SIC 041: The Market Has Adjusted, How Do I Adjust with It?
Links mentioned in this show
– Tarl Yarber at Fixated Real Estate
– Trader Joe’s AKA the best grocery store ever!
If you want to read… here’s the show notes
Have you seen the show Stranger Things?
Weird things are happening!
Julie is addicted to the show.
It’s kinda freaky.
At 4am the power went out in Ballard neighborhood of Seattle. Weird because the Clark’s have underground power…
What happens if the Donald Trump sold Seattle to Russia?
The last part of July here in the Seattle real estate market.
Joe’s been having computer issues with his Mac.
We might be able to use a downturn in the real estate market.
Julie’s gut says we are due for a real estate market adjustment.
The Seattle real estate market has adjusted… what do we do about it?
The Seattle real estate market started changing in the middle of May 2018. Instead of getting a lot of offers on your deals… the buyer sentimate has changed. They don’t want to compete.
If you want to attempt the offer review date, you need to be ready to drop the price if you don’t get offers.
Julie thinks Brokers need to be setting their prices right on what the houses are worth or a little below.
We’ve lost the reliability and the predicatability of the market here in Seattle.
There is a little slowdown due to the regular seasonal slowness.
This might be good for people looking to buy off market. There are hundreds of homes with price drops. It might be time to start looking at the MLS again. There could be a pocket where you could jump in.
It feels like we might move down a notch, but nothing crazy. That could be a 20k – 30k swing in your profit. Or a few percentage points.
Would that make you stop and think? We think you should.
Side note: Buddy is off getting his hair cut, and will be back next week.
Presentation of the listings – backend
Investors will keep finding deals to buy. This isn’t an issue finding wholesale deals. You might want to check in with the auction groups again. There is some shadow inventory showing up in our Vegas area.
You MUST understand your ARV and backend. You will need to be more consertive on your back end, and in turn, your front end.
Buyers are being more selective about what they are buying.
You should have a plan B or plan C exit strategy for each of your deals.
This effects whol you might want to work with on the backend of your deals. Make sure you don’t cut corners on the backend of your sales process. You need someone who can deal with issues if your houses don’t sell right away.
The presentation of listings is different these days.
Sold properties need to look at when it went pending as well as sold date. These could be completely different right now due to the market shift. Be cautious.
The risk is, that new listings are running the risk of non predictability of the market, and some broker will price a house in the same neighborhood coming on the market at a lower price. So, your property might have to sit until the other property sells (or goes pending).
***Brokers just want to get paid***
Julie votes for NO OFFER REVIEW DATES
She also likes prehabs! Do a little work, and throw the deal back on.
Julie is thinking this might have changed. And you might want to do a little more than before. Like a sewer scope, or inspection, or furnace. If the roofs not leaking… just clean it off.
The properties that are selling right now are well priced and clean as a whistle! They have all the listing attachments there. What did you do to the property?
A few months ago this was different. You didn’t have to do as much. Now you need to wrap it up in a bow.
Julie thinks houses are now going to be asking for an inspection contingency in the offer because there’s no offer review date.
Recommendation is that you do your own inspection. You don’t want people to bounce on you. You need no loose ends.
Everything needs to be good. Try not to get into a hurry. Really get your house 100% done. That’s what this market is telling us.
Matthew Gardener is an economist with Windermere. Look him up to hear what’s going on with the local market. A 1% increase in iterest rates will be a 10% decrease in buying power. It’s something to be aware of.
The market is still great! This is just a shift. Investors don’t like to sit, not for a minute.
Price consertavitly. That’s what we think you should do.
If you price 10k under where you think you should be… you’ll end up fine.
Have docs for your property ready to do. Don’t leave loose ends.
Potential issues that investors should think about…
We wouldn’t want to take on HUGE rehabs right now. There’s a contractors issue happening right now. Meaning your can’t find them.
Maybe Tarl Yarber at Fixated can help us with how to find contractors?
Not talking about new construction, we are talking about flips. There still might be a market for new construction. We are talking about general listings and flips. Not talking about multi-family. Landlords are selling because Seattle is so hard to deal with.
Julie thinks mult-family will continue to be hard to work with due to the numbers in the Seattle area.
Doing a blinged out total flip these days (spending 100k plus), with all the time involved, and contractors prices going up is really scary. Julie would scale back on doing those until things has adjusted.
We might be seeing more contingent offers. Meaning they will have to sell their homes first.
Julie thinks this might not be a bad thing for investors. It might give you the opportunity to hold the price up a little.
You should take your hold time up to 8-9 months, rather than the 4-6 months. There’s a period of disconnect with buyers and sellers. It’s happening right now.
You need to give proof to sellers as why you need to be more consertive. It’s going to take a little bit more to keep the prices down.
If you need to keep a crew happy you might need to keep your spreds down a little.
Pay attention to the other houses being sold in your area.
Again, contingent offers don’t have to be a bad thing for you until we get our predicitatility and reliability back again.
Julie’s email is julie@homelinkseattle.com. Email if you need a good broker.
Take some time to look and see what’s going on with your comps right now. Has anything changed? Do you need to scale your sizzle features?
Be more consertive. Think about doing pre inspections. It’s what good investors do.
Plan on only getting your list price and being happy with it. Plan on getting undercut in your list price, and having to wait.
Do some forward thinking! Buyers are getting tired of paying for blinged out properties right now. They might pay more for an advanced pre-hab instead of a full rehab. Like a heighend pre-hab. A house they can add some value to themselves.
Top agents around town are agreeing that offer review dates are gone, and that things have changed.
Who’s got Trader Joe’s Oreos?
One more tip!
It’s important if you’re newer… to parter up! Don’t take 100% of the risk yourself.
Being educated for making nothing is worth a lot, but you have to be ready and prepared to do that.
Go find a contractor to partner with or if you’re a contractor find an investor.
Avoid taking extra risks!
If you’re a one man show… go get your real estate license. Get ready for what we have coming soon!
Do you like discount cards? That’s what a real estate license is!
It’s a GREAT time to do a buttload of marketing!
CALL YOUR OLD LEADS NOW!!!!!
If you want to see the FULL transcription… here it is
Joe Bauer: Welcome to the Seattle Investors Club Podcast where we talk about the nuts and bolts of real estate investing. My name is Joe Bauer and I’m here with my cohost, Julie Clark. Julie, how you doing today?
Julie Clark: Hey, hey, everybody. What up? I’m good.
Joe Bauer: You’re good.
Julie Clark: I’m good, but I am a slight bit tired. I’ve just eaten some couple Oreos, sorry Joe, to give me a boost. They are from Trader Joe’s. I don’t know if that makes them healthier or not, but we had something weird last night. I don’t know if you guys are aware of: there’s a show out there called Stranger Things. It’s very, very popular. I think season three is getting ready to start. I’m a little late to the party. My kids watch it, which I probably shouldn’t let them, but they have a mind of their own, so they do.
Julie Clark: We started watching it together in the last couple weeks as kind of a little evening bonding thing, and I love it. Now, I’m addicted to the show. It’s kind of like set in the ’80s. I won’t go into all the details. Some of you may or may not know about this show, but it is kinda freaky kind of like the regular world, and then we’ll call it the … I don’t know if they call it the Underneath World, some like mirrored world, but the mirrored world is scary with monsters that eat people and all this stuff.
Joe Bauer: What?
Julie Clark: And it has like this Dungeons and Dragons kind of underlying theme to it with these tweenager little boys. I love it ’cause it’s set in the ’80s. I grew up in the ’80s, so there’s some funny stuff on that, but we were watching it last night, wrapping up season one, and it’s kind of spooky. You always feel like, “Whoa,” when you’re done. Well, we go to bed last night over here in Northwest Seattle, is what we’ll call it on the Western Northwest side of the Ballard neighborhood out here, is where I am at, and, 4:00 in the morning, one of my daughters comes up and says, “Mom, what’s that noise? What’s going on?”
Julie Clark: So, long story short, the power went out because our smoke alarms gave some beeps. Some stuff started beeping in the house a little bit, so I got up to see what was going on, and the dang power had went out, which is weird, ’cause we have underground power at my house, and it was like pin-drop silent with absolutely no wind. I was afraid to open the door because we have an alarm, a big huge alarm, and I thought, “My God, well, what if I open it and it goes off? I can’t turn it off,” so I’m half asleep at the time.
Julie Clark: It was super freaky, but the power went back on. I guess all of Blue Ridge and North Beach and part of Greenwood all lost power for some reason last night, so we’re a little tired, and we’re a little spooked out that the Demogorgon or whatever is actually coming after us or that some Russian spies have dropped some sort of … been watching the news lately. One of the girls said to me, “Maybe Donald Trump gave Seattle to Russia.” Oh man, so anyways, we’re over here poppin’ a little sweets to keep our energy up, today.
Julie Clark: Again, Joe, I know it’s against the rules. I’m sure you have a natural remedy for that, but that’s what we do over here in the Clark household, so that’s where I’m at. I’m a little tired, but I’m excited about this topic, ’cause today, we’re gonna do a little check-in, right? The market: what are we at? Where are we at now? It’s, what, July 19th today when we’re recording this podcast on the nuts and bolts of real estate investing. We jumped straight into: I call it our first true month of summer, here, but we are experiencing here in the Seattle market, and I think other markets are also experiencing some of this: a absolute undeniable shift.
Julie Clark: Now, is it still a seller’s market? I think at the moment, at this very moment is still a seller’s market. You can still … prices are still being held where they’re at, but we’ve definitely had a shift, and today we’re gonna talk about that. The theme today or the topic today is: the market has adjusted, and how do I adjust with it as an investor? What do you think? Joe, you don’t know. You’re out there in like … where are you at today?
Joe Bauer: I’m looking at the market here in South Lake Tahoe, and it looks like it’s flourishing.
Julie Clark: Ah, South Lake Tahoe: I am wishing I was there with you right now. What an awesome spot. I think most of you guys who listen to us know that Joe is on a yearlong adventure or longer — who knows — in his van with his girlfriend Emily, and they are hitting all the national parks, and you can follow their epic — and I do mean epic — adventure at thevantasticlife on all your social media accounts and everywhere else on the planet. Is that right? Do I got that right, Joe?
Joe Bauer: You got it right, you know? It’s been a fun ride so far. This last week, I’ve had a little bit of complications ’cause I decided to go to the Apple Store to get the screen on my computer replaced up in Reno, ’cause I’m like, “Hey, there’s a Reno Apple Store,” and it turns out that it’s a quick replacement, but they didn’t have the part, so I’m like, “Well, I’m not gonna be anywhere near another Apple Store for who knows how long, so take it,” and they said three to four days, and it ends up being that it’s going to be a week. So, without a computer, it’s fine. I have an iPad and all that other stuff, but you don’t realize how when you get out of your routines, it throws off a lot of stuff.
Julie Clark: So, they don’t have like an Apple vending machine up anywhere in … the world is weird today, right? I mean, God. It wouldn’t surprise me if you got some popup shop in the parking lot of some national park ’cause they know everybody’s freaking out about their electronics. So, who knows?
Joe Bauer: That would be interesting. That would be interesting.
Julie Clark: That would be: another business model for you guys if the real estate market goes south. Actually, if the real estate market goes south, that might be actually be good for all of us, right, ’cause it’s actually been hard to get deals in this crazy market. So, you know, a shift in the real estate market, whether it’s happening or it’s just a little adjustment or whatever, doesn’t necessarily need to matter to all of us because hopefully we’re all sticking together and smart enough to decide that we just pivot along with it, right?
Joe Bauer: Totally.
Julie Clark: And so, no alarm, no concerns about any market adjustments: let’s just talk about, “Hey, what are some things we should maybe start thinking about if this is something that’s actually happening?” My gut tells me it is, you know, and I think if you listen to economists and market prediction people out there, we’ve been due for a while for an adjustment. I don’t think there’s a doomsday thing out there by any means so that’s not what this is about today, but it’s like, “Hey, the shift that has happened does require us as investors and agent investors,” you know, if you’re both a real estate agent and an investor like myself, you gotta keep on top of all that stuff, right? And, today, we’re gonna talk about it.
Julie Clark: So, let’s jump in and do that. Do we have any technical stuff? We normally release the podcast on Fridays. That would be July 20th. I guess we’d be past that by the time people listen, so, I’m just talkin’. I’m talking to Joe like you guys aren’t even here. Right on.
Joe Bauer: Nobody will know that we’re having technical difficulties right now, Julie. It’s gonna be a thing of the past.
Julie Clark: Right on. Well, I hope you guys enjoyed the podcast that came out around July 20th because we don’t know when that’s coming or not, but all right, let’s do it. So, like I said, we’re gonna talk about the fact that the market has adjusted and how do we as investors adjust with that?
Julie Clark: So, what I’ll say in a nutshell: this is just my opinion. I’m just one of you guys, goin’ through the same concerns, watchin’ the same stuff, you know, as you guys, so this is just my opinion and I have a microphone so I’m gonna tell it to you. You guys, there’s a lot of meetups and podcasts and all this and that where we should all be listening to as much information as we can gather, especially as things are pivoting and changing. So, today like I said is July 19th, and what I say today goes for today and we’ll see what happens after that.
Julie Clark: But, feel free to check in with us as much as you want at seattleinvestorsclub.com. If you wanna know what my thoughts are on the market, you know, a week from now, a month from now, or you just want an opinion on something that you’re getting ready to buy, feel free to reach out to me at Julie@seattleinvestorsclub.com, and if for some reason I don’t answer you right away, you can send me a text, (206) 910-2985, ’cause I get busy, but you guys are welcome to contact me as much as you want as long as that’s not 10 times a day, deal.
Julie Clark: Okay, right on. So, here’s what I am saying about the current market: what’s happened, in my opinion, is that we have, for the last several years, the wholesalers market, as we all know, multiple offers, big escalations, almost predictable in some ways after you do enough deals, right? And, I think what’s going on right now is we’ve had … definitely, the pricing has capped out. I believe that we have reached pretty much … this isn’t all or nothing ’cause there’s going to be deals that get multiple offers and go way over list. That could happen, but in general, the consensus is that prices have capped out, k? That’s Kings, Snohomish, Pierce County.
Julie Clark: Pierce County’s actually on fire right now. A lot of people are tired of the Seattle home prices and I think people are buying a lot down in Tacoma. It’s a pretty hot market down there right now. I know ’cause I’m working with buyers, several buyers, and people from Seattle who wanna just move down there, so there’s some of that going on, a little shift. Multiple offers may be in Tacoma more likely at this point than in Seattle in the Pierce County area.
Julie Clark: So, what we’ve lost, friends, is the reliability and predictability of our market. So, what comes with that? What does that mean? That means that things are sitting on the market longer right now. There’s no confidence. It’s very hard. There’s no crystal ball that I feel is reliable right now, even if you’re in the best neighborhoods. I just sold a super well-priced, not-high-priced regular homeowner-as-a-broker property, actually a Seattle Investors Club lead that we converted to a listing instead of a wholesale deal because we know how to make money off every lead because we know how to provide options, which we’ll talk about later.
Julie Clark: But, I have talked to so many brokers in the Seattle and Phinney Ridge neighborhoods lately, very, very recently, which is a very hot neighborhood. Homes are priced well, and they’re getting one offer, guys, one offer. I think most of you who are doing deals on a regular basis have seen that the market has slowed down and you’re lucky to get maybe two offers. Earlier this year, I’d say in May, it had slowed down maybe to about: you’re getting between one and four offers. I had a stellar flip for some of our Seattle Investors Club members out in the Maple Leaf neighborhood that, I think we slid under the radar, and it was listed at, I think, $965,000 and we got $1,055,000 with four offers.
Julie Clark: If that were to list today, it’d be a completely different ballgame, so the market started changing, in my opinion, in about the middle of May. Nobody was paying close enough attention. Things were still getting done at escalations and maybe slowing down a little bit, but by the time June hit, guys, it was like, “Ert, boom.” Everything didn’t stop, but multiple offers dried up. And, what does that mean? That means that instead of getting four offers or five offers or whatever on your deals, that the buyers have … the buyers’ sentiment has changed. They are being much more selective. They have slowed down their pace. They’re still out there and they’re very qualified, but they’re being much more selective.
Julie Clark: So, the multiple-offer, how that usually happens is that the brokers list the properties for sale on, let’s say, a Thursday, a Wednesday or a Thursday, and they say, “I’m gonna review offers the following Tuesday if any come in at 5PM.” Well, that has been the name of the game for years here in the Seattle area, and that essentially has dried up. Very obviously by June of this year, that has changed, so if you’re a broker out there and you’re listening, my advice to you is to not use an offer review date. I don’t care if you’re in the best neighborhood, Ballard or Phinney, or Capitol Hill. Wherever you’re at, I would caution you from using an offer review date.
Julie Clark: Or, if you’re gonna do that, make a deal with your client that you guys are going to attempt it, but you have a plan in place to drop the price at a certain date if you guys wanna attempt the offer review date thing. But, what the problem is with offer review dates these days right now, guys, is that when buyers see a property listed that has an offer review date on it, they’ve been trained to think that means they’re gonna have to pay $50,000 over the list price or more, and they are done with that. They hear all the news out there, all the bumps with all this Amazon talk and interest rates going up and taxes, property taxes going up, all these things combined are making them nervous that they need to, you know, maybe be more selective and take a pause and maybe …
Julie Clark: They’re willing to pay full price for a properly priced home, but they aren’t willing to escalate the price more than, let’s say, I’ll say maybe $20,000 max, is is my feeling, k? I think that, right now, you guys need to be setting your prices right on, right, and if not, a little bit before, and have no expectations of selling over the list price and be happy with taking the first offer that you receive as long as it’s at list price.
Julie Clark: I think people are actually … still, buyers are offering over the list price for homes that are priced well to begin with, that are listed at the right price. They know that they have an opportunity to go in and maybe grab that, and that … so I think you might still get offers $5,000 or $10,000 over the list price to start when there’s no offer review date because they know somebody could potentially come in behind them, still, but that’s what I think’s going on.
Julie Clark: We’ve lost the reliability. That’s the main message here. The reliability and the predictability of the market is sort of just floating out there in limbo. You know, we are in a cyclical, seasonal slowdown here in the summer. It might even slow down here more as we get into August. That’s sort of typical for our market, but aside from the slowdown that we might normally see seasonally, the big difference that’s happened is on how brokers need to present the listings for sale, and that means how sellers, investors need to present their listings for sale. Now, that has totally changed, in my opinion. So, that is where we’re at in the market.
Julie Clark: Still, a great market: you might have to compete, like I said, more down in the Tacoma market. I think you’re always going to be competing for purchasing investment properties. If you’re buying off the MLS, there actually might be more opportunities for that right now as more homes are actually coming onto the market. Also, keep a close watch, because what I’ve noticed lately is hundreds of homes every week with price drops.
Julie Clark: So, this is a good time to start thinking about, first of all, making sure you’re set up on alerts, if you’re looking at the MLS at all. I think it’s actually okay to start looking at the MLS where maybe I woulda said last year, the year before, “Don’t bother.” I actually think that it’s time to start paying attention again, because there’s going to be a pocket, potentially, where you can jump in there as things are starting to adjust and shift around. I don’t know if we’re just having a little mini adjustment or if we’re actually moving down a notch.
Julie Clark: It feels like we might move down a notch, but nothing crazy, right? But still, with investors, moving down a notch could be a $20,000 to $30,000 swing, honestly, and there goes your profit, k, or a bit portion of your profit. If I told you that you need to watch out for a $20,000 or $30,000 swing in your properties, or let’s call it a few percentage points or something like that, right, would that make you stop and think about what you’re doing on that property and what your plan is for your rehab or what your exit strategy is or how much you wanna invest and all that stuff? I think, of course, it is, so we’re gonna talk about that a little bit today as we just keep rolling on here.
Julie Clark: I’m sorta … whoops. Hey. You guys hear that? Listen to this. Side note: my daughters changed the ringtone on my cellphone. This is what it sounds like.
Addison: Ring, ring, ring-ring-ring, ringing the phone, ring.
Julie Clark: Yeah, that’s not really funny when you’re-
Joe Bauer: I’d like to have my ringtone phone like that. You think they could send me one?
Julie Clark: Well, just leave your phone laying around my house, Joe, and I’m sure you’re gonna get a surprise the next time you take off. That’s the kind of stuff that happens over here. One of my other friends who’s like an investment advisor … sorry, guys. We’re getting a side note here. Addison somehow changed the name of his email something. I don’t know what she did, but his email as investment advisor was sending out to people for a while and it said something like, “The nutty squirrel,” like a total weird pedophile, and it took him a minute to catch it. “Aw, Jesus,” you know?
Joe Bauer: That’s awesome.
Julie Clark: So, anyways, we keep it exciting around here, guys, so that was Addison singing on my cellphone as my ringer there. Oh, by the way, Buddy’s not here. For all of you that love Buddy and know that he’s our sidekick on the nuts and bolts of real estate investing I’ll just … little tip for you: he’s off getting his hair cut today, you know, so he’s camera ready. He’s at the salon and he will be back next week, so, shout out to our brother, Buddy. We love you man.
Julie Clark: All right, let’s see. What else can we talk about here? Let’s see: no multiple offers. Offer review dates, we’ve talked about to scale back on those. Let’s talk about something else, and that’s the presentation of … first, we’ll talk about the presentation of the offers, and then … or of the listings. We’re talking about the backend, okay?
Julie Clark: You guys as investors, you’re always gonna continue to find your wholesale deals. You’re gonna continue to find the deals to buy, okay? What we’re really focusing on here today is not an issue finding wholesale deals. That’s been challenging for the last quite a while, right? That actually might ease up. That actually might be easier, like I said. You might wanna start looking at the MLS. You might wanna check in with your … also, you might wanna check in with the auction groups because there is some shadow inventory. We also invest out in the Las Vegas area, and our partner down there is telling us that he is getting more and more REO properties ’cause he also does REO work. He’s a broker/investor like me, and he said those are starting to come on more and more. There’s been a release of some inventory there, so check back in with your auction groups on maybe possibilities of deals flowing through there.
Julie Clark: Of course, you’re gonna stay in touch with your wholesalers and so forth, but what really needs to happen is you guys need to understand your ARV and your backend and how that dictates what you can pay for properties, right? So, if you’re gonna have to be more conservative on your backend, that means you’re gonna have to be more conservative on your front end. Don’t take any risks. Don’t buy any properties that have variables because there might be more inventory coming out here in the future. Things are gonna be sitting on the market longer, and already, we know that buyers are being more selective about what they’re buying. They’re willing to wait, so you do not wanna catch yourself buying properties that have variables at this point in my opinion.
Julie Clark: And, what does that mean? Unless you have a plan B and plan C exit plan for those properties: maybe you can keep it as a rental? Sure, buy it. Maybe you can lease-option it? Sure, go for it. But make sure: you should always have multiple exit strategies, but especially now, you wanna make sure you understand what those multiple exit strategies are. Understand what your financing options are on the way out so you can get out of your hard money loans if needed. Don’t overlook that, guys.
Julie Clark: So, we’re talking about how listings … and you guys need to know this even if you’re just an investor and you don’t have a real estate license. You need to know this because it effects your purchase, and you also need to know this because it effects who you might wanna work with on the backend on your deals. There’s a lot of people out there that are paying as little as possible to their broker relationships, or they’re paying a flat fee or they’re doing it themselves, maybe for-sale-by-owner, or MLS for owners. Don’t do that, guys. Right now, I would not do that, rolling, until we know where things are landing.
Julie Clark: You’re gonna need experienced team in place to navigate through any bumps, right, and somebody that has had experience dealing with sales that are not just straight over tackle, you know, throw it on the market and it sells in the weekend, okay? Those, you need to start thinking about that. You know, don’t use your brother who is got his real estate license. I’d be cautious about that sort of stuff at this moment. You’re gonna might need more skilled team on the backend.
Julie Clark: So, the presentation of listings is different these days. We already talked about not using an offer review date. I know some people out there are like, “Well, I saw things close recently and they closed and they sold over the market and they had an offer review date.” Well, let me tell you what: go back and look and see when that property originally listed for sale. I would say up through the first week of June, that those properties, there’s a lot still that maybe had offer review dates, and they may be selling over the list price, okay?
Julie Clark: But, those are … again, I wanna point it out to you guys: recent sales that have recorded as sold were probably listed the first week of June right about now. So, when you’re looking and reviewing your comps, your sold comps, one of the things you need to add to your list is when it listed for sale originally, and when it went pending originally. If it went pending at the first week of June and you’re thinking of putting something on the market now in the same neighborhood, it literally could be completely different, okay? Completely different: I realize that that was within a three-month window, but I am telling you guys that it is not the same market as it was the first week of June or the end of May, so when you’re listing stuff now, you need to be cautious even though it wasn’t that long ago. Trust me on this.
Julie Clark: One of the risks that you have if you don’t pay attention to this is that new listings: the general brokerage community is now fully aware of the adjustment, and we don’t know: some brokers are able to … brokers, they just wanna get paid, right, and they will do whatever they can to keep the price down to make their sale easier and go through, so you’re gonna find, potentially, that you’re gonna have listings. You’re ready to list your flip? Okay, well, you have running the risk, even if you price it appropriately 100%, you’re running the risk right now of the unreliability, the non-predictability of our market that some other broker at Windermere or wherever else is going to have a listing that comes on within the same neighborhood area as yours lower than you would expect because they’re nervous and they wanna get it done and make themselves look good, you know?
Julie Clark: And therefore, what that means is, as soon as you list your property, you run the risk of other proprieties around you coming on the market at a lower price. That means that you might have to sit there and wait til that property sells or goes pending … not pending inspection; people don’t really share information when a property’s just pending inspection, but they do when it’s pending if you ask the right way, k? You might have to wait til that property goes pending in order to get back and have that information to share with buyers and brokers of your own listing that you know you listed at the correct price.
Julie Clark: So, that just, in a nutshell, means you might have to wait because you can’t predict what people are gonna list stuff at around you, k? So, I say my vote is for no offer review dates. Another thing is, for the last several years … you know I’m a big fan of perhaps. That means like: clean it up and have fun trying to do as little as possible to put the home back on the market, to spend as little as possible, do as little as possible as long as it’s financeable, or maybe in some cases, you know it’s gonna be … you can predict that it was gonna be a cash offer and you’re not as worried about if it’s financeable or not and you can roll the dice and just throw it on and see what happens. That, also, I’m saying, in my humble opinion, has changed.
Julie Clark: The presentation of the listings right now needs to be super tight with all the information. That means, when I say all the information, that means that you need to provide … you might wanna consider providing a sewer scope. You might wanna … if you don’t wanna provide an inspection that you’ve done right before you list, a seller-provided inspection, it means that you definitely probably wanna inspect, yourself. You don’t necessarily wanna share that inspection and just take care of any issues.
Julie Clark: The properties that are selling right now are well-priced or listed maybe within $5,000 or something like that, $7,500 of full price, k, a little bit conservative, and clean as a whistle. And when I mean clean as a whistle, I mean, yes, spotlessly clean, doesn’t necessarily have to be cosmetically upgraded or whatever your situation is, but it means with all the attachments, the listing attachments there, “What did you do to the property for the upgrades?” a list of that. Give ’em a sewer scope. Give ’em a property inspection, or inspect, yourself, and take care of all the problems. Service the furnace. Clean off the roof. You still don’t have to do a roof replacement, k? There’s a little bright light.
Julie Clark: Again, we’re still in a great market. If the roof’s not leaking, just clean it off. If you need a guy to get up there and brush off the roof, you give me a call, I can maybe find somebody to help you do that, but, you know, you don’t have to have perfection, but you have to have it just in a bow, nice and tidy. That’s different than it was even four, five, six months ago where you could be loosey goosey about it and you’re gonna get an offer. That’s changed, k? Don’t rely on that anymore. That also means if you’re doing a flip, a lot of investors don’t … I think that they maybe don’t like to do a sewer scope because they’re rolling the dice that somebody’s gonna buy it anyways, or somebody’s gonna pre-inspect.
Julie Clark: When you take away the offer review date, you can now count on, I think, your offer, for the most part, is going to have an inspection, k? People don’t wanna take the time to pre-inspect. Even if you have a pre-inspection agreement available to them, they think if they take the time to pre-inspect and it’s something that’s newly on the market, that they’re gonna lose their opportunity, that they need to strike very quickly. They’re willing to strike quickly, but you should expect you’re gonna have an inspection contingency in your offer, okay, just because there’s no offer review date.
Julie Clark: So again, you either offer up your own inspection, or you don’t, but my recommendation is that you, yourself, inspect your property because people have choices. There’s more stuff coming on the market all the time. If you have a crappy inspection happen, there’s a good chance that there’s gonna be another opportunity that comes up that they like better, and they might bounce on you, right? We just wanna get it done at a price that we’re happy with and call it a day, k? So that means tight landscaping, no loose ends. Service the furnace. Your paint, everything’s good, guys.
Julie Clark: A lot of investors tend to get in a hurry. Oftentimes they list for sale when things aren’t 100% complete, or there’s little knickknacks here and there that need to get done. This is the time where I would think about not doing that and really being 100% done. It’s always a good idea to be 100% done, but is now even a better idea to be 100% clean and presentable, okay? That is how things have changed. You’re gonna expect inspections if you’re not gonna use an offer review date, which we are telling you probably don’t wanna do, and you need to not have any loose ends, guys, and that’s my recommendation to you.
Julie Clark: What else can we say? Oh, I’ll just give you a little tidbit, little side note. Matthew Gardner is an economist that … I think it’s Windermere’s economist, very well respected guy. If you don’t know who Matt Gardner, Matthew Gardner is, look him up. He’s very knowledgeable and reliable, I think, and a lot of people listen to him in regards to what’s going on with the local market, and I just heard him say the other day, “A 1% increase in interest rates equates to a 10% loss of buying power,” okay? So, we are in a rising interest rate environment right now, and I think I just saw something on the news, even, that said the Fed said to keep pushing rates up, k?
Julie Clark: So, what does that mean? That means that that’s gonna effect the ability of what buyers can afford. Is that gonna effect you guys? I dunno. Maybe it means that people that were gonna buy stuff for $700,000 are now buying stuff for $650,000, right? You know, just something to keep aware of: make sure that you think about that and that you are thoughtful when you go to price your properties. Again, I’m not doom-and-gloom here. The market is still great. Properties are still selling very quickly. They’re just not selling with multiple offers and unless you’re tied up tight in a bow, you might sit for a minute, and we know as investors, we don’t like to sit, not for a minute.
Julie Clark: My recommendation is that you price conservatively and you have a better chance, then, of getting those one or two offers, again, over your list price, right? I think people, like I said, will pay $10,000 to $15,000 over the list price, still. I think they’ll automatically pay over the list price if they think they have an opportunity with no offer review date … not a lot over, but a little bit over. So, if you price yourself ten grand under where we think that that should be, I think you’re still gonna end up just fine. That’s as of today, right?
Julie Clark: What else? So, presenting the offers differently: now, let’s talk about … we also talked about what needs to happen on the properties: no loosey goosey, everything tight as a button. That means if you have an oil tank, make sure, as you always should, have the decommission paperwork done. Don’t have it coming later or have it come as part of an inspection. Don’t leave loose ends, is the point there.
Julie Clark: Now, let’s talk about maybe some potential issues as investors we might wanna think about, k? To me, I kinda feel like taking on huge rehabs right now is something I kind of wouldn’t wanna do, myself. Not only do you have a contractor issue happening right now, which will be interesting to see what happens there. We have … we’ll be following up with you guys and there’s lots of groups out there that, you know, like Fixated on Real Estate is a good one. Those guys do a lot of rehabs out there, and our friends Tarl over there might be able to help us stay in tune with his contractor availabilities. I know everybody’s been struggling with that for a long time. Who knows if that’s changing. We still got a lot of new construction projects going on.
Julie Clark: And, let me just clarify: I’m not talking about new construction so much today. My focus on what I’m covering today is more from the flip standpoint. There might be, still, a higher demand for new construction, partially because a lot of foreign investors really, really like new construction, and I think they’re still in the market, so I’m gonna put that aside as a side note today that I’m more talking about general listings and flips and things like that, perhaps that get listed and stuff like that.
Julie Clark: Not talking about multifamily today on this topic … obviously, everybody and their brother has come out of the woodwork wanting to buy multifamily deals. I think there’s gonna be more people selling their property. A lot of landlords are selling, especially in the Seattle area because they are so freaking tired of dealing with the City of Seattle on all their tenant-friendly rules and stuff like that. I get a pretty good flow of landlords wanting to sell their properties as they are getting up into age. They just wanna be done with it, and they still need exchanges. They want exchange, and therefore, I think multifamily properties are gonna continue to be scarce and hard to pencil in our area, here. So, we’re talking, again, not about that today. We’re talking more about price adjustments and listing adjustments and ARV adjustments, which means purchase price adjustments for flips and perhaps and the standard stuff.
Julie Clark: So, I think, in my opinion — this is just me sharing my opinion with you guys ’cause I’m just one of you guys — that doing a blinged-out total flip these days is: it’s easy to spend a hundred grand these days due to the lack of contractors and the increase in price of construction materials and labor costs, especially. It’s easy to drop a hundred grand on just a full flip, right? Doing studs-out remodels and stuff like that, today, man, the whole time involved and the fact that you’re still paying top dollar for contractor prices and what’s gonna happen when you’re ready, probably next year, I think is crystal ball stuff that’s hard to predict, like I said, no reliability, no predictability. So, me, I’d probably scale back from doing those until we feel like things have settled down and adjusted.
Julie Clark: What else are I gonna say? I also think, guys, on a side note, that we’re gonna see more and more contingent offers, so that’s something to think about. I think that buyers are starting to come out of the woodwork and not be so scared to make contingent offers, meaning they have to sell their home first instead of coming out of a rental or something. They have to sell their home in order to buy your home. Now, I think that’s not necessarily a bad thing for investors because when somebody’s contingent, that means that their offer is not as strong as others. It might give you the opportunity to hold your price up, right? It might give you the opportunity to have some leverage back if things continue to adjust down a little bit. So, I wouldn’t shy away from those.
Julie Clark: What that means is, guys, for your underwriting of your deals: instead of your … I think a lot of you probably were using four months because you have your systems down and you got your crew. I think at a minimum, you need to be hold time of six months. If I were you guys, I would be bumpin’ your hold time to be conservative more to like, you know eight months, maybe even nine months. What does it hurt to be conservative, right? Unfortunately, we’re in an area of the market right now where seller expectations and buyer willingness, even for investors, there’s gonna be a period of disconnect, and I dunno how long that’s gonna last, but I think we’re in it right now where you’re gonna have to spend more time giving proof to sellers on why you can’t pay as much for their property right now or why you need to be more conservative, right?
Julie Clark: Because, you’re gonna need to be talking to them about days on market. You’re gonna be showing them that there’s no more offer review dates. You might have to … it’s gonna take a little bit more during this pocket period to work hard to keep the prices down. Or, if you’re somebody that’s busy and needs to keep your crew going or something like that, you need to be happy that your spreads might come down, right, until we kinda see where things land, right?
Julie Clark: Choices, choices to make, depending on whatever situation that you’re in, but, you know, also, if you are going to be accepting a contingent offer on the home, if you end up having to do something like that, not saying you are, but something to keep in mind: make sure you’re paying attention to that other home that’s being sold, right, where it is, what they’re pricing it at, even setting some rules within that offer like, “If it doesn’t sell in the first two weeks, that they’re required to drop the price by ten grand,” something like that to protect you, ’cause I don’t think contingent offers necessarily have to be a bad thing for you: might give you some leverage if you structure them properly. If you guys need help with that, again, that’s where I say, using an experience broker, at least for the near short term is gonna be key, I think, to helping you navigate maybe through some of the bumps that we have until we land and we can get our predictability and reliability back.
Julie Clark: Again, I’m available to you guys. My broker email is Julie, J-U-L-I-E @ homelinkseattle.com, H-O-M-E-L-I-N-K seattle.com. If you are looking for a very experienced investor or a broker who understands investors, hit me up. I’ll give you a deal.
Julie Clark: What else can we talk about? That’s kind of it, guys. I just wanna check in. It’s not gloom-and-doom. It’s a time for you, if you are sitting on projects and you currently have a project that’s not gonna be done for a few months, here’s some big tips: it is time to check in. You need to take some time and look and see what’s going on in your market with your comps that are out there now, if anything’s changed, and that might make you decide to put down carpet instead of wood somewhere. It might make you change your sizzle features or scale things back. It’s a good time to check in on that.
Julie Clark: Again, I’m not scaring you. Just check in, see what’s up. If you guys need help, just give me a call. Be more conservative. Think about doing pre-inspections on your own properties. A lot of investors that I know are super successful, they always pre-inspect their own properties and take care of any repairs, right? We’re not of the mindset to see what we can get away with. This isn’t a see-what-we-can-get-away-with environment, is what I’m basically saying.
Julie Clark: Plan on only getting your list price and be happy with it. Plan also on realizing that as more things come onto the market that are non-investor properties that might compete with yours, just regular old homeowners listing their properties with regular old brokers, that you might get undercut in your list price in their … you know, the predictability of that is gone. I see it happening all the time right now. I’ve had properties come on, myself, and I’m like, “Crap, why did they list it at that? Now I’m gonna have to wait because I know it’s still a solid property and that it’s gonna sell over that price, and now I’m just gonna have to wait it out until I can gather the information. I’m not gonna do a price drop on the property I’ve listed, but now I have to wait to be able to get the information to share with buyers that are coming in: you know, time to do some forward thinking.
Julie Clark: I think, in my opinion, that buyers are getting tired of wanting to pay for blinged-out properties right now because they feel, and they’re being told, that we’re at the top of the market, and they don’t necessarily want to pay top-dollar price. Now, in my opinion, actually, buyers are more likely to pay top dollar for a property that has some sweat equity left in it, you know? If there’s a way for you to clean up the properties and maybe make ’em all nice: we’ll say an advanced prehab, a blinged-out prehab instead of a blinged-out full rehab. “I’m gonna do some number crunching on all that sort of thing and see if it makes any sense to do a kind of a high-end prehab,” and maybe, what can you save on?
Julie Clark: I think the buyers are liking to come in and be able to pay full price for a house that they can add some value to themselves, rather than pay for some totally stellar blinged-out big flip. That’s just my opinion. I think, something for you guys to think about: shifting the types of rehabs that you’re doing, and first looking to see that, “Hey, look. If I do a full paint job and maybe I do or do not put in all new windows, or maybe I just place some of the worst windows, can I get away with this, do carpet, do paint, do new countertops?” Maybe don’t do a kitchen. Maybe don’t open that wall if it shows well and has a nice yard: things to start thinking about, guys, as you roll through and buy your properties.
Julie Clark: If you can’t buy the properties at wholesale prices that you want right now because you’re full flip mode, I challenge you, and I’m there for you, and I’ll come look at the properties with you and I’ll give you my opinion. Again, it’s time to start thinking about that kind of stuff. Buyers, in my opinion, are still willing to pay for that, more than they’re willing to pay for a super blinged-out top-of-the-market priced no-upside home. Again: just sharing opinions. I’m just a little girl over here hanging out with my buddy Joe. We’re lifting some weights. We’re walking the dog. We’re eating some Joe-Joe’s. [crosstalk 00:49:30]
Joe Bauer: I thought we were eating Oreos.
Julie Clark: Yeah, well, those are the Trader Joe’s versions: made me feel healthier. But, you know, let’s talk about it. Let’s continue the conversation. We wanna hear your feedback, too, from you guys on what your experiences are. I can tell you, all my friends that are the busiest rehabbers in town are agreeing with me on no m ore offer review dates and scaling things back a little bit. The challenge that everybody has, and I don’t have the answer right now: I’m gonna be talking to my friends about this and sharing it with you guys is: how do you balance the fact that you don’t wanna lose your contractors?
Julie Clark: If you been keeping deals pretty busy, I’m not saying … you gotta find the right balance, but you guys need to wake up, pull your head out of the sand for a minute, realize that, “Yes, things have changed.” Admit it to yourself and have a full check-in on everything you’re working on, and see if the price that you were planning on to get for your property came down by 20 grand, let’s just say, what changes would you make to your current project, k? Do that. Do that now. Do that now. I think, again, choosing your properties to be in the best locations is important. I think that buying properties down in Canton, Auburn and South King and these places: little bit more risky unless you’re getting a stellar deal or you have a bunch of tools in your toolbox like you’re a real estate agent or a contractor, and you have some savings.
Julie Clark: I think that there’s gonna be more days on the market, more properties available. Spreads are smaller down there, maybe, and you need to be cautious, right, or have your plan B and C in place, for sure. One other tip I’ll have for you guys, especially if you’re just getting started, which is: actually, this tip, if you’re just getting started, is the same tip I give you whether we’re having a market shift or not. I think it’s important if you are newer or you’ve done a deal or two, to partner up, okay? Don’t take risk 100% on yourselves, especially on your first deal, second deal. Don’t do it. Now’s not a great time to do that. Unless you feel like you’re listening to what I’m saying, you’ve got maybe 20 grand of room in your deal, and another 20 grand for the mistakes that you’re gonna make, right, and that you’re not gonna lose a bunch of money or you’re happy to just be educated and make nothin’, then go for it, because being educated and make nothin’ is actually work a lot. It’s a bit risky business, but how you offset that: partner up with somebody that has an opposite skillset.
Julie Clark: What do you bring to the table? Do you bring money? Do you bring hustle? Do you bring a real estate license? Do you bring contractor skills? What do you bring to the table to contribute to somebody else? I’m not talking about joining companies. I’m talking about just on one deal, and really think about that, what you can offer, and go find somebody that has the opposite skillset as you. You’re a contractor? Go find a real estate agent. You guys are a great combo to work with, right? You have two sets of savings there. You have some money? Go offer up your money to an experienced contractor. Ride along with them and learn at this point. They’re still buying, guarantee you. Everybody’s still buying. You just have to be able to have enough skill at this point to adjust if you have to. Don’t skid by. Don’t take any risks, okay? That’s my tip.
Julie Clark: Another thing that you should do is: you’re in the real estate business, right? Well, somebody on your team if you’re a one-man show is: you should get your real estate license. Think about it, guys. I have been preaching this for a long time and I’m gonna continue to preach it, and I’m actually gonna preach it more and I’m gonna preach it louder and I’m gonna preach it and tie it up in a box and give it to you in a nice little bow on top, working on something for that for you guys, but hey look: what’s better?
Julie Clark: If you’re a business owner, right, and you need to buy inventory for your business — in our case, real estate — and somebody offered you a discount card … Joe, you know where I’m going with this?
Joe Bauer: Oh, yeah.
Julie Clark: Yeah. Somebody offered you a discount card to buy your inventory at a discount, right? Would you … why would you say no? That’s what having a real estate license does. If you needed inventory and your inventory was available, let’s say somewhere like Costco where you have to have a membership in order to be able to buy that inventory and they’re getting all kinds of good inventory over there, let me ask you: would you call up one of your friends or neighbors or relatives and say, “Hey, my business needs this inventory. There’s a bunch of great inventory at Costco. Can you go and buy it for me using your discount card?” Or wouldn’t you just go get a membership to that club so you can go get that inventory yourself?
Julie Clark: I’m talking about the MLS. More and more properties are listing that are gonna be good deals and available for investors. It’s a great time to get your license to be prepared as more homes are gonna be coming on the market, so you don’t have to ask anybody else to go get it for you or pay them to get it for you or make those offers when they’re available. You guys get the point, k?
Julie Clark: Not only that, k? Think of a real estate license as an insurance policy. As a business owner, would you start your business and run your business without having any insurance, without maybe having the most affordable insurance that’s available to you? It’s called a real estate license, right? Now, you can list your own properties. You can … as long as your broker’s okay with that, right? Or, you can pay somebody in your office a nominal fee to list it for you, and you can have some savings, 3% savings. That could be 15,000. That could be $20,000, which is what I just said. Expect a 20,000 potential adjustment by the time you’re done with your rehab. You wanna get that money back? Get a real estate license. k, sorry to preach it, but I’m gonna continue to do it til you guys wise up, and we can talk about the myths and all that kind of stuff on why people think they shouldn’t get one, but you know, I’m gonna hang it up right there. I won’t talk about it anymore today, but you guys know how I feel about that.
Julie Clark: What else is it a great time for? We said it’s a great time for getting your real estate license. It is a great time to do a butt load of Joe’s favorite thing on the planet besides lifting weights, and that is: marketing. It is a great time to kick ass and get your marketing done, guys, because there is some bumpiness, uncertainty in our world, in our market, raising interest rates, BS landlord/tenant crap, all kinds of stuff going on that you guys don’t wanna start doing that marketing when the word’s out to all these sellers who are right now in their adjustment phase, right? They don’t quite know it yet, but if things keep going this way, all right, and we keep having a low adjustment down, not a big massive down term, but, you know …
Julie Clark: Sellers who figured out they missed the peak of the market, that’s enough to give them a reason to sell, okay? Property taxes are continuing to go up. That’s enough reason to give them a reason to sell, right? There are lots of reasons that they’re going to be slapped in the face with here pretty soon that might give them the reason to sell. You do not want to be late to the party, peeps, so get on your marketing right now. I’m talking about direct mail. I’m talking about door knocking. I’m talking about whatever. Just go for it. It’s a very good time to start filling your pipeline.
Julie Clark: It’s also, if you haven’t been doing it, a very good time to follow up with everybody that has been in your pipeline, everyone you’ve talked to. If you talked to somebody two years ago and they told you to piss off, F off and don’t call them; they’re not gonna sell: you know what? I don’t delete those because it could be coming a time — maybe, maybe not — hit the ones that didn’t tell you to F off first, but don’t forget, the ones that said, “I’m not interested in selling,” those are still might be good leads in the future, so anybody you haven’t talked to for six months, nine months, a year, two years, that you called, shame on you if you didn’t keep track,? Say shame on you if you didn’t keep track. You guys need to have a system to keep track.
Julie Clark: We have probably at least 5,000 leads in our system. I don’t care what the status of those are. I have their contact information, right? I have their contact information. Guess who’s gonna win. We are, k? So, keep track of your leads. Do a lot of marketing. It might be a year from now that things change enough that it kickstarts even more people to sell, right? There’s a lot of people that were on modified loans, right, that those people, maybe their stuff’s going to be adjusting on variable loans. Those people are going to sell.
Julie Clark: Just do your marketing. Get on it, and we’re talking about preparing for the future. We don’t know where things are gonna land. Maybe this is just a little blip, k? I think it will be interesting to see what happens. I think it’ll be bumpy here at least until the end of August, part of September. We’ll see if things, you know, get more brisk and sales pick up and maybe less days on market as we roll into the fall, but I think a real test’ll be what happens in like February and March of 2019 because January or February through about May is typically when people get the highest price for their home and things like that, so that’ll be a big check-in moment.
Julie Clark: But, between now and then, you know, check in with yourselves. Check in on your deals. Check in on your business model and think about adjusting if you had a $20,000 swing that is uncontrollable and unpredictable, k? Think about getting your real estate license for access to great deals that are gonna be coming on the market, more inventory coming on the market. Check back in with your auction groups and see what’s up, if they’re experiencing any new inventory. Start working with experienced brokers only. Consider that, you know? I’m here for you. And, kick some marketing out the door: all good stuff, over and out, k?
Julie Clark: I guess my Joe-Joe’s worked. I got all beefed up and energized. Maybe beefed up isn’t the right word, but, that’s all I got today guys. I feel like I talked nonstop for however long that was. So, thanks for letting me get it all out of my system. It’s very cathartic and all that stuff. It’s a good reminder for Joe and I to follow our own advice, but again, it’s just my opinion as one of the crowd hanging out with you guys, so hopefully you’ve enjoyed the show today. Joe, where can they find the show notes? Since I talked nonstop for however long, they probably either fell asleep or might need a redo, a replay.
Joe Bauer: I don’t know, Julie. I think that they might want to listen again and then go read the show notes as well ’cause they liked it so much. That’s what I’m thinking.
Julie Clark: Right on.
Joe Bauer: But, they can find those show notes at seattleinvestorsclub.com/41. That’s seattleinvestorsclub.com/41, and as always, we love ratings and reviews on iTunes, which you can find at seattleinvestorsclub.com/itunes. We actually had someone give us a five star review last week, so, high five, Julie.
Julie Clark: High five. Right on. We love you.
Joe Bauer: We love you. We have no idea who you were. If you give us a rate and review, send us an email or drop us a note on one of the show notes pages. We would love to give you a high five as well.
Julie Clark: Right on, guys. We love you. We’re here for you. We’re gonna stick together. This is all good news. You know, a market shift is good for investors, so, but for investors who are holding a bunch of deals or big rehab projects right now, could be a bump: maybe not, maybe. Just check it in and we’ll see … we wanna hear from you guys. Tell us your experiences. We can’t wait to hear back from you guys. Can they write that kinda stuff on the reviews?
Joe Bauer: They could write some stuff on the reviews. Although, we don’t usually get to … I mean, we can see it. It doesn’t really notify us, though. I have to go in and check it, so if you have any-
Julie Clark: How much space does there on there for them to write stuff?
Joe Bauer: I don’t know. I’ve never capped it out. I’ve written a few paragraphs before, myself, but I mean-
Julie Clark: Ooh, challenge: somebody go tell us their experience on our show notes so we can test if it’s like Twitter and we have 40. Then we’ll make up a bunch of fun buzzwords that we’ll share with you guys to use, right, little short little words that we can use to talk to each other in code, right on our … that’d be kind of fun, right?
Joe Bauer: There you go.
Julie Clark: Yeah.
Joe Bauer: Make up a code, secret code.
Julie Clark: Secret code. All right guys, over and out.
Joe Bauer: All right, we’ll see you next time.
Julie Clark: Ciao.
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