Cutting Junk Fees: Context-Based Commissions, Buyer-Paid Broker Addendums, and Lower Property Taxes

Rene (00:00)

Yes, so one of the things that I’m, know, as I work with a lot of investors, they always want me to source properties for them and they ask me and they use the example of, hey, Rene, where do you think the next Austin, Texas is? And I, I, and I typically tell them, well, believe it or not, the next Austin, Texas ⁓ is not in, you know, North Carolina, which I love as a market or in Arizona and Phoenix and.

all these ⁓ other markets, it’s actually in Mexico and Mexico as a whole, right? Three years ago, maybe, yeah, it’s been three years. Tesla, for example, shifted and created a plant in Mexico. And what that created was it’s in Monterrey, Mexico. So in a border, it’s maybe about two hours from the border of the United States. And with that brought a lot of the suppliers from

⁓ China from India to move closer to the United States via Mexico. So with that, you see a lot of growth, right?

Kristen (02:39)

Welcome back to the Real Estate Pros Podcast. I’m Kristen and I’m here with Rene Perez, who’s the founder of Context Real Estate. It’s a brokerage that’s brand new, two months old, very exciting. And he’s licensed in California, Washington, Colorado, and soon to be Oregon and Texas. So thank you for being here, Rene.

Rene (02:55)

Yeah, no, and thank you for hosting me. It’s a great time to be in real estate. There’s a lot to talk about. it’s also scary, right? We’re seeing mortgage rates at all time high, really, as well.

Kristen (03:07)

Yeah,

definitely. So I’d love to go into kind of your background and you’ve been able to build a really impressive career for yourself. I’d love to get into that and then we’ll, you go into context.

Rene (03:21)

Yes, and you said it perfectly. So everything in real estate has context, right? So I first got my real estate license right before the pandemic, right? And during the pandemic, I decided to make the shift ⁓ and I had the opportunity to actually grow one of the largest ⁓ flat fee brokerages in the nation, right? So I have done in my career more than a hundred.

around 180 real estate deals, ⁓ mostly focused on buyers, right? And it’s a mix of investors and first time home buyers and through all over California, all over Washington. And the idea is that, you know, I saw that there’s a flaw in the system, right? I think commissions and, you know, junk fees in terms of escrow costs and inspection costs, there’s a lot of middleman fees that make

the cost of home ownership much higher than it should be. But with being in this brokerage, I realized that there were still things that were missing. mean, simple things like just general customer service, right? There’s a lag in that and just, you know, being really open about that. just ⁓ there’s a lot of, you know, I think that at the end of the day, sometimes you do, you know, get what you pay for, right? So I figured that there’s

The only real way to have everyone be aligned in the mission and to understand, you know, how much, how a transaction should happen is if it’s with context. So the way that I created this real estate model is,

are you a first time home buyer? Are you a investor that doesn’t need me to source of properties for you? Do you want me to source of properties for you? And with that is the way that I shift.

and I create my cost to you as a consumer for commissions. Now, it’s one of those things where, let’s say that even if I’m charging you 4 % commission, right? In that example, ⁓ I can still cut ⁓ junk fees from the transaction because ⁓ one of the things that I really like to do is ⁓ say, hey, we’re under contract. Okay.

Property taxes are based on sale price. So why should you as a buyer include the buyer broker fee into the sales price? So forever and ever, I mean, if you’re flipping in, you won’t really be harmed that much, but it’s still a couple thousand dollars. But if you’re going to be paying taxes for four or five, six plus years, why have that as part of your sale price? So what I do is something really simple. I do an addendum where I tell the sellers,

and the seller’s agent, everything is as is in terms of how much the seller’s agent is going to be paid. ⁓ Everything is as is in terms of the net price of what the sellers will receive at the end. But instead, the buyers will pay me directly. And that payment might be a flat fee. That payment might be a percentage. That payment might ⁓ include costs like inspections. Right. So it’s all going to be case to case. ⁓ But but

But the whole idea is that every transaction has context, So I’ve really tried to create a brokerage where there won’t be lawsuits regarding commissions. And you see that that’s probably one of the biggest things that are happening around real estate. mean, every day there’s a new lawsuits about price fixing and commissions, right?

Kristen (07:51)

Of course, and I think something else that’s really special about your brokerage is you’re not trying to rush people into buying or selling, you’re not pressuring them, you’re just kind of, you’re trying to present the best opportunity and I’d love for you to talk more about that.

Rene (08:05)

Yeah, and I think that so for a lot of the listeners who are, know, they’ve already bought a lot of properties, they don’t realize this perhaps, or maybe they do, but for the first time homebuyer, it’s a lot more apparent. ⁓ You have a lot of agents who the reality is they do maybe one or two transactions a year. So they really need to push you to purchase a property quickly or else they can’t, you know, have food at the dinner table.

And I can’t blame them for that, right? They don’t really want to be pushy. I hope that they don’t really want to be pushy. But if they don’t close an adrenaline section…

it’s going to be bad for them. But given that I do have a really good amount of volume ⁓ for real estate transactions, I don’t have to deal with that. There’s not a lot of overhead that I have to deal with. My office is small. I don’t have a 4,000 square foot ⁓ office. The idea is that if I have clients that want to meet me, I will meet them at a property that they might like. In real estate, you don’t really need offices or fancy offices.

⁓ I think it’s more mostly for the ego. ⁓ But in any case, ⁓ when I onboard you as a potential client, I’m going to look at your entire profile. ⁓ Let’s say that you have a potential rental property, ⁓ but you might not even know that it’s a potential rental property. Maybe you call me to tell me you want to sell your property. I might tell you, hey, look, you’re in a really good market. The market’s not really good right now. Let’s wait until the spring. Right. If this is a condo.

And I see that, I’m sorry. It is a condo and it might seem that you, we’ve hit the top of the market because there’s a new development that is still not really heard of, but it’s, it’s in the planning.

it’s in, it’s in a planning stages. I might tell you you’re better off just selling, ⁓ and just move on to the next deal. Right. ⁓ but I don’t want to rush you. have clients who I started working 2020 and.

It took them till 2025 to purchase. I’ve had clients who I speak with them at 9 a.m. and by 2 p.m. we’re under contract. So I do really want to make sure that you’re not rushing to a transaction. The two transactions that I’m under contract right now, actually there’s one deal that I just closed last week. I think that would be really good to share. It was a property that was on the market for $2.6 million.

Kristen (11:11)

out please.

Rene (11:17)

They did a price reduction reduction for, ⁓ 100 K like 2.5, which, you know, it’s like, ⁓ okay. They reduce a hundred thousand dollars. Well, ⁓ I got that property under contract for $2,080,000. So, and, and with that, it was a lot, you know, a lengthy negotiation. took over a month, but the idea is that even if we do make an offer, right. And even if you get a little bit too anxious and want to just.

meet in the middle to get the property under contract, I’m going to be the first one to tell you, you know, it’s, it’s, it’s a, you have a little bit of leverage. There’s no one else that’s looking to purchase a property. That’s just stay put, right? Let’s not counter. ⁓ Let’s wait maybe a week, two weeks even, and see if the other party responds. And you know, it’s going to be case to case, right? I can get a sense of.

If you go to the open houses, if they’re still at the three week mark, people walking into the doors. And the hard part is that at the end of the day, there’s a lot of people who are on the sidelines looking to buy. So there is a risk, right? You could lose a property by doing that. But the idea is that I don’t want to push you to just buy something and then have regrets on that. I’d rather have that relationship with you.

Kristen (12:34)

Right.

Absolutely. mean, it sounds so simple, but it’s really missing in the industry. And I think that you’re feeling actually a gap that needs to be filled. I would love for you to talk about, you know, I know that you are expanding this practice to Mexico, correct?

Rene (12:54)

Yes, so one of the things that I’m, know, as I work with a lot of investors, they always want me to source properties for them and they ask me and they use the example of, hey, Renee, where do you think the next Austin, Texas is? And I, I, and I typically tell them, well, believe it or not, the next Austin, Texas ⁓ is not in, you know, North Carolina, which I love as a market or in Arizona and Phoenix and.

all these ⁓ other markets, it’s actually in Mexico and Mexico as a whole, right? Three years ago, maybe, yeah, it’s been three years. Tesla, for example, shifted and created a plant in Mexico. And what that created was it’s in Monterrey, Mexico. So in a border, it’s maybe about two hours from the border of the United States. And with that brought a lot of the suppliers from

⁓ China from India to move closer to the United States via Mexico. So with that, you see a lot of growth, right?

you know, I have a small budget, so I’m nowhere as rich as Elon Musk with ⁓ his 500 billion net worth as of yesterday, I believe. But I know that if with their budgets, they think that Mexico is a place to be.

I think that you as an investor ⁓ would really benefit from being in Mexico. And the thing is that the price to enter is really low. And Mexico is a young country, so there’s a lot of young workers. It’s a thriving economy. There’s a lot of natural resources. mean, the biggest threat to Mexico really is that, let’s say for data centers,

There’s not a lot of water resource that can be used, right? So there is some form of water shortage. So it’s not the perfect market, right? But ⁓ yeah, I think that

when you’re thinking about how am I going to 10x my return, ⁓ I think that there’s just too much demand in the US where you need to think about new markets and that new market is Mexico.

Kristen (15:57)

Yeah, and I mean it’s kind of using the same principle, know, people when they’re looking at their areas, they look at where the Starbucks are popping up, or the, you know, fast food restaurants are popping up. They have all the money to do all the community data and do all the research. It’s kind of a similar, on more of a macro scale.

Rene (16:17)

Yeah.

And with that, as we talk with data, so one of the reasons that markets like Austin, Texas, or even markets around Seattle and San Francisco Bay Area don’t work is because there is so much data, right? So you don’t have these off-market deals, for example, because the people know that if they post them on the MLS, which is a multiple listing service on Redfin and Zillow, they’re going to get the most money, right?

or at least they think they will. I think some off-market deals are still really good, but in Mexico, there is no one MLS. A lot of it is by word of mouth. So as an investor, you do want to profit and be able to negotiate without 10, 15 retail buyers, because I think the reason that houses go a little too…

Kristen (16:58)

wow.

Rene (17:14)

aggressively high is because the investors, they know that the numbers don’t work. The investors know that, you know, if the deal goes south, they’re going to have to rent it and the rental has to be at a certain price point or does or the numbers don’t work. But the retail buyer doesn’t care about that. They just want the house. So they end up overpaying. Right. But if you’re buying in Mexico where you don’t have a lot of these retail buyers and it’s just you and the seller, you can both have a really good deal. Right. So ⁓ that’s that’s the beauty of Mexico as well.

And the data is coming, which is fortunate and unfortunate, right, in Mexico. But you do want to get in right now while it’s a wild west, right?

Kristen (17:53)

Yeah. Are there any areas in Mexico in particular that really excite you?

Rene (17:58)

So I think, so in the state of Oaxaca, the coastal area of Oaxaca, there’s a lot of coffee beans, for example. It’s a place that has awesome weather and awesome beaches. They’re expanding their airport. It’s a really small airport. I went there a year and a half ago and I sat down. I I like to always sit down and overhear conversations.

I ended up talking with a man from the UK who was talking about how he purchased investment property there. was meeting with actually an American from Arizona that he was there also purchasing. So it was one of those things where I would not imagine, you know, just sitting at a bar, I would hear people saying like, oh yeah, I’m actually here to invest in the area. And that’s where you want to be.

I think that if you’re looking at where to purchase in Mexico, when you look at the resort areas, you’re already overpaying for the premium. Everybody knows that they want to be there. So you want to work as like, where’s the development going to? Are they building a train? There’s a new train. It’s called, I don’t know if there’s an English translation for it, but it’s called the Mayan train.

Tren Maya, right? even though it’s devastating for the ecosystem, right? If they have those routes, and there’s going to be stops, okay, well, there’s definitely going to be developments there, right? So that’s where you want to move. And ⁓ you don’t really want to… I think that as beautiful as Cancun and Cabo is, those markets are, know, people already know about those, right? It’s like buying in Austin, right?

Kristen (19:52)

Exactly.

And before you were kind of mentioning some off-market deals and some of them might not be as good of an opportunity as you think they are. Can you expand a little bit more on that?

Rene (20:03)

Yeah,

so what happens in the just in the general real estate ecosystem is one of the things and I’m sorry if you are a real estate ⁓ maybe coach that is listening into this ⁓ but when you’re when you’re a new agent you’re told you should tell your potential clients that you have off markets and if that if they work with you they’re gonna get off markets right and that’s one of the biggest pitches and obviously as if I’m buying

And you tell me that you have off markets, I’m going to want to join you. Right. ⁓ but the reality is that, you know, in markets like San Francisco Bay area, you have a lot of savvy sellers who know that you’re likely going to get top dollar if you are, ⁓ if you put your property on the market. Right. So I think this, this common misconception that there’s off markets, it’s quite limited. Now they still exist. and.

It depends on what the situation of the sellers are. mean, there might be sellers who are really wealthy and they want to keep a low profile and they don’t care about getting the highest price. They care more about privacy. So those off markets exist. It might be that there’s legal issues and maybe it’s a divorce sale and people don’t want to share. Sorry, divorce sale, meaning that there’s people that are

still fighting for who’s going to keep the property and those might be off markets right. ⁓ So there are still off markets there’s there’s there’s properties that have been empty for a long time and the owners have not really taken care of the property and if you reach out to them they become off market deals but the idea that off markets exist in the open market are it’s quite limited right.

So be careful if one of the biggest pitches that an agent tells you is like, work with me because I have off markets, you should probably question them. Yeah.

Kristen (22:07)

Yeah,

yeah, no, I think that’s a great point to bring up that people might not be, not really know about while they’re starting out. So I would love to talk about, we’re nearing the end of our time, but to kind of wrap it up, talk about context and what you see for it and your goals.

Rene (22:27)

Yeah, so ⁓ as part of me being in real estate, I’ll start that over there. ⁓ So in my tenure as a real estate agent and real estate broker, this year, for example, I was awarded ⁓ number four agent in the nation ⁓ for real estate sales volume as a Latino agent. ⁓ And that just has been an honor of just me just really

doing a lot of deals, right? And what I’m really looking for this coming year is I don’t, I think I want to maybe put a pause on so much volume,

Rene (23:07)

I would like to be able to have underground people. So this is a call to anyone that, you know, has been in the industry for maybe one or two years and they’ve realized that like, hey, it’s a hard business. Can I start over? If you’re looking for something refreshing, ⁓ come join me. I need boots in the ground, right? I need people ⁓ who are local to the area. And I think that’s another misconception, right? As well, you have people who will tell you like,

Oh, you don’t need to be local. I can do it better. And yes, I myself, I have case studies where I perform better than the local agent, but that’s because I am, you know, up at 5 a.m. and still on the computer at 11 p.m., right? So it takes a really specific kind of person to be able to perform when they’re not local, right? But and there’s still things that I can’t do. Like right now, if there’s a fixer in San Diego, right, next to a Starbucks, I won’t know about it because I’m not there.

Right? I still like to, as we move forward, create a larger team. So please reach out if you’re for something new.

Kristen (24:16)

Amazing. Well, thank you so much for sharing your insights on the market. And I think the opportunity in Mexico is so exciting. Tell people where to find you, where to find contacts, and how to work with you if they want to.

Rene (24:30)

Yeah,

website is contextre.com. You will find me. ⁓ I mean, I have my direct direct business cell in there. There’s a there’s a place to schedule time. I am also on Facebook, Instagram, ⁓ on X. ⁓ So on also on all your favorite social media or least favorite social media platforms. And yeah, I mean, please give me a follow. I’m looking to have a newsletter on LinkedIn.

where I provide a lot of, I provide a couple of deals. ⁓ I have first time home buyer grants that are available. So there’s a lot of resources out there in my newsletter as well.

Kristen (25:07)

Night.

Amazing. Well, I really encourage everyone to check that out, sign up for the newsletter and learn more information because it seems like you have a lot to share. So thank you so much for being here today. Amazing. Thank you everyone for listening. Hope you learned a lot. Maybe got some inspiration for your own business, your own real estate goals, and we will see you back next time. Bye.

Rene (25:20)

Yeah, no, and thank you for hosting me.