As you are aware, the upheaval in the Mortgage Lending industry has necessitated a change of strategy throughout the entire Real Estate Industry.
The prior dynamic within the industry was that the professional attached to the client or property was the "hub of the wheel", so to speak, and all other individuals were, while necessary, incidental.
That still remains true to a degree, but with one major change. The new Real Estate Industry MUST put the mortgage financing process at the center of the wheel, or, alternatively, as step one in the process. Any time a prospect approaches a Realtor or Builder for a home-buying transaction, the first statement needs to be, "You need to get qualified with a Lender with whom I am acquainted. I'm not saying you have to use my lender, but in the present market you need to be verifiably pre-qualified before we go any further." The response you get to this statement will quickly tell you how serious the prospect is. Because of the increased chance of fallout on Home Purchase transactions, I advise that you spend the majority of your time with clients who are pre-qualified with a lender whom you know and trust. Put the others into an incubation system for later business down the road.
According to a national survey of mortgage brokers released at the end of August, approximately 33% of contracted purchase transactions scheduled in August did not close. Again, a 33% failure rate in August on purchase transactions! This was due to a failure in ability to put together financing for the prospective buyer. This is HUGE!
However, it is easily avoidable. The first step, again, is to require that your buyer prospects get pre-qualified, up front, with a lender whom you trust. The second step is to NOT fall into the trap of continuing working through the purchase process with those who are not, or will not pre-qualify with your lender.
There is another aspect that is central to your success in this new business model. The current hype naturally creates fear and uncertainty for the uninformed. As part of any initial consultation, you must be able to convey the reality of the situation, backed by accurate statistics, and when possible, convey why now is a time for people to buy. This can be done in any market. In a down market geographic, odds are foreclosures are up, allowing buyers to obtain properties for pennies on the dollar. In stable or improving markets, (yes, they are out there still,) now is the time to buy because we WILL come out of this lackluster market and home prices will escalate once again, so buying low is key to financial success for the Buyer.
I am noticing a disturbing trend lately. Too many professionals seem to be a little gun-shy of late, as if concerned with making a mistake. Let me be clear - it's one thing to make a mistake; it's an entirely different matter to commit fraud. Let me give an example: I recently dealt with an appraiser who, because there were not enough comps in the subject neighborhood, went to a nearby, yet inferior neighborhood for additional comps. He came back with an inaccurate appraisal that eventually killed the deal because he placed more weight on the inferior comps. He simply wanted to take a very conservative approach because he really did not understand the micro-local market. (I say this because I happen to live in the subject neighborhood and know well the values of properties.) My point is this - appraisers, like all of us in the Industry, happen to be under the gun lately. Fear is not the way to react.
By getting on top of the Real Estate Industry, as opposed to getting mired in the conventional hype, seeing what's really there and the opportunities within, and then being able to calmly, professionally, and accurately convey the real assessment of the situation to your prospects, you will instill confidence in them. They will be more apt to move forward properly and you will have established yourself as a beacon of reason in a world otherwise filled with reactionary, knee-jerk oriented individuals, and you will come rolling through this new real estate market with great momentum.
Greg Polashock is a Real Estate Home Mortgage Loan Consultant and Certified Mortgage Planning Specialist with Cherry Creek Mortgage and resides in Castle Rock, in Douglas County Colorado. He can be reached via email at Greg@GregIsFinancingSolutions.com, by phone at 303-887-0672 or on the web at http://www.gregisfinancingsolutions.com/.