Want to know the secret to getting your Real Estate offer accepted? Lack of Inventory frustrates some potential buyers.

Written by Michael A. Foote, CMB on . Posted in direct lender, Lending, mortgage banker, mortgage broker, mortgage finance, purchase loan, Real Estate

home-value-photo-1I read all day long. Working, researching, learning, creating ideas and developing game plans from that reading.

I’ve come to a conclusion today.

The surest way to get your offer accepted, is to go to the listing agent and have them represent you too. Yes, I know that’s crazy. How can an agent be completely unbiased and neutral while still providing you the protection you need when he is representing the seller too?  The short answer they can.  And what protections are we talking about? Laws, Compliance, Disclosure. A Realtor most likely won’t try to pull the wool over your eyes anymore, as there are VERY punitive actions if they do. And if you read your disclosures and research your property you’ll be fine.

The market is totally digital now.  Aside from actually walking through a property, everything is mostly online.

Realtors spend the VAST majority of time looking for listings. They typically don’t look for Buyers and furthermore don’t prefer to work with Buyers as the time spent with a Buyer is usually substantially higher than working with a Seller. And in a tight market, it is much better to have a listing rather than buyers if your the Realtor. Although they like to have both of course.

So think about it. There are multiple offers on each property. The listing agent has to look at them all and determine which are real, which are well qualified, which are cash and/or financing, which are too low, and which are too high with financing… and more importantly is the offer from HIS/HER Buyer is the mix.  And remember the Listing agent in theory is not allowed to tell other prospective buyers what the other offers are at price and concessions wise.

All offers are required to be presented to the Seller. That is the truth. Are they? Who really knows. Let’s assume all offers are being presented to the seller. If you were the Listing Agent and you have to present all the offers including his/her own, whose offer do you think gets pushed and sold hardest? I mean we are talking almost double the commission in this scenario.

To add on to this further, if you are financing your property? You should try to use the Realtors Lender as well. The Listing Agent knows his/her Lender. They work together, they close deals together, and more importantly they KNOW and BELIEVE what their Loan Officer says about a Buyer. And TRUST that their Lender will make sure the loan closes. And ultimately, the Realtor wants to close the deal and get paid. Realtors and Lenders don’t get paid a hourly rate usually, they are paid 100% commission.

So if you LOVE a property and aren’t being represented by a Realtor already… I highly recommend you contact the listing agent, get pre-qualified by their Loan Officer and submit your offer as soon as possible. I think you’ll be happy you did.  

In my opinion this theory only works for markets that are highly desirable and active with low inventory where multiple offers are the norm.

Michael Foote, CMB

Certified Mortgage Banker

www.MichaelFoote.com

Licensed Real Estate Broker #01149645, NMLS 235435 & 1059372

michaelfoote com

A Bird in the Hand is Worth “No Points” in the Bush

Written by Michael A. Foote, CMB on . Posted in bad boys, direct lender, good faith estimate, high ltv, interest rates, Lending, Loan Processing, mortgage banker, mortgage broker, mortgage finance, mortgage regulations, refinance

I share real world stories with my clients always. They always help me and my clients make good informed decisions. I ran into a bad story that is good to share with all of you in regards to mortgage financing.

Too often we get stuck on getting the best deal, the easiest deal, or both. It’s a Californian’s drive to ‘grind’ people for better deals or better treatment. Sometimes it works, sometimes it doesn’t. Today’s example is of when it doesn’t.

-Paralysis by Analysis

A friend, who I’ve known for years, asks about a jumbo refinance in 2013… Yes, I said 2013. We spoke and talked about his current adjustable loan, which only interest was being paid on each month, and a recasting of this adjustable would take place in the next couple years. The new payment would be higher but the payment would be fixed and amortizing. He wasn’t willing to take the increased payment and his credit score needed to be a few points higher to obtain the slightly better pricing. The value needed to be a little higher maybe as well so we could include the HELOC that was maxed out and needing to be converted to fixed rate debt.

He moved on.

Over the next few years… rates changed very little, values shot up and in 2016, we talk about the mortgages again. Values are probably high enough to combine that pesky HELOC (which is basically a $100,000 credit card balance sitting out there…Albeit at a nice low compounding adjustable rate. The debt load was now lower so the DTI shouldn’t be an issue either. Comps are there.

We chatted, I quoted, He moved on.

Here is what the average rate and points for a conforming loan during this timeline:

2013 – 3.980% @ .70 points

2014 – 4.100% @ .60 points

2015 – 3.850% @ .50 points

2016 – 3.650% @ .50% points

2017 – 4.125%  @ .50% points

What I didn’t fully until this point was that my friend, and I still consider him a friend, was speaking with other lenders behind the scenes and had applied at a few. One lender, a super techy-awesome mortgage bro-company advertised on the TV and Radio that has a Hip Cool Name, took his application and as a crappy mortgage company does, proceeded to drag the application and underwriting process out for weeks… No matter the companies techy nature, bad service is bad service, and worse further is working with people who don’t understand the real world of underwriting and rely on the computer to make all their decisions and push their workload…and the client gets turned down. All the while talking with me about, “what I thought about what the lender was telling them”. Yes, still my friend…Yes, those are painful conversations for us Mortgage Professionals. You mean you trust me enough to tell you if the other guy is hosing you… But not trust me enough to do the deal with? <Me swallowing my pride> OK, Thanks. My kids

As a reminder, I had already done all the homework, pointed out the concerns I had to the client, who went elsewhere, because someone said, ‘It’. The two most dangerous words commonly spoken by the mortgage sales people that give ALL OF US a bad name,

“No Problem”.

There are no two more dangerous words you can hear from a Mortgage Originator…If you are a consumer, Realtor and hear these words…don’t walk, run to another Originator. Because, those two words mean its gonna be a problem! You can count on it.

So after that techy-awesome So-Phisticated FIn-Tech Lender declined my friend we spoke about where he was now. We looked at his credit report, at this point, the constant credit pulls and changes he was told to make with his debts and cards, had pushed his scores from 719 to 680-ish… Almost a death blow for a Jumbo loan.

But I still had options and presented a plan of attack.

We worked on the credit, got the scores back up. And when we were ready to get started he applied at yet another lender.  I graciously as possible accepted the call and notification that, yet again, he was going to work with someone else.

I don’t hard sell my closest friends or anyone for that matter. But I do regret not being more forceful and reminding him I’ve been doing this for almost 30 years, I’ve been right from Day 1, and oh yeah I’m your friend and trusted adviser? Maybe not? Still a friend though.

Sure enough the lender got the loan into underwriting… Which by the law is like suing someone, anyone can do it.. But getting an approval remains a difficult but precise process. Bad/Poorly Educated Salesmen = Low percentage of approvals.

My friends loan wallows in underwriting. Lot’s of “we are taking a look” or “I’m waiting to hear from the underwriter about the exception” or ” I’m gonna need another something”. All generally not good signs.

My friend was turned down again.

At this point we are in 2017 and the borrower home has peaked in value and it is probably the best time in the last four years for him to consolidate the first and second mortgages and get everything on a fixed rate, after all this is the house he wants to stay in with the wife and kids.

I quoted him again… at this point… I acknowledge that he will probably be applying somewhere else. I told him, I would have more input with underwriting, since I understand the file better than most, and I would do my best on pricing. After all after four years, it matter more to get it done than not, right?

He finds a quote that is cheaper than mine, again. Always amazing to me when there is always a LOWER quote. People… it doesn’t make it real. If you take anything away from this article, please realize you can be lied to by a mortgage sales person still. Shocking? It really shouldn’t be. People lie in all industries to win business.

I call him to check in one last time on the mortgage last week…

…And he still applied at yet another bank…

And he lost his job as well… Big paying tech job. I worry for him and his family. I am sure he will land somewhere and all will be fine.

He did say he would apply with me IF I COULD MATCH THE RATE & PRICE. I told him knowing he had lost his job is a non-starter for me as I would have to disclose it, which is pretty much a guaranteed decline at this point.

Still a friend though. I hope he lands a job, and I wish I could have made him trust me more.

Michael A. Foote -Certified Mortgage Banker & Trusted Mortgage Professional for 30 years.

949-584-4600

mfoote@calpropre.com

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A bad day for one FHA Lender

Written by Michael A. Foote, CMB on . Posted in bad boys, fha mortgage loans, LendAmerica, Lending

You know you are having a bad day when the justice department wants you banned from FHA lending and all government mortgage products for that matter. Lend America clearly has some slick marketing but questions have been raises about some of the loans funded. Apparently, they’ve been under investigation for about a year and this isn’t the first time Lend America’s executive has been under fire, previously he was convicted for mail fraud and paid a substantial and once again for false advertising…Makes me wonder, how do these people stay in business. Lend American was ranked 22nd in FHA volume recently and has funded over 11,000 loans in the last year. Staggering numbers and now we have to wait and see how many of those loans should never have been funded.