Inside the $1.8 Billion Lawsuit and the Shift in Commission Dynamics in Real Estate With Fred Glick and René Pérez Jr. of Arrivva

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

• Discussion about recent lawsuits in the real estate industry, particularly a $1.8 billion conviction
• Exploring the dynamics of commissions from both buyer and seller perspectives
• Arrivva’s approach – Transparent fees for both buyers and sellers
• Insights into the role of a buyer broker in navigating real estate transactions
• Real estate bidding strategies and the fierce competition among buyers
• Know about the recent surge in 1031 exchanges and Arrivva’s involvement
• Fred and René share valuable tips for individuals seeking buyer’s agents
• The importance of knowing the agent’s charges upfront and communication expectations between buyers and agents
• Debunking the idea that sellers pay the buyer broker’s commission while moving further into the discussion on the NAR lawsuit and its implications
• Fred and René’s commitment to helping buyers and sellers navigate the real estate landscape

In this episode with Fred Glick and René Pérez Jr.

Join Drew Thomas Hendricks as he sits down with Fred Glick, a Broker, Real Estate Realist, and the Founder of Arrivva, along with René Pérez Jr., a Salesperson and Pricing Savant, as they dive deep into the latest developments shaking up the real estate industry. From groundbreaking legal rulings challenging traditional commission dynamics to the intricacies of buyer-broker relationships, Fred and René share their insights and experiences. 

Explore topics such as bidding strategies, the myth of second rounds in multiple offer scenarios, the emergence of 1031 exchanges, and invaluable tips for homebuyers and sellers alike. Discover the unfiltered truth about real estate, unraveling complexities and offering actionable advice for navigating the ever-evolving landscape. Whether you’re a seasoned real estate professional or a first-time homebuyer, We Fixed Real Estate podcast provides a fresh perspective on the industry’s challenges and opportunities.

EPISODE TRANSCRIPT

[00:00:00] Drew Thomas Hendricks: Drew Hendricks here. I’m the guest host today for We Fixed Real Estate. Today I’ve got Fred Glick and René Pérez.

[00:00:07] René Pérez Jr.: Welcome to the show guys.

[00:00:09] Fred Glick: Howdy, what’s happening?

[00:00:11] Drew Thomas Hendricks: We are just talking about how much energy we have. This is,

[00:00:14] Fred Glick: Yes we do.

[00:00:15] Drew Thomas Hendricks: This is going to be an adrenaline-filled podcast. So let’s see. What’s up, guys?

[00:00:21] Fred Glick: What’s up? Okay, well, everybody’s been kind of digesting the real estate lawsuit stuff with realtors and every one of the brokerages that are franchises that you can imagine, Compass, Coldwell Banker, RE/MAX, Keller Williams, et cetera, et cetera, et cetera. There’s only been one deal where they’ve actually had a conviction and that’s in the forget where it is, Missouri.

I think it was. I don’t quote me on that, but it took the jury three hours to decide that all these agents should pay back 1. 8 billion dollars. One lawsuit, 1.8 billion. And from what I hear, they can get triple damages for some reason, so it’s like, it’s almost $6 billion dollars. It’s like,

[00:01:14] Drew Thomas Hendricks: That’s amazing. What are they getting back?

[00:01:17] Fred Glick: What they did was they would go in, there’s two sides of this as a buyer and a seller. As a buyer, what they would do and say, don’t worry about the commission, the seller’s paying. Of course, the seller’s paying. But also it comes out of the sale price of the house. So actually the buyer is paying it in the long run, in the reality.

Okay. That’s the problem. Number one, number two, basically was they lied to sellers. They said, you have to put a buyer broker fee, because, and it, and nor made it a requirement in their MLSs, and the MLSs all made it a requirement. And the requirement was you had to put at least a dollar, but you couldn’t put zero.

So the court said, like, I mean, the jury said, like, no, no, dude, you don’t have to. So here’s what’s going to happen from all this. There’s not going to be, like, one day it’s all going to change. This is just going to start to change. Like, for example, Arrivva doesn’t require anybody to put anything for a buyer broker.

We’ve done it with a dollar. Basically said, you know, hey, buyer agent, you know, you get it from your buyer. Okay. So get it from your buyer is an important thing. So right now, today, obviously you go to us and we have the rebate over the two and a half percent. But what if there’s nothing, you owe us the money because we’re doing the work and all that.

But you’d like to be able to not pay it to us, you know, maybe you want to roll it into the mortgage. So there’s actually a way on the contract in California that allows and tells the seller, hey, you know, X amount of dollars is actually going towards commission. And so you’re not really getting that much of it’s a million dollars.

It’s 10, 000 dollars commission. It’s a million, 10,000-dollar contract. Then there’s a form they have to coordinate with this basically explains it to the mortgage company. So, but it still has to appraise for the 1, 010, 000, which it will 99 percent of the time, so I can make that much of a difference. So there’s a process now to have the seller paying your costs for your buyer broker fee.

What that also might lead to.

[00:03:29] Drew Thomas Hendricks: So if it’s a dollar and the house is a million dollars, would the house be 1, 000, 0001?

[00:03:33] Fred Glick: No, no, no, no, no. You’re missing the point. Follow this again. I’m the buyer. Or you’re the buyer. Say you’re the buyer. You come to me and we say, okay, you have to pay us 9, 750 dollars.

So we go to property A. The seller’s offering two and a half percent of the sale price, 25, 000. Okay. You make an offer of a million dollars and then they pay us the 25, 000 and you get everything over 9750. Okay. In this case, if they, they’re only paying us a dollar, that means you owe us 9, 749 because the seller is paying us a dollar. Got it?

[00:04:12] Drew Thomas Hendricks: I get it from the buying side but from the selling side.

[00:04:15] Fred Glick: So excited. Hey, you’re you want to sell your house. You want to get a million dollars for it. You’re going to pay us 15, 750 to do our listing and we’re going to do all the work and you can read at arrivva.com slash sellers to show what we do.

But then you go out, we put it on Redfin and Zillow and everywhere else, and the buyers come to us, and when they make an offer, and they accept, an offer is accepted, we don’t pay their buyer broker anything. Their buyer, buyer has to pay their buyer broker something. Now, here’s why you need a buyer broker in California.

I’m going to put it this way. You can’t be your own buyer broker and here’s the system because the system has locked you out. Number one, you don’t have access to the multiple listing service, which you must be licensed and under a brokerage. To get an in there. They have agent-to-agent notes. They have disclosure forms.

They have a whole bunch of other information that’s not public. You can’t get that. So let’s say even if you could get it, you got a friend who’s an agent. He’s happy to just give it to you. Second problem is you can’t make an offer. Why? Because the offer has to be on this California Association of Realtor form that you can only get it.

If you’re licensed and you pay a fee and under the fee, under the contract for that if you’re a realtor or not, you’re not allowed to just give it out because, and they could pull the licensing for it. So you gotta use somebody. So what’s going to develop and I can see us developing this in the future is something where, oh, and by the way, you can’t take the forms and do an API and automate it.

So it fills in the blank. Somebody has to sit there and type it in within this stupid zip forms online software. So that’s what makes it even more ridiculous because they will sue you for your license. If you do it in the automated fashion, I was just saying. So they’re sticking to the 1960s. You do everything their way or the highway.

Will this change? Who knows? But that’s the way it is right now. So you do need somebody to represent you and you might as well because, you know, there’s, there’s negotiations involved and that’s what we do. And that’s things you don’t see and we can’t put on websites. And if you check our reviews, it’ll kind of give you an idea.

And, you know, having said that, and nobody really knows this. So René, why don’t you tell people what you do? Because it’d be really interesting. We can’t really put this in writing. But he does a whole bunch of stuff, and he’s like a pricing savant, too.

[00:07:00] Drew Thomas Hendricks: Pricing savant, René.

[00:07:03] René Pérez Jr.: That’s a pretty loaded question, like, what do I do?

[00:07:06] Drew Thomas Hendricks: What do you do?

[00:07:06] Fred Glick: Well, for a buyer broker, and why they should use us, and the difference of things.

[00:07:12] René Pérez Jr.: Talk about the contracts, right? And, you know, and… And, and I’ve, I’ve heard it from people, you know, that are experienced and they’ve done 5, 6 different properties and they say they, they really already know what they’re going to offer and et cetera, et cetera.

I think that regardless of you having a lot of knowledge and being an experienced buyer or seller. At the end of the day, like you, you are also trying to, or you should be, even if you’re not trying to, you should be trying to get a second pair of eyes because there is a, u don’t want to call it friendship, but an alliance, sort of an agent to agent, right?

Sellers and buyers, they won’t get the information directly or more truthfully than when, when the person that you’re dealing with on the phone is an agent or even in person. I’ve had it where agents that won’t even answer your, your phone or the emails you go to one of their open houses and they’re a completely different person.

But, and I think, and I think that’s as much as I sometimes hate it because it does kind of get into the gap of, you know, being a salesperson, you know, the idea, I mean, even when we get our license, you know, and obviously there’s a real estate broker’s license and a real estate salesperson’s license.

I don’t really like the name of salesperson license because it’s like, it’s our title to be salespeople, but the reality is that if you are. Actually trying to help a buyer, you do function more as an actual consultant because you’re doing comparables as to how much the house would be, be sold for you’re doing the calls to other agents as like, hey, how did the house next door sell for, even, I mean, even today, this morning, right?

We were working with a house in Berkeley and it was on Terrace Drive. It’s like, okay, well, what do you know? Like we’ve actually already worked with buyers and sellers, in that same street. So having the knowledge of like, okay, six, eight months ago, there was four offers and we, there was a counter offer system, someone that is experienced in selling before they don’t know that context of that particular sale.

So I think that’s the value add-on of an agent. An agent that’s actually trying to help you. It’s not someone that just read a book and is actually just writing the contracts. It’s someone that really does have the bandwidth to look at that in specific property and they’re, they’re all just kind of case to case.

So I can’t really tell you how much, how much one property is going to go for because I’ve seen it time and time again, where a total fixer is going to go higher than the one next door that is fully renovated because the house next door sold four months ago. And now there’s 10 people that still want that same property in that same block because, I mean, we label it as school, school, schools, but it’s not even really about the schools, right?

I think it’s more about people that have been outpriced and that are tired of not having a house where they can just live in and they want to show their parents and their kids to just have a house. So the whole idea that it’s about schools or about a street. Yes, it’s important, but there’s there’s fatigue people just wanting to move somewhere.

So, kind of just ranted there a bit and.

[00:10:21] Fred Glick: Well, yeah, one thing I’ll just throw on top of that is what people think, what buyers think is you’re just negotiating with the seller. So I want this price, I want to do this contingency, blah, blah, blah, but you’re not. You’re competing most of the time against other buyers.

And other buyers who’ve been through the wrecking ball for two years. And we’ve had those, we have those buyers, but they get it, you know, as high a price as you can get no contingencies settle as quick as you can, you know, maybe even a swing loan to get it to a cash deal and close quick. And that’s it.

That’s it. There’s nothing else. You know, we had these guys from there. I bought 10 houses and I know how to negotiate. It’s like, dude, you’re wasting your time because it’s all about my favorite word, my favorite word in life. C-O-N-T-E-X-T context. No, that wasn’t mine. There was helicopters. There’s always helicopters at the beach.

I don’t know what’s going on here. Anyway, context, it’s like context of each sale, context of who else is bidding. But yeah, if you remember, you’re competing against other people and not the seller. That’s, that’s the way to bid. There’s nobody else.

[00:11:34] Drew Thomas Hendricks: That context is so important.

And René is that how I mean, that’s where the savant comes in and that you have the context that the average,

[00:11:42] René Pérez Jr.: So, I mean, there’s, there’s been times where it’s like, okay, how did that house, like, why did that house sell for much less before? And yeah, using the context of like, okay, well the, unfortunately, the sellers had cancer, but then they had to just sell it quickly.

Well, in that case, yeah. If you’re a cash buyer, you submit ASAP, you can get a deal. Boom. It’s a bit cynical. That’s kind of where, like, the deals and submitting quickly goes into effect. Sometimes, I mean, and we got all types of buyers, right, who they want to use their own strategy. And I think that every strategy does have a function in our bidding process.

And it can be successful, but yes, context of how you’re going to bid that in that particular scenario is going to be important. So it’s like most of the time, and you know, I, I’ve lost a good amount of deals as well from, like, thinking that it’s going to be incredibly much lower. I mean, once you’re above the context as well, right?

Once you’re above like the 4 million, 5 million mark, you realize, well, there’s not a lot of hell is sold nearby. So what context do I use? So you’re also kind of bidding in the air, right? Because the house being sold.

[00:12:54] Fred Glick: The other mistake on the quote unquote normal houses where we have multiple bids is that people think there’s going to be a second round of the seller is going to come back.

No, we had one the other day where I forgot now make up a number. It was listed at a million, three, and we knew it would go for at least a million for and our buyers. Okay, I’ll give them a little bit over list and it ended up like the agent said, okay, basically we got our doors blown in by a cash buyer and there’s going to be no second round.

It’s over. This was too good a deal to give up. So I always say to my buyers, go in first offer highest and best. Cause here’s the other thing you’re buying this for 20 years. So you paid 25 grand more than you should have per se, or in your mind, you should have. In 20 years, 25 grand isn’t going to matter.

The second thing about, especially in Northern California is they ain’t building more houses, Meta, Google, et cetera. They ain’t going nowhere. So guess what? It’s called supply and demand. People want to live there. People love living there. People building roots.

[00:14:00] Drew Thomas Hendricks: – moving into San Francisco.

[00:14:03] René Pérez Jr.: I mean, I mean, I’ll kind of add a point there to kind of disagree with Fred though, because there’s could be a nuance there on the, because I mean, and this is something that people and buyers do disagree with all the time.

And it’s because text is lost in translation because Fred, you always says, you know, bid the highest and best. And if you get it, you get it. If you don’t, you don’t. The problem with there is that people don’t realize that what Fred is really trying to say is that based on the context of what the comps say and the added emotion, beta number where you wouldn’t necessarily go above, but that you know has a chance. Right. We’re like

[00:14:40] Fred Glick: That too. Yeah. Yeah. Yeah.

[00:14:43] René Pérez Jr.: And you know, it’s like, yeah, like people and buyers, like I’m never going to tell somebody to bid 2 million if we just think it’s going to go way above asking. It’s like, okay, as a buyer, okay. Agent, why are you trying to make me bid X amount? And well, that’s where I come in and I tell you you’re bidding this because.

There’s a layer of the math involved and the emotion attached to it. And I know that there’s more offers. Sometimes it’s hard to tell there’s more than one offer, but sometimes it’s really easy to find out, you know.

[00:15:13] Fred Glick: Sometimes these agents send us a thing. They say we have 30 packages downloaded. 11 people say they’re going to make offers.

I mean, that’s a beginning to it, but yeah.

You can’t really believe in that all the time. But I mean, you know, I mean, it’s, people I think are, at least in our market where it’s it’s really still really active. You have 50 people at the open houses still it’s a on Thursday. It’s in the market by Tuesday. It’s gone.

You know that you have to be aggressive if the house has been on the market. Oh one thing that I kind of want to mention that, you know, people always ask is the idea that oh, well, it’s 40 days in the market, we submit an offer and somehow there’s another offer. Well, okay as a listing agent, if you’re a good agent as soon as you get one offer you go and shop with other buyers that have been kind of just driving and just waiting on something you can offer.

So my job as a listing agent is to make sure that I can get the most for my sellers, right? So it just makes sense that as soon as someone submits, someone else submits. And that’s where you get the scenario where every time that you submit an offer, when a house that you think is kind of dead, it gets multiple offers is because everybody was just waiting to see how long it would take or if they can get it for less price. And that just generates a bidding there because there are people that don’t really need to sell that don’t really need to buy, but they aren’t interested in the house.

If you want a multiple bid, just make sure to have a good agent that even though you have one offer, they go to reach out to everyone else.

[00:16:47] Drew Thomas Hendricks: Yeah, that, that’s a super important thing to think about. Like I, sometimes I look at those houses that are on the market for 40, 60 days. I don’t look at it.

There’s no interest, but you might have a couple dozen people sitting on the sidelines, all waiting for the first mover.

[00:17:00] Fred Glick: Some idiot. I mean, the sellers are idiots. They just price it because they want, they think it’s worth it. I had a woman tell me back in Pennsylvania, well, you know, I bought it for this and inflation is this much.

So I just took that number and now it’s worth this. No, it doesn’t work that way, lady. And I see the house has been on the market for a year now. You’re out of your mind. Don’t waste your time.

[00:17:26] René Pérez Jr.: It’s a perfect time for you to reach out and educate the sellers. I think she didn’t get it. I can guarantee, I can guarantee I’m talking to you here both that if I would talk to this woman, I would be able to kind of have her understand and she would maybe give us some context.

That’s like why she wouldn’t sell at the lower price, so.

[00:17:46] Fred Glick: She obviously doesn’t need the money either. That’s the thing.

[00:17:49] René Pérez Jr.: Yeah, but people, you know, this idea that people don’t need the money, it’s kind of, there’s kind of a, a twisted kind of lie to this, because if you don’t need the money, then why are you selling?

Just keep it there empty.

[00:18:02] Fred Glick: It could be an emotional thing. It’s an emotional thing. And they got something better to do with the money once they get it.

[00:18:10] Drew Thomas Hendricks: Yeah, you may have all the money in the world, but if you can save a dollar or a hundred dollars off it.

[00:18:14] Fred Glick: Yeah, and they do a 1031 exchange. You sold it for what it was worth.

By the way, this has been crazy. The last month we’ve gotten a couple of 1031s. They’ve just started. popping up with us. It’s been a lot. It’s been a lot of fun with them. But hey, 1030, if you’re doing a 1031 exchange, we can rebate you the money that you can get after closing. That’s not part of the exchange.

So it’s just free money for an exchange.

[00:18:39] Drew Thomas Hendricks: Oh yeah. And what they have, what

[00:18:41] Fred Glick: 90 days. Forget all the details. Check with your person who knows how to do it. We’re just talking about brokering for you. That’s all.

[00:18:50] Drew Thomas Hendricks: If you need to buy that house, go to Arrivva.

[00:18:53] Fred Glick: Exactly, exactly. Exactly.

[00:18:56] Drew Thomas Hendricks: One question I do want to ask you guys. So this is advice to the average person looking to find a buyer’s agent. What’s the one thing that no matter what they’re using, that you think that tip that you have for a customer working with a buyer’s agent to get the most out of them?

[00:19:11] Fred Glick: First of all, if the buyer agent doesn’t tell you how much they charge right up front, run. Period.

Because then if they do, then as you talk with them, hopefully they understand what you need to do to be able to make an offer. If they don’t tell you to get a fully underwritten pre-approval, run. You’ve got to be super prepared for the market. If they’re not going to share with you agent-to-agent notes and any disclosures up front, even before you see a property, run.

Look at the reviews, look on their site, Zillow, Google, wherever. You know, take them in context. They look like, you know, there’s people doing reviews where it’s just they pay people to do ’em, but you can tell if they’re real or not. You know, and it’s just, are you getting the value? If this person says they’re charging at two and a half percent on $3 million, why?

How are they worth it? They took a course and a test and a little continuing education and they have a license. By the way, let’s start speaking of taking tests. This guy took his test twice now as a salesperson and now a broker. He is now a broker. So congratulations.

[00:20:25] Drew Thomas Hendricks: Congratulations. Renée.

[00:20:28] René Pérez Jr.: From, from brookie to broker.

So, you know, Drew did ask, you know, one thing, so I’ll keep mindset of things,

[00:20:36] Fred Glick: But I have comments.

[00:20:39] René Pérez Jr.: I’ll keep my nice and short, but so I think there’s in our industry, I think we do a part of our value is, you know, quote-unquote, you know, being likable, right? If people don’t like you in the industry or they just don’t want to work with you, they won’t work with you.

That’s just the realities of where real estate is. And I think then one should take note that if someone’s being a little too nice to you and they’re just being like, oh, let’s go see this house.

[00:21:06] Fred Glick: A little too salesy.

[00:21:08] René Pérez Jr.: You should kind of red flies kind of roll, roll over because the reality is when you want someone to negotiate for you, they should be pretty stern about that, right?

There should be a tune of like, okay, I can actually negotiate for you and I won’t just be overly nice because what’s going to happen, like always think about how they’re going to react to an offer. Right. If they’re really nice to you, I imagine they get to talk with an angry agent and they’re just going to just back off and just, you know, be a yes person and then just make you overpay.

Right. So it’s all about like, remember that you’re working with someone that’s going to negotiate for you. You want someone that’s actually going to be able to negotiate for you, if not just overly nice.

[00:21:48] Fred Glick: Yeah, there are two things. Number one, there’s there’s like a thing, at least years ago, when I had a regular broker, just like, let’s try to make friends with our buyers, and keep in touch, and blah, blah, blah.

It’s like, nothing personal, guys, but we all have our own lives and we don’t need to have everybody be our friend. You know – Yes, we don’t send out, we don’t do anything like that because we don’t want to bother you. You know, it’s just, it’s just goofy. If we’re going to send anything to you, it’s going to be really good information that you can use. That’s the only reason.

[00:22:24] Drew Thomas Hendricks: Or it’s going to be your fat rebate check.

[00:22:26] Fred Glick: That too, yeah. And one other thing is ask them how they’re going to communicate with you. Oh, I can text you. Well. You know, there’s multiple people involved. We use Slack. They haven’t figured out Slack yet. They just don’t get it. And it’s the world’s best way of communicating this.

You finishing a beer there, René?

[00:22:45] René Pérez Jr.: Water. Drinking water.

[00:22:47] Drew Thomas Hendricks: Isn’t it a nice -?

[00:22:49] Fred Glick: Yeah, as I said, it’s quite the water stein. Anyway, so we’re getting off-topic as usual, but you know, you just got to be able to relate to the person. But number one is what if they don’t tell you what they charge, run away because they’re not doing it for free.

They still only pay their commission. No, they don’t. You pay your commission.

[00:23:14] René Pérez Jr.: And that’s in our lawsuit. So more about that in our website as well. So we’re going to continue talking about this NAR lawsuit, and I’ll give my longer take later, in a longer video format. But yeah, this whole idea that the seller pays, it makes no sense.

[00:23:33] Fred Glick: Oh, by the way. By the way, this is the most, this is the biggest chuckle I had all week. The outgoing, basically forced to get out, CEO of NAR, Realtors, National Association of Realtors, said at the National Association of Realtors convention right down here in Anaheim this week that NAR is going to fight this and they’re going to appeal.

They took three hours to decide that you were guilty. Okay, you’re guiltier than OJ. Okay. Hello. But I guess they got no other way to go. They might as well throw a couple million dollars into legal fees to try to fight it as opposed to paying the billions of dollars, which would make them insolvent.

[00:24:24] Drew Thomas Hendricks: Yeah. And it’s looking like that 1. 8 billion is going to grow to what? 40 billion or

[00:24:29] Fred Glick: Oh, who knows? Gazillions of billions. Yeah, because the lawyers who won that case literally did copy paste and put it over like 50 states and sued everybody. It’s just, it’s just silly at this point. You know, I don’t even want to talk about it anymore.

All I want to do is figure out for the buyers and sellers what they should do next and what their best avenues are.

[00:24:53] Drew Thomas Hendricks: A new round of those late night TV commercials that’s going to compete for Mesothelia or for the joining the class.

[00:25:00] Fred Glick: If you’ve been, oh, I saw one on Instagram today. If you sold a house in the last 10 years in California, click here. You might be entitled to money back.

[00:25:11] Drew Thomas Hendricks: It’s going to be the new late-night tv.

[00:25:13] Fred Glick: And your errors and admission insurance won’t cover it, from what I hear. So you’re hosed. You’re really hosed.

[00:25:20] René Pérez Jr.: I wonder if we could use some form of advertisement like that, you know, if you’ve been told that

[00:25:26] Fred Glick: You have to pay a buyer worker fee.

Yeah, well, the hardest thing is to find everybody who’s going to be a seller. Without mailing them 17 times a month and finally getting to the moment because we we’re we’re big. We’re all in place. So most of our selling people either come in from leads or from referrals or from buyers who turn into sellers later?

So, but hopefully we’ll be Drew work and get us more sellers.

[00:25:55] Drew Thomas Hendricks: Oh yeah. As we’re here, guest hosts and lead generator.

[00:25:59] Fred Glick: There you go. Well, guys, this is long enough that people’s attention is probably gone by now, but

[00:26:05] Drew Thomas Hendricks: If you’re still listening, thank you.

[00:26:07] Fred Glick: Thank you.

[00:26:09] Drew Thomas Hendricks: Latest episode of We Fixed Real Estate.