Welcome to the May episode of Learn With A Lender with Joel Schaub of Guaranteed Rate!
In this episode Joel talks about the raised rates and the importance of agents’ knowledge of the market when advising clients. Joel once more emphasizes the the importance of having a lending partner who can educate you on the important topics of the business. Joel also discusses the appraisal gap and what to do when an appraisal comes in low. Last, Joel talks about his relationships with partner real estate agents and its benefits.
If you’d prefer to watch this interview, click here to view on YouTube!
Joel can be reached at joel@rate.com and 773.654.2049.
This episode is brought to you by Real Geeks and FollowUpBoss.
Transcript
D.J. Paris 0:00
Today we’re going to be discussing what real estate agents can do right now to pivot to adjust for rising interest rate environments to keep your business strong. Stay tuned. This episode of Keeping it real is brought to you by real geeks. How many homes are you going to sell this year? Do you have the right tools? Is your website turning soft leads and interested buyers? Are you spending money on leads that aren’t converting? Well real geeks is your solution. Find out why agents across the country choose real geeks as their technology partner. Real geeks was created by an agent for agents. They pride themselves on delivering a sales and marketing solutions so that you can easily generate more business. There agent websites are fast and built for lead conversion with a smooth search experience for your visitors. Real geeks also includes an easy to use agent CRM. So once a lead signs up on your website, you can track their interest and have great follow up conversations. Real geeks is loaded with a ton of marketing tools to nurture your leads and increase brand awareness visit real geeks.com forward slash keeping it real pod and find out why Realtors come to real geeks to generate more business again, visit real geeks.com forward slash keeping it real pod. And now on to our show.
Welcome to another episode of Keeping it real the largest podcast made by real estate agents and for real estate agents. My name is DJ Parris. I’m your guide and host through the show today, once again is our monthly series titled learn with a lender with Joel shop from guaranteed rate. Now, Joel is the vice president of lending at guaranteed rate. And he’s been doing loans at a high level since 2003. And he’s got to that level because of what he does specifically for agents, which is he gives back part of his commission to the buyer on every transaction. So last year alone, Joel gave back almost $300,000 in closing costs to buyers who worked with them. And that puts Joe’s volume in the top 1/10 of 1% of all lenders nationwide. In fact, there’s over 400,000 loan officers in the United States, Joel is actually ranked number 137. Last year he closed 619 sales is highest amount ever for $249 million in loans already this year. And we haven’t even updated the numbers. So these are old numbers. And I’m sure they’re much higher now. But already this year is Joel’s close over 70 transactions for over 27 million. And Joel Welcome once again to Oh, I’m sorry, my apologies before i for i get to actually welcoming Joel, if you if our listeners or viewers are looking to work with a loan officer, we cannot more highly recommend Joel he’s the very best we’ve ever worked with. He can be reached by the way at his email address, which is joel@rate.com. Very easy. joel@rate.com. Or you can shoot him a text message or call him at 773-654-2049 Let’s say hello to the biggest Cubs fan. I know Joel, welcome back to the show.
Joel Schaub 3:13
Hey, DJ, thanks so much for having me on. And maybe the Cubs keep losing I’m gonna have to drop that I am not a fair weather fan. But uh, you can’t keep losing as many games as they’re doing. So we’ll see. Kind of like the market right now. Things are up in the air. Right. We talked about it just before we got on and interest rates are moving. And there’s a lot of activity and so I’m excited to be back.
D.J. Paris 3:35
Yeah, it’s it’s a really, there’s a lot of tension right now, I think that agents are feeling, you know, there’s course we have low inventory, we’ve got raising rising rates, the Fed has, you know, changed that there’s a lot of news, there’s a lot of commotion about it, and people are freaking out. But I think this is a good time to reset and sort of talk about what’s really happening. So we can all take a breath. And maybe things aren’t quite as chaotic as as they are appearing in the media and in the news at the moment.
Joel Schaub 4:09
Well, the big thing here, if you’re an agent listening right now that you’re not going to hear when you’re looking at the media, right is that they keep talking about all the rate increases coming down the line, how many times the Fed agent is going to raise rates this year, and I’m here to tell you that most of this is already baked into mortgage rates that we’re seeing, okay. And just think about it. It wasn’t, but six months ago, where rates were hovering around 3%, and now they’re over 5%. Yeah, the feds have only raised rates by 75 basis points. So if you’re actually following the math and looking at this, you can really pick up new clients and strengthen relationships with your current clients by leading with education and value. And the idea here is that just because the feds are going to raise rates again several times this year, does not I mean, the day that they raised rates, they call it a mortgage company and say, Today’s the day to raise rates, most of that’s baked in. And we can see that right now. Now that rates are above 5%.
D.J. Paris 5:10
Yeah, so I guess that’s a really important thing for our listeners to understand is that mortgage companies have economist on staff, they know or can act pretty accurately predict what the Fed is going to do. And in anticipation of that, they make those adjustments so that they’re not caught with their pants down when the Fed does make a decision. So a lot of what we’re seeing in the news can create stress and worry for an agent or for a client, but the reality of it is, you know, lending institutions have known that this is coming. And let’s also sort of just remember, you know, historically, five and a half percent is what is that the sort of current at 30? year average? Right, right, around five and a half percent these days? For 30 years?
Joel Schaub 5:56
Yeah, a little bit below that? Yep. Absolutely.
D.J. Paris 5:58
I mean, let’s, let’s keep in perspective that, you know, we it’s always that thing where it’s easy to forget, right? We have such short memories, and it’s easy to forget that, you know, well, yeah, we were at these historic lows, you know, 1824 months ago? And yes, of course, okay, we’re not there. Now. It’s okay, we can, we still have a lot of purchasing power. To me, the bigger challenge isn’t so much lending rates, its inventory, I mean, we can focus on lending rates, because this number ticks up, you know, or ticks down, and we can feel good or bad about that. But the end of the day, if there aren’t homes to buy, you know, that’s that, to me, is the real challenge.
Joel Schaub 6:38
There’s gonna be an opportunity here right now, and I’m already prepping a lot of my buyers, as we film this here today, it’s, it’s the middle of May. And what we’re going to see is we’re not going to see rates drop anytime soon, we already know the CDA rates are moving up. However, most of it’s baked in. And that means this summer, and into the fall when properties are on the market. And maybe they’re on the market for seven or 10 days, that’s a lot longer than it’s been on the market. And a buyer will have the opportunity. And this is my prediction to go in and submit offers without so many offers coming in, because all of the buyers that were right on the cusp of qualifying, because they could qualify when rates were at two and a half percent. They’re gone. Yeah, this might be controversial, but we’re only going to help so many buyers each year, as agents, we’re only gonna have so many buyers that we help going forward, it’s going to be slightly easier to help those buyers submit offers that are going to win, because there just truly won’t be as much competition, as rates continue to rise. And that’s an opportunity that I can be very excited about.
D.J. Paris 7:49
You’re right. And we have to also remember, again, this sort memory is like when rates were that low, you know, it really opened the floodgates for a lot of people who, you know, maybe previous prior to that wouldn’t have been able to qualify to purchase, you know, certain levels of property. And now we’re seeing the that receipt a bit. Right. So there was this huge, the floodgates were open. Everyone sort of, you know, trampled into the into the yard, and everyone got access. And now it’s like, Okay, now we have to now we have to limit access, because let’s remember what it was like when he got 30 offers on a property. You know, yes, that was great for the seller. But for the buyer, not so great, right? Not so much fun for the loan officer not so great. And also for, for the agent representing that buyer, that was a stressful time. So I actually think, you know, it’s I always like balance. So I would like to see a balance place where yeah, maybe rates are a little higher, but at least you know, there’s going to be hopefully some inventory out there. And then you have a few days to actually make a decision on a property as opposed to oh my god, I have to submit it my offer before I even go see the property.
Joel Schaub 9:04
So if I’m an agent, and I’m hearing this a lot, right, I’m hearing buyers ask agents, did I miss the boat? Should I not buy now that rates are up over 5%. And the one thing that we got to kind of remember is if we’re renting a home right now and we’re renting for in our market $2,000 is pretty common for even just a one or two bedroom property in a nice neighborhood. That’s 24,000 a year, over four years. That’s $100,000. And that’s all money out the window. Right? Yeah. So we don’t need to sell anybody anything as agents. If I’m an agent today and I’m being asked by a first time buyer, should I buy or should I continue to rent? Just do the math, right? interest on rent is 100%. All of it goes right out the window. And if you’re paying rent that’s 100% rate of interest. It’s all money that you don’t get back at the end of the year. Are. Whereas rates at three and a half or even six and a half, that’s still a much better rate in terms of being lower than what we’re paying in rent. So that’s option one that we have as a talking point with first time buyers. And then the second is that this is not just a straight hill up DJ. In terms of rates, we know that when they go up, they do come back down. And the best thing about the mortgage business is it is a refinance a bull loan, meaning taking the rates that we can get today. And if they go down to three and a half, or four and a half again, in the future, you can refinance that loan, usually, with little to no cost if you’re working with the right mortgage people.
D.J. Paris 10:43
Yeah, I remember when I bought my first property in 2005. And I think my rate was about five and a half percent, maybe a little bit less than that. But somewhere in that neighborhood, I don’t exactly remember. And I remember it, but it was adjustable. It wasn’t a 30 year fixed. And it was I think it adjusted every two years. And I want to think it was a two year arm or a five year ARM. I can’t exactly remember, but it was adjustable. And it was told to me at that time rates are probably going to go up, you know, when this adjusts, it’s probably going to adjust up and I went, Oh, no. And they go, don’t worry, because we’ll be able to refinance in some capacity within that timeframe. It we’re going to figure this out, don’t worry, you’re not alone. You’re not the only person who is in this sort of, sort of vehicle. And, you know, we it’s so my point with all of this is all of these immediate sort of stresses that that seem to be the challenges ultimately end up getting figured out over time, right. But like low inventory, it gets figured out at some point, it’s stressful to day, but it won’t be stressful, maybe a year from now, looking back at today going oh, we were maybe we were being a bit over reactive to it. There are opportunities, there is a lot to do. And yes, as Joel just said, mortgages are refinancing for indefinitely, right? You can always find and there and like Joel said, things are cyclical things move. Things ebb and flow. So right now rates are on the way up, and at some point, they’ll be on their way down again. And so still, I don’t think there’s much cause for alarm right now, the biggest cause for alarm, I think, is inflation, right, we’ve got the Feds trying to do everything they can to make the price of things come come down. And that’s the most important thing. And that’s really all the Feds trying to do. As far as I can tell, that’s a good thing.
Joel Schaub 12:34
I love that you say that. And I made a name for myself years ago by doing the refinancing for clients after the OAE crash. And one big tip that I want to share with the agents that are listening or even just homeowners here that are listening, is that there’s always an option if you speak to the right mortgage professional to refinance the mortgage with no costs. And I want to explain how you could actually do that in under two minutes so that you have a leg up when this happens, because I’m already preparing for the next two to three years of everybody that’s buying right now, to get a follow up to them when rates do go down. Because it is not just straight up. There will be a time in the next couple of years, where rates are lower than they are today when the Fed stop raising rates, and it looks like this DJ back and oh wait no nine when rates did drop below 6%. Right? We’re saying oh, boy, it’s a bad time now. But we were pretty excited. When rates got into the fives. People had rates that were higher end rates literally did go down to 5%. And banks would call you like crazy and say do you want to refinance and the trick there as they’re making 1000s of dollars on the fees to refinance, right? There are title fees and appraisal fees and underwriting fees and processing. And it goes on and on. So of course, bank seven incentive to refinance a mortgage because of all the fees. So what you want to do is find out what the best rates in the market are. And in that time, they went down to 5%. And I helped clients and I got them locked in, it’s a 5.1%. Because if the rate was a little bit higher, they didn’t have to pay any fees. And I mean, nothing, no underwriting, no processing, no appraisal. And if you’re already at a rate of six and a quarter, you could go down to five and pay a bunch of money, or go down to 5.1 or 5.2 and pay nothing. So since I was upfront and honest and did the math taught them, if rates go even further down, we didn’t pay anything for this. Let’s take the lower rate for free. I literally did hundreds and hundreds of transactions over those years, where clients paid nothing and then when the market heated up, they had a friend in the business. So that’s the big trick is finding out what the rates are for a no cost refinance. And believe me, the time is coming. It’s not just gonna go up and up and up. It may go up a little bit further from here. spend the next couple of years there’ll be days and weeks, where rates are lower than they are now and we can refinance. And as an agent, I wouldn’t be spreading the word.
D.J. Paris 15:08
I want to pause for a moment to talk about our episode sponsor are one of my favorite companies out there follow up boss. Now after interviewing hundreds of top Realtors in the country for this podcast, do you know which CRM is used by more than any other by our guests. Of course it is follow up boss. And let’s face it, following up is the key to taking your business to the next level follow up boss will help you drive more leads in less time and with less effort, do not take my word for it. Robert SLAC, who runs the number one team in the US uses follow up boss and he has built a one and a half billion dollar business in just six years. Follow up boss integrates with over 250 systems, so you can keep your current tools and lead sources. Also, the best part they have seven day a week support. So you’ll get the help that you need when you need it and get this follow up boss is so sure that you’re going to love their CRM that for a limited time, they’re offering keeping it real listeners a 30 day free trial, which is twice as much time as they give everyone else. And oh yeah, no credit card required. So you can try it risk free. But only if you use this special link visit, follow up boss.com forward slash real, that’s follow up boss.com forward slash real for your free 30 day trial follow up like a boss with follow up boss. And now back to our episode. I think this really speaks to the larger point of having a lending partner that is able to give you these talking points like you’re giving our listeners. And I think that this is so critical because clients see the news, they react, they come to the agent or possibly the loan officer but probably the agent and say, oh my gosh, things things are going up. I’m freaking out. Agent then needs to have a partner to be able to say okay, how what do I say? And and the this is exactly what what we’re really talking about is, you know, the realtor doesn’t need to be the expert in lending, you know, sort of practices and where things are. But what the realtor does need to do is have somebody have a team of people that the realtor can call and say, Hey, how do I calm this person down? What can I talk to? How do I how do I phrase this? What What are what’s actually happening right now. And to me, that’s the greatest value and having these sort of partnerships is having somebody like Joel, to be able to say, Okay, let’s, let’s have this conversation, what how can I communicate what’s really happening? How can we cut through the noise of you know, the stress of the moment. But let’s also talk about the sort of creative ways, you know, let’s talk about appraisals, because at the end, we’re totally switching gears. But appraisals, I know are really, you know, think this has been very crazy right right now with the offers that have been coming in. And then oftentimes appraisals come in, under what the offer is. And then there becomes a challenge to sort of make up that difference. We are still seeing a lot of multiple offer situations with with buyers. So what’s your thoughts about appraisal Gap coverage and how agents can start to, you know, tell their clients how to begin anticipating that
Joel Schaub 18:24
last month was April and I know for a fact that appraisals are still front and center on listing agents minds when they’re looking at offers. I had 39 successful closings in April all 39 purchases. And to some degree, appraisal was one of the biggest things that we talked about upfront when we’re submitting the offer. Right. listing agents when we have a property that’s hot, they’re almost forcing the buyers to waive the appraisal, right meeting, if you even want to compete in this market, tell me that you’re not going to worry about what the appraised value is on your financing. And that can be scary. For a lot of buyers. It’s scary for agents, because they haven’t seen this even if you’ve been in the business for 20 years. The idea of wrapping your head around appraisal Gap coverage can be hard even if you’ve heard it before. Can I have so let’s go through it. And specifically what buyers do when an appraisal tells you what the fair market value is, but we’re willing to pay more than the fair market value. Right? Yeah, let’s be frank. That’s, that’s really what it is DJ to say that an appraisal came in low is kind of this throws it back to the mortgage company like they did something wrong, right? If my client is willing to pay $500,000 for all and it was listed for four ad and all the sales say that it’s worth 480 But they’re willing to pay 500 Did the appraisal came in low? Or did the appraisal tell the story of what it’s worth? But agents will say, Well, I had five offers, I had other offers that were higher the sales support a certain value. So and I’m on your side agents, I mean, I get it. So what we want to do is submit an offer designed to win. And if an appraisal comes in a little bit low, and a client has a good downpayment, the rate won’t change. Maybe they have to carry a small amount of insurance coverage for the mortgage insurance. But if you’re setting this up front correctly, and educating the buyer, I’m having buyers with good down payments, go in and just waive the appraisal. I teach them up front. That sounds scary, right? Yeah, yeah, but it’s not if we’re willing, and we have the money. And we’re working with an agent that knows what they’re doing, we can submit an offer and we need to win. Okay, if we need to win in this market to get a property, we aren’t so concerned if the property appraises 10, grand higher, 10 grand low, okay, we’ll either make up the difference with a larger downpayment, or we’ll have a small amount of mortgage insurance, and the mortgage insurance might be 50 to $60 a month. And talk to your lenders if you’re an agent right now, if you don’t know what happens when an appraisal comes in low, get on the phone with that trusted mortgage professional, he knows right now, he or she really knows how to walk you through appraisal Gap coverage, otherwise known as mortgage insurance.
D.J. Paris 21:28
Yeah, it’s, it’s one of those things where, you know, this is again, back to this trusted partnerships. You know, for information, I mean, this are what Realtors need. And I think this dovetails a great way to sort of wrap up our our episode talking about having a trusted partner that can help educate the client and the agent, so that the buyers and sellers are on the same page, they understand what’s at stake, and also having creative ways to to get offers accepted, when appraisals might be, you know, an issue when we’re over not overpaying. But when we’re paying more than than what is asked. So this is why it’s so critical to have a good team of lending partners with you. And Joel, I know you partner with a lot of agents. Can you talk a little bit about just as we wrap up? Why you partner with agent’s number one, and then what you do with them?
Joel Schaub 22:28
Well, the big thing here is what I figured out years ago is I was unable to control interest rates. I mean, go figure here we are now but I could control the fees that a buyer paid, because I was willing to take part of my commission and give it back to a buyer. So I found out early on that if I made a little bit less than every transaction, I could really grow the business and it doesn’t affect the amount of service that I provided. So I give a $1,500 closing cost credit out of my own commission, to every single buyer that buys a home where their loan amounts over $250,000. And that usually in the beginning, it really made the difference for certain buyers that just didn’t have enough money to pull deals together. And so even though I’m doing millions of dollars a month, sometimes 20 and 30 million, most of its just back to basics, teaching, educating and helping agents close just one more deal. And if I can help you close one more deal by giving a commission back to the buyer, that’ll that in turn, hopefully get them to refer you more business and it grows. And I created this newsletter so that agents don’t necessarily have to have all the talking points. I had an agent literally post this up in their office. And you guys can get added to the list. And it’ll give you just some great things that are happening in real time. We do it once per week Murray, who’s on my team is just an absolute Rockstar who helps me put this together, and it’s mortgage market update. And you can get added to the list, just email me joel@rate.com And just say add me to the mortgage list, right? There’s a mortgage market update that we do. And it talks about rates. And it talks about things that you can have conversations with just to sound one step above your competition. And that’s what it’s about is education, leading with value and just helping people and that’s what we’re about.
D.J. Paris 24:25
Wonderful well that is it I get I get your your weekly email with rate information. And it’s really helpful it what’s great about it is it gives me the exact information, I would need the little data points that you post graphs in there, but you also make it really digestible and a quick, easy read, but with a lot of specifics so that I can go out there and then, you know, be able to professionally have a conversation with a few data points. And so I can say actually, here’s here’s what we’re seeing. So definitely encourage Everybody listening to get on this email newsletter, easiest way to do it just email joel@rate.com asked to be put on his newsletter, and he will add it. His team will add that add you to that. And we just want to thank again, Joel. You know, Joel is such a great example of a trusted lending partner. And if you don’t have somebody like Joel, in your, in your quiver of with all your arrows, if you don’t have somebody like that, who’s able to get on the phone with your clients and talk to your talk to your buyers and sellers about what’s going on, then you need to find somebody like him, If not him, him. He would also like to speak with you too, if you’re interested in working with him directly. So definitely reach out to Joel get on his email newsletter. But also, if you have any questions about what’s going on in the lending world, you know, Joel works at guaranteed rate, they’re licensed in all 50 states he can assist, and if he can assist to connect you with somebody that can. But we want to thank Joel for coming on our show every month. Joel is a trusted partner to our show. He’s been providing this kind of advice ever since basically, we started and our audience loves it. So Joel, thank you on behalf of our audience for coming on yet again. And welcome back to Chicago. And we also want to on behalf of Joel and myself want to thank the audience for continuing to listen and support our show. One thing we ask that you do before you sign off or after you sign off rather, it’s just telephone I think of one other realtor that could benefit from this conversation that Joel and I had about, you know what’s going on in the world right now? And how do we talk about it, you know, in a intelligent way with our clients and send them a link to our to this episode, you can find every episode we’ve ever done at our website, keeping it real pod.com. And also anywhere podcasts are served, just look for keeping it real and hit that subscribe button. But Joel, we will see you next month. And very excited to continue having a conversations around rates. And also and beyond rates Joel has is really a marketing genius. So we’re going to we’re going to not only talk about rates going forward, because that’s what’s you know, leading the news. But going forward, we’re going to go back to our basics of despite the fact that we can’t control rates, like Joel said, we’re going to give you strategies to no matter what’s going on in the rate world how you can continue to evolve your business. So that’s what we’re all about here. And Joel is we’re so grateful to have him be part of the show. Thank you for
Joel Schaub 27:30
that. No, I appreciate it a lot. If I’m an agent right now, before we go, there’s a lot to be positive about coming up this summer and fall, as those rates are a little bit higher buyers are going to have some opportunities. And it’s actually a really great thing to have some of the fineness in terms of the offers that are coming in. So lead with value. Be genuine, educate yourself, right. Make sure that you’re the person they’re going to and just stay positive. We’re here for you know, we’re really happy to be on the show again, DJ, thank you so much.
D.J. Paris 28:03
All right. Thanks, Joe. And we will see everybody on the next episode. So thank you so much. See you next time.
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