[Music] Hello everyone and Welcome to another episode here in the New Year 2021 Selling Greenville your favorite real estate podcast here in Greenville South Carolina and I am your host as always Stan McCune I'm a realtor here in Greenville I represent buyers I represent sellers I'm happy to represent you or anyone that know that might need a realtor to represent them for a transaction or to help them to buy a house or to help them to value a house or whatever the case may be I am your guy for that all of my contact information is in the show notes should you need to reach me for anything and as well as I always remind you guys please go ahead and leave a rating leave me a review we we need more reviews I've got a few ratings I would love if you guys could just take 15 seconds just to leave me a quick little review if you haven't already done that that helps me with the podcast that encourages me to keep going with this helps me to reach more people with this and that helps all of us as more people get educated about real estate here in Greenville so please go ahead and do that make sure you're subscribed as well so you don't miss any future episodes I'm hoping this year that we can do some cool things that we didn't get to do last year and so I'm really excited about the future of this show now today we are going to be talking about as we look ahead to the new year a lot of people are going to be doing a lot of different things this is this is a a weird year this past year 2020 of real estate in a lot of ways and I want to think ahead towards all right what is going to be happening in the year moving forwards now that might sound like I'm going to be projecting we're not going to be doing that we've talked about some of that in past episodes but today I want to talk about something that's really important to everyone as they determine what they're going to do whether they're investing whether they're looking to buy or sell and that is your gut relying on your gut and how your gut influences you from a real estate standpoint and this is really important because every one of us relies on our gut you might not realize it but everyone relies on their gut to a certain extent even the people that are the most data oriented people that are out there at some point they rely on their gut and what do I mean when I say relying on your gut well what is your gut when I think about that I tried to break this down and I think really your gut is your instincts that you've developed over time right it's like you look at at an animal like say a dog they have instincts they have learned that certain sounds are associated with different things I had a dog growing up shout out to to Buddy my my childhood dog he had an instinct he knew exactly what my family's minivan sounded like and he wasn't allowed to to be up on our couches in our living room but we started to notice that it seemed like he was probably when we were leaving the house he was probably getting up on the couches and somehow he knew exactly when to get down at just the right time and we could we could tell you know he'd leave indentions and in the couch cushions and it'd be warm and you could see dog fur you know there were some telltale signs that he had been up on the couch well I came up with the idea I bet that he instinctively knows the sound of our vehicle and knows to get down when when he hears that sound and so we tried an experiment we parked a few blocks away and then walked to to the condo we lived in a condo at the time grown up we walked to the condo so that he couldn't hear the normal process of us either the car or the garage whatever the case may be whatever it was that he heard and it would throw off his instincts of of waking up and getting off the couch well lo and behold we go up to the condo open the door and sure enough there he is caught in the ax sleeping on the couch and he woke up as soon as we opened the door and just looked just so confused everything was off that he had never had that happen before and and I'm sure it was really he didn't even know how to process that because just instinctively when we came home it was always associated with a certain sound and this time it wasn't well in that case he had an instinct he had a gut and he would rely on that but he didn't account for the fact that that we might actually figure out that that he was misbehaving and that there was a way that we could catch him in the ACT that's a silly story but we all similar to animals have instincts like that that are running in the background that that we're not even really thinking about that we don't even necessarily know are there and and are informing honestly very major decisions that we make and when it comes to real estate when it comes to buying selling homes land whatever the case may be you do have a gut not just related to real estate but also related to other things that impact that for instance money for instance risk tolerance for instance your idea about different areas and construction and there's there's all sorts of things is that you have a gut about you and that gut that broad real estate gut needs to be developed and honed over time because at the end of the day if you are looking to to buy something or if you're looking to to sell something to sell a house if your gut is not calibrated correctly you're going to ultimately make a mistake I've tried to address this in some of my podcasts in the past for instance we talked about overpricing a home how big of a mistake it is to overprice your home well some people their gut tells them that you should just overprice your home you know if you think it's worth 200,000 just list it for 250 you can always drop the price well I showed through the data that that gut feeling that some people have that that's wrong that those people actually on average based on the the data set that I was looking at are losing $12 a square foot which can mean tens of thousands of dollars in in an average transaction you don't want to do that you want to make sure that your gut is calibrated so how do you calibrate your gut when it comes to real estate well I think you need to start and and you might want to just write this down if you're really serious about this particularly if you're a first-time investor start by thinking about the parts of the process that confuse or overwhelm you what is it that when you think about purchasing a home or purchasing an investment property or selling your home or whatever the case may be what is it that confuses or overwhelms you for me when I think about selling a home for instance the part that always overwhelms me is just all the things that need to go into getting it ready getting it ready to actually get on the market to be sold to get Top Value obviously I know very well what it takes to get that and so I know that it's a lot of work so that's a bit overwhelming to me well I have a my gut tells me this is going to be a ton of work just automatically right and that might not be accurate it may actually be you know what if I just hired a guy for a few hundred bucks he could knock out a bunch of these things that that that I'm just overwhelmed by it it you never know sometimes your gut oftentimes your gut needs to be calibrated and and again the first things that you start with are the things that confuse or overwhelm you and you need to educate yourself about those things and then building a team of experts to use my example that I just used I've got a team that I've developed over the years a team of lenders of contractors of surveyors a whole lot of different people and if I have something like that where it's like you know what I feel overwhelmed by the prospect of of getting this home ready to list really it's it's not hard for me to just go to one of those people and be like hey can you help me think through this can you give me a quote on what it would cost to do these different things and guess what sometimes in that process I might get a quote from someone but they might share with me a piece of information that's like hey this is how I would do this and this is a simpler solution than the solution that you thought and it it may end up being that I I was overstating the work that need to be done in some way or I didn't know that there was a simpler way of doing something and then it ends up that now my gut understands okay this isn't as bad as I thought one of the things that I have learned to you know calibrate my gut on is structural things people automatically assume structural problems with a home are devastating a lot of people do a lot of people do well I've learned over the years that not all structural issues are equal in fact the vast majority of things that are deemed structural issues are really they they might it might cost a couple thousand dollar but a lot of people assume a structural issue with a house it's going to be like 25 or $30,000 and unless you're talking about you know a million dollar house it's very unlikely that it's going to cost 20 or $30,000 it's it Mo in most cases most structural things that I've run into cost a maximof like $2,000 now again that varies but my my gut when I first started flipping houses and whatnot I just thought you know I'm not even going to deal with structural issues and I've found that a lot of Real Estate Investors are that way they just won't even won't even deal with it but I've learned that that's actually There's an opportunity there with with those homes because a lot of them don't need as much work as you would think when you first look at it it's simply the fact that it's it's a scary unknown to a lot of people but my gut has been refined and and now structural things most structural things don't concern me I bought a house last year was it last year maybe two years ago actually wow 2020 went by quickly didn't it I bought a house a couple of years ago that had major major structural issues and I ended up doing a a basically a whail where I didn't do any repairs to it I've got it cheap enough that I didn't have to do any repairs to it and I was able to just dump it off to another investor that investor took that house and completely redid it and made a gorgeous house got really top dollar for it I was honestly jealous I was like man I should have kept this house I just didn't want to have to deal with all of that but again someone else that was really knowledgeable about how this would work and I mean we're talking about floors sinking in like one wall was higher than the other because of how it was how it was sinking it had a lot of things that needed to be done to it and those things were done to it and ended up being sold for top dollar I'm sure that they made quite a bit of money on that house and I'm really happy for them that that worked out that way and that's part of where I'm going with this is that you need to like I said we all have our gut that we rely on for different things people that are wise that have wisdom in this that are going to be successful in real estate they don't just go off of their gut every single time and just assume that it's always right they actually check it they actually make sure that their gut is accurate and you need to find a way to compare if you have a gut feeling on something let's say you pass up on a deal because your gut tells you that that's just not going to work then you need to to go back later and be able to compare your gut feeling to the actual data was that gut feeling actually accurate or was it wrong I had I had someone earlier in 20120 they were looking to get into small multif family invest in and I showed him a property and I was like hey this this property it needs a a lot of work but you're not going to find really anything cheaper than this in an area like this and his gut told him it was too expensive and it was going to be just too much work not enough you know not enough profit it just wasn't going to work out well guess what we I look back now a year later and that property was a great deal should have been jumped on any of my investors I would encourage them to to jump on a property like that and we can go back and just look at the data and look at multif Family Properties that sold the past year and say yeah that property honestly he probably could have put you know $40,000 into it and probably could have sold the property flipped it and made a lot of money doing that even if he chose to not buy and hold it so you need to be willing to do that and be willing to look at the data and admit that you made a mistake maybe you estimated that a project would be $50,000 but end up at $75,000 now this is the bad the worst case scenario if you make a purchase or whatever the case may be and your gut was wrong and you had to learn from your own mistake but you need to in that case okay what was I wrong I estimated it would be 50,000 but it was 75,000 what was the reason for that go back and actually analyze what mistakes you made and make sure that you don't swing to the other you know the pendulswing to the other end of the spectrwhere next time you're estimating that it's going to be $100,000 when it's really 75,000 well that's not helpful either you need your gut to be as accurate as possible and and in in a case like that let's say that you bought a bought a house you thought the rehab would be 50,000 it was 75,000 that tells you that your gut on construction costs and it might be a very specific thing but I'm just talking in general terms your your gut on construction Cost needs to be calibrated if it's sold perhaps it sold for even more than you thought it was worth or for less than you thought it was worth and that tells you that you're gut on home prices is off and that needs to be calibrated as well when you catch yourself making mistakes it it's important to when you're just getting into this or you know when you're a first-time home buyer whatever the case may be that you identify as quickly as possible where those gaps are in your knowledge and that you try to educate yourself and there's a lot of data out there now and I can provide a lot of data to people to to help educate you without you having to make the mistake to educate yourself but you need to to educate yourself when you make those mistakes pretty quickly one thing I run into from time to time with people looking to buy to buy a house is they'll say Stan I'm looking for a house that is you know this price has all these features is in this location etc etc do you think that that we can find a house like that well if they're what they're looking for is Pie in the Sky I'm going to be hesitant I'm going to say you know I'm not sure that we're going to be able to find that and so there are some ways and and maybe they're like well no I think we should be able to find that their gut tells them yeah we should be able to find that and my gut says I don't know about that now I'm going to try to help to to educate them not to prove my point not to prove me wrong but to make sure that we're both on on the same page that's very very important and so what I've done for some clients is I've sent them okay let's look at the past 6 months all the homes that sold that fit your criteria let's see if there are any homes that that you would actually have been interested in the past six months if the past 6 months there are no homes that fit your criteria that you would have potentially been interested in then probably there's not going to be any the next six months either if there were one or two then that tells me that when one comes on the market here in the future we're going to have to be very aggressive and make sure that we get that as soon as possible that that we don't let it slip and go to someone else if I send them that list and there's a bunch of homes a bunch of properties that fit that criteria then it's like okay we're we're probably going to see a bunch of homes in the next six month mons that that you could be interested in then that that completely changes the dynamic so data helps us to calibrate our gut and listen me as a realtor I'm willing to admit if my gut is off and I Rely heavily on data that is for me the most important way to make sure that my gut is not off and so a lot of what I'm saying here is you need to develop the skill of being able to identify where your gut is good and where it isn't if you start to see consistently that your gut is accurate that tells you what you're good at this is part of how I got into real estate originally was when my wife and I we were looking at homes back in 2010ish trying to trying to get our first home we were we didn't have much of a budget at all we didn't have much for down payment I wasn't making a lot of money back then and so we were in a situation where we had a very limited bandwidth for homes that we could potentially buy a limited number of homes that we were looking at well it turns out that even though we were in the worst part of the recession from a real estate standpoint in 2010 we kept finding ourselves getting into bidding wars with people like major bidding wars like 15 or 20 offers on homes at a time when homes were sitting for 10 or 11 months normally why was that the case well what I started to realize with that was that I was actually good at identifying these homes that were under value that were basically on the market below value these were good deals these were homes that investors were going after and as well a a lot of owner occupants as well and so I realized that my gut for identifying good deals was actually really good and that ended up being something that I ultimately used to kind of push me into real estate investing it's like well if I'm good at this maybe I should see if I can actually make money from this and it turns out that I can and so my gut was good in that but I had to learned to really educate my my gut personally on construction that was I was really backwards on construction when I was first became a homeowner when I first became a homeowner I didn't even know what a drywall anchor was I mean I was so green it was honestly laughable extremely extremely laughable I didn't know what tools to get I I didn't know anything it was it was honestly embarrassing I had a lot of catching up to do and it's taken me years to to get better at that but you know what I feel a lot more confident now than I did then and when I feel like okay I'm not really sure about this like I had this happen recently I went into a home that was where a remodel had been started but stopped and the home was now down to the studs and I mean there was not a single thing on the inside and they had reframed everything so everything was reframed so it it was it didn't have electrical it didn't have very much Plumbing in it it was literally just framing but I didn't like the framing I didn't like the way they had framed it it it was going to end up being a very non-open floor plan if you just hung dry wall where all that framing was and but I had never dealt with something like that I wanted to know well will it be super expensive for me to open this up when it's just down to the studs will this be and there were some specific questions that I had with regard to the loadbearing walls and whatnot and so that was something where you know what I hadn't really run into this before at least not in this way so I called one of my contractor contacts face timed with him showed it to him and he gave me some really good thoughts on that and so I educated my gut now I know more for next time next time I run into that situation I'll have a calibrated Instinct in terms of how to how to evaluate that situation and the con and the potential construction costs there now a common mistake people make with their gut is in situations where they are uneducated and nervous to make a decision all right that for instance their gut on risk tolerance in general is not calibrated they're they're not willing to take risks they want a property that is basically free of risks and listen that is you might as well just not even move or not even look into getting investment properties if you're not willing to take on risk there is inherent risk to buying a house whether you're a homeowner whether you're an investor there are tons of risks that are involved with that and if you're not willing to take those risks then you need to just come deter with that and a lot of this comes back to having a good team and this is where as a realtor I can help I can bring my team along to supplement yours and this is one of the the biggest values that a good realtor brings is they they have a quote unquote Rolodex obviously we don't use Rolodex any rolodexes anymore but we have a Rolodex of contacts in our phone of people that are specialists in a lot of different areas and so if you are uneducated or nervous about something a potential investment or something that you're you're looking to buy or to sell then what is it think through what is it that is making you feel nervous making or that again that you feel overwhelmed about it's good to write these things down and to actually process it and then you can address each thing individually is it oh man this looks like it needs all new wiring well your your gut may tell you that it needs all new wiring but it may not actually need all new wiring and if it does it may not be as expensive as you think it will be so there's a lot of different things like that so bring an electrician and have an electrician look at this what does he think or maybe even just give him a call there's a lot of different things like this that you need to consider and again having a team that is able to supplement these gaps in your knowledge that is that's extremely crucial and so it's good for you to assemble your own team but don't feel bad to use mine if you're using me as your realtor I'm happy to to share my team with people that have an agreement with me to use me as a realtor now if you don't want to use me as your realtor if you see me as simply a guy to to you know one of many Realtors out there who can maybe find you a deal but outside of that you're not really interested in working with me then no my roal Dex is valuable that's that's a major value to me I'm not going to share that with with just anyone and I'm just G to I'm just going to be honest about that we need to have a an actual relationship here where I'm working working with you you're working with me and in that instance I'm willing to be very transparent in terms of here are the best guys that can handle these different things and the repeat clients that I have they they understand that they see that value one thing I also run into that I guess I I should mention here is and and I try to be obviously I always try to be patient with all of my clients we all have things that we have to to work through in our minds and there's going to be disagreements sometimes I understand that not everything that I that I say to a client that they're going to agree with and so I always just try to be open in my communication and just try to be honest and and focus on data I I tried to to Really if if my gut disagrees with my clients I try to supplement that with data rather and say no no no no no no you're never going to sell this house for that much don't even don't even bother no I'm going to actually say well here are the comps here's what historically in the market your house would sell for and here's what I believe that that I can sell it for but what will happen is sometimes people who have very little real estate experience will tell me that they would take a different approach on selling or buying real estate then I would they they they have a gut that goes against mine to for lack of of a better way of putting it and that's fine but I just want to be honest I I live in this market I see every single home that comes on the market I'm constantly analyzing the market I'm constantly looking at the data I'm constantly working with Professionals in this field and my gut is pretty educated on real estate I'm not trying to be cocky I'm just being honest if you disagree with me I want to see why I want to see the data I'm I'm not going to work with people who are just constantly disagreeing with me just on the basis of well it just doesn't feel right well why doesn't it feel right it does it not feel right because there's actual data supporting that it doesn't feel right or does it not feel right because you're just not really sure you you haven't ever done this before or you've only this is only the second home you've ever bought and so you don't know how it's supposed to feel and so I've I've had to fire clients before over this I had you know that one client that I mentioned before that I presented that multifam property to and he ended up not moving on it when he should have I ended up having to part ways with with that client because it was like you know what this this is just not going to be a good fit you're so far your your mindset and mine are so far in a different direction we can't help each other I can't help you I'm never going to be able to find a property that fits what you're looking for you're looking for a property that that has no risk and that's a perfect price point well guess what we'd all love if unicorns existed but unicorns don't exist you have to be willing to look at data and Trust data and to hone your gut based on that there is no free lunch to use that cliche that that I heard a lot growing up and and the same is true in real estate and as you do refine your your gut and as you become more educated in different things with the market that opens up more things for you and I've already alluded to this that you know whereas some people won't consider consider homes that have structural issues people that are willing to consider them there's a huge Market out there for them there's a huge opportunity for them to then pounce on those properties that have a lot less people buying for them because those people won't consider them people that won't consider properties that have water damage from one thing or another you know what water damage can come from a lot of different things mold can be the C can come from a lot of different things if you find a property that has mold in it well is the mold isolated is it throughout out the house is it in the duct work there there are so many things to consider is it just in an isolated part of the basement ises that part of the basement have moisture in it right now there are so many different things to consider there and so as you start to experience more and more of these things and as you talk to more and more people that have experience with them that helps you to become better educated and to to take advantage of more opportunities as they're there and I always with my clients I try to be very forthcoming if I go into a property and I'm like oh man this is going to be a ton of work you know what this I have experience with this specific issue and this is going to cost you a lot of money I'm GNA be honest with that I just got a review from Chris thank you Chris that for not for my podcast but for me personally as a realtor who said said that I will give advice that sometimes means that I will miss out on getting a client under contract because my reputation and making sure that my clients get what they want is more important to me than simply getting another property under contract getting another closing that my reputation is going to get me more closings and more clients in the future so I have to maintain that and so so the way I maintain that I'm just brutally honest and I spend more time talking people out of purchasing something or out of doing a real estate transaction oftentimes and I do talking them into it now if I do try to talk them into it it's because I believe in it it's because I believe that it's truly something worth investigating that it's truly going to be a good deal but at the end of the day you will have to take particularly if you're investing you will have to take a leap of faith an educated leap of faith you want to educate yourself as much as possible but a leap of faith you cannot isolate every single variable and account for every single variable you will have to rely on your gut and I've had some clients in the past where they tried to isolate every variable and try to get to a point where nothing is unaccounted for everything is accounted for that's impossible you can't do that you have to be willing to educate yourself to the point to a reasonable point and then take a leap of faith now what I always encourage everyone to and if you've listened to this podcast a lot you've heard this before you need to have Protections in place don't use all your cash reserves don't do not do that if you if you purchase this is investment property or for your for yourself for your own home do not deplete your savings make sure that you have cash in reserves for the worst case scenario make sure if you're investing that you have multiple exit strategies and what I mean by that is maybe this home well this home could be a good flip it could be a good long-term rental it could be a good short-term rental there's a lot of different options here and if that's the case we've got multiple exit strategies and and part of that that's built in is remember if you're looking to flip a home let's say that you buy a house to flip but it turns out that you can't get for that house what you really hoped you could get you part of having a multiple exit strategy approach is that then you have a backup plan that you can actually hold on to that property for maybe one two three or more years and now rent it out so you have to make sure that you can actually afford that maybe part of that is is that you're assuming that you can refinance that property and get cash out do a Cash out refinance and use some of that Equity rather than selling it well part of that assumes that you can actually get pre-qualified to do that refinance so that's part of educating yourself and making sure that your your gut is accurate as well is is making sure you've got all those eyes dotted and teas crossed that you can actually follow through with that strategy and so at the end of the day here is the point of this whole podcast as I wrap it up here is that we all have things that we know or don't know when it comes to real estate transaction you need to educate yourself as much as possible on what you don't know and part of that is actually reflecting on what you're knowledgeable about what you're not knowledgeable about and and demonstrating to yourself through data of some sort that you actually are knowledgeable in the areas that you think you're knowledgeable in you may not be knowledgeable in those areas but then you also need to have a good team to help you to help fill in those gaps and that's where a good realtor comes into play whether me whether someone else the realtor himself or herself is a crucial asset just because we have knowledge of so many different parts of the transaction but also the team that they have is a big part of it as well and as I said before that's something with my clients I am more than happy to share my team with them you know what I have clients that they share their team with me an we go back and forth and we each get better as we go along and that's that's a really cool part of this I love that I have clients that I've worked with for years and years I've been a realtor now for 5 years and you know what it's it's a rewarding experience to have someone come back to you after after all these years and to say you know what there's a gazillion Realtors out there but you're the guy that I want to work with and and I appreciate that and I appreciate all my clients if you or someone else needs a realtor you just want to talk real estate you just want to talk about this podcast my contact information is in the show notes and here's to a wonderful and prosperous 2021 [Music]