- Could coronavirus wreak havoc on real estate markets? [1:20]
- Oakland sets alarming precedent in squatter eviction case [11:52]
- Florida brokerage sued for sending spam texts [18:59]
- Barbara Corcoran gets scammed out of $396,000 [25:34]
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Pat: What is going on Rockstar nation? This is your boy, Pat Hiban and I am back [laughs] with Mr. Aaron Amuchastegui today to do a state of the market, how are you feeling today, son?
Aaron: Man, I am so glad you’re in here to chat with me today, everybody’s been asking where’s Pat, why hasn’t he been on there and I knew I had to reach out today, said, “Hey, we got to get back, dude.” Let’s do this state of the market.
Pat: Let’s let’s do it, I love doing state of the markets buddy, any time, anytime, there’s a lot of good news outlets. Let’s start this off in talking about the Coronavirus because it’s in everybody’s heads now, Coronavirus, you can’t buy a mask for the life of you, I’m getting ready to go to Cuba, and my wife spent day’s looking for masks for us to wear on the plane.
I know they got some, in your neck of the woods, they got their first unlinked case of a dude in Sacramento California, and Inland’s putting out news talking about– I’m going to read you this headline, I want you to tell me, first of all, if you agree with this, because I know there’s a contradicting headline, I’ll let you read the contradicting one, but this one says it’s under markets and economy, Coronavirus poised to wreak havoc on real estate.
Aaron: Man. I thought it was really interesting to see that as a headline because you’re right, Coronavirus totally top of mind right now, everybody is asking about it, everybody’s thinking about it, it’s making the stock market crash, people are saying all sorts of different things. I thought it was really interesting the way they say that articles, is poised to wreak havoc.
It’s not really saying it’s wreaked havoc yet, people are starting to say what is going to happen, some agents have said that people have stopped buying houses because of it and that makes me a little confused that people would stop buying houses to as they wanted to buy if there was no coronavirus, they’d be in contract today. Looking through that article, some of the stuff I thought, well, maybe could happen, but there was also some stuff in there that said, with the Coronavirus people are traveling less and so it could impact people who Airbnb their house or extra income and things like that, that could affect the market.
Then also really impacted mortgage rates, so it says plummeting mortgage rates, different stuff. How long do you think this is going to last? I was surprised that it hit the real estate market, but I guess it’s been hitting everywhere else, so I guess it should.
Pat: Okay, so a couple of things here, so number one, I don’t think it’s hit the real estate market yet, I don’t think anybody’s like, “I’m not gonna buy,” I agree that yes, people with Airbnbs could eventually see less people there, you’re going to see less hotels rented and stuff like that. You’re going to have less travel I agree with that, so Airbnb’s are part of that, but I don’t agree that it’s already started that the market is tanking because of it. Now. that being said, it is a fascinating thing to think about and people’s minds how they react to this because you are starting to see it grow and you are starting to see how everybody’s paying attention to it all of a sudden.
The question is just the way the stock market continues to sell off, are you going to see investors in the housing market sell-off? I don’t think any homeowners who’s been living in their home for 11 years are going to just suddenly sell because of the Coronavirus, but my question is, if you have a real estate portfolio and you think the economy in itself is going to crash, are you going to sell all of your rentals, just like you would sell all of your stocks? It feels different but I think some of this article is saying that that could potentially happen, what do you think?
Aaron: Yes, if I had houses in China, I might sell them right now depending on where we’re investing, we might say it is impacting there. I’m trying to figure out how serious to take this right, as we hear it as an investment in the news and the stock markets crashing, that makes rates go down in general that helps us as investors, you know, with financing and things like that.
With rates going up and down, it makes you know stuff a little bit, but I don’t think it necessarily increases or decreases renters, it could impact Airbnb I see that but I was remembering the Ebola virus, do you remember five, six, seven years ago, there was this Ebola virus outbreak and it was all over the news and for like three weeks or like the world’s coming to an end, Ebola is popping up here, it’s popping up here.
It had hit a few people in the US and then all of a sudden it was like, not in the news, it got fixed, they figured out how to knock it down and so it’s trying to figure out, is this a scare or an impactful thing? Is it going to be like the flu or is it crazy? I have a tough time trying to it–
Pat: I think it’s like the flu, but it kills you [laughs] but the flu kills people too, it’s weird. Here’s how I’m looking at it. Number one, I am helping my sister-in-law buy a house and she got with a lender a week ago and everything was normal, it was no problem, locked into a rate.
Literally today it’s one week from that day, I decided to check with a buddy of mine, “Hey, what would this rate be today?” It is half to five, eight of a percentage point less, and it has less points and for the same mortgage and I’m like, “We got to switch mortgage companies.” I hate to be the guy that advises you to do this because my whole life I’ve been telling her stick with your mortgage broker and dah, dah, dah, dah, once they lock you in your lock but it’s a significant change in interest rates and so I think that’s going to help.
Now where it’s going to hurt is if you work for a company and that company is a public company, and all of a sudden your 401k with company stock in it is dropped in half, or if your 401k is invested in the Dow Jones or whatever, yes you have less money today than you did a week ago. Is it possible you’re going to have less money in another week? Yes and less money in another week?
Yes, it’s very possible because your money was so high, to begin with, but is that going to keep people from buying houses because they have less money? Unequivocably yes, People won’t buy houses because they got less for a down payment, but is all that going to happen? Is the stock market going to bounce and their rate’s going to go back tomorrow, we don’t know.
Aaron: I think you hit the nail on the head there, that what it will definitely do is buying power, especially those entry-level markets, people are pulling out 401k is for those down payments, so I could see yes, people have less money today than they did a couple of weeks ago, as that changes that could make a big impact. but like you said, with those mortgage rates, there was another article that was almost like the opposite, so this one was with Bloomberg and the title says housing to get a jolt with virus pushing down mortgage rates and it was, talking about the same thing you just said–
Pat: Yes exact opposite.
Aaron: Right, because of all this mortgage rates are going down and so now people, even though they might have less money, they can buy a bigger house this week that they could buy last week [crosstalk] just their income. I can’t believe that you saw that, where that rate changed that much, all from the Coronavirus.
Pat: It’s crazy, it’s crazy. It’s crazy, so anyways, it’ll be interesting to watch and we don’t know, it’s above our pay grade, we don’t know what’s going to happen, but it does seem different to me than Ebola. I’ve read a lot on it and which makes me dangerous, but it’s different. You can get it from touching something, someone doesn’t have to sneeze on your back of your neck for you to get it, walking down the street you can touch something and get it and also the number of people that get infected by one person is four times that, of what Ebola was. Ebola if you got it you infect one person, so it was one to one, if you get it, you infect four people, so it splits up.
Aaron: Yes, you’re traveling to Cuba, I’m going to Hawaii next week and I’ve traveled all over the world. I’ve never been afraid to go travel anywhere. You and I were in Zimbabwe and Africa and all these places, the right before the government got thrown out [laughs] we’ve been all over and this is for the first time it’s like flying to Hawaii, we’re like yes, do we need to wear a mask on the plane?
Pat: Here’s the thing, if it wasn’t a big deal, Donald Trump wouldn’t have requested two and a half-billion dollars to be prepared, what are you going to do with that money? You need that money in case you need to build hospital like they are in China, I don’t know if you’ve seen this, where they are building these hospitals in like six days.
Aaron: It’s like the same press congress too, we need two and a half-billion dollars, but don’t be worried, we got this, but we need some–you’re right man you’ve definitely studied this more than I have and I think you’re right, maybe it’s time to pay attention, at least pay attention to interest rates out there and we’re in the process of buying a house right now, too maybe I need to go look at rates again.
Pat: You do, you’ll be shocked.
Pat: All right, man, what else you got in the news there Aaron?
Aaron: Yes, there’s some really interesting news that’s been coming out of the Bay Area, talked about it a few times, yes I’ve thought about it a few times over the last couple months and so about a month and a half ago, these ladies moved into a house in Oakland.
This is from NBC Bay Area article, I pulled up homeless moms evicted from Oakland home may return and so a little bit of a backstory, so a couple of months ago, it’s cold, investment company named Wedgewood out of California they buy and sell houses, they buy and sell rentals, there was a vacant house out there and these ladies, homeless ladies moved into it.
They said, “Hey, it’s cold outside, there shouldn’t be a vacant house.” They just moved into it, Wedgewood called the cops and the cops said, sorry, there’s nothing we can do, you’re going to have to send them through this normal eviction process. Through that they started to get people picketing and saying, let’s not pay our rent until this happens, all these people started rising up around in Oakland saying, yes, there should not be vacant houses out there when it’s cold out and there’s homeless people.
Well, Wedgewood goes through the process, they finally are able to evict the people, these ladies moved into a house that wasn’t theirs, didn’t get arrested, didn’t get arrested for trespassing, anything like that had to go through an eviction process and then there was such an uproar afterward that this company, the partners with the city of Oakland said, we’re going to actually now buy the house from Wedgewood and then rent it to these ladies at a low-income rate. That’s just crazy precedent to set to me, it’s called the–
Pat: Exactly, that’s a good word precedent.
Aaron: Yeah, it says we’ll sell the home to Oakland community land trust, and they’re going to provide it as affordable housing back to these ladies and then Oakland started talking about, we might start doing this with other multifamily properties that are out there where they could almost use eminent domain to buy an apartment complex from you for market value, turn it into low low-income housing, that’s really wild because it sets a bad precedent that people are breaking into houses instead of arresting them, it’s like, “You know what? You’re right” Let’s buy this house and let you rent it for below market rate, that’s crazy to me as an investor.
Pat: Usually vacant places, there is no landlord, the city owns them anyway because they don’t pay the taxes or whatever, but if someone really does own it, then yes you should kick them out, that’s–
Aaron: They had bought it and fixed it and was listing it for sale–
Pat: Yes, if it’s listed for sale, the city should be able to do a homeless shelter or something that’s a little bit smarter than buying an apartment building that they didn’t plan on buying.
Aaron: Yes well, and it’s a tough concept that I think got a lot of people thinking about it because they are like yes, there’s a ton of homeless people in the Bay Area and it’s also where there’s a lot of the most expensive real estate in the world, in the Bay Area and in those cold months they started looking at that going, yes, they could see there is such a big divide there, but I don’t think they came up with the right solution. I don’t know what the solution is, did you see what Seattle did with that?
Pat: Is that crazy? Seattle, if you guys haven’t seen this, basically they decided that there’s only certain months of the year as a landlord that you’re allowed to evict people, do you know what the months are? It’s six months or five months out of the year, you can evict and the others you can’t because it’s cold all the time in Seattle.
The reason is, I don’t know if that’s the exact number, you can look it up, but the reason is that it’s inhumane to evict people in the cold.
Aaron: It says here it’s December, January, and February, so let’s say somebody doesn’t pay–
Pat: Okay three months then–
Aaron: If they don’t pay their rent November, they essentially, you can’t file on them because you need 30 days in Seattle anyway, so if they don’t pay their rent November, you actually can’t file for eviction until March.
Pat: People know we’ll get over on that, especially if you have a lease that ends in November, you’ll be like, whoa, it ends in November, but I get a free extra three months.
Aaron: Yes, totally, it’s the same thing that happened when all the foreclosures were happening in California and they created this rule that said, “Hey, there’s this 90-day rule if somebody was a renter, they could just stay for free for 90 days.” Everybody found out about it, everybody abused it, owners would say they were renters, friends would move in, it was totally something that people that–they didn’t care about their credit, they didn’t care anything else, they just stole those months.
I get what they’re trying to do, I get that you don’t want to make people homeless when it’s 10 degrees under, I totally agree with that, there needs to be a solution for that, but again, I think this is the wrong solution, it’s the wrong way to solve this.
Pat: In Baltimore city, I have a bunch of section eight properties and they made a rule that they will not evict on unpaid water bills, and the landlord is responsible for the water bills, because it’s inhumane to evict somebody, especially in the cold months, it’s inhumane to evict somebody because of an unpaid water bill.
Now, what happens is the landlords have to pay them and then get them back from the tenants but the problem is if you have section eight properties, the tenant is not paying the mortgage and section eight isn’t going to pay the water bill, the tenants not paying the rent, section eight is paying the rent, but they’re not going to pay the water bill. The tenant has to pay the water bill and they’re not going to pay the water bill, so as a landlord, you end up with water bills to pay, it’s just a huge added expense.
Aaron: That’s interesting, so the tenants supposed to pay the water bill, but if they stop paying it, the city says, “Hey, we’re not going to turn off the water, we’re just going to send the bill to the landlords.”
Pat: We’re going to lien the landlord, we’re going to lien the house though, they will lien the house, they won’t lien the tenant.
Aaron: That is crazy, landlords should actually control like cable, I met these guys that they had their apartment, [crosstalk] they would control cable–
Pat: I’ve never heard that yes.
Aaron: As soon as somebody didn’t pay their rent, they would just turn off cable, and then they would be like, okay, they’d go pay their rent, so it’s like way better than evicting people, they’d be like, no, we’re just turning your cable off and on for you.
Pat: That’s funny it’s so true, dude, we were in Argentina and Chile and these people didn’t have plumbing, literally didn’t have plumbing, they had to use public bathrooms but they had televisions and they had iPhones and just crazy satellite dishes with TV shows and HBO and stuff and I’m like, that’s more important, absolutely though people.
Aaron: Yes, they won’t pay their water bill, they won’t pay their rent they’ve got no problem, but they’re going to pay their cable bill the day that gets turned off or their internet, that’s probably the most expensive utility, the most like needed utility now, you turn their internet off they’re going to pay that before they pay their rent.
Pat: All right, so what else we got here?
Aaron: I don’t know what that solution is, but when it’s cold out they’re trying to do something. I think this last thing I wanted to talk about, so Inman posted this as, Florida brokerage sued for sending spam about home buying process.
Pat: Yes, I saw this one yes.
Aaron: I think this is going to be really big news, there’s so many real estate CRMs out there right now that are teaching people saying, “Hey, send the text message out” I get those text messages, I get those voicemail drops that are fake, voicemails, fake text messages, it says a Florida man has filed a lawsuit, accusing a broker of sending him spam text messages about the home buying process and so he was sending out text saying, “Hey, have you heard about this?” This guy is now suing him, trying to turn it into a class action, what do you think about all that? Do you think people should be taking notice of this?
Pat: It’s interesting because I’ve started getting some spam texts and it is annoying because you think of text as being sacred almost, if someone calls you, nowadays it’s like, well, it’s obviously not sacred anymore, but someone texts you, it’s like hey–
Aaron: It’s all in your face.
Pat: It’s all in your face, especially if they know your name and these said that the dude’s name was Ryan or whatever, the dude who’s suing he said, “Hey, Ryan, I found this article and wanted to share it with you let me know what you think.” The next one says, hey Ryan, guess what most Americans are saying about home ownership check out the entire South and Central Florida listing in Tori for free by clicking here.
Clearly, it wasn’t a text sent to just Ryan, it was a scripted text and it got sent to thousands of people, where they got Ryan’s Cell phone I don’t know, but I’m not necessarily fighting for the agent doing this, it was So Flo real estate, I don’t know what his side of the story is, what So Flo side of the story is, but he or she may have just sent it to Ryan and maybe Ryan had called them at one point they had a relationship with Ryan, but I doubt Ryan would have sued So Flo if he actually knew So Flo, but let me read you this from the article as this is what it boils down to.
It says to avoid getting in trouble with the law, agents who send marketing messages to clients need to show that they received “affirmative consent.” The person you’re contacting with marketing materials needs to have previously agreed to or explicitly signed up to receive texts. Well, who the hell signs up to receive texts? That’s a hard rule, what is an agent supposed to do? Really actually just not text anyone, who signs up and says, hey, text me.
Aaron: Yes, that’s why I think it’s really important news for agents to pay attention to because people are coming on and we’re interviewing them on the podcast to say, call expired listings, call these people, reach out to these people and see if they want to sell their house, see if they’re still interested, do that.
This is saying if you’re texting them because that is so sacred, that if they haven’t opted in, you get in trouble and the thing that scares me the most for people out there doing this, is class actions are serious, they get an attorney to sign up for the class action, people are also silly and people join the class action for nothing, they’re going to get five bucks maybe or three bucks maybe the people that win are the attorneys and the guys that get sued but once it’s a class action, everyone goes, “Oh yes, I got a text like that.”
Yes, I remember getting a text, yes sign me up, add me to it, and all of a sudden that list of people will grow and it sets a crazy precedent. I wonder if it was a text from an individual phone or if it was a text from a texting machine that may come into play as affecting it more to or where does that limit go?
Maybe you can’t send somebody a bunch of text messages, but sending someone a text and going like, “Hey, your house was on the market yesterday and just got canceled, do you still want to sell it?” Where’s the line where all of a sudden this is spam and bad and all it’s saying is the line is if they didn’t tell you, you could text them, you can’t text them, which is–
Pat: What I read is not ambiguous, but I think in most agent’s mind and in most people’s mind, it’s an ambiguous line. It’s more like, “Hey, stop texting me.” If someone texts, you and I need to do this to this, it’s a real estate trainer actually that I signed up for, I think I signed up for something at some point with this real estate trainer and he’s been texting me, just about every month that these bullshit texts that they’re unwarranted.
I think really the onus is on me at this point, I just need to write, stop or something in big letters, or please stop texting it, it doesn’t say who it is, it’s an anonymous text, so I know it’s coming from a machine but it is ambiguous I think, I think most people don’t know what’s right and what’s wrong.
Aaron: Yes, I was just trying to look at my phone, I know that I’ve gotten unsolicited text messages in just the last week, just random ones in here from people saying, “Hey, have you thought about selling your house?” “Hey, we have a new lead source for homeowners who were rejected for a refi, interested in buying this lead?”
Just random companies texting and it says unknown number, I have no idea who it is, people are using texting for marketing, they’ve realized that people aren’t opening their emails or using voicemails from marketing text messaging for marketing I’ve even told people they should do that and so this is like,” Yes, that’s a great method to go reach out to people, instead of knocking on their doors, texting is less obtrusive, call them or text them first.” Now maybe the old-fashioned door knock because the only thing that you’re going to be allowed to do and then people are just can put up the no solicitors signs, I guess.
Pat: Yes, no solicitors, at some level you probably won’t be able to do that but it takes so much more guts to do that and so few people do that.
Aaron: You can’t do it on such a massive scale, you could text 10,000 people in a day, you cannot knock 40 doors. I totally understand why they’re protecting and I don’t really have an opinion on who should be right or wrong, but this is a scary thing that I think all of our listeners out there that are real estate agents should pay attention to because if unsolicited text messages becomes a scary thing, I think some people are going to change their business models.
Pat: Yes and I think some companies have already been shut down because of this, oh you know what we forgot about? We forgot to talk about Barbara Corcoran getting billed
Aaron: Yes, that was the craziest thing, when you sent me that today, Barbara Corcoran she’s famous from Shark Tank, also famous brokerage has people that work for her and
what happened this last week, maybe it was just the last few days. Somebody had copied somebody that worked for her, her email and just changed it by one little letter and then had hacked their system somehow to see the email, he sent the email off and said, “Hey, we need to send a wire for this transaction, did you see how much it was? Was it like 400-
Pat: It’s ridiculous, it was $396,000. First of all, she gets billed at almost 400 grand to pay a bill, but who pays that kind of– first of all, who authorizes their secretary to pay a 400? That’s just crazy, I don’t understand how that could happen. I don’t know what her net worth is, but how could you possibly even have a bill that wasn’t a house, for 400 grand, what could the bill possibly be? The person wired the money and then when she realized that the person who worked for her shouldn’t have wired the money, it was too late, it was gone.
Aaron: Dude, how would you feel if you were that person? I think you’re totally right, that’s a huge amount, I can see how– this almost happened in my company. Somebody had hacked one of my assistants’ emails, and to get in charge of her email, they copied my URL and changed it by a letter and they sent her an email but from me, so now it says, it looked like it was coming from me and the emails said, “Hey, cut a check to this person for this much, bill it to this entity.”
They had obviously read her emails to see the direction I would give her and sent it to her and she was going to scan a copy of this check back over, and the people were going to use that to get the checking account or whatever, and then she sent me a text and just said, “Hey, just wanted to make sure that you’re doing this feels weird.” It’s a random request, but it almost happened now was for a lot less, if it would have been for 50,000 or 75,000 or 100,000, for sure would have garnished a phone call, that one was like a $10,000 check and it almost went out so I could see how it happens.
Pat: We know a guy who owned– a real estate agent that’s been on the show a couple of times that opened the title company and auxiliary business to his team and had a settlement and the hackers hacked into their settlement files and saw that there was a million-dollar sale, and sent an email to the title company that said, the payoff wiring instructions have changed for this loan, for this sellers’ loan. Please, here’s the new payoff. It was all organized and it was Wells Fargo or whatever, it looked completely legit just like you, one letter was different. They took a $1 million and they paid off a loan or thought they paid off a loan that they didn’t pay off.
Then the buyers move into the house and a week later, they say, “Hey, we’re getting letters from Wells Fargo, or something happened and they’re like, we paid that loan off, then it ended up they didn’t pay it off. The money went overseas, and they never saw it again, they actually had to close down. They had to shut down because they had to pay that million bucks out of their operating account. Their operating can only had $200,000, and they had to come out-of-pocket to pay off that mortgage because that’s their responsibility.
Aaron: I wonder, Maybe that has to be what happened to her on it. Maybe it’s something like that. It could have been the $400,000 wire, it has to be for something like that, for a big house for paying off.
Pat: It had to be something that they were thinking about anyways, Yes, you’re right. They had to hack into her stuff and be like, “Barbara, what is she about to do? Or what would she spend 400,000 on?” Because normally if it was like, “Oh, your Amex bill is in, 400,000.” I don’t know, maybe she does spend that much money. I think when you talk about that, the title company that closed down and how it almost happened to us. I’ve heard of it happening to so many people, wire fraud, becomes such a scary thing.
That people aren’t double checking the spelling of everything when they’re sending it back. Now more and more title companies are saying, “Hey, you have to log into this secure server to send it over.” I have to imagine there’s going to have to be an insurance product that comes out that are there to protect people like that. You know what I’m talking about like an IRS . It probably is, and it’s probably really expensive. I don’t know what it’d be. Maybe it’s for a million dollars is $20,000 a year something really expensive to cover everybody.
They are going to have to do something because this is only going to happen more and more. We’re trying to get to digital notaries and digital everything where people don’t ever have to meet in person to buy and sell a house. That’s only going to open the door for more stuff like this happen.
Aaron: These guys are professional that are doing it. Whoever pulled that scam on Barbara Corcoran was a professional. That was a very, very intelligent thing for someone to do. Number one, they got her right hand, her assistant’s email, they figured out what she would actually spend $400,000 on in one day, they changed– whatever they had to do. It wasn’t a purse purse snatcher that did this. This was a professional, smart ass person.
Pat: It’s got to be. Then people, it’s like you feel bad if you’re the one that hits send, but at the same time, the versions I saw of it were so stinking good. The people that showed me examples of it happening, I wasn’t surprised. I was like, “Yes, I could totally see how that happens.” That’s why I think insurance can be one of the only ways or that’s a problem that somebody out there needs to solve.
Aaron: I’m sure the banks are insured. I know banks are, pretty, pretty tight about– I love sending wires because I hate checks. I try to wire most stuff. It’s so more convenient. When people send me checks. I get pissed. I’m like, “Hey, please. ACH that chip.”
Pat: “What am I going to do with this? How am I going to do something with this?” I feel bad for Barbara and her team. That is a massive problem that’s out there. Again, for our agents out there, pay attention and warn your people. There’s that one addendum everybody has to sign right now like beware of wires. It’s the real deal when you got big professionals getting scammed out that much money. This isn’t the only time I saw news like this over the last week.
Aaron: She was just absolutely the most famous person that I saw happen last week. Be careful out there.
Pat: It was a lot.
Aaron: That’s true. It was a huge amount. Not fun news. Today’s news was all not fun, I guess. We had coronavirus, we had enough of those.
Pat: News never is.
Aaron: It was fun getting to talk to you today, man.
Pat: You too. Aaron. Man, I’m happy to come back anytime, buddy.
Aaron: Cool. We will talk to you soon. Enjoy Cuba. Enjoy your trip out there.
Pat: Congratulations. I hear now that you’ve been running the show here, your downloads are up 30%. That’s a huge thing. You’re obviously doing something right. Kudos to
you on being better than me. [laughs]
Aaron: We have been super lucky. January we did, we had the most downloads we’ve ever had. It was a huge uptake. It was really cool to see but nobody’s as good as you, Pat.
That’s why I need you back as often.
Pat: My pleasure, buddy.