Home Selling in USA>Question Details

Chris Roark,  in Raleigh, NC

Explaining the mortgage situation to Sellers - How?

Asked by Chris Roark, Raleigh, NC Fri Aug 17, 2007

Over 60 mortgage companies have folded jsut recently. Many of which had loans on the closing table which did not get funded. How do we you explain the current lending situation to a Seller without casuing fear?

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A sellers concerns about getting to the closing table are real. To tell them differently is a disservice. It is a buyers market and a seller is happy to get a buyer. A seller does not have a lot of leverage to influence the lender that a buyer chooses. The best thing a seller agent can do is stay on top of the process of the mortgage and reach out to the loan officer. This does not provide any guarantees that a lender will be there on the day of closing. As a seller agent, I have no control, but can offer my consistent follow up and report back my findings.

As a buyer agent, I encourage my clients to go with direct and strong lenders right now. In a presentation of an offer, if my buyer had their pre-qual from a direct lender, I would use that as a strong leverage point in my buyers favor.
2 votes Thank Flag Link Fri Aug 17, 2007
Deborah Madey, Real Estate Pro in ,
Explain that the lenders that have been folding, were sub-prime lenders. When the market gets hot, everyone wants a piece of the action. Lenders pop up out of nowhere, the number of real estate agents increases, there are more FSBO"s because there is more business.

Since the end of 2001 interest rates were low, home sales were up and everyone jumped on the bandwagon. Since the bubble has burst in several large key markets and slowed in others everything has been making a correction. Agents are quitting, FSBO"s are down and much harder to sell, Sub-Prime lenders are folding.

People got loans without much qualification, and others who were well qualified got into bad loans (more than they could afford, or with a variable rate). Now the mortgage market is taking the correction for that, people and these lenders are in over their heads.

If you have good to above average credit, you can still get a loan. Banks make money by loaning it! The main thing here is to 1. Shop around, 2. Learn as much as you can about how loans work, 3. Stay with one of the large banks (Wachovia, Chase, Wells Fargo etc.) instead of some small independent lender.
3 votes Thank Flag Link Fri Aug 17, 2007
Straight to the point is best - my approach has been honest without a sugar coat. I give my sellers a weekly update call each week anyway, and I discussions lately have been revolving around not just showing activity and new inventory near their house, but about how this mortgage situation has been a ticking time bomb for a while, and what has changed the since the last call, etc.

Personally where I am having trouble is explaining this situation to buyers. They don't seem to understand that a loan program that is available today just may not be available tomorrow.
Web Reference: http://www.sacreblog.com
2 votes Thank Flag Link Fri Aug 17, 2007
Erin Stumpf…, Real Estate Pro in Sacramento, CA
Explain the rules have changed for what makes a strong buyer, the old standards are good gauges for what makes a good offer. 1. Money down (LTV) 2.Terms of the Note & Rate 3. Credit Scores (don't be shy - ask for them. An learn what they mean.) There are still plenty of solid buyers. Have a mortgage expert on the sellers side to - get your listing pre-approved for a mortgage/know what a qualified buyer would look like on paper.
1 vote Thank Flag Link Fri Aug 17, 2007
IN a calm voice, I guess. Because I don't see any strong arguments to support that everything is OK now. Unless, you could lie with straight face. However, you know that better then me but as I said -- I don't see any arguments to calm them down. Except they should trust you on every word you said, which is rare, but I am always trying to deserve their trust to extend that I lead and they follow without questions.
1 vote Thank Flag Link Fri Aug 17, 2007
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