Saturday, September 04, 2004
Save The Gray-Haired Agents, a 1031 Specialist's Lament
Save The Gray-Haired Agents, an "indutry-specific" article by David Reed made me chuckle when I read it today. I know were-of he speaks from personal experience, and if you happen to read this and want to give this "graying" haired, and hard-working professional a smile, please read this article---and then consider my advice at the close.
Mr. Reed writes:
" There are about 2.5 million real estate agents of all shapes and sizes -- give or take. And many of them have gray hair. How did they get gray hair? From home buyers. A typical closing time on any sales contract might be 30 days or so, and a lot has to happen during that time. There's much at stake, and if either the buyer or the seller doesn't perform as agreed then things can go wrong. Blown escrows, re-listing of the home for sale, lost deposits. Why do buyers give agents gray hair?
1. The buyers haven't applied for a mortgage, much less gotten a prequalification letter. Sure, they've been to the websites and calculated their own debt ratios. I've even seen a website that lets buyers compose their own prequalification letters based solely on data input by the borrowers. (Can you believe it?) But the buyers haven't applied for a mortgage because they figure that everything's going to be okay because their credit is good and why apply for a mortgage without a contract in the first place only to "ding" their credit report, right?
2. The buyers haven't chosen a lender. Okay, maybe the buyers have applied for a mortgage but they've applied with more than one company waiting until the very last minute to make up their minds. Nothing wrong with having one lender play off another is there? Of course not. America was built on competition. The problem is that buyers think they can just call up any of those lenders the day before closing and say, "Okay, I choose you!" and everything falls into play. All third-party documentation such as title work, appraisals and verifications all have one name on them, most likely the initial lender.
3. The buyers aren't sending in their "loan conditions." When lenders approve loans, invariably there are a few missing pieces to the puzzle that are needed before printing closing documents. Some of these loan conditions might be a missing bank statement, tax returns or even providing proof of insurance coverage for the new home. Sure, they've been to the websites and calculated their own debt ratios. I've even seen a website that lets buyers compose their own prequalification letters based solely on data input by the borrowers. (Can you believe it?) But the buyers haven't applied for a mortgage because they figure that everything's going to be okay because their credit is good and why apply for a mortgage without a contract in the first place only to "ding" their credit report, right?
WHAT BUYERS/INVESTORS can do to
SAVE the Gray-Haired Realtors....:-)
1) PLEASE DO go ahead and get a PRE-QUALIFICATION letter for your mortgage if you are looking at buying a home, or if you are working towards a 1031 investment, and you need to do some financial strategizing, talk with a banker who specializes in 1031 Like-Kind Exchanges so that you canhave a heads-up on your flexibility.
2) Speaking of bankers, PLEASE DO talk with several and if you are buying real property in your home town/area, do this before you start your search.If you are investing in property out of your area, ask me for referrals, I will be happy to give you the names of a number of excellent bankers with whom I've worked over the years, and then you can interview them and make a choice.
3) Yes. It is important to save all those IRS documents and to have them at your fingertips if you are a serious buyer/investor. Try to gather up all your documents including bank statements and IRS returns in one place. ..and then SEND them on over to your chosen banker who will need them to be able to get ready for closing day.
If you intend to invest in a second or vacation home, remember that insurance requirements are different than if you live in your home full-time, so DO call the folks who will insure your property and have proof ready before closing.
THANK YOU, and 10,000 happy bows!
Mr. Reed writes:
" There are about 2.5 million real estate agents of all shapes and sizes -- give or take. And many of them have gray hair. How did they get gray hair? From home buyers. A typical closing time on any sales contract might be 30 days or so, and a lot has to happen during that time. There's much at stake, and if either the buyer or the seller doesn't perform as agreed then things can go wrong. Blown escrows, re-listing of the home for sale, lost deposits. Why do buyers give agents gray hair?
1. The buyers haven't applied for a mortgage, much less gotten a prequalification letter. Sure, they've been to the websites and calculated their own debt ratios. I've even seen a website that lets buyers compose their own prequalification letters based solely on data input by the borrowers. (Can you believe it?) But the buyers haven't applied for a mortgage because they figure that everything's going to be okay because their credit is good and why apply for a mortgage without a contract in the first place only to "ding" their credit report, right?
2. The buyers haven't chosen a lender. Okay, maybe the buyers have applied for a mortgage but they've applied with more than one company waiting until the very last minute to make up their minds. Nothing wrong with having one lender play off another is there? Of course not. America was built on competition. The problem is that buyers think they can just call up any of those lenders the day before closing and say, "Okay, I choose you!" and everything falls into play. All third-party documentation such as title work, appraisals and verifications all have one name on them, most likely the initial lender.
3. The buyers aren't sending in their "loan conditions." When lenders approve loans, invariably there are a few missing pieces to the puzzle that are needed before printing closing documents. Some of these loan conditions might be a missing bank statement, tax returns or even providing proof of insurance coverage for the new home. Sure, they've been to the websites and calculated their own debt ratios. I've even seen a website that lets buyers compose their own prequalification letters based solely on data input by the borrowers. (Can you believe it?) But the buyers haven't applied for a mortgage because they figure that everything's going to be okay because their credit is good and why apply for a mortgage without a contract in the first place only to "ding" their credit report, right?
WHAT BUYERS/INVESTORS can do to
SAVE the Gray-Haired Realtors....:-)
1) PLEASE DO go ahead and get a PRE-QUALIFICATION letter for your mortgage if you are looking at buying a home, or if you are working towards a 1031 investment, and you need to do some financial strategizing, talk with a banker who specializes in 1031 Like-Kind Exchanges so that you canhave a heads-up on your flexibility.
2) Speaking of bankers, PLEASE DO talk with several and if you are buying real property in your home town/area, do this before you start your search.If you are investing in property out of your area, ask me for referrals, I will be happy to give you the names of a number of excellent bankers with whom I've worked over the years, and then you can interview them and make a choice.
3) Yes. It is important to save all those IRS documents and to have them at your fingertips if you are a serious buyer/investor. Try to gather up all your documents including bank statements and IRS returns in one place. ..and then SEND them on over to your chosen banker who will need them to be able to get ready for closing day.
If you intend to invest in a second or vacation home, remember that insurance requirements are different than if you live in your home full-time, so DO call the folks who will insure your property and have proof ready before closing.
THANK YOU, and 10,000 happy bows!
