Lenders wrote me angry—screaming angry!—for what they perceived as giving the mortgage industry a bad name. Some realtors wrote me saying I was exaggerating the story. A person in a non-related field wrote to thank me for shedding light on the topic.
But the response that was most powerful to me was from the president of one of the largest lenders in our area. She was thrilled about my article because she’s sick and tired of attempting to provide a realistic and reputable service amid a sea of bad practices. She also believes that lenders and agents together should be responsible enough to discourage the types of irresponsible behaviors that have led to the current crisis.
Just to clarify my point again: Not all lenders are predators. Not all realtors who help a client get creative financing are negligent. All I’m trying to say is that lending has spiraled out of control in this country and the proof is in the numbers. Foreclosures are at an all-time high. Lenders are folding under the enormous weight of unpaid debt. These are facts, not suppositions.
And builders are scared. I was at a builders’ meeting earlier in the week and most of the attendees brought up the crisis with me. This is a true alarm signal. You KNOW that when builders are concerned, it’s going to cause a trickle down effect.
But here’s the good news: Real estate agents have the power to do something about it.
What can you do?
1. Don’t be afraid to talk to your clients about the money. I always tell my clients, “It’s not just what you pay for your house. It’s what you pay for the money on your house.”
Advise your clients to get a second and third offer. Too many agents shy away from the topic of money because they’re too eager to “make a sale”. Bring attention to the money instead of avoiding it.
2. Take your lender to lunch. Or two. Or three. Get to know them. Understand their world. Find out what it means to be a mortgage broker. Ask questions. Dig into the business.
I do believe that as a real estate agent, it is your responsibility to provide the best service to your clients—not just sell a property. In order to provide “five-star” service, you must understand what your client may be getting into. Know who the credible lenders are so you can help them make a decision.
And if you have a client who wants to do some “creative financing” with no down payment or other agreement, fine. If they’ve worked out the numbers and believe they can afford it, it’s surely their call. But if you smell a rat—even if you have the slightest inkling that there’s a hungry salesman making overblown promises to them—you’d be doing a favor to your industry (and to the lending industry!) to help them clarify their position in a subtle professional manner.
I know that sometimes it can be hard to understand the difference between “creative financing” and a predatory tactic. Which is why it’s important for you to learn about the lending world as well. Your expertise in this area will only help you become a better real estate agent.
3. Look at your own mortgage. I met with a group of homeowners lately and asked them, “Can you dissect your own loan for me? Your monthly payment? Your interest rate? Your loan-to-value ratio?”
Most of them didn’t know. The perfect first step for learning about all this is to examine our own mortgage. How did it rate against competitors? What kind of tactics did the broker use to get us to sign? How long will it take to truly pay it off? What’s the difference between yours and the ones in the news?
I’m always saying we need to constantly educate and re-educate ourselves. This crisis is an invaluable opportunity for us to learn about issues that are important to our clients. The more knowledgeable we are, the more we can help them.
