The Power Broker Roundtable is brought to you by the National Association of REALTORS® and Rei Mesa, NAR’s Special Liaison for Large Firm Relations. Watch for this column each month, where we address broker issues, concerns and milestones.
Rei Mesa, Special Liaison for Large Firm Relations, NAR, and President/CEO, Prudential Florida Real Estate Services
Joe Clement, Broker/Owner, RE/MAX Properties, Colorado Springs, Colo.
Gary Thomas, Broker/Owner, Evergreen Realty, Villa Park, Calif., and 2012 President-Elect, NAR
Steve Brown, Broker/Owner, Irongate Realty, Dayton, Ohio, and 2012 First Vice President, NAR
Rei Mesa: Ever watch a swinging pendulum? When it swings too far in one direction, the force of gravity pulls it back, creating a balance that settles somewhere in the middle. It’s the law of physics we are seeing in action in today’s financing environment, as the pendulum has been dragged so far back that even some qualified buyers may run into obstacles getting the financing they need. But is balance really a long way off or are we just not seeing the signs? What can we do as brokers and agents to be successful in the meantime? Steve, how do you see the lending situation today and how do we work with it—or around it?
Steve Brown: The pendulum is still in mid-swing. I’m sure none of us want to go back to the environment of a few years ago, when it seemed like anybody qualified for a loan. But I don’t think it’s true that qualified buyers are having trouble getting loans.
Joe Clement: In this environment, it’s a matter of working smarter. Agents need to be honest with their buyers—to be sure they qualify and have the documentation to prove it before they get in the car to show property. While you don’t want to waste time and energy with buyers who can’t qualify, you have to be willing and able to help them look for ways to solve the solvable roadblocks.
Gary Thomas: It also helps to work face-to-face with your lenders; to be a facilitator for both the client and lender.
RM: Agents also need to be honest with sellers, because once the buyer is approved, there may be appraisal challenges. If you don’t want the deal to fall apart, it may be just as important to prequalify the property as it is to prequalify the buyer.
JC: There’s no question opportunity exists, and there are plenty of qualified buyers. In many cases, at today’s prices and interest rates, a house that would have carried a monthly payment of $1,300 a few years ago will now cost a buyer hundreds of dollars less.
GT: It’s too soon to project that underwriting standards are going to loosen up in a hurry, but I do think there’s room for some cautious optimism that progress is being made in that regard. And I say that from the point of view of NAR, which is working hard with major lenders, in tandem with other interested consumer groups, to remove some of the lending roadblocks and establish more reasonable guidelines.
SB: I think it’s fair to say a lot of loan originators are sharing our frustration. Take the national standards set by Fannie and Freddie, and add the individual lender overlays, and it’s a real recipe for gridlock, especially when you’re dealing with short sales. I think most everyone is aware that the general economy is going to recover only when the housing market does—and that remains the number one goal on the NAR agenda.
RM: Another positive point we need to look at is pent-up buyer demand. Rents are up, so more people are ready to buy. Inventories are shrinking in many areas of the country—and prices, generally, are beginning to stabilize. As REALTORS®, we can’t punch the pendulum into place—but we know from experience that we’ve always been able to ride it out.
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