It’s more important than ever in a hot real estate market to choose the right lender for your home purchase or sale. Most buyers select a lender based on their advertised interest rate, but did you know that lender may not be able to get the property closed on time or worse yet, not at all?
A savvy real estate professional will tell a buyer to get pre-approved for a loan BEFORE shopping for a property. I typically recommend one or two lenders that have a good reputation and track record for getting their loans closed. It is important to listen to this advice and interview these resources. I have a short list of lenders that I refer based on the needs of my client. Different lenders specialize in different types of loans. As with any professional, each has their own expertise and has built a team around them for success.
To get on my lender list, each lender has to have a completely open and honest work ethic, not sell my client a loan based on what the lender is going to earn from the recommendation, but rather recommend the loan product that best meets my clients needs. They also have to have competitive fees and rates. Then, I insist on in-house loan processing and underwriting. My clients speak to the same team members throughout the process and get good communication. If a problem of any sort pops up, it can most easily be resolved if these staff people work alongside each other in-house. No voice mail hell. Finally, to get on my list, the lender has to have a panel of pre-screened appraisers with years of experience in the geographical area where my client is purchasing. The lender can’t speak to the appraiser, and the lender doesn’t know who on the list will pick up the assignment, but there is no question of competency or whether or not the appraiser will turn in the appraisal in time to close a property by the closing date.
Many lenders (not mine) use another type of appraisal process by ordering their appraisals through an appraisal management company. These lenders electronically submit an order to an appraisal management company, a profit center for the big banks that own them, and the company then puts the appraisal assignment and the amount they are willing to pay for the work out “for bid”. The lowest bidder typically picks up the job and he or she may not even be familiar with the area. Even if the buyer pays a higher fee to expedite the appraisal, sometimes the appraisal management company doesn’t pass the additional money collected to incentivize the appraiser to pick up the order. The order can sit unfilled for weeks because appraisers are in short supply right now and the fee offered by the AMC isn’t worth the appraiser’s time. When this happens, a delay can cause the buyer to lose a property.
So now you can see, there are BIG differences between lenders. When making your decision, you will want to consider rate, but more importantly, service, communication and the appraisal process. Does this lender use a panel of experienced, local appraisers or does this lender turn in an appraisal order to an appraisal management company? The results can vary widely.
For the very best success, I recommend a strong, local lender, with the attributes previously described. Typically, this a mortgage broker who has a variety of loan programs, including portfolio programs, conventional conforming and non-conforming jumbo loans. The mortgage broker interviews the buyer, pulls credit, verifies assets and employment based on an electronic loan application and then issues a letter stating the buyer’s creditworthiness. We use this letter showing the buyer’s financial strength when we make an offer on a home. In a competitive real estate market, this letter and the lender’s reputation can make the difference when a seller is considering offers. As a listing agent, I always contact a potential buyer’s lender as part of the evaluation of offers to inquire about the lender’s loan processing, underwriting and appraisal process.
A strong, local lender is far superior to the bureaucracy and lack of service one generally gets from one of the big banks. Unless the buyer has a special relationship in their Private Client department, the process can be painfully slow and that reputation follows them among the real estate community. Remember these banks own the appraisal management companies. The big banks have a reputation for poor communication and taking much longer than a traditional mortgage company. They also often have processing and underwriting in a different city altogether. For me, they are not a good option for my clients especially if we are competing with multiple offers.
Some buyers want to use a credit union for their loan. Credit unions are member driven and their rates and service are generally good. However, they have a fiduciary to their members and don’t take risks on unique properties. Because of this, I find their appraisers are much more conservative. If a property doesn’t appraise for the sales price in the contract, the buyer may not be able or willing to put more money down to get the loan to value ratio required by the credit union. Sellers should keep this in mind when reviewing an offer from a buyer who is using a credit union for financing.
Technology has touched many facets of the real estate industry and many of those changes are good. Buyers can see lots of properties quickly, sign documents remotely and save a lot of time. Sellers can get world wide viewings of their home and review a comparison of offers from anywhere. The internet lender however, leaves much to be desired and would be my last choice if presented with multiple offers. As a real estate professional, I need to interact with the lender frequently to meet deadlines in the contract both on the buying and selling side. Communication is difficult and who knows how the appraisal process will go. So, just say no to the internet lender.
The first step to finding the right lender is to find the right real estate professional who has years of experience in selecting the right resources for your individual needs. Real estate is local and so is lending. Choose right for the win.
Laura Duggan, Broker/Owner, West Austin Properties, 3312 River Road, Austin, TX 78703, laura@westaustin.com, 512-750-2425.
The Austin job market is expanding at a level that exceeds the availability of housing. While more homes sold in the first three months of this year compared to any prior year, the number of homes on the market is at record lows. This is occurring for several reasons.
Business relocations, combined with job expansion of current business and the attractiveness of the Austin business and social climate continues to bring more people to Austin. The Wall Street Journal claims Austin is the second fastest “boomtown” in the US, only behind Salt Lake City.
The Milken Institute rated Austin the Third Best Preforming city on metrics including jobs, wages, salaries and technology output , just behind Provo, Utah and Palm Bay, Florida.
Site Selection Magazine in March identified the cities with the most corporate expansion and Austin came in sixth in the nation for total active expansion with 84. And Austin came in second with 43 projects per capita.
Over 130 people are moving into the Austin area every day. Over half are relocating from Texas because of the strong job market. There is strong migration from California, Florida, New York and Illinois.
While the number of homes for sale continues to grow, this growth is not able to compete with the influx of new people. The result is houses listed for sale are sold quickly, having received multiple offers and with most homes selling for over list. This causes home prices to increase.
Austin is now one of the fastest-growing cities in the United States. In the last 20 years, the city of Austin has seen a population increase of 48%, from 675 ,000 in 2000 to over 1 million today. Oracle Corporation and Tesla have both just moved their headquarters from California to Austin. Other companies like Microsoft, Amazon, Indeed are expanding their presence. According to the Austin Chamber of Commerce business relocations this year are expected to create nearly 10,000 jobs. The result is increasing demand. At a time when some home owners are hesitate to move because of the Covid19 Virus, demand for existing homes listed for sale are intensifying. The result is prices are rising. For a most up too date on the Austin market by Zip Code and Price Range, click on the Market Report link at the top of this page.
In the Spring of 2020, the coronavirus and the federal, state and Austin restrictions on public activity had a major short term impact on the Austin real estate market. The governmental restrictions were most severe in late February, March and part of April. In mid April restrictions began to be relaxed.
Initially , the number of homes sold dropped significantly, down as much as 24% from the February totals.
As the real estate market began opening up, the pent-up demand can be seen in the number of home sales that are Pending, under contract but not closed. Pendings in the first of June are at the highest level in Austin history and 15% higher than June of one year ago. Demand for homes remains very strong as people continue to relocate to Austin. Several companies have made deep commitments to Austin and they are not backing off.
Sellers concerned about the uncertainty of the coronavirus impact and the desire to restrict outsiders into one’s home have significantly decreased the number of homes for sale. The number of homes on the market today is down 27% from one year ago.
Prices overall have remained steady during this time and we are again seeing prices increasing because of the high demand and low inventory. For homes priced below $600,000, it remains an Extreme Seller’s Market. For homes over $2M, it remains an Extreme Buyer’s Market. Every zip code and price range is different. See the June Market Report at the Tab listed above for the complete analysis of this market. Experience in the Austin real estate market is critical in the rapidly changing landscape.
More homes sold in February than any other February in Austin history. 2,263 homes sold last month. This is a 13% increase from one year ago.
Pending home sales, homes under contract that have not closed, are up significantly from one year ago. Currently there are 4,715 homes under contract. This is an increase of 19% from one year ago. This is a record number of Pendings for any March.
There are 20% fewer homes for sale than one year ago. Today there are 5,080 homes for sale.
Because of he high demand and the lower homes for sale, there are only 2.24 Months of Inventory making Austin average an “Extreme Sellers Market.” Each Price Range, Zip Code and residential area is different.
The average sale price last month was $402,271, an increase of 10.3% from one year ago.
The Median sold price last month was $325,000, an increase of 10.2% from last year.
Last month, homes that sold had been on the market for 61 days. This is a decrease in the number of days by 9% from one year ago.
Click on Market Reports Tab above to view the full report.
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