Jason Hartman begins the show with Carmen, a Venture Alliance Member. They discuss the idea of vacation saturation. Later, Jason goes into housing market news and discusses the impact of labor shortages in the housing industry. In the interview segment of the show, Jason hosts Dr. Andy Krause, Principal Data Scientist at Greenfield Advisors and AVM Analytics. They discuss automated valuation models (AVMs), the potential future for AVMs, how they work, and what practicalities are slowing their development down. AVMs give another tool for real estate investors.
Investor 0:00
I do very much credit you with getting me involved in real estate investing. I had tried to do a flip originally that went sideways. And I ended up having a condo that I had rented out after that after a bad flip. And I realized that being a landlord wasn’t all that tough. And eventually, I found you on the web. And that really got me into real estate investing. So thank you for that.
Announcer 0:25
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions, this approach We’ll help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:15
Welcome creating wealth nation. This is your host Jason Hartman and this is episode 1041 1041. Thank you so much for joining me today. As I am being chauffeured I’ve been driving most of the day. But right now I am being chauffeured by our client and venture Alliance member who you heard on the podcast before that is Carmen Carmen Say hello. Yes. Hello. Okay, so we are going we’ve been driving from San Diego, up to Long Beach to see a little bit of my childhood roots there in Long Beach. We are headed up to Manhattan Beach and then oh, I don’t know maybe Santa Barbara. Oh, hi. I’ve had a pretty long vacation this summer. But you know, look, I never really take vacation and I never will Want to because I love. I love to work. I have a huge passion for it. Do you know, after I spent a month in Europe and talk to you many times from Europe, whether we were on the yacht in Croatia, or we were on our traveling around Italy poza, Tonto, Capri. Where else did we go? Naples, etc. Oh, and what’s that place called? You know where the ruins are on pay on pay? That’s right. Yes. For some reason I couldn’t think of a Thank you. Yes. And I thought well, I did talk about pumping on the podcast.
Carmen 2:35
Yes. Yeah. You
Jason Hartman 2:36
have talked about it. You said I forgot to talk about pumping. Anyway, in traveling all around. Do you know that? Well, I was traveling around Europe. I hired about a dozen people remotely on that trip. And I got a whole bunch of things done. I just refinanced one of my apartment complexes, the one I own with our client, Steve, and we just did a $2.3 million refinance on that unit. And I did that from Kansas City signed the docs there. And, you know, it’s amazing how you can just be geographically independent nowadays, and it’s pretty neat. It’s not without its hassles and its costs. I’m certainly not saying that it is as productive as sitting at a desk all day, you know, that can be a lot more productive. But hey, you got to get out and enjoy life and see the world a little bit. But Carmen had an interesting remark. It was about vacations. Now, you stayed in Europe a little longer than me. How long were you there? I was there for a month. You were there for a month. Okay. So I was there like, four days short of a month, I think. Okay. And so you stayed a little longer. But while you were still there, I remember we were communicating back and forth. And you said something to me that I thought was, it was an interesting statement. And it was about how you were kind of sick of vacation and now we’re still on vacation. You know, we’re driving up to California goes, we might even make it up to the hospital. counsel and hey, Hearst, and Pulitzer. Those are the two icons, who really, in large part save the world. Why? Because they were the first, at least the first sort of known people that were into investigative journalism, investigative reporting. And I tell you, the media should not be a lapdog, the media needs to be a watchdog. And that’s what we intend to do on this show. And our other media outlets, you know, tell you about scams and things that are hurting people you know, that’s that’s what we do. And it’s not without great cost. I mean, hey, my troll is one of those great cost and, and I know he’s out there listening because he keeps commenting on my show. So thank you for subscribing. Appreciate it. Glad you’re listening. So the interesting thing about vacation, Carmen, tell tell the listeners what you said it was a pretty It was pretty cool thing.
Carmen 4:55
Well, let me give you a little background. So I spent a month in Europe. I First we were in Croatia, which was beautiful. We we did all the islands. Then after that we went to the Amalfi Coast,
Jason Hartman 5:07
those Croatian islands are pretty awesome. And Croatia is gorgeous. And, and having our own boat that we could go wherever we want. It was a pretty neat thing, too.
Carmen 5:15
Yeah. So after that we went to the Amalfi coast in Italy. I mean, that’s just beautiful is probably one of the most beautiful places in the world. After that, I had I was headed to Spain, a span a week and a half there. And then after that, I went to Portugal.
Jason Hartman 5:29
So this is the part where we split up. So you did have the trip with me after the trip without me.
Carmen 5:34
Yeah. So when I was in Portugal, I have no idea what I was going to find. And I, you know, Bordeaux was just another beautiful place, great food, great wine. And all of a sudden I found myself sitting in a bus stop. And I that’s when I left to that message. And I said,
Jason Hartman 5:50
No, wait, what were you doing at a bus stop. When you were you were staying in like $400 a night hotels. I mean, you sent me a picture of one of your hotels. It was gorgeous.
Carmen 5:59
I was just seating. I wasn’t waiting for the bus.
Jason Hartman 6:02
Okay, cuz, you know, I know what you’re like you probably have a limo escorting you around Europe. No, I just hashtag high maintenance.
Carmen 6:11
No. Correct. Anyway, I just stopped there and that was when I left you a voicemail and I said, Listen, I think I have a list of about vacation saturation,
Jason Hartman 6:23
vacation saturation that is the phrase of the month vacation saturation. And what else did you say after that? It was pretty funny.
Carmen 6:31
Well, I mean, you know, I have seen so many beautiful CDs and so many beautiful churches and even so much good food. I mean, there’s a point where you just had enough
Jason Hartman 6:41
or you know, and I agree with that, by the way, look at the point of this show is to help everybody become financially independent. And financial independence is something I achieved way back in 2005. I certainly don’t have to work, but I love to work. I mean, it’s, you know, look at we are meant to do things As people we are meant to contribute. We are meant to have a purpose in life. You know, who wants to sit around and lay on a beach or vacation all the time. It’s really purposeless. I mean, that’s why even when I’m on quote unquote, on vacation, you know, I’m always working because I just, I can’t get enough of it. It’s just though it’s just very fulfilling. I just, I don’t know, it’s, maybe it’s not always balanced or healthy, but whatever. That’s where I am now. That’s the stage I’m in. But, hey, let me before we get to our guest today, we are going to this is gonna be a fascinating subject. By the way, we’re gonna talk today with a guest who is a specialist in a VM, a VM, what does that mean? Your ask automated valuation modeling, automated valuation modeling. So when you go to Zillow, or rental meter or rent range or any of these websites, that give you valuation estimates, there’s a thing in the The real estate industry called a BPO. That stands for broker price opinion. And they’ve largely automated these things. You know, they used to when I was in traditional real estate, I remember banks and various organizations used to send me BPO request and, you know, they’d send you a 50 bucks, or 100 bucks, and they’d say, do a BPO on this property. And you know, you really didn’t do it for the 50 or 100 bucks, you did it. So maybe they would list the property with you or list some of their other properties with you for sale. And this stuff is becoming largely automated, everything is becoming largely automated. And so this is a fascinating discussion today with our guest, make sure you notice that we are many times producing more than three episodes per week. So last week, we had four episodes the week before that we had four episodes, and this week, we probably will as well, because sometimes we have to split these into two segments because the show runs too long. So always keep an eye out for that we definitely produce episodes. for you every Monday, Wednesday, Friday, but occasionally we’ll throw in an extra one or even two per week. Okay, so automated valuation modeling. We’ll talk about that we’ll talk about what’s behind it, how accurate it is. And I think you’ll really enjoy that. I also wanted to give you a reminder, be sure to subscribe to our property cast. I’m getting astoundingly good feedback on that one. Everybody seems to love it. So you just on whatever podcast platform you’re using, look up Jason Hartman property cast, like podcasts. But instead of a podcast, it’s a property cast. And you can get the latest and greatest properties, right in your RSS feed on your podcast app. So be sure you take advantage of that. And also, if you are an Alexa user, if you have the Alexa in your home, be sure you download our Alexa skill for my daily real estate update. And that can be part of your flash briefing or your news briefing every day on Alexa so check that out as well. Okay. So I want to share with you a sign. Now these are, this is an insider sign on the direction of the market. And I’m not sure how to interpret it, but I’m just going to share it with you. So personally, in terms of my own money, I have approximately $2 million in loans out there on pieces of real estate. And these are all hard money loans. In other words, they are short term loans with fairly high interest rates. And I’m mostly loaning money and this is just my own money. It’s not you know, I don’t get the money anywhere. It’s just literally out of my bank account. Okay, I loan my own money to a lot of times our local market specialists so that they can acquire more properties and they can have more inventory for for you to buy and invest in. This is a sign Okay, and it’s an insider sign that you will not hear anywhere else unless you’re in business. But I thought this was meaningful. And I thought I should share it with you. Here’s the sign. And then let’s talk a little bit about how we might interpret it. And I don’t have a conclusion on this, I just want to tell you before I tell you the sign, what’s going on and how might be interpreted. one of two ways it really could go either way. The sign is that these these loans that I make are typically six month loans, they’re six months in duration, and I will be happy to extend them. And many times if they want to extend and have another six months, or any portion thereof, they pay a little extra extension fee the borrower does. And the borrower again is buying a property, doing a rehab and then selling it ultimately to a retail buyer or investor. And they might put it in the MLS and sell it to a regular homebuyer or they might sell it to an investor either way, and what is happening. I’ve noticed with my own portfolio, that Just my own money that I’ve loaned out there, about proximately. 2 million bucks. Currently,
Jason Hartman 12:06
the loans are paying back more slowly than they should, I’m getting extension requests, a lot of them are going over six months, that is a little bit of a concern. It’s not too terribly much of a concern. And I’ll tell you why. I actually don’t want them to pay me back very quickly, because the interest rates are good. And I want to keep the money in play. I want to keep it loaned out, because hey, if they pay me back, then I’m not earning interest from from the loan. So that’s one thing I mean, I all ultimately Of course, want to be paid back. I don’t want them to default on the loan. But I’d like them to keep the money okay, and just pay interest because that’s obviously the investment. But they are getting slow. The paybacks are late. And again, I don’t much care about this because I want to keep the money in play. But it is A sign. Now, the question is, what is the sign? How do we interpret the sign? I think one way you could interpret is you could say, Oh, God, the market is slowing down. It’s the sign of a recession, they’re not able to unload these properties. And that’s why they haven’t paid me back on the loan, and that’s why they’re going overtime and then why they need extensions. Okay, that could be one way to interpret it. It could be the sign of a legitimate real estate market, slow down. That’s one side. pregnant, pause, intentional. Okay, what is the other possible interpretation and there are many, but I’m just sharing two of them with you. The other interpretation is that the market is booming at such a crazy pace, that it is so difficult to source labor and materials, that their rehabs are taking longer. And they are having to carry the properties longer. And that is costing them the rehabbers. The ultimately local market specialists that you might be buying properties from, it is causing them to hold the properties longer. And if they hold the properties longer, they have not only an opportunity cost, they have higher management costs because when they own the property, they gotta manage the construction and manage the rehabilitation of that property and manage the sales process of that property and the rent up and the you know, the lease up of the property and so forth. And also, the labor is very scarce. There is a huge labor shortage right now, in the construction field. These trades are very, very busy. And they have raised their prices a lot because look, the oldest thing in free market economics is raise the price until the demand falls off. Okay? And that’s what you do. You keep raising it, you raise it, raise it until the demand sloughs off. And then you don’t want to slough off too much. Because you want the work, obviously, and you stop raising the price. This is true with rentals. Also, as you’re an investor. And some investors kind of stupidly, not thinking about it will brag about things like, Oh, you know, I have a 2% vacancy rate or a zero percent vacancy rate on my rental properties. Well, okay. Okay. You sure that’s good, right? It’s not good. Okay. You want some vacancy rate? We perform a 8%. About one month per year. So a 92% occupancy rate 8% vacancy rate? Why do you want some vacancy rate? You might think, oh, that’s bad. Well, no, you want some vacancy rate? Because if you don’t have any vacancy rate, it means your rents are too low, raise the rent. You know, remember that guy there? rent is too damn, I remember that funny guy. He was funny. Carmen, did you think that was funny?
Carmen 16:04
Yes.
Jason Hartman 16:08
That’s all we got here. Yes. Okay, comment now she’s giggling. So that’s the thing. So the same happens with the construction trades, right? All these contractors that are rehabbing the properties that many of you are buying. And so that labor is scarce, and it’s making the project take longer. And materials are also scarce. They’re shortages of materials. So I just wanted to share that with you from my very own portfolio of loans that I have out there. Of course, I prefer owning the actual real estate to doing the loans, but I do both because the funding the loans, with my own money, helps increase our inventory. So we have more properties for you to buy. So it’s kind of a little ecosystem and that’s one of the major reasons I do it. Okay, so just wanted to share that with you. Be sure to join us In Hawaii, and by the way, we are selling tickets at a nice pace for Hawaii. I’m feeling that event might sell out. And at first, I was a little worried. But we’ve also got, I am now looking at various bands. And we’ve got some good proposals from bands. We’re gonna have some fun there, we’re going to do probably a luau. We’re working on planning that. So we’ll have some good community building and networking, where you can network with your fellow investors, and so forth. And it should just be a great time for you. So you can register for that at Jason hartman.com. And what else do I want to tell you property cast Alexa app, Hawaii event? I think that should do it. Hey, let’s go to our guest and talk about automated valuation models. And let’s understand what’s behind the zestimate Okay, here we go. It’s my pleasure to welcome Dr. Andy Krauss. He is principal data Scientist at Greenfield advisors and AVM analytics. Andy, welcome. How are you? Well, thank you, Jason. Good. Good to have you on the show. And we were talking a little bit offline here before we started about automated valuation models. That’s what AVM stands for. This is the bots and the algorithms are taking over the world, aren’t they?
Dr Andy Krause 18:21
They certainly are. It’s invading all aspects of our lives. So I think that it’s happening in real estate is no surprise.
Jason Hartman 18:27
Yeah, well, I think the biggest AVM that everybody listening will be familiar with is Zillow, you know, the zestimate, right? Whether it be a rent zestimate or a sale prices estimate, and everybody’s got their opinions on how accurate they are, how inaccurate they are. And, you know, I’d say they’re both what I like to tell our listeners is, look, you know, take it with a grain of salt. It’s better than what we used to have, and we used to have nothing. So these avms they’re a guide, but they’re not the holy grail yet are they? each house is so good. Different. I remember I looked at on Zillow recently at one of my old homes that I owned in Orange County, California. And I sold it for I think, gosh, what I sell for like $911,000, the property was pretty unique, it had a pretty unique lot unique view, not similar to the rest of the home’s neighborhood. And I think that’s where the models really struggles when you get a really unique property, kind of take us through the science of this and, and the accuracy of it.
Dr Andy Krause 19:27
Sure, sure. And I think the example you just gave is really illustrative and in terms of how and when a VMs are good and when they’re not so so in terms of that the science of it, you know, it is, after all, a model and for any model AVM or any sort of mathematical model that’s out there, it’s only as good as the data that goes into it. So when you do run it against a unique property like that the model the model is going to struggle. And in terms of the science of it, I think people often get the impression that you know, they’re these massive kind of black box They’re doing some sort of strange magic underneath it. And to some extent, that’s true, you know that the formulas can be quite complex and the terms and the models are things that a lot of people never heard of. But at the end of the day, it’s really trying to mimic what an appraiser does, it’s really trying to look at what have sales in the local neighborhood done recently. What are the trends there? How do various factors influence value? And how do we convert all that into a prediction? Sure. So at the heart of it, it’s not much different than what your local appraisers doing it just doing it at scale.
Jason Hartman 20:31
In certainly in fairness to avms we should say that appraisers are they make mistakes all the time? Right, they have their own accuracy problems, don’t they?
Dr Andy Krause 20:42
Right, and I think what often gets left out of the conversation is that we don’t know how wrong appraisers are. We don’t ever actually do tests to see we don’t do Hey, what’s up seven appraisers appraises home, right and then see what it sells for two weeks later. We don’t do that.
Jason Hartman 20:59
Well, you know that That is a real I’m so glad you said that because I want to sort of couch that a slightly different way. Wouldn’t it be nice if there was a database? And I’m I don’t think there is one. I may be wrong, but I really doubt there is one of appraised final appraised values on properties versus actual sales prices within, say, a month or something like that. So, you know, you knew it was the same time because the remember folks, the ultimate appraisal on any property is a meeting of the minds between a ready willing and able buyer and a ready willing and able seller. When those two minds meet, and the contract is signed, that is the best appraisal in the world, bar none. Everything. Less than that is an educated guess, isn’t it?
Dr Andy Krause 21:51
Absolutely. And I think that’s that’s very well put that everything short of the two people meeting really is is just one person’s estimate or or in this case, a models estimate.
Jason Hartman 22:00
Yeah, absolutely. So so to go back to what you just said, which is really fascinating, and the fact that there is, I guess, no database of appraised value versus sales prices. You know, I always like to talk about how you can’t hear the dogs that don’t bark. And like you said, there is no test to test the accuracy of appraisers, because there’s no database, I’m guessing. I mean, there needs to be a database like this, right?
Dr Andy Krause 22:22
Yeah. Yeah. And I think they’re, they’re two things, stopping it, and then I’ll maybe talk about how it might be a reality. I think that the first thing stopping is obviously price. I think a lot of people would would love to do these sort of tests. But in order to have seven, let’s say group having seven appraisers do a home, okay, so that’s a couple thousand dollars for one home and if you actually want to come up with some statistically meaningful estimate of how, if there’s appraisal there and how much you need to do that a thousands and thousands of times, so there’s this kind of a cost and time prohibition to it. And not only that, you need a house that’s probably hasn’t been listed yet. That truly is sort of off the market. Do this too and then have it turn around and sell quite quickly. You just have a market dynamics that are kind of preventing that that as well as two things that make that really difficult Now, that’s not to say it’ll never happen. I mean, what I think we see in the in the industry of avms and real estate data more in general is like a lot of places there’s consolidation and you know, many of the the mortgage big appraisal management Corporation z MCs, are slowly being bought up, you know, corelogic is has purchased some of those companies, some of the other big players are looking at that as well. I don’t know the the rationale, but there’s a lot of data that comes with with those appraisal management companies. Right, right. And then that
Jason Hartman 23:37
could lead to what I just hope for that database, you know, if you do see a roll up now I hate the big corporatocracy in the monopolistic or do awfully type of thing, but it does have some benefits to and right as you can get really clean, good data when it’s not so fragmented, right? And so something like all these buyouts with logic and so forth, that could lead to some better data to make better ABMs. Right.
Dr Andy Krause 24:07
Yeah, absolutely. That that is the other side of that coin. You know, as consumers, sometimes we can suffer from monopolistic movements, but with it sometimes
Jason Hartman 24:17
some good stuff comes out of two. Yeah, yeah. So it’s a mixed bag.
Dr Andy Krause 24:21
Yeah, absolutely. Absolutely.
Jason Hartman 24:23
Okay. Go ahead with what you’re saying, though.
Dr Andy Krause 24:24
Yes, I think just just with the database, and you know, I think as a researcher and a developer in this space, I would love that database. You know, I mean, there’s many of us who would absolutely love that to have that sort of data, but just really doesn’t exist at the moment. So when it hopefully does, it’d be interesting to see how well appraisers do I suspect that they do quite well in many places. Yeah, absolutely. appraisers should fear that. I think that they should relish that because, you know, they have the local knowledge that the models often don’t,
Jason Hartman 24:49
right, right, use it as it as a tool rather than in fearing it. Okay, so, how do these avms work? I mean, take us through kind of some of the details. I mean, probably everybody sort of has a simplistic view, I do at least I’ll speak for myself, you know, hey, look, there’s a computer database. You’ve got all these prices in there, you’ve got maybe certain remarks in the in the remarks section of the MLS listing, God bedroom and bath count square footage. What do they really do behind the scenes to come up with these valuations?
Dr Andy Krause 25:21
So I think you hit on one of the most important things, and I think I mentioned earlier is really the data that goes into it. And a lot of the bigger firms that are that are doing a VMs you’ve got to have a really solid database behind and it’s a combination of, you know, your local tax assessor who has information on the home sighs all that biased as they may be combining that with MLS data. That was sort of if you look at a VMs. A decade ago, that was kind of where the data stopped. What we see moving forward is this movement into as you hinted at text analysis, kind of the natural language processing of the remarks. You will Also see people starting to use image data. So whether it’s an aerial image or Google streetview, trying to slowly gather more information, and the two pieces of information that are always the hardest for a VM to measure are conditioning quality, it’s really hard to know what’s inside a house. And it’s really hard to understand the quality of that home without having an inspection done, you know, all the things that an appraiser does. So AVM companies have been really working hard to gather information on condition and quality and that’s through the photos and through the listing information. So all the improvements, you see that, you know, Zillow is listing other errors going down and house Canary says, you know, they’ve got an error around 3%. And these people are publishing their rates. A lot of those improvements are made by image processing and looking at the natural and natural language processing of the comments.
Jason Hartman 26:44
Okay, so they process the natural language, but what else happens really, you know, what, what is the software doing to come up with a value? Sure.
Dr Andy Krause 26:53
So, in sort of a nutshell, it’s trying to find comps, I mean, that that’s maybe the easy Easiest way to do it. It’s not in a traditional way that an appraiser says, oh, here’s, here’s the three most common, most mathematical models within IBM are going to look at somewhere, let’s call it 10 to 100, maybe even more, but you know, they’re looking at a bit of a larger set of comps, because statistical models need more than three observations to work properly. So in some ways, they’re just trying to find what homes are similar to this home. What did they sell for? And how do we adjust for differences? It’s really that simple. If you really look at an adjustment gradient and an appraisal, you kind of follow that same logic through the VMs or just using a number of different statistical techniques to get to that same underlying logic.
Jason Hartman 27:40
Okay, good. Do you want to tell us anything about the possible flaws with these models and, and then maybe some use cases we talked about that a little bit off air, and we’ve seen the residential single family home real estate business become much more institutionalized since the Great Recession. You know, this is the AVM thing is, I think, a critical component of making that possible. So maybe want to speak to that a little bit?
Dr Andy Krause 28:05
Let’s see, first question, what are some possible flaws? The first thing that we all say in the modeling industry is, you know, garbage in garbage out. So if the data in your area is not particularly accurate, or it has a bias in one direction or another, the models going to suffer for that. So it really is a question of having good data, it raises a lot of problems actually, in the non disclosure states, because actually getting the true sales price can be a bit difficult. So you know, if you ever wonder why,
Jason Hartman 28:34
by the way, by the way, speak to that if you would have any non disclosure states are there I think this has to end. This is one of the problems with real estate around the world. You know, we’ve had many clients ask us, why don’t we talk about international investing and those markets are so opaque, it’s ridiculous. You just it’s very hard to understand the value because the data is just not there. The US has a very special market. That way, but there are still some places where you have these, these non disclosure areas, which areas if you know, are non disclosure and, gosh, there’s got to be a movement to stop that. And we’ve got to make this stuff public so, so everybody can really know value. But you know, go ahead.
Dr Andy Krause 29:16
Yeah, it says I think there are the numbers, not exact, because some states are sort of on the board. I think there’s somewhere around 15 to 17 non disclosure states, mostly in the mountain west and southwest, South Central us. So, you know, Texas, Oklahoma, Utah, places like that. I don’t know the full list offhand. But, but it’s generally focused. So the date is pretty good on the coasts and in the in the upper Midwest, most of that is all publicly released. But But in those non disclosure states, as you hinted at the sale prices is not a matter of public record. And to get that you need to do a number of ways to kind of derive what you think the best estimate of that sale price was. So you can see how not having that exact value can lead to higher In your automated valuation models and
Jason Hartman 30:02
Okay, okay, so how does the algorithm work to try and get data in non disclosure markets Now see, even though the public record may be non disclosure, there are still other records, there’s still Multiple Listing services. There are still various websites do have data. So it’s not
Dr Andy Krause 30:22
completely opaque, is it? No, no, it is exactly what you said. You’re looking at the MLS and depending on where you are sometimes upwards of 90% of single family residences go through an MLS so if you have access to that MLS as a data aggregator or an AVM builder, you’ve got some certainly some good information there. There are other public records such as you know, when the mortgages are recorded, you can assume some loan to value ratios based on the way the mortgage has been recorded. And
Jason Hartman 30:49
that’s I’m glad you mentioned that I wanted to speak to that a little bit, but don’t forget your train of thought. Okay, so, so you know, look at if the typical mortgage is nine percent loan to value or 80% loan to value, the software can estimate what the purchase price was because it knows the recording amount of the mortgage. So if the mortgage is $80,000, you know, hey, look that home probably sold for 90 or 100,000. Right? Correct.
Dr Andy Krause 31:16
Correct. And that’s something that you then triangulate, you’d say, Okay, I had that property address. What did I find in the MLS? Oh, do I have an MLS sale and they are $400,000 Hey, I’ve got a match here. This looks pretty good, you know, or, oh, this was for sale by owner property, maybe there’s a little less weight I need to put on this one. Or maybe we won’t consider this sale. So there’s some sort of internal algorithms or scoring that that goes into the data to judge the quality of that imputation or estimate of price. But just kind of circling back around to something I said, I do really think there should be a movement to make that public information. And I think it needs to start with with real estate professionals in those states, who say, you know, our industry in the state is suffering, you know, we’re potentially losing out on investors. The market is is a lot more opaque than it is in one state over, you know, why can’t we have this information? This will be continued on the next episode. Thank you for listening and happy investing.
Jason Hartman 32:12
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