The market is booming in a way we’ve never seen before.
Home prices have reached record new highs, and homes are flying off the shelves.
In this episode, Elliot Kallen brings on Larry Hertz and John Kay to discuss the housing market in the Bay Area and beyond.
Meet Our Guests
Real Estate Agent, Vanguard Properties
Larry Hertz has been in real estate management for 27 years and spent 17 years as an investment management consultant on Wall Street.
Loan Officer, Cornerstone Home Lending
John has been dedicated to providing a world-class mortgage experience to his clients for the past 30 years, and has assisted over 2200 clients with their financing needs.
What’s going on in the 2021 housing market?
Since the start of the pandemic, interest rates are the lowest we’ve ever seen. Homeownership has suddenly become much more affordable.
The flip side is, there isn’t enough inventory. So, there are many more buyers than there are properties for sale. As such, we’re starting to see homes being sold for 20 percent over asking price.
That’s why, now, everyone needs to be pre-approved for a loan.
Prequalification vs. Preapproval
As a buyer, getting both prequalified or preapproved will give you an estimate of how much home you can afford as a borrower. However, preapproval is a more specific estimate of what you may borrow from your lender.
Preapproval requires the lender to verify your financial information — through documents such as your W2, recent pay stubs, bank statements and tax returns — as well as your credit history. The lender will then use these documents to determine exactly how much you’re preapproved to borrow.
Most buyers think they have to put 20 percent down on a home. The truth is, buyers can buy a home with as little as 5 to 10 percent down. Moreover, homes are selling above their appraised value. That emphasizes the importance of buyers understanding their full range of options.
What should a buyer look for in a real estate professional?
We’ve seen a lot of fly-by-night companies come and go. The only real estate professionals who are able to stay in business for decades are the ones who offer quality service — real estate professionals should provide the Neiman Marcus experience of buying and selling.
Why should a buyer work with a local real estate professional?
FinTech has commoditized the real estate industry. They capture the customer segment that looks for the lowest rate with little concern for trust or the customer experience. However, the lowest rate doesn’t always translate to the best experience.
Buyers should not settle for a one-size-fits-all experience. Your Loan Officer should know which questions to ask, based on the your short-, medium-, and long-term goals and objectives, to match you with the right loan product.
They should also maintain your relationship by doing annual loan reviews and educating you about your options, such as prepaying your loan (which can save you hundreds of thousands of dollars of interest over the life of the loan).
How do you generate—and keep—real estate business?
The most successful real estate professionals focus on maximizing value. Value comes from offering a high-quality client experience.
One way to focus on quality is by limiting the number of buyers and sellers that you’ll work with at any given time.
Moreover, real estate professionals should consider the lifetime value of each client. Keep in touch with clients many times throughout the year, even if they move to a different state. When clients move, refer them to a real estate professional in your network who is based in their new location.
What’s the mortgage market looking like today?
Every client is unique based on their short-, medium-, and long-term goals. Most buyers are looking for a fixed-rate product, whether 15-year or 30-year.
Loan Officers should listen to their clients’ needs. If a client wants to maximize their tax deductions, they should be matched with a 30-year loan to keep their cash flow as flexible as possible. If they want to pay off the loan sooner, they should be matched with a shorter-term loan; interest rates are about 0.5 percent lower on a 15-year loan than a 20-. 25-, or 30-year loan.
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