Housing market conditions create challenges … and opportunities …

Housing is the sector of real estate most watched … and worried about … by economists, politicians, journalists, bankers, and investors … from Wall Street to Main Street.

That’s because housing, quite literally, hits us all right where we live.

We can all relate to it and housing is both an objective and subjective measure of individual and national prosperity.

Housing has certainly been in the financial news of late …

Housing Starts Surged in December. Don’t Expect It to Last
MarketWatch, 1/17/20

Housing market falling short by nearly 4 million homes as demand grows
CNBC, 1/21/20

New Risk to World Economy: Synchronized Housing Slowdown
Wall Street Journal, 1/28/20

As you can see, there’s both “good” news and “bad” news. Of course, buried inside of all that is opportunity.

So we think it worthwhile to look at housing through the lens of a tried and true investing strategy which could prove timely in today’s market conditions.

But first, let’s set the context …

Despite low interest rates (and largely because of them), housing is expensive relative to incomes.

That’s a problem for both renters and prospective home buyers … and why affordable housing is a hot topic today.

It’s also why we’re strong advocates of leaning towards affordable markets, neighborhoods, and price points. Demand tends to be stronger there.

We think it wise to be positioned below the top of the range. If interest rates rise or there’s a recession, people above will flow downhill to you.

Meanwhile, be prepared to survive a notch or two below your current price point. Otherwise, you may lose more demand leaking out the bottom of the range than you gain flowing in from the top.

In other words, ALWAYS compete for the loyalty and rent checks of your tenants … even in a high demand market.

Those who push rents to the margin of the range are the first to feel the pullback. Like equity, all rent retraction is at the margin. High rents hurt first.

That’s because when tenants start to feel a financial squeeze, giving a 30-day notice and moving to someplace more affordable is a relatively easy thing to do.

And don’t get suckered into thinking there’s no inflation or high employment based on the highly publicized and potentially “adjusted” official data.

Pay attention to the real world … because that’s where your tenants live.

From a home buying perspective, demand comes from first-time home buyers entering the market and pushing things up.

That’s why pundits are concerned that the average first-time home buyer age has risen to 47 years old.

Perhaps young people would rather rent than own? Maybe. But even if true, we wouldn’t bet on that lasting.

Sure, Millennials saw their parent’s real estate experience turn sour in 2008 … but that’s now 11 years ago … and a LOT of equity has happened since.

Most Millennials we know would like to own. They see prices rising and affordability getting away. Meanwhile, rents are climbing.

So we think Millennial demand will be a substantial factor in housing going forward. Demand is already growing … and it’s a wave you can likely ride over the next 10 years or more.

Also, Millennials are among a large group of Americans standing to inherit about $764 billion THIS YEAR alone.

We’re guessing next to paying off student debt, buying a home is near the top of the wish list for some of those heirs … adding some additional capacity-to-pay to fuel demand.

And speaking of capacity-to-pay …

Interest rates remain crazy low … and aside from a collapse of the dollar or a seizure in the bond markets (which could easily happen somewhere down the road) …

… there’s not much in the near-term to suggest interest rates will rise substantially.

In fact, with the amount of debt in the system, it could be argued there’s FAR more downward pressure than upward.

Still, because you don’t know, it’s not a bad time to stock up on inexpensive good debt. Just be VERY attentive to marrying it to durable income streams to service it.

Of course, another much discussed hindrance to Millennial home ownership is the now infamous and mountainous levels of unforgivable and inescapable student debt.

But in terms of student debt defaults and the resulting dings to credit, it’s only less than 15% of borrowers.

That means 85% of Millennials are chugging along making those payments … and presumably preserving their very valuable credit scores.

Of course, making those student loman payments hinders a young person’s ability to save for a down payment on a home. They start later and it takes longer.

And if a young person doesn’t have parents with equity they’re willing to re-position into a home for junior, or they aren’t on the receiving end of a chunk of that $764 billion inheritance …

… the lack of a down payment is perhaps an even bigger hindrance to Millennial home ownership than student debt.

And even though there are low down payment programs out there, they come with higher interest rates, private mortgage insurance, and larger loan balances …

… all of which converge to make the resulting mortgage payment much bigger than low interest rates can offset.

So that elusive 20% down payment dramatically increases the affordability of home ownership for many Millennials.

ALL this adds up to a great opportunity for real estate investors …

There’s a simple, time-tested strategy to leverage your cash into long-term equity … while preserving your credit and avoiding virtually all land-lording hassles.

It’s “equity sharing”.

In short, a cash rich investor supplies the down payment to a credit worthy owner-occupied home buyer.

The credit partner gets the loan, makes the mortgage payment, and lives in the house for the long term.

After a predetermined period of time … usually 3 to 10 years … an appraisal is done.

Any equity growth net of capital investments (reimbursed to the partner who made them) is split at a previously agreed upon rate such as 50/50.

Of course, there are some legal agreements which need to be put in place … and the borrower needs to work closely with a mortgage pro to make sure nothing is misrepresented in the loan application.

But equity sharing is a profitable way for Main Street investors to help the next generation of homeowners get into the market … so both can ride the long-term equity wave.

The borrower gets a home of their “own” … to live in, care for, and fix up for their personal enjoyment and prosperity.

They don’t feel or act like tenants … and they’re in for the long haul.

And with their name and credit on the line, they’re HIGHLY motivated to make the payment … even if it’s higher than they could rent a similar home for.

They don’t move to save a few bucks the way a tenant would because they have housing stability, tax breaks, long-term equity growth, and pride of ownership.

Meanwhile, the investor gets half the amortization and appreciation over the hold period … and next to no management headaches.

Plus, the investor has no property management expense, no loan on their credit report, no turnover or vacancy expense.

Equity sharing is a great way for an investor to leverage cash without as much risk as traditional land-lording.

Equity sharing is really just a form of syndication and a simple strategy for taking advantage of current market conditions.

For the cash partner, you get to invest in housing for the long-term, while mitigating much of the downside risk in the short term.

For the credit partner, you convert your housing expense into housing security and long-term equity. Half of something is better than all of nothing.

And when it’s hard to find rental housing that cash flows after expenses, equity sharing is a way to ride the housing bull with far less risk than traditional land-lording … while helping a young person get on board the real estate equity train.

Looking Ahead with our Predictions Panel – Part 2

Listen in to hear part two of our 2018 Predictions Panel!

In this episode of The Real Estate Guys™ show, we sit down with three expert economists. Our guests hail from Fannie Mae, the international finance sector, and the National Association of Realtors® (NAR).

Together, we’ll look back on the economic trends of 2017 … and talk about what our experts think is coming around the corner in 2018.

Then we’ll put it all together to calculate how trends in the U.S. and across the world will affect YOU as a real estate investor.

This show features:

  • Your trending host, Robert Helms
  • His not-terribly-trendy co-host, Russell Gray
  • Doug Duncan, senior vice president and chief economist at Fannie Mae
  • Richard Duncan (no relation!), best-selling author and economist
  • George Ratiu, director of quantitative and commercial research at NAR



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Where do we fall in the economic cycle?

We asked Doug, Richard, and George about where the U.S. economy will be heading in the next 12 months.

“Recent data suggests a recession probably won’t happen in the next 12 months,” says Doug. He reminds investors to be mindful, however … “Every expansion eventually ends.”

Doug also predicts that, “In 2018, we will see a small acceleration of growth over what we saw in 2017.” The forecast at Fannie Mae predicts a growth of approximately 2.75 percent over the next year, after which the market will slow down a bit.

Richard also agrees that although we are in the midst of a remarkably long expansion, it’s unlikely the bubble will burst in the next year.

Should investors sell now? “That depends on their risk tolerance,” Doug told us. “The best strategy is to ride a bubble out and surf it to the top. This is probably not the top of the bubble.”

Every expansion has to end eventually. The market has been growing since the market crash in 2008 … but so far, our expert economists aren’t seeing any major signs of impending recession.

What will cause an eventual crash? “The key as to when the bubble will pop depends on interest rates,” says Richard.

Will interest rates rise?

The biggest factor affecting players in the lending world … that’s you! … is interest rates.

In the next year, says Doug, “The central banks may tighten, which will apply upward pressure to mortgage rates.”

He says upward pressure won’t be significant this year … but that we’re moving that general direction.

Richard is a bit more concerned about rising interest rates, and thinks YOU should be too … he says, “Listeners should be very concerned about the possibility that U.S. interest rates will go up within the year.”

That’s because the Fed is currently reversing quantitative easing right now … essentially “uncreating” money. That may bring danger, as higher interest rates will push asset prices down, says Richard.

He also says higher rates will cause credit to become more expensive and “contract and cripple the economy.”

What’s happening in the housing market?

Doug notes the rental market is slowing down right now … but only because the largest metros are saturated. Smaller, less saturated markets are a better place for investors to be right now.

George agrees. Prices in large-cap spaces are still trending upwards, he says, but investors have started to take their foot off the accelerator over the last year.

By contrast, smaller markets like Austin, Nashville, and Jacksonville are still seeing continued acceleration. “There’s a lot of potential in smaller markets,” says George … and these markets are grabbing the attention of investors, both locally and internationally.

What about the supply side of the equation? “Single family home construction is still running slower than demand, whether that’s from investors or occupants,” says Doug.

George emphasizes the low housing supply … “2017 has been a year characterized by extremely tight inventory,” he says.

But in 2018, George thinks the market will be a stable platform for real estate investors. He says price appreciation will flatten and prices may even decline in some markets.

On the other hand, Doug predicts that “Real prices will continue to accelerate faster than has historically been the case.”

Even if housing prices flatline this year, they’re already historically high. Will incomes rise to meet the cost of buying property? That depends, in part, on the effect of the recent tax reform.

How will the tax bill affect the economy?

According to Doug, “The tax change should result in household income growth due to tax cuts for most households and acceleration in business investment,” which will increase productivity and wages.

“This is the biggest sweeping change in a very long time,” says George.

Will the tax bill benefit those who want to become homeowners? George notes that the mortgage interest deduction and property tax deduction were both capped in the new bill … and predicts that will affect the real estate market going forward.

The impact will be higher, however, in states where the property tax is significant.

What does the future look like for millennials?

George notes there is concern about this generation acting differently than past generations. Living in a sharing economy may mean millennials are less likely to want to own their own homes … which could be good for investors.

But according to Doug, “There’s clear evidence that millennials are moving to buy homes.”

Despite the demand, there are some barriers to entry for millennial home buyers … George notes that property prices have increased six percent year over year, while wages have only gone up about two percent.

Combined with rising interest prices, millennials are faced with an affordability challenge. And, says George, “Student debt also presents a serious issue.”

What’s going on in the global market?

Richard sees several areas of concern, globally.

Europe is cutting down on quantitative easing, just like the U.S. This will push interest rates higher, eventually impacting the market negatively, he says.

He is also concerned about Chinese exports. “The world can no longer continue absorbing so many Chinese exports,” he says, and this may lead to tariffs on goods from China.

He thinks China will begin overproducing goods, weakening prices and ultimately causing bank loans to default. This would cause a systemic banking sector crisis in China, says Richard … and have serious repercussions around the world.

For the time being, however, U.S. investors find themselves in a fairly stable position. According to George, “The U.S. economy has performed quite well, even as other places resort to negative interest rates.”

Although George, Richard, and Duncan aren’t sounding any major alarm bells, we encourage you to do your own research and figure out a plan that’s right for you.

Start by checking out part 1 of our 2018 Predictions Panel, if you haven’t already!

Whether you buy, sell, or hold, make sure you’re prepared for an eventual crash. Investing is a long game. Start figuring out your contingency plan now!

More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

America divided…

America Divided…

As much as Americans clamor for a UNITED states and ONE nation under (pick the deity or political leader of your choice)…

From a financial perspective, and in particular in terms of real estate, America is anything but uniform.

And that’s GREAT NEWS!

This is why real estate is such an effective investment vehicle… and why so many financial professionals don’t understand it.

Real estate is NOT an asset class or a market like financial pros are used to.

Properties aren’t uniform. They don’t trade in bundles on highly efficient high-speed electronic exchanges.

Every property is different.  The inefficiencies of real estate ARE the opportunity.

Ironically, the headline which triggered today’s topic comes from none other than Money:

The One Big Real Estate Trend You Need to Understand in 2017

The opening paragraph says it all…

“Forget a tale of two cities: Extreme housing market fragmentation is now creating different experiences for home buyers and sellers in a wide range of locations and segments.” 

News flash…  it’s been like that forever.  And it’s what geographically diverse investors THRIVE on.

But here’s an interesting observation from the article, which reinforces important lessons… some of which we’ve been commenting on for some time:

Small homes have seen a much sharper price growth than larger ones…” 

Makes sense.

With both nominal and real wage growth fairly soft, healthcare costs on the rise, and many workers still burdened with student debt… even with crazy low interest rates, it’s hard to buy the bigger home.

So although those are largely economic negatives, the consequences don’t hit housing equally.

That’s because less prosperity lessens demand for HIGH priced properties, while simultaneously INCREASING demand for affordable properties (and markets).


Just like the 2008 financial crisis created a BOOM for landlords.  It was primarily the housing speculators who got crushed.

When people lost their jobs and homes, they rented smaller homes and apartments, found new (often lesser paying jobs), and though America become poorer in the aggregate… landlords of the right properties in the right markets became wealthier.

So bad times for the masses doesn’t necessarily mean bad times for YOU.

The bottom line is we don’t know what the future will bring.

Maybe Trump’s policies will make America great again.  Maybe they’ll crash the economy.

Maybe Peter Schiff is right (he was right about 2008), and no matter what Trump does… or if Hillary overthrows the vote and claims the Presidency… or if Obama declares himself emperor and refuses to leave… the amount of debt, deficits and promises will eventually overwhelm the economy and we’ll get the MOTHER of all crashes.


Just remember… real estate has survived depressions, recessions, high interest rates, currency collapses (yes, 1971 was a collapse), stock market crashes; Presidential assassinations, attempted assassinations and impeachments; hanging chads; AIDS, Ebola, Zirka; civil unrest, Reefer Madness and disco.

You get the idea.

Real estate isn’t going anywhere short of a revocation of private property rights or a life-ending collision with an asteroid.

The key is whether YOU and YOUR portfolio will survive.

We’d argue the fat spot in the middle is a safer bet… even though many say the middle class is being wiped out.

True.  But that’s only financially.

So instead of owning a big home in the suburbs in a pricey state, the no-longer middle class might need to rent a smaller home in a more affordable market.

And if YOU build a great boots-on-the-ground team in those more affordable, low tax, strong infrastructure markets… you’ll be there to meet their needs.

Sure, you could make more money faster playing at the margin… IF you get it right.  And maybe there’s some high risk room in your portfolio to play there.

It’s REALLY exciting when you buy a property for $500,000 and sell it a year later for $650,000.

But back to our article…

“Inventory has also risen at the higher end of the market, climbing almost 8% for homes in the $500,000 to $750,000 range.”

Sure, that’s just a data point on a curve.  But it’s a trend worth noting.  It says the higher end of the market is slowing down.

We got lots of lessons in 2008.  Many the hard way.  But we got them.

Speculators… people buying at a high price in a hot market hoping to sell quickly to the next guy or pull out free equity with cheap financing… got stuck with underwater properties and negative cash flow.


So we think it’s really smart right now to be hyper-attentive to YOUR market selection, team, property, financing structure, CASH FLOW… and maintain some liquid reserves both inside and outside the banking system.

Then pay attention.

If times are good,  the mega wave of Millennials, lower-middle class folks, immigrants attracted by opportunity (assuming we let them in), will all push up into the middle markets and price points.

But… you’ll have to work harder to find good deals.

This is where a GREAT local team who LOVES you is awesome.  They’ll help you exploit micro-inefficiencies and find great deals at the street level.

And if times are bad… even really bad… then all the folks who are riding high on today’s bubbles in the stock market, or have high paying jobs in debt-driven industries, might see the music stop.

They’ll move DOWN from the top… into more affordable markets and product types.

But good deals will be plentiful during the transition… just like in the wake of 2008.

Back then, those who had soundly structured portfolios, even if they were underwater, could hold on through the down trough.

And those who were both soundly structured AND liquid could go shopping to ADD to their portfolios at below-replacement cost prices.  Ah, the good old days!

As investors, we’re thankful the market isn’t level.  The schisms are where all the opportunity is.

Best of all, it’s guilt free profit.  

Because the only way you really succeed in income property investing is by collecting a portfolio of properties you’re committed to maintaining, and collecting a portfolio of tenants you’re committed to serving.

In other words, you do well by doing good…and we hope you do.

More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

Unleashing the Millennial Mind – A New Generation of Opportunity

We hear about #Millennials in the news all the time.

Growing up in a social media world, they have a voice – and they’re not afraid to use it.

We felt it was time to talk about millennials on our show … after all, their generation is BIGGER than the Baby Boomer generation.

As an investor, it’s important to know about this group, since they will be your tenants, vendors, and even investing partners – if they’re not already!

Sure, some millennials are straddled with seemingly endless student debt, living it up in their parents’ basement until their thirties.


Others are starting valuable businesses, creating world-changing foundations, and making a difference in their communities.

We see an investment in the rising generation to be the best one you can make – for all of our futures.

Who better to argue the case for Millennials than someone who IS one? Tune in to our latest edition of The Real Estate Guys™ radio show with personalities:

  • Your #MillennialLivesMatter host, Robert Helms
  • His Millennial-daddy co-host, Russell Gray
  • Entrepreneur and Millennial Success Strategist, Sean Gray



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Why Millennials are a REAL opportunity for real estate investors

Some folks in business don’t consider Millennials as a viable market. We DO!

Millennials, defined by the Pew Research Center in 2015 as those between the ages of 18-34, number at 75.4 million. Their numbers have overtaken the Baby Boomers, meaning you need to pay attention to the purchasing power of this unique group.

Every time a huge wave of humanity moves through the cycles of life, they bring their collective consumption habits.

Whether you’re a Millennial yourself, the parent of one, or simply an investor looking to grow your business – there’s no getting around the need to interface with this generation.

They’ve spent their formative years in their teens and 20’s on social media and accessing information on the Internet.

We see them as bright, bold, with real potential to be movers and shakers.

Standing up for the “selfie” generation: Millennial Success Strategist, Sean Gray

Sean Gray is first to say he was “22 without a clue” when he graduated from college a couple years ago. His friends were starting jobs and he was at a standstill, not sure what he wanted in life.

“I remember sitting in Belize with dreadlocks,” said Sean Gray, who now speaks about strategies for millennial success. “I wasn’t even thinking about adding value to the world.”

Most people ask themselves the question, “What do I do to make money?”

Sean says mentors helped him ask a better question: “What can I BUILD that will afford me the lifestyle I want to have?”

Sean sought freedom to go the places he wanted, to spend time doing what he enjoyed.

The tricky part was getting started for Sean.

After all, how about you start creating the lifestyle you want?

“You don’t have to wait 20 or 30 or 40 years for that,” said Sean. “You can build streams of income around the places you want to live, doing what you want to do.”

He found inspiration in an event with Brian Tracy, where he spent time with other folks his age in a master mind group. They were inquisitive, bright, and had great ideas.

A millennial strategist’s biggest piece of advice?

“If you really want to go places in your life, start hanging around people doing the kinds of things YOU want to do,” said Sean. “It’s key to hang out with like-minded people.”

The way you think and the way you behave is a product of the people you are spending time with.

A lot of times, even those who are closest to you might not understand your vision. That’s OK. Just be conscious about who you let influence you.

Entrepreneur Jim Rohn talks about limiting associations with those who don’t help you. So perhaps instead of being around negative Aunt Nancy for days at a time, maybe visit for a couple hours instead.

Tips for parents of millennials

You might have noticed the same last name – yes, Sean is Russ’s son.

Russ realized that Sean’s struggles to find what he wanted in life weren’t the sign of laziness or lack of motivation. He was just confused.

It can be easy to get discouraged in this economy, and even daunting to start a business yourself.

“The hardest thing and the easiest thing was realizing I wasn’t the answer,” said Russ on the show. “It bruises our ego as a parent to think we may not be the answer, but in reality Sean needed more than I had to give.”

So what did Russ do?

He exposed him to a whole network of successful people.

The Real Estate Guys™ believe we, as the older generation, need to help those who are coming next. Passing the torch is an act of enlightened self-interest. You can’t help but benefit when you help someone else.

How millennials can let go of limiting beliefs and find CLARITY

What does Sean recommend for his peers who want to create a business that fits their lifestyle? Let go of limiting beliefs and take time to look at the big picture.

“Then five or 10 years down the road, you won’t be frustrated you plugged into someone else’s system instead of creating your own,” said Sean.

Why do so few make it? It takes real effort.

“If you’re down-trodden, take time to get clarity,” said Sean. “It doesn’t come overnight. It takes immersing yourself in positive ideas and having as many experiences as possible that help you achieve your goals.”

Listen in to our latest show for more insights on millennials in today’s real estate market. 

More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

Brian Buffini On Success And Future Of Real Estate Agents

Brian Buffini Success Tour


Real estate investors and their real estate agents have a symbiotic relationship. They need each other to thrive. Few know this better than Brian Buffini.

Today, both investors and their agents face challenges and opportunities created by technology, economic cycles and demographic shifts – just to name a few!

In this episode, we look at real estate investing through the eyes of a man who’s trained more real estate agents worldwide than anyone else. Plus, he’s a lifelong investor and a great American success story.

So tune in to be enlightened and inspired as Brian Buffini shares lessons from his life as an investor, agent, trainer and entrepreneur.

Discussing the symbiotic relationship between real estate agents and real estate investors:

  • Your experienced real estate agent, investor and show host, Robert Helms
  • His grateful for the great mentors co-host, Russell Gray
  • The Godfather of Real Estate, Bob Helms
  • Master Real Estate Agent Trainer, Brian Buffini




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(Show Transcript)



Robert Helms: Welcome to the Real Estate Guys Radio Program – I’m your host, Robert Helms. Joining us this week, as usual, co-host and financial strategist Russell Gray –

Russell Gray: Hey Robert –

Robert Helms: And the man we call the Godfather of real estate – he’s been investing in real estate in 7 different decades – Bob Helms –

Bob Helms: Good morning, guys! Great to see you both!

Robert Helms: Yes indeed! We’re here in beautiful San Diego, California. Always a great place to come and super excited because our guest today hails from this part of the country, and it just so happened that our schedules came together – and we’ll tell you all about him before we introduce him, but – we’re talking today about the role of the real estate agent; we are very pro professional.


Avoiding the “Discount Agent”

You hear a lot of folks that say that you can save the commission if you don’t use a real estate agent. Or, here’s the thing – here’s how you negotiate – none of that. We are all about loyalty, getting great agents in the market you’re in, and sticking with them – because a great agent never costs you money; they make you money.

Russell Gray: Well I mean if you think about it, if you had a major health issue – brain surgery, heart surgery, cancer – something like that – do you want the cheapest doctor? Do you want the least motivated professional? Or do you want the person who can charge a premium, because they’re great at what they do?

I mean, at the end of the day, price doesn’t necessarily mean that you’re getting the best, but most of the time the best don’t work cheap.

If you think about the amount of money you’re going to make on a piece of real estate over the lifetime of ownership, one or two percentage points on the front end is inconsequential. And if that’s the difference between success or failure in your deal, you don’t have a deal.

Robert Helms: Well, not only that – you want your agent to have the gumption to get up every day and the incentive to work with you. Right, Bob? You sold real estate for 1,000 years – and there’s certain clients that you would be happy to take their call, and there’s other folks that you see their name on your cell phone and you go I think I’m busy right now.

Bob Helms: I know I’m busy right now – it’s just a matter of anticipating who you’re going to work with, your reputation precedes you. You only get one. You need to take care of it, and you need to make sure that the people you pay aren’t all about discounting.

Discounting is a terrible, terrible burden to pay, because you don’t get what you think you’re getting with people that discount. I want to pay people extra – not short – because I want them to earn it.


The Business of Relationships

Robert Helms: Such an interesting mindset, you know. I always tell people that you should ask the agent if they’ll take less, and if they do, then don’t use that agent – because if they’re going to cave in on their commission the minute you meet them, what’s going to happen when they’re negotiating on your behalf?

There’s a lot to be said for developing great relationships. And of course, this is a relationship business.

If you’ve heard the show a lot, you’ve heard us harp on that – but we’re in the business of relationships, and one of your primary teammates is your agent.

Now, if you’re a real estate investor, you may have more than one agent – and that’s because you have more than one product type, or more than one marketplace. If I’m buying property in two states, then even legally I need two different agents.

What you don’t want is two or three agents in the same market competing. It sounds like a good idea – I’m going to get three agents working for me, and that’ll really get them motivated to – who can bring me the best deal.

That’s the worst way to motivate an agent. In fact, you want to develop a loyalty relationship so that you’re the one – you’re on their short list – they call when they get a great deal.

Russell Gray: You know I think it really comes down to understanding what the real estate agent is going to do for you. What you’re really doing is you’re buying into a network.

This is somebody who’s taken the time to go out into a community and to get to know that community – to build a brand – to build a reputation – you know, they talk about farming and real estate – the idea that a real estate agent – and anybody listening to this probably has that going on.

They’re getting solicitations in their mailbox, and they’re having people knock on their doors and hang fliers and things – there are people who work certain geographies, and they begin to build up their reputation. After a while, people begin to trust them – and so when it comes time to list their property, they’re going to do business with that person.

If you want to have the opportunity to find that deal – the guy that controls the inventory – you’ve got to have the guy who has that brand – who has that reputation. Really, that’s what you’re hiring.

Sometimes we forget – we think, “Oh, we’re just going to hire somebody to manage my transaction.”

Your relationship with your agent is so much bigger than that – that’s why I’m really excited to hear from today’s guest – because Brian is just the king of going out and building that brand and building that network and creating those relationships with the community to where you have access.

As a real estate investor, I’m looking for the person who’s got control of the inventory, so I can be at the top of the list in terms of when that good deal shows up.


Building Referrals is Key

Bob Helms: Well, great real estate agents bring a lot more to the table than just experience. Experience is urgent – it’s necessary – but much more important is their attitude.

It’s where they come from. They’re looking for referrals; they want to get them and give them. You only get that on one basis – as our guest today will say.

You have to earn it. It has to be an important part of who you are, and how you go about that. If I’m interested in maintaining – keeping – a client, I’ve got to take good care of that client. It doesn’t take a lot, but surprisingly a lot of people never bother to do it.

Robert Helms: You know, naturally, Bob, I think – looking back at the time we sold real estate together – you just did that. I mean, you weren’t trained to go get referrals; you just had a genuine interest in people, you did a great job for them, and they did what people do when you do a great job for them.

They worked with you again, they told their friends, they told their neighbors – and you built a referral based business – without a handbook or a training course.

Bob Helms: Well if you look at what happens if you’re not that attentive, and you’re not paying attention – it’s called, you don’t get any referrals. As a matter of fact, you do a transaction as an agent – and you think you did a pretty good job.

But the question happens – now what? Did they call you the next time around? Did you continue to touch them? Did you continue to be somebody who was delivering service to them?

And many agents are shocked when not only did they not get a referral – they didn’t get the next deal directly from that client, and it’s just a weakness in the system.

And it’s so easy to overcome – if you pay attention, you can do all the business you want to do.

Robert Helms: It’s amazing – and the worst thing that happens as a real estate agent is when you drive by a house that you sold, and someone else’s sign is in the yard. That tells you you’re not doing the job.

So how is it that you as an investor find the right agent? How do you keep the right agent? How do you change agents when you need to? Those are all things we’ll be talking about today.

When we come back, you’ll meet our guest. Many years ago, we had a chance to go to a seminar given by this gentleman, and I had been in real estate already many years. We were quite successful; top 1% of our company – but he blew me away with the simple idea of asking for the referral, and building the business.

Today, Brian Buffini has trained more than 3 million agents in more than 35 countries, and he’s going to share some wisdom with us.


Background on Brian Buffini and the Buffini Company

Robert Helms: Please welcome to The Real Estate Guys radio program the amazing Brian Buffini. How are you sir?

Brian Buffini: I’m great. Thanks Robert – thanks for having me.

Robert Helms: Oh, absolutely. You know, we haven’t seen each other in quite a while. I went to your amazing one day event, and then went to the turning point in Monterey – just the end of our real estate career, if you will, and I have to say you worked me out of a job.

Brian Buffini: Great. (laughter)

Robert Helms: We took what you taught, and really embraced that, and did extremely well – and today, we don’t sell real estate. Happily, we spend our time investing in real estate instead.

But what’s amazing – and if you will, because our audience, I’m not sure, is clued into what you do – but your story’s amazing. You didn’t start in San Diego. You started in Ireland. How’d you get here?

Brian Buffini: Well I – born and raised in Dublin, Ireland. I came to America in 1986 on a vacation. I had two very specific goals – I wanted to get a suntan, and meet sun tanned girls.

Robert Helms: Alright!

Brian Buffini: And so I ended up – I’m still kind of pasty, and I married a black girl, so it didn’t quite pan out the way I was hoping, you know?

So I came out here – I was selling t-shirts on the beach – down and off of Pacific Beach, off a cart. I actually was moving $50,000 worth of t-shirts and sweatshirts a month, so it was pretty good.

So I always liked to sell, and while I was here, about three weeks before I was going home to Ireland, I got in a motorcycle accident. I got broadsided by a car, and I was in and out of the hospital for the next two years. $252,000 in medical bills and expenses, 19 years old, 7,000 miles away from home, and my family was pretty poor – you know, didn’t have a lot of money.

So, I found myself in that spot. And so, when you have no money, when you’re totally broke, you don’t know anybody, and you don’t have any discernible skills, the obvious choice is real estate.

Robert Helms: Yes.

Brian Buffini: So that’s what I did. And so I dove right in. And while I got my license, the first home I ever bought – I bought myself. And I had – I had no money, back in the day – this is 1987 – the beginning of ’87.

And – one page contract, used three credit cards – which I wouldn’t advise today – but I was a painter’s son, so I knew how to fix and work with properties. And I spent $14,822, and the reason I know that is because I had $15,000 on the credit cards.

Robert Helms: Wow.

Brian Buffini: Bought a house for $106,000 – and put 14+ grand into it, sold it for $169,000. And so that was my first transaction.

After that, that was kind of the path I was on, where I later developed a methodology, as you know, for developing referrals as a real estate agent, but I also never lost – and have never lost my pension for buying and investing in real estate. In fact, when I leave here today, I’m going to go put a deal together. So, real estate’s been very, very good to me.

Within the next three years, I was debt-free, thanks to both owning real estate and selling real estate as an agent. And within the year after that I was the number 5 real estate agent in the state of California – the year after that I was number 5 real estate agent in the country. By 26 years of age, I owned $6 million worth of real estate, and I was selling 100 homes a year.

You know, from that point on, that was the foundation from which I eventually built what is now Buffini Company – the largest coaching and training company in the world.

Brian Buffini referrals

And we train not just realtors, but business people all over the world now. But it was from that foundation – and I still love real estate. I still train real estate agents. I still own real estate. I still buy real estate – I’m not a big fan of selling real estate – I’m a big fan of holding onto real estate – that’s my story, and I’m sticking to it.

Robert Helms: Awesome. Good stuff. Well, not everyone makes the transition from success in the business to mentoring – and really, the idea of that – what you did was successful, now how can I share that with other people? How did that part of the business come about?

Brian Buffini: What happens in real estate, as you know, is that people go to conferences and conventions all the time, because it’s either that or work. So, hey, there’s somebody coming to town with a free seminar – let me do that.

So there was a number of conferences and speakers and events around, and I eventually – you know, I was the top salesman for Remax, for example.

So they brought me in and they asked me to sit on a panel. And I would share a very simple process of how I developed trust with my customers, how I exceeded their expectations, and how I got them to send me referrals, and why I was selling 100 homes a year.

And all of my business was referral; I had 0 advertising budget. I would finish this panel, and there’d be 500 people in the room, and it seemed like 490 of them were standing in line to talk to me and going, how do you do this? How do you this? How do you do – that sounds like me. I want to have – I want to take care of my customers. I want to do a great job for people. And most do.

But the industry was teaching cold call, door knocking, you know, the lead trainer at the time had a phrase – “Find ’em, fleece ’em, and forget ’em.” So what I was talking about was somewhat contrary to that.

Robert Helms: Yeah.

Brian Helms: And so I did a number – for two years, I volunteered at least one day a month that I would speak, whether they were seminar speakers, or real estate conferences that I would get requested – and I would do that.

And it was my way of giving back to the industry. But I’m also a businessman – and after two years, and my phone is blowing up, and people are sending me letters and emails, I go, you know, I think I might do this.

Robert Helms: Yeah

Brian Buffini: And I wasn’t going to do it on a grand scale – I decided I was going to do it here in San Diego. So on February 14th, 20 years ago, 1996, I held an event that I promoted in three weeks – and I’d just sent out a letter – a fax [laughter] – to all of the people I’d done a transaction with, and I said, hey – a lot of times people have asked me, hey, how do I do what I do? And so on and so forth. I’m going to come and share with you. And I did a free seminar, right here in Mission Valley, San Diego. And 460 people showed up.

It was probably to this day – and we’ve done over 2,000 seminars – it’s probably the most meaningful event I ever had, because it was all people who knew me, who I had done business with, and I had established a relationship with.

And they were like, I’m here because I watched you, and I’ve watched you do your craft. I’ve watched you – how you’ve treated me. You know, I would send every agent I was ever on a transaction with – I would send that agent a personal note, during the transaction, and after the transaction. I believed in a cooperating spirit.

It was never – we could negotiate and be tough in a negotiation, but it was always about working for our clients and being pros. And so that first event – some of the top pros in San Diego said, “man, you’re on to something”.

And so I gathered a few guys together and we started, and we said all right, maybe we’ll do a few more of these. Within 12 months, we were seeing 3 to 4,000 people every month. Our events were sold out all over the country. Companies came and sponsored the events. I built a coaching program, and a training program.

Then, every time someone had a need – I never said oh I’m going to build this product and sell it to people – every time they said, “Man, I really need help with this – ” and we’d ask them why, and we’d give them ideas, and we’d give them all of our stuff for free, and then we ended up systemizing it.

So, today, we have 15,000 members that are in a coaching relationship with us. They sell 1 out of every 8 homes in the United States, and 1 out of every 7 homes in Canada.

We have a couple hundred staff up the coast here that are great coaches and mentors and trainers that provide all of the resources these folks need. I think, when you try to provide – when you try to make a buck, and everybody should make a buck – we’re all capitalists here – but I think when you try to make a buck, you’ll end up stuck always trying to make a buck. But if you try to fill a need, you have a chance to build a business.

brian buffini work by referral

But if you meet the need, and then really are genuinely interested in the person on the other side of the need, now you create advocates.

Our company grew, at one stage, no less than 40% a year for 10 consecutive years, as today without a single dollar of advertising. We’re a $50 million a year business today that has no advertising budget.

We have a lot of advocates. We have a lot of people who believe in what we do, it’s helped them, and then they tell their friends. I know it’s kind of quaint, but doing the right thing, in the right way for the right motives, produces the right results. You can be a good guy and win.

Robert Helms: It’s what Jim Rohn would call enlightened self-interest. So capitalist for sure, but if you’re not providing value – and I love the – I don’t want to miss this nuance – we talked at the start of the show about how important the relationship is between a client – a home buyer/seller/investor, and their agent. But it’s bigger than that, right?

We often say that this is not a business of competition. It’s a business of cooperation. Sure, we might go up against each other on a listing every now and then, but more often than not, agents need each other to provide inventory.

So this idea of not only is the relationship with the client – but with the other agent – that’s gold right there.

Brian Buffini: Well, it gets to probably three different things, right? There’s 1.25 million realtors in the United States. There’s another double that amount for number the people with a license, see. So there’s 2 and a half million real estate licenses running around the United States.

The challenge is, if you get into the transaction – and again, this is – you have new agents, and so on and so forth. But if you get into a transaction with someone who’s desperate – you get into a transaction – Ben Franklin said, “It’s hard for an empty purse to stand upright.”

So what happens then is, everything’s a panic. Everything’s a freak show. It’s three days before the closing, a storm comes through, you get the call at 8 o’clock at night, the fence fell down – the fence fell down. They’re freaked out, they’re panicked – I told the seller I’d pay half, I told them you’d pay the other half. Those are the kind of calls where I say, “I’m sorry, I have a bad connection” – you know?

But a lot of agents are coming from a place of desperation. Last year – and the National Association of Realtors doesn’t want this coming out – but the average sales agent in the United States last year made about $35,000 – gross commissions. Now when you get a NAR number, they include broker revenue in there.

So if you get a sales agent who grossed $35,000 and then has to pay their broker split, and whatever else, it says the average agent in the United States last year took home 20 grand.

Now here’s the thing – if you’re dealing with someone who’s making 20 grand a year, and there’s a $5- or a $10,000 commission on the table, they’re pretty desperate. And so that’s part of the challenge. And so, you know, God’s created all people equal, but not all realtors are equal.


Look for the Real Professionals

Brian Buffini: What you’re looking for are the pro’s. If you’re a pro, you want to be a pro. And I don’t care – we work with new agents all the time.

We have a new agent training program that the average new agent sells 12 homes in their first 16 weeks of real estate. That’s a great start to a career. But their fundamentals – they are professionally sound. They are taught what to do and how to do – how to serve the customer – how to build a database.

If you’re looking for an agent and it’s – ok, they’re the cheapest; you guys were talking about this – they’re the most available – they might be the most problematic. And so that’s the agent that’s freaked out during the transaction. You want someone who’s a pro. You want someone who’s a rock.

You want someone who says, “You know what, Robert, I’ve got to be honest with you. I don’t think you should buy this one. I don’t think you should buy this one, because I don’t think you’re going to get out of this one.”

The amount of people I’ve told in my career I’ve told in my career not to buy, or, “You know, I don’t think now’s a good time to sell, for you, based on your needs.” You can do that. It’s hard for an empty purse to stand upright – the full purse can look someone in the eye and say, “You know what, maybe not now. Because I’m more interested in a relationship.”


Respecting Your Client – A Top Priority for Being Professional

One of my top clients in my whole life was a real estate investor. And I was – here I am, I’m 19 years of age, I’m doing an open house, in a drive by community in San Diego, ok? And I’m not talking about pizza, ok. This lady walks in the door – she’s about 5 foot tall, about 250 pounds, a little Mexican lady – Anna Deleon. She has sauce down the front of her shirt. She walks in, I say, “Hello, how are you doing?”

We walk through the house. She asks a lot of good questions – some I didn’t know – and I said, “You know, I don’t know the answer – but I’m going to find out.”

I followed up with her. I got her her answers. I wrote her a note to thank her. I followed up a week later, “Hey, did you have any questions, so on and so forth.”

She goes, “You. You come to my house. You come to my house, tonight.” So I go to her house that night.

She goes, “Here’s the house I want to buy.” A house I hadn’t seen.

She goes, “Do you have an offer?” Now I had you know done two or three deals at this stage. I pulled out the contract. She kind of helps me through writing out the contract. Anna Deleon bought 10 homes – one for each of her grandchildren.

Now I didn’t have the courage until about the third sale to ask her, why in the hell she was talking to me. Cause I was 19. I obviously didn’t have as much experience to share. She said this – she goes, “I go to these houses all the time – the cars, and the nice BMW in the driveway. You followed up with me. You treated me with respect. You always showed eagerness.”

And she said, “When you told me that you didn’t know the answer, and then you found out the answer, I trusted you.” That woman taught me the real estate business. She taught me how to be a real estate investor.

She made me a fortune. I was actually the executor for her estate years later, and I didn’t know how much real estate she owned, but she owned a lot – a lot of real estate. Buying, holding, built herself a fortune – bought every one of her grandkids a house.

She’s walking in open houses, and the realtors wouldn’t give her the time of day, because she was a heavy set Mexican lady with spaghetti sauce on her shirt.


Trends in Technology, and Millennials in the Market

Robert Helms: Great, great lesson there. People shouldn’t judge, but they do. And if you will instead treat every client as though they had the potential to be your best client, amazing things will happen for you.

Well, Brian, you sit in a really interesting seat, because you have 15,000 agents across the world, plus people that come to trainings – and that’s just the members, right?

So you kind of have your pulse on what’s happening on the agent side. And as we’re seeing huge changes in technology, potential changes in the market, conflicting information about where the economy’s going, we’re in an election year – let’s talk about the things you see have changed for the real estate profession.

Brian Buffini: Well I’ve done 15 major media interviews in the last 40 days. And so we’ve been on a little bit of a blitz. For a reason.

Brian Buffini: And because every one of these – whether it’s CNN Money, or Money Magazine, or whoever else we’ve done this interview with – they all have two questions. Tech, tech, tech – and the Millennials are coming. And the Millennials are coming. It’s like the Russians are coming. The Millennials are coming.

A great example is I had this interview with a gal from CNN Money, and she’s just blasting away. She’s like, “the real estate business needs interruption. The real estate business is about to get Uber-ized.” Because this was the theme of her story.

“Real estate agents are a thing of the past, and by the way there’s 80 million Millennials – there’s far more than the Baby Boomers – and Millennials don’t pay for anything.”

And she’s going on, and she has her position, and I’m like, “Look, I’m in this business 30 years so I’ll give you my best. But she’s blazing away – blazing away. So finally I said – we were not seeing eye to eye – but so finally, I asked her this question. I go, Can I ask – can we stop on this for a second – kind of stopped the interview. And I said, “Do you own a home?”

Silence. So I go, “Hmmm. Are you looking for a home right now?”

She goes, “Yeah.”

“I thought you were.” I said, “Are you a Millennial?”

“Yes I am.”

I said, “Are you using technology and apps to search for properties and look?” I go, “Great, let me just walk you through this.” I said, “I’m just going to give you the top 10 things that can go wrong on a real estate transaction.” I go, “This is just the highlights – this is not down into the weeds.”

I started going through, from appraisals, to the negotiations, to the home inspections, to the title report, to the financing – that underwriters really don’t go to heaven – all of these different things – and we go through all of these different – and I said, “Look, this is just the tip on the iceberg.”

Now I said, “You’re a Millennial. Just to give you a little context on that. Millennials represent about a third of the buyers – but they only represent one of the sellers. Can I ask you this question? You’re looking for a home, you want to do it yourself and trust your app – here are the 10 things that are going to wrong. I’ve done thousands of real estate transactions and something happened on every one of them where the stuff hit the fan.”

And I go, “Let me ask you this question – a couple things. If you go and find this property – you’re a Millennial, right? You don’t believe in paying for anything,” I said, “What are you paying for? The seller pays the commission in real estate.”

So I go, “Where is that to start with?” I go, secondly, “Don’t you want someone to hold your hand and walk you through the minefield of all these things that are going to go wrong?” I go, “Let me just tell you this – there’s a commercial that says there’s an app for this – let me tell you, there’s not an app for when the stuff hits the fan, and you need to walk through the details of a real estate transaction.

That’s where you need a person – a skilled pro who has knowledge, who has expertise, and has the personal character to care enough about you to put your interests first, and walk you through it – because they get their jollies from seeing you moving into that home and handing you the keys.”

I go, “That’s the deal.” And I go, “So if you think that’s going to be outsourced to some app,” I go, “maybe.” But I said, “I’ll say this. The statistics don’t bear out.”

I said, “They’ve been keeping track of for sale by owner statistics since 1970. We have more technology than ever before. We have more resources than ever before, and last year – 2015 – was the lowest number of for sale by owner since they kept history. Ever. Since they kept a record of it.

Robert Helms: Do you remember when the MLS came out, and it was supposed to be public? And agents were freaking out, because we had the book to start with, and then we had the 300 bod dumb terminal, and we had the information – and we thought, the minute we give that to the public – we’re done – this business is over. Realtors are more important than ever before today for the reasons you just said.


Competition Creates Opportunities; What Competition is doing for Real Estate

Robert Helms: Hey, let’s talk about what’s happening on the other side of the business which is that, competition in any business creates a great opportunity for the consumer to have choice, but it also changes the nature of the game. Right?

Take your business. When we were heading into the hot real estate market back in ’05/’06, I remember going to one of your big events – things were huge. There were a lot of people in your business.

When the downturn came – not so many people in your business. So, today, what are you seeing from that perspective – the competition and what that is doing for the real estate community.

Brian Buffini: Well, I believe competition makes everybody better. And efficiency gets driven through the market.

That’s one of the things that technology does. I mean, I’m an American by choice – I’m an American citizen, but I bleed green still – so I still have a little bit of a stranger in a strange land perspective. And I see this with Americans particularly – which is, a fascination with technology, and almost an abdication to it: “Oh my God, this is going to do this. This thing is going to water my lawn and do my dishes for me.”

The truth is that technology makes things more efficient. Like you were talking about, the MLS books. Well, now it’s on a person’s phone with Zillow.

I used to be lost, most of my career, trying to use Thomas’ Brothers map. And now, I’ve got Siri telling me, “turn left Brian – you’re lost”. I mean, I think I would have sold twice as many homes, honest to God, if I’d have had GPS. It makes things fantastic.

And there’s a neat thing online if you check it out called “The Evolution of the Desk,” and it shows the desk in 1980, and the desk today. And what the efficiencies that technology brings to the table. So, what are we watching in real estate? What are we watching in the world?

I used to go travel all over the world – get out, get a cab. You never knew what you were getting, who you were getting, what language they spoke, or where they were taking you – is it the shortest route? The longest route? And am I going to get mugged at the end of it?

Now along comes Uber. Now Uber, they do the technology. It’s on your phone. They show the little car’s coming, and it’s a clean, black car, yada yada. Now, the Uber driver – he has abdicated the lead generation part of his business to Uber. So because of that, he has to pay Uber 25%.

You have to count the cost. Uber doesn’t own any cars, they don’t hire any drivers, they don’t pay a lot of expenses; they generate leads. They’ve brought something more to the market. That technology has made it better – it’s better for the consumer. There are technologies and processes in real estate today that are more efficient for both the consumer and for the agent.


brian buffini on real estate apps like Zillow


So, for example – I’ll give you an example with Zillow. Zillow is for realtors – realtors really have some mixed emotions about Zillow. And one of the reasons for it, is that a lot of the information is not that accurate. You know, they’re off by square footage – it’s available, it’s unavailable – so on and so forth. But let me share with you this – consumers love it. Love it.

Consumers don’t care if it has hardwood floors or doesn’t have floors or marble – they’re just looking. It gets you.

You know, the folks that used to be the nosy neighbors, now you actually get to find out – you know that house you have no business going in, because you don’t qualify to even drive up the driveway? You get to check it all out. Consumers love it.

So, the “Zillows” of the world – and there’s many of these now – have created far more interest in real estate. They’ve created far more exposure to real estate. But here’s what we’ve found. 92% of people start their search online – 89% of those who start their search online get an endorsed professional – they get a referral. By the way, with Millennials, it’s higher; people think Millennials are different. Millennials are actually more committed to old school referrals than Baby Boomers.

Millennials are the first generation to grow up with the infomercial as part of their DNA. They watched it as children. They’re immune to sales pitches.

So the old realtor who goes, “Come into office for 20 minutes – I need to see you.” You’re not getting the Millennial into the office. You’re going to have to meet them at a coffee shop. The dynamic is 1) they are far more educated, 2) they have a great frame of reference, so they know a good deal when they see it, and then 3) they’re looking for someone they can trust when the opportunity arises.

Now, I will say this to you; that I believe the future of real estate – and we train 200,000 realtors in the US and Canada alone every year. I’ll say this. What you’re going to see, is an increased pressure on commissions.

What I actually believe you’ll see – people have been saying for years that the real estate agent’s going out of business – the real estate agent is going nowhere. The pressure is going to be at the real estate brokerage level. And it’s the real estate brokerage that’s getting squeezed. And that’s where – that model is what’s actually getting interrupted. The old brick and mortar office. 

84% of realtors who are affiliated with a brick and mortar office, now consider their primary office their home. Because, we used to have to come into the office – examine the microfiche – ok? Like James Bond. Now I’ve got everything I need on my phone.


Technology Increasing Effectiveness and Efficiency

I interviewed Neil Armstrong, years ago, at one of our events. He said he went to the moon with less technology in the cockpit of Apollo 11 than was on my cell phone.

brian buffini on millenials using iphone

So now, the technology and the speed of the information – the ability to communicate – Docusign – my Gosh, if Docusign had been around in my early days – my wife wouldn’t have known how many properties we would have bought. That’s all I have to say. The fact that I had to have a discussion about every time I wanted to buy an investment property – they eliminated – but Docusign, “honey, you’re on file!”. You know?

So, it’s made things more efficient – made things more effective. You guys did a great job of talking about value today – talked about not getting the discounted broker and so on and so forth.

But I would say this – I believe commission pressure is a thing of the future. I think realtors need to have a long term perspective.

If you have listeners that are buying multiple properties, then a realtor should take a look at it as a business arrangement, and should say, this is a bulk deal arrangement.

If you’re Suzy homeowner and you’re not buying another home for 10 years, you’ve got to pay the freight. But if you’re going to buy – do a deal with me every quarter, or whatever else – we’ve got to look at a different arrangement.

Now I would also say – and to support what you guys said earlier on – is a lot of times investors – they’re watching the dimes and counting the pennies, and they need to, because you’ve got to be careful to make money on real estate.

But, on the way out, you’ve got to realize that the average real estate agent sells a home for 14% higher than someone selling it for themselves. And so, their commission is more than covered – because of their ability to promote and market.

They’re going to get multiple offers – multiple people interested – and more people means more interest, more interest means it sells quicker and faster at a higher price.

So, I do believe there’s going to be more pressure in the marketplace for realtors. It might not be, “Oh, I’m going to sell it for 3% or 4%.” It might be, “I’m going to give you $1,000 off,” or “I’m going to do this,” or “I’m going to do that,” or “I’ll help with this closing cost,” or whatever.

But I think the other side is – you want to make sure you’re working with a real pro, because they’re going to make you more money than they cost you.

Robert Helms: You know in any business, as efficiencies come in, and it becomes easier to do the business, then it’s fine that the previous model changes. I don’t think there’s any objection to an agent saying, “Well I’m stuck on a figure,” right?

I mean, commissions are negotiable, by law. And it’s really – you go to different marketplaces, and there are different practices. We’re in a lot of international markets where commissions are 10% typically. It’s like, “Wow!”

We often say, “Yeah just so you guys know if you decide to buy in this country, typically the agents get paid 10%.” And an agent will pipe up and say, “Yeah, and we haven’t had a raise in 10 years.”

But, if I can do – as an agent – if I can do more business, if I can reach more people, and if I can do it more efficiently, then shouldn’t the cost come down for everybody? So it’s not getting – you’ve got to get your mind around – doing more business and having your bottom line increase is more important than what the gross commission is.

Brian Buffini: Well, I just think the future is this – you’re going to see a smaller amount of realtors doing a higher amount of business. That’s just the way it is. And you’re going to see an awful lot of agents who do a very small percentage. That continues on. I mean, when somebody says to me, “How big is your market?”

I’ll have consultants come in and they’ll say, “How big is the market in the United States?”  

And I say, “It’s 400,000 agents.”

And they go, “No, there’s almost a million three agents…” and I go, “No, there’s a million three people who are affiliated with the National Association of Realtors who have a license, but they’re not my customer.”

They’re not my customer. My target is the 400,000 people who’ve made this their career, who are solid pro’s, who get it done, who make a good living at it, and who might need to improve their skills – get better, have a better quality of life – we can help them with that.

Robert Helms: Now Brian, I know we do have listeners who are in the profession, and in case someone’s interested in finding out what you guys do in terms of coaching, and your programs, and your amazing live events – what’s the best way for them to find that out?

Brian Buffini: Go to Buffinicompany.com – they’ll find everything they need to know, live events. We have teams of people.

I think I’ll do 8 live events this year, but the company probably puts on 50. And so, we have a team of coaches, trainers, and everything in between. Our marketing that we provide for agents goes to 1.5 million homes every month. So, we ring the bell for a lot of people.

Robert Helms: And it’s amazing stuff – I’ll tell you. We didn’t really get into that part of your business. But if you’re in the business – whether you’re a lender, a real estate agent professional, even an affiliated person – like title company and all those folks – check it out. It really did a ton for our business last year selling retail. So, great, great stuff. Great to have you on the program, finally!

Brian Buffini: My pleasure. You guys are doing a fantastic job.

Robert Helms: Thank you, sir.


Show Recap

That’s Brian Buffini from beautiful San Diego California – amazing to hear from Brian Buffini.

Russel: Oh, absolutely. The guy’s an icon in the business. It reminds me of the first time I met Tom Hopkins – and of course, Tom’s a little bit longer in the tooth, but these guys are legends in the business.

And even if you’re out there listening and you’ve never heard of either one of them, I think the thing that you need to understand is that they’ve affected you. There are people out there who have conducted transactions on your behalf that have been trained by these guys.

What I love in both cases – with Tom and his sales ability – very excited to spend time with Tom on the Investors Summit at Sea coming up, but with Brian, and just his whole concept of building your network, working through referrals, and taking care of the customer first. All of those things that he was talking about, is so powerful – because it translates not just into real estate – right?

I came out of the mortgage business. Many of my mortgage reps were using Brian Buffini’s training. They made me a lot of money. Brian Buffini made me a lot of money; and that’s awesome.

But you know, we teach syndicators. You just got done talking about The Secrets of Successful Syndication.

At that seminar, one of the major things that people learn how to do in the syndication business – because even though the new laws have been passed – and it’s possible to advertise – syndication – raising private money – is very much a business about networking.

And if you don’t know how to network – and it’s a skill – if you don’t know how to network, some people are gifted in naturally, like Bob here – right? But if you think that it’s something that people are just born into – it’s not that way. It is a skill – it’s a learnable skill – and there’s nobody – and there’s nobody better at teaching it than Brian Buffini.

Robert Helms: This is what’s great – when you talk about advertising for syndication – yeah, we had shows on that – that’s wonderful. Real estate agents have been able to advertise for a long time. And they have. And who gets the business? Do you pick a realtor by their ad? Or by a relationship?

The great agents who service their clients well – it’s not that they’re trying to figure out how to get a referral – it occurs naturally.

What Brian does is he helps people in that process. You may have a great heart to help people, and you may do great business as a real estate agent, and those of us that have investment property – we want a great agent like that. That doesn’t necessarily mean they have the skills or the tools to get the word out. It’s going to happen – but it can happen much better if you have a program, and a system.

Of course, just the fact that we have so much in common – I was sitting here just thinking man, we have so much in common with this guy, at so many levels. And just a really great opportunity to hear about his takes on the business, because he does have this perspective of training a couple hundred thousand agents a year, and coaching 15,000 agents – that’s a lot of agents!

Bob Helms: There’s not a lot of people I know who are better connected to the real estate space – and he’s been doing it for years. The thing about him is that he’s so consistent. He has the skills and the tools, and he’s compassionate. But, he understands what makes it work is to deliver. You have to deliver what your client needs. If you do that consistently, you won’t have any shortage of business; you’ll have all the business you can handle.

Robert Helms: So as an investor, as we kind of wrap up, I think there are some things to take away from this show that are critical. One is that your relationship with your professionals is critical. You’re the executive producer; you’re the quarterback of your implementation team on real estate investing.

You’ve got to find sharp folks. You’ve got to find the types of agents that will get up early, stay late, sniff out deals, and bring them to you. But it’s a two way street.

Russell Gray: Well, yeah. Certainly it is. We talk all the time about how one of the great ways you can tip somebody in your vendor circle – the people who are providing you services – is to give them a referral. It doesn’t cost you anything except the risk that you take that they don’t do a great job. But if you believe in them, and they’ve done a good job, and you want to say thank you, you don’t always have to write a bigger check – right? Sometimes it’s just giving them the referral – giving them your influence – and that’s really the point, right?

He talks about teaching real estate agents how to – and business professionals in general – how to build their brand – how to build their worth – their value – by growing their network; the number of people that know them, like them, trust them, and know that they’re in the business – right?

Well, you can do the same thing as a real estate investor – and you should, because every single service provider that you work with is plugged into a whole network of people that you don’t know – and that’s all part of the deal flow.

That’s all part of access to intellectual capital – people who know how to get things done – and it’s all part of your growing your network, because of the 6th degrees of separation concept; the idea that somebody knows somebody who knows somebody who knows that person that has exactly got the right answer or the right resource that you need to solve your problem or advance your agenda.

So, learning how to master the art of networking and building your business through referral is something that applies to everybody listening to the show, no matter what you do for a living – investor, real estate professional – business of any kind.

Bob Helms: Somebody who is really good at referrals does a lot more than simply give you the name of an agent somewhere. I could pick maybe 6 agents that I could send you to. What I want is for you to have the outcome you want. So I can’t just give you a name; I’ve got to do enough work to make sure that they have the tools, the skills, and are a good match for you, or else there’s no reason to make that referral.

Robert Helms: Yeah, so just make sure as you’re out there, and you’re looking for ages and marketplaces, that the best place to go is for a referral. You’re going to search out a great agent or a marketplace, and then the other side of it – be that referring person, as well. Oh by the way – Brian’s a great guy, as well.

If you haven’t yet done so, there’s plenty of time for you to register for the 14th annual Investor Summit at Sea 2016.

Excited about this. It’s just right around the corner. But you do have to move – there’s time, but there’s just not a lot of time because we’re down to a few cabins. It’s going to be absolutely extraordinary. We’ve G. Edward Griffin – the author of The Creature from Jekyll Island coming; Tom Hopkins coming back with us for his third year; and also, joining us for his third year, the amazing Robert Kiyosaki.

You can get all the details on our website https://realestateguysradio.com/ and click on events. Big thanks to Brian Buffini for sharing his wisdom. Until next week, go out and make some equity happen.


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8/3/14: Clues in the News – Banks, Millennials, the Middle Class and Interest Rates

U.S. home ownership is around a 19 year low…banks are lowering their standards for jumbo loans…millennials aren’t buying houses…and the middle class is moving inland to more affordable markets.

Other than that, there’s not a lot going on. 😉

But what do all these headlines mean to everyday real estate investors?

Behind the shiny silver microphones to explore the Clues in the News:

  • Your clued in host, Robert Helms
  • His clueless co-host, Russell Gray

We like to watch the news.  Each headline is like a piece of a jigsaw puzzle.

Each headline adds to the bigger picture of challenges and opportunitiesViewed separately, it’s hard to see the big picture.  But when you look at a series of headlines, they start to tell a story.

So when we’re not sitting in the studio or gallivanting around the world seeking out interesting guests and real estate markets, we bury our noses in the news.

For this episode, there were a few headlines that popped out.

First, Reuters reports that Wells Fargo is loosening their lending standards.  But this time, it isn’t for the lowly sub-prime borrower…it’s JUMBO loans.

So it’s no surprise that Bloomberg reports million dollar home loans have surged to new records.


Well, partly because, as CNBC reports, millennials aren’t buying homes.

We also see that banks are showing interest in cash out refinances and home equity loans.

So on the one hand, this is all very exciting.  We’re having flashbacks to 2003.

Yes, we know it all ended badly.  But everyone made a ton of money until the music stopped.

Maybe it’s possible to take all the lessons from the last crash, and use them to prepare better for the next one?

We think so.  But, as we’ve been discussing in our weekly newsletter, this isn’t your parent’s real estate market…which is both good and bad.

Of course, bad can be good too.

What’s good is that interest rates remain low and lenders are opening up to allow more people to qualify.  They’re also creating loan programs which permit the repositioning of equity.

What’s bad is that first time home buyers aren’t pushing up the demand. In fact, a lot of the price appreciation is the result of hot money looking to real estate for yields.  This includes both foreigners and hedge funds.

Of course, because hedge funds and foreigners don’t use loans, prices are up, but lending is down.

That’s bad for lenders, but good for borrowers…because as lenders try to create business, they lower their standards and their interest rates.

Meanwhile, every day real estate investors aren’t competing heavily with home buyers…at least not yet.  And that’s good.

In fact, home ownership is at a 19 year low.  The inverse of that is there are more people renting.  Great!

It also means that without home buyers to bid up prices, even though prices are up in many markets, they are still at or below replacement costs.

In short, houses and the mortgages to buy them remain on sale!Time to fill up the shopping basket with investment real estate!

How long will this window last?  We don’t know.

But when you can buy a real asset for less than it’s replacement cost, and lock in low cost financing for the long term, it seems like you’d want to get all you can.

Of course, as we always say, market and team selection are important factors.  And being sure to structure your deals so you can weather the next financial crisis….whatever that looks like, and whenever it comes.

For those with money in the bank, the latest inflation numbers should be giving you fits compared with real estate.  Sure, there’s no guarantees with real estate.  But it seems like the only thing a bank account can guarantee is the long term loss of purchasing power.  The need to hedge inflation seems obvious.

With savers are being crushed by Fed policy, no wonder everyone has piled into the stock market.  If you recall, this is exactly what happened last time.

Do you remember what came after the last stock market bubble?

Yep.  It was the real estate bubble.  But if you structure your deals right, even if there is a bubble, as long as you have the cash flow to service your low fixed rate loan, you have a fighting chance.  We know many investors who rode out the last crash…and we took notes.

So it seems to us that properly structured income producing real estate could be one of the hottest investment opportunities right now.

We’ll keep watching the news to see if the forecast is changing…so listen in for each edition of Clues in the News!

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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed.