Entries from Searchlight Crusade tagged with 'competition'
The Return of Portfolio Lending
Fannie and Freddie long had a policy that they would not fund investment property (non-owner occupied) beyond 10 loans. Although it did impact a certain number of investors, for most folks that rule just never came into play. They have...
How to Effectively Shop for a Buyer's Agent
This is easy. Much easier than effectively shopping for a loan or a listing agent. So easy that a congresscritter can do it. So easy that congressional leadership can do it. The only thing possibly moderately difficult to understand is...
Listings from Non-MLS Websites
About once a week, I get an email from a client or prospect asking about a property they found on a site not sourced from MLS. These properties are pretty universally non-existent, at least as far as being for...
Negotiation Requires More Than Dueling Ultimatums
Not too long ago, I started negotiating for a property. I did extensive research online, and and I and my clients visited several competing properties. We made an offer that was a little under 90% of the asking price, and...
What Do Loan Qualification Standards Accomplish?
If you don't know the answer to this, don't be embarrassed. Lots of alleged professionals forgot the answers to these questions for several years, if indeed, they ever knew. It seems like quite a few still don't know the answer...
Magical Thinking About Mortgage Loans
(This is an updated reprint of an article written in February 2007. The Era of Make Believe Loans that made it easier to qualify people for inflated loan amounts ended abruptly a few days later, but the sort of thinking...
Professional Referrals in Real Estate and Loans
People ask for referrals all the time, and many folks will stumble all over themselves to provide referrals. Some of them really are excellent providers. Others are not so good, but the person providing the referral has an agenda of...
Pocket Listings: Out of Sight, Out of Mind
Every so often, you will see references to a "pocket" listing. These are usually bad for owners, and usually bad for buyers, but good for agents. A "pocket listing" is one where there agent keeps the listing "in his pocket"...
Fixed rate, Balloon, ARM and Hybrid Loans
One of the things that always seems to be aiming to confuse mortgage consumers is advertising based upon whether the loan is fixed rate, and for how long. First, I need to acquaint you with two concepts: amortization and term....
"All of the Good Properties Get Offers So Fast!"
That's way up there on the list of complaints buyer's agents get. Probably number one, definitely no lower than number three, and it's only going to get worse when the markets recover. There's really only one honest response: "Well,...
Exclusive versus Non-Exclusive Buyer's Agent Agreement
From an email: I was in the process of buying and selling the house when we saw a FSBO house we liked was for sale. But sale fell through, which is a good thing anyway because of contigency on our...
Don't Allow Yourself To Become A Victim of Bad Real Estate Practice
This woman made herself a victim stayed in a hotel for 7 weeks looking for my "Dream Home." And, when I found it, even though it wasn't in my price range, I knew I would do anything I could to...
Credit Reports: What They Are and How They Work
I went to a "direct from the providers" seminar on credit reports and credit scores. Some of this information has changed from previous information, and some of it will change in the future. Credit Reporting, FICO scores, and related items...
Desperation Mining: How a Buyer Hits Paydirt (and How Sellers Can Avoid it)
One of my favorite blogs ran a picture of a listing sign that included the caption "REDUCED But Not Stupid or Desperate". I beg to differ on the former. On the latter, time will tell. Most successful real estate investors...
Procuring Cause and Multiple Agents
Dear Mr. Melson, If you sign two or more non-exclusive buyer's agent agreements in your search for a home to buy, how do you avoid putting yourself at risk for a procuring cause situation from either agent, or even the...
Stupid Negotiating Tricks: Appeal to Pity (or Falling for Appeal to Pity)
A while ago, another agent in my office got an offer and brought it to me for feedback. The listing was range priced over a $30k range, and priced correctly, so there was a lot of activity on it. The...
What to Do When Your Loan is Declined
Loans are declined, or actually, the next thing to it, all the time. It is pretty rare for a loan to be outright rejected; I do not recall ever having had a loan outright rejected. That's a sign of a...
Did That Slap On The Back Leave a Knife?
One of the things the place I work does to attract clients is advertise foreclosure lists to our clients. Several times a week, people call and ask for the lists, and we say, "Great! Just come on down, fill out...
Is Remodeling Likely To Show A Profit?
My general rule of thumb is "Remodel for your own enjoyment. If you're lucky, you'll get some of your money back when you sell." The remodeling industry has made a very large amount of money seducing people into believing...
Top Ten Reasons You Bought The Wrong House
A while ago, I wrote Top Ten Reasons Your Home Isn't Selling. It was well received so I thought I'd take it from the buyer's perspective. Once again, I'll try to inject as much humor as I can. And...
Agents "Buying" Listings: Promising the Undeliverable and Hurting Their Clients
Quite a lot of the time when I view a property, I get requests for feedback. Usually it's an automated email. Other times, it's some office assistant who wants to fax me a form which will "only take a...
Trying to Buy Real Estate Below Market
This question: What real estate office can I trust to help buy below market house in (location) California? brought someone to the site and I have not previously written a real answer to the question. The short answer is "nobody."...
The History of Suburban Housing
For at least the last thirty years, I've been hearing "affordable housing" advocates yammer about the high cost of housing, and how working families can no longer afford "decent" housing, which they apparently consider to be the three or...
You Never Have To Sell to a Any Particular Offer
Must you sell if you list at a specific price and the broker comes up with a qualified buyer? in the US in general, no you do not have to sell, but you could still be liable to the...
Why Cost Is As Important As Rate For Mortgage Loans
When I wrote explaining why borrowers should consider a 5/1 ARM, because the tradeoff between rate and cost is lower for that loan, and most people don't keep their loans 5 years anyway, so having a likely need to...
Mortgage Lenders Don't Want to Compete on Actual Price
Yet that is exactly what you want them to do. To avoid competing on price, they have all kinds of distractions they offer to make life more convenient, but not cheaper. They offer automatic payment options, the convenience of having...
Top Ten Reasons Your House Isn't Selling
No, I'm not a David Letterman watcher, for reasons having to do with turning into a pumpkin before his show starts. I'm going to treat it a little more seriously than he does, as this is a serious subject,...
Loan Rate Sheets: The Games Lenders Play With Rate and Cost Adjustments
This is part and parcel of the system that's abused. Here are sample rates from one A paper lender, picked at random, that were in effect when I originally wrote this. Rates are lower now, but it's a good example...
Shop Loans By The Bottom Line To You, Not By What the Provider Makes
When it comes to mortgage loans, people get distracted by the darnedest things. Let's look at Wal-Mart. You think they got to be the largest retailer in the world by making less money than their competition? I assure you...
A Good Listing Agent's Most Difficult Task
The general public may not understand this, but the most critical parts of a listing agent's job all take place before the property hits the market. The most difficult task of an agent who wants to successfully list property is...
Why You Want To Price Your Property Correctly From Day One
This article is for sellers who want to put their property on the market priced too high "just to see if we can get it." I know where sellers get it. A lot of people are out there hyping...
What Happens When You Over-Price Real Estate?
Short answer: It almost certainly won't sell! The first thing that happens is that when it goes onto the Multiple Listing Service, all the agents who see it know that it's overpriced. Even on the public part of MLS, the...
Pre-Qualification
One of the most useless and overworked items in the real estate industry today is the pre-qualification for a loan. Sellers want buyers to be "pre-qualified", and buyers are seeking "pre-qualification" to convince buyers they are serious. The level of...
Writing Real Estate Purchase Offers to Beat Higher Competing Offers
This article was inspired by closing one of many transactions where my clients did not make the high bid (or even close), but did get the fully negotiated purchase contract and the property. By building an airtight case that...
What is Reasonable Loan Officer Compensation?
I get people asking me about how much their mortgage loan providers make, usually with an idea towards negotiating it down but often with the idea of choosing one loan or the other based upon the loan officer's compensation. This...
Debunking "Lenders Are All The Same"
Just like Mohandas Gandhi and Genghis Khan and Attila the Hun were all human beings, lenders make money by lending money to people who want it. That's about the limit of the truth in that statement. Lenders do, by and...
Sixty Second Public Service Announcement About Selling Real Estate
Here was an idea I had: Pack a list of the most important things consumers need to know about buying real estate, as packed into the words I can say in sixty seconds without sounding like an over-clocked squirrel. Here...
Real Estate: Giving Someone a Monopoly Does Not Encourage Top Performance
From an e-mail I've been talking to agents lately and I ask them about the things I've learned about from your site. I thought I would say things like "I want to apply for a backup loan" and they would...
The 2010 Good Faith Estimate (Page Three)
This is the conclusion of the series begun in The 2010 Good Faith Estimate (Page One) and continued in The 2010 Good Faith Estimate (Page Two) Page Three is where the most blatant lies of this whole piece take...
The 2010 Good Faith Estimate (Page Two)
Continued from The 2010 Good Faith Estimate (Page One) The next section is on origination charges. Indeed it is titled "Your adjusted origination charges" It starts with "Our origination charges" saying this is the charge for doing the loan....
The 2010 Good Faith Estimate (Page One)
I had a great rant about the limitations of the Good Faith Estimate all planned out in my head when I when I was in the very first stages of planning this website in my head. It was the first...
Mortgage Accelerator Programs: A Good Basic Idea, But the Devil Is In the Details
The recent hot thing in mortgage circles is a mortgage accelerator program. I've heard other things, most notably biweekly payment programs, called mortgage accelerators in the past, so let me take a moment to define exactly what I'm talking about....
Pretending the Service Equation is Simpler Than It Is
Way back when I was just out of high school, I was doing a lot of things with my time. Working, dating, competing on the fencing team, gaming of various sorts. But every once in a while, I dropped...
Online Mortgage Quotes
(This is a reprint from December 2006, with a few updates. It is instructive in the wake of a certain new mortgage quote service, launched with great fanfare. The negative amortization loan is gone, but I'm seeing lots of other...
My Thirty Second Public Service Announcement On Mortgage Loans (UPDATED)
I usually write medium-long articles, Part of that is because I've done all of the easy subjects, part because sound bites facilitate sloganeering, not serious thought that's likely to result in a better answer - or the realization that you've...
Do Not Sign Loan Disclosures That Don't Apply To Your Loan
from an email: First let me say that I really learned a lot from your postings/articles/website; its awesome that a resource like yourself exists. Now to the problem. I recently refinanced and the mortgage broker lied to me about many,...
The Push Towards Bigger Loans: Why It Happened and How Consumers Suffered
One of the consumer attitudes I encounter constantly is the feeling that if you cannot afford the loan, the lender will not loan you the money. This safety zone common sense sort of reliance upon lender policy as a backstop...
Debt Consolidation Refinance - Doing it Wrong vs. Doing it Right
There's a lot that gets written on this subject, mostly by loan officers looking for business. Well, don't think I'm not looking for business, but not with this post. Or if anybody calls me because of this, at least I'll...
CBB: The Art of Setting Buyer's Agency Compensation on a Listing
First off, let me make something very plain. All a CBB (Cooperating Buyer's Broker compensation) can do is give good agent an incentive or disincentive to look at the property. A high one will not, by itself, sell the...
Racial Gap In Home Loans
Racial Gap in Loans Is High in California. I can give a variety of reasons for this. First off, especially in Los Angeles but to a lesser extent throughout the state, there is a huge "Spanish speaking only" community. When...
Debunking "Banks Give Better Deals Than Brokers"
Better deals for the bank, that is. Ken Harney has an article Study Shows Loan Brokers' Better Side But now a new, independent academic study has concluded the opposite: According to a team of researchers headed by Georgetown University's Gregory...
Non-Exclusive Buyer's Agency Contract - A Bet Consumers Can't Lose
There are two sorts of buyer's agency contracts, exclusive and non-exclusive. Note that this has nothing to do with Exclusive Buyer's Agents, who do not accept property for listing. I disagree with their reasoning on the virtues of doing...
Finding Bargain Real Estate: Work With the Buyer's Agent Who Actually Finds The Bargain!
Several times a month I get calls and emails. Sometimes, it's even people stopping in. "I've heard you're good at finding bargains." Well, yes I am. "Please tell me the addresses of some bargains so I can drive by."...
The Perfect Time To Buy Real Estate
There is no such thing as the perfect time to buy. The perfect time to buy would mean that you have all kinds of leverage, and can make sellers give you pretty much the deal you want, but prices are...
Changes In The Mortgage Market And Transparency Since 2005
The overview is simple: The government has made it take slightly more effort to lie to consumers, while adding layers of delays that add a minimum of a week - an average of three weeks - to the time...
Real Estate and the Four Levels of Competence
People who talk about learning skills tend to discuss a model for learning called the conscious competence learning model. It starts with unconscious incompetence. You not only don't know how to do something, you don't realize that it is...
The Mortgage Loan Market Controls the Real Estate Market
One of the things I keep telling folks about the real estate market, whatever area you live in, is that it is controlled by the loan market. If you want to understand where real estate in general is headed, look...
Lenders Holding Your Money Hostage
My lender told me that there is an application fee? He said an application fee of $250 and then we'll need the appraisal fee and of course we'll need an inspection. Does all this sound legit, is there always...
Games Lenders Play, Part I: Misleading Advertising to Get You to Call
I get the same junkmail and spam most of you folks do. They don't know who I am when they send it out. It's just that I know what's going on behind the scenes with this stuff. So I thought...
What to look for at Loan Closing
I've said upon more than one occasion that the factors at closing are all in the loan provider's favor. Unless they signed up for multiple loans, the typical consumer has no leverage to get the loan provider to play it...
Lenders Adding A Prepayment Penalty After Funding
I recently closed a mortgage loan. The loan officer told me there would be no prepayment penalty. When the documents came there was none and the loan funded and closed. Two weeks later I got an e-mail stating some...
"All Mortgage Money Comes From The Same Place"
This sentence is a textbook illustration of the most effective way to lie. Tell the truth, but not all of it. Not that I'm trying to coach habitual liars, but I am going to deconstruct this astoundingly dishonest claim that...
How to Sell Your Home Quickly and For The Best Possible Price
There's really nothing mysterious about this. There are some subsidiary tricks and issues, but the most important thing is obvious. The economic games theory is crystal clear, as is the research into what really happens. But most people don't like...
Real Estate Agents and Mortgage Loan Officers Don't Want to Compete
It's the same reason the phone company doesn't want to compete, General Motors doesn't want to compete, Wal-Mart doesn't want to compete, Disney doesn't want to compete, and Microsoft will do everything in its power to appear as if it...
Translation: Salesgoodspeakian to English
It may not come as a shock to you, but loan officers, along with many other salesfolk, speak a different language than the rest of the population. What will probably annoy you, however, is the number of times they'll say...
The Future of Real Estate Agency is Expert Consultants, Not Controlling Market Access
Expertise and attitude, not control of an informational chokepoint, is the way that things are going. Let's analyze this from both sides of the problem. The current owner looking to sell really needs a marketer. For better or worse, most...
Real Estate and the Tale of Aesop's Dog (Greed Envy)
At a very young age, my parents bought me a book of Aesop's Tales. Aesop has gone out of style, probably because these are stories with a moral lesson, and it seems the modern society is actively averse to moral...
Mortgage Loan Rate Locks
One of the most true sayings in the mortgage business is, "If you can't lock it right now, it's not real." But many mortgage providers will play a game of wait and hope. They tell you they have a certain...
Multiple Mortgage Inquiries Do Not Drop Your Credit Score
>broker incurred 19 inquires in 1 week dropping my score. B.S. I'd go the full Penn and Teller on this one if I wasn't trying to stay family friendly. The law is clear on this one, and practice is fully...
Yield Spread is a Beneficial Tool That Can Be Misused
If you read the papers and the congressional record on the current housing crisis, you might think yield spread is the central culprit for the entire meltdown. You would be wrong. Yield spread is a beneficial tool, offered voluntarily by...
Should I Buy A Home? Part 2: Process
Continued from Part 1: Preparation I am considering buying a home, although I have not made up my mind on the subject. This is not due to indecision, but rather due to a lack of necessary information. There are many...
Two Things Sellers Need To Understand About Buyers
There's an old saying in sales: "The best way to achieve your dreams is to help others achieve theirs". I wasn't able to run it down to the original attribution, but it is as true a saying as can...
Nightmare Mortgages and Self-Destructive Behavior
This article started another one of those desperate consumer fishing calls a while ago. Loan standards have tightened since then (In my considered opinion, over-tightened and the lenders and Wall Street will figure it out within a couple years). Stated...
The Doctrine of Delaying The Moment Of Truth
One of the worst things about the loan process, and indeed, found throughout the whole real estate industry, is the idea that if you can just delay telling the client about something they won't like, it's more likely they'll continue...
Why All The Fuss Over Real Estate Transactions?
Why doesn't real estate just sell for the asking price instead of having to go thru all the paper work...? Wouldn't it be easier to just put a price on it and sell it for that price? We don't...
Games Lenders Play, Part V - Selling a Low Payment
Hello, I've been reading your website for awhile now, and have found it very helpful as I'm learning to navigate this crazy loan process! I had a question I was wondering if you could write about/answer. We currently have...
The Consequences of Not Shopping Multiple Lenders
Minorities get higher rates. They add that the fact minorities are more likely to borrow from institutions specializing in high-priced loans could mean they are being steered to such lenders or that some lenders are unwilling or unable to serve...
Some Offers Are More Equal Than Others (Even If They Are For Less Money)
The phrasing in parallel with Animal Farm is intentional. Sellers need to understand this, and so do buyers, especially in a hot real estate market. Some offers are more equal than others, and knowing how to choose between competing...
The Loan Shopping Koan
It's very easy for loan providers to talk about a much better loan when you're shopping than they have any intention of delivering. Then you give them thirty days after you sign up, and you're put into a situation where...
The Tollbooth Model of Real Estate Agency
Over the last couple of decades, there's been a rising movement, mostly on the part of those who want a piece of real estate agents business, to sell agents as a toll booth. Tollbooths sit there, guarding the entry to...
The Sperm Donor Theory of Buyer's Agents
Some fathers, sad to say, are not involved in their children's life beyond conception. Maybe it was just a one night stand and they have no idea they even have a child, maybe they were involved with the mother on...
Segmented Real Estate Markets And Taking Advantage of Them
Market segmentation is what happens when certain things are much more in demand than others. For instance in the hot market brought on by the tax credit of 2009, the central area of San Diego was in high demand,...
Don't Rely On Reputation - There Are No Silver Bullets
On a regular basis, I get emails that ask me what I think of a particular company. When I check out public forums, I see questions about particular companies every time. "What do you think of X Realty, or Y...
I'm Competing Against Multiple Offers. How Do I Proceed?
The first thing to consider is that maybe you shouldn't. You never want to get involved in a bidding war. There's a classic riddle I ask every single one of my buyer clients at least once. "How often does...
The Measurement Unit For Desirability Is Dollars
I have been asked by more than one person how to measure desirability of real estate objectively. Fortunately, the Phoenicians did all the hard work for me three thousand years ago when they invented money. Precisely what that measurement unit...
Efforts to Rehabilitate the Negative Amortization Loan
The negative amortization loan is a very popular loan with certain kinds of real estate agents and loan officers. It has two great virtues as far as they are concerned. First, it has a low payment, and despite the fact...
Buying Real Estate Isn't Simple
And I don't know why people expect it to be. Cancel that. I do know why. Popular media. It's not all that common in popular media, but on those occasions I see someone buying a house in the movies...
You Want an Agency That Can Pay ENOUGH Attention to YOU
A lot of advice gets given to choose a "top producing" agent. These highly corporate offices may have the name of an individual agent attached to them, but they are in fact transaction mills. They have done pretty well for...
Inducements to Use A Builder's Lender for a Purchase
One of the things I'm seeing more of in MLS listings and developer advertising, among other places, is the phrase "$X in closing cost credit (or "$X in free builder upgrades") given for using preferred lender" Sounds like a bargain,...
Will Agents List My Property if I Owe More Than It's Worth?
The answer is yes. This situation is called a short sale. As with everything else pertaining to real estate, there are potential upsides and downsides. First of all, lenders in short sale situations often demand agents reduce their commission, so...
Realtor and Loan Officer Responsibility: Can the Client Afford The Property?
Every so often, I write about professional responsibility. Every month I get a couple of magazines because I'm a Realtor. There was a letter from someone who was proud of the fact that he had never asked someone if they...
Should Lenders Be Permitted to Sell Real Estate?
My answer is yes. National Association of Realtors is very proud of their sponsorship of legislation to keep lenders out of the business of real estate. They quote the legislation keeping banks out of the real estate business as being...
When Your Offer is Rejected
"overpriced house offer rejected what next" (Before I get started, I want to make it clear that I am using the same definition of worth found in this article) The first thing to consider is the seller obviously didn't feel...
Shopping For The Best Loan In The Changed Lending Environment
It shouldn't be any surprise to anyone with the headlines of the last few years that shopping for a mortgage loan has radically changed. Indeed, a lot of the regulatory changes seem directly aimed at what were the best...
Should Negative Amortization Loans Be Banned?
Having written several articles on Negative Amortization Loans, telling of the details of what is wrong with them, and even destroying the myth of Option ARM cash flow, I sometimes get asked if I would like to see them banned...
Competing Offers From The Same Agent For The Same Property
I wouldn't have believed this one if I hadn't been there when it happened. Another agent in my office had a listing where the property went into default. We just happened to find out about it; the seller tried to...
Loan Providers Offering to Pay For The Appraisal
This is one of those commercial gambits I keep seeing that has nothing intrinsically wrong with it, and yet it is most often a tactic employed by the more costly loan providers. In short, sharks and scam artists. The basic...
Buyer's Markets
One of the phenomena that I am encountering is fear of the market in buyers. They are concerned that prices are falling, and that they will lose some or all of their investment if they buy. Well, the first...
My Loan was Denied - What Fees Can I Recover?
"What mortgage fees can i recover after loan denial" was a search I got. The answer is basically, "None." The only thing that should be charged up front is a credit check, which costs about $20, and you should be...
Buyers: Stretching Your Budget Means Compromise
As a good buyer's agent, I love a challenge. When someone comes to me trying to make a budget stretch just a little bit further than it would usually go, that's the kind of client I love to have....
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