The I Love CVille Show With Jerry Miller! - Woody Fincham And Heather Mull Joined Keith Smith & Jerry Miller On "Real Talk With Keith Smith!"

Episode Date: April 26, 2024

Woody Fincham, Owner of Fincham & Associates, Inc., and Heather Mull, Owner of Placer Realty Advisors, LLC, joined Keith Smith & Jerry Miller on “Real Talk With Keith Smith” powered by YES Realty Partners and Yonna Smith! “Real Talk” airs every Monday, Wednesday and Friday from 10:15 am – 11 am on The I Love CVille Network! “Real Talk With Keith Smith” is presented by Charlottesville Settlement Company, LLC, El Mariachi Mexican Bar & Grill, Fincham & Associates, Inc., Free Enterprise Forum, Intrastate Service Co, Pearl Certification and YES Realty Partners.

All right, guys, it's the Friday morning of Real Talk with Keith Smith. Thank you kindly for joining us on a pollen-filled Friday morning. It's a pleasure to connect with you. We're getting a later start here with some technical difficulties, but I think Jude has indicated that we have those solved, which we're excited to connect with you. Today's program features two appraisers that need no introduction. Woody Fincham is the guy for this market in Central Virginia,

Fincham & Associates. Heather Mull, it's her second rodeo here on the I Love Seville Network, and I'm real proud of Keith Smith. And she is absolutely fantastic. Personally, I've done some business with her with one of my properties, and she exceeded expectations, her firm, considerably.

Judah Wickhauer, the director and producer, if you can go to the studio camera, and we'll welcome Keith Smith. I think we should start with some introductions, my friend. So, two, thank you, Judah, for making some magic happen. So we're going to start with quick introductions. It's Heather Mould. You are a rock star in the commercial appraisal world and you do a little bit of sales, which is great. And Woody Fincham, everybody knows Woody. He is the rock and roll heavy metal fan of appraisal in our area and around the country. So we're going to kick back in because we're going to have a hard stop today at 1130, so we need to kick right in.

So one of the things I wanted to talk to you about, Heather, and we're going to kind of get to it right away. Those of us in the retail side of the world, right, are now looking at the commercial side of the world to say, what is things going to look like post decoupling? And when now all of a sudden the MLS will not allow to have buyer compensation in it. And we do a fair amount commercial uh in our shop and me in particular so i'm kind of used to this so let's talk a little bit about um you know putting your sales broker commercial broker hat on it what does that look like what does a typical commercial transaction look like to you because you've got to look at multiple places to figure out what's available to buy we we do yeah we've got you know like we talked about

a lot of stuff occurs off market so you know there is that sector that can't be ignored where it's just word of mouth or you know hey I'm somebody has something and I know a friend that has it that's looking for this I know a guy I know a guy exactly every single one of our commercial deals never hit the market yeah that I did not a single one of our commercial deals never hit the market that I did. Not a single one of them. It was all a conversation with the seller and us. Sure. Yeah, yeah.

You know, aside from that, you've got your local MLS. They vary on how much is in there. I hate to quote, you know, statistics, 10%, 30%. It's kind of a... It's not a huge number, though. Yeah, it's not a big number. And then we've got, you know, CoStar, Crexie, LoopNet, you know, other sources.

But, you know, obviously a lot of talk about what's going to happen in the residential world with the buyer's agent and the commission. But for us in the commercial world, it's kind of just like, hey, that's welcome to our party. We've been used to having that commission talk from the beginning. What's the commission offered, negotiating our commission, and in some cases, there's not a commission offered, and that's when we turn to the buyer to pay the commission,

and that's a, we find a lot of commercial buyers are used to having that. But you have that conversation before you start looking, right? Absolutely. You have to establish that relationship. Right. We call them buyer-broker agreements. There's really not a commercial version of that, but there are agreements that you would have with your commercial buyer that says,

look, if the seller's offering, great. If it's not, we need to work this out. They're typically large transactions, sophisticated buyers and sellers. Does the decoupling of commissions have any impact at all with you guys, Woody and Heather? No, not really. I mean, commissions are a cost-to-do business, and that's something that we normally don't really address in the appraisal portion of it. When we're doing adjustments on comparable properties,

we have five transactional adjustments we look at, and commissions have never been considered, just like, you know, title insurance or title fees or all the various other fees that go into it. So it's not something that really affects the appraisal side of it, at least at this point. Same question for you. Dan, I'd say probably even, yeah, probably exactly the same, probably even less of an impact in commercial because, again,

there are so many that happen off market anyway. So it's really, it's pretty difficult to quantify what that's, that's really going to have any impact. We had comments come in on start one here, and one of them was tied to homes.com. I'd love to throw that to you, Woody, the impact of homes.com, of what you see potentially coming with real estate, if it has any impact at all. Well, I don't really know the context of what you're asking. So homes.com is becoming

uh you you talked about this in richmond market you did a uh transaction sans mls altogether yeah so home yeah homes.com is becoming the 10 ton elephant as far as the portal goes out public facing portal um actually bringing uh later in may on two executives from homes.com to talk about it. They're never going to get, at least according to them, never get into the MLS space. But in Richmond, I'm doing one, two, three, four new construction transactions that I just used homes.com, much like you and I would do for a commercial transaction. Homes.com being known by Co and I would do for a commercial transaction. I thought they were homes.com being owned by CoStar. CoStar.

We'll just throw that in. And actually, a little news. They just bought Matterport out for $1.2 billion. I saw that the other day. Over a billion dollars. $1.2 billion. I just saw that. Oh, that explains why their fees are so high.

No comment. Sorry, CoStar. Well, I mean, one thing I'm noticing is Homes.com and their parent company seems to be utilizing a strategy that is customer-focused, where I'm seeing with, say, the Realtor app, I'm seeing a strategy that is agent-focused. So I'm actually going to push back on that. It's actually agent focused. Which one? Homes.com.

The thing is they're doing it concurrently. I've sat down and had long discussions with them. They're doing it concurrently. They're being more transparent with information in the public thing. Here's the difference between Homes.com and let's call it Zillow and I'll probably get myself into trouble for doing that.

So if I'm a listing agent and I'm a preferred agent or I pay for the homes.com, when my listing is out in the world and you two guys want to get information on it, I get the information directly. In Zillow, it goes out to all the people that pay for the zip code. Their focus is going to be very much so agent focused on the back side of it. The front side of it is definitively customer focused. I'm doing four transactions. I pulled it up. I called the agent directly just like the

conversation I'm trying to have about commercial. Tell me what your builder is offering, how does it work, yada, yada, yada. And those transactions will never show up in my MLS because they're never going to hit my local MLS on that. I find it interesting, and I find them, I have this question for you. When does homes.com and and costar and everything that they're purchasing mataport's another example start becoming um antitrust you know that's something uh i mean you could ask that question of core logic that core logic owns more real estate related data than i think anyone uh i mean they're a huge juggernaut they own

marshall and swift the cost service. Most MLSs now are owned by, or the backbone of their systems are run by that. CRS and all the various other things. I mean, it's, I mean, I don't know the FTC even looks at the real estate space anymore. I mean, they obviously are looking on the commission stuff, but they're not, you know,

they're allowing these juggernauts to, it's an ogleopoly out there. It's not a competitive market space whatsoever. And that's why the fees are so outrageous. It's very expensive to have access to all the information we need. I'll tell you, homes.com's agent fee is relatively inexpensive. Right now. That's correct. Until they

corner the market. Yeah. They're no dummies. You laughed right there. I laughed because you're not the first one that has said that comment that I've heard. You take a loss lead. I mean, it's basic business. I mean, you lose a little bit at first, and then you make it up in the back end. But here's the difference.

They're not setting prices. Homes.com is not setting, you know, you can't charge more than this. You can't charge more. That's what ultimately got NAR into trouble, right? You know, that back end of it. And let's be clear, NAR never said that, right? But, you know, the reality of it is... It could have been more transparent. That's the problem. Transparency. We talked about this on

Wednesday. I'm holding in my hand NAR pulled off its website how you can track the number of agents come on and off look I'm sure there's some reason behind it it sure as hell ain't transparent but I do want to stay a little bit for the agents that are watching it

to talk a little bit about how a commercial transaction actually happens, because I think that's what we're going to see come July, right? So if I have a buyer, and you have a listing, and it's not in the MLS, you're not on CoStar, right? I pick up the phone and call up Heather. I'm doing this right now with a couple of local commercial agents and say, what do you got? This is, I've got this client. And what's the next step after that? Well, once, once you find out what, you know, what they have and, hey, I have somebody,

you know, interested in this problem, you know, my next question after, hey, you know, how can we look at it? Is it available? Is there a tenant in? How can we get accesses? And what is the commission split that's being offered? Is there a commission split being offered? Is there a, you know, as me representing the buyer? You know, I will say the one thing I think that is, and again, I don't do residential unless it's my own stuff. And even then I usually will a lot of times get a representation because I'm not, I try to stay where. Good for you.

I'm a big, I tell other agents that. I'm like, I'm licensed to do it. It doesn't mean I'm going to do it. Hire a pro. Right. But I think, you know, a lot of the difference is that in commercial, they are probably have, it's going to require more money down so a lot of commercial buyers are more in a position to be able to

pay the buyer's agent if that comes up as opposed to residential first time home buyers you know VA buyers FHA these are I understand you know it's going to be a harder conversation for the buyer's agent of residential buyers, FHA, these are, I understand, you know, it's going to be a harder conversation

for the buyers, agent of residential in a lot of sectors than the commercial. So, Woody, why is that? Why do we as a residential industry struggle with talking about money and how we get paid? I don't understand that. Well, I mean, go back to 2008, 2009. I mean, the precipice that we were on. Let's never really go back there. It was hard times for a lot of us, myself included.

But, I mean, let's look at it. I mean, residential is, the way it's been put together over the last several decades is that a lot of times buyers don't have the ability to pay commissions or, you know, they've saved up everything they have to put a down payment on, you know, if they're going FHA, it's three and a half percent, right? So they're really not in a position where they can do it. So it matters a lot on that side of, but however, if you look at 2008, the mortgage companies were ill prepared for what happened. All the lenders out there, all the secondary investors, they had themselves in a lot of situations where they were upside down. There was negative equity in the property that they were taking back. And it was just a huge loss for the entire economy.

I mean, it created a lot of problems. On the commercial side, folks have the ability, they have to be well- qualified to do what they're doing or they're not going to get the loans. There was a substantial change in our industry from 2000. I had a 2008 through the time of great unpleasantness. I actually had a phone call yesterday from a very reputable architect in Charlottesville that has a custom build for a client at Lake Monticello. You know, waterfront, substantial project, can't find anybody to build it. He says, you wouldn't want to do it. I said, nope.

Thank you very much. That's scary that they want to build a design to build in Lake Monticello. Brother, I did tons of those. Oh, I know, but they tend to be a little bit of a super adequacy in that market. Why is that scary? Because price point doesn't justify? Well, usually your ROI on it is going to take you about 20 years to get equal to the market. Why is that scary? Because price point doesn't justify? Well, usually your ROI

on it's going to take you about 20 years to get equal to the market if you overdo it. It's nice if you can afford to put all the things into a home like that you want to, but in the end, will the market absorb it when you need to resell it? I don't know that people think that through. It's like, I'm going to be here for the next

20 years, and then they find out in two years they've got to unless yeah because i'd ask some questions unless it's a second home cash i want something on the waterfront and don't care yeah and that's what this box that's what that does happen for sure what's the top uh transaction you've seen uh at lake monticello that's a good question for both of you guys. Oh, God. Oh, I know it's over a million. I've done a few that valued over a million, but I don't recall what the absolute highest was. Well, we're going to let Heather share some of her wonderful thoughts, and I will tell you what the highest sale at Lake Monticello is. Heather, I'll throw this to you here.

I don't do residential. Y'all are the Lake Monticello. I know you don't. What sector of your business is most hopping right now? I would say it's still industrial warehouse. Yeah. Really? Yeah.

And you know what's interesting? I'm looking at the, I was just pulling up the NAR's third quarter. I just haven't pulled up CoStar yet, but it happened to be, I was searching through CCIM and the NAR. Third quarter, excuse me, me first quarter i'm thinking third month march first quarter report came up um with areas with the strongest 12-month absorption and this is nationwide nationwide richmond is eighth on the list for industrial strongest absorption um and we're seeing i had one that I'm doing now that I listed.

And, man, we were just multiple showings, multiple offers on industrial warehouse. I just did a rather large Class A medical enrichment, substantial project, same situation. I was representing the buyer on that. To buy it, we were competing against multiple offers. This is a large six-story facility and it kind of blew my mind and it was interesting. It almost fell apart, believe it or not, over

$5,000 worth of office furniture. Could you believe that? I will because I've been there on one. Has that ever happened to you before? We had one that almost fell apart. It was actually a flex property over office chairs. And that's when you're kind of like, oh, my gosh, I'll just buy the office chairs. I literally wrote a check and said, here you go, and let's close that. The Richmond market is exploding.

It is. That's your market, right? Yeah, I'm in Richmond. Yeah. And a lot of it, you know, and I say industrials, top of everybody's. Retail's still doing good. And there's some, you know, there's always, and even going outside of Richmond, there's always some more specialty stuff.

I mean, self-storage is still doing good. Mobile home parks still have a lot of investors looking. Retail, you know, multifamily still, even though there's back and forth with, are the rents going to maybe tick down a little bit, or maybe even not tick down, but not go up as fast, still in demand. Yeah, I mean. Don't you think we're overbuilding that multifamily market? Possibly, but, you know, so far it's been, you know, if you Possibly, but you know,

so far it's been, you know, if you're building, if you build it, they will come. We do this as an industry, right? We have stuff that's hot, we start overbuilding it, right? Then all of a sudden we overbuild it and it kind of drops back out. You see that from an appraisal perspective.

Oh, absolutely. I mean, the pendulum's always swinging. I mean, when you're right in the middle of, like, when we're doing market analysis, you never really know exactly what's going on right now. You can see what's happening, and you can kind of project to what's going to happen, but the force of the trees kind of gets involved when you're at the present. It's kind of neat.

You're still having a lot of people coming down from northern Virginia where we're seeing, that's the one thing that, you know, we know how this works with economic supply and demand, but we're still just steady getting more demand in these areas Richmond and in the rural areas especially post-COVID with places getting high-speed internet we're doing a ton of stuff in rural areas appraisal wise I know I am I know you are too why is that most of my business um so many more the presence of high speed internet and i can think personally because my husband and i are looking at going a little more rural we now that the kids are older

and getting out and we have five dogs so we need like less house and more land but it's also did you say five dogs yes no my husband's like joseph gentile watching the show. How's it going? Brother from another mother. But people can work from home. Post-COVID, they're finding that rural is more affordable, obviously, but that's starting to go up in price. And from a commercialist perspective, more rural markets have kind of been overlooked for many, many decades. The rents haven't been going up, and investors are finding, hey, I can go in this rural market, raise rents, make money, and I know there's all kinds of social implications about that. Should they be raising rents?

Now I'm just saying from an investor's perspective, they're seeing a lot of opportunities in these traditionally overlooked areas where people are now starting to go to. So back on Lake Monticello. Yeah. So I did the total sales as far as our MLS would go back. So that's 5,713 sales. There were two that were over a million. It was on 3-10-23. It was one for $1,190,000. And then on 11-29-23, there was a $1,150,000. And then there was one, two, three, four, five at, excuse me, four that had a nine in front of it. Then it starts dropping from that point. You got two over a million?

Two over a million. Two waterfront properties. Both waterfront, right? Two waterfront. Oh, yeah. Yeah, The one at 1.25 was an amazingly different kind of property. It's

just a big sprawling house that goes down on the main lake, too. Yeah, so it actually went up. The list price was one. I've read the list price. Thank you, Woody. It was $1,190,000. It actually sold for $1,250,000. I'm going to give some props out to Vicki, too.

Vicki Wilson had both of those listings. And she made it happen. Yeah. Good job, Vicki Wilson. I'll throw this to Heather. Walk us through the appraisal process of storage. Is it based occupancy? Is it based on land value?

Is it based on zoning potential? I mean, just give us the broad strokes of that. So you're talking about, like, warehouse space or self-storage? Self-storage. Self-storage? Yeah. Gotcha. Yeah, it's going to come.

I mean, investors want cash flow. That's what it's coming down to. How much can I maximize a site? How many units can I get on there? You know, cost and time to build. But then it's going to come to what are the rents doing? Are they going up? You know, and it's hitting that, you know,

investors are probably not going to come out necessarily and spend all that money to buy, you know, just to build five units or ten units, but there's going to be a break-even point where, hey, it's worth doing 50, 100, 200 units. You know, and there's a demand in the area of competition. But in the end of the day, what can I build it for? What can I rent it for? What are my expenses and what's my profit at the end?

How about existing self-storage that's already on market, that's already been constructed? How much do you consider the fact that you have units that are empty? How much do you consider the, maybe you don't consider this, the brand position where maybe this doesn't have websites, signage, digital, any of that stuff, where it's underachieving or underperforming? Yeah, I was going to say, and that's what a lot of investors are looking for, too, is where's my what we call value add? If it's underperforming, is it underperforming because there's too much competition? Or what we see a lot in existing, I'm not saying all of us, but a lot, is it's just underperforming because there's somebody that's been owned, that's had owned it for a long time.

That's coasting. They're not, maybe they're not, they're trying to self-manage, but they don't quite know how to compete. They don't have the internet presence. And then an investor will come in and say, hey, I can do the marketing, the website, I can manage it better, i can get at least up to where it should be i have two local two they're not local but i have two clients looking for cube storage space in charlottesville and a hilton and the dirt is just too expensive the acquisition of the lamp

because both of them need about two acres to work. You can get a cube to work for maybe about an acre and a half. A Hilton, like Garden Inn or something like that, needs two acres. And they, of course, all want to be close to the UVA. It's just the opportunity is

just not there. We have them out in Zion's Crossroads. We might have them out to your conversation in Goochland and stuff like that, but the numbers don't start working. You all do tend to be at a higher price point in Lane, obviously, than we do over in Richmond, but we're seeing that coming up.

Again, that kind of rural sprawl we're seeing. Interesting with hospitality, I'm also seeing a lot of the builders are taking and they're trying to get a little bit bigger of a site and do two of their hotels, same brand, side by side to kind of get a little more economies of scale when they're developing. This question's coming from John, how do you say his last name, Woody Copulus? John, we can just call him Cope. John Cope,

he says, Woody, that 1.2 at Lake Monticello, what was it worth in 2019 pre-COVID? Oh, gosh. I mean, it was not worth that much for sure. COVID really, you know, it was steroids for our market like it was in a lot of places around the country. But, yeah, I mean, I don't know. I don't think we'd seen much go for more than three-quarters of a mil or so. Well, that's what I'm trying to say is, so the next highest sale, so anything that had a nine in front of it was October 22 through March of 23. So all post-COVID.

785 is the highest I see in 19, right? I'm sorry. In 17, there was a nine, in 17 there was an 870 sale more questions coming in if you want go ahead Woody Lake Monticello 830 was in 1210 closed anyway

closed 10-2020 that was the highest then after that it starts starts jumping, you know, in the 22, 23, 24 range. But the number is so small, right? Yeah. The median over the whole length of this time of 5,713, the median sales price is 219. Yeah. Well, that's also going to have a lot of outliers, too, because Lake Monticello was hit really hard during the 2007-2008 period. There were a lot of foreclosures in there.

Has your industry seen, and you guys are the best at what you guys do, so market share is on your side here. Has your industry seen a replenish of new blood or younger blood into the profession? Because we're seeing with the realtor profession, the average age in the realtor profession is what, 59, 58? I think it's 57. 57? I say we buy both. Can you answer that?

But you go ahead. This is a big, big question. And we are concerned about this. And he's a teacher. He's a professor. He teaches this. She's the professor. I teach some appraisal classes.

Heather's an adjunct at what, VCU? I am. It's been a few years since I've taught, but I was teaching at VCU. I mean, I do some teaching for the Appraisal Institute and a couple of other entities for CE and QE. But anyway, to answer your question, there's not enough people coming into the profession. Licensing became a thing in 1991, 92, and a lot of the people that were credentialed at that point in time are now getting to the point where they're retiring or otherwise not going to be appraising anymore, and we're not getting enough folks into the profession.

There's hardly any undergrad programs anywhere in the United States for valuation. Like VCU and a few other universities do have a master's program, but they are concentrating mostly on commercial and development, and that they're not really looking at the residential space or something. It's just not on anybody's, I mean, my kid who grew up as an appraiser's kid swore forever he would never do it. Now he's my business partner and a certified residential appraiser. And a great appraiser at that. I'm not just saying that because he's my kid.

But in the end, I mean, it's just not a sexy profession. I mean, you don't think about it. You probably have heard your parents talk about it. But you're not going to come out at 22, 23 years old out of college. And, you know and you've got $150,000 in student loan debt and you're looking at this profession that you've got to get into, that you've got to spend two years as a mentee and you might make $50,000 or $60,000 if you're at a good firm. I'm going to ask a question that is going to get me in all kinds of trouble.

Yeah. I hope Jonah's not watching because I might get fired. So do you think it's a good idea that our profession follows that same model? That if you want to be a real estate agent, and I'm going to piss a lot of agents off by saying that, that you have to go through some sort of apprenticeship program? Do you think that's a good thing or a bad thing? I mean, for a mercantile economy from the 1800s,

I think apprenticeships are a good idea. But, I mean, I look at the law profession, you know. I mean, you've got folks that as soon as they pass the bar, they're able to hang a shingle out. I know engineers can't do that. They have to do ENTs, right? Right. They have to do engineers in training for quite a while

before they're allowed to get turned in. But you compare it to passing the bar. Law school is two years. So you can make it pretty big. That's the apprenticeship. It's an advanced degree for sure. And if you're going to be really effective in law, you're going to go clerk for a judge somewhere or get to a law firm where you can actually get some practical experience.

Someone could seamroll through the Moseley online school in less than a week. And they go to, they could do it on Moseley on a Monday morning and then go take the test the next week and pass. That's a problem. I mean, you're not going to have the ability. I mean, if you're going to become a realtor, you have to, you know, meet a code of ethics number 11, which says that you are competent to do the work. If you've just done a week's worth of education, then you're really not doing what you need to do. But what a professional should be doing in that situation is partnering up and working with a firm. On the residential appraisal side of things, there's no advantage to working in firms anymore because the appraisal management companies and the lenders out there have really compressed fees down. And they've done it intentionally because they're making money off of what the appraisers are doing. And so, you know, they've basically broken up the

ability for firms to exist in the residential space. So, you know, it's just not lucrative. And until we get an undergrad program out there at a few of the universities around the country, I really just don't see it changing much. And it's scary. I mean, the best answer, and Heather's on the board of directors for the Appraisal Institute at the national level, but, you know, and I'll mention one of my mentors, Sandy Adamadis, who's the president of the institute this year. She was instrumental in developing PARIA. And PARIA is a practical program that allows appraisers who can't otherwise find mentorship to actually get in. And they can get certified residential through two modules worth of work. It takes about two years to do. But they're able to come out of that as a competent appraiser.

That just started last fall. And we've got, I don't know, how many members do we have in it now it's more than a hundred yeah it's it's a good step but I mean the appraisal institute's the only entity out there doing it right now that or that have successfully completed it so that is an alternative for folks to go into but it's not cheap I mean they do have a lot of scholarship and grant money available for folks that want to do it. But, I mean, it's several thousand dollars to get through that. Heather, you're eager to jump in here.

I was going to jump in and just say one thing that, you know, I guess, you know, one of the core differences in being a sales agent, being an appraiser, is you can take the test. You can become a sales agent after the test in the 60 hours. 60 hours, yep. But remember, you can't hang your own license. You're still required to work under a broker. You can't hang your own, I'm sorry I said license, but try to hang your own business license and start your own firm until you're a broker, which takes three years.

Three years. Three years active. I should notice I have mine. And then you can start. So to own your own brokerage, there kind of is an apprenticeship built in. Yeah, there is. And, you know, technically, when you are a salesperson, you're working underneath your broker. So your broker is taking responsibility for everything you did.

And we can talk for an hour about how, well, that may or may not be working. I was going to say that. Yeah. I mean, there are some brokerages, especially some of these online ones, where the broker's not even in the market. Correct. Yeah. That was happening in the appraisal business for a long time, too,

where they would say they have trainees, is what we call the new folks in the appraisal business. And there was a guy in Bedford, Virginia, that had over 200 trainees at one point. It was being abused big time. I mean, I won't highlight which ones, but I think that's happening. So, Heather, thank you for pointing that out because that is an important distinction, right? You have to hang it to your point. Is it being managed or not is a whole different animal.

And I think I've been on the record saying this decoupling is a really good thing for our industry. I think it's a good thing for our industry, a good thing for the public. We're going to have a lot of transparency going through forward. We're going to start a lot of transparency going going through forward we're going to start building our value proposition i think ultimately this on the back end is going to be a very good thing for the industry and those of us who stay in back to where i think this is going to be very much like our commercial transactions and i've been saying this on the show for a while it's 100 right you've got to demonstrate demonstrate your value proposition to your buyer. You've got to go ahead and be transparent on how

you get paid and do that. And then you've got to do our number one thing that we do the best, which is negotiate. And if I can't negotiate for how I get paid, how am I going to negotiate for your money, right? So if those are out there that are wondering on what this is going to really look like, need to start talking to some commercial folks and picking their brain because that's what this is going to look like. What do you think about that? Yeah, I think there's,

I've always been a big proponent of, I think that residential and commercial should talk more for, I mean, a multitude of reasons. But, you know, I think we can learn a lot from each other. Well, the big difference on the commercial business you do, you're not required to become a realtor. Correct. That's the difference. Yeah. Right. A lot of them are not. Yeah. It was interesting. I was watching, I was on a Facebook blog the other day,

group, and I was watching the conversations with all residential agents. And I think that's a good point that's not understood a lot. There's some out there that think that commercial agents can't be realtors. They can. Of course. And then there's some that say, you know, they just call commercial realtors. Well, some are not. So, yeah, they do not have to be realtors.

Well, your regular real estate license that you acquire from the state that you hang underneath a brokerage, there's no differentiating between a commercial real estate license and a residential. I, as a resident, there is a real estate license, period. I can do anything from that. Now I can reach into my pocket and pull up my class A general contractor's license, that I have one for residential, I have one for commercial, I have one for plumbing. I have all these different licenses that I've acquired over the years. And appraisers, too. We have commercial, we have residential.

We have different licenses for appraisers. But not in the real estate. Correct. This is from Danville, Travis Hackworth. I wonder what Heather, Keith, and Woody see as the future of mixed-use developments going forward in the next couple years. Major cities are quickly running out of available property or affordable property. Does this squeeze in the major metros of the state present more opportunity for smaller cities in the state, or will the market just drop in that arena all the way around?

He's asking because he's in Danville. That's a big question. There's a lot of parts to that question. I think mixed use is definitely going to be here for a while. I mean, it's definitely a portion of the market's definitely going to stay there and grow there. I mean, Charlottesville is kind of a smaller market as well. You know, with the upzoning here, I mean, we're going to see, I think, some issues coming from that I do we just haven't seen anything that's directly absorbed in the market yet I think that would reflect that but if I had to get my crystal ball I would say yeah yeah sure why not but I don't know Keith and

Heather probably have a better I think also has to do okay it goes to a lot of the government and how fast the zoning is going and how open the zoning in your governmental jurisdictions are going to be open. 25% of all new construction is regulatory expenses. Yeah. I believe it. And that is no different in the commercial world. Yep. So that has just exploded over the decades.

Back to mixed-use. I've said this in a I was speaking at a Zoom via zoom panel about a convention last week. What is old is new again mixed-use was around It was the thing that everybody did Then it became not became the Levittowns of the world right right? The sprawl. And now mixed use is back. It was for different reasons. Back in the day, you didn't hop in your car and drive out. You took your buggy or you took a tram or whatever, right? I'm making this up as I go along.

Be careful. Now it's because of expenses, right? And you have to put your density together to make things somewhat cost-effective. But I did the acres at Lake Monticello. I tell this story all the time. 150 acres, central water and sewer, VDOT roads, yada, yada, yada. By the time I acquired it, got it rezoned, got a site plan, and put a bulldozer on the job site, it took six months. I'm helping consulting people on projects that are in my sixth, seventh, and eighth year, and we haven't even put a bulldozer on the job site yet.

That is costing, that is driving costs. Time is money. It is. And folks don't realize that. I mean, government is hurting trade, basically, because, you know, if you add – it takes six years to develop something, and that just seems silly to me. No, that's just to get past the zoning and the approvals. Well, Colonial Place took what? Six years. Yeah, that's crazy.

It took six years. And they're still not, you know. We're still in the development phase. They're still in the development phase. I drive by it every day. And that lovely water tank. Based on what we were talking about, is there an appraisal degree track at four-year colleges, and who's doing it?

There are some real estate programs for undergrad, but I don't think anything that's specific to appraisal. I think all the programs go through valuation, and they spend some time on development, and they spend some time on development. They spend some time on the various other things that go into it. I don't think you get into actual valuation specifics other than maybe a class or two until you get to an advanced degree. And most of those programs are really not designed for residential. They're really designed more for the commercial side of stuff, which is, you know, as a residential appraiser, I take a little bit of a front to that because, I mean, residential is a specialization that, you know, not everybody can do it.

I mean, there are, I know commercial appraisers and certified general appraisers, they call me all the time for guidance on residential because they'll get an assignment that, you know, they've just never done residential and they don't understand it the way that they should and then there are other certified generals that they're great at it but you know it's it's definitely a facet and a nuance that a lot of people just they don't understand it i know vcu has a degree has a bachelor's degree in real estate um but it's commercial that that correct yes yeah and they have a master's in real estate valuation specifically. But yes, it is. And part of that is to get a commercial license or commercial real estate appraisal license, you have to have a four-year degree.

Whether that changes in the future, I don't know. But that's also part of it. I actually had some... I don't know that. Yeah, you do. Part of it is also, because I have had conversations with VCU, and I know that Virginia Tech is in the process of building their real estate program. ODU has.

UVA has one at Darden, but it's very much so commercial-focused. Right. Multi-family focused. Part of this, and this was us years ago i was told is also because their business department it's some of this is the the core curriculum that is told to them that they have to teach to to to be accredited in their business department and a lot of that has core classes like finance and things that you're going to see more in commercial so it's kind kind of what's handed down to them that, hey, you have to have these as part of your, and it just kind of steers more towards that commercial.

Nationwide, we are in, in my opinion, not just my opinion, whoever you read, a crisis of inventory, right? We're in a crisis across the country. What I don't understand is why we don't have some universities and higher learning institutes trying to work together to create, to help the knowledge level. A lot of this is, you know, I've been doing this for 35 years, so, you know, I kind of got a kindergarten degree. Well, it's interesting that you say it as we wind down here. It's not just realtors that are short staff or the industry is down. It's also appraisers. We talk plumbers. We

talk trades peoples. I mean, I don't understand what's going on with maybe the upcoming generation and maybe this is me. I walk 10 miles in snow together uphill. One way, both ways. But I mean, plumbers, electricians, realtors, appraisers, what are people doing for work? We spent decades focusing on making our children go to universities to become middle management. And what's happening now in corporate America

with middle management, they're shedding them. There's too many people doing it. I mean, how many waiters and waitresses out there have an MBA that they can't find a job doing that with? I mean, there's nothing that's not honorable about trades. I mean,

plumbers and carpenters and all of that. My father was a builder. Try to hire one. I know. Auto mechanics, I hear from their sector too. Any trades and... I tell this story all the time and we've got to wrap up with a hard stop here in a few minutes.

My little brother is in Richmond. My little, when I went in the Marine Corps at 18, he was three months old, didn't see him for six years. So he's really my little brother. Is his nickname Oops? Sorry? No, I think that was me. They named me Oops. I was an Oops baby me oops they made me oops and they tried

four other kids to try to get it better it just never worked and I'm going to by the way I'm driving them up for 12 hours up to New York depending on traffic I'm going to hear this because my mother watches this and I'm going to hear that comment for 12 hours driving up but he he's a high end trim carpenter

in Richmond I call him doctor. You know? And you put the numbers together in your head on how much he does. Right? And it's booked out forever. Well, if you're good at something, don't do it for cheap. Amen, brother. All set.

Well, and rallying it back around to the decoupling, I've been very connected with the Pacific Northwest for years with my affordable housing work that I do. And the conversations I'm having with agents out there because they decoupled in 2022, the people that are really good are actually charging more than everybody else.

The people that aren't, aren't making as much. I think that, you know, if you're a residential agent and broker, that's where you're specializing in, get people like Heather, take them to lunch, get them a drink, and talk to them about it. Because, I mean, you're salespeople, right? I think it's incumbent upon you now to be really good at selling what you bring to the table. What are you doing for your clients to make them want to use you? And I just think that's the evolution we're seeing right now.

One last thing, and we'll wrap up around this. All your commercial contracts buried in the contract is how everybody gets paid, correct? Yes. There is not a single commercial contract that does not talk about buyers' agents getting this, sellers' agents getting this, and how it's going to get paid. That's the next step. It is going to have to be buried into the contract contract because otherwise, how are you going to get paid? Or I might say, this references an additional document.

But it is, yes. In the total contract docs. So those realtors out there that are watching this live or down the road. Get ready to do that. Do yourself a favor, to Woody's point, if you don't want to talk to local folks, give Heather a phone call, say, how the hell you do this, and she'll tell you.

I'll try to help the best I can. Heather Mull is fantastic. Woody Fincham is fantastic. Keith Smith as well. Judah Wickauer, guys, also does an excellent job behind the scenes. This is Real Talk with Keith Smith, where it's archived online at realtalkwithkeithsmith.com. Thank you kindly for joining us on the Friday edition of the program. The I Love Seed Mill show is up in approximately one hour. So long, everybody. at realtalkwithkeysmith.com. Thank you kindly for joining us on the Friday edition of the program.

The I Love Seedl show is up in approximately one hour. So long, everybody. Nice teamwork. Thank you, guys. Thank you. So