Nick Bailey oversees all support services provided by RE/MAX, LLC to its expansive network of franchisees and Affiliates, with an unwavering focus on the relationship HQ has with Broker/Owners. Guided by his expert insight into the real estate industry, Nick drives the network’s business growth, professional development and engagement, and global and Canada organizations to ensure Broker/Owners maximize the advantages, tools and services available to them.
Nick rejoined RE/MAX as Chief Customer Officer in September 2019. A licensed real estate broker with 23 years of real estate industry experience, he first joined RE/MAX in 2001 as a management consultant. Within two years, he was promoted to Vice President, Regional Services. During his initial 12-year tenure, he drove tremendous growth by concentrating on franchisee success and relationships. In 2021, Nick was named President.
Nick’s experience includes being a Sr. Vice President at Market Leader, a Vice President at Trulia/Zillow and, most recently, the President and CEO of Century 21. Originally from Wyoming, Nick bought his first investment property as a teen and earned his real estate license at 21. He is a Certified Real Estate Brokerage Manager, Accredited Buyer Representative and Certified Distressed Property Expert. Nick holds a Bachelor of Science degree in Business Administration from Montana State University and is a past recipient of the Entrepreneur of the Year Award from the Powell Valley Chamber of Commerce.
Family comes first for Nick, who enjoys traveling, skiing, and spending time with his wife and two children. Outside of work, you can find him volunteering in his children’s classrooms, exploring the Colorado mountains and finding adventure in all things.
Episode Notes:
Narrator  This is The Norris Group’s real estate investor radio show, the award-winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever-changing real estate market hosted by author, investor and hard money lender, Bruce Norris.
Joey Romero  Welcome back to The Norris Group real estate radio show and thank you for joining us for part two of our interview with REMAX President Nick Bailey, enjoy.
Bruce Norris  What do you consider the biggest challenge for agents in this, in this hot market right now?
Nick Bailey  Right now, one of the biggest challenges is buyers. When you’re in a bidding war, and even though rates are so terrific, and so competitive, they’re, they’re, they’re bringing buyers out from everywhere. But buyers are having a hard time getting their offer accepted, because they’re competing against so money, they’re competing against cash investors, they’re competing. And so you look at some of the folks that are trying to do FHA financing, or VA financing. And they’ve got a little bit of money to put down they’re just getting beat out every single time. And there’s a lot of cash flying around right now. But you’ve got to be prepared to make up the difference in cash with appraisal gaps and some of these different things and so there are a lot of frustrated buyers that feel like they’re just beat up, they’ve offered on 10, 12, 15 different houses and haven’t gotten an accepted offer. And agents are feeling beat up because their buyers are frustrated.
Bruce Norris  I’m just curious, do they try to like write a compelling letter? When you write an offer and say this is the story of the family that’s going to live in your house? Is that ever been tried?
Nick Bailey  You know that, it has been a big thing for years and just recently over the past few weeks? There are states now that are completely restricting that, that’s not permitted.
Joey Romero  Portland? Yeah, I saw that.
Nick Bailey  And part of that’s due to fair housing. Fair Housing is on the on the minds of a lot of folks right now. And they believe that by providing these, these letters can maybe be swaying consumers to, to, to not be thinking about just the objective, or looking at the offers objectively, but maybe it’s skewing them outside of where fair housing covers.
Bruce Norris  Wow, that would never occurred to me. When we bought a home, my first wife who passed away, we bought a home that I put up for sale after she passed away. And it was a hot market and a lot of people showed up the first day. But there was a family with two little kids. And though the boy was two and a half years old, and I had a Nintendo and he’s like talking to me says what was your, what’s your favorite game? And I said bowling and he got this face on him. It’s like there’s a lot better games. When when the offers came in, I took theirs because of that little kid. And you know, it’s, it’s okay to make those decisions because honest to God the next year, I got a, I got a fifth like a 50 gallon barrel that held things in my backyard. He had made it for me. On the, on the 10 year anniversary, he writes me this great letter about the the enjoyment his family has had in speed. So thankful that I leaned their way. So man, I don’t want that to disappear from my industry.
Nick Bailey  Well, you know home, what, what you’re describing great story, by the way, what, what I think you’re describing is home is emotion to us. It’s emotional. It’s our safe place. And home purchasing is emotional. It’s where are you going to live, raise your family, your kids. I have a similar story. My wife and I, several years ago, bought a second home in the mountains of Colorado in a ski resort. And it was interesting our kids were small. And it was unfortunate. We had friends that knew this neighbor. Unfortunate that this was a retired couple. And they were actually Bernie Madoff victims like true. Bernie Madoff they, and this was a gentleman. He was a pediatrician for over 40 years, just nice, nice people. And so they hadn’t put the house on the market, but kind of put out feelers to the neighbors to say if you know someone I think we’re going to have to sell. And we, our friends made the call for us and made the introduction we went over to visit them. And very similar story, they saw us our little kids. And they said this is why we’ve owned this for 30 years is we raised our kids coming up here on the weekends and skiing and we would love for you to have the same experience, right then done. So, yeah, they’re cool stories like that. But, you know, in an area, now we’ve gone way extreme. I’ll tell you, I just talked to an agent last week and she said she had almost 20 offers on one home and to avoid kind of this, this fair housing of people trying to select, she redact the names off of all of the offers, so that the home seller can’t even look at the name to try to say, where’s this person from? Because some names can point that out. So, we’re seeing people go to the extreme of, of keeping the buyers completely secret, even their first and last names to make sure sellers aren’t going down that path.
Bruce Norris  Oh, okay. Well, it’s not, it’s not what I would like is to say, I would like it to be a personal experience still and I would like as an owner to be able to, as it turned out, the they couldn’t get approved the the buyer of that house I mentioned, they had to actually they couldn’t get approved for the, for the full price of the offer. The, the max they could get was 40 grand less than that. And I ate the 40 grand because of that two year old.
Nick Bailey  Wow.
Bruce Norris  So, that’s how important it is, you know, you like, Okay, this is a home that I want somebody I think is going to really enjoy it. And that was a good, that was a good choice. I’ve got a question on you’ve got a Certified Distressed Property label, now that’s not needed all the time. But it seems like it is once in a while. Do you see that coming up at all?
Nick Bailey  Yes, so I obtained that designation, the CDP during the recession, when most people hadn’t even heard of most people have heard of foreclosure that happens in every market, because someone might have a hardship. But short sales, vast majority of the industry, excuse me didn’t know what a short sale was or how to handle it. And so there was a designation that came out. And it was essentially training of how you put together a short sale package how you present it to the bank or the lender to get that through and short sales just changed the lives of so many during the recession. Granted, that has not been at the forefront, and I don’t see it anytime soon. inventories extremely low, we have more we have more realtors than we have listings right now. But here’s the biggest difference 34% of homes in the US don’t have a mortgage 64% have positive equity. And so we’re dealing with, with a margin of error two to 3% of homes only that are sitting in a negative equity situation. And the the biggest change is even though the refi boom of last year, the, the product that wasn’t at the forefront was the cash out refinance. And so 12, 13, 14 years ago, people were using their houses ATM machines, and they were refinancing with cash out refinance all over the place. And that’s not happening now. And so you have a lot of people that are cash poor and equity rich, but there’s a lot of equity and a lot of homes. And so, in less we saw values decrease at a tremendous, tremendous rate in a short period of time. I don’t think we’re going to see the need to use that designation anytime soon. Because we’ve got the biggest run up with the millennial population of household formation that this country has ever seen.
Bruce Norris  Yeah, what’s what’s interesting, you know, like he said, you own the home very early. And I got married at 17 and worked my way to getting into homeownership at about 21. But, man, that was my goal for the whole four years of my married life is I got to figure out how to own a home. And I still remember this to this day. I mean, this home that we bought wasn’t anything special. The windows didn’t open, they were painted shut, the air didn’t work on and on, but on Saturday, I mowed my own grass for the first time and I felt like a man. That’s how important that was to me. In 2006, we wrote a report called a California Crash, saying you know what this is going to unfold. It’s going to damage prices, maybe up to 50%. So, I wanted at the time at $1.2 million home. So, I literally am sitting here going I know I’m going to take a 600 grand haircut, why one and not be a homeowner. So, I thought about that seriously, one day and I called up a guy that had a pretty cool house for rent. And I said, I’m not your typical renter, I’ll pay you a year in advance. He says, oh, it sounds great. He says, Can I ask you a question? He says, Do you have any pets? And there was a little pause. And I just almost wanted to hug the guy and said, wow, you just reminded me why I want a home. Because I don’t want anybody to get to ask that question ever again. I don’t, you know, that’s so years later. I sold that home at 750. So, it costs me 500 grand basically to keep that house and when I do it again in a heartbeat. That’s how…
Nick Bailey  You get a dog so your dog cost you a half million.
Bruce Norris  Thank goodness.
Nick Bailey  You’re right. I’d love the nonsense that I heard four or five years ago about this millennial population, all they’re going to want to do is rent and ride. And…
Bruce Norris  Yeah.
Nick Bailey  And it’s just not true every generation has come through. And it’s so important to own a home. And it’s not just because of the feeling that it gives you in the accomplishment. But let’s look at just, just the net worth that the average homeowner in the US his net worth is 200,000, the average renter in the US his net worth is 6000.
Bruce Norris  I was gonna say it’s like 5…
Nick Bailey  Yeah, five or 6000. I was I interviewed Ben Carson last year, and he was talking about that. And so it’s really twofold, one, about how it makes you feel and yes, it’s yours. And, and the other part is, it’s a really sound financial investment. Overall,
Bruce Norris  I think it makes you feel and this was important for me, because I just said it I felt like a man. Well, I just had a meeting with the president of Fannie Mae, Doug Duncan invited me to Washington DC I flew in for we had about an hour and a half meeting with the President. And here was my suggestion and unfortunately, it was the same suggestion I made 10 years ago, I said, you know, what we need you, real estate as a chance to reach across the aisle and get people to participate in something that’s very important for makes them feel like part of the system. It’s called homeownership, I think we needed to make a national nothing down loan. And I said, it sounds dangerous. But all you have to do is put in a couple of things. years ago, matter of fact, how I bought my first house was subject to, I didn’t have to qualify for the loan, there was a 21 grand loan sitting there a guy that qualified for decided he wanted to go somewhere else, I got to walk in and fill out one sheet of paper, and 45 bucks into VA, and I took it over without qualifying. So create a loan. That is nothing down qualify him as you will like maybe through the VA process to where they have very good success rate. But you’re going to have failure. So, let’s assume we’re going to have failures, make it one foreclosure process. This is only one foreclosure process, not per state. And the opening bid is the late payment has nothing to do with the principal, you’re going to have two and a half percent loans out there. And you’re going to have an opening bid of what six months payments, what would that be under 10 grand? Not going to have foreclosures? And that’s how you have price damage. So, what you would do and if they did this 10 years ago, can you imagine the wealth effect for people had they bought things in 2010? Okay, mission accomplished. And you also would have had real estate reach across in a societal way and say, Hey, you can be part of this, these goodies that you’re feeling like you are not connected with? Well, there’s always talk about affordable housing, we have it, it’s called interest rates. That’s that’s the affordable part, you’re going to sign up and get a 30 year mortgage rate that starts with a two. And I just interviewed somebody yesterday is pretty, pretty smart economically. And that’s why I interviewed him. He thinks we’re gonna see them and we’re the ones. Well, that’s affordable housing. So, you don’t have to cost yourself 200 grand to build a house at less than cost, just have a nothing down loan program, that if it fails, and it’s going to, it has a chance to move forward to a new buyer without an REO, because since you’re in the distressed business, that’s where price damage happens when the, when the inventory is dominated by REOs and short sales, when it’s a half to sell, can corporate owner that all of a sudden starts dictating the market price. And this is, you know, again, being in the flipping business. We were buying houses in 2010, where the price was at de escalating at 3% a month.
Nick Bailey  I remember, yeah.
Bruce Norris  But the problem was, we’d say we’d fix up the house perfectly. Water for 70 grand put in 20 had it sold, put it up for sale for 120 grand, 25 offers the first day appraisal comes in at 90 because there were no comps of perfectly fixed houses. And so, it was it was kind of crazy that you couldn’t you, couldn’t even get a below replacement cost yes answer for the, for the sale. But at any rate. What do you think about the nothing down loan product prospect?
Nick Bailey  Yeah, I think it’s interesting. I mean, you might have a lot of folks say that nothing down and no qualification is what led to subprime lending.
Bruce Norris  Yeah, don’t, don’t do the no qualification do often like VA, VA does a very good process.
Nick Bailey  Absolutely.
Bruce Norris  And I’m into charts, and there’s the safest loan over the last 100 years.
Nick Bailey  Yeah, and it’s it’s removing some of the barriers and you know, post, post recession, gosh, there was a period of time where you had to have 20% down and then it came down and now you’re starting to see you can have some of the single digits. I think for the right buyer. It works because you have a lot of people that want to be a homeowner they want to take pride in their home, and they just maybe don’t have the downpayment, but they’d rather pay a mortgage than pay rent. And in some cases, it’s less expensive, then I think you’re gonna see and have some people that say, let me play devil’s advocate on the other side and say, if there’s no skin in the game, they don’t take care of the house, they don’t care. I don’t have anything to lose if this doesn’t work out. And so, I think it’s going to be driven by the individual. But I think it’s interesting how you talk about looking at kind of the avoidance of the REO foreclosure type thing. In lieu of where pricing damage happens, I think you’re right, I think that’s, it’s a super interesting concept that I hadn’t, haven’t thought about or put into the way the term that you describe it. So it’s interesting, for sure.
Bruce Norris  Unfortunately, I’ve been talking about for 10 years. So, you can imagine if we had a program like that, that was in place for the last 10 years, how many people have gone from no equity to 50% equity or more?
Nick Bailey  Yeah, would have been a lot of tremendous wealth. And most of that was gained by investors because they knew that it would cycle and a lot of them gobbled up and and took that equity versus going to the individual homeowner. So, somebody got it just depends on who. But the one thing that you said, though, that I that can get in the way of this even more, is appraisals. And I kind of have mixed feelings on him. After you know, being someone that’s bought sold real estate, someone that’s been an agent, and I’m watching something similar, you talked about how it came in at 90, and it was less. Now we’re dealing with appraisals that are because prices are going up or coming in. And it’s then taking some people out of the market, they can’t make up the appraisal gap in cash and so they end up having to walk away. And what’s interesting about appraisals when you talk about it, and I remember, gosh, I was working in Florida at the time, prices were literally going down every day by a certain percentage. And I kept thinking what’s the point of this appraisal? I know it’s the lender wants a snapshot to look at this and protect their, their investment but it made no difference. The appraisal was only good for the day that it was given. And a week later, it was different. And so why are appraisals knocking people out of the market, when it’s only off by a percent or two but the difference in someone being able to qualify or come up with the cash gap knocks him out. I think that should be fixed.
Bruce Norris  So, in 2009, we, we had on the, on the panel at the I Survived event was a gentleman named Magdziarz. He was the, he was the president of the Appraisal Institute. And so I told him that exact example I got 25 offers at full price. He said to me, those are comps. They are, they have raised their hand in the market and said we are buying yours ‘Yeah, I can buy something without a kitchen for 75 grand but I choose yours because I see value in my appraisal world. That’s an that’s a that’s a comp.’ And all of those offers are comps and I like that. So, now we have the opposite thing. So, before the pressure was downward, now it’s upward. We just had it this is really interesting that you just raised this because this was a shock to me. The appraisals are taking in Florida now, six weeks to get an appraisal. So, we, we were going to be putting up something for sale. And I really wanted to get an opinion of value. So, we did we had a broker price opinion, which was really interesting about that. It really considered not just the comps because that, she what she did was a very thorough presentation. She said this is literally how fast the prices are moving on a two week basis. And so what she did we we literally thought we had a $515,000 house. She, she showed through a process why that was absolutely not correct that it was 615. I just couldn’t, I was an owner of that. I thought, well, gosh, that’s nice. The exact house the day after we got that BPO that we built a year ago. So, it’s exactly the same house, went on the market for 620 and sold in four hours for 100 more grand than I who am in the business thought we were going to get. So, you’re right, that appraisal could be very wrong as to what the value is right now.
Nick Bailey  Yeah, at the end of the day, I always say a house is worth what a seller is willing to sell it for what a buyer is willing to pay and granted the lender wants some level of protection that you don’t have a crazy buyer that’s out there really kind of overpaying but I think today is just a great example of we it’s supply and demand. I mean our business is pretty easy and because we have such limited supply, people are willing to pay more and so you know, I’ve always thought what’s interesting too, about appraisals, the appraiser gets a copy of the contract, they see what the selling price is and it’s amazing how the appraisal comes in and usually right on the sales.
Bruce Norris  Yeah.
Nick Bailey And so I just I think that the appraisal side and how it operates is primed for disruption.
Joey Romero  Speaking of disruption, you know, the last year that we went through realtors had to make a huge adjustment on how they showed houses, you know, with all the COVID protocols has that, has that kind of is that winding down? Or is it something that came about in the, in the COVID era that sticking and is going to be an innovation that is going to be valuable?
Nick Bailey  I love that, because that’s one question. One of the number one questions I get, well, what I get, are we in a bubble, the second one I get is post pandemic, what’s here to stick? What truly changed our industry, and what was just a fad that we adjusted to at the time. The idea that everyone’s going to buy a house sight unseen, I said was a fad, there were some that just had to, and they did, and some still will. But the vast majority of people are buying it, to live in it, to raise their family, they want to see it, touch it, feel it, experience it, and they’re going to go see it in person. That said, here’s what I do say is going to stick. We talked about home search that you can find any any home in any market anywhere pretty quickly. But look at virtual tours and I’m not talking the kind that just have the photo reel that move automatically, you know, set to funeral music, like that’s not a virtual tour. It’s the ability to truly walk through the house virtually, well, most virtual tours over 90% of them only get applied to houses over 4000 square feet and over a million bucks. And right now only 6% of houses on the market that are online have a virtual tour, we just got our consumer survey back two weeks ago. And 70% of consumers said they want that type of experience when they’re looking online at all price ranges. And cost and capture of these tours have been the two components that are the reason that we haven’t done it. Plus, when days on market are low, I can take a picture of the outside of the house with my iPhone, put a sign in the yard and still get five offers. But what is here to stay is I think that in all price ranges, sellers are going to demand from their agent that their house show in a better way. And so that’s going to stay people are going to be using these virtual tours. And instead of going to look at 14 houses in person, they’re going to use these virtual tours and they’re going to narrow it down and go look at five instead. It’s gonna make the agent more efficient, the consumer is going to enjoy their home search better. And so I think as average days on market starts to increase, which it already is and will continue to slowly you’re going to see virtual tours like that on the front end of home search at the forefront on almost every listing.
Bruce Norris  Probably a good and close to run out of time. I’m just curious. I for one was really shocked at the, the aggressive price increases after April and the volume of sales I, that I didn’t anticipate there was just a lot of people that were you just going okay, Wow, what’s going to happen? And what was interesting because I pay attention to charts a lot. What ultimately ended up happening, you had all kinds of buyers come off the sidelines. And it was met with a whole other group of people that took their listings completely off the market. So, basically in California, volume went up maybe 25%. But it landed on 50% of the inventory. So, you had you had the mindset of I have to buy something landing on half of the inventory. And now and now in every city, every county, you can basically count the number of like listing in days inside of a week. That’s, that’s the supply and the demand is like you know, everything is like I get 20 offers that type of thing. So, I guess my question is you just say that’s growing some, but I’m thinking there’s a couple of things that are in place that are sort of going to take inventory more permanently off the market the ability to refi a 2% something probably means yeah, I’ll just stay and during that stretch of the Coronavirus where we stayed home. There were so many people looked around and said you know what? I’m going to build an office or add a room or something like that they made it in the home they might have wanted to move to and now they have it.
Nick Bailey  Yeah, the what we saw is first time homebuyer activity did increase a little bit because of interest rates. But what really drove the market, I believe we shoved about 700,000 extra transactions through the funnel last year. And when I looked at the data, it was all driven by the first and second time move up buyer. Even just as recent as two months ago, I saw a survey that 78% of homeowners have selling, possibly selling on their minds. Now, it doesn’t mean that nearly 80% of every homeowner is going to put a for sale sign in the yard. But going back to our consumer data, number one feature that people want and have wanted over this last year, backyard a number two was home office, right and so the idea of having flexibility of living where you want and being able to work for who you want, has created the idea of I need some more square footage, and families realize they didn’t all like hanging out 24/7 in the same room. They wanted to get away from each other a little bit. So, they wanted a little bit more room. And it afforded people the ability to do it. So, isn’t it interesting that there were articles 10, 15 years ago, you probably recall, the McMansions were going away and it was all urban and people were, you know, going into different size homes. Well, now the McMansion it was the biggest seller during the pandemic, and people going into square footage. But what’s interesting is when there’s a lot on the market, people want move in ready, I think then the next big wave, of course, new constructions not coming out of the ground fast enough with labor and lumber costs, But I think the next five to seven years of renovation work is going to be off the charts. Because people are walking in saying that kitchens 10 years old, I don’t care, there’s nothing on the market, we’ll buy it and we’ll worry about fixing it later. Let’s just paint the cabinets white for now som it looks a little fresh. But I think home renovations are forecasted to be higher than we’ve ever seen.
Bruce Norris  That makes perfect sense. It’s hard to build where you know, we’re building homes in Florida. And everything’s a bit of a challenge, including the labor pool of people that are doing your permit processing, and on and on. I mean, it just takes you way longer than it used to. So, it’s hard to have a bunch of inventory show up when the process is taking a lot longer.
Nick Bailey  Yeah, it is. And people I did an interview with NBC last month, and there was some data that came out may like new house, new home starts had dropped by nine and a half percent from the previous month. And not one forecaster could see that coming. But permits were up point 3%. And so, my argument was it’s not that housing starts are declined it oh my gosh, that’s going to crash and fall apart. You’re just delayed. And National Home Builders Association surveyed builders last year and 72% of the world worried about labor. And so I don’t believe that it’s a downturn of new construction. I believe it’s a delay of new construction.
Bruce Norris  Oh, absolutely. No, that’s the the mood of a builder has to be pretty happy. And it’s not euphoric and it’s the right buyer. You know, that’s the big difference too. In the 2005 market, you had investors buying 10 homes with nothing down? Because they thought, yeah, it’s gonna go up, you know, 50%, and I’ll be rich and that’s, so when you had foreclosures in Florida, by the way, a great many of those were California investors about 10 at a time. And that was they lost them all, not just one.
Nick Bailey  Yeah. And there was a point at which I think it was nearly 30% of transactions in Florida were Canadian buyers, that were coming down for investment. So, a lot of people lost, it didn’t see that it was gonna crash. None of us saw the magnitude of it. But I think the one difference that we’re going to see here is we’re starting to see price reductions in some markets now, which to me are the leading indicator, we’re starting to see days on market go from seven to maybe 12, or 13. And so, we’re getting some of that stuff through the funnel. And I don’t think it’s a bad thing that if we got a little more inventory, and maybe some buyers had a chance. You know, it’s estimated that in terms of rates, you’d mentioned, the one gentleman you interviewed, so there may go down to one, I think they’re going to just sit and bump along the bottom, all through next year. So, I think it’s going to still be pretty favorable for a lot of people this year, the remainder of this year and all of next.
Bruce Norris  Absolutely. Well Nick, I’ve enjoyed this discussion very, very much. Congratulations on your new position and have yourself a great year.
Nick Bailey  You know, when you’re in real estate and passionate like we are about it, I could sit and talk all day about this. So, thanks. Yeah, thanks for having me. And I look forward to seeing you next time.
Joey Romero  I want to tell you about some upcoming events with The Norris Group. You’re not gonna want to miss Bruce’s third quarter market update and forecast on Saturday, August 14 at 9am. AI, Artificial Inflation, real estate in the stimulus economy. This is only available through VIP subscription. So, if you’re not a subscriber please give me a call at 951-823-8266 or shoot me an email at Joey@thenorrisgroup.com. And finally on August 27, we will be back in Florida for our fifth boot camp. We only have a few seats left. So if you’ve been thinking about investing out of state this is a great opportunity to invest alongside Bruce and The Norris Group. For more information please give me a call at 951-823-8266 or email me at Joey@thenorrisgroup.com.
Narrator  For more information on hard money, loans and upcoming events with The Norris Group, check out thenorrisgroup.com. For information on passive investing with trust deeds, visit tngtrustdeeds.com.
Aaron Norris  The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669. For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.