Layoffs = Opportunity

As we have talked about here recently, those lenders heavy into refinances would begin shedding jobs. It has already begun as hundreds of employees have begun the process of finding new homes. I expect this is the first wave of this new wave of downsizing, and expect more to follow from almost every area of the industry tied to large refinance volume.

So where is the opportunity here? Well, for anyone needing a skilled assistant, there are likely going to be dozens of well qualified loan processors, underwriters, and loan originators left to find a new team to join. So why don’t we all just take a look at our current team and see where we might benefit from some new help?

Besides the obvious of moving these people into jobs they already held, it is also an option to have these new people train for new positions like opening, closing, disclosing, clearing conditions, and become assistants of all sizes and areas. Maybe even cross train someone to be skilled in a few areas if you don’t have enough current business to hire multiple people, but have multiple tasks that would benefit from an experienced mortgage professional?

The same holds true for loan originators who have the ability to generate more business than they currently are producing if they only had more time to prospect. Now is a great time to look at this market and find a first class production assistant! Someone experienced in refinances can easily help manage purchase transactions. Many experienced people have a wealth of knowledge that would be helpful in tracking conditions, managing disclosures, reviewing documents, updating clients and referral partners, any number of tasks that could come off your plate to free up valuable new prospecting time!

Take a look at your business and look into the future. If you have been making the transition into higher percentages of purchase business and can see how by having more opportunities to be out networking and prospecting, this may be your chance to grow. Many large refinance based originators did some purchase business. As they get out of the business because they can’t survive on just those few loans, you have the ability to secure new referral partners and new purchase opportunities.

But you can’t wait. You have to look at your business and see exactly what you can take off your plate and have someone else do for you. Don’t hire anyone until you know exactly what they are going to do for you, and what you are going to do to generate new business with the newly found time.

If you are currently not doing more than eight to ten purchase loans a month; than  this isn’t the right time to take on new people, but if you have a number of good solid purchase minded referral partners and you are closing this type of volume, you just might benefit by making a move. If you have a small company looking to expand your capacity, then now might be the time to hire. Also, if you have a number of quality originators and they all have the need for a little help, you might want to think about bringing in someone they can share, or that you can have support them.

The move to a higher ratio of purchase business to refinance business is in process. Unfortunately, this will cause some people to be displaced. These are often really good people with exceptional skill sets just in need of the right home with a good system of finding purchase opportunities. Do not allow this talent pool to pass you by. Take advantage of the opportunity by looking at your business and making a choice that you would be better off with one or more of these skilled professionals joining your team.

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“Real Time Real Estate”

One of the common complaints in the market over the past few months has been the lack of housing inventory. In my 30+ years involved in the real estate industry, I can’t remember a time when we went from an excess supply of available inventory, a “buyers’ market”, to the current state of quick sales, multiple bids, and offers higher than asking price, “sellers’ market” in such a short time frame. It seems while many Realtors® have increased their efforts to help generate the supply of new listings, it appears that it hasn’t been enough to prevent the speed at which these homes are being bought.

While much of this can be explained by the large number of investors buying homes for cash, it doesn’t seem to help those who are looking for that dream home and are making offer after offer but not succeeding at winning a bid. We need to look at this market and compare it to other areas in search of some solutions to help those who are getting discouraged. Recently the struggle to find that dream home got more frustrating by the sudden rise in mortgage rates, raising the total cost of that home that they have yet to secure.

For the purposes of explanation I have taken a page out of the modern retail supply chain. Years ago a retail store was almost equal parts “showroom” and “storeroom”. Merchants ordered in bulk to reduce the per-unit cost and keep a large inventory on hand. In many places today we find a completely different model. Much more floor space dedicated to the sales area, with very little inventory on hand. With the changes in technology today, merchants have automated their systems to keep a very well documented, but limited quantity inventory on hand, and by use of computerized check out systems, now make orders to their suppliers as quickly as each unit leaves the store. The modern supply chain can track and deliver goods in what we call “real time”.

Well let’s look at the current real estate market. Houses are listed for sale and instead of being on the market for months they are being sold in days or weeks. Properly priced homes are often the recipients of multiple offers. In fact, some homes are being placed on the market at below value prices to encourage multiple offers which can often drive up the price and generate a higher sales price in the long run.

So how do we help our clients compete in this new “real time real estate market”? Well, we have to educate them and prepare them that the days of having your Realtor® show you twenty homes on a weekend and then thinking about which one or two you want to see again the following week before presenting a low “starting” offer will only find that would be buyer seeing that house sold before that offer was ever presented; and likely for more money than their first offer.

We must prepare our buyers for the current market. They must do everything they can to be as solid a buyer as they can be, as well as doing the best they can to be ready to make the deal when they find the home they want. Mortgage professionals need to do a great job explaining loan options and costs. The buyer needs to know exactly what they can do, and how they can work within the system to make their best offer when they are sure they have the right home.

Realtors® need to be sure they have understood what these buyers are looking for and have all the information available for that buyer so that they can be sure they have the tools to make a winning offer.

Buyers need to be clear with their thoughts as to what they really want and what they are willing to concede so that their Realtor® really knows what they are looking for. Buyers also have to deliver all needed documentation to their mortgage professional so that they can get them approved to move forward and with any number of possible options.

It is still a great time to buy a home. Yes, mortgage rates are higher than they once were, but still far below where they have been since the beginning of the last housing boom cycle. Yes, property values have gone up since the “bottom” of the market. While not at the lowest point, housing prices are far from their all-time highs in most markets.

Mortgage professionals and Realtors® really need to work together as a team to help today’s buyer avoid frustration buying a home. As inventories remain a challenge, total transactions are on the rise so inventory is finding the market, the advantage remains today with the seller so a well prepared buyer has a distinct advantage of those buyers who are uniformed. While today’s market isn’t easy, it is still certainly worth the effort to land a home you will be happy in for years to come.

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Abundant Opportunities

So interest rates have bounced back pretty hard. We have seen the 30 year fixed rate loan average across the country rise from 3.25% with no fees to over 4.75% with no fees. While each market may vary a little, that is quite a move in just a couple of months. Last Friday was likely the most volatile day many of us have ever been part of.

So what are we to do with these events and how do we find the opportunities that present themselves? Clearly we have to be looking. There are significant opportunities for loans, relationships, and recruiting. Here are a few simple thoughts worth considering.

Loans: The rapid move in rates may have left some people with loans unlocked and unprepared about what their options are in this new market. Some don’t know rates have gone up, while others think they are protected and will only find out the bad news near or at closing! We need to continue sharing information with our people and our referral partners to be sure everyone is aware of their options. We must also present options for those in need as to what is now actually possible. Remember, many advertised rates are sent out well in advance of actual market conditions. We can’t blame a lender for sending an ad in to be published on a Wednesday for a Sunday piece and for those rates to be significantly “out of the market” by the time the ad hits the streets. However, we must also challenge those who don’t do their homework, or are quoting rates we know to be outside the arena of plausible.

Many people closing in July will face these challenges. Some you may be in a position to help, others you may not. The important thing is to be on top of the reality of the market. No opinions needed about where rates are going, just the facts about where we are and what the options are. Certainly much more talk about ARMs the last couple of days than I have seen in a while!

Relationships: Credibility and integrity are in play here. True professionals always return phone calls in a timely manner, share bad news as quickly as possible, and provide the best possible options in the worst case scenario. Those that don’t will be casting aside some pretty important relationships. Those relationships become available to those professionals that step up to the plate and do the right thing. A few of my clients have already established new relationships and received new referrals from those that found themselves abandoned. While some where hiding, these people were out on the street providing information and options to those in need of real help. I guarantee you that these new relationships will become very valuable. Realtors® that have watched deals blow-up at or near closing because of bad or false information are likely to share that story quite a bit. I also know that those Realtors® that had someone standing beside them sharing information, and protecting these transactions will also be sharing their stories.

Recruiting: Need a production partner, assistant, processor, underwriter, or closer? How many people who have been working in primarily refinance shops will now become available because their loan volume is fading? Many very qualified people will be in search of those who need help and have positioned themselves in front of the still active purchase market? While total mortgage applications are falling in number, in many parts of the country purchase applications are growing! Now would be a great time to locate and hire the skilled people you need to support your business as you grow your market share!

Challenging times often produce significantly more meaningful change than good times do. Those that succeed under stressed systems and markets are often those innovators that make great advancements by becoming better and faster than their competition. A rising rate market with extreme volatility could certainly qualify as a challenging market. It is what you do during the challenging times that either elevates or defeats you. If you have lived by the basic rules I have shared these many years of 100% of the truth 100% of the time, and if you are not 100% sure about something, go get help! Then you are likely to have followed these words and made great effort to be in front of this market sharing solutions as opposed to behind this market making excuses. There are an abundance of opportunities in the market for growth. New loan opportunities, new relationships, and the ability to find some very skilled mortgage people looking for work coming out of the refinance area. You need to be aware of theis and establish a plan to maximize these opportunities for you and your company!

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Reflect A Moment

Today it is important that we take a moment to reflect on ourselves and the part we play living in this great country. We have two distinct areas of reflection. One is certainly the 237th anniversary of the signing of the Declaration of Independence. The other is the 150th anniversary of the battle at Gettysburg. As citizens of this great country, we are obligated to remember that the Fourth of July is not just a day to BBQ. It should be a day of important reflection.

237 years ago a small group of men and women made a painful choice that freedom and liberty were worth more than comfort and security. That certain thoughts, dreams, principles, and ideas about how a free people could come together and enjoy the fruits of their own accomplishments as well as share an obligation to each other for the guarantee of what would become our basic human rights. While the signing of this declaration was just the first step in this great experiment called “America”, it began something bigger than any group of people had ever attempted.

I think it important to share that I read those words at least once a year to remember what the framework was for our very existence. It doesn’t take long to read, but you could spend a lifetime thinking of all the ramifications. I also take the time to review the very “Articles of Confederation” that began our process and what finally lead to our Constitution. It appalls me when people I know and meet have never taken the time to read these documents. I cringe when people who have grown up in this country have no idea what the holiday is all about, or have never bothered to read the very words that supply them with the very freedom and liberty not to have read them!

We also need to acknowledge that this particular year is the 150th anniversary of the Battle at Gettysburg. For three days America battled against itself in and around a small town in Pennsylvania. While not the end of the war by any means, it was the beginning of the end and presented an opportunity for Abraham Lincoln to put into a few very choice words, the reality of the struggle.

On this day, we should honor all that came before us and presented us with this great nation. We need to read and understand the fundamentals that Jefferson, Madison, Adams, and the rest of those great Americans who began this great experiment. Honor them by reading their words and take the time to think about what they mean. Go back and read the Gettysburg Address and feel the pain and struggle that Lincoln felt, and see the greatness he saw in this concept of freedom and liberty. As Americans we can differ in our opinions and how we think we should implement the hopes and dreams of those that provided us with such great opportunity. But as Americans we should also take a moment to remember where we came from and how we got here. We are 237 years into this experiment, and 150 years from a great battle during our own civil war fought with strong convictions on both sides. We need to remember on how we have arrived here or be denied the possibility of achieving all that we are capable.

Happy Birthday America!

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