How Lenders & Realtors Are Teaming Up to Solve Housing Market Challenges

Written by Posted On Monday, 13 September 2021 12:44

Here’s the good news: the housing market is booming. The bad news? The housing market is booming. A hot residential real estate market for sellers means a challenging homebuying landscape for prospective buyers. In June, home prices soared 17.2% over last year’s June numbers. Remarkably, over 50% of homes for sale in the current market have sold for more than the asking price. The result is that 2021 homebuyers have had to navigate the most competitive housing market in history. While the reasons for this unusual market dynamic are multifactorial, there is little doubt that the newfound ability to work remotely is prompting an unusually—and in fact historically—high level of activity. Millions of Americans are relocating to homes in search of more privacy and more space—a phenomenon Zillow calls The Great Reshuffling.

From double-digit sale price increases, and a sharp drop in supply compared to pre-pandemic levels, to historically high numbers of Americans looking for new homes and new opportunities, the result is a market that simply can’t keep up with the demand. In other words: a seller’s market.

What can the average homebuyer do to stand out in a market where even the most modest of homes can fetch multiple offers over asking? As home prices soar and bidding wars become the norm, it’s a problem that mortgage companies and realtors alike are working to solve. The lack of inventory isn’t just an inconvenience and a frustration for buyers—it’s impacting the lending business. As lenders look to find ways to get more loans closed, creative and unorthodox solutions will need to be added to the toolkit. Ideally, this creativity will provide a resource for realtors and enable prospective homebuyers to have an edge when making offers in the current cutthroat environment.

At Ross Mortgage, one of the ways in which we’ve attempted to do just that is through our new Guaranteed Pre-Approval Program. The program essentially turns a client’s offer to purchase into a cash offer: a commitment to lend. Under the terms of the program, a Ross Mortgage underwriter reviews a prospective buyer’s income, assets and credit, and subsequently approves them for the appropriate sales price and loan amount. Each buyer’s creditworthiness is verified, and all funds are approved.

The idea is to empower prospective buyers by giving them a way for their offer to stand out from the competition—and, simultaneously, to enable sellers to accept offers with full and complete confidence, knowing that the offer is as strong as, or superior to, any other offer they receive. To confirm the lending commitment, Ross has gotten even more creative: in this case putting our money where our mouth is by promising to pay the seller $1,000 if we can’t close the mortgage. While this kind of guarantee may seem like a gimmick, it’s a unique way to get the seller’s attention, alleviate any doubts or uncertainty they might have, and, ultimately, express confidence in the way we do business. For sellers, the prospect of a no-strings-attached cash offer lets them know that they can expect a timely, guaranteed closing with a commitment to lend. Ultimately, strengthening the power of the offer that would otherwise be standard.

The best residential mortgage companies are champions for prospective homeowners, working closely with realtors to give them new tools and unique resources that they and their clients can use to close the deal. As more and more homebuyers get frustrated with making strong offers that don’t pan out, new tools and programs like this are likely to proliferate. Because, in a competitive market, creativity can be a difference-maker.

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Tim Ross

Tim Ross is CEO of Ross Mortgage Corporation, a residential mortgage banking company based in Troy, Michigan and one of the top independent lending firms in the Midwest.

https://www.rossmortgage.com/

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