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31 Dec Ep. 23: John Charlton & Nick Albright


In this episode Adam talks with Nick Albright, the newest Hermann London recruit, about always going to the party, record setting rainfall problems, St. Louis being the 2nd best market in 2016, why discounters aren’t winning, & creating a business plan for 2016. Adam then brings in John Charlton of GSF to talk mortgages and the Fed’s funds rate increase.

Email questions to [email protected]


0:48 – Adam introduces Nick Albright
1:58 – A short story from You² about why working harder doesn’t necessarily mean more success
5:25 – Don’t stay home. Go to the party
7:45 – St. Louis is supposed to be the 2nd best top market in the country in 2016
10:05 – Why Adam lives below his means
10:49 – Why are the discounters not winning
14:09 – Dealing with this record setting rain
17:32 – Doing the right thing/putting the moose on the table
18:42 – Put your Realtor license on hold & become a Hermann London Referral Agent
19:49 – Have Hermann London over today to get ready for a spring showing
21:06 – Nick Albright gives the St. Louis property sales stats
27:00 – Creating a business plan for 2016
29:38 – How to get in contact with Nick Albright
31:10 – Adam introduces John Charlton of GSF Mortgage
32:18 – What the raise in the Fed’s funds rate means
32:52 – What are the rates
35:52 – What is a sweat equity loan/streamlined 203k
38:55 – Based on how much you are paying in rent now, what kind of a house could you afford to buy
41:05 – How to get in contact with John Charlton



Adam Kruse & Nick Albright


Adam Kruse & John Charlton











Adam-Welcome, everybody, to podcast 23 of the St. Louis Realtor Podcast. I’m your host, Adam Kruse. We are live from the rooftop of The Hermann London Real Estate Group in beautiful downtown Maplewood, Missouri. We are excited. It is the last podcast of the year. It has been an amazing year. We’ve got Joey Vosevich, our producer, in here. Today we’ve got a special guest. Our expert real estate analyst, Nicholas Albright. He is new to our company but not new to real estate by any means. Hi, Nick. How are you doing?

Nick-I’m doing great.
Adam-Tell me something about yourself.
Nick-I started investing in real estate when I was 22. I’m a new licensee. It looks like the real estate market is doing real well. I’ve had 3 closings so far and I’m glad to be here.
Adam-You are absolutely our rookie of the year. You are our most successful realtor that we’ve ever had within the short amount of time you’ve been here. A little later you are going to give us our market update. I went on a listing appointment with Nick the other night and he had all the charts and the graphs. He knew about every house that had sold in that neighborhood, he was well prepared, and impressed the seller. I’m going to do something weird today. I’m going to read a short 1-pager from this book called You ²: A High Velocity Formula for Multiplying Your Personal Effectiveness in Quantum Leaps and the author is Price Pritchett PH.D. When I read this page I got up, started making copies, posted it on Facebook, and started passing out copies to our agents here. I think it is metaphorical for where a lot of people are in their lives, businesses, and personal relationships. It says it is a true story.
[Skip to 1:58 in the podcast if you would like to hear the story about a fly that is dead set on flying through a window instead of going out the door 10 feet away]
Adam-I like to share that story because a lot of people are trying the same thing over and over and they are not finding success and they need to take a second to reevaluate what is working and not working. Over the years I’ve seen so many realtors that don’t take the time to acknowledge that they need to change what they are doing if they want to find success, stop getting complaints, or increase their business. I love that story because I feel like it can apply to everyone in all aspects of their life.
It is the holidays and I want agents, business people, and people who want more friends, I want you to go to the party. That is my saying that represents getting out there and being involved. I think Woody Allen said, “The first step to success is showing up.” When you are tired and you want to go home, put on your sweatpants, and sitting by the fire, don’t do it. If your friends are inviting you to a party, go to it. If there is a class or a networking thing, go to it. An agent was talking to me about her frustrations with seeing her Facebook friends posting about using other realtors and I asked when was the last time you went to a party that they invited you to. She said that it is hard, she’s busy, and there are always things going on.
Nick-I always say that if I were to go home and go to sleep, I know what is going to happen in that situation. If I choose to go out, there is no telling who I am going to meet or what could come of that.
Adam-I like that. My buddy Tim is a country boy and a hunter and he says he never killed a deer from his bed. You were saying, Nick, that you will start hanging out in certain parts of town in order to meet new clients.
Nick-I went to a wine bar called Vin-De-Set and noticed that the clientele seemed to be of an upper class. I figured that if I went there to hang out, I would meet some people.
Adam-Instead of going home to have a drink with your feet up and watching Netflix? If you ask yourself why you are not successful, I want you to think about the last time you went out of your way to give people your time. When is the last time you went out of your way to go somewhere new and get out of your comfort zone?
I want to talk a little bit about this article that said 2016 is supposed to be this amazing year for real estate.
Nick-Realtor.com posted that St. Louis is supposed to be 2nd best top market for real estate in the country because job growth will increase the real estate business and the pricing.
Adam-2015 was a very good year for me. We sold a lot of homes and I’m wondering if I will be good enough to do this again. A lot of people set their goal to be double what it was last year. Nick, do you have a plan for next year?
Nick-My goal is to try and find what works for me. There are a million different ways to market yourself so my goal is to find a couple of ways that I’m really good at. I’m starting fresh and I’m excited for this year.
Adam-I know 2016 will be a great year for you and I think it will be a great year for me. My worrisome attitude is what drives me to keep working. Being in real estate is weird business. Because I always go to the party, I get random phone calls from people that want to buy and sell real estate. Nick, you are coming on two appointments tonight and those were two people that interacted with me at one point. One is a fraternity brother and the other one is someone I cold called in the neighborhood a year ago. They randomly called and wanted to meet on the same night. I hope we continue to get more of those calls. If you are a listener with real estate needs, just give us a call. 
My philosophy is to live below my means and I think that is because I got into this business right around the crash and I saw all these investors and realtors spend every dollar they were making on cars, lake houses, and diamonds. When the crash happened I saw a lot of people go through some really tough times. I’m actually thankful for that since it has made me live below my means.
I want to talk about why discounters are not winning. When I say discounters I mean that there is always a realtor out there that is willing to charge a lower commission. There are some companies out there that base their entire business model on charging no commission. There have been some local real estate firms that have created a commission split with their agents that are incredibly cheap, and what I call a race to the bottom. Why aren’t these discounters winning? I was actually a discounter a long time ago when I got in the business in 2005. I worked at a company that would list homes for $300 on the MLS plus you had to pay the normal buyer’s agent commission. When I was doing that I thought this model was going to take over. I like to evaluate that every once in while. Why are the companies that charge a higher commission that me doing so well? I think it comes down to the reason why people still shop at Nordstrom. K-MART has filed for bankruptcy and Nordstrom is opening more stores. I believe that an agent with a plan, proven process, good communication, are honest, and trustworthy are worth the money. I have a listing right now where the client is the seller and he feels comfortable calling me to ask questions about updates that are needed with his house. I came over before he listed it and we made a huge plan about all the different things he was going to do to update the property and he found that advice worth paying for.
Nick-I was watching a TED Talk the other day and the guy was speaking about how he paid for the most expensive pair of jeans he ever bought in his life the other day. The jeans were $500 but they were guaranteed for life and the company would always replace the jeans. He was talking about how quality is worth that extra price. The quality of good advice is worth paying for.
Adam-Wow. There is a company in town right now that is charging their agents almost nothing. It’s like if you close a house, throw them a shiny nickel and a hug and you’ll be good. It’s interesting that they are growing a little bit but most of the people that are joining that company are not successful. The successful agents that are making their companies a lot of money are staying loyal to their brokerages or they stay working at those traditional companies. The agents that are not selling houses and not helping clients are looking outside of themselves, wondering what’s wrong, and switching companies. The discount real estate company in town is growing but I don’t know how successful they are because they don’t have a lot of agents that are doing a lot of business.
We are now going to jump into water woes. Do you have any idea how many inches of rain we got?
Nick-No. I heard in some areas it was up to eleven inches.
Adam-Eleven inches of rain! A lot of people are having water woes. We are having listings that are calling us that have water in their basements and they haven’t had water in their basements in fifteen years. We are having buyers that closed in the past few months saying they have water in their basements. We have sellers who haven’t closed yet that have water in their basement. You had a water woe, Nick. Are you willing to talk about it?
Nick-It was a property we closed on a few weeks ago where the seller signed a contract saying they had made all the necessary repairs for the sump pit to make sure all the water would be pumped out just in case. They said there hadn’t been water in there in ten years but with this rain there was water that didn’t get pumped out. The first step is to fix the problem. I’ve already notified the agent.
Adam-They said they would fix the sump pump and pit and they didn’t?
Nick-They must not have fixed it properly.
Adam-Now that it is raining, your client called you and said there is water in the basement? Is it a finished basement?
Nick-Partially. I told them to take pictures of everything to document evertyhing that has happened. It is partially finished but it looks like the rubber floor pieces will need to be picked up. It shouldn’t be a huge problem but it is still an issue.
Adam-This is a delicate situation that you are in. I am not an attorney. Who is fault here? Can we blame mother nature? The seller for not having fixed a problem whether they knew about it or not? The inspector for not having found it? Can we be to blame? Every case is different. In your case the seller was supposed to fix something and they didn’t so it is more concrete. We had another case where the buyer’s basement is leaking and they are saying the seller didn’t disclose that basement leaks and I am saying this is a little bit of a questionable situation. Did the seller know? I heard this was one of the three largest rains in St. Louis history. It could have rained 4 inches 3 years ago and the basement might not have leaked. The buyer may have to prove that the seller knew about the problem and didn’t disclose it. In that particular case the inspector said there is a crack and you may need to get this thing filled with epoxy, they ignored it, and now they are paying the price because it was a finished basement. I have a listing where the seller called and said there is some water in the basement, this has never happened, and I’ve lived here for 15 years. We are doing the right thing and it feels good. He contacted a crack repair company to come out and give a bid. We contacted the agent who is representing the buyer and disclosed what is going on and got their approval for the type of fix we are going to do. I think that some sellers in that instance would try to hide the problem. One of the things that we preach at Hermann London that I learned when I was an accountant is to put the moose on the table. The other one is eat your frog. There is a problem and lets talk about it right now and that’s what I did instead of getting my seller to buy a heater, dehumidifier, and cross our fingers that the buyer doesn’t notice and we don’t have a historic rain in the next couple years. Take care of the problem.
Realtors, you just got your bill from the association of realtors. If you are not wanting to pay that bill and not wanting to continue to be a realtor, but you would like to still be a licensed real estate agent, at Hermann London we have a separate company called Hermann London Referral Agents. We will hold your real estate license for non-active agents. You can still refer business into us and receive commission, but you will not be a realtor. You will not have access to the MLS, the super key, and all the forms, but if you would like to keep your license and get back into the business at some point down the road, contact me at [email protected]  and I’ll give you more details about putting your license on referral. I hate to see somebody who worked so hard on getting their license just give it up because they can’t afford their dues this year. I know they come two weeks before Christmas and it is close to a thousand dollars. Just give us a call.
I want to say to anyone that is listening that is considering selling their house, have us over. If you are thinking about selling in the spring when everyone sells their house, I want to encourage you to have a Hermann London realtor over to your house so we can walk through it, make a plan, and get the house ready so it looks the best. Some projects may take a little bit of time. Have us over now so we can give you advice and we can start our pre-marketing so when you are ready to list in the spring, you will be totally ready. My little ad campaign that I’m about to run is called Have Us Over, so call us at 3148020797. Receiving our advice if part of the benefit of working with a realtor. Any realtor will say that they will give you a free CMA and tell you what your house is worth, and we will do that also, but we will also come over and give you advice on what to do to make the home put its best foot forward.
I’m looking across the table at Nick and I’m seeing all types of charts and graphs. I know you like data so start throwing some numbers at me. What’s going on in the real estate market?
Nick-It looks like over the past 4 years, active listings are down about 4,000. They must not be sitting on the market as long.
Adam-How many homes are on the market now?
Nick-About 25,000.
Adam-I can remember when that was 30,000.
Nick-Four years ago it was 28,000.
Adam-I notice on your chart there is a big drop. When was that?
Nick-From 2011-2015, the big one is 2012-2013 there is a 2,000 home drop in active listings.
Adam-25,000 still seems like a lot of homes on the market. I think the MLS includes Jefferson County, St. Louis County, St. Charles County, Franklin County, and Gasconade County. What else do you have for me?
Nick-The expired listings are down 6,000 from 2011. We are down to 5,500.
Adam-That means less homes are expiring and in theory more homes are selling.
Nick-They are not sitting until the end of their contract with their current realtor.
Adam-If you list your house now, the chance of it not expiring is higher and are selling within the listing period. That’s good.
Nick-Pending sales are up to 14,500 and that’s up about 3,000 since 2011 so the homes under contract are up greatly.
Adam-Part of the reason that there is less homes on the market is because more homes are selling faster. That definitely applies to what I saw in 2015 where our company goal was to have 100 listings and we sat at around 50 listings but that’s because we were selling them, which is obviously our real goal.
Nick-Closed sales are up 2,750 at 14,000.
Adam-14,000 homes sold in 2015?
Nick-Yes. The average list price since 2012 has gone up $50,000. It currently sits around $275,000.
Adam-That statistic is skewed because you listed your own personal residence for $100,000,000, right?
Nick-You know it.
Adam-You are saying the average home price is up by $50,000? Holy cow. Here is a little side note. I saw some friends this weekend that I helped buy a house a year ago and they say they are ready to list their house because they paid around $420,000 and they are getting letters from realtors that want to list their house because there is nothing for sale in their neighborhood. I think my friends were only half kidding. They want to list their house in the $520,000 range. They said that if they could make $100,000 in a year they would be quite happy with that. I think we might be able to do it, especially with the statistics you are giving me now.
Nick-The sold price is up about $50,000 as well. 
Adam-What else do you have?
Nick-When you were mentioning listing in spring and how it is a good idea to contact us now, the pending sales from this time of year is in the mid 800’s and in the spring time it goes up to 1,200-1,500. It is a good time to contact us to get prepared for spring.
Adam-The spring thing is interesting because sellers ask if they should wait to list their house, and I answer that by saying in the winter there will be less competition and less buyers but in the spring you will have more competition and more buyers. Instead of being the only house on the block for sale, there may be three other people on your street.
Nick-The percentage of sales according to listings does go up in the spring.
Adam-You are saying the chances of you home selling in the spring are higher?
Nick-Percentage-wise. It looks like with the pending sales in December were 875 and in April about 1,400. It is about a 75%. The new listing in December are 900 and the new listings in April are 2,003 so the percentages are a little bit less.
Adam-What month of the year has the least amount of sales?
Nick-January. The most is close between May and June.
Adam-So I should go to Hawaii for all of January?
Nick-Sounds good as long as I can come.
Adam-Absolutely you can come. People like to hear the numbers and I want to make sure everyone is getting some value out of our podcast.
Lastly, I want to talk about business planning. A lot of people have already done their business panning for 2016. Our company does our business panning retreat in January. Mary Couch from HR ETC. is going to come and run our event. I call it business planning/goal setting/motivational/state of the union. It is an all day thing that covers a lot. My friend says that if you monitor and measure what matters, what matters always improves. The thing that I see with a lot of realtors is to take a look in the mirror. You are a business. A lot realtors look at themselves like they are an employee or something and if you are a realtor, you literally have opened your own business. You are your own business and if you want to be successful then you have to invest in your business. It is unreal to me that people get into real estate and they don’t invest in their business. They may invest time by going on Facebook all day or going to the parties I’m encouraging everyone to go to, but you never see anybody who opens their own hot dog stand, shoe store, or graphic design, and they don’t do any sort of investment in it at all. I think it is important for realtors to think of themselves as a business, invest in themselves, and make a budget. They don’t have a marketing plan and they don’t know who plays what role. I don’t understand why a realtor wouldn’t have an organizational chart. A realtor might say they are the only one in their business and they are the one doing everything, but it is nice for you to define those roles so that as you grow you know what the roles are and you can take  yourself out of one of those roles like marketing and put someone else into that role. Who is in charge of mailing out the Christmas cards every year? Eventually you might have someone else do that for you. Make a plan, set some goals, and figure out some statistics. My new favorite T.V. show is called The Profit on CNBC. It is about this guy that goes into businesses and helps them out. He always tells them to trust the process. They make a plan, establish a process, and he wants these people to follow it. One of the biggest problems he encounters are people who don’t trust the process, pull audibles all the time, and think they have to do something different.
Thanks Nick for coming on the show. I know that being a guest on a podcast that you had never listened to is kind of a weird thing, especially when I just pulled you in. I’m glad that you already had your statistics and data ready because you are the man. I want you to be able to give your personal information out. How can people get in touch with you?
Nick-You can contact me at [email protected] , you can reach me at 3143593223, and you can follow me on Twitter and Facebook at NickJAlbright .
Adam-Is that a business Twitter or are you posting what you do on the weekends?
Nick-I keep everything professional.
Adam-Thanks again, Nick. I’m glad you came on the show. If you listeners out there have any questions, please email us at [email protected] . If you have any subjects or questions that you’d like us to cover let us know. We are always looking for new interesting people to interview as part of the podcast as well. We are looking forward to a successful year and growing this podcast to make it as informative and valuable as possible. Up next we are going to do our mortgage minute with John Charlton from GSF who is going to give us some updates so I’m going to go grab John.
Adam-We have John Charlton here. He is our office lender. He is with GSF Mortgage. Buying real estate is great but you need money to do that. Most people don’t have a couple hundred thousand in cash hanging around so they have to call John. How about we reintroduce you even though you have been on the show a few times.
John-I’ve been in the mortgage industry for about ten years. I’ve been working for GSF Mortgage for the past year. I specialize in residential home loans. I can do pretty much any type of loan you can imagine as far as that goes; VA, FHA, USDA, and first time home buyer programs as well.
Adam-And you are a hurler.
John-I play some Irish hurling.
Adam-We are calling it the John Charlton Mortgage Minute but you don’t have to keep it to a minute. Just give us an update. We like to know where the mortgage market stands.
John-In general, interest rates have been really good for the last few years but that’s been kind of an indication of a poor economy overall. I am going to say first and foremost that the biggest question I’ve been getting here in the month of December is about the Federal Reserve raising the fed funds rate and what that means for interest rates in the future. That means they believe the economy is doing better, house prices should be going up, and interest rates along with house prices will be going up. In the short term it is still a great time to buy. It probably couldn’t be a better time to buy. The housing surplus is still there in a lot of areas. You will see those start to dwindle and when they do then prices are going to go higher along with rates.
Adam-I always ask you what the rates are. I know it depends on credit score and income but is there a general answer that you give?
John-The general answer I give is that the rates are great. What getting a mortgage is about is getting the best financing possible with your situation. Historically the interest rate environment is low meaning that a home is more affordable now to buy and in a lot of cases it is more affordable to buy versus renting. I think the rent year over year in St. Louis metro is 6% higher and home prices are about 3.5%. Long story short, it is a great time to buy and if you contact me I will get you the best mortgage available to you. If you are looking for a specific number you could say 30 year interest rates are a little over 4%. The bigger issue is understanding that it is more affordable now to buy than to rent a home and a lot of cases cheaper than a month to month basis if you do a MHDC loan or a home buyer loan. A lot times you can get in for less than what you would pay as far as a first and last month’s deposit if you were going to lease a property.
Adam-I know it is beautiful. I just bought a duplex with my brother and one unit is vacant while the other is occupied. Their rent is almost equivalent to our mortgage.
John-It makes sense for investment purposes and owner/occupants. There is no reason not to buy a house right now.
Adam-You can give someone a loan so they can buy a duplex and rent out the other half.
John-I tell people all the time that if I could do it all over again knowing what I know about residential home loans, I would absolutely would have bought a duplex or a four-plex because you have the income generation that comes with that. It is an added bonus.
Adam-What is the down payment requirement on a duplex if you are going to live there?
John-It is pretty much the same as a single family residence. The only difference is that you might have some reserves for making the payment if your tenant were to move out. Usually they require 3-6 months reserves for the mortgage payments on a duplex. A four unit is about as much as you can do with a residential home loan and they want a 6 month reserve in case the catastrophic thing happens and everyone moves out at once.
Adam-I know that the mortgage market changes all the time. Every time we talk there is a different thing they come up with to help people. You know there is the 203k loan for people who want to rehab a property? What about the sweat equity loan?
John-A sweat equity loan is another name for a streamline 203k. A traditional 203k requires you to hire a contractor to do all the work. A sweat equity loan will give you money to do things like paint. Things that will add value but are not a full renovation. In most areas it is limited to $26,000 worth of work. Keep in mind that you are not going to do all the work yourself. The main thing is you don’t have to have one contractor do all the work. People who are doing the streamlined might have a flooring company do the flooring and other people to cabinets and paint. The key thing is you don’t have to hire a general contractor which means in a lot of cases you are not paying extra overhead for a contractor to handle the job.
Adam-Recently this came up in conversation while I was teaching a little class in investing and real estate. The whole idea of the 203k loan is great but I am handy. I don’t want to hire someone to paint my house for $75 an hour.
John-Here are some caveats. If you are handy and want to do a 203k, you still need to get a bid from a contractor for that work and if you don’t spend the money, the money goes towards the loan. If you are handy, had a bid for $20,000 but were able to do it for $10,000, that doesn’t mean you get to pocket $10,000 and walk away. Any money that is leftover would be applied as a principal reduction to the mortgage.
Adam-Either way, they don’t just give you $20,000 in cash. They pay as the work is done.
John-They monitor the work and you have to send in the invoices. The bank handles it but the idea with the 203k in general is that there are a lot of properties out there that are great but they are one-offs or two-offs. Somebody looks at a property but they can’t stand the kitchen, bathroom, or it is outdated. This gives you an opportunity to have the money to put into the home to get it the way you wanted.
Adam-Someone emailed me saying she called a lender or a bank and told them she wants her monthly payment to be somewhere between $700-$800, and they told her that would be a purchase price of around $100,000-$110,000. I bet that she is paying more than that in rent right now.
John-Think about what that would buy in our city. That would get you a nice starter home.
Adam-Is it still for every $100 in monthly rent you pay to a landlord you get about $15,000 more in purchase price?
John-That is going to depend on the area. When someone is figuring out a mortgage payment they are taking into consideration how much the insurance and taxes are. If you are buying in the city of St. Louis that is pretty accurate. I always tell people what my loans are. On my rental property my interest rates are at 4%, I think I owe $120,000 on it, and my payment is about $800 a month. On my primary residence my mortgage is about $200,000, it is in the county, and my payment is about $1,500 a month. What’s good about that is you have a county example and a city example.
Adam-Taxes are a lot higher here?
John-A little bit higher. It’s about $3,600 for my home in Maplewood which is a lot more than the $800 or so I’m paying on my house in the city tax wise.
Adam-So that’s what affected that monthly payment so much because it seemed like a big difference.
John-It’s not a huge $80,000 difference but the mortgage payment is almost double though. The interest rate on my property in the county is at 4% too. It is the same interest rate but in different areas and different tax bases.
Adam-Beautiful! Joey is giving me the wrap it up symbol. How can we get a hold of you?
John-The best way to get a hold of me is to give me a call. My direct line is 3145170262. My NMLS i.d. is 188910.
Adam-Thank you for coming! Take care everyone and we will see you on the next podcast.


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