The Expert Podcast

We have a lot to talk about today on a Monday get near the beginning of the middle of the month for July. It's flying by. Of course we're going to talk about the housing market not just any old news on the housing market there's indications that we're not at the peak of the housing market There's a lot of predictions and even data. That shows that not only home prices will go up. But interest rates will go up Usually when interest rates go up home prices go down.

But there's some…data and reports coming out that show that both of them might go up in the near future And we'll talk about why and how it's related to the larger employment. Market and the overall economy. Of course, we're also going to talk about the…automotive industry and there's some…data coming out today from one of the largest. Automotive processors Manheim. Where there's a crash in used car prices.

that may affect, your, trade in value may also affect if you're looking to buy a used car. what's available but at the same time, Some new cars. Are also going up but there's one area of new cars where the prices are going down because there's too many of them. And that could be related to some government regulations.

we'll also talk about some scams with auto sales, where there's some fake ghost dealers selling vehicles that they're not supposed to be selling. And last of course we'll talk about, the. Cyber market and, More commercial. risk and liability markets. So first as usual.

One of the most. Common. subjects that we talk about is real estate. So everybody has a stake in real estate as we always say. You either a renter or a home buyer, a home shopper, maybe trying to sell your home.

And the price and Val. of…resale property is of interest to everybody. Even if you're not in the market everybody wants to know. What's gonna happen with real estate prices and everybody's got an opinion. Some people say it's going to go up Some people say it's going to crash.

A lot of people wish it will crash so they can afford to buy a house. some people say well it's going to be like the crash of 2008 because prices went up so much.

but what are the facts Not what are opinions? But what are the facts…

Take a look at some…

Data as we always do on this channel. Now granted we always look at the source. What is the motivation behind the source? This comes from realtor.com. Of course that's a real estate industry.

Amazingly 2023 is not the most unaffordable it's ever been to buy a home not even close…

Well…

In some ways realtor.com will probably watch. to have an opinion about house prices They probably want them to go up or sell more. But they also have to back it up with facts. Yes We've heard it buying a home I seemed like the most unaffordable and impossible And for many people it is. Mortgage rates are near 7%.

But here's the thing. Baby boomers had it worse. Is that true? How could it be true? The typical buyer spent just under a third of their household income on housing…

That may seem uncomfortable, but it's not even close to how much buyers paid in the 1980s…

September and October. Of 1981. Buyer spent 51% more than half of their household income on their mortgage payments…

Right now. It's 32%…

40 years ago. It was. 50%. Could that even be true? Well here's the thing…

The price of homes was much less. You could buy a really nice house for under 200,000. I can remember an eighties. Seeing great houses for 180 1 90 you could almost buy a mansion for two 50 to 300 If you bought a quarter million dollar house. That was a big deal.

In the mid eighties at the same time the interest rates. We're outrageous. They were over 10%…

So when you add that together plus the fact that. Incomes were lower. It makes for…a. Very expensive. Housing market.

And here's the share of income going to housing over time. Sure Where we are here right now over 30%. Is higher than what it's been. for…

You know 20 something years, right It's been down in the mid twenties for a long time, but here's the thing. This is only a lot higher than what it was since 2019. Right. If you go back. Two.

2007 it was at 25%. And most of the past two decades was in the mid to upper twenties. It's at 30. You know just over 30% now so it is higher, but all of this time period right here. From 90 to let's call it 2005.

Or six was always in the mid to upper twenties up and down. And then it went low Why did it go low Well because of interest rates. Interest rates dropped and the and the housing costs was in the teens and twenties. That was an anomaly That was pretty rare. Numbers never went below.

20% all the way back. To the seventies. Now it did spike, but this spike is only marginally higher than what it was Most of modern history In fact, for this period of time right here here's 30, 19 79. Here's 1986. Right.

That's…

What six years it was well over 30. And during this time was one of the biggest booms in real estate. In the eighties…

Today's buyers wouldn't want to purchase home in 81. Because…those are cheap standard single family home cost $66,000. That was back in the late seventies early eighties 81. By the mid eighties you know a hundred 150 was what it would take to get a decent house…

Right. But incomes are also different. Typical household made $19,000. So what is that? quarter no that's about a third.

Right now you're talking household income of 73. And for 10 it's about this. ratio. The difference is…

You have. Interest rates…

Interest rates were 18%. In 1981. Now there may be let's call it 8%. Seems high. But it's not as high as it was…

That doesn't give anybody any comfort into what the, how hard it is to buy a house now and nor should it…

But…it does put in perspective. It does put in perspective to where. If you are in the housing market. Number one it used to be worse Number two. It indicates something else that could be worse of a problem…

Number one is. That…economists see a potential rally in the housing market…

How's he market could go up even more. Why would there be a rally? Well, It all gets back to supply and demand…

Home builders are not building. New houses at the same rate that they were…back then. Because of the fact that from 2008 until now that's 15 years, there's never been a long run more than three or four years…

Of good. Economics for home builders. 2000. Eight. Nine and 10.

That was the housing market crash. Builders A lot of them went bankrupt A lot of them went out of business. The ones that could hang in there. Didn't…

They didn't fall over themselves to build huge subdivisions Let's put it that way…

Once you got out of the other side of the housing market. Crash in 2012 let's say. There were some builders that were still around Many of them were very cautious and the ones that were building houses. They were building at a drip drip drip basis from 2012 13 and 14. Now, once you've got the 2014.

They started going like gangbusters. Maybe for five years from 2014 to 2019…

Building houses very quickly. Then what happened? Of course now we have pandemic. So when the pandemic hits a lot of builders went into survival mode They figured this is going to be a crash. Like…2008.

Was, we're not gonna…fall into that trap again. So they clamped down sold a lot of equipment. Put a lot of projects on moth balls canceled a lot of permits. For almost a year…

All through 2020. Builders were kind of. On ice. And then it became apparent at the end of 2020 beginning of 21 Wait a minute. People want to buy.

New houses. So they turn on the tap again 2021, 2022. Well now interest rates spiked up. They were at two or 3% then they went up to five and six and now seven. So then the builders pull back a little bit way.

The Mar the interest rates are too high and people can't afford homes…

Well, just within the last six months beginning of 2023. Builder's realize it doesn't matter. That the interest rates are high. Because people still are buying houses…

So let's turn on the tap again So this has been like a herky jerky start and stop for builders. What does that do? That makes the new house market. Very unstable…

The houses aren't being built in large volumes by a lot of builders…

And the rates might go up again. And you might think well, No houses Aren't the only ones on the market That's true…

There's also resale houses and you would think. When. Interest rates go up and there's a demand that all of a sudden there would be a change in the housing market prices will go down and more people will be able to afford homes. But here's the problem…

Why isn't the housing market behaving the way it's supposed to and supposed to is a judgment That's an opinion supposed to just goes by history Well, it did this before so it's supposed to do it again. Well that assumes everything is the same…

Rate hiking campaign last March, the housing market responded predictably mortgage rates climb leading to eventual decline in home prices But after 10 rate hikes…

The market is anything but predictable…

Mortgage rates have likely peaked We'll see in a minute why maybe that's not true. Home prices still keep increasing…

Y our home price is increasing even though mortgage rates are almost 7% and about ready to go to eight And we'll see why in a minute…

Why would home prices keep going up If mortgage rates go up Well, it's not a. Direct comparison. Between the two…

Mortgage rates don't automatically make house prices go down because remember. Just because a buyer He…

wants to pay less for a house Doesn't make it happen until. The seller also agrees to that price. Right It's supply and demand. While on the demand side if a lot of buyers are saying I can't afford it I don't want to pay this much for a house. Your house is not worth 600,000.

That's great That's one person's opinion. If the other side of that equation the seller doesn't agree and say yeah you're right I'll sell it for 500. It's not going to happen. The buyer can think six. 500 all they want, but the seller has to agree to that supply and demand side.

Supply and demand after. Come together…

Why wouldn't. A. Home seller. Adjust their price. When the interest rate goes up well the interest rate doesn't affect them…

If you have a house and you're already living in it, your interest rate was set back when you bought it or refinanced it, you probably have a three or 4% interest rate. If your interest rate goes up that doesn't…

Put any financial pressure on you to sell…

If the interest rates go up to 15%. You can just stay huddle down, hunker down in your house and enjoy your 3% mortgage. Why would you give that up? Well what if the housing prices crash Who cares? It's not like stocks, you're not losing cash.

If you bought a house for 250,000 and it went up to six…

And then it goes back down to 400,000 in theory on paper. That money doesn't come out of your bank account…

Unlike a 401k fund or a stock market account. Your balance you don't get a statement every month that says oh your house is only worth 400. Who cares what it's worth you're living in it. You get to use it. The value going up and down doesn't affect you at all, unless you want to sell it…

And the only reason that people want to sell a house one of three reasons either you have to move or you want to move to another house either different location, bigger house. Right. Or you have a financial problem You have financial pressure…

Well here's the, here's the fact. Over the last 15 years since 2008 housing price crash housing market crash. Lenders did not let people buy homes. Unless they were very well-qualified right in the two thousands late nineties early two thousands. anybody with a heartbeat and a pulse and a could fog a mirror could buy a house Didn't matter Your credit didn't matter Your down payment.

That's what made the housing market crash? Well after that they put all kinds of rules and laws in place that said if you're a mortgage company, You're lending through these people You have to make. Solid shore. That they have good credit. They have a good job They have a good income their income supports what they're borrowing.

Right So if you're buying a $300,000 house you have to make X amount of money, right You can't. Oversell people into mortgages. For the last 15 years that's the way it was. So there's not a lot of people that are financially distressed because it was very very stringent. Underwriting guidelines…

For these lenders. And. If…somebody wanted to buy a house or get em. Refinance mortgage. You have to qualify big time…

So now all the people who are living in these used houses these resale houses that could be inventory for people to buy. There's no reason for them to sell just because the market goes down doesn't force them to sell it Doesn't it doesn't affect them financially In fact, If anything, when housing prices go down, That's a benefit to homeowners who want to stay…because your insurance rates your property taxes. Are all based on the assessed value of the house. So if your house goes from two 50 to 500 your insurance is going to go up. Your taxes will go up.

If they. How's the market goes down You can maybe save some money on insurance and taxes. So if you're a homeowner. That's living in your house and has no reason to move. House price.

Let it go down Who cares It doesn't affect me that it doesn't make the four walls any less desirable. It doesn't make the roof any less desirable. Right. So the market. Doesn't…

Determine sellers the seller. Is. to sell you too because they have to move or want to move. They have financial distress which is rare because of the underwriting or because there's some outlier event there's a divorce a death in the family Something where somebody doesn't need the house. Right now none of those three things are very common.

Right. Financial distress is rare because of underwriting. Yeah Divorced deaf in the family It happens but it's not a major reason why there's millions of houses on the market…

There are people who have to move for their job but now work from home is a big deal So that's not as popular common. there's also people that want to move maybe to a bigger house but now if you're looking at a bigger house…

It may be more desirable Just to put in the addition on your existing house because look. If you have a house that you paid two 50 for now it's worth 500…

You have a. 3% mortgage on your two 50 You're probably paying two grand a month…

On your mortgage payment. Now you want to…

Buy a house that's bigger Well if your current house is 500 how much is a bigger house going to be 700. Well now not only do you have to pay the extra two 50 or 200. The…cover the difference in the house but you also have to pay a higher interest rate on the whole thing. Because if your rate is 3% now now you're going to pay eight. Well guess what 8% mortgage on a 700 houses That's like five grand.

So your payments kind of go up 3000 a month. $36,000 a year. For the rest of your life, just to upgrade house. So what if you instead. Took a hundred thousand dollars.

Cash and just putting an addition on your house…

You'd have that. Equaled out. In three years on your mortgage payment, if you went to a bigger house and spent $33,000 more a month on mortgage that's 36,000 a year times three years is a hundred grand. In three years, you'll have already paid the extra amount for. The addition plus you have to keep paying that 3000 a month more interest.

So why not just. Take a hundred grand slap an addition on your house If you have to borrow what you borrow it. But. That's a lot better than…switching out your low interest rate mortgage. So our mortgage is going up or down Well, a lot of people think that mortgage rates are too high and they're going down but we've seen before.

Where. Mortgage rates were over 10% for a very long time. In fact, there's a lot of…

Talk that. Mortgage rates…

May have peaked. But on the other hand…

Mortgage rates might go to 8%. The labor market is putting…

Pressure. On mortgage rates And well how did that how do those two things relate? Well, Mortgage rates have. In origin with the federal reserve the federal reserve bank sets. The.

Basic interest rate. For interbank lending…

And they use that rate to. Speed up or slow down the economy…

If the economy is getting too overheated. They will. Raise rates to slow it down…

What makes an economy get overheated Well labor data. Right. The mortgage rates have been rising close to the 2003 23 high to make things more complicated The spreads are getting wider. The question is will labor data push mortgages to 8%…

Well jobless claims are low. Meaning that people filing for unemployment that number's low. And the labor market is holding steady which means the economy is healthy when the economy is healthy. The…federal. needs to raise rates…

In order to slow it down. So basically if a lot of people have jobs, The government has two. Artificially throw a monkey wrench into the economy by jacking up interest rates to slow down the economy So prices don't get out of hand…

Which begs the question…

Does America need more unemployment…

Right is more unemployment Good

…

Economy itself is under strains. For every unemployed person there are 1.6 jobs…

Right. This is a pretty high number. So for. Every person that doesn't have a job there's more than one and a half jobs available…

Wage growth has been fast for service. Will these games survive when labor shortages…

Feed through prices So what happens is…

When companies have to pay more to get employees they have to raise their price which makes inflation go up…

Wage growth. Would be around 6% per year That's more than. The inflation…

Optimist hope that the labor market can carry out as it has cooling down. But not having too many people unemployed. Well here's the thing. Let's talk about employment. Because this is something that.

A lot of people are interested in…

Next time you go to any kind of local business a restaurant a shop a store ice cream stand anywhere. Ask how's business. You guys busy. Talk to somebody you know who's an employer…

One of the first. they'll say is I can't get anybody to work We are at a small little. cafe. A week or so ago asked my normal question How's business. And the guy who was there happened to be the owner I said great but I can't get anybody to work.

Can't get any workers. In fact they want it to open for breakfast. They're open for lunch in early dinner I think they call that for…

But they want to open for breakfast. They tried to open for breakfast came out with a great menu. But they hired two people to work. And after a week or two they stopped showing up One of them would come to work and they have to stop opening for breakfast And they could make more money They could have more revenue they could hire more people. People didn't want to work…

On a larger scale you have 1.6 jobs for every unemployed person Why not all those unemployed people take those jobs…

So the question is. What are the factors that go into. People. not. Wanting to work…

Well I'll throw a few out there and you can put messages in the comments below what you think. One could be that there was a lot of money that was thrown out there during the pandemic stimulus. Rebate checks. You didn't have to pay your rent There was rent moratoriums. You also had student loan moratoriums.

During that time people didn't need as much income They didn't need to work as much Plus a lot of businesses shut down. There was a lot of work from home. People got used to a more comfortable life where you didn't have to work as hard because you didn't have as much responsibility for payments. So once you get that in your head you don't have to work 40 hours a week Maybe that becomes a norm. Is that a factor?

Another factor that's been thrown out there and we've talked about this in some business. forums. Is overuse of technical, you know tech devices, people on their phones too much playing video games computers. Does that take away from the ambition that people have I'm not saying it's good or bad Maybe people just want to live a more relaxed life, not have to burn themselves out for a job. Maybe not have a, have a personal life That's more balanced with work.

Right.

maybe you don't want to just, you know wear yourself out for your boss There's nothing wrong with that. But what is the reason. Some people have suggested that. diets. Have affected people's energy level.

Where it slows it down Some other people have even said…the fact that. Traditional families are less…common and also less desirable And even. In some ways that are discouraged by society don't have a traditional family. Be a blended family. Right.

You know different…identities. That may take away from. Job. Ambitions How is that Well, The biggest reason many people especially head of household go. To work and work a job That's that's.

You know, This tasteful or brutal or hard work is because they want to support their family. You know people will kill themselves. Working. To support their family. We can go into a job They hate because they want to be the, you know, Bringing home the bacon, that's a cliche.

Now if you don't have that family waiting home depending upon you because you live in by yourself you're single. Right Maybe there's two people in a blended relationship. Why are you going to go to work and kill yourself? Just relax. Sit on the couch watch TV.

Maybe make a little bit of money maybe get some stimulus money Maybe you have to pay your rent Don't have to pay your student loans. Why the heck would you want to work…

Again I'm not saying this is good or bad I'm just guessing at the reasons why companies are having so hard time. Finding employees And the answer is always well they're not paying enough or it's a bad job or, you know they're mean bosses That could all be true. But this is all true before…

Wages are higher than they've ever been. How much would it take to get you to come to work? We have some contractor friends of ours that pay 60 to $70 an hour. For. Framers construction workers still can't get help.

So I don't think it's the money. Cause I don't think people really need money. You can actually live a pretty comfortable life with very little money. We watched a documentary. This week…

There was a. a guy who goes around the country and looks at different areas of the country to kind of show how people live. And he went out to rural West Virginia What they call the hollers where people live in these little canyons. And they say people live out here for two or $300 a month…

Because they own their home. You know properties may be worth three grand They paid it off a long time ago. They get some low-income assistance you know food stamps or whatever they call it Snap. maybe they get government checks for a few hundred dollars, put all that together They grow some food in the property, you know they could do part-time job or some other, you know little side gig for a couple hundred a month and live. Now you're not going to have a Ferrari.

You're not going to go on vacation all the time but for these people living a comfortable relaxing life is more rewarding. Get to spend time with your family your dog. You don't go up in the woods go hunting. Right. What's wrong with that…

So. Who knows what it is If you have guesses or opinions about what is holding back. The employment market. Put those into messages below. Let us know what you think.

Love to hear everybody's opinion. We come back We're going to talk about vehicles automobile market…

Used car prices are crashing quickly. And this is fact this is coming from early on in the…supply chain When the cars first go to auction before they go to dealerships, the house is The car prices are crashing which means prices at dealerships may be 20 or 30% lower thousands less in the coming weeks and months And you want to hear about this So standby for a moment We'll take a quick break we'll come back with the automobile market. Projection

…

All right We're back pretty quick…

So here is here are the facts as we always do We don't do opinions that much If we do they're always backed up by facts. Here are the facts Audrey marketing, which is a. news media of the pre-owned industry It's pretty clear what they do That's all they write about. Largest month over month drop in man time Use car price index. Well what's Manheim.

If you don't know Manheim is the largest used car auction. And, chain in the country…

They have, I believe 200 auctions They sell…

they actually, they actually claim that they have billions of interactions a year. And by interactions it means bids on cars people trying to buy cars people trying to sell cars. They have millions per year. And. That means that, they know more than anybody about the used car market Matter of fact they have what's called MMI Manheim market index that all the dealers use to keep track of what cars are selling for.

Well there. Index dropped. The…steepest month over month drop…

And. this is a big. Deal This is 4.1 month. If you extrapolate that out 4%. In one month, if you multiply that times 12 months that's 50% drop in new car value It may not drop 4% every month.

But even if it drops 20 or 30% a year, You have a $10,000 car. Used car it's going to be worth six or seven grand in a year. That's pretty big drop…

That's what the dealers are seeing. Cox automotive…

Owns Manheim. Us wholesale parts take a dive…

Analyst's with the firm anticipate less volatility through the end of 23, but it's still. Here's MMI man I'm used vehicle index. It's still a big deal…

Why is this happening Well…

Here is one factor in the mix One…

Used cars are typically purchased. Bye less credit worthy buyers. Most people had good credit good income And you buy a new car…

Not everybody There's some multimillionaires that buy used cars because they recognize the value. But most of them are bought by less credit worthy Well…

The banks are cracking down. On lending because they see that there might be some employment issues. The interest rates are much higher. So when you look at. used $30,000 car.

At 12%. In a new $45,000 car at 7%. The payment's not much different…

So more people might be gravitating…towards. New cars. If you can get approved…

At the same time. There was a shortage of used cars when the pandemic hit and the used car or the new car factory shut down in 2020 21 And there were supply chain issues and chips and all that stuff. There wasn't as many used cars. Well they started ramping back up in 2022 Well now you're starting to see. Right now 2024 cars are coming out…

So a 2022 is a two year old car That's a used car You're starting to see more used cars coming into the marketplace. Which means supply and demand…

The other factor is the new cars are having more of a moment of inventory availability. Part of the reason that use cars spiked up. In 2021 and 22 is because there were no used cars. I'm sorry There were no new cars So used cars spiked up. You've went to go to a new car dealership to buy a brand new Jeep Wrangler And there were none on the lot but there was a used car You bought that because that's all there was because of the pandemic chip backlog…

That's over because now there are new cars…

Throw those two things together and use cars are crashing. So if you're in the market for a used car you can find a low mileage late model. Decent price car You might maybe wait another month or two because this Manheim index are cars that are selling right now at Manheim. They may take a month or so to get to the dealers lot, get reconditioned to get out and in the market. One thing people don't realize is whatever they pay for at the auction.

By the time it gets to the dealer's lot. There may be another $2,000 in costs If you're a used car dealer or even a new car dealer. And you go to Manheim and you buy a car for $20,000…

You probably have to spend a thousand or so to get a ship to your lot…

You probably have to spend a thousand or so reconditioning the car fixing little dental scratches. You know repairing things new brakes new tires, the average reconditioning cost right now for late model car believe is about 1400. So now you have shipping for 1,014 hundred for reconditioning. you're probably going to spend a few hundred on advertising on average per car maybe a hundred a month for a few months. So now you have $3,000 worth of expense.

So now your real cost of that car is 23,000. If you're a used car dealer how much profit do you need to make Maybe two or 3000. Even if you make 10%. 10% profit…

On a $23,000 car. That's 2300. So now you take that 23 plus another three grand that's 26,000. So maybe you start out by average advertising it for 28, 9 20 8,000 discount A couple thousand negotiating right. So just because our car was purchased for 20,000, it doesn't mean that's what it's going to show up for on the used car dealers lot It'll probably show up at 28.

28 5 get discounted a couple thousand. All the other fees are paid Dealer makes a couple grand boom. That's how it goes…

But those wholesale prices are coming down now…

Let's talk about. New car market What's going on man There's some crazy stuff happening. In the…

New car market. Well, as you know EVs electric vehicles are…all the rage. According to the dealers and the manufacturers and the government…

They're shipping. Big volumes They're making more EVs than anything else, but these EVs. Are just sitting on dealer's lots as supply outgrows demand…

EVs once limited supply Now it's become…

Limited demand. EVs. Getting on dealer's lots for far longer Ours piling up as buyers mostly continued to overlook. Electric vehicles…

51% of buyers. Say they're considering use the V which is up from 38%. They're interested. But. There's too many cars…

No one in the U S really wants to buy an electric vehicle. In fact. There's a lot of incentives, tax incentives rebates. Government incentives. And incentives from.

Energy companies utilities. If you put a E V. Hugging your house They'll give you a couple of some places. Question number one. Do you want any V how do you feel about EVs…

Something you want in your life or not? Well you may not have a choice. Now here's an article We're going to show it This comes from. You know a new source that has a, a certain…

Bias against EVs. Right. Republicans bash Biden's woke Evie rule, right Could that be more biased again Agree or not? Democrats. Session with sounding the alarm on climate change Okay Let's skip all roll that.

However, the environmental protection agency has a rule that would force automakers to make more electric vehicles The proposed rule would force manufacturers to grow. Today's 8% share. Two 67% year by 2032 That's less than 10 years away. So right now. The market share of EVs is 8%.

That's happening. Right now And I was going to say happening naturally but it's really not natural because there's still incentives on these cars. And a lot of…

How should I say. A lot of…

Suggestive force behind. Manufacturers making these EVs. Right. being built as existing standards. And pose rule is the neck.

It's phase and top to bottom attempt to review the automobile Indus…

And the people who don't like EVs are pushing back against again how far this goes where. Who knows. But. It just goes to show that there are. Forces…

Behind manufacturers making electric vehicles whether these you agree with these forces or not doesn't matter there is something happening So. You might want to prepare for the fact that. EVs are coming down the pipeline…

So stay in the automotive section for a minute and then we'll jump to cyber. insurance. And camera insurance. There is a. Phenomenon that happens in the used car market called curb stoning.

This has been going on for 50 years I can remember back in the seventies. And eighties, there were kerbstone dealers What does a curb Stoner? Oh curb stoner is a car dealer…

Who puts ads in the. Classifieds could be Craigslist. It could be…

I don't know it could be…

Maybe Facebook marketplace I…could be…

Autotrader. Or your local newspaper. That says look. Here's this car for sale. And it kind of makes it seem like they're a dealer.

But really what it is. Is a…non-licensed person. Who is out there flipping cars. They buy these cars from maybe salvage auctions, maybe. Repos may be, backdoor used car dealers think to buy all their rejects.

Maybe they buy them from other people that are selling them in distress and what they do. Is they. Resell them to unsuspecting buyers Now the fact that you're not buying it from a dealer means you don't get any protection. This is an article from Western North Carolina. Why not.

About. Curves stoning on the rise. Again this is not a new thing This is 50 years old. Curves stoning is when someone buys a car through online classifieds. Find a problem And then resells are for more than it's worth.

They call a curb stoning cause you're selling cars off the curb rather than from a dealership. by the time of your victim is too late. It's a lot like flipping a house. When a buyer makes a purchase through classified and turns around and flips it. Now you can flip a house legally.

The problem is vehicle resale is, is regulated under law. When a buyer doesn't the title the vehicle in their name. And then flips it. That's curb stoning and it's illegal. If you're a buyer.

Of a vehicle You have to put the title in your name first get a new title before you sell it to somebody else. And they do this without a dealer's license

…

How. is that going to be a problem for you as a buyer Well if you buy a vehicle from a kerbstone a first of all you have no warranty no buddy to complain to if there's something wrong with that vehicle. You can't complain about them on Yelp. You can't call it better business bureau. You can't even complain to.

The dealer licensing division of your state because they're not a licensed dealer. They're just some guy flipping cars Sometimes they pretend like they're a dealer Sometimes they even make up a fake dealer name. The other problem is paperwork. A lot of times these curb solvers give you a title. It's what's called a skip title or jump title where the back of it's not filled in.

Right. The front of it is a legal title, but the back of it is just an open title or a skip Tyler jump title. You show up at the DMV with a jump title they're going to confiscate your title and you won't be able to title your car…

So watch out for these curbs stoners This is getting to be. a recurring thing for about 10 years in the nineties and two thousands. It was pretty much shut down because there's a lot of regulation and enforcement. Well now, with…

Government agencies being defunded and investigations being. not prioritized. There's more curb stoners out there. And now when you complain about it or you call the police or anything else they say it's a civil matter. Where you they don't really do anything about it unless there's some very egregious.

Violations which usually there's not…

So be aware of buying cars from somebody unless you can see their dealers license and you can see a copy of the title that's properly endorsed. You want to try to avoid. That scenario…

So we're going to come back and talk about. Cyber. Risk cyber insurance cyber protection. If you're a small business medium business even a civilian consumer resident residential property owner. You may have risk for cyber losses which you may have no coverage for it You may think you have insurance coverage.

You may think you're protected, but you have no coverage for so we're going to come back. And talk about that cyber riskier than ever. should. be aware of and maybe talk to your insurance broker about what's available because it's pretty cheap

…

All right. Cyber attack cyber insurance. It's not a huge, hugely popular subject but it is becoming more and more prevalent in the news You're hearing about ransomware cyber attacks. The company's being shut down because of insurance We had a story last week where there was a hospital that completely went out of business because they were attacked by a hacker…

What goes into the kind of hacks. And what coverage is available Let's talk about how you can protect yourself. cyber insurance meaning that if your. A person who has an insurance policy. You're getting pulled in a lot of directions There's a lot of noise If you go to buy a cyber policy you're going to find that there's all kinds of different exclusions exceptions.

businesses need help cutting through cyber. Security noise, giving a lot of different alerts pulled in a lot of directions of what they should spend their cyber money on. Industry leading cyber loss ratio 36%…

Which is a very low loss ratio. What does that mean? What this means is…

The risk to a business or even a household from a cyber attack is higher than it's ever been. But you want to mitigate that with some best practices Obviously you can't protect against every single attack Look behind you All these computers every one of these computers. Connected to the internet is a potential and potential. Vector or entry point for a hacker once they get into one computer or they're in the network during the in the router. You're done Everything's is shut down.

So can you protect all of them while you can? but that's hard to do. What about things you forget about what about your phone? Right. Everybody has one or more mobile devices in their household Every one of those connects to your wifi.

Now that's in your network…

Can you protect everyone What if somebody comes to visit your business is on your wifi a customer Can you protect that phone Maybe not. So what happens is the cyber insurance companies they know about all of these potential losses. And instead of just saying Hey if you have a loss we'll pay you like an insurance claim. Like if you crash your car we'll fix it. They also…put.

Best practice apps protections. Patches on your system They put out the router, they may put on a few computers to detect if something comes into one of them. But they're going to do more than just…pay you. If something goes wrong they're probably going to put some defense. In front of your screen and here's the thing it's all done behind the scenes.

And…they're one step ahead of the hackers because. Unlike the insurance company you're only exposed to hacking attempts to come to your company. There are thousands tens of thousands of hackers out there They're all using different methods to try to attack a system…

If the method is trying to attack your system is not one you're ready for You're going to get in…

They're going to get into your system. The only ones you can protect against are the kind that you are aware of Maybe you read about it somewhere Maybe your it person read about it. Maybe you were hacked before and now you're protecting against that. But you don't know how your business. Competitor down the street where he was hacked or they tried to hack them.

Your insurance company knows this because they have to insure hundreds or thousands of companies. And because they insure these, this group of companies. They know. That. There's hundreds of ways they try to get in and they know all the ways.

So they're gonna watch for all the methods that are used…

For your company. And they're going to try to. Prevent those from happening Cause look, they have more to lose than you do. If there's a hack they got to pay. So they're out to try to keep that from happening.

Not just pay if it does, because if. You know you have let's say a million dollar policy on hacking, maybe even with a 5,000 deductible if a hack comes in and does $2,000 worth of damage. Yeah you have to come out of pocket 5,000 for your deductible. The insurance company has to come out of pocket 200,000. They have more to lose.

So they're going to be out there trying to protect from that event that loss that risk. Ever happening. So use the insurance company to your advantage…

You just don't want to have an it person you want to use best practices In fact your insurer will probably require that…

Let's do a little overview about what goes into cyber insurance and even commercial lines in general…

What a cyber insurance that definition and cost. Cyber insurance or cyber security insurance is an insurance policy which covers losses that you might suffer from a data breach or cyber attack Pretty simple. Right. History of cyber insurance. It's been around for 20 years but not really that significantly really started.

In the late two thousands like 2008 or nine So it's really like 15 years old. And. Agencies were reluctant. Within that first to take on the risk. And cyber exposure was so new There weren't any ways to…do loss protection but here's the thing.

They now have 15 or so years under their belt…

The reason this is important to know is your insurance agent or broker has a hundred…of knowing about fire insurance slip and fall lawsuits. So they know that inside and out cyber insurance is maybe 15 years old Plus it's changed Even during that 15 years the kind of hacks have changed…

The market is expecting to reach. 29 billion by 2027 we just saw. another, survey that said you're thinking 50 billion. By the end of the century So 29. We'll be 50 our end of the decade $50 billion.

Used to be that cyber policies were ad-ons to. Liability. Now. They're their own policy…

Why is it important We talked about that. Regulations are increasing used to be that their…excess and surplus lines And now they're in, admitted carriers for the most part. benefits some of the main benefits are you get forensics support We talked about coverage, but. Also defense against losses. And also BI business intelligence.

That means that if business is interrupted, it pays. Make sure your policy covers this now. Not all of them do. It pays. Your losses during that time if you don't collect revenue for two weeks it pays your revenue Make sure you understand because not every policy covers everything…

What are the issues The issue is sometimes it's hard to get, if you're sloppy with your record keeping. Different types of coverage. How does it work? Let's see what costs. Right…

You want to have. About one or two. Years worth of revenue for coverage…

And. That's going to cost. Roughly…

Let's take a look

…

It says here 10,000 to 25,000 They're talking about a…

$10 million business. We are seeing…

Premiums. For a million dollars for roughly 1500 bucks a year. Is there a deductible Yeah probably. Thousand bucks The 5,000 you can make your deductible higher. We would recommend.

Going with the highest deductible you can afford. Because your premium will probably go down drastically If you raise your deductible…

So go with the highest deductible you can afford and still be okay. That's our recommendation…

On that subject of insurance we're going to talk briefly about commercial lines, commercial policies what's happening. In commercial lines. Bottom line is at. Rates increased about 5%. That's not bad.

That's not bad…

When you have commercial lines. Going up 5%. They call that. holding steady…

It's not a very hard market It's okay You can actually get insurance And this comes from market scout, CEO This is a great company out of Texas. they know everything about. The commercial lines market. They're talking about different industry classes even breaking it down. Property insurance 10% most coverages.

Are up about five to 7%. This is a good type of insurance they have right here umbrella. Excess. Whatever type of insurance you have on your business…

Property insurance business interruption, business owner's policy work comp commercial auto whatever you have. Talk to your agent a broker about an umbrella policy What this does is it increases your limit on all your policies. To a high number Let's say if you have, you know a commercial property. In policy and you're building for 1.5 million. maybe you have a business owner's policy for a million.

Maybe you have a GL policy general liability for 2 million whatever your different policies are. You can buy an umbrella policy let's say for 5 million. That raises your coverage to 5 million on all your policies underlying. And it might only cost you a thousand 1500 a year…

And the reason why it's cheapest because they only pay the overage over that base policy Now you have to have coverage underneath it You can't just buy a. an umbrella policy by itself. It goes over an excess of what your existing policies are, and it's only going to pay if the existing policy covered the loss. So make sure, you know don't take our word for it. Get with your broker or get with a broker to make sure you understand what's covered.

But one of the best deals I commercial insurance is adding an umbrella. You're adding extra coverage over and above. All your existing policies. And it's just like, it's not like what it sounds like it's an umbrella It covers more than just what you have. Okay…

So that's another good episode of…

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