The following program. The ENT , mortgage and Realty Show is paid for in full by ENT mortgage, LLC and equal housing lender consumer access.org number 2 5 5 3 6 8. The advice and opinions expressed during the Academic Mortgage and Realty Show are solely that at the hosts and guests of ENT mortgage, LLC, and not WTMJ or Good Karma Brands.
Speaker 2:Welcome to the Accu Net Mortgage and Realty Show, getting you inside information on buying, selling, and financing your home with expert advice from Accu Net Mortgage and Realty. And now here's Brian and David Wickers.
Speaker 1:Welcome to the Accu Mortgage and Realty Show, Easter Sunday edition. I'm Brian Wicker, licensed real estate broker with ANet Realty Advisors and the majority owner of Acumen Mortgage, along with my son David, who's one of our senior loan consultants at Acade Mortgage and our Chief Client Experience Officer. David, do you still have your real estate license too?
Speaker 3:I do. I did my continuing ed. I think it was over a year ago, but yes. Yeah ,
Speaker 1:I have both. We'll get to do it again. But he's not affiliated with Academic Realty Advisors. He's just kind of a licensed guy on the sidelines anyway ,
Speaker 3:He just went to
Speaker 1:Get it. Anyway , my individual N ML s ID number is 2 5 9 6 1 0 and David's n mls ID number is 3 2 8 8 4 7. If you have a question or a comment, don't call today because we prerecorded the show on Friday. 'cause it's Easter Sunday weekend. You could text the WTMJ talking text line , which is 8 5 5 6 1 6 1 6 20 and we'll get that and answer any of your questions. And remember, you can grab a podcast of this show wherever you normally get your podcast. So, David, since it's Easter Sunday, you told me you have a story about a pastor, a man of the cloth, a reverend who is retiring and you're trying to help him do something. Give us the lowdown .
Speaker 3:So this is one of those examples where I described there's, there's Real Life and then there's Mortgage Life. Because in real life, Reverend Tim , uh, is actually, he's kind of a pinch hitter pastor. Sure. Uh, for a congregation that is between pastors, I think he'll come in for some amount of time and be like, Hey, I'm your guy. You know , um, they
Speaker 1:Call that an interim Pastor David in , in the
Speaker 3:Pinch hit Pastor just has a certain, you know Yeah .
Speaker 1:Panache pastor . Yeah. Yeah. Okay. I got it.
Speaker 3:But, you know, kind of given, so like in real life, is he doing his work and earning income and paying his bills on time? Well , yeah, right. You know, when I, it's always funny when I access, you know, someone's credit and they've got just like one credit card with like, you know Mm-Hmm . <affirmative> $40 on it. It's like, yeah . That is a clear sign that you make money, you pay your bills and , and you are clean . Everything's good clean, right? Yeah , exactly. But the problem is, you know, they want not the problem. Dad, you wanna guess they're currently in up north Wisconsin. Why do they want to move to the greater Milwaukee area?
Speaker 1:I'm gonna guess because it's warmer in southeastern Wisconsin than northern Wisconsin.
Speaker 3:Well, that, but the greatest reason of all grand babies . Oh . 'cause they wanna be closer to their grandkids in the Milwaukee area. And, and so they want to, they're not, you know, in a place where they can just like cut a check for a house. They Right . They want to take out a mortgage. And thank goodness when we pivot well, right. But when we pivot from real life, boy, you pay your bills on time and clearly we can show that you do so. And then when we pivot over to Mortgage World, it's like , uh, well
Speaker 1:You don't have a job.
Speaker 3:Well 'cause your , your friendly mortgage lender cares. If we were to rank the things your friendly mortgage lender cares about, income, I think would be top of the list. Yes. You need to have ability , some down payments. Yes. But it's because your mortgage lender wants you to make the monthly payment. And actually, funny enough, no faster than the amortization, you always can pay faster. But your friendly mortgage lender doesn't want it back any faster than what's on the sheet if they can help it. And so income is, especially for these clients, man, they got the down payment no problem. Not enough to make a hundred percent down payment as we say. Sure . But a great down payment. And so it's just like, ugh . Okay. Well, because he doesn't have a future congregation, right ?
Speaker 1:Correct. Yeah. 'cause he's a pinch hitter and the , and the, and the team that needs that pinch hitter has yet to be identified.
Speaker 3:Right. Exactly. Come and when he , I think he is concluding with his current con congregation, let's say Memorial Day, he's gonna be a free agent again. Mm-Hmm. <affirmative> . Um, and so this was, this was a referral from their realtor who I really like Sharp. And because this is not just your ordinary, like, Hey, I'm a W2 engineer at Rockwell, you know? Yeah. And my, my spouse works at Close
Speaker 1:Corp . Yeah . I got a little something interesting here. So what's the , did you have a , did you fix it? What
Speaker 3:Do you I make , well , what you guess, what do you think my first question was out of the gate,
Speaker 1:Are you over 59 and a half ? And can we take IRA withdrawals?
Speaker 3:Yes. That was exactly it. I tried to feather the question, you know , um, not , not , maybe not so directly all the time. Like, so how old are you ? But some, some savvy version they're in . And lo and behold, yes, they are over the magic age of 59 and a half , which is the threshold by Congress and implemented by the Internal Revenue Service that hey, when you hit 59 and a half , you are retirement age. And so that opens up AC one of ACU Net's favorite tools for income, which is he has, he has been a pastor. Our client, pastor Tim has been a pastor for year decades. And through the synod or you know , the , the organizing Mm-Hmm . <affirmative> entity for, he has been setting money aside into a retirement account year after year, no matter what parish , uh, he's at. So he is got a great, he's got this, you know, asset. Right. This big chunk of money. Is it in a pension? It is not. It is a , it is a deferred compensation qualified account.
Speaker 1:Okay, great. So he controls the money himself.
Speaker 3:Exactly. So after this first break, let me tell you how we turn asset into income so that we can lend him the mortgage money more after this. You are listening to the NT Mortgage and Realty Show on AM six 20 WTMJ
Speaker 2:Home buying advice from the guys who know it best. This is the ACU Net Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Welcome back and thanks for tuning in this Easter Sunday, we're downloading the podcast. David , uh, you want to continue with your story of the retiring, well sort of semi retiring pinch hit pastor who wants to move from up north Wisconsin where he is an interim pastor and come down to southeastern Wisconsin and relocate. But you found out that he's got a bunch of retirement money and so how are we gonna turn that? I have two questions. How are you gonna turn that into qualifying income and couldn't he just take money out of a non-retirement account and, and use that as income? You wanna take that one first? I
Speaker 3:Gonna answer the , yeah, let me answer the second question first. Uh, in the eyes of mortgage underwriting, that is not well and in the eyes of the IRS, if you just pull money out of a savings account at Chase Bank, that is not income.
Speaker 1:Right.
Speaker 3:That is not rec because you're not paying taxes on it. When you take money from a qualified account that you're paying because you didn't pay taxes on it. When you put it in, uncle Sam says, may I have some taxes? Please, at the time you take it out that that is treated like income. Like you're working that W2 job anywhere in Yeah . America.
Speaker 1:But let's also point out, if you happen to have put your retirement money into a Roth IRA, you can take the Roth IR money out tax free . 'cause you paid income tax on it before you put it in. And then can we use Roth IRA , uh, distributions as income? I think that's ,
Speaker 3:I would need to reference the guidebook.
Speaker 1:Okay. We'll
Speaker 3:Do that . The preference is always, the preference is always a pre-tax account.
Speaker 1:IRA Alright, so, so how are you going to jingle this up for Pastor Tim?
Speaker 3:Well, so what we do is you are , what , what you're trying to do is you're trying to take the asset and turn it into income that you can put it on the application. So let's just say he had $360,000 in a IRA
Speaker 1:Oh yeah . Or whatever is defined. Retirement plan is
Speaker 3:Yep . You take that total amount and you divide by 36 to represent 36 months. Why not 48? Why not 24? Yeah. Because someone, someone in an office in DC at Fannie and Freddie was like 36 months.
Speaker 1:We want to , let me say it a different way. The mortgage world wants to pretend that whatever your income stream is, whether you're working at Walmart or you're taking money out of a retirement account, likelihood of continuance for 36 months, that's, that's what we're going for. Which always
Speaker 3:God help you at 37, but 36.
Speaker 1:Well, and what if you're an elected official? You know what, if you're a member of Congress, can those guys get any mortgages? Because they only have two year job agreements.
Speaker 3:No doubt there's a provision. I just have
Speaker 1:<crosstalk> . Okay . Unless you're a congressman or a Anyway, <laugh> . Alright , so back to Tim. So, so you're gonna have him take one withdrawal before closing or ?
Speaker 3:Exactly, because So take that. My 360, 300 $60,000 example divide by 36 . Bam. I can put on the mortgage application $10,000 in income as if that's his salary from any congregation or any W2 job he's ever had.
Speaker 1:Fantastic.
Speaker 3:But the extra cool thing, by the way, just to pivot on the interesting parts of mortgage lending, anyone who is of the cloth, as you said, gets a special tax break. Oh yeah . Love this . On the h on the amount that they take out of a retirement account that is dedicated to housing
Speaker 1:Called a housing allowance.
Speaker 3:Exactly. And so he doesn't have to pay taxes. So he's kind of , he's almost incentivized to like take out a big mortgage. Correct . Because then he can take, it's kind of a savvy move, Hey, I'm gonna take some of my pre-tax money, dedicate it toward my housing payment, not pay taxes for that money on my housing payment. Then in the future when they go sell, I am not a tax tax advisor but person . But proceeds up to certain limits do not require that you pay capital gains on that. And
Speaker 1:As long as you've lived there for three out of the last five years. Yes . So you do have to live there for five years and or at least three I think in order to claim that capital gains exemption. Yes. So, so if you are a reverend or no one, we have been doing these pastoral loans for all 25 years of our existence.
Speaker 3:It's , yeah. And it , 'cause it's not just on this new IRA piece because we've helped many practicing pastors Mm-Hmm. <affirmative> who are working, do that same thing. And what many congregations do is they delineate designate, yeah. Designate between this is your regular pay and then, you know, this is your, so let's say you make $5,000 a month, 3000 of that is, you know, to go to your groceries And 2000 of that is dedicated for housing payment. That tax , housing payment portion, you don't have to pay taxes on. And crazy as this sounds in mortgage lending, you actually can gross that up by 25% . Oh, we
Speaker 1:Can gross up housing allowance. Well , okay, because it's tax free .
Speaker 3:These, these are the weeds of mortgage
Speaker 1:Lending. It's , no , you would think that we would have a bumper crop of ministers with those kind of tax breaks. David, who wouldn wanna be minister in today's world. Come on. Alright, when we come back , uh, you ha you know what, I'm gonna give an update on a transaction. We've been tracking the big purchase along the Gulf Coast of Florida and that's gonna also lead us to real estate commissions and got a little update on that as well. Uh, stay tuned. We'll be right back. You're listening to the Academic Mortgage and Realty Show on Wisconsin's radio station. AM six 20 WTMJ
Speaker 3:Getting
Speaker 2:You into the home of your dreams. Here's more of the ACU Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Welcome back. I'm Brian Wicker, the elder. That's , uh, David Wicker, the younger, taller , more handsome wicker over there, my son. And , uh, uh, if you've been listening to the show the last couple of weeks, we've been tracking a lovely purchase of about a $2.95 million home on one of the Gulf Coast Keys in Florida. And , uh, if you tuned into last week's show, and this was a 30 day close by the way, and it was a cash offer. It was written as a cash offer. Uh , and if you tuned in last week, you know that just six days before closing, the buyers learned that because they were allowing the sellers to rent back the home for a month after closing, which is common as dirt. Yeah . Right . I mean that Yeah . Rent back after closing. But it turned out, when they mentioned that to their insurance broker, they said, whoops, no insurance company that we represent, this was an independent insurance broker. We don't have a single insurance carrier who will provide insurance e on a rental property even if it's only being rented back for a month. Do you have a question or you just raising your hand?
Speaker 3:No, well, I'm , no , we would never recommend anything other than the full and honest truth. But what would've happened, you know, if they had just moved in or if they had closed and this just had never come up, the post-closing occupancy, you
Speaker 1:Know, I think the worst thing that could have happened is there was some catastrophic event. The house burns to the ground
Speaker 3:And they have no coverage.
Speaker 1:Correct.
Speaker 3:So, so they would've po would've this would would've just worked. Yeah. Maybe they would've gone 60 days with no coverage until such time as they moved in and they hunt down some coverage.
Speaker 1:Horrible.
Speaker 3:Yeah , I know. I'm just, okay.
Speaker 1:I mean, or I'll advise , you know, horrible. Maybe too long . But yeah . And that was one of the bones of contention, David, was, well, you don't need insurance. This was a cash offer. It's like, oh , no, no. A sane person would want to have their $3 million property insured, you know? Yes . On the day of closing . I would agree . This has , this has nothing to do with whether you're a cash offer or having a mortgage. Well , uh, this , so the bottom line is Florida insurance companies are looking for reasons not to write insurance. And so apparently they've come up with, oh , if there's any rental income we ain't writing . Yeah, okay. 'cause they're trying to reduce their exposure. So I, I came up with the idea. I said, what if we just redefine , uh, the arrangement and by, oh by the way, each agent was chipping in five grand to pay for the $10,000 of rent back. That was the original deal. Hey, the seller's gonna pay 10 grand. Oh wait, the seller's not gonna pay it. Each agent is gonna chip in five grand each to pay for the seller's rent pack . So on that Friday, I said, well, here's a crazy idea selling this to the real estate agent, the buyer's agent and the buyer. What if we amended the contract and said the seller is staying in the property for 30 days as the guest of the buyer and strike the bit about the rent back . And then we just have to change the language. That had already been, you know , uh, committed to writing that The $5,000 credit from each real estate broker was for closing costs and prepaids. Sure. Not for rent. Yeah . And I gave that about a 10% chance of working, like within a half an hour of sending that idea to the real estate broker. They contacted their carrier and they said, that's a great idea. We'll do it. Just Sam . So , um, the buyer .
Speaker 3:Good job by you.
Speaker 1:Thank you. Yeah. That didn't come. Yeah . So, so finally we ,
Speaker 3:Because I remember from last week, the , your idea was we have to delay closing then. 'cause if the sellers can't figure out how to get out of the house, then you gotta wait however many days.
Speaker 1:That's right. So in the course of mulling this over the weekend , uh, the listing agent comes up because remember they had agreed to chip in five grand and all of a sudden they're going getting on their high horse and saying, well , we can't, we're gonna renege on our $5,000 credit because there's a paper trail that says this was supposed to be for rent. And now to say that it's for something else for closing costs and prepaids, we think that's improper and shady and we can't be a part of that. This almost craters the deal. Right?
Speaker 3:Completely.
Speaker 1:Completely. Because, you know, this is at the end of the process, David. And you know how things are at the end of any Oh ,
Speaker 3:Oh yes. What ? No, our , our guy Kahneman . Yeah,
Speaker 1:Yeah. Kahneman. Right. Oh, you're absolutely right. So even though this is all about the insurance company, you know, we have negative emotions flowing both directions. Oh yeah . Oh yeah . Oh , this is the seller's fault. Like what? And the buyer's like, or the seller's, like this is the buyer's fault. 'cause it's all about the end of a process. Yes. And , and how that just really heightens the negative perceptions. Do you have a comment or should I I continue to the punch him .
Speaker 3:You didn't know this. Our guy Kahneman , he passed away on Wednesday. Oh . Oh . That's why Daniel so fitting. You just brought it up naturally. Yeah . And he So unbelievable tip of the cap to Daniel Kahneman at age 90 .
Speaker 1:Yeah. Great economist, behavioral economist and wrote a great book thinking Slow and fast. And bottom line is somehow then the listing agent comes to their senses and decides to honor their original commitment to chip in the five grand and with negative feelings in abundance. Yes. The buyers did close on time on Wednesday. Ah , all right . And I , I don't know what I'm gonna do with all my time now. I've been babysitting this deal for a month, like almost every day. Yes. Alright , uh, when we come back , uh, let's talk about the real estate commissions David, and how things are gonna change with that and questions we're getting. But right now, it's time to turn it over to the WTMJ Breaking News Center.
Speaker 3:Don't break
Speaker 2:The bank to get into a house. Back to the ACU Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 1:Welcome back to the Easter Sunday edition of the ANet Mortgage and Realty Show. I'm Brian Wicker , uh, managing owner. What am I I'm the president. I'm the majority owner. I'm a lot of things at Academic Mortgage. And that's , uh, David Wicked over there. Our Chief Client Experience Officer, senior loan consultant. And um, I'm also a licensed real estate broker at Academic Realty Advisors, although we don't really transact. Um, the National Association of Realtors announced like two weeks ago now, I think. Yeah . A big , uh, proposed settlement 'cause they were getting sued left and right along with major brokerages , um, over commission practices. And what they were getting sued over in class action lawsuits one state at a time, and they had lost at least one or two of these already, is that, you know, by allowing, by offering by the listing agent, offering a set level of compensation to any cooperating broker in a transaction that brings them the buyer, you have artificially and intentionally inflated the level of real estate commissions. And and that's like antitrust
Speaker 3:Material. This is , this is the thesis of all the lawsuits.
Speaker 1:That's right. And, and that they, they lost. Yes. So in this proposed settlement, the National Association of Realtors is saying, okay, great. You know what? We're gonna decouple the way that , um, real estate agents who represent buyers get paid. It'll no longer be a blanket offer of compensation coming from the listing agent. You, Mr. Buyer ha have to have a separate written agreement, a buyer's agency agreement if you want to use a buyer's agent. The other alternative is don't have a buyer's agent just work with the listing agent. And so this decoupling and de standardization of what do agents who work with buyers get paid and who pays it , uh, is all up for grabs right. Now, the nice thing about the current system, and by the way, this is all gonna change in July, so there's a little time before the world changes, but the nice thing about the current system is from the buyer's perspective, it doesn't feel like they're paying the Buyer'ss agent anything because it comes from the purchase price. The purchase price is paid. You know, let's use a simple example. A hundred thousand dollars. The , uh, listing agent gets 5%, let's say it gets five grand on that. And then they maybe give, keep , uh, three grand for themselves and they give two grand to the buyer's agent. It feels like it's coming from the seller, but it's really baked into the sale of the house, the sales price of the house. So now it's all up for grabs and buyer's agents are wondering how this is all gonna work. David, you told me , uh, before, while we're getting ready for the show that you're getting questions left and right from real estate agents about how this is gonna work. What, what are some of the typical questions you're getting?
Speaker 3:Well, you know, above all else, to your point about decoupling, it is now going to be a bullet point in conversation between buyers and their agents. Whereas before it, there was an implied , um, compensation, it was listed, it was, you know, it was on right there on the MLS. But now it's gonna be a point of negotiation, either between buyer and their agent, or even between buyer, their agent and the sales side.
Speaker 1:Oh , and one thing I uh , heard in a seminar put out by the Mortgage Bankers Association, I gotta finish listening to it, but one of their points was the buyer's agency agreement cannot say I, the buyer's agent will take whatever compensation the seller is offering. That's somehow, well , if only because
Speaker 3:Rule out
Speaker 1:The settlement ,
Speaker 3:If only there is gonna be no offering from the seller as I understand it.
Speaker 1:So what I think I'll just jump to say what I , what I think is gonna happen. Yeah. It's always been the case that sellers can pay for a buyer's closing costs in prepaids. Okay? Yes . And there are limits. Do you wanna run down the limits of what the , uh, an interested party
Speaker 3:Can , if you put less than 10% down, those contributions or credits can only be 3% of the purchase price. If you put between 10 and 25% down it , uh, that ceiling goes to 6% can be, they're called interested party contributions and God bless you. If you put more than 25% down, you can have interested party contributions of 9% of the
Speaker 1:Purchase price. 9% . Okay. So I think what's gonna be the most common practice, and I believe this is already kind of laid out as being permissible, is in MLS, the seller can say, Hey, I am willing to pay 2% whatever they want. Or they could say, I'm willing to pay $20,000 the indicative fee or a percentage of the sales price toward buyers closing costs and prepaids. Yes . That's perfectly fine.
Speaker 3:Yes. And then
Speaker 1:You just cannot say it's for the Buyer's Agent Commission.
Speaker 3:Go ahead. And then what happens is your the buyer, your buyer's agent commission is itemized like a closing cost or a prepaid on your closing disclosure to be offset in your example by a credit toward closing costs and prepaids hopefully from the sale . I'll take, I'll take the other side of that bet, but it is yet to be revealed.
Speaker 1:Alright. Uh , and by the way, the real estate commissions on that nice big near $3 million , uh, transaction we were just talking about in Florida, north of $85,000 each.
Speaker 3:It was about to be zero from what you described now .
Speaker 1:Yeah. Yeah. So it seems like there are probably some room for those kinds of commissions to come down. Alright. When we come back, David, do you have another story you wanna tell
Speaker 3:Us? I have another retired person story when we come back. Alright.
Speaker 1:You're listening to the Accident Mortgage and Realty Show on AM six 20 WTMJ.
Speaker 2:Important home buying questions and answers you can count on. This is the Accu Mortgage and Realty Show with Brian Wicker on WTMJ.
Speaker 3:Welcome back to the Accu Mortgage and Realty Show. I'm David, that's Brian over there. Dad , um, retired. This is not a swear word at Acuate Mortgage. Not when it comes to qualifying for a new mortgage, which I also enjoy anytime I've helped some people in their eighties take out a new 30 year fixed and they're just like , oh yeah , really, really? You can do this. Right ? You can
Speaker 1:Do that. Absolutely. You know what , you know, I'm not likely to live that long. It's like, oh man. Yeah . Being debt is not a problem. <laugh>,
Speaker 3:So
Speaker 1:That's somebody else's problem.
Speaker 3:Well, so , uh, the first part of this story, I got called in, I got called by the agents because our client was working with a different mortgage lender. I got the call on Wednesday being like, Hey, we have an appraisal contingency deadline of Monday and our current lender hasn't ordered the appraisal yet. Can you help us?
Speaker 1:Sure.
Speaker 3:I was like, yeah. I was like, let's get this going. And so I connected the AC net team and appraiser. If I got the call on Wednesday, appraiser walked through on Friday, had the report on Monday, good to go. Okay . So kudos to the AA team for making it happen. Timelines not a problem. We then though, having tackled the appraisal kind of tight deadline. Yeah. We turned our attention then to income. This client is going to be retiring as a school teacher at the end of the year on , out of the east coast and moving back to the Milwaukee area where she's from originally.
Speaker 1:Wow . This is sounds like the , uh, the Yeah. What's your new income source gonna be now ? Well,
Speaker 3:And so that was part of our conversation. She actually has already received her social security income.
Speaker 1:Okay .
Speaker 3:But her pension from the state, again, as a guy once told me, details matter in this mortgage business. Mm-Hmm. <affirmative> , is she gonna get the pension? Yeah, you can . The important , you can point to it, right? Yeah . You can say look at , but the thing is well , well when will it be here? And our client was in this no man's land where because she has told the school district I am retiring, I will not be here at the end, you know, on June 2nd. Yeah . Next year I'm out. Right . So your mortgage lender and you know, clients do this. They're like, well, but I have a job right now. Like, what do you mean you can't use my current job? It's like , well , it's not
Speaker 1:Gonna continue for 36 months, so we can't use it, ma'am.
Speaker 3:Which is a reasonable question, but Right. It's like, let me pull you into Mortgage World, which is this weird Alice in Wonderland sometimes. But then as we turn , then it's like, okay, well you're gonna get this retirement income. Mm . You closing date is in April. Mm April , which means your first payment is June 1st, but you're not gonna get that pension payment until maybe July or August. Mm .
Speaker 1:And future income doesn't work for pension
Speaker 3:Statement . You can, you need to receive the pension income before the first payment. So our first diagnosis was, well, can we move the closing out to like May 1st? 'cause then your first payment's not till July 1st July. Right. But as we kept reading, we got more details about the pension and the language was so squishy about receipt. It's like, you're not gonna get this pension money until probably August. And the sellers just weren't willing to kick it out till , you know , June Okay . For closing to accommodate. So again, we're kind of in this snowman's like , can't use your, you know , teacher money pension hasn't arrived yet as it's like an economist, like you said last week. You're either later , early. Yeah . Uh , when it comes to income in this example wrong , you're not wrong. You're just later , early. So I reached for one of our favorite tools. Our client has pre-tax retirement money from two other higher institutions of learning that she had worked at during her career. Oh . I was like, let's get two letters. One from the one and one from the other. Be like, you are gonna create new income from these assets. There you go. And that's how we're gonna get to the closing table because, you know, so I've got her social security, I've got this new income and a good and a good down payment that's gonna be enough to carry the day in real life. Am I David worried about her ability to pay this? No. Because she's got income. She's got assets. Yeah . And there's this pension in the future sometime , but as we say, we're in the problem solving business. And particularly when you're on a deadline. Like, that's right. Right . 'cause she wants this house. It's a cute house on the south side and oh , you know, as she's describing, it's like, I kind of wasn't expecting to do this, you know, as soon as I Oh , just all of a sudden happened . Yeah. 'cause all of a sudden there's this really cute house and, and it all, it's real life. And so our job is to try to, as best we can, wrangle the tools that we have so that she can get to the real life part of this.
Speaker 1:So there's two things that come to my mind. One is this is what we try to do ahead of time in the rock solid guaranteed pre-approval. <laugh> Yes . Is flesh out all these issues.
Speaker 3:She was not rock solid .
Speaker 1:No, no. She, you said she started out with some other lender who didn't even order the appraisal on time. Um, so that's one thing. The other thing is we're kind of like high priests of an obscure religion where, you know, we interpret the Bible of Yes . Mortgage lending and it's written in some odd language that doesn't Yes . Sometimes make sense. But, you know, we , we kind of know all the rules and it's our job to navigate that. Hey, when we come back, David, there was an interesting , uh, article , uh, quoting Barbara Cochran, the Star of Shark Tank. And because she made all of her millions in real estate talking about what she thinks gonna is gonna happen to home prices when mortgage rates get back down around 6%, cover that when we come back. You're listening to the Anette Mortgage and Realty Show on AM six 20 WTMJ.
Speaker 2:Find a place to call home without the headache. This is the Acuate Mortgage and Realty Show with Brian Wicker on WTMJ. Welcome
Speaker 1:Back to the Acade Mortgage and Realty Show. Easter Sunday edition. Also March 31st, which was my mother's birthday. Your grandmother. Oh yeah . Yeah . She would've been 94 had she , uh, if she was still alive. Yeah . And um , uh, I bring that up because she loves Shark Tank. She loved watching Shark Tank. Oh yeah. Okay . And so , uh, Barbara Cochran is one of the stars of Shark Tank and she , um, uh, what do I wanna say? Made her millions in real estate. Mm-Hmm . <affirmative> . And so she was quoted recently, I think she was interviewed on Fox News, talking about how, you know, 'cause current rates folks are still right around 6.99 mm . And so she came out and said, well, you know, when rates get down to six or a hair under
Speaker 3:Katie
Speaker 1:Bar the door, she thinks that there are 10 buyers at least for every house that's for sale. And a lot of 'em are just waiting for rates to come back down. And when they do come down, it's gonna just open up of , and she thinks the magic rate is six or under, it's gonna open up the floodgates. Now what do you think of that, David?
Speaker 3:She must listen to the Academic Mortgage and Realty show. Sunday mornings at 10 0 7 on six 20 WTMJ.
Speaker 1:She did not quote us, but , uh, here's a little interesting math. So the median sales price and the five count , what , what ?
Speaker 3:I just love the incrementalist. Oh 6%. Well, why not six and a quarter? Why not 6 3, 7, 5? Why is Well , it's the emotional thing . Why is that the
Speaker 1:Yeah , well, you know, it's because it seems significant Now how significant is it? It, well, I just ran the numbers. This is on a $310,000 purchase with 25% down. Maybe I should have done less money down, but at 25% down, you could get a 6, 9, 9 30 year fixed rate today from academic mortgage if you have seven 80 credit and all the other Right. Stuff. And , uh, that principle interest payment would be $1,545. If rates dropped down to 5 9 9, that would knock your payment down by 153 bucks.
Speaker 3:Okay .
Speaker 1:That's more that , you know, that's something
Speaker 3:If it's not like it's if you could buy that house for the same price.
Speaker 1:Right. So now I did the calculation and I say how much , um, if the , if the home went up 10% in value because of this increased demand, which is kind of what she's projecting, yes . That would put your payment back up to $1,527 or you'd be like almost all the way back to where you were with rates higher. So it's, if it's to a degree, to what degree is Barbara Cochrane gonna be correct, that , uh, demand goes up and thus , uh, pushes up supply? We don't know, but we are certainly seeing it. You're seeing multiple offers, right. For your customers right now?
Speaker 3:Well, yes, and , and not just in that meat of the market. Um , you know, one 50 to four 50, I I have clients above half a million and it's competitive even in that stratosphere.
Speaker 1:And to what degree are you talking to like under five offers more than 10? What are ,
Speaker 3:I'm I'm gonna say half dozen.
Speaker 1:Okay. Half dozen.
Speaker 3:Yes . 'cause because it's, there's just not enough homes for sale. It's that simple. Yep . And it's not gonna get, well what's implied in Ms . Cochran's notes if rates, oh man, rates went from 6 9 9 to 5 9 9, that is not going to dislodge enough sellers to put the for sale sign in their yard, you know, curing the supply and demand
Speaker 1:The supply problem. Right. It's only going to boost demand without, well
Speaker 3:Take it to its extent. If rates went to zero and every seller could trade in their 3% for a 0%, yeah . You still wouldn't solve the supply and demand. You could dislodge every seller and it still wouldn't solve the supply and demand dynamic.
Speaker 1:Um, all right . So hey, if you're a buyer out there or about to be a buyer, you need a sharp team to help you navigate these , uh, continued tight inventory waters and we think we're the best. Give us a shout. Click on the blue button and let us put together a rock solid preapproval plan for you before you go out there and start writing offers. It's always fun and it's good topics to talk about on the radio when we're, you know, saving deals left and right because they started out somewhere else and didn't do their homework. But
Speaker 3:We , we much prefer boring mortgage, which we can deliver with rock solid pre-approvals.
Speaker 1:That's right. And I have a nice couple, 25 years old , uh, that's got their accepted offer and things are progressing there. So we'll be ready to close them , uh, here by the, I think it's toward the end of April. They did have a little hitch in the giddy up on the , uh, inspection, but the sellers agreed to fix the two problems. So we're back on path and gonna be closed before you know it. Hey, that's all the time we have for today's show. We'll see you back here next week. You've been listening to the Accident Mortgage and Realty Show on Wisconsin's Radio Station six 20 WTMJ. The proceeding was a paid program. Advice and opinions expressed during the Accu Net Mortgage and Realty Show are solely that of the host or guests of Accu Net Mortgage and Accu Net Realty Advisors and not WTMJ Radio or Good Karma Brands. Milwaukee, LLC.