Be The Bank S5 Ep8 - Don't Break Your Process
On episode 8 of season 5, Justin Bogard and Richard Thornton discuss recent mistakes made!
Key Takeaways:
Resources and links discussed
About the Host
Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!
Connect with the Host:
Be The Bank S5 Ep8 - Don't Break Your Process
On episode 8 of season 5, Justin Bogard and Richard Thornton discuss recent mistakes made!
Key Takeaways:
Resources and links discussed
About the Host
Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!
Connect with the Host:
Interested in real estate. How about wealth? Well, they go hand in hand. And here you'll learn all about it. About it. Welcome to Be the Bank, a podcast where we discuss and debate the topics centered around real estate investing. Your host, Justin Bogart, shares insights into investing in real estate to create real wealth and passive income for you and your family. He'll share stories of real estate investments done right, walk you through the process of owning a real estate note, and most importantly, educate you. So you can be the bank. Bank. This is be the bank brought to you by American Note buyers. Now, here's your host, Justin.
Justin Bogard:Hi, there it is episode number eight of season five of the Be the Bank broadcast, brought to you by American Note Buyers. And today I'm going to be discussing, uh, I kind of had a mistake that I made in some, doing some underwriting that I wanna talk about. Um, believe it or not, we do still make mistakes in this industry. Uh, sometimes they're not, not as bad as others, but it'd be nice to talk about that and explain how you can learn from others' mistakes. And we did a broadcast recently on our live, on our YouTube channel and our Facebook page, and we kind of found some interesting data about the foreclosures and kind of what's going on in the residential community as far as home prices and month to month and year over year, um, percentages if they're going up or going down. So stay tuned for more. Richard, what's happening to my dude?
Richard Thornton:Hey, uh, it's a beautiful day outside, but judging from the fact that, uh, I'm sitting here in a down vest and you're in a T-shirt,<laugh>, we have switched places and that, uh, sunny, California's sunny, but chilly and Indianapolis is what's, what's it supposed to be there today?
Justin Bogard:Uh, lemme check my watch here. So it says it's 80 degrees right now. There's not very much wind. I was actually outside before we started recording this. I was actually hitting some golf balls, believe it or not. Mm-hmm.<affirmative>. And it was, it was beautiful outside, no, hardly any breeze. 80 degrees. I started to sweat a little bit. So we haven't, we haven't seen that yet this year. We've had a couple days that I've peg close to that. I think the next two days we're gonna have 75 to 80 again, and then next week it's gonna be back down to what normal April is, like, windy and 50 or 60.
Richard Thornton:Yeah. I, well, we'd like a little bit of that here. It finally stopped raining, but, uh, it's chilly.
Justin Bogard:Yeah, I, I, I was, when I first saw you get on camera and I saw that vest on. By the way, if those of you that are listening to the podcast, you can always watch the video of our podcast on our American Note Buyer's YouTube channel. Uh, we have it posted in one of our playlists called Be the Bank. So you can check us out there. You can see Richard's, uh, got a long sleeve button up on with a nice, comfortable puffy vest, I would say,
Richard Thornton:Right? Mm-hmm.<affirmative>. That's right. That's accurate. And it's keeping me warm.
Justin Bogard:Yeah. It looks like you're ready to go on the slopes or something.
Richard Thornton:<laugh>. I wish. I wish. Although the slopes here are, you know, Tahoe, they got 750 inches of rain or snow this year,
Justin Bogard:750 inches. Wow.
Richard Thornton:Inches. That's, that's, that is a record tied with 1950.
Justin Bogard:Wow. So how, how consistently deep is it in on most of the mountain?
Richard Thornton:Well, uh, I'll tell you a, around the cabin that we have up there, um, I'd say there's about 10 feet of snow consistently around there.
Justin Bogard:Huh. That seems like
Richard Thornton:It's so, it's very interesting to drive down the roadway because you feel like you're driving up against this wall of snow. Yeah.
Justin Bogard:Have you, do you remember the blizzard of 78?
Richard Thornton:I do.
Justin Bogard:So the blizzard of 78, I was born in 1978, for those of you that are listening and watching us here. So my, my mom and dad would tell me about how, you know, cuz that's very un unreal to have that in Indiana. And they said, yeah, that was like driving down just a corridor with two really high walls next to you<laugh>. And they basically for a couple weeks couldn't, couldn't really do anything. Those of you that experienced that, we'd love for you to chime in on our YouTube channel or leave us a little comment about it, cuz we'd like to hear about that.
Richard Thornton:It makes parking difficult.
Justin Bogard:<laugh>, you shouldn't even leave your house really<laugh> until melts, but, uh, what, what are you gonna do? Right. That's right. That's not what we're here to talk about today. Okay. We are here to talk about some mistakes, uh, particularly from this guy here talking with the microphone. So we have our company portfolios that we have together. We have our company portfolios outside of what we do, Richard. And then we also have our private portfolios, uh, for ourselves and mainly our, our retirement accounts. So I have one small retirement account that's more like a trust. And so I bought a note, um, about a year thir 13 months ago and I bought it from another, another, um, hedge fund that had the account and it was escrow and stuff. And so I bought it and I borrowed it with my servicer. It's actually the only loan, um, for that specific servicer that I had with my retirement account. So I just kind of moved forward with it and the borrower's paying and everything's fine. I get a email last week that said that, hey, the borrower mentioned that the house burnt, I was caught on fire. And um, it's no longer livable. And they want to know what their options are because they have no insurance.
Richard Thornton:Insurance.
Justin Bogard:Oh. I'm thinking, oh yeah, I probably got force place insurance on it. Not a big deal. Let's, let's go ahead and do some research on it. And sure enough, I did not have a force place policy on that house. Uh, even a blanket coverage because I missed a step when I was boarding that loan with my servicer. Uh, this is something that I typically would look out for, especially, you know, all of our business stuff, everything's kind of automatic, it's set up with a process. But with my retirement account I don't really go in the same asset management channel lanes as I do for like our company portfolio cuz it's obviously much larger. And so I made that mistake. So, um, I don't really have any options, Richard. I pretty much have to accept the fact that it's not livable and they need to sell it and I need to get as much money as I can from it so that they can pay off, you know, the debt that they owe. Luckily this balance is only about$14,000. It's a pretty low balance, um, loan. When I bought it, it was, you know, towards the end of its life anyways, so I should be able to get, um, the unpaid balance out of it by selling it. But man, did I dodge a bullet there,
Richard Thornton:So, um, do you think they're gonna sell it?
Justin Bogard:Well, they have no option. They, hey, either have to keep paying on it, which I don't see why they would if they can't live there or they have to sell it outright.
Richard Thornton:Mm-hmm.<affirmative>. So you're saying it's beyond their means to do re do the repairs of the house?
Justin Bogard:That's what they're telling me. They, they have. And maybe that's just a, um, just a initial knee jerk reaction to what had happened because, and, and by the way, nobody got seriously injured. Nobody was seriously hurt. Um, it actually wasn't as bad as they described it. Mm-hmm.<affirmative> the entire house from the exterior. Cuz I happened to be near this house when we were on vacation actually on spring break. And it was about an hour, hour and 15 minutes away from where we were at. Just by coincidence, um, it did not seem like there was any fire damage. When you look at it from the outside, it wasn't burnt to the ground. There wasn't any roof, there wasn't smoke coming out of it. There was one window broken on the second floor that I had saw and I, I kind of peeked through it, you know, from a distance and I could see, you know, just black inside there. So my assumption was basically the upstairs just kind of burnt really bad and uh, they were able to put it out where the fire department was able to put it out.
Richard Thornton:Mm-hmm.<affirmative>, uh, yeah, sounds like a flip to me.
Justin Bogard:Yeah. Yeah. So be, because it's such a low balance, I think that's my saving grace in this. Otherwise it could have been really bad. But this is another, another good reminder of the fact that you really don't wanna break your process. You know, you have a checklist, uh, you wanna do things just, you know, like, like it's habitual. Right? Right.
Richard Thornton:And
Justin Bogard:This is one of the things that I dropped the ball on,
Richard Thornton:Right. So for them or, or you, your hope is that they'll just quietly give you a deed and lie. Um, and you don't have to, uh, miss things or foreclosure or anything. Right?
Justin Bogard:I could, my hope is that they just go and sell and do all the work for me and just pay, pay off the debt. Mm-hmm.<affirmative>. So then I don't really wanna get involved with my trust or have my trustee kind of get involved with this. It's more work than I want to do. Right. Uh, since it's kind of, kind of an arm length, arms length, uh, transaction here mm-hmm.<affirmative>. So my hope is that they'll just go out and sell it, which I think that they end up will. They, they end up well-doing, but if they keep paying on it, I'm happy with that too cuz I'm still making the return that I
Richard Thornton:Want. Right. And um
Justin Bogard:Right. So we're gonna send somebody out there to take some pictures of the inside and get like the whole story, get, you know, the fire department maybe if they have some sort of report or, um, you know, write up that they did based on, on putting, putting out the fire just so I have all the documentation. Right. But I, I can't go and get insurance on it now cuz it's it's already done.
Richard Thornton:Yeah.
Justin Bogard:Yeah. Papers have been done.
Richard Thornton:Yeah. Those, those ongoing things, I mean it's one thing to miss something during underwriting or whatever and we all do that from time to time. But Yeah, I think cuz we all get so busy, it's very interesting, very easy to um, forgo and or miss one of those ongoing items.
Justin Bogard:Yeah. It's, and this was just a kind of a brain fart. Um, the servicer that I was using for this, this is part of onboarding with them for your first loan with them for Right. Because every account you have to have your own account ID and is treated as if you're a brand new entity to the company. So whatever blanket insurance coverage you have on another account, it doesn't overlap to this other account. Right. So I just didn't go through those steps in the beginning just not thinking, cuz I was like, oh, this is, I'm doing air quotes here, escrow account. It was escrow, but it was just escrow for taxes and I didn't notice that when I was, um, getting the loan boarded over to my new servicer. So, you know, shame on me. Uh, it's the first time that's happened to me, but believe me, it'll never happen on my personal account again. Right. I definitely have good steps on our business accounts where that doesn't happen
Richard Thornton:Either, so. Right. So if something along that same line that, that doesn't have the, the downside potential, uh, that yours does, but that's happened to me that actually I had forgotten about until you were just talking about it a little bit here mm-hmm.<affirmative> is that I've, I've had, um, more refis in my portfolio. I think we've talked about this than I would like. Um, I've had about five now. Uh, and the reason for that, uh, is that we're obviously still in high equity, uh, people's, I guess credit ratings have improved enough so that that equity offsets some of the risk and they're able to go out and get conventional loans. Um, great. Um, what I'm finding though is, is that, uh, to the degree that maybe there was an assignment or something like that that was unrecorded, I think, uh, some of the people in our crowd have are saying, Hey, look, you know, if this isn't recorded, it's not a big deal and just, you know, go sort of move on. Well, if they're closing through, if they're refining you out and cl uh, closing through a conventional, um, title company, they're gonna want everything recorded and they're gonna want it recorded, um, correctly. And so I've had to go through some somewhat painful situations where in the state of Georgia, you have to have two witnesses. If you don't have two witnesses on your assignments, they're not valid. So we had to go through and correct every assignment with everybody all the way back to the, you know, when the property was first sold, it took three months.
Justin Bogard:Yeah.
Richard Thornton:Well, so, uh, you kind of have to be careful for things like that and go ahead and get the stuff recorded and, uh, not let it lay around.
Justin Bogard:Yeah. And another state, just because you mentioned it, is South Carolina that requires uh, uh, two witnesses as well.
Richard Thornton:Right. So, right. I I I thought it was very odd. Uh, they also, state of Virginia or state of Georgia says that the, in the notary statement that they actually have seen, uh, you signed the paper in front of them mm-hmm.<affirmative> the document. Um, a lot of, uh, notary, uh, statements don't have that from, you know, x, y, Z state. Yeah. Uh, because my, my owner was in California, he got something done in California, it didn't fit the, the, uh, Georgia requirement. And guess what? Ding, ding, ding.
Justin Bogard:No bueno,
Richard Thornton:No boyo.
Justin Bogard:Yeah. Those, those things are kind of trivial right. When you're going through it and you're thinking, eh, that's not a big deal. But your example says like, look, you know, as much as a pain in the, the butt that it is to set up, you know, going through it the first time, you might as well do it Right.<laugh>,
Richard Thornton:Maybe headache in the future. You don't Yeah. You don't know what's gonna happen because in this case, rates were rising, um, and the guy was losing his, uh, ability to close. Yeah. Yeah. He was no longer gonna qualify.
Justin Bogard:Yeah. This is, this is why we use attorneys to help us draft documents. Yes. We never, we never draft any legal documents ourselves or use a template system for that specific reason. Right. Some things you can use a template for like, you know, purchase and sale agreements and you know, a launches you pretty much can use a template for an alane. Mm-hmm. Um, most assignments are very similar in, in about every state. There's a few of'em. Like for example, you need double witnesses and you have to tweak some things, but for the most part the assignment is pretty much the same. Mm-hmm.<affirmative> indeed. You definitely don't wanna do yourself for tempo times. Right. Cause it'll not work
Richard Thornton:At all. Right. So you've switched us right from our current efforts from from one company to the next and you're kind of liking
Justin Bogard:New one. Yeah, we we're using a new, a newer company. So we're still using both companies. We have a different, um, vendor that does our, well, our collateral management I guess I would call it mm-hmm.<affirmative>, which includes creating new assignments, uh, new deeds, new launches and stuff. So we're gonna try them out, see, see how they work and see if it's a good flow. Uh, since we have the fund and operation and we have our other accounts, we're just kind of, we're not putting all of our eggs in one basket. We're kind of spreading stuff out into for different vendors as well. Cuz as you get larger Right, you don't wanna put all of your stuff with one specific vendor because that could be a catastrophe if something went wrong. So.
Richard Thornton:Right. So tell me a little bit about collateral management with a firm like that rather than say your servicer.
Justin Bogard:Well, the servicer doesn't specialize in managing collateral. That's not their area of expertise and their area of expertise is really, you know, servicing the loan, which is borrower outreach, you know, collecting payments, documenting the principle balance on it on a monthly, a daily basis. And that that's really their main area of expertise. A lot of servicers will hold your collateral and, and can, they're competent enough to do the collateral, but if they're not attorneys, why, why put them in that situation? Right. Even if you save a few bucks, you know, with as many examples that we have together in the one small example you mentioned before mm-hmm.<affirmative>, a lot of this stuff can be avoided if you just have a professional that does this day in and day out, uh, collateral management company just handle this stuff for
Richard Thornton:You. And so how much are they charging? How much is our new group charging us?
Justin Bogard:Well, I don't know what the new prices are. It's all a la carte. Right. You got different, different prices for some, for them to basically take your collateral file and what they call intake it mm-hmm.<affirmative> when they intake it, they just go through and review it and make sure that the chain is sound on the assignment or the launches and the deeds if, if necessary. Um, they look for anything that's missing, like title policies that they may need with it. Then they give you the thumbs up or thumbs down or they show you an exception report. Um, and that is a cost to it. I don't know what the cost is off the top of my head. Obviously they can hold everything in a secure vault after they digit digitize all the files and then they basically, it stays there until you have a change and that change is selling a note or selling a partial or hypothecating it and then you just keep on adding to the collateral file.
Richard Thornton:Right. So how much are they charging or how much is the last group, uh, charging to say prepare a deed and record it?
Justin Bogard:Recording? Always depends on the county. It's anywhere from, you know,$30 to maybe$80 mm-hmm.<affirmative> just to record a document depending on if it's a deed or a mortgage. Mortgages are usually cheaper than deeds. Preparing a deed is the most expensive documents that I've seen. It's, it's typically in between the 60 to$110 range for one of our custodians that have done it before to prepare a deed.
Richard Thornton:Mm-hmm.<affirmative>, the reason I ask is because I just wanted to get your take on I'm, cuz I'm getting one right now. I've, I've completely in agreement with you for both our A and b um, fund documents, but also my, my own personal stuff. Um, they're charging me$90 to review all the docs mm-hmm.<affirmative>, uh, chain of title, uh, to make sure my assignments are all correct to make the, I'm getting ready to sell the note, uh, to actually prepare, uh, the assignment, the elange, uh, and the deed. Um, and then the, they'll charge me whatever the recording charges are mm-hmm.<affirmative> in addition to the number I'm gonna give you right now, but they're doing all that for$90. To me, that's the best$90 I ever spent. Yeah. I, a I don't have to think about it. B I know it's correct. C I don't have to have it kicked back to me because sometimes Yeah. As you know, some of the counties will kick back, kick'em back to you because you've only got a three inch margin on the top of the
Justin Bogard:<laugh>
Richard Thornton:As opposed to three and a half. And the first time that happened to me, I was floored. I said, you, I won't say what I said, but you know, you've gotta be kidding me and, and with extra words. Right. Uh, but that's the way they are. So Yeah.
Justin Bogard:It, it, it can seem expensive on the surface where you're looking at the documents and you're seeing why is it, why, why is it costing me a couple hundred dollars to go through this transaction just for that part of it? Well, there's a reason for it because you have, you basically have a guarantee that if something screws up, they're gonna fix it and might as well. Right. When you're doing a lot of these loans at the same time, well then that cost becomes, it becomes a very large cost overall. So you look for ways to kind of lower that cost, which is what another company that we have is gonna be more, um, what I say less hands-on and more auto processes. So there's still a human interaction and a human quality check to it, but most of the preparation is done through some sort of like automation process.
Richard Thornton:Right. And so you're doing something that thinks very smart that I think a lot of note buyers don't do. Uh, I didn't do it when I first started out mm-hmm.<affirmative>, uh, and that is, uh, you're, you're pricing, um, you're basing our prices that we're offering people on a net basis. So you're figuring all the, all those costs, all the servicing costs, all the everything. And you're saying, all right, here's our net yield. So does this meet our requirement as opposed to a gross yield? Because I think a lot of people Yeah. You know, will, will buy something, they'll have, its serviced by say Allied that only charges$18, but then they switch to FCI that charges 50 or whatever. And I'm not saying one is better than next, but they go, oops, you know, there goes part of my yield and didn't really think about
Justin Bogard:It. Exactly. Exactly. Yeah. So when you're buying in quantity like we do, and we obviously borrow money, which is what the fund is for, we have to take all that into consideration to say, okay, we know what we owe our investors. We know what we owe the management fee for the company. We know what kind of, kind of slush we need, kind of slush fund, if you will, and all that into consideration. Like we, we do know the expenses up upfront, like it's gonna cost X amount of dollars for us just to just to buy this loan and to kind of hold it for however long we need to hold it. Since we know that we might as well throw that in the equation. Right. It's just like you owning, uh, a store that, uh, buys widgets from another company and then you resell them to consumers. You have to know what that widget cost and your internal operations, uh, what you're gonna spend to kind of sell that product as well. And so that way you kind of know your profit margins and you can predict your future cash
Richard Thornton:Flow. Right. Right.
Justin Bogard:Enough of that business nonsense. Right.
Richard Thornton:Okay. Enough enough of how to make money. We don't need to. Right.
Justin Bogard:<laugh> so last night as we're recording this, we actually had, the night before we had a live YouTube stream of our broadcast. It was the April broadcast that we do. And we had found some really good data of kind of what's been going on today, the past 60, 90 days, past couple years as well as far as like foreclosures and kind of the residential, um, home pricing index month over month, year over year. And so what surprised, well, didn't really surprise us, but what gave truth and a fact to what we've been saying and we've been kind of, uh, shouting out to the masses is that there hasn't been a lot of negative, um, home pricing. There hasn't been a lot of negative things with foreclosures happening as, as far as, uh, being bad for let's say the, we'll say the economy and the real estate for residential, like single family. Uh, what we find is that back in the great recession around the nine eight, 2009, 2, 10, 11, 12, 13 timeframe, that's when the s hit the fan. Right? Right. And we had a lot of banks foreclosing on properties because they were really underwater and they do, they, they couldn't get them off their books fast enough. So at some point, Richard, they had an average of 210 to 240,000 loans starting foreclosure per month. Right. That's how bad it got. Mm-hmm.<affirmative>, the national default rate was well over 10.5%. I think it got close to 11 and 0.7 0.4% as a national default rate. Mm-hmm.<affirmative>, um, even at our worst during Covid and in the, in the pandemic, we only got to about a 7, 7 6 or 7%, I wanna say seven and three quarters, but I'm not sure if that's right off the top of my head as a national default rate. And then we did have a lot of loans go through forbearance, uh, during Covid about 8.8 million, but 85% of those loans, I'm, I'm just guessing it's between 80 to 90% of them came through their forbearance and started to repay. They either sold the home so they paid off the debt or they just started repaying again. So that's a really positive sign. Now the foreclosure starts over the past couple years. So during Covid Richard, it, it dropped to 8,000 starts a month. Right. So those are special cases that, you know, the judges would allow cuz they basically weren't allowed to foreclose almost every county. Um, the foreclosure starts now have, have gotten up to about 32,000, uh, 38,000, 32,000 per month. And now they're sta they're hovering steady between 29 to 30,000. That average hasn't been seen since like 2001 or 2002. Right. So we are not anywhere near a, a panic on residential real estate. Um, the home prices that we saw on the home pricing index, Richard, the Midwest and the southern states, and basically east of the Mississippi, it's been holding strong and it hasn't really gone up crazy numbers and it hasn't gone down crazy numbers either. It's just kind of stayed just plain Jane. Right. 3, 4, 5, 6% just appreciating month over month or year over year.
Richard Thornton:So it would be interesting to, to uh, look at the stats at some point, and I don't know if they keep stats in this on, uh, what percentage of the, those loans have been modified mm-hmm.<affirmative>, because really if you think about it, rather than a bank taking a hit, if somebody couldn't pay during the recession for say seven months, um, it would be much less expensive for a bank just to throw those payments at the back of the mortgage re amortize and go on their merry way because then they don't have to meet loan loss reserves and, and all those things, number one and number two, you know, to what degree did the federal programs, um, which is saving one of our, our loans that we have, uh, and help the borrower make up their payments and pay it even for like the next six months beyond that offset all of that,
Justin Bogard:You get the day on the head. So that's exactly what's going on. The, the appreciation and equity in people's homes has, has not fallen, it's only risen in this environment. It, it takes a lot of pressure off what happened during covid with, with everything that's shut down. Right.
Richard Thornton:Right.
Justin Bogard:10 years, 12 years prior, before that it was the opposite. The real estate dropped completely and went underwater under the mortgage value and that's when it became a really bad recession. So again, we, we've said this before, we've preached this on our broadcast broadcast, we've preached this on the podcast<laugh>, I dunno, I sometimes makes
Richard Thornton:Sense. That's interesting word. That's an
Justin Bogard:Interesting word. We need to have the, uh, the the word mess up jar start putting coins in Yeah. To see how far we get when I talk, since I ramble on too much, but this is a complete opposite timeframe. So home appreciation has saved the economy Right. For residential mortgages.
Richard Thornton:Right. And even if, I think some of the stats that we saw, which I don't totally agree with, especially in the Bay area, they're saying is that there's a 13% drop over the last 12 months. Uh, I I I think there's gotta be some downtown San Francisco, uh, condo numbers that are dragging this down and, and things like that because out here, I don't wanna say I'm not in the burbs exactly, but even if you went into the East Bay, uh, people would tell you that prices maybe dropped 2%, um, but they went up 15 to 20. So even even with that, you're still so far ahead of the, the game.
Justin Bogard:So these are misleading stats that someone can read them wrong pretty quickly. And quite frankly, most people read those numbers and they, they misinterpret what they really mean when you see a month over month change percentage, it does not mean that the house appreciated that much. It means there was a change in the appreciation amount of that much. So if it was a 13% change year over year, that means it grew in appreciation 13%. But if it has a negative number, you had already appreciated so much that it says it was a negative 5% growth from year over year. It doesn't mean it dr it lost value. It just mean it didn't grow as fast as 13% the prior year or the month over month, whatever stat you're looking at. So hopefully I explained that well. But that's what the misleading stats is, is out there. And that's what a lot of real estate, uh, agents or brokerage firms, they kind of mislead people and maybe they don't mean to, but that's what the panic is about. People see those negative numbers out on the West coast and they're thinking like, oh my God, don't live out there. It's terrible. Whoa, whoa, whoa, whoa. They're not losing value. They just didn't grow as fast as they did before. Right. So that's all it means.
Richard Thornton:Right. And I think, you know, as we're calling around to buy various notes, uh, we are seeing what that data indicated, which is, uh, nationally housing prices have not dropped that much if, if at all. Yeah. I think that data said that they've actually are still increasing, albeit slowly. Maybe it's only, you know, two, 2.2 or 0.3%. Um, but hey, that's better than some huge drop. Yeah. Um, and I know certainly here in the North Bay area of San Francisco, um, I saw a, a, um, presentation for the entire Bay Area, uh, by a realtors board. Uh, and they were saying in general, uh, yes, the market has slowed. Yes, you can say that overall it's dropped, uh, maybe 2%. Um, but for houses that are well priced and desirable, we're still getting multiple offers. Mm-hmm.<affirmative>, one of the ones in my neighborhood here, um, got five offers over and went for$150,000 over asking, I mean, you know, that's still pretty strong market.
Justin Bogard:It is. And the short, the shortage, this, uh, I'm making up word here. This is a Richard term shortage ness.
Richard Thornton:<laugh>, thank you.
Justin Bogard:<laugh> of inventory and causes that, um, that, that economy, that, that, uh, that lack of supply.
Richard Thornton:Yeah.
Justin Bogard:So you have people, this is, this is the hot season now we're, we're in the middle of April as we're recording this. So we got May, it's gonna turn up a lot more with people winding to buy houses in June and July. It's gonna get even heavier. So you're gonna have a lot more situations to where if inventory isn't starting to be released, if people aren't wanting to move and who's to blame them if they don't wanna move because the mortgage rates have gone up three, three and a half percent from when they had their mortgage, so why would they want to? Right. It doesn't make sense unless you have to move always. Somebody always has to move, someone always has to buy. Right. But that's why you're gonna see another log jam, uh, during this, this selling season of a lot of sellers being happy going Yep, I'm getting multiple offers. Again, cuz there's not that much inventory out
Richard Thornton:There. Yeah. There's not that much inventory. Certainly here in the North Bay. There's not that much space to build. Yeah. I mean we got a lot of wetlands and people, um, you know, sort of beef, I think about Marin County and areas like that and say, oh gee, it's very ritzy. Mm-hmm.<affirmative>. But what they're not thinking about or acknowledging or knowing I should say is that, uh, I think it's 85% of Marin County is agricultural. Huh? It's got cows on it, it's got<laugh>, you know, all this other stuff and you think, oh well gee, you know, it's, it's very shehe. Well there's just not that many places you can build. And uh, so that's, um, a large, large part of it.
Justin Bogard:Richard, awesome having you on the podcast again today. Thanks for being my partner in the business. I
Richard Thornton:Appreciate us.
Justin Bogard:Oh, enjoy it. Talking about our mistakes, uh, that we make cuz you know, we all make mistakes still. Uh, we try not to make them very often, but, uh, we're definitely not afraid to, to admit them because, uh, if anything we learn from them. Right?
Richard Thornton:We do. We do. Sometimes it's painful, but we do
Justin Bogard:<laugh>. It's not fun to admit your mistakes sometimes, but hey, this is how we grow.
Richard Thornton:That's right.
Justin Bogard:All right everybody, until next time. This is episode eight of the Beta Bank podcast, season number five, brought to you by American Note Buyers and we will see you on episode nine. See
Richard Thornton:You. See you then.
Speaker 4:Thanks
Narrator:For listening to Be the Bank. We hope you learned something from today's show. If you enjoyed this episode, please rate and review us. Plus check out our channel on YouTube and follow us on Facebook and Twitter at Be The Bank and on Instagram at Be the Bank Podcast, be The Bank is sponsored by American Note Buyers. Thanks again for listening.