It wasn’t too long ago that we were looking at multiple offers on million-dollar homes and fights erupting on homes in the affordability range. This was just in March of this year. We are looking at something dramatically different now with interest rates driving the changes. Those million-dollar homes are now sitting on the market longer and we are now seeing price reductions in that price range. While in the affordability range we are seeing the demand get sucked up quickly and houses are coming on the market at a much faster rate.
I will start with the analysis on the upper end of the market, those million dollars plus homes. I now can say without a doubt that the top of the Real Estate Market was March of this year. Since then, interest rates have risen above 5% which alone has slowed the market. In March of this year, you could still get a home loan with an interest rate in the 3’s, and now with rates in the 5’s that has cut the purchasing power of potential home buyers by a lot. What we have seen is that people were qualified back in March for one loan amount and didn’t realize that rates have risen as much as they did and while they were not looking they no longer qualified for the homes that were in their price range. Watching the Multiple Listing Service or MLS we are seeing more properties that were in pending status come back on the market with no fault of the seller but turns out buyers no longer qualify with the higher rates.
In the affordability range (here in California) is between $450,000-$650,000 we have seen more homes hit the market in the last several weeks. As potential home sellers realize that the top of the market has come and gone they are now putting their homes on the market. I believe that potential sellers have waited to market their homes until the top of the market and now that we are there, they are all putting their houses on the market at the same time. This is great news for potential home buyers that have been beaten out of the Real Estate market and decided to sit on the fence until this very thing happens. Demand will quickly be eaten up and inventory will continue to rise. As interest rates continue to rise this will cut a significant amount of potential home buyers from the market. So, if you fall into this price range of home buyer then I believe it won’t be long before we enter a buyer’s market.
As interest rates rise and inventory rises, prices will have to soften a bit to get buyers to buy. In addition to that, those sellers will be making concessions to get potential buyers to buy their home. A sales concession is when a seller pays for pest work to be done, the buyer’s closing costs, and other things to entice a potential home buyer to buy their home. This is what is commonly referred to as a buyer’s market. This will occur once the pent-up demand slows down and interest rates price home buyers from the market. This is not something we like to see; however, I believe this will not cause a manic sell-off as we saw in 2008 through 2011. The reason is simple we don’t have a money crunch like the last Real Estate correction. Money is still available but at a much higher rate and we have relatively full employment, and we are not seeing mass lay-offs as we saw during the recession of 2008-2011. This is not to say that it still can’t happen. The way this would happen is if the Federal Reserve continued to raise Interest Rates past the equilibrium point which is where we could be today.
If you are a home buyer today my advice would be to buy as soon as you can as interest rates will continue to rise. At MAE Capital Mortgage we have a “Lock and Shop” option for home buyers. The “Lock and Shop” is once we have you approved for a loan amount, we can lock in today’s interest rates. The lock period could be up to 180 days to give you the opportunity to look for the right home or if you are having a new home built it will allow time for the build. Doing this will cost you a little more than if you were to have a home a lock your rate for 30-60 days, but in a rising interest rate market, it could save you hundreds on your monthly payment. We are at a rare place in history where the Federal Reserve has already told us that they will have 2-3 more rate changes this year alone. That said the “Lock and Shop” option offered by MAE Capital Mortgage Inc. is an easy choice to do if you are shopping for a home to buy in the next few months.
If you are a Potential seller in this market, know where your house falls in the affordability range. The higher the value of your home the more difficult it is going to be to sell your home. If you are considering selling your home in the next 6 months now should be the time to get your home on the market to get the very best price. My advice would be to talk with a MAE Capital Real Estate Agent about getting your home on the market and devise a strategy with them to get the highest and best price for your home. Here at MAE Capital, we are no strangers to changing Real Estate Markets and how to market to the changes our Agents are seasoned pros and our newer agents have the energy and mentors to get you the very best price for your home. We also have a bundling program that when you list, sell and buy your next home with us and use our mortgage options we will buy your interest rate down so you have a lower than market interest rate thus a lower payment as our realtors will put some commission towards your closing costs on the new loan. This program is great and is not offered by any other Real Estate firm.
If you are considering buying or selling now would be the time to get on it. I can say that next month the Interest rates will be higher, and so will gas prices, and food prices. Inflation is here to stay for a while and the Federal Reserve has said they will be continuing to raise rates, we know that gas prices will continue to rise until we either produce more domestically or cut our demand, which is not possible. We also need to keep a watchful eye over geopolitical events as they could cause even more problems to our economy. We are living in a very unique time with a very unstable economy, high gas prices, high inflation, and a government that wants to spend more money and raise the minimum wage, and raise taxes, all of which will cause even more inflation.
As we wind down 2021 we are still in a pandemic era with uncertain times ahead. From an economic viewpoint, we currently are under a low-interest-rate environment with high inflation (6.2%). Before the pandemic, this would be an easy fix with the Federal Reserve (the Fed) raising interest rates to combat higher prices. Under the pandemic era, things seem to be working in opposite directions from an economic approach as there is an uncertainty of new COVID variants coming out and the Government overreacting to them by shutting the economy down again. With higher interest rates you will see a slowing in the housing markets as fewer people will be able to qualify for the already high prices of homes. This brings up a question of right or wrong to raise interest rates and should the Fed raise them now or later?
To see the future, we have to look to the past in how the economy works. Contrary to some trains of thought the economy is consumer-based, meaning that the consumer is driving what the Federal Reserve does not the other way around. What we have seen from the past is that the Fed has bought Mortgage-Backed Securities (MBS’s) starting in 2008 to help recapitalize the housing industry. This means that as the Fed buys MBS’s mortgage companies have the ability to sell their mortgages to them freeing lenders up to lend more, in simple terms. So as the Fed buys fewer Mortgage assets the ability to sell mortgages to them becomes tighter thus forcing lenders to raise their rates to slow the number of loans they take in. This is what “tapering” is as you hear this on the news channels. So, the Fed announced that they are going to taper their buying of these MBS’s at a pace twice of what they said back in November so lenders will generally have to raise their rates to slow the number of loans coming in so they can inevitably sell to recapitalize so they can lend more. I know these concepts are confusing but this is what it all means as you hear financial people talk about “tapering”.
The other area of which the Federal Reserve controls to slow inflation is to raise their funds' rate. The Fed Funds Rate is the rate at which banks can borrow money from the Federal Reserve. We learned that the Fed is not planning on raising this rate this month but plans to through 2022. What this means is that the banks will be able to borrow at 0% still from the Fed making banks ability lend stay at the status quo. This begs to question with a 6.2% inflation number currently and the Fed’s goal of 2% inflation is not raising the Fed Funds Rate going to cause inflation to continue to rise? Time will tell, but one thing out of all of this is for sure is that interest rates must go up it’s just when and how fast. Is the Fed going too slow or not aggressive enough in the fight against inflation? This is the question up for discussion and time will tell. From my perspective, I would say they are moving too slow and will have to be more aggressive in raising interest rates in 2022.
Why do I think that rates will have to go up significantly in 2022? I see many factors here that the Fed has glossed over that will keep prices going up into 2022. The major factor the Fed glossed over is wage inflation. Wage inflation is a good thing for those working folks, however, if inflation rises faster than wages then workers are worse off than before even making more money. One of the factors that I believe the Fed is missing in their outlook is that the continued demand for goods and services is going to continue to rise into 2022 at a faster rate than they think. The Fed believes that inflation is, in the most part, due to lack of supply or goods being hung up at the ports and not making it to consumers as fast as demand wants it. I believe that the demand will continue beyond the current supply issues into other supply issues into 2022. This means that once the ports catch up with the goods coming into the US the demand will still exceed supply thus the continued inflationary trends. Once this is realized in interest rates will have to go up to slow demand and could rise far faster than people have seen before. The longer the interest rates are held low the faster they will have to rise to offset inflation.
So now that we see interests going up what does that mean for Real Estate? In a higher interest rate environment, fewer people will be able to qualify for homes. For example: If you qualify for a $400,000 loan at an interest rate of 3% if the rate moves to 4% now you may only qualify for a $350,000 home loan. The same concept flows over to people buying cars and trucks and companies that buy heavy equipment. Couple this with an “Infrastructure Bill” that is poised to go through congress, the demand for these goods will be on the upside further pushing inflation. So as the Fed thinks that inflation will calm down on its own, I believe with the Government spending more and more money that inflation will continue to rise so interest rates will have to as well.
In Conclusion, I see the Real Estate market tapering, so to speak, with interest rates on the rise. There will be continued demand for housing, but fewer people will be able to afford housing. Housing prices will stabilize in 2022 and if inflation is left untouched or not acted upon aggressively you will see housing prices go down if interest rates are forced to go up at a faster pace than everyone is anticipating today. Housing itself has been a major cause of inflation and that is not generally looked at by the Fed as a major problem, but, as housing prices rise the perceived wealth of people increases and they have taken out equity due to this. When reality is that the increases in housing prices are the precursor to all price increases except for the price of oil. Simply put, when people have seen their equity in their homes rise, they tend to take it out for home improvements and the purchase of other goods and services and that is what we have seen over the last few years. So as home prices stabilize, and interest rates go up the demand to take equity from their homes decreases thus the demand for goods and services will also decrease. Another factor that is missing in all of this is the price of fuel. If the price of fuel continues to go up, then it will cost farmers more to bring food to market so we will see continuing inflation in the food sector if prices of oil are not contained. So, with certainty, we can say that interest rates will be on the rise through 2022 and it looks like wages will continue to increase as there is more demand for labor than there is the supply of it currently. Home Prices will stabilize and move lower if interest rates go up too high. If you are looking to buy a home in 2022 it could be a great time to buy as demand slows down and prices may adjust down a bit. Interest rates may be a bit higher but if you can qualify go for it. You can never go wrong owning Real Estate especially your primary home.
When you’re ready to sell your home, you may think about upgrades that will attract buyers. As nice as it is to have all the best features, what’s even more important is for your home to be clean, clutter-free, and staged for wide appeal. This advice may sound obvious, but it’s a process that’s often easier said than done. That’s why we’re here to walk you through prepping your home for sale so it's easier and affordable.
Why Stage Your Home?
A home is more than just a structure — it’s a place that reflects your style and feels like you. The problem is that you want potential buyers to walk in and feel like they could be at home there. Staging is the process that removes personal items and clutter while highlighting the home’s best features. When you stage your home right, the result is a boost in the number of buyers who want to see more — and who will pay top dollar.
Start with a Plan
The best plan of action is to tackle it one room at a time, and maybe even use a guide so you don’t overlook anything. Make sure you have all the supplies you need too, like boxes, tape, markers for labeling, and trash bags. This is the perfect time to sort through your belongings so you don’t move anything you no longer need or use. In the process, you will naturally end up packing, donating, or trashing some of the clutter you need to get rid of.
Cut the Clutter
You may think of clutter as junk mail lying on the counter, but for home buyers, clutter is really anything that makes a space look crowded, small, or that detracts from it in any way. The Huffington Post explains that this is why decluttering to stage your home should be all about taking a less is more approach. Besides the obvious things (like the mail on the counter), pay special attention to decluttering these areas:
We tend to focus on the wide-open spaces and surfaces when decluttering, but buyers will also look in, under, and around just about everything. This is why Apartment Therapy recommends cleaning all storage spaces, including closets, shelves, sheds, and cabinets. Everyone wants lots of storage space, and keeping these areas neat and clutter-free is how you give the impression that there is plenty of space available.
Everyone wants their home to be livable, and that often means having lots of furniture for seating and storage. The problem is that buyers are going to notice how large and open a space feels — not how much furniture it can hold. This is why you may need to remove some furniture so that your home has an open and airy vibe. The furniture you do leave should be set up the way it would be used and around a focal point. An inexpensive idea from Forbes is to set up a bar or dining room table for entertaining so buyers will picture having their own meals there.
Decor Should be Tasteful, Not Personal
The great thing about staging is that when you focus on the less is more perspective, you realize that you can achieve this goal without spending a lot of money. After all, you’re ultimately taking away more than you’re adding. For example, you can free up wall space by removing personal items like family photos. Then all you really need to add back is tasteful art and mirrors to give the room a lighter and larger feel.
Spruce Up Outdoors
Decluttering and depersonalizing inside is necessary, but don’t forget about outdoor spaces. The outside of your home is where first impressions are made. Fortunately, you can get curb appeal by doing a little yard work and a few easy, inexpensive DIY projects.
These projects are seemingly small, but sometimes the smallest changes can make the biggest difference. Getting your home ready to sell requires a whole different mindset. This is why it’s all about decluttering and lightening up so buyers see its full potential.
For more information of selling a house click here.Article by: Natalie Jones
Photo credit: Pixabay
If you have never purchased a home before you are reading the right article. This blog will give you some tips and show you the transaction flow of a typical Real Estate transaction. These are the steps and the tips that will help you move smoothly through the process.
This process is the same for every house you will purchase. It looks an sounds complicated but your team at MAE Capital Real Estate and Loan we will walk you though the process and tell you what you have to do and when you have to do it by. We try really hard to make a complicated process fairly easy. We look forward to assisting you with your home buying needs. Call us today at 916-672-6130 or click here to have one of our team members call you.
Excellent, you have decided to pursue the American Dream of home ownership. Now what do you do? Well you need to know how much of a home you can afford with the income and bills you have. This step is the single most important step to your process of obtaining a home. This process is called getting pre-qualified or pre-approved. Although, the thought of shopping for a home may be an appealing one you should not even look at homes until you know for sure what you can buy or if you can buy. The Pre-Approval process is where you will gather all of your financial documents together and get them to a licensed Loan Officer so he or she run the numbers and your credit report and derive a number to which you can qualify for. You can read more about this process on our Pre-Approval page or our Process Flow page. Your Loan Officer will give you a loan amount, a loan program, and a sales price you qualify for based on your finances.
Once you have the Pre-Approval letter in your hand with the terms and amounts you qualify for it is time to find a Realtor to look for homes with. You may ask why you need a Realtor, and a simple answer will be it doesn’t cost you anything to be represented by one that knows the laws, the inspections requirements, contracts, and inventory. Yes, it doesn’t cost anything for you, as a home buyer, to be represented by a licensed Real Estate Agent as the sellers pay the real estate commissions to both the listing Agent and the Selling Agent. If the free service is not enough to convince you to contact an Agent to work for you how about the laws, unless you happen to be a Real Estate Attorney the laws with regards to real estate process and procedures are many. If that doesn’t scare you enough to be represented, how about the contract itself, there are items in a professional Real Estate contract that, if missed, could cost you thousands of dollars. Then there is the inventory, or shopping help an Agent can provide for you. Again you might say I can find anything I need on the internet. Again true, but, the problem with internet data is the updating of the data is old. In some cases like Zillow it requires that the listing Agent actually input the data into the system in order for the world to see it. Whereas the Multiple Listing Service or MLS is required to be used by licensed Realtors for every listing they have or they will be fined.
Now, that you are convinced to find an Agent to represent you, who do you use? I would, of course, recommend one of our qualified Agents, but if you are out of our service area we can always screen Agents for you in the areas you are looking to buy. This is a little know service, again its free to you as a buyer, that we offer to assure our clients are represented by an Agent who knows their stuff. You see, if you go dialing for dollars, as we call it, you will undoubtedly end up with an un-experienced Agent. This is because the experienced Agents are out working not sitting in the office waiting for the phone to ring, the Agents that are in the office waiting for the phone to ring are generally new to the business trying to get call in business. Another pitfall buyers run into is calling the listing Agent on a house they wish to buy and have them represent you. This is called dual Agency, and we as listing Agents love this as we get both sides of the commission, however, undenounced to the un-educated home buyer, the listing Agent’s allegiance is to the seller first, by law. So it can really pay to be consulted first by one of our Agents to have them either represent you or screen other potential Agents to represent you and your needs.
Shopping for the perfect home should not be taken lightly either. You should have a list of items that are “must have” items in a home such as number of bedrooms and bathrooms, updated kitchen, new or existing home, and most importantly location. Making this list is crucial for your Agent as they will be able to search for properties that fit your exact criteria, so you are not wasting your time looking at homes that don’t fit your needs. In addition to the “must have” list you should do a “wish list” like granite counter tops, hardwood floors, a pool etc. You should also do a list of items you absolutely do not want. You Agent has the ability in the MLS system to put in exacting parameters that you can’t get on the consumer version on the internet. Your Agent will put your parameters into the MLS system and put you on an automatic drip of homes in the area(s) you are looking in with the exacting parameters you have. Your first email of homes will be the largest as the initial search will pull all the current listings that fit your parameters. The emails you will get after that are “as they hit the market” emails, in other words you will be the first to see the properties come on the market. This is great if you are in a competitive price range as you will be able to see properties as they come on the market with no delays. This could be the difference of you getting the best home or not.
A great strategy to look at homes is to drive the properties that look good in the listings that you have viewed on line. Driving the properties will give you a real idea of where they are, what they really look like, and how they have been maintained. When driving the properties you don’t have to include your Agent as you are simply doing your own diligence. Make notes of the ones you would like to see and then call your Agent to make appointments to see the homes. Never go up to the door and disturb the occupants it is not nice nor is it safe. To see the homes your Agent will need to make appointments with the listing Agents or the owners directly for you to get inside. Your Agent will put together “a tour” that will include your availability to see them and the seller’s availability to show them. When you go to view the home take pictures and take notes so you can remember the ones you liked and disliked. You may not find the perfect house after several showings, don’t get discouraged homes are coming on the market every day and with patience you will find what you are looking for.
You did not expect to go looking for houses today and find the perfect one, but that is the way it happens, one minute you think you will never find the perfect house the next you find one you can’t live without. You now need to get it tied up so no one else can have your perfect home. Your Agent will write an offer for you and ask you to provide your pre-approval letter and a Ernest Money Deposit (EMD). The offer will be on a 10 page form that has all terms in it from the offer price to the loan amount, to the items that need to be inspected, and it also spells out who pays what. Remember you can ask for anything in the offer and your Agent will go over those details with you. Once you have decided the price and terms you will be offering you will sign the offer and your Agent will then submit your offer to the listing Agent. Within the offer you wrote a time period the seller has to get back to you with a response. When the seller reviews your offer they will either accept it as is or they will counter offer your offer with different terms. This is all part of the negotiation process. Once you and the Seller have reached an agreement and both have signed and accepted the terms you are now officially in contract.
Once in contract you will have certain dates that you must adhere to in the contract such as inspection periods. The inspection periods include your right to get a home inspection, appraisal and any other inspections you and your Agent deem fit. Those inspections periods are about 2 weeks so you should be prepared to start paying for them right away. Your Agent will know good inspectors to use so rely on them to guide you through this time period. A special note about home inspections is that they cover everything from cracks in the driveway to mold in the attic and sometimes it is difficult to determine what items are important to have repaired or if they need repair. You can talk with the inspector directly to determine this or talk with your Agent or both. If you determine you require additional repairs in order to buy the house you will have your Agent prepare a repair addendum, and submit it to the seller. The seller has the right to say that they will or will not do the repairs. If the Seller says that they will not do the repairs you may need to make the decision to renegotiate price or back out altogether. If you do back out during the inspection periods you are entitled to a refund of your deposit. If you miss the time frames in the contract and decide to back out you could very well lose your deposit. Your Agent will work with you to make all of this legal. Another variable inspection is the appraisal. If the appraisal comes in lower than the offering price your Agent will discuss your options with you. Those options will be to give the seller a counter offer with the lower value as the price, or you could pay the difference in down payment if you are so inclined. If you decide to pay the difference be prepared to make the down payment on the lower of the sales price or appraised value and pay the difference. For example if the sales price is $250,000 and you are putting 10% down for a 90% loan to value (LTV) or $25,000, and the appraisal came in at $245,000 you will be required to put your $25,000 down and you will have to add an additional $5,000 for a total of $30,000 and you will still be at a 90% LTV.
Once you have made it through the inspection periods and everything has passed your standards, we are full steam ahead to the closing of this transaction. At this time I would suggest you get back with your MAE Capital Loan Officer and make sure they are on schedule to close and see if they need any more documentation from you or explanations. By now the loan should be approved, and hopefully you are just waiting for the legal paperwork to be delivered to the escrow so you can sign and bring in the remainder of down payment and closing costs. You can always refer to the closing diagram on our Process Flow page to see where you are at in the process. There still may be a few weeks left in your escrow process so be prepared to provide more information for your Loan Officer. Now would be a good time to start preparing to transfer your utilities so you have no interruption when you move.
OK, you signed brought your money in to the Escrow and are ready to close. The lender must review everything before they release funds to Escrow to make sure all signatures are correct and the all the conditions the underwriter put on the file have been met. Once everything is good the lender funds the loan to the Escrow and they then take the Deed to the county to record the transaction to make the house legally yours. Congratulations you are now a home owner and you can move in and do anything to the home you wish. Your first mortgage payment will be due the first of the following month and be sure to make that payment on time or it will affect your credit. I hope this helped you with some basics to buying a home. If you go to our Pre-Approval page and complete the form at the bottom of the page we will contact you are start your process or give us a call we would love to talk to you at (916) 672-6130.
Holiday Real Estate selling can be challenging at best for Sellers but don’t give up hope with rising interest rates potential home buyers should be looking to jump in before they are priced out of the market. Other than rising interest rates it is not so bad for home buyers this time of year, but a seller has to always have their home ready to show and can be problematic if you live in the house you are trying to sell. With family coming and going from the family home it can be nearly impossible to keep your home “show ready”. However, if you are selling a staged and remodeled home this may be the perfect time of year to sell as homebuyers are always looking and inventory is traditionally lower this time of year. As homebuyers are always” in the market to buy” a seller may not be for obvious reasons.
Traditionally, during the holidays there is so many extraneous things going on in lives of people that they most often decide to wait to sell their homes after the first of the year when things calm down and they have the time to keep their homes “show ready”. Many folks that want to sell the family home, decide not to list and sell their homes during the holidays as they may have family coming and going or they may be going to family. They may also be coming and going from their home doing holiday shopping, decorating, or parties or all the above. So, for these reasons some people will opt to wait till after the first of the year to put their home on the market. In January you will traditionally see more homes come on the market as time has freed up for the potential sellers to get their homes ready to sell and all the holiday decorations have been stowed away. Homebuyers, I have found, are always looking to buy so if there would be a possibility to list your home during the holidays chances are greater that you will sell your home during this time.
For investors listing and selling their houses, they won’t have of the same pressures as they do not depend on the house they are selling for their family. For an investor this is a business of buying, fixing and selling homes so they don’t have the same problems that a homeowner will have that lives in the home they are selling. So, for that reason you may see more remodeled homes hitting the market place this time of year as investors are smart and know that their houses will be in more demand this time of year as the inventory of available homes for sale has shrunken due to the holidays. For a smart homebuyer they may get to take advantage of buying a newly remodeled home where other home buyers may have opted to wait till after the first of the year to resume looking for a home.
There are pro’s and con’s to buying and selling a home this time of year, but always remember that both Buyer’s and Seller’s can write anything they want in the contract. If a Homebuyer doesn’t want to move over the holidays they can always write a Close of Escrow Date to be after the first of the year or after Thanksgiving so they do not have disrupt their living arrangements during the holidays. The same holds true to a seller they can dictate when they wish to close escrow as well. Some other factors during this time of year to take into consideration is that the service providers such as the Lenders, Title Companies, Escrow Companies, and even Realtors may have travel plans with their families that may slow things up as well. The toughest time of year to try and close an escrow is the last day of the year and that should be taken into consideration. This year is particularly difficult as the 31st falls on a Monday which makes December 28th the last business day of the year and it is a Friday before a potential 3 day weekend, people may be leaving town or trying to leave town which can slow or delay a closing. Also, Christmas falls on the Tuesday of the same week making that week only a 4-day or 3.5-day week at best. There are a lot of things going on this time of year that doesn’t usually happen other times of the year, so if you are buying or selling a home I would say be flexible as you never know what may happen to delay a close of escrow. We know how this works and plan for it the day we list or make an offer for a client. Seeing the future is impossible but panning for it is not and we want to make sure your experience this time of year is the best. Please call us at MAE Capital Real Estate and Loan and we can guide you through the process 916-672-6130.
As a Real Estate Broker who has been in the industry for the last 33 years I have learned several tricks and secrets that other Brokers don’t want you to know about. I want to share them with you as I have learned to save my clients money using the secrets other Brokers don’t want you to know about. In Real Estate everything is negotiable and that is the first secret I will share with you as that will be theme of this whole post. We will cover how Agents are paid and how loan officers are paid, as knowing this will help you negotiate and choose the best firm and Agents to work with. We will explore the various other aspects of Real Estate like how the financing works and how you can bundle the services from one company to save thousands of dollars.
Let’s start with selling a house. If you are considering selling your home, you should know that when you talk to an Agent about listing your home that he or she’s commission is negotiable. The Agent will tell you that the going rate is 6% or 5% but the dirty little secret here is that there is nothing written in stone. If you did a little research you could find a company like MAE Capital Real Estate and Loan that can that can save you thousands by bundling Real Estate services you will need anyway and receive a discount on the commission you pay to sell your home leaving you with more money to buy your next home. If you are dealing with a “Big Box Real Estate Firm” you may not be offered this option as they are not allowed to negotiate like that and may not offer all the same services, but the smaller firms can. Another little secret is that when you list your home for sale whether it is with a small Brokerage or a large Brokerage the way your home is marketed is exactly the same. Your home is listed on the Multiple Listing Service (MLS) that is a digital service that every Realtor has to belong to. So, if you think your home will be seen by more Agents if you list it with a large firm you would be mistaken. In fact, smaller firms generally have strong roots in the community and those Agents that work for these firms understand that they have more ways to serve their clients and save them money. Another secret is that when listing your home and you know you will buying another one the same Agent who listed your house for sale can sell you your next home and when doing so can now accept a lesser of a commission on the sale of your giving you more money to buy your next home. Here at MAE Capital Real Estate and Loan this practice is common place.
This brings us to Buying a home. Did you know that you don’t pay your Agent to represent you when you are buying a home? It’s a fact, the seller pays commissions to the Listing and the Selling Agent as per the listing agreement already completed before you ever saw the house. This is why, as the seller, you will have to pay something to sell you home or you won’t get anyone to show the house. So as a buyer, either moving up or a first-time home buyer, you should always have representation. Did you know that if you go directly to the Agent who has the house listed it won’t save you any more money as a buyer? This is a common myth when looking to buy a home, as what you don’t know is that the Agent who has the house listed for sale has already made arrangements with the seller for their commission, in fact, in that scenario it might end up saving the seller money and not you as the buyer. In Real Estate in California the Agent has to look after the seller’s best interests first, that is the law. So, knowing this will put you at the advantage as, if you remember, everything is negotiable and if you have the right Agent they should be able to negotiate a better deal for you than the Agent representing the seller could by law. The trick is when you are selling a house and buying another is to work with a MAE Capital Agent as they will bundle their services and take less when they sell your home leaving you with more to buy the next home if they also represent you when you buy your next home, this is called service bundling.
The next aspect of the Real Estate transaction is the financing. This is probably the part of the transaction that you will be least knowledgeable about as you can’t see a loan like you can physically see a house. This part of the Real Estate transaction is the part most people are afraid of and have no knowledge of how it all works. I’m not going to teach you how the financing works, but I will teach you the secrets that your Loan Officer doesn’t want you to know about. Again, going back to our theme of everything being negotiable, you guessed it, the financing is also negotiable. Most people don’t realize this as the laws have changed to where Loan Officers and companies have to set their fees up in advance of disclosing to you. This is where you have the advantage as you can easily shop an interest rate and fees to get the best deal. Going back to small shops verses large shops, the same holds true for Mortgage companies. The large Mortgage shops are far more restrictive when it comes to negotiating fees and interest rates than smaller shops and the reason for this is the regulators who the companies report. A dirty little secret is that most of that larger Mortgage Companies in California are licensed under the Department of Business Oversight(DBO) which means they don’t have the same restrictions that the smaller companies that are Regulated by the Bureau of Real Estate (BRE). The secret is that if the regulator is the BRE the Mortgage Company under them can only make a total of 3% in fees and commissions whereas the Mortgage company regulated by the DBO can make unlimited amounts of money on your loan thus they are generally higher in interest rates and fees. Choosing a Mortgage Company under the BRE that can provide multiple services translates to you not only having a lower mortgage payment but also lower costs to get that loan. At MAE Capital Real Estate and Loan, we are regulated by the BRE and thus ours rates and fees are less than any of our DBO competitors before we discount anything. Here is a secret that will save you thousands, and you can quantify it. If you use MAE Capital to Sell and Buy your next home and use our financing without any discounts you would be better than our competition in fess and costs and monthly payments, however, the reason for sharing this is to show you how we do use discounts to save you additional money. Having the ability to have Listing, Selling and Loan Agents under one roof will not only save you time it will save you money, we are here to help.
I understand you have choices when you need a Real Estate Service or services, I wanted you to learn some secrets and tricks to save money whether you use MAE Capital Real Estate and Loan or not. I am a firm believer in empowering my clients to make informed decisions. If you are reading this blog then you are one who researches and fills your brain with knowledge before you make any big decisions. You are the smart one as most people follow the leader like sheep and you know where that leads you (to the slaughter house). Here at MAE Capital Real Estate and Loan we pride ourselves on serving our customers and they keep coming back so we must be doing something right. When you talk about experience and the ability to think outside of the box that is what we are and sharing the secrets of the trade is just one way of keeping our clients informed. If you need further assistance with one or a bundling of our services, we would love the opportunity to show you how we do this Real Estate and Loan Business. www.maecapital.com 916-672-6130
This is going to sound obvious to most folks that read this, but to others it might be a revelation. When you do a Real Estate transactions there are going to be hundreds of papers you will be faced to sign. Paperwork from the Real Estate Contract itself to hundreds of loan disclosures if you are getting a loan. Every one of those papers were derived by an attorney to protect the interests of the lender or Realtor, so if you are unsure of what you are signing you may want to ask your Realtor or your Loan Officer to explain them in more detail. If they can’t provide you with an adequate explanation of what the document is then get a second opinion from an attorney or another professional. In the past, it has been buyer beware but with the new laws that have been enacted over the last several years the responsibility of disclosing all material facts of the transaction has fallen on the Realtors and the Lenders. This may sound redundant, but I assure you it is not, for many reasons.
When I started in the lending business in 1984 the Real Estate Contract was a one page document and now it is over 12 for the initial contract with no additional addendums or additional disclosures. All in all you will sign over 50 different pages of Real Estate disclosures when you buy an owner occupied home. These disclosures are designed to tell you, the consumer, as much as possible about the home, the process, inspections you should have, what the condition of the property is as the Agent sees it, etc.. When you read them you will know they are designed by attorneys to protect the Real estate agent. You may even feel that you don’t understand what you are signing but feel forced to sign in order to get a house. This is not what they are designed for, you should know what you are signing and what your rights are as a consumer and your Agent has a Fiduciary responsibility to make sure you understand the disclosures. But when you are hot in negotiations with multiple offers on a house and your objective is to win the house with the highest and best offer you and your Agent may gloss over some details in the very papers you are signing.
An example of missing things when negotiating would be the inspections section of the contract. This is an area within the contract, usually on the second or 3rd page, where it states the inspections you want to make the contract contingent upon. If you decide that your offer would be best as an “as is” offer you just waived your rights to back out if the house has any major problems. Consumers miss this a lot and an Agent will “assume” their clients know what “as is “ means. This could be very costly to a home buyer in the long run, if they find something extremely wrong with the house before they close escrow and they do not have the means to fix the issue and they have to back out their deposit could be in jeopardy. Or worse, if they do close on the house with a known major problem, or they find out about a major problem after escrow has closed it could end up costing them the house itself. This would have been prevented if the buyers knew upfront the process and what they were signing and the ramifications of signing the documents.
The Real Estate paperwork has been evolving over time with new cases popping up all the time that will begat more disclosures. The disclosures for the loans have evolved so rapidly over the last several years due to the mortgage crisis that paperwork you signed last year for your loan is now obsolete with the new disclosure laws. So if you are trying to refinance your loan in today’s environment and you have done it a time or two you might see the new disclosures and be completely confused. Remember all of this is designed to protect you the consumer, but it does no good if you do not read what you are signing. In some cases you could be committing loan fraud and not even know it. If you sign documents that you are going to live in a property and you are really going to rent the property out you are committing loan fraud. Or if you are saying the property is going to be a rental and you are actually living in it you are committing loan fraud. You will be signing no less than 4 documents stating the occupancy of the property. Your loan officer only knows what you tell them so in effect you could pull your loan officer into a situation where they had no idea you were lying and it could cost them their license, but with the new disclosures that will be put solely on the borrower to tell the truth and the disclosures state that implicitly. So don’t try and say “my loan officer told me to do that or I would not get a loan” that will not fly with the disclosures you sign. The new Loan Disclosures give the borrower time to read them and get a second or third opinion of what they are signing before consummating the loan.
Now attorneys love to challenge these new laws, but most of the time they are ignorant of what their clients have actually signed and will wait till the discovery part of a lawsuit to find out their client has signed papers refuting what they told them in the first place. This ends up hurting their clients in that attorneys are paid on billable hours and it could take many billable hours before they realize their client actually signed paperwork that is contrary to what they are suing for. This process not only hurts the borrower, but it will hurt the lender, brokers etc. involved as they had to pay for their attorneys to defend them. But in the end what really hurts is the fact that borrower signed paperwork that they will make them pay for the lender’s attorneys to defend the lender if they lose and they do lose more than they win because of this. It is my opinion that attorneys that do this are self-serving and greedy agreeing to take cases like this, but they do every day to support their lifestyles like traveling to Greece on vacation and fancy cars etc.. I have even heard of attorneys agreeing to take monthly payments for their services to sue lenders, knowing that cases like that will take years to complete and in most cases go to the lender. Giving a client false hope is criminal but some of these leeches do it everyday advertising on the radio and TV fishing for suckers to sue lenders. Remember ignorance is no defense of the law so read your paperwork, disclosures are given to you to protect the lender against you.
I could go on and on about attorneys and their practices, but I want to make sure you understand the importance of reading your disclosures and if you don’t understand what you are signing don’t sign them. There is now a mandatory “cooling off period” when you get an owner occupied loan it is called “know before you owe”. Lenders have to make sure their clients have sufficient time to read and ask questions about fees, costs, and disclosures before they can lend them money. If you are getting a loan for a rental property, or a property that will be used primarily for business purposes those rules are waived as the government figures you should be educated if you can afford to investment in rental property, flips, commercial buildings etc. These rules in California are the “covered loan” laws and are qualified mortgage laws at the Federal level and most states have implemented their own versions of this. What all this boils down to is that you, the consumer, must read what you are signing and if you don’t then you could be committing loan fraud or you could lose your home in extreme circumstances. Most of these disclosures are sent to the borrower via the internet or email, so it may be a little more difficult to read, so if you would prefer you could ask to have your disclosures sent through the mail. If you choose this way the time frames extend out to close your loan, it could be 2 weeks longer if you choose the snail mail way but you may need that time so take it. In the end, we are all here to help our clients get the best possible deal with both the Real Estate transaction and the loan transaction. We don’t want to close a transaction just to make money, we strive to do the best possible work so our clients will refer their friends and neighbors to us. We are here to help so if at any time you need help on what you are signing we can help interpret the maze of paperwork, but we will always tell you to seek an outside opinion on legal questions as we are not lawyers and can’t give you legal advice or accounting advice. As always please leave your comments if you have them.
When we say Customer Service in today’s world what are we really talking about? Some of us older generational folks’ definition may be a little different than the millennial’s definition of customer service. I was brought up to open doors for women, talk when spoken to, and treat people as though I would want to be treated, call back people when they leave you a message as soon as you can and so on. So you can probably guess that I am over 50, but do these simple concepts change with generations or should the new generations take into consideration the old ways of serving people and should the older generations have to keep up with the new ways of communicating? My answer would be yes to both, the younger generations in order to keep top notch customer service should take into considerations the way things have been done in the past to provide the highest level of customer service. On the flip side of that the older generations have to conform to the new ways of providing top notch customer service. The older generations have to learn the new advanced communication techniques in order to provide top-notch customer service.
That said, we all should take care when providing top-notch customer service and take into consideration who our customers are and how they expect to be communicated with. In the Real Estate and Mortgage world, we are taught from day one to provide a high-level service as we know our customers have choices in who they work with. From the first contact with a new customer, it is imperative that we establish the needs of our clients. By establishing exactly what the customer is looking for it is then our responsibility to build a relationship with the customer and determine exactly how they wish to communicate with us throughout the transaction. We have to see if the customer prefers to be called on the phone, texted, emailed or all the above. We then have to learn their personality, their style of talking, their demographics, and a little of their background to not only communicate with them in a manner they expect but to be able to build a level of trust. Yes, trust is imperative when you are trying to provide a high level of service, if your clients can’t trust you there will be no way to provide any level of service that will make your client happy.
Customer service is not just simply being nice it is getting know your customer and what their needs and personality is. Communication goes far deeper than simply being nice and giving the client property to look at or loan choices. In Real Estate you have a fiduciary responsibility to your customers to act in their best interests. This is defined as acting on the behalf of your customer in a manner to which you are them. So if you do not take the time to fully know your customers you will not be providing the best fiduciary services for your customer either. Although your customer may never know, or care to know Real Estate law, it is not only an ethical responsibility it is also a law, once you have established your fiduciary relationship with your client to act on their best interests. This should be a given in any Real Estate transaction and that service level is the bare minimum, going above and beyond should be the norm.
So what is going above and beyond the norm actually mean? My opinion is simple and that is give the customer what they want and then give them more than they ever expected. Sounds easy but exactly what does that mean to a fledgling Agent or even an experienced Agent who may have forgotten that art? It all starts from the beginning, the first time you meet a customer, either on the phone or in person, or even in an email. First impressions are the most important impressions as those impressions will be the driving force throughout a transaction of how your customer views you. If your first impression is one that is rushed and you appear to be too busy to deal with them then the customer will have that mindset of you though the whole transaction and feel less important than your other clients (not good). If you give the appearance that you are very busy but you drop everything else when you are with the customer and they are your only focus when you are with them, and you treat them as though they are your only client and that they are special whenever you talk with them they will feel that they are special and will be more apt to work with you. It is these subtle things that can make a customer feel comfortable with you and want to do business with you, even if you have worked with them in the past the same rules apply. Remember, you don’t have to know everything about the Real Estate or Loan business to build a special relationship with you customers, you just have to treat them with the upmost respect for their time and their efforts, the rest will fall into place.
As a customer, you should feel like you are very important to the Agent or Loan Officer you are working with. You should feel that your Agent is representing you to the best of his or her ability and is looking after you best interests. A customer should be able to convey his or her needs to an Agent fairly quickly upon the first meeting and feel as though the Agent is going to work for them at a high level. Sometimes you are referred to an Agent by a friend or a family member and feel obligated to use that Agent as your friend or family member used that person. I say absolutely not if you are not comfortable with them at the first impression you will be continually be disappointed throughout the transaction. Sometimes your family or friends will refer you to an Agent who just assumes the sale because of the referral and the Agent doesn’t feel the need to “turn it on” for you. If you are feeling this then do you own research and find an Agent or Loan Officer who you feel comfortable with. This is a relationship business and just because your family member or friend has a relationship with a particular Agent or Loan Officer does not obligate you to use them. Everyone has a different personality so pick someone who fits yours, you can discriminate as a customer as to the type of person male or female, black, white purple or pink who you want to work with so find a person you feel will best work with you and your personality. You will be working with this person or persons for at least a month or two or maybe longer, so you need to feel good about your representation and your relationship with your Agent and your Loan Officer.
In conclusion, you should have an Agent and Loan Officer who you are comfortable with and your Agent and Loan Officer should be looking out after your best interests. From our side of the fence, and as the customer service provider, we are humans and we make mistakes and we are not perfect but the way we treat our customers should be with the upmost respect and it is up to us to “show you the service”. That’s right you should be able to stand on top of a mountain and yell “I am the customer show me the service!” It is up to us to show you the service and communicate with you however and whenever you want to be communicated with. As a Realtor and a Loan Officer and the Broker of record from my company, MAE Capital Real Estate and Loan, it is up to me to show you the service you expect, then it is up to me to take that to a whole new level, adding education, coaching, compliance, and a products that are second to none. It is one of the reasons you will find our website full of useful information that even our competing companies use as a source of information and training. I am not saying that all Real Estate and Loan transaction we do are easy, in fact, most transaction in today’ regulatory environment are slow and cumbersome, but we know that it is the industry not our service levels. We map out your transaction from the beginning so you know what to expect with regards to time lines, documentation, and disclosures so there are very little surprises. If you are another Agent that works for another Broker I hope this helps your career. If you are a Loan Officer from another company reading this I hope this helps you as well. Most importantly I hope all Real Estate and Loan Customers are treated with dignity and respect and receive the best service the industry has to offer and we do hope to have the opportunity to work with you.