Why That Home Is Never Worth $8M (Even If They're Telling You It Is) With Fred Glick and Chris Gustavel Of Arrivva

Drew Thomas Hendricks00:00:23

Welcome to today’s episode of We Fixed Real Estate. Although we’re starting in San Francisco today, we’ve been shaking down south in San Diego. We just had our first earthquake in a long time. Another latest wild events. Here we have Fred. Fred, how’s it going? Chris Gustavel is here, and René is incognito driving back from a very important sales meeting.

René Pérez Jr.00:00:45

Oh, come on now. We just closed on our biggest transaction, probably the last year, really. It’s a property in Monte Sereno. It was originally listed back in September for close to 8 million, and we were able to close the transaction for $5,475,000. So.

Drew Thomas Hendricks00:01:06

Whoa, that does deserve a little bit of bragging.

Fred Glick00:01:08

Was it the same listing agent René? It just kept lower the price?

René Pérez Jr.00:01:13

Yes, it was. Yeah.

Fred Glick00:01:14

So let me explain, talk about buying a listing. “Oh, of course. I’ll be able to get you $18 billion and you know, a free trip around the world if you list with me.” This is so fricking typical ’cause sellers don’t understand what’s going on.

All they know is I want a big price for my house. And this agent said they could, they’re with a big company and they’re global and they’re gonna… it’s a bunch of crap people. All these listing brochures and promises.

René Pérez Jr.00:01:47

Here’s the issue, right? Yes, in the industry, one of the best scripts that agents use to get listings is to say you can get X price for a house when, let’s say it’s $3 million that the sellers want.

 The agents already know what number you want, so they just give you a bigger number, right? So that’s really well-known in the industry. However, you know, it is hard to really give a price as to what hell it’s going to sell. Because as agents, we have an idea. We know what the comps are, we know the market, but we don’t know what the actual market will do once it’s on the market, right?

Let’s say two weeks ago, two weeks ago, if we list a property, everything is well, the market is telling you good things, and then what happens? Tariffs happen. Well, now you have people who are scared to get into the market, so you don’t know how that’s gonna affect the market in terms of what you get afterwards.

So it’s hard to really know what a house is going to sell for. If we knew what a house was gonna sell for, you know, we would, we’d be retired. Right? And the other thing is that in residential real estate, once you go above like the $3 million real estate sales, it’s hard to figure out, “Okay. The house next door sold for 10 million, but they put in like 5 million on interior designs, so that’s why it sold for that price.” So you’re just kind of making up numbers in the luxury market. So it’s not, I would not blame agents for, you know, just bringing up random numbers when you’re above the 5 million because it’s hard to know.

And if you look at the street of where this sold, there are houses that, on one end, like the house next to this sold within a week, the house across from this has been on the market for more than two years. Right? So it’s really hard to kind of figure out, “Okay, what is the market really doing?” Right?

And these houses have huge lots, and they’re so big that, you know, between being in one house to the other, there’s a huge comparison in noise level, right? For example. And you can’t really tell because you’re so close, you would imagine if there’s no noise on this one, you know, the one next door probably isn’t noisy either.

Right. But it is. So that’s nothing that you can really mark. You can’t put a number on the comparables as to like what the noise level difference is. And that’s why it’s so hard. So don’t blame the agents for pricing and the way they did, because someone who doesn’t know real estate could have just emotionally bid for that number and they would’ve, you know, been geniuses.

Drew Thomas Hendricks00:04:15

And were you representing the buyer or seller on this one?

René Pérez Jr.00:04:18

We were representing the buyers.

Drew Thomas Hendricks00:04:19

You were the buyers and you got it for 3 million off?

René Pérez Jr.00:04:21

Yeah. Yeah. I mean, this is interestingly enough, and you know, when people listen to us, we always say like, “Oh, we’re a small brokerage.”

Well, I’m starting to think that we’re actually a big brokerage because this was actually the second set of buyers that we took to this house. So back when it was new on the market, we actually, I brought in a first set of buyers to that property. Eventually, they thought, you know what, it’s over prize and I don’t want to, I don’t really like it. It’s outdated. There’s this and that, that I don’t like. So they moved on and, you know, a few months later we get another call from other of our buyers who, by the way, we were working with them for, I’d like to say three or four years now.

Fred Glick00:04:59

They would pop up every once in a blue moon, like, okay.

René Pérez Jr.00:05:01

Yeah. That’s the thing with real estate, right? We’re here for the long game of, you know, just because you call us in, and just because we charge less doesn’t mean that we want to quick sell. You’ll get a house when you want to get a house, right? That’s our, our, our model.

Fred Glick00:05:15

And what we tell people is we could care less how many offers you make as long as they’re legitimate offers.

You know, we’re not gonna work with a developer who wants to lowball everything in Cupertino. ‘Cause you know, it’s just a waste of time writing contracts. But if you’re serious, it may take you a couple years to find a house.

Sometimes. I mean, hopefully, it only takes a couple of months. But what happens is the new first-time buyers come in and usually the first contract they underbid and they think they’re overbidding and they get killed, and then they understand the market.

So they, you know, then they know what to bid on the next one, or they get out on the market, it’s, or they look for a lower price house.

So just, you know. It’s crazy, but we’ll stick with you because I know in the big brokerage they have a thing. “Oh. If you show them three houses and they don’t do anything, drop ’em.” No, we’re not like that at all. I mean, it’s just, I’m not gonna comment.

Drew Thomas Hendricks00:06:15

The right house. Well, gosh. So that was in the pencil.

What’s happening up at the 16th and Mission Street, in San Francisco? There’s a lot of buzzing.

Fred Glick00:06:22

Oh, let’s talk about San Francisco. It is, it is truly coming back. Anybody’s, you know, puts on these things. Oh, there’s, you know, this place is closed and there’s guys around. The new mayors really got it together.

So if you’ve ever been to San Francisco in the last couple of years, and you’ve had to take the BART and either come out of the BART or going to the BART at 16th and Mission, it looks like, what does it look like? Let me give an idea. Two in the morning after a Coachella concerts, you know, it’s pretty dreary.

It’s crazy. There’s people doing everything there. He brought a big bus full of people to clear it out. And they’re all gone. And now you can get off at 16th and Mission and actually like walk down the street and not have to worry about it. He’s gone into the Tenderloin and cleaned it up.

So, San Francisco is absolutely coming back. We’re seeing, and René can go into a little more detail about this, certain properties single families, Western Addition, or that area. I mean, they’re flying off the shelves at ridiculous prices. You know, if the property looks really nice and staged really nice and photographed really nice, it’s gonna fly.

So, you know, it’s coming. It is. There’s still employment there. The AI people are HQ there. It’s happening.

Drew Thomas Hendricks00:07:54

So all the return to work, so people are now coming back into the city. So they can’t live out in Vacaville and telecommute in.

Fred Glick00:08:03

Yep. Or at least three, four days a week.

Drew Thomas Hendricks00:08:06

Well, that’s very encouraging.

Pied-à-terre will probably start going up in price for the condos downtown. I think in the same way it’s as Seattle that like the condos are starting to come back downtown. Chris, how’s the condo life in downtown Seattle these days?

Chris Gustavel00:08:21

I really don’t know.

Fred Glick00:08:24

Good answer. We haven’t sold them there. We don’t have many buyers downtown.

Chris Gustavel00:08:28

To me, downtown to me still is not a place to be.

Drew Thomas Hendricks00:08:31

Still.

Chris Gustavel00:08:32

Yeah. I mean, I don’t go down there very much, but there’s a reason. Everything’s gone.

Drew Thomas Hendricks00:08:37

That revitalization is coming back soon.

Chris Gustavel00:08:39

Yeah. Hopefully.

Drew Thomas Hendricks00:08:40

And then so San Francisco’s back, it’s getting even backer than it already was. I don’t think it ever left. But even going down south towards San Francisco into Hunter’s Point type area, or North South San Francisco, that’s even starting to.

Fred Glick00:08:53

Well, the Hunter’s Point thing, we talked about it last week, but we found out a little more, you know, they’re starting to make restitution and deals to finish the cleanup and it was in court forever and, you know, bad people trying to hide crap that was still in the ground and was like, “Whoops, we forgot,” I guess was their excuse. But it’s coming back.

Drew Thomas Hendricks00:09:20

And then as we circle through the whole rest of the city. What about the Great Highway? I know they’re closing it permanently to be a park.

That just seems like a traffic thing.

Fred Glick00:09:28

Yeah, they gave it a new name. Sunset Dunes? Is it? René? Have you been out there since they… Sunset Dunes. You know where they closed the road right down beach.

René Pérez Jr.00:09:42

Oh. I mean, that’s where I used to live, right?

Fred Glick00:09:44

Yeah.

René Pérez Jr.00:09:44

You know, I wonder what they’re gonna end up doing then eventually, I mean, there was a whole, you know, call to recall the, I don’t know if it was a city official that voted for them. But eventually,

Fred Glick00:09:59

It was a vote. It was a public vote.

Drew Thomas Hendricks00:10:01

It was, as a surfer, I miss not being able to be able to drive seven miles and actually see the ocean.

René Pérez Jr.00:10:09

Yeah.

Drew Thomas Hendricks00:10:09

Now you gotta drive through the avenues to get to wherever you want to go and like then hike up a sand dune.

René Pérez Jr.00:10:15

Yeah. Yep. Yep. I mean, they’re gonna turn it into a park allegedly, but we’ll see what they end up doing though with that.

Drew Thomas Hendricks00:10:21

Okay.

Fred Glick00:10:22

Good for bike riding now, that’s for sure.

Fred, tell me about mortgage.

Well, I wanted to talk about a little bit about what we do on the mortgage side. The most important person in your entire transaction, if you’re getting a mortgage, is someone you will never talk to, never meet, but they hold the balance of power in their hands for you to get a house.

Who am I speaking of? I’m speaking of a mortgage underwriter. Hey, very good Chris. She learns quickly.

Chris Gustavel00:10:53

I know. Yeah.

Fred Glick00:10:55

I could have done that before. We could have done it as a question and I could have asked you, so that would’ve been even better. But anyway, the mortgage underwriter is the one who takes all your documents and with the help of the underwriting criteria of whoever they’re underwriting to. Fannie Mae, Freddie Mac, jumbo lender, the bank, whomever. They decide if everything they have is good and they clear you, and then you get that fully underwritten mortgage preapproval. I can’t tell you how many people we tell to get the fully underwritten approval, which by the way, we can get in 24 to 48 hours for anyone doing a conforming loan really, or FHA or VA or USDA, we can get you that approval. It’s fully underwritten. But a lot of people just go and they get an approval.

Which is just like put in your data, they run you through the Fannie Mae or the Freddie Mac computer system, and then they promote a piece of paper you’re conditionally approved.

The words conditionally. Conditioned. That’s not good. You want the full, real approval that it’s been underwritten by someone because then you’re ahead of other people who didn’t do this. And as a matter of fact, like even on our listings, we tell people don’t even bother submitting an offer unless you’re fully underwritten, because there’s still a question whether you’re gonna get approved or not. So it’s really important and we do that. We love doing those.

The other thing about mortgages is obviously the price, the rates. The market moves literally every day. We had a day last week where there was tariffs. There was no tariffs. There was some tariffs. There’s left, left-side tariffs, right-side tariffs. China goes a hundred and million percent of the… All over the map. We had about seven rate changes that day. Okay. So it’s nuts. So when it comes to you comparing mortgage companies, you have to literally do it at the same minute. I know that’s hard to do. We’re one of the only companies that puts our rates online.

You can see our rates, arriva.com/rates. Put in your criteria. Boom. There’s a live price that we can, we can honor, assuming they don’t change it by the time we lock you in.

You know, take an hour. Compare us and three other companies, you’re gonna have to call ’em and talk to some loan officer. It’s gonna drive you crazy.

They’re gonna try to become your buddy. The other thing they’re gonna tell you is, “When you get approved and when you’re ready to put an offer and call me and I’ll give you an approval for the sale price so the seller can see, you know, that’s it. That’s your price and that’s what you’re coming in with.”

It’s the stupidest thing you can do because if you’re in a multiple bid situation, especially, and they say, okay, if you’re a million, and they say, “Okay, we have three offers. They’re all at a million or close, we’re gonna have a second round, but you can’t be in this because your approval only says you’re approved to a million.”

The loan officer screwed you. So be very careful. Rates, our rates determine real quick. They take a wholesale price from a wholesale lender, and wholesale lenders can be Wells Fargo. They could be Rocket. They could be anybody. We’re signed up with about a half a dozen companies. ‘Cause doing it with anymore is ridiculous.

We take our wholesale price and we add just $4,750 to it. Whereas every other lender in America does a percentage and they’re gonna be at least 1%. So if you have an 800,000 mortgage, that’s $8,000. So guess what? Our prices are gonna beat them. We don’t add on any extra fees, no processing fees, no junk fees.

So only with the lender charges and they’re underwriting fees, like somewhere between 1,012 hundred, but they’re all basically within a few hundred dollars of each other. That’s it. So those are really important things to do when you’re looking for a mortgage. You look at these criteria.

Drew Thomas Hendricks00:15:08

That’s very good.

And what about rate locks? Is it important to lock it in early or longer?

Fred Glick00:15:13

Here’s the story. You can only lock in after you have a contract. And you have to look at what your closing date is and add the number of days. So if you, if you’re closing within 30 days, that’s usually the best price. Yes, there are some companies that do 15-day lock after you’re fully clear and approved, but that’s different.

But like we had a client enter into a contract and the contract for 60 days. The seller want a time. We all agreed. Well, per rate or 60 days is gonna be, it’s probably an eighth to a quarter percent higher. But your alternative to locking in right now is every day, literally finding out what the rates are and being able to lock it any time.

So you do not have to lock it application. So just keep that in mind. So, but if you’re gonna go out 60 days, know that you’re gonna pay a higher rate than if you did 30 days. So just keep that in mind.

Drew Thomas Hendricks00:16:11

And once you’re locked, you can’t go apply for another mortgage if the rates go down.

Fred Glick00:16:16

Well, every company’s different.

If it drops significantly, like three, eight, and rate, you can usually renegotiate something. It’s not gonna be perfectly all the way down. Or you can just literally go to Mor, another mortgage company if there’s enough time.

So that can happen too.

Drew Thomas Hendricks00:16:32

Re lock it in.

Fred Glick00:16:33

With a refinance you can, you can get out of the deal even after you sign the papers.

‘Cause there’s three days after you sign the papers, it’s called a rescission period. So you can rescind the entire transaction and start from scratch.

Drew Thomas Hendricks00:16:47

Really?

Fred Glick00:16:48

That’s another podcast. We can talk about that. When the rates get lower, we’ll start talking about it. Now, the 10-year treasury all over the map, you know, it’s just nuts.

Drew Thomas Hendricks00:17:00

Yeah. All the pennants have been talking about it and they all seem to be not getting it right, like this tenure looks like it has a mind of its own right now.

Fred Glick00:17:08

Oh no. What’s happening is foreign governments are, they’re doing it to Trump. It’s like, “Okay, you wanna play the game with us? We’re just gonna sell a bunch of treasuries.” But we won’t know for like three months till the period comes out of when they actually have to disclose who was selling.

But I’m sure it’s China. China and more China and probably Japan, Mexico. Mexico owns a lot of our debt. Anyway. That’s all I got.

Drew Thomas Hendricks00:17:35

Chris? What’s the good word up there?

Chris Gustavel00:17:38

Good word. The weather’s getting nice.

Drew Thomas Hendricks00:17:40

The daffodils are out?

Chris Gustavel00:17:42

Yes, sun is out. It’s nice. Yeah. But kind of slow, real estate-wise.

Drew Thomas Hendricks00:17:47

Up there?

Chris Gustavel00:17:48

For me.

Drew Thomas Hendricks00:17:48

There’s opportunity?

Chris Gustavel00:17:49

I see houses coming on the market. I just, just not much going on for myself.

Drew Thomas Hendricks00:17:56

So in a market like this where houses are coming outta the market, but there’s not a, like the safe fervency that is in Cupertino with 50 people bidding on a home.

What’s the strategy for the buyer? Like, find something you like and make a thoughtful offer. Or wait, I mean, what, what’s the strategy

Chris Gustavel00:18:13

I think, yeah, find something you like and then, but it’s weird ’cause sometimes we think houses are gonna go in a couple days and then they don’t, they’re sitting there for, you know, it seems like it’s a hot home.

And then, you know, it’s been 10 days and it’s still sitting there, so it’s just, it’s kind of weird. I don’t really know if I have an answer for that. Just that you have to really, but then there are some houses where there’s like, you know, 10 bids. So.

Drew Thomas Hendricks00:18:37

I think that was the best honest answer I’ve heard because I don’t think a lot of people understand what’s happening with the economy and there’s so much indecision on both sides.

Chris Gustavel00:18:46

Yeah.

Drew Thomas Hendricks00:18:46

People selling it, “No, I should wait maybe another two months. It might be better.” People buying, “I should wait two months.” Like everybody’s just kind of looking for a clear signal on

Chris Gustavel00:18:54

And there is not, right.

Drew Thomas Hendricks00:18:57

Unless you’re forced to like, oh, I’m relocating. I need to move here.

Chris Gustavel00:19:01

Right.

Drew Thomas Hendricks00:19:01

How’s rents up there now?

Chris Gustavel00:19:03

I think rents are good. Rents is expensive and I think the rental market is strong. So yeah, especially there’s tons of condos here, so.

Drew Thomas Hendricks00:19:14

Rent’s still a possibility or a short-term lease or short-term like month to month until you find something.

Chris Gustavel00:19:19

Yeah.

Drew Thomas Hendricks00:19:20

Might be an option in this…

Chris Gustavel00:19:21

Yeah. I think people like are just not moving right now. If they don’t have to move, like why would they right now, they might wanna wait and see, you know, even a couple weeks or something.

Drew Thomas Hendricks00:19:30

Then you’re predicting that you’re gonna have more clarity in the future than you have now.

Chris Gustavel00:19:33

Right. Which you’re not.

Drew Thomas Hendricks00:19:35

Might even be less clarity.

Chris Gustavel00:19:36

Right.

Drew Thomas Hendricks00:19:37

Yep. Everything shaken here in California had the earthquake.

Chris Gustavel00:19:41

What was the earthquake? What was the

Drew Thomas Hendricks00:19:43

It was 6. It was a 6.0 up near Julian. So it was just east of, more of the downtown area of San Diego. So I’m up north from there.

Chris Gustavel00:19:54

And you didn’t feel much?

Drew Thomas Hendricks00:19:56

We could definitely hear it. It was loud. It was a very, but there wasn’t very rum, much rumble where we were. It was more of just this like loud kind of, it was a loud rumble, but not much movement.

Chris Gustavel00:20:07

That’s interesting.

Drew Thomas Hendricks00:20:11

Okay. Fred, René, Chris, I think this has been another episode of We Fixed Real Estate.