Due to housing prices having risen over the past two years, homeowners are now sitting on an addition six trillion in tappable equity. So, what should they do (if anything) with it? Joel Schaub, Vice President at Guaranteed Rate, discusses several ideas such as contacting clients currently paying PMI to re-appraise their home to see if they are now eligible to remove PMI. There are also cash-out refinancing options for owners looking to pay down other debt at higher rates. The bottom line is this now gives real estate brokers the opportunity to reach out and communicate with their clients and provide a value added touch.
D.J. Paris 0:15
Hello and welcome to another episode of Keeping it real the only podcast made by Chicago real estate brokers for Chicago real estate brokers. My name is DJ Parris and welcome to the show and today is our monthly learning with a lender series with Joel Schaub from guaranteed rate. And let me tell you a little bit about Joel, if you are unfamiliar and have not heard any previous episodes, Joel is vice president of lending at guaranteed rate. He has been doing loans at a high level since 2003. And has gotten to that level because of what he does directly for agents as well as clients, he gives part of his commission back to the buyer on every transaction. Last year alone, Joe gave back over $244,000 in closing costs to buyers who worked with him, and that put his value in the top 1/10 of 1% of mortgage brokers nationwide. And out of 370,000 loan officers in the country, he was ranked number 181. Year to date, Joel has closed over actually 100 Exactly 159 transactions as of yesterday, for just under 51 million in closings, and he is here with us today. Let’s say hello to the biggest Cubs fan. I know Joel,
Joel Schaub 1:29
I thank you so much DJ, I appreciate the kind words. And like I always tell people, it’s not about me, I want to make this very useful and educational and help the agents on the call. So I appreciate all the numbers and telling them what I do. But it’s really a chance for me to give back and actually help grow business. And I’ve seen so many things over the years that if I can give a little bit of knowledge here. It’ll go a long way.
D.J. Paris 1:58
Well, I I will it I appreciate that. And that’s the intention and purpose behind the show is to just provide value to the industry. But I will say on a very specific level that Joelle just recently helped my friend Karen, buy a home in Wisconsin, and she could not have said nicer things about Joel and how professional and quick can you get you to get the deal done. So I can say from experience working with Joel is a good idea. So if you’re not currently working with a lender that you like, obviously give Joel, give Joel a shout, he’s great. I
Joel Schaub 2:30
appreciate that. And at the end of the segment, I’ll make sure that people have good contact information. And it really is vital that you’re working, whether it is with myself or another mortgage professional, just somebody that actually cares about you, I can’t work with every agent. Okay, I wish I could. And for me, it’s about partnering and finding people that really want to grow right now whether you’ve done five or 6 million, and you want to bring it to 10. Or whether you’re doing 10. And you want to bring that to 15 or 20. Using some of the tools. I never thought I could get to a point where I would close $7 million in a single month. But that’s what I did last month alone. And we can share some of these tips and secrets and just things that really may resonate with the agents out there so that they know that if they want to connect with me, they can absolutely have me as a partner.
D.J. Paris 3:24
Awesome. So what are we talking about today? What’s on the agenda?
Joel Schaub 3:27
Well, I want to make sure that right now we’re seeing a little bit of a lull in the market agents are telling me properties are staying on the market longer. Are you seeing that? Yes. And you’re seeing that the buyers that already wanted to buy have bought right, so there’s less buyers that are out there? Right. So what I want to do is give the agents some things that they can do to actually stay active and connecting with their old clients. Okay, so the number one thing that you can do is not be transactional, the way I’ve gotten to my level of business is it’s not about closing one transaction and moving on. Right. So as agents, how can we stay in front of the past clients that we have helped in a way where you’re not calling them up and saying, Hi, do you want to buy another house? Hi, are you are you looking to sell your house? Right, that doesn’t work. But if you could give them help, and you could call them and tell them a couple of things that are going on about the market right now. We’ve seen agents pick up new deals on it. And you were telling me some of these interesting stats about the amount of equity that are in properties right now. Right?
D.J. Paris 4:35
Yeah, I was just reading the article on CNBC that homeowners are sitting on 6 trillion in available cash as homes prices have risen kind of nationwide over the last two years. It’s essentially more cash. It took 21% more cash is sitting on the sidelines than in before the crash in 2006. So pre K ratash We’re still have more equity in our homes at this point today.
Joel Schaub 5:03
So what will that allow us to do? I’ll start with it being on the lender side, and then I’ll actually turn it into something that absolutely agents can do. And that would help them get additional transactions. So what does it mean, there’s a lot of equity in these properties. And it means if a client had bought a property in the last two or three years, and they did not put 20% down, what do they have, they have mortgage insurance, right. And so it’s one of those necessary evils. If you don’t have 20%, down, you still get a mortgage, but you’re going to be carrying an extra 100 200, even $300 a month of PMI, or private mortgage insurance. And once you get into the house, sometimes you forget that the value has gone up. So right now, what we’re helping clients do is go back in anybody who did not put 20% down, sending out an appraiser to their house at no cost and seeing if we can get a higher appraisal, so that they could literally save again 100 200 $300 a month. And if we ended up having enough equity, I do a 350 flat fee closing for that client. That means from underwriting processing, even that appraisal cost the buyer pays just $350. And if they’re saving 100 or $200 a month, would you pay me $350? If I turned around and sent you $100 Every month for the next nine years, yeah. And so we don’t make a lot on these, this is just a value add. So here’s one of the things that agents have been doing. I have one gentleman in particular, that took his entire database, and just call them and let them know that, hey, the house that I sold you, when you bought it for 310, it looks like right now, that value is up. And he doesn’t quote specific numbers, but it makes him look good. And he says, I know that it might be a good time for you to reach back out to your lender to see if you could drop mortgage insurance and huge call, right think about what they want.
D.J. Paris 7:12
I will tell you when I bought a condo to 2000s, five or six, right. And I had PMI and I ended up refinancing a number of times over the next 10 years just because it always made sense. The only reason I ever knew to do it was I saw a news story. No one ever my realtor never reached out to me and my lender never reached out to me. And I would always have to call going should I be refinancing and eventually I was able to get out of the PMI situation. But no one no one told me. So great opportunity for the agent.
Joel Schaub 7:44
It is this agent in particular was a Behrman order agent. And he called 22 people and out of it, he got two new listings. So let me There you go. Out of that we ended up doing one or two refinances for clients. But the number one thing that it allowed him to do was deliver good news. And that’s what I like to kind of set the tone when I’m having a relationship with a client is can I call them back and deliver something to them? That isn’t me asking for business. And that’s what I want these agents on the call to think about? Is this is a perfect opportunity. Do you think you’re slow this week? Were you slow last week? Are you trying to get new deals? We’ll call people that already like you. Right, exactly. So these are ways that you can go and get your list of past clients and say, Now would be a really good time to reach out to you know, Jim, your lender, or whoever it was that closed the transaction and see if you could eliminate that mortgage insurance, my numbers show that you paid 310,000 And right now, properties in your neighborhood are going for 370 What a good call.
D.J. Paris 8:56
Yeah, and even if they did put 20% down, it still might be a good refi opportunity. So it’s just a huge opportunity to stay in touch.
Joel Schaub 9:04
Right. So the second portion of that would be a cash out refinance. Even if the market rates are up right now we’ve seen rates go from 375 At about this time last year, to right now they’re hovering around four and a half, okay? Meaning on a 30 year fixed four and a half is probably still a lot lower than what they have on say a credit card or etc. So it’s not like 2005 and oh six where everyone was just taking out all this cash to pay off credit cards. This could be an actual smart move for somebody that is sitting on 20 or $30,000 of credit card debt and is paying four or $500 a month just to cover the minimum payments. If they took out $20,000 on their mortgage, it might increase their payment by 40 or $50. Right? What a change that would be for somebody and then all of that interest is taxed. deductible, whereas none of it on the credit card is tax deductible. So another opportunity right now for agents to call back clients and deliver good news about higher values, and then provide something of value.
D.J. Paris 10:16
Yeah, I think that’s such a such a smart opportunity. Where do you see rates? Or do you have a sense of where rates may be heading? We know they just increased? Do we? Do we feel that this guarantee read? Have you ever thought about where they see that going,
Joel Schaub 10:30
DJ, let me get out the crystal ball, right, then I would have a larger boat. This is my old joke, right? If I knew where rates really, truly were gonna go, I would have a much larger boat, I would know the market in a way where it’s more than just a prediction. But the All joking aside, we know that they’re just going to continue to grind slowly, higher. Sure, we’ve already seen a big jump. The market is not anticipating another spike. But we won’t see any opportunities for them to have a big drop, either. We don’t
D.J. Paris 11:08
know the economy’s doing well. And so there’d be no reason to.
Joel Schaub 11:11
Today, the 10 year Treasury just peeked over 3%. And that put us at the highest rates that we’ve seen since May of this year, right. And so there’s a lot of economic data that goes into these mortgage rates. And the underlying issue is simply there’s a lot more things that could have the market go up slightly than anything that could have these rates get back down into the threes that we saw in years past. So all is not lost. Right? If rates continue to go up, it’s going to get buyers that were on the fence off that fence. Right. Yeah.
D.J. Paris 11:47
Great, great, great algae. And let’s talk about and I just want to just want to talk very briefly back to the partnering that you do. You have brokers that you’ve worked with it because I think there’s a lot of brokers out there who this are starting to build their business and getting into those, those numbers that you were mentioning, they start to realize they need strategic partners to do some different initiatives. Can you talk a little bit about what what you’ve done with some, you know, some of your brokers.
Joel Schaub 12:17
So next week, I’m gonna be setting up coffees with folks that want to reach out to me, and it’s as simple as email@example.com say, I’d like to have coffee. Okay, so firstname.lastname@example.org. And what I’m doing for my realtor partners is something that’s way different, okay. And people know that I closed $7 million of mortgages last month alone. And it was one key factor that everybody gotten that was, I used part of my commission on every transaction I gave back to the buyers, so realtors that come over that don’t have somebody that’s truly in their corner. It’s like this, call my guy Joel at guaranteed rate, he’s been a VP of lending there for 14 years. And when you mentioned my name, he’s going to cover the closing costs. So I give a $1,500 credit that covers our $1,200 in fees, and on most transactions that will also even cover the appraisal cost. So we’re making a lot less than every transaction. I’m just doing more transactions.
D.J. Paris 13:20
Okay. Yeah, no, I mean, we have a similar model here, obviously, not the lending side. But we have a similar structure at our company, we make a lot less than every deal. And we hope that that keeps people pretty happy. And it seems to work for both of us.
Joel Schaub 13:35
So here’s some of the things that will help an agent if they’re new to the business, or they want to grow by actually partnering with somebody that puts their files first, what I’ve seen, in the last, say, 60 transactions that I’ve done is a rapid, clear to close turn time. So I take a file that comes over on the contract, and I order the appraisal right away. Since I’m paying the cost of the appraisal. That means I’m not waiting on inspection. And I’m not waiting on all these different issues to be cleared. I have an average term time start to finish of 12 to 14 days. And if you’re an agent on the phone, and you’re sitting here, wondering about a file right now, and you’re wondering, I wonder if that bank is gonna give me the clear to close they they promised it last week, and now there’s another delay. Think about what it would be like if you were actually partnering with somebody that did the exact opposite. They reached out to you and said things are done sooner, and the file could be clear to close weeks before the contingency date. And that’s what we’re doing. And we’re setting it up in a way where these agents can then go move on to their next transaction, get a signed contract, get it over to me and my team of eight literally from start to finish gets it through underwriting and has a true clear to close in about 14 days.
D.J. Paris 14:56
Yeah, it’s It’s remarkable and like I said, I’ve I’ve seen this for just had with Joel, with people that I know that have used him. And everyone has a very similar impression, which is, Joel is great. And obviously it’s reflected in his numbers and his success, and also his generosity. Being on the show is also indicative of his generosity, there’s nothing in it for him to be on the show other than to provide value to the audience. And we really could not appreciate it more on there’s a lot of lenders out there, Joel was the first one to sort of come saying I need to be on the show, I have to be doing this every month, and we couldn’t appreciate it more. So please give him an opportunity if your broker out there or even if you’re just a consumer out there looking for, you know, a lender, obviously, he’ll work with you, either way. So what Joe is one more time, what’s the best way people can reach out to you.
Joel Schaub 15:46
So next week, I’ll be setting up a coffee appointment for agents that are literally looking for a lending partner, right, somebody that will actually do things for them. And some of the things not just the clear to close and 12 to 14 days, and giving back part of my commission to the client, which is actually a really good one, when you think about, Hey, call my guy, he’s been there for 14 years, and he can get the bank fees waived. That’s a real good connection. But such as are things such as doing broker opens where we could deliver food and drink to a new open house or a broker open that you’re going to do. It’s all about giving back. I got to this level by truly giving. And it’s this model of givers gain. I don’t want people to know how much I you know, no, I want them to know how much I care is as simple as it sounds. That’s how, if you look on Yelp, or any of these review sites, every review that’s ever been written is a five, I don’t have fours threes or twos. In the mortgage business. It’s really easy for these agents and mortgage guys to have bad transactions and we stay ahead of it. We teach we educate and go ask your lender. Do you have 100%? Five Star rating like this every single client? Would they rave about you? Or was it just okay? Did they just do a good enough job, we want them referring more business back to the realtor. So when they get referred over, I say the realtors name no fewer than five times during the transaction, when they’re happy with something that I’ve done, such as your appraisals in the value is good. And we got it in four days. They go wow, that’s amazing. And I say it is amazing. But it’s the reason that you got me was because of Jim or Susie realtor. Can you make sure that anybody you know that’s getting ready to list connects with Jim or Susie? That kind of thing? That’s awesome. Yeah, so email@example.com And I’ll get my phone number. This is one of the things I have no problem taking phone calls at 678 at night. As you can tell, I love mortgages, kind of like almost in a dorky way. Sure, right? I never say Thank God, it’s Friday. I I lied. Today is Monday. And I still love getting in here because I work Saturdays and Sundays. You know, over 50% of the transactions happen on a weekend and you need somebody that I’ll actually give you an updated letter and is willing to help you share in a weekend, right? Of course. So the phone number is 773-654-2049. And then an email was Joel and rate.com. What we’re trying to do is work with agents that want to grow the business and I have some real, proven strategies to get additional deals. And if you’re just looking for something different, somebody that’s actually been at a company for 14 years go figure in the mortgage industry. That’s like 100 years.
D.J. Paris 18:42
It is and also I’d like to say that if you have as a broker, if you have questions for Joel on our next installment of learning with a lender, you can email those, you can email us at Jen. She’s our producer Jen at keeping it real pod.com Or you can actually submit it through Facebook keeping it real pod or our website keeping it real pod.com Send us rate quipment not so much questions necessarily about what we’re what’s going on with rates. But any questions on the lending side? Joel is the expert he will answer those two. So on behalf of Joel and myself, thank you for listening and we will see you again in a month for our next learning with a lender episode and we love this series. And thanks again to Joel for being on the show.
Joel Schaub 19:28
Guys. It’s genuine ly my pleasure to help and give back and we’ll see you again next week.