Navigating Rebates, Reverse Mortgages, and Rising Condo Fees With Fred Glick Of Arrivva

Drew Thomas Hendricks00:00:25

Got another episode of We Fixed Real Estate. Today, I’m gonna start this show with a little hypothetical. Got a friend who’s in a bit of a financial situation. I thought I’d put Fred on the hotspot for some impromptu mortgage advice.

Fred Glick00:00:39

Go for it.

Drew Thomas Hendricks00:00:42

So here’s the details. Here’s the details. This individual, they’re in their mid-eighties. They’re about 85 or so.

Fred Glick00:00:48

Young kids. Yeah.

Drew Thomas Hendricks00:00:49

Young kids. Young kids. Married and still have about four dependents at home.

Fred Glick00:00:53

Not dogs?

Drew Thomas Hendricks00:00:54

Four illegal dependents at home that they’re supporting. So they have their mortgage, their house is valued around 3.4 million. They’ve got a $685,000 mortgage on it at 3.3%.

Here’s the rub though. Their savings are at 300,000. So they’ve run out of their savings. The runway’s about expected to be exhausted in one year given their current spending rate. So the idea is they need to take cash out of the house or reverse mortgage or any other creative financing. If they were to, they talked to Mr. Cooper, they talked to Cal Coast or somebody. And the problem is, if they were to take $250,000 out of the house that’s gonna put them almost into jumbo land and it’s gonna increase their mortgage rates. ‘Cause the, they would refi would be 6.5% or they could take out a HELOC for 250 at 7.5%.

Fred Glick00:01:55

They’re 85 years old. They have a ton of equity. Take a reverse mortgage. Don’t even think about anything else. It pays off the first mortgage. Here’s what you do. You do kind of a combo plan. Take off the first mortgage, obviously, ’cause they have to pay it off, plus the closing cost. Let’s just pretend that’s 700 grand. Then take a monthly payment.

So between social security, any other income they have coming in from the interest from the 300,000, plus they get a monthly payment on the reverse. I don’t know what the number would be or how much. The jumbo doesn’t matter. Depending on the county, you can go up to the high balance conforming.

There are also a couple of reverse companies that do jumbos. So that might be an idea. Yeah. The rate’s gonna be shitty. They’re gonna lose their 3% rate, but the equity in the property is not going to matter that much. Even if they live another 10 years, still got a ton of equity and it sounds like it’s in California, in a nice area. It’s a good house, so it’s just gonna increase in value. That would be the first thing I would think of, and I’d investigate it. As a matter of fact, I know somebody who does these reverses that I trust who is actually a CPA. We could do them, but that’s not our thing. So we don’t bother doing things.

We don’t, you know, really know what we’re doing about. So that would be the first thing. Now what they shouldn’t do is one of these guys who comes in and gives them equity, it gives them an amount of money and says, “Hey, you don’t have to make a payment. Here’s the money. We’re now your partner.” but you have to pay them back after a certain period of time. What you have to pay them back is an agreed upon number, which is ridiculous. They’re making 60% of their money. It’s some insane number. I forget they came up with some marketing name for them and it’s just really slimy. And they do all these TikToks, you know, with UI people doing, the fake people doing them and saying how great it is. “Oh, my cousin took this loan and he said it was better than a HELOC or a Eloan. So, the number one thing I would tell ’em is the reverse.

The number two thing that they don’t want to hear is to move. So move, you know, they can find a house, a nice four bedroom house for a million. Somewhere that they like and pocket, you know, a million and a half or whatever. Live off of that. That might be a way to do it. So, that’s kind of right off top of my head. The ideas of what they should look into.

Drew Thomas Hendricks00:04:41

Yeah. To me, pulling out a HELOC for 250 just seems like a stop gap.

Fred Glick00:04:44

Stupid.

Drew Thomas Hendricks00:04:45

It’s gonna get another year, but…

Fred Glick00:04:47

That’s just a loan officer looking for a commission. And not pushing to do the right thing for these people. If they were 68, no way would I tell them to do a reverse.

Because it’s gonna add up and it be ugly, but, you know, this just with so much equity. That’s the thing. That just makes sense. The other thing I would do is find a certified financial planner and one of the ones that does it on a fixed price, they are out. There’s actually an organization that promotes all of them that they all are members of.

Yeah.

Drew Thomas Hendricks00:05:21

These people do have a CFP working for them.

Fred Glick00:05:24

Yeah, they should be able to help them. Or maybe if not, they need to find somebody else.

Drew Thomas Hendricks00:05:29

The CFP was suggesting the HELOC.

Fred Glick00:05:33

Yeah. Find a new person. Yeah.

Drew Thomas Hendricks00:05:36

Okay.

Fred Glick00:05:37

Or they don’t understand, you know, what the reverse is and why it would be good for them at this point.

Drew Thomas Hendricks00:05:44

Is there a cap on reverses? Like how much they can get per month? Like, would he even fill their…

Fred Glick00:05:52

I don’t know because it’s all based on loan to value and number of years they’re gonna live, actuary tables and things like that. So that’s why somebody who knows what they’re doing on reverses needs to talk, they need to talk to.

Let’s go to this week in Reddit. Oh boy. Have we got a good one for you. So someone posted.

They have a broker in Texas. They went under contract and before it went under contract, the broker said to them, “Hey, I’m gonna rebate you $10,000 outta my commission.” But they didn’t get in writing.

So what happens couple days before closing and they’re starting to ask him about it, he completely ghosts them. Everything in real estate must be in writing. Everything. Including contracts with real estate agents. It can’t be verbal. And now that we have this beautiful NAR settlement thing and everything’s supposed to be perfect and great, everybody’s gotta get a written contract with somebody.

So this should have been in the contract, but it wasn’t, people didn’t realize, and, “Hey, he’s a nice guy,” and all that stuff. Crock. So. The good news is for them, they went, contacted the state of Texas through the TREC. Yeah. And they filed a complaint against him, and he’s gonna get it, and he’s gonna get screwed on this, this agent.

But the reminder is get it writing, get anything and everything in writing. Do not listen. That’s why we don’t do phone calls with most people. Especially with other agents when we’re in the middle of negotiating or something or something, even after we’re under contract. Thanks for the call, but please put it in writing.

It can be a text or an email or Slack Connect, which absolutely zero real estate agents we’ve dealt with over the years have any clue about. We’ve never been able to do that, but that would be the best way. But get it in writing is really the key. I mean, it’s just. It’s just pathetic. Just another lie from a realtor.

It’s sad.

Drew Thomas Hendricks00:08:00

It is sad. So it’s just a handshake agreement with no…

Fred Glick00:08:05

No. I don’t know if it’s a phone call or they talked in person, but they put it in Reddit.

Reddit is just a perfect place to have rage bait, right?

René Pérez Jr.00:08:14

I mean, it’s like you’re commenting things and problem with all these commentary is that there’s no one to defend themselves, right? So we don’t know exactly what the agreement meant whether it was, “Hey, I will reduce the commission if X happens,” which is actually not a legal way to write contracts.

There’s actually a partial lawsuit regarding, or there was, there’s a section in the contract that say you can’t have a buyer broker agreement that has a range. It either has to be X or Y. Right? And it’s pretty standard. I think that, that there’s a flaw in that law. I think that there should be a specific use cases for when you’re charging X or Y, but we’re not there where we’re built in that way.

I mean, the logistics of it. I think people are just lazy and they don’t know how to document things well, but in any case the problem with this is you know, I don’t know if there was an agreement that changed, right? It’s like we’ve helped people. And I mean, they tell us like, “Hey, we’ll pay you more, right?”

Like, “Hey, thank you for your services.” Or they, we’ve been asked, “Oh, can you charge less?” And we don’t know how the conversation really went. Secondarily, I think that the problem with all these agreements is that even if they’re in writing, getting the money is just complicated. I think we’re probably one of the few brokerages or companies that, you know, we have done hundreds and millions of transactions, and when we see that we’re going to refund the money, we do do it. Right? But theoretically, like, there’s nothing that can like force us to give the rebate afterwards. It’s just that we have enough.

Fred Glick00:09:56

Sure it is. We have a contract with our buyer.

René Pérez Jr.00:09:59

Okay, sure. But sure we have that contract, but that, what is that contract worth? If we close, you have the money. You can just not give the money.

Drew Thomas Hendricks00:10:07

I don’t think…

Fred Glick00:10:09

Yeah, but how stupid would that be? They would go on Google and Zillow and give us ratings of zero and say we ripped them off for 10,000 bucks or whatever. It would just be stupid.

René Pérez Jr.00:10:20

No, it’s stupid, but it’s doable. And most people don’t even know that they can review and do that kind of stuff.

Some people don’t. So that, I’m just going about the reality and the practicality of it. There could be a universe in which that happens. Right? I’m just saying that we don’t do that. We have the reviews that show that. But bottom line is that getting that money, you still have to go through the legal process.

I mean, me going through a small claims process and getting the money is just a huge pain. Because the court system doesn’t really help you afterwards, right? It’s like, “Oh, okay, well, you won the case. Well, figure out how to get your money afterwards.” There’s a, I know I’m going on tangents here, but 55% of small claims don’t go, actually, don’t get paid out. Right?

So it’s yeah, it just sucks. I think it’s just really about the trust. Can you trust the person that you’re working with? Do they have a reputation of it? And yes, you want to have big things in writing, right? But a phone call helps you digest things differently. You’re able to kind of not lose track of translations of items, right?

Fred Glick00:11:28

There are reasons for certain things, but you know, terms and conditions and reasons why, you know, we just try to get it all in writing. It’s 2025 kids. There’s automated AI lawyers out there that’ll just sue you.

Drew Thomas Hendricks00:11:44

Get it in writing and also find someone you can trust. I mean, look at the reviews. Don’t go into it lightly just because you think they’re a cool dude.

Fred Glick00:11:51

And don’t, like if they just have reviews on their website and they’re not from Google or Zillow or Trustpilot or some, some source where it verifies the person and allows, you know, responses, then don’t take them at all because he just put it up on his site. Big deal.

Another interesting place that I, I remember, I only have a couple on there, but I don’t even think about it, is LinkedIn.

So yeah, that’s the Reddit of the week and the AI loves Reddit. Reddit. Reddit. Reddit. Reddit. Reddit. Reddit. Yeah.

Drew Thomas Hendricks00:12:30

Let’s talk about ADUs. AB 1033.

Fred Glick00:12:34

If you listen to this podcast religiously, you know, we’ve been talking about this for a couple years where the state passed a law that says you can take your lot and put an ADU in the back combo it sell the ADU off. Great stuff. There’s more to it than that obviously, but that’s the gist of it. So at this point, and part of the law said every city has to approve this law. So which cities have done it so far? We have San Diego. We have San Jose.

Drew Thomas Hendricks00:13:06

Yep.

Fred Glick00:13:06

Santa Monica. And the fourth one was…

Drew Thomas Hendricks00:13:10

Oakland.

Fred Glick00:13:11

Oakland. Thank you. So that’s where you can do an ADU right now and split it off.

We’re working on, I’m talking with a an attorney to do documents. You know, blank kind of off the shelf, same vanilla documents play, fill in the blanks and make it easy for people to change this to a two unit condominium. So that’s great. But what’s on tap for 2026, it looks like, is Los Angeles, Sacramento and wait for it kids, San Francisco.

So that’ll be great.

Drew Thomas Hendricks00:13:55

A lot of San Francisco though. It’s gonna be tough to put an ADU.

Fred Glick00:13:58

Yeah, exactly. Exactly. It’s gonna be like three houses that can, that can do it. But you know what, with ADUs there, I mean, you may be able to build another storey or those houses mostly in the Western edition, in that area where the first floor is a garage, but people have sort of converted it into a unit. You know what I’m talking about?

Drew Thomas Hendricks00:14:19

Friend lived in buildings.

Fred Glick00:14:20

Yeah. So there are some other provisions in the law to make it, you know, applicable to those places. So…

Drew Thomas Hendricks00:14:28

You got bigger places, like in Forest Hill area, there’s a lot of,

Fred Glick00:14:31

Yeah.

Drew Thomas Hendricks00:14:32

There’s some land there.

Fred Glick00:14:33

But if you think about it, the bigger properties, you know, I was just looking at something in Los Altos with a 10,000 square foot lot, which would be perfect if Los Altos approve it, but they’re not gonna approve it. Cause the people buying Los Altos for $4 or $5 million, don’t need the money to build something in the back and sell it off with 500 grand. And have a neighbor and less land. So, it’s good news, bad news, you know.

There’s that other law that allows you to put on 10 units and that’s also crazy. But we’ll keep giving you information on how to do it, how to get the condo done. The mortgage shouldn’t be a problem, you know, if you have the right condominium docks. So that’s something to keep in mind. And, you know, up to $1,209,750, you can get in with 3% down as a standard loan program.

Drew Thomas Hendricks00:15:32

Yeah.

Fred Glick00:15:32

That’s conventional. Forget VA, it just takes forever to get a VA approval. FHA, you have to get the whole thing approved too. So that’s a pain. So there’re mostly gonna be conventional loans, so.

Here’s the impact, I think. It’s going to continue to hurt the product that has been really slow, which are condos, flats. Let me change that to flats. As you know, I’ve talked about what a condo is, a condo’s not a building. It’s a type of ownership and townhouses. So condo, so flats and townhouses have, I mean, I see price reductions every day. A lot of them. So they’re just not selling. This is gonna hurt them even more. Putting a single, you know, a single family for, you know, one or two people that they couldn’t afford. They’d have to be in a condo building with other people.They want to have a little garden. They wanna let their dog run around a little bit. So this is the perfect thing. So if there’s enough built, it will affect market for condos and for flats and townhouses cause it’d be in the price point too. So fortunate and unfortunate.

But yeah, that unless the rentals are dramatically exceeding what your debt service is gonna be in, what you can pay for it, stay away from buying a flat or a townhouse to live, well, maybe not a townhouse as bad as a flat, but these flats prices are going up on the fees. They’re finally getting to the fees that they should have been at. That’s part of the problem with that.

Drew Thomas Hendricks00:17:16

I guess since I’m, San Diego allows it. But I guess where I’m up in Vista, that’s a whole different city. It’s not a countywide thing.

Fred Glick00:17:23

Correct. It’s city by city. It couldn’t be by county. ‘Cause there are disparaging views within each county.

Drew Thomas Hendricks00:17:32

I see. That makes sense. So yeah, check your city and if something you’re interested, go to the city officials and get them to push this forward.

Fred Glick00:17:41

Oh yeah. I’m sure. You know, once you walk in and say you want it, they’ll just snap their fingers and do it. So you gotta go.

Here’s kind of a trick. Whoever your local representative is in each city and they’re all called different things, council person, whatever. They have staff. Their staff is divided into certain different things that they do, like one person will handle healthcare. Another person handles real estate. You know, just the local issues, what’s going on. So call the office, find out who the person who handles real estate issues are. Tell, okay, everybody go out and do this. Everybody tomorrow go out and do this.

And talk to them and say, “Look, this is why we want this.” We need the additional moneys. We are happy that we’re helping, you know, a young person, a young couple, whomever, move into the property in a single family, and this will add additional. What it’s gonna do is add additional tax dollars to the city. Well, to the county, but to the city. The reason is because they reapportioned based on the values. And they’re not gonna, not, they’ll separate it out by the land, reestablish the tax base based on the land for the second condominium. Remember, it’s not built yet or done, and then reassess your property a little less.

But what in the end, when you build that second property and sell, let’s say for 500, they’re gonna then base the taxes on 500. So the tax base itself in total will actually be the tax dollars, lemme say, will be raised between the two properties. So they’ll be making more, the counties and cities will be making more money off the taxes. So there’s a great reason it’s raising taxes without hurting anybody. It’s raising taxes with helping people. As crazy as that sounds, that’s exactly what it is.

Drew Thomas Hendricks00:19:50

And then you can go in on your main house, go appeal your taxes after that. But not many people end up doing that. So there you go. Talk about main houses and talking about fees and not fees, but housing, overpriced housing going up. And we’ve seen more and more of it lately.

Fred Glick00:20:08

It’s always there. There’s this cartoon that’s been around for years. It’s like, how everyone sees their house. Here is, the owner sees their house as this grandiose, beautiful mansion. It’s worth zillions of dollars, you know? And the, and they have the tax base, the same thing because they’re taxing. And the appraiser sees it this way and minimizes. The lender sees it lower and you know, but the buyer sees it even lower. You know, you get it. Everybody’s got their opinion of value no matter what it is.

But the problem that faced a lot of people even, ’cause we’ve seen this, is that the market goes up and up and up and up and slowly. You had five houses on the market and they went off, four of the five went off the market in two weeks. But then you don’t know how many properties are gonna be listed the next week. You decide you wanna list your property and now 10 properties are on the market.

And you say to yourself, ” Okay, well that went for X number dollars per square foot, so mine is worth this at the same square footage price,” which is also a wrong thing to do. So now let’s listen for this, because the time is showing that the properties are going up in value. And by the way, let me just interject with appraisers. The reason an appraisal, appraiser is able to appraise a property at a high value, you know, goes five, 600,000 over asking, is because they make what’s called a time adjustment.

“Oh well, property has been going up x percent per month.” And they can justify the added thing because the market is still strong and the prices are going up. I mean, my thing is, you’re willing to pay it. You’re willing to pay it, and you’re gonna have a mortgage for 30 years. So who cares what’s worth now?

You know, it blows my mind. They focus so much on today’s value. How’s it gonna change the monthly payment? That’s a whole different story. But pricing your house correctly, you wanna go and you price it a little higher and you think, ” Oh, well, let’s try it at this price.” It’s not about what you want, it’s about what buyers look at.

And they look at something and they say, “Oh, they have an open on Sunday.” You know what, that’s priced a little high, so I’m not gonna look at that. Even, it’s not like, “Oh my God, I have to own this house. It’s the greatest thing since Swiss cheese.” And that’s what the seller thinks that everybody’s gonna say. But the buyer’s looking at it, “Hey, there’s six houses. There’s 10 houses now. And you know, that one’s, you know, it’s high. So we’ll wait. We’ll wait for the price to come down.” and then what happens is, inevitably, you have days on market. Now you’re at 31 days. Now buyers think, “What’s wrong with this place?”

Even if you’ve lowered the price, that’s gonna prevent them from seeing the property. So the idea is you want to price it correctly the first minute it goes on. There’s a couple of ways of doing that. Number one is that you price it a little under what you think it’s gonna go for, in conjunction obviously with the comps and your agent talking about it. So if you had a million dollar, if you think house’s gonna sell for really a million, but the seller thinks it’s worth 1,000,050, I convinced them to list it for like 998,000 kind of thing. Just a little bit under, so people will say, “Hey, it’s good price, it’s a nice property, let me go.”

It’s gotta add up. Price and quality. Then there’s the crazies, like in El Cerrito where they list property for 998,000, but it’s really gonna end up going for 1.7. That’s just a joke and just, and that just pisses us off ’cause it wastes everybody’s time. So, you know, on the 1.7 house price, it is 1,499,000. Gives a couple hundred off. And then you’ll have those buyers, not everybody in the world. And then the agent gets to say, “Anyway, had a hundred people at my open house.” Well big deal.

Drew Thomas Hendricks00:24:29

It went for 60% over asking.

Fred Glick00:24:31

Yeah. And you only get need one. Right. Exactly. And some agents, maybe they’re outta the area or they don’t understand it. They don’t think, ” Oh, it’s 998,000, let’s offer them 1,000,050 and you’ll get it.” Not gonna happen. Right. You know? So.

Drew Thomas Hendricks00:24:48

At that point, you’re better off just doing an auction. Like if you’re, if it’s that low below what you’re, it’s actually gonna go for.

Fred Glick00:24:56

Maybe.

Drew Thomas Hendricks00:24:56

Like an auction.

Fred Glick00:24:57

What I’d love to do and if they made it legal, ’cause it’s legal in some places, is do a raffle. You got a million dollar house. You sell a hundred dollar tickets.

Drew Thomas Hendricks00:25:07

Don’t they do that dream home raffle here in California all the time?

Fred Glick00:25:11

Yes, but that is because it’s a nonprofit.

Drew Thomas Hendricks00:25:14

The Ronald McDonald Dream Home.

Fred Glick00:25:16

Right. If you wanted to sell your house, you have to give it to a nonprofit. It’s gotta be a nonprofit.

Drew Thomas Hendricks00:25:24

Okay.

Raise money for nonprofit stuff. But since they have the way to do it and they could add some more safeguards and only certain people approve for it, they should do it. ‘Cause you know it’ll be a great way to sell houses. Thousand-dollar ticket, your chance to get a million dollar house, you have to sell it. Hundred thousand tickets?

Fred Glick00:25:46

I don’t know. Whatever the math is.

Drew Thomas Hendricks00:25:47

10,000.

Fred Glick00:25:49

Yeah.

Drew Thomas Hendricks00:25:49

Hundred thousand. Well, math went out the door at minute 20.

Fred Glick00:25:56

There you go. Yeah. But it’s an idea.

Drew Thomas Hendricks00:25:59

Well, that’s where we’re at, everyone. This has been another episode of We Fixed Real Estate.