9/16/26 Rates, Real Estate & AI: What's Changing for Your Money and Your Home

The Moneywise Radio Show and Podcast Wednesday, September 16th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com https://www.moneywiseguys.com/ facebook: Moneywise_Wealth_Management https://www.facebook.com/moneywiseguys/ LinkedIn: Moneywise_Wealth_Management https://www.linkedin.com/company/moneywise-wealth-management-bakersfield/ Guest: Merv Rash, Realtor at Jeff Jackson & Associates website: https://buyinbakersfield.com/agent/merv-rash email: [email protected] mailto:[email protected] phone: 661-706-3146 The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Merv Rash & Jeff Jackson + Associates are not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management

• 0:00Speaker 00

  Live from the basement inside the historic Woolworths Building in downtown Bakersfield. Call or text in at 661-396-1000.

• 0:09Speaker 01

  I need a dollar, dollar, dollar, that's what I need. Hey, hey. Well, I need a dollar, dollar, dollar, that's what I need. Hey, hey. Said I need a dollar, dollar, dollar, that's what I need. And if I share with you my story, would you share your dollar with me? Securities offered through LPL Financial, member FINRA, SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.

• 0:37Speaker 00

  Now, let's start the Money Wise Show.

• 0:40Speaker 02

  Hey, welcome to the Wednesday edition of the Money Wise Show. Live from the basement of the historic Woolworths Building in downtown Bakersfield. Come on down, get yourself a burger and some fries, maybe a shake.

• 0:52Speaker 03

  Peanut butter shake.

• 0:53Speaker 02

  Peanut butter shake. Mmm, that sounds really good. Uh, for the next hour, you're here on News Talk 96.1 and 1230 AM, KERN, streaming live at MoneyWiseGuys.com. MoneyWiseGuys.com, and if you don't want to listen to commercials, whoever wants to listen to commercials, you can wait for about an hour after the closing of the show and Steven will have it up on podcast form.

• 1:17Speaker 03

  Come on.

• 1:18Speaker 02

  With all the commercials all ripped out.

• 1:21Speaker 02

  And you can listen to that after you listen to your true crime podcast.

• 1:26Speaker 02

  Or whatever podcast you listen to, Manosphere, what, I don't care, whatever. But definitely subscribe to the Money Wise Podcast, because it's the best one out there.

• 1:34Speaker 03

  I want to listen to podcasts, I just don't have time, gosh darn it.

• 1:36Speaker 02

  That and audiobooks. My Audible is, I have like 30 credits with Audible at this time and I don't have, like.

• 1:45Speaker 03

  I literally have probably 80 to 90 books at home and they're, you know, maybe one or two chapters. They're great books.

• 1:53Speaker 02

  Yeah, but you just.

• 1:54Speaker 00

  How do you know?

• 1:55Speaker 02

  Yeah.

• 1:55Speaker 03

  What's that?

• 1:56Speaker 00

  How do you know?

• 1:57Speaker 03

  Dude, I read the first couple of chapters.

• 1:59Speaker 02

  And then he put it back down.

• 2:01Speaker 03

  I'll send a picture if you, it's crazy. Bookmarks in all of them, but yeah.

• 2:05Speaker 02

  Dog ears, yeah.

• 2:06Speaker 03

  Yep.

• 2:07Speaker 02

  Uh, we're your host, I'm Justin Leland here with.

• 2:09Speaker 03

  Seth Perry.

• 2:09Speaker 02

  Absolutely. Uh, like I said, if you want to listen to this show or any of our other shows, past programs, by all means, subscribe to the Money Wise Guys Podcast, commercial free on all major podcast platforms like iTunes, Apple Podcasts, Spotify, wherever you get your podcasts.

• 2:25Speaker 03

  We charge for those, right Steve? They're $10 download, 15?

• 2:28Speaker 00

  Oh, for free.

• 2:29Speaker 03

  Oh, they're free?

• 2:30Speaker 00

  Oh my gosh. There's one fly in this thing and it is driving me crazy.

• 2:33Speaker 03

  Well, he's drawn, he's drawn to your incense, man, he's drawn to the.

• 2:36Speaker 02

  At least it's not a mosquito. We have a mosquito in our house and we can't seem to find it, but it finds us.

• 2:42Speaker 03

  Just one.

• 2:43Speaker 02

  Just one, and I don't know where, like, it's ridiculous. Um, but anyhow, we're doing the show today. Uh, Fed Chair got close to a microphone today. Uh, yeah, Seth, what's going on in the markets? You got some numbers here.

• 2:59Speaker 03

  Well, it's changed quite a bit even since we just got in here a few minutes ago, but.

• 3:02Speaker 02

  In the last 15 minutes or so, it's been kind of, kind of wild.

• 3:06Speaker 03

  Yeah, he went live, uh, was it 11:30?

• 3:09Speaker 02

  Yeah.

• 3:09Speaker 03

  Yeah, 11:30 went live, I think the changes had already been made right before that, but the Dow's down, uh, 0.4%. The S and P was flat, now it's down about 20 basis points and the NASDAQ was actually up a little bit. So you might wonder, well, why is the Dow down and the S and P was, well, yeah, it was flat at the time, but.

• 3:31Speaker 02

  Technically even moved since then.

• 3:33Speaker 03

  Tech and comms were, were leading the way and, uh, American Express, IBM, Microsoft, were dragging down the Dow a little bit.

• 3:40Speaker 02

  Yeah, I think there's a, there's reason for that. I mean, even since you just mentioned it, the Dow is down 1%, 1.1%, S and P is down 0.4% and the NASDAQ's actually flatlined it, you know, a little, little negative. But basically we've got some red on the screen. Um, and there's a really good reason for that. The, initially, the, at about 11 o'clock, the, the, the minutes were released and the Federal Reserve had, uh, agreed to raise interest rates. So we're now going to, it's 0.25%, 25 basis points, raising interest rates to about 3.75% to 4% is the, the baseline rate for the Federal Reserve.

• 4:20Speaker 02

  Now, that is what was expected, so very shortly thereafter, the announcement was made, the markets were like, oh, perfectly, like, totally what we expected. Um, and so the markets actually kind of went up slightly. So the Dow was, had been down for most of the day, actually wound up going into positive territory for a little bit and has now since fallen by about 600 points. Um, the S and P 500 was actually in positive territory really all day, had a little bit of a bump because of the announcement, hey, this is what we expected, and has now since kind of, you know, retreated and is now in negative territory. Same thing with the NASDAQ.

• 4:58Speaker 02

  Here's the thing, the top line is, oh, this is exactly what we expected, 0.25%. You read deeper into it and Kevin Warsh has gotten next to a microphone and the, the numbers are basically stating, he, as, uh, Warsh has said, inflation's way too high. Those words immediately said, oh, we're not done with raising rates yet.

• 5:21Speaker 02

  Now, you dive deeper into it, most of the Fed Chairs are agreeing that this rate hike plus potentially one more between now and the end of the year, and they have two more meetings between now and the end of the year.

• 5:33Speaker 03

  How often do they meet, six times a year?

• 5:34Speaker 02

  Yeah, it's like nine times a year they meet or something like, so it's, it, I have like two more meetings, uh, between now and the end of the year. But, and there's 12 Fed Governors that make the vote. Um, they released the dot plot on nine of them, not on the other three. Kevin Warsh had not voted because he was the, the policy wonk. Um, so it's essentially, they're looking at it and saying there's going to be another rate hike between now and the end of the year. However, you look deeper into it, four of the 12 Fed Chairs on the dot plot said potentially 75 basis point change between now and the end of the year.

• 6:18Speaker 02

  That's big because we just moved 25, that means we have 50 more to go. So they're either going to do a double raise next time or they're going to do two more raises between now and the end of the year. 75 basis points is a pretty high, uh, number and that's where I think the market is saying,

• 6:37Speaker 02

  oh, what does the Fed know that we don't?

• 6:40Speaker 02

  What does the Fed know that we don't? And so a 75 basis point, a 0.75% raise in the federal funds rate between now and the end of the year, while it's not on the cards just yet, but the, the people that are reading the tea leaves of what the Fed is saying, oh, this might be a little bit more difficult to tamp down inflation.

• 7:00Speaker 03

  This trickles down to the average investor or the average borrower, correct?

• 7:06Speaker 02

  Yeah, not directly, not, you know, and, and we've had these conversations before. So the Federal Reserve rate is basically banks lending to each other overnight. So if Wells Fargo needs money from the Federal Reserve, they're going to borrow from the Federal Reserve and they're going to pay a rate of about 3.75, you know, it's, it's pennies on the dollar really, but that's the, what it does is it basically slows down the velocity of money. So when we talk about inflation, it really is, you know, too many dollars, you know, flowing after too little stuff or whatever. I mean, it's, you know, what we have with the situation going on in, in Iran and, and, you know, we have to take into account the energy costs of, you know, oil now being at what?

• 7:51Speaker 02

  $110 a barrel or $120 a barrel, it's heading up, you know, pretty high. That raises rates, that raises inflation because it flows downhill from there. All of the other things you pay for, you do have to pay for the, the energy to get it here.

• 8:08Speaker 02

  The volatility index is spiked by about 5%. So, I mean, that it's, it's an interesting day on the market. You know, the, the Bank of Japan raised interest rates yesterday, uh, and that was the first nail to kind of, you know, the first shoe to fall was that.

• 8:24Speaker 02

  Our Federal Reserve raising interest rates today. Um, and there's, we have on Friday, um, the Producer Price Index and the, uh, Consumer Price Index numbers that are going to be coming out tomorrow and Friday. So there's, it's a very, um, eventful week on the market as far as, uh, reporting is concerned and some of these Fed meetings being, um, you know, discussed. So it's an interesting time in the market. We did get some questions.

• 8:55Speaker 03

  Some good ones.

• 8:56Speaker 02

  One, one of the questions actually kind of goes to this a little bit, so Seth, do you want to hit us with some questions?

• 9:00Speaker 03

  So question is, so if the market keeps bouncing around like this, should someone like me that is close to retirement begin moving some cash out of stocks?

• 9:10Speaker 02

  Uh, no. Uh, that's a, that's an easy, uh, answer. The broader answer is if you are already over allocated, let's say you're getting close to retirement, you're 60, 62 years old and you're, hey, I'm, I'm going to be retiring in the next, uh, two, three, five years or next week, right? If you're still in a portfolio that is 80 or 90% stock, you're in probably the wrong portfolio for you.

• 9:37Speaker 03

  It's pretty beefy.

• 9:38Speaker 02

  That's a, that's a very.

• 9:39Speaker 03

  Taking on a bit of risk.

• 9:40Speaker 02

  That's a lot of risk, right? Now, if you're in a portfolio that's say a 60, 40 kind of a split, 60% stock, 40% bonds, that's an appropriate mix for somebody who's getting close to retirement that's going to be taking on, hey, I'm going to need this money for the next 25 years.

• 9:58Speaker 03

  Yep.

• 9:59Speaker 02

  Let's go, like, if you are, uh, if you're in your 60s and you are looking at the stock market and saying, I'm, I'm afraid and I don't need to, if you're allocated properly, this is a, this is going to be a blip on the radar and I'll use this as an example. 30 years ago, what was the stock market sitting at?

• 10:18Speaker 02

  Right? You probably wouldn't be able to tell us what that number is.

• 10:23Speaker 02

  Is it lower than it was today or higher?

• 10:26Speaker 03

  Quite a bit lower.

• 10:28Speaker 03

  It's up 71% in five years.

• 10:30Speaker 02

  Yeah, orders of magnitude. We're talking a logarithmic scale. It's an orders of magnitude difference between what the S and P 500 was trading at back in 1996 versus where it is today.

• 10:44Speaker 02

  So getting out of

• 10:46Speaker 03

  Have a plan.

• 10:46Speaker 02

  Have a plan, but getting out of stocks at this moment because there's a bit of a shutter in the market. It, it, all it does is it locks in your losses if you were to make those types

• 10:56Speaker 03

  Exactly. And then you don't know when to get back in. That's where most people make the mistake.

• 10:59Speaker 02

  You gotta be right twice.

• 11:00Speaker 03

  And we have all the charts. So we show our clients here at MoneyWise. You missed the top 10 days.

• 11:05Speaker 02

  Out of the last 20.

• 11:06Speaker 03

  Out of the last

• 11:07Speaker 02

  20 years.

• 11:07Speaker 03

  20 years. If you miss the top 10 days, your returns go from like a nine, two, all the way down to six, something. I mean,

• 11:13Speaker 02

  Yeah, you lose like half of your returns just by missing a few days out of 20 years.

• 11:18Speaker 03

  And emotions get involved and that's, that's our job. We sit down and, and go through everything and make sure, well, what's, what, how much cash do you need? You know, and, and for how many years? And then we talk about, uh, well, if you retired at 62, how are we going to bridge that gap to Medicare at 65?

• 11:32Speaker 02

  Exactly.

• 11:33Speaker 03

  That's the kind of planning you need to be doing as opposed to, man, just move it all to cash because

• 11:37Speaker 02

  It's the wrong, it's the wrong move.

• 11:38Speaker 03

  Cash is paying great now, but historically, 1.5%?

• 11:43Speaker 02

  It was lower than that historically. But yeah, I mean, so, you know, going through the process of saying, hey, I'm going to move everything to cash, probably the wrong call. What you would want to do, pick up the phone and call your advisor or call MoneyWise. We'll talk to you about it and, and, and kind of hopefully talk you off the ledge. Um, but that's, you know, if there's going to be some hiccups in the next, you know, little bit, we fully expect there to be a correction in the market. We just don't know exactly when. Is this the, the start of that correction? Probably not.

• 12:11Speaker 03

  Yep.

• 12:12Speaker 02

  Probably two or three days from now. Oh, that's okay. That's normal news again. We'll go right back off to the raises.

• 12:18Speaker 03

  We're not just, we're not, uh, financial advisors.

• 12:22Speaker 02

  Right.

• 12:22Speaker 03

  We are our clients advisors and we advise them on life decisions and, and it's not just investments. It's, it's taxes, it's income, it's all kinds of stuff. But this next question is shocking, Stephen. Shocking. PG&E raising rates to, to pay shareholders? They continue to raise the cost as shareholders are getting more to pay these hedge funds. How is that legal? I can totally understand if they were raising prices to update what they're using, but to just pay their shareholders should be illegal.

• 12:55Speaker 02

  That's always been legal. Unfortunately, I mean, as, as a publicly traded company,

• 13:02Speaker 02

  this, this is one of the problems, I think with, with, you know, the stock market and the way it's set up to a certain degree is that, hey, you know, corporate entities, who is their first and foremost, uh, responsibility to?

• 13:17Speaker 02

  Their shareholders.

• 13:18Speaker 03

  Mm hmm.

• 13:18Speaker 02

  Right? That's the investors. Those are the owners of the business. That's their first and foremost.

• 13:22Speaker 03

  It's confusing though, because they're regulated by the

• 13:24Speaker 02

  Right, they're

• 13:26Speaker 03

  California Public Utilities Commission.

• 13:27Speaker 02

  But name a company that's not regulated.

• 13:30Speaker 03

  I guess.

• 13:30Speaker 02

  Yeah, but there's, there's regulations for everything. Every company, you know, MoneyWise, we're regulated. I mean, you know, rightly so. But publicly traded companies, there's this kind of weird, uh, you know, uh, responsibility of who are we responsible to? And in many cases, they're responsible to the shareholders, that quarterly call. And so, you know, um, not necessarily beholden to their end users, right? Which kind of flies in the face of, hey, if you don't have any consumers, if you have no clients, then you make no money.

• 14:06Speaker 03

  Yeah.

• 14:06Speaker 02

  Problem is with a utility like PG&E, I can't shop around and go find another company to give me my, my gas or my electric. I'm, I'm stuck with PG&E and everybody listening to this is stuck with PG&E. If I were to be like an unregulated kind of a thing and I could go out and shop around and find the right company that give me the gas and electric, it would bring in competition. There is no competition for them.

• 14:30Speaker 03

  And it's just a function of what it is too. It's, it's their massive power grid and, and

• 14:34Speaker 02

  Yeah.

• 14:35Speaker 03

  You know, that, that is what happens. So the, the Public Utility Commission is limiting them to, they've authorized a return of no more than 10% over a three-year period. So they are, you know, limiting, but in the 2023, 2026 rate case, they, they included 1,230 miles of undergrounding, 778 miles of covered, uh, conductors and one point, this is mind-boggling, $1.3 billion in vegetation management.

• 15:05Speaker 02

  Holy cow.

• 15:06Speaker 03

  So imagine winning some of those contracts to go clean up along the power lines. But I mean, if you think about it, that's what can devastate them the most is their own.

• 15:12Speaker 02

  Well, look at what they lost from Paradise.

• 15:14Speaker 03

  How much was it?

• 15:15Speaker 02

  Uh, it was an ungodly amount of money because of, uh, Paradise, uh, and the fire that they had up there over the past couple of, you know,

• 15:22Speaker 03

  Yeah.

• 15:22Speaker 02

  A decade ago or whatever, when Paradise was just completely gone. Um, and the, the lives lost and everything else that, that happened from that. And it was all because of a PG&E, uh, spark, right? Uh, you know, bad, bad resistor or whatever that just kind of like went, went belly up.

• 15:37Speaker 03

  30 billion.

• 15:38Speaker 02

  How many?

• 15:39Speaker 03

  Over 30 billion.

• 15:40Speaker 02

  30 billion. Holy cow.

• 15:42Speaker 03

  So I guess if you're paying, you know,

• 15:45Speaker 02

  Yeah.

• 15:45Speaker 03

  3% of that to go do some preventative maintenance, that's not

• 15:49Speaker 02

  That's actually not that bad. Yeah, it's a good return on investment, quite frankly.

• 15:53Speaker 03

  That's crazy.

• 15:54Speaker 02

  Um, we're going to take a quick break. When we come back, we have Merv Rash. He's a Realtor with Jeff, uh, Jackson and Associates. Uh, we're going to chat with him about the, the real estate market, uh, when we come back.

• 16:24Speaker 02

  Gotta love Jimmy.

• 16:27Speaker 02

  Welcome back to the MoneyWise program. I'm your host, Justin Leland here with Seth Perry. We are joined by great Realtor, Merv Rash from, uh, from Jeff Jackson and Associates. Merv, thanks for joining us today.

• 16:42Speaker 04

  Well, thank you for having me, Justin.

• 16:44Speaker 02

  Absolutely, absolutely. So, you know, we, we like to get down to business. This is not normally our get down to business day. That's typically Fridays, but we're going to get down to business a little bit here with, with Merv. Um, yeah, I mean, first off, I mean, how, how are things going in the real estate market? The, the, the market here in Bakersfield, you know, I, I know a couple of friends that are in the process of putting their house up on the market and, and I'm seeing some not so great kind of, you know, headwinds that are happening in real estate right now, specifically with, you know, uh, single family homes and stuff like that. What, what's your take? What are you seeing out there?

• 17:22Speaker 04

  Well, it certainly up until just recently, it has been largely a seller's market where things are getting, if they're priced, uh, fairly and, uh, they're marketed significantly, they'll, they'll sell. And that has recently changed. It's now more of a buyer's market. Uh, traditionally, when we get near the end of summer, there is a slowdown in the real estate market. People particularly that have young families and school-aged children.

• 17:48Speaker 02

  They're not in the market anymore.

• 17:50Speaker 04

  Right. They've hopefully landed where they planned on landing. So they know where their kids are going to go to school. But even taking that into consideration, the market has turned and it is at this point a buyer's market.

• 18:02Speaker 02

  Yeah, yeah. I, I mean, it's just, it's interesting. And so when you break it down from like, you know, like first time home buyers, those people that are the first time home buyers, they're looking for homes that are in the, the 250 to 350 range. They're probably not looking in the mid to upper market into the, you know, fives and 600 range. They're probably down there in the, in the two to three, you know, 350, maybe 400 range. Um, is, is there, is there compression in that market as well for some of these, these first time home buyers with interest rates? And I mean, the Federal Reserve just raised interest rates. Now that's not going to trickle through to the 10-year just yet, but it's starting to. And the 10-year is what really kind of derives the mortgage rates right now.

• 18:45Speaker 02

  So we're seeing mortgage rates right now that are back above 7%, which still is historically about average. But for somebody that's looking for a three or $400,000 home, that just increased their, their mortgage cost by a couple hundred bucks a month?

• 19:01Speaker 04

  Easily, yeah.

• 19:02Speaker 02

  You know, over a 30-year period? That's, that's material, right? So.

• 19:06Speaker 03

  I think it's, uh, 380 or so is around the median home right now in, in Bakersfield. And yeah, it's getting tough. It's getting expensive.

• 19:16Speaker 02

  Yeah. So, I mean, let's just kind of talk about that, but it's, you know, what do you see for some of these, these people that are like first time home buyers that are young adults, maybe have a couple of kids and they're trying to find that first place that's, that they can call their own? How, how is that working out for them?

• 19:32Speaker 04

  Well, typically when I get an opportunity to work with a first time buyer, the best thing they can do to help themselves and to kind of set an, a reasonable expectation is for them to find a lender and get pre-qualified.

• 19:45Speaker 02

  Yeah.

• 19:46Speaker 04

  That's of course is necessary. When you go to make an offer on a home, generally all the sellers are going to want that pre-qualification letter to indicate that the buyer has the ability to execute.

• 19:57Speaker 02

  Yeah, they have the funds to be able to do it. Yeah.

• 19:59Speaker 04

  By doing that, of course, they're going to learn, you know, how much, obviously the more they have down and the less they have to carry in terms of a loan, the better their monthly payment's going to be. But, um, most of your lenders are going to pre-qualify you and they don't want to overextend you to where your house poor. And basically all you're doing is servicing your mortgage. You're no longer going to Disneyland or you're no longer eating steak once in a while.

• 20:26Speaker 02

  Right.

• 20:26Speaker 04

  Uh, things are tough.

• 20:28Speaker 02

  Yeah. I mean, this, it's, this is no longer the, uh, the days of 2004 to 2007 where it's like you can, no income, no

• 20:36Speaker 03

  Stated. You just tell them whatever you want to make.

• 20:38Speaker 02

  Oh, yeah. I make, I make six figures. Totally. My dog does too.

• 20:42Speaker 03

  Yeah.

• 20:42Speaker 02

  Yeah. Those days are gone. So, yeah, the, the pre, the pre-qualification is, is the, the most important part. You know, what other, I mean, we'll get into this maybe in the next segment, but you know, what got, we'll, we'll take, we'll, we'll table that. I want to, I want to ask the questions. What got you into the real estate market, you know, before what you see? But, you know, do you see that the interest rate change now is going to put more pressure on the, the sellers to maybe bring their prices down?

• 21:12Speaker 04

  That perhaps may happen. I was doing some work and just trying to looking at the market here, uh, a day or so ago. And our days on market currently is 44 days.

• 21:22Speaker 02

  Which is inflated from what it was just a couple of days ago or a couple of months ago. What we're going to do is we're going to take a quick break. Uh, Merv, we'll come right back, uh, after these messages.

• 21:44Speaker 03

  Now, my wife has sung this to me recently. I don't know what it means, but

• 21:51Speaker 03

  thank you, Stephen. I appreciate that, brother.

• 21:53Speaker 02

  She's telling you something, Seth.

• 21:56Speaker 02

  It's actually BB King's birthday today. So happy birthday to BB.

• 21:59Speaker 03

  We had another message come in and I feel this message. Boy, do I. These days, first time home buyers, uh, first time homeowners will be 50 years old.

• 22:07Speaker 02

  Probably.

• 22:08Speaker 03

  There's a lot of truth to that. There's a lot of truth to that. I think what I read recently is in our local area, you need a, in order to afford a

• 22:17Speaker 02

  median home?

• 22:18Speaker 03

  A median home, you need to be at at least 130 or 140 of

• 22:22Speaker 02

  of income.

• 22:22Speaker 03

  Combined household income. And that's

• 22:25Speaker 02

  that's

• 22:26Speaker 03

  it's doable, but it can be very tough, too.

• 22:28Speaker 02

  Yeah.

• 22:28Speaker 03

  It can be very tough, especially so. Um, well, Merv, we've known each other a long time. So just give a little bit of background. You've seen me through all the great times being your son Brian Rash.

• 22:40Speaker 02

  Not, uh, don't, don't give us all of the info.

• 22:42Speaker 03

  Oh, we won't give any.

• 22:44Speaker 02

  There's certain things that stay off the air.

• 22:46Speaker 03

  Yeah, I, I've known you, uh, for a very, very long time and we go way back. Really appreciate you being here. We've worked together on several transactions, both for myself and, and some family members and such. And I've learned a lot um, about your process. And what, what would you say if you had someone who hasn't worked with you before, first time home buyer or not, what are a couple of the things that they can do? What can they start preparing for now? Because I know a lot of people will just start spending money and fixing this and fixing that. But you were very calculated in the things we should invest in and the other things we just let go. So what, what would you say?

• 23:24Speaker 04

  Well, if you're in that position where you're listing your home with me, then I would caution you very carefully not to spend money where it's not needed. Uh, one of the quickest returns on investments is with, when you use paint. Uh, paint, uh, can spruce up a room, make it look much, depending on the color, much larger than what it really is. It obviously gives a new look, has a nice smell to it. Um, and paint, you can generally get your money back. Now, if you paint with black, um, or you know, um, chartreuse or some other wild color, while that may suit you very well, it obviously doesn't suit most people.

• 24:04Speaker 04

  And so you want to stay in the more neutral tones and that type of thing in order to maximize your return.

• 24:10Speaker 03

  About carpet? Carpet seems like a

• 24:13Speaker 04

  Carpet? Yeah. Yeah. If it's, uh, badly worn and soiled to, to the extent that you can't get the stains out, that type of thing, then you may want to put in a low grade, what we call a apartment grade.

• 24:28Speaker 02

  Carpet.

• 24:28Speaker 04

  Carpet and things.

• 24:29Speaker 02

  Cause a new buyer is going to rip that out first thing anyways, but at least

• 24:32Speaker 04

  Could be.

• 24:32Speaker 02

  It winds up looking pretty decent for when they show the house.

• 24:35Speaker 04

  Right. And again, like so many other things in life, uh, you only get one chance to make a good impression.

• 24:41Speaker 03

  Yeah.

• 24:42Speaker 04

  So you wanna, you wanna do that in a way that, you know, there's not anything in the house. It's going to be an instant turn off.

• 24:48Speaker 03

  Yeah. I remember when we sold the place out in the Southwest, our, our, our little house that we were renting. You know, we walked through it and, and you were more or less just pointing things out like, hey, let's, let's, let's get that taken care of. And I'd ask, well, what about this? No, don't worry about that. You know, that's, a lot of value came from that. And if I don't, if I'm correct, do you remember how many offers we had? Was it 19?

• 25:11Speaker 04

  Yeah, something like that.

• 25:12Speaker 03

  It was unbelievable. A little bit of a different market.

• 25:15Speaker 04

  Yeah, but it, uh, you had, you had spent the money where it needed to be spent. You painted the whole inside of the house, as I recall, you painted the outside of the house. You did some landscaping out front, which when people step out of the car and they look at the house, they're already making a judgment based on what they see before they ever enter the house.

• 25:34Speaker 03

  Yeah.

• 25:35Speaker 04

  So you spent money in the right places and as a result, and then we priced it strategically. Not necessarily where we thought we'd wind up, but where we could encourage multiple offers.

• 25:45Speaker 03

  Yep.

• 25:46Speaker 04

  And if you remember right, we kind of got into a little bit of a bidding war.

• 25:49Speaker 03

  Indeed.

• 25:50Speaker 04

  That was a good thing.

• 25:51Speaker 03

  That was a great thing. Yeah.

• 25:53Speaker 02

  So we got a message here. Mr. Merv is a gentleman and a great guy to work with. Glad to catch him on the show. Has the housing market slowed down? It seemed around COVID, there were no homes available and now the prices are so high. I have two family members who have their homes listed out in Seven Oaks area and they had to drop the price because it slowed down. Could be wrong, just might be the area. Yeah. I mean, might, may be the area, but what, what's your take on some of the, the higher end homes? I know that in my neighborhood, I'm seeing, you know, some people that are listing their homes and it's, it's sitting there for a month or two, and then they're having to drop the price a little bit. So what, what is your take on that, Merv?

• 26:28Speaker 04

  Well, I think your observations are correct. It is taking longer to sell the higher priced homes. Part of that is, you know, again, you have to figure out where the market is. And you have to attract in your marketing campaign, you have to attract those particular people. Usually in that strata of price, you're talking about people that are moving up. That's not a first time buy.

• 26:52Speaker 03

  Yeah.

• 26:53Speaker 04

  So consequently, the way that you market that house is going to be different than the way you would market, say, an entry level home.

• 26:59Speaker 03

  Yeah.

• 27:02Speaker 03

  One thing I see all the time now, we'll, we'll just get on and browse, you know, and, and it's the AI, uh, staging. You know, like, is that kind of just the norm now, right?

• 27:12Speaker 04

  Well.

• 27:12Speaker 03

  Most of these pictures are, they'll show the room empty and then they show it staged.

• 27:15Speaker 02

  I, I can't stand that. I mean, I've seen that myself and I just, I, I'm sorry, it just, it, that gets under my skin. That actually kind of bothers me.

• 27:25Speaker 03

  So, uh, listeners, you need to send in as many pictures to Justin as you can.

• 27:29Speaker 02

  Of fake rooms.

• 27:30Speaker 03

  AI staged rooms.

• 27:32Speaker 02

  The AI staged room with a Picasso on the wall.

• 27:35Speaker 03

  Yeah. Show me that one. Yeah.

• 27:38Speaker 03

  But I remember, um, you know, the pictures make a big difference too. I mean, you spend money in the right places. And I know that you guys and your team use, uh, you know, high quality photographer. And then it was, uh, you know, the time of day that they come out and take the pictures. But it was also when we listed, there wasn't there some strategy behind when it actually went to market?

• 27:57Speaker 04

  Uh, yeah, there's days, um,

• 27:59Speaker 03

  We don't want to give your secrets away.

• 28:01Speaker 04

  No, that's all right. Uh, when there are day, when you can choose what day of the week you have it hit the market. In my estimation, the best day is usually a Wednesday or a Thursday.

• 28:13Speaker 04

  Believe it or not, realtors occasionally do take some time off. And if they're going to take some time off, they're going to make a long weekend out of it, either a Friday or a Monday. When a new listing hits the MLS, uh, it shows up on our dashboard of our computer. And so if you have a buyer that you've been working with and you haven't found the house yet for them, uh, that's the first place you go. You want to see what came on the market in the last 24 hours. So that's a good place. Uh, so I, I generally try to list usually on mid, midweek. That way everybody's, I've got the maximum exposure. All the realtors are looking and, uh, you talked about pictures, the sale, um, of a house takes place at several different levels.

• 28:58Speaker 04

  One is whether it's on, you know, most of the time besides being on the MLS, it'll be on all the public forums, Zillow, trulia.com.

• 29:06Speaker 03

  Right, right.

• 29:08Speaker 04

  Realtor.com, homes.com, there's dozens of them. And if you, as the buyers are looking, um, on the internet at the various public websites, they have to be sold on what they're seeing. If they don't like what they're seeing, there's, it's dead in the water right there.

• 29:26Speaker 03

  Right.

• 29:27Speaker 04

  So you're selling at that level and then obviously you're appealing to the other realtors in this marketplace. And that's what creates the traffic.

• 29:36Speaker 03

  Yeah. I've seen recently and, and, you know, correct me if I'm wrong, but I've seen recently where uh, realtors, especially maybe in the, the, the higher end market or people looking for more land or whatever, that they're posting on Instagram and they're, the, the realtors are actually using Instagram algorithms. To kind of go after and they'll use drone footage and it's like a reel, you know, like a video of, of this, hey, this great property here off of the current river and, you know, this, that and the other. Is that a way that is, um, becoming more prevalent? Or is that just kind of a one-off that people are just trying to kind of make their bones as a, as a real estate agent?

• 30:19Speaker 04

  No, that's, uh, kind of the up and coming thing, and particularly in your higher priced homes, your drone shots, your photography work is, is critical. And your drone shots and

• 30:30Speaker 03

  Like 3D, they have the, where you can like a virtual showing almost.

• 30:34Speaker 04

  Yeah. You can literally walk through at your pace by using the arrows on the

• 30:39Speaker 03

  On the screen.

• 30:40Speaker 04

  On the screen. And you, you know, if you want to go back to the, the entryway, you can go back there. You want to go back to the back bedroom.

• 30:46Speaker 03

  Yeah.

• 30:47Speaker 04

  You can do that.

• 30:47Speaker 02

  We just want to look at the closets. That's it.

• 30:49Speaker 03

  Go straight to the closets.

• 30:50Speaker 02

  Go straight, straight. If it's not a walk-in, we're not doing it. If it's not the size of another bedroom, like, no. Do you have any horror stories you can share? You know, don't name names, but you know, worse situations.

• 31:02Speaker 03

  Start with sets.

• 31:04Speaker 04

  Well, I don't know if I'd call it a, I don't know whether I'd call it a horror story or not, but I think, you know, one of the things that we try to work, we will try to work within people's budgets and that's why getting pre-qualified is so important because I can show you homes with elevators and I can show you homes with helicopter pads and all kinds of things, but if that's not the market you can afford, all I'm doing is setting up a false expectation.

• 31:33Speaker 02

  Right.

• 31:33Speaker 04

  So it's, it's real critical to get pre-qualified first. Then you know what market range you're in and then I can tailor what I would suggest that you will look at based on your ability to make the monthly payment.

• 31:46Speaker 02

  I mean, I just remember seeing some of these, you know, jokes during COVID of like, you know, the, the House Hunters, you know, show, if you remember back and then, you know, currently received my stimulus from COVID or whatever, my price range is 1.2 million.

• 31:59Speaker 03

  Yeah.

• 32:02Speaker 02

  Nope. Incorrect. But yeah, that's, I mean, the biggest thing, like you said, Merv, is, you know, getting pre-qualified and knowing what your price point is and being very careful. I mean, you know, you do see some of these folks that get pre-qualified that maybe you're overextending. Maybe, you know, maybe some of the pre-qualification letters are saying, oh, you can afford up to a $425,000 house. Well, maybe they can, maybe they not because...

• 32:32Speaker 03

  Beans and rice if they do.

• 32:34Speaker 02

  Right. And so, and so being careful and saying, really in essence, I've been pre-qualified for 425, but I'm really going to be looking at houses that are in the, the 350 to 375 range and that's going to be more my price range. And then you start getting into looking at those houses and now you kind of know what your, what your, what your level of house is going to be and you try to find the best one that's in that, in that price range. How are you able to kind of bring somebody maybe back down who comes, comes to you and says, hey, I've been pre-qualified for, for 425, show me everything that's 450. You know, because that's what I want to live in. I want that house that's in that 425 range. If you show me 450, I'm going to, I'm going to, you know, offer 425 or whatever, trying to get more

• 33:18Speaker 02

  house than really what they can afford.

• 33:21Speaker 04

  Sure. Well, and that's, that's a difficult place to be, but we do face that every now and then. Again, I, we all have calculators on our, on our phones that will help us to kind of get a down and dirty P I T I payment. And so when they start getting above their pre-qualification letter, then a lot of times I'll say, okay, let's see what that would do for your monthly payment, assuming you're going to put at least 2.5% or more down. And, you know, sometimes that will shock them back to reality and they'll realize, gee, I'm, I am overextending myself. I try to get people to live within their comfort. Again,

• 34:02Speaker 04

  it doesn't do any good to put them in a house that they really can't afford and they maybe stretch themselves and make the payments, but then later they get buyer's remorse.

• 34:11Speaker 02

  Yep.

• 34:12Speaker 04

  Much of our business, 70, in our case, about 73 or 4% of our business is from referrals. Well, you don't get a referral from somebody who you've put in a house they can no longer afford, they couldn't afford to begin with. And so that's, it's kind of counterproductive for all parties.

• 34:30Speaker 02

  Yeah. So I, we just got a message came in and said, you know, what would be the interest, you know, with the new interest rates and such, if you were to buy a $400,000 house, what would your, your mortgage be? I just ran a quick calculation here. If you're coming in with 20% down, a more conventional loan, you're coming in with 20% down, that's $80,000, $80,000 down, at a 7% interest rate, no PMI needed at that point because your down payment's so high, your total, you know, monthly payment winds up being somewhere in the order of like $2,700 a month for a $400,000 house.

• 35:04Speaker 03

  What was that payment?

• 35:05Speaker 02

  20, about 2,700, 2,650.

• 35:08Speaker 03

  Yep.

• 35:08Speaker 02

  Ish. So, I mean, and that's, you know, taking into account a little bit of the, you know, taxes and, and insurance as being kind of, you know, included in that. But even so, I mean, it's, you know, the, the days of buying a house and having a sub $2,000 mortgage.

• 35:29Speaker 03

  I think some people wait. I think, I think they think, oh, they're going to come back down to three.

• 35:33Speaker 02

  Nope.

• 35:33Speaker 03

  Probably never.

• 35:34Speaker 02

  Yeah. Slim and none and Slim is lacing up his boots to go on vacation. So it's just, you're not going to see those rates anymore, I don't think. So that's, that's really kind of what it comes down to.

• 35:44Speaker 03

  Another message here. How close are the prices listed on sites like Realtor or Zillow? Great job with BB King and sorry about the wife. Ah, ha, ha, ha. Man. Hey, it is what it is, man. You just, you just got to take your lumps and move on. But I was wondering the same thing. Merv, is there one that you feel is more accurate than others? You got Zillow, Redfin, Realtor, those, Trulia? Or are they all just kind of, because they're, all they are, are...

• 36:09Speaker 02

  They're looking at comps.

• 36:10Speaker 03

  They're looking at comps and running their own algorithm and trying to make themselves special, but.

• 36:14Speaker 02

  And, and yeah.

• 36:15Speaker 04

  It's, it's a guideline. Your, your better source, obviously for that kind of information is a lender.

• 36:20Speaker 02

  Yep.

• 36:20Speaker 04

  A lender works with it every day and they'll, they'll bring a dose of reality that might not be there with the public websites. But again, it's, it's an indicator, it's an idea, it'll get you close, but the better number comes from the lender.

• 36:35Speaker 02

  Yeah. I've, I've basically, you know, hey, Zillow says that my, my house is worth, take that number and, and take probably at least five to 10% off of it.

• 36:45Speaker 03

  Or look at your upgrades and you can bump it up. I did a study for clients that shows the true return on investment and the number one was paint, but a lot of people think that their 60, $70,000 backyard barbecue is going to, you know, yield that much more. Absolutely not. It's like a third of that.

• 37:01Speaker 02

  Yeah. You're not going to get that money back in, yeah, in any meaningful way. So, Merv, thank you so much for joining us today. It was great talking to you, learning a little bit more about the, the real estate business that's out there. We are going to take a quick break and we're going to have a very quick segment when we come back.

• 37:27Speaker 02

  All right. Welcome back.

• 37:31Speaker 02

  Welcome back to the Money Wise Show. I'm your host, Justin Leland, here with Seth Perry. Want to thank Merv from the real estate, you know, guru coming in, talking to us a little bit about some real estate.

• 37:42Speaker 03

  Wanted to give him a quick shout too. He had a, we stepped out real quick, but his Zillow profile, 55 reviews, 5.0 stars. He's the real deal. So if you need a Realtor, hit him up.

• 37:55Speaker 02

  Want to really quickly, we only have a couple of minutes here to talk about it, but the news came out yesterday that the, the Fresno diocese, basically their pension plan is basically run out of money. Retired Fresno diocese employees will no longer receive retirement benefits starting next year. And the Fresno diocese is huge. Hundreds of former employees are now left scrambling over what to kind of do over their, their retirement at this point. In a letter to the retirees that were sent last month, the diocese said that their retirement plan was frozen at the end of June and the churches said that they, they contributed the agreed upon amount into the pension plan to be able to, to continue

• 38:37Speaker 02

  paying. The diocese is placing blame on a company by the name of Christian Brothers Services. The company was responsible for managing the money and they're the reason that the money's not there anymore.

• 38:48Speaker 03

  Yikes.

• 38:50Speaker 02

  And there's not enough money to continue payments. So I guess the diocese in the article that I'm reading and kind of the things I'm seeing, the diocese says that it's explored different legal options to be able to transfer money into the retirement plan of their own, like moving money out, moving around. Problem is, the church is filing bankruptcy for all of the, the issues with the, many of these dioceses, the Catholic Church has been dealing with, with multimillion dollar lawsuits for sexual assault and sexual issues with, with clergy. And so that's going to be in a position where it's going to maybe force the diocese to file bankruptcy, which probably going to happen.

• 39:29Speaker 03

  So a nonprofit can file bankruptcy?

• 39:30Speaker 02

  Yes. Yeah. And for, because against any potential, you know, losses in lawsuits and things like that. The problem is, is so we have the pension and they, they are not able to fund that because of the, the other issues that they're dealing with. And so people that are maybe in the Fresno diocese that are maybe hearing this or dealing with this, there are options and, and things that can be done. You know, obviously the, the diocese is going to have to keep in touch with everybody and make sure that they're kept up to date on, on what the, the findings are and everything else. But there is a, an organization known as the PBGC, Pension Benefit Guarantee Corporation. So for the, for

• 40:15Speaker 02

  the diocese to have a pension plan, they had to have been paying premiums into this insurance company called the PBGC. Now, it is not going to be able to replace the pension entirely, but my guess, if I'm guessing on kind of the situation, the PBGC would be able to potentially take over and help to maintain and, and pay some of those benefits. So it's not like the benefits go away, but based upon these pensions that are out there, the PBGC is there as a backstop. You, you may wind up getting pennies on the dollar, but at least it's something. So, you know, more to come. I'm going to be keeping my eyes on, this is

• 40:59Speaker 02

  very new news. I just saw it actually yesterday come across. I'm going to be paying attention to this because this is very close to home, right? You know, Fresno diocese, you know, Bakersfield's part of the Fresno diocese. And so there are going to be some people that are probably like, hey, what do I do? And so we just want to, you know,

• 41:17Speaker 03

  Keep you posted.

• 41:17Speaker 02

  Keep everybody posted on the kind of what's going on. And we're going to be kind of keeping, keeping tabs on the news and, and the, the things that come out from this because, yeah, it's pretty painful when you have hundreds and hundreds of people that have retired from the church and, and working with the church. And now that income stream is potentially gone, right? So they're scrambling, trying to figure out what they're going to do going forward. And I want to kind of do some more research on this company, the Christian Brothers Services, like what, what the heck happened? Like, you know, what were the investments underlying this? And like, you know, get some data on that. I don't want to speculate, but...

• 41:58Speaker 03

  And is it all gone? Or is it like our social security that's set to drop down?

• 42:03Speaker 02

  That's the question I would like to ask and kind of see. I don't, it's too preliminary to be able to kind of find out what that is. I'm sure there's more news that'll be coming out of that, but definitely we're going to be staying on top of that and kind of making sure that people are aware. So keep, keep tuned into the Money Wise program. We'll be bringing up updates to the Fresno diocese issue as we move forward. But as always, be smart, be safe, be money wise, and we shall see you tomorrow. Have a great afternoon.

• 42:34Speaker 01

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