The Real Estate Market and the Real Estate Professional

The Real Estate Market and the Real Estate Professional  
by John Occhi, Hemet CA REALTOR®  
Mission Grove Realty 

With all of the dramatic changes that have taken place in the world or real estate and mortgages in the  past month it is more than apparent that something has got to change.

I am of the philosophy that in order for these huge banks, mortgage corporations and Wall Street giants to stay in business they need to continue to do what has worked for them in the past - and that is make loans.

                                                                         

Granted, the rules have changed - but so what, the rules are constantly changing! I have enough confidence in the American Entrepreneur to know that we will build the better mouse trap...or in this case create a new program that will allow for the cycle of real estate secured loans and mortgages to once again create a viable real estate market.

Qualification Criteria

Yes, the qualifications for loans are changing on a day to day basis.  I would strongly urge any pre-qualified buyer to do a follow-up prequalification at least once a week, if they are in the shopping for a good deal mode.  Then, once they are ready to write the offer, have their lender do one last quick prequalification to make sure the program they are slotted for and the lender they are planning on using is still in business. 

As a listing agent representing the interests of a seller, I want to see the pre-qualification or better yet pre-approval letter dated the date of the offer...which better be the day I receive it.

But What About REALTORS® and Real Estate Professionals?

It is true that Wall Street created the loose credit environment that got us into the trouble we now find ourselves in.  However, as I stated above, Wall Street will figure it out - after all some of the smartest and brightest financial wizards that America has to offer are hard at work on the solution...and it doesn't take the United States Government to bail us out to do it.

                                                                 

The down side is that whatever programs are created and released will be more restrictive than what we have been use to. I say unfortunately because it will make the job of the real estate professionals tougher and it will be tougher for many to qualify for a home loan or refinance. We will be required to produce more documentation and generate higher FICO scores.  In addition we will have a lower loan to value guidelines and of course higher interest rates.

The good news is that I am certain that we will have a much more solid housing market, once the dust settles.

From what I can tell, some of the restrictions that Wall Street will be initiating will include even tougher standards on those who consider themselves real estate professionals; and I don't just mean REALTORS® and Loan Officers.  I have even seen mention that anyone who owns two or more properties will be considered a real estate professional. 

Who is a Real Estate Professional?

Here is a list that I believe has a good chance of being the yardstick by which to determine if an individual is a real estate pro:

• Real Estate Agents, Real Estate Brokers and all of the employees of a real estate company
• Property Management Companies, Property Managers and of course the employees of Property Managers
• Home Improvement Contractors, Home Improvement Salespeople, and even the employees of Home Improvement Dealers and Contractors
• The Real Estate Investor who would be labeled by owning more than two pieces of property. (I wonder if a Time Share counts.  How about an RV that qualifies on your income tax as a second home - oh boy?)
• Mortgage Brokers, Loan Officers and yes, their employees.
• Title Companies, Title Officers, and employees
• Escrow Companies. Escrow Officers and employees
• Real Estate Appraisers, Real Estate Appraiser Management Companies and their employees.

And What About?

Now I have not seen these positions specifically targeted, by according to ActiveRain, they are Real Estate Professionals and welcome to network with us here in the Rain...So, are these positions to be considered Real Estate Professionals or not?

• Insurance Brokers
• Home Warranty Insurance Companies and their employees
• Home Inspectors
• Real Estate Attorneys
• Real Estate Auctioneers
• Virtual Assistants
• Home Stagers
• Real Estate Media
• Real Estate Trainers
• Notaries
• Environmental Services
• Business Brokers

                                                            So, What Do We Do?

                                                                                   

Well, I am just a REALTOR® and really do not like to give much advise on what loans are good or not, because I do not know your situation.

There are two things that come to mind though...

1)         I you have been planning a refinance over the next 2 years, because you have to - do it now.  Yes, I understand there may be some pre-payment penalty to deal with, but do it now, because you many not be able to if you fall into one of the classifications above that label you a Real Estate Professional.

2)         If you have not already created a HELOC go ahead and get one now so that you will have some financial flexibility and reserves if you need one.  Again, there is a lot of good reason to wait and see what way the dust settle, but remember if the restrictions against Real Estate professionals come to be, you may find it impossible to ever again obtain a HELOC.

Well, food for thought.  As I said earlier, I have all of the confidence in the world that we will come through our current situation.  It's just that it will be a new world that we will have to learn to adapt to, once we do.

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR®
Real Estate - Hemet CA
Mission Grove Realty