Two easy tools to put you in control of your client’s home loan

When buyers ask you for your lender referrals, how many agents have just been sending them a list of the “top three” and then take a back seat with a wait-and-see approach to find out what happens next?

I raise my hand here. I am guilty of this!

Times have changed

I have done just that for most of my 25-year career, because quite frankly, the lending side of the business was not what attracted me to real estate. I always left it to my trusted lending experts to handle the financials for my clients so I could focus more on my clients and their needs to get their transaction to a smooth close.

Be at the helm

However, with so many more cash buyers and a highly competitive market, things have changed dramatically, and we need to up our game and take more control, even on the lending side of things. Knowing with whom we are working and what their financial strengths (or weaknesses) are can really make or break a deal when we are trying to structure that offer and win that bid in a multi-offer situation.

Agent-centric integration

In the past, I felt segregated from the process. At most, the more sophisticated lenders would spit out automated emails to agents when key milestones in the loan process were met. Quite nice as it kept us in the loop; however, we were always in the back seat waiting, along with our clients, for this information.

Now, there are integrated systems with 24/7 access so that we agents can stay on top of the loan like never before with data access throughout the entire mortgage process. Systems designed for agents so that we can work hand in hand with our lending partners and stay informed ahead of our clients. This has been a game changer for me, because it allows me to circumvent unforeseen situations that could blow a deal apart.

Two easy tools that could work for you

Let technology put you in control for each client’s home loan process like never before with access throughout the entire mortgage process. With these tools, you have the advantage of keeping the lender in the palm of your hand, staying on top of the daily mortgage rates in real time and having the qualification tools to help your clients find the best solution for their home loan needs. Here are two that do just that:

“Agent Advantage” Portal:

This proprietary portal, designed for agents, is offered by Proper Rate and Guaranteed Rate. Yes, it has many bells and whistles that can help you with lead gen, drip campaigns, co-branded marketing and even coaching. But what really sets this platform apart is the Loan Status Monitoring function. All of your clients can be managed in one database which allows you to monitor their loan status at all times. You can check in at any time, see when an appraisal has been ordered and even review it once complete! It’s super-efficient, keeps you informed for your clients and saves time from when the initial invitation link gets sent all the way to the “Flash Close” — and everything is done remotely.

“Rocket Pro” App:

This app by Rocket Mortgage keeps you up to date with the daily mortgage rates and also allows you to manage your clients within one database. You can send loan application links to your clients with qualification tools to help them find which loan would best suit their needs and acquire preapprovals within 24 hours. It gives you vision into your client’s loan process with real-time optional push notifications for every step — from appraisals and underwriting all the way to the clear to close. It even allows you to securely upload documents, which puts you in greater control of your client’s home loan process.

Digital mortgages — wave of the future

Both of these tools also offer complete digital mortgages. If you are working with lenders that still have platforms that require your clients to tediously upload countless documents — i.e., pay stubs, bank statements, etc. — then you need to consider partnering up with lenders that have gone 100% digital. This means that applications are streamlined and can be completed in minutes, saving your clients time and hassle. Clients can have their income and assets automatically verified with minimal information. This can essentially eliminate all paperwork, plus all documents can be signed digitally. These enhancements not only simplify things — they also provide a smooth process that your clients will appreciate.

So, no more sitting in the back seat in the dark waiting for updates. Use these tools to take the helm, and guide your buyers to one of their best home lending experiences ever.

Anne Ewasko is a veteran Realtor in the Chicago area and a longtime techie. Visit her at anne.luxhomechicago.com.

The trouble with appraisals: How the wild market is making it harder to get financing

Anyone paying the slightest bit of attention to the residential real estate market these days knows one thing: It’s hot.

With record-low inventories and rock bottom mortgage rates, every day seems to bring a new piece of data pointing to a market on the move. The fast pace of change is being seen nationwide, from Boise to Boston and Miami to Minneapolis.

The rate of change is so fast, in fact, that one crucial piece of the homebuying puzzle is frequently being left behind: the appraisal.

“The market’s so insane that properties aren’t appraising for the purchase prices,” said Carrie Dorn, a Chicago-area real estate agent at Compass and a certified real estate appraiser at D&H Appraisal Service Inc.

Homebuyers lucky enough to win a bidding war for a property are increasingly running headlong into appraisals that don’t match — or even come close to — the agreed sales price, leaving them with limited ways to close the sale.

This can leave parties to the deal — the buyer, the seller and their real estate agents and lenders— frustrated, to put it mildly.

“We’re running into appraisers not wanting to be flexible with the market,” said one Atlanta-area agent who asked to remain anonymous. “They’re wanting to stick to prices-previous, and the market’s a little bit different now. …Appraisers are going to have to be just a little bit more flexible, because the willingness to pay, the demand, is there. Appraisers like to set the prices themselves instead of the demand of the market.”

Such characterizations understandably raise the hackles of the appraisal community. Five appraisers from across the country who were interviewed by Chicago Agent Magazine all complained that their role in the homebuying process is often misunderstood, especially in these heady times.

“Other market participants may say that the appraiser is ‘killing the deal,’ but our first responsibility is to our client, which, virtually 100% of the time, is the bank or the mortgage company or the lending institution that hired us to provide an appraisal,” said Lincoln Appraisal & Settlement Services President and Chief Valuations Officer George Demopulos, who is also the immediate past president of the Massachusetts, Rhode Island and Maine chapter of the Appraisal Institute, an industry group.

“Many of the lenders that are very upset with appraisals today, they will also be the first ones to sue when the market declines,” said Robert Mesner, principal and real estate appraiser at Mesner Real Estate in Royal Palm Beach, Florida. “Appraisers don’t make markets. Appraisers determine from market data what markets are doing and apply it to the valuation of the properties.”

The primary piece of market data Mesner is referring to is the comparable, or “comp,” which is a recently sold property with characteristics similar to the subject property. Given the pace at which home prices are rising, a three-month-old comp can seem like ancient history.

“The question is, where do you get data? From closed sales,” Mesner said. “So, when the market is jumping at the rate that it is right now, closed sales are based on something that happened previously. Therein lies the issue.”

For Mariella Massa, an appraiser and the CEO of Houston-based FinHous, the frustration people feel when an appraisal doesn’t meet sales price is an opportunity to educate others on the appraisal process.

“It’s not just us waking up on the wrong side of the bed,” she said. “We’ve just got to follow these rules. I think a lot of Realtors are getting hip to the square.”

Taking your time adjustment

One tool appraisers do have available in a fluid market is the so-called time adjustment or mark-to-market, in which the value of a comparable property is adjusted by the rate of appreciation (or depreciation in a declining market).

Demopulos pointed to the Boston market, where big tech companies — Amazon, in particular — have flocked in recent years to capitalize on the intellectual power of recent graduates of Harvard, MIT and other schools, driving up real estate prices in the process.

“Time adjustments must be used by appraisers to reflect the market,” he said. “There’s some appraisers I see — I do review work — who aren’t making time adjustments, and that’s concerning because they’re not reading the market and analyzing the market.”

Dan Fries, president and chief appraiser of Atlanta-area Daniel Fries & Associates Inc., agreed.

“We all have the same comps,” he said. “It doesn’t matter that the cost of lumber’s gone up. What matters to the appraiser is, ‘Where can you hang your hat?’ And if we can show the market’s gone up X percent a month, you can apply that. They probably wouldn’t be yelling and screaming as much if everybody would do that.”

Appraisal wavering

Others involved in the home-sale process also have tools, the appraisal waiver, in particular. Under this agreement, the buyer makes up any difference between the appraisal and sales price. It can be indispensable in winning a bidding war in today’s market, and would-be buyers without enough liquidity are often priced out by cash-rich competitors.
“It’s not a traditional market, because only the buyers that have the extra cash are able to be successful in purchasing,” Dorn said.

In other words, cash is king.

“What’s happening is Mr. Triple-A Credit with a lot of money will go in there and say, ‘OK, I’ll make up the difference,’ and your [Veterans Affairs] person or first-time homebuyer is going to get squeezed out,” Fries said.

The pandemic’s work-from-home phenomenon is also making liquidity more important, as residents of expensive gateway cities, realizing they don’t need to come to the office every day to work, take their Park Avenue equity to Main Street, or Biscayne Boulevard, as it were.

“If you were in New York City, the market values compared to South Florida are off the charts,” Mesner said. “There are many buyers who are coming in with cash offers, and that means that the buyers with mortgages are at a disadvantage. If the prices are bid up beyond what the historical market data can support, that means that the buyer has to come up with additional cash.”

Calling all would-be sellers

Going forward, appraisers expect the disconnect between appraisals and sale prices to shake out — eventually.
“There’s a light at the end of the tunnel,” Fries said. “In the next 60 days, when all of this closes, hopefully we’ll have a new comp base and better comps to draw from.”

In the meantime, people who have long considered selling their split-level but didn’t want to put in the effort to prep it for sale might want to seize a rare opportunity.

“If I had that house on the busy street, or with the shag carpet, or didn’t feel like updating the kitchen, now is the time to sell,” Fries said. “People are going to take you, freckles and all.”