Why New Home Builders Are Under Fire? Builder Truths, Forward Commitments, & Real Talk

Buyer payments didn’t spiral because people forgot how to shop; they spiraled because the inputs changed overnight. We sit down with builder leader Tommy Fryer to talk candidly about what kept new construction moving when rates doubled—and why transparency beats shiny incentives every time. From the DR Horton headlines to the realities of “payment shock” letters, we lay out how improved taxes, real insurance quotes, and honest monthly numbers safeguard buyers and reputations.

Tommy walks us through the rollercoaster: 2019 optimism, 2020–2021 mania, and the 2023 slowdown that forced everyone to reset. The answer wasn’t gamesmanship. It was forward commitments—rate lock buckets that buy down payments without inflating prices or risking appraisals. That choice to take margin pain instead of hiding costs stabilized affordability, protected backlogs, and kept trades working. We also get into inventory discipline, smarter cycle times, and how to avoid a return to metered chaos that leaves buyers waiting months for a chance to sign.

If you’re an agent or lender, you’ll hear a playbook for true partnership: full 3 percent commissions, Agent Rocks lead sharing, CE, and even builder-provided listings—plus a clear path for outside lenders to serve clients with meaningful closing cost credits. For buyers, especially VA borrowers, we map out the “rent it, then rebuy” strategy that turns relocations into stepping stones and builds long-term wealth through lease offsets and entitlement reuse. The throughline is simple: align around the monthly payment, tell the truth early, and choose programs that help families stay in their homes.

Subscribe for more real talk on mortgages, incentives, and market timing. Share this with a friend who’s considering new construction, and leave a review with your biggest question about buying in a high-rate market.

Chapters

• 0:00 Introductions And Industry Context
• 4:20 Tommy’s Background And Builder–Realtor Alignment
• 8:35 Lawsuit Spotlight And Tax Transparency
• 13:10 2019–2024 Market Whiplash
• 19:00 From Booms To Headwinds: Resetting Expectations
• 24:15 Interest Rate Spike And Payment Reality
• 28:30 Forward Commitments And Affordability Strategy
• 34:10 Pricing, Margin, And Appraisals Explained
• 38:40 Inventory, Starts, And Avoiding 2021 Chaos

Transcript

SPEAKER_02: 1:03

And welcome back to another episode of Key Factors Podcast, Real Estate AF, where the AF stands for and finance. And I'm your host, Mark Jones, and we are powered by Lone Bot, Smarter Mortgage Matching. And on our last discussion, um, we had a group of gentlemen in, uh, all veterans in the business, and we were talking about builders, builder incentives, um, some misconceptions that are going on, and some malpractices that we believe um should be corrected because of the fiduciary responsibility we have for our clients. Um, and a good friend of mine saw the episode and said, Man, that was a great discussion, the way that you guys painted that picture. Um, and I'd like to add some two cents to it. So without further ado, I'd like to introduce Tommy Fryer. Tommy, how are you? We're good, brother. How are you? Doing well. Um, so Tommy, you surprisingly, if I'm not mistaken, geez, I am not looking it up. I think you got in the business damn near the same year as me. Uh 2012.

SPEAKER_03: 2:04

Yeah, 2012. Yeah, yeah, yeah. So uh yeah, August of 2012. I was hanging out at USAA before that, trying to figure out what I was gonna do when I grew up, you know, uh, and then a good friend of mine was in the business and was like, hey, like you would do really well, like face to face uh and go sell some homes and change your family's trajectory. And I said, let's go. That's let's go. Yes.

SPEAKER_02: 2:25

Uh you and I used to do a lot of business back in the day. I I was matter of fact, I had Savemybuilderloan.com, was doing a lot of turndown business. Um, so a lot of folks out there may or may not know who you are. A lot of realtors watch this, lenders watch this. So if you could just for a moment, tell us a bit more about yourself.

SPEAKER_03: 2:45

Yeah. Uh so Thomas Fryer, uh been working for Meritage Homes for the last 13 years. You know, nine and a half of those years were on the sales floor making friendships with knuckleheads like you. That's right. And uh a lot of phenomenal realtors. Uh, you know, uh Cesar uh from last week's episode, near and dear friend of mine. Uh so when I saw him on here, I was like, all right, all right, all right, there might be this. Not only that, but there might be some validity to this now. Um, but yeah, no, been in the business for 13 years, nine and a half as a uh sales counselor in the last, you know, four and a half years as the sell one of the sales leaders here in San Antonio. Yeah. We have a phenomenal um team here with Meritage Homes in San Antonio and uh just just excited to be here. Uh love the industry. I've loved what what we've been able to do together. Um, we're a big believer that the the builder relationship and the uh realtor relationship does not have to be adversarial. I love it. That we can absolutely partner together, and we'll talk about that a little later about how we want to partner better with our realtor partners and our and our realtor friends and our and our lender friends too. You may know that you know that too. Um but yeah, that's that's a little bit about me. Also love long walks on the beach. Absolutely. Love my wife, Lauren. Hi, absolute love of my life and my two babies. Uh the my family, my household is everything to me, and it's why we do this crazy thing in the builder world. They're my everything.

SPEAKER_02: 4:04

That's exactly right. Well, Tommy, um, not to break the ice or have us fall through the cracks of that polar ice, yeah. Uh already did that this morning. So I want to kick this off. Uh, matter of fact, JC, if you could throw up the screen real quick. First off, to our listeners, our subscribers, our folks tuning in, we are almost at 30,000 subscribers. We're 200 subscribers away. Um, I'm hoping after this episode goes live, we may reach it. So thank you all for tuning in and continuing to stay active with our channel. Um, we promise to continue to bring you folks like Tommy. Um, let me kick this over to the following. So something was brought to my attention um uh besides what we were going to talk about today, and I wanted to get your perspective on it. Sure. Um, so what we're looking at on screen is basically an update or a uh uh uh a quick synopsis of something that is going on right now. And and what I mean right now, we're talking October 1st. What just took place was DR Horton and DHI are under fire right now for some um malpractices. And what those are, matter of fact, we touched on them in the last discussion, which is setting up your borrower on unimproved taxes um without them being aware of that.

SPEAKER_04: 5:33

Yeah.

SPEAKER_02: 5:33

Now, mind you, I will uh at least say the following anytime you close with unimproved taxes, there is a form that you sign called a payment shock letter. And I don't care what lender you are, what title company you are, it's in the closing package. Whether the borrower reads it, understands it, um, that's a totally different story. In my opinion, that conversation should come from the lender for sure from day one all the way till the end, reminding them what's taking place. Yeah. Um, I don't know if they're the only ones going through something like that, but I do know that it is a very, very big deal. That being said, what separates maritage and the way that you guys do business from someone like a D.R. Horton and uh a parlay DHI concept, if that makes sense.

SPEAKER_03: 6:27

Right. And you know, like I'm not, I don't want to pick on one particular doctor in the truth. Just as an example, yeah, as the example of a lawsuit example. Yeah, yeah. Huge, huge lawsuit. You know, I think in in today's world, there's a lot of folks that are afraid to just be honest and lay out the facts because they're afraid of getting that terrible word no. That's right. Like, I'm not gonna buy this home. I'm not gonna go with you as my lender, I'm not gonna go with you as my agent. But at Meritage, I think what really sets ourselves apart, you know, as far as like our customer care and our and our service is we're gonna be real with you. Yeah. Like when, and that's my, you know, myself, my vice president of sales, finance, all the way down to our intern, right? Yeah. Like our entire sales team is empowered and is expected to have those legitimate conversations around financing. So you may not like our answer. You may really get upset and potentially walk out of my sales offices because you don't like the payment, but it's gonna be the truth.

SPEAKER_04: 7:22

Yeah.

SPEAKER_03: 7:23

Like we are gonna be 100% factual. Where here's your principal, here's your interest, here's your improved taxes. Yeah. We'll work in, you know, your your homestead in there and any other, you know, disabled vets are 100%. Obviously, then it's a non-issue. But we're gonna have the real combo and with a legitimate homeowner's insurance quote.

SPEAKER_02: 7:40

Yeah.

SPEAKER_03: 7:40

We're gonna be real and incredibly transparent. Right. And I think that's where uh other bad actors right now are not being transparent. They're basically telling the buyer what they want to hear, sure, which is not a great course of business. And it's it sets all of us up for failure later because it taints our reputation too. Even though we have nothing to do with that builder or with that lender, it still makes us look bad. We get painted with that same brush. So that's where that's where we're trying to be, and we will always continue to be truthful and transparent, even if the answer isn't uh a popular one. We're gonna be real.

SPEAKER_02: 8:13

Okay. I mean, that's that's makes perfect sense. And I have to uh uh uh concur with that. You talking about painting a picture. Yeah, I'd like to paint a picture of let's say the last five years. Okay, we'll sum it up like fast track because let's go 2019. Sure, me as an outside lender to a builder was still doing turndowns for several builders. For sure. Then 2020 came around, um, shit hit the fan, and all of a sudden, builders don't need outside lenders anymore.

SPEAKER_03: 8:46

Yeah.

SPEAKER_02: 8:47

And then we fast track towards a couple more years, and now all of a sudden it's like, hey, you guys uh can you get this deal done? For sure. Now I'm not talking specifically maritage. This is just at builders in general. Sure. What can you fast track us through what has taken place in the last, let's say, five years?

SPEAKER_03: 9:05

Yeah, yeah. So I I go, and it's a really good place to start, right? The let's just call it like six years ago. Let's go to October of 2019. Yeah, you know, there was a a lot of um optimism, a lot of excitement, especially in Texas, right? It's a great place to move, uh, to raise a family. Um, so we're we're expecting really good solid growth in 2020. Uh, to your point, when our in-house lender, you know, shout out MTH Mortgage, you know, when our in-house lender couldn't get the things done, we would be calling Mark. Yeah. We'd be calling a handful of others. We knew the portfolio that you carried as far as uh your flexibility and underwriting and what you were able to do, uh, your layers. Um, and and it was always a solid part of our business. Um 2020, you know, COVID. Correct. You know, you started hearing COVID uh right after, you know, uh, you know, what January and February really started hitting mainstream media here. Uh, then we started doing shutdowns in the beginning to middle of March. We thought the world was gonna end, like, or at least our business, not there was a lot of people that got hurt by that. So I don't mean that disingenuously at all. Um, we really thought the business was just gonna freeze. We were all gonna get stuck in our homes, our apartments, our our what, our rentals, whatever, and nothing was gonna happen. Right. The exact opposite happened. Absolutely. Everyone and their mom moved, everyone and their mom at that moment had just great credit. They had cash. So unfortunately, for our referral partners or our turndown partners, uh, we didn't have a lot of opportunity to send to you.

SPEAKER_02: 10:32

And and and yeah, just to kind of help help that conversation, just that portion of it. Yeah, us outside lenders, and I can speak for all of us that had a book of business that had a great reputation, had a good process, had great products, et cetera. Yeah, we weren't hurting for business either. Yeah, you were doing good. No, you do. It's not like we were reaching out, hey, we need this turn down. No, no, no. Yeah, no. Our business was coming in. Correct. It was an entire industry boom. Yeah, yeah.

SPEAKER_03: 11:00

3% interest rates was what a what an amazing thing that that did for all of us, right? Um, you know, and also kind of gave us a false uh bias on our abilities too. And we can talk about that later. Um, but no, you know, so 2020, you know, started off really scary for the first four months. Then I remember I was still selling homes on the floor in May of 2020. I think I sold like a like eight or nine homes, which was the most at my time that time of my career. And I was like, okay, we're gonna be okay. Yeah. Uh and I'm a good sales counselor. The rates definitely helped, but I'm not not gonna lie. Um, then you go into 2021, same thing, wait lists, right? We're taking, you know, like literally as you came in, we would write, hey, I was only allowed to sell five homes in my neighborhood. So you're, hey, I'll write you okay. So it is, you know, May of 2021. I can put you under contract in July. How does that sound? I have no idea what the pricing is. I know how this sounds. I sound like I'm a crazy person. I'm a charlatan, maybe. Yeah. Uh, there was a lot of words thrown in our way at that moment. Sure. Um, and but again, to your point, right? Y'all were incredibly busy as as uh retail lenders. Our in-house was very busy because of our team's business. Fast forward 2020, we had the cascading effect of interest rates started creeping up. Yes. And then, you know, we really were still doing a really good job. You know, I think the industry was still really strong in 2022. 2023, that's where it really got challenging. Absolutely. And for us, that's where, you know, y'all were with us during the great times of 19 and 20. We still send, you know, uh turn down business. But in 2023, I can ex, I can say for, you know, Meritage as San Antonio, we wanted to partner with our lenders better that had nothing to do with our in-house. Sure. So to this day, you know, we are still offering. So in 2023, 2024, 2025, if you sent me a client, right? You just had to send that through our referral channel, which is basically me and the other sales leaders in the division. And like I'm still gonna give you all closing costs, right? Plus uh a very generous amount of money to buy the rate down to improve the rate because I want you to eat too. Absolutely. Because if you're eating and SWBC is eating, all the lenders are eating, we're winning, and we're good. Absolutely. We're gonna get our capture because of our Ford commitment money. And I know we'll probably maybe talk about that later. Um, but you know, we're gonna capture that business, but I also need referrals because like the you know, shocker everyone, uh, there's no one really beating down our doors to walk in. So it really takes our relationship with our realtors and their lenders, and I'm not gonna let them, you know, I'm not gonna like bite the hand that feeds them. Sure. So we're gonna go with you and we're gonna give you uh like right now$28,000 in closing costs if you use Mark Jones.

SPEAKER_02: 13:35

You guys hear that? That's a big deal. That's a very big deal.

SPEAKER_03: 13:38

We're gonna give that so we can help some cash to close, and then you can use the rest of the money, whatever makes sense to that client. Uh, use it to their best of the ability, buy the rate down, save cash, whatever, do a two-one, three-one, buy down, don't care. Whatever makes sense to your client, let's do it.

SPEAKER_02: 13:51

So in talking about reality, real talk, we know that the um drought of customers, and I'm not gonna say fully a drought, the the uh softening? Softening, yeah. We'll we'll go with that. Yeah. Of customers all around, um, especially builders because of the price point. Yeah. Um this was all due to interest rates immediately, and it was like a spigot that was on, drinking from it. Yeah, and then it was like bathing in it. We're bathing in it. Yeah, somebody turned it off and we went, uh, where'd it go? Where did all the business go? And that being the case, what what was that like for the builder at that time? I mean, you guys have a large and and just Meritage in general, but I'm sure a lot of the builders are set similar to where you guys have a lot of overhead. You've got a lot of employees, you've got a lot of operations staff, including the sales and the builder side, the projects. There's just a lot. A ton of people. Yeah. Yeah. So what was that like going through that at the time? And that's probably at the time when you made transition from sales to leadership management, right? Yeah.

SPEAKER_03: 15:05

Yeah. What what uh what a crazy time to make that change. Managers like, I don't know what to do.

SPEAKER_02: 15:10

Yeah, what do we do? Put Tommy in.

SPEAKER_03: 15:12

Yeah, maybe I don't know. Um, I mean, honestly, it was a head spin. You know, we went from, you know, like like just like you said, the the faucet was on, the shower head was on, and we were raining sales, the storm clouds were throwing out sales. Right. Uh then to really, you know, I think we really started feeling the pinch, you know, March or April of 23, uh, 2023. Um, and it really was you had to go into triage mode. So, number one, everyone's head spinning. Yes, because like we went from hero, and I'm not saying zero, we didn't die, right? We're still here, still very strong, still selling a lot of homes. Uh, but we had to reevaluate our expectations as a leadership team, but also as a good leader, is you go and seek out the wins to keep your team motivated. Yes. So, okay, we maybe we didn't hit like what our original plan was, what we thought we were gonna do in 2023, but we still were very profitable. Yeah. You know, you it you have to essentially your entire organization has to erase 2020 and 2021 out of your mind. So that's like my greatest recommendation to any realtor listening to this, to any loan officer listening to this, like erase those years out of your mind because those were anomalies. Yeah. The amount of business that we were able to do and and take across the finish line in 2020 and 2021, unheard of.

SPEAKER_02: 16:33

Carried over.

SPEAKER_03: 16:33

Carried over, right?

SPEAKER_02: 16:34

Um like an old mentor used to tell me I tucked away enough acorns.

SPEAKER_03: 16:38

That's it. That's it. That's it. And if you were smart, yes, and if you were financially prudent, it allowed you to weather the storm of 23, 24, and 25. And God willing, you all were able to do that.

SPEAKER_02: 16:48

Yeah.

SPEAKER_03: 16:49

Um, but yeah, I think I think like, you know, just re-adjusting expectations, number one, and being real with senior leadership was is what every sales leader had to do. Yeah. Be like, hey, if you want me to tell you that you we're gonna sell a thousand units this year, I'll tell that to you. And then you'll be really disappointed on December 31st. That's right. Or we can just be real, we can have a legitimate conversation. I can show you my whys and I can show you where the math is mathing. Correct. Um, and and then, you know, we'll go forward from there. Uh, and then with our sales team, with our builders, project managers, uh customer care folks. I mean, it's just seeking out wins for them to still feel that they're doing their part. Because no one in this business likes to lose. Absolutely. We're all very competitive. It's part of our personality trait that makes us makes us successful here.

SPEAKER_02: 17:34

That's right.

SPEAKER_03: 17:35

Uh, so I think that's what, you know, when we went, when we went through that, and look, we're still going through it too. You know, 2024 was balanced, like 2025. There's been a lot of market fears. There's been a lot of fence sitting. That's right. Right. There's a lot of people waiting for something to change. Pent up for sure. Such pent up demand. Um, so you know, it's it's every day going out uh and and celebrating the wins that we can find. Yeah. Uh, and just being a good leader and and you know, put a kind ear to the team. You know, some some of the team may watch this, some of you may not. Uh, you know, some days you think I'm probably a very understanding person, and other days I'm gonna, you know, get on your ass for doing something wrong, or or maybe not giving me the uh the energy. But we always say if you can give me energy and effort and a great attitude, we'll find results somewhere, you know. So, so that's a that's a big deal.

SPEAKER_02: 18:22

So I'm looking up on screen. Um what okay, here it is. So let's see here. The most recent period when interest rates rose quickly was from March 2022 to July 2023. Oh, yeah. And they rose from, let's see, yeah, near zero.

SPEAKER_03: 18:43

Yep. Yeah, near zero to a five and a quarter, five and a half.

SPEAKER_02: 18:47

Yes. And and what that equated to was approximately a three and a quarter rate all the way up to seven. Yeah. It was like, holy cow. Yeah, is this what our parents experienced? Right. And it wasn't really because their rates were higher, but at the same time, our price points were higher. Oh my goodness, it was higher. Our taxes were higher. So everyone felt that a lot. Oh, that huge pen. Direct, yes, a lot more directly.

SPEAKER_03: 19:14

Yeah.

SPEAKER_02: 19:14

Now it wasn't, and you can kill that. It wasn't but maybe a couple of months, maybe max a year later, where all of the builders, I don't know if you guys got together, but you came up with something pretty genius that hadn't been used in quite some time, or if ever before. Yeah. And it was essentially uh builder forwards.

SPEAKER_03: 19:35

That's right. Yeah, forward commitments. Forward commitments, um, rate lock buckets.

SPEAKER_02: 19:38

Yes.

unknown: 19:39

Yeah.

SPEAKER_02: 19:40

So luckily for the ops team, luckily for the build for the the contractors that are all the trades, you guys put your heads together and went, okay, let's put our money where our mouth is, let's take a risk and we'll buy this block of rates because it was always you're gonna buy the first block and let's hope that we sell it all by the crazy guy.

SPEAKER_03: 20:03

Correct.

SPEAKER_02: 20:04

So when you did that, boom, it worked. It didn't. You and every other builder on the streets went all right, that's how we can continue to sell these homes and give the customer what they're looking for in regards to their payment comfort, in regards to their affordability 100%. Yes. And on the last discussion, I'll say it again. Yeah, I don't think that that's wrong in any way. Yeah. Reason being, and I'll paint the picture for the folks there. Uh if we are selling a pre-owned home, let's say I'm financing it, I'm working with a borrower that maybe is using down payment assistance. Sure. They've got very little in the bank. I don't want them to use every penny. I love to see my borrowers have some reserves. I call it oh shit money.

SPEAKER_03: 20:47

That's right. That's right.

SPEAKER_02: 20:48

Eventually, something's gonna happen. Absolutely. That being the case, it would be like us going, hey, seller, we need more money in closing costs from you guys. You're only willing to do 5,000. Right. We need an additional 10. Right. So what we're gonna do is we're gonna raise the sales price from 300 to 310. You guys are now gonna pay 15,000 total, and we're gonna get the deal done. Borrower is bringing truly zero to closing. Right. The reason why it works is because it makes appraised value. That's right. The buyer knows about it, the seller knows about it, all agents are on board, that's right, and the and the loan officer with the builder, same concept. Yeah, you guys are just able to increase that quite a bit more simply because the property appraises for more. Right. Can you explain that concept to us? Uh I mean, that's that's truly it in a nutshell, and you don't have to explain the concept. Sure, sure. But how did that save you guys?

SPEAKER_03: 21:48

Yeah, yeah. So our Ford commitment or or rate lock bucket. I mean, really, we started um and it was crazy. Um, I think we're almost on like our 100th rate lock bucket. That's awesome. Which is like, which is great. Yes, because again, it keeps business moving forward. It does. It it keeps the it keeps the cycle moving. So someone needs to move because they're gonna sell a home. Yes. So then it opens it up for a true first-time buyer. Because I'll, you know, uh, we're our average sales price at 385 across the city. So some some may say that's not in a first-time home buyer uh uh piece. I think some of my neighborhoods I could I could show you completely differently that it absolutely is. Yes. Um, but no, uh I mean at the end of the day, we had to keep we had to keep the machine rolling, and that's every builder. Because if if real estate uh does not do well, we know what that looks like. You know, look at 2008. We know what that looks like, right? Uh so you know, the real estate, you know, the real estate world they say is uh one of the big backbones of the economy. So we have to keep that sucker moving. So uh some really smart people got together, uh, I would jokingly say with the Illuminati, but that's not serious, that's a joke. Um but no, but but you you kind of you kind of touched on it. A lot of the CEOs got together, a lot of the CFOs understood like what it was gonna take to keep the business moving forward. It started off as you know, you got a rate lock bucket. Actually, if you were already under contract. Yeah. So back in 2022 is when we really started rolling out our first, our first rate lock buckets. Yeah. And that's where um, you know, you were already under contract, and hey, we were giving you a max ceiling. So we're like, hey, we understand you went under contract at, you know, when when the rate was a five. Right. Well, guess what? You know, I'm gonna put you in a bucket that isn't you're not gonna go up more than five and a quarter. Yes. Are you comfortable? Outstanding, sign this, press um, boom. And then it and then it changed rapidly to probably October of 2022, where it was for new sales. Yes. So we had protected the backlog, we had protected you know, clients for our realtor friends. And then again, if if we weren't able to do the deal when we sent it out to our referral partners, uh, we were giving you max closing cost contribution legally allowable.

SPEAKER_04: 23:46

Yeah.

SPEAKER_03: 23:46

Um, all this without touching sales price. Wow. We took it. I can speak for Meritage Homes of being a true partner of the industry for realtors, for lenders, but most importantly for the homeowners. Yeah, we took it as margin erosion and continue to do that today. Wow. Uh so we did not move or we did not inflate prices.

SPEAKER_02: 24:07

Well, it also speaks volumes to the prices that you guys had set their properties at. Yeah, because if they're making absolutely if it's making value and you guys are still able to make a solid margin, the borrower feels like they got a good deal because their payment is right where they want it to be. That's right. They understand what's going on, where the money's coming from. And and I would say most of the realtors that I work with, when they go builder, they tell them this is how it's going to work. Now, a lot of lenders out there for the past three years have been pretty upset. Sure. I'm a little bit different. I'm okay to not get that business because I've been in the business a while. I've got to book a business. We we do pre-own plenty, et cetera. Got a great referral business too, by the way. Because you do a good job for your people. Absolutely.

SPEAKER_03: 24:55

That's a big deal.

SPEAKER_02: 24:56

And for me, I'm looking at the big picture of all right, San Antonio, bottom line, we need more inventory. Oh, yeah, anytime. And at the end of the day, if you're not gonna build it, they will. That's right. And what that means is over a period of time, let's say five to eight years, and that could be if we start seeing rates come down, shrink a little bit more, but it has it it rose all the way to eight years as the the average versus the normal three to five. At a certain point, those homes are gonna be coming on the market. And now we've got more pre-owned homes. Right. That's where they come from. That's I mean, every home eventually started as a uh as a new construction home.

SPEAKER_03: 25:39

Every single one of them. That's right. Believe it or not, yes, they don't just appear. They don't just appear five years old, right? Like someone built them branding. Exactly right. That's right.

SPEAKER_02: 25:47

So that's the way I look at it from my perspective of our market needs more new construction homes because eventually those will become the new second home for someone. That's right. Truly, yeah. That being said, how how are you guys dealing with and let me ask you have you experienced already someone trying to resell too soon?

SPEAKER_03: 26:13

Yeah, I mean, yes. So I mean, we really only find out about those. It's not anything that we really track internally, of course, yeah, but it's when that when that um when that client needs to move, typically we see it with our military and dod friends, right? Like our military and do um clients, you know, they're getting rotated out. Um, really, I think the if you're if you bought in 20 at the end of 2020 and any time during 2021, you bought at the height of the market is pricing. It's just the thing in any market. In any market, yeah, in the United States of America, you bought at the the last three months of 2020 and all of 2021, it was the height of the market. Right. Just it is what it was. Something propelled you. You had to move. You you made a great choice. You bought a home, still better than renting, still better than renting all day long. Um, but hey, you got a good rate. But you got a great rate. You got a great rate. The conversations that are having to be had, and and I'm really I'm impressed with I call I always refer to the top performing real estate agents. Yeah, they are really great, Cesar being one of them. Um, they're coaching them like, hey, you might want to be a landlord for two years, three years. Let's let the market rebound. You know, let's let the market really just become um balanced. Yes. And then you can sell. Uh because yeah, there are those conversations um that are tough to have. Yes. When you're you bought at this time and the prices have come down uh and you might barely break even, you might owe 15 or 20 grand at closing. That's a very uncomfortable conversation. One of the ones you have to have to be to be transparent. Um, but I would say that um the ones that we do hear of, they they really either they're gonna get a corporate relocation package. Sure. So the company, the DOD, the government's gonna buy the home. That's right. Good for you.

SPEAKER_02: 27:59

They're the ones taking the L.

SPEAKER_03: 28:00

That's right. They're gonna take the L later, good for them. Um, other than that, the you know, we're gonna see an increase in rentals, but to the point of being low on inventory. I mean, we're very methodical on our starts. So we have really smart people that work for us and our their strategic operation partners strops. Yeah, they just do data analysis and they tell us where we need to buy the land, what we should be paying for the land, how we should develop it, what our development costs should be. So they give us a really strong budget. And then they say that's that's the growth, that's where it's going. Uh, they're still batting a thousand percent. So that's really great. Um, and so that's where we're starting our homes because we agree. I mean, there we are, we are a flashpoint, like one quick rate dip of 1%. Yep. And then all of those folks that are sitting on the sideline are running in and they'll run through my inventory. Yeah, and then we'll be back into a 2021 situation that we do not want to be in.

SPEAKER_02: 28:49

I'm right there with you.

SPEAKER_03: 28:50

As a sales counselor who went through that, that was the worst. Like having to look at, hey, Mark, I know you love this home, and I'm so happy that you love this home, but I can't sell it to you for three months because I've already sold my allotment. My, my uh, oh what do they call it? Uh my meter. Okay. They metered us. Oh, wow. So I already sold my allotment probably by the fourth of the month. Then I went and hung out at Top Golfer and then draws with the kids, right? So some kids, yes. But I mean, yeah, so it's like, hey, and like, so this is like May. So I've already sold my May. I already have my June squared away, ready to go. I already have the earnest money locked up in the safe at the office. Um, so I'll get you in July. That was so uncomfortable. And we don't want that again. We want a healthy, balanced market that's good for everybody.

SPEAKER_02: 29:32

Yeah.

SPEAKER_03: 29:32

Um, a run on housing is tough because it always equates to crazy uh uh price increases, and we don't want that. That we don't want to break the market again. Um, so we're being very methodical and keeping a healthy supply of homes. Also, and and every builder is doing this, you know. You know, kudos to everybody. They're working on ways to perfect their cycle times. Yeah, let's be really smart and super efficient on how I build a home so I can do it more affordably, which then that gets. It's passed right back to the buyer, right back to a realtor, right back to an outside lending partner. Um, but you know, we're we're really keeping our eye on that ball. Like we're we're keeping where like the the proverb, right? The the the whole uh phrase goes like, don't watch where the hockey puck is, watch where the hockey puck is going. That's what we're really doing. That's exactly trying to be very, very methodical on housing starts. Um, you'll see a little probably very similar start numbers this year versus last year. Next year we expect growth. I mean, we expect substantial growth for next year. Um and I'd like to talk about that now briefly.

SPEAKER_02: 30:33

Um, we're we're short on time, but yeah, no, you're gonna get real tight. And and the idea of of the buyer having to relocate, having to quickly uh uh um get out of the current new construction home. Yeah, I'm hoping that their realtor did a great job, their sales counselor did a great job of explaining the concept of hey, you're probably gonna have to be here for the next at least three years. Absolutely. And uh after that being stated to the borrower, hey guys, it's time to turn yourself into an investor. That's right. And I will I will be honest, it almost forces them down that road to get them shaped into okay, this isn't as bad as I thought it would be because a lot of folks and and me, one of them, early on, we started investing three years after we bought our first one, yeah, and that's how we made a lot of our money. I'll be honest with you. That's right, sold all our properties, et cetera, et cetera. But the idea was if I'm gonna have somebody else pay my equity, let me go do that more. Yeah, I'll be the mom and pop investor. Let's replicate that absolutely that's generational wealth 1000%. In addition, your VA buyer, and that was very specific when Josh was talking about that. Yes, they are harmed the most, but at the same time, they also have the most ability to gain in those situations. Absolutely because let's say you've got borrower, military veteran, or current active duty that is stationed in San Antonio, they buy their home. Three years later later, they get PCS to another state, convert that into a rental. This property that they go and purchase, hopefully their credit stayed good because we know their income is consistent. Absolutely. They can a hundred percent offset this property with the lease agreement and now move on to their next. They've got upwards of million of entitlements that they can continue to use over and over. Go build your empire. Absolutely. Somebody educate them. Are you are you why go build your empire? Yeah. Um, so just wanted to kind of put a little uh uh exclamation point on what you were talking about there because it's it's important. So, with this last uh couple of minutes that we have here, um I've gotten everything that I needed to and wanted the the folks to to hear about in this. Is there anything you want to talk about? Is there anything you want to let us know?

SPEAKER_03: 32:59

Yeah, yeah, I we're plenty of time left. Yeah, no, so I number one, thank you for having me on. Thanks for listening. I can ramble, so thanks for guiding me. You're doing great. You've kept me in the guardrails really well, so thank you. Um, I mean, I think what I really want, you know, the everyone listening and and and jokingly, like the world to know about maritage is we uh oh dude, we've got subscribers in India. Let's go. Hey, let's go. Let's go. Hey, I have some amazing homes for you. Yeah, beautiful homes. And let's go to Sagebrook. You'll probably love Sagebrook. Um, no, uh we are building a business on partnerships, right? And and that, and that, and that's not you know, being corny or anything. I mean, we are partnering. So we relaunched, you know, when we started in this business together, Meritage had an agent rocks program. Yeah, all it was was just increased bonuses. I didn't help educate realtors, I didn't share leads with them, I didn't give them listings, I didn't, it was just bonuses. And that's kind of cold and callous. It's great, right? Like everyone likes to get paid a little more. Sure. That also got us in a lot of trouble, and that's why we had the NAR settlement. Yeah. Again, another topic for another time. But you are correct. But it it really did. So we took our program and said, hey, how can we better partner with our realtor friends? Um, thus helping our realtor or our forgive me, our lending friends also. But like we let's partner together and let's truly build something together that's special. Yeah. So when everyone goes, any any realtor listening, I I really encourage you to go to MeritageHomes.com forward slash agents. Sign up for our Agent Rocks program. 100% uh free to sign up. The moment you sign up, you have a suite of perks your way. Outside of just like, you know, heads up on like really cool um, you know, promotions that we're running. I mean, automatically you can get lead sharing. Then as you kind of engage with us and you work with us, you'll earn the right all the way up to getting one of my listings. Like I will give you a brand new home. My team will give you a brand new home to list and treat completely as yours. Wow. Yes, it's a brand new home. It always something uh like you said, every home starts out as a brand new home, but it's your listing. It's your MLS, it's your photos, that you can have all the broker open houses you want to. It's your listing, it's your marketing, it's everything. I'll pay for the virtual tours uh and you just list it and then dominate the marketing space. Wow. Uh, but that's that is a big thing where a lot of builders and you're starting to see because a lot of there's a lot of optimism going into 2026. Absolutely. So there are a lot of builders that are kind of stepping away from our realtors again. We'll never do that. When people, you know, when other builders, again, bad actors, when they dropped commission to a flat rate or a 1%, we stayed at 3%. Yeah, you know, uh there were some ways. You are exactly correct. We we never we never shied away from our realtors because we know that that partnership together is what makes the light stay on.

SPEAKER_04: 35:43

Yeah.

SPEAKER_03: 35:43

Um, nothing happens until a realtor, you know, shakes one of our guys or gals' hands and introduces a client. That's right. You know, um, so that that's what I want the world to know is we're we're putting our money where our mouth is. We are offering a suite of education CE, uh, open house opportunities. Like literally, you can go into any one of my neighborhoods uh across this across the country. Yeah. And they will let you host open houses, sit in the office. There's the new lead sharing thing that, like I said, just got turned on yesterday, actually. So if you go sign up for Agent Rocks, there's a public profile you'll turn on, and that will allow people to see your profile, your beautiful mugshot on our website. So when they're looking at a home on the east side, if you say, Hey, I'm an east side pro, your name will show up there. So if they don't have an agent, they can start engaging with you. What builder out there is giving realtors business, right? None. And then and then it allows again for the agent that you partner with, can bring them to one of our models. As long as you give us a heads up through the referral channel, you're protected as the as the lender, too. Like we want to partner with everyone. Because if the builder, the realtor, and the lender win, that's gonna get us through this nonsense until it becomes a balanced market. So that's exactly right.

SPEAKER_02: 36:55

That's what I got. Man, that's what I got. So so you guys add a pretty substantial amount of value. I believe it's because your leadership is very forward-thinking, very, uh, very proactive instead of reactive in this market. Uh, it shows, um, especially that you guys are able to do what you're doing and still thrive through this market. Yeah. Um, that being said, I would like to give you some gifts, a couple of gifts. Lone bot hat. And I don't want to go. Over the last uh three years, not only have I been lending, but I've been working on a tech tool called Lone Bot. Yeah. Um, and I want to be able to provide you and your sales counselors with this tool. Um, what it does is allows those borrowers to self-diagnose, kind of similar to a homebuddy, but totally different. Yeah. If that makes sense.

SPEAKER_04: 37:45

Yeah.

SPEAKER_02: 37:46

Um, allows them to shop viable programs, no credit pools, no credit checks, that just something that they can find um true and accurate program details, payment calculators, all that kind of stuff. Um, you guys can embed your maritage home search in there. That being the case, I want to give that to you guys as a gift. Um and I'll get that set up and that way three months from now, when everybody's using it, they know where they got it from. Boom.

SPEAKER_03: 38:15

Yeah. Yeah. I appreciate that, brother. Thank you.

SPEAKER_02: 38:16

Absolutely. Now, to cap this show off, um, I want to thank you for the friendship thus far.

SPEAKER_03: 38:23

Heck yeah.

SPEAKER_02: 38:23

Um to be continued, most definitely. Yes. And I want to tell the folks out there that God is my witness, I have worked with all of the builders, uh, especially in the turndown capacity over the last 13 and a half years. Not once, not once have I ever received a negative review, uh, negative feedback, uh, complaint, anything like that on a maritage home or maritage transaction. I can honestly say that. Your checks in the mail. I'm just saying, yeah, no, no, no, not non-paid. That is just nothing but real talk always on this discussion or on this podcast. Um, you guys are putting your money where your mouth is and it shows.

SPEAKER_03: 39:07

Thank you. Yeah. Thanks, buddy.

SPEAKER_02: 39:09

Yeah. Well, Tommy, thank you for joining us. Um, those of you out there, you heard it here where we only talk real talk. Uh, hopefully you guys are getting something out of this. Uh, and as mentioned before, please make sure to like and subscribe. We've got 200 more to go to get to three to 30,000. So we're almost there. Um, still, this this thing right here, I don't know if they can see this. It says estimated monthly earnings,$35 to$105. Easy chief. I've never seen that before. I'm like, where is this money?

SPEAKER_03: 39:41

Like, where did you send it? Those are unrealized games.

SPEAKER_02: 39:44

Okay, that's what that's gotta be.

SPEAKER_03: 39:45

Like, don't tell my CPA. That's right, that's right. Don't tell the IRX. That's right. Terrible.

SPEAKER_02: 39:50

Guys, um, thanks for tuning in. We really appreciate you. Uh, we'll continue to bring you more uh real talk with real guests, just like Tommy. Thank you, and we'll catch you on the next one.

unknown: 40:04

Tuesday, get better, two save, better, the internet for five years, ten years, and fifty.

SPEAKER_02: 40:09

If you're still sending out pre-approval letters and praying your realtors send you the next lead, you're already behind.

SPEAKER_01: 40:15

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