SOTM 45: Signs of Normalcy Returning to Real Estate as COVID-19 Restrictions Loosen

April 30, 2020
As COVID-19 restrictions loosen in certain states, America and the real estate industry may be on the path toward some semblance of normalcy. On today’s State of the Market podcast, we discuss how coronavirus has impacted markets nationwide and when we can expect to recover from this recession. Plus, we cover a few of the cuts we’re making to stay financially fit, offer advice on the types of touches Realtors should make now, and more.
SOTM Listen to today’s show and learn:
  • Signs of normalcy returning [2:19]
  • What’s happening with the stock market [6:58]
  • How high equity will help Americans through the recession [10:05]
  • Why one high-end home purchase is a positive sign for real estate markets [14:36]
  • Cuts we’re making now to stay financially fit [18:38]
  • Sotheby’s franchise sues Michigan governor over stay-at-home order [24:36]
  • Paul’s “I care” message [28:03]
  • Stats showing coronavirus’ impact on real estate [32:12]
  • Unemployment in Los Angeles [37:54]
  • Why now is a vital time to touch your SOI [40:14]
  • How to break through your goals.
  • Plus so much more.
Related Links and Resources: Thanks for Rocking Out Thank you for tuning in to Pat Hiban Interviews Real Estate Rockstars, we appreciate you! To get more Rockstar content sent directly to your device as it becomes available, subscribe on iTunes or StitcherReviews on iTunes are extremely helpful and appreciated! We read each and every one of them, please feel free to leave your email so that we can personally reach out and say thanks! Have any questions? Tweet meFacebook me and ask Pat anything. Don’t forget to head on over to Bare Naked Agent for Pat’s answers, and advice. Thank you Rockstar Nation, and keep rockin!

Aaron Amuchastegui: Rockstar nation, it’s Aaron Amuchastegui I am back with Paul Morris today, we are talking about the state of the market. Paul, how is everything out in LA today?

Paul Morris: Well, personally I’m getting very tired of being locked down. I find that’s what I’m hearing from a lot of my friends even though they’re full of us, probably among them in some regards. We’re just tired of being trapped at home. Lots of ideas and nowhere to take the action.

Aaron: Are you starting to see more cars on the road and just people halfway out? The first couple of weeks of shelter-in-place in Texas, I went to drive somewhere and there was no traffic. Now when I go run an errand, it’s not the traffic that we used to have but a lot of people are driving. Is it the same out in LA?

Paul: Absolutely. They were doing things like our beaches were totally blocked off and now this last weekend, there were people on the beach. You see weird little things like people with a shelter-in-place, people are stuck. One of the things the city did was they said, “Okay, no parking tickets.” Now my friend just said, “Oh, hey, I got a parking ticket.” I’m like, “What? How’s that possible?” We’re all coming out of our shells a little bit.

Aaron: They’re trying to figure it out. In Texas, they announced that this Friday, the governor is going to let the stay-at-home order pass. Now restaurants can open and movie theaters can open and different places can open and there’s a couple little caveats. One, I think they gave them a set of restrictions of how to make sure that it stayed clean. Another one it said 25% of approved occupancy. In a lot of cases like a restaurants approved occupancy is much higher than the actual number of seats. Part of me says, 25% occupancy in a restaurant is like every table could be full.

I’m pumped, around Austin are their homes out in California and out there? Everything just got extended, just like I think we’re seeing up in Northern California, especially where we’re from. In Austin, they opened it, we’re super excited. The only downside is so far, only a few restaurants have said, we’re willing to open this Friday, and we’re going to be first and come on out. A lot of the movie theaters have said, Hey, we’re not quite ready yet. I think they have some fears of the consumers– They don’t want to open and have no consumer show up.

They also have some of their people that were employed are like, “Hey, we’re making more money on unemployment.” Have you heard much about that yet? Or any theories or ideas on what’s going to get people to start coming back out?

Paul: Well, I think that there’s always this lag time between when the information gets out there. I saw this great lag when there was really a lot of information that said, we should lock down. Our mayor said, shelter-in-place was very strict about it, and you would go out and see a bunch of people around. A week or two after that you really saw people they’re getting the message and really not going out. There’s a little bit of a lag time. Now, as things are easing up, you’ll see that lag again.

I think the pent up desire to get outside is also a metaphor for the pent up demand that we’re going to have for goods and services. I think people are going to want to get out. Let’s also be clear, I don’t think that this thing is over. The government is just like, Hey, we can’t continue to print money and debt to pay people who aren’t working. At some point in time we’ve got to take a business approach to this and forget the politics of where we fall on that.

With friends of mine, I got to tell you, it ranges all the way from friends that I have that are medical practitioners that say, this is absolutely crazy. We just have to stay inside longer. All the way to normal business people. People I generally think of as not conspiracy theorists, for example, they’re like, you know what, hey, I don’t know a single person that has COVID and this whole thing is just completely crazy or a hoax or whatever. Now, I know that you and I have been touched by it very differently and so we know the reality of it. The spectrum is massive but I think the reality of it is people are going to fall in line with that and I think they’re going to start coming out.

Aaron: You’re absolutely right. The spectrum is massive. It’s on super extremes. Some people are like, I’m ready to go out right now. I never want to be locked down. I’ll never get sick, I’m too young to get sick. It’s a fake thing. To like, hey, let’s stay in for six months. I think you are right. I think part of that, some people they’re going to weigh the risk. I saw some people say, Hey, you know what, I’m going to stay inside for the next year because I can always get my money back, I can’t get my life back.

I’ve seen other people that are like, Hey, I’m going to die over my loss of finances before I’m going to die of this. Just let me go risk it and put on a mask and go try to open business. It will be really interesting over the next few weeks as we see– Two weeks from now, I’m interested in the news in Georgia. Three weeks from now, I’m interested in the news in Texas when they do open, what’s that like?

I saw pictures of a gazillion people on the beach in Santa Cruz, and in two weeks are we going to see, “10,000 beach goers have COVID.” Or are we going to see like, “Hey, everybody’s okay, let’s do it again.” That’s the stuff that you and I aren’t doctors, we are getting to just try to look at what’s out there and analyze it and try to see what we can track as we start to jump into the news.

One thing that I just wanted to lead with was, I opened up news today and it says the Dow Jones is up 600 points today on coronavirus News. The coronavirus news of the day is making stuff go up. The stock market hit low, the Dow Jones hit low March 23rd, and this was a week into shelter-in-place, maybe two weeks into shelter-in-place, it hit 18,591 and now it’s up to 24,000. That’s a 30% increase. The other low was around April 1st, it’s up 20% from April 1st, 30% from then.

I know that it has hit a hit really big low, and it coming up from the bottom doesn’t necessarily mean much but in the last week or two, it’s consistently been going up. What do you think the stock market knows when it says, “Hey, the stock market is doing well again, and it’s because of COVID News.” I couldn’t figure out what COVID news was such good news. What do you think?

Paul: Well, first of all there has been some interesting medical News, where they’re fast tracking a couple of treatments, they’re fast tracking a vaccine. I think they’re seeing a little light at the end of the tunnel in terms of that news. There are some things that I look at, like when the cost for crude oil was a negative number. I was like, I don’t day trade, I don’t play the stocks like that, and I just look at and I go, look, it’s got to go up. We’re going to return to normal at some point. It’s probably not going to be as far in the future as some people think and you’re going to get that balance.

One of the things that’s critical, and these are great talking points for our realtors are that we’re going to have a financial impact. That’s what the stock market is saying like, “Wow, this is unforeseen. This is uncertainty. This is bad.” Nine out of the last 10 recessions, we were led into recession by a precipitous drop in home values. That is not the case this time. That’s an important differentiator for our realtors. The home market was very healthy prior to this. For it to get back to something that resembles healthy or normal, faster than before only makes sense.

I’m seeing that stock market whipsaw and real estate for better for worse is not as liquid. You got a bunch of buyers and sellers in stock market. The reason why crude oil was low was because people just aren’t buying it and it costs money to store it. It costs money to transport it. People are stuck with it, and they’re just like [sighs].

When you’re sitting on a house and you’re like, geez, even if the market went down 20%, the sellers are not selling for 20% less. The buyers are not buying because the sellers haven’t come down in price. You see this big lag. That I think is going to help us because things aren’t as permanently damaged as they were in the recessions.

Aaron: Last week we talked a little bit about the equity out there. We talked about that even though we are going through some crazy times and are going to go through some crazy real estate times, that there’s equity in the market like there never was before. We are going to see people in default pre-foreclosure. In two months we’re going to see people that are supposed to pay back three or four months of mortgage payments and all of a sudden they’re going to go into foreclosure but what we didn’t have back in 2008, 2009 was equity.

We talked about that a little bit. You dug into some of those numbers. I know you’ve got a couple of articles out there that really talks about– What does that news tell us about the real estate market? Is it all doom and gloom?

Paul: One of the things that I think would be very helpful to our listeners– You can get this article. The article is a HousingWire article July 8, 2019. That’s old news but it’s talking about the great amount of equity that we have in our markets that did not exist. 2008 prices were artificially boosted up. People were into mortgages that they could not afford. There was a whole rash of what they call shadow debt and shadow risk that’s associated with it. This is almost the opposite. The article, it’s a Harvard study but it was printed by HousingWire. It notes that the aggregate home equity, so all of the home equity in the homes in the United States in 2011 was $7 trillion. That already is a very healthy number.

That was 2011. By 2018, the number had more than doubled to $15.5 trillion. That sounds great but what does that mean to us? What that means to us is when you have a lot of equity in the market, banks are less afraid of the foreclosure. If I can’t make my payment today and I call the bank and say, “Hey, cut me a break.” This is why they were all saying, “That’s okay. You can have a deferral for three months.” They don’t want to mark it onto their balance sheet as bad debt. There’s going to be a shakeout and people are in houses that they can’t afford and that sort of thing. I think you’ll see an uptake in foreclosure but it’s not the doom and gloom thing that it was before.

Aaron: What Paul just said there is he said, when we have those postings like people have equity so their house is worth $400 000. Their loan is $300 000 and so if they can’t make the payment the bank doesn’t want to start foreclosure proceedings. They don’t want to go through that process of foreclosure and eviction because they know because there is so much equity, there’s a very good chance that that buyer will either come back on payments or sell the house themselves so they can capture that equity.

The equity in those houses is going to become– I believe it’s going to become the piggy banks that people are going to tap into right now to survive unemployment. To survive the change in their lifestyles there’s that to tap into. Even if we have a 10, 20%, reduction they’ve still got equity in there. That’s a really good point. We did not have that in 2007. In 2006, 2007. As soon as the market started crashing in 2007 through 2009, nobody had equity so they had to force it to foreclosure because the longer they waited, the longer people stayed in the house for free.

They weren’t making a payment. They had no intention of selling the house, they had no intention of making their payments again. They were like, “We’ll just stay here till the bank kicks us out.” The banks had to be quick then. Not like that this time. I think that is good news that’s out there when you try to take everything into comparison on there.

Some other good real estate news, there’s a giant house in LA you said just got put in escrow right?

Paul: Yes. That’s a bit of insider information so I wouldn’t say what agent it was and what house it was. It was well above $50 million and it just went into escrow. What I find extremely unusual about that is this. After you reach a certain price point, these are not people that need to live in the house right now so most people no matter how affluent, what it looks like in LA is, oh, hey, I was on a job in New York City. I got relocated to Los Angeles, I may be even what would be considered super wealthy but I’m looking for a primary residence. I’ve got to live somewhere. I really don’t want to rent because I’ve got a family so what do I do? I have to buy.

When you get over a certain price point– when you’re north of $50 million, this is not the only home that the person has. They are ready to move forward with it but here’s the thing, they can always wait. What you see in the ultra-luxury market is when you see a crisis looming, these deals go 100% cold because what can happen is if I’m like, Oh, gees I really like that $50 million house and I’m super excited about it. First of all, there aren’t 10, 15 people chasing that house.

To begin with I’m thinking, well, it will be available six months from now and I don’t want to get into a $50 million purchase where there’s a big change in the market, I could lose $10 million in one day. It’s like, Oh if I buy the house for $50 million today mid-crisis, what could I sell it for tomorrow? I’ve got to find some other ultra-rich person that’s going to pay all of that house.

Most of the time these sales go absolutely cold. I was very surprised and it’s sort of a weird canary in the mineshaft thing where it’s like, Oh, hey it sounds bad but the canary’s doing fine. It’s anecdotal. It’s not something you can look at and go, okay, well, I’m going to change everything I do based on that. It’s interesting nonetheless.

Aaron: A transaction of that size– Your point there is so valid there was no reason to rush. There was no reason to do it now instead of later. There was no incentive to get into escrow now compared to six months from now. It’s just because it was like, “Yes. That’s the house I want.” There wasn’t these impending factors. A normal super high-end transaction occurred there or is in the process of occurring.

I think I told everybody last week I put my house on the market in Austin. We bought a new house when the coronavirus shelter-in-place started. My other house wasn’t sold yet. At first, I’m like, “Oh, we’re going to sell it as soon as we move out. We’re in this crazy hot market.” Then all of a sudden it was coronavirus. It was like, “Do we wait to list it?” I was like, “No. What’s it going to hurt? What’s it going to hurt to go list it now?”

I hired a great agent. He went and he did great virtual tours and drone videos and all sorts of stuff to really market it and put its best foot forward. We got offers right away. It’s now at the point it’s going to close now next week. That was just an example of really good marketing, priced correctly so that it would sell right away. I wanted that house sold during this time and it was great to see that. It’s cool to see transactions happening and semi-normal transactions happening. I’ve also seen the transactions happen where people are doing quick cash offers for 20 grand below asking to see if it will go but I’m also seeing normal stuff happen. There’s less of it but they’re happening.

Paul: People, we’ve got feedback from Rockstar Nation that people, they do like to hear the personal stories or how or hey, we can talk about news, but what are we doing personally to put it into action. Just like you’re sharing that, I definitely think that it makes sense for people to plan on living on on less. This has been a great lesson for me. With all of the expenditures that I do, I’m really looking line item by line item, which we all should do, but I’ll get up and speak in public and say, “This is what you should be doing.” I go home, I’m not doing it. This pandemic has caused me to do that.

One of the things I did was pre-COVID, I looked at my P&L, and I’m thinking in my brain, “Oh, I have got a second home in Palm Springs. It’s nice. I love it. I don’t use it as much as I should.” Sounds familiar, I’m sure. I’m thinking it’s a three or $4,000 cost to me per month because the mortgage is about 2,500. I’m like, “I’ll  here three or four grand.” I just took the last 18 months I go, what did I spend on it? Divided by 18 comes out to 7,500. I’m like, Oh , that one thing I had it. That’s life. Now I’m like 7,500 a month. I really felt like I could bring the house out and sell it for about 780.

I was going to do a pricing strategy of pricing at about 765 getting a lot of attraction to it, and thinking “While definitely at you’re selling at 765, it will probably go north of that by pricing it a little below.” Now I’m thinking about doing it again still. My reality check is it’s a second home market. It’s not– it’s demand.

My reality check on it now is what will I take 720 or 730? My answer is, yes, I would. I’m going to come out on the market with it at about 715 and see if it doesn’t really raise some eyebrows and get some quick offers on it. I’m going to take some of the equity that I have in that house off the table, and then start banking the 7,500 a month that I’ve been spending on that place you can go on lots of vacations when we get ready for that.

Aaron: Banking that savings is a huge thing. One thing that I really got of what you just said is as we are encouraging people to look at their costs, look at their P&Ls, try to see what expenses– be honest with yourself too. You actually had to be really honest with yourself and dig to come up with that, wait a second, because in your mind that you probably liked the idea that that extra house only cost you $3,000 a month. That’s like if you stayed in a couple of hotels and then really having to dig and go, no wait my real true savings is 7,500 a month and I’ve got to do this.

My place up in Northern California, I dropped the price on Airbnb 75%, because I was like you know what all my weddings are canceling, all my stays are canceling. Even if somebody wants to go stay there for a month or two really low, it’d be a great place for somebody to go shelter-in-places, it’s a giant properties. I’ll just drop the price and get realistic with it.

For a while, I wanted that premium property. I just want to break even right now. I want to cover 90% of my expenses on that thing. Let’s just lower the price and get somebody in there right now. Maybe next week, I’ll have the news that that price drop works. There’ll be more Airbnb news next week with that. I thought there was a– so Architectural Digest had an article.

I think you’ll have some fun comments on this, it says, real estate market sees uptick and more news in San Francisco. It was saying like, hey, we’re seeing real estate market sees an uptick. It’s good news. It said, “In the midst of the coronavirus pandemic, new listings are hitting the market. The total number of listings on the market all went up last week according to mansion global.”

I thought that was funny that it was presenting it as– maybe in San Francisco that’s good news. Maybe more listings in San Francisco is good news because there’s been such a shortage of inventory. What do you think about that? Do you read– am I wrong, or do you read that the same way like wait a second, that’s not necessarily good news?

Paul: It’s great real estate sales news written by architects. I definitely think that– and I’ll say this to you. I still find that to be good news because it shows activity right now. It shows people are signing listing contracts right now, and I don’t see it as a desperation. Just like my house in Palm Springs, I just signed a listing agreement. It’s not a fire sale, and if it’s got to be a fire sale in order to sell it, I won’t sell it. I’m being very realistic and taking a 10% maybe even more 15% less than that. Sorry about–

Aaron: Like a 10% discount.

Paul: 10% discount. Okay, fine, I’ll take that 10% discount to get that off of my P&L, to get the cash in the bank. On the other hand, I have a deal that I went into escrow before COVID. I’m going to close on it. Each deal is separate. I think the fact that there are more listings on the market, it sounds funny to ask us, real estate professionals, we go, “I think you read that wrong.” On the other hand, it makes some sense that that’s still good news. People are not fire selling, I haven’t seen yet. They are coming out with listings. We’re poised to get back into business.

Aaron: I think that is a good prospect of it. There are a lot of places in– some people are saying hey, this is great news for my buyers in Austin, Texas. There’s been such a shortage of inventory. Now there’s not going to be a shortage of inventory. There’s going to be more opportunity for my buyer to come in.” Some people are welcoming a price correction. Some people are hoping for that. The Inman News article says–this was a good article just came out. It raised my eyebrows a bit “Sotheby’s ranked franchised sues Michigan governor over the stay-at-home order.”

It says, “The lawsuit which demands trial by jury claims that Governor Gretchen Whitmer is COVID-19 lockdown orders are overreaching and unconstitutional.” Have you seen any other, and I’ve seen a lot of real estate companies and realtor associations reaching out and saying, hey, make my job essential. Out in Texas it’s saying, say that real estate is essential, so we can still show houses, do stuff? Have you heard of any other lawsuits like this? Do you think is this the first one?

Paul: I got to tell you that I’m a lawyer by education, I guess period, because I’m a member of the bar. I hate stuff like that. I really do. The governor is doing the best that she can with the information that she has. I will say one of the things I know from direct experience that Michigan has one of the most restrictive rules. There was a point in time where Governor Whitmer came out and said that you can’t even go to a friend’s house. In other words– and they actually–

Aaron: That’s shelter. That’s lock down.

Paul: Yes, it’s lock down. I understand getting a reaction to that. On the other hand Detroit, which is a very isolated part of Michigan, there’s a lot of rural Michigan. Detroit was starting to look like New York City. Governor Whitmer is like, “We’re not going to have this happen in Detroit.” I get what they’re trying to do. I don’t think lawsuits are the way to do it. I think lawsuits are going to gum up our system worse. Okay, so why do you file a lawsuit? You’re like, hey, you didn’t treat us fairly. We want to open up. We want– Of course, there’s going to be medical stats, and she’s doing the best she can, and government has immunity and da da da da.

Maybe they’re trying to get a headline. I think it’s dumb, we’re trying to work as hard as we can within the rules. Our mayor, one of the most restrictive, our governor said, “Hi, real estate is essential.” Our Mayor came in and said, “You cannot show houses.” Once we get into escrow, it then becomes an essential service. If you can’t show houses, you can’t sell them for the most part. We’re finding workarounds in terms of doing some virtual showings and people are buying some houses getting into Escrow prior to actually taking the home tour. Then once you’re in Escrow, it’s an essential service, you can take a home tour.

We’re finding some workarounds. I’m having the opportunity to talk to realtors around the country. I talked to the number one realtor in Philadelphia last week. He’s damn busy. He’s doing a lot of what I referred to as the I care calls. Just calling up and saying “Hey” now’s an opportunity to do it like you’ve never done it before. If you have somebody in your database, if you don’t have a database by the way, telephone is a great database. Go started at A and start moving down. Now, it’s a bit awkward when you do that during normal times. You’re like, “Oh, geez. I like that person, but I haven’t called him in four years.”

I find it awkward. I don’t make that call, but I do send a text message. My text messages is like “Hey, Aaron, I haven’t talked to you in ages. I was thinking about you. I hope you and your family are safe. Let me know if there’s anything I can do. This too shall pass. All the best, Paul.” That’s my I care message. I make it personalized. I am reaching out to people I haven’t been able to reach out to because it was weird to do. Now’s the time when you can– where you can just build that base and go out there and come out of this stronger than ever before. I really truly believe it.

Aaron: That’s something that a lot of people aren’t doing. There has been dozens of people I went to college with 10 or 15 years ago that I have not talked to since that in the last week, we have started texting and chatting again and catching up a little bit and just going like, “Hey, what are you doing? Where are you working? What are you doing? Where are you living?”

Because this it’s the only time in the last 10 years where you could reach out to somebody after it’s been five or 10 years and be like, “Hey, I just thought I’d check in. What’s life for you right now?” That is a great point have something to add. I didn’t realize you were a member of the bar. It was cool to be able to bring that up to you. I’m sure you had told me and I had forgotten. I was curious if lawsuits can actually force the governor to say, “Okay, I’m going to drop my shelter-in-place ordinance because of this lawsuit” or you think government right now is just going to have immunity to be able to do that stuff.

Paul: I’d be wrong to say that I’m an expert on that for sure. I can tell you that government has immunity all the time, not just in these times. It’s really extraordinary measures that it takes to file a civil lawsuit against a government official. There’s usually just no place for it. Now, the law makes other forum so that they’re not totally above the law.

You’ve got to give governors and executives that run our government real latitude and not have to be afraid of lawsuits everywhere. Now, back down to our reality level is I have heard talk of governments passing legislation that would really limit the amount of lawsuits, like personal injury lawsuits for COVID exposure. I think that would be a phenomenal thing to do, because there’s no way to trace where you’ve gotten it. If a business, restaurant, they say, “Hey, you could be open, but you got to have six foot spacing”.

I take a selfie with my friend, and everybody’s three feet away from each other instead of six feet and then somebody gets sick, you sue the restaurant, say, “Hey, they weren’t taking proper care.” This is something we’re all assuming–I’m really speaking not a lawyer, because I think lawyers again, gum up the works. There’s some positive stuff to it. I lived in England for a little while, and it’s very much a buyer beware, we take our own risks, we have our own consequences, and we’re not blaming everybody for it.

Now, California is especially bad with the plaintiffs bar suing everybody for everything. I hope that they come out with laws that really greatly limit that because it’s just going to mess up our ability to get back to normal.

Aaron: I think that last kind of law that you came up with of people trying to pass legislation where people wouldn’t be liable for passing it, that’s going to be a key to get restaurants and theaters and those places to open again. I’m so excited because, Hey, everything’s open this Friday, we want to go support local business, we want to jump back out there and try to push toward normalcy but I think a lot of the places are like, Hey, we’re not going to open yet because they’re worried about some of that liability.

If you can protect them a little bit and say, Hey, there’s no way we can actually blame this– if you can protect those places to do the best they can and open, it’s going to start. Last article I want to jump through, there’s a bunch of numbers on here. Inman yesterday article came out and it says, By the numbers, how hard has COVID-19 hit real estate?” Bunch of random stats on here that I think are pretty interesting. I’m just going to run through them and see which ones kind of stick out to you.

It says there’s a 22.3% drop in US new home construction stats. There is a 408% increase in agents using Zillow’s 3D home tour feature, a 500% uptick in Redfin video tour requests, 700 credit score is now required and a 20% down payment mortgage from Chase mortgage, that’s a big bump and 120-day window on appraisals for FHA, USDA, VA, Fannie Mae, Freddie Mac loans. Then it’s under 3%. Fannie Mae forecasts mortgage rates for 2021 that mortgage rates will hit under 3%. A lot of statistics in there. A couple of minutes down to me, they’re like, “Well, duh.”

The Zillow 3D home tour, four times. We’ve been talking about 3D home tours since the first day we got in shelter-in-place, we’re like, “Go get a 3D home tour.” Agents requesting video tours on Redfin, that makes sense. What do you think about those or any of the other ones that stuck out to you?

Paul: You picked a few of the good ones, and I would add to the good ones the last stat, where they’re predicting interest rates going below 3%. I will say this, to all the rest of the stats, you can hate me if you want, I just call BS on it, on all of it. When you say, well, hey, here’s the thing, how can you call BS? This is a fact. Chase is now requiring 20% down and 700 credit score. That freaks me out.

Here’s the thing. That’s today, tomorrow, that will change. I’m on the frontline talking to the people behind the scenes in the mortgage industry and they’re saying, Hey, there was a freeze on jumbo loans just because they got nervous and they’re just like, We don’t know what to make of it right now. Then they started to go through but a little slower. It’s going, Oh, 23% drop. Oh, let’s compare unemployment right now to the Great Depression and try and start figuring out.

Again, I call BS on that, because this is not normal circumstances. Everybody’s unemployed as far as I’m concerned, of course, it looks horrible but there is a difference. We will really, truly be out of this when there’s an effective vaccine. One of the things that I think could cause some of the bump in the stock market and all these sorts of things, is they’re fast tracking some vaccines, they’re also fast tracking some treatments other than injecting disinfectants.

Aaron: Don’t do that.

Paul: Yes, don’t do that. That actually makes sense. We were drawn into this recession, maybe for the first time ever, that I can think of that is maybe a war. It’s generally a big financial hiccup that causes a big financial downturn. Right now it’s a 9/11 type event. It was a lightning strike, it was a black swan event and it’s one that is repaired easier and faster than most. I definitely think that we’re dealing with something different. It’s just my personal belief, I don’t think there was a massive overreaction to this. I really don’t.

When you look at yesterday, here’s a statistic, yesterday the deaths in the US surpassed the deaths in the Vietnam War. When you think about it you’re like, “Oh, that’s mind boggling.” However, how many of them were old people that were very ill anyway? How many people died from really bad flu virus that was just a regular flu? I don’t think it’s an overreaction because this is a novel flu so our immunity systems haven’t seen it. We had to lock down.

Here’s a reality check, I definitely have people that don’t know anybody that have been struck down with COVID. Here’s another true statement, as of last week, there were refrigeration trucks in front of major hospitals in New York City. If you get sick or one of your loved ones gets sick, you go to the hospital, you drop them off, you’re not allowed in the hospital, and there are refrigeration trucks out front because they can’t store the bodies. These are crazy times.

Aaron: That’s terrifying. That is a terrifying picture right there that of course, the people see that, it’s blowing their mind.

Paul: Terrifying. At the same time, what we need to do is figure out a way to hold those two very competing facts the same. My friend [unintelligible 00:38:59] says, I don’t even know anybody that has COVID back to New York City because I have friends I talk to, friends of mine that live in the city, they fled to their home in the country and they’re like, “Oh my gosh, you should see what kind of crazy has happened.”

These are both happening at the same time. It is bad, and just resist the crazy News, I’m going to tell you. I saw a Business Insider article, had definitely not planned on bringing it up on this show because it freaked me out, and I try not to get freaked out easily. It said, “Unemployment in LA reaches 50%,” Business Insider. Then the the photo show this big long line, unemployment line, which let’s just say it was a real line of photo that they took. On one hand, I’m like, “I can believe it because everybody I know is unemployed. It could be 70%.

Then I read the article and what they were talking about is LA might have a higher percentage of people who aren’t employed to begin with, but it’s talking about it includes the people that are in college. “Hey, I’m over 18, but I’m in college therefore I’m unemployed. It includes the people that are 80-years-old that retired 20 years ago.

Aaron: It’s not filed for unemployment, it’s the people that don’t have a job?

Paul: Yes. Then you read further, it was like, Oh, it was 40%, before the pandemic, and now it’s gone up.

Aaron: If you’re an entrepreneur, do you show up as unemployed on that stat?

Paul: One of the things that we do on this show is we talk about the news and we talk about it and we bring it to the attention of the realtors that fall, and we’re super grateful for the following. We’re super grateful for people sending us comments because we listen to them. What we’re trying to do is make sense of it and make it visible. Business Insider, I’m like, I understand the clickbait thing and I’m just like, never again, because it scared me to death. I was freaked out for a half hour. Never again am I going to look at Business Insider the same. I like Barron’s, yes. Wall Street Journal, yes. New York Times, yes. Business Insider, no.

Let’s makes sense of even you can read a New York Times article that will still tell you really true facts, but are they telling us in the context of this is a very different thing? That’s the way I think it’s important to look at the news. Also, what can we do now to shift our reality? That’s the get in touch with your database more now than ever. Kudos to you and your friends for for having those calls. I haven’t received them yet. A little bit but not that much. When I reach out to people, I am an absolute standout. You and your friends are already standouts.

When I do this– this is the thing, think about think about how many business people– how many service providers, are you in business with? You’ve got a doctor, you’ve got a dentist, you’ve got an accountant, let’s say there’s 10 people that provide services for you. How many of them have reached out to you and say, “Hey, Aaron, how you doing? I’m just checking in.”

Aaron: The service writers have not, they have not reached out to us.

Paul: For me honestly, now, as of yesterday it’s been one or two but it’s just because things are coming back to normal a little bit. You can be a standout in your industry to be the one person. Don’t say, “Hey, it’s Paul, what are your plans to buy or sell real estate in 2020 and do you know anybody that wants to buy or sell that you can refer to me?” or whatever your script is. Use the I care script that I’ve been working with my 3000 realtors and saying, “Hey, do this.” I’m never afraid of telling much for our audience the secrets because guess what, very few people do it, actually take back.

Aaron: This is where you get that secret, you’ve got– Paul has 3,000 agents working for him. He’s telling those 3,000 agents to do it. The other part about that, you got those 3,000 agents, if they all make 10 calls, you got 30,000 people whose lives got better. They all make 100 calls, you got 300,000 people that because of you guys reaching out are now saying, “Hey, somebody cares about me and maybe they’re helping them with groceries, maybe they’re helping out with other stuff.”

I think that has been such a great thing that Paul has been pushing that I started pushing that out. A lot of you listeners have told us you’re doing it, it’s working. We’re having a bunch of new reviews coming in. As we close up this podcast, I want to remind you guys of one of the things that Paul said is you need to be able to take the opinion and the news of, “Hey, I don’t know anybody that this happened to,” and the news of, “I’m standing in New York City, I’m at the hospital, I can’t go in and I see these trucks.”

You have to take both those pieces of news from the opposite ends of the spectrum and say how can you believe both of them equally and use that to your ability to succeed, to thrive, to be okay, to make your decisions? There’s a lot of news out there, get as much news as you can and all the news that we gave you today and you have to be able to believe all ends of the spectrum as, “This is the news, now how am I going to act on that?” The reality in this city is different than this reality and the reality over here is different and that governor in Michigan compared to the governor in Texas. Everybody’s realities are different.

Learn what you can, keep listening and keep coming back. Rock Star Nation as a reminder, as always, please go leave us a review. If you are loving the state of the markets, come tell us, if you’re hating the state of the markets, come tell us. Tell us what you need, what you want to hear out there. If you haven’t checked out Rebus University yet, we have slashed the prices on everything for all the agents that are bored at home right now. We got $1,000 courses for $99 bucks to go sharpen your toolset. Go check that stuff out. Paul, any final thoughts, any last things for our listeners?

Paul: I want to say thanks to you, Aaron, for really being a weathervane and getting me fired up about about doing this podcast because we’ve gotten so many great reviews and touching people’s lives. We’re trying to be to be a light and I’m trying to be a light for everyone that I can be all the time. I know that realtors do the same thing. Right now, when times are dark is when the light shines the brightest. You can just be that little source of light, and right now you’re such a standout. If you’re tuning into this, you’re already at the top 1% of that. Take a little action on that and and we really appreciate it.

Aaron: If all of our listeners reach out and text 10 people, like, “I care. How are you?” We’re going to touch over a million bodies this week. If you’re listening, do it right now. Text 10 people say, “Hey, how’s it going? Anything I can do to help you? Just been thinking about you”. At least a million more people this week are going to feel better about themselves and their situation. Paul, thanks for coming on. We’ll be back next week.

Paul: Okay, thanks, Aaron.

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