44: Veterans in Real Estate
In America, veterans and real estate have a very close tie thanks to some landmark legislation known as the GI Bill of Rights. Some have argued that it almost singlehandedly created the middle class as we now know it.
About This Episode
Changes set into motion by the Servicemen’s Readjustment Act of 1944 reverberate still today, giving veterans the opportunity to go to college, create their dream career, and buy a home.
This episode breaks down what makes veterans such good real estate agents, as well as why the GI Bill of Rights was so transformative for American culture.
Download our free ebook, Business Guide to Helping Veterans Become Homeowners: here
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JON: Hello and welcome to Shop Talk: The Real Estate Show. I’m Jon Forisha, and on this episode we look at being a veteran in real estate, selling real estate to veterans, and why veterans are so well-equipped to become successful real estate agents.
JON: First off, to talk industry news is Zach Levine, Content Specialist at The CE Shop.
JON: Hey Zach, how's it going?
ZACH: I'm good.
JON: All right. So how are markets looking around the country?
ZACH: In general there's more or less what you would call the Great Pause, as we're probably going to refer back to this about 20 years. But no, like back in February, many thought that home prices would begin to surge due to historically low mortgage rates and a highly competitive tight market. Fast forward a month. Now you think people are about to lose their jobs and how, you know, they need to get quickly liquidity, so you think they're going to possibly sell their homes, especially undervalue what ended up happening was people were actually likely to just take their home off the market and wait out the storm. This ended up leaving to have an entire market, you would think with a home inventory supply dropping. This obviously started back in March and a lot of it deal with the state home orders. And then demand also dropped for the same exact reasons, you know, people want to keep safe and we're just not willing to go and move. So again, I expect things to stabilize things, both demand and supply to go back up as to which one surges higher, uh, will actually depend on, you know, the economy, unemployment rate, and we'll determine what prices are.
JON: So a lot of states are starting to lift their quarantines, or at least they're talking about it. What exactly does that mean for real estate?
ZACH: It can be good. It can be bad. If we open up and covid spikes are at a minimum, you'll eventually begin to see more one-on-one tours and sales to pick up. If we have another outbreak, uh, we'll be conveyed. Our people are still afraid to go out. We'll be confined to, you know, VR tours and FaceTime, which technically could maybe hinder sales pending. Um, in the end, people just want to be able to see and tour the house as a society. We haven't really embraced technology, the, from what we need from a home purchase. And that makes sense. I mean, think about it. Like someone gives you a VR headset and you put it on. It's amazing. It's, it almost feels like real life, but it's not real life. You know, when you walk into a home, there's a vibe and feel you get from the ride home and is, you know, the sunlight comes into the room. How tall are the ceilings. You could tell some what those metrics are, but you know, it's one thing to be told that and the other thing to be seeing it. So I don't think technology isn't quite there, but, um, you know, we'll see what happens.
JON: So as agents get back to work, what are some precautions that they could be taking?
ZACH: The obvious stuff that everyone's been talking about for this three months? Make sure to wear mass. Both you and the potential buyer and seller have gloves, sanitizer and soap wash on hand. Uh, as long as the weather permits, we strongly urge you to open all doors and windows to keep air foregoing. This is the airborne sickness, first and foremost. So that's extremely important. Um, and then also make sure you just keep six feet away from everyone. Avoid handshakes, any type of touching whatsoever. Uh, if you were giving a tour of a home that is currently occupied, I strongly suggest sticking to video tours. There's just too much personal contact, at least right now that could be deemed safe. You gotta remember, most people's homes are a petri dish up the family itself. So, and other people are venturing through this home throughout the day and they're with a larger petri dish. Well, larger petri dishes obviously leads to moral odds, uh, spreading the sickness.
JON: Yeah. So how can agents stay productive if their market still hasn't lifted restrictions?
ZACH: You know, it depends on what state you're in. So if agents are deemed essential workers, they can keep doing what they've been doing. Based time tours, working safely with the mask, cleaning supply, six feet away. Common sense, uh, for those States not deemed essential. You really should talk to your local a NAR association or brokerage and find out what you can still do. Just because you're not essential does not mean you still can't work. And this is a big ass, but you know, because it requires time and some invested money. If you can get a production team together, look into instituting virtual reality into your practice. I know I literally just said technology is not the same thing as touring your life, but if you have the time and funds starting out now can really get you ahead and actually corona-proof your practice, at least for the short term.
ZACH: Yeah. So what are the predicted long-term effects of COVID-19?
ZACH: I'm not a big fan of predicting long-term effects, so I'm just gonna tell you that right now. But I'm also going to quote someone that I'm not terribly keen on his politics. Donald Rumsfeld is secretary of defense and former congressmen. He made a great point, his autobiography about how America's relationships with our countries are always changing. Now, we can't predict, for instance, 1990 the Russians were our enemy. 2000 now we're friends. 2020 enemies again, now the world's an ever-changing place with limitless variables. That being said, I do believe the real estate market will persevere like it always has. We're certainly, recessions usually do not majorly affect the housing market's growing, that homes that are potentially up for foreclosure are now suspended, more terrarium in over 50% of homeowners have at least 50% ownership in their homes. There are some very positive conditions that support a very robust home market once we get out of this. That being said, it all depends on when we get back to normal and what exactly that normal will be.
JON: Great. All right, Zach. Well, thanks for the update.
ZACH: Of course.
JON: To make it as a real estate agent, you have to be a self-starter. If you wait for someone else to tell you the right way to approach something, then you likely won’t make it very far. Many people transition to real estate from unrelated and far-flung careers, and military service is a common background.
JON: In some ways, it’s self-explanatory why. Many service men and women are disciplined and self-motivated, and they’re used to creating goals and doing everything they can to accomplish them. Many veterans are habit formers and love solving problems. In short, they’re perfectly equipped for the entrepreneurial pursuits that are inherent to real estate.
JON: Being an agent makes use of any of your previous skill sets, and military service can result in a lot of unique and valuable skills. If you’re looking for a book recommendation, Extreme Ownership by Jocko Willink and Leif Babin draws a very clear line between military service and excelling in the business world.
JON: In America, veterans and real estate have a very close tie thanks to some landmark legislation known as the GI Bill of Rights. Before World War II, veterans were more or less left to their own devices when they returned home from service. While struggling with employment, housing, healthcare, and education, there really weren’t any good answers from the government.
JON: Faced with the enormity of World War II, in which some 16 million Americans eventually returned home from service, many politicians were reminded of the 1929 stock market crash. That many newly-unemployed Americans would surely place a burden on the economy, and veterans of previous wars had been lobbying for years to get more assistance. Never before had such a huge number of veterans existed.
JON: Thus came the Servicemen’s Readjustment Act of 1944, passed just two weeks after the invasion of Normandy. It’s not hyperbole to say that this act reshaped American society, and some have argued that it almost singlehandedly created the middle class as we now know it.
JON: After the break, we dive into greater detail about the Servicemen’s Readjustment Act of 1944.
JON: The CE Shop is the leading provider of real estate education, with online courses available in all 50 states and DC. If you’d like to learn more about working with veteran clients, take our course Ddi You Serve? Identifying Homebuying Advantages for Veterans. Right now you can use promo code SHOPTALK for 25% off this course and all of our other courses.
JON: Some of the many provisions granted to veterans by this bill gave help setting up a business, starting a farm, going to college, learning a trade, finishing high school, getting a government job, and, of course, buying a home. New unemployment benefits meant that veterans no longer had to settle for the first job offered to them when they returned home, and they could put new skills to use in more advanced fields.
JON: By 1947, half of all college admissions were veterans. 2.2 million veterans eventually attended college thanks to this program. The GI Bill of Rights has been expanded several times since it was enacted, and today you would be hard pressed to find an American who wasn’t affected by the programs laid out in this bill. Even if you yourself didn’t serve in the military, likely someone in your family did, and a cheap home, covered healthcare, or free education isn’t small potatoes. Having assistance on massive financial purchases reverberates through a family tree and is felt for generations.
JON: Recipients of these perks include 14 Nobel prize winners, three Supreme Court justices, three presidents, a dozen senators, and 24 winners of the Pulitzer Prize. Homeownership in America had been stalled at around 40% for the four decades leading up to this bill. By 1960, it had risen to 60%. Thanks to the GI Bill, home loans to veterans were guaranteed by the government, and by 1946 there was a 300% increase in housing starts, half of which were purchased with VA loans.
JON: For more about the VA home loan program, here’s Brett Van Alstine, Regional Content and Social Media Specialist at The CE Shop:
JON: Hey Brett.
BRETT: Hey Jon. How you doing?
JON: Good. How are you?
BRETT: Not too bad man.
JON: All right. So what is the VA home loan program?
BRETT: So the VA home loan program is pretty cool. It's a program managed by the U.S. Department of Veteran Affairs to help ensure that veterans and military personnel have the opportunity to buy a home. Mainly because back in the day when this was first enacted for veterans of World War II, it was a way to help veterans who have may, who went to go serve and kind of gave up that time to start their careers or build their careers and make the money to buy a home and kind of reach that goal or, um, step in their life. So the program was put in place to kind of tackle that issue and serve those that have started the country. Um, in foreign affairs like that.
JON: So what's so special about it?
BRETT: So what makes it so special is really the benefits that come through the program that help buyers, um, you know, become homeowners. Uh, the key, I think some of the key benefits that VA buyers will have are, there is no required down payment for a home purchase. There is no mortgage insurance that is required through a most VA home loan like home loans. The uh, credit rating is usually lower the requirements for that as well as their much lower interest rates, usually about, um, 1% or half percent lower than conventional rates.
BRETT: So that's pretty big when you're, um, when a buyer's looking at what sort of interest rate and how much money they could save over time. And then the last benefit would be the lower closing costs. Um, so in most cases, this is where the real estate agent kind of comes in, is they have to negotiate with the seller to essentially pay for these costs. In most cases, a veteran or an active duty personnel will not have to pay these closing costs at all.
JON: Yeah, that's a nice perk. So this was enacted in 1944. I imagine a lot has changed since then. What kind of amendments have been made to the program?
BRETT: So over the years, I'd say the, the main, uh, changes have been, um, to include all branches of the military as well as include veterans from any sort of conflict following world war II. So that would include the Korean war, Vietnam, and anything that had gone on in the Middle East, things starting in like the Gulf war. But one of the key changes that really I think changed the course of the program was in 1970 from Richard Nixon, which was this change was eliminating the expiration date of the benefits for the program. So oftentimes someone might think that the program can only be used for one home purchase, but after that was enacted in 1970 that essentially made it so any veteran in any active duty member could use the program benefits on multiple home purchases if they so choose.
JON: Wow, that's huge. Yeah. So why is it important for real estate agents to know about the VA home loan program?
BRETT: I think mainly it's important to know this just so that they can best serve these military personal clients and veteran clients. But also if you think about it, and especially if you're thinking about if you're in a market that might have a military base near it or some sort of government facility, um, this could be a huge competitive advantage if you develop the right relationships with the right people. And that word gets spread on to let them know that, Hey, so-and-so helped me get the best deal in my home. I saved X amount of dollars. We didn't have to pay these closing costs. They negotiated with the seller. Like, we're able to save so much money and put some money down for kids going to college or maybe a project that they want to do on the house to update it. There are a lot of advantages that a real estate agent can take from this to benefit their clients. Um, and it really is just a two way street in that, in that way.
JON: Great. All right. Thanks, Brett.
BRETT: Yeah, no problem.
JON: Even if you yourself didn’t serve in the military, there are plenty of ways you can work with those who did. Many veterans are in the unique situation of being highly skilled with no clear path when they return home, and the better that you understand their situation and circumstances, the more helpful you can be. We actually just wrote a free ebook on this topic, which is linked to in the show notes.
JON: The first step to branding yourself as a veteran’s agent is obviously to know the VA Home Loan program inside and out. There are many stipulations afforded veterans, and having a thorough knowledge of them can help answer your client’s concerns. This includes having a knowledgeable lender lined up who can help answer VA loan questions.
JON: In practically every purchase situation, the house will require some repairs to appease the buyer and make it move-in ready. To qualify for a VA loan, though, that process looks a little different. A property must meet a set of VA-designated Minimum Property Requirements, which you should also become acquainted with.
JON: If your client is still enlisted, it’s possible they’ll need to move fast and often. Being ready to assist when the call comes can make your services indispensable, and can be the difference between getting a referral and not.
JON: While you build your business, it’s important to identify specific niches that help you stand out from the pack. Being the quintessential veterans’ agent could be just the ticket, especially when you consider that the homeownership rate among veterans is close to 80%, compared to 64% for the general population.
JON: Knowing how to properly serve veterans is a skill that every agent should have, so that when the opportunity arises you’re ready to wow them while you solve their problems and further grow your business. The more subsects of clients you’re equipped to help, the better off your career will be, and I don’t think there’s an agent in the world that would complain about that.
JON: That’s it for this episode, thanks for listening! If you enjoyed the show, remember to subscribe to us and review us on your favorite podcast player of choice. Shop Talk is a production of The CE Shop.