Tips on Rent-Back Agreements and Preparing Your Home for Sale With Fred Glick and René Pérez Jr. Of Arrivva

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

• Explore rent-back agreements in real estate transactions and understand their key aspects
• Compare real estate closing traditions in different states
• Navigate the complexities of the mortgage process, focusing on the role of loan officers
• Know why you should heed caution on pre-approval for the highest mortgage and the importance of comparing interest rates and fees
• Be aware of the practice of rate locking and considerations for the evolving 2024 environment
• Discover valuable tips about listing and preparing your home for sale
• Explore the challenges of navigating renovations, emphasizing the importance of prioritizing buyer preferences over personal taste
• Hear expert advice on remodeling over new construction, with insights into FHA 203(K) loans

In this episode with Fred Glick and René Pérez Jr.

Welcome to the We Fixed Real Estate podcast! Join Fred Glick and René Pérez Jr. of Arrivva for an episode packed with insider tips! Discover the secrets of rent-back agreements, insights on real estate closing traditions, and savvy advice on mortgages and loan officers in the 2024 market.

Tune in as they share game-changing tips for home sellers for preparing your home for sale. Learn about presenting a clean canvas for your buyer, and navigating the remodeling versus new construction dilemma. Plus, get the lowdown on FHA 203(K) loans for fixer-upper purchases. Don’t miss out on this quick, insightful episode to level up your real estate game!

EPISODE TRANSCRIPT

[00:00:00] Drew Thomas Hendricks: Welcome to We Fixed Real Estate.

[00:00:01] Fred Glick: I’m Fred Glick and I’m in Freezadelphia. Next guy down there.

[00:00:08] René Pérez Jr.: Yeah.And I’m on the top of the Golden Gate Bridge right now.

[00:00:13] Drew Thomas Hendricks: Looks like you’re in the Headlands.

[00:00:15] Fred Glick: Yeah, you’re in the Headlands. You rode your bike up there, right?

[00:00:18] René Pérez Jr.: Oh, yeah, I should be riding my bike. I’m still trying to lose the winter 15.

[00:00:24] Drew Thomas Hendricks: Yeah, last time you were on a salad diet.

[00:00:27] René Pérez Jr.: Yeah, yeah, no, I’m still kind of on that salad diet. It’s disgusting. I don’t recommend it.

[00:00:33] Drew Thomas Hendricks: I’m on an expansion phase still.

[00:00:35] Fred Glick: Winter. The winters in California are so rough. I had to come to Philadelphia today. Real cold, you know, at 48 degrees. Everybody’s in REI buying, you know, these overcoats in LA, it’s hysterical, but I’m cold inside all the time anyway, it’s just me. So I’m always freezing.

[00:00:54] Drew Thomas Hendricks: Looking stylish. So you’re in Philadelphia for the snow.

[00:00:58] Fred Glick: No snow. I, unfortunately it doesn’t snow here anymore. Like I grew up here and it always snowed. Now global warming guys or, I did it.

[00:01:08] Drew Thomas Hendricks: Let’s talk about rent-backs.

[00:01:11] Fred Glick: Okay. That’s a good thing to start. We’re seeing an increase in listings. You know, I keep seeing back on the market, back on the market, back on the market. So this is the stuff that all came off right before Christmas. And then add that to everything new that’s coming on.

And what happens in an occupied house sometimes because the people don’t have anywhere to go yet or can’t get into a place for a period of time, they’ll want to rent the house back from him after closing. So everybody wants to close fast for 15 days, get their money, put it in the bank, and then sit there in the house for a while. So a bunch of things about this first of all, your lender will allow you to let them be in the house for up to 60 days.

No more than that so that’s one thing you have to make sure you understand, especially when you’re negotiating a contract, because you have to put these things in the contract. As a matter of fact, in California, there’s an actual specific form already done. If somebody is going to be there less than 30 days or 30 to 60 days.

So I won’t go into the details of the form, but also the good thing about these forms and what they do is they make it so these people are staying there like they’re in a hotel. So if day 61 your person’s not out, you basically can call the police and get them out. Theoretically, because they’re just there as a hotel type of situation.

I don’t remember deleting stuff with it. But that’s kind of where it is on that. The other couple of parts on how much are these people going to pay you? And what is a security deposit? So security deposit, let me start with that. That’s an easy one. Pretty much everybody will not have an issue with this because it’s not about just the people moving out.

It’s the movers and who knows what’s going to happen. In a regular transaction, you don’t have this, you just say to him, “Hey, I’m not closing until this is done or we put aside money.” It’s a last-second renegotiation if there’s a problem. But in this move-out, 60 days later, they move out, there’s stuff done, you know, you need to hold some money.

So, I normally do 2, 500. I don’t see anybody who objects to that, and they can just, the escrow company just takes it from escrow. So the other thing is rent. So, here’s the thing, in Northern California, or you have a house that’s got 50 packages out at 12 offers, and you’re putting in a pretty good offer that might win, but you can’t then ruin your offer.

And what I mean by ruining it to say, “Okay, I want market rent for 60 days and I want you to pay the HOA fee and all that.” She’s like, “No.” Leave them there for a dollar for the 60 days or zero, whatever it is. Have them just pay the utilities. Have them pay the cost of operating the house.

That’s it because you’re more apt to get your agreement accepted rather than I want this and I want that. So if they take, you’re going to take five grand a month. That’s 10 grand off your offer. Basically is what is the way they’ll look at it. So you may lose the house because you try that. So it’s really important to get all these details upfront before you submit your contract and think about the ramifications of what’ll happen once a seller sees it.

[00:04:24] René Pérez Jr.: I think you give a pretty extensive explanation on the buyer side. On the seller side, I think a lot of the sellers that I’m talking to, they seem to think that they have to like, once they close on a transaction or they sell their house, they have to leave immediately. And one thing to note is that no, as a seller, you can have multiple ways of getting or accepting offers.

So one of them is just as Fred is talking about, rent-back, is requesting 30, anywhere between 30, 60 days to stay in the house after the house is sold, but you can also start looking to purchase a new home elsewhere and tell the, and tell buyers like, “Hey, like I will sell my house, but it will be contingent about me, around me finding a replacement property.” that way, you don’t have to be rushed.

I have clients who are like, “Oh, well, I don’t know where I’m going to stay. Like, I might have to stay in my car or just hotels and it’s expensive.” And it’s just like, “Well, no, no, no, you don’t have to do that.” You just we say, like, “Hey, if I don’t get my terms, I won’t move out of the house.”

[00:05:28] Fred Glick: Right. So it’s a seller’s market, you can kind of dictate it. People, and we prepare our buyers and I hope other agents do prepare your buyers. This may happen. So here’s another thing on a buyer side. So let’s say you settle in February, February 3rd to make up a number. You obviously don’t have a mortgage payment in February, but you also don’t have a mortgage payment in March.

Your first payment is April and April pays for March’s interest. And you’ve already paid February’s interest at the close of escrow. So they collect that upfront. So you don’t have a physical mortgage payment to make in that case, you know, for 60 days. And then big deal, you let them just stay in there and pay the utilities.

So think about the cash flow difference there, but also it’s the most important thing about what your offer really is because of the rental. Now in other states. Let me, let me just add this, like I was used to in, you got to move out. We didn’t do rent-backs. You got the trucks there and at 12 o’clock, you know, settlement at 11, everything’s gone by 12 and everything’s fine.

Or the other way around, out by 11, settle at 12, move to the next house. So it’s like wire-to-wire kind of thing. So there’s a lot of stuff going on. Each individual transaction is different. Each area has different things, but the rent-back works great.

[00:06:49] René Pérez Jr.: Yeah. The other thing to note about like why you don’t want to charge rent is because think about it this way, you’re probably gonna have one cash offer against you that can also offer the rent-back.

If you’re a cash transaction, you don’t have a lender asking you to only do 60 day rent-back. Right?

[00:07:05] Fred Glick: Good point.

[00:07:06] René Pérez Jr.: So,

[00:07:06] Fred Glick: Good point.

[00:07:07] René Pérez Jr.: So then at that point, you want to just tell the buyers, “Hey, we’re being extremely flexible as much as we can.” And that’s how a cash deal also outbeats a buyer.

Because a seller says like, “Hey, I might not find a replacement property in 60 days. I’ll just take the cash deal and I can talk it out and get an extension and me staying here longer while I find a house.” Yeah.

[00:07:30] Fred Glick: Yeah. Let me throw an exception at you. If the seller says, I got to stay here 120 days, your mortgage company says, no, no, no, no, no.

We have lenders that will just close your loan. You’re going to pay for it and it’s going to be expensive, but don’t close your loan as a cash buyer in seven days. Then they can stay there for 60 days and then you can make your mortgage application. Rates are going down. So it probably behooves you to wait and get the lower rate for the longer-term mortgage.

So there’s a lot of things out there. This could get extremely deep, but that’s, that’s a good start with this topic.

[00:08:04] Drew Thomas Hendricks: I really enjoyed the conversation, but I have a question. You’re talking about like a hotel-type scenario versus a rent scenario. Does that help prevent the seller from just squatting in the house after they sold it?

[00:08:16] Fred Glick: Yeah. Yeah. Well, no, ’cause the contract that I’m talking about is this lease after the sale. If they stay after you bought it, there’s no rent there implied. I’m not gonna gander or guess call your lawyer from day one.

[00:08:33] Drew Thomas Hendricks: Oh yeah.

[00:08:33] Fred Glick: But I think you can pretty much get ’em out. It’s your house. They have no lease. They have no tendency. They have nothing there. So, every municipality may be different in that answer, but.

[00:08:45] Drew Thomas Hendricks: So in a rent-back though, the buyer, the seller gets the money and they’re still living in the house.

[00:08:51] Fred Glick: Exactly.

[00:08:52] Drew Thomas Hendricks: Buyer says that you, you can well, I’m going to buy the house. I’m not going to charge you rent. So it’s easier. So it’s more for the seller, but

[00:09:00] Fred Glick: The buyer is now the owner.

[00:09:03] Drew Thomas Hendricks: The buyer is the owner living there.

[00:09:05] Fred Glick: The seller, former seller is now the tenant. That’s all it is. You change what you are in the transaction.

[00:09:13] Drew Thomas Hendricks: And then you mentioned the other question I had is you mentioned in Philadelphia, it wasn’t a or in Pennsylvania, it wasn’t a thing. Is it illegal or just not common?

[00:09:20] Fred Glick: No, no, it’s just not a thing.

[00:09:22] Drew Thomas Hendricks: Okay.

[00:09:23] Fred Glick: I don’t know. It just is. It’s just been that way. We also are different. We have, if you say closing is Monday at 12 o’clock, everybody goes to the title company office.

They sit across the table from each other. They say, hi, how you doing? Nice to meet you. Tell me about the best restaurant in the neighborhood. You talk in your chat. Most of the closings are a lot of fun. The escrow per title person just does all the numbers and they get all the money. You sign, the buyer signs the mortgage documents and everybody gets their checks and keys, and off they go.

Whereas in California, I’ve never attended a closing because the escrow company sends out a notary to somebody’s house. They sign the papers in front of the notary. The notary puts them, sends them back to escrow. Escrow sends them to the lender. The lender and the escrow company, blah, blah, blah, blah, blah.

They all figure out the numbers and everywhere. Sellers, same thing, they send out a notary to sign the deed and this and that. And it gets, and then it gets sent to the city to record the next day. So you sign on Monday, you don’t close until Tuesday. And that’s when the money gets traded over. So you’re going to need the money for the next house.

You know, it’s a tight thing. It’s a, it’s a whisper down the lane stuff. That stuff happens, but you might get on Tuesday rather than Monday. So you can have a one-day, a two-day lease back just for stuff. But our, like our clients, want to get in, you know, if it’s recorded at noon, they want to get in by 12:15.

They want to get in right away, start cleaning, prepping for it, because they got the movers coming the next day. And we try to tell people, look, wait a few days after closing, just in case, you know, get it clean, do it right. Don’t rush. Again, this is all case-to-case stuff. We’re just throwing out some stuff about what happens here.

[00:11:14] Drew Thomas Hendricks: Yeah, I like the idea that more of a formal situation. I know the 1st house I bought in the mid-90s. I did go into the escrow office. I don’t think the seller was there, but it was a lot more than the last.

[00:11:26] Fred Glick: Yeah, there’s no notaries and email and websites. And when you were young,

[00:11:32] Drew Thomas Hendricks: Yeah, so I did appreciate that. It had a little sense of gravity to it versus the last few houses I bought where everything’s done electronic and just kind of,

[00:11:43] Fred Glick: You know, and in the future, it’s going to get more electronic. It’s just going to,

[00:11:48] René Pérez Jr.: Yeah. Bing, bang, boom. So like in Mexico, the way that property closings happen is sellers meet up with the buyers at the house and they explain how the switches operate, how this and that works.

That makes much more sense than like, oh, it’s your house, you know, good luck finding out what this switch does, you know, or just,

[00:12:11] Fred Glick: Well, that’s like, yeah, but here’s like us when we have a buyer, we send out this Google form to the seller to ask the agent, you know, like what days the trash goes out, you know, all that kind of little, so who’s the best cable company, internet, whatever, nine times out of 10, they never send it back.

It’s just so rude. And that reminds us we got to do it for our new listening coming up in Culver City. Which we’re not allowed to talk about, although it’s, it’s a nice house with three bedrooms and probably about a million four, if you’re interested in getting this call. Anyway, I think I just violated the terms of the multiple listing service, so sue me.

But anyway, it’s, you know, it’s just, we can’t get the answers out of the sellers because the agents, they don’t even know what a Google form is. Oh, can you just print this out for me? Yeah, whatever. Print it out yourself.

[00:13:07] Drew Thomas Hendricks: Yeah, I do miss that formal process where the seller can, it adds finale.

[00:13:12] Fred Glick: Yeah, one last thing, the other thing we do on our listings specifically, no one does this. Is when we go and put everything into the multiple listing service, we do it with the sellers on the phone. So we go through literally each line item that they asked for, and then they can expand on it.

They can talk about, oh, yeah, we put a new dishwasher in 2 years ago. And the reason was because we felt as though it was better on the right side than the left side. We got the extra heavy-duty one because of blah, blah, blah. You know, they can talk about the house. Yeah. You know, how many, do you have any special thermostats or something to talk about their nest or how to use it?

And, you know, so we do get into that. We don’t literally do it in writing, but we, you know, we’re in a meeting, but if you try to do it, kind of personalize the house for the new buyer and the prospective buyers, obviously.

[00:14:05] Drew Thomas Hendricks: That’s interesting. So all MLS listings aren’t all actually considered the same.

Some are just done on a checklist. Yours is done in a thorough fact-finding tour. Absolutely. It also helps convey to the buyer. It helps with that transfer of knowledge.

[00:14:21] Fred Glick: Right. And this way we don’t make mistakes on the MLS. We put everything there because we got the owner, you know, talking about it. So it’s pretty great. It’s pretty great.

[00:14:30] Drew Thomas Hendricks: One of the things, so this mortgage process is pretty complicated and also kind of varies between states. Talk to me about the loan officers in the process.

[00:14:39] Fred Glick: You know how we were talking a few minutes ago about how it’s impersonal, the real estate closing and all that.

That’s what it actually should be for the mortgage, but it’s not. It’s full of salespeople. And you gotta be licensed to be a loan officer. You’d go through some training. It’s a lot more extensive than being a real estate agent. If you’re under what’s called the NMLS system where you’re a mortgage broker, to want to be work for mortgage brokerage or be a mortgage broker.

You go through a lot of training. If you just walk into Wells Fargo, say, “I want to be a loan officer.” They say, “Here, great. We’ll get you an NMLS number.” That’s it. No training, nothing. So that’s 1 thing to be aware of. Although the banks are going to be training people, but these small mortgage bankers, you know, have to have loan officers and brokerages, everybody except banking officers.

But anyway, the point is they want to rule your transaction. They think they’re the most important cog in the wheel. So they’re going to tell you two things and the two things you should never do with a loan officer. Number one, get an approval for the absolute highest mortgage and sale price you can.

They’re going to tell you, “Hey, here’s what we’ll do. When you make an offer, we’ll get you an approval for that offer that you’re making, and then the seller will think that it’s all, you you’ve done your bad, you’re the tough negotiator. Cause you’ve got…” You’re an idiot for doing that. And I’ll tell you why.

Let’s say you put in, you follow the loan officer. It’s a million-dollar offer, 800,000 mortgage. And guess what? There’s five other offers and seller’s multiple counter offer says, no, somebody is going to pay at least a million 50. We’re not taking anything less. Well, you only have a loan approval for a million dollars.

What are you going to do? Go back to the loan. I’ll be like, “Oh, I’ll give you a new one over a million fifty with an 825.” Well now the seller looks at it and say, well, wait a second. How did you automatically in 24 hours just qualify for a new loan amount? So you lied to us upfront because this is the way I look at it.

You lied to us. We don’t know what you qualify for. We tell our clients, get the highest you can. So if you’re approved for 2 million and it’s sale price, you’re gold with this person. And they don’t look at it and say, “Oh, he’s approved for more, let’s try more.” That’s only if you’re going one one-on-one with the seller.

But what you forget to realize, you’re not negotiating with the seller. You’re negotiating against other buyers, period. So you’re only going to go what you’re going to go just because you’re approved for 2 million. You’re not going to go to 2 million. So we have to tell the loan officer, no, I need to get approved for the maximum loan amount. Okay.

[00:17:33] René Pérez Jr.: I wanna follow up on that, that are important. One of them think about this simple fact, if you’re submitting an offer for 1.562, right? And the pre-approval shows that exact number as your pre-approval, what are the odds that, such coincidence that’s the max you’re approved for?

Agents that have been in business for a long time know that that is the, a gimmick that mortgage officers do and when submitting offers. So it doesn’t work because nobody’s going to believe that that’s your max offer, first of all, right? Second of all one of the theories behind this strategy was because loan officers wanted to keep a tight leash on buyers.

They wanted to know exactly where they were offering and where they were in their buying process because they didn’t want to lose business, right? So if, if we have to go back, if you as a buyer have to go back with your loan officer to get a new pre-approval for every property you submit, then you don’t lose business and you can at least try to get them through your transaction, right?

So that’s the whole mentality. It’s not to help you become more aggressive and powerful buyer. It’s because they want to make sure that, you know, you work with them versus someone else. That’s the only reason. Yeah, that was my

[00:18:52] Fred Glick: And then the second thing is rates. So here’s the story. There are very, very, very few places on the Internet.

You can get live interest rates. Wells Fargo is nice enough to publish some of them, but they’re not exact because everything is based on credit score, sale price, mortgage amount, property type, blah, blah, blah. There’s a million things. Somebody says to me, what’s your rate today? I don’t know. Tell me these 10 things and I’ll get you a rate.

But so the other thing is rates can change like stock prices I’ve had over the years. And I’ve been doing mortgages since Ronald Reagan was in his second term. Where we had five rate changes in a day. So the loan officer can say, “Oh yeah, we’re at five and a half with no points.” And you know, you think, “Oh, these guys are great.”

And then you get to the day you actually have to log, lock in when you make an application. So you call him up. The idea is call him first, Hey, what’s the rate today? And what are all your lender fees, processing fee, underwriting fee, credit fee, tax service fee, flood certs, everything, get everything they charge.

They give you the rate and the points or rebates, depending on the interest rate, because it’s like a see-saw, it goes up and down, rates versus points and rebates. And then, you know, call two other people and find out what they really are. I mean, for us, we charge a flat fee over our wholesale rates.

Basically, everybody’s wholesale rates are the same. Mortgage brokers and bankers go at least one and a half, usually up to two and a half percent of the loan amount as their charge on top of the house. So that’s why you’re going to see we’re going to have better rates nine times out of 10 unless there’s a bank with portfolio in something, you know, that we can’t compete against or Wells Fargo jumbo.

We’re terrible on jumbos. If it’s just a clean, super clean deal, we can do those PSCR investors and all that stuff. But that’s another thing you’ve got to be careful of. The rate can catch you in. You know, so, so get everything and get it all in writing. Ask, email it to you, and then compare.

[00:21:08] Drew Thomas Hendricks: Well, when you say compare, because the last home I bought, my rates were guaranteed. So I could go look at the home. You wanna check to me?

[00:21:16] Fred Glick: You locked. You locked before you bought a house? Yeah. Is that a bad thing? They’re rare. They’re always gonna be higher than the market rates. Right, you were scared it was going to go up, and yeah, I mean, depends on the day. Right now, it’d be crazy to do it.

[00:21:31] Drew Thomas Hendricks: Evaluate, I guess, if it’s lower.

[00:21:33] Fred Glick: It depends on their program. Sometimes they do these long rate locks, and if it’s lower, you get the lower rate plus a quarter in rate, you know, something like that. Because they’re selling the loan to Fannie and Freddie, they’ve already sold it based on what you told them you were locking in at.

So, there’s always a little bit of loss, but there’s a reason why they hold the locks. Or they’re matching funds, etc.

[00:21:54] Drew Thomas Hendricks: In this environment going into like 2024, would are rate locks a thing anymore? Is it something you’d recommend or they’re so fluctuating? You might want to just ride the tide.

[00:22:04] Fred Glick: It depends. I mean, CPI was a little hotter and they thought, but you know, it’s all the trends are coming down. But get somewhere you’re comfortable with and look at the monthly payment, not just the rate. Look at the payment. See if you’re comfortable with taxes, insurance, homeowners, you know, HOA insurance, condo fees, whatever you have, flood insurance, look at the total monthly payment, be comfortable with it.

[00:22:27] Drew Thomas Hendricks: That’s excellent advice. I mean, that’s what I do when I buy cars. When I buy a house. It’s like what I really am less concerned about the underlying rate, especially when I’m buying. Can I afford the payment every month?

[00:22:38] Fred Glick: Yeah, that’s a good start. That’s a good start. Yeah. And they look at that too. Not as much with car dealers, because they don’t care that, they love to repo and resell the car. So, and they, they usually have insurance. They get paid off their insurance and they sell the car again. So they love to repo. Car dealers or car dealer financing, another thing not to do.

[00:23:02] Drew Thomas Hendricks: Oh yeah.

[00:23:02] Fred Glick: No way. It’s where they just, you buy the car with nothing extra from them. Nothing.

Pay cash or get a loan from a credit union or something and just buy it. None of their extras, undercoding, overcoding, missile launchers, I don’t know, whatever. That’s where they make their real money. There’s a guy I follow on Twitter who talks about car dealers, it’s great. Learn all the insides, like this podcast, you’ll learn all the insides about real estate. There you go.

[00:23:34] Drew Thomas Hendricks: There is. René, you’ve got a good tip. So we were talking in the pre-show about when you’re going to list your home and how it’s not necessarily always a good idea to fix it up before the listing agent has a chance to see it. Do you want to talk about that for a second?

[00:23:51] René Pérez Jr.: The reality is when you buyers come into a property, they’re going to see the lot, they’re going to see the main frame of the house.

And then decide I’m going to just change and remodel everything I’m going to make. I’m going to paint my kitchen red and my bathrooms pink. They’re going to do whatever the heck they want with the house. Right? So the seller, you want to give new buyers a clean canvas, but you don’t want to overpay with like nice countertops in the kitchen, for example, unless you’re doing a full rebuild and selling as a developer a new construction you build, right?

If that’s the case, that’s a different story. But if you’re a seller, you’re preparing a house to buy, especially if you need to manage a lot of like moving-out items, right? There’s a lot of times that people throughout the years have collected a lot of items. It’s like, okay, how do I navigate the moving all these big furniture items?

You don’t want to just move them out of every room, scratch the floors even in a worse condition. So what you want to do is, you know, pick one bedroom, where you’re going to pick and choose what you’re going to keep to move out while you pick whether you’re going to have a moving service. Which, you know, someone can actually bring in a pod and keep it there for any time that you need and it could be as little as one or two days to just two, three months, right?

There’s different fees attached to them, but you can get a pod. There’s a lot of U-Haul services where you do have a driver that can take it from one place to another. Of course, the rates are quite expensive in that regard, and I’m here to kind of navigate whether it might be a quote-unquote cheaper option to do a moving service versus a pod service to keep the items outside while you find someone else or another place to, to move into.

[00:25:41] Fred Glick: And let me just add there’s that clutter.com. That’s pretty good. They come take it away, put it in their own storage area. It’s not a specific 7 by 10 room for you. And it’s high security and then they bring it back to you. It’s a pretty cool thing.

[00:25:56] Drew Thomas Hendricks: Help you unclutter it or do they just.

[00:25:57] Fred Glick: Yeah, they pack and everything. Yeah.

[00:26:01] René Pérez Jr.: Yeah. I mean, it’s a whole process. When you’re a seller that doesn’t have a new place to live, you still need like one bedroom, one corner to just kind of sleep and have all your belongings in, right? And you might want to donate items. So as a, as a good listing agent, a listing agent should be able to help you navigate where can I donate or recycle these items.

Right. That’s really important for when you’re when you’re picking and choosing who you’re going to work with, which I’m more than happy to coordinate all those access versus whether it’s recycling metal, whether it’s recycling baby items sometimes we get

[00:26:39] Fred Glick: Electronics.

[00:26:40] René Pérez Jr.: Electronics, and you also, it is a taxable deduction, right?

You do when you donate items, a lot of sellers don’t know, you can actually get a receipt for what you donated for what the donations are worth, then you can put it in your taxes, itemized deduction.

[00:26:57] Fred Glick: I will get the name of it. I can’t remember right off top of my head, but I will get it before this goes live. There’s a company out there that will come and pick up all the food and be able to reuse what they can deliver to homeless shelters. And they’re in the Bay area too. You might want to Google it if I don’t find it, if you don’t see it in the bottom here. But I’ll, I’ll try to dig it out. It’s good people.

[00:27:25] René Pérez Jr.: That’s really nice. An organization that’s trying to help in every aspect, shape, way, or form. That’s in tune with whatever product or service you want to get help on or provide help for. So there’s that. I mean, when you’re moving out and have a house and renovating it or move out, there’s two different things. Right.

One, you can take care of it yourself and you do want to take care of the floors and the paint. If you don’t take care of that, it’s going to look like a fixer. There’s no way around it. Right. You can update the electrical, you can do a lot of different things to it, but you do want to give this, the new buyers a clean canvas, unless it’s a teardown, unless you have cracks in the walls and they’re going to completely tear the house apart.

You, you want to give him a clean canvas. Now, as a seller, I know that you might not have the money. There are ways to have these listing concierge services remodel the entire house, and you don’t pay until closing. Once the property is sold, they get the money out of the proceeds from the sale.

That way, you don’t have to worry about paying any upfront fees. And this is for everything. This is for if you’re going to need help moving. Right. They also, these concierge companies can help with paying for that before the sale. This is for help in even the staging, if you want to stage the property, things like that.

So don’t, don’t think that when you’re selling, you have to get money upfront. You can work with concierge companies that yes, they will charge a fee for their services, but it allows you, if you’re paying, let’s say 10K for in fees, to be able to get a hundred, 150K in more profit than you would’ve if you wouldn’t have renovated.

And I’m here to tell you, you know what, it does make sense or no, you’re, it’s not really gonna make a difference. Right. Because

[00:29:10] Drew Thomas Hendricks: That’s the important thing when someone’s considering their home, they should be talking to a listing agent, talking to somebody such as yourself to help them advise them on the best use of their money, where to put the lipstick, should they do a concierge service.

And it also seems like this might be a, another benefit of the, your flat fee sellers list things with all the money they’re saving on commissions, they can put that towards a concierge service.

[00:29:34] René Pérez Jr.: Yeah. And sometimes people think, well, I was thinking of buying a new refrigerator so that it has a better visibility.

Well, okay. Are you going to put that 2, 000 on their fridge? Maybe instead you, you know, do landscaping in the backyard. That’s going to give you a more attractive price than getting a new refrigerator. Right? So, right. All right. Yeah.

[00:29:59] Fred Glick: Here’s the thing. I always say to people and it’s so hard for them to think about when you’re selling your house, you’re not selling it to yourself. Don’t make it so that you think it’s nice. You got to make it so the buyer thinks it’s nice. And you may be, I don’t know, in your, your 90s, and you don’t like any landscaping, and you have minimalistic house, and you just, I don’t know, I’m making this up, but the buyer wants to see a clean slate, pretty, you know, easy to move into and they’re willing to pay for it.

You know, we have some buyers that don’t show me anything. It’s not, I want to be able to move in day one. They’re going to pay for it. And that’s when that’s where you get into a competitive bid situation too. The nicer it looks, the higher the price, the more people. So if you want to look like crap, not do any work, you’re going to make less money and you may have less people bidding on it because there’s not a lot of, not as many people who want to do the fixup.

They don’t know what to do. They don’t know who to trust. They don’t know how to get it done. And I don’t blame them. I mean, all the good contractors, the really good ones, they’re working and they probably have a year’s worth of work lined up already and people are begging for them. So what you’re getting is this kind of, yeah, this is not for everybody, but kind of the next level guys, yeah, you can get the work done.

Or it’s one company that’s doing three jobs at once. Which can also be a nightmare. A bunch of guys don’t show up. They got to move from one job to the other and it just takes nothing but time. And don’t even try new construction. Forget it. Well, that’s a whole different, a whole different world.

[00:31:42] René Pérez Jr.: If you’re trying to build new construction, actually, I was actually a bit concerned that Fred was really optimistic. He was like, “Oh yeah, you’ll need, you’ll build it in two to three years.” Two to three years is pretty optimistic. That’s if you know,

[00:31:57] Fred Glick: That’s if it was modular.

[00:32:00] René Pérez Jr.: Oh, okay. Well,

[00:32:02] Drew Thomas Hendricks: What are you building in two to three years?

[00:32:05] Fred Glick: Getting approval and building in San Jose in like two to three years.

I mean, we had clients, they think, oh, we can build, we can get it by land and then just, you know, put the house on it and be in it in a few months. So I can turn to understand the process. My favorite California real estate story is this, I had friends who are both engineers, know exactly what they can do, designed, can design a house, plumbing, everything.

They knew everything. They bought a piece of land in the hills of Malibu, and you have now the city of Malibu, the county of Los Angeles, the Santa Monica Mountain Commission, the Coastal Commission, the state of California, the Environmental Protection Agency and on and on and on that had to approve.

So once they approved one thing, everybody had to approve it again. So from the time that they bought the piece of land to the time they walked in their front door was guess how long? You can’t do this, René. You’re nervous..

[00:33:04] Drew Thomas Hendricks: We’re playing five years.

[00:33:06] Fred Glick: Seventeen years.

Okay, now, they finished building in the 90s, but still.

[00:33:14] Drew Thomas Hendricks: They bought it in 83? Oh, jeez.

[00:33:19] René Pérez Jr.: Now it is on a worst-case basis, but

[00:33:21] Fred Glick: That is the worst case.

[00:33:25] Drew Thomas Hendricks: Persistence. I got to give them persistence 17 years. So what would you advise? Find a house that you want to like extensively remodel.

[00:33:33] Fred Glick: Yeah. Remodeling is going to be a lot easier than new construction. As long as you have a foundation.

That’s kind of what every city will say is it’s the basis for a rehab. So if you literally can knock the house down, you build it right on the same exact envelope that the last house was you’re building up from the foundation. It’s already there. I mean, the pipes are there, the electrics, you know, coming in from the street and all that.

So then it’s called a renovation. You can also do that with a, not in this price range, but a FHA 203K loan all over the country they’re done, where they give you the money to buy it and fix it up, but it has to be a renovation loan. So, but again, you can take it down, take everything out, and put a new house up on an existing foundation.

They’re great loans. They take a little bit of time and detail, but if the seller’s willing to wait to close and you can get it done, you got the right person doing it. Fabulous.

[00:34:28] Drew Thomas Hendricks: If you’re looking at fixers, the FHA renovation loans the way to go. Is there a certain, does the house have to have a certain amount of decrepitude to qualify for it?

[00:34:40] Fred Glick: 5,000 dollars. You literally can use the FHA 203k to put in new carpets and that’s it.

[00:34:46] Drew Thomas Hendricks: Really? Do they carry higher interest rates or is there a

[00:34:50] Fred Glick: Little higher than the, higher than the regular Fannie FHA loans? Which are lower than the conventional loan. So there’s somewhere in between, you know, conventional loans and regular FHA loans.

So it’s not bad. And get the mortgage insurance on it. I’m sorry.

[00:35:07] Drew Thomas Hendricks: Can you include the price of the renovation?

[00:35:09] Fred Glick: Oh, that’s the whole point of it. They let you buy it. You buy it with a three and a half percent down payment as low as, as long as qualified, plus all the renovations then they’re giving you. So let’s say you buy a house for a hundred, costs 50 to renovate.

They give you a 150,000 mortgage, they release 100,000 in closing, and they give you the 50,000 over time. I don’t want to go into all the details of it, but they release it after you do a certain amount of work, and it’s a whole thing.

[00:35:37] Drew Thomas Hendricks: Well, it’s an interesting thing. A lot of people wouldn’t, don’t realize it.

[00:35:40] Fred Glick: Fannie Mae and Freddie Mac have similar programs, but the FHA one is the one that’s most used and most identified with.

[00:35:47] Drew Thomas Hendricks: Interesting. Well, I need

[00:35:48] Fred Glick: Good stuff.

[00:35:49] Drew Thomas Hendricks: I need to let you get back to the chilly weather in Philadelphia and René I think there’s a light bulb that needs to be fixed on that.

[00:35:56] Fred Glick: Oh, yeah I’m up there King Kong Pérez.

[00:36:04] René Pérez Jr.: I know that there’s a Golden Gate Bridge, but apparently the Bay Bridge, he’s actually getting its lights back.

[00:36:11] Fred Glick: Oh, really? Cool. Who’s paying for it this time?

[00:36:14] René Pérez Jr.: I don’t know. Yeah, no, I didn’t read the article ’cause it’s

[00:36:17] Fred Glick: It was some company that was paying for it, wasn’t it before

[00:36:20] René Pérez Jr.: We stole money. Yeah, yeah. No, it’s a nonprofit of sorts.

[00:36:26] Fred Glick: Can’t remember. May, maybe the the guy who just sold the, or just moved the Oakland Athletics is doing it as a tribute to his friends in Oakland.

I’ll pay to light the bridge since I stole your baseball team. Boy, that was one ugly stadium. I was there about three or four years ago. It was like going to prison. It was just awful. It was in terrible condition. You know, it was just, oof. Anyway. Anyway, hey, one quick note on a hockey front, Cutter Gauthier, I hope you enjoy Southern California, but you better be sick on the days you have to come to Philadelphia to play.

You’re a moron. And we’ll, we’ll end it with that. Cutter Gauthier is a moron. On that note, you guys have no idea what I’m talking about, but there’s people who do.

[00:37:17] Drew Thomas Hendricks: I’m Googling it right after this. On that note, another episode of We Fixed Real Estate.