How Real Estate Agents Should Talk About Lending Rates This Summer • Learning With A Lender • Joel Schaub

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Welcome to the May episode of Learn with a Lender with Joel Schaub of Guaranteed Rate!

In this episode Joel discusses what’s going on in the world of lending rates and what are the opportunities that agents should educate their clients on at the moment. Joel also talks about the importance of understanding the numbers and how to educate renters for their opportunities as property owners. Joel also explains the recent changes in the market that are affecting both people with lower credit score and those with perfect credit score. Last, Joel reminds everyone how to sign up for his weekly newsletter.

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.


D.J. Paris 0:00
What can you do about high interest rates for your buyers and how it affects your sellers? Well, you probably think not much, but today we’re going to show you what you can do to keep your business running in a high interest rate environment. 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 solution so that you can easily generate more business. Their 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.

Right 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. And today, once again is our monthly series called Learn with a lender with Joel shop from guaranteed rate. Let’s tell you more about Joel Joel is the vice president of lending at guaranteed rate. He’s been doing loans at a high level since 1220 years now to that actually 21 years. He’s been doing this since 2003. And he got to that level of being one of the top lenders in the nation because of what he does specifically for agents, which is he gives back part of his commission to your client on every transaction. Last year alone, Joel gave back over $300,000 in closing costs to buyers who worked with him. And that puts Joel’s volume in the top 1/10 of 1% of all lenders nationwide, which is a really impressive number because there are over 400,000 loan officers in in the country and Joel is currently ranked 137 out of 400,000. So he is really at the very top of the mountain last year alone he closed 319 transactions is highest ever. And that was for 126 million in loans, which is insane. This year, he’s already closed. And remember, this is not an easy year for loan officers. He closed 106 transactions already for just shy of 40 or sorry, just over $45 million insane. Now if you’re ever looking for a to work with maybe a different loan officer, maybe you don’t have a great relationship with people that you’ve worked with in the past or you’re just want to expand your business and want to partner with one of the best we cannot more highly recommend Joel he’s the very best we’ve ever worked with. Guess what he did my loan. That’s how much I like him. And it’s not because he’s my friend. It’s because he’s literally the best. Joel can be reached at and I want everybody to shoot him an email joel@rate.com J oel@rate.com. Asked to be put on his newsletter but also asked to have a conversation with someone on his team where you guys can talk about how he can help you grow your business, shoot him a text message also or call him at 773-654-2049 Let’s say hello to the biggest Cubs fan. I know Joel welcome again to the show.

Joel Schaub 3:57
Hey TJ thanks so much for having me on. I love it that you referenced the Cubs even though they’re not having a good year you got to stay positive. And that’s kind of the message that I send over to real estate agents every time I meet them doesn’t matter what the market is you got to stay positive and that’s what we’re doing with the Cubs this

D.J. Paris 4:12
year. Well as as a Cubs fan that’s pretty much always how it is it’s we don’t win but we don’t care we just enjoy

Joel Schaub 4:20
there’s an old saying I think right win or lose will still booze you can go out to Wrigley and have a good time. That definitely holds true this year when they’re not winning two games.

D.J. Paris 4:29
Awesome. Well, what Okay, we got I think we have to talk about rates because rates are in the ether. Everyone’s you know, either frustrated about rates hoping that rates move a certain direction or just wanting to know from somebody like yourself who really has an inside track to what’s going on in the lending world. What do Realtors need to know about what’s going on today right now in with rates.

Joel Schaub 4:53
Well, listen, we’re now in this new normal right where when a client hears that rates are at six or six and a half percent. They’re actually not scared off by this, right? They may not like it. And I don’t like it either. But if you’re an agent, you’re not telling borrower something that they don’t know already, right? It used to be DJ, even just a few months ago, this was news. This was something that borrowers were not expecting. And now we’re finally getting to the point where everybody’s expecting it. Right? We’re actually off from the highs, there were rates that were in October, November for a 30. year fixed, that surpassed 7%. And now on today, you know, they’re averaging in the low sixes. It’s something that we can spread positivity about that they’re not as high as they once were.

D.J. Paris 5:44
Yeah, my, when I first got when I first bought a condo, I think it was 2005. And I was younger, younger man with, I think I still had pretty, pretty good credit, but I certainly didn’t have the income that I do today. And I Yeah, well, that’s true. I had perfect credit, almost, but very little income. But I remember I got five points, 5%, maybe, around that number, somewhere around there. And I was, that was okay. For me, it seemed reasonable. So I think people need to remember, historically that we’re, you know, if we’re just comparing against the 3% days of a few years ago, you’re always going to lose, because those were historic lows. But people are still concerned thinking that rates are higher than they’d like to be. Realtors are obviously struggling with this with their buyers. So what do you what sort of opportunities are there right now that agents should be educating their clients about and how to take action?

Joel Schaub 6:40
Well, right now, since rates are higher, we just have less buyers, right? We just simply do, they’re, they’ve been priced out. So there’s a lot of people that only could buy DJ, when rates were at two and a half or three and a half percent. And now that they are up over 6%, there is a contingency of buyers that just are not in the market. And so that means if we are in the market, we have less bids on that property, even though at the moment I say that I know that agents out there, say and not my market, we’re seeing multiple offers on hot properties. And I understand that for sure. But if we’re a buyer in this market, and the strategy would be I’m going to wait until rates come down to buy it’s not a good strategy, right? There’s going to be even more of an influx of buyers, if all of a sudden rates drop, and we don’t anticipate them just overnight. Dropping a full point, I think it’s going to be a gradual thing. But I do think that it’s going to start this year, even by the third and fourth quarter of this year. I do anticipate rates being lower than they are now.

D.J. Paris 7:42
Yeah, I mean, we also have to remember to back in the 3% days that obviously you were working probably harder than ever because nobody was priced out of the market, except everyone was kind of priced out of the market, because prices went up so much higher. It was like the rate was amazing. We’re like, whoo, I’d like to only pay 2.75% Except I can’t get anything because everyone’s buying things $100,000 over asking without even going to see the property. So let’s let’s all also everyone viewers, listeners, remember that those weren’t just the easy days, those were good days, but they were very difficult to actually get if you had listings, you were doing great. If you had buyers, it was tough. So now as Joel mentioned, yeah, rates are higher. But boy, I, you know, I’d rather have less competition and a slightly higher rate or you know, even even a much higher rate, knowing that I could at least get the property that I want, then refinance a couple of years later and bring that rate down.

Joel Schaub 8:38
What we’re seeing right now is sellers just don’t want to trade up and do that big of a rate increase. If I’m selling my house today that has a 3% rate DJ and I have to go with them take a 6.5% rate, I’m just not going to sell the home. And I think there’s some evidence here that if rates do dip into the fives, which we probably will see here in q3 and definitely q4 of this year and into next year, we will start to see sellers say Okay, now that rates have come down, I’m okay trading up. But I think that 6% is this, this threshold where sellers are just saying I’m going to stay put. And if we do see these rates, get down into the fives we will see a not a large number of sellers are still going to be sellers, DJ that will never sell that. All right, they’re going to be the incidental landlord, all of a sudden, they’re going to just keep that property and put a renter in it versus selling it. But I know that we will start seeing much more inventory as these rates come down and we’ll be seeing that soon.

D.J. Paris 9:37
You know, for me as a, as somebody who considers themselves slightly outside or adjacent to the real estate industry, I’m not a practicing realtor. I would much rather have less competition on on the purchase. So if the rates dip into the fives, which we hope of course they will I know the NAR Chief Economist believes they will Well, hopefully by get to about five and a half by this, you know, the end of the year, who knows, we don’t nobody has a crystal ball. But I would actually be a little afraid of that, because so many buyers are waiting on the sidelines, I would just hate for there to be a buying frenzy, waiting for that rate to hit. And then all of a sudden, I’m sort of back in a similar scenario to when it was 3% days, where it was just lots of buyers, prices going up, right now prices are down, this might be a good time to even get in at 6%. Knowing that I can get what I want, pay a little bit extra for a couple of years, maybe made probably less, but whatever, pay a little bit more, and then possibly refinance into a more comfortable place. To me, I think where you live is, is you know, it’s like you buy a TV, but after a couple of weeks, you don’t even notice, like how much you paid for it anymore. It’s just your TV, but at least it’s the TV you want. And I think that that that realtors, you know, really could do themselves a huge favor by saying, Hey, it’s okay, if you want to wait. But here’s what happened, the last time rates got lower, is we had this huge challenge of actually getting buyers to actually, you know, close on property.

Joel Schaub 11:11
So the action plan, if you’re a realtor is have the clients actually speak with a loan officer, somebody on the mortgage side to make sure they’re comfortable with the payments. So we’re so focused on this rate. But we don’t put a rate on a check every single month, and I’m dating myself saying a check, but you’re making a monthly payment. And the payment is what matters. It’s not the rate. So understanding what the all in payment is. And if you’re comfortable with that payment, let’s buy something if we’re not comfortable with that, then we have to wait. And it’s just about being honest with ourselves and understanding what is our maximum purchase price, working with a trusted loan officer to actually get that information. And I’m thinking, Oh, it’s much worse than they think. And we go through the numbers and they realize, okay, with these rates, it’s actually not that bad. Maybe my payment is 230 or $300 more per month than that price point. But when rates do come down, I can refinance the debt. So that’s one of the big things is just understanding the numbers, knowledge is more important than anything and just understanding where you are actually at. And doing that with your buyers will put you in a good position.

D.J. Paris 12:22
You’re so right, the actual rate percentage itself is largely irrelevant. It’s just what our brains kind of, for some reason, that’s an easier number for us to sort of grasp in our brain. rates are high rates are low. I know that number, but you’re right. At the end of the day, it’s about how much did I pay for the home? How much downpayment did I have? And what’s the check I’m writing every single month. And honestly, if it was me as a buyer, I would, I would say okay, my purchase price, because rates have gone up, my purchase price has probably come down. But so if prices a bit in certain areas, so I would still want to look at lower price properties. And see if maybe it’s not quite as big a chasm as back in the 3% days where I could afford, you know, a home, that’s an extra 150,000. Well, maybe prices have come down enough now to where that actual chasm between what you want, what the price is, is actually not as great as it used to be. So I actually think I would encourage everyone and not just because it’s good for the industry and good for the economy and good for your business. But I actually think you there’s an opportunity here to take advantage of what a lot of agents aren’t willing to do, which is a lot of agents are just sitting on the sidelines waiting for the rates to change. And it’s like, okay, maybe and maybe that’ll work out and eventually rates will change one way or the other. But I would encourage your clients to start looking because the moment somebody sees as you know, somebody sees their dream place. A lot of those trepidations and challenges go right out the window. They’re like we’re gonna have this place. Yep, it’s all it’s it’s 6%. Okay, I don’t care. I need this place. And we’ll refinance later.

Joel Schaub 13:55
I love that you say that because the payment really does break down a lot of the the walls of oh, I don’t want to buy because rates are high. So if you’re an agent right now that’s dealing with a lot of clients that are move up or higher end buyers that already own a home. Yeah, you do have an issue, right? A lot of people don’t want to move. But I work with a lot of agents where their book of business or first time buyers, you’re working with people that are already renting in a lot of markets throughout the United States, rents are as high as they’ve ever been. It’s very easy to spend two, three or $4,000 a month in rent. And it’s funny when you talk to these borrowers and say, Well, I’m going to wait one more year. I don’t like six and a half percent, or I don’t like 5.75. I’m going to keep paying the rent. Well, that’s 100% interest, every single dollar that you spent as money gone when you’re renting, I’d much rather have five or 6% of my money going to interest than 100% of it going out the window for rent, right and so, educating and talking to borrowers and see In what they can buy for an equal or even sometimes DJ lower amount than they’re paying in rent right now. It’s just that little switch that’ll go off in a borrower’s mind, you got to make the phones ring, you got to go create your own destiny right now you can’t just wait for borrowers to call and say I’d like to buy a home, it doesn’t work that way anymore. So find out where renters are and be the person that they go to and educate and teach in your business as well.

D.J. Paris 15:27
And right now, you’re right is it’s the absolute best time to reach out to first time homebuyers, renters in particular, and just saying, Hey, you got a huge opportunity. Now, so many buyers are sitting on the sidelines, let’s get you out of you know, giving away all of your, your housing money to the landlord. And let’s figure out a way to you know, to get you, obviously, some, a little bit of principal, and also some tax deductions next year on the interest, I think huge opportunity for anyone renting. So here’s here’s a quick little opportunity I have for anyone listening, if you’re looking to find more renters reach out to anyone you know, who works at a company, especially like a tech firm, where maybe it’s a lot, it’s a skewed younger workforce, maybe people in their 20s, in particular, and I would offer to reach out say, Hey, who is there an HR manager at your company? Or who, you know, can I come in and just plan a lunch and just do a quick little informational session about, you know why maybe buying now is a good idea, or why people should consider home ownership versus renting. And I would reach out to whoever is in charge of the HR or in charge of these events, and say, Hey, can I come in and bring lunch? I mean, this is a huge opportunity right? Now, if you’re like, I don’t know, any renters, you can find them talk to your clients say, Hey, do you have a lot of 20 somethings in your office, I would like to come and do a presentation and bring somebody like Joel along with you who can actually have the conversation and talk about this elegantly. And then you know, reap all the benefits of these people who aren’t shopping rates, they’re not worried about rates, they’re just wanting to maybe consider what the next step is. And the rate is not as important to them as somebody who’s already got a mortgage and looking to either upgrade or change. So yeah, huge opportunity there.

Joel Schaub 17:08
I always leave with education, and you go to those events do you talk about the number one objection that younger people have is the down payment, right. So I just always use this example, if somebody’s paying $2,000 a month in rent, these year, they’re going to spend $24,000 This year, right? If we negotiated rent per year, the way that we do per month, everything would change. And he said I’m gonna give you $24,000 to live here for the next 12 months, and you’re gonna give me nothing in return, I have to think that rents would be lower, they probably wouldn’t be. But when you put it in the actual annual dollar amount, and then you say, Well, you could actually buy a home with just 3% down on it first time homebuyer Program, or 3.5% down on an FHA program, you could buy a $400,000 house and only put down $20,000. And we have ways to help you with the seller to cover your closing costs. So do you want to spend $24,000 Over the next 12 months? Or can we put together 20 grand and actually go own a home. And that’s the big benefit that we talked about.

D.J. Paris 18:17
I love that. And I am starting to see a lot more buyers now taking advantage of the 3% programs, the three and a half percent FHA, I’ve seen a lot we’re seeing a lot of that here at our brokerage where people are doing more of those deals, where they are lower, you know, initial upfront and still getting pretty good rates. So you know, this is going to be another great opportunity to talk to anyone renting and say, Hey, I’m

Joel Schaub 18:44
so excited about it. So excited. I think the camera went out, but I haven’t the idea. It’s just such a great idea to get out there and actually educate

D.J. Paris 18:53
Well, Joel’s camera is gone, but his voice is still there. So we will power through. We only have a few people watching this live anyway. So it’s no problem at all. But Joe, I’ve also been hearing these these rumors that it might just be marketing stuff, but I’m hearing like, oh, there’s these programs now at certain lenders where even people with moderately Okay, credit or even less than Okay, credit are getting the same rates that people with perfect credit are having even better rates sometimes. And so I want to just talk is is that happening? If not, let’s let’s dispel that myth.

Joel Schaub 19:30
Yeah, you see it in the news a lot lately, right. The the Biden administration is giving people with lower rates, better or lower credit scores, I should say better rates than somebody who has good credit and a good down payment. Just do a quick search. It’s not hard to see all these news stories coming up. And really it’s Fannie Mae and Freddie Mac have retooled their loan level price adjustments, and to put it really easily because They’ve been around for years, it’s just another way to price risk DJ, if you had a lower credit score, you would probably be charged a higher interest rate. Right? If you’re putting less money down, you’d probably be charged a higher interest rate. So none of this is new. What did happen recently was that they did make it easier for people with lower credit scores, and lower down payments, to pay less in fees. And so it’s overall a good story mixed in there, there are some casualties were people that do have good credit scores. And people that do have good downpayments are paying slightly more than they would have three months ago. So that’s absolutely true. But I want to dispel the myth that anybody who has a 650 credit score today is going to have a better interest rate than somebody who has a 780 credit score. It’s just simply not the case. And that has to make sense.

D.J. Paris 20:56
Yeah, it does in any, you know, there’s that old expression for for news media, which is if it bleeds, it leads, meaning, you know, as was pretty obvious, but in case anyone didn’t understand that, it’s, if it’s if it’s going to elicit outrage, or fear, or, you know, those are a huge human emotions. So obviously, news media outlets will focus on that part of it, and your video is back, which is great for our viewing audience. But yeah, so So this is, you know, this is just if it bleeds, it leads, again, an opportunity for an agent to correct the narrative that some of the news outlets are, are projecting just to get more views and clicks. So I’ll give you

Joel Schaub 21:38
an example of this. And I don’t mean to cut you off. But it really is important to understand that these low level price adjustments have been around forever. We just retooled them on the Fannie Mae and Freddie Mac side. And so here’s a perfect example of a borrower that had a 20% down payment, and a 650 credit score, today would pay about $3,000 less in costs on a $400,000 loan than they would have before. Okay, which is a positive thing. At the same time, a pretty cookie cutter deal where somebody has a 740 credit score, and they’re putting down 20%, that person now is going to pay $3,000 More than they would have before. And that’s kind of the outrage, right? Somebody that has good credit, a pretty typical situation 20% down, their loan level price adjustments have gone up by 75 basis points, where somebody with a lower credit score improved by 75 basis points. And so we’re never going to get this exactly right. They’re trying to make it more equitable, for lower credit score borrowers and more first time homebuyers. But there are casualties along the way. And I can definitely see the outrage on both sides.

D.J. Paris 22:54
Yeah, and again, we should just point out again, this is the exception rather than the rule. It’s very unusual. And it’s really just a convergence of events that are happening that create this, it’s not to specifically punish the people who are doing well with their credit and reward the people who have struggled, it’s just kind of a confluence of events. It’s a weird sort of thing that media sees it goes, ooh, great time for an article to get some clicks. And, you know, let’s get people pissed off who worked really hard on their credit. And, obviously, again, it’s not as widespread as as so I’m glad you dispelled that. So agents don’t have to freak out when they are dealing with clients with good credit. But it’s important to have these conversations with a loan officer like Joe like you, so that I don’t have to worry Oh, my God, I just saw this news story. First thing I would have done was lob a text over you going, is this true? Do I have to worry about this? And you would have said don’t know, here’s how it works. So this is why it’s so important to partner with, you know, people like Joel like you, who can actually help me navigate as the agent through this so that I know what to say to clients. That’s what I’m always worried about is what is my answer when a client asks me a question. And of course, we always want to be seen as the knowledge source. So tall having somebody like you on my team would be helpful because you’re going to feed me and I’m going to then feed that to my client.

Joel Schaub 24:16
I recently talked about this in my weekly newsletter that breaks it down so that you’d actually have bite sized pieces that you can talk to your buyers about or your sellers about. And instead of having this legal mumbo jumbo about Fannie Mae’s loan level price adjustments, it’s gonna written out for you, you can actually dissect it and understand in less than 60 seconds how you could disseminate information and not only sound smarter, but be smarter understand what’s actually going on in our industry. So if you want to sign up for the newsletter, it’s free. You can simply email me Joel J. O el@rate.com. And say, add me to your newsletter. That will send that over to you on a weekly basis to that you allow up to date information about the market. Completely no obligation. We’re happy to help you guys every step of the way.

D.J. Paris 25:08
Yeah, guys, I really can’t encourage you more to do this. Aren’t you tired of just getting, you know, prospecting prospecting emails from from loan officers are like Happy Mother’s Day emails, which is great. All that’s good. I’m not here to put it down. But aren’t you tired of only getting that from lenders, where if you sign up for Joel’s newsletter, which is awesome, because it gives you like four or five bullet points and some explanation, more explanation, but it gives you these bullet points where you can every single week where you can literally just parrot what is Joel sends to you. And so you can go out there and seem knowledgeable. And guys, it’s awesome. Subscribe, email joel@rate.com for that, and he will send you that out every single week and his team is awesome. Well, Joel, I think that’s a really good place for us to wrap up. I think we covered a lot today. We kept it short and sweet. Unless you have any other topics you want to dive into. I think this is a great place to wrap.

Joel Schaub 26:05
I’ll just leave you with if you’re an agent. Remember that it’s not all about 30 year fixed rates, have your borrowers look at all of the options. Okay? There are rates right now that are in the threes, fours and fives. You can utilize seller paid buy downs, understand what arm rates are looking like right now understand what 15 and 20 year rates are looking at right now. And understand how you can use it to one buy down for your clients in the next few years. While rates are going to continue to go down. Let’s make sure we understand all the ways that you can educate your borrowers and clients on how to get lower rates. So it’s not just 30 year fixed, get out there.

D.J. Paris 26:46
And I’ll tease you guys to about our previous episode that Joel and I did a month ago. So you’ll have to go back a few episodes to find it. But Joel talked about some really interesting loan products that I guarantee you’ve never heard of. I won’t tell you what they are, I’ll tease you. But if you go back to the previous episode, you will hear Joel talk about some cool opportunities. Specifically like when children are going to college, there’s opportunities there. And even like for parents that are elderly that are going into, you know, assisted living, or just buying a home for mom and dad as they’re older. So anyway, that’s the only tease I’ll give you but these are really cool products I almost guarantee you’ve never heard of. So go back a month ago, listen to that episode, we’ll put a link to it in the show notes by the way, so you don’t have to search too hard for it. Or even better just reach out to Joel directly and have him tell you about things like a two one body down and some of these other products that are really cool and creative ways to get your clients to a more palatable, monthly amount that they’re writing for their mortgage. So reach out to Joel joel@rate.com. You can also shoot him an email or sorry, obviously, you can shoot me an email, but you can also call him and we have his phone number there in the show notes. So guys, thank you so much for everyone watching, listening, supporting our show our numbers, which is amazing. I’ve really never been better. So I am so thankful. And Joel is part of that reason why we have such high numbers because his content is so incredibly valuable. He comes on every single month, please support him, how reach out to him, get on his newsletter and ask him for how you guys can work together to get more deals closed faster. So again, joel@rate.com He’s amazing. He’s the best. And on behalf of all of our age, our listeners and viewers. Thank you, Joel. And on behalf of Joel and myself, we say thank you as well. One last thing before you sign off, please don’t sign up just yet because I want to ask you to do just two quick things. One is tell a friend of course, tell one other agent who’s struggling right now about this episode, send them a link to this episode. And also, please check out check us out on social media we are on now all the social media channels. I didn’t have an Instagram account for the last five years. That was a mistake. We have one now. And we are posting daily content from these episodes. So I have one of a new member to our team France. He goes through he combs through each episode, he finds like three clips or so that are bite size, 60 seconds or less but something actionable. Something you can literally do right now to help grow your business. And we publish those every single weekday on social media. This includes Tik Tok, Instagram, Facebook, LinkedIn, YouTube, Twitter, all the channels, so please just Google Find us on whatever channel we’re easy to find. So look for a subscribe and you’ll get that daily dose of wisdom from people like Joel In fact, I published one from today from Joe’s episode last month. So follow us if you want to find us on Instagram the easiest probably one there. It’s top agent interviews. That’s our hashtag or that’s our handle someone else that already had keeping it real podcast so anyway, top agent interviews, but just Google that you’ll find us Alright Joel, thank you so much and we will see everybody on the next episode.

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