Real Estate myth #2: The loan officer is your agent.

Here's a real estate 101 question for you:  Who does the loan officer work for?

Here's a hint:  it's not you.

Loan officers work for the bank.  Now I know that is kind of obvious, but the real point here is how that fact affects you.  Loan officers have a fiduciary responsiblity to the bank.  Their goal is to maximize the profits of the bank to the best of their ability.  The basic law of supply and demand kicks in here.  They try to borrow money at the lowest rates and lend money at the highest rates possible.  They negotiate their rates of interest on what they borrow.  You should do the same.

When it comes to obtaining a loan, shop around.  You can use the bank that you have always used, the one that mom and dad use, the one that has the prettiest building or advertising....but how do you know that their rates and terms are the best you can get?  The answer is by taking your potential business to at least three of them.  Compare apples to apples and see who gets you the best deal.  The really cool thing?  That comparison shopping is about to get even easier.

Beginning in 2010, all lenders will be required by federal law to use a standardized Good Faith Estimate form.  This form will outline the estimates for interest rates, origination charges, escrow information, settlement charges, and more.  The new GFE will tell you what charges can not change and what charges can change and by how much.  Some lenders are already using this form.

Most of the loan officers I know are upstanding, honest, and friendly.  You could trust them with your children, your house keys, and your money.  This is not a slam on any of them.  You just need to know that the loan officer is not there to represent you or to be your agent.  Only you can shop loans to find the best deal for you.  Don't rely on regulation to guard against ignorance.  Educate yourself and be prepared.

Real Estate myth busting #1

From time to time, I will address certain Real Estate myths that I uncover, and I will expose them here in the blog. As I discover new ones (and people are always creating new ones...these things are like computer viruses, folks), I'll be sure they are brought to light here.

Here's one that I am going to debunk right now. I was speaking with a prospective client a few days ago. This person was very savvy and knew quite a lot about Real Estate and what is involved in selling one's property. Towards the end of our conversation, she asked me, "Why does it take so much longer to close when REALTORS are involved?"

The short answer is, "It doesn't."

Working with a REALTOR will not, by itself, increase or decrease the time between getting "under contract" and closing. Now, a REALTOR might suggest that a client increase this duration due to contingencies on obtaining financing, selling one's current property, waiting for a lease to expire, or about a thousand other possibilities.

All of these things can and do happen with "For Sale by Owner" situations. The real difference is that, without a REALTOR, you may not know to ask for a longer time before closing. A REALTOR is trained to ask the questions that the client may not think to ask. Be sure to tell your REALTOR about your situation. Treat him or her like your closest friend. We have a fiduciary responsibility to our clients. If you don't think you can trust your REALTOR, dump them and get a new one.