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The Right Time to Buy a House with Elizabeth Convery

George Grombacher March 9, 2023

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The Right Time to Buy a House with Elizabeth Convery

LifeBlood: We talked about the right time to buy a house, whether it makes sense to rent or buy, the important variables to consider, and managing emotions through the process, with Elizabeth Convery, former commercial real estate broker turned residential realtor.   

Listen to learn why you may not need a 20% down payment to buy a house!

You can learn more about Elizabeth at ElizabethConvery.com, Facebook, Instagram, YouTube and LinkedIn.

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Our Guests

George Grombacher

Elizabeth Convery

Elizabeth Convery

Episode Transcript

Well, I’m left with is George G and the time is right. welcome today’s guests during a powerful Elizabeth Kaveri. Elizabeth, are you ready to do this?

Elizabeth Convery 0:08
Yes, I’m excited. Thanks for having me, George.

george grombacher 0:11
I’m excited to have you on let’s go. Lizabeth is the founder of very real estate. She’s bringing a thoughtful touch to home buying with a special interest in first time homebuyers, Lizabeth, tell us about your personal life more about your work, why you do what you do.

Unknown Speaker 0:27
Yeah, thanks. So I started my business in 2013. After years of working in commercial real estate, my my job previous to starting my own business was working for a large commercial brokerage in New York selling hotels, I found that I just really wasn’t satisfied. I’m a millennial, and the millennials, they have to connect with their work. And I wasn’t connecting with mine. Selling hotels was glamorous, but it was not getting me out of bed in the morning. So I took all my experience with commercial real estate and I applied it to residential, hoping that I could make a difference in people’s lives. And by creating an approach that was based in, you know, our tenants, our professionalism, market expertise and transparency for the largest transaction of someone’s life, we really were able to partner with people and help them to see a path to homeownership. So that the goal was when they sat at the closing table, they felt completely confident in their decision to buy a home. So I started the business in 2013. It was a boutique shop based in Philadelphia, which is where I’m from. And I partnered the company in 2019, with compass to layer in some really fabulous technology to create not only the experience with the customer service, but also give the people the layers that they need of, you know, technology and apps and AI and all kinds of fun things that I personally don’t know how it gets there, but it’s there.

george grombacher 2:07
That’s awesome.

Unknown Speaker 2:08
Yeah, so I’m married to my husband, Chip is a naval officer. And we have a son Jack, who’s three, and we’re expecting a daughter in two and a half weeks or so. But who’s counting, George?

george grombacher 2:24
That is that, that is pretty exciting. Excellent. So you and I were talking a little bit before we hit the record button about this trend of large financial institutions buying up single family homes, and even this new trend of them building single family detached homes that are just going to be rented forever. And the idea that the millennial generation isn’t interested in in home buying, so wanted to kind of pick up on that. Get your thoughts?

Unknown Speaker 2:57
Yeah. So I think it’s a good investment play. We’ve talked a little bit about that for this company, because rents are the highest I’ve ever seen in my career. But overall, I don’t really buy it. I think that millennials do want to become homeowners, I think that there are a lot of challenges to becoming a homeowner. And there’s a lot of misnomers out there. Right? I think that the majority of people know this is I’m painting a very broad brush here. People think, you know, you need 20% down to buy a house, we need to save all of this money, the housing costs are so high, how are we ever going to do this. But you know, we have student loan debt. That’s another major fear that people have. But I think by surrounding yourself with quality professionals who have been in the business a long time, you can get solid advice that you’re not reading on the internet, that you’re not seeing with the media. And you can speak to a lender who can say, you know, there are options for you at even as low as 5% down to get into a home. And I think that when most people start to my experience has been when people start to see the numbers, the cost of renting versus the cost of owning, they see that the path to ownership is number one attainable, but number two, really financially smart for them for the long term.

george grombacher 4:21
Do you know like they’ve no idea what percentage of generations other than Millennials are homeowners versus millennials?

Unknown Speaker 4:30
Yeah, so on average in the US, 65% of Americans own their own home. The baby boomer generation is even higher than that. They’re closer to say 69%. The generation above them so our grandparents generation, they’re almost at 70. But millennials believe it or not, or at 43% and a lot of people say you know if you google it even and you read the commentary, it says that the millennial generation not homeowners because They’re too young. But the average millennial is 34 years old. So last I checked that’s old enough to own a house.

george grombacher 5:08
That is interesting. So it’s its ability and desire. So the ability pieces can offense financially make this happen, does it pencil out, and I want to talk about that. But the desire piece, that’s obviously going to be on an individual basis, but I can’t I’m like, why why would somebody not want to buy a house?

Unknown Speaker 5:30
Yeah, well, a lot of people don’t want to be tied down. They feel that Owning a home is like a weight on their ankle, right? And their say, I mean, I hear this all the time from clients. So what if like, I’m not here in three to five years? Okay, fine. That makes sense. Let’s figure out what your exit strategy is. Right? Are you going to rent it out? Because we know we just talked about how high rents are. And there’s always there’s always a market for rental. You see big companies now buying up swaths of properties to be in the rental market. So there is an opportunity there. Three to five years is a really good number for selling a property because you can recoup your closing costs, market appreciation is pretty solid. In America. I mean, you’re looking at roughly on average 5% a year. So think about that, depending on which market that you’re in. So I think that there is definitely that fear of being tied down. I think there’s also the fear of luck of millennials, we’ve lived through the 2008 crash we’ve lived through seen people lose jobs, we’ve had to move home with our parents, many of us, right? There’s always that fear of can I afford this? Is this going to be okay, am I going to go into foreclosure? But don’t we have that same fear about our rental properties? And I see very few millennials who are not renting expensive, high end properties. I mean, they’re, they’re they’re renting, they’re spending 1000s of dollars doing it. So I think it’s a matter of shifting the conversation to eliminate some of that fear.

george grombacher 7:12
Yeah, I think that that is maybe a natural thing to kind of throw up. You know, I don’t want to be tied down. What if the market crashes, but I haven’t really thought it all the way through, or I haven’t sat down and actually penciled out. This is how much I’m actually spending renting. And this is how much it would cost to buy. And I imagined that there’s a massive upside, should I happen to hold on to the house for five 610 20 years, it’s going to be a source of potential massive wealth Ray.

Unknown Speaker 7:40
And I think that people look, our brains are not trained. It’s nothing that we’re doing wrong. But we’re not trained to look at real estate as an asset class. We’re trained to look at our 401k, right, we’re trained to look at our stock portfolio, we’re trained to look at cash to say, Okay, well, how much money do I have? Can I pay all my bills, is my is my portfolio appreciating, but very few of us, I think, look at real estate and say, Wow, I’m paying off that mortgage every month, which means I’m getting more equity, I have higher ownership. And when I sell that’s going to convert to cash. And so I think that needs to be part of the narrative.

george grombacher 8:20
Yeah, it certainly it certainly strikes me that a lot of the wealth that older generations have experienced is due to their housing. There’s all

Unknown Speaker 8:29
kinds of statistics about, you know, wealth of homeowners versus wealth of people who have rented their whole life, right. And percentage wise, I’m I don’t know what it is off the top of my head. But it’s, I remember, it’s a markedly different number for net worth, if you have owned real estate over your lifetime.

george grombacher 8:48
Yeah, I love the idea of saving money renting, and then I’m going to take that money and invested somewhere else, but doesn’t always work out that way, necessarily, because we’re human beings. And we don’t always make logical, great decisions.

Unknown Speaker 9:04
Yeah, I mean, I see, you know, we’re all on the internet, right? So we’re all on Instagram and Facebook. And I see a lot of people talking about the additional hidden costs of owning a house and it cracks me up when I see it, because it’s not a hidden cost. It’s a common sense cost, right? Buying a house, you’re going to pay utility bills, you’re buying a home, you’re going to have to paint the walls, buying a home, you’re going to eventually have to like replace the siding. I mean, these are things that happen but it’s the same thing of buying a car. Think about that. You buy a car, what do you do you get your oil changed every month, right? You take it in when you need new brakes, you take care of the car, and the car will last longer for you. Same thing with real estate.

george grombacher 9:52
know there’s a secret organization that is hiding these costs from

Unknown Speaker 9:57
owning real estate To maintain, this is why people are so afraid.

george grombacher 10:04
Right? There’s this this horrible cabal out there that the doing this. And all that makes sense. I imagined, you know, real estate, it’s where we live. So we have this deep emotional tie to it. And money itself is wildly emotional anyway. And so why would I operate any differently? When I’m talking about making the biggest purchase ever? That’s gonna freak me out. And it is, oh my god, it’s this long term commitment. And maybe y’all Millennials have commitment issues as well, I can’t speak to that. But then actually going through this process and saying, okay, yes, there are costs, there are maintenance fees and costs that you’re going to have to come out of pocket on. So you need to make a smart decision and factor everything in.

Unknown Speaker 10:50
Yes. And it’s important to remember to when you’re buying a piece of real estate, you’re not buying it in a box, right? The internet has really helped us to be able to even virtually tour houses, right? I mean, during COVID, that’s kind of all we were doing in you know, in the beginning months of COVID. You’re touring house, virtually, you’re looking at the floor plans, you’re doing all of these things. But the reality is that, you know, the property is, you know, it’s just a it’s just an asset, at the end of the day, you have to live somewhere, you know, you have to put money into it. And it makes sense to really kind of drill down on owning something that is tangible. And you can kind of see where your money is going.

george grombacher 11:34
Yeah. So in terms of have the ability to, I think it is a really terrible thing that so many young people have graduated college with hundreds of 1000s of dollars in debt. And like we need to work on figuring out how to stop that kind of behavior. But here we are, for a lot of people. So the thought of saving up a 20% downpayment. I mean, I don’t know what the average house costs in in on the east coast, but I’m sure it’s a lot. So that is really daunting. But there are other options.

Unknown Speaker 12:08
Yeah, I mean, look, I think by working with a qualified lender, and you can find them really anywhere, the best way to find the lender is to ask your friends who have bought houses, ask your realtor start there. Lenders will work with you with your financial package. And I think it’s a misnomer that you need to put 20% down. I see on average in my business, and I’m based in the Philadelphia market. So to answer your question, the average home price in the Philadelphia downtown region is about half a million dollars. So if you were to put 20% down, you obviously have to save $100,000 However, most people are putting on average 10% down because they’re finding that one, it’s easier to save. And to you know, you still can be very competitive on your interest rates at that number. You can put as little as 3% down when you’re buying a house and many people don’t know that. There are additional costs related to that. However, the numbers because the rental market is so high and Philadelphia usually shakes out to be almost the same monthly cost.

george grombacher 13:20
So that is that’s just like you talked about transparency. It’s really understanding what an additional fees would be and then making a for lack of a better term of grownup decision on whether or not I want to wait and keep saving money for a down payment. So I’m avoiding extra costs or getting a lower interest rate. Yeah, absolutely. So it’s not as really confusing as people make it out to be. Well, look, it

Unknown Speaker 13:47
can be right I mean, with anything, we were not given a manual when we graduate high school or college right of like, here’s how to balance a checkbook. Here’s how to buy a house, here’s how to negotiate for a car loan all of these things, right. So where do we go to learn about it? Well, a lot of us go to our parents, right? Millennials particularly, we’re always going to our parents for things. Or we go to the internet and we’ll read articles and it’s it’s shocking to me like as we kind of joke about some of these memes and some of these influencers on Instagram and all these things. The narrative, it creates fear around home buying and I think a lot of people I’m seeing it particularly now people want to jump on to the home buying wagon, because they were too afraid to do it before and now they’re getting very nervous because interest rates are rising so quickly. And so so many people in my client base in my sphere have said you know when interest rates were 3% this year, but prices are so high, I am not going to buy I’m going to wait till the prices come down. Well now the interest rates have gone up and the prices are still really high because they’re Not a lot of supply is particularly going to go back to your original point, when you’ve got large corporations buying massive amounts of properties, taking that inventory off of the market, it’s classic supply and demand. If the supply is suppressed, best, the prices are still going to stay high. So I think there’s a lot of FOMO going on right now, believe it or not, where buyers are saying, Gosh, I wish I had done this. But I still need to do it. Because what if what if now the fear is well, what if it gets higher? What if the rates get higher? What if the price is I can no longer live in my town? What is this? What is that? And rental rates are going up just as quickly? And you have a lot less control when you’re renting?

george grombacher 15:42
Yeah, that’s a great way to think about it and look at it. You know, there’s no solutions only compromises. So I decide that I want to buy a home, and I decide I want to buy it in downtown Philadelphia, and I want all these things. But I’m never going to get all those things. So how do I how do you help people figure out okay, it’s not going to work out perfectly, but let’s get as close to as perfect as we can.

Unknown Speaker 16:07
Absolutely. So we coach everybody on what we call the ad 1010 principle, when you’re buying a house 80% of it should have your non negotiables. Now, these are things that are personal to you, and your family and whoever you’re buying the home with. So classic, non negotiables I want a three bedroom, I want to be in this neighborhood, I want to spend this much money, okay. But it can be anything remember personal to you. I’ve had clients who have said I need to wake up with the sun. So my bedroom must face east. I love to cook, so don’t show me anything that has an electric rage. Right? So we talked through what that 80% is 10% is something you can change or upgrade. So I show you a property that has carpets from 1976, shag, orange, disgusting, let’s go desiccated enough to know you can change that, right. So there’s your 10%. And 10% is something that you can’t change but you’re willing to live with. So let’s say that this property is two blocks further from your favorite coffee shop than you want to be. I can’t do anything about that you can’t do anything about that. But you’ve got 90%. So it’s really a leveling conversation with the client to say that, you know, your nothing is perfect in life, you’re never going to get 100%. And if you think that you’re going to get 100%, you’re frankly probably never going to buy a house, right, but let’s just focus on the 80. Let’s focus on the 80 that are your non negotiables. And we should not be looking at properties that don’t hit those boxes. Now if a client comes to me and says, Hey, Elizabeth, look, I want this, this, this, this, this, this, this, these are all my non negotiables. And I want to spend $250,000. And I want to be in a luxury high rise building in Philadelphia with a doorman. I, again, come back to transparency and say Not gonna happen. But let’s get a little more realistic. And let me show you some of the things that you can afford for 250.

george grombacher 18:12
I love it. I love a good framework certainly does make sense. So it makes

Unknown Speaker 18:18
our job very fun. I have to tell you, I’ve had some really cool challenges in the 80% over the years that have I’ve risen to them. They’ve taken a little longer but you know, you build a client for life, when you can deliver on things like that.

george grombacher 18:35
Yeah, yeah, I thought that for a second. So the difference between selling a hotel and selling a single family home? Tons of differences fairly similar.

Unknown Speaker 18:51
Yeah, so selling a hotel is obviously a much larger asset. But it really is very numbers driven. It’s all about the investment return. It’s all about the repositioning strategy, believe it or not, I’m not sure if you know this, I learned this when I got in the business. Most hotels are not owned by the brand that you think you’re staying in. They’re owned by a third party. And then the brand is you know, a contract essentially. Selling residential real estate is driven so that’s very analytical. So hotels, very analytical, the numbers work or they don’t, this is going to be okay or it’s not residential, very emotional. very connected to the heart. If somebody’s home, it’s driven the sale is driven by lifestyle. So, you know, layer that in. Why are you moving? Oh, well, we’re relocating to a new city. We’ve never been here before. We’re expecting another baby. And that baby’s coming soon and we don’t have a place for the baby. We’re getting divorced, you know, sadly, or we’ve lost a family member. So you really are dealing with that layer of the real estate, but also the family or the individual. And I think it takes a level of empathy that is, it just has to be present in this business.

george grombacher 20:25
Yeah, like that makes a ton of sense. And it also makes sense why you take so much care to be transparent and walk people through that. Just sort of, for lack of a better term, kind of a financial underwriting. What term do you use? As I tried to make up terms, Elizabeth?

Unknown Speaker 20:43
No, that’s true. I mean, you know, it is obviously an underwriting for sure it is. I mean, it’s, you know, you come back to an earlier part of our conversation where we said real estate is an asset class. So I always like to make sure that the client understand the true financial costs, all of it, even those hidden costs that we laugh about, right. But also, at the end of the day, I’ve had so many clients who have said to me, Well, is it a good time to buy is now the time to buy I don’t know should I buy? And my answer to them is always it’s a good time to buy when it’s the right time for your family to buy if you’re outgrowing your home, we can’t time the market. You got to make a move. So it takes both of those things in tandem.

george grombacher 21:27
Love it. Well, Elizabeth, thank you so much for coming on. Where can people learn more about you? How can they engage?

Unknown Speaker 21:35
So I’m on instagram@elizabeth.com very, this is a new account that I created in the fall to really give homebuying tip. I talk on there about coaching that I do with my team. I do a lot of team lead coaching as well. So there’s some tidbits there for realtors. And I also talk about being a working mom which has its own challenges and fun little stories so you can find me@elizabeth.com Very on Instagram.

george grombacher 22:07
Excellent. Well, if you enjoyed as much as I did show Elizabeth your appreciation and share today’s show with a friend who also appreciates good ideas find Elizabeth on Instagram. It’s Elizabeth II Li zabth.com Very co N ve R Y and figuring out if now is the time to buy your next house variable might be Lizabeth. Thanks again.

Unknown Speaker 22:33
Thanks, George. Have a great day. You

george grombacher 22:34
too. And until next time, remember, do your part by doing your best

Transcribed by https://otter.ai

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