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What Realtors & Lender actually get paid for! Guests Chantry Abbott and Michelle Evans (St. George Real Estate Radio Show)

 

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Below is the actual St. George Real Estate Morning Drive show, hosted by St. George Real Estate Agent Jeremy Larkin, word for word! Enjoy and please share if you find it valuable! 

Jeremy Larkin and The Larkin Group @ Keller Williams Realty can be reached by calling 435-767-9821, or emailing sales@gostgeorge.com. 

Andy: News radio 94.9, 890 KDXU. Good morning to you. Tell me this guy has the coolest music in the biz right here. It is Jeremy Larkin. I did not even want to turn it down. You have got Jeremy Larkin, St. George Real Estate travel show, and I know Jeremy is trying to get all is tech set up and everything over there. Are you ready, Jeremy?
Jeremy: I loved how you stuttered there. You had a hard time.
Andy: Well, it has been a weird kind of –
Jeremy: I do not know what else to say about it, Andy. Let’s just name the elephant in the room. Right?
Andy: It has been a weird kind of day. You look outside and our red rocks are covered in white snow. I know you had issues this morning with the two-hour delayed start for school.
Jeremy: Yeah, this threw the kids’ schedule off a little bit this morning. No one in this room has a child going to school except for me.
Michelle: That is true.
Jeremy: And there are a whole bunch of us in this room. There are five people in this room. You know what is amazing?
Andy: I have two by the way.
Jeremy: Oh you do have two high schoolers?
Andy: Yes.
Jeremy: Okay. So you do.
Andy: Yes.
Jeremy: That is nice. That is good. So for them, it is cool. They are like I have got to sleep in and I will just drive to school. I have two boys that are going to school at odd hours. So normally the one is going either at 6:55 at the bus stop or he is being delivered at 7:30, and then the other goes at 8:15. So with the radio show and then a meeting at 9:30, I am finagling this kind of thing. It is being finagled as they say.
Andy: That is a good work.
Jeremy: Really, it is. It is being finagled. Today, Andy? Whoops, I dropped my microphone. I am going to invite you to lend that microphone to these guys today because we are going to have three of us on the show today.
Andy: Okay. Okay.
Jeremy: I have got some incredible guests in the studio. Andy Griffin is almost a guest because he is brand new. I have got Chantry Abbot with Guild Mortgage, on the air with us. One of our great friends, incredible home mortgage lender. And I have got, well, why don’t you introduce yourself, Michelle.
Michelle: Hey, Michelle Evans with the Larkin Group. Glad to be here.
Jeremy: I like it.
Michelle: Glad to get here safe and sound in all the slush.
Jeremy: It is kind of slushy out there. It was 33, I think, all night long.
Michelle: Oh perfect. One degree.
Jeremy: And I think that is why school did not get cancelled. So the kids can blame one degree. Because I think at 32 degrees, you would have had some really extra nasty roads and it would have been different. Right?
Michelle: Yeah, I was surprised that they were all right. They are slushy, but it is doable.
Andy: Yeah.
Jeremy: Chant, what do you got over there?
Chantry: See this kid is making a snowman. Kind of cool, right?
Jeremy: Isn’t this amazing?
Chantry: Bluff Street Park.
Jeremy: Yeah, it is absolutely incredible. We are at the Cherry Creek Studios on North Bluff Street, which is on the west side of Bluff, up on a hill. And those of us watching our live feed, we are on Facebook dot com slash Jeremy Larkin. Or we are on YouTube Live which is YouTube dot com slash Go St. George TV. But from here we see everything. Like we see everything.
Michelle: It is a great view.
Jeremy: It is incredible. It is amazing. So we are looking out at Bluff Street Park, and the famed snowstorm of 2013, we could not get up this hill, and last night they were forecasting five inches. I would be shocked if we even got two inches. I do not know.
Michelle: Yeah.
Jeremy: Chantry, what did you get at your house? Maybe an inch?
Chantry: Yeah. But I think there was more in like Santa Clara. I saw some folks this morning that got quite a bit.
Jeremy: Where it is higher.
Chantry: It was pretty hard.
Jeremy: Yeah. I went up to the Ledges last night at 8:30, eight o’clock, maybe to take my kids to a little get together and it was like a full-scale, winter, just a blizzard on the way up to the Ledges. It was incredible. And there was this fog later between here and the Ledges.
Michelle: Yeah.
Jeremy: So then you were going up and then it was snowing and you could not see, and it was wacky. So anyway, gang, look, clearly everyone knows it is snowing outside, and all of our friends on Facebook are going to make sure that we know that. Are they not? Everyone is going to do that today. So we are going to have a fun discussion. I do not know what Jesse has got going on. He is over there. What do you have going on over there? What is that? My phone died? I do not know, man. Who knows? So we are running Facebook Live. We are going to talk today about what realtors and lenders actually get paid for. Is that fair?
Michelle: That sounds good.
Jeremy: So Chantry has been with us for a really long time. How many years? A decade?
Chantry: I remember working with you back when you were starting to take over all the foreclosures. So that was probably –
Jeremy: 2010.
Chantry: So let’s say 2010, 2009 or 10.
Jeremy: 2010.
Chantry: I am tangled with my coat here.
Jeremy: So there you go. I do not know about this phone. So it is funny, guys. We are running a Facebook Live, and for whatever reason, it just died on us. I hope we are still live, but I think we are still going to, we are good to go. We are good to go. So 2009, 2010, you came into our world. Right? And since that time, have you ever been paid a salary to close mortgages?
Chantry: I have not.
Jeremy: Right. Michelle, how long have you been in the real estate business?
Michelle: Going on ten years.
Jeremy: Ten years. Have you ever been paid a salary to sell real estate?
Michelle: Never.
Jeremy: No, so we only get paid, right, gang, when the deal closes. That is the only way to describe it.
Chantry: Yep.
Jeremy: Right. And so Michelle and I were in this discussion I think yesterday talking about this dynamic that folks perceive, so this is the perception. So the perception is like Michelle goes out and shows homes and that is where she is doing the work. So the real work she is doing is showing people homes. Like find me a home. Correct?
Michelle: Right. It is all in the finding.
Jeremy: Yeah, it is in the finding. And the perception of course, is that that is where it is. That is where the pay –
Michelle: The value (indiscernible) –
Jeremy: Where the value is.
Michelle: Yes, to open the door.
Jeremy: It is to open the door, and at the end of the day, let’s all be frank with ourselves. What hourly rate could we pay someone to open doors? Could we pay someone minimum wage?
Michelle: We sure could.
Chantry: Sure.
Jeremy: Yeah, what is minimum wage anymore?
Chantry: Seven-fifty or something. Right?
Jeremy: Yeah, $7.50 a hour. We could theoretically pay someone $7.50 to open doors. And the issue is that for us in the real estate business, the real work, the real work especially if you are buying a home, right, begins when Michelle?
Michelle: When it goes under contract.
Jeremy: Right. So, what do you mean by under contract?
Michelle: Well, and putting it under contract, too. So it is the negotiation of getting it under contract, and particularly in the last few years where it has been a seller’s market, so you have really got to know your stuff to be able to win that contract for your buyer.
Jeremy: Yeah, absolutely. Right? So the work for the real estate agent happens we, like when it goes under contract, and of course, what Michelle is saying is when we get into the negotiation for the contract. Right?
Michelle: Right.
Jeremy: That is the issue. That is the issue.
Michelle: Yes.
Jeremy: You told me a cool story, and Chant, I am going to have you chime in here momentarily. You bought a home here how long ago?
Michelle: Yeah, back in ’05.
Jeremy: Okay, and you were not even an agent at the time.
Michelle: No.
Jeremy: Of course.
Michelle: I was teaching out at Tuacahn High School and I used Will Potter, who is now our competitor.
Jeremy: Yeah.
Michelle: He was great. He did a great job.
Jeremy: Great guy in town.
Michelle: We had three days to find a home. He blocked that out for us. We looked at 32 homes. I just want to say, so sorry, Will. I am just going to apologize publicly for doing that to you.
Jeremy: 32 homes. That is ten a day. That is a lot of homes.
Michelle: Oh my gosh, we ran the guy ragged. And ironically, we went back and bought the very first home that we saw. Anyway, and then I was teaching out at Tuacahn High School and he called me and he said when is your lunch hour? I said well it is from 12-1 or whatever it was, and he said I need to come out and have you sign this addendum. I said well you do not have to do it then. You can do it later or whatever. I had no perception that we have legal confines, legal deadlines that, he said, no, I need to have you sign this by five o’clock. I was like wow. Okay.
Jeremy: Hey, come on, you do not have to do that. It is fine.
Michelle: Like it is okay. I was trying to be so nice to the guy. Clueless. And what is funny is that I had bought four homes prior to that. So I think a lot of times agents think oh well, they have been around the block. They have bought a home or two before. And granted, I was probably not as smart as most about it. But you just do not realize what is the process once it is under contract? And I think that is probably some of the pushback of millennials. Well, I can find a house online.
Jeremy: Correct.
Michelle: And we are like right. That is just getting us into the game.
Chantry: And you probably will find it online right?
Michelle: Yeah.
Chantry: No matter how many –
Jeremy: 95% likelihood, guys.
Chantry: And no matter how much somebody tells you what they want –
Jeremy: 95% likelihood.
Chantry: They know what they want. Right?
Michelle: Yeah.
Chantry: They cannot really relay it. So look online. That is just the beginning. That is the easy part.
Michelle: Yeah, yeah. That is the fun part.
Chantry: Jeremy, when did you get in the business?
Jeremy: 2005.
Chantry: That was probably right after they had the books. Do you remember the books?
Jeremy: The books were obviously previous to my time.
Chantry: Not by far though, right?
Jeremy: I do not think by far.
Chantry: Probably late 90s, early 2000s.
Jeremy: What was the MLS called at that time? The Multiple Listing Service. It was called –
Chantry: I do not know.
Jeremy: Oh, what was it? It was this weird –
Michelle: I do not know.
Chantry: So those you that do not know, was it once a month, once a month the Board of Realtors would print out a book with a page for every single listing that was out there. So if there were 500 listings, there were would be 500 pages that would have property for sale.
Jeremy: Right.
Chantry: There was not an internet so the buyers could not go find the homes. So they really did need to sit down with an agent and flip through this book and try to figure it all this out and which ones were sold and which ones were not.
Michelle: Right.
Chantry: Now with the internet you find a house on the internet.
Michelle: Right.
Chantry: So anyone can do that.
Michelle: And the contract was so much less back then. So it really was, their perception was correct.
Jeremy: Yeah, we have added five more pages of contract paperwork.
Michelle: It really was finding the house. The weight was more on that.
Jeremy: Right.
Michelle: And much less with the contract. Now it has flipped. Now it is reversed.
Jeremy: Well, and let’s understand how buyers, let’s hit that door. These guys are exceptionally loud down the hall, aren’t they? Let’s remember how a buyer finds a home. Right? And so this is really good. If you are a home seller, I hope you will really listen really closely to this today. So what will happen is someone will put their home on the market, and they will be like if I can just broadcast this enough times, if I can just be in everybody’s face long enough, we will find a buyer. Right? But how do buyers, in fact, find the home they want to buy?
Michelle: Almost always online.
Jeremy: But how? When I say how, how does a buyer find a home? Do they go hey, a realtor called me and said they have the home for me?
Michelle: Oh, no never. They are out on the home websites. They are out looking. They are searching themselves. They can do it online.
Chantry: So wouldn’t you say really the only accurate, there are others. Yeah, we talk about Zillow and stuff, but only one that is truly live, real-time accurate is probably the Multiple Listing Service that you have to get by –
Jeremy: Yeah.
Michelle: Primary source. That feeds all those websites.
Chantry: — through a real estate agent.
Jeremy: Yeah, so let’s think about this. Chantry, let’s say that you want to buy a home today. What kind of home would you want to buy? Let’s just have some fun here.
Chantry: If I were to buy a house today?
Jeremy: If you were to buy a house today, what would it be?
Chantry: Let’s buy a million-dollar house in Green Springs.
Jeremy: And what would be a couple basic criteria that you –
Chantry: Really nice swimming pool, maybe a game room in the basement.
Jeremy: Okay.
Chantry: Four or five bedrooms, maybe a big casita. Kind of know we are dreaming. Right?
Jeremy: Okay. No, we are dreaming. Okay. Beautiful. So what you would do, where would you go to start looking?
Chantry: Well, me, knowing what I know, I would call a real estate friend, one of you guys, and say hey, this is what I am looking for. Set me up on a search.
Jeremy: Yeah, so two things that actually happen. Right? Number one, you call an agent and say set me up on a search. Tell me if you find anything. And then number two, you and your wife at eleven o’clock at night would be on a computer –
Chantry: Yep. Michelle said –
Jeremy: — or on an app searching. And you would be like Zillow dot com. Show me every home that is four bedrooms, three bathrooms, 3100 square feet or bigger, in the Green Springs area. I want a pool. It needs to be under a million dollars, and here is what would happen. You would actually burn yourself out looking, obsessing, you would obsess. Let me explain. This is really good. Jesse, just yell. Am I accurate with how buyers search for homes?
Jesse: Oh yeah.
Jeremy: They will drive their agent crazy searching. Hey, I saw this new one. I saw this new one. Did you see you the new one? Hey, what did you do this weekend? Well, actually we know that we are working with you, but we drove around, and we went in 27 open houses because we figured that somehow what we wanted you were not showing to us. But we could not find anything. And then we went to Craigslist and then we went to KSL dot com and we went to Zillow dot com, and then we came back around. They will literally drive themselves sick and they will get to this point of fatigue where they are like I do not even think I can look at another home. So what I always remind sellers is that if your home is a great home priced in a proper way, will buyers find it, yes or no?
Michelle: Absolutely.
Jeremy: Instantaneously.
Michelle: Many times over.
Jeremy: Yeah. So here is the other thing that sellers do not realize. Is it the buyer that is overlooking your home? Probably overlooked it like 30 times. Here is why. They tried KSL. They saw it there. They went to Zillow. They saw it there. They figured maybe realtor dot com would have it. They saw it there. They are getting listings emailed to them from five different agents because bless our hearts, that is what we do. We are consumers. So we go around and we see five different real estate signs. We call all of them, and all the agents being agents the way we are, hey Michelle, thanks for calling. Hey, how about we set you up on a home search. We will send you all the new listings in the morning. Wouldn’t that be great?
Michelle: Oh yeah.
Jeremy: Chantry is smiling because that is exactly what we do. I will just get you what you want in the time you want. Won’t that be great? There is a real estate script. They are getting listings from 5 to 10 agents based on their criteria. Are they seeing the home, yes or no?
Chantry: Absolutely.
Jeremy: They have overlooked your home so many times. Actually, you would be offended at how many times they looked at it and said no. We have seen it. No. Right? So we are having this interesting conversation here today about understanding the consumer’s mindset. Right?
Michelle: Right.
Jeremy: So the consumer’s mindset is number one, from the seller’s perspective, well, maybe there is someone out there who does not know about my home. Trust me, everyone knows about your home that is looking for a home, especially if you hired a good agent.
Michelle: And when they come in for a consultation and we pull up a list of homes that they are interested in and I will say hey, I just want to make sure we vetted the process. Have you seen this one, this one, this one? And not only have they usually seen it, but they have named it. Oh yeah, the big tree home. Oh yeah, the lion house because there is lion statue on it.
Jeremy: They have named every home.
Michelle: They are very familiar. They have seen it multiple times on multiple occasions.
Jeremy: And this is a my reminder I would give to sellers. For people who are selling and trying to find a home, I want you to think about what you are doing. You are doing what I am saying the buyer for your home is doing. You know you have seen all the homes. So the buyers come in. You take them out, Michelle, and for $7.25, $7.50 a hour, no pay per hour, you show them homes. And the real work begins the day that you say oh we found a home.
Michelle: Yeah. We want to make an offer. We do not want to let this one get away. So then we start the negotiations.
Jeremy: What kind of paperwork is required to buy a home right now in the state of Utah?
Michelle: Well, you have got the contract, six-page contract.
Jeremy: Real Estate purchase contract.
Michelle: Right.
Jeremy: A Rep-C.
Michelle: Yeah. Then you have got a buyer-broker agreement so that we have –
Jeremy: With the broker.
Michelle: — a right to represent you in the deal.
Chantry: Six pages does not do it justice. There is no inch that is not used. It is a lot.
Michelle: Yeah, it is a lot.
Jeremy: It is 29 sections, 26 sections.
Chantry: It is not like hey let’s just hand this to a, we have seen horror stories when people try not to use a realtor. It is like let’s just take this contract and fill it out and turn it into a seller. There are so many things in that contract that if they do not know exactly what they are doing, they are going to miss out on something.
Jeremy: Yeah, so it is six-pages. There 26 sections.
Michelle: Yeah.
Chantry: 26 sections, yeah.
Michelle: Yeah, and for example like what loan are you using? What loan are you using? That will determine an additional addendum that is required for that loan.
Jeremy: Okay.
Michelle: Then there is the buyer due diligence checklist that the state requires that. So that is something to warn the buyers hey here is a list of stuff to be sure that you are checking off so that you make sure that you are making the right decision. That has to be included. And then negotiations go back and forth which will add addenda to the contract. It can get pretty –
Jeremy: Addenda.
Michelle: Yeah, did you like that?
Jeremy: You know what is interesting?
Michelle: Not addendums.
Jeremy: How about this? How about this? Section 8.4, additional earnest money. If the Rep-C has not been previously cancelled by the buyer as provided in Sections 8.1, 8.2, or 8.3 as applicable, then no later than the due diligence deadline or the financing appraisal deadline, whichever is later, buyer will or will not deposit additional earnest money. Any additional earnest money deposited, if applicable, and sometimes referred to herein as the deposits, that the earnest money deposit or deposits, if applicable, shall be credited toward the purchase price at closing. Did anyone hear anything I just said?
Chantry: It is very attorney-speak.
Jeremy: That is one stupid paragraph —
Michelle: Yeah. Legalese.
Jeremy: — of 26 sections of a contract. Right?
Chantry: And I know I should not use this term, but I do tell them when they are working with Michelle or someone that is really good like Michelle that Michelle is your attorney. You can find the house. She has to let you in, and there are a lot of things that she does need involved there, but she is your attorney, really.
Jeremy: Yeah, because they sign (indiscernible) that we are not legal help but we are playing that.
Michelle: Yeah.
Jeremy: How about this, and by the way, I have got Michelle Evans with the Larkin Group with our team over at the Keller Williams Realty. I have got Chantry Abbott, Guild Mortgage. So Chantry, you are a lender. What about if somebody submits a contract to you and it has deadlines that say that there is a financing and appraisal deadline? You get to deal with that. Right?
Chantry: Yeah, we have to make sure that we have got their loan approved and their appraisal reviewed, and everything looks good, otherwise they are potentially risking their earnest money deposit, which if you do not know what that is, like a security deposit, and sometimes it can be really expensive. We have seen $5,000, $10,000 can be in trouble if they are not having a real estate agent that is taking care of those deadlines.
Jeremy: How many pages in your typical loan contract to close a loan? I do not mean the contract with you. I mean the actual loan agreement with the bank. How many pages? Typically.
Chantry: Like at closing, it is probably roughly 30 pages.
Jeremy: 30 pages. Has anyone ever read one of those? It is epic. Right?
Chantry: Yeah.
Jeremy: It is epic boilerplate –
Michelle: Take your dictionary.
Jeremy: — legal-speak. Right? So Chantry, what if I turn in the contract to you that says listen, Michelle, wrote an offer. The offer is contingent on an appraisal. It is contingent on –
Michelle: Due diligence
Jeremy: — due diligence or a home inspection. It is also contingent on the seller who is in San Francisco selling their home, and there is an addendum that says that they have just put their home on the market in San Francisco, and they have 21 days to sell the home, and if they do not sell the home in 21 days, then we can cancel the contract and come back. While that is at it, we have a 72-hour clause that will allow other buyers to come in and the other buyers can make offers on the listing that Michelle wrote an offer on and then they could kick the first buyer out of place. Do you see that stuff as a lender?
Chantry: Yeah, quite often.
Jeremy: All of the time. When does the work begin, guys? The work begins at contract.
Chantry: Yes.
Michelle: Very much so.
Jeremy: And so if we are selling your home, by the way, the work, of course, begins when we start marketing your property. Of course, right? But we are really more, the day that we sign that listing agreement and we start saying let’s schedule photography and let’s do what we do. But if you are buying a home, the heavy-duty work, that is contract work.
Michelle: And I think that they do not realize that there is a second set of negotiations. So during that due diligence period, that is 10 days, two weeks roughly that you have to get a home inspection done and then there is a second set of negotiations. Because a home is sold as is, but often sellers will defer maintenance and just feel like well the buyer can take care of that.
Jeremy: So you mean there is a negotiation to buy the house and then there is another second negotiation once they have done an inspection?
Michelle: correct.
Jeremy: What if the appraisal comes in low, Chantry?
Chantry: Another opportunity for a negotiation. Right? So I guess that is a third potential negotiation.
Jeremy: What percentage, Chantry, of deals do you see have an appraisal come in low right now?
Chantry: Probably 95% of them are just fine. So maybe 1 out of 20 or something along those lines. There is an appraisal something. Sometimes it is not just value. Maybe it is the roof has an issue that needs to be fixed or things like that.
Jeremy: Guys, it is snowing really hard out there. I just want to interrupt this previously scheduled program.
Michelle: Gosh, it is pretty.
Jeremy: So, Michelle, Chantry, so happy you are with us today. Let me share some statistics with some folks this morning. It is February 21st. We got a little bit of a slow start at the Larkin Group this year. Last year, we had 173 buyers or sellers, families we helped. But we have 21 properties under contract, representing a buyer or seller. We have closed 13. So all that paperwork we just talked about, 13 times we have closed it. We have 21 under contract. We have executed 31 contracts since January 1st, meaning we took a buyer out, went through all that nonsense, negotiated a purchase price, negotiated a deal, went through the inspections, went through the appraisals, went through all the headache. Chantry, does sometimes days before closing a lender, like the underwriting lender come back and say that they need a pay stub from 2007 to prove that these people are actually real?
Chantry: Can. We sure try hard to avoid it but yeah, it is just one of those things sometimes. Right?
Jeremy: Yeah, right. So we have put 31 contracts together like this, and eight of them have fallen apart so far this year. That is the numbers so far. So 8 of 31 have fallen apart. And why do contracts fall out, Michelle? Like what would be the reasons? Why do deals fall apart mostly?
Michelle: They cannot qualify for their loan is a big one. They change their mind is another one. Something happens during the home inspection and if the seller is not willing to credit or repair that issue, then they are like we are out.
Jeremy: Yeah.
Michelle: So that is another thing.
Jeremy: You mean they get scared. They get nervous, they do not like the neighborhood, they do not like the church, parish, whatever they went to. They found five broken roof tiles and maybe they are concerned that, and the list goes on and on. Right?
Michelle: It does.
Chantry: Appraisal. Appraisal does not come out good. There is an issue.
Michelle: Their home does not sell. It was contingent on –
Jeremy: Yeah, they had to sell their home.
Michelle: Their contract fell through back in San Francisco or whatever it could be.
Jeremy: Yeah, the domino chain. Chantry, as we wrap up, final minute. Most important message you feel like buyers and sellers need from a lending perspective today.
Chantry: Yeah, I just think that I have preached about this a bunch of times. But interest rates, we all know at some point, are going to be going up. Right? They have gone up about 1% in 2018. They went up about 1% in 2017.
Jeremy: Yeah. By the way, that costs people 20% of their purchasing power.
Chantry: And that is what I was going to tie it into. Perfect.
Jeremy: Ooops.
Chantry: If that goes up, no, it is great. If that goes up 1% again in 2019, which it probably will, most likely, who knows, but probably, that impacts their purchasing power or their monthly payment by 10%, which means home prices would have to change by 10% or they would have to buy a 10% less home. So I know the price of the house matters. I bought a place in 2007. I still have it. I have a ton of equity.
Jeremy: Worst possible time to buy a house.
Chantry: I have a ton of equity because it does not matter that much unless you are going to sell it next year.
Jeremy: Yep. Exactly. Exactly.
Michelle: Yeah.
Jeremy: Michelle, thank you for being on here with us today.
Michelle: Thank you.
Jeremy: And for bringing your expertise and talking about what realtors, I was about to say real estate agents, real estate agents and mortgage professionals, mortgage lenders, we get paid to produce an outcome. Right? At the end of the day, we do not get paid for the hours we work because sometimes we work 100 hours and sometimes, we work seven on the same deal. Right?
Michelle: Right.
Jeremy: We get paid to produce an outcome. We get paid to walk somebody through the most complicated and emotional process of their life, and that might include needing to reduce their price if they are selling the home. All sorts of things.
Chantry: I think we protect them through that process. Right? That is what we do.
Jeremy: Bingo. Bingo. Guys, I want you to visit St. George Home Searching dot com. St. George Home Searching dot com because we are talking about the MLS. If you want to look at every single house that is on the Multiple Listing Service right now, St. George Home Searching dot com. You can click on the link there to find out what your home is worth. Check it out. Thanks, Chantry Abbott, Guild Mortgage. 674-1090 if you want to speak with him. 674-1090. If you want to reach out to us, 275-1690. Sold in St. George dot com. There you go. End of story.

 

SIX HOME PRICING MISCONCEPTIONS THAT COST YOU MONEY (St. George Real Estate Morning Drive Show)

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Below is the actual St. George Real Estate Morning Drive show, hosted by St. George Real Estate Agent Jeremy Larkin, word for word! Enjoy and please share if you find it valuable! 

Jeremy Larkin and The Larkin Group @ Keller Williams Realty can be reached by calling 435-767-9821, or emailing sales@gostgeorge.com. 

Mike: KDXU News time. It is 8:35. It is a Thursday. Good morning and welcome. It is also time for another edition of the St. George Real Estate Morning Drive. We welcome in the voice of St. George Real Estate. Here is Jeremy Larkin.
Jeremy: Thank you, Mike. And Robert is offended that you did not say voices.
Mike: The voices of St. George Real Estate –
Jeremy: Thank you.
Robert: I am not at all.
Mike: How about if I say Robert and Jeremy. Now Jeremy is mad.
Jeremy: Robert J. DeBry. I mean MacFarlane.
Robert: Robert J. DeBry and Associates.
Jeremy: I had the resume and I thought it said Robert J. DeBry, and I am like he is interviewing for a real estate position?
Robert: Because I am Robert J.
Jeremy: But then I looked again, and it was just Robert J. MacFarlane.
Mike: Just.
Robert: Just.
Mike: Just.
Robert: Just. Not bad though.
Jeremy: I will take it. Very good morning. Here is a fun trivia for you this morning because it is a beautiful January day in St. George, Utah. I was driving my child over to la escuela, as they say in Latino America. You guys understand, right? This school. Robert, I think you understood.
Robert: Oh, okay. Got it. That was a tough one for me.
Jeremy: I want to make sure. We are going to do a little Spanish course today. So I am headed over to Tonaquint Intermediate School and we pass Southgate Golf Course. I said, Matt, look at the golf course. And it was covered in frost.
Robert: Frost.
Jeremy: It looked like snow.
Robert: Frosty white.
Jeremy: Yeah, it looked like snow. He said man, that is the whitest I have ever seen it besides when it snowed. And I helped him understand. Gang, if you are not a golfer, do you realize, so do you know what the rule is with the frost in the morning?
Robert: I do not.
Jeremy: So they will not, Southgate Golf Club, by the way, is owned by the City of St. George. Golf Club, golf course. I think club is a little liberal. They will not let players out until the frost is off. And really the frost only has to be off on the first hole because once it is off on the first hole they send them out, and then of course, the sun is going to hit everywhere else. But that is the deal. So this morning, the second that sun hits that fairway or that first hole and green, then they will send people out.
Robert: Interesting.
Jeremy: You did not know that?
Robert: I did not know that. I am not quite as much of a golfer as I probably should be.
Jeremy: Should be. I have news for everybody. You do not need to be a golfer to be in real estate. People think that real estate agents just play golf and have lunch with friends.
Robert: Yep, I think that is it. Right?
Jeremy: I do not play much golf, and I really do not have lunch often with friends. I have lunch occasionally with clients. But I am going to get out tomorrow. So headed out, thank you to my brother-in-law. He has got free golf at Sand Hollow. Sand Hollow was just, if you guys did not see this, there was an incredible article in Golf Digest talking about, it was a feature on Sand Hollow Golf Course out there in Hurricane, out there near, Hurricane, Utah, near Sand Hollow, what do you want to call it? Reservoir.
Robert: That is what it is called. Lake.
Jeremy: Yeah, so very cool. And I will have the opportunity tomorrow afternoon to go out with these guys with my father, and it is going to be a great time. But work must be done, and we have got to sell some real estate first, don’t we?
Robert: We have to. It is not an option.
Jeremy: It is not an option. It is not an option. Gang, if you are watching us on Facebook Live, say hi. Shoot out some hearts or a thumbs up or let us know that you are there, or if you have got questions for us, we are on, this fun.
Robert: We are on three.
Jeremy: We are on three phones.
Robert: We are on three. I have got Facebook Live on mine. We have got Jeremy’s Facebook Live.
Jeremy: And YouTube Live.
Robert: YouTube, YouTube Live.
Jeremy: How do you like that?
Robert: It is a new age.
Jeremy: And, of course, we are on the radio, which you are listening to.
Robert: Thanks, Mike, appreciate that.
Jeremy: Thank you, Mike. Incredible. So check this out. If you are a YouTuber, and some folks will say yeah, I do not do Facebook Live, YouTube dot come slash Go St. George TV. G-O-S-T George TV. YouTube dot come slash Go St. George TV, and you will see us broadcasting live. Robert is running live and I am running live on Facebook.
Robert: Why not?
Jeremy: It is wild. It is wild. 94.9FM, 890AM. We are going to talk about something really cool today. So Robert is with me. Robert has been in my organization now for, pushing three years?
Robert: Pushing four.
Jeremy: Pushing four. Thank you. Jesse is over that hump. So Robert is with us. He is, I talk to him on Facebook. He is a, I actually think he is a home-pricing and home-selling expert and has been part of us now selling, I think we are at like almost 1200 homes.
Robert: I do, too.
Jeremy: That is a lot. Folks, that is a lot of properties. The average homeowner buys or sells every seven years, and of course, once they are an adult, then they are in the home.
Robert: Right.
Jeremy: It does not start at age zero.
Robert: Yeah. You know you have been selling real estate a long time when you actually, you see a home hit the market, and you are like that home looks familiar. And then you realize oh, that is because five years ago I sold that house.
Jeremy: We sold that. Yeah. It is fun, and I love to drive around and do that. And of course, I always tell my kids I sold that. I sold that. I sold that. I sold that. So it has been an interesting ride, and Robert is with us this morning, and we are going to be talking, so he really is. He is a home-pricing and home-selling expert. We are going to talk about the six pricing misconceptions that actually cost sellers money.
Robert: Is there only six?
Jeremy: There are a lot, but six is, man, I am telling you what.
Robert: It really boils down to these six.
Jeremy: Yeah, it boils down to these six, and it sounds like a lot. It is not a lot. It is really easy to digest, but this is a real issue right now because we have a lot of home owners, a lot of home sellers who are, they are aggravated right now. Why?
Robert: Mainly why because homes are sitting on the market. I was just sitting down with a client. Their home is actually for sale as a For Sale By Owner right up here on Bluff. And what happens a lot of times is for homes that were for sale by owner, they do not sell the home for a month –
Jeremy: Correct.
Robert: — maybe two.
Jeremy: Correct.
Robert: And then they reach out to a real estate agent and say hey, what am I doing wrong? So that is what ended up happening with this family over here on Bluff. And we sat down, and I noticed that in the $4-500,000 price range, the active homes on the market have been sitting there for an average of 102 days.
Jeremy: That is a long time.
Robert: That is an average, so some have been more. Obviously, some are less, but that is 106 homes sitting on the market for an average of 102 days. That is pretty –
Jeremy: Yes.
Robert: That is not typical.
Jeremy: And here is the perspective for people. Last summer, most homes under $500,000, I am not going to give any specific other than under 500, they were sold in 30 days or less, and some folks, we have sold homes that I was thinking about, a home that we sold over on, the Jenkins home on Canara in Green Springs. Pseudo-luxury home, $480,000. We had multiple offers.
Robert: Right.
Jeremy: We had two buyers competing. We sold another one in Greens Springs in Silverstone. Two buyers competing at $650,000 for that home.
Robert: And I am sure we have home builders listening to the show –
Jeremy: Yeah.
Robert: — and I bet you more now than it has been in probably the last three years, spec homes have been sitting on the market.
Jeremy: Yeah, and it is going to freak people out.
Robert: They were not having to really do a whole ton of work trying to sell those before –
Jeremy: No, no, no.
Robert: — and now it is a different game. Just to kind of, it seems like overnight.
Jeremy: It is interesting. This is so subtle that it throws people off. And so we have a lot of home sellers who are frustrated, like man, I thought it was a good market.
Robert: Right.
Jeremy: And what we want to talk about are the six pricing misconceptions that cost you money, and also reiterate that it is a great market.
Robert: The best really.
Jeremy: It is an incredible market. The market that we were in for a little bit there was actually unsustainable and was akin to giving your kid the keys to your Corvette and telling them to drive 120 down the freeway indefinitely and assuming that nothing was ever going to go wrong.
Robert: Right.
Jeremy: Okay, at some point, okay –
Robert: Right.
Jeremy: — he is going to hit something.
Robert: Yeah.
Jeremy: And that is what our real estate market was doing. It was careening out of control. You cannot have homes sell that quickly. You cannot have, look we had appreciation in 2005, remember. 36%. We all remember how that turned out.
Robert: Yeah. And I think that is probably the biggest challenge I hear more than anything is well, in 2005, and they are always going back to this, now we are looking at 14 years ago.
Jeremy: Right.
Robert: Kids that were in diapers are now driving cars. Right?
Jeremy: Yes.
Robert: That long ago. They are saying well, it was like this then. Why isn’t it like this now?
Jeremy: Correct.
Robert: And the reality is we are looking at two different eras.
Jeremy: Bingo.
Robert: Completely different eras.
Jeremy: It is two different times. So it is fascinating because I mentioned a home in Green Springs at $650,000. It was sold for another radio personality who we have mentioned on air before with another firm in town, and he was delighted when I had two buyers competing against each other to buy his home.
Robert: Right.
Jeremy: The interesting part is that there was a 30-day period where the home was actually listed too high.
Robert: Right.
Jeremy: Let’s just find out what the market will bring. And the second, the second that price was brought in line, we are going to share with folks today, Robert, that you cannot what a home?
Robert: You cannot underprice a home.
Jeremy: Not even possible. But Robert, I do not want to give my home away.
Robert: Right, and I understand that. We all understand that. Nobody does.
Jeremy: (Indiscernible)
Robert: Do you know anybody, Mike, can I have your house?
Mike: No.
Jeremy: No. No.
Robert: He is not going (indiscernible)
Jeremy: But Robert, I do not want to leave money on the table.
Robert: And we understand that. That is a valid concern. Right? Nobody wants to leave money on the table.
Jeremy: No.
Robert: So there is a strategy behind that.
Jeremy: And what we are saying is it is actually, this is incredible, I hope folks are listening who are selling right now, considering selling. Builders, you cannot underprice a home. It is actually not possible, and we are going to talk about why.
Robert: Right. Even in horrible markets, right, even in a full buyer’s market, which we are not in one, unless you are selling in the 600 and above, and really in some cases, depending on how unique the property is, that is not even a buyer’s market. Right? But for the most part, we are in a seller’s market from top to bottom.
Jeremy: We actually are.
Robert: So if you are in a seller’s market, what does that mean?
Jeremy: That means that the benefit, the advantages to the seller that there is a less supply, right, and the buyers are really hungry to gobble up the limited supply.
Robert: Yeah, it is the iPhone launch. Right? There are not as many iPhones on the market, but they are going to charge you $1200 and you are going to happily go pay that –
Jeremy: Correct.
Robert: — which is not always true, and that cannot happen forever. Right?
Jeremy: Correct.
Robert: I remember reading an article about Apple doing that, running into issues with that, and at the same time, because we are in that seller’s market, do you think Apple is like do you know what? I am really worried about selling this. Could I have asked $50 more?
Jeremy: Right. Right.
Robert: Am I leaving $50 on the table? No, they are not.
Jeremy: And this is so interesting. So let’s talk about this. Six pricing misconceptions. Okay. I am going to overview them. Is that fair enough?
Robert: Yeah.
Jeremy: So, Jeremy Larkin here. Host of the St. George Real Estate Morning Drive. And I want to share something. I do not say this to impress. It is to impress upon you, right? So 1200 homes is where we are at as a real estate group here in Washington County. If you can imagine that 25% of the contracts fall out, as a matter of fact, this last year, 19.6% of the contracts, contracts that buyers wrote on our listings, 19.6% fell apart.
Robert: For one reason or another.
Jeremy: Yeah, the appraisal came in low. The buyer got cold feet.
Robert: The inspection came back poorly.
Jeremy: The inspection came back poorly. They could not get financing. Right? Whatever. All right. 19.6%. So for us to sell 1200 homes, we actually had to sell, to put on the market, we had to deal with 120%.
Robert: Right.
Jeremy: But the reality is it was not because we probably spoke to 250 or 300% as many clients –
Robert: To get those.
Jeremy: — to get to there. Okay. So understand, folks, that we have literally had thousands, this is where the –
Robert: Yeah.
Jeremy: I am even baffled saying this out loud. We have actually had tens of thousands of real estate conversations. Tens of thousands of conversations with buyers and sellers. Okay. So, it just gives some credibility to what we are talking about here. These scenarios never change. It does not matter whether you are in Cincinnati or Miami, Florida or St. George, Utah, these are realities. Okay. Six pricing misconceptions. Your home is not worth what you paid.
Robert: Nope.
Jeremy: Well, it could be, but it is not worth what you need. But Robert, I need 450.
Robert: We all need a million dollars. Right?
Jeremy: It is not worth what you want.
Robert: Nope.
Jeremy: It is not worth what your neighbor says.
Robert: I disagree with you there. My neighbor, he knows a lot about real estate.
Jeremy: I know.
Robert: He has sold two or three homes.
Jeremy: He has sold two or three homes and he drives for Andrus Trucking, but he is a real estate expert. It is not worth what your neighbor says. It is not worth what another agent no matter how bad they want to get your business –
Robert: Yep.
Jeremy: And it is not even worth what it costs to rebuild.
Robert: I think it is interesting. You say it is not what another agent says. That includes yours truly.
Jeremy: Right. Right because do we determine the value of a home?
Robert: Absolutely not.
Jeremy: Absolutely not. So we do not make the market. We just interpret the market. So if Robert goes out or myself or one of our team and you hire us to sell your home, we do not make the market. We do not come in and say well, I think it is actually worth 425. We may say that based on all the data and that is what we do, but we do not make the market.
Robert: Right.
Jeremy: In every market, for every product, who determines value, Robert?
Robert: The buyer. That is a t-shirt. That is a cell phone. That is a car.
Jeremy: Yes, everything.
Robert: It does not matter. A burger.
Jeremy: Yep. Buyers determine value.
Robert: Always. That is the free market.
Jeremy: The greatest example on the whole planet right now, at least I think it is the greatest example, I am a Disneyland fan. And I heard 30 days ago they raised their prices again.
Robert: Yeah.
Jeremy: And it came across Facebook or something and I saw one of these blogs that is like a Disney insider’s blog. And what they said is does not matter. It is not deterring anyone. Right?
Robert: Netflix is another example.
Jeremy: Oh my gosh, right.
Robert: They raised the price of Netflix. They did a survey. How many people are going to stop using Netflix? 76% said that it was not going to phase them at all. Of the remaining piece, only 3% said they would probably stop watching Netflix. 3% and they raised it like, I think it was like, they raised it like $5 or something like that for the top plan.
Jeremy: Right. Right. So buyers determine value. And here is the point. You may say well wait, if Netflix and Disney are raising their prices, I can, too. No, what we are saying is the market is determining value.
Robert: Right.
Jeremy: So today, they said it is $190 to buy a one-day hopper to Disney (indiscernible)
Robert: I have got a sidebar.
Jeremy: Good grief.
Robert: My sister she lives up in Salt Lake. Her and her family, it has been ten years since they have been to Disneyland.
Jeremy: Right.
Robert: They just went this last week. She has got a sweet picture of the whole family all of them wearing fanny packs like it is 1980.
Jeremy: Everything is just regurgitated.
Robert: Isn’t it so funny?
Jeremy: It is 1980 again.
Robert: It is so funny, man.
Jeremy: It is Marty McFly. Right? 1985.
Robert: They were the best fanny packs. Good strong, there are six of them, all with fanny packs.
Jeremy: You know what? I think the next time I am going back I am wearing a fanny pack.
Robert: You should rock it, man.
Jeremy: And you realize they spent thousands on tickets.
Robert: They did.
Jeremy: And it is not going to deter people. So until Disney raises their price to a level that the market says oooo, now that is out of range. Right? Here is another thing. So folks, one of the challenges we have is that how many Disneylands are there? There are about a half dozen.
Robert: Right.
Jeremy: There is Disneyland, Disney World, Tokyo, Paris, are there six? Are there two more that I do not remember. Okay. Maybe that is it.
Robert: Asking the wrong guy.
Jeremy: Okay. How many homes are hitting the market every month right now in Washington County?
Robert: About 300.
Jeremy: Another three, and by the way, as many as six in a big month.
Robert: Oh yeah.
Jeremy: Three to six hundred homes –
Robert: Like the one we are coming up to. Right.
Jeremy: Right. We are in the biggest month right now. See the difference is, folks, we are not Disneyland. These are homes, and even though you love your home, and I know that you, I realize how much time you spent on the custom cabinets and the custom closet inserts, and that was important to you. Right? You put those in for your enjoyment. And Robert, did you enjoy them?
Robert: Oh, absolutely.
Jeremy: Right. Did you put them in for the next buyer to use?
Robert: No. Actually, I did not.
Jeremy: Probably no, but I read an article on home improvement and it said –
Robert: Zillow told me that I could get a $15,000 return if I remodeled my bathroom.
Jeremy: Right. So the reality is buyers will always, yeah, buyers will always determine the value. So as we walk through this. What you paid. If you paid for your home an exorbitant amount in 2005, understand that values fell in Washington County 46% since 2005, 2006, and they have come back, that was between 2006 and 11, and they have come back 42%.
Robert: Overall.
Jeremy: Overall. So we have almost gained back every bit of what we lost. But do you realize it took us five years to lose it and another almost six years to get it back? Almost seven years to get it back. So if you followed that, in 2005, values were really high. In 2011, values were really low. In 2018, values are really high, and now it is 2019. Where can we only predict that values can realistically be in the next few years? Not higher.
Robert: Or, if so, we had to weather going down to come back up eventually.
Jeremy: Right. So for our home sellers right now, what I want to articulate is there are six pricing misconceptions and when you put your home on the market at a price well, I paid this, well I need this, well I want this, well my neighbor said this, well an agent told me, well do you know what it would cost me to rebuild this day? None of it has any bearing on what your home is worth. What your home will be worth is what a reasonable buyer with funds available and the initiative to move into your home will pay in today’s market. And what I am trying to, want to make sure that we convey is that even though, even though right now, Robert, a whole bunch of your clients, my clients, in the area are frustrated saying but I thought I could sell for blank. They need to understand that the price that they need to be at, which is probably 5% lower is an amazing price.
Robert: Right.
Jeremy: Is an amazing price.
Robert: It is all perspective. It is all about perspective.
Jeremy: If someone had told them in 2011, if someone had told these people in 2011 when I was selling Hidden Valley townhomes for Fannie Mae and Freddie Mac and HUD, government foreclosures for $85,000 –
Robert: Wow.
Jeremy: What is Hidden Valley at right now? 170?
Robert: Maybe a little more.
Jeremy: If someone had told somebody in 2011, hey you know your Hidden Valley townhome that you have to sell for 85 right now? It is going to go back to 170 or 80 thousand dollars, it is going to double in value by 2018. Would have kissed me on my face if they could have had the old almanac. You know the almanac from Back to the Future.
Robert: Back to the Future.
Jeremy: If I could have predicted that, would you have been very happy with me?
Robert: Biff, I would be so happy.
Jeremy: I know you would. So it is all perspective. So even though, and the most important two words of today’s show are even though. Even though you feel frustrated today that the market will not bring quite what you want, you need to realize that the market is bringing you the, this is one of the highest price points in the history of American housing today. And what is going to have to happen is this. You are going to have to amend that price mostly as folks are. And here is the challenge. Robert, if I know you are a baseball player, and a few other sports.
Robert: Go Yankees.
Jeremy: Yeah, go Yankees. Hand-to-hand combat. I actually watched you do hand-to-hand combat that day with Creed. When the ball –
Robert: I won.
Jeremy: Yeah, when the ball, you kind of did. When the ball goes away from the field and it is rolling down a slope away from you, what is the only way to get to the ball?
Robert: You have to get in front of it.
Jeremy: Yes. So, folks, envision. You are a kid. You are chasing a ball. It is rolling down a hill, and you are lunging. Right? You are lunging.
Robert: Trying to stand. Keep standing. Try not to fall.
Jeremy: Tearing your hip flexor. The only way to stop the ball is to get in front. And so, if folks want to actually capture the highest price for their home it is important that they get in front of the ball and not be chasing the ball. And right now, we have sellers who are chasing the ball. And in six months, they are going to look back and say what?
Robert: Man, I probably just should have just made the move six months ago.
Jeremy: Yeah. But I was so convinced that I needed that extra 5%. Right? Why is it impossible to underprice a home?
Robert: Well, I think there are a couple of reasons, but the main reason why is because one you hit that price where all of the buyers know that truly there is value, because it is value. It is just like going down the street and hey milk is $3 a gallon at Smith’s –
Jeremy: Got it.
Robert: — and it is $3.50 at Albertson’s, I will drive across town to save that fifty cents. Right? I will do whatever it takes to get the cheaper value or the value I see that is actually there. So if I price it to a spot to where I know multiple buyers are in it, I am not going to wait. I am going to worry about the fact that somebody else is going to get it if I do not, and so I am going to pay 100% of what they are asking because I do not want to lose it.
Jeremy: Do you think this is true even for the luxury, the high-end market? Let’s talk to our luxury listeners right now.
Robert: Oh, absolutely. I think the luxury in this, specifically in this town, our high-end clients, the people that own second homes here or have retired here and put their nest egg in a beautiful home because we get probably some of the most amazing homes for the best value in my opinion.
Jeremy: We sure do.
Robert: In this town.
Jeremy: We sure do. We have folks come out of California and go wait a minute. $1 million for this? This was three back home.
Robert: Exactly. It is unbelievable. The biggest mistake I see happen is realtors tell them it is worth more than it really is, and the list to sales price of luxury homes is significantly different than it is even at the six, five and six hundred thousand. At 500,000, they are getting 99.9% of their asking price. At a million dollars, they are getting 92% of their asking price.
Jeremy: Good grief. You sold, okay, this is fun, I looked at this. You sold the most expensive home in Bloomington. It is the highest sale I have seen in five years. What was the sales price?
Robert: $1,070,000.
Jeremy: Okay. 1.070. Okay?
Robert: Right.
Jeremy: $1,070,000 on Jolly Circle.
Robert: Beautiful house by the way.
Jeremy: Yeah, there was some marketing that was done.
Robert: Absolutely.
Jeremy: We shot this killer –
Robert: Sweet video.
Jeremy: This video and –
Robert: We are going to put it out on Facebook.
Jeremy: Yeah, we will link it up for you. Incredible video. A guy hitting a golf ball, it is actually me, but you cannot really tell it is me unless you know it is me.
Robert: You shanked it. It actually was not even that good of a hit.
Jeremy: I actually hit it right on the green, I think. But we shot this incredible video, and there was some marketing that had to be created for this home. But no amount of marketing –
Robert: Nothing.
Jeremy: Nothing would have changed the value of that hope.
Robert: Nope.
Jeremy: But Jeremy, wait a minute. You mean that marketing does not matter? Oh I did not say it did not matter. Marketing is actually, in a lot of ways, a defensive measure. It is a protective measure to ensure that you get all of the value out of your home.
Robert: Right.
Jeremy: But buyers will not pay you more than the value. They do not say you know that video that you guys shot? That was incredible, and I am a really smart buyer that has enough money to spend a million dollars for a home. I think I will pay you an extra hundred grand because the video was so impressive.
Robert: Yeah, I was just blown away.
Jeremy: The video, right, the video was to make sure that we got them all their value. It is impossible to under price your home because if you price your home even quote below market you will have multiple buyers bid against and raise the price. Downtown St. George, Putnam’s home, you sold it for twenty grand over the asking price?
Robert: Twenty grand over asking.
Jeremy: $20,000 over the asking price because buyers bid against each other.
Robert: And in downtown St. George, they are selling for what the value is.
Jeremy: They are. Bingo.
Robert: They are not selling for an inflated value. They are just selling for what they are worth.
Jeremy: Thanks, Robert. Hey, let’s go sell some real estate today.
Robert: Hey, why not?
Jeremy: Let’s do that.
Mike: You have been listening to the St. George Real Estate Morning Drive. For more information, call 275-1690 or online find them at Sold in St. George dot com.