Latest / The Jon Sanchez Show / What Is your House REALLY Worth?
Transcript
- Jon G. Sanchez: Pleasure to be with you today and a pleasure to be with my co host. Around the horn, we shall go. Smiling as always, Mr. Aaron Clark of Adrility. How are you doing, buddy? Aaron Clark, Edge Realty: I'm doing good. Good topic today. I like it. Jon G. Sanchez: Good. Glad to hear. You like that? You like that? Just for you, man. Just for you. All right. We'll Dwight Millard: Mm-hmm. Mm-hmm. Aaron Clark, Edge Realty: I do. Yeah. Yeah, I like it. Jon G. Sanchez: we'll well that that's important since it's all about you today, right, Dwight? Dwight Millard: Yep, Absolutely. Aaron Clark, Edge Realty: Ha ha Jon G. Sanchez: I I should mention, Dwight, before we we go any further. So the title of today's show is What is your house house really worth? What is your house really worth? You know, you got Zillow, you got realtors, you got appraisers. Reality is what what is it really worth? And I think that's just such a great question that everybody wants to know. Dwight, you don't care what it's worth, you just look at what the appraisal says. Your job's your job's easy from that standpoint. Aaron has to go on the hook. Dwight Millard: Absolutely. Yeah, but you yeah, yeah, but you need you Aaron Clark, Edge Realty: Ha ha ha. Dwight Millard: need you need guys like Aaron and Corey though that really truly understand because otherwise they put their buyer in such a hot box because if the seller doesn't want to come off, then they've got to come Jon G. Sanchez: Yeah. Exactly. Dwight Millard: up, they're trying to come with a minimum down. Well, you got to pay the different yeah, so it's it's critical. It's critical Jon G. Sanchez: Yep. Yeah. Dwight Millard: in the financing side of it as well. Jon G. Sanchez: Hey, Aaron, I'm gonna put you on the spot. I'm gonna put you on the spot to start things off. How close are you when you, you know, tell your client what price you ought to list a house for or sell a house for, buy or sell, excuse me. how close are you to the actual appraisal? Are you like within 5%, 10% when it's all said and done? Now, of course, you know, I know, I know, I know. Aaron Clark, Edge Realty: That's a tough question. man. Well, so the values aren't always or even I mean, most of the time they're not exactly the same. because there's the value of what somebody's willing to pay for something, and then there's the value of what somebody who's issuing a loan determines for collateral. So when a market is very balanced, you and you have a lot of data, then those numbers are very, very close. If you have a market that isn't lined up equal, they can be very far apart. And a buyer Jon G. Sanchez: Mm-hmm. Good point. Aaron Clark, Edge Realty: can agree that the property is worth way more than the appraisal or vice versa. Jon G. Sanchez: Mm-hmm. Dwight Millard: But John, that goes to back to Tuesday's show with Corey when they said this the numbers are skewed when you talk about the median home price. Remember, because the Jon G. Sanchez: Yes. Dwight Millard: upper ends are move so that to c to Aaron's point, wow, you've got a really weird market. And so everybody's looking at that median going, well, my house has got to be at least worth that, you know, and so and it's Jon G. Sanchez: Right, right, right. Dwight Millard: not always that case. Jon G. Sanchez: Yep. Yep. Exactly. That's that's why I wanna I you know, especially you, Dwight, after Aaron goes through, you know, how how how is everybody pricing? Because again, everybody's different, again, Zillow and so on so forth. but Dwight, you know, again, you're the ultimate decision maker, right? Your underwriters are the ones that go, you know, okay, we're gonna go with the appraisal. Do they ever do do the underwriters ever disagree with the appraiser? Okay, I think that's a good point to get across. Dwight Millard: Absolutely. Absolutely. All the time. All the time. All the time. Aaron Clark, Edge Realty: Yeah. Dwight Millard: not as much a Jon G. Sanchez: Yeah. Dwight Millard: anymore. I mean, because you got a lot of these out, you know, automated valuation models, different things they can check. Jon G. Sanchez: Right. Dwight Millard: But there's still that, there's still that scoring, John, on these appraisals. Anytime you get a four or a five, it requires a an elevated review. So you it yeah, there's a s there's a score Jon G. Sanchez: never heard you talk about scoring before. Interesting. Dwight Millard: on these one, two, and three, you're good. But if you get a four or five, it's, you know, you gotta go back through and Get either a second opinion somewhere or something like that. Jon G. Sanchez: So so let me let me play devil's advocate, which is probably going through all of us real estate layman's minds right now. you got scoring models yourself. Other lenders have scoring models. What the heck do you Dwight Millard: Mm-hmm. Jon G. Sanchez: need? No offense, Richard Lace, I love you. But what do you need an appraiser for? If you guys have your own which ultimately it sounds like it's gonna be the Dwight Millard: What John, we've been talking Jon G. Sanchez: decision. Dwight Millard: John, we've been talking about this though for ten or fifteen years about the odd you know, you know, where you don't need an a you an appraised. I I just had one here in Reno where I didn't Jon G. Sanchez: Right. Right. Did ya? Dwight Millard: have to. I had got an appraisal waiver. There was enough data that supported the value that was came yeah. And now I don't get a lot of those. Jon G. Sanchez: really? I've never heard that an appraisal waiver. Dwight Millard: Well, I don't get a lot of them. Jon G. Sanchez: Interesting. Dwight Millard: So when you don't get an appraisal waiver up front, then you need the human element. You need the Richard Jon G. Sanchez: Right. Dwight Millard: Lace to go out there and do the appraisal. But there's still a scoring model inside. There's so much that goes over ever since the 08-09 meltdown, John. There's Jon G. Sanchez: yeah. Sure, sure. Dwight Millard: we run it, we run the loan through a lot of different scoring models and the appraisal's one of them. Jon G. Sanchez: See, that's that's fascinating, Dwight, for those of us again not in the real estate industry, because we think the appraiser is the ultimate, you know, pricing decision maker, right? But I think Dwight Millard: Mm-hmm, mm-hmm, mm-hmm. Jon G. Sanchez: it's important that you emphasize this this evening when we go through this, that there's a lot of other, you know, I'll call it checks and balances, right? You've got, like you said, your own systems and things like that to to really Dwight Millard: Mm-hmm. Mm-hmm. Mm-hmm. Jon G. Sanchez: do it. So, Aaron, you can start off as the realtor. You start off with one price, even even if, you know. I don't know. I'll spick a number. Let's say you you you say the house is worth 800,000. And let's say it sells for 775,000. Okay, so you're pretty close. But again, Dwight's system has to come in and agree with that 775. if the human appraiser has to come in, they basically have to agree with that. If not, which I want you guys to get into, we could we're talking some cash out of pocket. You know, if it came came in at 700,000, guess what? No one's gonna budge, right? It's gonna come down to either Mr Seller, you need to drop your price to seven hundred thousand or mister buyer, you gotta come out of pocket for seventy five thousand. That's the that's Aaron Clark, Edge Realty: Yeah, and it Dwight Millard: Absolutely. Aaron Clark, Edge Realty: usually a big swinging component to that is how much a buyer is putting down. Because if they're putting a large amount of money down, then everybody sort of says, It doesn't really matter. You know, I mean, Dwight Millard: Mm-hmm, mm-hmm. Jon G. Sanchez: Okay. Aaron Clark, Edge Realty: obviously I'm paraphrasing the mentality of that, because Jon G. Sanchez: Sure, sure. Aaron Clark, Edge Realty: it does matter, but it's really not as critical when you're talking about somebody putting thirty, forty percent down versus somebody who's doing exactly three and a half percent or five percent or Dwight Millard: Five percent, yeah, or five percent, Jon G. Sanchez: Right, right, right. Dwight Millard: yeah. Aaron Clark, Edge Realty: Or they're right on the threshold of the no PMI twenty percent down, 'cause if they go at nineteen, Dwight Millard: Yeah. Aaron Clark, Edge Realty: they're back to PMI. If they go above that, then you know, obviously it doesn't matter. So Jon G. Sanchez: I I always know when we when we have a good topic because we do this, we tend to start going off these tangents before before anything else. Yeah, exactly. And so this is gonna Aaron Clark, Edge Realty: We start it before anything else. Yeah. Dwight Millard: Yeah. Jon G. Sanchez: be a great topic. But now I've got to ask this one one final question, then we'll get on to the stock market update. And that is Aaron Clark, Edge Realty: Ha ha ha. Jon G. Sanchez: I know Dwight, from a lender's perspective. Not to by any means disrespect Aaron, but I want to hear it from you as the as the lender. Does that down payment really have that big of an influence on kind of, okay, so we're a little bit off the appraised value? Tell us from your perspective. Dwight Millard: John, I've seen deals completely blow up because of that. And the reason, and and Aaron alluded to it perfectly. I mean, if you're coming in with the minimum down, that's all you got. You're getting a gift. Jon G. Sanchez: Yeah. Dwight Millard: You're so tight. And the appraisal comes in and the seller is just not willing to budge. Here's Jon G. Sanchez: Yeah. Dwight Millard: the problem on that particular one. I just had a situation come up. And Aaron can tell you this: there's a lot of sellers out there that are are controlling the agent, not the agent controlling the seller, feeding them the information. So Jon G. Sanchez: Sure. See that everywhere. Yeah. Dwight Millard: Yeah, it's everywhere. And and so that's where the expertise and the and the real professionalism comes in. But Jon G. Sanchez: Mm-hmm. Dwight Millard: yeah, it can blow it up. And and to Aaron's point, you're putting thirty, forty percent down. I I really am not overly concerned if it comes in five or ten thousand dollars off because I just change your loan to value a little bit, no big deal. But yeah, the and John and everybody Yes. Yeah, yeah. Every I'm concerned every time somebody puts the very max the Jon G. Sanchez: But are you concerned if I put five percent down and and it comes off, you know, five to ten thousand? But but y if you think but but but if you think about it that if you think about it from the from the consumer standpoint, that's not fair. Dwight Millard: Okay, but but y no, I I agree a hundred percent. Aaron Clark, Edge Realty: Yeah, but you remember that the consumer standpoint, when somebody's putting 40% down, the pricing variable doesn't change if Dwight tweaks it by 2% one way or the other. Nothing changes. But if you're Jon G. Sanchez: Right. Right. Aaron Clark, Edge Realty: putting 5% down, everything changes by one percentage point. Or everything changes by one percentage point when you're at 20% or 3.5%, because you're at the bare minimum. So you just don't have that that flexibility. And so the consumer's worried about Jon G. Sanchez: But aren't you looking at the collateral? Aaron Clark, Edge Realty: the Pricing, not so much the ratios. Jon G. Sanchez: But as the lender though, you're looking at your collateral, right? That's the ultimate that's ultimately Dwight Millard: Yeah. Well Jon G. Sanchez: what you're doing as the lender. You're going, if this person defaults, I as the lender need to be able to get get out of this mess, right? Dwight Millard: Yeah, but John, but that's why the appraisal is so important, because if that's the collateral, and we never want to Jon G. Sanchez: Right. Dwight Millard: make a loan with the taking it back. But to your point, the I don't this doesn't keep me up at night, but everybody's putting the minimum down most of the time. I mean, most Jon G. Sanchez: Sure, sure, sure. Dwight Millard: of the population is putting them in. So yeah, it doesn't keep you up at night, but there is that always that element that if it comes in like at $2,000 off, I usually usually get irritated. Jon G. Sanchez: yeah, big deal. Dwight Millard: The appraiser can't find two grand. Jon G. Sanchez: Right. Dwight Millard: But if it comes out two grand, you usually can work around that. It starts when you start to get a spread of 10, 15, 20,000. The sellers start to have this pride and this ego. And if they don't have a good seller's agent over there talking with Aaron, that's it starts to fall apart. And it's unfortunate because you're right, the buyer unfortunately is the victim. Because there's they have all the intent. Jon G. Sanchez: There you go. Aaron Clark, Edge Realty: And especially this Dwight Millard: Yeah. Aaron Clark, Edge Realty: all of this stuff changes especially with new home sales. Because on new home sales, you're paying for a product that doesn't quite have data or exist. And I see it all Jon G. Sanchez: Mm-hmm. No track record. Aaron Clark, Edge Realty: the time where my clients come in, they're using the builder's lender, the builder's title and escrow company, the builder's everything, everything. And then the Jon G. Sanchez: Mm-hmm. Aaron Clark, Edge Realty: builder's own valuation comes in. I've seen them as much as a hundred thousand dollars less than what they're in contract for. And the builders sometimes if they're if the market's slow, they'll play ball, they'll s they'll come down a little bit. Some of them are like, take it or leave it, pay the extra. We don't care. And Jon G. Sanchez: Yeah. Yeah. Aaron Clark, Edge Realty: some of them will come right down to that appraised value. So I mean, you see a lot of that. And you're in on a new home purchase, you're paying a lot premium per se. That doesn't really get calculated into comparable sales. So Jon G. Sanchez: That's a good point. Yeah. Right. Yep. Yep. And the and the and the and the developer does not want to come down in price. Why? Because they've got they've got a yeah, they've got a they've got a hundred other homes that if they you know, which are all relatively Aaron Clark, Edge Realty: Of course not. 'Cause r and there's not a lot of meat on the bone right now. Exactly. Dwight Millard: No, yeah. Jon G. Sanchez: similar and if they drop the price in home number one, guess Aaron Clark, Edge Realty: Mm. Jon G. Sanchez: what? They're gonna have a hard time borrowing, you know, for lots, you know, two through ninety nine or two through a hundred because hey, Aaron Clark, Edge Realty: Exactly. Jon G. Sanchez: you you just hurt yourself with your own sales price. So yeah. Dwight Millard: Yeah, and John, a good appraiser like Richard Lace, timing is everything. He looks out what's coming in. Hey, I got a closing. Jon G. Sanchez: Yes. Interesting. Dwight Millard: He goes and researches, makes sure. I mean, cause you know, because if you close if Aaron closed one with a new building, they just discounted at fifty and I have an appraisal done the next day, they're gonna that just that was my most recent model match comp. Yeah, so timing is everything, and a good appraiser understands that. Really. Jon G. Sanchez: Yeah, yeah. Fascinating. Yeah. Just so much to so much to learn what goes on behind the scenes, what I love. All righty, boys. Well we burn up this first segment. So when we come back, I gotta get down to the I gotta get down to the Aaron Clark, Edge Realty: Yeah. Jon G. Sanchez: stock market side because we we had a we had a heck of a mess today and I'm got some concerns that I want to share with everybody so everyone can make informed decisions for their portfolio if you're not one of our clients. so we'll do that. We of course Aaron Clark and Dwight Millard will turn it over to the Saxman for right now in the Right Now Traffic Center. Wow, that was great. I did too. I did too. Yep. No, no. No, it's real real life stuff. That's that's the Dwight Millard: I love segments like that though. I love the im I love the impromptu, because we're just we're not babbling. This is this is this this is really good. And and well and it's stuff that nobody really thinks about, right? W they don't know I have a scoring model behind the scene. They don't know Jon G. Sanchez: Right. R yeah, no, not at all. Yeah. Dwight Millard: that if Richard Lace appraises a house one day later after closing on a model match Jon G. Sanchez: Yeah. Dwight Millard: for fifty thousand, just probably killed us. Richard's really good at that though. He gets it. Jon G. Sanchez: Yeah. But see, I didn't I didn't know you guys had your own as a lender. I didn't know you had your own valuation data. I thought you just went straight to lay off the appraisal. Huh. Is that is that new no, been around? Dwight Millard: Yeah. yeah. no. No, it runs through. No, no, we've had scoring models probably for pro at least six or seven years. Jon G. Sanchez: No kidding. Aaron Clark, Edge Realty: It's definitely become way more popular though across the board because and especially the type of property. Jon G. Sanchez: Yeah, well, yeah, with AI, right? Go out and crunch those numbers. Dwight Millard: Yeah, yeah. Aaron Clark, Edge Realty: Like if you're buying a if you're buying a twelve hundred square foot and a condo complex where there's eighty of that sold in the last month, then Dwight Millard: Yeah. Mm-hmm. Jon G. Sanchez: Right. Aaron Clark, Edge Realty: it's very simple to discover what the value is versus a custom home Jon G. Sanchez: Right. Okay. Aaron Clark, Edge Realty: where you might need more. Jon G. Sanchez: Right, right, right. Wow, fascinating. Dwight Millard: Yeah. No, it's it's it it is the appraiser and they're starting to become under more scrutiny now, John, because they're seeing around the country what's going on. You know, I mean, you know, the Jon G. Sanchez: Mm. Dwight Millard: the market softening up, especially areas where it is softening up, they're just really scrutinizing. They're making you get additional information. Jon G. Sanchez: W would your would your pricing models, Dwight, or valuation models, do you think it takes into account what is going on around the country if you're if you're look Okay, so it doesn't just pinpoint Dwight Millard: absolutely. Absolutely. Jon G. Sanchez: it to Reno, for example. Yeah, okay, interesting. Dwight Millard: No, well, I think it I think that when it does the one through five, it's it's taking data right there. But I do believe that as we start to see I think the screws tightening down on the on the what I would say the where you get the appraisal waivers are tightening down because it sees the data all over the country. Jon G. Sanchez: Okay. Okay. Dwight Millard: Yeah. Cause a lot of lenders do loans everywhere, right? I mean, so Jon G. Sanchez: Right. Dwight Millard: y I I just y yeah, it's it's interesting. Jon G. Sanchez: Yeah, that's what I was wondering if they Yeah. yeah, no, it really is. Dwight Millard: Yeah. Jon G. Sanchez: So I wonder I wonder who who decides what data goes into that algorithm. Dwight Millard: So so if we get a one is so if we get a four or a five, generally have to go like to Clear Capital, which is a local company. They're national, but they're local, and they will do an appraisal review for us for whatever, 150 bucks desk review. Jon G. Sanchez: really? Dwight Millard: Mm-hmm. Yeah. Yeah. Appraisals are tough to fight. If you don't get into I mean, you can go if you think all they just want is more information. If you can give them a comp or two that supports what you're thinking, they're pretty cool about it. But Jon G. Sanchez: Yeah. I I you know, as Richard and I talk a lot, it's like, God bless these appraisers. What do they make? Three fifty, three hundred and fifty bucks or something like that for all that Dwight Millard: Yeah. Mm-hmm. Yeah. Yeah. Yeah. Jon G. Sanchez: time and work and liability. It I Dwight Millard: Yeah. Jon G. Sanchez: so I'm I'm just shocked they're still around with AI. I mean, Aaron, Dwight Millard: Yeah. Yeah. Jon G. Sanchez: bringing your real estate and your tech knowledge, couldn't couldn't the whole appraisal process be AI modeled right now or created? Is it Aaron Clark, Edge Realty: It's close. But I every once in a while I get a wild hair and I want to test it Jon G. Sanchez: Yeah. Aaron Clark, Edge Realty: and I'll download all the data from the MLS. I'll create CSV files, formats, tables, everything, give it all of the data that it could possibly get, and Jon G. Sanchez: Right. Aaron Clark, Edge Realty: then tell it to go research on its own on a specific property, and it's just not there. It just doesn't have Jon G. Sanchez: Right. Not there yet. Interesting. Aaron Clark, Edge Realty: it it doesn't know like for example, it doesn't know the orientation of the lock. And how that'll affect value. It doesn't understand how like it looks yeah, it can't quantitate Jon G. Sanchez: okay. So non non quantitative items it can't factor in. Aaron Clark, Edge Realty: a view or if like so it goes, you have a view. Well, yeah, but it's of the sanitation station. Well, but Jon G. Sanchez: Right. Aaron Clark, Edge Realty: it's a view. That's how that's how AI looks at it. It doesn't go, Jon G. Sanchez: Yep. Aaron Clark, Edge Realty: you ha this house has a really good view, and there isn't the sanitation station in it or a freeway or whatever, and this Jon G. Sanchez: Right. Aaron Clark, Edge Realty: house does. You know, it doesn't do that yet. Jon G. Sanchez: Right. Aaron Clark, Edge Realty: And it and and taste does not get translated by AI. So if the overall consumer, let's say, for example, is over yellow metal in the bathroom and Jon G. Sanchez: Mm-hmm. Dwight Millard: Okay, okay. Aaron Clark, Edge Realty: bra you know, brass colored finishes and Jon G. Sanchez: Right. Aaron Clark, Edge Realty: grays and whites on everything, it doesn't understand that. It just thinks, Jon G. Sanchez: Right. Sure. Aaron Clark, Edge Realty: it's it's been recently remodeled. So it's not really that great yet. You can get a good ballpark. I mean, I Jon G. Sanchez: Okay. Aaron Clark, Edge Realty: mean that's that's gonna be kind of my stance on it is if you're wondering what Jon G. Sanchez: Right. Aaron Clark, Edge Realty: your home is worth, pull it up on Zillow and, you know, give or take ten percent. You've got an idea, you Jon G. Sanchez: Yeah. It's already done for you. Yeah. Yeah. Aaron Clark, Edge Realty: know. Cause if you're going, I bought it for three hundred, I wonder what my home's worth now. Zillow says it's nine hundred. Well yeah, it might be eight fifty or it might be nine fifty, but you at least you Jon G. Sanchez: Right. Right. Aaron Clark, Edge Realty: know that it's ballparked at that price. Jon G. Sanchez: Right, right. Wow. Is Zillow getting more accurate? Aaron Clark, Edge Realty: Zillow is pretty decent with structured tracked homes, Jon G. Sanchez: Okay. Aaron Clark, Edge Realty: but it is terrible with non track custom homes. Dwight Millard: It it well and I think they're getting better, Aaron, and timing. It used to they used to be a month or six weeks lag. Yeah. Aaron Clark, Edge Realty: Mm-hmm. Yeah. Jon G. Sanchez: Here we go. Yes, sorry. Aaron Clark, Edge Realty: Now it's instant. Jon G. Sanchez: Welcome back to the John Sanchez show on News Talk seven eighty KOH with Dwight Millard of On Q Home Loans. Aaron Clark, of course, of Edge Realty. All right, we'll get to our topic here in a moment. almost gave it to you already. what is your house really worth? Zillow, realtors, appraisers, et cetera. What is it really worth? The boys are gonna go behind the scenes and yeah, I've already learned a lot in that first segment. So I guess we were chatting off off air during the break. I went I told Dwight, I said, like, yeah, geez, I thought I knew a lot about your industry, but yeah, I didn't know this, you know, you guys did your own you know. valuations besides that. And I Dwight Millard: Yeah. Mm-hmm. Jon G. Sanchez: said, is that something new with AI? And Dwight said, but no, last six, seven years it's been around. So see, even I learned something. My goodness. All right. Let's get this. Yeah, it really does. God bless you guys. That's all I can say. God bless you guys. Dwight Millard: Yep. Yep. Keeps you further and further away from this business, doesn't it, John? Jon G. Sanchez: All right. Let's get down to what happened today. Let's get the bad news out of the way if you haven't if you haven't seen what the what the market did today. I was if you if you If you read between the lines of my tone yesterday, when I I was very skeptical when I told you of the, and I won't even say a market rally, right? I think what we gained, you know, 114 points or something like that yesterday on the Dow side and NASDAQ, you know, it was it was an okay day, as I said, you know, when I would give you the stock recap yesterday. but I also told you, looking in the big scheme of things, the big announcement yesterday by Scott Basent, the you know, Treasury Secretary, that We're doing this massive two to four billion dollars, you know, bond buyback of the 10, 20, and 30 year maturities. And I said, folks, keep this in mind. You know, the bond market itself is 30 plus trillion dollars, about 34 trillion dollars. So to do it from September through November is what they said the time period was. I said it was gonna be a drop in the bucket. It it's it's it's no big deal. Well, we we wake up this morning and now everyone else is going, you know what? It's no big deal. Matter of fact, there was so much criticism, guys, by various, and it surprised me, right? Surprised me. Criticism by various very powerful Wall Street strategists and firms coming out and criticizing Bascent's strategy. Saying, you know, it's kind of first of all, it's kind of ironic that you announced this additional, you know, two to four billion dollar buy bond buyback right before a major government auction. I saw a stat today. And I think the government saved, which, you know, hey, God bless them, saved it was a staggering amount. It was like $100, $200 million in interest payments doing the auction yesterday when the bond yields cratered, than let let's say today or the previous day. So the government, you know, we're we're we're spending well over a trillion dollars now, as I also shared on the show. We've spent over a trillion dollars year to date in interest on our government debt. The government debt issue is. Has also very much surfaced in the last 24 to 48 hours. $40 trillion we are in debt. Staggering number. And people are like, this is the reason that the 30 year and the longer end of the curve is rising like it is. No amount of, you know, little, you know, spit in the wind type of action of two to four billion dollars you know, bond buyback. So what happened today? So Bassent had to come out. He went on CNBC this morning. I'm sure this was choreographed, went on to CNBC this morning and said, Well, you what, the two to four billion dollars, it can actually be higher. We we may do a little bit more. And what happened? Market went big deal. And we started selling off as soon as he did that, had that comment this morning. And we never looked back. And we finished down 704 on the Dow, 1.32% to 52,759. NASDAQ gave up 264 points one percent, closing at 26,067. S P down sixty seven points point eight seven percent to seventy six forty one. Boys, before I bring you in, I want to emphasize one point why I spend so much time, not only with the guys on Tuesdays and Thursdays, but just in general, talking about the importance of watching interest rates as to what's going to happen. I sent, well, Aaron, I forgot to send it to you. I sent it to Corey and to Dwight. I'll I'll send it to you after the show. there was a fascinating article written by a former Fed governor today in Bloomberg. And I read this and I'm like, Man, did this guy get into my head or or what? And Dwight Millard: Mm-hmm. Jon G. Sanchez: I'm going to cover it on the show tomorrow when I do my my week on Wall Street. And this article, I think, what do you say, Dwight? Seven reasons why the market's gonna basically tank in the next within the next year. And it's the same thing I've Dwight Millard: Abs yeah, yeah, yeah. Mm-hmm. Yeah. Jon G. Sanchez: been saying. We are so stupid that we don't remember what happens to our economy and to the markets when there is new technology. We, all three of us, we love AI. We love everything about AI. But Doggone it, it is smelling so similar to what we went through in 99 and 2000. I know some of you may not agree, but I will share with you this article tomorrow and you will see exactly what this former Fed governor had to say. And it's the same thing I've been saying. You've got massive borrowing going on. So let me bring this conversation back to what's going on in the treasury market. You got this massive borrowing going on by what are called the hyperscalers, the Nvidia, the Metas, the Googles, et cetera, of the world. Massive borrowing going on. They have got To start making money in these data centers and all these places that they are spending hundreds of billion dollars in CapEx spending each and every year, right? It's not there yet. But now with these stubborn interest rates, you know, the longer end of the curve being up there like they, like they are, now this is gonna crunch their free cash flow even worse than we've already been warned by many of these companies. Some of them were, you know, like like Oracle, they went negative cash flow because they're borrowing so much money. Well, guess what? That money's gotta be paid back. There's higher interest rate is no good for anybody, right? It's not good for Dwight's world, Aaron's world, hyperscalers. It's not good for anybody. But the bond traders are going, you know what? We think there's an inflation problem. We think there's underlying issues with the economy. So yeah, let the Treasury Department do what they want to do. We don't agree what they did as the the sentiment on the street. But you know what? We're gonna do our own thing. And that's exactly what they did today. They they you know, they they shot the yields up, four basis point increase on the 10 year to yield of four seventy. And the bond so Watch the bond market. They forget about what the what anybody in in government says what's gonna happen and all their little tricks. the bond traders are the right are the are the are the telltale sign. Do I? Dwight Millard: No, absolutely, John. And you know, and some of the things that get overlooked, I I wasn't we just to go over 40 trillion on our debt. Didn't I read that? Yeah. Yeah, Jon G. Sanchez: So I just said, yeah, forty trillion. Yeah. Yeah. Dwight Millard: 40 trillion. I mean, those are things that put so much pressure the wrong way in which we're going, John. And and and to your point, when when that news came out, I thought, this will be a good day in the bond market. Nope. Do Jon G. Sanchez: Mm-hmm. Dwight Millard: your, you know, as you mentioned, that that's nothing. That's nothing. This is worse than what you're trying to right. The the the little cure you're throwing our way. Yeah. Jon G. Sanchez: They are saying this, they are saying this could be worse than the eight nine time period, Dwight, from a from an interest rate perspective. I know. No, I'm just saying that's that's that's what they're Dwight Millard: Yeah, please don't tell me that Jon G. Sanchez: saying. I like I said, usually you have these Wall Street firms because most of them love Trump and he loves them. They don't bash the president or his strategies. They have this time. It started yesterday, not long after Bissett made the announcement, and obviously they voted with their their fingers today on the on the you know the sell side of the bonds, which why the yields drove up. So They're not agreeing with what the president did. On top of that, let me throw this in before we go to break. On top of that, you had the president this morning, early this morning, in a true social post, he said that the U.S. would begin, quote, the most crushing economic operation ever taken against any country. Obviously, he's referring to Iran. Basent in his CNBC interview basically said the same thing. And I thought it was strange. Basent said something along the lines of don't expect any major military action going forward. We're gonna, you know, basically fight them with you know. With the financial, you know, sanctions and different things like that. So I thought it was strange that you had a treasury secretary speaking for the president and speaking Dwight Millard: Yeah. Jon G. Sanchez: for the military saying, Yep, you know, Iran, we're not gonna be doing anything against you again. I thought that was really bizarre. So the whole thing is just smelling really weird, guys. I I hate to be real blunt. And then oil prices shot up on the president's comments, two dollar and forty-four cent gain to eighty eight fifty. Dwight Millard: It well, like you said, John, it was it's not enough. It's it's the timing's poor, everything you know, so it's just like I don't believe it, right? I don't yeah, that's Jon G. Sanchez: Yeah. Yeah. Dwight Millard: that's the attitude 'cause everything went south ever since then. I mean, we'll get into the mortgages and yeah, it was a rough day. Jon G. Sanchez: It yes. The the the the consumer guys, the consumer, a da data point just came out today. I forget what it was a credible organization. Name excuse me. Came out today and said the US consumer has spent eighty eight billion dollars extra in higher gas and d diesel purchases year to date since the war started. So you think about that. Why is the consumer not have money in their pocket? There's one answer, right? Eighty-eight billion dollars Dwight Millard: Yeah. Jon G. Sanchez: that people weren't planning on spending when you know January first rolled around this year. So all those little things add up. you know, we're we're hearing it from Home Depot, Lowe's, you they reported that a very challenging environment. Walmart today just terrible. I mean, stock, you know, tank today. they're they're seeing it. They're saying the only thing that's really kind of, you know, I'm paraphrasing, kind of keeping them alive is the higher-end consumer. You and I and Aaron, we're shopping at Walmart, which I do, or my wife does. versus the lower end consumer can't afford Walmart anymore. Right? So see how the demographics are shifting? The kind of the middle and lower class, which I hate using those terms, they're they're struggling. Now if they're not shopping at Walmart, where are they going? Grocery warehouses? I don't know. But Dwight Millard: Yeah, yeah. Jon G. Sanchez: but those were you know Walmart's comments today. It's a bougie place. It is a bougie place to go. Absolutely. God, I do my very best not to do that. You still grocery Aaron Clark, Edge Realty: Guess Walmart's very bougie now. Dwight Millard: Hmm. Jon G. Sanchez: shop every day, do I? You like my dad. My dad used to go grocery shopping every day. Yeah. man. God bless you. Just don't have the patience. Dwight Millard: Pretty much. I still do the grocery shopping. I got a pretty good pulse on it. Yep. Mm-hmm. Jon G. Sanchez: All right. Enough of my ranting. I will get off my soapbox and we come back. What is your house really worth? The boys are going to give the behind the scenes of how this is calculated. Let's turn it over to Jack Sabin, News Traffic and Weather. Aaron Clark, Edge Realty: Mm-hmm. Dwight Millard: Did you guys see that guy that hit those bicyclists in Tennessee? Did you see it, Aaron? Aaron Clark, Edge Realty: No. Dwight Millard: You gotta go read it. Fourteen, he hit fourteen of them, killed two on the scene. Airlifted. Anyhow, my niece, Kelly's daughter, was the trauma nurse that they brought him to. Said it was a mess. Absolute. Jon G. Sanchez: you're kidding. Aaron Clark, Edge Realty: How did he hit that many kids? Dwight Millard: 69 years old. They said they said they smelled pot in the car. They haven't got the blood or whatever, toxology or whatever, but they you know they're they're suspecting that he was high. It's crazy. Jon G. Sanchez: Shocking. Dwight Millard: If you got your look at right there for Tennessee bicycle and they're they're an elite bicycle team. They've won lots of it was an elite. Yeah, Jon G. Sanchez: it was a team that they hit or the guy hit. Dwight Millard: it's not like a bunch of rag tags. It was an elite team that that this guy hit. 14 Jon G. Sanchez: Okay. you're kidding. Dwight Millard: of them. Didn't even put on his brakes. Aaron Clark, Edge Realty: He was more than just high then. Dwight Millard: That's what I'm thinking. He's there I already hit him with vehicle manslaughter. Jon G. Sanchez: So I wonder were they in a straight line like they're they ride in and just dominoed them? Dwight Millard: That's what I'm thinking. Yeah. Yeah. Aaron Clark, Edge Realty: Where what news source was that article on Dwight Millard: That was on Breitbart, but I found it on Fox earlier too, but that was on Bright Aaron Clark, Edge Realty: No, I mean the seven reasons we're gonna crash or something. Jon G. Sanchez: here I'll send it to you. Aaron Clark, Edge Realty: I was just curious. Jon G. Sanchez: Yeah, it's a phenomenal article. Aaron Clark, Edge Realty: What's crazy is there's been evidence and signs and algorithms that have been saying this for fifteen years now and nothing happened. So I'm so curious, like Dwight Millard: You wanna say hi to John? Say hi to John. Say hi John. Say hi John and Aaron. Say hi to Aaron. Jon G. Sanchez: Murphy. So freaking cute. So frickin' cute. Gotta be great snug great snuggle at night. Yeah. I can imagine. I can. Yeah, I bet. I love it. yeah. Dwight Millard: Hi, Aaron. He's like a teddy bear. You know what? If I didn't if I if I didn't have a wife, this is a chick magnet. Every woman. that's the cutest dog. Yeah, yeah, yeah. You too. Aaron Clark, Edge Realty: Yeah. Jon G. Sanchez: that's so funny. Dwight Millard: I I gotta just keep him entertained. I don't want him bark, so I gotta I'm throwing treats and it's like pff but Jon G. Sanchez: Yeah. Dwight Millard: now I now I gotta I I'm gonna give him a peanut butter filled bone so he'll he'll be good the Jon G. Sanchez: I keep busy. Dwight Millard: rest of the show. Won't you? Jon G. Sanchez: Okay, Aaron, I just sent it to you. Yeah, great, great article. Yeah, Bill Dudley, that's who it was, former Fed Governor. Dwight Millard: Yeah. John, that everything just feels like it's so on the verge. It just feels just one little. And and did you see where what was it that they awarded, what was that lawsuit against Meta? 1.4 trillion? Did you see that? I heard it today, something. But I well, Jon G. Sanchez: They they just went to court. You talk the talking the kids? Dwight Millard: okay, but it's like 1.4 trillion. You got 1.4 trillion. You got more money than you should have. That's crazy. That's a lot of money. Jon G. Sanchez: Now is are you saying that's what they're seeking? Dwight Millard: That's what yeah, or I don't know. I didn't get it was just a did it? Okay, yeah, Jon G. Sanchez: Yeah, 'cause the trial just started yesterday. Yeah. Dwight Millard: I I Aaron Clark, Edge Realty: Yeah, and the whole like it's causing kids to become addicted algorithm, yeah. Dwight Millard: Yes, yes, yeah, addicted, yeah, yeah. Maybe you're right. One point but that's our sh one point four trillion. God. Yeah, yeah, Jon G. Sanchez: Yeah, they'll write a check for a couple hundred million and get their hands slapped like always. Dwight Millard: yeah. Aaron Clark, Edge Realty: I think it's a pretty bull crap lawsuit though. We're slowly eroding free speech. It's like it's like, hey parents, you know you're the parent. Like, restrict your Jon G. Sanchez: Yeah. Well it's his parents n never yeah. Well it's parents never wanting to take responsibility. Yep. Yep. Dwight Millard: Right. Aaron Clark, Edge Realty: kids or lock their phones or take their phones away. You know, it's not Meta's fault for doing good business practice. I mean, can you imagine? Jon G. Sanchez: Right. Aaron Clark, Edge Realty: You you you lured too many people in with your marketing and advertising strategy, so you're gonna have to pay them for Getting them to use you instead of someone else. I mean, that's basically what this is about. Jon G. Sanchez: it's almost like you know, w when the tobacco Dwight Millard: Okay. Jon G. Sanchez: industry, you know, got sued because people smoked and they got cancer or whatever. It's like, is there no responsibility for your own actions? You know, it's the same thing with this shit. Aaron Clark, Edge Realty: Yeah. It's crazy. Dwight Millard: But that's it. My babysitter didn't work out. Google didn't work out or Met you know. Jon G. Sanchez: Yeah, that's right. That's right. Aaron Clark, Edge Realty: Did you text it to me, John? Jon G. Sanchez: No, I emailed it. Did not Aaron Clark, Edge Realty: Still don't have anything. mean I don't think it would've gone to junk. Let me just double check. Jon G. Sanchez: Yeah. It's out of my outbox. It's titled Market Predictions by my my email subject. Aaron Clark, Edge Realty: Here we go. Jon G. Sanchez: Alright, we're gonna have to really consolidate Aaron Clark, Edge Realty: There it is. Jon G. Sanchez: this. We're gonna be so tent. Dwight Millard: I won't say much. I know I know you don't believe it, but I won't. I'll Jon G. Sanchez: Yeah. Dwight Millard: only say if you if you want ask me. Jon G. Sanchez: It's like you're talking to your wife. Honey, I'll be quiet unless you want to s want me to talk. Dwight Millard: Yeah. Yeah. Aaron Clark, Edge Realty: All right, I got it. Jon G. Sanchez: Hallelujah. Get rid of that dial up modem. All music's starting, we're coming with Aaron Clark, Edge Realty: So I'll ask you later. Jon G. Sanchez: Welcome back to the John Sanchez show on News Talk 780 KOHO with Aaron Clark of It's Reality, Dwight Millard of On Q Home Loans. All right, once again, here's how we finished up in this tough day. 704 loss on the Dow, 1.32%. NASDAQ down 263%, 1% decline, and the SP lower by 67.87%. What is your house really worth? Now, before we get to that, Dwight, we gotta gotta talk to you real quickly. So, again, as I said, four basis point increase on the 10 year, 470 was our close. How do we do on the mortgage side? Dwight Millard: Yeah, John, I think we dodged a bullet initially because the mortgage backed securities, they were down twenty-five points right at the opening. So I mean, I just expected this thing just to but but we only lost four basis points. So according to Mortgage News Daily, six point seven six up four basis points. So yeah, Jon G. Sanchez: Kind of hovering where we've been. Okay. Dwight Millard: we've been just sitting in that six point seven, six point eight, six point eight two range for Jon G. Sanchez: Yep. Dwight Millard: Several weeks now, so no Jon G. Sanchez: Yep. Dwight Millard: no relief. It just y and and you know, we talked about the other day, you take one step forward in a positive way and then you take three three steps back, right? And it's so Jon G. Sanchez: Yeah. Yep. Dwight Millard: hard to get that one positive step. Jon G. Sanchez: Exactly. Dwight Millard: but it gets wiped out with you know, but yeah, it's it's a tough ride. We're just gonna Jon G. Sanchez: You got it. Dwight Millard: have to yeah. Jon G. Sanchez: Hang in there. All right, Aaron, here we go. I call you up this morning and I say, Aaron, I want you to list my house. The first thing out of my mouth is, Aaron, what the heck is my house worth? I want you to walk us through exactly as a top-notch realtor what you do to answer my question. Let's start with that. Aaron Clark, Edge Realty: Well, I mean, the first thing that we do is you you'll get a lot of people that'll run straight to the computer and start searching properties and trying to determine value. And we can get a generic value of an average of like what the price point is in a specific neighborhood, especially if it's a tracked home or something like that, where it's easy to find like similar properties. But really the first thing is to do a walkthrough. Before I'm bringing a whole bunch of information I without even seeing the home, I need to see the home. So I usually walk through, talk to the person, find out in that scenario, you know, what things you've done, what have you upgraded? Is your home 40 years old and it's the original furnace, water heater, roof, everything? You know what I mean? So we got to determine all of that kind of stuff first. Cause without having that information, we're just comparing generics, which is what AI and Zillow and all these other algorithms do is they just compare generic information, not specific information. So once I've done that, and then I'll take a whole bunch of photos and videos for myself so that I don't forget when I leave what the bathroom looked like and what this looked like and what that, or if I see any weird stuff, I'm going to take extra pictures of it. And then I can sit down in front of the computer, pull the MLS stats, look at the neighborhood, look at trends, what Corey and I do specifically too, along with determining value of a home in a neighborhood. is we'll actually look at the trends for what's happening in the market from the month over month. Because if you're looking into a valuation of a property within a neighborhood, assuming that it matches perfectly with the last three homes sold just for argument's sake, but we're Jon G. Sanchez: Mm-hmm. Aaron Clark, Edge Realty: heading into a downward trend or seasonally downward, because we're going into the end of summer, you know, fall, winter, whatever, then we have to assign that to a value. So if all three homes were exactly the same, they all sold for 800,000 And we're going on two months later using just seasonal or downward trends, even though we could make the argument it's worth eight hundred to an appraisal bank situation, really it's probably gonna sell around that seven eighty, seven ninety price point because of the seasonality Jon G. Sanchez: Mm-hmm. Aaron Clark, Edge Realty: in the stats. Jon G. Sanchez: Okay. So a lot of a lot of personal opinion goes into it. Okay. Aaron Clark, Edge Realty: So much. Well, personal opinion, but appraiser look really focuses on what has sold. Sillo really looks at what has sold. We look at what has sold, what are market trends, what pending, how long stuff stayed on the market, what new stuff go on. I know my colleagues that are doing stuff. When I sell something, I get a call saying, Hey, would how is the the progress on your property? I'm putting one on down the street in two weeks. Jon G. Sanchez: Mm. Aaron Clark, Edge Realty: We're getting it ready right now. They're getting intel from me that no one else can get because they're making those extra Jon G. Sanchez: Interesting. Aaron Clark, Edge Realty: phone calls and that's what goes into it. So I I think we're a little more precise to what the consumer would pay for a property, not necessarily what it Jon G. Sanchez: Right. And you left out one point. You are also factoring in forward looking, like you said, market trends, et cetera. Where an appraiser doesn't do that. Right. Appraiser appraiser doesn't that. Aaron Clark, Edge Realty: yeah, absolutely. We have to. Yeah. We're we're looking at trends. We're looking at future. We're looking at past. We're looking at issues. We're looking at you know, is it next to a school and there's gonna be crazy amounts of parking during nine AM and three PM? Jon G. Sanchez: Are are you gonna look at mac are you gonna look at macro data such as you know the Fed just raised interest rates, the mortgage rates are going up? that could Aaron Clark, Edge Realty: Mm. Jon G. Sanchez: slow things down. Do you get into that detail? Aaron Clark, Edge Realty: Yes and no. I mean that sort of translates into our market statistics. So yeah, I'll look at that. You need big swings to really take that in consideration Jon G. Sanchez: Okay. Aaron Clark, Edge Realty: on point. It's more the micro stuff. But we are looking specifically at future development. If we're in a specific area where we know future develop development's coming or there's some neighborhoods where they're talking about removing a golf course and putting in homes Dwight Millard: But Aaron Clark, Edge Realty: or things like that. Those are all things that we're taking into consideration when we're doing pricing. Jon G. Sanchez: And that is what AI will never, ever be able to do, right? Dwight Millard: Mm-hmm. Aaron Clark, Edge Realty: It can't. It's not there. Jon G. Sanchez: They're not g yeah, right? Yeah. Both of you shaking your head, no, yeah, there's no way. Like you said, that Dwight Millard: Well, John, one of Aaron Clark, Edge Realty: No. Dwight Millard: the big ones that Aaron knows really well, they all do is a the good agents is that when the freeways are starting to come in, you know they're twenty years out, but Jon G. Sanchez: Sure. Dwight Millard: you know, you've gotta know that you've got a there's a potential that in your lifetime you might meet near that freeway. Yeah. Jon G. Sanchez: So Aaron, the example you gave, excellent example, but you left out one part. What if this is a one off house? What if this is a custom home? Or what if, you know, this was a home sitting out in Washoe Valley on five acres that was built ten years ago? I mean, not everything's a track house where you have data. So what's your what's your procedure then? Aaron Clark, Edge Realty: It's like the price is right wheel. We just spin it and whatever it lands on. That's what we list it for. Yeah. Jon G. Sanchez: two hundred thousand for it. Aaron Clark, Edge Realty: No, we do the same thing, but we're looking the the data is more broad. And for example, let's say you have a property that's on the river. That that's a really good example because that happens. And you don't have anything specific within that area that's common or it's a custom home. You have to pull other custom homes on the river. You have to look at the difference between the two. So if we were gonna just get Well, I mean, you're you're almost Jon G. Sanchez: What if there isn't though, which happens a lot, what if there isn't? Aaron Clark, Edge Realty: never gonna have a home that's not similar to anything, right? I mean, even a Tahoe luxurious home is gonna have homes that are similar to it. And so you can look at one and another and determine, okay, well, this one's larger square foot, but this one's nicer. And you can start to figure out how each segment increases or decreases value. It's it's The same thing an appraiser does with a tracked home when they're assigning it for Dwight Millard: I think so. Aaron Clark, Edge Realty: a value for collateral. We're doing it on a larger scale. Well, this home was built earlier than that home. It has more modern amenities. It's going to get a higher value. And we can compare three other homes similar to that and how much they gained in price. And then we can come up with sort of an algorithm of what the value is for that specific part. And then when you add them all together, you come up with a value price point to start your listing at. Dwight Millard: And John, on on a one-off house like that, you know, you that's where you need someone like Richard Lace because the lender will allow you to go outside of the area, but you've got to write a narrative of why you have to do this. And the better the narrative, the better the, you know, the case that you make it for it, they'll allow you. I I typically that doesn't usually happen, but there's some flexibility. So if you're doing a house in Washoe that's completely and you gotta go to Tahoe, you just gotta explain it. And and Jon G. Sanchez: Yeah. Dwight Millard: they'll they'll understand that. So to Aaron's point, they'll you'll always find something that will comp with it. Whether the underwriter buys it or the investor buys it, that's another thing. But generally is with enough narrative you can get through it. Jon G. Sanchez: Okay. All right. Excellent stuff. We'll continue on our discussion with what is your house really worth? Let's wrap it up with a sacks, man. In the right now, traffic center. Aaron, I I just I can't imagine that the average excuse me, the average real estate agent can go through all that and figure out an accurate price. Really? Okay. Aaron Clark, Edge Realty: They can't they don't. Jon G. Sanchez: I didn't want to say that, but I I wanted to say it, but I'm not going to, but yeah. Yeah. Aaron Clark, Edge Realty: No, I appreciate you not saying that because that would be a hard one to try to discuss. But no, what I find i and I will be fair, there are some times when you have a super custom situation where you know, like I had this one in Washoe Valley that backed up against it was next door to the the campground there, and then it backed up against the Washo or the the the county lake, like national forest, whatever. It's called. And it was on Pepi Sand was the street. And it was super unique. it was a log cabin style feel. Parts of it were permitted, parts of it they did it themselves. Then it had a huge detached open span metal garage. It had Dwight Millard: Excuse me. Aaron Clark, Edge Realty: it had some agricultural stuff, etc. It was not an easy one to figure out price point on it. So you can kind of look at it and you know. you know, when you look at research and everything and you go, okay, I Jon G. Sanchez: Yeah. Aaron Clark, Edge Realty: kinda know that the value's gonna be somewhere around, you know, let's say a million two or whatever. And then you talk to this the the seller and they're like, I bought it for 500. I did all this stuff. I'm not taking less than a million one. And then you're like, Yes But if they're Jon G. Sanchez: Right. so you keep the million two to yourself. Okay. Aaron Clark, Edge Realty: well it's not that you keep it to yourself, but strategically speaking, like if you put something on the market that has a it a value that other people will perceive to be higher than what it's listed for, Jon G. Sanchez: Right. Aaron Clark, Edge Realty: then it's gonna go really fast and it's gonna get more traction. Jon G. Sanchez: Well, that's what I was gonna say. So in a y in a custom situation like that, do you tend to have the first price listing higher than what you really think you're gonna get? 'Cause you're 'cause really y what you're doing is you're you're just testing the waters, right? You don't really know. Aaron Clark, Edge Realty: Well, all of it, I mean, I always tell people I go, Listen, my job is to take all of this information, make an evaluation, and then see if we get a bite. I mean, that's the reality of it. And I would never say that publicly because it's just sounds Jon G. Sanchez: Right. Yeah, you're fishing. Right. No. Aaron Clark, Edge Realty: so ridiculous. But when you actually sitting down with the seller, they actually appreciate that. They're going, Okay, that makes sense. And then I go, and then the biggest part of it is once we've done Jon G. Sanchez: Right. Thirty seconds. Aaron Clark, Edge Realty: that What's that? Jon G. Sanchez: I I I'm sorry, we just said thirty seconds. Aaron Clark, Edge Realty: I said once we've done that, then we need to react quickly if the evaluation is wrong. If it's too low, too high. You can't really ever be too low, but if it's too high, we need to tweak. Jon G. Sanchez: Right. Do you ever have other agents saying, Aaron, you listed it for one five? I'm gonna challenge you, validate. Tell me how you came up with that. Aaron Clark, Edge Realty: All the time. Jon G. Sanchez: Okay. Aaron Clark, Edge Realty: Yep. But that's just because they're lazy. Jon G. Sanchez: Yeah. Okay. Aaron Clark, Edge Realty: Or they want to pick a fight. They're a Karen. Jon G. Sanchez: Yeah. There we go. Yeah, exactly. Welcome back to the John Sanchez show on New Stock 780 KOH. We're talking about what is your home really worth? We're going to get into the Zillow mystery here in a moment. Aaron, your phone number, sir. Aaron Clark, Edge Realty: six seven three sixty seven hundred. Jon G. Sanchez: Mr Rillard? Dwight Millard: New four zero two zero two two. Jon G. Sanchez: Great. Thanks, boys. All right, here we go. Aaron the Zillow question. Zillow says my house is worth, I don't know, nine hundred and twenty-five thousand. How much confidence as the owner of that house should I put in that automated online home valuation error? Aaron Clark, Edge Realty: I mean, again, if it's if it's track based and you have easy duplications of your own home, so a condo, for example, in a complex where there's fifty of sold in the last year, you can put a pretty high stock that that value is very close. But anything outside of that, it's algorithmically what it will do is Zilla works off of a like a a a geo fence of let's say a half a mile radius, and Jon G. Sanchez: Yeah. Aaron Clark, Edge Realty: then it starts plus and minusing based on bedrooms, bathrooms, square footage. garage size, lot size, et cetera. And that's how it determines value. It doesn't use it doesn't even use like an AI alg alg algorithm interpretation. It's strictly using algorithm based on data points. So it's a formula as opposed to an evaluation. Jon G. Sanchez: So you're what you're saying there is Zillow has no way of knowing that you just recently put in I know it's not hot anymore, but let's say it is, granite countertops and you just did a kitchen remodel with new appliances. Zillow has no way of knowing that, so therefore you're not gonna get credit for that. That's where the i the Aaron Clark, Edge Realty: And no. It's only gonna know s your your criteria. It's like when you go to Jon G. Sanchez: Fundamentals. Aaron Clark, Edge Realty: the to go buy a new suit and they're measuring every part of your body to determine the the fit. Like Jon G. Sanchez: Right. Aaron Clark, Edge Realty: it only knows that information. It doesn't know h anything else. Jon G. Sanchez: Do I i if if my appraisal comes in lower than what I've offered and my offer has been accepted, does that automatically mean I've overpaid? Dwight Millard: That's a tough question. I mean, based upon the the the valuation, you would say that, but I mean a lot of buyers still are okay going forward with it, even if there's an I mean, most of the time what Aaron would do is hey, we gotta go renegotiate it. You know, we've got to go talk this over and make sure Jon G. Sanchez: Mm-hmm. Dwight Millard: that, you know, they understand it came in lower than you know than what we're paying for it. But a a good I Aaron, correct me if I'm wrong, but a good smart borrow with a good agent's gonna know they're overpaying at that current market condition. Aaron Clark, Edge Realty: And sometimes you have to to get into contract, but you Dwight Millard: Yeah. Aaron Clark, Edge Realty: need to make sure that the contract's contingent upon the evaluation coming in or the appraisal coming in at the purchase price. But if you're in a competitive situation where you've got other buyers trying to get that property and it's important to you, you might have to offer a little bit more and try to negotiate Jon G. Sanchez: Mm-hmm. Aaron Clark, Edge Realty: on that back end. So I mean, some of it's strategy. Jon G. Sanchez: And then your and then your job as the agent is to say, All right, yeah, it's competitive. You yeah, you're gonna overpay by whatever, twenty five thousand. Do you have that extra twenty five thousand that you're gonna have to come up with? 'Cause Dwight, you're not gonna lend more than what the appraisal is. Bottom line. Aaron Clark, Edge Realty: It could be that, yeah. In in a sure, in a seller's Dwight Millard: Yeah. Exactly. Exactly. Aaron Clark, Edge Realty: market, absolutely. In a buyer's market, it's not really so much that. I mean, I've had a Jon G. Sanchez: Right. Aaron Clark, Edge Realty: few recently where we had to sort of overpay a little bit to get beat the competition to get into contract. And then on the back end, we got it all back because we use that as a strategy to win. And then we use the back end as a strategy knowing that the seller doesn't want to start over again. And now there's an appraisal proving what their actual home is worth. Jon G. Sanchez: Right. I was gonna ask you about that. Aaron Clark, Edge Realty: And if it's Jon G. Sanchez: Yep. Aaron Clark, Edge Realty: FHA or VA, it stays with the property. And Dwight can talk about that, but it stays with the property Dwight Millard: Yeah. Yeah. Jon G. Sanchez: Perfect. Aaron Clark, Edge Realty: for 120 days. Jon G. Sanchez: Dwight, let's talk with a minute or so remaining, let's let's talk real quickly from the lender's perspective. the data you're Dwight Millard: Yeah. Jon G. Sanchez: using, to really get down to what you the lender think the house is worth. Dwight Millard: Well, I I John, I think the first thing most important we talked about earlier in the segment was if I get an appraisal waiver, then I don't have to worry about my reps and warrants from the f Fanny, Freddie, the investors are good. But if you've got to go out and get a an appraisal and it all the boxes check and everything, we're gonna be okay with it. But I I you know, Very rarely an underwriter will see something and they'll ask for something else, but it does occa happen occasionally. There'll be an underwriter going, I don't like this value. I want another comp. I want something else. Because that's the easiest thing that the investors and agencies can go after, John, is they the comp don't support the value, right? That's what that's what they'll come back and they'll make you repurchase the loan. I mean, appraisals are so easy to attack. Right. I mean, and they can come back to you a year after n ask Richard Lace a year later, two years later and say, Hey, we need an additional comp on that house Jon G. Sanchez: Mm-hmm, mm-hmm. Dwight Millard: you did. And you're going, What? I mean, that's two years ago. So the it's Jon G. Sanchez: Do you ever do you ever do you ever ask for two appraisers? Two appraisals? No. You can't. Okay. Dwight Millard: No, you can. No. Now, now if you if there's a challenging, very, very rarely can you get a second appraisal approved, but I have been able to get that occasionally, or you can go get a second appraisal because you think the first one was just grossly unconfident or just did not work with you when you gave them. Yeah, yes, yep, yep. Jon G. Sanchez: Yeah. Major mistake was made or something. Okay. Aaron Clark, Edge Realty: We do it a lot on divorce sales and and probate sales and things like that. Yeah. Jon G. Sanchez: really? that would yes, I've seen that before. You're right. Yep, I've seen that. Yeah. Because she's never gonna believe his appraisal and vice versa. Exactly. Yeah. It's tie tiebreaker. Yeah. Dwight Millard: Yeah, yeah. Okay. Love st yeah. Aaron Clark, Edge Realty: Exactly. You get the average. And they are wildly different, believe it or not. Jon G. Sanchez: All righty, fellas. Great job. A fascinating topic. We just scratched the surface. We'll have to come back and revisit this one again in the in the future. Aaron Clark, Edge Realty: Yeah. Jon G. Sanchez: But you got any questions about how this works? You got the number the number for the boys. They can tell you everything about it. Great job, fellas. We'll do it again tomorrow on the John Sanchez show. God bless. Have a great afternoon.