January 23, 2024 • 33 mins
Ari and Marcus are joined by mortgage broker Jack Skovgard to discuss the current real estate landscape, where incomes struggle to catch up with soaring home values and homeowners weigh the pros and cons of selling in a high-interest-rate environment.
The conversation also goes into the explosion of remote work, examining its transformative effects on housing trends and the mortgage market. We share strategic insights for brokers adapting to a clientele that's more diverse than ever and dispense sage advice for first-time buyers bracing for financial hurdles beyond the down payment.
We delve into the world of FHA loans and the allure of properties with Accessory Dwelling Units (ADUs). These real estate gems are reshaping the market, and our conversation is your guide to understanding their potential impact on your home-owning aspirations in this post-COVID era.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Hello everyone and thank you for tuning into the
Real Estate Shop educationalplatform, episode two, the go-to
destination for expert insightsin the dynamic world of real
estate.
I'm Ari Petronelli, your host,and a real estate agent based in
sunny Southern California.
Today we are going to delveinto the intricate realm of
property valuation and mortgagesand how they relate to one
(00:25):
another.
Today we are joined by my goodfriend, jack Skovgard, a
mortgage broker with almost adecade of experience, and he
works with United AmericanMortgage.
Thank you for coming, jack.
Speaker 2 (00:39):
Thank you, happy to be here.
Thank you, jack, for coming.
Speaker 1 (00:42):
We are also joined by our seasoned appraiser, marcus
Espinoza, who has an MAI, sra,asaccim with 25 years of his
professional experience inappraisals.
Speaker 3 (00:58):
Thank you.
Speaker 1 (01:01):
Let's just.
I have actually quite a fewquestions.
I just kind of wanted to go inright away.
But, jack, can you explain therole of property valuation in
the mortgage approval processand how does it impact the loan
amount a buyer can qualify for?
Speaker 2 (01:13):
Yeah, that answer is pretty simple.
The valuation of the propertydirectly determines how much the
lender is going to loan to theclient.
The lender is always going totake the lesser of the appraised
value or the loan amount or thepurchase price in a purchase,
and so if the valuation comes inless than the agreed upon
(01:34):
purchase price, that's what thelender is going to lend on, and
then the buyers and agents aregoing to have to go back to the
negotiating table to either tryand negotiate that price down or
the client is going to have tocome up with the gap in the
funds needed between theappraised value and the purchase
price.
Speaker 1 (01:53):
So they may just have to come up with more cash then.
Speaker 2 (01:55):
Yeah, which can be a big deal in this market.
Speaker 1 (01:58):
Absolutely.
Speaker 2 (01:59):
As things are more expensive these days.
If your valuation comes in$25,000 less than what you
agreed upon to buy the property,then that's additional 25K
you're coming up out of pocketthat you might have had set
aside for updates, repairs,getting into the home,
(02:20):
furnishing the home.
Speaker 1 (02:22):
And so this question can really both of you, but what
are some of the key factorsthat influence the valuation of
a property, and how do thesefactors vary across different
types of real estate?
Speaker 2 (02:33):
I'm glad we're with an appraiser today, because I
look at these reports all thetime and I can tell you what I
see them calculate within thereport, but I feel like you're
going to know exactly.
Speaker 3 (02:44):
Yeah, so I mean your first question.
I mean I saw several differentpossible solutions.
You, being a realtor, you cango back and renegotiate and get
that $25,000 carved off or arebuttal.
Lenders like to use the wordrebuttal and say, hey, we're
going to rebut this appraisal.
I think we're missing somethinghere.
(03:06):
And it gives the lender or itgives the borrower or it gives
anybody to present an argumentto the appraiser and the
appraiser can take that inconsideration.
And so I also see that.
But yeah, I mean, when it comesdown to what's going on in the
marketplace, it's always movingand we just like we're in a
(03:27):
place right now where there'shigh interest rates and that's
impacting value.
And that's what's impactingvalue in today's market is
interest rates, and it's not badHistorically speaking.
I mean I look at your face andI get your face and you know,
sometimes I look at myself inthe mirror very seldomly and I
say, okay, well, we've neverseen rates, you know, that much
(03:48):
higher in our, you know in ouradult life.
But you know interest rates arepretty close to what historic
norms have been, and it's justthat because since 2000,
interest rates have always beenso historically low, that just
became the norm for the last 23years and so that's what
everybody's expecting.
So when we got, you know, these, these interest rates hikes,
(04:13):
it's impacted everything.
It's impacted the workflow here, you know, for appraisers.
I'm sure probably impacted yourinput at both.
Speaker 2 (04:19):
Yeah, both you know, both you know so, yeah, I would
imagine lack of inventory isalso affecting the valuation of
homes.
The you know the problem withinterest rates being higher.
You know interest, they arewhat they are.
The market is what it is.
The real issue is that homevalues have increased at a
(04:42):
substantially faster pace thanhousehold income has.
So, although interest rates maybe somewhat relative to
interest rates in the past, orsomewhat norm, it's much more
difficult to afford thatmortgage than it was, you know,
15, 20 years ago when 8% rateswere the same.
Speaker 3 (05:00):
Yeah, and he.
That was a good thing that youmentioned about inventory.
I mean, from what I hear, fromtalking to different investors
and buyers and sellers, and it'sjust like people that are there
, people are not willing to sell.
So if I'm going to go sell myproperty that I'm already in a
4% interest rate or even a 3%interest rate.
They don't feel comfortableselling their home, relocating
(05:23):
and then picking up a 7%interest rate.
Absolutely, and so that's,that's, that is what I hear the
reason for, you know, lowinventory and You're absolutely
right.
Speaker 2 (05:32):
I mean we're behind on building as well.
I know that builders wentthrough a lot of restrictions in
the past and then COVID shutdown a lot of buildings, so
building new homes issubstantially behind schedule.
So there's that's increasinglyadding to the lack of inventory.
And then you're absolutelyright, there's got to be a
really good why to move.
(05:53):
You know you either have anexpanding family, you need
larger space, you are retiringand leaving the state.
You know a lot of peopleleaving California going to more
affordable states where theycan sell here by cash elsewhere
and have the same size home orlarger and maybe have a little
land.
Speaker 1 (06:11):
Yeah, the people that are locked in and they're
really good rates.
There's no reason to reallymove except like, exactly like
what you said.
Speaker 2 (06:19):
Yeah.
Speaker 1 (06:20):
So that kind of took care of another question.
So in your experience, Jack,what are some common
misconceptions that clients haveabout property valuations and
how do you address them?
Speaker 2 (06:35):
I get a little bit of feedback from clients in terms
of, like the appraisal,valuation.
So I don't.
I would say the biggestmisconception is you know, I
just spent $20,000 on my yard.
Why am I?
Why am I not?
You know, why isn't that valuein my home?
You know, I think some clientsthink the curb appeal, the back
(06:59):
yard, although it is aattractive feature to new buyers
to walk in and not see a yardfull of dirt, it doesn't really
add to the valuation of theproperty as my experience, as
much as they would think, youknow, as much as they've
personally committed to theproject and that's 100% right.
Speaker 3 (07:17):
And what that does is I spend $20,000 on my yard.
I mean that actually probablyexpedite the sale, but it
doesn't really give the valuethat they're looking for.
I just spent $20,000.
Well, guess what?
You know, you just sold yourhouse a lot quicker because you
spent $20,000.
So those are the things that Ihear when it comes to that.
Speaker 2 (07:37):
One last project and the new homeowner has to do
coming in.
But I think would you agreemaybe the most important rooms
to be spending that money on, orthe kitchen, the bathrooms and
necessary updated fixtures, youknow, new electrical, that sort
of stuff really goes.
New plumbing it was a long way.
Speaker 3 (07:55):
Yes, that's.
That's been historically thecase and it remains the case, so
yeah.
Speaker 1 (08:00):
So, with the rise of remote work, do you anticipate
any shifts in the housingpreferences or property values
in certain regions, and howwould this affect the mortgage
industry?
Speaker 2 (08:10):
Hard for me to speak to the property values in
certain regions.
I feel like some of my realestate partners would have a
better understanding of comps incertain certain areas, but I do
know I did see someone post amap recently of metropolitan
locations around the countrythat had the largest increase in
(08:30):
value in 2023 and they weren'tin California.
I have a pair of clients rightnow that are remote workers and
we're looking around Long Beach.
You know from one of them'sfrom Long Beach looking to stay
here close to family and thenkind of seeing how far their
dollar went here.
(08:51):
And now, because they're remote, they're really outdoorsy
they're looking in Idaho now.
You know it's another statethat our companies licensed in
and we can help them.
You know we can help clientsmove almost anywhere in the
country right now and for themthat's a really exciting
prospect that they can keeptheir mortgage payment at a
level that's comfortable withthat for themselves, getting a
(09:13):
home that's probably larger thanthey would get here with a
little bit of land and not haveto compromise on their lifestyle
.
You know, they they the otherpair of that that partnership is
from South Africa.
They love to travel.
They love, you know that's abig, important aspect of their
life, and they're young, they'renot ready to give that up.
And so I think the more peoplethat are remote workers and are
(09:36):
open to living elsewhere maystart to migrate to places where
homeownership is a possibility.
You know, they can kind of havethat comfortability, that
homestead, and then stillcontinue to live life the way
that they want.
Speaker 3 (09:53):
Yeah, I mean it isn't that is impacting other areas
of a different real estate types, like office, for example.
Office is getting hit hard, youknow, because of that reason,
so it's going to be interestingto see what happens over time.
Speaker 1 (10:09):
How can mortgage brokers adapt to changes in the
real estate market to betterserve their clients?
Speaker 2 (10:14):
I think adding more products to the I mean, you know
, more arrows in the quiverright, more access to lending,
is the answer to that.
Not everybody is a cookiecutter client who fits for a
full dock.
You know, 15 year, 20 year, 30year, conventional fixed or arm
(10:37):
product there are.
I think, especially after COVID,we're entering an era where a
lot of people have becomebusiness owners.
A lot of people have startedtheir own businesses and or are
trying to grow those businessesand it's somewhat difficult to
run a business and qualify forfinancing.
(10:57):
You know it's expensive tolaunch a business and generally
there's a lot of businessexpenses that go into that and
you don't show a lot of incomeon paper, right.
So having access to alternativedoc or non QM products, like
our company has, allows profitand loss only loans, bank
statement only loans, a lot ofinvestor products that show no
(11:20):
income, dscr, debt servicecoverage ratio, loans that allow
investors to use the incomecoming in from a property to buy
something.
And I'm seeing a lot of folkscontinue to rent actually for
their primary residence and lookinto investing in second homes
(11:41):
and short term rentals orinvestment property you know,
full investment properties.
Speaker 1 (11:47):
So finding more avenues to get people the money
that they're looking to borrowwithin a qualified setting is
the answer you know, I know thatboth of you are homeowners, and
so what financial preparationsshould first time home buyers
make before entering the market,aside from saving for a down
payment?
Speaker 2 (12:08):
I have all of my clients go through a like a pros
and cons checklist of owningproperty.
I don't think propertyownership is for everyone.
You have to really want it.
You want to.
You have to want to be ahomeowner, especially in this
market, and owning a homecarries weight for different
people.
Some people really want thatsafe haven this is my home place
(12:31):
and others look at their homeas a investment, long term
investment.
Part of those can bleed overinto one another.
But looking at what yourfinances look like right now,
what your spending looks like,what your savings looks like and
what your income looks like andwhere that income is going, and
(12:52):
having a budget worked out,helps you understand what might
need to change in your life tomake homeownership a reality In
this market.
If you're going from renting toowning, your monthly housing
expenses going up there's no,there's no question about it.
Yeah there, there once was atime where there was a safe
(13:13):
argument to make about.
You know, could you own it forthe same amount that you were
renting?
That is long gone, and so it'sa choice to get into making a
higher housing expense payment,and there are some things that
are going to have to fall downby the wayside to make that
happen.
You know what are your futuregoals look like?
(13:34):
You know, do you have theforesight to kind of see that
once you own a home you arebuilding equity over time,
especially in a place here likeSouthern California?
You know you are naturallybuilding equity over time.
You are paying down alone andis that increase in value for
(13:55):
the property kind of offsettingthe higher expense you're paying
or the mortgage, as opposed tocontinuing to rent and pay
somebody else's mortgage?
So learning what your, whatyour bills are, what you're
willing to give up and not giveup like the clients I previously
mentioned who weren't willingto give up travel, you know,
figuring that out helps peopleget prepared to make that plunge
(14:17):
into homeownership.
Speaker 3 (14:20):
Yeah, yeah, yeah.
And I and I believe there's agood misconception out there
that if I, if, if I stop renting, I could just, you know there,
yeah, it does go up as soon asyou go into into home owning.
But you know, yeah to, I meanit's just, it's pretty much
right, vanilla, I mean, I meanyou just got to.
For me it's like you know workharder if you're a PE teacher,
(14:44):
you know, maybe you know go outand you know, do some coaching
on private coaching on the side.
You can save money that way.
There's several ways you cansave money.
But you know, just to kind ofveer a little bit off of home
owning, I would encourage people, I mean I'm gonna.
I'm mostly commercial appraiser.
90% of my work, 95% of my workis commercial valuation, so I'm
(15:05):
more on the investment side.
If I was to encourage somebodyto go out and buy, make their
first purchase, it would not bea house.
You asked 98% of the USpopulation what's the greatest
investment you made?
Always in my house.
But the other 2% are out therebuying income, producing
property.
You get a return on and you geta return of investment, not
just a return on.
(15:26):
So you know, and you don't seethat money in a single family
home.
You know you go out and you buy, you live there.
Yet it's comfort and it's, youknow, great.
I mean you.
Obviously it depends what yourmotives are.
If you're, you know your family, you want to provide a home and
you want to have pride ofownership and do whatever you
want.
What's your real estate?
That's, that's the key.
You know, buy yourself a houseif that's your biggest
(15:48):
motivation.
But on your but, on your firstpurchase, you know maybe you
might have a three-year-old andyou can live in an apartment
with a three-year-old.
I mean so you can delay that.
I mean there's so many, there'sso many financing opportunities
for people to go out and buy anapartment building, for example
(16:10):
.
You know, buy a duplex, buy atriplex.
I would start off with afourplex and then work your way
down to a triplex and two unitsand then a single family.
Now you have, you know, realestate holdings and you know,
when you retire, now you have anincome stream when you're
retired from real estate, and sothat would be my first purchase
(16:31):
would be looking into takingadvantage of an FHA program and
buying a four unit apartmentbuilding.
They still lend on four units,or is it three units now?
Speaker 2 (16:42):
Yeah, they lend on one through four units.
There's different qualifyingfactors when you get into
triplexes and quadplexes.
But I mean you make a greatpoint.
I have a client signing docstoday who bought a duplex here
in Long Beach on an FHA loan.
And to further that point therehave been new guideline changes
that are going to allow buyersto put 5% down on multi unit
(17:06):
properties for conventionalloans, whereas previously that
was 15, 20, right, you know,percent down at a minimum and
that's going to allow.
You know if you're comfortablegetting into that income
producing property first livingin a apartment style home in
(17:26):
Long Beach here actually there'squite a few like duplexes and
triplexes that are stillsomewhat removed from each other
.
You know separate, separateproperties.
You still feel like you'reliving in a home, even though
you've bought a multi unitproperty, and having that
ability to get in, have someincome offsetting your mortgage
payment and you know, eventuallymove.
(17:50):
But to keep that property inyour portfolio is paramount, you
know it's.
You can't get a betteropportunity to grow your
generational wealth and setsomething aside for your
retirement than building thatportfolio.
Speaker 1 (18:04):
Can you outline the main types of mortgage products
available for new homeowners andwhat factors should they
consider when choosing the mostsuitable option?
Speaker 2 (18:12):
Yeah, I mean the standard loans that you hear the
most about are conventional FHA, va loans that's kind of like
you know, right down the middleFannie Freddie and government
sponsored loans.
Fha is not a first time homebuyer loan program.
That's kind of a commonmisconception.
But it is one of the easierloans to get to use as a first
(18:35):
time home buyer because itallows as little as three and a
half percent down.
There are as little as threepercent down options, home ready
, home possible programs that dohave, you know, income
qualifying limitations.
I've got lenders that offer, youknow, grant programs.
I have one that just did awebinar with the other day
(18:57):
that's offering up to $15,000for home buyers and it's not
exclusive to first time homebuyers.
But if you buy a property incertain census tracts where
they're trying to lend to lowincome or moderate income census
tract communities, you canqualify for a grant program.
(19:19):
You know, to put some moneydown.
So depending on thequalifications of the new buyer,
depending on the scenario ofthe purchase, how fast it has to
happen, how competitive thesituation is, a lot of these
factors come into play in termsof setting somebody a new buyer
(19:39):
up with success at the rightlender, you know, with the right
pricing and the right product.
Speaker 3 (19:45):
So to testify with Jack is saying that actually
happened to me.
I went out and bought a house,bought another house and then
bought another house, but thefirst two houses I sold and so I
only had one house.
So I was like God, I want anFHA loan, how do I get one?
But I couldn't get one becauseI already have a house.
So a unique thing happened tome is I started working in
(20:06):
downtown LA and it was horrible.
So we got a condo out there andI rented my house out.
So when I rented the house out,I was living in a rented condo
in downtown LA for some time andI was generating income from
the single family house.
So what I did is I went and Ialso applied for apartments in
LA and for an FHA loan.
(20:28):
I got the FHA loan so you canget an FHA loan.
You know it's not just forfirst time buyers.
Speaker 2 (20:36):
Right.
Generally you can't have twoFHA loans.
That's the main factor.
They're not meant to be aninvestor avenue to own property.
But you can own multipleproperties and acquire an FHA
loan.
So as long as the propertyyou're leaving is under
conventional loan VA loan evenyou can then utilize an FHA loan
(21:00):
on a new home.
So it's a good avenue to kindof hopscotch into new properties
with smaller down payments ifyou work on saving the funds.
Because as long as you buy theproperty and then FHA and then
refinance it before moving on toyour next property, you can
continue to use an FHA propertyto get into your new primary
(21:21):
residence.
It has to be your primaryresidence that you're living in
with that FHA loan.
I like that.
Speaker 1 (21:26):
Yeah, that's really great information.
Speaker 2 (21:29):
Here in Long Beach, you know, with new ADU laws
constantly coming up and peoplelooking to take advantage of
that and expand on theproperties, this kind of goes
hand in hand with thosemulti-unit properties we're
talking about first time homebuyers trying to get into.
My clients just recently boughtthat.
They're signing docs on thatduplex today and the reason they
went for this property isbecause it's got space for an
(21:50):
ADU as well, so they're lookingto put a third unit on there.
In your experience evaluatingproperties like, how do you see
the new properties popping upwith the ADUs and how does
valuation coming intoconsideration for those with so
limited comps to compare them to?
Speaker 3 (22:08):
Yes, yes, thank you, jack.
Yes, so I think okay.
So in the appraisal process,the first thing we look at is
what is the appraisal problem?
And when we're appraising anasset that has an ADU, we have
to ask ourselves, as appraisers,who is the lender, because each
(22:30):
lender has different scenarioson how they identify what an ADU
is or if I'm not going to givevalue for it.
So, for example, fannie Mae,they land on single families
with an ADU.
They do not land on two unitswith an ADU.
They do not land on three unitswith an ADU.
Freddie Mac does, but FannieMae doesn't.
So Fannie Mae and Freddie, theypretty much talk to each other
(22:52):
and they're pretty close, butthat's how they differ.
So when you have an appraisergoing out to appraise a property
, the first question that anappraiser should ask where is
this loan going?
And so If you're doing a VAloan, there's another set of
(23:15):
guidelines for it.
So it's identifying what theappraisal problem is.
I'm not saying that there's notother lenders out there that
will lend differently, becausethey will.
But if you want to takeadvantage of those agencies,
those government-sponsoredagencies, and get the great
terms, then they have their ownguidelines and that's why
(23:37):
appraisers look at itdifferently.
Speaker 1 (23:40):
So, give it the current economic climate and
market trends, how do youforesee the future of real
estate market?
Are there specific factors thatyou believe will have a
significant impact?
And I know this is kind of moreof like a real estate aging
question, but I would love toget a lender and appraisers
insight.
Speaker 2 (24:00):
Yeah, I think, if I heard that question correctly.
What comes to mind is kind ofwhat we mentioned previously
about there being low inventoryright now in this market and
value of properties being higher.
Because of that, the current,like the future, market of real
estate, especially in this area,will be, I would say,
(24:22):
substantially affected wheninterest rates eventually start
to come down.
When that time comes, there's alot of buyers who either pushed
out of the market because theycouldn't qualify for what they
wanted to qualify for with ratesgoing up, and unwilling to
compromise on different types ofproperties or different
locations.
(24:43):
There are still buyers outthere who are buying properties
that are listed.
They may not be getting 20offers of property now or
substantially above asking, butthere are people who still want
to buy and still qualify to buywhen interest rates come down
even remotely.
All those buyers who aresitting on the edge of the pool
right now are going to jump inand the market's going to be
(25:05):
flooded with buyers again tryingto take advantage of what they
feel is the opportunity they'vebeen waiting for and that's
going to push values ofproperties even higher.
We're going to see peopleasking over and the desire for
those properties is going to behigh.
Speaker 3 (25:21):
Yeah.
Speaker 1 (25:22):
Just like what we saw a few years ago.
I mean, it was wild.
Speaker 2 (25:28):
Yeah, covid coming out of COVID, a worldwide scare
of any amount Generally pushespeople into making life
decisions and trying to kind ofreevaluating their life and
changing what they want.
And a lot of people wanted homeownership.
A lot of people wanted propertyelsewhere, outside cities.
(25:50):
We saw a lot of people moving.
We saw a lot of remote workbecause of transition, because
of that and people not goingback from remote work.
People would rather leave a jobthat's trying to bring them
back into the office, then lookfor another job that will offer
them that remote option.
I think people have just kindof figured out this is what I
(26:12):
want.
This made me think about what Iwant and now I'm not going to
compromise.
Speaker 3 (26:20):
Some of the things I've seen or talked to different
investors.
When it comes down to theinterest rates coming down, I
don't think a hundred basispoints is going to be enough for
people to like get out and goout and refinance, because
they're probably still sittingin a better loan at that point.
But even if there was to bringit down from where they're
(26:41):
existing now let's say they'rein a seven and it's going to
bring it down to, you know, sixand a half or even a six I think
you're going to get a refinanceboom when it gets down to the
200 basis points below what theyare now, and I think that's
when a lot of work is going tocome in.
A lot of movement in realestate is going to be expanding.
Speaker 2 (27:01):
That's yeah, those are definitely there's got to be
a substantial enough movementin the market to warrant
refinancing Right.
A refinance is a transaction.
It's a cost.
It costs money to do so and youwant to make sure that the
money you're spending to do sois warranted by the savings that
you're getting from the rate inthe market.
Speaker 1 (27:21):
Do you guys have any questions for each other, Are
you?
Yeah?
Speaker 3 (27:24):
actually, you know, one of the things that I hear
about just from borrowers isjust like there's always a I'm
not going to say always, but itseems like one of the biggest
setbacks that borrowers havewhat lenders is like there's
always a delay.
You know like, oh, we're goingto close on Thursday, and then
Thursday does become Saturday,or well, you're going to close
(27:44):
on Saturday, it comes the nextMonday and then it continues and
you know, it seems like they'relike lagging like about three
weeks, and that's what it seemslike I hear a lot of borrowers
complain about.
I mean, do you see that in themarket, or I don't see it in my
market.
Speaker 2 (28:02):
I see people having experiences like that with other
lenders and then you know, whenthey come to me or there's a
lot of information on theinternet to you know people read
about the home buyingexperience or refinance
experience and they haveexperience with us.
You know myself and otherlenders that United American
mortgage and they're like, wow,I didn't know, like I heard, it
(28:22):
was going to be so much worse.
And really what is involved inthat is setting proper
expectations and opencommunication.
You know there's a there's atimeline it takes to process
paperwork and process alone andthe client is an important part
of that.
You know how fast can theyprovide us documentation and
(28:45):
conditions we need to clear at alender.
So, having an open avenue ofcommunication, all my clients
have my cell phone number.
You know we're constantlytexting throughout the week,
phone calls.
I try and make it very easy formy clients to reach me because
when you're dealing with one ofthe largest financial purchases,
(29:06):
one of the largest assets inyour life, wouldn't you want to
be able to reach the personwho's helping you manage that
transaction?
Is this stressful time?
I would, yeah, so yeah, I makesure people have access to me
and that we're constantlytalking about the process.
You know, here is here's whatwe have left to clear in terms
of conditions.
Here's what the underwriter islooking for.
Here is what the lender needsto do to be able to meet Fannie
(29:29):
Freddie FHA VA guidelines, to beable to package and sell that
loan on the secondary market.
You know it's not simply justlenders or banks saying, okay,
we're going to, we're going tolend you this money.
You know they are a business aswell.
They have to make sure thatthat loan is properly
underwritten so they can sell itand continue to lend money
(29:49):
Right.
And I think educating people inthat process opens up the
conversation.
You're not kind of like kept inthe dark on the side about
what's happening with your loanprocess or your lending.
My goal for all my clients isto have them be as educated as
me about their loan by the timethey're done.
Now they may not retain all theinformation that I'm telling
(30:12):
them, but we can be sure thatI'm walking them through exactly
what's going on.
And I think some lenders areeither afraid to be openly
communicative with with theirclients, especially if something
isn't going right.
I think being open about what'snot going right is and how
you're going to solve it.
Coming to the table with thesolution is important and
(30:36):
finding a way to bring theclient into the conversation so
that they don't feel like againthey're in the dark.
So the delays it's really atlender by lender basis and the
only thing that might cause adelay is something popping like
there should be, there reallyshouldn't be a week to week
(30:58):
delay.
If you have a kind of an idea,guideline of when you're landing
the plane on this transaction,you know, if you know what
conditions you're trying toclear, you know the turn times
it takes for a lender to reviewand clear those conditions.
If you know the turn times fromwhen you get clear to close on
a loan and then it takes forgetting clear, to close, to get
(31:20):
docs, you know final documentsassigned and then if you know
how long it takes to sign finaldocs and to fund and to record.
Here in LA County we can't fundand record on the same day.
We got to fund one day, recordthe next day for closing, right,
that's different in OrangeCounty.
Orange County you can fund andrecord on the same day.
So when you have that timelinebuilt out and you're setting
(31:41):
proper expectations and you'redelivering that information of
how long it takes for certainthings to do, then the client
isn't sitting at home thinkingwhy isn't my loan closed yet?
What's going on?
Speaker 1 (31:53):
I actually have quite a few friends that have worked
with you, jack, and they I meanthey love you.
They have and I think that youactually probably are pretty
close with those clients stillto this day.
Speaker 2 (32:03):
Yeah, absolutely.
Like I said, everyone has myphone number, everyone has the
cell cell number.
I am in an age of communicationwhere we're used to getting
information quickly and weprefer to have responses quickly
.
I find that like it doesn'tbother me that you know my
clients can text me at any, anyand all times of the day.
(32:24):
I they understand that in thebeginning I set an expectation
that if I'm not available I'lltext you back and say hey, can
we chat?
You know this is an emergency,or can we chat tomorrow morning
at 9am or is, or give me an hourI happen to be free and I'll
jump on the phone and chat withyou because I I work with people
(32:45):
who work nine to fives, for themost part Right.
So it's very hard to do a joband also buy a home and collect
documentation and schedule phonecalls while you're in the
middle of your job that you'retrying to do.
So a lot of my business is doneoutside of that nine to five
time frame or on the weekends.
(33:06):
And again, you don't get thattype of service with a bank or
credit union.
You know when they close atfour and you're like Well, looks
like I won't get answers untiltomorrow morning.
That's a good point.
Speaker 1 (33:18):
I will put Jack's information in the comments
below, just if anyone would liketo reach out to him.
But I think that might wrap upour Thank you.
Our second episode.
Speaker 3 (33:28):
All right, yeah, thank you so much.
Speaker 2 (33:30):
This was fun.
Yeah, happy to do this.
I love talking about realestate and financing.
Speaker 1 (33:36):
Yeah, clearly very good at it.
Hello everyone and thank you for tuning into the
Real Estate Shop educationalplatform, episode two, the go-to
destination for expert insightsin the dynamic world of real
estate.
I'm Ari Petronelli, your host,and a real estate agent based in
sunny Southern California.
Today we are going to delveinto the intricate realm of
property valuation and mortgagesand how they relate to one
(00:25):
another.
Today we are joined by my goodfriend, jack Skovgard, a
mortgage broker with almost adecade of experience, and he
works with United AmericanMortgage.
Thank you for coming, jack.
Speaker 2 (00:39):
Thank you, happy to be here.
Thank you, jack, for coming.
Speaker 1 (00:42):
We are also joined by our seasoned appraiser, marcus
Espinoza, who has an MAI, sra,asaccim with 25 years of his
professional experience inappraisals.
Speaker 3 (00:58):
Thank you.
Speaker 1 (01:01):
Let's just.
I have actually quite a fewquestions.
I just kind of wanted to go inright away.
But, jack, can you explain therole of property valuation in
the mortgage approval processand how does it impact the loan
amount a buyer can qualify for?
Speaker 2 (01:13):
Yeah, that answer is pretty simple.
The valuation of the propertydirectly determines how much the
lender is going to loan to theclient.
The lender is always going totake the lesser of the appraised
value or the loan amount or thepurchase price in a purchase,
and so if the valuation comes inless than the agreed upon
(01:34):
purchase price, that's what thelender is going to lend on, and
then the buyers and agents aregoing to have to go back to the
negotiating table to either tryand negotiate that price down or
the client is going to have tocome up with the gap in the
funds needed between theappraised value and the purchase
price.
Speaker 1 (01:53):
So they may just have to come up with more cash then.
Speaker 2 (01:55):
Yeah, which can be a big deal in this market.
Speaker 1 (01:58):
Absolutely.
Speaker 2 (01:59):
As things are more expensive these days.
If your valuation comes in$25,000 less than what you
agreed upon to buy the property,then that's additional 25K
you're coming up out of pocketthat you might have had set
aside for updates, repairs,getting into the home,
(02:20):
furnishing the home.
Speaker 1 (02:22):
And so this question can really both of you, but what
are some of the key factorsthat influence the valuation of
a property, and how do thesefactors vary across different
types of real estate?
Speaker 2 (02:33):
I'm glad we're with an appraiser today, because I
look at these reports all thetime and I can tell you what I
see them calculate within thereport, but I feel like you're
going to know exactly.
Speaker 3 (02:44):
Yeah, so I mean your first question.
I mean I saw several differentpossible solutions.
You, being a realtor, you cango back and renegotiate and get
that $25,000 carved off or arebuttal.
Lenders like to use the wordrebuttal and say, hey, we're
going to rebut this appraisal.
I think we're missing somethinghere.
(03:06):
And it gives the lender or itgives the borrower or it gives
anybody to present an argumentto the appraiser and the
appraiser can take that inconsideration.
And so I also see that.
But yeah, I mean, when it comesdown to what's going on in the
marketplace, it's always movingand we just like we're in a
(03:27):
place right now where there'shigh interest rates and that's
impacting value.
And that's what's impactingvalue in today's market is
interest rates, and it's not badHistorically speaking.
I mean I look at your face andI get your face and you know,
sometimes I look at myself inthe mirror very seldomly and I
say, okay, well, we've neverseen rates, you know, that much
(03:48):
higher in our, you know in ouradult life.
But you know interest rates arepretty close to what historic
norms have been, and it's justthat because since 2000,
interest rates have always beenso historically low, that just
became the norm for the last 23years and so that's what
everybody's expecting.
So when we got, you know, these, these interest rates hikes,
(04:13):
it's impacted everything.
It's impacted the workflow here, you know, for appraisers.
I'm sure probably impacted yourinput at both.
Speaker 2 (04:19):
Yeah, both you know, both you know so, yeah, I would
imagine lack of inventory isalso affecting the valuation of
homes.
The you know the problem withinterest rates being higher.
You know interest, they arewhat they are.
The market is what it is.
The real issue is that homevalues have increased at a
(04:42):
substantially faster pace thanhousehold income has.
So, although interest rates maybe somewhat relative to
interest rates in the past, orsomewhat norm, it's much more
difficult to afford thatmortgage than it was, you know,
15, 20 years ago when 8% rateswere the same.
Speaker 3 (05:00):
Yeah, and he.
That was a good thing that youmentioned about inventory.
I mean, from what I hear, fromtalking to different investors
and buyers and sellers, and it'sjust like people that are there
, people are not willing to sell.
So if I'm going to go sell myproperty that I'm already in a
4% interest rate or even a 3%interest rate.
They don't feel comfortableselling their home, relocating
(05:23):
and then picking up a 7%interest rate.
Absolutely, and so that's,that's, that is what I hear the
reason for, you know, lowinventory and You're absolutely
right.
Speaker 2 (05:32):
I mean we're behind on building as well.
I know that builders wentthrough a lot of restrictions in
the past and then COVID shutdown a lot of buildings, so
building new homes issubstantially behind schedule.
So there's that's increasinglyadding to the lack of inventory.
And then you're absolutelyright, there's got to be a
really good why to move.
(05:53):
You know you either have anexpanding family, you need
larger space, you are retiringand leaving the state.
You know a lot of peopleleaving California going to more
affordable states where theycan sell here by cash elsewhere
and have the same size home orlarger and maybe have a little
land.
Speaker 1 (06:11):
Yeah, the people that are locked in and they're
really good rates.
There's no reason to reallymove except like, exactly like
what you said.
Speaker 2 (06:19):
Yeah.
Speaker 1 (06:20):
So that kind of took care of another question.
So in your experience, Jack,what are some common
misconceptions that clients haveabout property valuations and
how do you address them?
Speaker 2 (06:35):
I get a little bit of feedback from clients in terms
of, like the appraisal,valuation.
So I don't.
I would say the biggestmisconception is you know, I
just spent $20,000 on my yard.
Why am I?
Why am I not?
You know, why isn't that valuein my home?
You know, I think some clientsthink the curb appeal, the back
(06:59):
yard, although it is aattractive feature to new buyers
to walk in and not see a yardfull of dirt, it doesn't really
add to the valuation of theproperty as my experience, as
much as they would think, youknow, as much as they've
personally committed to theproject and that's 100% right.
Speaker 3 (07:17):
And what that does is I spend $20,000 on my yard.
I mean that actually probablyexpedite the sale, but it
doesn't really give the valuethat they're looking for.
I just spent $20,000.
Well, guess what?
You know, you just sold yourhouse a lot quicker because you
spent $20,000.
So those are the things that Ihear when it comes to that.
Speaker 2 (07:37):
One last project and the new homeowner has to do
coming in.
But I think would you agreemaybe the most important rooms
to be spending that money on, orthe kitchen, the bathrooms and
necessary updated fixtures, youknow, new electrical, that sort
of stuff really goes.
New plumbing it was a long way.
Speaker 3 (07:55):
Yes, that's.
That's been historically thecase and it remains the case, so
yeah.
Speaker 1 (08:00):
So, with the rise of remote work, do you anticipate
any shifts in the housingpreferences or property values
in certain regions, and howwould this affect the mortgage
industry?
Speaker 2 (08:10):
Hard for me to speak to the property values in
certain regions.
I feel like some of my realestate partners would have a
better understanding of comps incertain certain areas, but I do
know I did see someone post amap recently of metropolitan
locations around the countrythat had the largest increase in
(08:30):
value in 2023 and they weren'tin California.
I have a pair of clients rightnow that are remote workers and
we're looking around Long Beach.
You know from one of them'sfrom Long Beach looking to stay
here close to family and thenkind of seeing how far their
dollar went here.
(08:51):
And now, because they're remote, they're really outdoorsy
they're looking in Idaho now.
You know it's another statethat our companies licensed in
and we can help them.
You know we can help clientsmove almost anywhere in the
country right now and for themthat's a really exciting
prospect that they can keeptheir mortgage payment at a
level that's comfortable withthat for themselves, getting a
(09:13):
home that's probably larger thanthey would get here with a
little bit of land and not haveto compromise on their lifestyle
.
You know, they they the otherpair of that that partnership is
from South Africa.
They love to travel.
They love, you know that's abig, important aspect of their
life, and they're young, they'renot ready to give that up.
And so I think the more peoplethat are remote workers and are
(09:36):
open to living elsewhere maystart to migrate to places where
homeownership is a possibility.
You know, they can kind of havethat comfortability, that
homestead, and then stillcontinue to live life the way
that they want.
Speaker 3 (09:53):
Yeah, I mean it isn't that is impacting other areas
of a different real estate types, like office, for example.
Office is getting hit hard, youknow, because of that reason,
so it's going to be interestingto see what happens over time.
Speaker 1 (10:09):
How can mortgage brokers adapt to changes in the
real estate market to betterserve their clients?
Speaker 2 (10:14):
I think adding more products to the I mean, you know
, more arrows in the quiverright, more access to lending,
is the answer to that.
Not everybody is a cookiecutter client who fits for a
full dock.
You know, 15 year, 20 year, 30year, conventional fixed or arm
(10:37):
product there are.
I think, especially after COVID,we're entering an era where a
lot of people have becomebusiness owners.
A lot of people have startedtheir own businesses and or are
trying to grow those businessesand it's somewhat difficult to
run a business and qualify forfinancing.
(10:57):
You know it's expensive tolaunch a business and generally
there's a lot of businessexpenses that go into that and
you don't show a lot of incomeon paper, right.
So having access to alternativedoc or non QM products, like
our company has, allows profitand loss only loans, bank
statement only loans, a lot ofinvestor products that show no
(11:20):
income, dscr, debt servicecoverage ratio, loans that allow
investors to use the incomecoming in from a property to buy
something.
And I'm seeing a lot of folkscontinue to rent actually for
their primary residence and lookinto investing in second homes
(11:41):
and short term rentals orinvestment property you know,
full investment properties.
Speaker 1 (11:47):
So finding more avenues to get people the money
that they're looking to borrowwithin a qualified setting is
the answer you know, I know thatboth of you are homeowners, and
so what financial preparationsshould first time home buyers
make before entering the market,aside from saving for a down
payment?
Speaker 2 (12:08):
I have all of my clients go through a like a pros
and cons checklist of owningproperty.
I don't think propertyownership is for everyone.
You have to really want it.
You want to.
You have to want to be ahomeowner, especially in this
market, and owning a homecarries weight for different
people.
Some people really want thatsafe haven this is my home place
(12:31):
and others look at their homeas a investment, long term
investment.
Part of those can bleed overinto one another.
But looking at what yourfinances look like right now,
what your spending looks like,what your savings looks like and
what your income looks like andwhere that income is going, and
(12:52):
having a budget worked out,helps you understand what might
need to change in your life tomake homeownership a reality In
this market.
If you're going from renting toowning, your monthly housing
expenses going up there's no,there's no question about it.
Yeah there, there once was atime where there was a safe
(13:13):
argument to make about.
You know, could you own it forthe same amount that you were
renting?
That is long gone, and so it'sa choice to get into making a
higher housing expense payment,and there are some things that
are going to have to fall downby the wayside to make that
happen.
You know what are your futuregoals look like?
(13:34):
You know, do you have theforesight to kind of see that
once you own a home you arebuilding equity over time,
especially in a place here likeSouthern California?
You know you are naturallybuilding equity over time.
You are paying down alone andis that increase in value for
(13:55):
the property kind of offsettingthe higher expense you're paying
or the mortgage, as opposed tocontinuing to rent and pay
somebody else's mortgage?
So learning what your, whatyour bills are, what you're
willing to give up and not giveup like the clients I previously
mentioned who weren't willingto give up travel, you know,
figuring that out helps peopleget prepared to make that plunge
(14:17):
into homeownership.
Speaker 3 (14:20):
Yeah, yeah, yeah.
And I and I believe there's agood misconception out there
that if I, if, if I stop renting, I could just, you know there,
yeah, it does go up as soon asyou go into into home owning.
But you know, yeah to, I meanit's just, it's pretty much
right, vanilla, I mean, I meanyou just got to.
For me it's like you know workharder if you're a PE teacher,
(14:44):
you know, maybe you know go outand you know, do some coaching
on private coaching on the side.
You can save money that way.
There's several ways you cansave money.
But you know, just to kind ofveer a little bit off of home
owning, I would encourage people, I mean I'm gonna.
I'm mostly commercial appraiser.
90% of my work, 95% of my workis commercial valuation, so I'm
(15:05):
more on the investment side.
If I was to encourage somebodyto go out and buy, make their
first purchase, it would not bea house.
You asked 98% of the USpopulation what's the greatest
investment you made?
Always in my house.
But the other 2% are out therebuying income, producing
property.
You get a return on and you geta return of investment, not
just a return on.
(15:26):
So you know, and you don't seethat money in a single family
home.
You know you go out and you buy, you live there.
Yet it's comfort and it's, youknow, great.
I mean you.
Obviously it depends what yourmotives are.
If you're, you know your family, you want to provide a home and
you want to have pride ofownership and do whatever you
want.
What's your real estate?
That's, that's the key.
You know, buy yourself a houseif that's your biggest
(15:48):
motivation.
But on your but, on your firstpurchase, you know maybe you
might have a three-year-old andyou can live in an apartment
with a three-year-old.
I mean so you can delay that.
I mean there's so many, there'sso many financing opportunities
for people to go out and buy anapartment building, for example
(16:10):
.
You know, buy a duplex, buy atriplex.
I would start off with afourplex and then work your way
down to a triplex and two unitsand then a single family.
Now you have, you know, realestate holdings and you know,
when you retire, now you have anincome stream when you're
retired from real estate, and sothat would be my first purchase
(16:31):
would be looking into takingadvantage of an FHA program and
buying a four unit apartmentbuilding.
They still lend on four units,or is it three units now?
Speaker 2 (16:42):
Yeah, they lend on one through four units.
There's different qualifyingfactors when you get into
triplexes and quadplexes.
But I mean you make a greatpoint.
I have a client signing docstoday who bought a duplex here
in Long Beach on an FHA loan.
And to further that point therehave been new guideline changes
that are going to allow buyersto put 5% down on multi unit
(17:06):
properties for conventionalloans, whereas previously that
was 15, 20, right, you know,percent down at a minimum and
that's going to allow.
You know if you're comfortablegetting into that income
producing property first livingin a apartment style home in
(17:26):
Long Beach here actually there'squite a few like duplexes and
triplexes that are stillsomewhat removed from each other
.
You know separate, separateproperties.
You still feel like you'reliving in a home, even though
you've bought a multi unitproperty, and having that
ability to get in, have someincome offsetting your mortgage
payment and you know, eventuallymove.
(17:50):
But to keep that property inyour portfolio is paramount, you
know it's.
You can't get a betteropportunity to grow your
generational wealth and setsomething aside for your
retirement than building thatportfolio.
Speaker 1 (18:04):
Can you outline the main types of mortgage products
available for new homeowners andwhat factors should they
consider when choosing the mostsuitable option?
Speaker 2 (18:12):
Yeah, I mean the standard loans that you hear the
most about are conventional FHA, va loans that's kind of like
you know, right down the middleFannie Freddie and government
sponsored loans.
Fha is not a first time homebuyer loan program.
That's kind of a commonmisconception.
But it is one of the easierloans to get to use as a first
(18:35):
time home buyer because itallows as little as three and a
half percent down.
There are as little as threepercent down options, home ready
, home possible programs that dohave, you know, income
qualifying limitations.
I've got lenders that offer, youknow, grant programs.
I have one that just did awebinar with the other day
(18:57):
that's offering up to $15,000for home buyers and it's not
exclusive to first time homebuyers.
But if you buy a property incertain census tracts where
they're trying to lend to lowincome or moderate income census
tract communities, you canqualify for a grant program.
(19:19):
You know, to put some moneydown.
So depending on thequalifications of the new buyer,
depending on the scenario ofthe purchase, how fast it has to
happen, how competitive thesituation is, a lot of these
factors come into play in termsof setting somebody a new buyer
(19:39):
up with success at the rightlender, you know, with the right
pricing and the right product.
Speaker 3 (19:45):
So to testify with Jack is saying that actually
happened to me.
I went out and bought a house,bought another house and then
bought another house, but thefirst two houses I sold and so I
only had one house.
So I was like God, I want anFHA loan, how do I get one?
But I couldn't get one becauseI already have a house.
So a unique thing happened tome is I started working in
(20:06):
downtown LA and it was horrible.
So we got a condo out there andI rented my house out.
So when I rented the house out,I was living in a rented condo
in downtown LA for some time andI was generating income from
the single family house.
So what I did is I went and Ialso applied for apartments in
LA and for an FHA loan.
(20:28):
I got the FHA loan so you canget an FHA loan.
You know it's not just forfirst time buyers.
Speaker 2 (20:36):
Right.
Generally you can't have twoFHA loans.
That's the main factor.
They're not meant to be aninvestor avenue to own property.
But you can own multipleproperties and acquire an FHA
loan.
So as long as the propertyyou're leaving is under
conventional loan VA loan evenyou can then utilize an FHA loan
(21:00):
on a new home.
So it's a good avenue to kindof hopscotch into new properties
with smaller down payments ifyou work on saving the funds.
Because as long as you buy theproperty and then FHA and then
refinance it before moving on toyour next property, you can
continue to use an FHA propertyto get into your new primary
(21:21):
residence.
It has to be your primaryresidence that you're living in
with that FHA loan.
I like that.
Speaker 1 (21:26):
Yeah, that's really great information.
Speaker 2 (21:29):
Here in Long Beach, you know, with new ADU laws
constantly coming up and peoplelooking to take advantage of
that and expand on theproperties, this kind of goes
hand in hand with thosemulti-unit properties we're
talking about first time homebuyers trying to get into.
My clients just recently boughtthat.
They're signing docs on thatduplex today and the reason they
went for this property isbecause it's got space for an
(21:50):
ADU as well, so they're lookingto put a third unit on there.
In your experience evaluatingproperties like, how do you see
the new properties popping upwith the ADUs and how does
valuation coming intoconsideration for those with so
limited comps to compare them to?
Speaker 3 (22:08):
Yes, yes, thank you, jack.
Yes, so I think okay.
So in the appraisal process,the first thing we look at is
what is the appraisal problem?
And when we're appraising anasset that has an ADU, we have
to ask ourselves, as appraisers,who is the lender, because each
(22:30):
lender has different scenarioson how they identify what an ADU
is or if I'm not going to givevalue for it.
So, for example, fannie Mae,they land on single families
with an ADU.
They do not land on two unitswith an ADU.
They do not land on three unitswith an ADU.
Freddie Mac does, but FannieMae doesn't.
So Fannie Mae and Freddie, theypretty much talk to each other
(22:52):
and they're pretty close, butthat's how they differ.
So when you have an appraisergoing out to appraise a property
, the first question that anappraiser should ask where is
this loan going?
And so If you're doing a VAloan, there's another set of
(23:15):
guidelines for it.
So it's identifying what theappraisal problem is.
I'm not saying that there's notother lenders out there that
will lend differently, becausethey will.
But if you want to takeadvantage of those agencies,
those government-sponsoredagencies, and get the great
terms, then they have their ownguidelines and that's why
(23:37):
appraisers look at itdifferently.
Speaker 1 (23:40):
So, give it the current economic climate and
market trends, how do youforesee the future of real
estate market?
Are there specific factors thatyou believe will have a
significant impact?
And I know this is kind of moreof like a real estate aging
question, but I would love toget a lender and appraisers
insight.
Speaker 2 (24:00):
Yeah, I think, if I heard that question correctly.
What comes to mind is kind ofwhat we mentioned previously
about there being low inventoryright now in this market and
value of properties being higher.
Because of that, the current,like the future, market of real
estate, especially in this area,will be, I would say,
(24:22):
substantially affected wheninterest rates eventually start
to come down.
When that time comes, there's alot of buyers who either pushed
out of the market because theycouldn't qualify for what they
wanted to qualify for with ratesgoing up, and unwilling to
compromise on different types ofproperties or different
locations.
(24:43):
There are still buyers outthere who are buying properties
that are listed.
They may not be getting 20offers of property now or
substantially above asking, butthere are people who still want
to buy and still qualify to buywhen interest rates come down
even remotely.
All those buyers who aresitting on the edge of the pool
right now are going to jump inand the market's going to be
(25:05):
flooded with buyers again tryingto take advantage of what they
feel is the opportunity they'vebeen waiting for and that's
going to push values ofproperties even higher.
We're going to see peopleasking over and the desire for
those properties is going to behigh.
Speaker 3 (25:21):
Yeah.
Speaker 1 (25:22):
Just like what we saw a few years ago.
I mean, it was wild.
Speaker 2 (25:28):
Yeah, covid coming out of COVID, a worldwide scare
of any amount Generally pushespeople into making life
decisions and trying to kind ofreevaluating their life and
changing what they want.
And a lot of people wanted homeownership.
A lot of people wanted propertyelsewhere, outside cities.
(25:50):
We saw a lot of people moving.
We saw a lot of remote workbecause of transition, because
of that and people not goingback from remote work.
People would rather leave a jobthat's trying to bring them
back into the office, then lookfor another job that will offer
them that remote option.
I think people have just kindof figured out this is what I
(26:12):
want.
This made me think about what Iwant and now I'm not going to
compromise.
Speaker 3 (26:20):
Some of the things I've seen or talked to different
investors.
When it comes down to theinterest rates coming down, I
don't think a hundred basispoints is going to be enough for
people to like get out and goout and refinance, because
they're probably still sittingin a better loan at that point.
But even if there was to bringit down from where they're
(26:41):
existing now let's say they'rein a seven and it's going to
bring it down to, you know, sixand a half or even a six I think
you're going to get a refinanceboom when it gets down to the
200 basis points below what theyare now, and I think that's
when a lot of work is going tocome in.
A lot of movement in realestate is going to be expanding.
Speaker 2 (27:01):
That's yeah, those are definitely there's got to be
a substantial enough movementin the market to warrant
refinancing Right.
A refinance is a transaction.
It's a cost.
It costs money to do so and youwant to make sure that the
money you're spending to do sois warranted by the savings that
you're getting from the rate inthe market.
Speaker 1 (27:21):
Do you guys have any questions for each other, Are
you?
Yeah?
Speaker 3 (27:24):
actually, you know, one of the things that I hear
about just from borrowers isjust like there's always a I'm
not going to say always, but itseems like one of the biggest
setbacks that borrowers havewhat lenders is like there's
always a delay.
You know like, oh, we're goingto close on Thursday, and then
Thursday does become Saturday,or well, you're going to close
(27:44):
on Saturday, it comes the nextMonday and then it continues and
you know, it seems like they'relike lagging like about three
weeks, and that's what it seemslike I hear a lot of borrowers
complain about.
I mean, do you see that in themarket, or I don't see it in my
market.
Speaker 2 (28:02):
I see people having experiences like that with other
lenders and then you know, whenthey come to me or there's a
lot of information on theinternet to you know people read
about the home buyingexperience or refinance
experience and they haveexperience with us.
You know myself and otherlenders that United American
mortgage and they're like, wow,I didn't know, like I heard, it
(28:22):
was going to be so much worse.
And really what is involved inthat is setting proper
expectations and opencommunication.
You know there's a there's atimeline it takes to process
paperwork and process alone andthe client is an important part
of that.
You know how fast can theyprovide us documentation and
(28:45):
conditions we need to clear at alender.
So, having an open avenue ofcommunication, all my clients
have my cell phone number.
You know we're constantlytexting throughout the week,
phone calls.
I try and make it very easy formy clients to reach me because
when you're dealing with one ofthe largest financial purchases,
(29:06):
one of the largest assets inyour life, wouldn't you want to
be able to reach the personwho's helping you manage that
transaction?
Is this stressful time?
I would, yeah, so yeah, I makesure people have access to me
and that we're constantlytalking about the process.
You know, here is here's whatwe have left to clear in terms
of conditions.
Here's what the underwriter islooking for.
Here is what the lender needsto do to be able to meet Fannie
(29:29):
Freddie FHA VA guidelines, to beable to package and sell that
loan on the secondary market.
You know it's not simply justlenders or banks saying, okay,
we're going to, we're going tolend you this money.
You know they are a business aswell.
They have to make sure thatthat loan is properly
underwritten so they can sell itand continue to lend money
(29:49):
Right.
And I think educating people inthat process opens up the
conversation.
You're not kind of like kept inthe dark on the side about
what's happening with your loanprocess or your lending.
My goal for all my clients isto have them be as educated as
me about their loan by the timethey're done.
Now they may not retain all theinformation that I'm telling
(30:12):
them, but we can be sure thatI'm walking them through exactly
what's going on.
And I think some lenders areeither afraid to be openly
communicative with with theirclients, especially if something
isn't going right.
I think being open about what'snot going right is and how
you're going to solve it.
Coming to the table with thesolution is important and
(30:36):
finding a way to bring theclient into the conversation so
that they don't feel like againthey're in the dark.
So the delays it's really atlender by lender basis and the
only thing that might cause adelay is something popping like
there should be, there reallyshouldn't be a week to week
(30:58):
delay.
If you have a kind of an idea,guideline of when you're landing
the plane on this transaction,you know, if you know what
conditions you're trying toclear, you know the turn times
it takes for a lender to reviewand clear those conditions.
If you know the turn times fromwhen you get clear to close on
a loan and then it takes forgetting clear, to close, to get
(31:20):
docs, you know final documentsassigned and then if you know
how long it takes to sign finaldocs and to fund and to record.
Here in LA County we can't fundand record on the same day.
We got to fund one day, recordthe next day for closing, right,
that's different in OrangeCounty.
Orange County you can fund andrecord on the same day.
So when you have that timelinebuilt out and you're setting
(31:41):
proper expectations and you'redelivering that information of
how long it takes for certainthings to do, then the client
isn't sitting at home thinkingwhy isn't my loan closed yet?
What's going on?
Speaker 1 (31:53):
I actually have quite a few friends that have worked
with you, jack, and they I meanthey love you.
They have and I think that youactually probably are pretty
close with those clients stillto this day.
Speaker 2 (32:03):
Yeah, absolutely.
Like I said, everyone has myphone number, everyone has the
cell cell number.
I am in an age of communicationwhere we're used to getting
information quickly and weprefer to have responses quickly
.
I find that like it doesn'tbother me that you know my
clients can text me at any, anyand all times of the day.
(32:24):
I they understand that in thebeginning I set an expectation
that if I'm not available I'lltext you back and say hey, can
we chat?
You know this is an emergency,or can we chat tomorrow morning
at 9am or is, or give me an hourI happen to be free and I'll
jump on the phone and chat withyou because I I work with people
(32:45):
who work nine to fives, for themost part Right.
So it's very hard to do a joband also buy a home and collect
documentation and schedule phonecalls while you're in the
middle of your job that you'retrying to do.
So a lot of my business is doneoutside of that nine to five
time frame or on the weekends.
(33:06):
And again, you don't get thattype of service with a bank or
credit union.
You know when they close atfour and you're like Well, looks
like I won't get answers untiltomorrow morning.
That's a good point.
Speaker 1 (33:18):
I will put Jack's information in the comments
below, just if anyone would liketo reach out to him.
But I think that might wrap upour Thank you.
Our second episode.
Speaker 3 (33:28):
All right, yeah, thank you so much.
Speaker 2 (33:30):
This was fun.
Yeah, happy to do this.
I love talking about realestate and financing.
Speaker 1 (33:36):
Yeah, clearly very good at it.
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