Baby Boomers will Sell 21M Homes Next Two Decades (HA 1125)
Baby Boomers will Sell 21M Homes Next Two Decades (HA 1125)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWitt: Hello.
Steven Butala: Welcome to the House Academy Show, entertaining real estate investment talk. I’m Steven Jack Butala
Jill DeWitt: And I’m Jill DeWitt, broadcasting from normally sunny Southern California.
Steven Butala: Today, Jill and I talk about how baby boomers will sell 21 million homes over the next two decades, the next 20 years and what that really means to us as house investors, or at least it’s my opinion.
Jill DeWitt: I was just talking to somebody. I’m trying to remember who it was, and they were young, and I think they were trying to impress me, and pulling random facts out of their head of things that they read in the paper. They were just talking about how the next generation coming up is going to buy so many homes. I don’t remember what generation it is, but all the 25 to 35-year-olds that are hot on buying homes more than we are.
Steven Butala: Yeah. Oh yeah. This generation coming up.
Jill DeWitt: Right.
Steven Butala: Yeah, the American dream has never changed.
Jill DeWitt: I know and I keep thinking-
Steven Butala: That surprises me a lot.
Jill DeWitt: It does.
Steven Butala: I read the same thing.
Jill DeWitt: And I watch them right now successfully renting and putting money away. I worry that they’re going to put their hard-earned money into a mortgage at the wrong time.
Steven Butala: That exactly what they’re going to do.
Jill DeWitt: I know and they’re going to lose some of that money.
Steven Butala: That’s what we do. I mean we both did it.
Jill DeWitt: Yeah. Well, but we’re here. I’m trying to save you.
Steven Butala: Let’s get back to this trying to impress Jill. People are trying to impress Jill.
Jill DeWitt: Yes, it was a guy.
Steven Butala: When you’re a young male, you try to impress women. It’s just part of our biology. And what’s funny is that we just do it all wrong.
Jill DeWitt: That’s true.
Steven Butala: Your innate reaction when you’re a young man, is to try to impress a woman is to tell her about how great you are, and bang your chest, and look at my sports car.
Jill DeWitt: My watch.
Steven Butala: And that’s not what women want at all, it turns out, at any age.
Jill DeWitt: No.
Steven Butala: What women want?
Jill DeWitt: The more mysterious, and discreet, and non-braggy, believe me, the more we like you. What do women want?
Steven Butala: Yeah. What do women want in that environment? You meet this new guy. The last thing you want is for him to talk about himself, and his job, and how great he is.
Jill DeWitt: Exactly.
Steven Butala: But that’s exactly what all men-
Jill DeWitt: You sit there and you’re like yawn. Seriously.
Steven Butala: That’s what men are hardwired biologically to impress you so it comes out that way.
Jill DeWitt: I don’t want to hear it.
Steven Butala: Give us some instruction.
Jill DeWitt: I don’t want to hear it’s my round because you bought the last two and you assume that I am women’s rights. Heck no. Don’t assume that. Assume I want to be swept off my feet, and I want you to be a gentleman, and treat me like a woman and take care of me, and offer me your seat, and by me and my friend’s drinks, and ask us a lot of yes questions.
Steven Butala: Ask questions.
Jill DeWitt: Yes.
Steven Butala: How about where’s the compliments? I’ve learned now in my later life that compliments can get you everywhere really quickly.
Jill DeWitt: Correct.
Steven Butala: With anyone, but there’s this line where it just becomes silly and see-through.
Jill DeWitt: Well if you don’t think first, number one, that’s a lot of it. Don’t issue a stupid compliment. I’m trying to think of an example, but they’re out there. Make it sincere. Don’t ask me the cliché ones. I’ve never seen eyes that color. I mean, we don’t want that.
Steven Butala: Oh, yeah.
Jill DeWitt: Right, but wow, you sound really good about your job. What do you do? That’s really cool. How did you get there? That’s really interesting. That could be a compliment, and push me forward, and make me feel good about myself. And then all the while go, Do you know what? You’re having this great conversation. This is dating one-on-one apparently here on this show. So, we’re having a great conversation. You’re asking me about myself. You’re asking about my job. You’re complimenting me about… God, you kick ass in that environment it sounds like. Yeah, I do. And then the next thing you say is, “All right, your drink is empty. Do you want the same thing? Would you like something different? I’ll be right back.”
Steven Butala: Wow, I’m learning a lot today.
Jill DeWitt: But you do this stuff. You know that. You are awesome at this.
Steven Butala: I wonder, every time we’ve talked about this, I wonder how much of it is Jill and then the universe of women.
Jill DeWitt: I think there’s a part of that too. Part of it’s me and I watch some of my friends. They aren’t that way necessarily. They do like the cliché complements, I think.
Steven Butala: I think some people and you’re not one of them, are just incredibly uncomfortable when someone walks up to them and starts talking. I think this is well within your comfort level because you’re a born salesperson and I just think that you can handle anything that anyone says pretty intelligently and quickly, and you can think on your feet. I think a lot of people are just like what the heck?
Jill DeWitt: Do you know the part that I don’t understand about my friends? We have a few friends, one, in particular, that was like pouting in the corner, and it’s actually not my friend. She’s a friend of a friend and she won’t be my friend because of this. She’s pouting in the corner because it’s not all about her.
Steven Butala: Yeah.
Jill DeWitt: We were out and a friend had her sister visiting from the East Coast. I mean come on, and she’s pouting in the corner because a conversation is not about her. What the heck? That screams insecurity and weirdness, and who would want to talk to her? Could you imagine? She was all pissed off because we’re not like for men. Never mind she’s married.
Steven Butala: Oh, really?
Jill DeWitt: Not kidding.
Steven Butala: How do you know that?
Jill DeWitt: I know that.
Steven Butala: That’s disgusting.
Jill DeWitt: I know she’s married.
Steven Butala: No, I mean how do you know she was-
Jill DeWitt: She just wanted to go out and flirt and have fun, right and talk to guys. We’re like we’re having a good conversation. It’s not all about you. I don’t understand that.
Steven Butala: That’s not good.
Jill DeWitt: Correct.
Steven Butala: Today’s topic, which I already said.
Jill DeWitt: How about the question?
Steven Butala: Oh yeah, before we get into the… I got so sidetracked about how to get a girl. Howtogetagirl.com by Jill DeWitt. Before we get into it, let’s take a question posted by one of our members on the houseacademy.com online community. It’s free.
Jill DeWitt: Edgar says, “I had to modify the purchase agreement a bit more because it was lacking on some additional terms.” It’s for him, I added. “The main one that stood out though is that it doesn’t have a deposit amount. Should we include a deposit amount or just leave it empty? I know that for some myself, closed deals, this is a no biggie but for most of my deals, I planned to use a title company. Also, for my real estate agents, I put in the following statement. Seller understands that one or more buyers of this company is a licensed real estate agent. The buyer has a personal interest to purchase this property as an investment for the purpose of making a profit. The buyer has no broker’s relationship with the seller and is not representing the seller in this transaction.”
Steven Butala: What are your comments? First of all, I don’t know where the question is in that.
Jill DeWitt: I was thinking-
Steven Butala: Second of all, on what planet? On what planet is all this language required? I’ll tell you what planet because I know about this person and there’s a lot more to this question and I truncated it before all the blood vessels broken the top of my head. We are not real estate agents. If you’ve ever read a real estate agent purchase agreement or printed it out, put it on your desk, and looked at our purchase agreement, ours is one page. There is 48 pages. We didn’t create a show, and create Land Academy, and create a business with the intent of complicating things and making it difficult for people, and hard to understand. So Edgar, feel free to make your purchase agreement 92 pages long and I’d like you to let us know how it goes.
Jill DeWitt: That’s all I can think of. It’s like this contract I just got yesterday.
Steven Butala: Yeah, we just got one of these.
Jill DeWitt: I’m staring at this contract and it’s so sad to me. I’m deal funding. It’s a deal funding deal that I’m doing. And the person that we’re doing the deal funding with, we’re on the same page, slash, however, they’re allowing this agent to call the shots and that’s not how we roll. It’s never been how we roll. And this agent is looking at this going, “No, I know I could do this type of a contract, but I think we should do this type of a contract, which is a longer one.” And they’re adding in extra addendums that the seller, actually we’re the seller in this transaction. That the buyer nor us cares about and they’re accidentally going to blow the deal and what that’s going to do for them is they’re not going to get a commission. And that’s a part I don’t understand. If everybody’s on the same page, I’m happy with a cocktail napkin and you’re happy with the cocktail napkin. And on the cocktail napkin says, “Hey agent, you get X percent of this.” Why would you want to mess that up?
Steven Butala: I’d like to buy your house for $134,000 and we’re going to use escrow agent X and if at any time this doesn’t work for you, let me know, we’ll kill the deal. And likewise, if we find some stuff we don’t like that anytime during the transaction, we’re going to kill the deal. And then there’s a few other little terms and conditions about how we’re probably going to pay for everything because of the price. And so all this stuff is for them. So I don’t know how our culture… This whole country was built on attorneys. All the forefathers of this country are lawyers and so there’s this prevalent legal. All of these things happen with these contracts that are built over time because of problems. So you can’t see into the future. There has to be a little bit of trust. Contracting stuff to death, in the end, you’re going to lose.
Jill DeWitt: Well, and I’d like to know. This would be a good case study. I’m very curious how many people would actually follow through on that contract? So let me give you an example. I’m going to buy your house, Steven. You and I are all into it and we’re getting down to the end. We sign the thick 25-page addendum that goes with the 98-page contract because you have the worst agent on the planet, by the way, but we’re all in. But at the very end of it, you decide you don’t want to sell. You don’t want to move. You love the neighborhood, whatever reason, right? And so you say, “Jill, the deal’s off.” Am I really going to go after you for this? What point… What would be the purpose of that?
Jill DeWitt: Am I really going to dig in and hire an attorney and say, “Oh, but you signed and it’s three hours before closing? You can’t change your mind.” And the escrow company’s not going to force it, by the way. They’re going to go, “Oh, well.” And move on. That’s fine. Push it aside. Who cares? They’re going to shred it. Again that would be me or vice versa. I’m not going to and what would I get out of it? I mean seriously, is there really going to be an attorney that I’m going to hire that’s going to come and pack you up and move you out? We’ll probably settle for something and we both spent a lot of money and wasted a lot of time, so what’s the point?
Steven Butala: Here’s the point and this a great question. The point is this. I’m an insecure real estate agent who has too much hairspray on. I’m very, very, very concerned that you’re going to change your mind and I’m going to lose my fee. Sign all these 500 pages of stuff because you can’t back out because I want my few. I’m not really interested in representing you. I’m not really interested in doing a real estate deal. Actually, I’m interested in getting my money.
Jill DeWitt: Do you know what I think? I think if I’m a real estate agent, in this case.
Steven Butala: We should do the show. I’m a real estate agent.
Jill DeWitt: I’m a real estate agent. Here’s what I do. I scare the crap out of you by having you sign your name 45 times and initial in 103 places because you think now that you’re bound to this thing. Never mind you could run it in the shredder and tell me to go jump in a lake.
Steven Butala: Yeah,
Jill DeWitt: Because you really can’t. It’s not about the agent. The agent doesn’t… It’s between the buyer and the seller.
Steven Butala: So this person’s starting… Do you know what? Edgar, I’m not picking on you. I’m really not. You don’t need to call.
Jill DeWitt: No, this is so funny.
Steven Butala: Please don’t call my customer service and say, “Oh my God, on the show they said this.” Nobody knows who you are.
Jill DeWitt: No, we’re not picking on you for real. You just open up a fun banter for us.
Steven Butala: Yeah. This show or the show, these real estate deals don’t have to be complicated and they’re not about fees. They’re about a buyer buying a piece of property for a low amount, reselling it for higher. Everybody’s still winning because the person just wanted to sell and get out of there, and the new person just wanted to buy a property that’s still undervalued and maybe renovate it. That’s our whole business model. This person’s starting down the path of trying to make sure that all the terms and conditions are going to be dealt with in a contract because this is what’s ingrained. This is what they teach you in real estate school and this is what their designated brokers tell them. You want to make sure you get this fee out of this thing. You want to make sure you cover yourself because you could get sued. We go 180 degrees from that. This is a rant now, but it’s just silly.
Jill DeWitt: I’m just about to do the right thing. Everybody do the right thing.
Steven Butala: Exactly.
Jill DeWitt: Thank you.
Steven Butala: Today’s topic, baby boomers will sell 21 million homes in the next two decades. This is the meat of the show. There’s a huge, huge shift in a real estate value and in real estate ownership that’s about to happen with a population shift. And so here’s the great news. Isn’t it funny, these big huge statistics? It’s like, what do they mean to you? Okay, this is big. These kinds of statistics, every time I read them, I’m like, all right, well now I have more questions than information. Maybe that’s the point. This is actually in the Wall Street Journal. Maybe they’re such skilled writers that that’s what they want you to do. They want you to read the title and then get more information. What does a stat like this mean? Well, it means that about 21 million houses are going to get sold over the next 20 years and if you do the math on that per day and per week, it’s pretty staggering. It’s a lot more than now. Where are they all going to go? We are all those people going to go?
Jill DeWitt: I don’t know.
Steven Butala: They’re going to downsize. They might get smaller houses.
Jill DeWitt: They’re going to move into something else.
Steven Butala: They might move into some version of long-term care facilities, maybe apartments. Whatever is compliant with their theoretical plan for retirement.
Jill DeWitt: Right.
Steven Butala: And retirement means spending less money and saving more and so these houses are going to come up. But here’s the good news, do you know who tracks this way more than us? It’s new home builders like Shea Homes and Tool Brothers and people that statistically have a lot more to lose than us who are going to stop building homes to address this infill scenario. Like Jill alluded to right in the beginning of the whole show, younger people are saying, the younger people still want to buy a house. They probably just don’t want to buy a house that a baby boomer owned that’s got an olive kitchen in it. So all this stacks up for good stuff for us. Here’s why.
Steven Butala: To do very, very well at what we do, you only need to do one or two. If you listened to yesterday’s show on Land Academy, we have a member who just does one deal a month. So if you buy and sell a house every month and net 50 to $80,000 and take advantage of this movement. The key to this whole stat for me is real estate is going to move and it’s going to move at a higher velocity and it will have higher volume than we’re used to now. That’s all good for us.
Jill DeWitt: I’m excited.
Steven Butala: Yeah.
Jill DeWitt: Can I tell you I’m personally excited? All I think of is all the people that I know from my hometown that are still living in the house that they bought in 1964 for $28,000 and it’s been paid off forever. So these people are going to get offers from us and our community here and they’re going to be like yippee-ki-yay. Thank you so much. I don’t have to remodel the kitchen. You don’t care that I filled in the pool in the backyard because it looks ugly but I couldn’t stay in the pool. I can cash out quickly and easily and you’ll help me arrange a mover if I need to.
Steven Butala: As a data person, this is really intriguing to me too because now if I realize there’s a higher chance that somebody between the ages of X and Y are likely to move out, it might change the letter that I send out because I can prepare easily identify the ages of people in their homes through API data development and the whole thing. Jill and I are… Well, not Jill, but I mean I spend a lot of my day studying how to get better data so that we can send out better, as a group, send out more accurate mail campaigns. So as a percentage, any little angle like this is good.
Jill DeWitt: Well I personally, now that we’re talking about, I’m brainstorming too. I’m thinking this is really going to be ideal for us because I really believe that generation values customer service. They like to walk into the bank, see the teller, talk to the teller, and write a check.
Steven Butala: Yeah. That’s right.
Jill DeWitt: There’s still people out there. So to have the level of customer service, they’re not going to go on a website, check this out. They’re not going to go on a website and put in their address because some of them don’t even have computers. They don’t have fax machines. They think that’s a big deal. They think that’s technology still.
Steven Butala: It’s true.
Jill DeWitt: They don’t know how to operate the camera on their phones if their phones have a camera. So to get a real letter in the mail from us that they can sign, and call and talk to a person, and do it the old school way, will sing to them.
Steven Butala: I agree.
Jill DeWitt: But watching a commercial on TV and going in and typing in their address to do it, is going to be scary for them. I don’t think they’re going to do that.
Steven Butala: There’s a huge gap.
Jill DeWitt: And they’re going to get a call from someone in a call center and it’s going to be beeping in the background because it’s going to be this weird recorded stuff. I don’t think that’s going to work. And as I’m thinking this through right now, I’m like our whole business model just got better.
Steven Butala: I agree. There’s just a lot more fish to catch now in the same pool and so you can drop your line in. There’s a much better chance that you’re going to be able to accomplish one or two wholesale, true wholesale flips. And then on the flip side, all of these homes are going to get gobbled up by younger people, much younger than us actually, because of these urban areas. All the young people want to live in urban areas. It’s always been like that and that’s where these baby boomers have aged in place. So it all stacks up to good stuff. I mean we could do whole hours and hours on this actually. I really dug into this. It’s a very positive thing for us. It’s a great time to get into the house wholesaling business, as long as it’s data-driven, and not silly, and you’re not a real estate agent. You can be a real estate agent, just don’t act like one.
Jill DeWitt: Happy you could join us today. Remember every Monday, Wednesday, and Friday you can find us on the Land Academy show. Tuesdays and Thursdays, we are right here on the House Academy show.
Steven Butala: Tomorrow the episode on the Land Academy show, is how Land Academy works from anywhere. You are not alone in your real estate ambition. That is kind of a rant.
Jill DeWitt: But that was good. That just made me think how great this is going to be.
Steven Butala: Yeah.
Jill DeWitt: If anything, I might tweak our offer just to make a short sings to them. We know you’ve owned your house for a long time. We know you want to get a fair price. We know you don’t-
Steven Butala: We know you bought your house in 1962 because we have all that stuff in our dataset.
Jill DeWitt: Right and you’ve been there ever since. We do.
Steven Butala: We have a tremendous amount of data that we could use differently.
Jill DeWitt: Right. One of the things that I do all the time still, like right now doing some of the things I’m doing in LA County, is when I have someone that comes back and says, “This offer doesn’t work for me.” Let’s just say that. I get those emails. So I have a template email that I send back, which is okay, I get that. Let me back up and just say, here’s who I am. This is how I roll. I’m not going to negotiate. I don’t want to waste your time and my time. Please think about this. Then I say things like there’s no agent involved so that commission is going to stay in your pocket, by the way. Please just fire back with me after you thought about it with your lowest best offer that you would… what you would accept. And I will click a respond with a yay or nay and we’ll move on. It works fantastic. Because I’m not going to go back and forth.
Steven Butala: Exactly.
Jill DeWitt: So I’m thinking about how I tweak things for that group. So maybe tweaking things a little bit going forward like we just talked about for this group of people that we’re sending offers to, might make a little bit of an extra difference.
Steven Butala: Well it’s actually getting me thinking because I obviously read this morning, doing a little separate mailer because there’s pockets. You can see through census data, and see there’s a lot of ways to look at data, and see do you know what? There’s a ton. The article was written… If you’re really interested in this, go look up Wall Street Journal and 21 million baby boomers or something. The article was written from a correspondent in Sun City, Arizona, which is a designated… It’s not a 55 plus community, I don’t think, but it was a Del Webb community that was made for retirement. It was one of the first of its kind in the country. All those houses are going to become available or are.
Jill DeWitt: It’s like they have the tennis courts, and the golf courts, and the pickleball. It’s designed for them. I don’t think it’s… Yeah, I think you’re right. I don’t think it’s restricted for anybody, but it’s sure designed for if you have little kids, you’re not going to want to live here. It’s not the right neighborhood. There’s no elementary school right around there.
Steven Butala: The millennial’s aren’t going to want to move in there.
Jill DeWitt: Right.
Steven Butala: There’s just a lot more data. When there’s more data, our group and our mentality is more successful.
Jill DeWitt: Wherever you’re watching, wherever you’re listening, please subscribe and rate us there. We are Steve and Jill.
Steven Butala: Steve and Jill. Information and…
Jill DeWitt: Inspiration.
Steven Butala: To buy undervalued property.
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