Costco or 7-Eleven? Can closing fast cost you money?

Many of the homes that are being financed for purchase today are either short sales or they are foreclosures. On the Short Sales in particular you may wait up to six months to get the approval to sell the property as the offer was submitted.  The approval can initially be a verbal approval with the executed contract to follow.

The Good News: You are in contract to buy the home that you wanted.

The Bad News: You have thirty days to close from the initial acceptance and your Loan officer will not get the contract for up to a week. This will give you 20-25 Calender days to close.

The Choice: Due to the limited time that you have been given to meet the contractual terms of the agreement you have been placed in a position to have to choose whether or not this home is worth the Price.

After six months of negotiating an accepted short sale contract and waiting patiently as a buyer to hear the news you now have to decide immediately.

Point to Ponder: If you are in a hurry and you need milk fast do you:

A. Go to Costco

B. Go to 7-Eleven

Second Point to Ponder: Which one of the two costs more for the convenience?

A. Costco

B. 7-Eleven

If you answered 7-Eleven both times you are correct. As a consumer trying to meet the contractual obligation of the short sale terms you have been forced to go to a store that is fast and efficient rather than the store that you may get twice the amount for your dollar. Costco on Saturday Morning is not the fastest place on the planet to get in and out of. You may have to wait in line. Of course we are happy to do so because of the bang for our buck.

Going to 7-Eleven costs you more but because you are eager to get in the home and meet the contract you have chosen to sacrifice your overall well being to meet the standards of the same person that took six months to make a decision. You may be saying about now: Is this fair? My answer is simple Absolutely Not! The worst part is even if 7-Eleven is not fast enough they have the nerve to charge you for making them wait.

In conclusion, I certainly know that not all is fair in love and war. I also now that as a consumer we have the right to choose whether or not we want to accept the terms of the contract. However, it is the same Costco approving the short sale that is saying 20 days should be sufficient to close this escrow so I just don’t care.

Can you get in and out of Costco on Saturday in 30 minutes or less including parking, shopping, purchasing and exiting the lot?

*7-eleven costs more most of the time. This is not always the case. Wholesalers hedge markets. When they do so they may be competitive for the moment but then they are subject to creating Costco like lines. Managing their offered rates help to control the lines. Therefore to keep turn times down rates may increase to decrease the traffic and vice versa.

Perfectly Packaged Presentation, It’s the Difference!

How many times have you chosen to to buy something based on the way that it was presented? How many times have you turned away from buying something because it was disgusting looking?

Bear with me for a moment: You have just went out to your favorite restaurant and had the meal of your life. There is a little left over so you get a to go box. You bring home the meal and what do you put it into:

a) Tightly sealed ziploc container

b) Plastic wrap

Yes, that is correct you generally will put it into the tightly sealed ziploc container. The reason that would do this is simple. We want to do the very best to preserve the integrity of the food so that we may eat it another day.

One more quick example: Imagine that you are shipping an ancient vase to your relative across the country. Are you going to

a) throw it in a box

b) Tightly wrap in bubble wrap and put it in a box with styrofoam peanuts to protect it.

protect your assets

You may be beginning to wonder what any of this has to do with loans. The answer may not come as a surprise either. Perfectly Packaged Presentation, It’s the Difference between whether or not your loan will be Approved.

The biggest item that separates one Loan Officer from the next is their ability to package a loan. A loan that is packaged and presented well can fly right through the system. It will make the experience seem seamless.  I qoute from a previous customer “I’m still amazed how easy the whole process was.” This qoute had very little to do with me and a ton to do with the customer being so well prepared.  It was also because all of the legwork was done up front. This customer currently owned a home with little to no equity and was buying a new home. Anyone that is in the industry will tell you that this is more difficult than it sounds. It came down to the “Motivation” of a client to buy a new home. In this case there was recently a new job acquired and both were commuting. The location of the new home was closer to the new job. We prepared a letter explaining this in full detail so that when the underwirter received the file there was little left to explain. There were a few other caveats to this file but as the customer said, “it was rather easy.”

Underwirting - When you are preparing a package to go to the wholesaler to be underwritten it is simply not enough to throw the basics of the file together and hope to send the rest after the approval. Loan Officers rush and are rushed to get to certain stages of a transaction and will often times submit a package before it is ready. This is disastrous. The result is an underwriter that will have to look at the file more than once. Taking an underwriter out of rhythm and given them less than your best will lead to a denial.

Send a complete package

Let’s put this into perspective and ask ourselves the following questions: 1) Can I or should I make a life changing decision without all the facts? 2)When given only part of a story and it smells like fish am I likely to say yes? 3) If I open up a package and everything falls to the floor and it is not in a clear concise order am I likely to be excited to proceed with the rest of the file? 4) If I was asked out on a date and my date arrived to the house with a stained white shirt with holes, pants no belt and two different shoes would I be excited to go to dinner?

All of these questions are designed to encourage you to say no. The same thing that an Underwirter is going to do when they look at a file that is incomplete.

Underwriters are human and they are in the job because they like to help homeowners obtain financing. Beleive it or not they are simply there to take the package that we deliver with an approval and verify the supporting documentation has been provided. When a file is in doubt or may contain a few nuances it is the job of the Loan Officer to tell the story as to why this file should be a go. Give them all the detail of the file in a clear concise manner. Tell a story that makes the Underwriter sympathetic or even empathetic to the situation. They do want to approve files.

Loan Officers are separated by this ability to package and present. You can make a name for your self that is of high quality or of poor quality. We all have equal access to the money you desire to buy a home. However, it is in the relationships and more importantly in the packaging of the loan that makes your experience. I have closed several loans that were declined elsewhere over the years. Many times I was asked what was my trick. The trick is in the packaging. The trick is in the Presentation. It’s the difference between the approval and the denial.

The Pain of Discipline or the Pain of Regret

We are taking a moment today to step outside of the normal content of this blog to discuss something that we think is very relevant to your mortgage needs.

The pain of discipline or the pain of regret is a choice that we face every day. We are giving the choice to get out of bed or to hit the snooze button. Hitting the snooze button can make us late to one of our many obligations. Our lives today are filled with obligations that we Must attend. We are constantly running from one event to another and we are barely taking the time to be present in the moment. The day is over now and we hear that alarm again: Do we give into the pain of discipline or the pain of regret?

Just stop for a second and think of all the things that we as human beings like to do. Working out (OK that is an opinion), networking, blogging, working, eating, vacationing, attending Church, reading or watching TV. Each and every one of those items asks the question of pain or regret just before we engage. Example: Yesterday I opened the freezer and for the first time in a long time there were Dibs in there. I looked at them and I thought to myself do I really want to eat those? I did and initially there was no regret but when I stepped on the scale to maintain my health I felt the regret of indulgence.

Many of us are simply living life to fast! Many times we are not focused and the lack of focus has us off in so many directions we do not know which way is up. We must focus on what will bring us balance, joy, harmony and happiness in our life. To do so we must do the following which is the very hardest thing to do. We must say “no” to the good things so that we may say “yes”  to the best things! This practice will lead us to regretfully tell some of our friends no I am sorry we cannot, cut out the dinner splurge at Round Table Pizza and cook as a family etc. In Business, this can be very hard to do because we are always looking to develop relationships. We commit to a million different events and in the end we cannot be present for them all.

The term that I heard from Jim Burns (Author) that best summarizes everything above is that many of us are in “Crisis mode living.” The Economy is in shambles, job loss, divorce, sickness, retirements being lost overnight, banks dropping like flies, and of course the Real Estate Market is facing some challenges. People are switching to survival mode and when that happens we tend to speed up and lose focus. The loss of focus leads to experiencing the pain of regret more frequently as we are unable to remain disciplined.  “Crisis Mode Living” simply wipes us out.

Wiped Out

So how does all of this relate in the least bit to Real Estate. We have right now one of the greatest opportunties to buy or invest in Real Estate. See a great article written by Kevin Nakano of Nakano Real Estate http://www.nakanorealty.com/articles/realestate/great-time-to-invest-in-real-estate.htm. We  have the chance to get in while the market prices are low as well as the rates. The perfect storm if you will. In order to take advantage of that we have to step out of the “Crisis Mode Living” economy and focus on what the “Best” choices for our families are. Do not listen to all the others that are telling you to wait because interest rates and prices will continue to fall. If they are not in the industry and they are offering advice to you be aware of the source. Don’t get me wrong it may not be the time for you to buy. You may need to work on some things to be in the appropriate position to do so. That is why it is so important to ask yourself the following:

Will this decision lead to “The pain of discipline or the pain of regret?” What can you do without and how can you go deeper with what you do need in your life. Whether you are a business owner, a homemaker, a first time home buyer, a move up buyer, investor or simply someone looking to grow yourself it is important to know that discipline can be painful. It can hurt to do things or not to do things. The question is: What hurts worse Discipline or Regret?