MLO | Mortgage & Real Estate Guide

New Construction | Is Shinier Really Better?

April 30, 2020 Addy Nett Season 1 Episode 8
MLO | Mortgage & Real Estate Guide
New Construction | Is Shinier Really Better?
MLO | Mortgage & Real Estate Guide
New Construction | Is Shinier Really Better?
Apr 30, 2020 Season 1 Episode 8
Addy Nett

Today in this episode, we dig into the truth behind New Construction homes. Does new really mean it is better? Why do builders want buyers to use their Lender? Casey Carpenter, a former new construction lender adds in his experience in the new construction world. What to look out for and what to be excited for!

Show Notes Transcript

Today in this episode, we dig into the truth behind New Construction homes. Does new really mean it is better? Why do builders want buyers to use their Lender? Casey Carpenter, a former new construction lender adds in his experience in the new construction world. What to look out for and what to be excited for!

Addy Nett:   0:00
New construction. They're definitely some of the prettier photos out there as we're looking for new homes, but is all the staging, the shiny, the clean, the brand new really worth it? Are builders actually putting together houses of Integrity and quality? Why the heck do they want us to use their financing, their lenders? Today we've got Casey Carpenter from the M L O team, representing. Casey brings a unique perspective being a former new construction lender and a family that actually has decades of experience building and selling quality new homes within the Portland area. My name is Addy Nett and this is MLO. Enjoy the show.  

Addy Nett:   0:50
Uh, we are gonna be up and going here. And Casey, thanks for taking the time today, man, we're coming up on another months end aren't we?

Casey Carpenter:   1:01
Yes, we are. Yes, we are. And, as you know, months end busy times, probably for everybody involved. Months end, no matter kind of how we usually try to work out our transactions, usually they kind of all majority, um, majority of them fall towards the end of the month. So...

Addy Nett:   1:18
Yep, yep. And, you know, I really just wanted to take some time today, Casey. Really to talk about what's different these days with, you know, Covid 19 and the pandemic, and how that is affecting closing. Um, we've got quite a few different, actually, not quite a few, but there's really split into two different deals here. So you've got your refinances, and then you also have your purchases, right? Those are the two buckets. Essentially, um and I really want to dig into the purchase side, and what is going on regarding struggles to close. So we've got a lot of different things to cover, and I really want to kind of distill it down to some digestible ah, buckets within closing and who all the players in the game are. So, maybe you could kickoff, um, the different agents, the buyers, the  sellers, and get us rolling on the convo.

Casey Carpenter:   2:17
Right, right, right. So we're at closing, right. I mean, here's your parties involved; we have your buyer's agent um, who's working with with the buyers of transaction. You have the seller's agent. You have your title agent involved, your Escrow agent. Um, you have yourself your Addy, your lenders in the background, and you have the buyers. And that's gonna be I mean kind of all your parties, sitting there involved at the end. Um, so for Addy, I got I got a question right out of the gate. This is Covid and I'm sure you might be seeing this. Um, are you seen any lenders and titles move to electronic signings now? And, I know we're kind of jumping ahead on it, but we'll assume most people kind of know what the signing is. Signing is where buyers are meeting at the end at normally your title office to sit down face to face with your title, uh, escrow agent and sign all your paperwork. So now we have Covid 19, people are stuck at home, uh, some people obviously afraid to go out being told they can't go out. We have a lot of stuff in place, people trying to stay safe. We're all trying to respect those rules that bring you forward happen to usually be there sitting at a table with clients and everybody's smiling, taking pictures for signings. Now, we have a completely different scenario. So, ell me, yeah, what do you What do you seeing,  Addy, and we'll start with that question, we can kind of start diving deep.

Addy Nett:   3:47
Yeah, yeah, yeah, so, yeah, a couple different things. Yeah, a  couple different things to note there, Casey, like, yes, you're seeing electronic closings, and it's different per lender. So you're gonna have a full electronic closing in some states, you're gonna have a hybrid closing in other states. We're on a hybrid closing. Um, now, people that are closing this month likely won't be on electronic closings, because from everything I've been trained up on, you have to consent to doing the hybrid or full electronic closing at the start of your process. So, that's something that's essentially been created, um, within the last few weeks, and lenders are working to adapt and develop the system. So, if you got into contracts, say, 30-45 days ago, you're not gonna have, you know, an e-closing right now. But, that being said, what the process is supposed to be is essentially they're gonna take, when you do a traditional ink closing, signing face to face, you're gonna have, like, 60 to 120 pages, depending on the lender and where you're doing your loan, and they're trying to bring that down to, like, four or five pages. So, they want to bring an hour or 45 minute close down to like five or 10 minutes, just in and out. But I have seen a lot of ah, I have seen a ton of Escrow officers taking a ton of safety precautions. Um, like the plexi-glass and whatnot. So, when you're standing there and signing, there's not any germs and all that good jazz. So, I think, you know, in the next month or two, you're probably going to see a lot more e-closings, hybrids and full. It's gonna take a couple months to iron out all the problems, though, with any new system like the S B A loans. I was just talking to one of my friends who is an SBA loan officer at a bank, and they're having to develop a whole new system that they're not accustomed to, and it's the same with, with a lot of the title companies. One of the biggest differences, though I really, really want everybody to hear and know about is like, what can we do to prevent some delayed closings? Because, people who have maybe bought a home before have experienced, you know, either easy closings or maybe late, or maybe early. We've all been amazing or better or worse, um, professionally. But now, there are so many moving variables with the closing date, because we're all working remote. And, I think something that maybe not so much the agents, but at least the clients don't understand is like on the loan side, we all have, like, high, high, high security parameters on our devices, like VPN networks, 40 client. All these things like I like to use the term Pentagon security on all of our devices. I mean, yeah, yeah, all this stuff in, Yeah. It's like, you know, Casey, when you try to, like, freshly reboot your laptop, it it's like a three or four step, um, process to get through it like text me this code, put this in here, your mother's maiden name, and then also like, you know, when was your birthday and your favorite cat, and this in person, now check this device. So, I think one thing that really needs to be communicated, and I've been starting to do this more is like, hey, there's a lot of moving variables within the closing side. So, not only the agents, not only the buyers, but Casey, who else? Like, you've got the sellers, you've got insurance, you've got title. There's a lot of different roles in the closing.

Casey Carpenter:   7:30
Correct, correct. A lot of hands involved.

Addy Nett:   7:33
There's there's a time of hands involved. And, I think what what needs to be noted is like if you, by any chance, can at least give yourself a little bit of wiggle room when it comes to the closing um, it used to just be easy, breezy like same day sell, close, move in, and like that was the win win miracle. And now those are still happening, but, it's not a guarantee because there's so many loans going through, and then everybody is working on a slower efficiency rate being remote, that it's not making all the players, not just the winning side, but the agents side, the title, the insurance, um, less effective.

Casey Carpenter:   8:18
Yeah, and I think it's a good, uh, point to touch there because I was actually explaining it kind of to someone earlier. Um, yeah, I mean, there has been a little bit of a slowdown, but honestly, I mean, right now, I mean the mark as far as for us, like purchase business, especially refinance business, um, a lot of stuff still strong, and you have really good interest rates right now. So you still have transactions, a number, handful, a lot of transactions still going on. But, now we don't have people sitting in the office. You have people working remotely, you have... and so it's a whole different variety of a set up to try to still essentially do the same amount of volume you were doing before this crisis. And, so I would hope that customers are having, you know, a bit of an understanding to - for that close date and everything that's going on to have some type of, you know, some leniencies because I am hearing that and seeing that, um, in the market on stuff,

Addy Nett:   9:14
Yeah, for sure. And I think I can't stress enough like, and it's maybe, it's maybe an overused word, um, in this day and age, but communication is key. Like, the, and I have adapted to this is well, it's like, you know, man, 3-4 months ago, I literally like,  "oh, final week of closing, we got our appraisal back, submit for final approval, no problem." You didn't even think about it. Like, you literally did not think about the close. It wasn't that big of a deal. It was essentially like, oh, clothes are out of the washer, putting clothes in the dryer. And then now you're like, hand scrub and  everything, you know, you're you're pinning it up to try to dry it on the clothes line, and it's sprinkling outside, and your clothes aren't dry yet, and you're like, yeah  because it's raining outside,Casey. Um, so I'm being dramatic there, but, communication is the key to just, like planning. Because, I think for the consumer, Casey, what's on their line is like, hey, I've got work, I've got kids, I've got daycare, I've got movers that I paid for, I've got furniture coming in, I'm gonna build up. Yeah, yeah, rent, I'm gonna I'm gonna maybe put a fence around my entire property, and those guys are actually showing up 30 minutes before I record. And it's like, man, I just can't stress enough like having a little bit of flexibility, if you can on the closing date and you know, you'll probably hear other loan officers out, who're going to say, "well, we're having no problems at all closing. Everything is going." I'm gonna tell you straight up, those people are just trying to get business. They're just going to try to get your business. Everyone.It's like a full restaurants, a full restaurant.

Casey Carpenter:   11:00
Either they're doing no business. And, yeah,

Addy Nett:   11:03
and they're not in touch.

Addy Nett:   11:04
How hard is it to close a couple loans?

Addy Nett:   11:06
gray Yeah, and they're just maybe just focusing on their one deal. No, that's a good point. But yeah, it's busy. Like, to use the analogy of the restaurant, the restaurants full, and everyone's trying to crank out entre's as quick as possible. But, if you're going to call another restaurant and be like, "hey, are you guys serving fast?" Yeah. They're going to say that they're gonna, they're having no problem, even know that they're struggling. So, I guess for the consumers out there, I wouldn't fall for um, "yeah, oh,  we're having no problem. We're doing a two, two-week close, and this and that." I was like, maybe on cash buys, but like, I think compliantly, you can't close a purchase deal in less than 10 business days, is it? I can't remember off the top of my head, but maybe it's 9, 7, it's something like that.

Casey Carpenter:   11:55
Yeah, yeah,

Addy Nett:   11:57
So, yeah, and another thing to consumers too, it's the same with the rate. I mean shifting over to the rate environment. Um, you're seeing a lot of mixed feedback when it comes to where interest rates are at. Like, I had one of my clients call and, it was like, "oh, I'm seeing that interest rates are, you know, a full point higher than what we locked him in at" and it's like woah, we like, I don't know where you're pulling that great off. And I think something to note is you're going to see Wenders price very differently according to how they handled the huge dip in rates, because the consumer doesn't know on the back end, when a lender commits to that rate, they're committing to a margin, whether it's a profit or a loss on that particular term locked in by the consumers. So, when everyone was scrambling around and was moving really quick Covid 19, this, that, that, you're seeing people probably companies locking in a ah loss on the loan. So, they're trying to make it up by raising their rates, so you're seeing it all over the place like mixed reviews. Um, the only thing I could stress more, at least on the purchase side, is be in tight correspondence with your loan officer and know exactly what you're you know, closing costs, your monthly payment, and your rates gonna be when you're putting in the offer, because it's changing. It's not as volatile as it was, but it is changing.

Casey Carpenter:   13:29
And always, always, always let your loan officer know, you know, discuss that, you know, putting in the notice notice with your landlord, if you're renting those conversations, just have them. Or, if you're trying to set up dates for moving companies and all that stuff, it's gonna be involved rather than be proactive and say, OK, this is the close, we're setting it all in there. At least just, you know, reach out, you have that conversation with everybody. Especially the loan officer said, you know, does this seem like we're on track? Are we on schedule? What if I set this up here would this work? And then you guys can discuss that, you know?

Addy Nett:   14:06
Yeah. Talking through the timeliness is really important. And, you know, we're all adapting like I'm, I've always considered myself a very involved loan officer and proactive. But, I'm feeling myself especially toward the end, being so much more involved in the communication with the listing agent, the buyer's agent and the clients, because pushing these through and getting them done, you know, um, there's a lot on the line and yeah, has just super important. It sounds exhausted, but communication is the key. So, you have some great takeaways for everybody today. Um, in just to summarize, Casey, I think we went like: A. electronic closings are in the mix. We're seeing hybrid and full closings. I think there we're still another 3 to 6 weeks out from seeing those being very accustom. So you've got the electronic closing. B.  

Casey Carpenter:   15:00
Virtual signings  

Addy Nett:   15:01
The virtual signings

Casey Carpenter:   15:03
I wanted to sneak that in that whenever, that's gonna fall into that.

Addy Nett:   15:05
Yeah, those are just getting launched. And I think that's why you're not seeing a lot of lenders. Like I, when we announced it, yeah, I wanted to hop on, on social media and be like  electronic closing. And I'm just like, well, I better learn this before I promote it. It's gonna take some time, to ah, incorporate that into a normal proceeding to close. So we've got, you know, electronic closings in the mix. Ah, were also noting to everyone, especially on purchase deals that be mindful of all the different players in in the transaction of a close, and using people that are local to your market is very beneficial. Uh, for example, like we had Tyler Ross shutout to uh TR, insurance agent, in the market, getting binders updated; there's a lot of insurance stuff people don't even know about that the lender needs in order to close on time. And if you're using a 1 800 insurance company, you're making it very hard on yourself to close because any changes needed are typically you're reaching out to 100 number and you're in the queue. We all know what it's like to call and, uh, you know, wait in line and hold.  

Casey Carpenter:   16:21
And that insurance binder with plenty lenders will slip to the end, and that is a must. You have to have that in from your insurance agent.

Addy Nett:   16:28
The, the insurance? Yeah, that's definitely like one of the first things people can get on after they drop earnest money check on an accepted offer is like you know, figure out your insurance and work. Um um I always recommend, you know, hey, if you're, if you have an agent, like, honor that relationship. Give them a call and see what you can do to uh bundle in your your insurance quotes. And then I secondly, have personal people that I know that hold, uh, customer service levels to my extent, you know T Ross being one of 'em. Casey, I'm sure you've got peeps. We all got 'em. But a supporting local as well as getting the attention needed to close on time. Very, very big. Um, I believe that kind of hit home there on the closing, and then we we wrapped it up with, you know, interest rates kind of being all over the place. From lender to lender, depending on how they, uh, have faired through the choppy waters in the last 60 days. Um, I'm, you know, very proud that we've aligned ourselves with Finance of America on a huge company that has done an amazing job and is servicing their loans, and forked over a ton of capital to keep doing loans, and not have any secondary issues, and provide outstanding terms. So, proud to be, we're both proud to be an alignment of uh FAM, and yeah, uh, anything else to add before we wrap it up? And we all got to get back here and, uh, we want to just make sure we're still getting on the street

Casey Carpenter:   18:07
It's Friday and its draft day. NFL virtual draft. We're all doing this virtual stuff nowadays. So, it'll be interesting to see all this stuff.  

Addy Nett:   18:14
Today's Thursday  

Casey Carpenter:   18:17
It is Thursday   

Addy Nett:   0:00

Casey Carpenter:   0:00
Why do I keep jumping to Friday?  

Addy Nett:   0:00
Wait, so-  

Casey Carpenter:   0:00
I want it to be Friday. 

Addy Nett:   18:34
Draft day is tomorrow?

Casey Carpenter:   18:34
No, draft day is today.  It's Thursday.

Addy Nett:   18:34
Oh, draft, the NFL draft.

Casey Carpenter:   18:34
Yeah, that's why i keep jumping it to Friday.

Addy Nett:   18:34
Just to be clear, it's NFL draft, right?   

Casey Carpenter:   18:34
NFL draft.

Addy Nett:   18:34
Ok, who's your team? You're a Raiders fan?

Casey Carpenter:   18:35
Las Vegas Raiders.

Addy Nett:   18:37
Oh, my God, that's just

Casey Carpenter:   18:38
Got me a, let's see here, stadium brick right there below the shoulder.

Addy Nett:   18:42
It's gonna take some time for me to get used to saying Las Vegas Raiders. Um, while big shout out to my new friend Andrew Kinney down in Las Vegas. He had ah, had us on the live show on Monday. Great, great experience in networking and hearing about different markets throughout the country. And, no big surprise the struggles and successes we're having here are the same in other places of the country. So, uh, thank you again Andrew, we really appreciate that and having us on, and promoting MLO. And if you are a podcast listener, all of these live streams are available on apple podcasts and Spotify. So if you want to hop on there and subscribe and download, actively listening, are also modernloanofficers. That's plural. You can do a direct listen to just on a browser if you're one of those people hiding from the world or afraid you're being tracked. Um, anyways, dude Casey thanks so much! I know we all got to get back to our stuff. I'm glad we jammed out a live session, and, uh,

Casey Carpenter:   19:56
Yessir, I appreciate it. Remember everybody, it's Thursday, not Friday.  

Addy Nett:   20:00
It's Thursday, not Friday. It's draft day. Alright, Case, go get 'em. Thanks, man.

Addy Nett:   20:03
Thanks, Addy.

Addy Nett:   20:03

Addy Nett:   20:05
Thanks so much for catching this week's episode of M. L. O. Can't wait for next week when we dive deeper into months end closing. What buyers, sellers and industry workers can do to preserve that precious closing date. If you'd like to catch any of our episodes Livestream, check out our Facebook page modern loan officers and we will be there, every week, shootin' it straight. So, looking forward to it. Thanks so much for listening and subscribing, and we'll catch you next time.