3.28.21
Ep. 115: You CAN Get That House
Join us to learn from Vice President of Mortgages David Pendley on how to navigate buying and selling a home during a hot, hot, hot market.
[transcript]
0:00:06.7 Lynne Jarman-Johnson: Money, I’m Home. Welcome in. I’m Lynne Jarman-Johnson with Consumers Credit Union, and today we have a very hot, hot, hot topic for you. It is one that everybody’s talking about, and it’s how to get a house in the hottest of market that we’ve been in. Who would’ve thought we would have this type of market during a pandemic? And I know somebody who is absolutely spot on with knowing this marketplace, and that is David Pendley, our senior vice president of mortgages with Consumers Credit Union. David, thanks so much for joining us today.
0:00:35.5 David Pendley: It’s great to be here, Lynne.
0:00:36.9 LJJ: Tell us a little bit about all of the background in this hot housing market. It’s been crazy. I just keep hearing of friends and family and people that I work with, that they’re trying to find a house and they just can’t find one.
0:00:52.8 DP: Yeah, it’s a perfect storm right now. You know, when you think of mortgage interest rates at below 3% or right at 3%, it’s like very cheap money. It’s also an exciting time for people who thought, “Oh, I’d like to sell my house, but I don’t know if it’s going to sell or not,” because literally everybody can probably do a reset right now, if they wanted to move up or move down or move out. So, if they put it on, the key is… If they put it on, it’s going to sell right away probably. The key is, “Where do I go?” So that’s the challenge right now. Will there be a house for me to purchase if mine sells? And there’s just a lack of inventory, not just in Michigan, but really all over the country. There’s a lack of inventory right now, and part of it is gridlock, because people do want to sell their house, they do want to move on, but they don’t have a place to go. So how do you bridge that? How do you find a place to go and how do you get your offer accepted and then turn around and sell your house and coordinate all that? That’s a big challenge.
0:01:51.9 LJJ: You mentioned where do I go? And I think that one of the questions that a home buyer might have is, it’s not the same game anymore. You know, it used to be, okay, you get a realtor. You go to open houses. You choose which house. You have a lot of time to think about it. There is just absolutely… You can’t even find a house that’s on a market that has an open house that doesn’t have five offers on it in five minutes.
0:02:18.2 DP: Yeah, we were at an open house a week ago Saturday, and there were 30 showings in the first 24 hours. And I said, “Why are you even having the open house?” And the realtor said, “We’re just going to take best and final at 6:00 p.m. tonight.” So literally within 48 hours, they’re going to have multiple, multiple offers, clearly over the list price, and it’s a question of how well do you know the market? Do you really want to jump into that? And are you able to move and execute very quickly? Because you’re going to need to.
0:02:45.2 LJJ: So, you are the coordinator and the leader for our award-winning mortgage team, and we have mortgage loan officers. Tell us a little bit about your background, David, and how you’re helping our own internal teams to help our members get those houses.
0:03:02.6 DP: I’ve done this since 1985, and I’ve been a mortgage loan officer. I’ve done thousands of mortgages for customers and members. And my philosophy has always been to try to have a comprehensive knowledge of the real estate industry. Not just financing, but also the transaction itself. To understand from the realtor’s perspective of how to get these offers accepted and so forth. So what I always tell my loan officers or instruct ’em and coach ’em up is to get on their side of the desk, to really understand how the realtor thinks, and how they’re going to need to present the best viable offer to get it accepted.
0:03:39.6 DP: So right now, I’m sending out instructional videos as well as, as much information as possible to get our loan officers to look up, to really understand the landscape of our current economic times and our current industry, and how to be the advocate for our member to get their offers accepted. And there’s a lot of different strategies to do that. I think when I’m working with real estate agents, they come in all different shapes and sizes, and all different levels of experience. So, I like to help coach the realtors as much as possible and help be an advocate for them. But one of the questions I have or one of the training of pre-approval for a member to hopefully get their offer accepted is, I’ll ask the realtor, “Will you find out what the seller really wants?” Because sometimes it’s not best price, sometimes it’s… I need assurance that they’re going to be closing on the said date.
0:04:38.5 DP: You know, I don’t want a speculative deal that could mean I could finance it. I need the assurances. Maybe a cash offer gets accepted, where a mortgage with 5% down doesn’t. Maybe the sellers want to stay in the house 30-60 days after closing to give them time to find a house. Maybe that’s your strategic advantage when you make an offer that, “Hey, we can move two months after closing. We’ll do what they call a rent back.” We’ll rent the house back to the sellers, to give them time, and that kind of meets the demand of the market. Maybe it’s price. Maybe they are looking, and they need maybe the highest price. So maybe you do an escalation clause that says, “The house is selling for $250,000. We’re willing to go up to $270,000.” It’d be $5,000 on the highest offer, up to $270,000. So, it’s really trying to find out what the sellers are looking to do, as you’re trying to fit your piece of the puzzle into what their puzzle piece is.
0:05:39.0 LJJ: You know, you bring up a good point. I had never thought about the concept of saying, “Here’s the price, but we’ll go up to this.” That’s very interesting. What happens though, when the appraiser gets involved? Because I remember selling our house, and you know you’re on pins and needles until the appraisal comes in. [chuckle]
0:05:58.1 DP: Well, there’s two major thresholds. One is the home inspection. So, they’ll do a home inspection and that’s not related to financing, but if you’re just trying to find out, is this house quality? Am I going to need a new roof in the first year? How’s my furnace? Things like that. So, that’s one thing. And you can wave your home inspection contingency. As a seller… your seller may say, “I know my house needs work. I don’t want you to beat me up on a home inspection.” So, you’re going, “I know, I understand that, too. I’m willing to waive that, but I’d still like to do the home inspection just so I have knowledge, but it won’t be contingent upon me buying this house. I’m buying it no matter what.”
0:06:32.6 DP: The second thing is the appraisal. That’s for the lender’s benefit and your benefit, so if the house is selling, once again, for $250,000, a good real estate agent who understands the market is going to educate their buyer and they say, “Okay, you’ve just offered $15,000 over list. So, it’s $250,000, you’ve offered $265,000. Great, good news, we got the house.” You need to be prepared that it may not appraise out at $265,000, and you need to also tell the seller that you’re going to have an escalation clause, that regardless of the appraisal, they will be at the closing, no matter what it appraises for, or if it appraise for at least $250,000, your asking price. So you can kind of set that, because the sellers and the realtors know if it goes too much over asking, it’s not going to appraise out, but it’s still a viable deal, because the buyer says, “I don’t care. I still want that house. It has the perfect kitchen, the perfect school system, the perfect yard, the perfect layout, what we’ve been looking for. We’re willing to pay even more.”
0:07:34.9 LJJ: When you look at all of these options that the buyer has, how important is it that the buyer understands that they can ask those questions, too, of their MLO or of their realtor, and to understand that it’s just as important that they understand the real estate landscape as it is that their professional team does?
0:07:57.4 DP: You said a key word, and it’s team. When I’m coaching young buyers or all buyers, I always say, build a great team, and that team would be a great loan officer, somebody who really understands what your objective is financially. The other thing is, build a great team with a great realtor, somebody you trust, who you feel has your best interest at heart and possibly an attorney or even an accountant. But either way, that’s your team when you go into this, and maybe somebody who’s been down this process three, four, five, six times and maybe you just consult them along the way. But if you’ve got two to three trusted advisors through this, you can kind of pool their collective wisdom as you navigate this very, very intense time right now.
0:08:45.1 LJJ: Well, it sounds to me like that is the key, making sure that you have people around you that can A, get you even in the door, right? And know exactly what you want as the homeowner, and then also what the seller wants, too, and so then there’s that perfect match.
0:09:01.3 DP: Yeah, exactly. And more than ever really, I would say, don’t get caught up in the frenetic pace of this market. I just read an article about a young woman in San Diego, she was like, “Yay, I got my house. I got it. I won it.” Kind of like she won something. Six months later, she realized, “This isn’t even the house I wanted, but I just needed to get a house.”
0:09:21.4 LJJ: I read that same article and it’s buyer’s remorse. You feel like you have to do it, and then you feel, “Awh, what did I do?”
0:09:28.9 DP: Right. So really identify exactly what you want. “I want a three bedroom, two bath and I’d like it to be in this quadrant of whatever, Grand Rapids, Kalamazoo or whatever, and this is what I’m looking for, and it needs to be under X amount of dollars. And I’m just going to hold out, be patient.” You know, cause the market will normalize at some point. And so that’s the part of just having a collective team to help you, hold you accountable to some of your objectives so you don’t get caught up in something that gets ahead of you.
[music]
0:09:58.0 LJJ: Well, David, thank you so much for your time and your expertise. It is so valued, especially right now in this hot, hot, hot marketplace. We’re going to be having a three-part series, and today was to talk about that hot marketplace. We’re going to also focus on building a great team, as David just said, and then getting your offer accepted. So please tune in the next three weeks. And if you have a topic you’d like, just send them our way. Money, I’m Home. I’m Lynne Jarman-Johnson with Consumers Credit Union. Thank you, Jake Esselink for your production skills. Everybody have a wonderful, safe week.