What Real Estate Agents Need To Know About Recent Bank Failures • Learning With A Lender • Joel Schaub

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Welcome to the March episode of Learn With A Lender with Joel Schaub of Guaranteed Rate!

In this episode Joel talks about the second largest bank failure in the US, and how this situation puts pressure on the Fed to change the course of rates. Joel explains a strategy on how to use higher rates and educate clients and not to buy just because the rates are low but always ask the question “WHY”. Lastly, Joel emphasized agents should organize events, spend money and engage with mortgage people to broaden their network.

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’s going on with these bank failures? And how is it going to impact your customers abilities to get mortgages? 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.

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 called 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. Which, by the way, 20 years congratulations. And he’s got to that level because of what he does specifically for agents, which is that he gives back part of his commission to the client to the buyer on every transaction. Now last year alone, Joel gave back over $300,000 in closing costs to buyers who worked with them. And that put Joe’s volume in the top 1/10 of 1% of all loan officers nationwide. In fact, out of 400,000 loan officers Joel is currently ranked number 137. Last year he closed 319 transactions, his highest amount ever, for 126 million this year. To date, he has closed 43 purchase transactions for just shy of 18 million. So if you are looking for a loan officer or a loan officer to partner with or for your customers, we cannot more highly recommend Joel he’s the very best we’ve ever worked with. I use them as well. Joel can be reached at here’s his email joel@rate.com joel@rates.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.

Joel Schaub 3:06
DJ, thanks for having me on. I love that you made the Cubs reference at Spring Training. It is a new season right. And it’s kind of a new season right now for real estate agents out there as well. We were kind of talking before the show started about how people are getting more energetic and they’re getting back into it. And there’s just a lot to talk about.

D.J. Paris 3:26
It’s exciting, the sun’s coming out. So if you’re listening and you’re in a in a northern part of North America, where you haven’t maybe seen the sun so much, it’s starting to get a little warmer. If you’re in the southern part where it’s always sunny, then, you know another sunny day down there. But yeah, it’s it’s exciting. We’re starting to see activity as far as real estate, at least here locally in Chicago, this spring market has started we’ve seen activity rates have have been you know, okay, and so I think buyers are back at it. But curious to hear your your perspective, because right now we’re dealing with while by the time this release is you know, this will be probably after but we had some some banking turbulence. You know, we had Silicon Valley Bank, which which basically failed, and is being recovered by by the US government, you have a couple other smaller banks, regional banks chat being challenged as well. And then Credit Suisse overseas. So there’s a lot of uncertainty around the banking thing. And then it’s also like, what’s the Fed going to do? Are they going to raise rates, lower rates, how’s that gonna affect everything? Obviously, our listeners want to know, obviously, no one’s got a crystal ball but curious to hear what what what your interpretation of what’s going on right now is all about.

Joel Schaub 4:45
We’re back to this phrase. DJ, we’re bad news is good news. Okay. And it’s strange, but it’s true these bank failures actually put pressure on the Fed to change the course of rate increases. So this Bad news, which by any stretch of the imagination, having the second largest bank in history fail is bad news. And what that meant was more money rushing into the bond market. And as the price of those bonds went up, the yields went down. And so did mortgage rates. And so even though we’re not anywhere near the lows of the last six months and rates, the news is telling us that rates are down, and it’s an opportunity for agents to get back out and talk to buyers, because rates are down significantly, from just last week, by the time this airs, we’re probably going to see more of this continued rates and buyers are not afraid now, to see rates in the sixes or sevens. And that’s just kind of the norm. And are you seeing? Yeah, yeah. And so if you’re an agent, right now, if it was a year ago, people seeing rates creep up into the fives or sixes, that put a halt on a lot of buyers. Now we’re into a new year where that’s the norm. And we shouldn’t see them continue to creep down. But we still will see the Feds raise rates in the short term. But we’re already looking ahead to what they do in 2024. And they’re thinking that we’re going to see a cut early next year already.

D.J. Paris 6:14
Yeah, I think, you know, the, maybe it’s kind of a, a byproduct of our diminishing attention spans as Americans with technologies kind of I think zapped our attention spans tick tock in particular social media. I think I think hopefully, one of the maybe one of the benefits is that people who were upset that maybe they felt they missed the that that amazing rate, time period from a few years ago, I think the you know, I think we’ve forgotten, I think I think it’s we’re moving forward. Now, I feel like the public sentiment is changing. I don’t I don’t hear as much from agents saying, all my clients are really bummed that they missed the three, you know, three plus percent kind of era. I feel like we’re turning the corner on that people are starting to realize, you know, the six is is not a bad place to live. And even the seven sometimes it’s not, it’s not the worst place to date, to data rate. And you can always like Joe, you say, you know, date the rate, marry the home, you know, you can always refi in the future. So I think we’re starting to get more acceptance from the public about about where we’re at currently.

Joel Schaub 7:24
But if I’m an agent, I’m also talking to buyers right now, I want them to know that there are rate options in the fours and fives, there’s ways to do this. So let’s talk about two things that the agents that I know are really using seller by downs to fund the rates. Okay, so let’s talk about what that to one rate, buydown looks like or a three to one rate by down, understand the mechanics of this. And this could literally make the difference of you getting a buyer that wants to write an offer, or then waiting, okay, so the problem is that rates are high right now. And we think there’ll be high for the next a year or two, we can get sellers to give a closing cost credit to drive the rate down in the first one, two or three years. And so let’s just take a minute and talk about how that works. And how you can use this so that you can go educate buyers on this. And even if you’re a seller, you’ve probably seen this come across your desk. So making sure that you understand this, and can talk to your sellers about why the buyer is asking for our credit.

D.J. Paris 8:27
Yeah, let’s talk about it.

Joel Schaub 8:30
30 year fixed rate mortgages, they’re right now in the mid sixes as the time of this taping, but if you got the seller to give a 3% closing cost credit, we can take the rate at any bank and drive that down for the next two years. So that in the first year, the rate is 2% points lower. In the second year, it’s 1%. Lower. And then for the rest of the life and loan, it’s fixed. So it’s not hard to get rates that are in the fours right now. Sellers can pay for this. And it really changes the monthly payment DJ people are saving hundreds of dollars by using this exercise.

D.J. Paris 9:06
Yeah, no, it makes it makes sense. So the seller basically pays this concession. And does it go? Does it go directly to the bank? I’m guessing does it go into? Does it pay for principal interest or it’s just a part of the package or

Joel Schaub 9:22
it’s an escrow account so the client doesn’t lose the money let’s say next year rates have dropped drastically and we want to refinance, the money the seller gave is still there, and that will actually go to reduce the principal. So that’s a whole other strategy. Okay. But let’s talk about what that means. If you’re listening and you’re thinking well on a $500,000 home, why wouldn’t I just take 15 grand off the price? I’ll just Why mess around with all this. This seems like a magic trick or look at the math. If you take $15,000 off the purchase price, it might save about nine V or $100 a month on the payment, it’s good. But if you take that same $15,000, and have the seller buy the rate down for the client, on a $500,000, purchase, their payment would drop four to $500 a month. It’s a big difference. Wow. Yeah. And that can make the difference for somebody that can afford a home and not afford a home, okay? And it’s not an excuse to go buy something higher than you’re approved for. If you’re not comfortable with the payment with the way the rates are, let’s not buy let’s be honest with ourselves and be putting ourselves into something that we’re comfortable with. It’s just a way for the next two years, while rates are high, to get the seller to give us a lower rate. And I love lower rates.

D.J. Paris 10:48
Yeah, we all we all do. And at the same time, we also don’t want to chase rates, it’s like chasing the stock market. It’s anyone who any competent financial advisor will tell you don’t chase the stock market. You know, the smartest minds, financial minds in the country have a hard time doing it. And I’m certainly not one of those smartest financial minds. So I certainly don’t try to, you know, time to market as they say, and in the in the equities market. And the same thing with with rates, right, we know that buying a home is a financial decision. It’s a huge financial decision, oftentimes one of the biggest financial decisions of someone’s life. But it’s also a hugely emotional decision. And so I think the way that you solve for the fact that rates are higher than then probably people would want them to be is to really focus on the Y, right, talking about the y but also knowing that there are these creative financial strategies to make it more palatable along the way until you get to a place where maybe a refi makes sense.

Joel Schaub 11:51
I’m so glad you said that, because it’s not an excuse to buy, just because that rate is lower, it’s just a nice added benefit. So if you’re an agent, the last piece of this equation is just writing it on the contract as a seller credit. There’s nothing fancy about it listed as a seller closing cost credit. Almost every bank out there right now will do by downs. I don’t know a single bank right now, this is we don’t understand that. So work with a mortgage company that you know, and make sure that they know how to execute a to one rate by down for your clients, for a three to one rate down by down for your clients, and then go out there and submit offers that are designed to win and help. So that’s one strategy. The other strategy to get lower rates right now is let’s stop talking only about 30 year fixed rate mortgages. Okay. There are so many options out there, whether we talk about 15 year terms, 20 year 25 year terms, or looking at Adjustable Rate Mortgages again, okay, they’re coming back and our take out, yeah, either think of this, if we think in the next two or three years rates are going to be down and we don’t have the crystal ball, is there a big downside risk and locking rate for the next seven years. That’s a great arm, right? I don’t like three year arms or five year arms, I just don’t. But I like the seven and 10 year varieties. And when you’re borrowing serious money, all those jumbo arms are a lot lower. If you’re borrowing in that million plus range, you can get jumbo arms down at five and a quarter 5.125. And so speak with somebody about this, don’t just think that the 30 year fixed rates, the only option options to get them lower,

D.J. Paris 13:36
you just brought up a really good point, I hang out with a lot of realtors, with my different, I do a lot of association work. And so I’m around not even just Realtors at our company. But realtors who are you know, all throughout the industry here in Chicago, and everybody only talks about the 30 year fix. That’s absolutely so true. Realtors only know one number for when it comes to lending. And that’s the number they focus on. And you’re so right that that is not the end all be all number, it’s just the most, you know, discussed number is the 30 year fixed. So that is a really, really strong point is to remember there are other products with other options out there. And not to to think about the entirety of the mortgage lending sort of industry as one number is oh, it’s all based on a 30 year fixed. No, it’s just that’s just the most common number that people know. But there are other options like these bite down options and arms and etc.

Joel Schaub 14:35
And why is it so common? Right? It’s because it’s the lowest payment. The lowest paying, you’re paying over 30 years. And yes, that works for a lot of people. But you’d be surprised right now the number of people that are not interested in paying a loan for 30 Damn years. Okay, why are we paying it for so long? Yes, my payment will be a couple of $100 more but if I can pay this loan off in 15 years, and I can get it right Getting the low fives, especially right now I’m going to do that. If I have the bandwidth and I have a good income and my debt ratio is low enough, we really should be looking at those options, or at least discussing them. Even if we ultimately do go with a 30 year fixed, having that conversation is something that you should be doing, and making sure that you know what’s available, because a couple of years from now, when rates are even lower, maybe you end up going to a lower payment. But having lower interest right now is one of the key things that is going to get people to buy a property. So now we’ve covered a lot of things, we’ve covered rate by downs, we’ve covered other ways to make sure that we’re not just having 30 year fixed rate conversation. So don’t forget about arms. Okay. Don’t forget about lower terms so that you can get lower rates on mortgages.

D.J. Paris 15:52
Yeah, that’s really, really helpful. I’m curious, too. You work with a lot of top producers, you know, in our area, I’m curious on what you’re seeing them start to do this year, because we know that this is a, you know, a more challenging market. 2023 So far, has been tough. Inventory is still challenging. Although string market has accelerated things a bit curious in what you’re seeing these top agents doing, I don’t what I’m not seeing as agents running and hiding our top agents running and hiding. So I’m curious because you have such direct connections to them. I’m seeing them do a lot more events I’m seeing I’m seeing a lot of like, customer events, or client appreciation events, those kinds of things I’m seeing. So I’m just curious if you’re noticing anything, and you do a lot of those as well.

Joel Schaub 16:46
If you’re an agent, right now, it’s all about your sphere, making sure that you’re getting out there and doing events. And these don’t need to be big over the top events. So we’re doing so many things into one right now, in terms of getting out with agents and doing candlemaking parties and doing sips, right doing wine tasting events. We’re doing March Madness, parties, we’re getting ready for the baseball season and setting up viewing parties, things that are simple and getting back out there. And it’s just spending money, okay, you don’t have to do a lot. But if you’re not doing something, you’re doing nothing. And so for the last couple of years, when COVID was kind of like the mainstay, right? We’re finally getting past all of that, we’re getting back out there. And so if you’re not doing events, go partner with a mortgage person, all of these mortgage, people would be willing to spend money on you. Okay, that’s the reason why so many mortgage people hate me. I talk about this all the time. Go work with somebody that’s willing to spend money on you. Because these mortgage people will call you left and right and tell you how fast they are on mortgages and how good they are. Say, Hey, do you want to do an event? This event is gonna cost me $4,000? Do you want to split it with me? The first person that says yes, that’s your person, somebody that steps up and wants to help you grow your business. Those are the people that are going to be in it for the long haul. Okay, so they’re doing events, and then they’re doing client gifting. We’re doing St. Patrick’s Day gifting. We did Valentine’s Day gifting. We’re doing all these off days, like National Pizza Day, find a day send something out to 50 people, even if it’s as simple as just a small token gift partner with a mortgage person. They want to help you and go out there and do events this year, do gift giving, and put it on them. A lot of these mortgage guys have done this with other agents and ask them what are you doing with your other agents? You call me all the time asking for my business. Let’s do some business together. Do you want to help me sponsor something? They’re gonna say yes, the good ones will at least

D.J. Paris 19:05
I interviewed a woman recently who’s the number one team in her and her husband are the number one team in South Dakota. And I She’s so interesting. So such a neat a neat woman, neat realtor. One of the things she does is they have a moving van like but a big, like a kind of a like a moving truck. And not the biggest ones but you know, like one that anybody could drive without a special license anyway, what she does, it is so brilliant. And she says anybody who works with me can use it at any time. Like I don’t care if you bought a home for me five years ago, you can just call me you can use the band anytime. And on the side of it on one side is her branding for her real estate practice. On the other side is her loan officer that she works with. And the loan officer you know, pays to be on that side of the van it pays for the lease of the van. And so it pays for itself because she’s doing Something that you’re and you know, the loan officer is thrilled because his name’s getting shot all over town. And people are moving. And they’re seeing this. And I thought, you know, I’m sure she’s not the only person that’s ever done this, but boy, that’s a smart idea. I had never thought of that. And I thought, What a cool thing. And she goes, it’s great because in her in her local community, she says, everybody knows that they can just call me and borrow my van anytime whenever they need it. At any point, you know, any of my clients. And I was like, That is genius.

Joel Schaub 20:29
And that tells the story of somebody that’s willing to spend money. And so go back to your partners, right now, it doesn’t have to be a new partner, it can be one of your mortgage people that you’ve worked with for years, right now more than ever ask them to help you on something that you’re doing. Okay? This is the key, that person was willing to pay a lease, right? That person can do a lot of things that are RESPA compliant, they can never pay you just to give them deals. But there are so many ways that as long as it’s less than 50% of the total spend, you can go out and partner with a mortgage person and put their money where their mouth is, we just had an event, yeah, over New Years, where the total cost was $8,000. And we wrote a check for 4000 of it. And these agents are getting deals because they’re out there doing things. And that’s what I encourage everybody who’s listening to do think of one event that you can do, you don’t have to go from no events to an event per month, but do one a year or one a quarter, and partner with somebody that wants to help you with that on the mortgage.

D.J. Paris 21:29
It’s just all about relationships. And one of the best ways to deepen relationships is have social gatherings, whether it’s one on one, whether it’s a client appreciation event, whether it’s a drop by gift, whether it’s Hey, I’m thinking about you, you know, and if you if you’re really budget, you know, if your budget is very tight, you know, then there’s other ways you can you can do things but but this is the time to partner like Think creatively partner with a loan officer, who they can basically double your spend, essentially, if you find somebody who is going to be helpful, and Joel and his team would love the opportunity to do that with you as well. Also, one thing that Joelle and his team does that I think is exceptionally important, especially right now around all of the crisis that’s happening financially, at least at the time of this taping, again, hopefully, it’s resolved by the time this releases, but But Well, yeah, it probably won’t be Well, we hope so you’re right. We just hope that the adults are in the room at these at these big financial institutions making wise decisions to keep us all afloat. But one of the things that Joe that you do that I admire quite a bit, and it’s very helpful for me personally, as you send out a weekly email that your team puts together, and it highlights kind of here’s what you need to know about what’s going on in the lending world. And it also even talks a little bit about kind of the broader financial picture. And it’s bite sized stuff, it’s data points that agents, their questions that agents get all the time. And agents have to really kind of comb the internet for their own answers. And I like the fact that you send that directly to my inbox once a week in a bite sized way where I can read it. You know, when I can read it in 10 minutes, and really digested be like, Okay, now I’m, I’m more confident when I’m speaking to a customer. And so I’m just want to make sure that any of our listeners know you can also get on Joel’s email newsletter list. So you can receive these weekly updates as well. Joel, what’s what’s the best way they should do that?

Joel Schaub 23:29
Well, yeah, that newsletter came about it used to be private, I used to figure out the ways to make it digestible, right. So that we’re not having to explain every single thing to a client. And it became something like kind of a pop culture, people want to see this, they want to know, like, what is he talking about? And so they can email me and just say, add me to your newsletter. It’s just joel@rate.com. So J, o el@rat.com. And as simple as one sentence, add me to your newsletter, and then you’ll get weekly updates, and you’ll be able to speak about the mortgage side. And it’s not so it’s so cumbersome, right, we got to break it down in ways that give you fun talking points and just help you through it. So that’s one of the things that we love to do. And then helping clients get lower closing costs as the second one. So we can send you the email template where clients get a $1,500 closing cost credit if they’re working with us. Once that gets sent over with a newsletter, we’re happy to help buyers as well. So yeah, there’s a lot of good things coming up for the listeners, TJ.

D.J. Paris 24:35
Well, yeah, this is a great place to sort of wrap up for for this episode. And Joel as per usual, thank you. Great, great content, great information super helpful for our listeners. And for everyone out there. If you don’t have a good relationship with a loan officer Joel and his team would love the opportunity to chat with you reach out to him, you can email him also, whether you want to get on his email list or partner with him or maybe just And a client his way. Or maybe you’re a buyer or seller yourself and are interested in lending opportunities. Joel and his team are fantastic. So you can reach out to him joel@rate.com. And that’s via email. And then Joe, what’s the best way they could reach out by telephone?

Joel Schaub 25:17
After I did this, I had about 15 or 16 individual conversation, I talked to people all over the United States. And they were shocked to say, like, you’re actually going to spend time and I love it, because I like hearing about different markets and seeing what people are doing, and just sharing my feedback. So yes, 773-654-2049, you’ll either have any pickup personally, or you’ll get a return phone call from me. And it’s really great to see how just different markets were in what you’re doing. And we just share that information and help each other grow,

D.J. Paris 25:49
and guaranteed rates in all 50 states. So wherever you’re listening to this from a guaranteed rate can likely help you to fit in if they’re not able to assist, they’ll be able to tell you who to talk to as well. So anyway, Joel, thank you once again for coming on. You’ve been with us for years and years and years always brings great content. We love having you on excited to see you next month for another episode. And on behalf of the audience, we say thank you on behalf of Joel and myself to the audience. We also say thank you, please tell a friend about this show everyone listening, just think of one other agent that could benefit from hearing this information. Maybe they’re a little depressed or down right now about the conditions of the market. This might help cheer them up and give them some things to talk about with their clients. So share this with the people in your office or any other realtors that you know that’s the best way you can help us grow and also support our sponsors too. But yeah, reach out to Joel get on his mailing list guys. joel@rate.com asked to be on there. Trust me, it’s worth it. You know, give you the ammo you need when you’re talking with clients. Joel thanks so much. We will see everybody on the next episode. Thank you, DJ

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