Expect Delayed Closings!

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Anthony: Do you like to negotiate short closing timeframes on a vacant home? Do you put in oftentimes that you’ll close in three weeks or close in four weeks? Well, I got news for you. If your buyer’s getting a mortgage, don’t do that for the next 60 days. This mortgage system is completely strained. It’s unbelievable what has happened in the last eight days because of fears with the Coronavirus.

Then investors jumping out of stocks, jumping into bonds, driving mortgage rates yesterday to the lowest point in history of our country. Okay. We’ve never had lower interest rates but what’s happening now is mortgage companies, law firms, they’re all taking in so many refis that the whole system is going to be completely logjammed for closings in April and May. It’s going to be probably worse than we’ve ever seen and it’s amazing to see what’s happened here.

Not only like I mentioned the stock market, the bond market worldwide economy, but then you also take a look at the companies that we deal with, the mortgage companies, appraisers, think about the supply chain, mortgage companies, appraisers, title companies, attorneys, who else is connected to a closing? There’s a whole bunch, right? That whole ecosystem is completely strained now.

These mortgage brokers are getting absolutely crushed in calls. They’re getting three different sets of calls. Number one, “I want to refinance.” Number two, “Hey, you lock my rate three weeks ago and I’m supposed to close in two more weeks. I want my rate to go down.” They’re looking for flow downs. Then number three, it’s the spring market, March is here. The whole season’s kicking off, properties are getting listed, buyers need updated pre-approvals, and bang, this happens.

Couldn’t happen in December. It couldn’t happen in January, had to happen the first week of March, right when the whole thing kicks off. Not the end of the world, we’ll all get through it, but it is at a historic time that we’re in right now and I don’t think enough people realize that. I don’t think enough realtors realize that this is literally a historic time. I’ve, since I started in the business, always been in the camp of push your vendors and the people in your circle, your ecosystem that you recommend, they need to be on the ball. They need to be getting things done.

They need to be in touch with your clients but if there was ever a time, guys, that we got to work together and give people a break and have some patience, it’s right now. These poor mortgage brokers are absolutely working their tails off and they couldn’t keep up if they had to. Just imagine, put yourself as a realtor. Let’s say you’re a realtor that lists three homes a month. Imagine if today’s Saturday, by Monday you had 32 homes to list and everybody wanted to get on by Tuesday, just think about that.

That is the equivalent of what they’re dealing with right now. That is the equivalent. We’ve got to have some patience with these people, we’ve got to set the right expectations with our buyers, with our sellers. I think that everybody should be warned that there are going to be more closing delays come April, come May, everybody on all sides of the transaction. I was thinking this morning, driving over here, I’m waiting to get a haircut. Yes, I get a haircut at five o’clock in the morning on Saturday.

I remember in ’08 and some of you might remember this when the market went bad. There was a time that people were past their mortgage contingency dates in not quite a closing and banks were going under. Literally banks were going bankrupt the day before closing or the closing would be scheduled for 11:00 AM, 11:00 would come, the attorney would go, “I haven’t got funds yet. I don’t know why I haven’t got the funds.” Twelve o’clock would come, one o’clock would come, whoa, bank’s out of business.

In the first week or so of that happening, there were a lot of angry sellers. A lot of people, “I want my deposit. I want my deposit.” Then it was nice to see after a week or two, a lot of people just started working together. A lot of people started saying, “Wait a second, this is unprecedented, this is something crazy.” Buyers and sellers really started working together. Sellers started giving, not all sellers, but some sellers and listing agents started giving some time to buyers to get a new mortgage and it was nice to see.

A lot of that came from us realtors, that were leading the way and explaining to people what was going on and explaining that it was an unprecedented time. Guys, that’s what we need to do. Us realtors, we’re the tip of the spear and we’re the ones that are in contact with the most parties and we got to make sure to get in contact with people to set proper expectations.

This doesn’t mean mortgage brokers can slack. It doesn’t mean that they should just be given a pass to delay everything, absolutely not but I think we need to be a little bit more patient here and we need to make sure that we’re working with our mortgage partners because, without them, guys, we don’t have a business. If nobody funds these deals we do, funds these transactions we do, buyers, sellers, realtors, we’re all done.

I think we should support our mortgage broker friends and set the right expectations, be in proper touch with everyone, don’t set up for failure from the beginning with 21-day closes and 30-day closes. That’s it, my friends. All right, mortgage brokers, if you’re listening, we appreciate you guys. Have a good weekend. Try to get some sleep.