Tego (00:00):
We’re gonna talk about real estate, cuz this is a real estate show. There we go. I think we’ll talk real estate. So, Tracy, on the, agenda today, we, we want to, take a deep dive into owner financing or seller financing or real estate contract or

Tracy (00:13):
All the same thing.

Tego (00:14):
Yeah. All the same thing. All the different, um, ways to say that we wanna talk about do o m other in, in our world known as days on market and what is, and, and, and why that really matters when you are, first off, how to calculate it

Tracy (00:30):
As well. Days on market for a home that we have on the market for sale and how many days it’s on the market. Correct.

Tego (00:37):
Correct. So we’re gonna talk about that. Um, and then I, I I’ve dug out some really interesting data on homeowners and what the interest rates that people have right now. So we’ve had this unprecedented increase in interest rates, mortgage rates over the last, you know, six months. We went from three and a half to now, you know, got up over seven now to pulled back a little bit, but just where people are locked in right now and it’s actually really good news there, Tracy.

Tracy (01:04):
So it is, I think we’re gonna find a lot of people probably refinanced, right? Yeah, yeah. Um, also Tego, a few other things. You know, we always talk about homes of the week and open houses. Yep, I really wanna jump in right now on one house that came on the market this week. Perfect. So maybe more than one, Crimson Glory in Primroses Point. Beautiful Luxury Home. Opened today, Saturday for the first time. Went available today, opened from one to three today and tomorrow it’s 1,000,100. One of the most beautiful homes. Large lot in Primroses Point, which is a neighborhood up near Poeo and Tramway. Kind of a newer neighborhood, so to speak. Probably 15, 20 years old or more. Yeah. Yeah. Things time, time flies. I remember being in that neighborhood when there was just lots of lots, so, right, right. But it had different phases and built out.

Tracy (01:58):
But this house is really spectacular and some of the things that, um, our listeners are gonna wanna know about it, it’s a single story. 4,100 square feet, five bedroom, two living areas. And one of the bedrooms is actually a attached Casita with its own entrance. So it’s really nice. The lot is really big 0.44, so almost half an acre there is not a pool, but there is room for a pool. Um, just beautiful single story house. So if that’s, um, something that’s of interest, I would run to see it because it’s one of those that we expect a lot of people will, um, be interested in based on the phone calls this week while we’ve been in coming soon, I expect we’re going to be quite busy for, so

Tego (02:44):
That property, you know what’s interesting, I wanna just point out on that. I, obviously, I follow a bunch of real estate news and there’s been a few stories out there about multi-generational housing in, in, in like, what is multi-generational housing. And that’s where you have, you know, either parents and kids, living together, either, you know, in the kids’ house or in the parents’ house. And you have this gen, you know, multi-generational, situation with adults and it’s become much more common now where, where people are cohabitating together and this is a perfect type of property where you have a, a separate what they call in-law suite for just, just for that purpose.

Tracy (03:23):
Right. And a lot of times we’re also seeing Tego like siblings moving in together, not just the multi-generational, but there’s lots of reasons why people might need this floor plan. It might even be a teenager that you just wanna have their own space or whatever. But it’s just a really great property. Um, 12 0 9 2 Crimson Glory northeast. If you wanna Google it and take a look and see if it’s something that you might wanna call us to schedule a private tour of that home for you and your family.

Tego (03:52):
Yeah, the, the, there is, you know, there are a few new homes on the market this week. The, the number of homes overall in the Albuquerque area started to, to pull back finally, it’s, it’s pretty common this type of year, time of year, um, this week we’ve seen less homes come on the market as go off the market. So, um, we’re starting to trend down and that’s more than likely gonna consider, consider continue all the way through till the, end of the year. And then we’ll probably reset starting, at the beginning of January and, and see some people put more homes on the market. Of course, there’s always homes coming on the market, always homes going off the market too.

Tracy (04:30):
Right. And there is another one we put on the market. Great.

Tego (04:32):
Let’s talk about it

Tracy (04:34):
Just freshly on the market. 2,700 Vista Grande. Yep. It’s a town home,

Tego (04:40):
Town home,

Tracy (04:41):
Right. three bedroom, two and a half bath. It’s a, a split level floor plan. So you enter on the main level where the kitchen dining are, and then about three or five steps down to the living area with just beautiful mountain views. Um, it’s, it’s, overlooking the bluff and, um, close to I 40 and Coors. Yeah. On the west side of the river overlooking the river valley and the bluff there and the city. And that one’s 315,003 bed, two and a half bath, just completely updated. Yep.

Tego (05:12):
Very much. Completely upgraded. Brand new kitchen, brand new appliances in the kitchen. The bathrooms have been updated not that long ago. They’re not perfectly, you know, brand new, um, new laminate flooring and yeah. So anyway, it’s, it’s, um, it’s gonna be a good opportunity for somebody. And that one is on Vista Grande, 2,700 Vista Grande. So

Tracy (05:32):
That is an gated neighborhood though, correct. So best to call us and schedule a time. We don’t have an open house scheduled for that particular property just because of the logistics of the gate. It’s a little trickier. Yep. So if that’s, um, something that works for you, give us a call at that four four eight eighty eight eighty eight.

Tego (05:50):
Okay. Let’s get into some topics here. Tracy. Real estate contracts.

Tracy (05:55):
Sure. What is a real estate contract? Tego?

Tego (05:59):
Yeah, so real estate contract is actually the, the, the document, the vehicle for, um, spelling out the terms on, on a seller financing deal, meaning the, the owner, the seller sells the property, but instead of just taking the cash out from the property, they, they take payments and it could be, you know, an interest rate with certain terms, certain amateurization schedule. So, yep.

Tracy (06:26):
So owner financing is just another tool and a way for a seller to have an opportunity to just sell their property. Right. So it, it’s just, um, an op option. You can put a property out for sale using conventional financing, fha, VA cash, but you could also do owner financing. So owner financing arrangements, Tego, like you just mentioned, don’t have specific requirements per se, like getting a regular loan. Right. So we can think of, um, like a lot of things are credit scores, debt to income ratio, underwriting requirements, all these things that when you get a regular loan are taken into consideration. Sure. But if owner financing, a lot of times those things aren’t, aren’t in play. There’s not a general guideline. Um, owner financing arrangements can be used for an owner occupied property, residential commercial, or even raw land. Right.

Tego (07:23):
Very common with, with raw land, because many times for raw land, especially undeveloped raw land, meaning there’s no utilities or anything on the property, you really don’t have an option for bank financing on

Tracy (07:36):
There. There’s some out there now, but it’s not necessarily the best. Right. Yeah. Um, so borrower and seller can come to agreement regarding the price of the property, the time of the loan, the period of the loan mm-hmm. the down payment and the terms regarding the agreement. So the terms would be the interest rate, um, when the note would be due. So it’s great, but there’s no mortgage insurance on it. Lots of reasons why it can be a good option. So Tego, why do you think somebody would wanna consider selling a property and offer owner financing or a real estate contract?

Tego (08:10):
Well, it, it’s actually a very, solid long term investment. If you are, um, somebody that doesn’t need to have all the cash out from your sale of your property, it’s a great investment. So let’s say you have two, a $200,000 property and you’re, you can earn, you know, 6, 7, 8, 9%, you know, interest on the, your, your sale of that property. Um, that’s a pretty darn good return Right. On your money.

Tracy (08:37):
So for some people, rather than sell the property and have the money and not know where to invest it because they don’t need to put it in another home, they might say, well, I can put it in a bank or a, a CD or something at 0.5% interest, or I could be the financier of this property and get 6, 7, 8, 9% interest, whatever people agree to. Right.

Tego (09:01):
It’s, it’s actually a pretty popular investment for savvy investors that, that are looking for a place to park some money. They will actually even buy the loan from somebody and just have it as a long term investment. Very common to buy, real estate contracts from somebody that holds it and just take over that, that, you know, basically cash somebody out. I’m, I’m confusing. You’re way ahead of I know. I know, I know. Okay.

Tracy (09:27):
Okay. Okay. So yeah. Reasons why a buyer might not qualify a reg for regular financing and why they might want owner financing. Sure. Lots of reasons, right. So sometimes, um, people think that there’s a red flag if somebody can’t qualify for regular financing, and there’s so many reasons. So one might be they just change job careers, it’s a new job industry mm-hmm. and they haven’t been there for two years, right? Yep. So a lot of lenders have some stability on the type of job you’re in because they want to make sure that you’re gonna make it in your new career. Right. Sometimes somebody just opened a new business, right. And they don’t have the financials yet to show that they can afford it. Um, sometimes self-employment.

Tego (10:13):
Yeah. Well, in, in one thing is that, you know, credit underwriting, the, the standards that that people must meet to qualify for mortgage per purchase became really, really tight in 20 2009, let’s say. And they’ve been relatively tight since. So Yeah. You know, the lending standards are very tight and there’s certain situations where people can definitely afford a property, but they can’t, um, qualify under the, the, the normal terms of, financing. Right?

Tracy (10:45):
Right. So self-employed individuals often have a lot of write-offs or deductions that might make it look like they don’t have the money to pay for a house Right. Loan. Right. Um, so owner financing can be excellent for that. So other things, sometimes people don’t have the credit score and sometimes it’s, you know, really close where their credit score is for some reason been hampered. Sometimes it’s because they co-signed on a loan and somebody else didn’t do their financially responsible thing. Yeah. Right. Yeah, totally. Um, also, a lot of times there’s borrowers with no credit, whether they’re young or somebody who just has always believed in paying cash for everything. Yep. If you don’t have credit, that can also keep you from getting a regular loan.

Tego (11:30):
Yeah. So there’s a lot of advantages on the, the, the homeowner seller side and there’s plenty of advantages on the buyer’s side. Right now in Albuquerque, as we sit here today, there’s 66 properties that are, have real estate con contract offered as a, as a financing option.

Tracy (11:50):
So this seller is offering to be the finance Correct. Like the bank for that property.

Tego (11:55):
Correct. Correct. You know, the, the thing is a lot of ’em are actually manufactured homes. Not unusual because ma a manufactured home, many times can’t qualify just for a lot of different reasons. We don’t know need to go into detail on that, but there’s a lot of reasons a manufactured home will not qualify for traditional, mortgage financing. And so that, that’s a, a pretty common one that we see.

Tracy (12:19):
So we can set up a search of homes for people if they wanna buy Yeah. Using owner

Tego (12:23):
Financing. I’ve actually got it on our website. There’s a link on there for homes with, seller financing available. We,

Tracy (12:28):
And we can set up a search for them. That’s very narrow, right? Yeah. To different neighborhoods and different things. So if something pops up in an area you really are interested in, you get a specific reminder of that. For sure. So other advantages we talked about, um, that maybe you don’t need that cash and you might get a higher interest rate on it by selling the property and being the lender. There’s also other things, sometimes people get a higher sales price because they’re offering owner financing. Yeah. Um, sometimes, you know, there’s no appraisal unless the buyer requires one, in which case, you know, that can happen. Um, a lot of times, you know, there’s a good down payment that that gives you some cash now and then you get monthly payments until you pay off the loan. One of the things that’s good to know about, owner financing is that all the terms are negotiable between buyer and seller.

Tracy (13:21):
And the realtors help facilitate that and make the offer and, and figure out the terms. But a lot of times people might say, I can do owner financing but only for two years. I can do financing for you, but only for five years, 10 years. Typically they don’t go 30 years. Correct. Correct. You know, it’s not a 30 year loan, it’s people say, yeah, for a few years while the market shifts this or that. I I don’t need that money, so I’ll do owner financing, but we’re gonna have a call or a balloon where the, the full loan is due in five years say it’s all negotiable. Yep. But that way you can maybe know how many years down the road before you get paid off. And so some people like to have 10 years because they just want what you call mailbox money. Right,

Tego (14:07):
Right, right. So mailbox money is a, a term that’s out there where it’s, you know, I sold the property and I’m not, I’m not a, a landlord and you know, I’m not renting it

Tracy (14:16):
Property responsible for taking

Tego (14:17):
Care of it. Yeah. I, I’ve sold the property, it’s, it’s in their name. Um, and just collecting, payments on that. So that’s a good option. So go, go ahead.

Tracy (14:26):
I was gonna say, um, the, they really do become owners. It’s a sale. You are like the bank. Oh yeah,

Tego (14:32):
Yeah, yeah, yeah. For sure.

Tracy (14:33):
And the deed and all that. So the one part I wanna get in before we finish this topic is we always suggest that um, you have a third party that’s like an escrow company, right. That is the company that’s holding everything that the new buyer pays them. Who pays you just to keep it real clean for both buyers and sellers and real

Tego (14:56):
Safe. A hundred percent. No doubt you

Tracy (14:58):
Wanna do it direct and give each other direct and have to prove that no, you were making payments and

Tego (15:02):
Things. No, no. You don’t. You don’t want to go there. You definitely need an escrow company.

Tracy (15:05):
And some of the downfalls of owner financing, if the buyer defaults and stops paying. Yeah. I mean it could happen, right? It’s a risk. Um, one of the good things about that is typically to take back the property is easier than going through a foreclosure in New Mexico. Yeah.

Tego (15:23):
So in New Mexico

Tracy (15:23):
You could have to do that.

Tego (15:24):
Yeah. So in New Mexico, it’s a judicial foreclosure, um, which is a long process on a, on a real estate contract, type type deal. It’s, it’s actually a much simpler process. So, I mean, we’ve only talked about this for about 10 minutes here and there’s so much to it. And so if you are, you know, either thinking about buying a, a property, using, seller financing or selling a property, using seller financing, reach out to us. Be sure you’re, you’re, you’re working with a realtor or professional that really understands all the ins and outs of this cuz there’s so much to cover. Um, we have a great book that was written by, Terry White here in Albuquerque. He’s the owner of, sun West Escrow was Yeah. Was No, he’s still involved. He’s still involved. Yeah. And, and it’s called, um, you know, it’s just a book about real estate contracts and we have copies here if anybody’s interested to learn about that. But there’s a lot of good information out there and just, just give us a shout if you want to talk some more about it.

Tracy (16:21):
Let’s talk about days on market,

Tego (16:24):
Days on market.

Tracy (16:25):
Dom, do you know, in our, in our system it’s dom, but really it’s days on market and the days on market for homes being listed for sale has shifted a little bit as we’ve come into fall and interest rates have jumped up. Do you have some statistics on that? Yeah, my, my

Tego (16:42):
Matic Yeah, of course I have stats on that. So, you know, days on market is a, an interesting gauge for the, let’s say the health of the real estate market overall. You know, as average days on market go up means that demand has, has slipped a little bit. Um, you know, as home sell faster, we know demand is stronger. And, and what’s happened over the last, let’s say a few months, days on market have, creeped up a little bit because demand has pulled back a little bit because of the, the higher mortgage rates. Um, the thing is, it’s historically it’s still very low. I think right now we’re about 21 days as average days on market or for homes that, that go under contract

Tracy (17:24):
This past like March, April, may. We were down to like two days, three days. Oh yeah. The most of them, most homes were selling in under seven days on market. Right.

Tego (17:34):

Tracy (17:35):
And, so now we’re all the way up to like 21 days on market

Tego (17:39):
On average. Yeah. There’s

Tracy (17:41):
Depends how you

Tego (17:42):
Look at it. It depends how you look at it. It depends if we’re talking about median or, or mean or median or average, right? So, but anyway, we don’t need to go there. But the, the thing really I wanna address here is I think most people that have ever shopped for a home recognize when they’re out shopping, they see homes, oh, it’s like that home’s been on the market for 30 days, 60 days, 90 days. What’s wrong with it? It’s the first thing that comes to mind. And so that’s why say right here,

Tracy (18:07):
Of course, so speaking of real estate contracts, someone on our team was writing an offer, um, today on a property that’s offering owner financing, it’s been on the market 102 days. What does that mean to you?

Tego (18:22):
It means that there’s couple things, right? That you know, it, it, I always go to why do homes not sell? Right? And there’s, there’s multiple reasons. The the most common one, the most obvious one is it is just the price prices above what you know, the market,

Tracy (18:39):
The price for the condition and location.

Tego (18:41):
Yeah. So it’s price, condition, and location. Right. Right, right. And so, you know, you, if, if you can’t, obviously in most cases can’t adjust condition or excuse me, can adjust location, sorry, I said that wrong. Um, and, and generally you can do something about condition. Um, it just, it just depends if, if, you know, doing the updates makes sense. If if it needs it.

Tracy (19:02):
So today’s market 102 days on market when the average is about 21 Yeah.

Tego (19:08):
It’s 21 right now make

Tracy (19:09):
You go, Hmm, something is not right for the, for that property.

Tego (19:12):
Yeah. Yeah. So, um, the, the thing to think about if, if you’re, if you are putting your home on the market, you don’t want to get those high days on market because that can be a red flag for, for buyers. Maybe it’s not rational, maybe it’s not true, but it can be an issue if, if you do get ahead of the market on price, maybe the home isn’t ready to be shown and you start tick off those days on market, it can, it can affect the, the sale and the, the actual actually in the end, ultimately what, what you do sell the property for

Tracy (19:46):
10 years ago, you know, five months on market was not unusual Today that would be very unusual.

Tego (19:53):
Well, you know what’s interesting, if we go back to, so right now, October of, of this year, 20 22, 22 days on market is the average days on market. If we go back to, um, October of 20, let’s say 2019, which is let’s say call that the last normal market, it was more like 30 days, right? 35 days, 40 days. But if we go back to 2018, it was more like 50 days. So, you know, we had just an extraordinary market over the last two years where we saw homes, you know, half of the home selling in four days or less. And, and that’s change. And that’s, that’s good, that’s good for buyers because now they have a little bit more time. They don’t have to just, you know, make compromise on, on what they’re buying and not take just whatever is available. And, and in some ways it’s good for sellers too. It’s not quite as frantic. You’re not getting a bunch of offers. Um, the home prices are still, holding in steady. And so it’s, um, you know, you just, just wanna be aware of that one.

Tracy (21:00):
So let’s talk about interest rates. You did some interesting stats and posted on your Twitter, which you have a great following on Twitter, and you’re known for your stats. And actually you were featured this week on a panel with the home builders. Yeah. Congratulations. As the person giving all the stats for our market, which was awesome. Um, so you did a little, post about interest rates and how, how they break down among our

Tego (21:25):
People. Yeah, so, so there’s been a lot of conversation about, okay, mortgage rates went from, you know, 3% to 7%, 7.5% in some cases. And, and again, they pulled back a little bit, but you know, how many homeowners out there right now have really good interest rates on the homes that they own and that they’re in right now? And so I did a whole bunch of digging and I came up with the stats in New Mexico, 82%, almost 83% of homeowners have a mortgage rate of 5% or less, which is still, you know, let’s say two points lower than what the going rate is today. Um, almost 60% of people have a 4% or less, and 19% of people have a 3% mortgage or lower in New Mexico. This is New Mexico stats.

Tracy (22:16):
So really interesting numbers, Tego and, you know, we can make all sorts of surmise all sorts of things from that. Yeah. But really the people still need to buy and sell. People still need to move and it’s a nice stat, but I don’t think we wanna say, oh wow, I’ve got a sub three, I’m never gonna move again because we have life changes, right? People have reasons why they still need to buy and sell homes.

Tego (22:41):
Let, let’s, let’s all be honest here. We don’t, nobody makes decisions purely for financial reasons. I mean, maybe there’s some people and maybe people think they make reasons, you know, all their decisions based on, you know, good financial decisions. I mean, of course that’s part of it, but, but a home and a home purchase and a and a home sale, has so many other factors, around it. It’s not just purely the numbers, but yes. Somebody that has a 3% mortgage now saying, well, I wanna move or I wanna upgrade, or I want update to another home, or, or whatever, another part of town, different school district, whatever the reason is you wanna move, um, suddenly giving up that 3% mortgage and having to go for a six and a half percent or a six 7% mortgage Yeah. That, that’s, that’s gonna be, that’s gonna have an impact on the budget, no doubt about it. So yeah, it’s an interesting thing to pay attention to

Tracy (23:35):

Tego (23:36):
So, yeah. Yeah,

Tracy (23:37):
Yeah. And rents, did you have some rent news?

Tego (23:40):
Yeah, rents, I, I did a short little video on what’s happened with rent over the last year in Albuquerque. And I think most people recognize that that kind of follow, you know, the economy and what’s going on is that, rent rents in Albuquerque and really around the entire country have really, grown exponentially since the beginning of the pandemic. Just like home prices for sale homes, rents have also gone up substantially. And in, just to give you an idea, go

Tracy (24:11):
Ahead. Two bedroom apartment?

Tego (24:13):
Yeah, just two bedroom units just kind of average. So, so the median, rent for a two bedroom unit in the greater Albuquerque area is now, about $1,300 a month. And that’s about 14% higher than a year ago. Over historically in Albuquerque we see three, 4%, you know, year over year appreciation in rent, you know, when you, when you, extended out. Um, so yeah, I mean, rents have gone up a lot and, you know, three bedroom now is

Tracy (24:43):

Tego (24:43):
A month. 1900 a month mm-hmm. 1900 a month. That’s, that’s the, that’s the median in, in Albuquerque. So, you know, it’s that, it, it’s, it’s frustrating because we know inflation has hit everybody and it’s hit housing and it’s not just the price of homes, it’s not just the mortgage rates, it’s, it’s also the rent, unfortunately. And, and the, the, the thing is, I mean, we still have a shortage of, of properties in the Albuquerque area, both for rent and for sale. And so that has been, been driving up, um, prices and, you know, who knows where this is gonna end up, but, but right now, um, it’s, they’re, they’re, they’ve gone up a lot the last year.

Tracy (25:25):
So last week we were talking to a rental property manager that does apartment has a specific apartment complex. Yeah, actually that was at bowling. Were you there for that conversation? Yes, yes. So, um, occupancy rates, you know, for a while there, there wasn’t a apartment to be found for rent in Albuquerque. Everything had a waiting list. Sounds like that might be loosening up just a little bit. Yeah, they’re more at like 90, 95% occupancy now. Um, so that’s good. There are at least some apartments apparently available. I know that particular complex was, um, the one right behind Sprouts ATS Road and Yeah. And Alameda, very large complex. Um, but you know, they come at a price, so we are always like, is there a reason that you’re not buying? Yeah. Right. Yeah. It’s hard to pay, you know, if you need a three bedroom to pay that much, I mean 1900 a month, you think of the property somebody could own. Yeah. Or 1900 a month.

Tego (26:24):
Yeah, no, the, the, the the, you know, the thing on rent right now, the data is showing it that may, we may have plateaued a little bit, just like home prices have plateaued, right. Um, we haven’t really seen a pullback in either, , for sale prices or for rent prices, but they do seem to have plateaued, which is actually healthy. Um, you, we, we just, we’ve been just going up so much so fast over the last few years.

Tracy (26:46):
It’s seasonal too. Yeah, absolutely. I mean, this is normal right now for us to see that everything level off for the next two or three, four months until about March. As soon as we get those warm days in March and grass starts greening up. So we’ll heat up the real estate.

Tego (27:01):
We will see for sure. You know, the big, the big question out there, um, you know, are, are mortgage interest rates gonna keep going up? Are they gonna plateau where they are right now? You know, in the high sixes are they gonna pull back and there’s, you know, people predicting both, of course. Yeah. Right. Some people think it’s gonna go up, some people think it’s gonna go down. Some people that I follow that have been pretty accurate on predicting mortgage rates do expect actually a pullback in, in the first quarter. But we’ll see. It really has to do with whatever happens with inflation and if they can get inflation under control, mortgage rates will, will more likely, um, start to pull back as well. But

Tracy (27:44):
Well see. I, mentioned that you were on a panel with home builders this week. So was, Paulty, Brazo, Dr. Horton and Westway Homes. Yes. Yep. Really great panels. So if you’re interested in new construction, we’ve got lots of the latest and greatest information on that too.

Tego (28:03):
Yep. Lot of, still, still a lot of homes, you know, being built in Albuquerque, which is, which is a good thing. We need them

Tracy (28:08):
And a lot of great incentives from the home builders right now. If you’re in the market to buy Eddie or anybody, you know, it’s great time.