Real Estate & Mortgage Market update | So Cal Edition | March 2019

My name is Teresa Tims, and you can find me on the web at TheSocalLoanPro.com. I’m President of TDR Mortgage and Real Estate. I specialize in home loans. If you have any friends or family that are looking to buy, sell, or refinance. If you could pass along my name, that would be great. I’m what’s called a Mortgage Broker, and I’m an independent originator. We have not only amazing service, but bottom of the barrel interest rates, and a whole bunch of other great stuff.

Today I wanted to share with you what I’ve been learning this week. As you know, because I go live and share what I’m up to a lot on social media, I’ve attended some events this week. There have been some goings on in the mortgage industry that I wanted to share. That’s why I’m doing this Southern California March market update.  I guess I want to first start off with the most important thing.

Low Low interest rates from a California Mortgage Broker

Since I’m a mortgage originator, I want to talk about mortgage rates. Rates have come down a little bit from a couple months ago, and thank goodness because we were inching up into the high fives, and low sixes there for a minute. I priced out some stuff this week  where we’re at right now. We just priced out and locked a loan, an FHA purchase with a 660 credit score borrower. Their rate was in the low fours, we were able to give that rate to them in the low fives, and pay two percent closing cost.  Pricing as of 3/25/19 FHA home loans are pricing in the mid to upper 3’s.

What that means, on a $400,000 purchase, you just come up with your down payment, and then we got you on the closing cost end of things. Conventional home loans, similarly in the low fours. I even priced out a 15 year loan this week that’s pricing out in the mid threes, so there’s some opportunity if y’all are looking to possibly go into a 15 year, the rates are really good on that end of the spectrum. I think I could have had my borrower pay a point, and got 3.3 or three and a quarter.

News for my California Real Estate Investors!

Okay, also, I’ve got the best news for my investor people out there.  I have been searching for this product ever since the crash. I used to do all of these investor loans for single family investors that have their long term buy and hold properties, and they want to put 30 year fixed on the properties. They’ve just got so much going on, S corps, C corps, multiple corps, LLC’s, land trusts, their personal credit report has 10 properties, they may own 50 properties, and they’re privately financed. And so so much going on that a traditional full doc loan just wouldn’t be a good fit. I’ve been looking for a light doc, or preferably no doc loan, and I found it.

If you know anybody out there that’s looking to firm up their rental portfolio with some beautiful no doc financing in the sevens with a 30 year fixed rate, I want you to give me a call. No schedule of real estate, the loan application, you’re pretty much just putting your name, address, and phone number for the most part. It really is a spectacular product.

We’re in that 8th inning, the final stretch.

This is on the southern California housing front for our 2019 Real Estate and Mortgage Market update. I attended a couple of housing events this week. One of them is someone that I follow a lot, his name is Bruce Norris. He’s this impeccable data gatherer. I love going to his events, learning from him, and seeing what the data has to say. I mean, because that’s really what we go off of in determining where we’re at in the market. His prediction is that we’re in that eighth inning, we’re in the final stretch.

If you are looking to sell something, this is what I’ve been trying to impart on my database, and my friends and family, and my viewers out there. If you have something to sell that you don’t want to keep through a downturn, you need to sell it right now. The key is to pricing it right. We’ll go into that more later, because that is really becoming a pain in my ass right now, so don’t get me started. Pricing a property right, you have to price the property right from the get go to have success in this market.

Real Estate & Mortgage Market update So Cal Edition March 2019

Real Estate & Mortgage Market update So Cal Edition March 2019

Okay, so Bruce, my take, and I kind of feel similarly is that I feel like Bruce’s take is that we are headed for a long downturn. That, we have such a big pool of high performing notes and these are the cleanest, most beautiful loans we’ve ever originated in the history of loans. Which, goes way back when, like to the 60s, or the 50’s. But, I mean these are all full doc, full income qualifying, down payment, committed borrowers.

These loans aren’t going into default. Largely what’s going to happen is, it’s going to kind of be like the 90’s. We are going to experience a downturn. What goes up must come down. It’s been 10 years, right? 10 years of this. We’re like this, headed back down. It’ll be a slow down, and then we’ll just kind of chill for a little bit. That’s a good chart, just chill for a little bit. Like the 90’s, so that’s kind of how I picture it, right? Just kind of, it’s going to go down slow, and it’s going to go back up slow.

If you’re going to keep your property get in, hold on. There’s going to be a lot of great opportunity out there though to buy, right? It is a buyers market, sellers get on board. Agents, get on board and price your properties right. To have success in this market, price is everything.

Steven Thomas for great detailed market data in Southern California

There’s another fellow that I follow that I’m just so impressed with him. His name is Steven Thomas. If you want to Google him and try to find where he’s speaking, and go look at his data, his data is very, very telling on where we’re at and where we’re headed. I thought it was really interesting, his data on days on market has increased a lot. I don’t know, like in our market you know. If something’s priced right, it’s going to sell in two weeks. That’s not the case anymore. I mean, look on MLS. Stuff is on there for 60, 90, 180 days now. It’s not uncommon to see that. The reason we’re seeing that, largely is because it wasn’t listed properly from the get.

Okay, so he has a website, ReportsOnHousing.com that you can check out, that gives further statistical data. Listing agents, if you’re out there doing your listing appointments, that’s some data that you should be using to show your sellers what the trends are, and what’s happening. He also made a prediction that the home prices were going to go down five to 10%, and we’re seeing that. That is right on point right now.

In order to have success selling your home IT Needs to be priced right

All right, so this is something that I’m seeing that is just, it’s really rampant right now and I don’t know what’s going on. Well, I have a feeling I know what’s going on.

The agent goes out, gets a feel for what’s going on, looks at the house, then comes back and they have a price decision, or a price conversation. “Hey, houses … Your house, great house, good condition. Houses are selling in your market from 375, to about 390. If you’re pricing at 375 we can put it on the market, get it sold in 30 days, call it a day. You take your winnings and go, and everybody has a happy transaction. Or, if you list it at the 390, we could try that for a little bit. If you’re really stuck on that number, we can try that for a little bit. If we get absolutely no activity, then we really need to go and drop it down to that 375 price point.”

A strong agent will really try to impart upon his customer not to put it at the 390, to do it at the 375. If for some reason that … Hi Edward, how are you? If that client is just very insistent, then what some of my savvy agents do is they’re like, “Okay,” they build it into the listing agreement. It’s 390 for two weeks, or three weeks, just to appease the seller a little bit. “Hey, you know, no skin off my teeth.” But in three weeks that price is being dropped to 375. No negotiating … Not 380, not 385. It’s got to go to 375.

You might even need to lower it to 370 just to adjust to the market. But, what’s happening is these sellers are telling this listing agent professional how to set the price. They’re saying, “Oh, well no. I want my house to be a 420, or 410, or 400.” That agent, who is not very skilled at setting a reasonable expectation and imparting how important it is to price a property right, they are just not educated in that manner apparently. They’re listing it at 410 or 420.

Then we go out there, we’re … Not we, but my agents are out there writing offers, and maybe they negotiate that house, that, right? That 390 house, but it goes into escrow at 380. Then the appraisal doesn’t come in. The appraisal comes in at 370, and guess what? Seller still thinks their house is a million dollar house, and really wanted a 420 offer, or $400,000 offer and they don’t want to lower the sales price.

Again, the listing agent is not savvy enough to go back and have a strong conversation with this listing agent and say, “You’re not being reasonable. Basically you’re wasting my time as a buyers agent, you wasted the buyer of the house, he spent 300 on a home inspection, and 500 on an appraisal.” It’s just a cluster fuck. I’m seeing that on so many levels right now.

We just had two in the last month … No, three that fell out because a seller didn’t want to reduce the price. I guarantee you we’re going to go in 30 days, ’cause I’m going to, I’m going to put them on blast and find out how much these houses sold for. I guarantee you they sold for what we had our offer at, or what the appraisal came in at. Because, that’s just what it is. We’re in that kind of a market right now.

Southern California Real Estate Agents need step up their game and set a reasonable expectation on pricing

Office managers, real estate agents, go step it up. Step your game up, and learn some really hard negotiating tactics and skills on price. Going into the market that we’re going into,  if you’re not a skilled listing agent on price, and setting a reasonable expectation, you will suffer. You will die a slow death, you will have these listings on your hands for six to 12 months that are just going to eat your time alive. I know Clyde’s not here, I wish Clyde was on here because we were going to do a segment on price.

Also, one of my associates, Brittany Layton who is so, so talented at price. You look at her listings, and her listings sell for what they’re priced at. You look at a lot of agents listings, and they have all these down arrows where they had to do, maybe they’ve got 20 sales this last year. All 20 of them were down arrows, so that’s a telltale sign of somebody not setting a reasonable expectation, and being a strong agent, and doing your client a disservice. You’re really doing your client a disservice when you do that.

Okay, so with that being said I hope you got something out of this Real Estate and Mortgage market update for March 2019. If you or someone you know is looking to buy, sell, or refinance in Southern California, I’d hope that you pass along my name. I would super appreciate it.

If you are looking to buy or sell in So Cal call us at (909) 920-3500 or text Teresa Directly at (909) 821-3093.