Trisha Ocona Francis | Talks at Google

Good afternoon. Welcome everyone. My name is Trisha Ocona Francis. I’m a real estate
professional, and today we’re going to talk about
real estate home buying and investing
the right way. There are so many
scams out there. So many of us want to
get into homeownership, or if we’re already a homeowner,
we want to go into investing. And we want to make sure
that we do it right. So how do we do it right? So before we start,
I’m just going to tell you a little bit about
myself, and why I do what I do, and I know what I know. I am the broker and owner of
Real Estate Ocona in New York City. My office is downtown
Manhattan in Cadman Plaza. I’ve been a broker
for over 16 years. I am also licensed in
New Jersey, Georgia, and Pennsylvania. I just came from a Sotheby’s
in Alpine, New Jersey, which is rated the wealthiest
town in the country. Medgar Evers College,
I teach real estate at Medgar Evers College. I’m an educator. That’s where a lot
of my passion is– to educate a lot of people who
don’t real estate real estate. I remember taking my course with
my mom many, many years ago, and she said, if I knew
then what I knew now, I wouldn’t have
bought her a house. I would have bought a
house, but I wouldn’t have bought her a house. Because she realized
her attorney robbed her, the real estate
agent robbed her, the mortgage person robbed
her, because after learning all the education
as she did, she realized she did not go
about it the right way. I also have spoken on
Hot 97, Street Soldiers with Lisa Evers. I’ve been interviewed
on Here and Now with Sandra Bookman on ABC7. I’ve spoken across the country
at the National Association of Realtors
conventions in Orlando, in San Francisco,
all over the country. I am also an appointed member
of the New York State Department of State Real Estate
Board, which means I’m appointed by the governor. There are five brokers
in the whole state of New York that makes the rules
and regulations of New York State real estate. And I am one of them. We meet four times
a year in Albany, and we just create all
the rules that real estate agents must follow. I write for the Huffington
Post business section. I do the “YPN Lounge,”
just quite a few things. But this is just helps me
give you better education. Between me teaching and
sitting on the board, you know, I just try to get
all the information to give the people
what they really need to know about real estate. Why? Why do I do this? Because I believe that I need to
turn to renters into homeowners and homeowners into investors. Many of you may be renters. How do you become a homeowner? How do you stop paying that
rent and become a homeowner? And if you are a
homeowner, how do you start getting more– more
assets, and more property, and turn into investors? So my goal is to help you
achieve your real estate goal. Whatever your personal
real estate goal is, you may want to rent
forever, but also how do you rent properly? You may want to buy
your first home. How do you buy your first home? You may want to invest. How do you invest? And that’s my goal, helping you
achieve your real estate goals. First of all, before we
get into the worksheet, I just want to go into
the value of real estate. Some people don’t
really understand how valuable real estate is. Anyone who gets any type of
money, the first thing they do is they invest it
in real estate, because the value
always goes up. So we have to think every
single thing is real estate. This building is real estate–
millions of dollars, right? Longstanding asset. A home has been around forever. It’s an investment, and
it’s a legacy builder. Many people get into
real estate because they want to have something to
leave off for their family. Everyone with wealth
goes into real estate. Who profits off of your home? You or someone else? How to profit? Appreciation. Why do people get
into real estate? And how to get into real estate. These are some of the
things I’m going to cover. First of all, what
is real estate? It may sound so simple, but I’ve
been teaching for over eight years, and many people come
into my class, some people who own over seven homes and
still don’t understand what real estate really is. It’s land plus anything that’s
permanently attached to it, including buildings,
sheds, and other items attached to the structure. That is the legal definition
of what real estate is. And as simple as this may sound,
every single thing around us is in real estate. So why aren’t more of us
investing into real estate? The parking lot, the school,
the place of worship, the building, the house, the
court– all of these things are real estate, and
all of these things are worth something. Think about it. These people, they’re at home. They’re working. They’re paying bills. They go shopping, right? They’re spending their
money in shopping. Then they, the people
that are shopping– what I’m trying to
get to is everything revolves around real estate. Once these people– if
these people don’t shop, then the store clerk
doesn’t have a job. The truck driver cannot
put stuff on the truck. These people cannot
work in the factory. This lady cannot
work in her office. And the whole
point of the matter is, what is the first bill
that we pay every month? Housing. That’s the first bill
that we pay every month. And if we cannot afford
our housing bill, then this whole
cycle cannot happen. If we cannot afford
to pay our rent, or afford to pay our mortgage,
we don’t go shopping. And then this whole
cycle doesn’t happen. So it’s very important that
whether you’re renting, you own, or you’re
investing, that you’re doing it properly so you don’t
cause any hardship later on. Real estate is the number
one asset, number one asset across the ball. Real estate has
always been around. Just think about it. This particular home
was around in 1930. It cost maybe $35,000. 1950, $70,000. 1970, $110,000. 1990, $170,000. 2010, $300,000. Right? Every year, it goes
up and up and up. In the year 2020, which product
do think will hold its value or appreciate for someone
who buys it today? Right? We have a lot of young
kids buying sneakers. We have people buying cars. But the only thing that’s
going to go up in value is the property. So the question is, do you
profit off of real estate, or does someone else
profit off of you? Are you paying rent, or
are you collecting rent? Or are you paying a mortgage? What are three ways that you
profit off of real estate? Appreciation. Cash flow. And flipping. Appreciation, we spoke about
that house a while ago. Every single year if this
person bought it in the family since 1920, over 90
years, it would have appreciated this much money. Cash flow, if you have
an investment property, let’s say you have a
parking space, cell phone tower, laundry, income,
this is how much you’re netting monthly. And this is how you how
much you can net annually on an investment property. And then some
people do flipping. That’s another form
of real estate, right? They buy low. They fix it up, and
they sell it higher. The profit off of
that house, $75,000. What are the three main
reasons that people get into real estate? Right? I’ve been teaching, like I
said, for over eight years. I’ve taught hundreds of students
who come into my classroom, and they want to get into
real estate for some reason. Passion, they just love it. Free time, they have
time to do other things. And money. Money. OK. So now we’re going to get
into the real learning. How do you buy your property? How do you invest your
property without the scams, without people trying
to rip you off. Real estate is not easy. Real estate is like a
whole different language. I’m in real estate, and if I
ever go to a real estate event, you hear a totally
different language. And if you don’t
understand the language, people just tell you whatever. I get phone calls every
single day of people who bought homes and
were scammed in some way because they didn’t
have the knowledge, and they just trusted
the person they were dealing with, whether
their real estate agent, their mortgage person,
even their attorney. So the more you
know, the better you are when you go
into the situation. Me, personally, I like
to educate the people before I help them. So these are some of
the things that we’re going to learn
throughout this process. You have a paper. Now this paper is for you. It’s for you to sit down
and take notes for yourself and decide within
yourself if you’re ready to buy, when
do you want to buy, and what questions you need to
ask yourself before you even think about buying. Now the average real estate
agent that you call up is not going to do this. But I think it’s important
that if more people do this, we will have less foreclosures. Do you know right now in New
York City there are over 30,000 people facing foreclosure. 30,000 people. Why? Because they got
into real estate, and they didn’t plan properly,
they weren’t educated, and they weren’t guided right. So it’s important that
you know these things. First, your credit. Many of you may already
know what your credit is, and that means, you know what? You’re one step ahead of it. But for those of you who do
not– or even if you do– just think about it. What do I think my credit is? Sometimes we think our credit
is a totally different number than what it really is. Sometimes it’s higher than we
think, and it’s much lower, or sometimes we
think it’s so bad, and really it’s not that bad. So think to yourself, what
do I think my credit is? Also, I want you to look
at your long-term debt. What is your long-term debt? Because when you go to get
a loan, a mortgage loan, they’re going to ask
you these questions. They are going to look at these
things on your credit report. Long-term debt. Credit cards. I’m sorry, not credit
cards, car notes. Do you have a car note? If you’re thinking
about buying, hold off on buying that car
for a little bit. But if you have one on there,
you need to calculate that. Because they’re going to look
at your income to your debt and see how much money
you have available. Because at the end of the
month, they want to know, can you pay this loan? Or are you going to
pay this car note? A lot of people will
pay the car note first, because they don’t want the
repo man to come for the car. But the bank is not going
to put you in a loan that you can’t afford,
or you hope not. Also, do you have
any other mortgages? And then student loans– now
student loans don’t disqualify you from buying a
house, but you want to look at your student loans. You want– they want to
make sure that, you know, student loans can’t go away. So if they’re giving
you a loan, they want to make sure that you can
cover the loan and the mortgage payment at the same time. OK? Credit cards. Do you have any credit cards? Nobody says you have to pay
off all your credit cards, but you want to make sure
that they’re on time, and you want to make sure that
the balance is not as high. So if your credit card
is a $5,000 credit card, you don’t want to be at $4,000. You want to be below, below
half, and also on time. Negative history. Use this form to write
down any negative history you may have on your credit. Because that is something
that’s not going to go away. When you try to go to
a bank and get a loan, they’re going to
look at these things, and they’re going to ask
you, what’s up with this? What’s up with that? Make sure it’s not in judgment. Call up those companies. A lot of people go to these
credit repair companies. I don’t advise it. A lot of these credit repair
companies, they’re scams. Unless you go to a nonprofit
agency, don’t do it. They’re doing–
they’re not doing nothing you can’t do yourself. Basically, when you go
to the credit report, you can go and dispute
these credit ratings. OK? Sometimes you just
have to pay it off. Sometimes, if you
can’t pay it off fully, you could do a settlement. But a settlement
will show, you know, it won’t be as great
as paying it off because it shows
that you settled, but at least it’s off
your credit as well. All I’m saying to you is, you
have to look at these things before you start to go buy
a house because the loan officer will look at them. You also may not know that maybe
somebody is using your credit that you didn’t know. I spoke to this
gentleman, and his father, who has the same name as
him, was using his credit. Yeah. So he had no idea,
because he had not checked his credit report. So now he’s coming
to go buy a house, and he’s seeing this credit. I know another guy had
not used his credit, had not checked this credit, saw
a student loan on his credit. I couldn’t believe it. I could not believe he had a
student loan on his credit. And he didn’t go to college. So you need to check and make
sure that those things that are on your credit. Also, things on
your credit can not be there for longer than seven
years once they’re finished. So if somebody is keeping
something on your credit, you need to dispute it. Disputing it is free. It takes the–
just take the time. The websites are
so much easier now. You can just put in
what the issue is. And by law– I’m not a
lawyer– but by law, they have to remove it off your
credit for a certain amount of days while they
contact the company and find out if
it’s valid or not. After you write down what
you think your credit is, find out what your
credit really is now. Right? Credit scores go
between 500 and 800. Obviously 500 is
really, really bad. 800 is really, really good. You have 800, you can
walk into any bank and say, give me what I want. OK? The three major credit companies
are Transunion, Equifax, and Experian, and if you go
to, you can get a free credit
report every single year. What I personally do is I
subscribe to one of these, and it gives me an alert
every time my credit goes up, every time my credit goes down,
anytime someone runs my credit. Anything that happens to
my credit, I get a notice. And I can get my credit
report any time I want. So for a couple bucks a month
you can get one of those. AUDIENCE: Can we ask questions? TRISHA OCONA FRANCIS: Yes. Absolutely. AUDIENCE: I have a
couple of credit cards I don’t really use. I use them once every few months
just so that they stay active. They don’t go dormant. But if, given that that I
have a lot of credit that is available to me
that I’m not using, is that actually
hurting my credit score, or is that helping? TRISHA OCONA FRANCIS: It can. A loan officer will look
at that, and it can hurt. Because they can give you a
loan today for a house for like, let’s say, $800,000. And their fear is that the
next day you max it out with furniture or whatever. And now you’ve put
yourself in debt that’s going to hurt you
from paying your loan. So yes, it can
hurt a little bit. But until you are really ready,
you don’t have to close it. Because when you speak
to a loan officer, as long as they’re
paid and everything, loan officer will probably
just say, hey close, this one. Close that one. Close that one, And
that’s not a big deal. AUDIENCE: Thanks. TRISHA OCONA FRANCIS:
You’re welcome. OK. Oh. Your money. You will need money
to buy a house, right? I know sometimes you can go
to a car, a car dealership, and they say, you know,
0% down, 0% financing. No. When you buy a house,
you will need money. So this is something on
the worksheet for you to look at yourself and say, how
much money do I have saved up? How much money can I
put towards my house? You may have a 401(k)
plan, a retirement plan. Well, many people don’t
know, with your 401(k) plan, you’re allowed to take $10,000
out your retirement money without penalty for the
purchase of a house. Yes? AUDIENCE: Is it
possible to borrow money from your own 401(k)? TRISHA OCONA FRANCIS: You can. Everyone is different. So you have to check
with your particular one, but I do know you can take
$10,000 without penalty, but it has to be for
the purchase of a home. OK? AUDIENCE: It has to be for the– TRISHA OCONA
FRANCIS: The $10,000? The $10,000 has to be for
the purchase of a home. Gifts. Yes, sorry. Go a– AUDIENCE: Is the $10,000, is
that per– so a couple buying together, is that per person? Or is– TRISHA OCONA FRANCIS: I’ve
seen people do it separately. I think it’s per
person’s 401(k). Yes? AUDIENCE: That $10k, is that
for your primary residency? Can you use it for like
an investment property? TRISHA OCONA FRANCIS: Primary. But like I said, check with
your– because everyone, I’ve seen so many different
401(k)s, and you know, they call it the
401(3) sometimes, have different provisions,
so check with that one. Gifts. Maybe you just got married,
and your parents are giving you money to buy a house. I know a couple, and
the husband’s father had silver coins. And he traded them in,
and he took the money, and he split it
between his two sons, and that’s what they
used to buy the house. Here’s the thing with gifts. They’re going to trace where
that person got the money from. OK? Because they want to avoid
any money laundering. So if someone is giving
you a gift, a lot of times they’re going to have to sign an
affidavit that this was a gift also, that it was not a loan. The bank wants to
make sure that you’re not– they’re not
giving you this money and then you have to pay it
back on top of that loan. So if it is a
gift, they’re going to have to say it’s a gift. And if there’s a gift, it’s
going to go into your account, and they’re going to have to
trace where that person got it from. Because the IRS wants
all that reported. And if you have any other money,
if you have anything else. Yes? AUDIENCE: So if it’s a gift, do
you have to pay different tax? TRISHA OCONA FRANCIS: It depends
on, I mean, you’re allowed, depending on who
you’re getting it from– I’m not an
accountant– but it depends on who you’re getting
it from, and how much it is. Right? But if they do give you,
you have– they’re basically just checking to make
sure that this wasn’t drug money under the mattress. So but other than that, you
know, if it’s like $10,000, you know, it could be
from a parent, right? So a parent is allowed to give
you a certain amount of gifts. But also, my disclaimer is
check with your accountant. Any other money? I know a new couple
who was getting ready, they were selling their car
so they could have more money to buy their house. OK? How much money will
you really need? Well, it depends. If you’re going an FHA
first time homebuyer loan– your first
time buying a home, you’re getting an FHA
loan– you need 3 and 1/2%. 3 and 1/2% of whatever
the loan is, that’s what you’re going to
need for the house. OK? Conventional or, if you’re a
vet, you can get a VA loan. These are the type of
loans you should explore with the mortgage
person that you’re dealing with to see
what rates they have, what programs they have. There are many different
types of loans. But FHA, just to note, is a
first time homebuyer loan– 3 and 1/2%. You also need closing costs. Closing costs is going to
pay for the filing fees. It’s going to pay
for your attorney. Closing cost is anywhere
between 4% to 6% of the loan. That, give or take, if
you want to calculate how much money you will need. So whatever the purchase
price of your home, 3 and 1/2% of that will be your down
payment, about 4% to 6% of that will be for your closing costs. How much is the value of
your home is going to be? That depends on what
the bank qualifies you for based on your income,
based on your debt. OK? You also have
something called PMI. PMI is, if you purchase a
home, and you put down– now the average for
FHA is 3 and 1/2%– but if you put down less than
20%, which 3 and 1/2% is, you are considered a risk to
the bank, which means that, God forbid you
were to foreclose, there’s a short margin
to sell the home back. If you put down less
than 20% of the loan, the bank will charge you PMI. That is an insurance to
protect them in case you default on your loan. But, with all this
training, you won’t do that. OK? Owner occupant
versus investment, that’s something else. If you get a first
time homebuyer loan, you have to live there. It’s to help people
become homeowners, so you have to live there. There’s also loans
for investors. So if you have a home already,
you don’t plan to live there, and this is just going
to be an investment home, you can do that. I also want to take
a second to let you understand
what’s the difference between a banker and a broker. I learned this the hard way. When you go for a loan,
find out from the person, are you a banker? Or are you a broker? A banker is the
person with the money. They’re the one
lending you directly. A broker is the one
shopping the loan for you. So what does that mean? They come with a cost. Why would someone go to
a broker versus a banker? Maybe your income
is not that high. Maybe your credit
is not that great. So the broker gathers
all your information and shops it out
to different banks. Believe it or not,
you are paying that broker for that service. So your closing cost
is going to be high. I’ve seen people pay up
to $20,000 for that broker in their closing
costs and not realize they were paying that broker
why their closing costs were so high. A banker would be going up to
Chase, Bank of America, Wells Fargo, one of these banks. That would be a banker. OK? A broker would be
another company who’s shopping it for you. Yes? AUDIENCE: 3 and 1/2% and 20%. I don’t understand. TRISHA OCONA FRANCIS: OK. So an FHA loan is a first
time homebuyer loan. And in order as an incentive to
become a first time homebuyer, you only have to put down
3 and 1/2% of the loan as your down payment, as
your part of the investment. Why the bank makes
you do an investment? Because, you know,
if someone is asking you to go into business with
them, and they’re saying, hey, I can I borrow $90 grand? You’re going to say, well, how
much money are you putting up? So that’s why the bank wants
you to put up something. So you’re putting up 3 and 1/2%. Now, you’re still considered
a risk because you only put up 3 and 1/2%. If you put up 20%,
you’re no longer a risk. Because if you
default on the loan, and the bank has to sell it
at auction in a foreclosure, they still have this 20% cushion
that they can make it back with. 3 and 1/2%, anything
could happen. The market could drop, the
property could need repairs, and they may go underwater. So that’s why, if you
put down less than 20%, they make you pay
PMI– Premium Mortgage Insurance– to cover
them, and protect them, in case you default. Yes? AUDIENCE: So then in the case
you’re a first housebuyer, and you put 20%, then you don’t
need to pay the PMI anymore? TRISHA OCONA FRANCIS: Correct. Now it depends. They changed the law. So now, on an FHA loan, the PMI
is for the life of the loan. It never was like that. On a conventional
loan, so in order– if you get an FHA loan, if you
want to get out of the PMI– because PMI could be like $450
a month added to your loan– if you want to get
out of the PMI, you would have to
refinance out the loan. On conventional,
once you get 20% in equity, which means either
you’ve paid down your mortgage, or the value of your house has
gone up, you can call them up and say, I’m by it, I’m
20%, take off my PMI. But you have to call them,
because they won’t take it off on theirself. OK? Yes. AUDIENCE: Is there
any way for a tenant to go to bank for a
mortgage, than to go to broker for mortgage? TRISHA OCONA
FRANCIS: Absolutely. Like I said, the
only reason people go to a broker is because they
don’t have that much income, or their credit
is not that great. But you have to pay
them for their service. Whereas a banker, you’re going
directly to the person who has, the entity that has the money. So what’s a good way to
do it is, a lot of times, you know, you’re shopping
and people run your credit. Every time you run your
credit, your credit rating goes a little bit down. They do understand
that you’re shopping, so they give you a little way. But you want to make sure
that that one or two points don’t really hurt you. Go to,
get a copy of your credit report, do the tasks that
I gave you, and go to them and say, listen, this is my
credit, this is my score, what can you do for me? Do not pull my credit. Because they pull your credit,
it would be a hard pull, and you can lose a point or
two every time somebody pulls your credit. Because what it looks like is
you’re just shopping around for credit, credit, credit. Yes? AUDIENCE: Is there
any online resource where I can compare [? ten ?]
bank rates before actually going to go see them? TRISHA OCONA FRANCIS:
What their rates are? Yeah. There’s a, yeah,
there’s a website like– ABBY ONTODD: AUDIENCE: And they don’t
know my credit, I just check. ABBY ONTODD: No, it just
compares the rates of credit, you know, what they’re
offering for mortgages. TRISHA OCONA FRANCIS: That’s
Abby Ontodd, my assistant. OK. So here, yes? AUDIENCE: What do you
think about LendingTree? TRISHA OCONA FRANCIS: I
don’t really, you know, I don’t endorse any
particular bank. Right? I don’t– I’ve seen some, you
know, do good, some do bad. I think what you just need to do
is just, at the end of the day, make sure that they are
fulfilling what you need. Right? The interest rate, make sure
the interest rate is something you’re comfortable with. Make sure the down payment, make
sure all those things stand. And then make sure you have
a really good real estate agent and a real
estate attorney who is going to be with you
throughout the process to make sure that
the i’s are dotted, and the t’s are crossed. OK. These are questions
to ask yourself also when you’re starting to buy. A lot of people don’t do
this until the last minute. Who do I want to buy with? You’ve got to be careful
who you want to buy with. Because, you know, buying with
someone is like a marriage. Once you’re in, you’re in. And in order to get out, either
through separation– or even death– you have to figure
out, you have to plan ahead, is this somebody I
want to buy with? OK? How soon do I want to buy? I spoke to a lady the
other day, and she said she’s been looking
for a house for a year. And she’s not ready to buy then. Because the market is changing. The value of a home last year
is different from the value of a home this year. So if you do want to buy, you
need to look at when is it do I want to buy? You may not be ready
to buy now, but that’s why this, this handout
is so important. Because it’s preparing you
for when you do want to buy. You don’t want to wake
up one day and say, you know what, I’m
ready to buy, and then you missed all these steps. So it’s important to start with
these steps before you say, I’m going to buy. Right? You’re going to need to take
some serious steps in order to start purchasing your home. If you don’t have enough saved,
you’re going to have to save. Right? You’re going to
have to, you know, pull back on the
movies, or the clothes, or whatever you want to do. You’re going to have
to make commitments. And then, when you
purchase, you’re going to have commitments. Some people don’t know that
when you purchase a home, not only do you have the
home loan you’ve got to pay, you have interest on the loan. It’s called PITI–
Principal, Interest, Taxes, and Insurance– you
have to pay on the home. Plus you have utilities. New York City, we
have water as well. You have property maintenance. These are all
things that are not factored in when you’re renting. So you have to make sure that
you’re able to do those things. Another thing that when you
get a loan what they look for, they look that you
have a steady income. You all have great jobs. That’s what they’re looking for. Because they want
to know that you are going to be consistent
with paying this loan. If you have any
degrees, they want to look at that as well, right? God forbid you
lose your job, they know that you’re employable. These are things that
they want to look at. They’re going to want to
look at your tax returns, two to three years out. Right? Let’s say you weren’t here
before, you weren’t here six months ago, but you were
working somewhere else doing the same
thing that you do. That’s OK. Because they want
to know that you’re not jumping around from
industry to industry, that you’re in
the same industry. Maybe you’ve changed
companies, but you’re in the same industry, which
means that you’re consistent. Now, question. In a real estate transaction,
who does the real estate agent work for? Does anyone know
the answer to this? Yes? AUDIENCE: It depends. If you’re talking about the
buyer or seller’s agent. TRISHA OCONA FRANCIS: Right. Hear what he said? Depends on who
you’re talking about. Most people think
that the real estate agent works for the seller. Wrong. The real estate agent
works for whoever is hired. So someone can be a buyer,
and I can work for that buyer. And I’m working for that buyer,
trying to find that buyer the best house for
the cheapest price. Or I can work for the
seller, and at that point, I’m helping the seller sell
their home for the most money. Whoever you work for doesn’t
determine who pays you. That’s a little
secret that I’m going to tell you that real estate
agents won’t tell you. Yes? AUDIENCE: My question
is on the seller. An agent gets paid like
a percentage of the deal. TRISHA OCONA FRANCIS: Yes. AUDIENCE: So what’s the
incentive for the buyer’s agent to find the cheaper, the lower
price, because their percentage would be lower as well. TRISHA OCONA FRANCIS:
Good question. They don’t have an incentive. Right? His question is,
if a real estate agent is paid by
commission, why would they help a buyer find
the cheapest house? Most of the time they won’t. I would, because I do this
because I like doing this. But my whole job is, like I
told you from the beginning, is to help people achieve
their real estate goals. Right? And if your real estate
goal is to get the best house at the cheapest
price negotiated properly, then that’s what
I’m going to do. But you’re absolutely right. Most real estate agents will not
try to find the cheapest house, because they know that
the more expensive they help you buy
this house for, the bigger their
commission will be. Absolutely. OK? So the person, the one
who hired agent, yes? AUDIENCE: So just a follow-up
to that question too, so what’s the
incentive for me then, as a buyer, when I see
a property listing. Why don’t I just go
directly to that property, go to that real estate
agent and say, we have two ways we could do this. I can bring in my
real estate agent and you can half
your commission, or I can work with you,
and you can get double what you’re going to get. Why don’t we play nice? Like, do people do that? TRISHA OCONA
FRANCIS: We’re going to go right into that right now. The seller’s agent. When you go into these
real estate websites, and you see these houses for
sale, and you click that house, and you call up that real
estate agent, guess what? That real estate agent is
working for the seller. So that term that the police
says, anything you say or do can and will be
held against you, is exactly what’s happening. Any single thing you
tell that agent who is working for that seller,
they will use against you. So you tell them you
just won the lotto. What you think
they’re going to do? They’re going to tell the
seller, you won the lotto. You tell them that you
are approved for $500,000. This house that you
want is $450,000. You put in the
offer for $420,000. They’re going to
tell the seller, he’s approved for $500,000. He can come up. They’re not working for you. They’re working
for their seller. Now a buyer’s agent. So just to go back,
what are they doing? When you’re working
for the seller, you’re helping that
seller market their house, show their house, find
a qualified buyer, approve the buyers, right? That’s what you’re trying to do. Where are you
working for a buyer, we’re helping you
shop for a house, you may find houses you
like and send to the agent. The agent is going to
research that house. The agent is going to find out
any secrets about that house. What if the house
is in foreclosure? What if the asking
price of that house is $799,000, but that person
is in foreclosure for $500,000 and needs to be
out in two months? Do you need to offer $799,000? No. That’s what their real
estate agent’s going to do. I showed a house last year. The real estate agent who works
for the seller never showed up. I came with my client,
who were the buyers. When I opened the door, the
old woman, very sweet and nice, her husband was
sitting on the sofa. What do you think she
told me the whole way? My knees, my knees, my knees. I can’t go up these
stairs any more. You like the house? You want to buy the house? How much you want to
buy the house for? Can you buy the house? Please buy the house. I turned to my clients and said,
we can offer whatever you want. They gotta go. Because I was working
for my buyer, right? Because they were telling
all the information. And that’s why, when you
have somebody working for the seller, and you have
somebody working for the buyer, it’s almost like two lawyers. Listen, I tell my client,
don’t say a thing. Let me talk. I was showing a house, a condo,
the other day, and the agent asked my client,
so what do you do? I said, talk to me. And then he says, yeah, so
the bathroom is up there, he says, could you
please tell your client that the bathroom is
up– like, you know, he made a joke about
it the whole time. But listen, I’m very
serious about that. Talk to me. Because anything you
say will be used– and a lot of real estate
agents don’t know that. Because, matter of fact, when
we’re walking into the condo, he collected his client–
the seller, I guess, doesn’t live there anymore–
and he collected the mail. And he said, oh man, my
client got to go to court. And we’re looking at him like,
your client got to go to court? Great. You just gave me a
piece of information. Now I have to research
it and find out why your client has to go to court. And maybe now I don’t
have to offer you what you are asking because
your client has to go to court. Yes? AUDIENCE: I don’t know if you’re
going to get into this later, but like for properties that
are like going into foreclosure, like what is the
process for that? TRISHA OCONA FRANCIS:
I have it at the end if we have extra time. But I kept it as a backup. Yes? AUDIENCE: Is it a good
idea to get pre-approvals at multiple price points, then? TRISHA OCONA
FRANCIS: Pre approval at multiple price points. You should get a pre-approval
at what you could afford. Because I’ve seen
loan officers do that. How much do you
want the loan for? How much you want the loan for? How much can they afford? So do it at what– now
if they approve you for $800,000, that doesn’t
mean you could go to $800,000. I’m going to get to
that in a few minutes. Go at what you feel
you can afford. You had a question. Yes? AUDIENCE: So there’s a bit
of physical game there. Let’s say I come in
with an all cash offer. That’s something ideally I’d
want to disclose to the seller. Because they know they can trust
I’m not going to, you know, fail on that. But at the same time, it’s kind
of telling them something too. How do you balance, you
know, showing yourself as a worthy– somebody who
can afford to actually go through with the purchase–
yet without saying, you know, about– without disclosing that
there’s little, how can I say? That you’ve got
a limited budget. TRISHA OCONA FRANCIS: One,
you need a representative to do that for you. Because the other agents know
how to pick– like I know, depending on what side, like
I can work on either side. I can work on the
seller’s side, or I can work on the buyer’s side. And depending on the
side I’m working on, I know how to pick
and ask the questions. AUDIENCE: How would you
present that situation? Do you say, I’ve got a buyer,
and he’s got an all cash offer. The seller is like, OK,
this is awesome, right? But then that also tells
them that you might be– TRISHA OCONA FRANCIS: Loaded? AUDIENCE: –able to bid higher
than you otherwise would. TRISHA OCONA
FRANCIS: Not really, because– this is what I do. If my client has a pre-approval,
or a bank statement– I had a client that had a
bank statement of $22 million on the statement. I’m not going to send
them over the $22 million. We got a statement
that shows less money. So they don’t really
see how much money you’re really working with. So this is my offer,
and then, also justify why you’re
giving this offer. So the house may
be asking $900,000, but you’re only
offering $800,000. And you’re saying, well,
I’m offering $800,000 because I’m giving all cash. All I need is a clear title. I can close in 30 days, so that
should be an incentive for you. You don’t have to wait for
someone who may not qualify. And two, listen, I need
to change the boiler. I need to change the roof. These are the reasons
why I’m offering less. So you have to justify. Now, once again, I said
you need a representative. Because the representative
knows how to talk to the person. Right? So this woman who came and
said her knees, her knees. If her representative
was there– if I was representing
her, I would have said, Mr. and Mrs. Jones,
please sit your butt down, don’t say a word. Just sit still. Right? But they didn’t do that. So now I saw what was wrong,
and I was able to use that. Or, if I go show a house, and
the real estate agent’s not there, right, they just
say whatever they want. Sometimes I’ll go up
to another real estate agent who I can tell doesn’t
have that much knowledge, and say, how much
will the owners take? So the house is asking
$500,000, and you just say, how much will
the owners take? And they’ll say, well, the
owners will take $450,000. And I’m like, who
do you work for? You’re supposed to be getting
the owners the most money. Why do they do that? Because they’re looking
for a quick, fast deal. The correct answer to say is,
the owner will take $500,000. Put in an offer. Right? If I’m working for the seller. OK. So you have buyer’s
agent, and then you have fiduciary responsibilities. So there’s an agency
disclosure form that a real estate
agent is supposed to present to you as
soon as they meet you. They’re supposed to
present this form to you. It’s not a contract. It’ll say big and
bold, not a contract. It’s if you’re
renting an apartment, or if you’re buying
a house, selling, and it’s a disclosure form. State law says
that you must, they must sign it just to prove
that they presented it to you. Because most people don’t
know who works for them. A lot of times they
think the person they call– when they
look online– is the person who works for them. You may see a real estate
agent, and one Sunday you see 10 houses with
that real estate agent. You talk about children,
you talk about family, and then that real
estate agent shows you one of their listings
with their seller. You think the
agent works for you because you spent the
whole Sunday together, when, really, still, that
agent works for the seller. So that disclosure form
completely tells you who they work for. So now you know to
keep your mouth zip, or get your own
buyer representation. How do you remember the
fiduciary responsibilities? Old car. It spells old car. This is how I teach it when
I teach it in the college. Obedience. The person– and this is for
the seller or the buyer’s agent. The person that you
hired, a real estate agent that you hire, has to
be obedient to you. Right? As long as not
discrimination, they have to be obedient and
follow, you know, whatever. If you tell them to put
in an offer for $350,000, they can’t put in an
offer for $355,000. They have to, you know,
go with what you say. Loyalty. They are loyal to you. They can’t be going
back and forth between the buyer
and the seller. Right? They owe you all that respect. Disclosure. Anything they know, they’ve
got to disclose to you. Now, when you buy
a house, if there’s something wrong with
the house, by law they must disclose that to you. They’re not allowed to sell
you a lemon without telling you it’s a lemon. That must be disclosed
automatically. But, if I’m working for
a buyer, and I find out some good juice
about the seller, I’m going to let the buyer know. That’s what they’re
supposed to do. Confidentiality– some
people don’t want. I had a client a
while ago who did not want anyone– a neighbor
was buying the house. She didn’t want anyone
to know that she was buying the house,
because she didn’t want the people on
the block to know that she was buying the house. She didn’t even want
the tenants to know she was buying the house. So confidentiality is
very, very important. You also get a lot of people’s
information sometimes. A loan officer gets your social
security number, your income, but I mean, I get a
lot of information. Right? I helped a friend of mine
and his wife buy a house. And his wife is pretty famous. And I know how much she
makes because I helped them buy their house, right? That’s confidentiality. Right? So my father would
come to me and be like, so how much was their house? I’m like, none of your business. Like you know, you
can’t tell them, because that’s
between you and them. Accountability. People are going
to give you things. They’re going to give
you maybe some documents. You have to make
sure that you’re accountable for everything,
and that you don’t turn around later and say, oh, I lost that. Could you send that
to me again, please? You want to make
sure you have that. And reasonable care means
that the real estate agent knows what
they’re doing, that they understand real estate. I always, when I
teach, I always tell my students, a lot of
people teach to pass a test. I teach you to teach
you real estate. So it’s very important that the
real estate agent you work with understands the
dynamics of real estate. So they can tell whether–
we’re not roofers, we’re not plumbers, but they
can tell that there’s a leak. Hey, you need to have
roofer check that out. Or that’s signs of termites. You need to have, you
know, somebody look at these termites. That’s what someone is supposed
to be doing as a real estate agent. OK? Also, back to the
worksheet that you have. Now, you went and got
qualified for a loan, right? This is to answer your question. They qualify you for $800,000. That comes to $5 grand a month. Am I comfortable
with that number? Just because a
bank says that you are qualified for a
certain loan does not mean you have to max it out. After you do this,
when my clients come to me with a pre-approval
from the bank, I tell them to sit down and
do a personal budget now. Look at your income. Look at your expenses. And figure out
now, personally, do you think you can
cover $5 grand a month? And if you think you can’t,
then bring it down to the number that you can. Because they loan
you all this money, it’s like you get a
credit card for $30,000. You don’t have to use that
credit card for $30,000. Use what you want. Location. By law, real estate agents
cannot put you into an area. You have to decide what
neighborhood you want to go to. So you need to sit down and
figure out what location you want to live in. Maybe where you live now, maybe
where you know friends are. Drive around, ride around,
walk around and figure out what neighborhood it is
that you want to go to. How many units? Do you– yes? A question. AUDIENCE: From what I hear,
being in a good school district increases the
price of the property quite significantly. I just want to know
your thoughts on those. And is it a big difference
between, let’s say, Manhattan and
Brooklyn and Jersey? Or like what would be some
recommendations about that? TRISHA OCONA
FRANCIS: Absolutely. You have– if it’s a good
school, a good school district, yeah, the
value is going to go up. I sold a home
where everyone that came to see that home, their
whole purpose for buying that home, was because
of the school district. Because they couldn’t get
their children to that school unless they lived in
that neighborhood. And that raised the value. So absolutely, that’s
something that a lot of people, if you’re planning on
planning on having children, even if you just want a
good value, a good resale value in a house, that may be
something you want to look at. AUDIENCE: Are there any other
points for a good resale value? I’m just trying to
think, you know what– TRISHA OCONA FRANCIS:
A good resale value are– anything– I study
real estate every single day. So I look at the Department
of City Planning with Zoning. I look at what the
mayor is doing, right? What neighborhoods
are they revitalizing? What’s coming up? Obviously, you know,
in Brooklyn you have the Barclay Center coming up. You have the 7
train in Manhattan. So these are things
you need to look at. Where are they rezoning? Where are they building
shopping malls? These are things that you
have to look at and decide, you know, that’s going to
be another hot spot of where people want to live. People want to live near
the train station, right? People want to live
near the attractions. So that’s where you
have to look at. ABBY ONTODD: You
have a question. TRISHA OCONA FRANCIS: Yes? AUDIENCE: So are you
going to talk about some of like the New York specific– TRISHA OCONA FRANCIS: Locations? AUDIENCE: Yeah because we’ve
got like nine minutes left. TRISHA OCONA FRANCIS:
Oh, I’m sorry. OK. AUDIENCE: So it’s like, you
know, I look at the taxes, and things like that
are different for like, I don’t know, four story
buildings versus, you know, there’s like all
these crazy things. I just moved to New York. What are the New York things
that like you gotta know about. TRISHA OCONA FRANCIS: Be
a little bit more specific in your question. AUDIENCE: Yeah. Like taxes, property taxes. TRISHA OCONA FRANCIS: How
to find out property tax? AUDIENCE: Yeah, I mean,
there’s like a whole bunch of crazy things like that– AUDIENCE: Tax abatement. AUDIENCE: Condos versus co-ops. TRISHA OCONA
FRANCIS: Ooh, you’re going into a whole course. This course is– my
courses are very– I try to bring all this
course into one hour. Co-ops and condos, you
know, condos, you own it. Co-ops, you don’t own it. You own a share in a
building, but your maintenance is more money in a co-op,
because your maintenance is going towards
the underwriting mortgage over the building. Property tax, you know, you can
go to the Department of Finance to find out property
tax on any property. As far as abatements go, a
lot of the new developments are giving
incentives, so they do have tax abatements
that are great that you can take advantage of. It also depends on
the neighborhood. I just spoke about
revitalization. So the city is giving
a lot of developers in certain
neighborhoods incentives in order to revitalize
those neighborhoods. So it all depends. I’m going to just go real quick. I put my contact. You could always email me if you
have any question further, OK? Also any features that you
have on the home that you’re looking for. Once you found
your home, you have to make sure that you or
the real estate professional and your attorney that
you have– now an attorney is not enough. Because an attorney all
they do is– you know, they do a lot of work, right? But they never see the house. They don’t know what
you’re interested in. So you do need someone
to help you research. You contact their attorney
once you’ve found a house. And they’re going to work
with the other attorney to put the legal
language together. But what you need to do
is get the research done. Find out what’s going
on with that house. Right? Find out if there was any
fires ever in that house. Find out if the house
is for foreclosure. Find out if there’s any liens
or judgments on that house. Very important, Right? Then you put in the offer. Once you put in
the offer, you have to worry about negotiation. Be careful with negotiating by
yourself, because once again, if they know stuff
about you, then they’re not going to negotiate. You’re not going to– it’s going
to be very tough negotiating. But if you have this wall
up with a representative, then it’ll be harder for them to
know what cards you’re playing. Then you have the contract
which goes with the attorney, and then you have closing. And once again, this is
just the real estate process that we just spoke about. Right? After you find the
home, you’re going to want to do an
inspection on the home. An inspection is
basically like a checkup. An inspection should be done
every 15 years on a property anyway. The same way you
go to the doctor and you get a
checkup every year, is the same way an
inspection will tell you what’s wrong with this house. So you know what you’re getting
into and making sure you’re not buying a house that’s going
to collapse the day after you close. An appraisal, the bank
will use an appraisal to determine what’s the
real value of a home. Somebody can put a house on
the market for $10 million. They’re allowed to ask
whatever they want. The appraisal is going
to say, whoa, whoa, whoa, that house is only
worth $2 million. So an or appraisal
will always be done. A title search– your attorney
will pull a title search to make sure that that person
really owns that house. Believe it or not,
there’s a lot of people who try to sell houses
in New York City who don’t own their houses. Right? I mean, it’s very easy. They forge deeds, or
they didn’t know they don’t own that house anymore. That’s also going
to make sure there’s no judgments on that house. You don’t want to buy a house
that has a whole bunch of liens and judgments because then
you can inherit those liens and judgments. So that’s very important. And then underwriting. Your bank is going to take
your tax returns, your pay stubs, the title
search, the appraisal, they are going to take
everything, and say, hmm, yes, I will give
money on this house. Absolutely. And then you have the closing. So this is who I am. This is what I do. Like I said, my goal is
to help people achieve their real estate goals,
turning renters into homeowners, homeowners into investors. And if you have any questions,
I know the time is up. I thank you. I thank Google. I thank Terrence [? Coltney ?]. I thank [? Evian. ?] And if
there’s any, any questions, I’m here to answer. [APPLAUSE] AUDIENCE: There is something
in the appendix you said someone had a question on. Can you clear that up? TRISHA OCONA FRANCIS: Anyone? Question? AUDIENCE: Foreclosures. I think about foreclosures. TRISHA OCONA FRANCIS:
Oh, foreclosures. OK. So what is– see? I came prepared. I had right behind it,
what is a foreclosure? Now, a lot of people
always ask the question, what is a foreclosure? People always think, oh, I
can just buy someone’s house who’s in foreclosure. If someone has not
foreclosed on that home, then they still own that home. That home does not– you cannot
go and take someone’s home if that person still
owns their home. OK? They had to have
lost it in auction. Now people can sell it if
they feel they’re behind, and they want to get out of
it before they foreclose. But until they foreclose
on it, they still own it. OK? Because there’s
a big difference. Pre-foreclosure–
your mortgage is due on the first of the month. The bank gives you
five days grace period. By the 16th day, after the 15th
day, you are considered late. You get a blemish on
your credit report because you’re one month
behind– 30 days behind. If you fall four to
five months behind, the bank files something
called a “lis pendens.” A lis pendens is public record. You can go to the
courthouse and see everyone who’s listed as a lis pendens. These are people who
are facing foreclosure. In New York City,
there’s– I mean, this is happening all across
the country– but like I said, there are 30,000 people facing
foreclosure in New York City. So it’s so much a
backlog that some people are in pre-foreclosure
for over five years, which means they have not paid
their mortgage in five years. Once that bank files that lis
pendens, more than likely, they’re not taking
your money anymore. You try to send
in, like let’s say you owe $20,000 for the
five months, you send it, they’re going to send
that money right back. Because now they
want all their money. OK? So there’s a big difference
between foreclosure and pre-foreclosure. So what is actually foreclosure? Foreclosure means you
lost it at auction. The time passed,
and the bank finally got the OK from the
courthouse to foreclose. Now every state, all 50 states,
have judicial foreclosure. Judicial foreclosure means if
someone is facing foreclosure– in pre-foreclosure– the bank,
in order to get that home, they have to go to the court
and follow rules and steps to get your home from you. To take a step back, when you
get a loan, you get a mortgage. A lot of people say, I’m
going to go get a mortgage. You don’t get a mortgage. You give a mortgage. What is a mortgage? A mortgage is a promise–
it’s collateral– it’s a promise to pay. You’re basically telling the
bank, you loan me this money, and I’m going to sign
this piece of paper that if I default on this loan,
you can have my house back. You can have my house. So within New York State,
there’s judicial foreclosure. Now, remember I said every
state has judicial foreclosure. Oh. OK. No, he’s saying I got to stop. Oh. I could just wrap
it up real quick? OK. Every state have
judicial foreclosure. Some states have a
non-judicial foreclosure. Non-judicial
foreclosure, New York is not a non-judicial
foreclosure. Judicial means that
in order for a bank to take your home, if
you’re in pre-foreclosure, they have to go through
the court system. Non-judicial means they
can just send you a letter and says, give me back my house. Foreclosure means that
the time has passed, the bank has granted
them permission to take your home from you. OK? Foreclosures don’t look
like foreclosures anymore. You know, before,
foreclosures used to look like abandoned houses. With 30,000 homes in
foreclosure in New York City, foreclosures don’t
look like that anymore. They look like regular homes. You never know what
a foreclosure is. And the scariest part
is, a lot of people are renting and paying
rent to homeowners, and that home’s in foreclosure. I’ve seen a lot of that. I’ve seen a lot
of people, they’re paying their rent every month
to their landlord, have no idea that their home
is in foreclosure. Matter of fact, this woman
told me the other day, when I was doing another
speech somewhere else, that it was happened to be her day off. And she saw the marshal there. And the marshal asked
her for an address. And she said, wait a
minute, that’s my address. The marshal came to evict her. And she said, I
didn’t know about it. The landlord was
removing– and by law, they have to put the
notices on the door– the landlord was removing the
notices while she was at work. So if she didn’t
have that day off, that home would have
been foreclosed on. So I just want to
wrap it up real quick. Just, you know, I do do a
whole course on foreclosures. So if, you know, I
ever come back, then I could do the whole, it’s a
whole full course understanding, how did this happen? How can we fix it? How can you invest in it? Where to find the foreclosures? You know, how to evaluate
the distressed property. But once again, thank you. I know we’re out of time. My contact is here. You can e-mail me, call me,
and if I ever come back, I’ll be happy to do that course. Thank you. Thank you.