SOTM 50: Real Estate Giants Speak Out for Social Justice

Aaron Amuchastegui: Rockstar Nation, this is Aaron Amuchastegui. I am back with Paul Morris for State of the Market Number 50. There’s 900 and something episodes of Real Estate Rockstars. About a year ago, Pat started The State of the Market, where we talked about the news, a lot of realestate-based news, and then talked about how it applies to us. Lately, everybody’s favorite has been the news.

It’s not that surprising because there’s a lot of news going on in our world. I remember doing the news back in January with Pat, and we were talking about could Coronavirus change the market? We were reading these articles and we were like, “I don’t know. Let’s talk about this.” Then you think so many months and you go– 2020 right now, has this felt like three years in one? Isn’t that crazy?

Paul: It really has. One thing that is a good perspective is that when times are good, people forget that times were ever bad, and when times– Everything’s a phase in other words. When times are really bad people think, “Is this ever going to get better?” The answer is, yes. When times are amazing things are going to cycle. That’s why I call them business cycles. We forget even people that are old enough to be through many business cycles forget, but this will change.

Aaron: It is. 90 days ago, I was in Maui, and I had just gotten to Maui and it was like there was not a worry in the world. There was more people there than I’d ever seen, more wealthy business booming people partying and enjoying vacation than I’d ever seen. 90 days ago. We’ll get to go over some news today but, man, it is just a fraction of the news that’s going on out there in the world.

We got to talk to a great agent, Rod yesterday, out from LA. Paul, you’re out in LA. We are seeing so much stuff going on. First, it was quarantine, and now there is a whole bunch of race issues happening out there, progress and protests, and everything else. It’s almost tough to even talk about real estate news right now for us because there’s so much worldly stuff.

We’re going to do our best to try to dig into the news that we think still applies, the news that is changing on a weekly basis. Because we also want to stay current and relevant with everything that’s out there. I think the listeners are going to be happy with the data and the things that we’re providing today, and really I’m just ready to get started.

Paul: Crazy times. Seemingly unprecedented times until you look. I always go to what’s the historical precedence for this, and it’s amazing that 1968, obviously, very famous time for rioting and what took place then. Interesting that we had a space launch from SpaceX, and there was an Apollo space launch obviously in 1968. There was also Hong Kong flu in 1968 that killed 100,000 people. There’s some weird similarities.

Aaron: That is fascinating. It’s like it skips a generation too, because it was 50 years ago. Change happens, big things change. Right now we’re in the middle of some history happening, there’s big stuff happening very–

Paul: ’68 mainly focused in– It spread out over to 110 US cities. It really spread out, but it started in Washington DC in 1968, obviously, with the assassination of Martin Luther King on April 4th 1968, and there was a four-day rioting. Interesting that the rioting was much shorter in duration and also a lot deadlier, the number of deaths. I haven’t seen what the deaths were, what the death toll was for this particular, what’s going on now. It’s not over. We’re now weeks into it, it’s not over, but it was very deadly, very violent and deadly, in almost all the riots that took place.

Aaron: If you turn on the news you’re going to see the videos of the craziest parts, and the fires and everything else, but don’t forget to see those pictures of how many people are out marching and protesting and some of the biggest– It’s a fascinating time we’re living in. Just like we talked about on the podcast on the live yesterday, was like inform, educate, and empower. That is the life that we’re doing, and the best any of us can do, is try to inform and educate ourselves. Because not just that is going on, there’s business, there’s changes.

The first article I want to talk about, this just came out, and it said the Compass CEO encourages agents to spend billions with black vendors. He’s inviting his company, Robert Ruskin, is inviting his company’s approximately 15,000 agents to guide 15% of their spend to black-owned companies or vendors. Throughout history, there’s been a lot of things like this.

I don’t even know what the word for it is, but proactively trying to right wrongs by being more proactive toward a solution. What do you think about what Compass is doing? You have a huge brokerage out in LA. As a reminder, how many thousands of agents work for you?

Aaron: How big is your office?

Paul: Our fore leading sub-brand of Keller Williams has 3,000 realtors mainly in Los Angeles, and are our three regions, which I run out here have 8,000 realtors. So quite a large swath. We’re the number one market share in Los Angeles, we represent a lot of folks for sure.

Aaron: What do you think about Compass encouraging their agents to spend 15% their money to black vendors?

Paul: I think it’s a great idea. It feels a lot like when we talk about buying local. That’s change. There are big trade laws, and one thing individuals can do is vote with their dollars, and I do think it’s important. I’ll just take a little step back and say that we’re not like any other industry. There are lots, and lots, and lots of industries. Realtors represent the American dream.

We’ve got to do our best to represent all of society in this very important aspect of industry. I really believe that it’s a– Of course, you want health care to be doled out fairly and evenly, that’s super important, but in terms of businesses, I can’t think of another one that’s more important. Vote with your–

When I lead a large group, one of the things, and I think, by the way, Robert Ruskin’s ideas is great. If someone came to me with that idea I’d be like, “Oh, that’s a great idea.” How do you measure it? How do you make it happen? How does it become more than rhetoric? I’ve worked with people like Rod Watson, who’s one of our local leaders, who has obviously black American experience. Grew up in Houston, has a lot of firsthand experience that we don’t have. Listening and learning and then taking some important steps that really have change and are measurable.

One of the things that we’re doing is, we’re implementing what the NFL calls, The Rooney Rule. Of course, I’m from Pittsburgh so that is a Steeler thing. What it does is require an ethnic minority in the mix for hiring. What’s cool about this, first of all, you can measure that. We’re doing this in our local markets with everybody’s agreement. The owners agree.

Keller Williams as a national system is doing phenomenal stuff and we’re piloting it out here.

Our Rooney Rule, it means for senior management, we’re just going to make sure that an ethnic minority is in the mix. Let me tell you, that is not a hiring quota. It’s not even Affirmative Action. All it is is an interview requirement. I’ll just say this to you, one of the things that I learned personally was I was able to say I’m not racist. I can look into my heart and say I’m not racist. Therefore, I’m fine, I’m not part of the problem, and that was very short-sighted.

What can we do? I talked to a bunch of owners and they were like, “Why aren’t we better represented. Why don’t we have more minorities represented?” One of the answers that I got from other folks was we haven’t had people raise their hand, ethic minorities raise your hand say, consider me. Maybe because they don’t know they would be considered or maybe– there could be a hundred reasons.

Let’s forget the reasons, let’s just get an ethnic minority into the mix. That’s going to force me to look a little deeper into my own roster, to look a little further out into the field when I do some hiring. Just like the NFL, I know that will make changes over time.

Aaron: It’s measurable. Just like you said, finding something that’s measurable out there and for everybody out there, everybody can vote with their dollars. Compass is saying, “Hey, let’s go find these vendors and spend their money.” A month ago we were talking about, “Hey, go support local. Go support small businesses,” because they were the ones that got hurt the most during quarantine.

This is another example of that. People want to be able to do something, and as we’re educating ourselves, and saying, “Hey, let’s fix it. What can we do to get into action?” What you guys are doing with the Rooney Rule is a super cool way to start to expand that and I’m really excited to hear about all of the ideas that come out from all the different businesses.

You’ve got listeners that are out there, find us on social media and tell us what you’re doing. If you’ve got something that we should be sharing on here to help people, we want to know about it. We want to know what the signal is. Next one, on a similar topic, Inman posted, “Zillow CEO, Rich Barton signs letter supporting Georgia hate crimes law.” A lot of people would be like, “Duh, why doesn’t that happened?”

Georgia is one of the few states– Let me see what it said. It said Georgia is one of only a handful of states without a hate crimes bill on the books. Zillow, it’s not realestate-related but the CEO of Zillow has big reach. He has a lot of listeners, and he said what can I do, “Hey, we can help sign onto this. We can help push this.” Along with leaders of three national real estate companies, signed a letter asking Georgia legislators to pass a hate crimes bill. Did you check out that article? Did you see any of this last week?

Paul: Yes. I’m in favor of all the talk and I have a weak spot for actual activity, that goes beyond the talk, that people are actually doing things. It’s great for our leaders to do that. One of the things that you and I talked about, and I really applaud you for letting us skip the line with Rod and putting Rod right up front, is one of the things people just said, hey, if you’re not an ethnic minority, one of the things we can do like Rod said, is listen. The best thing to do is stop talking and let some people that have experience with this talk and listen.

In one of the conversations, and it was one of the pivotal conversations for me, that took me from that, “Hey, here’s the thing, I’m not racist. I can look in the mirror and say I’m not part of the problem.” I’m embarrassed to say it took listening for me to figure out that I needed to do way more than that. One of the things that happened is I was talking to, it was before the racial tension and the George Floyd incident took place, but it was right when COVID had taken place.

I have a friend who is a mom, she is white, she is a mom to multiracial kids. Basically, here’s a white lady, she’s a friend of mine talking to me, and she’s like, “I am troubled with this COVID thing.” Because she has a son who is a point guard, but I don’t want to get into too much detail, you’ll figure out who it is. She has a son who’s a point guard at a major university, and he’s only a freshman, and he’s 18, 19 years old. He’s a big dude and he looks like a black American. She said to me, it makes me nervous with COVID that I have to figure out what kind of mask am I going to put on him.

My mind was blown and I’m like, “What? I would never have–” My daughter is 16, I’m not worried about what– I’m worried she’s wearing a mask, I’m not worried that she’s walking through the neighborhood with a mask as a 16-year-old white girl. Here’s this woman that’s like she’s worried for her 6″3′, athletic, smart, cool, wonderful, young man that is multicultural. To put a mask on him and have him walk through neighborhoods where he doesn’t live because he’s away at college or was away at college. I was like- my mind was blown.

Aaron: As we educate ourselves, as everyone out there educates themselves, I think we realize there is so much that we don’t know. So many things that people regardless of just wherever they are in their lives, there are other people who live different lives, and when they are waking up they’re concerned of different things than we are. Sometimes people are concerned about stuff we would never even think about, and you have to empathize as we get to learn and hear those stories.

One of the cool things about this bill, people were like, “Hate crime laws? What does that do?” Of course, people are going to get in trouble, and that’s what people are marching for right now, they’re marching for justice. Like, “Hey, help them get there.” One of the things that it says is it doesn’t just– beyond offering the victim their immediate circle of justice, it also protects the victims’ greater community, who is also in fear of being targeted. It’s not just punishing people to do things wrong, but there’s extra things in there to try to protect people before something happens.

Unfortunately, it takes giant events like this for people to go like, “Hey, let’s do some more prevention. Let’s actually jump ahead and push that through.” I think we will see more of that stuff coming through as we continue to educate ourselves. What a story about your friend there. All of us out there have heard a lot of stories like that lately are going, “I never had to worry about that.”

Aaron: One of the things that my wife said is what really hit her is, we’ve got a son that’s four, and she said she never has to worry about if he goes for a run that his life is in danger, and that’s not the reality for all Americans out there. Sometimes it’s as simple as educating ourselves of that and trying to go like, “Oh, maybe I don’t know everything. Maybe I can learn.”

You said recently you used to say like, “Hey, I’m not racist,” and realizing that wasn’t just enough. All of us out there are still learning. It’s never too late to learn, and we’re going to just continue to try to learn more and more. It’s okay to change your mind sometimes. As an adult, there are so many times we lock in who– It’s a very politically biased world that we live in and it’s so normal for us to get locked in on our things and forget the reasons behind it. I would just encourage all the adults out there always to continue to learn, and continue to be open to learning, and open to changing, and open to going, “Oh, I always thought that but maybe I was wrong.”

When we pulled our kids out of school years ago, that was the biggest thing. Maybe we were wrong, maybe we can change our mind, anyone can change their mind. That is one of the freedoms that we get.

Paul: One of the business applications to that is that as soon as we have, what you’re talking about is a fixed perspective, and you can have a fixed perspective in so many ways, and adults really suffer from it. That goes for business too. As soon as we’re like, “Hey, my business is X and I know how to get it– It’s doing great I need to get a little more production in my real estate sales business. I need to just do a little more of what I was doing.”

That’s why we have Real Estate Rockstars, is bringing these people on. You might be listening to a 28-year-old, you might be 48 and you might be listening to a 28-year-old. You’re not even listening to this if you have a fixed perspective, because you’re open to the, well, what are they doing? I may have 9 out of the 10 things that they’re doing mastered but I’m going to look for that 1 thing. It’s a great business tool set also, is to come with it– in yoga, they say come with a beginner’s mindset or a student’s mindset.

Aaron: It’s a great way to live life. It’s great in business, it’s great in these other times. Some topics are bigger than others, and they take some extra things, but continue learning. You’re right, anyone that’s listening to this already, they’re trying to learn. They’re listening to the podcast or watching us on YouTube.

All right, next article said– Slightly different mood out there but this goes more to quarantine. This Coldwell Banker CEO on the future of offices, less rent, more happy hours. The company’s been re-examining the best use and layout of its 700 offices to maximize effectiveness and allocate savings. It said, many companies were rethinking office space and Coldwell Banker was already in the process of re-examining its physical spaces when it hit. Working to maximize the effectiveness.

They say the space needs to do work. It’s not just there, it’s part of the value. You should never need to come to the office, you should want to come to the office for coaching, collaboration, connection, community culture, and those things but you should be able to work from anywhere. We’ve seen offices starting to change, what do you think of the comment of– It’s like, “You should never need to come to the office, you should want to come to the office.” What you think about what Coldwell Banker’s are doing?

Paul: I have a fixed perspective on that.

Paul: It’s funny because this is why I came on this podcast, a few others but mainly this is it because this is what I do for a living and I really have an idea of what works. The real estate of the future, a lot of it will be done remotely, and an important part of it will not be done remotely. One of the things that I study this, is the virtual broker the wave of the future? The answer is no.

Why was Amazon building out– Amazon, the ultimate digital vendor, is building out physical spaces at the new development, new mall, in LA, Pacific Palisades, where they have one of the top developers in the country and all of his numbers put them right at the top. One of the things they had was more new businesses in tiny little spaces, and they had a lot of online businesses that were very successful putting their first physical location there.

Industries are different, but real estate will never be done wholly virtually, and it will never be done the way it was done before where you go into the office, you do all your work in the office. As realtors demand to be paid more, as commissions get compressed, as brokers still need to make a living, to make it happen you will see physical space squeezed out of it.

I do believe the brokerage in the future is something that looks like we have a great owner operator here that has a coffee shop. That’s going to be the wave of the future and then you’ll have a beautiful space, smaller space, much smaller space, going from 15,000 square feet to 4,000 square feet. The essential services there, mortgage, escrow, manager’s office, a place to meet with your clients, but physical officing there will go by the wayside more and more.

Aaron: I love the idea of I think all businesses have the potential to create this hybrid business that says, maybe it doesn’t have to be the office for this anymore. You’re saying, no matter what, there still is going to be a need and a value of that physical location for people to go to. What does it look like now? Does it change a little bit? I love doing trainings when everybody’s in the room. When everybody comes together, and they feel the energy and they’re locked in and their phones are put away, and everybody leaves there going, “I shut everything off for four hours, and man, I learned so much.”

It’s been very difficult to mimic that remotely, training. We just did this giant summit, we had hundreds of people on there, but it’s very difficult to get people entertained the whole time. I like the idea of people re-looking at that and saying, hey, we still need some office space but maybe we don’t need a ton of cubicles, maybe we need it for the stuff where it involves the team and it involves being there in person. Then giving everyone else the flexibility to come in or come out.

I think that’s going to– It adds efficiency, it saves money. That’s the other side of it, people want to save money on office space. That’s been a huge expense that they’ve realized maybe they don’t need the same amount of it.

Paul: People outside the industry, they all have the same question, and that is, are realtors going to go away? People inside the industry stick their head in the sand and say realtors will never go away. You look at travel agents, and travel agent, that’s an industry that I look at that was totally decimated by technology. Then you look at something like a cancer surgeon is not going to be totally decimated by technology.

Realtors are not cancer surgeons, but here’s the thing, houses are not– unless you’re selling one of those plots that are just like everyone is identical. Even then, people need to go and feel it and touch it before they buy a house. They had been selling jets, private jets on eBay. I remember Mark Cuban was the first guy, he bought a private jet on eBay. I have bought used cars, a slightly used car on the internet, and had it shipped to me.

There’s a lot of things you can do that with, but real estate is personal. It requires, to the point where I’m supposedly a great real estate professional, and when I want advice, “Hey, how’s the housing market affecting my house right now?” I go to the number one realtor in Santa Monica, which is not me and I say, “Hey, what’s going on?” Because they really know the market.

They know which houses sell, if you’re on a corner lot, what does that mean? If you’ve got a view, what’s the percentage increase for that? They know it like the back of their hand. It will be a tech-enabled agent, will be the agent of the future, and Keller Williams is big on that for sure. Tech-enabled agent but it will not be technology-enabled by technology that’s helped by agents, it will be agents helped by technology.

Aaron: When you talking about buying a car on eBay or buying a jet on eBay, or why I buy golf clubs on eBay, I do it because of ease of use and cost. It’s going to make it really easy for me and it’s going to save me money, and that’s not always what people are looking for with real estate. There will be some people that do the iBuyer route because that is ease of use. Or that’s quick or that speed or things like that, but then there’s that cost offset. You’re right.

People saying, house buying can be just like eBay, yes and no? I am super excited about the technology that’s out there but the reason we like eBay is we’re going to get it for cheaper. Why would you ship a car from somewhere else? Because you’re going to save $1,000. It’s not going to be the same as like, “Hey, if you buy this house online, instead of seeing it, you save $1,000.” You’re going like, “I don’t know, it’s a house.” I like that idea, the agent of the future and then that office of the future as that hybrid.

Let’s start talking about the marketing. I want to talk about stocks in a second, but on Bloomberg, Prashant Gopal came out with an article a few days ago. This was a week ago. The world is wildly different a week later, to be fair, but it says the housing market has been surprisingly active during lockdown. He talked about nationwide, how many sales have actually been happening.

Contracts, even though they went down to a record low in April, everything started to come back up. Homebuilding stocks are coming back as they’re seeing it and buyers are out there. All of us have seen transactions are happening. I think overall it’s an opinion piece that says, hey, it’s been surprisingly active during quarantine.

I don’t know if over last week and the next couple of weeks it will slow down. Because the world environment right now is, I don’t know, I think it might impact it a little bit more than quarantine did. Because quarantine people wanted to get out of their houses and there were so many things out there. What has the market been like where you’re at? Has it been surprisingly active in Santa Monica?

Paul: It has. One of the things, I pulled up the California showings statistic because showings are really, they’re really a great leading indicator of what’s going on. The showings bottomed out at almost 70% below the baseline, where the baseline was the first week of January. Now we’re down at 25% above that baseline, that baseline again being first week of January.

When we’re in the first week of June, we would expect that. We’re basically back on track, I know that there’s a lot of pent-up demand. I personally do not see things as going back to normal even though that leading indicator really shows normal. I think there’s some pent-up demand and people need to buy and sell no matter what the circumstances are. There are still divorces, deaths, people moving for jobs, kids graduating and leaving, empty nesters. There are great reasons to buy and sell or must reasons to buy and sell no matter what, and there was some pent-up demand.

I see things slowing down. I also read lots of reports that we are in a recession. Interestingly, one of the things that happened, by the time that The Economist told us we were in a recession the last time, we had already felt about one year of pain. My business was greatly impacted and we were feeling quite a bit of pain already. If there’s any bright side to that, it’s like, “By the time they tell you, by the time they say we’re in a recession, we have already come through a piece of it.” I believe that’s true also. Some of this is just little cycles.

Aaron: Months of inventory in Texas has gone up just a little bit, there’s maybe at a 10% increase from March to April. We’re waiting to see the main numbers, but for a few weeks, we saw biggest unemployment requests ever. Now we’re actually seeing, like last week, it was like most jobs ever of people signing back up in a week. Over the next few weeks, we’re going to hit the timeline where you don’t get double unemployment anymore. People are actually incentivized to find a job and go back to work. Some locations are starting to try to open up again, and we start to see, there’s some hope in that, and seeing what will happen with the market.

I think we’ve had a lot of predictions coming on here and people trying to figure out an extended winter or not. I’m really curious about what the May stats will be in Texas. That’s the market where we’re heaviest right now in all of our sales in houses. When you think about that, when it comes to economics, we’ve started to have some decent news. It’s some decent news of, “Hey, we’ve been in that recession for a little while. Hey, some jobs are coming back. Some people are starting to go back to work.”

The stock market seems to be feeling that too. You looked up some stats, you were telling me before we got on, and it’s kind of crazy. I’m not a stock market guy but it’s crazy when you actually think about the numbers.

Paul: Yes. Dow Jones closed today at 27,272 and the low point was 18,951. We’re at about 45% increase over that bottoming out. It’s just stunning. Like you, I’m not a stock market guy, I would have never predicted that for sure. I do like, and we get comments on this. I enjoy it and I’m glad our listeners enjoy it too, just the anecdotal stuff of like, “Oh, our experience.”

I have a second house in a second home market, Palm Springs. People tend to live somewhere else than go to Palm Springs. That’s the first one to go in a down market. If I were advising myself, I would have said, “Oh, you want to sell now? You’re late to the game already.” I went ahead and did it anyway and I’ve got that house, knock on wood, in escrow at full price. Now full price was a little lower than I was hoping for but I did market it somewhat aggressively.

Last week, I was in a different state, I was in Michigan, actually, and I drove to Indiana, which is not that far away. I drove to Indiana so I could have dinner out. Things are changing. I went to a really nice restaurant with my girlfriend and we had dinner out. It looked different. They had the tables all spaced out weird, they had hand sanitizer on the table, they were telling us what precautions they take.

All the staff had masks. We did not have masks, we’re not required to have masks on but all the staff did. I got to tell you, we really enjoyed it, of course. We’ll see what happens if there’s a new spike with, first of all, with the rioting. There was no social distancing with protesting and with peaceful protesting, no social distancing with rioting and looting, and we couldn’t have imagined that not long ago. We’ll see what happens.

Aaron: We’ve gone to a few restaurants now. We’ve gone out there, and I tell you what? There’s that pent-up demand. When you go out, you feel like you’re breaking some rules, you’re a little bit nervous. Man, just getting to breathe and have that sense of normalcy out there is awesome. You see the market coming up, and that’s awesome you got your house in escrow.

I’ve sold some houses that I listed after quarantine that I was like, “Hey, I really want to sell it.” I did the same advice, I priced it to sell to make sure. It’s just like any other market when it comes to that. When times are tough and there’s a lot of competition, you price aggressively, you over market, you do a really good job. It’s just another transaction you have but you got to work harder. You got to work better, you got to make sure it’s priced right, you got to make sure the pictures look right.

Those secondary markets, I really wonder what’s going to happen out in Hawaii because Maui is a place where it’s a very big second home market and they’ve been completely shut down for a few months. Whereas Airbnb is coming back in other states right now. It has not come back there because people can’t fly out there yet.

Paul: One of the things I think is important for our audience for sure is to let people know that I definitely see a disproportionate number of sales going to the top realtors. If you’re not the top realtor in your area, you’re not getting these one-off calls. I talked to the number one realtor in our area and she told me, even she when she gets a listing, she would win the listing most of the time but she would go out and they would interview two or three people. Now she’s getting the, “Hey, get over here and list the house.” She’s pricing it right and they’re selling.

The top realtors are getting a disproportionate number of sales right now. What can folks do who are not the top realtors? The answer is, get active. Because most people are freaked out and they’re in the waiting room. The waiting room is not where you sit and you wait for them to call your name. That’s not where you want to be when you’re trying to make an impact. Because most people are in the waiting room, you could be a mid-level agent and take real ground share right now by getting very active.

I was doing these iCare messages which I talk about, I’ll just talk about over, and over, and over again to get my folks to do it. That’s, hey, reach out to your database. Say, “Hey, I know it’s crazy times. Thinking about you.” I have morphed it because before, it was such a shock to our system that first Coronavirus, social justice issues, and now it’s like, “Hey, we care about you. We’re thinking about you. Let me know if you have any real estate needs.” We have morphed to that. Everyone should do what they feel comfortable doing, but now’s the time to be active no matter what you do.

Aaron: Even if you believe the market is going to come back stronger soon, or in two or three weeks, when that boom happens, you got to be listed already. By the time you’re like, “Oh, now’s a great time to sell,” it’s too late. The people that are out buying, we’re looking at Texas foreclosures right now, and some stats. We didn’t have these articles but some stats that we know.

In April and May, there was like 30 foreclosures that occurred statewide in Texas. Usually, there’s 5,000 scheduled, 1,500 occur, there’s been 30 statewide two months in a row. Well, this last month, we had like four to five times what we had. For the June auction, definitely not back to normal numbers but we saw this huge spike from months prior, five times before. Within a couple of months, we’ll start to see that get back to that normal setting.

You see stuff starting to change, to go back to that. I think my point was that it’s almost too late to start getting it back in the foreclosures. People have a month or two, all of a sudden, there’s going to be 15,000 houses scheduled for auction and there’s going to be two weeks’ notice. It’ll be too late for somebody to get into the business. You got to start getting into the business now. You got to list your houses now, similar.

The last article, which I think there’s a lot of hope in this. It was on, what to do if you’re in forbearance but still paying your mortgage? This is a real unusual twist. 4.73 million borrowers are in forbearance. I don’t know what the percentage are nationwide but 4.73 million people reached out to their lender and said, “I’m going to have trouble making my payments. Can I get a forbearance? Can you postpone or let me pay less?

All that is saying is you’re going to postpone your rental payments– or sorry, your mortgage payments. 4.73 million, but as of July, 22% of them have actually been making their payments. People got permission to not pay and that turned out a little bit better than they thought. They got the unemployment or they got something else or they were able to keep working and they were like, “Oh, I can still pay my bills.” Even though I don’t have to pay my mortgage, 22% of people are choosing to pay their mortgage even if they don’t have to.

Which the recommendation in the article was like, “That’s a great idea.” Because forbearance means you’re going to have to pay it anyway. If you’re going to plan to sell your house, you’re going to pay it when you sell your house. Some people, you’re going to have to pay it at the end of forbearance. There’s different new laws depending on the loan types. Some loan types are actually going to be required to tuck it on the end.

What’s interesting is there’s no official explanation about why so many are actually still making their payments other than, the only thing that would make sense to me on that is the people, they got the permission, they did it, and then things didn’t turn out quite as bad as they thought. The first week of quarantine I was like, “Should I be cashing in my 401(K)s? Should I be paying the penalty?”

I’m going to go, “I’m going to pay penalty. I’m going to cash it in early because I need to have as much as I can right now.” Some of the stuff that I was in a panic to do, I did not do all the way. Because within a week or two I was like, “That’s great to have that option but maybe I don’t have to do it yet. That’s great to have that option but maybe I don’t have to do it yet.” We’ve seen that work its way out.

Canceling forbearance is an option. That’s the other thing too, as you guys are talking to your clients out there and seeing that people at this point, for the people that are able to make the payment, in some sense is it’s kind of like having a loan or a 30-year-loan that you paid off in 15. They’re having the option but they’re paying anyway. You can always just cancel and say, “Hey, I want to be out of forbearance.”

Because I don’t know what the impacts would be when tried to get loans. People have said different things about their credit scores and things like that, but that’ good. That’s good news that the people in forbearance aren’t really taking it?

Paul: Yes, for sure. If I were advising them, you asked for forbearance, you’ve got it, I understand why people do that, they don’t want to increase their debt which I think is very smart. At the same time, if you could put the money aside with discipline, then that’s the problem. People decide what they can afford based on how much is in their checking account. If they pay that mortgage, then their checking account is down to a point where they know how to manage the money that’s in there, which I understand also. It’s definitely good news for sure.

As I look at news, I’m somewhere in the middle in terms of the optimism and the pessimism. There’s a lot out there. One of my business partners is incredibly optimistic. Gary Keller is much more pessimistic, certainly, than my business partner, and I’m somewhere in the middle. I think you don’t lose anything by being more Gary Keller, as in that’s being more careful, spending a lot less, and being careful. You’re not going to get hurt by cutting your expenses right now, and that’s what I’ve done for sure. Is just really cut everything down to bare minimum.

Aaron: At the very beginning, the first week of this, we said, “Don’t waste the crisis.” It’s a great time to go renegotiate things and maybe it’s going to get better. You can always add the lease expense back on, you can always start paying your mortgage again, but if you go the forbearance, some people are like, “We don’t know if they’re still going to have their jobs the next year.” Some people get the forbearance and they’re paying because they’re like, “I got it while I could. I have the option for the next nine months because who knows what’s going to happen six months from now?” It’s like a safety net, it’s like an extra protection that’s out there.

I think it’s really good to be safe and aggressive at being safe, and if the news we get is better then we get to go, “It was not as bad as I thought.” I think with everything that everyone is going through right now, if we end up going, “It wasn’t as bad as we thought,” in a lot of cases, that would be good news. Paul, any final thoughts to add, man? I know you’ve been traveling and seeing a lot in all parts of real estate. What else do you want to tell everybody that’s out there?

Paul: The biggest news is raising awareness for what is going on out there in terms of the injustices that have taken place, and there’s time for a real change. I think we’re going to see a real change. I have had a wake-up call that I didn’t expect, taking responsibility for things that I didn’t know that I should take responsibility for. Let’s work together on this and see what we can see– It’s a Gandhi thing. It’s just, “Be the change.” That’s what Rod Watson was saying in our podcast, “Be the change you want to see.”

That’s a much higher responsibility and I think we, as realtors, have an even greater responsibility. Serve your clients fairly and see what proactive steps we can take to create a welcomeness to all people. Making sure, again I love things that are measurable, and I would love to see realtors represent at least the same proportion of the ethnic minorities that live in our country and open the American dream to everyone.

Aaron: All that starts with education, educating yourself about what’s going on. You talked about that there has been so many things that you have learned over the past few weeks and so many things that I have learned. I think we have a responsibility as humans to go educate and go do that. I remember at the beginning when a lot of this was happening too, there’s a lot of sadness going on with quarantine, there was a lot of the sadness going on with race. There were so many problems with that.

The videos coming out that just showed the devastation. I remember a few weeks ago, a lot of people were like, “I’m not going to watch that video. It’s going to make me sick.” Then really going through the idea to say, “To educate myself properly, to have an opinion, I need to figure out what’s going on.” There’s some gut-wrenching, heart-changing things going on out there and it would be impossible to not be getting new perspective right now.

I would just continue to challenge our listeners to keep coming on, keep listening. I know that sometimes it’s hard to go, “What are we going to talk about with real estate news today?” Like what Rod told us yesterday, we said, “Hey, are we allowed to go do our business? Are we allowed to market? Are we allowed to do business as usual?” The encouragement and the recommendation that he gave us, and I would give all of you, is don’t stop your businesses right now, we need to rebuild.

Don’t stop your marketing right now, we need to rebuild, but don’t act like nothing’s going on. Don’t act like it’s business as usual, don’t act like there isn’t something. You need to address what’s going on, share your opinions, educate yourself, wherever you are in that stage, and continue with business as you can within these new confines. Do the best you can within these confines. Don’t put your head in the sand.

Keep working hard out there, Real Estate Rockstars, we’re so glad you’re here. Paul and I, we would love to chat with you guys more on social media. Come find us on Instagram and Facebook. It’s Paul Mark Morris, It’s Aaron Amuchastegui. It’s @rerockstars. Did I miss any other place that people can find as, Paul?

Paul: No, that’s good. We love to hear from you. Because right back to what you said about not having a fixed perspective, I know for sure, and it’s one of the things that I did when we said, let’s have the conversation. I said, “Okay, let’s have a conversation, but let me tell you in advance, I’m not an expert. I’m going to mess this up. Give me a chance to mess this up so we can have the conversation.” Aaron and I love the input. What are we doing great, what can we improve on? We’d love to hear it from folks. Thank you very much, we really appreciate it.

Aaron: If there’s anybody that we should be interviewing, come find us. Come find us on there, come find us at hibandigital.com. Until the next time, Real Estate Rockstars, we’ll see you. Thanks for joining us.

Paul: Thank you.