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Home > The-Real-Estate-Bubble
The Bubble
Bubble, bubble, bubble, bubble..... Did you just cringe? Does the term housing bubble have you on edge? If you said, "Yes", you're not alone; and if you said, "No", you just might be in denial about that term's impact on our business. Many people in the California Home Loan and real estate industry are fighting to get people to stop saying that dreadful term. Why? What do you say when a client asks, "Is there a housing bubble?" Do you try to show them how wrong they are and convince them they shouldn't listen to their own concerns?
Additional California Home Loan Information:
The Great Gimmick: Everyone's got an angle, right? Everywhere you look in the mortgage industry, there's someone advertising a "free" vacation, a "free" gift card to Home Depot, a "free" cake mixer, or any possible "free" thing the human imagination can think of. You'll hear home builders offer a "free" $5,000.00 credit towards closing costs when you use their lender. The ONLY problem with all this "free" stuff is... it's never free.
The Appraisal: When you refinance the mortgage on your home most, if not all the time, lenders require an appraisal. When you obtain a second mortgage, lenders are less likely to ask for an appraisal however it is still common. An important thing to understand about the appraisal process is never ever agree to do an appraisal with a lender that you're not 100% sure you're moving forward with.
Will My Mortgage Be Sold: After you close your mortgage loan there is a good chance your loan will be sold. Some estimates are as high as 80%-90% of all mortgage loans are sold at least once. Selling mortgage securities has become another way banks and lenders are able to provide more funding for people who want a new home loan. Should you be concerned? Not really as most the time you would never even know. Many lenders retain the servicing rights on the mortgage loan so you would continue to receive the same bill (your interest rate and terms do not change), from the same company month after month. If and when it is sold and a new company will be billing you, you might want to stay on top of them for the first 3-6 months to make sure the transition goes smooth.
Why not try a different approach? We, in the mortgage and real estate industry, are in the relationship business. People do business with us because they trust what we say. If a potential client asks you about the housing bubble, do the number one thing any salesperson can do: acknowledge the issue, address the concerns that they have, and educate them on the facts. Don't try to show them they're wrong by just saying, "Real estate always goes up, so of course, there's no bubble!" Don't ignore their fears. Don't tell them the person they're listening to is an "idiot" because if they trust that person more than you, you've just called them an idiot as well.
People will do business with you if they know you have their best interest at heart, and this is even more true with the slowing market. The fact is things are changing in real estate, but it doesn't mean we have to continue to beat the same drum to keep business going. It's time to adjust and change.
When a client ask me if there is a housing bubble, I respond by asking them what their current situation is, what their needs are and what are their expectations for the market they are looking to buy in. Then I give my advice based on what I hear from them. I have no problem saying we could be in a bubble. Stranger things have happened. But when someone is talking about buying a home they can afford for their family, where they can raise that family, and make it a long-term investment, I have no problem telling people that they should buy that house. If someone is looking to buy a million dollar home for a quick flip, I'd tell them those days are over, and they should look at something else like income property that has a positive cash flow.
The bottom line is this: Do what is right for your client, and you'll have a client for life. And remember a successful salesperson follows this simple formula when an issue like the housing bubble comes up: acknowledge the issue, address the concerns they have, and educate them on the facts. Doing this will ensure your clients' total satisfaction.
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