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Should We Be Afraid of iBuyers like Zillow?
Should we be afraid of iBuyers like Zillow? Have you have heard the crazy news about Zillow Offers, which is owned and operated by Zillow. The popular real estate website, that makes near-instant cash offers on homes – a practice known as iBuying? Zillow basically buys the house online directly from the seller, slaps on paint, makes a few repairs, and then turns around and sells it. Many of us in real estate and mortgage lending was starting to worry this could create an unfair market advantage. Zillow could buy multiple homes in a particular area and then manipulate or artificially inflate home prices. To be fair, Zillow and Redfin have issued statements denying this.
The experiment has failed as Zillow, the country’s 2nd largest iBuyer in the country, has shut down its home-buying operations. At the end of the 3rd quarter, Zillow reported it had lost $420 million and had to lay off 25% of its workforce, about 2000 people, right before the holidays. Effectively ending their attempt at flipping homes using their famed technology coined “Zestimate,” aka the estimate of a home’s market value.
What is the point of all this, and why is it so important to me? Selling and buying real estate is a relationship business. Having been in mortgage lender for almost 20 years now, it always comes back to relationships. Home selling should not be an automated process in my opinion. We need to remember this is someone’s most significant asset in most cases, and they should be working with a local, professional, reputable realtor, not a Zillow robot.
Zillow went against this model, and it failed. I have been telling clients and referral partners my stance on Zillow for years – not a fan, as you can imagine. Still, they have become a necessary evil for many of us because of their market share and advertising dominance. Personally, I hope this recent fail on their part is a wake-up call for the masses – Get back to being local and build the people and business around you, in your own neighborhoods! I know we all love Amazon, but I am begging we don’t go down that road with the Zillows of the world. Let’s bring this back to the relationship piece, based on real people, with actual knowledge of your area.
Should we be afraid of iBuyers like Zillow? Now, there is still an opportunity for institutional buyers where that “iBuyers” platform might be the right path. But let your realtor, the professional, guide you on all your options and be part of this decision-making process. The seasoned agents I work with every day, take California law and their fiduciary duty to heart; they are genuinely there to give you helpful advice and counsel.
If you are interested in buying or selling a home please contact Weintraub & Wallace Realtors with RE/MAX Gold and Elizabeth Weintraub, Broker. We can be reached at 916-233-6749. Another very interesting blog from our preferred lender, DanTharp.
New Year = New Mortgage Strategy
New Year = New mortgage strategy is a fabulous blog full of interesting insights and relevant topics for any month of the year ~~ JaCi Wallace. Enjoy! While Covid-19 plunged the United States into a recession, the housing market exploded because of historically low housing supply and lower mortgage rates. Although this has been very nice for folks who own homes, it’s been problematic for the growing number of buyers who are being shut out of the housing market altogether. I will save that puzzle for another day, as I want to talk about Mr. and Mrs. Homeowner and what they do now with this unprecedented appreciation they are sitting on.
Side note
I recommend this quick read by Laurie Goodman, the VP of the Urban Institute, where she notes that homeownership is one of the most effective ways to build wealth and stability. According to the US Census Bureau in 2015, the median net worth for a homeowner is 80 times that of a renter. Now, that is striking.
I digress. Now, for you homeowners, let’s get into all that equity you have accumulated. With the new year approaching and, I am sure, a few New Year resolutions, why not make improving your financial future one of them? Maybe pay off some of those high-interest rate credit cards, increase your cash flow, or pay a little extra in principal to drive the balance of your mortgage down – and build a nest egg of equity to be used in the future. Even with higher rates, a new mortgage may make sense. I recommend that my clients review their mortgage options every year to maximize their savings.
WHAT IS MY HOME WORTH?
Maybe you don’t have a firm grasp on your home’s value or built-in investment opportunities. This free tool is something most of my clients use to track their wealth by keeping an eye on their homes value, loans, equity position, and market trends – Click here. (In case you overlooked it, It’s free, and the information is specific to your property and debt!)
Let’s keep this super simple for now and examine the following items:
#1) Future Goals
Do you think it’s time to use some of this equity to buy up and get into that forever home or neighborhood you have been dreaming of? Or maybe it makes sense to tap into your equity to help with your child’s education or build that additional bonus room onto your existing home or a new kitchen and bathrooms to modernize your home; the list goes on. My wife reminds me that dreams are free, so dream big! Then consult your favorite mortgage professional or financial planner to assist you.
#2) Your Current Debt Levels
Look at your current unsecured credit cards, lines of credit, and possibly vehicle loans (probably not). Don’t pay more interest if you can tap into your equity and dramatically reduce your bottom line, and allow your income to serve you better. Maybe invest in higher return index funds to help in retirement, or fund six months’ worth of expenses in your “emergency bank account,” or perhaps finally have that something special you have been wanting but could not afford – Or all of these!
#3) Your Next Home Purchase
I agree with Laurie Goodmans’ sentiment that homeownership is a highly effective way to build wealth, so maybe you are thinking of that 2nd home up in the mountains or an investment property? The New Year is your time to reflect on your equity and then use the tools and mortgage and real estate professionals you trust most to help you with a strategy to accomplish these dreams (as my wife puts it).
If you are thinking of being pre-approved for a mortgage loan or refinancing your current mortgage please give Dan Tharp a call. It is that time again as a New Year = New Mortgage Strategy.
If you are interested in buying or selling a real property call Weintraub & Wallace Realtors- Elizabeth Weintraub & JaCi Wallace can be reached at 916-233-6759. JaCi Wallace, DRE 00773532 is with RE/MAX Gold Real Estate, in Sacramento.
HAPPY NEW YEAR!
Dan Tharp NMLS# 280913
916-257-1470
Guild Mortgage
Covid-19 Mortgage Tips to Save Your Deal
Covid-19 mortgage tips to save your deal is a fabulous blog written by our team’s Sacramento lender, Dan Tharp. Enjoy. — JaCi Wallace
It’s been almost two months since Governor Newsom’s order that all Californian’s shelter-in-place. It sure feels like more. I feel such empathy for those that live alone, are single parents or have lost their job, It’s simply awful. I am thankful every single day I get up and get ready for work.
Covid-19 has re-ordered virtually every industry in the world to figure out how to adapt,. Not only adapt, but mprovise, and overcome this virus or otherwise fail. In California, mortgage lending and real estate are still thriving; all be it, with a whole new subset of issues to we have never faced before. Below are just a few tricks that might help you during your next purchase:
APPRAISAL WAIVER
Did you know that in some cases, your lender will not require you to get an appraisal when buying a home? We have been doing this for years. Now, with Covid-19, and given the fact, sellers don’t want a stranger in their home, the appraisers can be just as uncomfortable entering a home. It’s lovely to know you have this option if you work with the right lender.
Fannie Mae and Freddie Mac traditionally offer an appraisal waiver for low loan-to-value refinance or if you put down at least 20% on a purchase. Also, in conjunction with new Fannie and Freddie Covid-19 updates, our underwriters are permitting exterior only appraisals under certain circumstances.
However, you may still want to get an appraisal done (~$525) to ensure you are not paying too much for the home. But if you and your agent have taken the time to look at comparables and feel the value is there, not needing an appraisal can not only save you money by not having to pay for the report, it can also help in other ways.
For example, I had a client facing multiple offers, and the only reason their offer was accepted is that they came in at asking price AND agreed to remove the appraisal contingency. Meaning, if for some reason, the appraisal came in lower, they would have to come out of pocket to make up the difference. These buyers didn’t have much in reserves after the down payment and closing costs, and what they did have left was their cushion for any future emergencies. With this appraisal waiver in place, they would not pay one extra dollar out of pocket – And not needing an appraisal was just what they needed – peace of mind.
CAN’T GET A JUMBO LOAN?
Jumbo loans have been walloped during this pandemic as mortgage servicers tighten their lending criteria. Many lenders have stopped issuing them altogether. Jumbos are loans that exceed the maximum you can borrow with a Fannie, Freddie, or FHA conforming loan. For example, let’s assume you are buying a home in Sacramento County, where the max Fannie/Freddie loan amount is $569,250. Thus, if your loan amount is higher – you fall in the Jumbo loan category.
Since Fannie and Freddie do not back jumbo loans, they are considered riskier and require higher credit scores, lower debt-to-income ratios, and may require a few months of cash reserves or even up to a year or more worth of mortgage payments. A little trick is to use a piggyback second mortgage to avoid taking out a Jumbo loan. Jumbo rates can be higher than those on conforming loans, so borrowers buying a high-value home may take out a conforming mortgage, then cover the rest with a piggyback loan and down payment.
Qualified For A Loan
Let’s assume you found your dream home for $850,000 in the perfect neighborhood. Now, throw in you were just told by your Jumbo lender that the loan for $680,000 you were qualified for, no longer exists. When the reserves required become higher, your rate just went up too. You could instead go with a conforming loan of $569,250 plus a piggyback loan of $110,750 and save the day.
Every day this pandemic throws new challenges our way. Because of that, we continue to adapt and improvise and overcome. This is why it is essential to work with people you trust. Lenders that have decades of experience will guide you through the steps of homeownership and finance. Be safe, everyone.
These Covid-19 mortgage tips to save your deal are part of the full- service we provide to our clients. Call Weintraub & Wallace Realtors today with RE/MAX Gold. We can be reached at 916-233-6759.
— Dan Tharp with Guild Mortgage
Why Sacramento Credit Union Mortgages Can Be More Difficult
Borrowers don’t see what goes on behind the scenes with credit union mortgages.
Let me go on the record as saying I have nothing against credit union mortgages or credit unions in general, as I am a member of a credit union in Sacramento and also Hawaii. However, as a Sacramento listing agent, I am rarely overjoyed to see a preapproval letter from a credit union. For about the same reason as when an institutional bank prepares a preapproval letter. These preapprovals are generated by a salaried person, not a person earning commission.
Salaried individuals have little incentive to hit benchmarks and some do a poor job communicating. That’s not to say none perform nor exceed expectations because they do. Just as it’s not to say that all commission-based individuals rise to the occasion, either, because half do not. Just generally speaking, the incentive is not really there. It always depends on with whom you’re dealing, and not just for credit union mortgages.
For example, when I was leaving Hawaii, I knew that my baggage exceeded 50 pounds. It weighed more than that leaving SMF. Even with juggling stuff around, shoving heavy items into my laptop rolling luggage, abandoning beauty products at the hotel, I feared my luggage would not pass the maximum weight test. So when I noticed I could print out a baggage tag for my luggage online, supposedly to save time, I pondered this process. Seemed like a no-brainer to attach a pre-printed luggage tag and skip the luggage handling. Except for the fact I would be handing my luggage to a surly mouth-breather, a $10/hr clerk, whose sole job is to grab luggage from stuck up first-class passengers, weigh it, and follow airline policy.
Or, I could engage with the smiling, friendly reservation counter clerk — the woman with the Tahitian flower tucked behind her ear, the person with a manicure who deals strictly with first-class passengers and quite possibly enjoys her elevated status, not to mention is paid more than the luggage handlers — and let her weigh my bag. She will undoubtedly raise an eyebrow when she discovers my bag weighs over the limit. However, she will let me off with a small tsk-tsk, just a warning, mind you, then break into a wide grin and send my baggage on its merry little way down the conveyor belt. Which is precisely what happened.
Some worker-bee employees jump on little power trips when they have no real power in their lives. If I had let a luggage handler weigh my bag, I would have been yanking my bras out right then and there. I also cannot count the number of times I have tried to extract information from credit union employees about pending credit union mortgages and they simply do not respond. If they do respond, it’s generally to say they cannot provide any information and I need to call the buyer’s agent to extract an update.
All my seller and I want to know is whether the appraisal came in fine and the date the file will close. We’re not asking for personal information on the borrower. But they don’t seem to care. On the other hand, at least they are not placing my name on a direct mail list and hounding me to death with spam emails, like so many other mortgage brokers in town. It’s just a very different interaction.
Mortgage brokers keep both sides (listing and selling) informed all the way through the transaction; in some ways they are relentless with their communication efforts. Most of this is in hopes the listing agent will recognize what a truly superior human being is behind this effort and then send all of her buyers in that direction, which is not gonna happen with this Sacramento Realtor. But credit union mortgages are the opposite. It can be like pulling teeth to find out what’s going on. No wait, yanking out teeth is easier.
On top of this, there is no real urgency to close. Mortgage brokers will feel the personal responsibility and sometimes smooth over closings by offering financial incentives to those affected by delays, but generally not credit unions offering credit union mortgages. They work on their own timeframe, and delays are often inevitable.
Why Your Mortgage Lender in Sacramento Matters
Out of the 7 closings this Sacramento real estate agent is working on this week, only 2 transactions, according to the mortgage lenders, are closing are time, which makes closing delays pretty much par for the course for this week. Why? Because of the mortgage lenders. A few of the escrows are delayed because the buyers could not qualify for a conventional loan and were informed at inception that they should choose FHA but instead opted for conventional. Or, at least that their mortgage lender’s story and the guys are sticking to it. In others, everybody else thought somebody else was doing a job that nobody else was doing. Total cluster-you-know-what.
It’s also possible that the buyer’s agent felt the buyer didn’t stand a chance in hell of getting an FHA offer accepted upfront so the agent wrote the purchase contract with conventional terms and obtained the preapproval letter showing conventional financing, figuring who gives a rats if the transaction doesn’t close on time. But most buyer’s agents aren’t that devious. I suspect the truth of why some mortgage lenders can’t perform lies somewhere in between.
When a buyer runs past the closing date, the contract has expired. The seller has the option to cancel the transaction. The seller is not obligated to give the buyer more time to close the escrow. A lawyer might argue on behalf of the buyer and say the buyer invested money for the home inspection, paid for a pest inspection, perhaps other reports, and showed a good faith effort to close. She might say it’s not the buyer’s fault that things were delayed in underwriting or the mortgage lender messed up.
But that’s a tough argument if the contingencies haven’t been released, and the seller might believe the buyer is in breach of contract. The seller might give the buyer a Notice to Perform and then cancel. And let’s face it, many first-time home buyers barely have two nickels to rub together, and they can’t afford to hire a lawyer. So, they better choose a mortgage lender who can properly advise them and then follow that advice.
Here is my advice for home buyers today. For crying out loud, mortgage lenders all have access to pretty much the same ol’ bag of money, and you’re not gonna save 1/2 point here nor there, so pick the mortgage lender in Sacramento who can perform. Pick the company that won’t lead you astray. Pick the loan officer who will have your back. Don’t go with the guy who dishes out apologies when you’ve lost the house.
In all of my years of working with and referring business to Dan Tharp, this mortgage lender in Sacramento has never disappointed.
