Congratulations! You have decided to take the steps to become a homeowner in today's market. This is no small task and it can be overwhelming. Many new buyers start there search online on their own. In fact 82% of buyers start their search online. I understand that you do not want to be sold or bound to a Real Estate agent. I get it but you have to do your due diligence and hire a professional. Here are 10 benefites a great Realtor will add to your purchase experience:

1) Professional Advice - Real Estate agents are trained in the very thing you are looking to accomplish, Finding the right home. They can offer professional advice on Style, Location, and Price. They also have knowledge or professional contacts to make sure the structure, floor plan, area are all up to your standards. There is no substitute to Professional Advice.

2) No Cost to You - As a buyer you do not pay the commission of your selling agent. They are paid by the seller for finding you and selling the sellers home to you. It does not cost you anything. Their time they spend with you, the advice they give you, and all the additional benefits come at no expense to you until they find you the right home and you agree to buy it.

3) Negotiation - Realtors are skilled negotiators. A large portion of the job that they do is negotiating the right price and terms of your purchase. This can be the difference and to me very well could be the number one benefit.

4) Expanded Search - Agents not only have access to the local MLS but they also have access to a network of other agents that have inside knowledge on upcoming properties. This extends in most cases above and beyond their own company. Overtime Real Estate agents build strong relationships with colleagues. It is like water cooler talk. In the end you may be the beneficiary.

5) Knowledge of the Area - You may be familiar with the area that you are buying in and you may not. Agents are generally connected with the chamber of commerce, local churches, school associations and restaurants through their farm. Many agents concentrate on specific areas and know everything there is to know about that area.

6) Determine overall value to insure appropriate price -  Agents have knowledge of values and sale prices that are accurate in your market. It is their job to stay current with market values and sales in today's market. There are two markets going on today: The normal market and the distressed REO market. Realtors can help you navigate the two markets and help you to determine the appropriate value or price you may offer.

7) Limit Liability - An agent can limit your liability and make sure that you are protected as a buyer. There are time frames, contingency periods that a buyer must meet and there are contractual obligations to meet. Your agent will guide you through this process and help you to make educated decisions regarding your liability.

Emotion Manager - The market today can be very stressful for a buyer. It is essential to control your emotions. You cannot get attached to a property. If you write an offer on a short sale it is essential to understand that you may be waiting for a long period of time and your agent will help set that expectation keeping your emotions in check.

9) Simple Explanations to Complex Issues - Your agent will break down complex situations so that you can understand them fully. It can be very overwhelming upfront but your agent will break down a complex process and help you to understand the little pieces. This will be a major life-changing event and the Real Estate agent will help simplify it.

10) Experience only time and transactions can provide - Your agent has seen nearly all the situations that you may encounter during your purchase. From uncovering a hidden defect, loan issues, property not appraising, title defects, zoning, septic, well, inappropriate disclosure, and many more. They are there to help you understand the concerns that may arise and help work through any situation they may not have experienced.

If you are in the Sacramento  Area or Sonoma County Area I recommend the following Real Estate Agents. I have worked with each and everyone of them at some point. In my opinion each of them comprises everyone of these benefits described above. Please contact me for their contact information as out of respect for them I will not post it.

Sacramento Area - Dayna Neuse Remax Gold Roseville , Peter Bond Remax GoldRoseville, Karen Wallace Lyon Real EstateRoseville, Robert Wallace Lyon Real EstateRoseville, Kevin Nakano Nakano Realty Elk Grove, Bryan Hill Pacific Coast RealtyRoseville, Nathan Novelo Connect Realty Antelope, George Snyder Lyon Real Estate Roseville and many others. I am sorry if I missed you here are there are too many of you too mention.

Sonoma County - Brook Terhune Platinum Real Estate Santa Rosa, Delia Nieto Coldwell Banker Santa Rosa, Larry Mitchell CPS Real Estate Santa Rosa.

In summary, it is imperative that you use the services of a qualified Real Estate agent. It is up to you to interview each and every Real Estate agent that you may want to work with. Determine who is a good fit for you. Communication is the key to every relationship and it is a two way street. Qualified Real Estate agents will help you have a successful buying experience.

The market is phenomenal and the opportunity to buy a home is now. Many of you are taking advantage of the opportunity and that is amazing. Warren Buffet said, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."  Many of you are listening.

The time-line for an escrow to close is 30 days in most cases. In the thirty calendar day period we need to get our inspections done, appraisals done, have the loan underwritten, satisfy any conditions of the loan and be understanding of the turn-times of the third party services we employ. It is a cooperative group effort. I have given you below a few tips to help you survive the 30 day escrow and sneak out a winner.

Tip #1 - Be responsive to the requests from the professionals you hired- Before you began the process of buying a home you found a few professionals that you felt would best help you through the process. Many times these professionals (Real Estate Agent and Loan Officer) do not make the rules of the game. They are there to facilitate the process. If one of these professionals request documentation or a check for a service be quick to get them what they need. Your process will stop without it.

Tip #2 - Provide the documentation requested - It is imperative to provide all of the documentation requested. Do not try to find a way around it or think that something will be sufficient if that something is not what was requested. If you do not have what was requested get with your affiliate or loan officer and come up with an alternative. Holding back information from professionals that are on your team can cost you in the long run.

Tip #3 - Remember that we are on your side - All too often we forget that we are all on the same team. A victory is represented by a closed transaction. Communication is the key to that transaction. It stems from all parties who all have a lot riding on a transaction. Small details excluded can lead to a disaster that was avoidable upfront. Tell me the property is zoned service commercial and grandfathered in so I may come up with a solution prior to the problem.

Tip #4 - Be Prepared to fight for the home you want - It is not 2003, 04, 05 and obtaining a mortgage is a little more invasive than the past. If you could fog a mirror we gave you money in the past. Now we are asking for Birth Certificates to show the child support will continue for three years. The age on the application is no longer significant. This starts with the investors and trickles down to the buyer. Nothing good comes easy in life. It will pay off to be diligent and fight for the property.

Tip #5 - Everything is time sensitive - The purchase time-line is as follows. You go into contract and the clock starts. Your loan officer orders the appraisal, gets all the signed disclosures for the property, requests the preliminary title report and a copy of the fully executed purchase contract. Our wholesalers want a complete package to look at your file. The appraisal can be anywhere from 3-5 days, preliminary title report depends solely on the title company (I have dealt with companies in Philadelphia), Fully Executed Contract which can take time if the property is bank owned 3-15 days I have waited and all of this prior to submitting the loan to underwriting. Once we have all the documentation we can submit to underwriting which can be 3-9 days to underwrite. Business Days but the weekends count on the escrow. Once the file is approved there are generally a few conditions to meet and to be reviewed once they are obtained can be 2-4 days. When they are cleared and we are able to order your loan documents this is a 2-3 day job. Then we sign and the package is returned to be reviewed for funding. The funding process is 2-3 days. So if you add up the days on the short end a perfect process can take up to 12 business days with no hold up at all. This would include 2-3 weekends at 6days and we close the escrow in 20 calender days. On the long end 34 business days and 4 weekends would be a 42 day escrow.

In summary, it would require a group effort to survive your 30 day escrow. Note that we all have the same goal in mind. Home-ownership for you as the client is our goal and what we do best. I look forward to working with all of you in the years to come.

The very first thing that a buyer should do when considering  a new home purchase is contact their Mortgage Broker or Banker and get pre-approved. However, many times this is not the case. Many times buyers see a home that they like either by driving buy it or searching on-line. This home sparks the interest and they use on-line calculators to see if the home is affordable. The payment appears affordable and within their budget. The question is with tightening credit and underwriting criteria will the documentation support that theory.......

Mistake #1 - Test Driving Homes before Pre-approval - Looking at homes on your own or with a Realtor prior to have a clear understanding of your qualification, the cost and the payment is a recipe for let down. Two things commonly happen to the consumer when this approach occurs. They fall in love with the home and either buy it even though it was above their comfort level or get disappointed when they find out they do not qualify. Both are dangerous as one could lead to financial disaster and the other could lead to inaction that will cost you later.

Solution - Consult your Mortgage Broker or Banker on your qualification levels when you get the desire to buy. The consultation is free and can save you time, money and heartache. If you do not have a Mortgage Broker or Banker get a referral from someone you trust and respect or do thorough research and interview two or three. Generally your Realtor will know someone that you can trust.

Mistake #2 - Getting Pre-approved without providing your documentation - If the Mortgage Broker or Banker is willing to issue you a pre-approval in today's credit market without reviewing all of your income and asset documentation and looking at the credit  RUN! Every dollar counts and without reviewing the tax returns and the income documentation we may qualify you using an income that will not stand when the loan is underwritten. Your Mortgage Consultant should take the conservative approach to your income to leave room for the unknown.

Solution - Find a Mortgage Professional that you feel comfortable with and invest in yourself by meeting with them face to face to get your pre-approval. This will allow you and the Mortgage Professional to talk in detail about the situation and make sure that you explore all options. If you are unable to meet in person the next best thing is to provide all the documentation necessary and have a phone appointment on speaker phone. (You could always do Webcam or Webinar meetings as well).

Mistake #3 - Assuming the Pre-Approval is good indefinitely - Pre-approvals are credit approvals. Credit is a snapshot in time and can change daily if you are an active user of credit. If you were borderline on your credit approval from the beginning say 623 Fico and you are going FHA and you go buy some 0% interest at Home Depot you may be at risk. A credit report is generally good for about 60 days. Since a Pre-approval is a credit and income approval any change in either make make it invalid. Another thing buyers are not aware of is programs and guidelines are frequently changing and if they are not being updated by their Mortgage Professional they may again be at risk.

Solution - Stay in constant contact with your Mortgage Professional (They should be in contact with you but it is a two way street). Make sure that there have not been any program changes that would affect your approval status. You also have to keep your Mortgage Professional aware of anything that you have done that may help or hurt your approval. An example would be a pay raise or a new credit purchase. Communication is the key to protecting your Pre-Approval. 

The next time you are considering buying a home and you are in California, Oregon or Idaho go to http://capitolmortgage.com/officers-detail.aspx?LONum=161 for your pre-approval. 

Congratulations you are pre-approved!

Buying your first home is such an exciting time. There are so many things that will take place in such a short period of time. Each and every step of the process is a function of the process.

The word Process can make the home-buying experience sound like such a difficult painful task. By definition the word Process means a systematic series of actions directed to some end or a continuous action, operation, or series of changes taking place in a definite manner. (information taken from dictionary.com) The first of the definitions is the one that I think best represents the home purchase roller coaster.

Here we go!

Obviously the end is the day that you as the consumer would get the keys to your new home. The systematic series of actions that precede the glorious day are described herin as the Roller Coaster.  

Action 1 Boarding- Meet with your Loan Officer of choice and get Pre-approved for a home loan that will meet your budget. This is generally about a one hour meeting preferably face to face to discuss the payment that you feel is suitable, your three c's (see my post on fannie mae/ Freddie mac costs) and the type of financing based on down payment and qualifications that we will secure. (I say that this is the first action but I receive the majority of my business, 70% from my Real Estate partners, so many times you have looked at a home that sparked your interest or at least started some sort of search). You are now pre-approved strapped into the seat and ready to take off.

Action 2 The Departure and Ascent-  You are now pre-approved and you are out with your Real Estate agent looking at homes. You have found a couple that you like and have decided to write some offers. You sit down with your Real Estate agent and strategize on the offer you want to write. Many times after you write that offer you are already mentally moving in the house. "This is where we will put the blue couch" etc. At the same time you are processing the payment in your mind and saying what have we done right as you begin to peer straight down the initial drop.

Action 3 The first drop- You are peering right over the top of the drop waiting for your Realtor to call you back with the news. You have told everybody about the home that you made an offer on and how you don't have your hopes up but you do and that is natural. You are no different than the rest. The phone rings and the stomach drops, You are on your way down. Your Realtor says I am sorry they have countered and the bank say do not even respond if you do not at least offer 15K more. This is out of your limit and you know it. The rush and the thrill of the ascent and the short drop are over. You are about to begin another ascent.

Action 4 The second ascent- After a little frustration you are on your way up again and have found a few houses that you want to write on. You write offers much quicker this time because it is not so foreign and your expectation is less and you realize it was not that bad. You can do this. You submit two offers this time hoping that you will get one of them. Again you are starting to peer over the next sequence of the roller coaster.

Action 5 The Tight Turn and The Corkscrew- You begin to descend into the tight turn. This is when the Real Estate agent calls you and lets you know that one of the properties has made a small counter and they would like to talk to you about it. You meet with them and while you are meeting you come out of the tight turn and you are turned upside down briefly when they answer their phone and the other home has countered. Which do we like better? What is the better investment? What one will we get we don't want to be disappointed? This is is a lot to handle. You choose the one that you like the most and  submit the counter.  You have made it through the corkscrew and are being thrown into another tight turn. Then your offer is accepted right as you look down another huge drop.

Action 6 The big drop- Now that you are in contract it seems like things are moving fast. The nerves set in as your agent sends in the earnest money deposit, the loan officer asking for the appraisal check, the checks for home inspection and pest if you want it. Money is pouring out and you are saying what did we get ourselves into for real this time. A million different payment scenarios, excitement, fear, second guessing, excitement, nerves you get the picture are all shooting through you as you are speeding down the face of the coaster.

Action 7 another ascent or straight track- Things calm down for minute. The rate is locked the inspections are done and you are waiting for final underwriting approval. The loan is being Processed. That process is gather all pertinent info and updated financial statements if it has been greater than a month, submit the loan to underwriting and wait(average underwriting 5 days right now)., the approval is in 5 days later and there are conditions that we must meet. Many times the conditions are simple but other times the wholesaler asks for things like birth certificates now a days.

Action 8 The loop da loop- This is the point that you are asked to gather some documentation that may seem hard to obtain. Sometimes the giftor does not want to give a bank statement, you are asked to release financial contingencies and have your deposit at risk and you are not certain you can provide exactly what the underwriter has asked for. This is the time that you must remember that both your Real Estate agent and I are on this coaster with you. We want to get to the end safely and successfully as well. We made it through both the loops. Awesome.

Action 9 the last death drop- This would be the signing of the loan documents. You are prepared and you know what is coming but it is a large commitment. No time to turn back now. You sit in front of the notary and begin to sign your life over to the new mortgage payment. This is a long drop but it goes by very quickly. We have made it to the bottom. Yes we are done! Not Quite.

Action 10 The final turn and the end- We still have to fund the loan and based on how well a Loan Officer has done their job there is nothing you should have to do but wait out the steps. You take that last turn and they ask for something else to fund your loan. You are throuwn for a second but we are through it before you know it. We have made it to the end and the Roller coaster comes to a stop. You realize that it was not that bad at all as you get out but you are clearly trying to get your bearings on why you just put yourself through it.

Action 11 The conclusion- You went through it because it is the cornerstone to an amusement park and the reason that you go. We all dream of home-ownership and none of us are quite prepared for the Process. The reason that you go on the Roller coaster with friends is that it makes it that much easier. We as professionals are trained to warn you of the layout of the coaster so that it is manageable and in the end you say Let's do it again!

That will come in due time. For now I say go get something to eat and re-energize as it is time to get on another ride..............The Move!

Who is buying the drinks and pizza we bought the house:)

Disclaimer: For Illustrative purposes not all transactions go the same way. This is not meant to be an exact guide to buying.

We are taking a moment today to step outside of the normal content of this blog to discuss something that we think is very relevant to your mortgage needs. I heard a lot of the content from a man named Jim Burns who is an author and it made me think of our industry right now.

The pain of regret is a choice that we face every day. We are giving the choice to get out of bed or to hit the snooze button. Hitting the snooze button can make us late to one of our many obligations. Our lives today are filled with obligations that we Must attend. We are constantly running from one event to another and we are barely taking the time to be present in the moment. The day is over now and we hear that alarm again: Do we give into the pain of discipline or the pain of regret?

Just stop for a second and think of all the things that we as human beings like to do. Working out (OK that is an opinion), networking, blogging, working, eating, vacationing, attending Church, reading or watching TV. Each and every one of those items asks the question of pain or regret just before we engage. Example: Yesterday I opened the freezer and for the first time in a long time there were Dibs in there. I looked at them and I thought to myself do I really want to eat those? I did and initially there was no regret but when I stepped on the scale to maintain my health I felt the regret of indulgence.

Many of us are simply living life to fast!  Many times we are not focused and the lack of focus has us off in so many directions we do not know which way is up. We must focus on what will bring us balance, joy, harmony and happiness in our life. To do so we must do the following which is the very hardest thing to do. We must say "no" to the good things so that we may say "yes"  to the best things! This practice will lead us to regretfully tell some of our friends no I am sorry we cannot, cut out the dinner splurge at Round Table Pizza and cook as a family etc. In Business, this can be very hard to do because we are always looking to develop relationships. We commit to a million different events and in the end we cannot be present for them all.

The term that I heard from Jim Burns (Author) that best summarizes everything above is that many of us are in "Crisis mode living."  The Economy is in shambles, job loss, divorce, sickness, retirements being lost overnight, banks dropping like flies, and of course the Real Estate Market is facing some challenges. People are switching to survival mode and when that happens we tend to speed up and lose focus. The loss of focus leads to experiencing the pain of regret more frequently as we are unable to remain disciplined.  "Crisis Mode Living" simply wipes us out.

Wiped Out

                  "Untended fires soon become a pile of ashes." Break down your day and cut out everything that does not bring you what you are looking for in life. Give up the bunko game to focus more on the family. Our family feels the pinch when we live in crisis mode. It is our job to slow down and let the storm pass. Tend to what needs to be tended and leave the rest for another day.

So how does all of this relate in the least bit to Real Estate. We have right now one of the greatest opportunties to buy or invest in Real Estate. See a great article written by Kevin Nakano of Nakano Real Estate http://www.nakanorealty.com/articles/realestate/great-time-to-invest-in-real-estate.htm. We  have the chance to get in while the market prices are low as well as the rates. The perfect storm if you will. In order to take advantage of that we have to step out of the "Crisis Mode Living" economy and focus on what the "Best" choices for our families are. Do not listen to all the others that are telling you to wait because interest rates and prices will continue to fall. If they are not in the industry and they are offering advice to you be aware of the source. Don't get me wrong it may not be the time for you to buy. You may need to work on some things to be in the appropriate position to do so. That is why it is so important to ask yourself the following:

Will this decision lead to "The pain of discipline or the pain of regret?" What can you do without and how can you go deeper with what you do need in your life. Whether you are a business owner, a homemaker, a first time home buyer, a move up buyer, investor or simply someone looking to grow yourself it is important to know that discipline can be painful. It can hurt to do things or not to do things. The question is: What hurts worse Discipline or Regret?

Fannie MAE and Freddie Mac have gone to risk based pricing. This is not new news as loans have always been priced and approved based on levels of risk. When you as a consumer are looking to be financed the lender is evaluating three things. We refer to them as the three c's.

Credit - this is your history of repayment of other loans such as auto, note loans, installment, student loans and revolving debts such as credit cards. Your mid fico score is seen to be a fair reflection of your repayment history. Experian, transunion and equifax are the three bureaus who produce these snapshots in time that generate your scores.

Collateral - this refers to the property and the down payment or equity position you are in. Having 20% equity in a home is considered the breakeven point for a lender in the event they have to foreclose. Naturally the greater the equity the lower the risk. Someone with 40% plus is not likely to let a home slip away and has the ability to price to sell if they get into a dangerous position.

Capacity - this is your ability to repay the debt. Your income, more importantly claimed documentable income is what they are looking for. This is the arena that was most widely abused in recent years and as a result has become the most scrutinized and most important. Income is only part of capacity as length on the job, type of job and how you are paid are additional factors that are very important. Your debt to income ratio is your housing and other credit related minimums divided by your gross monthly income. The goal is to not have this exceed 43%. that means that the house and all the debt represent 43% of your GROSS income.

Traditionally, if you he a 620 fico score, 20% equity position and documented your income on a purchase you would qualify for the lowest wholesale rates we have to offer. However, this has changed drastically and it is undergoing another set of revisions.

Today you have to have a 740 fico to be in the top tier and from there it drops off fast. Those who want to refinance and take no cash out of their home with a 695 fico and 20-25% equity have to pay a 1.5% risk adjusment. This means that their par wholesale rate will be much higher than those with 740. Yield spread premiums are paid to brokers by wholesalers for selling higher rates or to absorb these costs. (another blog entirely) today the Ysps are not large enough to cover that 1.5% so the costs are passed on to the client making loans more expensive.

This one example is a cheaper example of the pricing adjustments that have been passed onto us all. So although rates are low it does not mean that you will get a low rate or if you do you may have to pay for it. Raising costs and adjustments is just one way for these companies to make up for losses.

The end result is that government loans such as FHA, VA and USDA do not impose such adjustments. Do not he suprised if your broker or loan officer tells you that FHA may be a more cost effective approach to financing your home. As always consult your professional and ask them to explain or show this to you in a manner that makes sense.

Good luck and until next time.

The new version of the Tax Credit has been released and is expected to be signed into law as soon as today. This tax credit will give first time home-buyers up to $8,000 as  credit when they file their taxes. The newest version does not require the credit to be repaid. The first time home-buyer would have to purchase the home prior to December 1st of 2009.  If the buyer sells the home within the first three years they would be required to repay it.

Here are the  list of my concerns:

1) The goal is too give a credit to those who get off the fence and jump into a hurting housing market.  So, we put a time limit on the consumer forcing them to make the largest financial decision some may make before they are truly ready so that they can get free money?

2) The credit is designed to give the consumer money they will turnaround and spend in the struggling retail industry to help Stimulate the Economy.  Like a well designed gift card consumers rarely spend only the amount they are given. So what account pays the overage. A credit card? 0% interest for a year at Home Depot?

3) Once the time-line is over and the government sees that the overall effect was very little and all they did was help to add debt to a debt driven society what will they do extend the time-line. There are several homeowners who will make it in the time that is allotted for the tax credit but there will be several who won't. Many of those that make it in time will have rushed just for the free money and may put themselves at financial risk (have it now society). Then we will extend the time-line for those that just did not make it so we can capture the others that felt like they missed their opportunity restarting the cycle.

4) If the debt does not have to be repaid then where is the money coming from and who is going to pay for it? There is no telling on this. The money will come from somewhere and the repayment is spending this money in the retail market and acquiring more debt hoping to stabilize companies that are on the verge of bankruptcy. The question is once the money is spent and we return to reality where many are struggling to make it spending will decrease and the companies will return quickly to where they were.

Overall, I like that there are plans out there to help jump-start our economy. As a Mortgage Broker I am excited that my home-buyers may have funds to reestablish reserves post purchase. If that is where they place the funds and they do not spend them in the retail market then the plan is a failure? If they save the funds then we gave them free money to sit on. This would not accomplish the goal but would be wise for the buyer. The Tax Credit reminds me of a heart being restarted by a defibrillator. The heart is jump-started back into action but only temporarily if the actual problem is not found and treated. The Stimulus Bill is a temporary fix or a delay while we dig for a cure. If the liver is the problem we can jump-start the heart all we want but in the end when the liver fails our body shuts down. In the end we are providing a stimulus package that is leading to impulse purchase, rush decisions and poor fiscal responsibility. Sound Familiar. Isn't that what got us where we are at?

Solution: Come back for the next blog entry on the solution. Why teaching fiscal responsibility is a bad thing for the economy!

Several Months ago I wrote the blog that I have pasted below. I wanted to take a moment to revisit that blog because I have seen some change. Locally I attend our MLS marketing meeting on a weekly basis. I have been doing this for the last year. In the last four months or so I have noticed that there are Homebuilders beginning to attend the meetings. At first they were there as spectators. Then they began to market. I said in the blog below that they offer very little commission to selling agents. Most recently JMC introduced the graduated payment schedule. They offer 3% and then an additional .250% for each subsequent sale. Ex. 3% first home, 3.25% second home and so on. It resets each year.

Point One: They are finally half awake. Pay Realtors to sell your homes since that is what they do for a living. I think this is an in-genius idea. List the home in the MLS and let it be shown. (Works real well with Standing Inventory.)

Point Two: If only they would understand that having a lender or being a lender is a way to alienate prospects. Like I said before a pre-qual makes sense but let the borrower use their lender and keep the incentive. It makes for a negative experience all around for the consumer. The consumer does their due diligence to find a team that they are comfortable with and the builder gives them an ultimatum to change that team. Talk about pressure. Cooperation with Lenders would make more sales occur I am certain of it. (save the money, liability, heartache and pissed off clients and let us do our job.) We have done several loans this year for a builder here that were fallout from their LO's. Low pay, high hours and limited resources make it hard for the LO to get the job done. In comes the Broker (soon to be forced to become a banker) to save the day.

Summary: I noticed somewhere in here while I was reading some comments about Realtor/Loan Officers and how that would be nearly impossible to do well. I feel the same about Builder,Realtor, Lenders. Specialization is where people succeed. Hire out what you do not specialize in. I heard a great example of this in a class recently put on by Don Yoakum (Keller Williams multiple office owner). The question was the following:

Can anyone tell me what Mervyns specializes in? The crowd was silent. Then the following:

Can anyone tell me what you will find at Nordstrom's? Expensive up to date fashion and great customer service.      

The point was in this economy which of those is struggling. Mervyn's is Bankrupt and Nordstrom's is business as usual. It is my opinion, which seems to be supported by others, that you cannot be a Jack of all trades master of none. Especially if you want to make it in this market.

Homebuilders please wake up. It would be better for us all.

HomeBuiders are Sinking Their Own Ship!

The waves are crashing and the storm has set in. The ship is taking on water fast. The crew is doing everything in their power to keep the ship above water. Are they? In a time where there is a lot of inventory on the market and homes are struggling to sell you would think that we would open our mind up to ideas that would help sell our inventory.

It is my opinion that Home builders are shooting themselves in the foot. They are putting a hole in their own boat. These are definitely very strong words so I am prepared to back them up. Let's go back to the time when the industry was booming. Homebuilders did not need to offer huge incentives to get the homes sold. They also did not have to worry much if an outside Mortgage Broker was doing the loan because you would have had to been a complete(fill in the blank) not to get a loan closed then. Many home builders would not cooperate with outside Real Estate agents and it did not matter. Although I believe many agents did everything in their power to find a resale. Those that did cooperate offered a minimal commission to the selling broker.

 The tides have turned and the inventory is sitting. My thought is that the builders would be more than excited to offer incentives to those who have a direct influence on the buyer to buy there homes. The Real Estate agent and the Loan Officer that have pre-approved the client in today's market generally have a good relationship with the clients. They have earned the trust in a market where trust is lacking. Well, if this is the case then why do home builders go out and start their own mortgage company. Yes, to keep as much profit in their pocket as possible I understand this. They also offer the selling broker a commission although still very minimal in my mind.

Bear with me for a moment:

1)You are the selling agent - there is an REO on the market somewhat move in ready. They are offering a 4% commission or 3% and a bonus (fairly common these days). The competition is a new home that is 3 months from habitable offering a 1-2% commission. Which one do you show? I know that many of you are going to get all ethical on me and say that it is your responsibility to show both and that your commission does not dictate your service. I feel the same but in America it is not hard to lead a client to the move in Ready REO for several reasons (a whole other blog topic).

2)You have a Loan Officer that you want to work with and the Home Builder says "you will not get the incentive if you do not use our Loan Officer. What a dumb move. I understand getting pre-qualified but why would you de-incentivize a prospective buyer when you have to sell the homes?

3)I am starting to see relationships with Realtors and Loan Officers strengthening greater than I have ever seen them. We are realizing that it is a team effort to close each transaction.   The Real Estate agents that I am working with want to see me get the transaction and vice versa.

So what is my point:I think that if the homebuilders would go out and network with Real Estate agents and Loan Officers they would sell more homes. Everybody likes brand new toys. Loan Officers and Real Estate agents are sales professionals. We sell the products that best suit the client. We would sell the new homes if Builders would cooperate and allow us to make a commission. Home Builders eliminate what I believe would be their best sales and marketing tool. Forget trying to run a mortgage company. You are a Builder not a Mortgage Broker. Team up with the professionals that can get your homes sold. The job is to get rid of inventory. Join the crowd instead of alienating yourself. Marry new home sales and resale's into the same category. They are all houses that need to be sold and have mortgages put on them.

Paraphrasing a line from Janet's phenomenal blog "Why I think Realtor's are missing a great opportunity to connect with Mortgage Brokers" this is "Why I think Home Builders are missing a great Opportunity to connect with Real Estate agents and Loan Officers!"

So you can put away the oars and stop bailing out the water if you open your minds and let the help on the ship. We can plug the holes for you and we will get the weight (inventory) off your ship. It is OK to let us help you. Being greedy and trying to keep everything in house is costing you a lot of money in my opinion.

As you all know there has been an increase in applications in the recent months. Much of the increase can be attributed to a drop in the rates that open the floodgates for Streamline FHA refinance activity and rate and term refinancing activity for those with equity. Many wholesalers that were 2-3 days in underwriting dropped back to 7-8 days in underwriting. When you have a 30 day escrow that begins the day that the bank accepts an offer, in a month like February, which is short and has a bank holiday, there is little margin for error.

Many times the wholesaler will offer incentive for a full package. This would include an executed purchase contract, preliminary title report, appraisal and all other documentation that the findings has asked for. The goal is to have the underwriter touch the file once and clear the file for loan documents. Many times there are a few conditions that are required to be met for this to happen so the Loan officer gathers the items and sends them into the wholesaler. They are then reviewed which may take 2-3 days. Finally, clear to order loan documents.

The delay starts with the banks inability to get an executed contract back to you in a timely manner. On the worst file I have worked it took one month plus prior to receipt of the fully executed contract. The contract was accepted on the 22nd of November and I received the fully executed contract on the 23rd of December. At this point I was given the escrow company to request a copy of the prelim.

Here is where I get to my point. Many times at the point that the file is approved it has been much longer in # of days than we would all like. In a perfect world the bank would quickly sign the offer, escrow would not be slammed and title would get us the report. The file would be submitted and no conditions would be needed, We would go straight to loan documents. This is rarely the case as the wholesalers are being very thorough in their underwriting. The more they need the less they want to touch that file again. It is our job as Loan Officers to collect all the documentation that they want to ensure the fewest amount of touches per file.

There have been several instances, primarily on a gift letter for FHA, that a consumer is reluctant to ask the giftor for a copy of the bank statement proving they have the funds to gift. I understand a parent or family member being reluctant to let another family member know how much they may have. At this point we are asked by the client and the Realtor if we can give them what we have, get to the signing and ask the parent at that time for the document because the parent can see that this is going to happen.

The Answer: Anytime we ask an underwriter to fore go a document that is necessary to make the file saleble or insurable in some cases we are asking them to put their job on the line to trust that we will deliver. They are doing a loan officer a favor in good faith to help us keep moving forward so our Realtor partners do not begin to believe we are not performing. In the event the relative refused to give up the documentation at a later time and date and the loan had been funded in good faith we are subject to a possible buyback. This is a cuss-word in the broker world and at the wholesale level. This is very costly.

Underwriters want to get the file moving forward as bad as we do. All they want is for us to get them the proper documentation at which time a RUSH can be an acceptable request. We are rushing to meet a bank imposed deadline that started slow because they could not get the contract out.

The Solution: We are all a team looking to accomplish the same goal: to close a transaction and help a client into a new home. The smoother the process the better. As the professionals it is our job to convey to the consumer the importance of the documentation and why it is necessary. Communication and working together is the key.

I am very fortunate to have some great partners in the business who help to facilitate the closing in a manner that makes everyone happy. I am writing this to go on record that there are times that a client echoes frustration in the turn times. This is a great opportunity to support all parties involved and educate the consumer. I have seen many cases where the professional chooses to complain along side the consumer. This is unacceptable. We all want to get the deal done.

If you want to delay your file from closing then ask your Loan Officer to ask for a rush prior to them having all the appropriate documentation. Ask them to try to skip steps in the process. In the end all the steps have to be complete. My question is whether you want them to happen prior to the client signing or prior to the client expecting to get the keys. A smooth post signing closing is a happy client no matter what the ride before it has brought. As long as the ride has been explained and they have been educated they are happy to have the key.

Asking for Rush without all the documentation necessary is certain to cause an Underwriter to want to delay. Just ask yourself this: Do you like working on files that come to you complete and well packaged or do you like the incomplete sloppy ones?

The alarm is going off and it is 5am in the morning. I reach over to hit snooze and I cannot find the alarm. That is right I use my smart-phone as my alarm these days. It is sitting across the room on the dresser. I get up to go turn off the alarm and grab my honey. It is 5 am remember and my eyes have not even adjusted to the little light that is coming from my alarm.

Immediately upon turning off the alarm portion to the phone I go straight to my inbox to check my emails that have come between the time that I went to bed and waking up. Who the heck is emailing between these hours I do not know? (yes I do, the answer is the other smart-phone junkies that I associate with). After I check my email I am straight onto Facebook which is an awesome application on my Iphone.

By this time my wife is starting to stir and she is reaching to find her phone so she can do the same thing. We proceed to go down the stairs and start the coffee and we have yet to say good morning to each other. Our other spouse listens and follows our every command so we will deal with them first:) After the coffee is made we take a moment to put down the phone.

The Bell rings and I am quickly back in to the intimate relationship with my phone. Marlet Alert has sent me a text message to let me know if I am going into the office to higher rates or lower rates. I close the window and go back to the inbox to check on the status of my emails and my friends on Facebook. Nothing new so I decide quickly to check my schedule for the day. I have three apoointments and I want to make sure that I prepare as soon as I get to the office.

I ask my wife (the human one) what we might be having for breakfast and I see that she is on her phone looking up recipes.....................................this is just the morning edition of married to my smartphone.

Stay tuned to see how the day progresses.....PS-I will text you when part 2 comes out,