Real Estate Talk Podcast with Jesus Castanon | RETalkPodcast
The Ultimate Real Estate Unveiling! Raw, Real & Revealing insights from industry experts
Dive headfirst into real estate's most electrifying depths with industry legends - Jesus Castanon, Josh Cadillac, and Richard L. Barbara. Why legends? With billion-dollar deals, groundbreaking innovations, and wisdom that's transformed the landscape, they've not just witnessed the game; they've been the game-changers. And if that's not enough, they're joined by a parade of industry-expert guests, spilling secrets and dishing advice that you won't hear anywhere else.
Expect RAW, REAL strategies that shook the market, REVEALING insights, and timely takes on today's market, coupled with actionable advice.
This isn't your typical real estate chitchat. This is RETalkPodcast - where the titans and top minds of the industry unite. Dive in, and prepare to have your real estate perceptions rocked!
Real Estate Talk Podcast with Jesus Castanon | RETalkPodcast
Unlocking Successful Real Estate Appraisal Techniques and Valuation Secrets | RETalkPodcast | Episode 15
Ready to unlock the secrets of successful real estate appraisal techniques and valuation tools? We promise this episode won't disappoint, as we go behind-the-scenes with industry veterans George, Josh Cadillac, and Jay Perez. Hear firsthand accounts of their experiences on the ground, from surviving the 2008 crash to adapting to industry evolution and changes.
Our journey navigates the intricate webs of real estate valuation, as we discuss how George, with over two decades of appraisal experience, uses MLS, public records, and other tools to make informed decisions. We're also examining the complexities of appraising homes with unique features like solar panels and how non-standard features can impact valuation. Additionally, we're taking a deep dive into the challenges of appraising for sale by owner properties and the use of marketing tools such as Zillow.
We wrap up by sharing the golden rule: understand the difference between a home's appraised and potential sale value. With a lively discussion on the importance of considering a property's features, condition, and public records, this episode is a treasure trove of useful information for anyone in the real estate industry. So, tune in, learn, and let the knowledge of these experts guide you to success in your real estate journey.
Real Estate Talk Podcast with Jesus Castanon - @retalkpodcast: The Ultimate Real Estate Unveiling! Raw, Real & Revealing insights from industry experts
Dive headfirst into real estate's most electrifying depths with industry legends - Jesus Castanon, Josh Cadillac, and Richard L. Barbara. Why legends? With billion-dollar deals, groundbreaking innovations, and wisdom that's transformed the landscape, they've not just witnessed the game; they've been the game-changers. And if that's not enough, they're joined by a parade of industry-expert guests, spilling secrets and dishing advice that you won't hear anywhere else.
Expect RAW, REAL strategies that shook the market, REVEALING insights, and timely takes on today's market, coupled with actionable advice.
This isn't your typical real estate chitchat. This is RETalkPodcast - where the titans and top minds of the industry unite. Dive in, and prepare to have your real estate perceptions rocked!
Meet The Legends:
Jesus Castanon: Visionary CEO of Real Estate EMPIRE Group, transforming property transactions into success stories.
Josh Cadillac: Renowned real estate coach, national speaker, and author; revolutionizing the art of 'closing for life.'
Richard L. Barbara, Esq.: Florida's legal luminary, pioneering change and setting the gold standard in real estate advocacy.
All right, guys, to all our millions of listeners. The reason why we have not had a podcast for a while is because we were actually getting some new equipment. We were getting prepared, even got a new laptop. So we were preparing to give you phenomenal service moving forward. All right, so we should be pumping them out. As a matter of fact, we're pumping out two today. We're pumping out a serious one, but it kind of bothers me that much in my face. You needed that close, yeah, all right, I'll get used to it, I guess. So, yeah, well, we have a serious appraisal one and then we have a complete nonsense one at four o'clock today. So you'll guys will realize who it is and what it is. But so this particular one here also. First and foremost, I got Mr Josh Cadillac. Everybody knows Josh Cadillac. Jay's been with us. Jay Perez, dayland Difference has been with us for a couple of times already, I think.
Speaker 1:So this is the hardest I've worked to get a podcast set up. This is by far the hardest man. We've had multiple cancellations, reschedulings. I've offered sexual favors to different appraisers to be able to come online with us and help us out and just to get an appraiser's feedback on this. But Jay finally got one. I won't tell you if I had to perform the sexual favor or not, but he will be on. Jay's on. The favor wasn't for Jay, it was for the appraiser, but Jay's on also. Jay, a funny story about us. You're actually perfect for this podcast because the way we met was actually through an appraisal process or a comparable process.
Speaker 1:The day I fell in love with Jay. Jay and I have been doing business for five years now, but the first day that I was like, wow, look at this man, I fell in love with his brain and his appraisal prowess was. I was with one of my realtors. She asked me hey, suze, what do you think? I actually had the listing? What do you think? Which lender should I pick? And I go, okay, well, who do you got? And then I had Jay Perry's there. I'm like, well, let me call this guy. I called Jay and what impressed me was that he had the numbers completely set up. He knew exactly what the property was going to appraise for. He knew that it was going to come a little bit short, but then he was going to give some lender credits and he just had the numbers. What really, really impressed me like all jokes aside was I had never. First of all, I called and he picked up, which was great, which is unheard of almost in the mortgage business, and then he just had. He had done the comparables, he had run it through the appraisal, he knew exactly what number this property was going to come in at Him and I have taught a bunch of appraisal classes together, and not appraisal classes but comparable classes and everything like that.
Speaker 1:So it's kind of cool because we have a different style of coming to a value. Right, I've learned a lot of things from him too. Kind of like has a different style. And that's really what appraising for all the millions of brand new listeners that we have, we could have 10 people do an appraisal or 10 people do a comparable. Everybody has a different number and everybody's right because it's an opinion of value. So we're going to go ahead and give us, give our styles of reaching that number today. But you know, hey, it's just a style. Like you know, what programs do we have out there to get? We got RPR, we got just a regular old MLS, we got public record, we got IMAP. I mean, is there anything else that's used out there?
Speaker 2:There's lots of valuation tools that people use. I mean for me, tried and true. What do you use? The MLS.
Speaker 1:Straight up MLS.
Speaker 2:Because normally what I'm doing. If I was doing a distressed asset, maybe I would do something different. But for just a straight up market valuation of what a property and the fair and open market is going to go for, or the place to go is the fair and open market. This is where it's recorded. So I don't want the sale that Uncle Louis did to his. I actually know my uncle named Uncle Louis brother.
Speaker 1:Yeah, so I don't want to know what he has coronavirus.
Speaker 2:I don't want to know what Uncle Louis did with his nephew to take and get the property to him without any realtors. That's not a real transaction to me, so I want to weed those out, and the MLS does that for me.
Speaker 1:Yeah, look. And the reason why I was so excited and was willing to go beyond and beyond the call of duty to get this podcast done is because I know, listen, we've done what 15 podcasts so far. What number is this? 14, 15, whatever. I know what podcast is All right, I know which one's shit and I know which one's good and I know which one's going to be good. This one's going to be good because we have right here in this. We have 40 and we had maybe 50 years of appraisal, comparable experience. And now one thing, what I would say qualifies me to be able to be in this conversation would be 21 years of doing comparables for myself.
Speaker 1:But if anybody was around in 2008, crash. So imagine, man, I worked my butt off. Everything was great, business was great. All of a sudden, business just goes to crap and the only way there was no such thing as closings anymore, just business deal, stop closing.
Speaker 1:The only way you could really start making enough money to even support your life, your lifestyle and if you wanted to stay in real estate, was doing what they call BPO's, which is broker price opinions. So these banks would pay you 30 bucks, 30 bucks, 40 bucks, you know so $40 to do a broker price opinion. That took you going out, taking a picture of the property, filling out a form. So the banks would order three broker price opinions. So when they would put a property on the market they would get three brokers like myself and they would say, all right, give me three broker price opinions, right? So for two years of my life I was eating and living and keeping my company afloat through BPO's 30 bucks a pop. I had to do thousands of them, tens of thousands in the in those years that I did.
Speaker 1:So you know what I was explaining to somebody yesterday, what you realize in doing and once you really reach enlightenment of, you know, evaluations of properties, you realize you don't know shit. You realize that it's you know. You know that you really don't know. You know that at the end of the day you could come up with a number, but at the end of the day that appears to come up with another one that's drastically different, because he completely sees it completely different than you do. Sure you know what I mean. So, jay, when you, what do you use? You use the MLS, rpr, imap. How do you come to a?
Speaker 3:value. I usually start off with IMAP because it's kind of my shortcut and then I'll pull my comps from there, and then what I do is I cross reference them to the MLS why?
Speaker 3:do you start an IMAP though? So because a lot of times the MLS public record, public record and then that you know you'll find the Louis, you know transactions there. We're trying, but on the MLS sometimes the filter won't update the comp. So a lot of times there's a pending comp that is the magic comp for me, that's closed, but when I go to the MLS it's still showing up as pending. So I usually like to go off of IMAP first, because it'll pull public records and then I'll work back into the MLS. A lot of times I'll pull stuff on the MLS really show up on IMAP. So I usually try to cross reference one of them. If I'm quick I'll just stay on IMAP and IMAP usually gives you a little logo with the realtor sign letting you know those are listing on it. You know that verifies that it was an actual IMLS transaction.
Speaker 1:So, just to make sure, the reason why he uses IMAP, just so the people that are out there that are brand new, because you know this podcast is kind of for those brand new people too you know it's it's, and while the MLS only pulls properties that were listed on the MLS, imap will pull a property that was never, it was a sell by owner or it was anything that was sold not on the MLS. Is there a lot of those? Probably not, but, like Jay says, it might be the one one comp that you need.
Speaker 2:The other piece that he said is this we know that with the MLS it is kind of a crowd sourced website, if you will, by agents, and agents aren't always the most diligent at changing the status of their listings. I think that's what I got from what Jay said, and so it's closed. It's recorded, but it's still showing as a pending sale on the MLS, so it's not appearing in my closed comps and, at the end of the day, it might be closed right.
Speaker 2:Absolutely, and it might be closed, and so he wants to get that information as quickly as possible. Now the MLS theoretically is capable of giving that information more quickly than the IMAP is, but that would require the agent to actually do their job and as soon as it closes, to close it, as opposed to waiting for it to be recorded and coming back.
Speaker 1:Yeah, yeah, so you. So you go on IMAP and then, and then you go on, and then you go on on the MLS and you do what you do a radius search, or or you do a subdivision search, or what do you do?
Speaker 3:Usually I do radius, so I kind of work off of a few rules. I would say to to you know, try to stay within a mile within a certain time frame, depending on the area. But yeah, I would say I just kind of stick to whatever I run. You know, I think IMAP is pretty good at giving you your, your one mile, three months, six months, and you know I'll get an idea of what I'm looking for and how much action. And then from there I'll go to the MLS and then whatever I decided I found the IMAP and then plug that information into the MLS and then, what do you do?
Speaker 1:You do a 0.25 mile radius. What do you do? 0.25?
Speaker 3:I'll start off a half or a mile.
Speaker 1:You know, I start, I start 0.25. 0.25. I go 0.25 and I get. If I get enough comps at 0.25, I don't go. And the good thing is, by the way, you want to text the appraiser. Gentlemen, I already did.
Speaker 3:I already told them we're on, we're active and then we'll go. I'll let them know when we're starting, okay cool Now.
Speaker 2:quarter mile is good because it gives you the hopefully the homes that are most labor, that's an even Absolutely.
Speaker 2:It's right there. But you have again, you have to just obviously watch to make sure where the addresses are, that you're not across the street in the much nicer, much worse subdivision. And so sometimes I have to go a little bit bigger because the subdivision maybe I'm on the edge of the subdivision Right, but as long as I have the number of comps, as long as I can get four or five decent comps, yeah, on the closed side, because I don't care about the active side so much. The closed side is where the business is. That's what people have actually agreed to pay.
Speaker 1:And that's the stuff that I want to ask the appraiser, because, okay, so we do all of that Right. So one question is definitely that I want to ask him is all right, so subdivisions, right? Like if we're in an area where there's an actual community with a guard gate and amenities and everything like that, of course you got to stay there. But if you're in a regular neighborhood, the subdivision even matter. You know what I mean. Do you even take it into play? And you know how many days back do we go? You know, those are the things you know. Obviously, I've been always doing 90 days. I go. Point 25, right, how many, how many comparable do we actually need? Right? So you know land, how do they handle land?
Speaker 2:You know, my question would be more so like, because we, when I was making adjustments, I did a kind of VPO as well. What kind of adjustment do you make from something built in 1958 versus built in 1978? Is there even one anymore? Yeah, I mean, does it matter?
Speaker 1:Well, and here's another thing. So when I first started aside from there being green letters, you know, and black screens, when I first started doing comparables that's how fucking old I am already right Like like, literally, it was like that DOS green letters. That's the first comparables I did. That's the way I did them, which is fucking scary, by the way. All right, let me not get depressed on that. But what we would do is areas, right. It wouldn't be area section, area section, area, section, subdivision. You know that's the way you would do the comparable, right. So you know enough that all of a sudden I saw that we got away from that. So has George been doing appraisals for a long time?
Speaker 3:Actually, I got George here on the line. He's on speakerphone, he's hearing you guys, just fine.
Speaker 1:Oh no, but we could call him on our system though, right, so it doesn't sound like shit. Yeah, okay, let's call them.
Speaker 3:The text is number Jake, they're gonna call you on the system, so he's hearing you. In the meantime, hold on. Oh no, so yeah, so he's been doing appraisal. So George is known as the guy with the most licenses I was actually joking with him earlier today Not more than the guys with the most appraisal licenses we know.
Speaker 1:Okay, yeah so I've been doing it for quite a while. All right, let's get a. What's his number, Jay? Well, we can't say it on the podcast.
Speaker 3:All right, I mean we should I'm gonna send it down. I mean unless he wants to get a bunch of people calling him for appraisal.
Speaker 1:Yeah, we should do that for canceling three fucking three publicity now.
Speaker 2:They're gonna call him to find out what kind of sexual favors you want.
Speaker 1:We should do that. We should do that. So we got everybody cranked on.
Speaker 3:Yeah, it's funny.
Speaker 1:All right, so I'm George. All right, so the top number or the bottom number?
Speaker 3:the 76 number. Okay, we gave a hint. We gave a hint, he's a 76 guy, yeah.
Speaker 1:You can just try all the 76 numbers and you'll get them.
Speaker 3:Yeah. So one thing I wanted, I wanted to throw out a 20 because on the IMAP, the IMAP also has a little map on top which we guys were talking about, the point two, five, and that also why I kind of jump in, because I could look at the map, look at the word where the cops are, and then kind of go from there if I gotta go out or stay there. So that also helps right.
Speaker 1:So I'm wondering if from you know, why did it go from areas to to zip? Goes you there? All right, then we got a minute. So, yeah, how did it go from areas to, like that radius was, was the, was the advent of matrix? Basically, what made it go? From you know, cuz I remember, I remember for it. I remember going on my from my green letter screen to a Physical map that was hanging on the wall. A physical map that was hanging on the wall, yep, right, and then I would go and go see what area and see what section it is, and then I would usually pick the four Different sections around, so I wouldn't just pick that one. You know that type of stuff is he on on. Yeah, george, you there.
Speaker 4:Yeah, I'm here.
Speaker 1:There he is All right, bro. Finally we got this guy, all right.
Speaker 4:Thank you guys for having me.
Speaker 1:But, yeah, yeah, I won't tell everybody what sexual favors I had to do to get you on, but, but, but, whatever you know, let's just leave it at that. Let their minds wonder.
Speaker 4:Okay, good, it's been a footer of all right.
Speaker 1:So all right, man. So here's. Here's, I guess, the first question. The first question I want to ask, right, um, what?
Speaker 1:I remember using areas and sections when I did my comparables right. So I know that you guys probably use something different, or, or, you know, I kind of don't know. You know so what? I went from areas and sections and all of a sudden we started using Radius. So that way we usually we just talked about it right now we all go and we put the address of the property and we do a point five mile radius or point two five mile radius. You know, we kind of pull those comps. So how is it that you guys do it? You know what, what? Because that's really all that matters at the end of the day. We could go ahead and guess all we want.
Speaker 1:We talked about Jay using IMAP and then and then go switching over to the MLS. I'm a straight up MLS guy myself. I think Cadillac is too. You know. I know some people that using RPR is RPR, because I, but I also know that RPR. Sometimes you just put the address, you press a button and all of a sudden the value comes out. Do you even go on that thing. You know what I mean. So. So yeah, tell us a little bit about your first of all, how long you've been doing this, who you are and and from what I understand you you're a commercial appraisal. You're been residential for a very, very long time, so give a little bit about your history in the business first, please.
Speaker 4:Thank you. Yeah, thanks again for having me on. I've been in the business for about 20 years. I started in the business when I was in college. I do residential and commercial appraisals, all sorts of clients from mortgage brokers to banks, to attorneys, insurance companies. I've also testified as an expert witness in legal cases Cool, and you know we're just uh where I'm happy to be on and happy to To chat with you guys.
Speaker 1:Cool man. Thank you, man, thanks for coming out. So yeah, what do you use? So you go under. What's the first thing you do? You go to public record to see the the square foot. That's another thing we mentioned. I always go on the public records and uh and search the property right for the square footage. So is that the way you start to?
Speaker 4:Listen, this is, this is a great. This is a great question, because a lot of times, as an appraiser, you'll get to the property and the realtors. I can't have all these calls for you and you're like, okay, uh, but then you know when, when you really kind of get to the bottom of it, they're not really comparing apples to apples, right? Uh, so, for starters, uh, whatever, you Want to get a value of a home, you want to, you want to define a market area, right? So you were referencing on the ls 250 mile one. You know, one mile, that's really. That's really something banks have have implemented, um to to keep comps with a one mile radius if possible, um one mile.
Speaker 1:That far, that far. So you're telling me that I should do comparables that far a mile, or do I have to start Smaller and if I don't have enough I go up to a mile?
Speaker 4:Well, I mean, obviously, the closer you can find the comps, the better, right. But a lot of times you don't kind of situations where A home's been completely rehab, the guys spent three, four hundred, 3400 thousand rehabbing it, or it's on a lake, or you know, there's there's, there's reasons to it and the search criteria depending on what characteristics the property has, right. So you want to make sure you're comparing apples, that, um. So, to answer your question about radius, or, or one mile, half mile, you really want to find a market area, right, I guess. Say, for instance, you have a property that's in coral gables, right, and it's, uh, south of us one. You want to make sure that the comps that you're looking for are still in coral gables, but it doesn't cross into the side of us one, you know I mean. So you know it's just. It's just kind of defining what a buyer would you know where, where their limits would be For that buyer trying to identify a home in that specific part, right?
Speaker 1:So we have millions of listeners and some of them are not here in Miami. So they explain that we have to know the actual area. So your knowledge of the area is actually important. You have to know that if on that other side of the street, even though it's just the other side of the street, it's a whole, completely different world. You want, you need to know that correct and that's why an appraisal that knows the area is important.
Speaker 4:It's identified the other side of the tracks basically, absolutely, absolutely critical. Uh, there's been talks about avms replacing the appraisal industry for years and years. In my opinion, it can never happen. Uh, there's, there can never be a machine that that can come in and and and give you the expertise of someone who has, you know, a tremendous amount of experience and knows. You know what the limitations are, you know where the boundaries have to be for each specific sub market.
Speaker 1:Yeah, also talking about the machines doing stuff. We got to talk about the, the, the dreaded, famous Zestimate before. Before you hang up, before you hang up, I want to get, I want to get your input on the fucking zestimate bro. You know, I just I just want to know that. So Go ahead.
Speaker 4:Yeah, to cut you off. Sorry, to cut you off real quick. I was speaking to a mortgage group. I definitely won't say his name, but uh, he was like. He called me up. He's like yeah, I got your appraisal. I mean.
Speaker 4:I don't know it was. It was it was, it was higher than the zestimate. You know, and typically my experience is the zestimate is the bottom of the market. Oh, I mean, I, I chuckle that. I was like man, I, I, I see the. I see it different.
Speaker 4:You know, a lot of times those estimates are inflated and they're kind of, uh, you know, they're there numbers that are typically towards the top of the market. So I kind of I kind of laughed at that. But you know, those estimates is just, it's basically a machine, right, and it's gonna, it's gonna, it's gonna grab the nearest comparables. Let's say, if you're in a, in a in a in a, some in a sub market where there's some Water-free properties that lead to the ocean and then there's dry lots, right, it's just gonna grab Everything from that market. So you're not really, you're not really doing doing it justice. If, if you're comparing it to properties that are on the water and have access to To the ocean Behind their holes, versus a dry lot, you know so, then that becomes a huge issue in those, in those estimates.
Speaker 1:Yeah, yeah, so just just to start again. So I'm gonna, I'm gonna log on, so this is okay, let's, I'm gonna take you through my process, all right, and I get, I will add some of j's process, the catalyzed process, and tell me if we're going wrong in any kind of way. All right, so I'm gonna log on and I'm gonna go to the, I'm gonna go to the uh, the county website Public record and I'm gonna see what the square footage is registered on that property. Okay, I want to know what the actual public record says on that property. Okay, um, because what I want to use is living area. Okay, that's so far, so good.
Speaker 4:You're. You're on the money.
Speaker 1:You're on the money, okay. So living area, then I'm gonna go to the mls, which is usually exaggerated by the realtor and they usually put the living area Incorrect for whatever reason. Right, then they start putting all kinds of shit and the description and everything so. So we're where we, we make sure that we're comparing living area to living area, and then what I, what I do is I start with a 0.25 Mile radius. I want the immediate neighbor, okay, first. So if I have, if I have Three comparables there, I'm good. Okay, I close up shop and I leave, or or do we need more?
Speaker 4:I mean, it depends, you know, when did those three comparables trade are 90 days, sorry, sorry, sorry. 90 days, no, no, 90 days.
Speaker 1:They're they are. They are similar because they're they're they're immediate neighbors, similar subdivision, similar construction. If I find three, what I'm trying to get at is how many do I need To close up shop, close my laptop and go? All right, I'm done. I'm sorry You're breaking up.
Speaker 4:Yeah, so yeah, just wondering. So, how many do I need in order to close my?
Speaker 1:laptop and say all right, I'm done. You know, I got, I got enough comparables that are similar and, and you know, is it three, is it four? 90, as long as it's?
Speaker 4:90 days, 0.25 mile radius, 90 day closings Well, I mean Every every property is different, but I mean, if you are, you're able to find, you know, three columns within 90 days, within 0.25 a mile, and they're all similar bedroom, bath, counter, similar size. I mean I don't think there's much more to talk about. Yeah, when you say similar size.
Speaker 1:When you say similar size, we're looking at what a 20 percent uh higher and lower as far as square footage.
Speaker 4:Ideally, ideally, want to stay in that range, um so most similar the better.
Speaker 1:So a thousand, thousand thousand square foot property where we could look up. We could go as high as 1200 or as low as 800 in square footage.
Speaker 4:Correct and and keep in mind. The thing here is that it's not like there's going to be some time so you're going to have to depart from those guidelines, but as as a as a basis yes, that's, that's a good basis to stick by.
Speaker 1:Okay, so same building, same okay, same footprint. That's another thing I learned from j. He pulls out, he pulls out the footprint of the property in the um, in the public record. So he right, you, you know the aerial view. So maybe the property is like an l shape or something like that. Okay, and, and you can look at the aerial photograph and you can see, well, it's not an l shape anymore. We're in high aliyah. I shouldn't pick on high aliyah, but I will because it's fun.
Speaker 3:Well, you want to pull the building To see if there's additional square footage, if there's an add-on when the you know, an unpermitted addition or something like that that might affect the square footage. So usually I'll go ahead and pull up the the building and check that out as well and see, you know, can start getting some insight on possibly if there's square footage that doesn't show up on public records but it's there. That might give us a chance to to come back a little larger than what we're looking at on public records.
Speaker 1:Right. But the aerial view of the property sometimes you know, not highly, I guess highly and it would never do stuff, stuff like this, right, but um, there's certain areas, certain areas that you see and the, and it's an, it's an l shaped, you know, and as far as the what's registered in the public record, you can see that the property is l shaped. And then you look at the aerial photograph and it's an s Right, and you get there and it's three floors right.
Speaker 1:That there's areas, not high aliyah, that that have that problem. It's very common there. So you know what? What do you do there? You just get there and you're just appraising. What you know is is uh, is is registered or or uh, or. What do you do that?
Speaker 4:Well, it all depends Uh. You know, typically, when you're working with uh knowledgeable Brokers such as j Perez from prmg, he kind of gives you the heads up. He's like, hey, you know, this property's bigger than what's affecting on public records. You know, uh, then when you get there, you kind of have to inspect the property and see if it was done in a similar, similar workman like manner as the rest of the home and then you can make the determination if it's either going to be living area or not. Living area. You know, but for the most part, uh, typically for the, for the most part, it is considered to be living area and you can consider living uh non permitted Areas to be considered living area.
Speaker 1:Okay, so the the whole garage thing, is it, uh, is it a urban myth that, as long as it it's, it's? It's the step, a step down In the garage addition that you're not allowed to count it. Is that an urban myth or is that real?
Speaker 4:I mean, uh, you know that used to be the case, Um, but I think fanny may has kind of expanded from that and said you know, if it's typical for the market, you can find sales.
Speaker 1:Typical for the market nice.
Speaker 4:If it's typical for the market and you can find sales or similar garage conversions that you know the the buyer for that sale has has has given value towards that uh, which is very, very common down here in south florida uh, especially high aliyah and westchester Um, you know, a converter garages to be considered as part of the living area.
Speaker 2:So I would actually say it's atypical to see one where it's not converted.
Speaker 1:Yeah right. There is areas that you're a hundred You're. You're a hundred percent right. It's. For whatever reason, culturally down here we don't have use for garages. It's. You use it as a you know it's. It's not common to drive your car into the garage here. Do I know anybody who drives their car into the garage? I?
Speaker 3:don't know, I don't know a guy with a nice car. Maybe you know a nice sports car, you know classic car or something, but no, yeah, yeah.
Speaker 4:I just I just, I just left the house in weston where the guy had two, two car garages, two two car garages Two. It was a basically four car garage, but they were like separate right and he had an identical Porsche cayenne parked in each one.
Speaker 1:Oh, wow, okay, there you go, that guy.
Speaker 2:Well, they all the same color.
Speaker 4:They're both the same with that color, which I find I found was it a miami dolphin.
Speaker 3:Is he a miami dolphin or something like that? He was. A lot of the dolphins were not on weston no, okay.
Speaker 1:Okay, so two, two questions before I forget. So, um, two houses right across the street from each other, same style, same year, same builder, the whole situation right, same square foot is very important, but one of them is a four bedroom and one of them is a five bedroom. Okay, does it? Do you? You give it more value because of the extra bedroom, knowing that you know very well that they just put sheet rock and they converted, you know one, they put to another door and all of a sudden it's, it's another extra bedroom. Right, how do you handle that? Because that then you see, oh, this has an extra bedroom, you know. So what do you do there? Is it? Do you stay with square footage, or or what?
Speaker 4:I mean, in my opinion, they're both the same model and it's just a matter of putting up sheet, rock them, Absolutely that it's. There's no additional value.
Speaker 1:You don't give it additional value, okay.
Speaker 4:I do that. However, in a market where it's, like the property slightly bigger, kind of like lower income market, where it's like on the cusp between a two and a three bedroom, then there I think there's more of a value. But if they're both identical properties and it's just a matter of putting up some drywall, I mean, that can be done in the other property quite easily, so there's no additional value there.
Speaker 1:Right, and in that other case that you just brought up, how do you put a value on same neighborhood, similar properties? One has a same square footage, almost the same layout, the same footprint of the property, but one has an extra bedroom. How do you make the adjustments for those extra bedrooms? Because that's not as tricky as that.
Speaker 4:Now's the time when you guys got to reach for your coffee or red bull, so I don't like bore you to death.
Speaker 1:No, no, no, I'll go ahead. This was fun to me, for whatever weird reason.
Speaker 4:So in that circumstance, what an appraiser should do is you have to do what's called a match pairs analysis, which is comparing similar three bedroom like, let's say, similar two bedroom homes versus three bedroom homes and determining what the difference the market is paying for the two versus the three. It's a process that is difficult to obtain at times because you don't have the data. How many times do you have sales from each product that have occurred at similar times to determine this difference? So sometimes you just have to go based off your experience. But from an appraisal standpoint, the correct way of doing it is through the match pairs technique.
Speaker 1:Right, so find the unit, find the property and then subtract. Basically find the extra bedroom and what it costs and then find the one that didn't have it and then kind of subtract them. That's how you put the actual value of a number, a sticker number, on that bedroom, I guess, correct?
Speaker 4:Correct Considering all items. All other items in the properties are the same, or you have data to adjust for the other factors that are different, like if you have data to subtract a one car versus two car garage, a lake view versus non-lake view, then that's really how you do a match pairs analysis.
Speaker 1:Right, interesting. You know what? What I've noticed in. Here's another question, and if you guys have questions, I mean I have a bunch coming up my head, so go ahead and ask. So what I notice is it's a lot. It's more common in luxury to use the adjusted square foot versus the living area.
Speaker 4:How do you mean?
Speaker 1:Well, I've seen that in valuing luxury properties, since they have, like you know, I've had cases where they've had, like a really nice balcony, you know, I mean there's been 1,000, 1,500 square feet of balcony. I had one, for example, on the Gables that it was just a weird irregular lot house and everything and it had, without exaggeration, it probably had about 1,000 square feet of balcony. You know, it was an apartment basically of balcony. So you know, then how do you get it? And then it had a courtyard, you know type of stuff, and so how do you? Okay, so let me ask the question differently Is there a point where you start valuing what would normally be considered adjusted square footage as living area, or where does that line draw as a courtyard, as a balcony? You know what? Is there a line? Or? You know, Jay, I can't hear you for whatever reason.
Speaker 4:On any appraisal you're really supposed to take all factors into consideration, right? But on the appraisal, the adjustment grid, there's going to be a section for gross living area. Now if you have to do a separate line item adjustment for covered paddials or balconies or garages, summer kitchens, you know that's just a separate line item. It doesn't mean in the lower end markets they're not considered to have value, it's just they're just not as common, you know. So in the higher end markets you'll still put what's the gross living area as part of under AC and then give it value for the other things on separate line items on the grid.
Speaker 2:Okay, so I had one, which is the question I talked to you about earlier, the idea that let's say, you had two comps. You had a house that was built in 1976. And you have a comp that's similar to square footage, similar bedroom, bathroom count, built in 1958. What kind of an adjustment do you do for those older homes, or does it kind of just sort of fade away in the wash as they get older and older?
Speaker 4:I mean that goes back to the old snooze fest of the match pairs. That's really how you're supposed to determine the adjustment. Like I said, it's very difficult to get that data. You know, in my opinion there's not that large of a difference between 50s and 70s. But you know, there does come a point where you know there's a home that's built in 1950s and you know, like I bought it for, let's say, 500,000 and he pumps like 300 grand into renovating it and he's like I only left the shell and I read that everything I should be new construction. Well, not necessarily, but you know you do why, though?
Speaker 1:why not? That was my next question, actually. So why not? Why not Like if you just left the shell, it's a whole brand new home? Why not?
Speaker 4:Right, everything's brand new. All the cosmetic upgrades are brand new and definitely you want to give them.
Speaker 1:We lost you there, George.
Speaker 3:Oh man, he's getting good insight too.
Speaker 1:No, dude, I'm having fun. It's good. What's up?
Speaker 3:What's the weight right, or what's the favor? Yeah, listen, whatever you have to do with, it.
Speaker 1:Whatever I had to do was worth it, you know. George is great man, he really knows the stuff. No, he does, he does. It was worth it.
Speaker 3:It was worth the 97 cancellations in the extra and then the buildup in all that and the buildup.
Speaker 1:Yeah, so, yeah. So what I'm gathering so far while we get them back, we're okay with that. We're okay with a 2.5. We're okay with a 0.5 mile radius? Okay, we're okay with that. We're okay with using the MLS. You know, I think that the reason why Jay uses the IMAP is just so we don't miss a particular comp.
Speaker 2:The point that I look at it is we're trying to find the ones that are just the most alike, and so, as soon as we go from 0.25 to 0.5, these homes that are 0.5 are less like the home than the 2.5 ones, right, but they may be more like it in other ways that cancel out the fact that we're going a little further away. You know what? This one that's 0.4, has? The exact same square footage to be exacting the number of bathrooms, the bathroom, the exact same view. This is a better comp, even though it's a little bit further away.
Speaker 3:Yeah, or maybe a pool home or something like that we're the ones that we're comparing in the same house but doesn't have a pool. So how does the pool factor into it? So you know definitely different things to look at, you know, when you're going outside. It's called bracketing too Like and I know this is one thing I learned from them it's for appraisal purposes on the bank side. They will never allow for you to appraise higher than the next guy unless there's another neighborhood you can piggyback to justify a higher value. So you might need to extend outside the subdivision to establish another tier of pricing so that now you can justify adjusting upwards if our home is in better condition and in better value than the home that's alike within a half a mile or a quarter mile.
Speaker 1:Yeah, it's tricky man. You know there's so many rules and, george, am I wrong in saying you're back, right, george?
Speaker 4:Yeah, I'm here.
Speaker 1:Yeah, so you might get you know 10 appraisers to give 10 valuations on a property. All 10 of you come with a different number and all 10 of you are right, correct?
Speaker 4:Well, yeah, of course, yeah, definitely, because what an appraisal is? It is an opinion of market value and, you know, my opinion could be different than the other nine in the anguished opinion that's. That's ultimately their opinion. Obviously, this opinion needs to be backed up with data and, you know, conclusions that are that make sense, you know, and it has to be supportive.
Speaker 1:Let me ask you a question. So I tell my realtors look, you know, when, when you go, do the appraisal show up? Be nice, show up with comparables. Don't make it like if they are no more than you. But hey, here's the comparables that I found. Okay, just in case you know, making your job maybe a little bit easier. You don't have to go out there and search and everything like that. Right, does that? Does that make a difference for you guys? I mean, I know you guys have to give the value and the values of value, but but you know, how do you? How do you see that? Do you see it? And again, I think the approach is very, very important to you. Know, you don't go up there, like you know, I'm telling you to mark the appraiser at that. But yeah, how?
Speaker 4:do you handle?
Speaker 1:that George.
Speaker 4:I mean, I agree with you 100% but, just like everything else, everybody's different. Right, there's, there's some appraisers that view that as, oh, they're trying to tell me how to do my job, you know, or you know. I welcome it. You know, you want to provide some information? I'll be happy to look at it. Yeah, you know, if there may be a, they may have some. You know, an experience realtor that has a lot of activity in a specific subdivision or a building may have access to information that you don't have yet. You know, oh, the sales pending, it's closing today, you know, you know, it's just, it's always helpful and I can take it. I would recommend to take it one step further with your realtors and always recommend for them to either have that survey of the property or a previous sketch. That will help, you know, help the appraiser when they're, you know, trying to measure the property.
Speaker 1:Interesting.
Speaker 2:I'd like to ask, because it's always been my my way of doing this has always been to not just bring the the comps that I want them to use, but I try to bring all the comps that are in the relative area and on the my notes as to why I chose not to use these comps. I kind of like it's kind of like when you watch a news story, depending on which channel you watch, that's going to be the opinion that you kind of walk away with. Yeah, so like he's giving an opinion of value I want to share. Hey, this is my opinion, this is how I got there. Tell me if I'm wrong. You know like I'm trying to take and make this as easy for you as I can.
Speaker 3:Yeah.
Speaker 2:Did I screw up with these comps? Because I didn't like these? Because of this, this, this and this?
Speaker 1:Yeah, and I like that's just a textbook approach right there. That's the way you're supposed to do it, you know, and I become psychology, like I will tell my realtors this business is all psychology. If I show up there, you know, like I'm the man and I'm Mr Comparable, and I run into a guy like George has been doing this shit 20 years. You know what I'm saying. He's literally going to wait for me to leave and go to the bathroom and wipe his ass with it. Maybe not even wait until you get to the bathroom, but you know, it's all about the approach, like anything else, you know. But but what I'm hearing is some of these guys are going to be welcome to it and some and some are not, you know. So you got to be careful of realtors when you up, when you, when you show up with this. But you should always know anyway, you should always know, you should always have an idea, you should always have some comparables, you know, and all right, so I have.
Speaker 1:I have another question here. Let's kind of get into the backyard a little bit, right, so this is what I understand. So, right, so some areas, land makes a difference, some areas makes no difference. Okay, so you might have, you know a. You know 15,000 square foot lot with a. You know to like a half an acre with like 20,000 in some areas coral gables in here in Miami. You know higher end areas. You know those 5,000 square feet are going to make a difference and some in some areas they're not. You know so how do you handle that. And you know irregular lots. You know how does that work, because that seems also very tricky to me. I've never really been able to put my finger on that.
Speaker 4:Right, right, yeah, it gets into a tricky, kind of a tricky, it's kind of a tricky situation.
Speaker 2:I'm even having trouble explaining it.
Speaker 1:Okay, good, good, because you know I feel stupid when I get to the land part, you know. So if you're struggling with it a little bit, you know, and it's a painting your ass, then it has to be one and one in mind too, you know.
Speaker 4:Right, well, there's, there's, there's some lots that they're kind of really considered could be like surplus land, right, like if you're like in a subdivision where everything's like cookie cutter 5,000 square foot loss, 5,000 square foot loss and then you know it's kind of like a rectangle and then when you know we turn the corner right like the like the elbow, so to speak, of the road, there's like this awkward shaped lot that you know that instead of being 5,000, it's really 11,000, right, that can be considered to be surplus land For the most part. Typically, when, when I do my appraisals, I typically I don't encounter situations where I don't get value for land, I typically, whenever there's a difference, I make an adjustment for it.
Speaker 1:Wow, right Interesting.
Speaker 4:Unless it's a small difference, that I feel like it's not justified. You know, right, if you have an acre home and it's 43,000 square feet and you're comparing it to a 45,000 square feet, then you're like, okay, the difference is not that big. You know, it's to me it's similar, you know.
Speaker 2:Let me ask this question because I did a lot of things, much like K Seuss, and so I ran into this a lot and I was doing a lot in like North Miami Beach area and so you know you have those homes between seven and maybe 11,000 square foot lot.
Speaker 2:I never had a buyer pay a nickel more, but they never even asked about the size of the lot. You know what I mean. And so when I would make an adjustment, I was going based upon, you know, like I don't see any difference in what people are clothes I, you know I see conditions being similar between these cops and I don't see a nickel's worth of difference in what they're giving for land. So when I would do my VPO is my adjustment was was zero because I didn't see reflected in the market. And so that's that's the first thing you said. That that really like surprised me was that you like always make an adjustment for land in that situation. I mean, is it right to not make one or should? Should there be some? There just should be some, just because there is theoretically some more value there, I guess.
Speaker 4:Yeah, I mean, listen, you definitely want to try to give the property owner you know whoever's getting this valuation their fair share, right, and you know typically, in theory, from from like a logical point of view, more land should equal more money, right? That's just kind of using the logic behind it. But yeah, I can agree with you, sometimes it's a market where that difference, that extra 1000 square feet or 1500 square feet or 2000 square feet of land, just really doesn't, doesn't yield a higher number. It happens.
Speaker 2:The weird one that I see, too, is pools sometimes.
Speaker 1:Yeah, I was gonna, that was next, and then I have a market question. But yeah, can.
Speaker 3:I jump in one second on the lot land the adjustments. Usually, george is not correct. They're very small adjustments, right, they're not necessarily big impacts. You might adjust, you know, a dollar or a square foot or something like that. Am I right?
Speaker 4:It's something that's really going to sway the value much. It depends on the market, you know. As, as as Jesus mentioned an area like Coral Gables, you're probably, you know, adjusting anywhere from like 10 to 20 dollars a square foot for land.
Speaker 1:You know it's waterfront even more, you know but yeah, waterfront canal, lake, ocean Bay, right, right.
Speaker 4:And then you get into the interesting adjustment of waterfront feet right Like which lot has more water waterfrontage. That's definitely also a big factor on these, on these waterfront homes.
Speaker 1:Yeah. So a pool waterfalls waterfalls, I mean you know, landscaping is another one I mean. I have a buddy of mine one day, a day, had like 50 grand in palms because he collects exotic palms. What the fuck do you do with that?
Speaker 2:Well, I'm actually thinking about it more from the standpoint of, like, there's neighborhoods. I know where people actually steer away from homes with pools because they see a pool maintenance bill when they say a chair.
Speaker 4:Absolutely.
Speaker 2:When you're like talking homes, maybe sub 200 to 50 ish, people look at it more as an expense and so there's really not much of a premium, it seems, in the market for that what would normally be a men. They really say you get over 300,000, you know people start to want to pool.
Speaker 1:Is that? Is that right? Is there a particular areas where a pool is? I know that a pool is less attractive, but do you deduct if it has a pool? No right.
Speaker 4:I mean, I personally haven't, because I praise predominantly in South Florida, but I have taken courses before where the instructor was from Detroit and he's like hey, you know, in Detroit pools are a negative, you know you literally would have to deduct.
Speaker 1:You may have to make a negative adjustment.
Speaker 4:I personally have never done that.
Speaker 1:No, no, I'm saying but what he said was that you would have to make a negative adjustment.
Speaker 4:A negative adjustment for pools.
Speaker 2:Yes, you have to adjust the value positively of the comparable, because they're more valuable, because they don't have a pool Right right right, right, right, right, right, right, Okay, yeah, well, maintenance in Detroit?
Speaker 3:I don't imagine like here. You go down the you know the highway and you find seven little trucks with the pool maintenance sticker on the side. You know they're everywhere. Imagine in Detroit, you know, to get a guy to come into your house every week for pool maintenance a lot harder.
Speaker 1:Well, I'm the house, I'm not like 20 grand, so what the hell?
Speaker 1:I mean, it was technically I mean I have a buddy of mine that has the, I will have a part of the show we're talking about well, there's this and my buddy has dispensaries, marijuana dispensaries, so he has in Detroit, so he's always buying real estate up there and you could buy a decent house for 30 grand. Yeah, decent house, decent house, cool a house that here you slap it on coral gables and it's a couple million bucks type of stuff. You know old, you know style, the Victorian looking, you know this and that, so yeah, it's. It's a tricky.
Speaker 2:I bought. I bought a bunch of non-performing mortgages all over the country and there's a few that are in like Ohio right 2030, yeah, and I mean it's a you know, 2000 square foot home right, it's crazy.
Speaker 1:So what does it cost to build a bull there? Probably 20 grand. Same thing. It was a lot of costs. Yeah, that's what I mean. Okay, but over here, okay, landscaping. Do you ever adjust for landscaping? My buddy that has a house in Palma I'll be that has 50 grand and exotic palms. What do we do with that guy?
Speaker 4:I Mean listen.
Speaker 1:You know that's kind of you can't take him with you, you know yeah.
Speaker 4:That comes. That's one of the appraiser. You just take your hat off and you're like yes, and I took everything into consideration.
Speaker 1:Brazing landscaping Pools. But pools have to matter right size, the, the style of the yeah, yes, yeah, but you know it.
Speaker 4:It becomes tricky because when, when you're doing an appraisal, it's like how do you determine what's the difference in value between a pool with a waterfront, a pool out of waterfront? You know it's like, is it, how do you determine the difference of a pool with a schoozie and without a schoozie? You know it's, it's tricky, you know it's not. It's not so black and white, right?
Speaker 3:you know I have a great story on a pool home in In a dr Horton community, cookie cutter for threes. You know, I think there was like seven cops in the same neighborhood within a half up, you know, within like the quarter mile, that were all for threes selling off the same amount. Some would pull, some without, but the gentleman that this particular case of seller was trying to sell for a hundred and sixty dollars 160,000 over the cops, because he built a three hundred thousand dollar pool in the backyard. He's the only pool company, an exotic pool company, and built this pool that they shoot rap videos and everything on, thinking that it was, you know, greatest investment of his life. And then now he's getting divorced, has to sell the home unexpectedly and is mad because the appraisal only Willing to give him twenty thousand bucks worth the adjustment.
Speaker 4:Yeah, I mean that's. That's a tough one. That's a tough one to swallow. You know, and, and, and. In my opinion, yes, there, there is value for him pumping that 300 grand in there. Now he's just got to find somebody to pay him for it. Right, it's not gonna be the bank that's gonna come in and say, hey, I'm willing to give you this wonderful adjustment or this wonderful Extra loan amount for this pool you put back here. You know, you just got to have a buyer that's that's willing to pay for it.
Speaker 1:Yeah, that's. I had a. I had a Interesting situation. I had I won't I won't say who was a famous rapper, I Purchasing a foreclosure of another famous rapper, and I walked in and there was gold, solid gold toilets throughout the house. What do you do there, george?
Speaker 4:oh, man, you know, that's, that's, that's, that's back to throwing your hands back up in the air. Yeah, I'm taking, I'm taking everything into consideration.
Speaker 1:You. But, all jokes aside, you say, listen, I'm not even going to get in there, I am not doing this, I am gonna look at comparables and I am not gonna take the toilets into consideration. Right, you just straight up have to say that like, listen, you want to spend good gold, that's, that's your problem, right I?
Speaker 4:mean. The key is the appraiser is saying that you took everything into account.
Speaker 2:Yeah, that's the magic. I took everything.
Speaker 1:I got it now, you know that's you know, you don't?
Speaker 4:you don't sit there and say, hey, I didn't give you value for your toilets.
Speaker 2:Yeah, I have one for me that I'm kind of curious about, because I'm, in addition to being a broker, I'm a general contractor. Okay, we're doing a lot of work with impact windows now. Oh, that's a good one, okay, and so it is from things that I've read one of the best Improvements people make for having an actual improvement in the value of the property. Is that something else we're? It's just, you know, you try to find because it that's not where. How do you check that with the cops?
Speaker 1:It's not recorded anywhere with, hey, these guys close, when they do the appraisal, they do check yeah.
Speaker 2:Oh, and they do the appraisal though. They'll check, but how do you?
Speaker 1:come.
Speaker 2:How do you check the comps to see what they?
Speaker 4:Well, it's good that you mentioned that. I frequently and most of the time prezels. Whenever a property has impact windows and doors or just windows, I typically make an adjustment for it. Nowadays, with what the way the MLS is it's under. You know, I've a comp sold and it had impact windows.
Speaker 4:Mention it the description of the property, absolutely Most, and and sometimes when you drive by, from the most part you can tell you know, hey, those windows are newer than their impact. You know For the most part, but you know a lot of the times the realtors do a good job about about most of times, about putting it in the comments or or putting it in the on the page to where it says impact glass.
Speaker 1:Sure, and what, what? What adjustment I mean? And? And is impact windows one of the better Improvements you can make on a home that you'll get the most bang for your bucket? Or is that the most bang for your buck? That in kitchen, I'm assuming?
Speaker 4:in my opinion? Yes, probably. Impact windows, pool, roof kitchen, those are like the main driving Improvements front door, front door, front door, sure, sure, that's part of the windows and doors, right? So the whole thing with the impact windows is You're. It's actually a monetary saving to whoever owns that property. You know you get big discounts from the insurance companies by having this. Lowers everything in my glass.
Speaker 2:Lower your energy. It lowers your energy costs as well.
Speaker 4:Yeah, absolutely right, and it's better for the noise pollution. So you know it's. It's definitely an improvement that I would recommend that. That's definitely a Tributes to all things being considered into getting your higher value.
Speaker 1:You get a property, you get two similar properties. You're you know and and the one has impact, one that doesn't. You got to say, well, I buy the woman, no impact, a I'm gonna have to go through a huge pain in the ass every time I purchase it and I got to put shutters and I mean eventually going to have a spend a lot of money to put those impact because they're not cheap.
Speaker 2:They're getting better. Yeah, well it's. It's actually becoming very saturated market. It's a different conversation for a different time. But yeah, the price you come down and it's pretty interesting.
Speaker 4:Okay, I got another one, george Josh it sounds like you just put your GC hat on.
Speaker 1:You know what, the more you put it right back on again to explain to you why.
Speaker 2:The more happy have the better. This is a broker 100%.
Speaker 4:Absolutely, I agree.
Speaker 1:Okay, so solar panels that this is my last question, and then I'm gonna just take you through a recap and just make sure we're on the same page on everything but solar panels. Okay, what do we do with solar panels?
Speaker 4:Yeah, that's, that's I mean. I definitely Listen from an appraisal standpoint. Right, you're getting out to do this appraisal, this property, and you're like man all right, wonderful, you know, the last six months or the last year that has solar panels.
Speaker 1:So you can't just give it and you, you can't just say all right, I know this. This, this dummy just spent 40 grand on these solar panels. Right, like you can't give it any adjustment whatsoever.
Speaker 4:You could, but the when you're doing an appraisal for a bank, it's the golden rule, right, he who has the gold makes the rules. So they had their guidelines. You know, it's like hey, you got to have a comp with it a mile. Hey, you got to have at least one comp with it. Like these hey you're, you're square foot. Your gross living area of your comps can't be more than 20%. Hey, you can't have across the board adjustments, which means if you have someone with solar panels, you got to find a cop that has either solar panels or similar feature. So you don't create what's known as an across the board adjustment, which is adjustments on all the comps heading in the same direction. Right, that comes to the bracketing concept.
Speaker 1:So for all those, all those solar panel salesman that tells you it's gonna increase the value, what do you? What are we telling George?
Speaker 4:No, it does, it's 100%, it does. You know? It's just. It's just a matter of when you come to do the appraisal, how do you handle it for financing purposes.
Speaker 3:That's all I think I think the market to chime in a little bit. I think I have to catch up. So, for example, we did a loan in Arizona recently with solar panels, yeah, and there was specific eye lines on FHA. We needed an exception Regarding because the way there was a and act it actually affected the property in a negative or the loan in a negative fashion and we had to make an adjustment. I can't recall exactly what the detail was, but it's very common over the day. But they couldn't still couldn't find the property with solar panels in that, so it could actually create a challenge for the financing the solar panels that it actually has. So I think that's once a market catches up and eventually something that is unique starts to become standard, like impact windows At one point where exclusive plasma TVs were exclusive than everyone has them.
Speaker 2:Eventually, once they become a standard, easier so then it's gonna be a you know processed well, jay, I think the reason why the solar panels are on negative in Phoenix my brother's assured me that, living in Phoenix, it is the surface of the Sun, so I don't know what you would do with a solar panel if you live on the surface.
Speaker 2:Actually that I had one more question because recently one more designation I didn't have that I needed to have. I was working with the green designation for real estate and the windows kind of fall into that category a Little bit. But there's a whole bunch of other stuff that go into making homes smart homes and I think Florida's kind of behind the curve a little bit with having that be part of the MLS so that it's easier for for people that are trying to take into evaluation, define this stuff. Do you are you able in Florida right now to find stuff or to give comps Adjustments positively for being smart homes? I mean I know they can sell it a premium because I mean there's a lot of data to back that up, but only if you know you have comps to justify it, I guess sure, and it's great that you touched on that, josh, it's.
Speaker 4:It's. It's great when you have data to back it up, you know from an appraisal standpoint right. It doesn't mean that there's no value, but just one. When it's from an appraisal standpoint and you're, and it's for a lending purpose, then you kind of get into this Situation of like, hey, I got to have comps that support this adjustment, I got to have comps that bracket this adjustment and and and that really comes, it becomes the name of the game.
Speaker 2:Yeah. So it's basically to give yourself a fig leaf, you will, in case the bank comes back and says hey, how did you come up with this? Well, here you go. Here's what I used. That makes exactly.
Speaker 4:Exactly, and, josh, I'm very excited for when you finally get your pilot's license that you can take me on.
Speaker 3:This is a pilot's like I'm actually a pilot's lesson.
Speaker 1:We got that covered over here. Listen, man, you know what? I've actually told me that the idea is literally the only license he doesn't have, and why he doesn't have. It doesn't make. Doesn't make any sense to me, you know. Oh, man, okay, so All right, unless you guys got any questions. I just want to, I just want to do, I just want to make sure. So I'm a realtor, I'm going in there, I am Pulling up public records just so I could compare, see what the real square footage is right with the living area is. I am going on the MLS, I am going on IMAP. The reason why I would go on IMAP is because there might be Comparables there that are not in the MLS, because it has public, has public record comparables, okay so For somebody knows frisbo, so I would be going on there just to specifically find one that I might not have.
Speaker 1:Okay, so Do I go on. Rpr, is RPR we? We never talked about RPR is it? Is it going in the? Is it in the area of Zillow, where it's just, you know, does estimate, or what do we do with RPR? Do we even use it?
Speaker 4:I Haven't been using RPR. I typically use MLS, I typically use real quest. Real quest, I use IMAP. That's real. Yeah, real question. It's a great source. Yeah, it's, definitely, it's great. Visda is a phenomenal source. That's what that's for commercial.
Speaker 1:Okay.
Speaker 4:I Doesn't really do residential, but those are great sources for comps. That's what I use.
Speaker 3:Okay, all right, let me ask a quick question on the on the buy owner stuff. If we have a buy owner, that's on Zillow for example with pictures.
Speaker 3:Okay, and you see that I was listening on Zillow for 90 days, right, seen a bunch of them down in the keys. And then itself, I mean, at that point, would that be something that can be factored in if through, let's say, the realtor comes up it says, look, here's what they listen to Zillow. Here's the pictures on the inside. The property was on the market for about 90 days before it sold and it sold Comparable to what it would be in the market. They just didn't listen with an agent. You.
Speaker 4:Right right.
Speaker 3:Yeah.
Speaker 4:I mean nowadays, you know, back before the whole major mortgage crisis, back then when you didn't have unless you just automatically sold it with fraud. But nowadays you find a property that's for sale by owner, nine times out of 10, there's going to be some sort of either realtorcom or Zillow on it, or yeah, and that's how you verify the condition of that company. You know you don't just throw your hands up as the appraiser and be like, oh, there's more or less, I can't determine the condition, I can't see. You know what the property looked like on the inside. You got to dig deeper. You know you go to realtorcom. You just Google the address and then it pops up either Zillow or realtorcom or Redfin on it. That kind of shows. You know what, what, what entailed this trade? You know what, what kind of updates it had? Did it have a pool? Did it have this? You know, did it have the wonderful golden toilets that he's used for?
Speaker 4:You know it's it's good that you mentioned that, Jerry.
Speaker 2:Let me ask a quick question, which is is there an adjustment made for being a for sale by owner, because, theoretically, the seller has sold the property for less money, but they've walked away with more because they're not paying any kind of commission, so effectively, in order for it to be? Like a stress sales well, in order for it to be an arms length transaction that that commission has to be part of there, that commission's not there. The seller has sold it for a lot of contribution.
Speaker 4:We forgot to ask that too Well well, when, when you come, when you, when you get into this hole for sale by owner versus commission, it's kind of a slippery slope, right. Because how do you, how do you say, hey, this one sold below market, right? Ideally, typically, when, when somebody sells a property for sale by owner, they typically pay a commission to a realtor who brings it, or if there was no realtor's involved, that's fine too. But in reality, that homeowner who is taking their time to show the property and market it, how are they decide to market it is really really the one that's, that's that's getting that value right. That 3% or whatever the commission is, that's really supposed to be already factored into the price. But yes, I agree with you, typically for sale by owners, so for less than properties listed with realtors, that's just that. There's, there's plenty of data on that. But yeah, that's, that's that's tough. And when you, when you kind of open that can of worms for an appraisal for lending institution there's, you better have a ton of data to back it up.
Speaker 2:So basically, what you're saying is it would be. It would be a mark against it being a comp that you would use if you could find better comps to replace it.
Speaker 4:I'm sorry you were picking up. Say that one more time.
Speaker 2:So if I had a for sale by owner it was one of the comps I was considering and I had five right and I had, and I had other ones that were arms length transactions that were just a similar I would exclude the for sale by owner. It would be a kind of, I would say, a mark against it, but would be one one more thing about it that's less like the subject.
Speaker 4:Correct, correct. But then again, if you're like, hey, it just we're in July and you're like hey, it's holding June and it's right next door to the subject, you know, that is like. You know, sometimes you're forced to use it, you know.
Speaker 3:I could also help you sometimes. I mean, there's cases where we found the words up, where you just got a guy put up a sign and because you've had you know the dumb luck and hey, you know what, somebody's going to pay me for this and and and it could help. So we've seen that help sometimes in certain scenarios, but the majority of them yeah, you're right, it's going to come up a little shorter than the other ones. They might hurt.
Speaker 4:And Josh, I'm happy that you mentioned the non arms land transaction thing. If you can, if you pull up this comp and the appraisal is coming out and it's lower and you can kind of determine, you can call up the owner and be like oh yeah, I'm the owner. I sold the property to my buddy that I've known for 20 years and, hey, guess what? It's a non arms land transaction. You know the buyer and the seller knew each other prior to the sale. You know that's it shouldn't be used. You know because they they've known each other, they're related. He's married to the guy's cousin. You know something like that. You know so. So I'm glad you mentioned that about the non arms land transaction.
Speaker 2:Well, I mean the other. The other piece of it is, I suppose, that it just hasn't been. I mean this again, me trying to make the case why I wouldn't use a fizzbo is because it's never actually been exposed to the open market, theoretically and so so that yes, yes, but nowadays that's the interesting way to look at it.
Speaker 1:I know we thought about it that way, yeah, yeah, yeah.
Speaker 4:And you and you put, if you put it on Zillow, right, I mean nowadays Zillow's like the open market almost kind of you know. I know most realtors are flipping through Zillow but a lot of the consumers nowadays are you know A lot of the realtors are too.
Speaker 1:believe me, I got, I got yeah.
Speaker 2:I think we're going to pay for the remelaness.
Speaker 1:Yeah, that's, the guys are incredible, yeah.
Speaker 2:Although I've got the bill from my hand the last day of the day. Well, I got the bill from Zillow.
Speaker 1:I got the bill from Zillow the other day and every time you get a realtor that clicks on it, it's considered a lead, so, and nowadays it's like 150 bucks every time you get one of those. You know. So, what else? Okay? So, yeah, I mean all right. So let me start. Okay, so we're going to use IMAP, we're going to use whatever system that we want to use. At the end of the day, what we need to know is that we're getting, we get as many comparables as possible, that that are as similar as possible to this property. Now, the reason why we want to go into other ones, because we want to. We want to make sure we have access to every comparable that this appraiser has access to. So, because, if, because, if we don't use IMAP, for example, and then you do, then I'm going to be missing a comparable that I didn't might be for a positive, might be in a negative. You know what I mean. So, and you know before one thing, that, what I explained, tell me if I'm wrong in my explanation to to my realtors here, right? So the way I explain the whole real estate processes, I go listen.
Speaker 1:There's three ways to appraise property, right? There's the income approach. That's more for commercial. You know there's a cap rate, there's a net operating income and that's how you're going to get the value. It's based on income of the property. Then there's the cost comparison approach, which is more for insurance companies. You know what it costs to reproduce this property just in case a hurricane comes down and tears it up.
Speaker 1:Okay, there's the, the, the comparable approach, which is, you know, same, similar properties in the area. You know that type of stuff. And then and then there's the market. Okay, that's, and the reason why I'm saying that is because I've seen it where a property, I had a situation on a property that it was the weirdest thing in the world because it was a $2 million property in Pancras. I had just sold one for 1.8, not too far away, $2 million property, dude, every comparable. I had every comparable in the world to appraise that thing. You would have appraised it at $2 million. The comparables were at $2 million, but I kind of knew that the market, for whatever reason, wasn't going to bear the $2 million Okay.
Speaker 4:Marko was declining.
Speaker 1:It was, you know, and I'm trying to explain it to the guy and it was a tough situation because he was right, it did appraise for it, right. He was right it did, the comparables did reach that right. So, but you know, he, I ended up trying to bring him down to like 1.6 or something like that. He ended up getting rid of me, got another realtor, got all the way to 1.3, didn't even sell it at 1.3, ended up renting it, right. So, and I've seen that on both sides of it so at the end of the day, not even on a fucking appraisal matters, it's the market. The market is there to give you the best indication. Sorry, the appraisal is there to give you the best indication of what the market will be. But the market speaks louder than all of those.
Speaker 2:What's something is my father used to say this all the time we had, we had commercial real estate in New York, and we had this through the 80s and 90s when the illustrious predecessor of Mr Cuomo, his father, was there and he decided to, in his infinite wisdom, to put a 10% tax on all properties that sold for more than a million dollars. Surprise, surprise, the real estate market in New York came to a screeching halt. We had an entire city block in Brooklyn, within sight of the tunnel to Manhattan. Could not find a. There was no buyer. So what was the property worth? Worth nothing. Because there's no buyer, nobody wants to pay the real estate taxes on it, right, right and so yeah yeah, what something is worse is what anybody is willing to pay for it at any given time.
Speaker 2:It's the reason why the comparable approach in my mind is through the whole, because somebody's actually taken their wallet out and agreed to pay that much for something, and so that's really what it falls down to.
Speaker 1:Yeah, and then, and then you get where you got a whole neighborhood that's worth something, right, but then you get the property that's on the main road, right? That's one. That's another question how do you handle main roads? And I'll give you the last ones, I don't want to take any more of your time. So, how do you handle the main?
Speaker 3:road. The longest 10 minutes of George's life. The longest 10 minutes of George's life.
Speaker 4:It's like George got 10 minutes. Thirdly, impressed that Jesus knew the three approaches to that and all and all the kind of like and all the kind of like licenses.
Speaker 1:You're like bro you know, I must stick around with these guys.
Speaker 4:Geez, I mean wow, I mean that was, that was impressive, I must say.
Speaker 1:Thank you.
Speaker 4:Thank you, but to answer, to answer your question about the main road, you know it comes back to the boring match pairs. You know you got to try to find a comp that's on a similar main road or the same main road, or so you take it, take it into consideration basically.
Speaker 4:Yeah, so you know, or this comp, this, this comp fronts a main road but hey, there's tons across the street from the school, so they're both suffering from external obsolescence. That's the boring appraisal terminology. Yeah, external obsolescence is. You know something that you know? You? You see, you saw the highway, you're you you'll put a commercial property, you know you'll put a gas, gas train train. Those are power lines. No, and I've seen, I've seen power lines running from people's properties and I'm like you know, you know you always end up finding a comp. You have to. Whether you're going to expand your parameters, your distance requirements, your size requirements, your age requirements, you have to find something to bracket that situation.
Speaker 1:Right, so, and rural properties? Is there a limit to how far you can go, as far as expanding?
Speaker 4:I mean typically when I get out there in the redlands, typically my comps are five.
Speaker 3:You know, within five miles three to five miles, you know my neighborhood and when you like to see in residential point five.
Speaker 4:Yeah, well, it depends on the location, right? If you're in an urban location, you should be. The comps should be as close by as possible, Right, right I thought I meant by urban.
Speaker 1:No, but urban, I meant urban. So textbook cookie cutter would be 0.5, 90 days. Right, that's cookie cutter.
Speaker 4:Oh man, that's. That's like a dream appraisal. I show up there. You know, all comps are from the same building you know they're all the same model, or? They're all from the same subdivision. Those are wonderful to do because they're simple. You know I am a complex person so I enjoy the more complex ones. You know I like, I like the battle, you know the challenge of having to find this comp to bracket this, or you know, or you know, that's what experience gives you that you get bored with the easy stuff after a while.
Speaker 1:Like I always tell my realtors when they bring me those super complex deals with everybody's fighting and then the whole situation, I'm like, all right, finally I get you know.
Speaker 4:I I get.
Speaker 1:It excites me. I get to fight with another realtor or there's an attorney involved that I could fight with. Oh man, I'm fucking having you know, bring it on, step away and let me do my thing. You know so, and that's what happens. You're in this business long enough that you just want you know, you just want difficult things.
Speaker 2:You like the messy ones.
Speaker 4:You like the messy ones.
Speaker 1:Absolutely, I like the messy ones, that's exactly right. So all right, man, listen, dude the best 10 minutes of my life, man.
Speaker 4:I appreciate that, man. I'm just happy that I didn't make the list of you know things that pissed off realtors. Yeah, I wasn't on your guys list.
Speaker 1:Yeah, man no no, no, no, absolutely. So, all right, bro. Thank you very much, jay. Stay and stick around for a little bit more, yeah.
Speaker 3:Thank you, man, they really appreciate it, bro.
Speaker 1:It was definitely worth the wait. Good stuff.
Speaker 4:Hey, Zeus, Jay and Josh, thank you so much and I look forward to getting to you guys.
Speaker 1:Yes, sir, thanks brother, All right, guys, okay, bye, yeah, so yeah, definitely worth the wait. Wealth of information. You were right, jay. You were right, all right, I was right about the iPhone. And you were right about George, all right. Yeah, by the way, guys, jay, everybody, lets all our millions of listeners, let's everybody give Jay a hand for getting an iPhone. You finally got an iPhone.
Speaker 3:There we go, bro, there we go.
Speaker 1:Do you have a sound effect for him getting his head out of his ass on the iPhone thing or not? No, all right so yeah.
Speaker 1:So listen, you use whatever you could use. This is what I learned. You use whatever you can use to get the information. Try to use as many tools as possible so you don't miss one right? That's basically what it comes down to. There's textbook rules that are you could break them if you have to. You know, take everything into consideration. Basically that's it. I mean, I don't think there was. I learned a lot as far as meaning that you're learning, that you're doing things right. You know A lot of the realtors out there are in the air. What's the appraiser going to think?
Speaker 2:Well, I have the approach that I think I took from this. The way I was thinking about it as I was explaining it is to be like a defense attorney you don't want anything coming up to surprise you. You want to have all the information. So I want to know what all the comps are. So I'm going to check all my different sources so that, when the appraiser comes back with anything, I've already got my bases covered. I already know what's going on. We don't like this one because of this. We don't like this one because of this. This is a good comp. This is a good comp and this is good comp. And this is why Make your case have all the data there, all the information there, so there's no surprises. The appraiser didn't say oh well, what about this comp? And now that's what you want to look away at.
Speaker 1:Yeah.
Speaker 3:Yeah, one thing also wanted to add on. There is, you know, I think I love this line about the golden rule. You know, when we do the class I always like to explain to the realtors is there's two values to a home. There's what it could appraise for, if you're depending on financing, and what it can sell for, and I think that's really what you have to make that decision if you're considering listing or, you know, presenting it to a buyer right, whether the home is an older home, that's been upgraded, say, look, it's not going to list or we're not going to get fined
Speaker 3:this amount but you're going to have to put your pocket and for appraise value. This home deserves it. Let me explain to you why you know. And then go into the cost of repairs and the pain in the ass it does to repair a home and build it. So I think that's always the one thing I try to tell realtors is that our job. You know that when we're doing that classes to teach them what the appraiser is going to think like, because the golden rule right, if you depend on financing, then you're going to depend on an appraiser to come in and if the guy had cash he could pay whatever he wants for the house. So you got to determine. You know what the house was conserved for and what the house could appraise for. So then really make what's going to be the best determination on how to approach that offer or listing or whatnot.
Speaker 1:Yeah, yeah, yeah, cool.
Speaker 3:All right man.
Speaker 1:Listen. I think I think it was great. Again, like I mentioned, you know I don't think I like these microphones. They sound weird.
Speaker 2:You have to be very close to it.
Speaker 3:Yeah, they're very close, but then if you go out here, we'll find out.
Speaker 1:We'll do that when we start the conversation.
Speaker 3:Get close to the mic.
Speaker 1:Yeah, yeah, your microphones are definitely better, but whatever, these are good enough for now. So, pride in his eyes. Yeah, a better, better. So yeah, I mean, I think I think we did a thing. This is a good one.
Speaker 1:I think that what I like when we do these real estate, straight up real estate ones, I want the ones, I want the podcasts that are like timeless, meaning that you know in six months from now, a realtor could pick it up and it's going to be the same shit. You know it's going to be. This is, this is hardcore real estate rules. If I am a brand new realtor and you know I just entered a podcast or here where I, where I heard, you know, 50 years of experience and over probably definitely over 100,000 comparables under our belt, you know to see, when I went over there, it changed it, so you got to stare right, right into it. So I think it's a hell of a podcast, not not because we just did it, but I think it's a. I think it's a bad, bad, bad ass podcast that I think a lot of these realtors are going to, are going to enjoy. So, all right, jay, thanks a lot, man, thanks for not quitting and finally getting us somebody. And you were right, george was was the right guy.
Speaker 3:I'm telling you he's the man. Not only that, he could speak well to some of the other places I got Just you know, they wouldn't have been such good content for the podcast, right.
Speaker 1:It would have been yes or no. Stuff Right.
Speaker 3:Yeah.
Speaker 2:No answer. So this is good like second tier stuff for agents, the first tier being kind of like how you use the MLS and how to get to a showing.
Speaker 2:This is how to, like, step up your game and get to the next level. I mean, I think, for to my mind, this is the level after this is when you start to know the components of the home, you start to be able to look at things, say, oh this, you see, this, this is, this is a special kind of system in the home, whatever. And that's when you really start to make the customer feel like you deserve to be there and you should be getting paid for what you do.
Speaker 1:And it just brings confidence. Like I think that if you listen to a podcast like this, you, what you're going to get from it is really confidence. You're going to be like all right, well, I just heard a bunch of like veterans talk about this, yeah, and it ain't much different than the way I see it, Right, Right. So I feel more confident talking about it. You know, and that's that's what you know, being in this business long enough, you're around people that know their shit and you're like, wait a second, they know their shit. And that's exactly the way I see it. I know my shit. I just realized I know my shit too. You know what I mean. So, and that's what I think that experience really is. You've been in around enough of these conversations like this could have been us talking at a bar you know what I mean and talking about appraisals.
Speaker 1:So you're at that meeting and you're, you know, hanging out talking and getting information on, you know, and everybody's talking crap about appraisals. You learn the next day you're a little bit better at it. So you know, I think that that's what it's going to serve to a lot, of, a lot of our millions of viewers and it's going to be. You know, it's, it's, it's. You know, I do know my stuff, because if these guys are talking about it, you know the same way I am. Then we're good.
Speaker 2:When I got into this business, that's what made away from me in this business, 100% was the short sales, because that's when I came in, that's what it was Me too and I just I listened and I learned and I had a better pitch than anybody else because I was the one paying attention and how short sales worked. And so I have a business now because I got involved in the conversation. I realized at some point, like you said, I actually do know this pretty well, yeah.
Speaker 1:And one thing I did a lot of at the beginning and I guarantee you, jay, did the same kind of like. They're the same. As you do, be around you. Try to be around people that know their stuff and sit down and pick their brain. There's very few old schoolers and I consider myself an old schooler at this point that won't sit down with you and explain. As a me personally, I don't mind really like I sit down and talk, unless it's my friends, I guess sit down and talk forever. But I'm not a big conversationalist man. I want to go home. I want to. You know, I like, I want to work. I want to go home. I want to my family, I want to go home. But we're talking real estate and you asked me questions. I'm going to fucking talk and I'm not going to shut up. You know and I can tell you, jay is the same thing, you know, and kind of like the same.
Speaker 1:So go out there, ask the questions. You know, sit down and go. Hey man, I know you've been in this for a while. What are you? You know what's up with this. How do you see this? You're like a guy like George. Look, I've been in this a long time and right now it's been. Those 10 minutes were were key, you know, picking his brain and you're like, all right, cool, all right, oh, that's the way you see it. All right, cool. Well, that's the way you see it. So go out there and ask questions, man, and don't be afraid to go to an experience, real try, and ask me what do you think about this?
Speaker 3:You know and what they wanted to say. You guys know I talked a lot, because last time you're on the last broadcast you're telling me to shut up. Right, you were kind of quiet today. Yeah, by design. I was like, let me pick my spots, come here. You know, I don't remember the start today, that's for sure.
Speaker 1:How long we've been so far. One hour and 20 minutes. That's good. That's good, right there.
Speaker 3:All right, so we're going to start off with the next question, Joe. I know you guys are. Hey, joanna, say hi to Joanna. Hi, they want to say hi, these are working away. Yeah, a number is crunched.
Speaker 1:You're not on your plain podcast. She's out there, she's actually working.
Speaker 3:Yeah, right, oh, I'm gonna get that as soon as we hang up you might not be in there.
Speaker 1:You're playing podcast for an hour and a half.
Speaker 2:You're playing podcast shirt to there.
Speaker 1:You're playing podcast. All right, guys, all right, Jake.
Speaker 3:Thanks a lot for putting it together.
Speaker 4:Thanks for doors now.
Speaker 1:Thank him and Cadillac, Thank you, sir. Always All right guys, Thanks guys.
