Rebuilding Confidence: Real Estate Trends and Predictions Post-Wildfires With Fred Glick Of Arrivva

Drew Thomas Hendricks00:00:00

You are on We Fixed Real Estate and we are in the midst of Southern California on fire. Fred dialing in from Pennsylvania. René, dialing in from the road in San Jose, San Francisco. Where are you today, René?

René Pérez Jr.00:00:13

San Francisco.

Fred Glick00:00:15

He’s in a short-sleeved shirt, and I’m, I’m bundled, I’m in Philadelphia, the suburbs of Philadelphia.

Not, you can’t call it Pennsylvania, because as James Carville called it, it’s Philadelphia, Pittsburgh with Alabama in the middle. So it’s, it’s three different places, Pennsylvania. It’s a big state. It’s 27 electoral votes. I think it was. Don’t quote me on that one.

Drew Thomas Hendricks00:00:42

Yeah, so last week we were talking about the driest season ever since 1926 in Southern California.

Fred Glick00:00:47

Surprise.

Drew Thomas Hendricks00:00:48

This week we’re talking about the fires, the fires in Pacific Palisades, Altadena, I think Hollywood just caught on fire yesterday. It’s a terrible

Fred Glick00:00:57

Yeah, the Hollywood one was quick. It’s gone, basically. They did a good job of containing that, yeah. I mean, the first thing I want to tell people there is an app, if they don’t know about it already, it’s called And if you can see it, Watch Duty. W-A-T-C-H-D-U-T-Y. Watch Duty.

And the free thing is amazing. You get alerts every time something happens basically. And it’s actually national, you know, like here’s the Sunset fire. I don’t know if you can see that it probably you can’t, but you can see it’s kind of willowed down to not much of anything. This is terrible. So, but anyway, if you haven’t looked at it and if this podcast is broadcast or you’re listening to it after the fires happened, still download it just to have it.

Drew Thomas Hendricks00:01:55

Oh, yeah.

Fred Glick00:01:56

Because it’s, it’s great for alerts. It’s really nice. It’s really easy to use. It looks nice. So it’s a really nice website. It’s actually a nonprofit that puts it out.

Drew Thomas Hendricks00:02:08

Really?

Fred Glick00:02:09

Yeah. And they do have paid versions and like the professional is like crazy. Like they tap into all the fire, this and that, and read about it on the site. But yeah, Watch Duty. It’s all over TikTok, too, of course.

Drew Thomas Hendricks00:02:23

Before we dive in, just want to say our thoughts go out to everyone that’s being affected.

Fred Glick00:02:26

Oh, God.

Drew Thomas Hendricks00:02:27

We’re going to be talking about the sort of the ramifications of the fire, but want to make sure everyone knows we’re very sensitive to those.

Fred Glick00:02:35

Yeah. Yeah. I mean, we’re not here to give you an update on the fires, obviously, because we’re just talking theory and looking down the road and, you know, cause this will all start in earnest that everybody will have their solutions or whatever. Let’s realize a few things. The people in the very expensive houses in Pacific Palisades probably already have second homes or the ability to pay to fly out to somewhere and go and do something.

But what was interesting today, we had a client, new client. 48 hours old. They said, “Hey, we’ve been looking at this house. We saw it on an open.” They’re asking somewhere in the threes, if it’s three, six, three, seven, it’s been on the market over a hundred days. And it was like, “Okay.” You know, we’re ready to pounce.

And they called us and we had our Google Meet. And by the way, that’s what we do with every client, me, René, and clients get on the phone and we discuss everything. So every, so we all know what we’re doing as opposed to, you know, just call up, “Oh, who are you? What are you doing?” It doesn’t work that way.

So it’s great. So now we all have knowledge, but anyway, I’m digressing. So we said, “Okay, fine.” So we started to contact the agent and she said that the buyer had tried to contact them and they didn’t answer for a couple days, so we figure there’s something involved in the fire. So, we finally get on with the agent, René does this morning.

René, you want to go from there on the story?

René Pérez Jr.00:04:13

So this one was pretty close, and I’d say maybe 10 15 minutes away, tops from the fire.

Fred Glick00:04:20

In Santa Monica. Yeah, let’s say that.

René Pérez Jr.00:04:24

Yeah, so the agent tells me, “Oh, look, well yeah, it’s had been a little bit quiet to the holidays and we did do a price reduction.”

It had been, you know, with the season, I mean, obviously after Christmas and New Year’s, you do get a new amount of traffic. And they said, “Yeah, with these fires, we have one person who has decided, ‘I’m waiting on the offer.’ And the second person who’s a cash buyer who did lose their home from the fire and who wants to move quickly. So we’re expecting a second offer for that.”

I didn’t get the, I didn’t get the info as in if the first buyer was also affected by the, by the fire, but you know, they could have. And then, I mean, he also mentioned that in his brokerage, he saw, I mean, he says that rentals are probably like one or 2 percent of the business.

And he said that they were getting calls, you know, nonstop in terms of people looking for rentals and had, it just became like the, everything that they’re doing now. So, I mean, not only are buyers who have been looking for houses now have a much smaller inventory range, but then now you’re also competing with sellers who bought a long time ago who maybe weren’t getting their number and they were ready to do price drops who now are saying like, “Hey, actually. Let’s just rent them.” And I know that Airbnb is doing some form of promotion.

Fred Glick00:05:53

Spree Week. Yeah

René Pérez Jr.00:05:54

But it’s like as those things do dry up remember people have really short memories. I mean, people still need a house for six months a year. I mean building in L.A especially in the coast, I mean, can take years, right?

Fred Glick00:06:07

They’re gonna have to do kind of what they did in Malibu, which is wave a lot of things, basically, if you’re putting the house in the same envelope that it’s already in, and the same height, and you do everything to code, you should be able to get things done quick, but, you know, there’s a bunch of things to look at here. If you listen to this podcast any amount of time, you’ve heard me talk about this 3D cement printing, which, you know, we gotta find alternative ways to build.

I futz around on ChatGPT and, you know, we’re, we’re going to take that and then put it on NotebookLM and we’ll take some of the NotebookLM and put this into the podcast. 

AI Podcaster 100:06:38

All right. So today we’re going to we’re going to dive into something, kind of heavy, you know, those wildfires in Pacific Palisades.

AI Podcaster 200:06:59

Oh yeah.

AI Podcaster 100:07:00

I mean, it really makes you think like, what if that was me? You know?

AI Podcaster 200:07:04

Absolutely.

AI Podcaster 100:07:05

So we’re going to like explore how these fires have really impacted the real estate market there.

And I think it’s a lot more complex than most people think.

AI Podcaster 200:07:13

Oh, absolutely. Yeah. It’s a chain reaction for sure. There’s so many ripple effects that last for years.

AI Podcaster 100:07:18

It’s not just the immediate damage. It’s like what happens six months later?

AI Podcaster 200:07:22

Exactly right.

AI Podcaster 100:07:23

A year later. Five years later.

AI Podcaster 200:07:25

Totally.

AI Podcaster 100:07:25

And we’re talking about Pacific Palisades, which is, you know, a pretty affluent area.

AI Podcaster 200:07:30

Absolutely. Some of the highest property values in the country.

AI Podcaster 100:07:32

High property value.

AI Podcaster 200:07:33

Yeah.

AI Podcaster 100:07:34

So how does a disaster like this really shake things up in a market like that?

AI Podcaster 200:07:40

Well, you know, we can break it down into three phases.

Right. Immediate impact, then the medium term adjustments, and then the long term outlook.

AI Podcaster 100:07:48

Got it.

AI Podcaster 200:07:48

And each phase has its own challenges and opportunities.

AI Podcaster 100:07:51

So let’s start with that, like the immediate impact. Obviously, there’s a sudden drop in available housing when something like this happens.

AI Podcaster 200:07:57

Of course.

AI Podcaster 100:07:58

So we know that rental prices tend to go up in a situation like this. Right.

But is it really that simple?

AI Podcaster 200:08:04

Well, it’s not just supply and demand.

AI Podcaster 100:08:06

Okay.

AI Podcaster 200:08:06

You’ve got to think about it. We’re talking about hundreds of families that need to relocate.

AI Podcaster 100:08:10

Right.

AI Podcaster 200:08:10

Immediately.

AI Podcaster 100:08:11

Yeah.

AI Podcaster 200:08:11

And they need somewhere to live right now.

AI Podcaster 100:08:13

Yeah.

AI Podcaster 200:08:14

So short term rental prices absolutely skyrocket.

AI Podcaster 100:08:17

Well, how much are we talking?

AI Podcaster 200:08:19

You can see 25%, even 50 percent increases.

AI Podcaster 100:08:22

Wow, that’s a huge jump.

AI Podcaster 200:08:24

In some cases, yeah.

AI Podcaster 100:08:25

And, you know, while those prices are going up, what’s happening in the sales market?

AI Podcaster 200:08:29

That’s right.

AI Podcaster 100:08:29

Do people even want to buy in an area like that after a fire?

AI Podcaster 200:08:33

Well, there’s initially hesitation.

AI Podcaster 100:08:35

I would imagine so.

AI Podcaster 200:08:36

Right, as buyers sort of process the risk.

AI Podcaster 100:08:38

Yeah.

AI Podcaster 200:08:38

But then you have this other group that sees an opportunity.

AI Podcaster 100:08:41

And who would that be?

AI Podcaster 200:08:42

Investors mostly, they’re betting on that long term recovery and potentially snagging a property at a discount.

AI Podcaster 100:08:49

So it’s this like push and pull between risk and reward.

AI Podcaster 200:08:53

That’s a great way to put it.

AI Podcaster 100:08:54

So let’s shift gears a bit. Sure. Let’s say we’re six months out.

AI Podcaster 200:08:56

Yeah.

AI Podcaster 100:08:57

Maybe a year after the fires.

AI Podcaster 200:08:59

Yeah.

AI Podcaster 100:08:59

What happens then?

AI Podcaster 200:09:01

This is where insurance becomes a major factor.

AI Podcaster 100:09:04

Okay.

AI Podcaster 200:09:05

Not just prices increases, which are pretty much guaranteed, but the availability of specific types of coverage.

AI Podcaster 100:09:12

Oh, so it’s not just that it costs more. It might not even be available.

AI Podcaster 200:09:15

That’s right. Getting comprehensive fire insurance in a recently burned area can be almost impossible.

AI Podcaster 100:09:21

Wow.

AI Podcaster 200:09:22

And without that, a lot of lenders won’t approve mortgages.

AI Podcaster 100:09:25

Oh, right, because they need to know that the property is insured.

AI Podcaster 200:09:28

Exactly. And that really narrows the pool of potential buyers.

AI Podcaster 100:09:32

Makes sense.

AI Podcaster 200:09:33

And that can further impact property values. So

AI Podcaster 100:09:36

it’s a double whammy then.

AI Podcaster 200:09:37

Pretty much.

AI Podcaster 100:09:37

Higher premiums and limited coverage.

AI Podcaster 200:09:39

Yeah.

AI Podcaster 100:09:39

Making it tougher to buy and sell.

AI Podcaster 200:09:41

Yeah, but you also have to remember that amidst all of this, you have rebuilding happening.

AI Podcaster 100:09:47

Oh, that’s right.

AI Podcaster 200:09:48

You have these new homes that are potentially being built to higher standards than before the fire.

AI Podcaster 100:09:53

So is that bringing some positive changes to the market?

AI Podcaster 200:09:56

Absolutely. Post fire rebuilding can actually be a catalyst for improvement.

AI Podcaster 100:10:00

Okay.

AI Podcaster 200:10:01

You see a lot of innovation.

AI Podcaster 100:10:02

Like what kind of innovation?

AI Podcaster 200:10:03

Fire resistant materials and landscaping, you know.

AI Podcaster 100:10:06

Oh, interesting.

AI Podcaster 200:10:07

Metal roofs. Stucco siding, drought tolerant plants. Features that not only add value, but also peace of mind for future buyers.

AI Podcaster 100:10:17

That makes sense. It’s like, out of destruction comes this new wave of innovation.

AI Podcaster 200:10:21

For sure.

AI Podcaster 100:10:22

But even with all these upgrades, there’s still that psychological factor to contend with.

AI Podcaster 200:10:27

Oh, absolutely.

AI Podcaster 100:10:28

The stigma of fire.

AI Podcaster 200:10:29

The stigma, yeah.

AI Podcaster 100:10:30

Does that linger?

AI Podcaster 200:10:31

It definitely can. You’re right. It’s not just about the physical rebuilding. It’s about rebuilding confidence. Data shows that even 5 years after a major fire, properties in those areas can sell for 5 10 percent less than comparable homes in unaffected areas.

AI Podcaster 100:10:45

Really?

AI Podcaster 200:10:46

So yeah, that’s a factor that both buyers and sellers have to consider.

AI Podcaster 100:10:50

So the medium term is kind of a mixed bag then. You’ve got this innovation, but you’ve also got this uncertainty.

AI Podcaster 200:10:55

Totally.

AI Podcaster 100:10:55

What about the long term?

AI Podcaster 200:10:56

Yeah.

AI Podcaster 100:10:57

What’s the long term outlook for Pacific Palisades?

AI Podcaster 200:11:00

This is where it gets really interesting.

AI Podcaster 100:11:01

Okay.

AI Podcaster 200:11:02

You see, Pacific Palisades has some fundamental advantages that don’t go away.

AI Podcaster 100:11:07

Like what?

AI Podcaster 200:11:08

The location. proximity to the ocean, the community.

AI Podcaster 100:11:12

Right? It’s a desirable place to live.

AI Podcaster 200:11:14

Exactly. And you have a limited supply of land.

AI Podcaster 100:11:17

Which means?

AI Podcaster 200:11:17

Which puts upward pressure on prices.

AI Podcaster 100:11:20

Always.

AI Podcaster 200:11:21

Always. So you combine those factors with all this rebuilding.

AI Podcaster 100:11:25

Yeah.

AI Podcaster 200:11:25

And you start to see a recovery.

AI Podcaster 100:11:26

And not just a recovery, a shift towards maybe a more resilient.

AI Podcaster 200:11:30

Absolutely.

AI Podcaster 100:11:31

Fire adapted community.

AI Podcaster 200:11:32

Think about it. You’ve got these brand new homes.

AI Podcaster 100:11:36

Yeah.

AI Podcaster 200:11:36

Built to modern fire standards in this incredibly desirable neighborhood.

AI Podcaster 100:11:41

Yeah, they’re going to be attractive to buyers.

AI Podcaster 200:11:42

Exactly. And as that memory of the fires fades, the market’s going to respond favorably.

AI Podcaster 100:11:48

So almost like a cycle of destruction and renewal leads to a stronger market.

AI Podcaster 200:11:52

In many ways. Yes, it’s about adaptation. You know, that’s something we see again and again in real estate. But remember, the impact isn’t uniform across Pacific palisades.

AI Podcaster 100:12:02

Oh, right. Of course.

AI Podcaster 200:12:03

There are micro markets within the area. Some closer to the burn areas that might see a slower recovery.

AI Podcaster 100:12:10

So it’s really important to keep in mind those nuances within the larger market.

AI Podcaster 200:12:15

Exactly.

AI Podcaster 100:12:16

So we’ve seen how these wildfires have created this complex chain reaction in the Pacific Palisades real estate market.

From those short term rental spikes to long term trends. It’s this story of disruption. Adaptation. And ultimately resilience.

AI Podcaster 200:12:31

It all comes back to that community response, you know, how quickly and effectively the rebuilding happens, how they adopt fire mitigation strategies. These all play a role in shaping the market.

AI Podcaster 100:12:42

It really highlights how interconnected these factors all are.

AI Podcaster 200:12:45

Absolutely.

AI Podcaster 100:12:46

And as we navigate a world increasingly impacted by climate change and extreme weather events.

AI Podcaster 200:12:52

Yeah.

AI Podcaster 100:12:53

How might these factors shape real estate markets beyond Pacific Palisades?

AI Podcaster 200:12:59

That’s the question.

AI Podcaster 100:13:01

It’s something to think about.

AI Podcaster 200:13:02

It is.

AI Podcaster 100:13:02

So thanks for joining us for this deep dive.

Into the Pacific Palisades real estate market after those devastating wildfires.

AI Podcaster 200:13:08

Absolutely.

AI Podcaster 100:13:09

We’ll see you next time.

AI Podcaster 200:13:10

Sounds good.

Fred Glick00:13:11

So you can listen to some of the different types of ways to build that were fireproof. I mean, the cement 3D homes’ fireproof, earthquake proof, waterproof. I mean, the fact is still, you know, car parked outside. It’s gonna burn. You know, the brush is still gonna burn. I mean, how can you have trees that aren’t going to burn? I mean, vegetation is not going to burn. That’s a big problem. You want to have nice trees at your house. Or grow, you know, stuff.

I mean, so there’s got to be some solutions to this. Putting out a massive, intense sprinkler system, possibly, you know, to protect your house. I mean, people look into things and also then you got to get the City to approve it, the local people to approve it. You got to get a waiver from probably the Coastal Commission, the Santa Monica Mountain Commission.

I mean, I have friends in Malibu who bought up in the hills and from the day they bought the land until they closed was 17 years.

Drew Thomas Hendricks00:14:23

Wow.

Fred Glick00:14:23

This is back in the 80s. So and they’re both engineers. So they designed it. They know exactly what they were doing. Because every time you make one change, it’s got to go back to five different agencies.

So they got to streamline that. That’s number one, because you want to get the faster you get it rebuilt, the faster everything is going to go back to normal.

Drew Thomas Hendricks00:14:45

Economy returns. Yeah.

Fred Glick00:14:46

Exactly. And then the prices of rentals come back down. The prices of the homes come back down a little bit. But we’re going to see, you know, don’t make decisions based on what’s happening today, because today’s not real.

Drew Thomas Hendricks00:14:59

Yeah.

Fred Glick00:15:00

Today is an event.

Drew Thomas Hendricks00:15:02

Either way, there’s going to be a construction boom because unlike a lot of places that get devastated by fires, I don’t think I’ve seen one with this amount of capital.

Fred Glick00:15:12

Yeah. Here’s another thing.

Drew Thomas Hendricks00:15:14

Have the capital to rebuild.

Fred Glick00:15:16

Well, as I said, those are the super wealthy people who have the gorgeous, you know…

Drew Thomas Hendricks00:15:20

Maybe the Berkeley Hills fire back in the nineties. Remember that one?

Fred Glick00:15:24

Yeah.

Drew Thomas Hendricks00:15:25

Berkeley Hills was a similar amount of wealth that lost their houses.

Fred Glick00:15:29

Well, there’s a lot of people in Pac Pal that aren’t super wealthy, older people. You know, I saw these people on TikTok who’s 91 years old, have been living there for 50 years kind of things.

And two weeks ago, their insurance company told them, you know, goodbye. And now they have a piece of land to sell and they have, you know, that’s horrible, but we’re going to see the land prices there actually probably go up. And the people with insurance, a lot of them might say, you know, give me the insurance money, sell the land.

So, you know, I mean, for land, we probably do a better deal than our $15, 750 because you really don’t have to do anything. So, but…

Drew Thomas Hendricks00:16:15

You bring up a good point though with the insurance companies and I just got off the phone with a winery before this call and they’re freaking out. They’re in Temecula that their fire insurance is going to get eliminated.

Fred Glick00:16:27

It’s going to be a nightmare. This is, this is something Governor got to handle right away. I’m sure he’s on it. You know, there’s got to be an answer to this. There’s fair play and, you know, in California, which is expensive and limited, you really got to still get liability. You got to get a bunch of other different coverages.

It just covers wildfires and something else. It’s very minimal coverage, but it’ll get you mortgage. If you’re going to go for a mortgage, you need insurance. If you have a mortgage and you were there, I mean, it’s going to be, it’s going to be full of insurance adjusters, lawyers, insurance companies, mortgage servicing people, and it’s just going to be red tape.

René Pérez Jr.00:17:13

I know that we mentioned that there’s a lot of wealth here, but so let’s say you’re using a mortgage. Yes, they force you to get insurance, but I don’t, is there a verification process that they verify that you have insurance month to month? Or how do they,

Fred Glick00:17:29

Well, they collect your mortgage payment and or they have a certificate of insurance.

And that lasts until a certain date. So they know expires June 30th, 2025, “Hey, you’re insured.” You know, and they didn’t get sent a notice because they become an additional insured, which means the insurance company would have to notify them of the cancellation in addition to the owner. And by the way, we’re not even talking about the commercial stuff in the storefronts.

That’s a whole different world. We’re not, we don’t do commercial. But that’s going to be a nightmare too. You know, but those guys and their insurance companies, and it’s commercial insurance, it’s different than residential. They’re all going to be fighting World War III. I mean, these insurance adjusters are going to be making a fortune. So it’s,

Drew Thomas Hendricks00:18:20

Restate the obvious, or what we talked about, it’s not so much even the people that lost their homes, it’s that impact that’s going to ripple throughout the whole Los Angeles community with other people trying to, maybe they want to relocate from Pacific Palisades or Altadena.

Fred Glick00:18:34

Yeah, I mean.

Drew Thomas Hendricks00:18:35

It’s going to raise the housing prices of the existing homes.

Fred Glick00:18:37

Well, here’s the thought. I mean, is, are you gonna like, go down to Orange County and buy a Newport Beach now instead? We had a deal that just fell out of escrow in, I think it was in Orange, California? Am I right, René?

René Pérez Jr.00:18:53

No. It’s in San Diego. But the idea is.

Fred Glick00:18:59

Oh, that’s right. I’m sorry.

René Pérez Jr.00:19:01

Yeah, I mean,absolutely.

I think, and this is where Fred maybe is changing his mind now, but if you’re in Los Angeles. Yeah, sure. Maybe you have family that’s in L. A. and you don’t want to leave L. A. But the commute, the traffic from L. A. to San Diego, it’s really minimal. So you see that change every day. You see people selling their houses in L. A. to go to San Diego. The same way that you see people leaving San Francisco to go to San Jose. Right?

Fred Glick00:19:29

I think you might even see people go from L. A. up to San Francisco or L. A. up to Napa Sonoma, just to get away from it all, but it’s, it’s what lifestyle you need and you want. So, you know, it’s not like they’re all going to Idaho like they did during the pandemic.That’s way over.

You know, there’s people who move between California and Washington State because in Washington State, there’s no state income tax. You give yourself, you’re making 500 grand a year. You’re paying some enormous state rate and you can save that. I mean, it’s probably 50, 75 by a year.

Prices are cheaper and there’s some gorgeous houses up there. I mean, it’s not as great weather.

Drew Thomas Hendricks00:20:15

Camas Washington or Camas.

Fred Glick00:20:17

Yeah, that’s right.

Drew Thomas Hendricks00:20:19

Drive across and buy your stuff in Oregon.

Fred Glick00:20:22

Exactly where there’s no sales tax. So it’s the cheapest tax place to live, I think. So yeah, I mean, everybody’s gonna be, have a little different story, but there’s, just be careful out there, kids, and, you know.

It’s going to be a little nuts, but insurance is going to be a big thing. Building, you know, time for the politicians to step up and make it easier and make it more comfortable and help people and we’ll see what happens. I mean, we don’t know the results of all these fires. There might be more fires. I mean, yeah.

Drew Thomas Hendricks00:20:59

I mean, we’re recording this on January 9th and it’ll probably this will go live 7 days from now.

So on the 16th. So when you’re listening to this, it’s going to be a very different landscape, but what we’re talking about, about construction, alternative construction, insurance, that’s not going to change.

Fred Glick00:21:15

Right.

Drew Thomas Hendricks00:21:16

That conversation is going to be just as relevant in a year as it is right now.

Fred Glick00:21:22

Yes, it is. So it’s you know, I feel sorry for these people.

I mean just the aggravation losing your house and memories and everything else in your life and now you got to deal with an insurance company.

You know, you thought you thought United Healthcare was bad.

Drew Thomas Hendricks00:21:46

My mind just went there, but I didn’t. Yeah.

Fred Glick00:21:50

Yeah. So, I mean, it’s, it’s just going to be nuts.

Drew Thomas Hendricks00:21:57

Now, is there such a thing as a, I don’t even know if this is a thing. So you’re, you’re wealthy enough where you maybe have 2 million, but you don’t want to, and you can pay cash, but you don’t want to tie up all that cash in the house.

Is there a way to do like an in pound investment account that serves as the collateral for a mortgage?

Fred Glick00:22:18

So, yeah, so let’s say you got $2 million. You have it in stocks. You can borrow against the stocks, usually only up to 50% margin. So you can put, you know, maybe get a mortgage for the other million or, but what you do is you buy it cash and then you do your financing afterwards because the cash deals are going to get done faster than a non cash deal, but you might even have a mortgage contingency.

And hey, you know, if you need to get a mortgage and you’re in this market, you want to move fast, you know, make sure you get, and I’ve said this a hundred million times, a fully underwritten mortgage pre-approval, we can get them done in two days, you know, go to somebody who can get them done fast, who can close fast, who gets it. Don’t listen to loan officers.

That’s another thing that I had separate topping. You know, we had a loan officer, you see, tells our buyer, well, you know, you only want to get a mortgage approval for, you know, the amount that you’re going to offer because then they can come back and jack the price up on you. Well, they’re so stupid.

First of all, these loan officers, stop it. You’re not negotiating. You don’t know what’s going on. You don’t have a license to negotiate anything. So the reason, they’ve done that years ago. Yeah. If you’re the only, only, only buyer and nobody else is going to put a bid on it, maybe play that game with the owner.

But if you’re in a multiple-bid situation, here’s the problem. Say it’s a 2 million listing; you come into 2 million. The loan officer gives you a 2 million approval. Well, now there’s 10 offers and now they say, “Okay, we’re going to go to a second round and we’ll go to everybody.” Except you’re not going to be involved in it because you only qualify for a 2 million house.

And this is going to go higher. So the loan officer screwed you out of the house because what you do is I told this woman again, tell the loan officer to get you approved for the match you qualify for. It’s got nothing to do with the price. You want to show the seller something to make them as comfortable as possible.

And that’s what this does. Like, look, I’m approved for three and a half million. I’m not paying you more, but you don’t have to worry about the mortgage because I’m super qualified and they go, “Oh, okay.” That feels better. So don’t listen to loan officers about how to negotiate your real estate contracts. They’re so smart, they’re stupid.

The other game they play is they want you to come back to them. “Oh, I need the new approval for 2 million one now.” So you keep thinking of them as your go to guy and you don’t shop them after you get under contract, you know, because you’re, they’re establishing the relationship with you, blah, blah, blah.

So yeah, they’re just sales guys. Okay. The license…

René Pérez Jr.00:25:10

But that’s why you also, as a seller, you’re going to prefer a cash transaction because you don’t have to deal with any of that back and forth. And secondarily, the cash offer doesn’t have to get insurance, which goes back to our fire conversation, right?

And we have a lot of buyers. We have a lot of buyers with a lot of money who know that insurance is a scam. That’s actually the big part of it too, right? There’s a lot of people who don’t have the insurance because even if you can get in, the premiums are just so much higher than just self insuring it yourself.

So it’s one of those things where you are playing with luck and it’s better to have it and not use it than, you know, than to not have it and then have to use it immediately, especially if you just bought your home and you have a huge mortgage. But yeah, no, that is the option that cash buyers do have that mortgage buyers don’t have.

So that’s why you also are a preferred buyer of your cash and cash is king.

Drew Thomas Hendricks00:26:11

Cash is king.

Fred Glick00:26:12

King, queen and everything.

Drew Thomas Hendricks00:26:15

What other advice do you have for someone that may be living in the LA area? That’s going to be thinking about either relocating or buying a home in the next few months? Is it rent for a while? Is it just buy if you see it? Or

René Pérez Jr.00:26:27

You know, I know our business is to help buyers and sellers with their properties, but looking at the numbers with the way that the industry is looking like, the numbers really don’t work out to buy really, right? So, it’s one of those things where unless you’re having the money, you know, unless you need to put the money somewhere because your family is giving you the cash to put a down payment and everything and your mortgage is going to be lower, I think it is cheaper to rent. Accept that now at the fire, there’s going to be the opposite. So it might actually be more cost effective to buy now. So I think it’s right now, as Fred mentioned earlier, he was talking about how people are going to sell their land. It’s not really about the house and don’t focus on buying a beautiful property.

Do focus on the actual land because if something like this does happen, it happens again, all you have is a land. And a lot size that’s 10, 000 square feet is gonna sell more than you know, if you have a 4000 square feet lot, which is really usual in San Francisco. Right?

Fred Glick00:27:36

Yeah.

René Pérez Jr.00:27:37

Especially, you know, now with these fires, I mean, I’m sure there’s going to be people that they’re going to reassign the lots and build, you know, apartment complexes and things like that.

I mean, that’s not going to be everywhere, but I’m sure there’s going to be a new redevelopment. Right? So,

Fred Glick00:27:53

Yeah, rezoning and things. An interesting thing. I looked at the MLS today in Los Angeles and there were in from Santa Monica on South to Redondo single family, there were 20 new listings that came up today because what you had is a lot of stuff that people took off the market during the big holidays and or people who were about to go on the market, they pushed this up because, you know, they think there are buyers right away.

So it’ll be interesting to see. We’ll see price increases, maybe. That’ll give us an idea. You know, one really goes nuts. Everybody else will raise prices. So keep a close eye, you know, have your Redfin or Zillow alerts set for the prices a little lower because, you know, there’ll be different types of properties coming up and you just never know.

It might be a house you like that you say, “Oh, I can live in that for a couple of years while I build back my other place.” And then fix it up and sell it, or just keep it and sell it, or, you know, as is and sell it. So, you know, you might

René Pérez Jr.00:28:58

Yeah, and I was going to say, the good news is that we’re already kind of prepared for this kind of disaster in a way, because of the pandemic, where a lot of these people in LA can work from home, and you are seeing a lot of slashing of those regulations of like, “Oh, mandated back into the office.”

So you’re probably going to also see a lot of the people being pushed back to being allowed to work from home.

Fred Glick00:29:24

Yeah, so that’s another consideration, but it’s crazy. I mean, just

Drew Thomas Hendricks00:29:30

The only thing certain here is it’s changed. Like, if we thought it was predictable the last couple of years and things just seem kind of a little too predictable, nothing about going forward.

And then this next year is going to be as predictable. We can conjecture that housing prices are going to go up, but

Fred Glick00:29:45

It’s going to be insane. I mean, new administration, terrorists, businesses, it’s like get out the popcorn. It’s just a giant, try not to get emotionally connected to all the news and just deal with what you gotta deal with in your own lives, and that’s it.

So…

Drew Thomas Hendricks00:30:08

Sage advice.

Fred Glick00:30:11

There you go.

Drew Thomas Hendricks00:30:12

From the blue couch.

Fred Glick00:30:15

And the blue sweater.

Drew Thomas Hendricks00:30:17

Oh, it looks black.

Fred Glick00:30:17

I have seven layers on.

Drew Thomas Hendricks00:30:19

Oh, I thought it was black.

Fred Glick00:30:20

This is super dark blue.

Drew Thomas Hendricks00:30:21

Yeah, it looks like black.

Fred Glick00:30:22

I wanted it in black.

Drew Thomas Hendricks00:30:23

Remember that internet phenomenon? Is the dress black or blue?

Fred Glick00:30:27

Oh, I dress in black all the time. I mean,

Drew Thomas Hendricks00:30:29

Yeah, so I assumed it was black, but yeah.

Fred Glick00:30:30

Yeah. Dark blue or black. Yeah, I mean, just.

Drew Thomas Hendricks00:30:35

Well, if you’re listening and you’re still watching, which all of you should be putting on the comments, let us know if you think spread sweater is blue or black.

Fred Glick00:30:45

Okay. On that happy note, let’s get out of here and…

Drew Thomas Hendricks00:30:50

This is another episode of We Fixed Real Estate.