In today’s market, banks that once touted their relationship banking services are experiencing quite the test. What was once a friendly phone call and a quick approval is now slowing down and subject to the same tightened underwriting stance that most of us experience. This has many high net worth customers and business owners not too happy and phones are blowing up. Sure, everyone knows that the bank needs to be careful, but private banking executives are worried that this might push their big fish clients to go swim in another pond. A fantastic opportunity for some smaller local banks to get a big catch…I have already heard of some making a switch.

Private banking relationships have always been around. It is a service that most normal banking clients do not pay attention to or qualify for due to their deposit levels. It is a more personal service level with a nice dressing of courtesies. Often the bank will make creative exceptions based on the strength of their deposits and overall portfolio held with their bank. A much needed and valued service for those who happen to be apart of it – but those clients need more than ever to keep things in perspective during this challenging economy. The slow down or tightening is nothing personal and your Private Banker should be conveying that. Be patient and things will improve and lending will start moving again. Additionally the bank should be communicating regularly to reinforce that input and that in deed you are valued.

As for the rest of us, it might just be nice to get a phone call from our bank wishing us happy birthday, right?

By now, the grand total of phone calls I have received over the past 48 hours is six…and still counting. Six people have contacted me and in the first 5 minutes of the conversation, we ended up discussing the bailout issue that our Government is trying to figure out.

What is my opinion? It really does not matter what I think…but I agree it has to be done. I watched the presidential debate on Friday night and that was a hot topic. Although nothing of what either candidate said that night really “sold” me on it. I guess I just realize that our economy is locked up and this is the best option to get things going again. It is what it is. If we do not pass it…the ripple effect would trickle down to the normal person faster than many people think. What I have found is the majority of people who are really against it do not really understand that larger picture of how things work nationally and globally when it comes to the economy. So hearing about a potential $700 Billion Bailout to Wall Street pretty much sends them over the edge. I understand their frustration especially since all of us are in the same boat struggling to put gas in the car and often silently wonder about the future of our job.

These are interesting times for the United States of America and a great lesson for the financial markets. Let us just hope that the next 4 years are better… So do not forget to vote in November.

Everyone is talking about it. The credit crunch, tougher lending guidelines, reduction of products, demise of lenders, and no more 100% financing. Yes, the industry and market are going through some shake-ups but the sky is not falling! As much as the real estate market was fruitful for many during the “boom” that last 4 years too long – it is time for an adjustment. Unfortunately, this market adjustment is hurting a lot of borrowers and good people along the way. What can we do? Press on and learn from the mistakes of the past. Underwriting is tougher and in some cases it might be going overboard with lender stipulations – but it is all for the greater good of the market and lenders. ( Which is very important! )

Think about it. Many residential areas have lost value and many borrowers are struggling on some of the financial obligations they made in the past. It is time for the industry to change and so must borrowers and industry professionals.

Here is my two cents. Prepare, research and accurately evaluate the financial obligation you are making before pulling the trigger. Today underwriting guidelines are focused on making sure you can repay the loan and it should have been that way for a long time. Borrowers and industry professionals need to communicate and really crunch numbers to make sure that the new homeowners of tomorrow don’t fall victim of credit woes down the road. Spend less than you make…focus on keeping good credit and thoroughly evaluate your real needs before you fall in love with that house 30K above your comfort zone.

Good luck.

Ok, the big questions of the month…are rates going to drop and should I refinance? Here is my opinion (do u expect anything less?) on what you should do. First, I do not know what to tell you about rates right now. Are they going to drop…I would bet “yes” but to what level I do not know and I think everyone is clueless on how long it will take. The market is WHACKED and I venture to say everyone would admit this is new for all of us. The economy, foreclosures, lenders, defaults, secondary market and MBS, appraisal values, the list goes on. These are new and very cold waters and you had better believe I have my wetsuit on as I am swimming in them.  Today rates were ugly as to what I was looking at on Monday and Tuesday. Realistically, you just have to watch it but be ready to act on that window of opportunity. Second, should you refinance? I would say if you are sitting anywhere at / or above 6.375% with a loan amount of greater than 150K then you should keep your eyes open and have a plan. At least have knowledge of what a refi at 6% or lower could do for you ( look at No Points vs. 1 point paid ). If you are on an adjustable – definitely be thinking about getting it put into a fixed rate this year.

Overall, crunch the numbers and see how it helps you and your family. Remember to be conservative on any appreciation on your home at it pertains to appraisal value. Many areas have changed and current market value may play a bit part on how your program calculates. Currently, I have clients who I have their files prepped and ready to rock as they sit on the sidelines. If rates drop somewhere in the high-fives or lower I am on the phone with them discussing it. 

So you have decided to put your house on the market and you have interviewed a handful of agents. They have given you the sales pitch of why to list with them and now its decision time. More importantly, you need to think of ways to display your home to attract that buyer who will love your home as much as you do. Paint, remodel, price it below market value…or start high and reduce down? Hmmm…decisions.

In a perfect world, your home would have all the details that a potential buyer would want and they would walk in and say, “I’ll take it”. Stuff like…granite, stainless steel appliances, tumbled stone walk-in shower, hardwoods, heated bathroom floor, finished basement, etc…But that is not the case. Today buyers are fickle and they want it all but most importantly they want to remember your house if it fits in their budget and seems like a good deal. A sure fire way to make a lasting impression boils down to two words…clean it. Yes, clean it…Clean your house!

I cannot tell you how many homes gave a “nasty” taste in a buyer’s mouth when it was dirty and in utter chaos. Something so simple yet so important. You can have a great house priced perfectly but buyers will find something wrong with it. That fault ratio goes up if they walk in and the house is in dirty, unorganized and cluttered. 

When your home is on the market you need to plan that you are going to have company at any given moment. Your house needs to be ready and needs to be able to “go on stage” quickly (within 45 minutes). Easier said than done, right? Throw kids in the mix and now you have your hands full. ( I understand, I’m a parent of two little girls ) Nothing is more challenging than to be picking up toys and sweeping up Cheerios ground into the carpet 5 minutes before your showing. Therefore, plan accordingly and stick to the plan until it sells…

#1) Box up all toys that have not been played with in the past two weeks. The reality is that your child is not going to miss that McDonalds toy they got in the happy meal 2 years ago. Moreover, they are not going to miss that 1000 piece puzzle your sister got them for their birthday either. #2) Designate play / work areas in the house and focus snack time in the same location every day. It is easier to pick up one room than five. #3) Try to use one designated bathroom to get ready daily as a family (if possible). Once again, limit the amount of clean up that has to happen prior to a showing. #4) Remove all cluttered furniture, kids toys, papers, and mismatched furniture that swallows up the room. Buyers want to picture their stuff in the room and your 5-foot inflatable Colts player with the Coors Light logo on it does not do your living room any justice. #5) Live simple…the goal is to be moving. Therefore, box as much of the old or unused items up and place them neatly against the wall in the garage or storage area. 

Prior to your showing, you need to pay special attention to “impact” areas such as the kitchen, bathrooms and bedrooms. Make sure they are tidy and clean. The beds should be made and you should spray some air freshener. Trashcans should be emptied, toilets flushed and sinks wiped out. Nothing is worse than seeing 6-hour-old toothpaste in a sink or even something worse…somewhere else. These are places that are important to buyers, so do not let something spoil the view.

There is a buyer for every house – you just have to be patient until the right one walks through yours. In this current market you only really get one shot so do not let your lack of planning and organization ruin your chances when they do walk through.

Ok, when I tell you that strange things can happen in real estate transactions I mean it. So let me share with you a funny story told to me by an industry competitor. For the purposes of this story, we will call the borrower Ted.

This person is the every day worker…tough minded and focused on the task at hand. He had taken steps to buy a home and treated the process as the “great debate” the entire way through. Every lender request was labeled “stupid and dumb” and he made his opinion known with every fax and with every voice message. He knew more than everyone involved and his “process” was the only one that made sense. His belief was that Lenders should loan you money on a firm handshake and a promise. “My word is my bond” kind of person… Yeah, whatever…

Well, Ted was approved for his loan and it did not involve a Lender handshake. A closing was scheduled and all parties were notified. As the closing started Ted was not present…He forgot? No way…. 30 minutes late the door opens to the title company and Ted is directed to the closing room were all parties have been waiting sipping coffee and making idle chatter. His wife was visibly upset with him…In a soft voice she says, “Where have you been?”…. Ted then goes on to say….”We’ll let me tell you about my day…” As Ted is rambling about his day the stench of multiple 40 oz., Pabst Blue Ribbon beers fill the room from his breath. He is definitely buzzed… He goes on to say “And you know that supervisor Frank, I was telling you about? Well, he finally had his day… He smarted off again and I punched him in his nose.” The room went silent…was this drunken ramble or did this person just say he punched his boss today at work?

The closing agent then said, “You punched your boss?” Ted boastfully said “I sure did and believe me he deserved it…” His wife said “So where have you been?” Ted said “Well…I of course got fired so I relaxed a bit until closing…I guess time kind of gotta away from me.”

The room was then again silent. The title agent looked at the real estate agents and the mortgage consultant and said, “I think we have a problem.” The loan consultant looked up and said, “Oh Ted…hate to tell you this buddy, but not only did you lose your job today – you just lost your new house.” The closing agent shut her file of documents and left them room. Immediately Ted’s wife started crying and walked out…Meanwhile, Ted sat at the end of the table and tried to “debate” the term of gainfully employed and that he was fully approved. Ted unfortunately failed to understand that the lender underwrote him under the condition that he was currently employed with the same company and without punching his boss. Not to mention…he was under the influence of alcohol at closing.

Moral to the story #1…. Do not be Ted…. Ted is an idiot. When you sign for a mortgage or submit a loan application, it must be accurate, truthful and current. Anything other than that is considered fraud.

Moral to the story #2… Do not go to closing under the influence of alcohol. You are not of sound mind to sign legal documents and they will not close the loan under those conditions. Not to mention, if you are going to make that mistake – drink a better beer than Pabst Blue Ribbon.

Moral to the story #3… Do not punch your boss. You might feel better for about 10 seconds afterward, but you are going to feel worse when your wife finds out you lost your job when you get home.

Just face it…your options appear limited. You have done your research but when it comes to real estate, you are still searching for “insider” information that has more substance than the canned content that fills the Sunday paper.  More urgently, you still need to find that one person you can call “your guy”. The resource that is not shy to offer his opinion about the local market so you do not get misled or forget to consider something. You require a trusted resource where real life scenarios shed light on the paperwork hell of mortgage lending and the emotional rollercoaster of buying or selling a home. 

My blog will provide just that…a streamlined version to help take the “edge off” when it comes to decision making. A sometimes “raw” view from a seasoned real estate warrior who has experienced quite a bit. One who has witnessed the financially gifted crash and burn to the clueless get really lucky. So brace yourself because you are entering industry waters where real estate sharks are prevalent…my job is to make you a faster swimmer when you dive in.

Check back regularly for updated posts!