How Legit is a Pre-Approval???

Real EstateLike any aspect of life, the more you do it, the savvier you get. My real estate business is no different. Over the years I have absorbed tips from others as well as through my experiences and sometimes even mishaps.

In the past year, my business has grown greatly as the inventory has shrunk and buyers have come back into the market with a fervor that I have not seen these last several years. With renewed market activity comes new players in all facets of the process. Everyone loves to back a winning horse, and the real industry certainly attracts those with a penchant for risk, but often they are looking for a quick buck. Those of us who have weathered the market ups and downs know that survival, and especially real success, come from realizing that this business is not a short sprint to the finish line but more a slow steady marathon.

Several times this year, I have had listings garner multiple offers with only a few days on the market. My first thought as a agent is to pat myself on the back. I work hard. Maybe I have finally earned an easy one, as if there is such a thing. So I sat down to look over all the offers for this one particular listing to make sure I had all the specifics down before calling my client. Of course, my client is going to want the one with the highest price; however, there are so many other factors that weigh in and must be considered. The most important one is how well qualified are the buyers really. Yes, they submitted a pre-approval letter with their offer, but do we know what they had to give the lender to determine what they are qualified for? I mean sure I could get the house under contract for a record breaking price, but if the buyers truly can’t afford it, I will waste weeks of my and my clients’ time.

So here is what I have learned to take as a first step in this situation. First of all, I googled the mortgage broker/lender if I didn’t know them. Next I actually called the number on the pre-approval letter. I had one that was an invalid number. Well that doesn’t bode well for those buyers or my seller. More than likely they just used an automated website to give them a pre-approval letter, and they were not required to submit any corresponding documentation. For the other mortgage brokers, I was able to speak to in person, I just asked them to walk me through their process for acquiring information and then subsequently issuing a pre-approval letter. This was a bit time-consuming, but I would rather spend that time upfront then waste weeks of time that the property is “under contract” and not being shown only to find out that the buyers ultimately don’t qualify for the loan. Plus by doing this due diligence, my client felt more secure moving forward.

There are lots of great mortgage brokers and lenders out there. I should know since I refer clients to them all of the time. This is not to say anything bad about that aspect of the industry as a whole. It is my job to protect my seller and ultimately myself as well from losing time and money, and this is one way that I have found effective to do so.

If you are looking to refinance your current mortgage or start the buying process with a pre-approval, contact me and I can give you some great mortgage contacts.

A Home as a Gift: Good or Bad Idea???

Gift-Wrapped House With Red BowThe Wall Street Journal recently posted an article regarding husbands purchasing homes as a surprise for their spouses. I was floored! Who does this???

Admittedly, the agents who reported these incidents work in highly affluent markets where the properties being purchased are often second or even third homes, not primary residences. I could not imagine being left out of the decision-making process for such a large investment, and it was interesting to note that my opinion was reportedly shared by many others. The real estate agents in this article confirmed that the gesture was often not well-received and often had costly consequences. Many high-end markets have substantial transfer taxes included in their closing fees, so turning the property around for a quick profit is high unlikely.

I think the take away from this story is to stick to a gift that is returnable just in case, and always get a gift receipt! With the holiday season upon us, this seems like good advice for everyone.

How would you feel if your significant other purchased a property as a surprise for you?