So we're in a down market, I get it. What happens when that happens? Lenders and Realtors start to re-think what they are doing to get and take care of customers. We get back to basics.
My thought here is to help out members of the real estate community, but my hope is that this will also be helpful to potential home buyers and sellers. We all suffer from "the curse of knowledge" -- the idea that we know so much about this industry and, because of that, we may lose sight of things that our Clients don't know anything about.
Closing costs-
I can't tell you how many buyers (first-time and move-up) that I've talked to in the pre-qualification / pre-finding a house phase who are afraid to ask the seller to pay closing costs. They think that it might hurt the seller's feelings or keep the seller from taking their offer. Some even think that, if the seller is paying these costs, that the seller is going to have to write them a check to get the money to them.
BACK TO BASICS --
Home sellers - go ahead and offer to pay X closing costs for a buyer. If you have a buyer come along who does not understand that they can actually negotiate for you to pay them, you've taken away an objection and offered something of value that might help your home sell more quickly.
Home buyers - know that home sellers typically look at the bottom line (offer price - any concessions like closing costs) to decide if they are going to take an offer. So (without getting into tax implications) an offer of $105,000 with the seller paying $5,000 in closing costs is essentially the same as an offer of $100,000 straight away. If they have read this post and are already offering to pay the 5k, you've got one less thing to worry about! ;-)
Friday, August 29, 2008
Should I Refinance?
It is a common question that many of us have and that we as Loan Officers hear all the time...including at cocktail parties! Well, in these days of government intervention into the financial markets and mortgage world, let's turn to the government for help with the answer! It has put together a pretty comprehensive tool that helps educate potential borrowers here
Hat tip to Mike Mueller
Hat tip to Mike Mueller
Friday, August 15, 2008
Help for Realtors
Based on the craziness that has occured in the mortgage industry, here are some (candid) tips for real estate agents as you move forward with your business:
ON LISTINGS:
1) Demand pre-approval letters or, at the very least, pre-qual letters that reference that credit has been pulled and reviewed. With guidelines changing frequently, it is that much more important for the buyers loan to have been reviewed by an underwriter (i.e. pre-approved) rather than the Loan Officer just having a conversation with the buyer and saying that it looks ok (i.e. prequal).
2) Watch who the letter is coming from. Who is the lender? Is it a name you know? Is it a banker or a broker? This distinction didn't use to be such a big deal, but the wholesale (broker) side of the business has been hit harder than the retail side (banker), so guidelines are often tighter for brokers. I'm not saying brokers are bad, but they are seeing more restrictions in a lot of cases and many banks have closed their wholesale lending business completely.
3) Who is the Loan Officer? Do you recognize the name? Are they local? Ask around your office or check with other agents you know to see if they are familiar with the loan officer. Experience in the industry and local knowledge goes a long, long way with all that has happened. Your paycheck is dependent on the loan officer as well as the company they work for. Take the time to be sure you are dealing with someone who is up on all of the changes going on.
WITH BUYERS:
See 1,2,3 above! Also...
1) Make sure that they are aware of the fact that the industry has changed greatly. This is not meant to dissuade them from buying, but they should know that everything is looked at much more closely than it used to be. They need to be completely honest from day one when talking to you and their lender. Quality control / quality assurance is a big deal for lenders these days, so the chance of a file being audited prior to closing to make sure that all of the t's were crossed and i's dotted is much more likely.
2) If they are in the process of packing, make sure to suggest to them that they keep all financial documents out and handy. This could mean documents from previous closings as well as paystubs, bank statements, etc. Setting this expectation up-front is huge and can make you a hero!
3) Let them know that it is not hopeless and that there are still a lot of options available. If it happens that they cannot do something right now let their lender be the one to tell them, not their next door neighbor. You hear the term "Mortgage Consultant" -- it means a lot these days.
ON LISTINGS:
1) Demand pre-approval letters or, at the very least, pre-qual letters that reference that credit has been pulled and reviewed. With guidelines changing frequently, it is that much more important for the buyers loan to have been reviewed by an underwriter (i.e. pre-approved) rather than the Loan Officer just having a conversation with the buyer and saying that it looks ok (i.e. prequal).
2) Watch who the letter is coming from. Who is the lender? Is it a name you know? Is it a banker or a broker? This distinction didn't use to be such a big deal, but the wholesale (broker) side of the business has been hit harder than the retail side (banker), so guidelines are often tighter for brokers. I'm not saying brokers are bad, but they are seeing more restrictions in a lot of cases and many banks have closed their wholesale lending business completely.
3) Who is the Loan Officer? Do you recognize the name? Are they local? Ask around your office or check with other agents you know to see if they are familiar with the loan officer. Experience in the industry and local knowledge goes a long, long way with all that has happened. Your paycheck is dependent on the loan officer as well as the company they work for. Take the time to be sure you are dealing with someone who is up on all of the changes going on.
WITH BUYERS:
See 1,2,3 above! Also...
1) Make sure that they are aware of the fact that the industry has changed greatly. This is not meant to dissuade them from buying, but they should know that everything is looked at much more closely than it used to be. They need to be completely honest from day one when talking to you and their lender. Quality control / quality assurance is a big deal for lenders these days, so the chance of a file being audited prior to closing to make sure that all of the t's were crossed and i's dotted is much more likely.
2) If they are in the process of packing, make sure to suggest to them that they keep all financial documents out and handy. This could mean documents from previous closings as well as paystubs, bank statements, etc. Setting this expectation up-front is huge and can make you a hero!
3) Let them know that it is not hopeless and that there are still a lot of options available. If it happens that they cannot do something right now let their lender be the one to tell them, not their next door neighbor. You hear the term "Mortgage Consultant" -- it means a lot these days.
Back to blogging!
So I'm back at it. I went full out with this blog when I first set it up and then got away from it. My apologies to anyone who left comments or had gotten hooked :-)
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