Aaron and Bruce Norris Join Realtors Chris and Molly Silva on the Norris Group Real Estate Radio Show #543

 

Chris-Molly-Silva

 

Sibling Realtors with Silva Group Realty Executives


(Full Bio)

 


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Aaron Norris is joined this week by Bruce Norris and Molly and Chris Silva. They are realtors and investors based in Riverside, and they followed in the footsteps of their father Steve Silva. Bruce Norris worked extensively with him over the course of his career. The family has been involved in everything from REOs to real estate investing.

Episode Highlights

      • When did Bruce first begin working with their dad Steve?
      • When did they first get involved in the realtor business?
      • What big event occurred during Quadrant 1 that had not happened before and many did not see coming?
      • What strategy in Quadrant 1 is essential though not necessarily powerful?
      • What years covered Quadrant 2, and what was the market like?
      • How many listings were Chris and Molly doing at the peak of the market?
      • What did Steve Silva learn from Bruce that he passed on to both his kids?

 
Aaron began by asking Bruce how he first met Steve Silva. He said he had a listing through the Bank of America in Moreno Valley, and he made a blind offer on it. It was listed at about $65, and he made an offer of about $35. Steve called him up and was not happy. He told him he would like to know what he wanted him to do with the offer, which Bruce said to submit it and get it accepted. He said he would like to do that but it was ridiculous. He said the only reason he would think it is ridiculous is that you might not be aware of the recent comps. He had just gone to an auction and bought seven of that type for $28-$35 grand. He faxed him over the sheets, and he just called back and said he had never seen anything like this and wanted to meet him. They were able to get the BofA deal done because they had new evidence that this was the new number, and the relationship was born.

Molly was not even aware of this, but Chris was actually a part of this. This was part of his very first transaction with Gentian in Moreno Valley. At the time he was working in San Marcos and had only been in the business for three months. Bruce had told Chris the exact same story, and he told Bruce he needed to talk to his dad Steve. He gave him his number, and this was where the relationship began. Bruce told him how when he was investing in homes, he would find himself working in areas in little pockets and create more business for yourself in a little area. You start with the comp that every listing agent gets to look at, and then you start getting calls from those people who say they want another one. In this way, it feeds upon itself.

Aaron asked Molly how she first became involved in the business. She said she had just gotten married in 1996 and graduated with her bachelor’s degree from Cal State San Bernardino. Steve asked her if she wanted to be a teacher, and he told her how she needs to realize you cannot just take any day off you want. If she worked for her dad, she would also work for herself. This was when he started sending her away to school to learn the tricks of the trade. She worked for him, was fired for a while, came back, and went from there.

She joined the business after the REOs were really done and things were pretty sweet for buyer and listing agents. She was so used to working for herself that when the REOs came in 2005-2006, she had to get used to working for banks. This was a hard pill to swallow since she was working for herself. Now she was working for the corporate banks, which was really difficult since they had transitioned from this human contact over the phone to this computer screen in front of you. Even her dad had to make a change, although it was not nearly as much. Bruce remembered looking at the prices, such as in Moreno Valley, where they were $350 and realtors were trying to get $280 from them. Ultimately, they would get $80 for it. At the time they had a grading system where if you did not sell it, you got a bad grade. After this, the listing would get taken from you and given to somebody else. The lenders took a while because they did not listen to people who knew. Steve tried to tell them they would not get anything close to what they were trying for, so they might as well get what they can now.

Today’s radio show focuses on the California Only Investor series. They have a course called Buying Systems and are going through each strategy and adding a whole new segment on the back end that talks about how specific strategies change depending on the timing. Chris first got into the business when he was going to school in Orange County. He had one class left, and his dad had just gotten into the real estate business. He did not really like what he was going to school for, which was commercial refrigeration. With just one class left, he decided he did not want to do it anymore. He got into real estate and started hanging bank repo signs for houses. He would get about $75 per house, mow people’s lawns, and work real estate part-time. Their dad, Steve, had originally come from the car auction business before getting into real estate. Now he is semi-retired but still working in the field.

The first strategy covered today deals with agents who control inventory. They have already alluded to some of their experiences, so today they will bust it down by quadrant. Quadrant 1 is the market turn from 2006-2007. Aaron asked Molly if she had ever seen a downturn prior to this, which she said she had not. Aaron asked if they saw the writing on the wall back in 2006 and 2007 and what they did about it. Molly said Steve had it set up perfectly since he did see the writing on the wall. Molly bought her first home in December of 2005, which her dad had told her not to do. She did it anyway and learned the hard way that he was right.

Steve set it up to where he already had the relationship built from the previous down market where he had a great grade and following. It was 8-9 years, and the same people were still being called. However, the agents do the same thing with the investors. If you were a good contact at that point, you got called by all those people who asked if you were still in since they wanted the same thing. They want a reliable source to say this 1 out of 40 that will go for cheap will close. They cannot say they did not see it yet and did not know any better.

Molly had a couple investors who would call her, one of them being a father/son team, who she would still call today because it was so easy. They did all their research and knew what they were doing. Molly did not even have to leave her desk because they made it so easy. All of the players were still in place, so Steve could just pick up the phone and talk to them. However, Chris said this was not true for all of them as some were new. Back in the 90s when you did the REOs, you would take pictures, go to the photo mat, glue them on, and mail everything into the bank with no monthly reports. It was all basically phone relationship. This time around you had to apply online with the banks and could not reach out to talk to someone in person. There were still some people in the business, but they did have this history and good resume to fall back onto and show. Things have changed and will be different the next time we have an REO situation than they were the last time.

Aaron asked if the technology piece caught them off guard in 2005 and 2006 or if they were already being put in place. Chris said it caught him off guard a little only because they had to use the computer so much and their systems. Bruce said Quadrant 1 is the calm before the storm, but this is the time when you cement relationships and say you are going to have a long ride and want to be in your list of the top two people when you call. It is harder after this since they would already have it established. It’s interesting how he saw the writing on the wall, but where are the opportunities for investors? You would have to really know that this was coming and call the Silvas about it.

Steve Silva saw the writing on the wall because he listened to Bruce. It is a big help to an agent to be the first one who calls the lender. It is all fine, then all of a sudden Steve calls and says it will not be fine for very long. It is good to have your place in line because when things start to happen, you realize they were right. It does not matter what the source is, it is just nice that they have somebody to go to on the front line. At the beginning, Steve was taking listings in Timbuktu. He would go out to areas like Bakersfield even for just one listing because he wanted to set the precedent. Bruce said if he Steve asked him to bid on a property in Bakersfield, he would get up at 4 in the morning and drive there. If you want to be in one of the top 2 spots, this is what you have to do.

Chris had a list of agents who he would call once a week. Sooner or later they will be nice to you on the phone, but he would still religiously call them. This was something he learned himself. He never went to the seminars, but he learned it all himself because the emphasis was really on the computers. It was very difficult to learn it, but he did through trial and error. Instead of looking at 50 houses a day, he can call 50 agents and now have access to a lot more inventory. The more he calls, the more they will call him back.

Bruce said it is like a mailer. You will receive a call, but whatever will hit the fan happened five minutes before you opened your mailer. This can happen with a phone call. If the agent has one they know will close and it falls out, then you call. The property is yours; you called four times and earned the right. He might have a number 1 or number 2 guy, but you break in by hurrying to be the first on the scene.

Aaron asked Molly if in 2006 and 2007 she had investors calling her saying they were ready to go. She said not really because it was so new, and things kept going down. She remembered waking up and seeing in both the Press Enterprise and LA Times a street in Moreno Valley with nothing but For Sale signs, and five of them were hers. This took place during Quadrant 2 back in 2008. Molly said since they had investors, it did not hit them until a little bit later.

If you are a real estate investor, this specific strategy is not really powerful necessarily in Quadrant 1. However, laying the groundwork and relationships is definitely essential. Aaron said in his first downturn, it seemed like a lot of the same players were around. He wondered how many REO agents really existed in Riverside, which Chris said it was not many. It was a lot of the same players from the time before, and a lot of them are the same ones you see with any REO listings.

In Quadrant 2, we are looking at the markets from 2007-2011. It caught people off guard, both how quickly and how deep it went. Aaron asked how many listings he went from in 2007 in just a year. Molly and Chris both said that it exploded. They were set on hiring people and having people come work for them. They had agents working for them, and it was a lot of work. They still bought and sold, although they could not buy their inventory. However, they had relationships still with the other REO agents, so they could purchase property. They just could not do their own because of conflict of interest.
Aaron actually bought his primary residence from them. He was not the highest and best and was actually up against an all-cash offer. Fannie Mae was giving him a difficult time because he found out the city had come into their HOA and levied liens because of dead grass. He had to call in some major favors with the city, but they got it done.

Aaron asked how many listings they were doing at the peak, which Molly said they had about 200 on any given day. Bruce said what was frustrating was the Realtors were not informed that this was maybe not going to continue. The default numbers kept on rising, but their REOs decreased. They just stopped foreclosing; and Bruce was actually on a panel where he was escorted out by security for standing up for Chris and Molly. Bruce was one of the people being asked questions, and he did not think they were the right questions. He started taking over the interview process and being very direct with lenders and asking them why they were not telling the people they were not getting the listings. At the end of it, the security guy came up and said he was instructed to take him to his room. One of the things brought up was that there was no sense in foreclosing since they were getting $.80 on the dollar hit. They kept using Chris and Molly to get values, and they did so much free work for nothing. It was unbelievable.

Their numbers went down after it should have continued. They should have had 500 within 18 months, and they probably had 100. They were setting up for volume, so they were incurring expenses. This was frustrating, and Bruce did not like this. Chris said being an REO agent is expensive, although it has changed a little bit now and some banks are different. However, they have to pay for rehabs, utilities, a way to be reimbursed, hire an accountant, and then hopefully you get reimbursed.

When you have an REO account, there is a long line of people behind you who want it because it is literally the only thing producing income. Bruce said as an investor, when he makes an offer in Quadrant 2 and it is really bad, he wants to make sure it closes because their reputation is on the line. You make the offer, the lender finally says yes, you take a beating, then it falls out of escrow. This does not look good, and there is somebody right behind them who says that will never happen to them. These people will then have their shot.

One of the things Steve Silva taught Chris and Molly that he had learned from Bruce was once you make an offer, you stick with that offer. They still get offers from people today from wholesaling, and these wholesalers will be trying to purchase property and at the last minute say they need a $10,000 reduction. It is so mind-boggling why they do this since it seems to be about reputation with them. Chris and Molly are in it for the long-run, and they do not know what their thoughts are on it. However, they do plan to stay in Riverside.

They made an interesting point about reputation sticking after ten years. When someone puts it in escrow, it is going to close. This is how you end up with leads. If they mess up the way they did, Aaron asked if they had the opportunity not to submit that offer if they were still playing games. Chris said if you come to their office when they are doing the REOs and bring your offer in when everyone else is emailing their offers, then you are the one they will remember.

Molly said there were always comments on the online offers she would leave. Sometimes the asset manager will say they just want to get it closed and will take the price reduction. Molly and Chris share the blacklist; and the best thing about it is that it goes all over social media. Bruce said Susan Rey actually wrote a book about this, and there are a lot of lenders in the book. Chris and Molly are professionals, and he said you want to stand out since there are so many professionals in the field. It is hard work. Chris does marketing, lots of mailing, and spends a lot of money every month to get where they are and continue to keep their inventory where it is.

There are obviously new players in the market, both realtors and investors. Aaron asked what some of the things were that helped investors stand out during the cycle for the downturn. Molly worked with a few investors, and the ones whom she worked with came to her office and sat down with her on New Year’s Day telling her their whole plan. They would then ask if she could relist their properties, to which she would then refer them to one of her buyers or agents since she is not going to do it. She is not interested in double-ending anything anymore. Molly said the reason for this is conflict of interest, and if something goes wrong on an REO she does not want it sitting over her head. This is why she will let one of the agents in the office deal with this. However, when they turn around and tell you they want you to take ¾ of a point to relist, this is when you say thank you but no thank you.

Now investors are a little more savvy and know what to do to get a property. These same tactics also apply to investors, but the investors who stuck out in her mind were the ones who do all their due diligence, go down to the city, and say they were ready to close. They would come in to the office a few times, send her a Christmas card, and talk a few times, but that was basically it.

Chris said their good clients are the ones who meet them face to face; the others just send them blind offers and you never hear from them. This is not good when you are dealing with that kind of volume. Aaron asked if they had a lot of people coming in who had done the guru seminars, which Molly and Chris said they did and were not happy. Aaron’s favorite was a realtor who called in with a hard money loan and flat out said it was a practice loan since they knew they would not make much money on it. Bruce had to ask the agent if they were getting paid.

Molly said another caveat she shared about at one of Bruce’s boot camps was discerning if something was really cash or hard money. It was very different back in that Quadrant since hard money was very different from cash. Now hard money is almost just as easy as cash. Aaron asked if this has changed and how they know it is legit. The Norris Group is very careful about who they give the letters of credit to and do not just give them to anybody. Aaron asked Molly and Chris how they want the lender to write their letter of credit. Molly said that first they need to show that they have proof of funds. If they legitimately do and throw in a hard money lender, that is okay now because it is just as easy. There is no down time, and it is not the same seller. If it were a corporate seller you could have the same issue since the transaction docs will say what not to do if you do not want to have a problem. Escrow would throw a fit since they would need to throw a deed of trust in there, so now you are dealing with a private seller. If you can convey, then it will close.

Molly said as investors they do this. They throw out their proof of funds, go into escrow, and slide it in there. Chris said sometimes it is not hard money, but rather their own cash. In the last five years, they have never had an issue with this.

Tune in next week as Aaron continues his discuss with Bruce, Molly, and Chris. For subscribers, the entire interview will be in the portal under the Buying Systems chapter, so you can check it out there. Next week we will be covering expired listings

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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