\n<\/p>\n
The 2023 <\/strong>housing market<\/strong><\/a> may be the \u201ctoughest real estate market<\/strong>\u201d we\u2019ve ever experienced. But, after this episode, we bet your home offer will get accepted<\/strong>, even during a wild seller\u2019s market, even if you\u2019re not offering the highest bid<\/strong>, and EVEN if this is your first time buying a home. While you may THINK that sellers always choose the \u201chighest and best\u201d offer that comes their way, we have a few experts to prove that that\u2019s rarely the case and how you can win even in an impossible housing market<\/strong>.<\/p>\n First-time home buyers and veteran investors alike are feeling the sting from this never-ending sellers market<\/strong>. There are still more buyers than sellers, and bidding wars<\/strong><\/a> have come back into fashion. Thankfully, a few quick tips from today\u2019s expert agent, Lindsey Iskierka<\/strong>, and David\u00a0Greene\u2019s own mortgage broker, Christian Bachelder<\/strong>, can help you win the home you love or your next cash-flowing, equity-boosting investment property<\/a>.<\/p>\n We\u2019ll walk through the five steps ANYONE (yes, even you) can take to put yourself in the BEST position to make a bid on a property<\/strong>, how your lender can ensure you DON\u2019T get squeezed into paying more, and the biggest mistake new home buyers make<\/strong> that are costing them their dream home. Stick around because once you put these tips into practice, you could have too many accepted offers on your hands.<\/p>\n David: Lindsey: David: Christian: David: Lindsey: David: Christian: David: Lindsey: David: Lindsey: David: Christian: David: Christian: David: Lindsey: David: Lindsey: David: Christian: David: Lindsey: David: Lindsey: David: Christian: Lindsey: David: Lindsey: David: Christian: David: Lindsey: David: Lindsey: David: Christian: David: Christian: David: Lindsey: David: Lindsey: David: Christian: David: Christian: David: Christian: Lindsey: Christian: David: Lindsey: David: Lindsey: Christian: Lindsey: David: Lindsey: David: Christian: David: Lindsey: David: Christian: David: Christian: David: Lindsey: David: Lindsey: David: Lindsey: David: Christian: David: Christian: David: Christian: David: \u00a0<\/p>\n<\/div>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is the BiggerPockets Podcast show, 826. Coming at you from Las Vegas.<\/p>\n
You have to call the listing agent and find out specifically what is the seller looking for? What is most important to the seller? We can\u2019t make assumptions that we know that it\u2019s highest price and best terms. There might be more to it. Do they need to rent-back? Do they want smooth financing? Do they want a longer escrow? Is there certain things that they\u2019re looking for in an offer that we\u2019ll only find out if I make that phone call? Build a rapport with the agents, flatter them a little bit, get them to tell me all the information about their listing, so that I can take that back to my buyer and say, \u201cOkay, here\u2019s the scoop.\u201d<\/p>\n
What\u2019s going on, everyone? It\u2019s David Greene, your host of the BiggerPockets Real Estate Podcast, the biggest, the best, the baddest real estate podcast on the planet. Every week, we are bringing you stories, how-tos and the answers that you need in order to make smart real estate decisions now in this current market. So, we\u2019re really glad to have you.
In today\u2019s episode, we\u2019re talking about how to get your offer accepted and get deal terms to work in one of the most challenging markets we\u2019ve ever seen. I have brought in Lindsey Iskierka and Christian Bachelder, two of my partners in the real estate game, to explain what we do to help put clients under contract in an incredibly competitive market. And more importantly, how you can do the same. The game has changed. The old advice of write 100 offers and hope that something sticks is not working in a market where every seller is getting what feels like 100 offers. So, if you want to win in today\u2019s environment, you have to be strategic and intentional. In today\u2019s show, we are going to tell you exactly how you can do the same.
If you\u2019ve been frustrated because your offers are not being accepted or things are going wrong, or things are changing in the middle of the process that you were not prepared for, today\u2019s show will help you a ton in eliminating some of those obstacles and hurdles, and getting rid of the snags. And even if you\u2019re not in acquisition mode right now, this information is timeless. And when you do decide that the time is right for you to buy, this is a blueprint for how your team should be communicating on your behalf and with each other. I think your mind is going to be blown by some of the practical information that we share to give you an advantage over your competition in this wealth-building journey.
Before we bring in Lindsey and Christian, today\u2019s quick tip is if you\u2019ve read my book, Long-Distance Real Estate Investing, you understand the concept of the core four. This is your agent, your lender, your contractor, and your property manager. My belief is that you need those four people all working with you to help you achieve your goals. And if you have them, you can invest anywhere. Well, BiggerPockets can help you put together this team of investors. You can use the forums to find other people that are vendors, like agents, loan officers, contractors or property managers, giving advice to different BP members, and decide who sounds the smartest and the one you like the most. You can also use the agent or the lender finder to find my team as well as other agents in different places that you can vet to decide if they would be a good addition to your core four, that would help you scale your portfolio. After listening to today\u2019s show, you will know exactly what to ask them and what the process should look like to find out if you got a stud or a dud.
All right. Without any further ado, let\u2019s bring in Lindsey and Christian. Christian and Lindsey, welcome to the BiggerPockets Podcast. I kind of got to bring my family with me to the show today. We\u2019re going to get into why this is such an important podcast briefly, because the market has shifted a lot. And if you\u2019re listening to this and you\u2019re wondering why you\u2019re having such a hard time finding deals and putting them into contract, after today\u2019s show, you will not be wondering. But Christian, let\u2019s start with you. Can you explain who you are, what you do, and how we work together?<\/p>\n
Yeah. I am the man, the myth, the legend, David Greene\u2019s business partner in The One Brokerage, which is our lending branch of the David Greene world. We started the company back in 2021, I wanted to say, been going strong ever since. And yeah, I\u2019m the money guy, the finance guy, right? So, doing everything that we can to make these deals work, communicating effectively with agents, making sure borrowers have the right advice moving forward. And ultimately, trying to close deals.<\/p>\n
Thank you. And Lindsey, how do we know each other?<\/p>\n
Hey David. So, I am Lindsey Iskierka, and I am your partner for the Southern California real estate team. So, I head up the real estate sales team here in SoCal, helping investors buy and sell real estate. And I think we started the team, I want to say in April, 2021 or so, and been going strong. Even just in 2023, so far we\u2019ve closed 68 deals, just under 50 million in volume. So, it\u2019s been an interesting, tricky market to navigate, but we\u2019ve done a good job in helping clients get to their goal. And we partner with The One Brokerage on our deals and it all goes smoothly.<\/p>\n
Truer words have never been spoken. This is honestly the toughest market I\u2019ve seen in my entire career. I\u2019ve mentioned this before. There is no clear answer out of it and there\u2019s no indication it\u2019s going to change anytime soon. So, you either adapt or you lose. And so, today\u2019s show is all about different ways that the three of us have brainstormed\u2026 What\u2019s the word that Rob always says when people come together and they\u2026 Workshop. We\u2019ve workshopped different solutions here for what can be done, and we\u2019re going to be sharing that with the audience today. Basically, the problem is that the supply and demand equilibrium is way off. It is a seller\u2019s market. It\u2019s been a seller\u2019s market for a long time, and it\u2019s just becoming more and more of a seller\u2019s market every month it seems like. Sellers are having more leverage even as rates are going up.
I mean, Christian, what was it you were saying to me the other day? How much does somebody have to make to be able to afford a $500,000 house right now with where rates are?<\/p>\n
I mean, it\u2019s getting there. I mean, especially with other debts and liabilities people have. I mean, you\u2019re getting to start to need multiple hundreds of thousands a year in income to be able to afford a $500,000 house, and we\u2019re talking 200,000, 300,000 with down payment requirements and everything like that. So, we\u2019re a little bit out of whack right now in the balance of sellers and buyers and everything, for sure.<\/p>\n
Yeah, Lindsey and I, we were just at Mega Camp in Austin, a Keller Williams event for real estate agents. And Jay Papasan, who we\u2019ve had on the show before, was mentioning that if you take on $50,000 of debt on a vehicle, that could rob you of $200,000 of debt that you\u2019d be able to afford for your house. As rates are starting to slowly climb into these higher tiers, taking on additional debt is becoming more expensive. I mean, it was always foolish to buy a more expensive car than you need and to run up your credit card debt, but the consequences of said foolishness were less when rates were 3%. Now, we\u2019re getting into the 8s sometimes, you\u2019re really feeling poor choices.
So, in this very tough market, every decision that we make is that much more important, and that\u2019s what we\u2019re going to be talking about today. What can your team do, your agent and your lender that are working for you, to help put people into contract easier? Because there\u2019s a lot of buyers that want this inventory. The sellers still have the power and the consequences are higher if you make a bad decision because rates are so high. Lindsey, before we get into some specifics, can you just share what it was like when we were selling houses in 2021 compared to what it\u2019s like now?<\/p>\n
Oh, my goodness. Well, in 2021, the consumers understood the market that we were in. Headlines were saying, \u201cHey, multiple offers, you got to waive contingencies, offer way over list price.\u201d And homes were so affordable at that time that buyers felt a lot more comfortable writing whatever it takes to get an offer accepted. Now, a lot of agents in that market put their clients at very high risk by waiving inspection contingencies. That\u2019s something we never really did. I never had to waive an inspection contingency to get a client\u2019s offer accepted. So, I think agents just felt like they had nothing else to do, and they didn\u2019t know how else to help their client, where we\u2019re able to protect the client throughout.
The difference is right now in 2023, as we\u2019re recording this, the market\u2019s not behaving like we would anticipate it should, with affordability being much worse. And so as a consumer, if they\u2019re reaching out to us and they want to buy a primary and stop renting or they want to buy a short-term rental or a house hack, they would anticipate that they have better negotiation power, that they have better leverage. But then, I have to be the one to tell them, \u201cHey, there\u2019s already 11 offers, 27 offers, 14 offers. Here\u2019s what we\u2019re going to have to do.\u201d So, the market\u2019s not behaving in the way that the consumer would expect. So, a realtor and a lender both need to know exactly what\u2019s going on, be immersed in the market, and know the psychology of both buyers and sellers right now, so they can put their client in the best position to get their offer accepted, without putting them at additional risk.<\/p>\n
All right, so Lindsey, that was the market before. It\u2019s obviously more challenging now. Do you have a story of an offer gone wrong in a market like the one we\u2019re in now?<\/p>\n
Yes, there\u2019s many. However, I think pertinent into this episode, I want to talk about a time when lender and agent weren\u2019t really communicating, and therefore, the client lost out on the deal. So, a client came to me, referral from a past client, they were already pre-approved. And the lender just didn\u2019t find it beneficial to talk to me, didn\u2019t really see the benefit in strategizing ahead of time before showing the client houses and writing offers. So, I get the client in the contract. And about five days into escrow, the lender calls me and says, \u201cOh, we can\u2019t actually do this loan.\u201d I said, \u201cWell, why not? We\u2019re way below the pre-approval price.\u201d And he said, \u201cWell, that pre-approval was sent contingent upon the client pays off their car.\u201d
And I said, \u201cWas the client aware of that?\u201d And he said, \u201cYeah, they should have been.\u201d Client had no idea. And had I been able to have a direct phone number to that lender, had they found it beneficial to talk to me and I can ask questions about the client\u2019s preapproval, I could have dug that out of them, and prevented the client from wasting money on inspections and appraisals and wasting everyone\u2019s time. So, that was a situation that unfortunately the client lost out, and they didn\u2019t end up buying the home after that.<\/p>\n
And we\u2019ve seen stories like that and more over the several years that we\u2019ve all been working together. And in today\u2019s episode with the help of Lindsey and Christian, we are going to get into what you as the investor can do at every stage of the buying process to put yourself in a better position, starting with the pre-approval, like Lindsey said. We\u2019re going to explain what could have happened differently there that would\u2019ve avoided that catastrophe. You\u2019ll also learn what not to do as this ace team debunk some common misconceptions along the way.
All right, so let\u2019s start. We\u2019re going to talk about the five steps for getting an offer accepted in today\u2019s very tough market with your lender and your agent on the same team. Christian, let\u2019s start with the pre-approval process. What would you recommend that investors ask their agent and their lender to do together when they\u2019re working on the pre-approval phase?<\/p>\n
Pre-approval number one, absolutely\u2026 Communication is going to be my cheat code answer of every step of the way because if mistakes are made, like Lindsey\u2019s with the car example that she used, communication can fix almost any issue in a negotiation standpoint, whether that\u2019s with the borrower, the realtor, and the loan officer, with each other. So, that\u2019s number one. But other things that I\u2019d recommend, number two, make sure you\u2019re getting a pre-approval, not a prequalification. This is not general knowledge. The differences between those two things. A pre-approval actually underwrites you. Underwrite is just verifying a couple of things. A pre-qualification is you walking into the bank, they ask you how much you make, they ask you what your debts are and they tell you what you can qualify for. There\u2019s not enough information in what you shared with them there for them to tell you that with any amount of confidence, right?
We need to pull bank statements, and pay stubs, and tax returns, and the real estate that you already own, and insurance policies. I can go on for 1,000 years on what I actually need to request from you to make sure that we dot all our Is and cross our Ts. Pre-approving is that process. Pre-qualifying is not. Pre-approving also requires a credit check, whether it be a hard pull or a soft pull. If you went to your lender and they didn\u2019t look at your credit, you did not get pre-approved, your realtor\u2019s not going to have a strong desire to work with you when you\u2019ve been pre-qualified. And obviously, sharing the findings with the realtor, bringing this full circle, and making sure they know not only the purchase price. That\u2019s not the most important thing on a pre-approval. I know that\u2019s what everybody thinks it is.
It\u2019s the terms. It\u2019s how strong are we with the loan? How flexible are we if the appraisal comes back low? How flexible are we with the asset type? Can this person that qualified for a single family go buy a duplex, right? Can they buy a short-term rental? Those are all things that may not be in words on the pre-approval, but need to be in a conversation that the lender has with the realtor before they start going and Lindsey spends all this time going and finding the perfect beautiful house for our client, where it turns out, \u201cOh, I meant they\u2019re approved for a single family, not a condo. My bad.\u201d We don\u2019t want to end up in that situation, and that\u2019s where the communication makes all the difference.<\/p>\n
So, what about a couple examples of this? Can you explain some stories of where realtors don\u2019t understand that a pre-approval on a single family is not the same as a duplex or a condo can be different than a house? Just explain what some of the things that the loan officer has to underwrite for that are different among those asset classes that agents might not know, or maybe the people getting pre-approved might not understand. To them, $400,000 is $400,000, why does it matter what I\u2019m spending it on?<\/p>\n
Yeah. Yeah, 100%. I mean, I\u2019ll give a standard example of the different in asset types. Let\u2019s say a single family to a triplex, let\u2019s say. There\u2019s different loan limits. Let\u2019s say I did Lindsey\u2019s car lender example. If I just gave the pre-approval to the buyer, I stepped away, never called the agent, never cared. If she got a pre-approval for, let\u2019s call it a million dollar triplex, that\u2019s not a million dollar single family. There\u2019s these things called loan limits that if you\u2019re getting conventional loans, I don\u2019t want to get too far into the weeds, but there\u2019s only a certain amount of financing that we can go up to for a single family, for a duplex, for a triplex and for a quadplex. They\u2019re all different. So, what Lindsey could do if she wasn\u2019t communicating well is take that triplex pre-approval that\u2019s at a million, and go right on a single family property where I would only be able to get her 700,000.
Unless the borrower has 300,000, it\u2019s not happening, right? I mean it\u2019s crazy. And that\u2019s actually my example as well. I kid you not, we have had people do this and it\u2019s happened multiple times where realtor won\u2019t pick up his phone, won\u2019t let us know when we\u2019re writing offers. I can tell you guys, any realtors listening to this, if you can take one thing away from this episode, the strongest thing that you can do is when you go write an offer, call your lender. When you write an offer, call your lender and say, \u201cI\u2019m writing on an $800,000 duplex in this county. What do you think? I know what your preapproval says, but is there anything we need to look out for?\u201d Maybe there\u2019s an HOA, maybe there\u2019s tax assessment. In SoCal, we have these things called Mello-Roos, which is extra payments that you have on your taxes.
Let me know about those things. And not only am I going to give the realtor the answer on that phone call, I\u2019m also going to ask for the listing agent\u2019s contact. Now I\u2019m going to go call the listing agent that\u2019s listing that property and say, \u201cThis borrower is a rockstar. We\u2019re going to slam dunk this loan. Lindsey\u2019s a rockstar. I\u2019ve never had a deal fall out of escrow with her for anything in our control, right?\u201d Obviously, if a house under-appraises or something\u2026 But we\u2019ve already got an insurance policy selected and quoted. There\u2019s not another choice here. When you guys were talking in the intro here about navigating difficult markets, that\u2019s how we do it. That\u2019s the answer.<\/p>\n
So, Lindsey, in your perspective, had you had this conversation with the loan officer before doing all the work of finding the house, negotiating the deal, the client spending money on the inspections and the appraisal, you spending money on gas and time looking into this, you would\u2019ve realized you\u2019re actually not pre-approved to buy a house. If it\u2019s contingent on paying off your car, we need to make sure that there\u2019s enough money in the bank for the down payment, the repairs, the upgrades, the closing costs, and the car note, correct?<\/p>\n
Yeah. So, going back to Christian\u2019s cheat code answer, communication, right? Had that lender been willing to get on the phone with me and talk through this pre-approval\u2026 And I\u2019ll add too, it is the agent\u2019s responsibility to ensure that that lender did do a thorough job pre-approving the client.<\/p>\n
Oh, that\u2019s good.<\/p>\n
And if they haven\u2019t, they may not know what questions to ask and they need to know, \u201cHow deep did you go with the pre-approval? Did you verify assets? Did you verify income and employment? Are there any red flags I need to be aware of? And on top of that, what terms can I put in the offer to make this buyer the strongest buyer possible without putting them at additional risk? Can I shorten the loan contingency period? No? Okay. Can you let me know why? So, I can tell the agent I would love to do this, but I\u2019m not going to, and here\u2019s why.\u201d In very specific situations with lender\u2019s blessing for certain borrowers, we can waive loan contingency and that may result in the client actually saving money on the house because they appear to be more like a cash buyer because we can remove that financing contingency.
But a realtor cannot and should not do that without the blessing in a full conversation with a lender, ensuring that we\u2019re working together on the same team. \u201cIf I get them into contract, can you close?\u201d So, the realtor has to take responsibility for that as well and not just think that they need to stay in their lane. That\u2019s not my job. Ultimately, we\u2019re all on the same team trying to serve the client and if deal falls through, no one gets paid. So, let\u2019s work together.<\/p>\n
Okay, so I\u2019m looking to buy a house. I heard about Christian and his team got me pre-approved. I heard about Lindsey and I felt really good. You gave me a buyer presentation, you explained the process, and I just got an email that says, \u201cCongratulations, you\u2019re pre-approved. $600,000.\u201d What\u2019s the next thing I do? Should I get my loan officer and my agent on a group call? Should we be in a group email? What do you guys recommend that people do to get everybody on the same page, so that we know where the boundaries are, what\u2019s okay, what\u2019s not okay, what the plan is?<\/p>\n
Yeah, I mean I think both of those options are good, a group call and a group text. But more importantly, I want to correct one thing because just being pre-approved for 600,000 is not all the information we need from the pre-approval, right? So, that phone call is intended to get that information\u2026 I just want everybody to think\u2026 If there\u2019s realtors listening to this or people who have bought houses, everything that Lindsey just said there, what asset type, what loan product do we have flexibility in the down payment? When\u2019s the last time you had that conversation on the first day of preapproval with a lender?
So, David, to answer your question, this should be phone call immediately. And the questions that Lindsey just ran through are needing to be what\u2019s asked, right? I mean, \u201cIt\u2019s okay 600,000, but for what? Could we change loan products and get that higher? What if we find something for 650? Do you have wiggle room built into your pre-approvals, right? Can we buy down the interest rate if we get some seller credit?\u201d That way, I\u2019m now giving the realtor ammunition to go write this offer in a way that\u2019s competitive, in a way that is going to lead to a win at the end of the day for the borrower. If we know we got to buy this interest rate down, we got to go get credit, or we got to go save some money on an insurance, or we know we can\u2019t take on an HOA, so condos are out of the question.
All these things go into it and that conversation is the only way that information gets passed because I can\u2019t put all this on a pre-approval page. Your pre-approval page has the county, the loan amount, and really, that\u2019s it. It\u2019s not really worth the paper it\u2019s written on. That\u2019s all the information\u2019s there. It doesn\u2019t say if it\u2019s a single family. It doesn\u2019t say if you can\u2019t do an HOA. So, it\u2019s got to be in that conversation. It\u2019s the only way to properly share this information and move forward as a team throughout the negotiating process.<\/p>\n
Which is especially important when it\u2019s an incredibly competitive market. When we were in a market, like 2010, where it was just throw spaghetti at the wall, write low offers, see what sticks, you didn\u2019t need to have these conversations because sellers would do whatever it took to sell their house. It\u2019s not like that anymore. It is now incredibly difficult to get your offer accepted. So, let\u2019s sum up some of the things that we think should be talked about in that initial conversation, then we\u2019ll move on to writing the offer.
We\u2019ve mentioned that it should be a single family or a multifamily. What type of asset class? Is it a condo? And if it is, how does that change what the pre-approval amount is? Different asset classes have different lending requirements as well as different expenses that will affect the debt-to-income ratio of the client, and therefore, how much they can borrow. What is the down payment going to be? Are we talking about an FHA loan, a VA loan? Is this a second home? Although those have different criteria that are not wildly different but enough, especially if it\u2019s really close and you want to go another 10 grand higher to get the deal, can you actually do that or would you have to bring the extra cash to close?
And the sustainability rule with the FHA loan. If you\u2019re using an FHA loan specifically to buy multifamily properties, it often sounds, in theory, better than it is in practice. You have to make sure that the property you\u2019re buying can sustain itself, which means that the rents have to be a certain portion of the income. Definitely something an agent wants to know before they go hunting down a triplex for their client to house hack because the lender never explained, \u201cHey, yeah, they\u2019re using an FHA loan. Make sure that things look this way before you move on.\u201d
Now, let\u2019s get into what I think is maybe the most crucial part, which is writing the offer. So, we are pre-approved, we are ready to rock and roll. Everyone\u2019s on the same page. We find a property that we like and we want to make an offer on, but a bunch of other buyers want that property as well. Not an uncommon scenario in real estate in today\u2019s day and age. Lindsey, let\u2019s start with you. What can our listeners do to make sure that their offer is the one that the seller chooses on a property that\u2019s going to make them massive wealth in the next 30 years?<\/p>\n
Yeah. So, a really important piece of the puzzle that a lot of realtors don\u2019t think about is that you have to call the listing agent. You need to call a listing agent and find out specifically what is a seller looking for? What is most important to the seller? We can\u2019t make assumptions as agents or buyers that we know that it\u2019s highest price and best terms. There might be more to it. Do they need a rent-back? Do they want smooth financing? Do they want a longer escrow? Is there certain things that they\u2019re looking for in an offer that we\u2019ll only find out if I make that phone call? Build a rapport with the agents, flatter them a little bit, get them to tell me all the information about their listing, so that I can take out back to my buyer and say, \u201cOkay, here\u2019s the scoop.\u201d
You can\u2019t just be the kind of realtor that calls them an hour before the offer deadline saying, \u201cWhat do you got?\u201d And think that the agent\u2019s going to be divulging information to you. You got to build a rapport along the way. So, prior to even showing the house, I call the agent and I say, \u201cHey, my client is so excited about this house. Let me tell you a little bit about them, this and this,\u201d and talk the buyer up. \u201cWe\u2019re also pre-approved with my preferred lender, The One Brokerage. We\u2019ve done dozens of deals together. They have never not closed a deal that they pre-approved a client on. We\u2019re really going to make this smooth as possible for your sellers.\u201d
So, that\u2019s a really important piece of the puzzle that a lot of agents miss. And so, then when we\u2019re writing the offer, it\u2019s really important too that I look at the comparable sales, what our homes are on here selling for. We\u2019re seeing more and more that listing agents are listing houses low, and it should sell for $100,000 over list price. The agent\u2019s not some miracle worker. Market value is 100 grand more and I need to know that and prepare my client for it. And if it\u2019s out of budget, we tell them that right away. If it is within budget still, I tell them, \u201cThis is going to generate a lot of activity. We need to come in strong,\u201d and then we get the offer written.<\/p>\n
Perfect. So, you\u2019re saying don\u2019t just shotgun email an offer to the sellers and text and say, \u201cHey, emailed you an offer,\u201d without even making an effort to build rapport, speaking with the listing agent, right?<\/p>\n
Right. So, many agents will send a PDF and say, \u201cSee attached. Confirm receipts.\u201d So, we have a real detailed offer template that I use on every offer. It outlines at a glance, which realtors love, what are we offering? So, you don\u2019t have to open up a 26-page document and figure it out what we\u2019re offering. \u201cHere\u2019s what it is. Here\u2019s the terms. Here\u2019s what your seller is going to love.\u201d And then, I highlight, \u201cI got my preferred lender copied here on this email. They\u2019re going to be reaching out to you,\u201d and just making sure they know we\u2019re a cohesive team and it makes the offer stand out and agents really appreciate it.<\/p>\n
Yeah, we have a certain list of phrases that are red flags in our world, like, \u201cSee attached. Confirm receipt.\u201d Not a good sign.<\/p>\n
See attached is for sure, 100%.<\/p>\n
Drives me crazy. It drives me crazy.<\/p>\n
I would say a listing agent who just says, \u201cHighest and best, highest and best, highest and best,\u201d like a little parrot on the shoulder of a pirate-<\/p>\n
Fire that agent.<\/p>\n
\u2026 is a great sign you picked the wrong listing agent. Exactly. That they\u2019re supposed to actually be negotiating manually, not automatically. They\u2019re supposed to be making an intentional effort to find the best buyer and get the best price. And because there\u2019s so many bad agents, having a good agent and lender on your team actually gives you an advantage. I mean, it\u2019s not uncommon for us to tell the other agent, \u201cHey, this is why our offer is best,\u201d and they were too naive to understand it on their own. So, what you\u2019re getting at here, Lindsey, is these are the things you do to make your buyer stand out as the one that really, really, really wants that house.
They\u2019re in the position of leverage. They have all the buyers that want their house. Now, after it goes into contract, that changes and we\u2019ll talk about that. The buyer gets some leverage in most cases, depending on how an offer was written after it\u2019s in contract. But before it goes in contract, the seller\u2019s got all the power, and so you got to play their game. Christian, what are some things that you would recommend that lenders do or loan officers to work with the buyer\u2019s agent, communicating with the listing agent so that the borrower\/buyer that we are representing has the best chance of having their offer selected?<\/p>\n
Yeah, it\u2019s funny. The biggest one that I think of right off the bat is we call it customizing your pre-approval. But in all reality, a lot of lenders across the country are hurting their partner realtor\u2019s negotiation power, and they don\u2019t even know it. And what I mean by that is let\u2019s say I give Lindsey a $600,000 pre-approval. Let\u2019s say during the search, the borrower and Lindsey determine they can find something for 500,000. Cool, perfect. It\u2019s below your pre-approval letter. Realtor feels we\u2019re good, borrower feels we\u2019re good. I know I\u2019m going to qualify because we\u2019re $100,000 below what my pre-approval says. They find the house, they love it. They don\u2019t call me, they write an offer. They write an offer for 500,000, but they submit the $600,000 pre-approval.
Without even knowing it, that\u2019s hurting their negotiation because subconsciously the sellers now know you can go higher. They know you\u2019re pre-approved for more. So, they\u2019re going to take that $600,000 pre-approval and say, \u201cHey, listing agent, you think we can get 520 out of them? We already know they\u2019re qualified. They can make up the difference because they had a down payment for a $600,000 house, so why don\u2019t we try to get a little bit more out of them?\u201d Versus if they came to me, I can match every single offer to exactly what you\u2019re writing. And even more than that, I call the listing agent. I say, \u201cHey, I\u2019m just letting you know, we got a little bit of wiggle room. I don\u2019t want you feeling like we\u2019re absolutely borrowing to their absolute cap, but I want you to know that I wrote this pre-approval specifically for your property. I work with this realtor all the time. She\u2019s one of the best that I know in the business. This borrower, I\u2019ve done multiple deals for. They\u2019re very qualified. I can tell you, I\u2019m guaranteeing we\u2019re going to close this loan. This is the terms that we\u2019re going to get ready to rock when you are.\u201d
And just that, I mean I want all the listing agents listening to this to hear when\u2019s the last time you had a phone call same day as the offer from the realtor, from the listing agent, clarifying the structure of the deal? This does happen, it\u2019s just rare. And over a large period of time, these are the offers getting accepted, guys. We know this because we\u2019re doing it. It\u2019s not like we\u2019re putting nobody in a contract. We know the tricks. That would be my guidance on the actual contract offer.<\/p>\n
Well, it works because the seller is sitting there saying not only, \u201cHow do I get the highest offer?\u201d But, \u201cHow do I know who\u2019s going to close?\u201d And Lindsey, I\u2019m curious to get your thoughts on when you\u2019re a listing agent and a buyer\u2019s agent is telling you, \u201cHey, what do we need to do to put it under contract?\u201d It probably feels a lot like when you\u2019re a single gal and every guy is out there saying, \u201cI\u2019m the guy for you.\u201d They\u2019re going to put their best foot forward in the beginning, but you don\u2019t know what you\u2019re actually going to get once you commit to that person. Are they going to back out? Do they have the resources to back up the claims that they\u2019re making?
How often do we see buyers will say whatever it takes, they\u2019ll go in contract. Then they drop out of contract now that that listing just lost all of its steam that it had, it\u2019s hard to get multiple offers a second time. What are some ways that you use the loan officer as a team to get the listing agent to feel comfortable that our buyer and their borrower is the one that\u2019s going to close?<\/p>\n
Really good question. Of course, I\u2019m thinking of all the ways when we have listings, how we prevent all the things that you just said, right? We try to lock the buyer in as much as possible, and not give them any outs, really, as much as we can. But on the buy side, when we\u2019re leveraging the loan officer and the realtor as a team, have to make sure that the listing agent knows that we have a daily phone call. Sometimes I\u2019ll say, \u201cI\u2019m on the phone every single day with The One Brokerage going over all of our deals to ensure clear and concise communication, that you always know what\u2019s going on. Even if I don\u2019t have an update on the loan, you\u2019re going to get an update every single day because that\u2019s just how we work.\u201d
And making sure that the lender also knows that, \u201cHey, this listing agent is really going to value communication. They\u2019re going to want to make sure we hit our deadlines. Can you please be on top of it? Let me know what you need from me.\u201d On top of that too, if the lender is having a hard time getting the loan pushed through because the borrower is dragging their feet and getting certain things, I want the lender to tell me, so I can put a little fire under the feet of the borrower saying, \u201cHey, we can\u2019t help you until you get that stuff back to the lender.\u201d So, that\u2019s how we can really leverage our partnership to move it forward.<\/p>\n
What about when the listing agent doesn\u2019t want to tell you how many offers are on the table or what the high price is, because agents don\u2019t trust each other? There\u2019s this weird ego game that gets played between agents a lot of the time. But the loan officer sort of appears like a neutral third party who can step in and get information. Is that a tactic that you\u2019ve ever used to find out where the buyer really needs to be?<\/p>\n
It is, yeah. So, first off, and I\u2019ll just say like, \u201cHey, you have a great listing. I\u2019m sure you have offers over this price point,\u201d almost like flatter them. \u201cAre we even in the ballpark if I offer this price? Is there a number that your seller is looking for that we can match or exceed? And on top of that, what kind of terms do we need to write?\u201d And if they won\u2019t really tell me a whole lot, because like you said, agents don\u2019t really trust each other or agents have a very blank stare towards other realtors, but if the lender calls, \u201cWhere does our borrower need to be to get this into contract? We have some wiggle room to play with. They\u2019re solid. I have it ready to submit into underwriting.\u201d
And sometimes the agent will tell the lender, because most lenders don\u2019t even call the listing agent to begin with, so they\u2019re already caught off guard. So then if the lender asks, \u201cWhere does my borrower need to be in order to get this under contract? And let\u2019s help each other here,\u201d the listing agent is caught off guard and they may be more likely to divulge more information to the lender versus another agent.<\/p>\n
And especially in a market where it\u2019s incredibly difficult to get your offer accepted. These little extra efforts can be the difference between being the second or third out of 10 and the first out of 10, because like Ricky Bobby said, in the world of real estate, \u201cIf you ain\u2019t first, you\u2019re last.\u201d You definitely want to be first.
Okay, so now we have met over the pre-approval. We have gotten the loan officer and the agent working together in tandem to get the offer accepted. We\u2019ve got success. You were the best offer out of all 10. You\u2019ve got the house and contract. Now, we are in the middle of the escrow process. So, now that the offer is accepted because you\u2019re smart and use your team together, how can investors use their lenders to improve the terms of the deal?
Christian, I\u2019ll ask you about this first because you and I have done this together, actually, when I was buying houses using out-of-state agents. You would even contact the listing agent and talk for me because our agent was not as good as we were, right? And we\u2019d come up with a plan where you\u2019d go get information from the other agent that our agent wasn\u2019t able to get, and then we\u2019d go back and tell our agent what should be done. And it was kind of like a puppet, but that\u2019s what was needed to be done because the agent that we were using either didn\u2019t know how or didn\u2019t have the rapport to get the same information. So, what are some ways that lenders can get involved once there is an escrow to get better interest rates for their clients, closing costs covered, even information out of the listing agent that a Lindsey could use to negotiate better terms for the clients?<\/p>\n
First and foremost, my cheat code answer, communication. Daily updates, right? Daily updates to the buyer\u2019s agent, the listing agent. That just builds good rapport. Maybe then when the time comes for us to ask for some credit for repairs, \u201cOh man, these guys have been so communicative throughout the process. They\u2019ve been keeping us up to date well. Okay, well, hey, seller, this is a really good offer. These guys are going to close. They need $5,000 credited for repairs.\u201d You\u2019re more likely to get it done when their experience with you has been beneficial up until that point. So, you kind of build up some brownie points. It\u2019s the equivalent of coming home with flowers to your girlfriend every day, and then you come home late one day, you had to stay at work, and she\u2019s like, \u201cWell, he brought me flowers six out of the seven days of the week. I\u2019m going to be nice to him the day he comes home late.\u201d
Same thing. You\u2019re just building up those brownie points and you\u2019re trying to get enough credit so that when you need to use it, you can convert those brownie points into seller credit. But in terms of what I\u2019m specifically asking for, questions that I like to ask are, \u201cAre you worried about the property appraising?\u201d So, that means the seller\u2019s starting to get a feel of where the house might be worth. You can kind of gauge that even pre-contract acceptance to maybe seeing where the offers are at. \u201cOh yeah, we\u2019ve gotten a couple really high offers.\u201d I can then go back to Lindsey and say, \u201cHey, they\u2019re over-asking on this.\u201d
Specifically, in contract though, let\u2019s just stay on the trend of the appraiser. If the appraisal comes back high, sometimes it allows us, we\u2019ve used this strategy before, we can up our offer by 5,000 or 10,000 because we know it\u2019s supported by the appraisal, but get 5,000 or 10,000 back. It\u2019s the same net out of pocket to the seller. It\u2019s technically both because the buyer\u2019s not paying any more closing costs. It\u2019s getting credited, but they\u2019re getting lower interest rate. So, that\u2019s where I\u2019m able to come, as the lender, explain, once again as a neutral third party. And explain, \u201cHey, there\u2019s a way as the seller where your situation doesn\u2019t change, but we can help benefit my buyer just a little bit here. Get them a little bit lower interest rate. It\u2019s going to lead to this deal working just a little bit more smoothly. We won\u2019t have to be up against the cap of our qualifying. Let\u2019s get this done together. Here\u2019s the number that we need. Are you guys willing to do that? I\u2019ve already supported it by the appraisal.\u201d
And we have a lot of success with that, and it saves the borrower 20,000, $30,000 in interest over the course of the loan. That\u2019s the big one that I can think of.<\/p>\n
So, let\u2019s talk about the rate stack. For people that don\u2019t understand how interest rates work, a common newbie mistake is to go to a bunch of lenders and say, \u201cWhat\u2019s your rate? What\u2019s your rate? What\u2019s your rate?\u201d Which just sets them up to be taken advantage of. Christian, if you could explain what the rate stack is and how it works briefly. And then Lindsey, I\u2019ll let you explain how you can negotiate to get credits for the client that can be applied towards getting a better interest rate.<\/p>\n
Yeah, 100%. Just quick explanation of the rate stack. Everybody just do this in your head with me. If you got every rate from a 5% to a 9% and it\u2019s separated in quarter points, so 5, 5.25, 5.5. And in your mind, just build a table of that going all the way down, like an Excel spreadsheet. On the right-hand side lined up with those rates, so 5% has a cost, let\u2019s say that\u2019s 0, right? So 5%, 0, 5.25 would be a lower cost. So, that would actually give you\u2026 When you hear of lender credits, that\u2019s what it is. And what you can do is you can choose to slide up or down on this, what we call rate stack, by either spending more money at closing and getting a lower interest rate.
So, that\u2019s, in our example, if you bought from 5 to 4.5, maybe that may cost $5,000, but your monthly payment\u2019s going to be, I don\u2019t know, $300 cheaper, whatever it is. We\u2019re throwing out random numbers. Or you could take a higher interest rate, and this is something that a lot of loan officers don\u2019t explain that could benefit people in short timeframes of owning property, you take a higher interest rate, but you get a credit and wipe out your closing costs. So, when somebody asks, \u201cWhat\u2019s your rate?\u201d It depends, right?<\/p>\n
But what happens is lenders quote them the lowest rate on the rate stack. Don\u2019t tell them that that rate that they quoted comes with a $35,000 rate buydown cost, and they don\u2019t find that out until they get to the closing table. They don\u2019t have 35 grand, so now their rate goes higher than what somebody else might\u2019ve quoted. This is very common in the mortgage industry, which is why we\u2019re talking about it. But when you understand the way that the inner workings of lending works, you can use them to your advantage. So, Lindsey, that\u2019s a thing that you can explain to a client because you understand both lending and being an agent.
Your husband is a loan officer on The One Brokerage, so you have to hear this nerd talk all day long all the time. Where if the client\u2019s really short on cash, they can get a lender credit and get a higher rate and keeps more money in their pocket that they can use to improve the property, or if they\u2019re going to hold it for a long time, you can go use an inspection report to negotiate credits for the buyer, which can be applied to the interest rate. Again, do you know how to do that if you\u2019re not talking to the loan officer to even know how much it would cost to buy the rate down to each point?<\/p>\n
There\u2019s two opportunities, really, to get the buyer some closing costs credits to potentially use towards buying down their interest rate. The first one is when you first write the offer. If you\u2019re first going to write the offer, not a lot of competition on the property, which we could see into quarter three and quarter four of 2023, we could see some seasonality in some of the demand and multiple, multiple offer situations start to ease up a bit. This might be a thing again. We did this all the time in quarter one and quarter two of 2023, is we got the two-one buydown or the rate buydown paid for by the seller upfront in the offer, but you\u2019re mindful of the seller\u2019s net profit because that\u2019s what they care about the most. So, if it\u2019s going to cost, easy math, $20,000 to buy the interest rate down to a point where the client is comfortable with that and the deal really makes sense for them, could we add in $15,000 to the purchase price?
Because then, the seller is only taking a $5,000 cut, and that might not be a bad offer. They might actually consider that. And you may see this more often where sellers are going to advertise that they will pay towards a rate buydown, but you have to be mindful of the net profit. So, upfront, when we\u2019re writing the offer, we\u2019ll do that. We\u2019ll say, \u201cOkay, $20,000 seller credit towards a rate buydown towards closing costs.\u201d So, that\u2019s when you first write the offer. Then, once we\u2019re in contract, the inspection really is the most powerful tool that we have as leverage to get closing cost credits for clients. If there are certain situations where we find out there\u2019s a foundation issue, right? Foundation is a big, oh no, kind of like the word of doom a lot of times in these deals, but we can use that to our advantage if it\u2019s really not that big of a deal, honestly, if the foundation repair isn\u2019t that massive, but it\u2019s going to freak out a bunch of other buyers should this buyer walk away from the deal.
I\u2019ll use that to my advantage and say, \u201cHey, Mr. Listing Agent, you are now obligated to disclose this to future buyers if my buyer walks out of the deal, which they very well could. We\u2019re going to need $20,000 to make this repair.\u201d And usually, we\u2019ll have invoices or estimates to prove that and have more leverage in negotiating costs. And we can take things like that\u2026 I mean, foundation is an extreme example, but I\u2019m just using it to make a point here. You can use things found in inspections that the seller will now be obligated to disclose to future buyers. If my buyer walks out of the deal and I\u2019ll tell him, \u201cThat buyer could ask you for a higher closing cost credit or even a price reduction, why don\u2019t we just do this, sign off on a $20,000 credit to my client, we\u2019ll remove all contingencies, we\u2019ll close next week?\u201d
So, not trying to corner the seller, but really utilizing the fact that, \u201cNow you\u2019re aware of this, Mr. Seller, these issues in the inspection report, my client\u2019s okay with it, but we do need some funds to make these repairs.\u201d And we can allocate that towards closing costs, and usually the client can then decide, \u201cOkay, do I want to use it to bite on the interest rate, make the monthly payment more comfortable, but then also keep some of the funds to make the repairs that we\u2019re talking about?\u201d But it\u2019s all about the agent knowing how to utilize and leverage what\u2019s found in inspection reports and throughout the transaction to negotiate better terms for the client. And clear communication throughout. And again, the certainty that, \u201cIf you agree to this, Mr. Seller, we\u2019re going to move contingencies. We\u2019ll close in seven days. Let\u2019s not start this all over again. Let\u2019s just get this closed.\u201d
So, there\u2019s two opportunities, really, that you can leverage getting the most amount of closing cost credits for a buyer to use to probably buy down their interest rate. That\u2019s really what the biggest issue is for clients right now.<\/p>\n
Okay, great stuff. So, to recap, talk to your loan officer about what the whole rate stack looks like, and make sure they even understand what that is. And then, have a conversation with your agent about what potential possibilities you have to get the seller to give credits to buy down the rate. Ask about the two-one buy down because it\u2019s basically free money. And have a conversation if contingencies need to be extended so that the loan officer can call the listing agent, and put them at ease if they\u2019re worried that the loan is falling through, because oftentimes, agents lie. But if the lender calls and says, \u201cNo, no, no, it\u2019s fine. We\u2019re just waiting on underwriting for these things. I\u2019m expecting it to be resolved within the next five to six days.\u201d You can get that contingency extended much more likely than if the agent is just sort of sending a form to have signed and not explaining what\u2019s going on, or the listing agent doesn\u2019t trust the buyer\u2019s agent.
Okay. Moving on to the fourth stage, which is going to be funding the deal. Is there a role the agent can play here that people might not know about? Lindsey, what is your experience when the deal\u2019s in escrow, you are moving to the finish line, we are waiting on the lender to get clear to close? What can you as an agent do to ensure that that process goes smoothly?<\/p>\n
One of the biggest hiccups as we\u2019re getting near the finish line of a deal is possession of the property. We have to be crystal clear as to when the buyer expects to get keys to the house and when the seller needs to be out of the house. This should be negotiated upfront. If there\u2019s some situations where the seller needs more time as we\u2019re getting closer to funding, you want to make sure two things. One is that the seller is actually preparing to move out. The worst thing is when you\u2019re doing your final walkthrough, which you\u2019re entitled to here in California, within five days of closing, you should be doing a final walkthrough, making sure the house was in the same condition as it was when you wrote the offer. That\u2019s the point of it.
If you notice the seller hasn\u2019t even started packing yet, or there\u2019s an occupant there that\u2019s supposed to be moving out or things like that, that\u2019s a hiccup that needs to be addressed. And we need to communicate that to the lender to make sure they don\u2019t fund the deal without these negotiations and without these hiccups being resolved. That\u2019s one of the biggest hangups as we\u2019re getting close to the finish line. So, the agent needs to be proactive in negotiating possession, not assuming everyone\u2019s going to do what they\u2019re supposed to, or that the listing agent understands that the buyer is entitled to possession day of closing. So, start to work out those details.<\/p>\n
We say that often don\u2019t assume best case scenario, that is what amateurs do. They assume everything will go great, and when something goes wrong, they\u2019re shocked. Assume worst-case scenario, plan for everything that could go wrong, and then if it all goes smoothly, you\u2019re pleasantly surprised. But that\u2019s what I look for in the professionals I want to work with. They\u2019re constantly saying, \u201cWhat are we going to do if something goes wrong?\u201d
Christian, what about when you have a funding hiccup and you\u2019re trying to work on getting clear to close or some condition an underwriter has, you resolve it with the borrower, but nobody tells the real estate agent? Have you seen situations like that, where nobody updates the agent what was done, that there\u2019s actually another three to four days that need to be added onto the timeline, but they don\u2019t get the right paperwork filled out and the borrower\u2019s actually at risk of losing their deposit? What\u2019s your recommendation for how loan officers can keep agents in the loop in those situations?<\/p>\n
I mean, I hate to just sound like a broken record over and over, but it\u2019s-<\/p>\n
Communication.<\/p>\n
\u2026 communicate.<\/p>\n
I knew it.<\/p>\n
Yeah, I know over and over. But I mean literally something for something as simple as, \u201cHey, we\u2019re clear to close. Hey, just letting you know we\u2019ve cleared underwriting. I just want to let you guys know I\u2019m going to reach out to the borrower. I\u2019m going to be scheduling the notary. Lindsey, when is time of possession? Is there a seller rent-back in place? Is there a tenant that\u2019s going to be vacating? Even though we\u2019re ready to close early here, is the day that you want to keep closing on for peace of mind of the seller or whatever situation\u2019s going on?\u201d Because I can structure that. I can make sure our funding day is going to take place on the right day.
Where do they want to sign? It\u2019s a question that not a lot of people ask. They just assume the seller\u2019s going to figure it out, right? Like, \u201cHey, is there a place that your borrower would want to sign? Do you want to be there with them? Do you want attend closing with them? Do you have a showing assistant that wants to attend closing with them just to be there to answer questions? Do you care about that? I can structure all of those things. Let me know. I can send you where the date and time is of signing.\u201d So I mean, there\u2019s a million things that can come up, of course. I am not going to be able to hit every example, but communication is just the trump card that allows you to knock out anything that happens, just a phone call.<\/p>\n
Agents need to be aware that they\u2019re not sitting on the sidelines during this time. Just because it\u2019s between the escrow and title company and the lender, the agent needs to be proactive in making sure people are moving this thing forward. If we\u2019re behind in closing, put a little fire under escrow and title to make these resolutions and keep communication open with the lender. Our job is to make sure people are moving things forward. We can\u2019t take a backseat and say, \u201cWell, not my problem. That\u2019s not my job.\u201d No, it is your job to make sure people are moving things forward. So, the agent really needs to make sure they\u2019re taking a proactive role in facilitating the funding, recording, closing, possession. Can\u2019t just assume it\u2019s lender and title escrow\u2019s job to get that done. The client is looking to you, the agent, really, to hold their hand through this process. So, we can\u2019t be passive in that process.<\/p>\n
Yeah, I mean, even something as simple as like you\u2019re on the funding date and the borrower\u2019s going to go to Ashley Home Furniture and get a furniture credit card, or they\u2019re going to go get a new\u2026 Whatever you\u2019re furnishing your house with. They\u2019re going to go open up a really large line of credit. In the event the lender hasn\u2019t fully underwritten yet and they haven\u2019t announced clear to close, that could mess you up. Our lender that we\u2019re getting your mortgage with could see your new line of credit and could ask, \u201cHey, what are you doing? What\u2019d you buy?\u201d And if you just went and bought 20 grand to furniture, that could kill your loan. So, if I was making sure to get ahead of that and the agent was knowledgeable and letting them know, \u201cHey, close first, then furniture, because if the furniture presents the house, where are you going to put it?\u201d<\/p>\n
But no one tells the clients about this. They don\u2019t realize that they weren\u2019t supposed to go buy a new car to put in their new garage or open a line of credit at a furnishing store.<\/p>\n
I was just going to say.<\/p>\n
Yeah, Lindsey\u2019s seen this before.<\/p>\n
Don\u2019t buy a Tesla for your new garage.<\/p>\n
We\u2019ve literally had it happen. Oh, my gosh.<\/p>\n
Yes, we have.<\/p>\n
Yep. Or even a HELOC on an existing home that you didn\u2019t have before is a new line of credit that affects your DTI.<\/p>\n
That\u2019s something going back to even the pre-approval stage, right? Hey, if the buyer gets excited and goes and opens a line of credit with Living Spaces or Target and makes a big order, it\u2019s going to kill the deal. So, we need to know how close the borrower is to potentially losing the deal. So, we can know that upfront and remind them throughout the transaction, \u201cDon\u2019t get excited. I know you want to buy the furniture, but just wait until closing to open any line of credits or have any hard inquiries on your report.\u201d<\/p>\n
Now we know communication is important, yet it frequently doesn\u2019t happen. So, Christian, can you just give a brief explanation of the system that we\u2019ve created so that loan officers, processors, real estate agents, pretty much everybody working on the transaction can be in the same location, communicating with each other easily and quickly?<\/p>\n
So, internally speaking, we have apps that allow us to never have to make phone calls internally. That means the loan officer never has to wait for an email or a phone call back from their processor, right? They\u2019re in voice channels all day. It\u2019s actually up on my side monitor here as we record this podcast. In terms of our real estate team communicating with our loan officer team, if you guys are in California, you work with the David Greene team as your realtor, and The One Brokerage is your lender. We have a daily meeting every day of the month. 10:30, whatever it is, Lindsey, whatever the time is, at 10:30 every morning we are on a 15 to 30 minute call breaking down every contract that we have in escrow. Breaking down updates, where they are in underwriting, where they are in closing, where they\u2019re on funding. All these five steps that we just went through, we talk about that without having to make a phone call every day.
On top of that, we\u2019ve built a process of seven touchpoints throughout the process of escrow, where the loan officer is required to make a phone call to the realtor. This is even if you\u2019re not on the DGT team. This is what we do with every single realtor that we work with. I can go through those seven real quick. Intro call, first point of contact, pre-approval call, in contract, underwriting conditions, appraisal back, funding and recording. Seven times where it is mandatory. No situation where we don\u2019t make those calls when each of those seven milestones passes in the loan process. That\u2019s mainly because that\u2019s when the negotiation possibilities are there. For instance, when the appraisal comes back, that\u2019s when the updates that, \u201cHey, you went and bought the wrong type of house,\u201d happens. That\u2019s in the event of a duplex instead of a multifamily that we talked about earlier. So, those have to be had, but that\u2019s the systems we have as The One Brokerage.<\/p>\n
And remember, if your loan officer and your agent are not communicating this way, the onus is on you, as the buyer, to put everyone together and then just make better choices on the next deal with who you have representing you.
All right, moving into closing. People might not normally think about this last phase, the fifth one, but what about after closing? Lindsey, is there anything investors can lean on their agents and their lenders for help with once they\u2019ve closed?<\/p>\n
Yeah, so once we\u2019re closed, I mean our communication is not done with the client, right? It\u2019s still continuing. I want to make sure if things gone smoothly with them moving in, if they\u2019re doing renovations and value adds, I\u2019m here to help them with references and vendors and resources. I love to see progress of the renovation. And also consult with the client, \u201cWhere are you going to get the best return? If you update this versus update this, where should your money be spent if you are going to improve the property?\u201d So working with them through that, keeping them up to speed about what their property is worth after closing is really important as well.
In Southern California we have great appreciation, and so it really helps the client to feel at ease with what they bought the property at if they find out six months later that they\u2019ve got 80 grand in equity, which is not uncommon here. So, there\u2019s that. And then, also just making sure that they\u2019re connecting with the lender if it makes sense for them to refinance. \u201cHave you saved enough money? Now we can get you that short-term rental. How do you want to scale your portfolio? Who can I introduce you to?\u201d They\u2019re part of our family once we close and communication doesn\u2019t end there.<\/p>\n
Christian, what about you? Post-closing what are some things that the loan officers should be communicating with the client about?<\/p>\n
Yeah, absolutely. I like to call it something kind of silly. I call it a save the date, but I call it a save the rate. So, on a buyer, I\u2019ll usually put a rate in their file. The buyers don\u2019t see it, but we do it in our CRM, where we\u2019ll put a rate where it makes sense for them to refinance. Whether that\u2019s saving 500 bucks a month, 1,000 a month, whatever the metric is that we\u2019re analyzing based on their purchase, we\u2019ll set a save the rate. And what we do is that we have a log of months and months and months, and years of clients that we\u2019ve done loans for that we have saved the rates for.
We track the market, just because of what we do, when the market unavoidably hits whatever that rate is again, we\u2019ll reach out and say, \u201cHey, we\u2019ve already done the math for you. We can shave off 500 bucks in your mortgage. Would that help you cash a little bit more on this house hack? Would that help you be a little more successful in this short-term rental? Would it just help you save money on your primary?\u201d Whatever they bought, obviously. But that\u2019s a big one, just helping the borrowers stay up to date with the state of the industry without them having to be on mortgagenewsdaily.com tracking rates, because nobody does that. Like you said, David, it\u2019s nerd stuff, right? Nobody does that in their day-to-day life.
And then, second of all, if they\u2019re working on a BRRRR, a loan is two steps of the BRRRR process. It\u2019s the buy and the refi, right? So, we need to follow up and make sure, \u201cHey, how did your renovation go? When are we good to order an appraisal on the new property that you\u2019ve renovated? And ultimately, when do you want to get this refinance open?\u201d Because typically, BRRRRs are done with hard money upfront. So, let\u2019s get you out of that. So, just follow up. Once again, communication. But making sure that they have the services and education that they need even after they close is equally as important to before they close.<\/p>\n
Because it\u2019s all about building a portfolio, not closing a deal.<\/p>\n
Correct.<\/p>\n
That\u2019s the idea here, right? So, if you\u2019re in this for the long haul, you want your agent to be reaching out and saying, \u201cHey, your house is worth X. What\u2019s the cashflow like on that? What headaches are you having? Do you think you might want to redeploy that capital into something that could perform better for you, or might see more appreciation?\u201d We talk a lot about the different ways people make money in real estate on our team. I\u2019m working on a book about that right now. And two of the big ways are buying equity and forcing equity. Could you sell this property that may be tapped out and buy into a market that could be growing in the future at a really good price, and then add value to it somehow?
And as far as your loan officer, you should be staying in touch with them. Rates could be dropping, new programs could be coming out. I can\u2019t tell you how many clients we\u2019ve had that assumed they could not buy a house because they didn\u2019t have 20% or 25% to put down, that assumed that their debt-to-income ratio wouldn\u2019t work for buying a house. And then we found DSCR products that were 30-year fixed-rate terms where they could go buy real estate. They just didn\u2019t know it because they had talked to the wrong lender. So, I think it\u2019s very important you stay in touch with your lender and your agent, communicate your goals for the portfolio you want to build and make them work to figure out how to help you. That\u2019s the most healthy relationship between the professionals that should be helping you build your portfolio and yourself. Works much better than when you go tell them, \u201cHey, this is what I think I need,\u201d when you don\u2019t know as much about the industry as they do, because they work in it every single day, at least they should be.
All right. Thank you guys for sharing such good information. As you\u2019ve seen, you got to be better and better and work harder and harder to make deals work in this environment. But I think the wins are even bigger for the clients when you do. Getting a property closed, rented, in your portfolio and being paid off over time is more important than ever because it\u2019s getting harder and harder to buy real estate, and that\u2019s the dirty truth that nobody wants to talk about. Lindsey, are there any last thoughts that you want to share before we let you get out of here?<\/p>\n
Yeah, I think if I can give advice to listeners out there, make sure the agent that you choose understands what you\u2019re trying to accomplish. I think that\u2019s a big piece of the puzzle here. When they come to us and David Greene Team SoCal, I have house hacked, I have long-term rentals, I have short-term rentals. You get to benefit from the mistakes that I\u2019ve made as an investor. And I look at this like a fellow investor, not just a realtor. So, you need to make sure whoever is helping you, that they get what you\u2019re trying to accomplish and that they have your best interests at heart. They\u2019re not chasing transactions and make sure that you feel like they really can guide you through this process, I think that\u2019s a huge determinant of your success here.<\/p>\n
Wonderful. And for people that want to reach out to you specifically to see what you could do to help them, guide them through their process, wherever they may be, what\u2019s the best way to get ahold of you?<\/p>\n
Yeah. So, they can reach me on Instagram. I\u2019m @LindseyIskierkaRealtor, or they can email me at socal@davidgreene, with an E, 24.com.<\/p>\n
Perfect. And if you can\u2019t find Lindsey\u2019s Instagram because of her last name, DM me and I\u2019ll get you connected. And you said the email was [email\u00a0protected]<\/a>?<\/p>\n
That\u2019s correct.<\/p>\n
Beautiful. Christian, what about you? Any wrap up thoughts that you want to share for advice that our listeners can benefit from when they\u2019re trying to scale their portfolio?<\/p>\n
Yeah, in the same way that Lindsey shared she\u2019s experienced the hiccups that come from being an investor, right? You can learn from her experience as a house hacker, as a short-term renter, as a long-term rental investor. We do David Greene\u2019s loans. And if I have not learned something from lending to you, I don\u2019t know what to tell everybody. If I can close a loan for David Greene, nobody is a challenge.<\/p>\n
That\u2019s funny. I\u2019m the diva of loans. I hate how high maintenance I am. But Christian has frequently said, \u201cIf it wasn\u2019t you, I would never take this on. I would never do this for anybody else.\u201d<\/p>\n
100%.<\/p>\n
Yeah. But thank you for that. And something, Christian, that you say that I think should be shared quite often is that you want a lender who\u2019s helping you achieve your goals, not just a one stop, \u201cHey, what\u2019s your rate? What can you do?\u201d You want someone who\u2019s like, \u201cHey, I\u2019ve got all of these products and all of these strategies and all of these resources that can help. You having a hard time finding cashflow? We have 160 other clients that have found properties that cashflow in different areas. I can put you in touch with somebody over there. Are you stuck getting something put in contract? We can help overcome that.\u201d You definitely want to find people on your team that care about your goals, that only make money when you win. And if they can help you win, they can make a life for themselves.
So, thank you two both for being here. Appreciate you coming on and sharing things, especially in this really tough market. Oh, Christian, where can people find out more about you?<\/p>\n
First and foremost, on BiggerPockets Mortgage Mondays on the YouTube channel. Every Monday we got a little 15-minute episode where David and I talk nerd. So, go check that out if you like the mortgage segment of this. Otherwise, on social media, I\u2019m @The_One_Broker, underscores in between. Or you can find us at theonebrokerage.com, which is our website where you could get in touch with us as well.<\/p>\n
Thanks both. Really glad we had you here. And if you like this type of content, a couple other BiggerPockets episodes for you to go check out. Look up BiggerPockets Podcast episode 805 for agents from two cash-flowing markets, or podcast 817 for two agents who really came through for their investor clients. We at BiggerPockets are here to help you grow in knowledge, build your portfolio and do it the right way. So, we really appreciate your views and your downloads. Thanks so much. If you don\u2019t mind, give us a comment on YouTube, tell us what you thought about the show. And leave us a review wherever you listen to your podcasts. This is David Greene for Lindsey and Christian, I\u2019ll see you on the next one.<\/p>\n