What Does the NAR Lawsuit Mean For Realtors with John Marion

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Good morning, good afternoon and good evening, everybody. Hey. Welcome to this episode of the Note Coach Show. As always, Scott Carson, Excited to be here today. And on this episode, I wanted to bring in a buddy of mine to discuss what you've been hearing about in the news. You know, all the realtors are kind of figuring out like do we stay or do I go now? You know what's going on with all the big gnar lawsuits and the settlement by nar, and what does this mean for realtors and what does it more importantly mean for you as a buyer or seller of real estate? And so I bought my buddy on John Marin here out of the Atlanta market. He's a realtor and an investor, probably an investor first, more so a realtor, but he's both. And I thought it'd be a great idea just to have an episode to talk about what's going on with that, where it's at and kind of where we foresee it and kind of clear away the myths of what everybody's talking about, what they think is there's a lot of misconceptions out there, what's involved with.

But there's also still a lot of.

Stuff up in the air. So we're excited to have John join us here this morning from Hotline. What's going on, John, how you doing, buddy?

Yeah. Hey, Scott, doing great. Thanks for having me on the show. I'm really looking forward to our conversation. This is great.

Oh yeah, buddy. We're going to have a good time. I mean, you're an active real estate investor. You're doing some fix and flips, dealing distress stuff you're also an active Realtor out there. Can you talk about kind of. Let's, let's talk about the two models, kind of your business model as we were talking about beforehand before we dive into the nuts and bolts of the NAR settlement.

Yeah. Yeah. So I got my start in real estate as an investor, and I was working in the Washington D.C. area when the market crashed in 2007, 2008. And I had, I was in the nonprofit world at that time and spent 26 years doing nonprofit work. And then a lot of the, the donors to the nonprofit, they were going bankrupt, they were losing their homes, they were going into foreclosure. And so the, the capital coming into the nonprofit just was kept going down and down. And I saw on the wall. So I made a big change in my career and went from the nonprofit world to investing in real estate in the Washington, D.C. area. And that's, that's how I learned real estate. And then I had the opportunity to move to Atlanta about 15 years ago, 14 years ago, and spent a year as an investor here full time fixing and flipping homes and looking for opportunities to buy rentals and different things. And then my real estate agent invited me to. Well, she, she told me I should get my lice and we became business partners. We were business partners on the investment side, and she was the real estate agent. And anyway, so I got my, my license 13 years ago. And for the last 13 years, I've been doing both working as an investor, representing investors as a licensed Realtor and doing property management. And so a lot of my clientele are investors. I do typical home sales for owner occupant buyers and sellers, residents. But I do a lot of investment transactions as well for investors as well. I have my own investment company and we do our own deals.

Yep. And that name of that is Alpha Dog Capital.

Yeah. Yes. Alpha Dog Capital. Yeah.

I love the name, man. I know, I know.

If you, if you listen to the intro to my podcast, you're the man that, that does it. I love. It's great. So everybody's got to go check that out now.

We'll put a link into the podcast definitely here in the description there for you. So what. And that's what great is too, is that there's been, I love it. Over 10 years in the business. And that's why I wanted to bring you on there. I mean, there's folks have been around longer. There's a lot of folks that have been around just for a little while. And one of the biggest things That I love is when you've been through an up and down market, you know, how to conduct business. And we see that happening everywhere here when the market's going up, everybody's excited, you know, they're getting in, you know, fog, a mirror, you can make money. But when it gets, the going gets tough.

Yeah.

And things change, markets change, markets cool off. We see a lot of Realtors, a lot of, I mean, we've seen that happen already. A lot of Realtors leaving the business, a lot of mortgage brokers, loan officers leaving the business and in droves because they can't figure out how to market. And I think that's kind of one of the big things that's going to affect kind of as a part B to what we talk about today, how Realtors can market themselves and services to make money besides just a flat commission basis in a lot of their services. What do you think about that?

Yeah, yeah, absolutely. I see that concept working in both the investment side and the Realtor side. So on the investment side, everybody's a real estate investing genius when the market is hot, going up to buy a house and it's worth more, you know, before you leave the attorney's office, before your signature is dry, and then you go over there, maybe paint a few walls and replace the carpet and you resell it and you've made a profit. You know, that's like, we saw that market a couple of years ago and a lot of people get into investing, quote, unquote. It's more the. A lot of people, a lot of investors, they're not really investors. They see an opportunity, but they're not professional investors. So professional investors know how to make money investing in real estate whichever way the market goes up, down, sideways and can mitigate against risk even in what I call a black swan event. And I know, Scott, you're right on the cutting edge of all that with the note buying industry. And you, you've got a niche there that is just resilient to all these changes. And whichever way the market goes, you know, you can do that in your business. And real estate is like that. So that's on the investment side. But it also works with Realtors. You know, when, when there's a lot of home sales and prices going up and, and everybody knows their aunt and uncle and cousin that bought a house and they see the commissions that were paid, they're like, wow, I should get my license. And so there's a glut of people that get their license. The bar is relatively low and I know a lot of agents will get at me saying that, but it really doesn't take that much to get your real estate license. And when you do, you, you get no training on how to run a business and how to be a successful business person. You just learn how to be compliant with the state. And that bar is very easy. And so that's part of what has been the problem in the Realtor community is you have so many real estate agents that don't know what they're doing or not, are not very good at what they do. And that, that has kind of been the cause of some of what, you know, what we'll talk about here shortly with this laws. Not, not a direct cause of it, but, but it, the perception that is put into the general public's mind is because there's a lot of non professional realtors out there. So I said it and that's, I'm sticking to my. That's good.

I couldn't agree more because that's the thing is when Realtors get their license, it's all about legal. The legal aspect of not getting fined or what you can't do.

Right.

You know, and if something comes across the box as an investor outside the box, the first thing, knee jerk reaction, oh, you can't do that, it's illegal. There's no kind of outside the box and definitely no coaching on treating it as a business, running it as a business, marketing, understanding what you've got to be doing to be successful in an up or down market and your market or working with other people. It's a whole variety of different things out there. So let's, let's dive into. We kind of danced around the bush a little bit here, a little bit, but let's dive into this kind of. So let's talk about this lawsuit and this ruling by my, by nar. And we've seen this obviously popping up. Different states are having different lawsuits pop up from nar, since this is the first one that popped up. So let's, let's, let's talk about that a little bit. John, what's kind of the, what's the, what's the nitty gritty that people need to realize right off the bat?

So, you know, without getting into like the minutiae of the legalities and this, that and the other thing, you know, to make a long story short, there's been a out of court settlement with that NAR and big brokerages made to the lawsuit that still has not been approved. It needs to be approved by a Judge, but it's probably going to, you know, hold and that will happen in July or, or the, the impact of that settlement will go in place in July. The judge has got to, you know, sign off on it sometime before that. So there's a settlement fee of, you know, I think over $100 million that's going to be paid over three or four years by different brokerages and NAR to, to compensate. It is a class action suit. The people that will really win financially will be the attorneys. And I think I read that if buyers and sellers do get any part of that compensation, you know, it's going to be an average of 10 to $100 a person. So it really doesn't compensate anybody for anything that happened that was wrong. But the, the attorneys made a lot of money doing it. So really the crux of it is what the Department of Justice actually sued NAR a couple of years ago and it was on the compensation of how, how the general public pays Realtors for their services. And it's always has been that it's been negotiable. Real estate commissions have always been negotiable. But what has happened is that the general public and non very not, not business savvy Realtors have presented it in a way that this is a standard commission or this is, this is what we decide. And really that's, that goes against antitrust laws, you know, to, for Realtors in any business. But in Realtors, brokers can collude and say, yeah, we're going to charge a 6% and that's what we're colluding to do. That that did not happen in reality. But the perception is a lot of brokers won't put a listing on for less than 6%. It's a business decision. You know, if I'm a broker and you want to sell your house, I might say to you, well, it's negotiable, but I charge 6%. And if you want to list your home with me, it's going to be 6%. And I've made a business decision that I'm going to share half of that 3% to attract buyers so I can get the maximum amount of buyers attracted to your house. And that's always been the case. But for whatever reason the perception has been and the, these lawyers capitalized on that, this idea that, that we're colluding that, that brokers are colluding, charging a 6% that's a fixed rate and a standard fee. And they made it out to be something that it Never has been. Now, it doesn't help that there's, there's been a glut of these realtors that, that do one or two transactions their first year in business and they present it to their clients as, yeah, we, we charge 6% and that's the way it is.

And, you know, they, we saw that, that there's basically 50. Only 49% of realtors sold more than one property in the last two years, basically, or on a yearly basis.

Yeah.

Which means 50% aren't doing anything, basically.

Yeah, yeah.

And it's. And that 6% is being paid by the, the seller, the person selling their house, and that's being split 50, 50 across the board.

Right, right. So what's going to happen, the biggest change, and this is where it becomes relevant to the average person listening. You know, we can talk about all the misconceptions that are out there in a second, but the. Where the rubber meets the road, two things are going to change. So in the MLS listings, when I go in as an agent, I can see that this house is on for sale, $400,000. And I could see that the seller or the broker is going to share, give me a 3% commission when I bring a buyer to them. And I could see that in the mls, clear as day, black and white. And that's information we could easily look up. So this lawsuit will prohibit that information from going into the mls. So it's going to create a situation where buyers, agents won't know if they're going to be compensated or not. So that's one thing that, that's going to happen. And we could talk about the ramifications of that in a second. So no, no, no disclosure of what compensation the seller is offering to the buyer's agent.

And let me ask you a question about it before we get to part two there.

Yeah, yeah.

Who doesn't want to do a job and not know what they're going to get paid? Right?

Well, yeah, that. Exactly. Yeah, exactly. And that's how the system has worked. And that's why I think a lot of Realtors are freaking out because they don't know any other way to do business. And, and I think they're freaking out to a greater extent than the negative impact of the actual lawsuit is going to be. So you're here, you're hearing a lot of chatter now, a lot of, you know, people freaking out, Realtors are freaking out. And then the, what I call the anti realtor crowd is out there too, saying, yeah, we, you know, they charge too much and those realtors don't do anything and they don't deserve anything. So there's, there's those two groups that are creating a lot of noise right now and, and getting everybody all confused and upset and, and whatnot. But I think it's not going to change as drastically. It's going to change, it's going to be some changes, absolutely. But it's not the, the app apocalyptic scenario that we've seen in the headlines in the last couple weeks and that we're probably going to be seeing for a little while.

So let's talk about the second part there before I, I stepped in and talk about that. You know, first part is that it's not going to be listed commissions. How are realtors then going to figure out how they get paid? Is it going to be something that these, this 3% or this commission now needs to get paid by the buyers that are buying the real estate? And obviously we'll know that will change depending on first time home buyers and what they have to bring to the tables as far as down payment and other things.

Right, exactly. So what's the other, the other thing that is that, that we can't, that we have to do now is we have to have a signed agreement with a buyer that clearly states how the buyer's agent is going to be compensated. And it used to be that, you know, we, a lot of realtors and I've done this plenty of times, somebody will call me up, they want to see a house. I don't have a signed agreement. That's best practices to have a signed agreement. But it wasn't required that I do that I can meet them. That's part of my sales approach and getting to know somebody and showing them this is, hey, nice to meet you. And here's the first home we're looking at to get to the point where they, you know, I can convert them into a client with a signed agreement. But now we will be prohibited from showing houses to any buyer without a signed agreement. So it's not going to make it any easier for buyers, not going to make it less expensive. So in that agreement we have to clearly state how we are going to be compensated. And so not knowing if I'm going to be compensated by the sellers, the seller, I'm going to, you know, have a signed agreement with the buyer that says they will pay me 3% commission. And then I could, I could also stipulate unless the seller offers that 3%, then I'll collect it on that side and then I have to, in the negotiation, when I present an offer to purchase this $400,000 house, in the offer, as long as the buyer directs me, I can. The buyer is the one that will ask the seller to pay me a 3% commission. But if they refuse to do that, then it's on the buyer. And putting it on the buyer reduces a lot of opportunities, opportunities for a lot of buyers that just can't afford to pay that. So I think what's going to happen in spite of all these rules that when I'm, if I'm going to list your house, Scott, I'm going to tell you, hey, you know, I, my business practices to, you know, has been to charge 6%. Things have changed. I need to get compensated 3%. If you want me to list it on the, on the, on the market to get the most, you know, to expose it to the market. Market. And I suggest that you offer 3% to the buyer's agents out there because that will open up your property to the widest exposure on the market. And I believe that you will net more money even though you, after paying the 3% to the buyer's agent because you're, you're, you have so many more buyers, you have competition owned buyers. But it's your call, Scott, whether you want to. If you say no, John, I am only going to pay you a 3% commission. I'm not going to offer anything to a buyer's agent. That's fine. I'll list your house on the market and, and then the buyers will come in and then we'll get an offer that, that asks you will you pay a buyer's commission of 3% and if you say no, I don't want to do that. I don't like this part of the off a counteroffer. And, and what's strike that out? Well, when we do that, there's a lot of buyers that will just go away because they, they don't have the funds to pay their agent and they, they can't wrap that cost into their mortgage loan. Yet things are going to change maybe, but yet they can't wrap that up. So you know, first time homebuyers especially do they have the money for a down payment. They, they've scraped it together, they saved their money, they're ready to buy a house and now suddenly they've got maybe $10,000 more that they have to suddenly come out of nowhere to pay. And that, so that's going to be, that's going to be where the problem will come in. But I think there's going to be solutions too.

Well, that's the thing too is you think about it as a loan, as a, a buyer's agent, somebody is representing buyers. Before you go show the host house, you're probably requiring that they, if you know they've got either proof of funds or a pre approval letter from a lender. Correct. You're not just out willy nilly and showing people who can't qualify for half a million dollar house when they can only afford a hundred thousand.

Right, Exactly.

But now it may be the aspect of what we actually are willing to pay a point or two points off of the sales price if the seller isn't willing to compensate. Huh?

Yeah, yeah. There's a couple of ways this could work. It doesn't have to be 3%. There's nothing that says that. I mean I, I could represent you as a buyer and say, you know, Scott, I really like you, you were great friends and you know, I'll show you around to 25 different homes over the next two months and just give me 500 bucks. You know, I could do that. I, I probably wouldn't unless you're, you know, a really good friend. But no, but that, that, that is negotiable. You know, it could be 1%, it could be $1,000, I could charge you 4%, it could be anything that I, as a, as a business owner want to negotiate with you as my potential client.

Let me ask you a question. The thought comes to mind if you think you split what has more, what is more work to it? If you're, if you're thinking about this, this is a general aspect of things. Is it somebody who's listing properties for sale, they list on the mls, take some photos, stage, make sure it's priced right and list it and then fielding offers. Or is it the buyer's agent who's reviewing the mls, driving around, showing things, you know, handling the new questions, walking through the inspections, walking through the time frame of dealing with that first time home buyer. Who do you think has, is it more labor intensive? I guess as far as time when it comes to buying or selling, it's.

Clearly the buyer's agent absolutely hands down. And this is where the industry may change to where we will see more discount, discount commissions for listing properties without much of a reduction of services because it's much easier. You can, you can multiply your business by, you know, I can list 100 homes for sale and I'm not having to, you know, drive around literally 1,000 or 2,000 buyers for those hundred homes. That's, that's a lot easier. And there's a lot of admin tasks that can take place behind the scenes that don't require, you know, interface with, with the general public for the most part with a lot of those tasks. But the buyer's agents do that and they, they, in my opinion, buyer's agents earn their commission. They, they, they put in the lion's share of the work. But having said that, they have had it handed to them on a silver platter that I'm a listing agent. I'm pre negotiating, I have been pre negotiating their, their compensation on their behalf and they haven't had to do that. So it's going to be a learning curve for a lot of buyer's agents. And I think a lot of people just get out of the business because they don't have any business savvy or don't, don't want to do that. They, it's been pretty easy, well, getting compensated has been pretty easy and negotiating that compensation. So that's a different set of skills than just opening homes right now.

I also think back about the negotiations we've done over the years with agents on a variety of things. When we were doing, you know, we were doing a short sale company years ago, it was very common for banks, lenders to reduce commissions to 4%, you know, to a side and their loss is if we're going to take a loss, we're going to bleed, everybody's going to bleed a little bit, which is kind of normal, reducing the commission.

Right.

I also think about other times we've paid more commission on the buyer's side to get multiple offers on the property. You know, giving 3% to our rent, our agent, the seller's agent then offering four or five points to a buyer's agent so they can close in 30 days or faster, you know, or it's always been interesting to post things like that and sit inside the house and see the massive amount of realtors drive by that house to inspect it if it's worth their time to make that extra five point, extra couple points too. But the thing that kind of comes to mind on something like this, that if a, you've got a seller who's not wanting to pay a buyer's rep. You could almost see a comeback of open houses where the sellers, seller is hosting more open houses, which has been more, if correct me if I'm wrong, more of an activity for a buyer's agent to find potential buyers instead of the sellers. Correct.

Well, usually the open house is done by the sellers, you know, the seller's broker.

Yeah.

And it's a great way to. It's not, you know, a little bit inside baseball here. It's not really a great way to sell the house necessarily, but it's a great way to build potential buyer leads, you know, so you get a bunch of people to come through a weekend. Yeah, this isn't really what we're looking for. Oh, you don't have an agent. Well, I can help you, you know, or I have, here's a buyer's agent that's standing by right here in the house with me. They can start showing you around different houses. So it's a good marketing technique because you could sell it. But in most cases, or at least in my market, I know some markets are different where open houses are a great way of actually finding the, the buyer. But in my market it tends to be a great lead generation tool to get buyers. And if we sell it, you know, during an open house, great. That's icing on the cake. But it, but it helps us to demonstrate to the seller that we're doing something, you know, over and above to, to market their house to out there. So it's a win win all the way around to have an open house, I think.

Sure. Just getting the word out because it leads to word of mouth advertising. Want to sell a house market to the folks around them, you know, hey, got family or friends, you can move into the house and buy the house here, stuff like that.

Exactly, yeah.

And also to realtors that, that represent both sides, which I don't think is a good thing in most cases where the 1 realtors representing the buyer and sell it. I think, I think it's hard to be impartial when you're representing both sides. You can't really represent either effectively because you kind of, you know, and that's been normal for agents to often take a, a 4% commission because they're representing both sides. Right. In a lot of cases.

Well, in, in Georgia. I'll only speak to Georgia. I think this is varies on a state by state basis.

You.

Well, you actually can do dual agency, but the broker that I'm with, they. I'm prohibited from being a dual agent because of that conflict of interest. But I can represent a seller and if a buyer wants to come along and they don't have their own agent, I clearly disclose that I'm representing the seller. And you're a customer, you're not a client, you're a customer and vice versa. If I have a seller that you know is unrepresented, I bring a buyer that I'm representing. So I don't do dual agency. And I think most brokers that I know do not do that, at least in Georgia, but in other states they may allow it. But it's very tricky ground because you can accidentally break the law doing that because you're not supposed to disclose certain things and you're not supposed to do certain things and you're really conflicted in that situation. So here's where the, the disadvantages of not being a party, not being represented. Because if I have your house listed, Scott and I have buyers come and they say, well, we don't want to work with an agent. We, you know, we're not working with an agent. I'm like, okay, that's great that that plays into our hand. It's like, okay, this, this person thinks they know what they're doing and they're convinced they don't want representation. And I've had that conversation with them. Fine, you know, we'll out negotiate them big time. I'll out negotiate them on your behalf, you know, 90% of the time. And it puts them at a disadvantage because there are some things that they may tell me that I can tell you then because I'm not representing them, I can disclose that they may say something in, in the house while I'm showing it to them about their situation, their finances, their motivation, a problem that they have in their life. And you know, I'm, I'm really obligated to let you know that, hey, I've got the upper hand on the negotiating this scottish on your behalf. And I really do have that responsibility then because I have this knowledge to tell you. So it really puts the unrepresented party at a severe disadvantage and, and general public don't, don't realize that or don't know that. Now I will say just to shift gears a little bit, I know a lot of investors who don't work with agents. Sometimes they, you know, some of my investor friends will, will ask me to list a home or whatever. But my point is that there are a lot of investors that are more sophisticated in transacting and negotia estate deals than a lot of realtors I know. And so it's that part of the, the, the, the real estate community, the professional, sophisticated investors that really have the upper hand even when there's a sophisticated realtor on the, the other side, or I should say, especially when there's like a new Realtor that doesn't not very well trained. An investor that's non licensed can out negotiate a Realtor. Most Realtors, you know, hands down and most Realtors when they, when they learn a little bit about how investors work and they run into some slimy investors and some sleazy deal deal making going on there, they extrapolate that to like oh these investors all are like this or all this way. And anyway there's a lot of Realtors that have that viewpoint of the investment community and so there's kind of a little bit of animosity on certain levels among certain unsophisticated parties on both sides.

Non experienced parties maybe is a better way.

But that's very common because.

And that's the thing. It's like all the different seminars have gone to you. It's always been that there's that crowd of oh you don't need a realtor to buy a real estate. And that's, that's technically true. Yeah but you should because they're going to help you along that process. Making the offer properly setting in contingencies, knowing the value of the assets, you know all that stuff that the normal public doesn't always have access to or investors unless you're on the MLS you don't get can't pull accurate comps in a lot of cases. And then of course knowing the inspection process and how to be able to negotiate back. And it's also kind of that like you, you mentioned that somebody's showing seen a property. There's not that poker face. You know, you can report back oh this client who submitted really loved it. They went on and on how much they fell in love with the house. Don't give a concessions because I think we can get a higher price because they're so emotionally kind of already attached to the property versus having a realtor when you're like it. But don't go into showing emotion. We don't want to give away our cards, right?

Yep, yep, that's right. That's right. Another thing about the investors I you know that who are, who are experienced and they can and do transactions without Realtors. I think that's great. You know that they experience that to that level. But I like to tell them that you want to find you want to have invest one or more investor friendly Realtors on your side. It's just another part of your team and it doesn't mean because you have a good relationship with an investor friendly realtor that you have to always use that Realtor on every transaction you do. Maybe you know, if you take down 100 deals a year, maybe only do one or two with a realtor, but that, that's part of your deal flow or maybe you do 10 or 15 from that. A realtor feeds you because they're a source of deal flow for, for investors. So the investors, they shoot themselves in the foot if they're so anti, you know, anti realtor. So it's just, you know, a full blown business model as an investor includes a big team of professionals.

Amen to that. And it's also too looking at what the market is going on. In a very hot market, you know, you might not need an agent as much to show his houses because the inventory. So like we see here in Austin, Texas, things have been flying off the market for years. It's still one of the tougher markets out there when you've, you've got to make offers to get accepted. You've. And it's a hot market. Things are sell, you really need to, you probably act fast, hey, I'll save you 3% because they're not represent ourselves except my offer versus a slower market or a colder market. You really do need somebody to help handle that and help you identify the opportunity. So you're not overpaying or not under negotiating too as well.

Yeah, oh absolutely, absolutely. Those market shifts, I find that the general public isn't aware of them. They think they are because they were the headlines, you know. So like for example, the headlines had come out about this Realtor situation. If you just read headlines, I mean I, I love reading headlines for the last couple of years about real estate headlines, they're, they're totally inaccurate.

Yes.

They don't reflect reality at all. But the general public, they're scrolling on their phone and saying oh yeah, look at that headline. Zillow says this or this says that or. And they think they know and understand what's going on in the market but they don't have a clue and they're actually misinformed or they may believe something that's opposite of what's actually true. And so that's, that's where I think somebody going into a transaction as an owner occupant buying their home, it's really important that they do have representation and somebody professional looking, looking out for their best interest because they really don't know what they're doing. Even though they, they, they may not want to believe what I just said, but it, it is reality.

Well, a great example I think back during the Last couple years, one of the big notices I saw was foreclosures up 300% in such and such county. And when you go down into the article, it says, yeah, last month we had one foreclosure. This month we had three. You know what I mean?

That's it.

Like, it's all about that pay per click. It's all about the click, the ratio. See, it's. It is, I hate to say it is fake news. You got to read through it, understand, it's all relevant on the true underlying numbers. You know, that's, that's the biggest thing. Now, one thing that has also kind of popped up that I've seen out there, I'm sure other folks have, is do people, do agents need to be on the, you know, paying their fees and dues to be a part of the mls? I think that's one of the big things is, oh, if you, if you, if you had, if you didn't have to, would you be part. You pay your dues on to the MLS on that stuff. Can you kind of clear. Clarify that up a little bit?

Yeah, that's a good question. I may not be the, the expert. The expert answer on this, but I'll, I'll tell you my take on it. So I think that's part of the problem that the NAR has gotten themselves into. They. They've almost made it to be like a monopoly, you know, that they want to control the listings. And then everybody else wants a piece of the pie. Zillow, you know, they feed our data out. When I say our data, the Realtors data that we put in the MLS is then fed out to these other. The Internet, which is fair enough. It's, you know, but we lose control as a Realtor to our marketing. So we're paying fees. We're. We're agents, I say are paying for the MLS fees. That data then goes out there and we, we're not generating the leads from our, the own labor that we're. We've created. So it's kind of like a lot of distrust between parties between Realtors and companies like Zillow and, you know, Homes, Redfin and others like that, all those things. But, you know, it's just the way it is. So as far as the MLS is, as I understand it, most of them are controlled by the Realtors. So you have a national association in Georgia, we have the Georgia association of Realtors, and in the county that I live in, Cherokee County, Georgia, we have the Cherokee association of Realtors. So I'm Members of all three of those. And I have to be a member. Member of one. You have to be a member of all three. So I pay dues and I'm, I'm covered. I'm a member of all those organizations. And when we do a transaction, there's also another MLS system. There's two that we use in Atlanta and it's very confusing in Atlanta. So, you know, my do is cover the Georgia mls, but we also have something called the first mls, which is mostly for the Atlanta area. So there's overlap and I have to put a listing on both and I pay an extra fee on top of that to the, the first MLS when a property sells and they base that on the sales price. So yeah, we're, we're kind of nickeled and dime to death to get the data in the systems that then feed out so that the whole world can see what, what we have for sale. And it's, it's a good system as far as marketing goes. I mean, I think the MLS is the 900 or is it 800-900 pound gorilla on the block.

Well, but that's true. You're uploading information and then the, it feeds information to Redfin, Zillow, which they turn around and will sell those leads back to other agents for potential buyers or other things. So yeah, you're paying one, you're coming and going. You got to pay in a lot of cases.

Yeah, yeah. I think the Realtor, the NAR hasn't really done much of a favor to realtors that are out that grunt workers out there, boots on the ground making things happen, working with people and you know, getting, helping people to transact their largest transaction that they're ever going to make in their life. In most cases it's. And for some people, that's, that's. Well, really it's the best way of the. What's the right terminology? It's the way most Americans acquire wealth in the United States is through home ownership. And they're not business entrepreneurs making lots of money on the side. They're just making a living and then by paying their mortgage down, they're acquiring a lot of equity. And, and that, that's a side of the real estate, you know. You know. You know, to a very deep degree.

Sure. No, it's, it's such a good point there too. It's, it's a definitely. Usually the biggest investment that somebody's going to make is buying their first home. And then depending on what market they're in, the appreciation somewhere we look at our folks in California may, you know, may not do anything and they got a million dollars in equity growth on, on their, their home that they bought they've lived in for 10 or 15 years. Now one thing that comes to mind thinking about this, the potential increase of fees and I don't know how much of experience you are is dealing on the mortgage side of business or mortgage brokers but I start thinking about that cap of for you know, 4 is it 4% is the normal cap for fees for mortgage costs, you know, to acquire the house. As a mortgage broker we get, you know and that's why we, you don't see a lot of mortgages below $100,000 balance because you can't, you're basically breaking even at that point when you figure in appraisal costs and closing costs and title fees and then other things thrown in there. But the fha, the first time home buyer assistance where people are having to bring 3.5% down payment like you said earlier, if now you're bringing have to basically double that to six and a half percent. Three and a half for your down payment, another 3% for potential realtor commissions that it will cut. I won't say half. I will say to cut 75% of potential home buyers having to wait, you know.

Oh yeah, yeah, absolutely absolutely. I think the mortgage industry will, will adjust to this change and that buyers will you know be able to wrap the, the commission into the cost of the home and, and they need to figure out how they're going to do that. As I understand it, long before I got my license and it used to be that way. And maybe you know more about that Scott, because you know you buy notes and there may be some notes out there that, that. Well I, that was on the transaction side and wouldn't show up on the note necessarily but, but I think buyers used to be able to wrap up, wrap in a commission into the mortgage. But that went away at some point in history.

It did. Well it went away because of values and loan balances and amounts. And if you're buying a property that's got a ton of equity, you're buying the discount. Then you, it's east pretty easy to increase the loan amount. Let's say you're buying at 70% of value, true value. Well it's pretty easy to increase that loan amount to 75% if you need to roll in those fees. I mean the. I'll give you a funny story. My short term in the mobile home industry back in the day they used to be able to roll in credit card fees and other fees and finance up to 125% of the value.

Oh wow.

Yeah, I didn't know that that ended a few years back with everything happening in, in 2009. But that's also, you know, it makes me think are they going to bring back different loan products like more negative AMs where you're only paying partial payments to make it more affordable. You know what's been attractive recently has been with the increased interest rates instead of people asking for concessions is asking for that potential concession be put towards a buy down on their, on the mortgage balance. You know, so give me a five thousand dollar credit, give me five thousand dollar credit towards the, the buy down to make the interest rate cheaper.

Yeah, yeah, that, that totally makes sense. Scott, there's something else I wanted to mention. Comparing and contrasting how investors take down properties compared to a home buyer looking at a home to purchase. So investors, it's about math for us, right. We calculate what are the profits is worthwhile. But there's a human component to that and I think you deal with that a lot when you buy a note. But certainly on the agency side, on the Realtor side, when we're showing a home to a potential buyer, they're wrapped up emotionally into it. This is a place they call home. This is not, not an investment transaction to them. And a lot of the anti realtor community that is outspoken now we don't need realtors that get overpaid. They fail to understand that this is an emotional and I don't mean that in a bad way. I don't mean that people are distraught or anything but, but it's a, it's a very human touching experience to look at a property and say this is, do we want to call this property our home? Do we want to make this property our home? And that there's a huge human experience that goes with showing a family a home that they are going to purchase. And for example, just on the contrast on this I, you know the open door model where you can go and go view a home and there's cobwebs on the doorknob when you open it up and it's vacant and the, the, the smoke detector is beeping because it needs a new battery and there's a camera in there and it's creepy and it hasn't been cleaned in a while. That's scary for most people to go into a home like that. I'm not, I'm not afraid. I love those kind of homes. You know, I've been there but like I can't imagine the average home buyer having a good experience in going to those homes in the past. And I don't, you know, without a realtor, you going into those situations, it's scary, you know, but it's also I.

I always joke that, you know, realtors dealing with first time home buyers are often better counselors. You know, the having to hold the hands and the nervousness and the, you know, what he wants versus what she wants or what one party wants versus what the other spouse wants and having to deal with that emotional aspect and. Exactly right. Most home buyers can't see past the cobwebs, can't see past the color on the wall. Oh my God, that house is hidden. Well, let's a 20 gallon of paint from Lowe's or 40 gallon of paint to fix that. You know what I mean?

Yeah, yeah. Knock them off the cliff. Yeah, yeah. That's why buyer's agents really earn their, their, their commission, in my opinion.

Amen to that. There was something else that made me pop up. The thing that we've seen happen recently too, and I don't care what side you're on, we're not talking about who you're politic on is the increased amount. There was actually an article today, especially with, in Florida where Florida just passed squatters, some legislation to eliminate a lot of the squatters rights to inhabit a house. I mean when you've got illegal aliens coming across the border and doing tick tock videos like listen, hey, if there's an empty house, just go into it and they can't kick you out immediately. You know, that makes it a little nervous when you're dealing with those open houses where there's a lockbox and no realtor there.

That's, that's a great point. Yeah, you know, that's a great point. What are you running into? And we, we've had situations where we have gone into vacant houses where somebody is, is there and living in the attic or some crazy thing. Yeah. So that's real. And the, with the squatter situation, I think, you know, there are different laws state by state and Georgia is a little bit more strict, so a little bit more owner and landlord friendly.

Right.

And in, in Georgia that if we, if I was to encounter a situation like that, let's just say I went into a vacant house and somebody has moved in, the owner of that house can file for eviction. They can get them out. It's not going to be immediately. It may take 30 to 45 days to actually do that.

Right.

But it's not like California. If somebody could live there for years, I don't really understand how that works. But you know, it's, it's different state by state.

Well, and there's people, you know, New York is even worse. We got a buddy of ours who has a proper in Chicago who has a tenant who hasn't paid rent in four years, went to the court, got the eviction, went to meet the sheriffs. The eviction was canceled because the county doesn't have enough shares to enforce the evictions. So now he's got to wait another 60, 90 days for them to get around to potentially evicting somebody there. And that's six months of it. Now the house not being rented or in, you know, house not being sold because now it's got to be delayed. Now you gotta go back and re. Repair the property, re clean it and go that route too. It's just, it's, it's I, it makes. And I think the only people making money, as you said, performance is the attorneys.

Yeah, yeah, absolutely. I don't know how investors who invest in those types of states, if they get themselves into that situation, especially mom and pop investor, they can go bankrupt or, or foreclosed on the house because who, who can afford, you know, a mom and pop investor buys a house, a rental, it's for rent, and then the next thing I know, some squatter has moved in and they, they still have a mortgage to pay. If they got an investment loan and, and then no income for a couple of years. I, I can't, that's not sustainable.

No, it's not. It's, it's definitely not. And we've seen that happen on more than one occasion. Different areas out there. Now let's, let's kind of talk about where do we think the future is going. I know you don't have a crystal ball. If you did, you'd be at Vegas, you know what I mean, playing poker right now. Poker. Or at the, at the, the sports bookie for the, the final four games. But we talked about this a little bit earlier. Maybe where more realtors, if they do stress this out, there'll be more flat service fees or fees for me to go show you 20 properties in a weekend or other kind of listing or buying services popping up. I won't say like the Uber, hey, we'll drop in the Uber, we'll drive around, look at properties and deliver a few pizzas along the way kind of services.

Yeah, exactly. Yeah, I think, I think we're going to see more of that and more of it's going to be marketed openly. I mean, all these, all these things that we're going to see have always been available. There's nothing new that's going to come up, but the marketing will be new. I think there's going to be more brokers that will advertise discount brokerage fees. A lot of buyers, agents, it really is an individual thing, you know, how much is their time worth? Are they willing to go show a bunch of homes for very low compensation, you know, for them? And that's a business decision. Some people, some realtors may, may be able to discount themselves or offer discount services easier than some, some of the larger brokerages that have overhead and whatnot. But you kind of, you know, will get what you pay for. I think it'll settle out people, you know, people use a discount broker and maybe not have a good experience or have a good experience. If they do, they'll want to go with a discount broker the next time. But if they don't have a good experience, they're going to see, well, maybe next time I'll go with a, a larger company and, you know, have a better experience and know that I'm protected because, you know, a solo agent, there's so much to this business. There's so much. It's such a complicated, so many moving parts in a transaction that a solo agent truly working on their own really can't provide the level of services that, that a team can. A large brokerage with a team, a lot of checks and balances, looking over the paperwork, making sure everything's compliant. Other agents or more experienced brokers looking over the shoulder of what the agent is doing to make sure they're protecting the client. So I think in the long run it's going to, you know, the market will take care of that, you know, but, but nothing is going to be new necessarily, but it's going to be perceived as new because it's going to be more blatantly marketed.

Yeah. And it may just come down to a couple paragraphs on a buy or sell agreement to, you know, yeah, if I don't get paid by the buyer, you're going to pay me in one way or another like that. Yeah, maybe. Maybe it would be even be with buyer's agents not taking, taking not just less commission, but more flexible. You'll pay me, you know, if they only pay me a point, you agree to pay the rest of my commission over a 12 or 24 month period if you don't have the full down payment of some sort, you know, comes to mind.

You know, stretching, that's an interesting concept. I. Yeah, I don't know, we don't know if that would work or. Yeah, that's, that's great. That's interesting. Yeah, I'm gonna think about that one.

Right.

And the thing is too, on the payment plan.

There you go. Well, we're gonna payment, you know, pay down that you'd have an exercise PMI. You're gonna have the realtor buyer's commission for six to 12 months.

Yeah, your realtor payment. Yeah, I'm gonna, I'm gonna, I'm gonna talk that up and I'll, I'll let you know what I come up with.

There you go. Let's see what happens. But I think it's also, I think what you see is like you said, the smaller MOMPA agents of smaller teams, it gives maybe the larger teams a bigger advantage because they can bring somebody on in a flat salary just to be the gopher that represents the buyer's agents that's getting a flat fee, flat commission. They can drive all over maybe not providing a lot of expert service, but that's somebody who can provide, you know, hey, we're checking in, making sure you're qualified. It makes me think of like automated underwriting in the mortgage business, that if you go online, a lot of these mortgage companies, as you fill things out and you're providing things, it's automated to see what you're getting approved on. Maybe we'll see more of that on the, on the home selling side, who knows?

Oh, yeah. Yeah. I think a lot of this will be automated and can be better automated than it is. Absolutely. Hands down, what can't be automated is that personal relationship, meeting somebody at the home, opening the door, the buyer will not have this. You can't automate that process for a buyer. And every house is different. It's not like lawnmower, sorry, go, go to Lowe's, go to Home Depot, take a look at the different lawnmowers and go ahead and buy one. Buying a house is so much different than, than that process. So you can automate a lot more than what's being automated, but when it comes down to the human interaction, meeting somebody, looking them in the eye, shaking their hand, opening the front door and guiding them through the, through the problems that might be in the house or the good things or negotiating the process, that's a human. And, and if we, if we automate that, we Cease to be human really, if we automate our relationships and, and the, the, the fact that we are, you know, in, you know, connect. Connection with one another as a community or society, however you want to say. You can put it in religious terms or, but, but if you try to automate all that, we just cease to be human.

Exactly. Well, maybe it's another play for AI in world domination. You know, it's not. And I like what you said, the personal aspect of it. And it's different. Every house is different. Every, you know, we're not buying cookie cutter houses, all the same three bedroom, two bath, 15 square foot house. We're not doing that. And you've got to know the different things that are going on, the nuances, especially with all the different benefits, the buyer's programs, the incentives that people are, you know, especially builders are selling stuff. It's a, it's a whole different animal depending on where you're buying and what's going on in that market and that neighborhood and that block and you really need on a block by block basis. And that's one of the, the biggest advantages of having agents. They, they're paid to know that right now. Who knows what happens going forward, but we hope we don't lose that.

Yeah, yeah, absolutely.

Awesome. John, what is the best way for our listeners to reach out to you, to connect with. It'll follow what you're doing. I have to give John a big, big boost here because one of the great things, not only is a phenomenal individual, a great investor, great agent, but he's also very big on the health kick aspect of things and was able to reverse diabetes and cancer, if I'm correct. Right. With what you're dying, stuff like that. So we might need to have you on another time to talk about when I was diagnosed, where I was a year and a half ago with what I had, he was the first person I reached out to. It was his counsel and his advice and stuff like that that helped me get the diabetes kind of waved a little bit. So once again, thank you for that, John.

Yeah, that's awesome, Scott. Thank you for mentioning that. I remember that phone conversation that we had a while back and that. That's awesome. So probably the easiest way, there are two, two websites. I'll mention you, you know, that's kind of maybe a. No, no websites, but mention them.

Go ahead. We'll throw them both in there for you.

Okay. So Alpha Dog Capital.com is my investor investment company and that's a great place to go if you want to connect with me on the investment side of real estate. My name is John Marion. That's M A R I O N J O H N M A r I o n dot com. If you go to johnmarion.com you can, you can find me there. That's my Realtor website, my main, one of my realtor websites, the main entry point. And then I added a tab for health on there because I have some personal info on there. So if Everybody goes to johnmarin.com and looks for that health link, you know, they can see what we were just talking about and read my story and, and recently did a podcast with a, with a medical doctor that wanted me to tell me his, tell him my story, his audience my story. So anyway, we can connect. On real estate, I'm always available to answer any real estate related question. But on the health and nutrition side, it's just my life has changed. It was impacted by learning about nutrition to overcome cancer and reverse type 2 diabetes. And I feel great and don't take any medication or drugs and everything's good.

Awesome. I'm so glad of that. Well, John, thank you so much for coming on here and providing some insight and wealth of knowledge, not only on the wealth side but also on the health side as well. So go out guys, that'll wrap it up for this episode. Go out and follow John like you said. Johnmarning.com or alphadogcapital.com Two ways to connect with them, whether you're looking to buy or sell or to invest there in the Georgia market. So go out, take some action, buddy, and we'll see you at the time.

All right. Thank you, Scott.

Thanks, John.