs on and tile, but once they actually start selling these units, they’ll be curious to see how they position the ADUs and their new home sales marketing.

[00:06:06] Fred Glick: Yeah.

[00:06:08] Drew Thomas Hendricks: So I’ll let you guys know about that. Talking about no houses just encroaching on the entire piece of property, there tends to be a privacy issue if you like to enjoy what limited backyard you have. I was camping this weekend and last weekend and a friend of mine, he has a house near the ocean and it’s a smaller lot, but now someone’s building an ADU to the right of him and to the left of him and those ADUs are going to look straight down in his yard.

And Fred, you’ve got a solution to this. It’s a website called Fast Growing Trees.

[00:06:39] Fred Glick: Yeah, so I found this thing. I think it was a TikTok. Yeah, it was a TikTok, but it talked about these trees that grow really fast. We were talking with a neighbor, with a client of ours who moved to San Diego three or four years ago and. He called us and he’s like, “Well, I’m thinking about moving.”

“Well, why?” I mean, it’s a great house. He loved it. “Well, can’t stand my neighbor.” So, you know, I’m sure people have that. And the idea is you want to block yourself from it. And I’ve always liked bamboo cause it grows super fast, but it can be even crazier.

So they gotten some trees, some evergreen trees that do grow faster.

[00:07:28] Drew Thomas Hendricks: Like the willow lemon cypress I planted.

[00:07:31] Fred Glick: Yeah. Yeah. I mean, you can Google this stuff to find it, but the idea is plan a row and plan a row behind it so that you got every gap covered.

[00:07:41] Drew Thomas Hendricks: Yep.

[00:07:42] Fred Glick: And you know, it could be six months to a year and you’re rocking and rolling. You’re never going to see these people ever again.

[00:07:50] Drew Thomas Hendricks: That’s exactly what I did. I had someone to the left of me, to the back of me, into the right of me, and I, my house sits on a hill. So I was looking out on all these people and they cut down their trees. So I did it. People are very polarized on bamboo.

You love it or hate it. I tend to like it as long as it’s the clumping and not the running. And I ended up planting 11 different varieties of bamboo in my lower section. That was like an instant one-and-done. And that was 12 years ago. And it’s those bamboo groves are still only 8 feet wide. So it’s the fear that people have is a little unwarranted.

And then in front of that, I did a lemon cypress. Then I did some pot of carpets on the backside.

[00:08:30] Fred Glick: There you go. And you didn’t need to get approval from anybody. That’s the beautiful thing.

[00:08:34] Drew Thomas Hendricks: Yeah. No one’s there.

[00:08:36] Fred Glick: Right, because, you know, there’s places that won’t let you build fences, but grow, grow, grow, you know, a beautiful idea.

[00:08:43] Drew Thomas Hendricks: No one’s going to notice a five-foot tree that you plant. Like, if you went in and, like, put in the twenty-foot trees, they might start to feel a little weird, but trees sneak up on the population and they get used to it by the time they see that there privacy is there.

[00:08:59] Fred Glick: Exactly. So, you know, when looking at a property, don’t worry about the privacy as much knowing that you can plan things to give you privacy. So that’s kind of the gist of it.

[00:09:10] Drew Thomas Hendricks: Yeah, especially in the, with the rising ADUs and people’s need for privacy. So let’s talk about home sales. Let’s talk about once you get this, what happens?

You’ve got your mortgage. What happens on day one of the mortgage?

[00:09:24] Fred Glick: Yeah, well, really day one of the contract. So let’s say you sign a contract, agree to everything. And now you, the three things basically you do is serve for once you’re under contract, you obviously follow the contract. So the first thing is you’re going to make an escrow deposit.

So you’re going to be in communication with the escrow company. All of them do it a little different or title company or attorney, whoever’s holding the money, to get the wires. We use a company that tends to separate text and then you go to their site and sign up. And so it’s all pretty cool that way, but there’s still companies out there just email you their wiring instructions.

You know, it’s a little dangerous. But anyway, so you put the wire in, you then work on if you needed to do an inspection, you get that all setup. Remember, you have a deadline on everything. The contract gives you deadlines. How many days until everything has to be done? That doesn’t mean if you have a 5-day inspection contingency, you can do the inspection on day 5 because the report might not come out till day 6, and depending what state you’re in, if you go on 5 days and not got an extension, it’s over. Or like in California, the seller has to give you a notice to perform or the conditions extend. So be cognizant of that. Ask questions of your agent. What happens after the 5 days or whatever. So the other big thing is the mortgage. Hopefully, you’ve gotten a fully underwritten mortgage pre-approval, so everything’s basically done, but you still have to go through things.

So here’s what happens. You contact your lender, you give them a completely, fully executed copy of the agreement of sale. All the addendums that have been signed, everything, just the contract, period. Don’t give them the disclosures. Don’t give them the inspections. They have no need for any of those. It’s not part of what they do.

They just need to know the contract between the buyer and the seller as to what’s going on. Sale price, seller concessions, et cetera, et cetera. So they take your contract and then what they do, they go in their back system. They’ve already pre-approved you, but they pre-approved you for a TBD, a to-be-determined house.

Now they put in the address. Until they put in the address, nothing has really happened in a real mortgage. Now the real mortgage starts. So the first thing they’re probably going to do once they put the address, they’ll change the sale price and the mortgage amount to what it is. And make sure that it is not over what you got approved for it.

So if you can’t get approved, but they’re going to put it in, they’re going to put in what the taxes are, unless it’s the kind of place like California, where basically 1. 25 percent of the sale price is the new taxes. Some places just continue the existing taxes. And they then first run you through the Fannie Mae or the Freddie Mac computer like they already did.

And this is even on the jumbos, they use the Fannie and Freddie system. So that you know, assuming they get an accept again, then that’s great. What they’re going to do then is issue disclosures. Some lenders email them, some lenders have a portal, but you’ve got to go in and sign these disclosures in order for everything to then continue.

You’re going to get in there that good old estimate of closing costs. It’s not going to be exact unless you see something that’s esoterically off base. Like the taxes are $42, 000 and you know, they’re only $4, 200. The lender is locked into what their fees are. They’re underwriting fee tax service, blood search, all that kind of stuff.

The title insurance, which comes from the third party is pretty much locked into within 10%. And there’s some other fees that are locked in that we won’t go over in detail. But the bottom line is you have to sign off on that because if you don’t sign off, nothing can happen and you are not doing what you promised to do in the contract, which is quickly and professionally move forward with the mortgage application in full.

So now you’ve made the full mortgage application. Once you click through that. Then what happens? Well, let me go a little bit back. If they ran the Fannie Mae computer, and your sale price is under a million dollars, there is a possibility that you may receive what’s called an appraisal waiver. So if you’re buying a, you know, a house that looks like every other house in the neighborhood, like, you know, Lennar, Toll Brothers House, generically, I’m making those things up.

They’re all going to be basically about the same and they do an AVM and automated valuation method and the computer knows it’s worth, you know, roughly what the sale price is. There’s always this or that. The, so you won’t have to have an appraisal done and it costs 50 for this appraisal waiver. So it’s really great if you get them.

We love them. I mean, you can get them on refis too. They pop up. The second type of approval they will get for an appraisal is a hybrid. This is something fairly new, and I don’t know how often it does. I don’t know what the percentages are the requirements within the system, but they will have someone sitting in an office somewhere doing the appraisal, but they will have, they actually hire licensed real estate agents to go out and just kind of make sure the place is standing, take a few pictures. You know, as opposed to sending a full appraiser out for a full appraiser and it saves a lot of time, it saves a lot of money.

And the third way is, you know, your regular old send out the appraiser and the appraisers are picked through a system that is absolutely 100 percent blind. You can’t, you know, mortgage guy can’t call his buddy and say, “Hey dude, I need this appraisal done. I need 550 or I’m going to have your head cut off.” You know, like part of the problem in 2008 with the Washington Mutual loan officers. Not mortgage brokers, loan officers who were employees of Washington Mutual.

This is what they were doing. They were strong army of appraisers. I need this value or you get no more deals, dude. So it goes through this system, which is a little bit goofy because you’re paying more because you got to pay these intermediaries to do this. I mean, it’s, there’s really no need for them.

Just give us a system that orders blindly and that’s it. But no, there’s an intermediate system, but that’s a whole another podcast. So it depends on the appraisal, how long it’s going to take based on, you know, what kind of a system it is. So again, let’s assume you’re fully underwritten pre-approved.

So let’s get the appraisal done. We’ve been seeing basically appraisers calling us within a day or two to get out there and another couple of days to get it back. So like five to seven days should be tops for it. Pretty much any appraisal, unless the refis start getting loony tunes, and that’s going to happen when the rates come down again.

I remember when it was in the threes, it was tough to get appraisers out because everybody was refinancing and purchasing at the same time. So that’s one thing. So let’s say seven days and the lender has it back. Here’s the other things the lenders do. That deposit you make with the escrow company, let’s say wire.

They’re going to want to see that the wire came from your account and went to their account. So the escrow company sends a receipt saying, “Hey, we got the money.” You’re going to send the, your mortgage person is going to send that plus your proof that the wire came from your account back to underwriting.

So it’s the second thing that has to go back into underwriting. The third thing is they will wait for the full updated title insurance commitment, which they should have in two or three days after you sign the contract and you have to go get insurance. And insurance is that’s 10, we could have 10 podcasts about insurance.

Start looking for insurance before you even think about buying a house, or even before you need to put in an offer. We had one that just, It was the last minute till we finally found insurance. So that was, that was a nightmare, but it’s

[00:18:03] Drew Thomas Hendricks: Because it’s like a fire area or a flood area or?

[00:18:06] Fred Glick: It was running in El Cerrito or Oakland or somewhere, somewhere in that area.

Yeah. And there’s some fire hazard areas and this house just happened to have a situation where they had a fire a couple of years ago, so nobody wanted to touch it. So you just got to be careful, look at it.

[00:18:28] René Pérez Jr.: Different markets for that, but it’s one of them…

[00:18:30] Fred Glick: Yeah. Yeah. Yeah. So those are the things that get done during this period, then it all comes back to the underwriter to make kind of that final finish up, make sure your wire went through okay. Make sure your appraisal’s okay. The insurance is okay. And then the issue again, the fully, fully, fully, fully approval. It’s not a pre-approval anymore. So it shouldn’t take them more than say, 10 days to get all this stuff done. Depending on volume, but then what they do is they issue something when they’re ready to go.

They issue something called the CD, closing document. So this is the almost final numbers that you have and they give them to you. Let’s say on day 10 for fun, and you have to go back to your portal or email or however, they do it. Look at the numbers, make sure they’re generically okay. Cause they could change a few bucks here or there that you know, get a notary for $200. You could find somebody and it’s gotta be somebody for 225. There’s little minutia that can change. Day of closing changes.

So the interest in the day of closing to the month can change. But you have to acknowledge that CD. It’s not locking you into the numbers completely, but it’s giving you a good idea of what’s going on. So you lock into that, you acknowledge a CD, let’s say on a Monday, then there’s three days you have to wait.

So you can’t close until Thursday. So you’ve got to realize. So now I’ve done it 13 days, 14 days, it should be able to close. We, our lender, got a couple of lenders that close 15 days. No problem. So these lenders and say they need 21-30 days, even after you’re fully underwritten pre-approved. It’s pathetic.

They shouldn’t. Cause that, that’s the process. So now, you know, what’s getting done and now you can try to speed it up. And, you know, by acknowledging the initial disclosures and acknowledging the CD, that’s the thing you really got to do, and obviously searching for insurance ahead of time. So that gives you an idea of what happens.

[00:20:46] Drew Thomas Hendricks: Sure. In a perfect scenario, what’s the fastest you can close?

[00:20:51] Fred Glick: With a mortgage? Let’s say you got an appraisal waiver, you got the insurance the next day, you wire the money, you have that acknowledged in a couple days, you literally, an underwriter could get it back in, say, everything three days, and then issue the CD that day, and then another three, seven days.

[00:21:11] Drew Thomas Hendricks: Seven days, okay.

[00:21:12] Fred Glick: Seven days is probably the absolute minimum. With a mortgage.

[00:21:17] Drew Thomas Hendricks: With a mortgage. What if you’re cash and you’re just handing over a check?

[00:21:21] Fred Glick: Five days. Because you got to get the title report updated. I know we’ve closed one in three, but that was…

[00:21:29] René Pérez Jr.: Answer the question then.

[00:21:31] Fred Glick: Well, but I want to give people kind of a realistic number.

I mean, yeah, it can’t get done in three, but five is really…

[00:21:38] Drew Thomas Hendricks: Well, people will be amazed. At Arriva, it can be done in three.

[00:21:42] Fred Glick: It can be done in three. There you go.

Whenever we want something quicker. Exactly.

[00:21:47] Drew Thomas Hendricks: That’s interesting. In the spirit of no stupid questions, can you tell me the difference between Fannie Mae and Freddie Mac and can they get married?

[00:21:58] Fred Glick: Fannie Mae and Freddie Mac are pretty much sisters or brothers or brother and sister. They’re pretty much exactly the same thing. Their guidelines are a little different on certain things, but like years ago, you can only do a non-occupant co-bar situation with Freddie. Now Fannie picked it up.

There’s nuances to each, but basically they’re both selling mortgage-backed securities, doing it the same way with the pass-throughs. But the good news is that the two of them existed because it was only Fannie Mae and there wasn’t a Freddie Mac, the rates would be higher because they’d want to make more money. Even though they’re quasi-governmental organizations, but they still make money.

So yeah, it’s good that we have Freddie and Fanny for competition. That’s pretty much it.

[00:22:47] Drew Thomas Hendricks: And the second no stupid questions is, so the million dollar level has always been like the defining line between jumbo and regular and…

[00:22:55] Fred Glick: No.

[00:22:56] Drew Thomas Hendricks: Well, I hear a million dollars is the threshold all the time.

[00:22:59] Fred Glick: No, people are idiots. They’re throwing you numbers. They don’t know what they’re talking about. Okay. So I keep my little chart here, you can go to conforminglimits.com, confoconforminglimits.com. And you will see on that page every MSA, every area, like you do Philadelphia, Los Angeles, whatever states, and it will tell you what the maximum mortgage amount is for a one, two, three, or four-unit property.

They’re going to be changing soon. They change every year, but right now, today in 2024, the maximum Fannie Mae mortgage, the base maximum I should say, which is most of the country is $766, 550 for a single unit. And that goes higher for a two, three, and four units. But let’s say the high-cost areas, Los Angeles, San Francisco, the maximum one unit that you can do a Fannie Mae loan for is $1,149,825.

Now, just to go the other end, a four-unit, let’s say you wanna buy a four-unit building in Milpitas, I don’t know, I just leave that up. You can take a loan up to $2,211,600. So this thing about the million is bull. So every area has got different maximums. So give you some ideas around California. Again, we have the 766 is the base one, 1. 149 in LA. Monterey is 920. Napa is 1.17. I’m rounding these off. San Diego, a 1.6. Santa Barbara 838, Sonoma 877, Ventura 954, King County up in Washington State 9775. So obviously the higher the sale price in the area, the higher the Fannie Mae maximum mortgage and they will be changing for 2025.

There’s a couple of lenders out there already throwing out a number and closing some loans that they’ll put in their portfolio for now and sell them later. Which is a good idea because rates are going to go lower. So they’ll have a better value for the higher-rate loans.

[00:25:29] Drew Thomas Hendricks: That’s great. So it is kind of adjusted to the market?

[00:25:32] Fred Glick: Yearly.

Yep.

[00:25:34] Drew Thomas Hendricks: Go to conforminglimits.com and see the current ones and Arrivva maintains that.

[00:25:39] Fred Glick: Yep. And we will change as soon as we get the change ones, which probably sometime, November, December, we’ll throw up the new numbers.

[00:25:48] Drew Thomas Hendricks: René, what’s top of mind for you right now? You’ve been a little silent today.

[00:25:52] René Pérez Jr.: I’m working on putting a listing public here. So…

[00:25:58] Drew Thomas Hendricks: Multitasking.

[00:26:00] René Pérez Jr.: A little bit. We are going live on a property in El Dorado Hills. So the great news about newer properties is that they all come with solar.

Right? I can’t wait till all properties have solar and we’re not dependent on PG& E.

[00:26:16] Drew Thomas Hendricks: I can’t believe the solar sales people are still finding properties without it. I mean, I think every house on my block has it now.

[00:26:25] René Pérez Jr.: Yeah. And even those commissions also, I wonder that’s a good kind of conversation to go.

I wonder where the commissions are in the solar. I mean, they walk around, right? And they obviously get paid. So I wonder if there’s like a transparency in how much they, they charge for solar. So if any of you are here, has been thinking about getting solar, you know ask us and see if we can help you negotiate that as well.

Because it’s all a commission system, right? So it’s whether they’re being transparent or whether they’re just telling you, “Oh, don’t worry, we’re getting paid elsewhere.”

[00:27:01] Fred Glick: And do they kick back money to real estate agents for giving them the lead? Because they technically can pay the real estate agent because it’s not a RESPA situation.

RESPA meaning Real Estate Settlement Procedure Act, and that has to do with it being contingent on the closing of the property. So this is it.

[00:27:23] Drew Thomas Hendricks: We actually got some referral money from our solar guy. My wife referred, our solar guy, he’s like, “I’ll give you X amount of dollars. If you give me a lead and it closes.”

And she referred her to her uncle who hired him. And he actually cut us a check.

[00:27:37] Fred Glick: How much did you get?

[00:27:38] Drew Thomas Hendricks: $1, 000.

[00:27:41] Fred Glick: So they overcharged your uncle by $1, 000.

[00:27:44] Drew Thomas Hendricks: Well, he was happy. We were happy. I don’t know. It’s not flat fee.

[00:27:48] Fred Glick: People are pretty complacent about this stuff. It’s lunatics like us that get nuts about this.

You know, we’d rather, like, we pass on everything to our clients. We don’t care less about 25 bucks for this or 50 bucks for that. And just, just get it done cheaper for our clients. You know, a lot of real estate agents out there, they’re nickel and diming you by getting these little referrals. “Oh, use my mover and he’s my guy.”

And, you know, just realize what’s going on. And, you know, we kind of have no allegiance to people and forcing them to use any body, particularly, with the exception of the fact that we have an amazing escrow and title company that is very, it’s ridiculously reasonable and does.

You know, all the title rates are all the same. They’re all registered with state California, your state, no matter what it is, the escrow fees. And I’m sure you’ve heard me bitch about escrow fees previously. So that’s another story and it’s interesting just to pick that up. In the state of Washington, we had a property and they gave us the title report ahead of time.

And I’m going to read this, buried in the title report, not told to you so you know it, is a disclosure of the affiliated business between the title and escrow company and the real estate company. They’re basically making, making fees for doing nothing. But they do say, “There are other settlement service providers available with similar service or comparable prices. You are not required to use this title company as a condition of your purchase or sale of a particular property.” Yet, if you try to change who the title is going to go through with a particular agent, oh no, you have to use our company because we blah, blah, blah, blah. They will fight you to the end.

And what I do sometimes I say, “Look, give me your escrow company’s fees. I want to see them in advance before we agree to this.” In a multiple-bid situation, you’re screwed. You can’t play this game, but if you’re, you’ve got one, maybe two people negotiating on a house, yeah. Search for what the escrow fees are going to be for your clients. Or as a buyer, find that out because you’re going to be paying it.

[00:30:13] René Pérez Jr.: And there’s a good amount of lies. I mean, even for agents that tune into this, right? Where the script is like, “Oh, well, it’s just that we already opened escrow and the prelim is done.” So it’s just going to make things easier. And it’s…

[00:30:27] Fred Glick: Oh, and it’s a trust. And they already looked at the trust.

[00:30:31] René Pérez Jr.: But the reality is like you get a prelim, it should only take 24, 48 hours to get right, so it’s not like it’s going to delay closing.

[00:30:43] Fred Glick: Yep, just search for your escrow title. Talk to your agent about it ahead of time. And if you’re a good agent, you’ll go and help them with something like this. There’s managers that give pressure to agents. “You got to use our company. You got to use our company.” Because they’re all making money. It’s all about the money kids with them.

[00:31:08] René Pérez Jr.: Yeah. I was in, I was on a call with someone the other day who reached out to us and they wanted to learn about them. And it was one woman and her friend. And they said like, “Oh, I’m a first-time home buyer. My friend has bought multiple properties and I told them about this flat fee, but I’m wondering like, you know, how it works. And, you know, we both have questions.” And I started telling them about our flat fee. I started telling them about how to be overprepared, which I include that we’re mortgage brokers as well.

And that we charge a flat fee on those as well. And that we will be more competitive than most if not all, you know, any other mortgage brokers that are out there because of our structure, where we don’t take a percentage out of the mortgage. So they were initially, they were under the impression like, oh, well, is that I mean, they didn’t tell me, but their impression was that, oh, it’s because you make money off of all the other services that we’re able to offer a lower commission.

And it’s no, it’s independent items, right? In the real estate, we are competitive because we’re not overcharging you. And on the market side, we are also competitive because we’re not overcharging you. And on all the other services that we give you as a way of bringing value in terms of inspections and companies like Inspectify.

It’s just that we are tech-centric and we want to offer you, you know, all the other services that exist, but we don’t take any form of kickbacks or referral fees. And pretty much every single company really will offer some form of like, “Oh, We’ll give you $200 to refer someone.” We don’t take any of those fees.

So it’s not, people think that, “Oh, they makes more money somehow from other services,” but we don’t, that’s just not our company.

[00:33:02] Fred Glick: Yeah, yeah, that’s pretty typical what people think, because our kind of company hasn’t been around. So people don’t even think it exists. They’re always thinking what’s the angle.

[00:33:12] René Pérez Jr.: Well, it’s just based on the idea that, I mean, people are greedy, right? I mean, theoretically we, on every buyer, we could probably make a good $2, 000 on us selling them ancillary fees, right? We can put in junk fees all over and, you know, in a multimillion-dollar transaction, nobody’s going to really argue with it, right?

Because it’s just a small number, right? But the reality is that we, we’re not that type of people who hide secret fees. So, you know, it’s hard for people to comprehend that, like, “Oh, there’s someone out there that is just being transparent about what they charge.” Because that’s not the industry.

The industry tells you, “Oh, you don’t pay, someone else pays.” And that’s what we’re trying to fight out.

[00:33:58] Fred Glick: Speaking of that, I was listening to a thing that Redfin put on. And if you want to use them, especially to see property, the way they’re working it now is interesting. So you go and you click the button that says, “See the property with an agent.”

The next thing they show you is that it’s like two lines. “Yes, I will,” you know, want to see this property. And I agree if I buy this property to pay you two and a half percent. Okay. Redfin is stuck at two and a half percent for buyer broker fees. They’re not really negotiating because you’re not allowed to negotiate because you have to click and the only thing available is the two and a half percent.

So I find that really interesting and we’re $9750 for buyer broker fees and it’s non-exclusive. I don’t know if they do non-exclusives or not. So you really got to check. And the rest of these people, I think we brought this up last week, it’s hysterical. We had one buyer come to us and say, look, he talked to three different legacy real estate agents, and all of them said the exact same thing about their value and why you should use them.

And it’s just still sticking to two and a half percent. It’s just stupid and ridiculous. But I pray for the Justice Department to come in and lower the hammer and get this, all this crap over with. But that’s a different story.

Yeah. Yeah. So we’re just here to try to like, do the right thing at a good price, save you the most money we can, have it go through as easy as possible. And that’s why we push everybody to be fully underwritten, pre-approved, and we won’t work with you unless you do that because you’re wasting your time. And you’re wasting our time because you’re not going to win offers.

That’s simple.

[00:35:47] Drew Thomas Hendricks: That’s the one way you’re able to offer such a reasonable full service package is you’ve streamlined it and you know, you don’t enter into somebody that’s maybe or may not be able to buy that house with that overhead eliminated. You’re able to operate more efficiently.

[00:36:05] Fred Glick: What else we got to talk about.

[00:36:06] René Pérez Jr.: The market, I mean, we’re heading into end of September here, October, and there seems to be an increase of listings.

Even through this, you know, almost holiday season. Prices are still being pretty competitive. I mean, there’s some, there’s cracks in the market. I mean, there’s builders who try to flip properties who expected, you know, hundreds of thousand dollars above list. And the reality is that because there’s been enough sales throughout the year, at least in my opinion, there’s enough to kind of tell you like where the market is.

So even though a lot of listings are being marketed, you know, still heavily under list, we can kind of tell where they’re going for a little bit more clearly. So I mean, we’re under contract for a property in South San Francisco Daly City, right? And there was a fully remodeled property that sold maybe a month ago for 1. 3 and it could ease. And we put a bid on a property in the same block, right? It was easy to compare, like to where the market is. And we, we got the property under contract, right? We got the property under contract under the current comp, because we can kind of tell like, hey, based on the same streets, just a difference in backyard, similar remodel criteria, it’s like, okay, it’s going to go a little bit lower.

And the agent still said, “Oh, there’s still six offers.” But we were able to negotiate that, right? People are able to kind of get a better sense as to what’s out there based on recent sales. So that’s kind of a good news on some markets. We’ve passed on making a lot of bids in the South Bay where it’s still people are making bids on…

[00:37:55] Fred Glick: For cocoa puffs.

[00:37:57] René Pérez Jr.: Yeah, and it’s tough, right? Because people see properties that are on the market for a long time, or that are ugly and like, “Oh, these won’t go crazy.” Well, those properties are probably from sellers who don’t need to actually sell a property. And they’re just waiting for their number. Another thing that actually want to talk about that regarding that is, people pass away and they don’t have a will or whatever it might be could go to probate, right? And in those deals, usually we’re…

[00:38:25] Fred Glick: Or to prove probate. Yeah.

[00:38:28] René Pérez Jr.: Yeah. So on those cases, it’s right, like any other regular deal. So they will have multiple open houses. And usually because of the court being in place, they don’t want to rush things and they want to give it a couple of weekends of open houses.

Usually it’s in the market at least two or three weeks. Some go for a month before they have an offer date. And once you have that offer date, they request a longer closing date. So it’s usually 60 days, 60 or 45 days. Because what they’re going to do is they’re going to set up a court date. So let’s say that on the offer date that happens two weeks after it’s been on the market, you make a bid and let’s say you win the bid.

And let’s say there was six buyers. So you’re going to have your contingency periods and everything’s set and settled. And once everything is clear, by that point, you will also have a court date set. So you will then have to go to court and it doesn’t have to be in person. You can also go through a zoom call. In the court session, there will be an again, an open bidding. So they’re going to start with the current winner, and then ask if anybody wants to beat that price. So on that one, it’s on those deals, it’s a little bit harder to know, am I really going to get in?

And it does lock you in for that time that you’re under a contract to not be able to bid somewhere else, right? Because you have the deposit in line and this is different than regular transactions where you actually have to have 10 percent as a deposit. And it can’t be just in a checking accounts or it’s not going to be wired. It’s actually, they actually ask and they request a cashier’s check, right?

So that’s something that you have to go when you go to court on that day, you have to take it with you. So I don’t know what happens if you don’t take a cashier’s check, but they make it.

[00:40:29] Fred Glick: Yeah, and you don’t know what your what the bid’s going to be because you could have less than that.

[00:40:34] Drew Thomas Hendricks: Do you bring multiple cashier’s checks like you got a couple five thousand dollar ones so you can up the ante?

[00:40:39] René Pérez Jr.: Yeah, which is it’s a weird kind of dynamic there, right? So I guess I’m assuming that if you have a close enough cashier’s check and you’re just missing some portion, they’ll give you like 24 hours or something to send in the minimum.

[00:40:56] Fred Glick: Yeah. The other question I have, we’ve only had one of these deals, but is, yeah, you could go in and bid higher, but your contingencies could be ridiculous.

So I don’t know how they handle looking at the entire bid itself with contingencies. Because you could be, I don’t know how to make up numbers, a million dollar cash deal, but somebody comes in and bids a million twenty five, but they have a 950 mortgage contingency, they have inspection contingencies, so it’s not always about the price, but I don’t know how the court handles that.

[00:41:32] René Pérez Jr.: I think the answer to that is that you have to purchase as is with no contingencies once you’re at the court level.

[00:41:39] Drew Thomas Hendricks: Pretty sure that’s it.

[00:41:40] Fred Glick: Got it.

[00:41:40] René Pérez Jr.: Yeah, it’s like an-

[00:41:41] Fred Glick: Probably.

[00:41:44] René Pérez Jr.: And then every bidding goes up. You have to have like a minimum increase and I think it’s like 15k or something. So I think it depends and it’s wild.

I mean, it’s still 200k above what the initial bid was.

[00:42:00] Fred Glick: Unless you know what you’re doing, stay away from these things. Really, it’s a mess. And it’s sad that it has to go to that. Because we do tons of deals without courts approving. That’s in California, by the way. So, check your local, whatever.

[00:42:20] Drew Thomas Hendricks: Yeah.

[00:42:21] Fred Glick: Yeah. Alright, that’s enough aggravation. We’re busy.

[00:42:26] Drew Thomas Hendricks: That’s good. That’s good news.

[00:42:27] René Pérez Jr.: Yeah.

[00:42:28] Fred Glick: Oh, here’s one other thing René was talking about in the market. So let’s say you get in the market now, it’s the end of September, you go and you get your pre approval. It’s good for 90 days. You start looking, you lose a bid in August, you lose another bid in early November. Thanksgiving happens. Look at what’s on the market then. Nobody, there’s like nobody around. Getting into the end of December, Christmas Day, nobody around. This is the time you can actually buy something a little cheaper.

From basically right before Thanksgiving until kind of the second or third week in January when everybody gets their head back together to start coming out. Again, depends on the weather. California last two winters has been lousy and raining. Lousy and raining hurts the market, but it’s a good time to buy.

Get your rain shoes on and your umbrella and go out and look at property. And I love, I’ve said this before, look at property while it’s raining to see if you got any leaks, see if any smells happen. There you go. Don’t get discouraged.

[00:43:33] Drew Thomas Hendricks: Good expert advice.

[00:43:34] Fred Glick: There you go.

[00:43:36] Drew Thomas Hendricks: Well, this has been another episode of We Fixed Real Estate.

[00:43:40] Fred Glick: Hey, you got that right.

[00:43:42] René Pérez Jr.: Nice.

[00:43:43] Drew Thomas Hendricks: Sprung it on you.

[00:43:45] Fred Glick: There you go.