This is a re-post from June, 2006:
Listening to Radio West on KUER the other night, talking about "Your Personal Finances"....
They had a financial counselor in the studio, which was great, gave good advice... then they had a REALTOR on talking about MORTGAGES. I wanted to call in to the show and ask the moron how many loans he had closed in the last six months. He was giving all sorts of incorrect statistics, and advice.
He noted that in Utah, most of the adjustable-rate mortgages that have been commonplace in the US for about 24 months now, are 5 year fixed, and we won't see fallout of those mortgages until 2008-2010.
Ummmm... the overwhelming percentage of adjustable mortgages that have been originated in the last 24 months are 2 year adjustables, based on the LIBOR index, and the time for beginning to the see fallout from the first nasty adjustments of those mortgages is NOW.
If you want a good way to garner a foreclosure, bankruptcy, and ruined credit history, all in one swell foop, go ahead and borrow the entire amount of what some realtor thinks you should qualify for, and what some idiot mortgage office says they can get you, on a 2 year adjustable mortgage, interest-only loan. You will likely be steered toward the realtor's "preferred lender." You think they are on your team?
Go ahead. Knock yourself out. Have fun with that.
Realtors don't do mortgages, and they are not to be considered experts. They are not even to be considered "on your team." They make between 3-6% of the sales price, for doing what, exactly? Listing your home on the MLS? Looking on the MLS to FIND you a house? GIVE ME A BREAK!! On a modest $250,000 house, that's between $7500 and $15,000 into the realtor's pocket. Did you enjoy that? Somebody paid for that, and that's a lot of money. I know who that somebody was. You think they are "on your team?" Think again. Think about whether that was worth it for you.
Did you know you can list your home on the MLS by yourself for as little as $300. Period. Did you know that you can also search the MLS yourself? Did you know that there are MANY houses for sale that are NOT listed on the MLS? You don't need a realtor. You need a financial counselor that knows how to get you a mortgage that makes sense. Do you think that just because a mortgage investor says you CAN borrow a certain amount that you SHOULD borrow that amount? Are you NUTS? Pick a payment you can live with, get a mortgage commitment on a mortgage program that fits your needs, keeps you secure, and gives you long-term stability, then find a house that will provide that for you. Forget what you CAN borrow, borrow what you SHOULD borrow.
Every time you make a mortgage payment, who do you think about? The realtor that sold you the house, or the loan guy that put you in the mortgage? I'm just sayin'.
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2 comments:
I'm really sick of people spouting off how bad Realtors are. I'm in the middle of a real estate transaction as an "agent" and the lender just screwed up and cost us several weeks. That's money out of my clients pocket. Will they get that back? No way. Will the lender say "sorry, I screwed up, I'll discount your loan $1000." No, never. But an agent is expected to give up their fees when something happens.
You think commissions are high? What about all the "fees" lenders and title companies charge. Oh, no one complains about that, or how incompetent most lenders are, and that a lender will sell them a loan that nets the lender the most money. Don't deny it. I've been doing this long enough to see my fair share of shady lenders too.
I just think anyone not a Realtor feels they need to take cheap shots because they are insecure about their own abilities. Go after the Realtor, they already have a bad rap; let's make it worse. Don't look at me, look at them. Yeah, that's what you need to do.
Moron.
Bob, thanks for the comment, and believe me, I hear what you're saying. I'll address a couple of your points here one by one:
1. Is the lender you're dealing with a "lender" - the actual lender of the money, or a "broker", one who connects the borrower of the money to the lender of the money? It's a valid question. As a broker, I am set up with more than 250 lenders of money. I bring this up because you ask if the "lender" is going to say, "gee, sorry about that", and the answer is "not on this green earth."
However, if you are with a "broker" and the broker screwed up, costing your client a bunch of money, you should not only INSIST that his fees be lowered, but you should also take him out behind the woodshed, if you know what I mean.
If that doesn't work, YOU ARE WITH THE WRONG LENDER. PERIOD.
I've done loans for free before. It hurts. It's a lesson. Do it often enough and believe me, it won't happen again. Or, with some, maybe it will.
There are poor performers all over the place. There are those who will jack you with a "no-fee" loan, but then give you an interest rate that is WAY too high, taking advantage of the borrower, and making everyone involved in the transaction look bad in the process. That's a classic lesson in "How to piss people off and never get return business again."
Next point: Yes, I think real estate commissions are high. Are you kidding me? 6% of the purchase price? Title fees, and lender fees can be high too - $40 for "email doc fees"??? What?? Do bits and bytes now cost MONEY?? But when you look at it, you're talking about $40, not 6%.
Sure, there are Realtors out there who earn it. And there are those who steal it. Which one are you? What did you do for your 6%?
Most lender fees (not broker fees) are low too... underwriting fees from 200 (or even lower in some cases) are not too bad, when you consider the MOUNTAIN of paperwork that has to be gone through and regulations adhered to.
If you're talking about broker fees, well, that can be a crapshoot. I've made it very clear here on this site how I get paid, and by whom, and by what methods. A person who is insecure about his abilities is not going to do that. So you're not talking to ME about being insecure in my own value to the transaction. That having been said though, there are those out there who will take you for a magic carpet ride, if you know what I mean.
Bottom line: This post's genesis came from the idea that a REALTOR should be looked at as an authority on how MONEY is borrowed and lended. (if that's a word) This is WRONG. Realtors are experts on REAL ESTATE, not money.
My problem is that MOST realtors think they are the resident authority on ALL FACETS of a real estate transaction, including the financing. WRONG AGAIN. How many agents know the yield on the 10 year bond on a day to day basis, and why it's important? I dare say NOT MANY. And they shouldn't, it's not their job. It's MY job.
It just bugs me when a realtor is looked at as the font of all financial and economic knowledge, when most couldn't find their way out of... well... you know what I'm saying.
Perhaps you are one of the good guys. Perhaps you work for repeat business like I do. But for every one of us, there are 19 more who are bonafide IDIOTS.
Thanks for reading.
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