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How to protect yourself and your clients in a changing market

By
Property Manager with PropertyADVANTAGE CA BRE # 01450265

                                                                               DON'T PANIC!

Yes. alot is happening in the industry that not only affects my business, but yours as a real estate professional as well. You've heard the headlines about the liquidity crisis, or credit crunch. But please don't panic! There are still programs and lenders out there to get the deal done. Please be proactive, and please share this information with others in your office who may not be a part of activerain. If you have deals in escrow get on the phone with the lender tomorrow! They should be able to tell you exactly what is happening and to assure you that all is well with your transaction. For now, here is a list of things you can do now to protect yourself and your clients. My best to all of you, we WILL get through this.

Buyers:

  • Make sure they are using a lender you trust.  Leaving it up to your client could be a huge waste of time and money, as well as damage your reputation (did you do your best to protect them).  Encourage them to use someone you trust and take control for their benefit.   
  • Get pre-approved early, and not just the "cursory" type of approval that lenders have been using for the  last couple of years.  Require a full review of documents as well. The loan originatior should send you the actual underwritten approval from the lender, along with their letter of approval.
  • Your client has to have loan options. The industry is tightening everyday.  If they are relying on one      option and it goes away, you're both stuck. Make sure they are talking to their lender to ensure their is a back up plan in place.
  • The lender has to stay on top of pre-approvals, and notify you and the clients of changes.  Notification of changes are coming every day and your lender needs to know what clients they might affect and when to change course. Make sure the lender is watching the market daily.
  • If your client needs a non-conforming program(above $417,000 or alternate documentation) they need to understand to current state of affairs.  Rates are  higher, in some cases much higher.  Guidelines are changing and programs are being cut the fastest in the non-conforming market so their lender needs to be on the ball.
  • Do not allow your clients to delay anything. Make sure they are turning in their required paperwork. You should be receiving at the least, a weekly status update from the lender so you know what is still requited from you client for the loan to proceed. An approved transaction is not safe, but a closed one is.

Sellers: (much of the same applies)

  • Can they afford to move?  They need to be treated like a buyer before a seller.  You don't want to pay to market a home if they can't buy their next one. 
  • Their selling cycle can be long, so make sure the lender is staying on top of things.  If things changed that prohibited them from buying another home while you were paying to sell theirs, when would you want to know? Proactive communication from your lender is essential.
  • Their bottom line has a lot to do with everything getting done.  Have your lender help them determine their bottom line (what they need to net) to make their next purchase work.  This will help with price reductions and seller assistance down the road if necessary. 
  • Call every lender that writes a letter on your listings.  Ask them what things look like, what contingencies they have with other programs, who is the lender, what type of program they are using, etc.  Everything outside of government (VA, FHA) and Freddie and Fannie backed programs should be intensely scrutinized. 
  • If your sale is contingent on the sale of another property, and so on, and so on, refer to the previous tip and go as far as you have to down the trail to make sure all lenders involved have control of their financing options.

 

Have a prosperous week everyone!

Posted by

                                                             

 

                                                                   

                                                             

Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes
It's important as agents that our clients use a lender who "we" also trust.
Aug 07, 2007 06:53 PM
Kaushik Sirkar
Call Realty, Inc. - Chandler, AZ
Nice summary of some of the important, or high points.  I am always at least the slightest bit leery when my client already has a lender...I try to do a bit more hand-holding in those cases...
Aug 07, 2007 08:23 PM
Micki OToole
PropertyADVANTAGE - Carlsbad, CA
General Manager

Bob & Carolin, Thank you for the comment. Absolutely have the buyer OR seller speak to the lender YOU trust. A great selling point for your preferred lender that I heard an extremely successful real estate agent (Terry Moeller ) say to her clients: "Mr/Mrs. Smith, I cannot guarantee you a smooth closing unless you speak to ________ from ABC Mortgage Company." It worked all the time! Protect yourself and your clients!

 

Aug 09, 2007 05:00 PM
Micki OToole
PropertyADVANTAGE - Carlsbad, CA
General Manager

 

Kaushik, thank you for the comment. I don't blame you for being a little leery, especially since mortgage brokers haven't had the best reputation. You could also use the same line that I gave Bob & Carolin.  The client isn't required to use a certain broker/lender, but it never hurts to get a second opinion from someone YOU trust.

Aug 09, 2007 05:04 PM
Nancy Moeller
Seven Gables Real Estate - Anaheim Hills, CA
Hi Micki- I reread this post this morning. You said it perfectly.  Great points - especially, getting a lender you trust - which in our case is you. 
Sep 22, 2007 02:13 AM
Micki OToole
PropertyADVANTAGE - Carlsbad, CA
General Manager

Thank you Nancy....(blush)

Sep 22, 2007 04:38 PM