What NAR's New Rules Mean For YOU As An Investor

Mike DeHaan: [0:00] Really quick before the show starts, in case you haven't heard, we have a growing community of investors called the scale community, which is full of people learning to make massive income with their real estate businesses, so they can reach financial freedom a little bit faster than building a rental portfolio solely over time, because honestly, that takes decades and who has time for that. So if you're an investor who is serious about growing and creating a scalable business without needing to be a slave to it twenty four seven, then go to collectingkeys.com/scale and apply. And if you're a good fit, we would love to have you join the community. So again, collectingkeys.com/scale, go ahead and apply, and we'll see if you're a

Dan Austin: [0:37] good fit. Imagine if Zillow can offer all of that stuff all accounts. Their title, their escrow for a flat $1,000 fee. You know, I mean, holy crap, that changes the game.

Mike DeHaan: [0:47] What is going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. Today is Wednesday. It's our off market operator show, and I am Mike DeHaan here with my cohost, Dan Austin and Dylan Cook.

Dylan Koch: [1:04] Hello.

Mike DeHaan: [1:04] And if this is your first time here, this is the show for real estate operators who are trying to figure out how to make massive income and not just passive income with your real estate investing business. On these Wednesday shows, we dive into real estate news, different business tactics we are currently working on in our own businesses, and whatever else we feel like for the week. And so the big news in the real estate world right now is, I guess, the official I don't wanna say, like, launch. Like, it's not like a launch. It's like a

Dan Austin: [1:32] Effective date for the new Gnar ruling?

Dylan Koch: [1:34] It's a settlement date. Yeah.

Mike DeHaan: [1:36] The settlement date for the new Gnar rules, National Association of Realtors, which, like, looks like the too long didn't read. Like, this actually breaks it down. Like, all I know is that buyers' agents can no longer get full commissions based off of the purchase price of the house. But is there, like, an actual, like, way that you explain it to somebody who doesn't understand real estate?

Dan Austin: [1:57] I'll say in dumb terms, then Dylan can smart it up. So, basically, understanding is is that the way agents were doing commissions, they were posting it in their MLSs. And, basically, they're saying that the agents were not incentivized to help the buyers or the sellers because their commissions were negotiated on the MLS, and that in turn was like price colluding and and either holding prices high or low to make a deal happen, which I guess could be true. I think there's a fair argument there. I don't know if Dylan, if you

Dylan Koch: [2:25] wanna fill in the gaps there. I mean, you can make a case, but in their settlement, NAR is explicitly saying, we did no wrong. But, yeah, we're still gonna pay you these billions of dollars, but they wanna say their claim, they're innocent in this whole thing.

Dan Austin: [2:37] The interesting thing about it too is I I did some research on this a while back, and not all MLSs are part of NAR. Correct. So the National Association, like Spokane MLS, where I where I hang my license, this part of the National Association of Realtors, which is super stupid, I think, because, like, you they force you to pay NAR fees, and then you have to pay MLS fees and all your other, like, quarterly fees, all this sort of stuff. Like, the Northwest MLS, which is a more broad MLS in the area, they're not part of it. They're not even opting in to the the settlement, which what does that mean? I'm not exactly sure. But as I guess, why why I'm bringing up is the settlement, there's a bunch of other things, but the highlight, like, the headline one is that you are and then it's kinda stupid. You are not allowed to post a buyer's broker's commission on the MLS. So

Dylan Koch: [3:25] Correct. And the other thing, just to add to that, not to cut you off the end, sorry, but you also can't if you're representing a buyer, you now need a listing agreement to work with that buyer. You can't just go and show them a house willy nilly whenever you want it anymore.

Dan Austin: [3:38] Which is fine. Whatever. That, I guess, protects the agent more than anything. Right? But, technically, the way they're setting up is that the buyer should be should have the option or ability to pay their broker the fee for finding them a house, and the seller should have the option of not even paying the buyer's broker. Kind of setting it up that way is that the seller, the way it works for those that haven't seen, a listing agreement, like, in our listing agreements here in the Spokane MLS, it says, how much are you willing to pay, whether a fixed dollar amount or a percentage to the selling agent? And usually, the selling agent wants that to be 6% because that's kind of the standard. It could be 10. It could be 12. It could be one. It could be four, whatever. Say it's 6%. The next paragraph down is how much is the selling or listing agent willing? How much of that compensation is the agent willing to share with a buyer's agent that brings a buyer? Typically, if like a lot of stuff we do, maybe it's a 4% commission to listing commission, the listing agent will get 1.5, and the buying broker will get 2.5. Like that's pretty standard split for a lot of flippers. Now you and then that I should say will get uploaded and input the form will get put in them. Actually, the form doesn't get put in the MLS, but the data from the form gets put in the MLS. And so buyer's agent pulls it up in the in their MLS, this is a two and a half percent commission. So basically, now they can't see that.

Dan Austin: [4:58] And the way you find out is you text the agent, like, how much are you offering? Correct.

Dylan Koch: [5:01] Yeah. And like, so you can't just do it on the MLS, but like, do you have a private Facebook page, your own like little website, or you're just putting on social media, you could advertise the co op percentage all you want. It just can't be on the MLS. So that's the annoying part. If you're an agent, you're like, let's say you're working with a buyer and you a listing pops into their port, you know, your predetermined portal that you made them, you have to call or text the agent every single time that, hey, are you offering a co op? And if so, what is it? And then then you have to go back and have that discussion with your buyer like, hey, you know, they're not you and I signed an agreement at 3%. They're only willing to pay one and a half. Are you willing to pay me one half out of pocket?

Mike DeHaan: [5:35] I mean, almost feel like what they should do is just like, if you're a good buyer, they can just figure out a different way to get paid. It was like, you're gonna pay me $5, whatever, to like, do this. It was like a flat fee.

Dylan Koch: [5:47] Yeah. Flat fee. That's what a lot of people say too. It's like, or on a per hour basis. Hey, I'm charging $50 per hour for a house we go look at, you know, or all the paperwork I have to do, or all the copying the analysis I'm doing on the neighborhood, etc. And I think on the buyer's agent side, that makes sense. Like, if you're showing buyers around instead of, like, worried about a commission, and, you know, like, here's what I'm going to charge you to do this. It's gonna be

Dan Austin: [6:10] a fixed rate. Maybe it's a thousand dollars, and I'll show you unlimited houses. And I think it'll probably get to that point sooner rather than later because buyer's agents are usually the new agents. Right? They're the ones slogging across town and just always, like, working evenings and weekends because they have no other option. The listing agent's the easy job. Right? The buyer's agent's the one that should usually get the higher split if you think about who's doing the most work.

Dylan Koch: [6:30] Honestly, that's that's true. That would be so true.

Mike DeHaan: [6:33] Well, kind of the funny flaw with that, though, is you're right. But we already know that buyers can't fucking afford anything anyway. That's why they're, like, looking to bring in other stupid laws like

Dylan Koch: [6:42] Like the 25,000 down payment assistance.

Mike DeHaan: [6:44] The Kamala Harris, like, $25,000 down payment assistant. Is that gonna go just towards your buyer's commission, your buyer's agent commission? They're gonna start being like, we're $25. You're gonna give me that. Yeah. That's first time home buyers bonus that

Dan Austin: [6:57] you're getting.

Dylan Koch: [6:58] Well, in this settlement to like, it was only really the big dogs had to pay anything like Comey and Shepherds, Berkshire Hathaway, like Keller Williams, obviously. Yeah. And so like, you had to do like over 10,000,000,000, I forget the numbers, but you had to do so much volume to even be like, named in this case. There's a difference between being like a real estate salesperson and having the realtor title, which is just like a monopoly on the name and having to pay for it. It doesn't give Yeah, you

Dan Austin: [7:20] any realtor's not, yeah, that's just a name, exactly. It doesn't give you anything else. It's an ad, like, calling somebody a realtor is not necessarily a factual statement if they're not part of NAR.

Dylan Koch: [7:29] Correct.

Mike DeHaan: [7:30] Yeah. I mean, what the middle and longer implications for this are, I don't know. But like, I feel like over the short term, what's probably gonna happen, I would imagine is probably not a lot.

Dylan Koch: [7:42] I mean, me, all of my flips all of my flips, I'm still giving a three percent co op. I'm not changing anything.

Dan Austin: [7:48] But I think it's the writing down the wall of where it's headed, which is people are like, cool. We don't need any more, you know, MLM brokers here. We have technology called Zillow and others. And I really think that these are, like, micro steps that are actually turning into large leaps towards essentially not having real estate agents being paid in the way that they're normally paid. And I think that the the Zillow model actually becomes much more interesting to buyers and sellers, much more, like, viable option.

Mike DeHaan: [8:18] Yeah. Well, I mean, it's funny, Dan, because you say, like, moving there from the MLM brokers. I feel like directly correlated with this change is an unfathomable rise where people are just promoting these MLM brokerages that they're now a part of at a level that, like, I didn't even really realize it was a thing until all of a sudden I see all these people that I respect very much, like good operators that are suddenly shifting their audiences and, like, like, what they're kind of promoting on their social medias to be directly promoting their brokerages, whether it's what eXp or real. And I don't know how these brokerages work, but there's definitely been this massive shift from, like, Templeton Walker down in Phoenix has been in this a ton. Our good friend Shelby over in Lexington, who's no longer hosting her podcast and now going all into being a broker. Craig Kurlaup here in Post Falls has a very large audience who's now an eXp agent. And the funny thing is is, like, I've heard how those models kinda work, and there's always these recurring words of, like, you know, oh, you're building your downline. You're building your team. Like, like, all these different things that it's structured and how they kind of pitch it is exactly the same as how people pitch, like, the different supplement, you know, MLMs out there and, like, all the other stuff that people used to get tied into. I feel like ten years ago, it's mostly gone away.

Mike DeHaan: [9:36] Is that the direction that the realtors are going now? Because they're not gonna get paid the same for doing real estate? Is they're just gonna recruit each other?

Dan Austin: [9:42] I figured it out here. So I I found the lazyagent.com/realbrokerllc explained. This is the legit this is a legit website.

Mike DeHaan: [9:51] Crazy agent. They have

Dan Austin: [9:52] a screenshot of the real, r e a l with the backwards l, their structure. So it's all about downline. So one through nine agent, you get 5% of their commission up to $4,000 per agent per year. Okay. So then if you recruit your agents from 10 to 14, you get 4%, 15 to 3%, 20 to 24, 2%, and then 25 plus tier one agents, 1%. But then below that, if any of those agents become like a tier one, like they have a downline, then you get 3% of their tier 4%, and it starts going. So then it's like, it stacks up to where if you get a 100 agents, I mean, that's 400,000 just based off of, you know, like, commissions. Well, estimated $400,000.

Mike DeHaan: [10:38] Assuming any of them do any freaking deals, which they won't because they're too busy recruiting other agents.

Dylan Koch: [10:43] This is true. Exactly.

Mike DeHaan: [10:44] Like, it doesn't make any sense.

Dylan Koch: [10:46] It takes away the incentive of actually selling homes and just turns you into like, hey, join your team and like all this

Dan Austin: [10:52] kind of stuff. Well, it rides with the Amway stuff, right? Where I used to know guys that do the Amway stuff. And then they were so busy recruiting other people, then those people were pretty people like who's selling anything? You guys all have bottles of water sitting in your apartments that say whatever that was like infused with nitrogen or something. Don't know, like, what's going on here?

Mike DeHaan: [11:09] So here's the thing. I don't know how these brokers work. Do they have like a cost to start up with them or a monthly recurring cost? Because if they do, that's where it starts to get real fishy.

Dylan Koch: [11:18] I know one of them does, but it's like a it was low, but it was like $50 a month or whatever. But you also pay your E and O on top of that, which is out of your own pocket. That's not covered by the

Dan Austin: [11:28] Oh, they make you pay your own insurance?

Mike DeHaan: [11:29] Yeah. Yeah. Because like where where stuff like, you know, Amway or Advocare or Isagenix or all those sort of ones started to get real weird was not only are you getting a portion of the profits, which are now getting smaller and smaller and smaller as things go down your line or whatever, but they're also making people invest heavily upfront to, like, purchase all these products and things based on day one that they then aren't able to sell because no one wants to buy their shit. And that's where the money's coming that's feeding up the pyramid.

Dylan Koch: [11:58] And that's where it's like, is it the Ponzi like behavior? The MLM versus Ponzi because if you're using that money to feed the person before you, one's house of cards fall.

Mike DeHaan: [12:06] Exactly.

Dan Austin: [12:07] So it's for real, it's $249 joining fee, a $30 I don't know what that is fee, and then 12 k annual cap. So that's cool. Great. You're capped at 12 k for commissions. And then you have a $285 transaction fee. Yeah. They have some pretty low fees, but yeah, they definitely have recurring income coming in. But also, you can choose to get your commission splits paid in stock.

Dylan Koch: [12:32] That's a big thing of the XP. I do know that is everyone was like driving up the stock. And for a while, they were loving it. But the past year, I think they're gonna like 303035%.

Mike DeHaan: [12:42] Yeah. Yeah. Now we're getting into like Enron territory, we're gonna start just creating all this stock to pay all these people because the stock doesn't actually exist.

Dan Austin: [12:49] Yeah. People are gonna start buying stock with their actual, like, every they're gonna be, like, going back to the company. Like, I want more stock, and then it's gonna tank, and then they all lose their whole retirement.

Mike DeHaan: [12:58] Yeah. And they're gonna start, you know, start splitting stock to be able to feed the new people that are coming in that are wanna get paid in that instead. God, what a fucking nightmare.

Dylan Koch: [13:07] So where I hang my license, it's not an MLM, but it's it's a flat fee brokerage where they, like, they take zero commissions. But I pay I think it's like $300 a month, just to hang my license there. And then I also pay my own e and o. But then everything else is on my own. But I say that we have the most signups at our brokerage in the past five to ten years now. And I think that is a reflection of it's getting harder to sell and buy houses right now. So people don't want their commission splits taken from them. Is that a local brokerage or a national brokerage? It's, I guess, a mix of both. I think we're in like three or four different states, but primarily where I live.

Mike DeHaan: [13:44] It's such a hokey business model, honestly. The way the the broker just kinda gets set up. Because the funny thing is too because I I feel like brokers just kind of exist. They wanna have, like, these regulations and these protections around how real estate transactions are taking advantage of all these different things. But how the models are run apparently isn't regulated at all. You can come in and just, like, make up your own way that you're gonna build a brokerage.

Dan Austin: [14:08] They're all ten ninety nines, dude. They're all ten ninety nines, man. Yeah.

Dylan Koch: [14:12] As long as you follow, like, your state laws, and then, you know, they don't really I don't even know how you enforce some of that stuff. I mean, it's genius is what it is. Right? I mean, they're making a ton of money being a realtor, you might have inside access to a house that's listed down the street. You know, that might have been worth it. But if you're a buyer sending today's shoes, you're on Zillow, you have your own saved searches, and all you did was find your house, send it to your agent, your agent filled out some forms and got paid 15 ks. That's where, like, kind of the hesitancy comes in. Well, when you find out this is a big part

Dan Austin: [14:44] of the settlement, like, within our stuff is then you find out, oh, I could've got my property for 20% cheaper had I been able to negotiate that commission. Because if you think about it, like, say that they're willing to give 6% and the buying or the listing agent wants 3%. They don't really care what that other 3% goes. Right? Yeah. No. Why would they? If they sign you around as a become a dual agent, they want that. Right? Which is, like, kinda bullshit because they were willing to do it for 3%. So the seller and the buyer should be able to negotiate that 3% or that $20 or whatever it becomes of that agent's that buyer agent's commission off the price. So then the buyer's missing out on the potential to get the house for 3% cheaper because the seller and them couldn't negotiate that commission. Because if you're showing if I'm a buyer like you're saying, Dylan, I go on Zillow, the listing agent's done their they've done their work, they put in their marketing money, they got a listing, they're pretty jacked, they deserve to get paid, Did a bunch of work. They paid for pictures and all that sort of stuff, signage. And you go on Zillow, was just some Joe Schmo, and you're like, I like that house.

Dan Austin: [15:42] I wanna call that agent. You should be able to say, hey. I'm coming with no agent. Are you willing to negotiate with your buyers to 3% off the list price? They might say yes today, but in a busy market, they're gonna be like, no. I just want all six percent for myself. Come on. Show up. Yep. Right? And that's not but that discussion's not even being had because buyers don't even know they can do that.

Dylan Koch: [16:01] Yeah. That's the biggest thing, what you just said. They don't know that that's a negotiable thing.

Mike DeHaan: [16:04] I do honestly just think that in general, the way that realtors are paid with it being a portion of the purchase price is weird. Right? Because, like, why did it take so long for them to just realize that it was a conflict of interest for the buyer to get paid based off of the property sales for the buyer's agent? Of course, they're gonna collude for it to be higher. They're gonna make more money. Right? And then for the on the seller side, in a lot of markets, like, if you're selling, like, luxury real estate, like, big luxury real estate, sure. It's like a network that you have. There's, like, a whole way that you stage it into open houses. A lot of work goes into selling like a $6.07, $10,000,000 property. If you're in freaking Ballard, right outside Seattle, and you have a two bed, one bath house that for some fucking reason is now worth $950,000, Should that agent actually get paid, like, $30 for listing that house? That's no different than selling a two one in Cleveland. I don't know. Right? Like like, honestly, it doesn't make sense to them to make that much money off of it.

Dylan Koch: [17:05] And when you get into the nitty gritty, like when the inspections come back, right? Both agents are technically incentivized to get the deal closed because that's how they get paid. That's where they say that, you know, quote unquote, ethics come in. Can you get this straight face back? Oh, you know, that's not really a big deal. You should buy the house anyway. Or are we actually gonna go to fight and try to get these, you know, as much money off as you can for the buyer?

Dan Austin: [17:25] Yeah, that's good part.

Mike DeHaan: [17:26] So like how stuff works. And if you go to like other countries, they don't have realtors, they'll have like a real estate attorney or like a closer, although I have like an brokerage that helps basically work both sides, but you just pay a flat fee commission period.

Dylan Koch: [17:39] And you probably go straight to a title company, can you? Can you even use an agent?

Mike DeHaan: [17:43] No. There's not a thing. Basically, what you do is if you wanna buy a piece of property, there will be like a listing agent that has all the properties. Can you say, I'd like to buy that one. And they go, okay, cool. And they go and they take your information as a buyer and they go to seller and say, hey, this buyer would like to put an offer on your property. They're offering this much money. Would you like to accept that? And they go, no. We would not like you because of x y z. They go, okay. Cool. And they basically just go back and forth, but there's no, like, salesmanship on either side. They're

Dylan Koch: [18:09] literally arbitrator almost?

Mike DeHaan: [18:10] Yeah. They're they're they're an arbitrator or, an attorney, and then they'll make, like, 2,000 to $3,000 just to do, like, all the paperwork. Like, how you negotiate the buy or sell is up to you. You don't have, like, your your agent that is, you know, telling you one thing and then playing inside baseball with the other agent where they're just like, hey. I think that we can get them to agree if we just, you know, do this. Totally.

Dan Austin: [18:32] Right. Well, just think about all the fees that if you're traditionally buying a house, all the fees and inefficiencies for, like, third parties, you got title companies, escrow companies Appraisals, inspectors. Appraisals, inspectors, real estate brokers. You have like processing fees at this bank, processing fees over here. Like, there's a large percentage. We're not even talking about taxes yet. Right? There's a large percentage of what's going out of that that the seller really is kinda giving up. The buyer's having to pay some too, which means they're affording less. Sellers have to keep their prices to a lower amount as well. So it's like pretty inefficient system, which is where I think the the Zillows and other folks can kinda come in and really start making things more efficient. Because imagine if Zillow can offer all of that stuff all in house. Their title, their escrow for a flat $1,000 fee. You know? I mean, holy crap. That changes the game. And then as more and more people, which I think of this last run up in the market, more and more people got comfortable with using Zillow to both list and buy houses or at least view houses. I think it just becomes you're so much more comfortable, and that becomes the brand standard, and people just go to it.

Mike DeHaan: [19:33] It's funny. I think my stance has probably shifted on this being a wholesaler and dealing with weird ass deals all the time, is how valuable, like, a good title company actually is versus, like, when you're a retail buyer, you're like, why did I just pay this person so much money? Because you you they probably didn't do anything, honestly. But when it comes to stuff that we deal with, it's like a probate and there's nine people on title, and they're having to, like, do all this stuff to get together, or there's, like, a really complex, like, laundry list of liens that are they're having to get figure out how to get paid off. If you have a good title company, they're totally worth paying. But for most cases, Dan, like you're talking about, why doesn't, you know, something like Zillow just basically do that? But, like, why do we even need a middle person? Why can't you just, like, go and post on some website that the house is up for 300,000, and you just go and you just say, like, hey, I'm going to bid $300,000 for this house, and then the person can receive it as like a web form and accept it or deny and go that way. Like, why do you even have to have a person in the middle, honestly?

Dylan Koch: [20:29] I mean, I do think you're seeing a rise of for sale by owners. I should actually try to pull that data up because people don't wanna give up 6% of their equity. Actually, not even equity, it's home value Yeah. Which is more.

Dan Austin: [20:39] Yeah. Exactly. More percentage of their equity.

Mike DeHaan: [20:41] Yeah. Absolutely. Yo. If you don't follow me on Instagram, which is at mike underscore invests, by the way, then you might not know that we officially have a new mission as a brand, and that is to help 2,000 real estate investors build million dollar businesses. Obviously, to do that, we need to get in front of as many people as possible. So quick little ask to help us reach that goal. First, shoot me a follow on Instagram at Mike underscore invest. Second, follow collecting keys podcast on Instagram. That's at collecting keys podcast all written out. And third, every time the algorithm is kind enough to show you a post from either of us, share it on your story, or in your post and tag us. If you do that, I'll DM you and we can have a little DM conversation about what is preventing you from having that million dollar business that everyone is seeking. And we can see if we can come up with a plan to help you make that massive income, not just passive income. So again, if you see any of our posts, just go ahead, reshare them, tag us and let everyone know that you enjoy the content we produce. It will help us a ton. And then I'll be happy to help you as well. What do you guys think this means for, like, investors as a whole? Both as, like, flippers or long term property values?

Dylan Koch: [21:54] I mean, for us as investors, the cheaper the fees get, the better it is, honestly. Yeah. I don't have to pay 6% off what I'm selling the price for, I can then pay more for the property. Agreed. Right?

Mike DeHaan: [22:04] Sure.

Dan Austin: [22:04] I don't see any major especially in the near term. Like, I think the near term status quo stays the same. I think it's like the the smart person that's going to use this as an opportunity and create something. You know, maybe that is Zillow who has a lot of money to to create something here. Maybe it's some third party we don't even know about that's gonna create create something that's gonna add value or or maybe take value out of the system. But I think in the near term, yeah, we're gonna continue to things. Agents are gonna be like, hey. What's the commission? And they're gonna find out over a text message or wherever they find it, and it's gonna usually probably be about the same.

Mike DeHaan: [22:34] Yeah. It'll just be, you know, something that provides I don't know. I think it'll ultimately give the governing bodies the ability to have more oversight if they want to. Right? If anything else, there's nothing else there.

Dan Austin: [22:45] It almost seems like they're gonna have less because now they can't track your text messages. Sure. Or they can't track the website you posted it to with your commission. I think there's some really good reasoning why they decided to do this, but I think at the same time, it actually made it less, like, transparent. Cartel like? Yeah.

Mike DeHaan: [23:02] We say that there's, like, a good reason. What happened is there was someone that was at the top of that whose, like, daughter, you know, bought, like, some house, and they felt like they really overpaid or they found out that there was a collusion, they were like, that's fucking bullshit. You hear what they did to Becky? I'm going after them for that. And that's what kicked us out.

Dylan Koch: [23:19] Well, no one does mention that the lawyers that did brought this case to NAR got paid, like, a 33% of the settlement. They made bank from just making that. Like, just bringing this to us. Like always, the attorneys get paid the most.

Mike DeHaan: [23:33] Those are the real crooks at the end of it. But, you know, a whiz gonna affect property values. I mean, we touched on this as before is that if Democrats get into office, Kamala Harris is $25,000 for first time homebuyers.

Dan Austin: [23:46] Wait. Can we also add a couple things that she's offering to this?

Mike DeHaan: [23:50] Is there more details? I've only seen the headline that people either share around in absolute glee or in absolute horror depending on the economy.

Dan Austin: [23:57] So frustrating because both parties do this. I don't know what the Republicans are saying, actually. I've just only seen the headlines with Kamala because I think some of the stuff people are like, really? You're in office now. You could actually make those changes right now. But the $25,000 credit or I don't know if it's how they worked out. I don't if it's gonna be a credit or whatever. The $6,000 for people that have a one year old or under. So, Dylan, woah. You can make some money here, dude.

Dylan Koch: [24:21] Yeah, I know, man. $6.

Mike DeHaan: [24:23] For every one year old you have?

Dan Austin: [24:25] For every kid that you have between under the age of 12. So like, if you pump out a kid, like, you're gonna get a $6,000 credit that year.

Mike DeHaan: [24:32] I'm just gonna start fucking it.

Dan Austin: [24:34] Exactly, dude. Exactly. I sort of thing. Then there was the she's gonna build 3,000,000 houses in her four years as president, which is wild. And they're gonna do that through like tax incentives for first first time home builders, like the builders that are building like entry level homes. And then the other one was that she's going to go after price gouging and price collusion to reduce the cost of groceries. I don't know how that one's gonna work. Yeah.

Dylan Koch: [24:59] That one doesn't make sense because most grocers make like one to 2% margins. So that makes no sense.

Dan Austin: [25:04] But those are all kind of the things. Right? Like, that's the bucket of things right now. But I think the ones that affect the real estate market the most would be the $3,000,000 house. 3,000,000 houses in four years, which we haven't been able to do in thirty years then the other one being the $25,000 credit.

Dylan Koch: [25:19] Here's the other one, they introduced a first ever tax incentive for home builders, who would only sell to start like first time homebuyers.

Mike DeHaan: [25:27] So basically, like, you're gonna make so they have to sell to new type of first time.

Dylan Koch: [25:32] Yeah. That's how I'm interpreting this.

Dan Austin: [25:34] And so these builders are gonna be like, sweet. Where's the cardboard I can use to build this house? Oh, no shit. No shit. You know what, if they're gonna that's how those things work. Right? It's like, somebody will make a shit ton of money, and it won't be the American public.

Mike DeHaan: [25:46] The funny thing is as you're breaking through that, I mean, and, you know, I don't know how much of that is true, has been misconstrued through all the different lines of media and everything else or what this the specific details are. But on all sides, you know, not a political show. You really start to realize how little, like, I don't know, the people at the top of

Dan Austin: [26:06] Know anything.

Mike DeHaan: [26:07] The country know anything about how shit works. Like, even just the logistics alone of building a $3,000,000 house. Do we even have enough raw materials for that? Let alone the price piece. Where the fuck is the wood coming from?

Dylan Koch: [26:20] Or the jurisdiction. Like, every jurisdiction is different too. Like, you know, what's a starter home in Ohio is different than a starter home in California.

Mike DeHaan: [26:27] Yeah. I mean, and you bet, yeah, just like even at the base level. So they're gonna, they're gonna do this about $3,000,000 has that's a hell of a lot of raw material while also pushing a green initiative that reduces manufacturing. Right? Like, I mean, there there's so many different pieces. And, you know, they're also gonna make those homes are affordable for new people while increasing minimum wage and making labor more expensive and increasing taxes on various things so that, you know, they can have more money as the as the government.

Dylan Koch: [26:55] Hold on. Sorry, not to cut you off, but to add some more flavor to this. The proposal for the $25,000 down payment assistance is for first time buyers who's paid rent on time for two years, or their parents weren't homeowners.

Mike DeHaan: [27:12] Or their parents weren't homeowners. So they basically have to pay rent or their parents weren't that's that's that's even more interesting because now what's gonna happen too is you're gonna have people that are like, higher income that are like, yeah, I fucking paid my rent. They're gonna be taking advantage of that when they don't need

Dan Austin: [27:27] it. Well, there's still gonna be it gotta be income thresholds, I have to assume. Right? I gotta assume.

Dylan Koch: [27:31] Does the government paying your rent qualify for that if you're on subsidized housing? Good point.

Mike DeHaan: [27:36] That's a good question. I don't know.

Dan Austin: [27:37] Yeah. So here's the reality of it, though. These policies sound pretty incredible for housewaters and people like us who are offering homes mostly in the entry level. A lot of times, these progressive policies do benefit because the government is essentially dumping money into the economy, but the only people that can get access to that money are the poor people and the wealthy people. Right? Because the wealthy people are the ones with the assets that they're gonna sell ideally. Right? Ideally, you're a flipper and you're wealthy. I don't know why you're flipping if that's not the case. But for us, I mean, if they really did drop that tax like $25, I mean, that to me just increases the price of an entry level home, not by $25, but probably by more than that. A percentage, you know, of the purchase price goes up quite a bit.

Mike DeHaan: [28:21] Yeah. Yeah. Here's, like, really the play. Right? If you're a savvy house flipper. If the Democrats get elected, there's

Dylan Koch: [28:29] gonna

Mike DeHaan: [28:29] be a window of time while they try to figure this out if they are gonna do this, where comps don't necessarily represent the increase in property values, but you know that it's coming. Yeah. It's gonna be like in the six months that they're in office in 2025. In that period of time, you should be hoarding houses like a freaking real estate dragon

Dan Austin: [28:46] Right.

Mike DeHaan: [28:46] And just sitting on them for, like, nine months so that you can offload all of them for $25,000 more than you're expecting to because

Dan Austin: [28:55] But do you not think that would happen? That would happen for sure.

Mike DeHaan: [28:59] It will happen for some people, but I'm saying, like, even people, like, that are flipping, I don't know, 10 or 20 ounces a year could probably find an angle there if they're

Dan Austin: [29:06] lucky. Right? No. I agree.

Dylan Koch: [29:09] This flies in the face of what they're trying to do.

Dan Austin: [29:12] Yeah. It does. Right.

Mike DeHaan: [29:13] It is. Totally. Also too, I mean, we say that, but very realistically, us as investors are householders are a very small percentage of the market. As in, like, a larger picture, it will probably help out more people. But those of us who are freaking botter feeders that are trying to figure out how to game the system, we absolutely have an opportunity.

Dan Austin: [29:31] Well, and the the entry level home builders, the national home builders like Lennar, D. R. Horton, all these places, those are the ones that can they can turn on a dime and pump out houses that cost a guy like us to build 500. They can build it for 300, sell for 4. You know what I mean? Like, they can move into that new home buyer. We're seeing it all over like where we live, Mike. Like, we have a lot the first time ever in the last few years, we've had national home builders here, and they just go and buy like 10 acres and just pump out house after house after house so fast, so efficiently, which is good for a first time homebuyer stock, and they'll be the ones that profit the most. And I mean, they're already billion dollar funds anyways, but that's really where it goes to. But bottom feeders like us have a little chance to make some money too.

Mike DeHaan: [30:12] Totally. So well, so I guess if you're a house flipper, I know a lot of you real estate guys are are big on the Republican side. Times are Democrat because they're trying to give you money

Dan Austin: [30:21] For free.

Mike DeHaan: [30:21] They're saying we are gonna give you $25,000 per house that you sell in the starter.

Dan Austin: [30:26] Go progressive, man.

Mike DeHaan: [30:27] You better start pursuing that.

Dylan Koch: [30:29] I guess is there a chance or are they trying to push this through, like this year? And then if they lose, they get all repealed next year?

Dan Austin: [30:39] No, don't see a push in. They're not gonna push it there. They're not

Dylan Koch: [30:41] gonna push it through this year. There's no way. There's no way. I don't know if they haven't don't know how politics works. I feel like you need enough time.

Mike DeHaan: [30:45] Oh, you mean, like, you mean, like, before the election? Oh, no way. Yeah. They won't do it.

Dan Austin: [30:49] They're not gonna waste any of that on Biden, dude. Like, they wouldn't do that. That would not be

Dylan Koch: [30:53] Yeah. I guess that's true. No.

Mike DeHaan: [30:55] It would be next year. But, I mean, what'll happen, though, is it'll be there for that short window of time. And then if they lose, what, in 2028, it'll all just go back to whatever. It's like everything does constantly. That's why nothing reads on.

Dan Austin: [31:07] So, alternatively, though, we have like two minutes left. Alternatively, the argument is that if Trump gets elected, and I don't have any idea what his policies are, actually haven't looked at any of them, that there's a sense that the economy will go on a tear. Does that reflect the real estate market, or do you think

Dylan Koch: [31:22] the real estate market gets negatively affected? I think that even though they're supposed to be independent, and he put Jay Powell, the Fed chair, in, like, he's the one that put him in that seat, he would press him to lower rates, and I think that would just be an uptick for prices.

Dan Austin: [31:36] There's an argument that it's a downtick, though. Now let me present that argument if I haven't done this before. The argument is that as interest rates go down, people that have been sitting there locked in at these low interest rates that do wanna move, do wanna sell, finally come to the market to sell and inventory actually goes up.

Dylan Koch: [31:54] I think there's more people trying to buy than there is trying to sell. I just think it comes out of supply demand.

Mike DeHaan: [31:58] I think it's still supply and demand heavily in favor of, like, demand. Right? Like, there's so many people. We have such a housing issue in general. Like, I think that the supply would have to increase such a disgusting amount for it to actually be any different.

Dan Austin: [32:12] Couple that with the statement I think you made a couple episodes, Dylan, was that when interest rates go down, the economy actually goes into recession.

Dylan Koch: [32:20] Typically, but it's usually short lived. By the time the Fed stimulates, it's they're usually a little bit too late. Yeah. Exactly. And so they're you're still like there's this lag effect between, like, the downward pressure and then coming back up. But to your point about the interest rates, we were in an unprecedented two to three, like our house mortgage is 2.5%. Like, I don't think you're ever gonna see those rates again. So if you're me, and rates go back down to four or 5%, that's still not an incentive to sell. And I think there's a lot of people who have those two to three, maybe mid threes, low fours. And if you can't get back down to that, then what's the point? You're smart

Dan Austin: [32:54] though, Dylan. Like, not everybody's that smart.

Mike DeHaan: [32:56] Yeah. Well, also, I mean, you say there's no incentive to sell if you're looking at, like, the interest rate point. But if your house is suddenly worth $600,000 more than you paid for it, you know, eight years ago, that's a lot of money to people. They'll probably start thinking about that.

Dylan Koch: [33:10] Yeah. We don't have that appreciation here.

Dan Austin: [33:11] I think the argument is this. Maybe it'll be more tempered because there's a lot of people saying that it'll go on a tear. Interest rates go down, it'll go on a tear. And on the other side of the argument is is like, no. They it won't go on a tear. It'll stay flat or it'll go down actually. Maybe it just tempers itself, and it doesn't go on a tear, it doesn't drop down. It just tempers itself, it just feels kinda like a slow, movement of properties. It kinda has been recently, but maybe just a little bit quicker than it is.

Dylan Koch: [33:34] Know I mean? Because the highs and lows kinda temper it out. It actually works out, and it doesn't go high. Mean, me as an operator, I'm running my business pretty much the same as it has been, but I do like the lower ish price points in my market at this point in time that I I think of the agree. And I think if you can stay in that range, you're gonna do just fine.

Dan Austin: [33:54] Always have something to sell in. Good point.

Mike DeHaan: [33:57] Yeah. As long as people keep beating the drum of the American dream, there's always gonna be somebody to buy those starter home houses.

Dylan Koch: [34:02] Hell, yeah.

Mike DeHaan: [34:02] So where it gets weird is that that middle price point. Right? Like, the not quite for rich people, but too expensive for first timers. That's the scary part. Wanna avoid, which yeah. I think you've always kinda wanted to avoid that, but now more than ever, you can definitely get that.

Dan Austin: [34:17] Great.

Mike DeHaan: [34:18] Alright, guys. Good conversation. Anything else to wrap up?

Dan Austin: [34:21] I'm good. I think I'm good.

Mike DeHaan: [34:22] Right on, guys. Well, thanks for listening. I would love your own opinions on these parasitic agents with their MLM schemes or the NAR stuff or don't tell me about politics, though, please. I hate it. You can keep that shit

Dan Austin: [34:36] yourself. Send Mike all your politics. No. I'll conspiracy theories. No. Do it.

Mike DeHaan: [34:41] Don't definitely don't do it. But either way, we'd love to hear more of your thoughts around different things real estate related. So you can hit us up on Instagram. I'm at Mike underscore invest. Dan is at investment Dan. Dylan is at Dylan underscore does underscore deals. And appreciate guys listening. Talk to you guys next week.

Dylan Koch: [34:58] See you. See you.