Reason #55 Why Using the Right Lender is So Important

There are many reasons why using the right lender/loan officer is important. Let me rephrase that…VERY IMPORTANT! And here is reason #55…

This comes from Allison, a home buyer in Fairfax who posted the following questions on Trulia Q&A (note: I’m not her buyer’s agent nor involved in her transaction whatsoever),

[My] lender overlooked the appraisal/financing contingencies. Closing is in a week and no appraisal yet. Seller hasn’t walked but what recourse do [I have]. I have the lender admitting in an email that no one knew there were contingencies even though the contract quite clearly stated this. My realtor, mortgage broker, and I were all told different dates for when the appraisal would be done by over the last few weeks. The seller hasn’t voided the contract yet but wants this resolved ASAP (as do we all). With only a week left, there’s not much I can do except wait but I don’t think the appraisal was even done until today (if I can believe the lender, and I don’t know if I do at this point). I have a settlement attorney and plan to speak with him about the situation but is there anything that can be done? Even if the deal goes through, I plan to address this with the company (much of this has been documented on email, although of course the loan officer is difficult to contact). I’m not blaming the appraiser at this point until/if I get more information.

This is a crappy situation to be in. Should the lender drag their feet any longer, the outcome could be that Allison (or you if you’re in this situation) loses out on her home as well as the money and time she’s already invested in the moving process. And what if she/you were timing the purchase of your new home with the sale of your current home?!

The truth is that, as the buyer, you are at the mercy of the lender you choose and you often have less control over their actions (or lack thereof) than you may think. If the lender makes a mistake or drags their feet, you may have recourse. But recourse often comes after the damage has already been done which is too late. And recourse has little to do with control.

In case the previous paragraph made you tense up and say, “WHAT?!” or “You’re crazy!”, I’m sorry to disappoint. But that’s the hard truth about real estate. If it makes you feel any better, you’re not alone – almost everyone involved in the transaction including your buyer’s agent, the seller, the listing agent and the title company are at the mercy of the lender. As James A. Garfield once said, “He who controls the money supply of a nation controls the nation.”

Enough of the bad news…let’s get to the good news.

There are ways to avoid getting yourself in the situation in the first place. It requires some legwork, time out of your day and trust, but it’s well worth the investment.

• Ask friends, family, coworkers about their personal experience with the loan officer(s) they’ve worked with in their real estate dealings
• Check the loan officer’s references. It’s not just about price as is shown in Allison’s example
• Ask your real estate agent for recommendations on loan officers
• Make sure your loan officer works for a direct lender, not a mortgage broker
• Don’t just rest on a company name. It doesn’t come down to the company/lending institution, it comes down to the individual loan officer. Just like you may get bad service from one waiter and great service from another waiter at the same restaurant, the level of service you receive depends on the individual loan officer rather than the company they work for.
• Though credit unions are often thought of as having very competitive rates and being good to their members, the complete opposite is often true (trust me, I’ve dealt with 99% of credit unions and can give you story after story)
• Make sure that the loan officer is giving you options, recommending loan types that are suited best for you rather than just the one you want/heard was the best and that they back up their claims with hard facts and numbers. The lender I work closely with and trust implicitly once said, “If you think you need your appendix removed, I would hope that the doctor you went to would check out your appendix and overall body and health prior to removing it just because you thought you needed your appendix removed.”
• Get more than one quote. Talk to 2 or 3 different loan officers. Ask them for an estimate of closing costs and interest rate and compare them to each other. But don’t forget to check their references and remember that it’s not just about price.

All of these are important, but a very important one that is often overlooked or not given enough weight is getting recommendations from your real estate agent. And here’s why…

You’re just another customer to “XYZ” bank and “Joe Smith loan officer” – you may or may not ever work with “Joe Smith” ever again and the loan officer knows that you’ll probably forget their name within a month after the deal closes. They do not have as much incentive to treat you right and go above and beyond as they do with someone they know is a repeat customer.

That’s where your real estate agent comes in… A real estate agent who refers borrower after borrower is worth gold to the loan officer. This is especially true in this market where most loan officers are closing fewer deals and making less per deal than ever before. When it comes to clients who the agent refers, the loan officer will bend over backwards and put out fires faster than you can dial “911″.  They will go to such lengths to provide stellar service because the loan officer knows that if they screw up, the agent will no longer refer them anyone and a potentially large chunk of their income will vanish.

I can honestly and proudly say that not one buyer that has worked with the lender I recommend has every been in Allison’s position. Nor have they been anywhere near such a position. This is the power of long term and ongoing relationships with competent, experienced and honest people and vendors.

Some of you may not believe me and will insist on using a loan officer of your choice despite not heeding the warnings nor following sound advice. I sincerely hope things work out for you and that you don’t end up in Allison’s position or another one equally if not more severe.

To those who do their due diligence and trust those who are honest and have lots of experience in the field of real estate and financing, you will find yourself having no such story to tell as the one at the beginning of this post. And that’s worth gold in itself.

River Creek Real Estate Market Update – Single Family Homes

Here’s the latest on the single family home real estate market in River Creek (Loudoun County)…

Overview

The overall single family home real estate market in River Creek is balanced – neither a seller’s nor buyer’s market. Buyer activity is up (though it’s not a buyer’s market by any means) and homes are selling in a timely manner if they are priced, marketed and presented correctly.

If you are a River Creek buyer, you will see everything from overpriced to underpriced single family homes on the market. Have your Buyer’s Agent give you the comps on any properties you’re interested in so you know how the asking price compares to current market value. If a property is at or below market value, don’t expect to “steal” the property from under the seller. If the property is underpriced by a significant amount, expect to battle it out with other buyers’ offers (yes, even in the $1M+ price point).

If you are a River Creek seller, you don’t have an overabundance of competition, but you still have competition. If you price, market and present your property correctly, you will have buyers come through and an offer in your hands in a timely manner. If you are selling your house “short” and under price it to get an offer quickly, you may very well see multiple offers on the property.

Numbers/Statistics

The number of single family homes listed for sale 2011 YTD is up 7.5% from this time last year. Not so good for sellers, but good for buyers because they have more choices. But, in the end, this stat is washed out because…

The number of single family homes sold 2011 YTD is up 28% from this time last year. This increase is much higher than the increase in homes listed which is why it washes out the previous stat. This is great news for sellers because there is more demand and helps with market values. For buyers, it means that there are more buyers actively buying properties in River Creek and you may have to face some of them in competition for the same property.

The average number of single family homes that sell each month 2011 YTD is 3.13. This is a 28% increase over this time last year (2.26 per month average). More activity in the River Creek single family home market is good news for sellers and home owners. For buyers…see the paragraph above.

The current number of active single family homes in River Creek is 21. Based on the absorption rate (3.13 per month), there is a 6.71 month supply of single family homes in River Creek. Generally speaking, anything over a 4 month supply is considered a “soft/buyer’s market”. But considering the price point, 6.71 shows a balanced market. The reason for this is because the higher the price point, the longer the average days on market and months supply of inventory.

Summary

The single family home real estate market in River Creek continues to show increased buyer activity and is considered to be a “balanced market”. Though sellers will be happy about this, some buyers may not. But remember buyers…once you move in and become a River Creek home owner, you’re going to want the exact same thing you dreaded as a buyer – a strengthening real estate market in River Creek rather than a weakening one.

If you would like more information about the real estate market in River Creek or are interested in selling or buying in River Creek, click here to contact me.