 I'm Keena Nicely and this is The Life of the Land is in its real estate. So I'm an agent at Keller Williams Honolulu and today I have an awesome guest. I have John Kiefer who has moved to guaranteed rate. He is an amazing lender here on this island. So welcome John, thanks for joining us. Thank you so much, Keena. So nice. Thank you for the nice introduction. I appreciate it. And thanks for having me. Yes. So tell us a little bit about yourself. Yeah, sure. Thank you. I'm a mortgage lender and I recently moved about three months ago. I moved to guaranteed rate as the vice president of mortgage lending here on Oahu and I've got incredible rates in service and quick turn times and quick processes and I'm ready to just keep moving forward. So great. So we are in the middle of a crazy market. I think it's we don't have a way of knowing but we do know that in May we did hit a record for Oahu for single family homes reached $978,000 for a three bedroom two bath single family home which is just crazy. And they are selling at a record pace. We had 403 sales last month compared to 248 in May before. Now we were in a lockdown in May before but that is a 63% increase in the number of sales of single family homes from year to year which to me is just crazy. So are you seeing a lot more mortgage applications come through? What are you seeing? Yes. Yes. That's so true. We're seeing a lot of mortgage applications. Last year I would say that refinance business was just out of control. We could barely keep up. There were so many refinances going. And just like we predicted, 2021 became a purchase market. So we're getting lots of new purchase mortgage applications. Every week we get more. I mean now and then there'll be a little uptick in the rates and things will slow down just a little bit. But as you've seen and what you just mentioned about homes are just flying off the market. Most people need a mortgage, not all these days. And because of that we get a lot of mortgage applications every day and week over week it's increased quite a bit. So yes. And we are seeing that these homes are going over asking. 58% of the homes sold in May went over asking. So basically that list price you see is just the suggested starting point. Yeah. We are also seeing condos go over asking mostly in the 600 to 699 range. 38% of those went over asking, which I know eight months ago we didn't know what the condo market was going to do but it has also just taken off. So yeah. So that is the market is crazy. So you talked about the rate maybe going up a tick. So where are the rates right now? That's another great question. The rates were historically low interest rates of course. We have been for over a year now. There's been a slight uptick after Chairman Powell made some comments about inflation last week but it has since recovered and I can give you some of the details on that. But for VA loans we're still down in the low to mid two's. So we're still right where we were last year just a little bit higher and then for conventional loans we're still under three. With the homes that you were talking about that are in the million plus range 980,000 wherever that super high number was. With 20% down those homes are going to be with good credit. Those homes are going to be under 3% as a rate right now without paying points for those. It's funny with condos on the other hand. You know how you mentioned the condos? We're not really sure. We're not really sure how they're going to react or what's going to be like for condos. But in my experience and my experience is just anecdotal with lending. I don't have a pulse on the market as much as you do on the sales side. But I'm seeing that the folks that are missing out on those higher price homes are actually they just want to move so badly that they'll just buy a bigger condo than the whatever home they're living in now just so they can buy a home now while rates are low. And so I think, I don't know if this is going to be the case, but I think the condo prices are going to start going up too. I think that there's just not enough inventory at that higher price point that people are going to start looking at condos more. And I think that's what's going to happen. What do you see in that? Well, so I will tell you that I have sold listings of condos to people who were shopping for single family homes and they I hate to say gave up, but in a sense they gave up. They couldn't get into a single family home. They wanted to move here. They're moving here for their job. They want to set the kids up in school and so they go and they purchase the condo that was comparable to a single family home as far as space and amenities and price. And yeah, so I have seen them people who are in lieu of a single family home choosing to go condos. Yes. And I will tell you eight months ago when somebody came to me with a listing for a condo, I was like, oh, but now I'm like, yes, because they are, they are going. I mean, we saw in condos, we saw an increase in price by 14% from last year and 135% for the number of sales. So so a year ago May, we sold 254 condos last May, we sold 598. Wow, that's a big increase. So that's because people are buying condos and people are paying top dollar for them now where, like I said, eight months ago, we weren't quite sure where it was going to go. Yeah. The higher the high end condos are they also selling because I'm seeing them like a year ago, luxury homes were sitting on the market and it was just tough to sell. Now they fly off the market multiple offers, hundreds of thousands over asking. And I'm noticing and again, this is anecdotal. I'm noticing the higher end condos are sitting, just kind of sitting there and the ones that are in a 600,000 range 700,000 range are flying. Is that the norm? Is that just what I'm seeing? No, the ones in 600 to 699 are the ones that are getting the over asking price. But if you think about that, 600 to 699, someone who's approved 800, 900,000 and then turn around and buy a $700,000 condo, because once they take into account the maintenance fees, which has impact their buying power, it's about the range they're at, 600 to 700,000. So it is what we're seeing. So it's not your imagination. All right. So sometimes I see things that are a little bit of an anomaly because I'm on the lending side, right? Yes. So I like to say it's anecdotal. This is just what I see. I'm not following the market like you are, you know, like listening and selling home. So thanks for clarifying that. Yes. Yes. I'm following it every day and we are seeing more luxury than we were seeing in last year, just because I watch the souls every day and you are seeing four or $5 million closings pop up every day, which means the market is going in the right way. So with the rates, we are still relatively low because I know my parents paid 18% for their first house they bought at Port Waimimi, California, outside the Naval base. So these rates we have now are incredible compared to what we're paying. But what do you think we can expect to see? Just a crystal ball. My crystal ball? What is in your crystal ball? My crystal ball isn't as see-through as it used to be because I thought I knew what was going to happen and then things changed. Like you follow the market every day for what's listed and what's sold, I do the same thing with rates every day, right? And the mortgage back securities and all of those things. So basically it depends on inflation. And so we're recording this on Wednesday, right? If we recorded this last Wednesday, I would have a different answer because last Wednesday is when the Fed had their meeting that they hold periodically every year, right? And Chairman Powell from the Fed made some comments about inflation and how he's expecting it to spike. And the market overreacted and the rates jumped up all over the place. And then the day after that, he had some more comments and he said, no, we're not going to superficially increase inflation because when inflation goes up, rates are going to go up. Prices of everything goes up. And so now even today he made more comments saying that we're not going to push it because the economy is bouncing back now because we're opening back up and people are going back to work. So this increase in the economic activity, if we increase inflation based on that, it's not a real marker because we have the spike because now everybody's going back to work. So it's not something that they want to engage inflation on, which is something really smart that he said. I was really happy to hear that. And now rates are back to where they were last Tuesday. So that's the thing, the spikes just go up and down. Another thing for the crystal ball. So today they announced that the FHFA, the Federal Housing Administration Chairman, can be fired by the president. He can be. I mean, they took it all the way up in the courts because the previous administration said that they could fire him at will. And they couldn't at that time. So they had to fight for it. It's a really long, somewhat interesting story. Feel free to look it up. I won't spend our time on that now. But his name is Mark Calabria. And I think last time I was on the show last year, I think I was just kind of like just giving him a business because I was so upset with him, right? Well, and he couldn't be fired. That's the thing, he couldn't be fired by anyone. Like he can't be fired, except for cause. If there's cause, it can be. But difference in opinions and stuff like that, he couldn't be fired. So now they won the appeal that they can. And today they fired him. Like today, he's out. So, okay. What are we going to see from that? Exactly. That's why, that's why my crystal ball is murky right now. Because what Mark Calabria did was he put, he added a half a percentage point fee to all refinances. He did that probably six, nine months ago, maybe nine months ago. And so the amount of refinances tanked at that point, right? Because now that's a half a point higher than it was. So some people, there wasn't really a big benefit to refinancing. For some people, it wasn't worth it. So we don't know if that's going to go away. Hopefully it does. And another thing is that he instituted any investment property loan refinance or otherwise. Simply, if a company has, if a company sells, if a company has 7% or more of investment properties in its portfolio, and they sell that to the government, then there's going to be a hit on those two. So basically it's another fee that they're collecting on investment properties. That one should go away for sure. Yeah, I know, right? I was like, what is this guy doing? I read this morning that because of his, his actions, he has brought in $124 billion into the FHFA. And for what? I mean, he's coming from us at a time, not us, but us, the homeowners and taxpayers at a time when a lot of people don't have the ability to pay extra for a mortgage when the whole point was to refinance into a lower rate so you can save some money, right? Instead, we got hit with a tax. So he's out. Who's, who they're going to appoint into his place? Who knows? This is brand new news from this morning. So prior to that, my thoughts were that we're going to slowly tick up as we get to the end of the year. Just as, you know, the economy opens up, inflation starts to tick up a little bit and people are buying things. But now, I think that's probably the course, but it could be a slower increase than I expected. There's the long-winded story. Yeah. So we do know the market's a little crazy and now we don't quite know, are we, you know, the murky crystal ball. So should folks buy now? Should they wait to buy? What, what do you give them as your opinion? Yeah, I would definitely buy now. Just because we don't know what these rates are going to do, we're historically low, like we always like what we've been talking about. And, you know, the prices are going to continue to go up. Rates are going to start to go up. Until then, I mean, it's going to, it's perfect timing to buy a home. You're going to save money. If you wait, the cost of waiting is too high. So like let's say you're going to buy a home for $800,000. Let's say you have a $600,000 mortgage, right? You know, if that's going to be about $18, $19, maybe $2,000 a month, just a principal interest, right? If you wait until next year, rates are going to be higher. So that's going to be a little bit higher monthly payment and the price is going to be higher. So you're going to need more money down to still get that same rate. So long story short, you should buy now if you can. And if you can't, you should start planning on doing it as soon as you can. Yeah. So we are, I know we both set through a great economist. I don't know if we can name him. We have to pay to name him. But phenomenal economist here on Island, and he also recommended that people buy now based on the fact that the demand is not going to go down and the inventory is not going to go up. So especially here on Oahu because we're so limited, right? With land to build and the demand we're not seeing any less of a demand. So he also recommended that we buy now, which is easy to say. But as all real estate agents know, and probably you too, I'm sure you've written quite a few pre-approval letters and offers don't get accepted. So I know I'm writing a lot of offers to only be told no. And keeping that spirit up with your buyers is difficult. You have to be a therapist, a cheerleader, and you just keep trying. Do not give up. What are some strategies that you are seeing to get offers accepted? Yeah, that's great. That's great. And you have to be creative now to get offers accepted. It can't be just I've got 20% down and I'm a strong, well-qualified buyer anymore. It has to be more than that, right? And you're right, we have to be motivators too. Like we have to be like the Tony Robbins type. So I'm okay, we're going to stick it out. You got to have perseverance and grit and all this thing. And it's so true in this market. You really have to. So there's different strategies for the higher end homes with the larger down payments. You can, you know, with an escalation clause, meaning, you agree to pay, the buyer agrees to pay more than the agreed upon price. If the appraisal, I'm sorry, then the appraised value, if the appraisal comes in at a certain price and we agreed at this price, then they agree to go up to that price regardless of what the appraisal is, right? The appraisal clause. And so we have some strategies around that and it has to do with the loan to value of a loan. So like let's say somebody wants, they're going to have a conventional loan and the loan and they need it to be 80%, 20% down minimum. But they write the offer and they're going to put in, you know, 30% down. But then the appraisal comes back and it's lower than the price. And if that price is within that 10% difference, they don't have, they don't have to come out of pocket. We can just lower the down payment amount. Okay, so there are some tricks. There are some tricks. But that's more on the buyer side to help them put in and feel confident they can put in and offer to win a home that's over what they feel is their comfort zone possibly, right? They have to think differently and they have to be aggressive. And like I'm dealing with one today with $700,000 down payment and we're competing with someone with a similar offer. And it's probably, I don't know, I don't know how many hundreds of thousands over the asking price. I lost track. But that strategy that I just spoke about is the one we're going to use if we win and the appraisal comes in lower than the appraise value. So the more sellers, agents know about that strategy. I think that they will see that those types of homes with the larger down payments are less risky even though the escalation clause is higher. And I know we're getting kind of too deep in the woods for our audience, but strategies that I use and my team uses is that we always call the sellers agent and let them know that we vetted the buyer. We've told them all, how great they are. And we've looked at the taxes and then we've looked at their W2s and their pay stubs and run their credit. And we've run them through the approval process. So they're already good to go. And back a year, a year and a half, two years ago, people just weren't doing that. But now you have to do that at minimum if you're the lender. You have to. You just have to. And you have to be able to tell them that you're going to answer their calls. If you have any questions, call me and then you have to really follow up with that. So we sometimes send videos to the sellers agent about how wonderful our borrow is and how great we are as lenders and we're going to close this thing in X number of days. There's those kind of strategies. What have you been doing on the buyer side to win? So we have been the buyer side paying, covering termite, covering, which you know with the VA buyer, the VA buyer cannot pay for the termite, but I can as the buyer's agent. But even with my credentials, making there are basically no contingencies, no cleaning, I'll cover that, I'll cover the termite, I'll cover the survey. So there's the basically the seller can kind of go and walk away, right? And no added expenses. And then relationships are so valuable in this market. Calling the other agent, being kind and being kind on both sides because I do have listings also. And I used to always, I remember when I started real estate, I couldn't wait to have listings. And now it's kind of brutal. You're getting kind of up on. I have days where my husband's like, oh man, you look exhausted. And it's like, yeah, I had two listings with offers due today. And it, yeah, be nice to the listing agent. Because it's not easy and realize we're the listing agent, we're presenting not. You're not making the choice. You're advising and educating, right? So I've had some, some get pretty upset with me. I'm kind of like, I don't know. And the relationship is really important. I mean, if you as the, you know, the seller's agent or the buyer's agent, if you know the other agent and you have a good reputation and report that person, they know it's going to be smooth. And if there's any obstacles that will be handled with professionalism and class, it goes a long way. And the same goes for the on the lending side too, because you know, you and I have been doing this long enough that, you know, we've built up, you know, quite a few, you know, a lot of relationships that are strong and solid and people know how we work and they know how we operate. And I had, I had an agent trying to get, you know, as a listing agent, you get calls all the time. Can we see the home? Can we see the home? Can we see the home? Right? Well, this agent was so tired of those calls that he wasn't answering agents calls. And I was working with a realtor who she was brand fairly new. So, you know, people don't really know her name much, right? You know, the company and stuff. She couldn't get him to answer the phone. I'm like, Oh, I know that guy. Let me call him. So I called him up and he answered. But he was just tired of realtor's calling him. So he picks up the phone. Hey, John, hey, man. Hey, our buyers want to see this place. Okay, here's a lockbox number. Perfect. It is totally, it is relationship and reputation. It has a lot to do with it. So as you always want to pick an agent, it doesn't have to be me, but you do always want to pick an agent with a good reputation and a lender with a reputation. So now what if folks do want to buy and they've been affected by COVID? They didn't work for a year. What should they be doing to recover and get into a position to buy? That's a good question. That's a tough one. I mean, if they haven't been working, if they're back to work, then they can qualify for a week. We can look at their income as if they were working the whole time. As long as they're back to work full time, again, and they're back to where they were last year, when they were last working, then it's okay. I mean, everyone knows that there was a pause button on a lot of people's employment, right? So then the tricky part with that is down payment and things like that. And hopefully they didn't get into too much debt while they weren't working. An interesting thing about the unemployment and the stimulus check. Thank you. A stimulus check. Yeah, I didn't get one. I didn't either. Can you count the stimulus check in your income? You can't, but they can use it for a down payment. Okay. What I learned about the stimulus checks is that people, I think there were two, maybe three stimulus checks that went out over the last year, right? They were meant for people to use to spend to get the economy going and help with groceries and things for people who really need it. A lot of people didn't really need it, but they took it. Of course, it's free money and they didn't spend it. They saved it. Wow. They saved it. And a famous economist whose name again we can't really bring up was talking about this. And after I heard him talk about that, I looked it up myself. I'm like, wait, what? Is that true? And sure enough, when stimulus checks go out, people who don't need the people who need them, they use it. Of course, gas in their cars, food on the table, clothes on their kids' backs, right? But the people who didn't need it, they just put it in the bank, like rainy day. Like I need this in case the bottom falls out of my work, right? Well, the bottom isn't falling out for a lot of people now, right? It's kind of becoming more solid. So now there are people that have thousands of extra dollars that they didn't have before. And I'm saying, why not use that for your own home and not have to pay rent or live with your parents? Even though living with your parents is fine too. But who doesn't want to own their own home and write off all that, all that interest on your taxes and have all those deductions, right? Yes. So yeah, so great idea. Well, thank you for so much. Thank you so much. I always learn so much when I talk with you. Yes. So if anyone is looking to buy or invest in real estate, I can connect with John. He's a great lender. He's a great company. And I will see you all in a couple of weeks. And this has been the life of the land is in its real estate. And I will talk to you all soon. Thanks.