← The David Greene Show
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- [00:00]
David Green
Welcome to Real Talk Real Estate, the show where we cover how to build wealth in real estate with no fluff, no BS and no sales pitches. I'm David Green and I've been doing this for over 10 years. I've seen the ups, the downs and everything in between. This is the show where we pull back the curtain and show it to you too. So if you want to build wealth through real estate or you just love learning about it, you found your home. What's going on, everyone? Welcome to Real Talk Real Estate. This is Mortgage Monday. I'm David Green. He's Christian Bachelor. We are the one brokerage and you are a wonderful, beautiful soul learning about real estate and hopefully building wealth through real estate. Today, Christian and I have got a great show for you. Most people know us as the investor friendly lender, which we are. But that comes at the misconception that that's all we do is investment loans. We actually do primary residence loan, owner occupants loans. I'll let Christian talk about that. But conventional loans really well better than the average bear. And in today's show, we're going to be talking about what you should be looking for in a conventional loan as well as the loan officer that you're going to choose. Christian, welcome to the show.
- [01:03]
Christian Bachelor
Absolutely. Happy to be here.
- [01:05]
David Green
Your hair looks amazing and so does your chain. Did you do this just for the show?
- [01:11]
Christian Bachelor
Believe it or not, this is how I woke up. So you woke up like this? That says I woke up like this. Right. But yeah, this is, this is just me on a normal day.
- [01:21]
David Green
All right, so let's talk about what is the difference between a conventional loan and a non qualified mortgage or non QM product?
- [01:29]
Christian Bachelor
Absolutely. We've discussed this kind of at length, so we'll keep this one short on previous videos. But the, the main difference is that we actually spoke in our previous video about Fannie Mae and Freddie Mac. Right. So the main difference with conventional or conforming style loans is that they adhere to what's been determined as the industry standard. Right. That's debt to income ratios, that's, you know, certain credit score brackets, that's down payment requirements, you know, what type of homes you can buy. One to four unit properties are typically the requirement, you know, and as long as your loan, you as a borrower and the property fit into what has been defined as the, the standard box, that's conventional. Right. And the moment you go out of that, those of you who follow us are familiar with like our DSCR and hard money products. Those are non conventional or non Qualifying mortgages where Fannie Mae and Freddie Mac do not determine the rule set. Individual investors do at that point.
- [02:23]
David Green
All right, what are the strengths of a conventional loan and what are the weaknesses?
- [02:27]
Christian Bachelor
Yeah, strength is access to it. If you walk into any bank in the country, chances are they do conventional loans. So there's a lot of competition, which ultimately is good. Right. That's the whole point of capitalism, is a lot of competition ends up being better for the client. Right. So access to the product. Every bank in the country usually comes up with the better rates. So just in terms of the quality and the competitiveness of the offer you're getting, you usually get the best deal in the conventional space. It also has things like down payment assistance programs or lower down payment options. You can buy a primary residence with 3, 3 and a half or 5% down with a lot of programs, whereas a lot of the non conventional world, little bit higher rates, little bit riskier underwriting, and typically a larger down payment requirement. As many of you know, our DSCR is around 20% requirement. Right. So some, some, some good options for sure. A lot more accessible for just the everyday person. Right. Not the 100 property unit investor. Right. This is, you know, somebody looking to get into their first primary, something like that.
- [03:30]
David Green
Right now, our goal on this podcast is to equip you, the listener, as well as the people that are supporting you in your journey, like your loan officer, like your realtor, whoever that may be to help you in that journey. If we're being frank here, most realtors are not very good, most loan officers are not very good. And the person buying the home, like you listening to this, don't really know how to tell who's good from who's not good. So one thing that we would like to ask you is to share an episode like this with any real estate agents that you know or are working with. Let them know that we have one show a week that comes out every single week specifically for realtors, and that if they listen to this type of content, it will actually help them be better at their job and serving you. Now, with that being said, we also want to let you know what you should look for in a loan officer. So as Christian and I sat down and we said, hey, what should we tell the audience that they should look for in their loan officer? We realized that we were describing all the things that we push very hard at the one brokerage because we want to be the best that there is in the business. Now, our hope is by listening to this, that you use our company to finance your real estate that you share with real estate agents so that we can help their clients as well. But if you already have someone that you're committed to using or if for whatever reason, you don't like me because I'm bald and you don't like Christian because he's handsome, we still want to give you the information that you should look for when talking to a loan officer. So we've got nine things to look for in a loan officer. Christian, why don't you start us off with number one.
- [04:52]
Christian Bachelor
Absolutely. One of the most important things, and we're starting here, because this is at the start of the process, is the difference between a pre approval and a pre qualification. Right. And really what that means, if you go into a bank and let's say, David, you work at Chase, I walk in and I say, hey, David, I make 100 grand a year, I have no debts, and I have an 800 credit that lender can technically tell you what you qualify for, but none of it is verified. So if I just got hired, and maybe that hundred thousand isn't super accurate, or maybe some of it's from a bonus or a commission. I don't know if I make a hundred thousand yet. Right. I have to meet certain performance indicators in order to determine that. A pre qualification is just a lender responding to what you say and giving you a paper that's not really worth the paper that it's written on. You know, just to be frank, a pre approval requires a full underwrite. That's the only type that we do. That means I've collected your tax returns. I've, you know, seen what your liabilities are. I verified your bank statements that you have the funds to close. I verified your living history and your work history. You're right. A bunch goes into it. Right. Important thing is to note in order for your real estate agent or the seller where you're writing the offer, to have any confidence in that offer that you write, you need a pre approval, you need to be reviewed, you need to make sure that you qualify for that loan. And ultimately to protect you. Right. When you put your deposit out there, you don't want to risk it if you don't qualify for the loan, which is why you want to make sure that you do all that up front. So a lot of people reach out to us and sometimes there's complaints, just to be frank, of how much documentation we request up front. We do that intentionally, even if it I, I'd rather ruffle your feathers and upset you Day one than have you three weeks in escrow saying, hey, I still need stuff from you, David. Right. I still need bank statements. Why didn't you ask for this day one? Well, exactly right. We do ask for a day one. So our pre approvals are typically a little bit more invasive than another lender would be. But we do that with your protection in mind. Right. We want to make sure that what we tell you you're good for, we absolutely know you can get.
- [06:52]
David Green
All right, and what is a. Like give me the gist of what somebody will submit during a pre approval.
- [06:57]
Christian Bachelor
Yeah. For a conventional loan, all your basic financials. So tax returns, pay stubs, bank statements. If you're a small business owner, you know, we need your last two years of tax returns. You know, maybe you get 1099 if you're a real estate agent. Right. David and I know that world very well. You know, if you own any property, we need to see, you know, your mortgage statements on those properties, any lease agreements you may have if you're renting it out, insurance policies. And just as I'm saying this, you guys can tell this is stacking up quickly. That's a lot of documents. Yeah, right. But getting a mortgage is a big deal and it shouldn't be something that you walk in and say, I make X dollars. Okay, here you go. That should probably be a sign number one, that lender's probably not very good. Right. Because there's so much, guys, I'm telling you, there is so much that can go wrong or right with the mortgage and that the quality and knowledge of that loan officer not only has, but imparts onto you in terms of what to expect and what to be prepared for. Is, is the make or break with a lot of deals. Right. And I don't want to be calling you guys or having you call me three weeks into your escrow saying, I trusted, you know, the Saskatchewan County Credit Union and they didn't come through for me. Sorry about that. Credit union. If that is out there, I'm not picking on them. But you know, some random bank that couldn't qualify them because they started with a pre qualification and now they're coming to me to save the deal and I have five days to close a loan. Please don't put me in that position, guys. Right. It's better to talk to us from day one.
- [08:22]
David Green
Once those documents are submitted, how long should someone expect to have an answer on what their pre approval amount is?
- [08:29]
Christian Bachelor
Yeah, 100%. Once we actually get the documentation we need, sometimes you have to Go back and forth a little bit. But after our clients complete a loan app, we usually run 24 to 48 hours for a return. So get all our documents ideally that same week. Right. Unless it's a Friday. We have you out on the market looking for a property, writing offers with.
- [08:48]
David Green
Your agent 24 hours. And that's because we have a dedicated team that does nothing but puts out pre approvals. Is this something that you see other loan officers are usually able to do?
- [08:58]
Christian Bachelor
Yeah, this is a good question. And this is maybe if there are just any loan officers watching this, I challenge you to respond here and say, is there another broker that has an in house underwriting department? We built that out. We have underwriters on staff to underwrite your deals before a lender sees it. I think that would otherwise be very difficult unless it's a one man shop and they're doing one or two loans a month. David, we have systems in place to help the quality and clientele and the quantity of clientele that we generate. So 100% guys. And if you don't believe us, give us a, give us a try, right? Submit an application and see if we get back to you quickly. I promise we will.
- [09:36]
David Green
What would you say is the average time that your standard loan officer takes to get somebody a pre approval once they've submitted their documents?
- [09:43]
Christian Bachelor
I'd say across the industry, probably three to five days. Is, is probably estimated to be, to be where it would be. You know, we've had times in our company's history where we were taking longer than that. Right when we first started, David, and it was during COVID that was tough. Right? We've built out processes and systems exponentially since then to handle the clientele that we get.
- [10:03]
David Green
Okay, so number one, look for someone to give you a pre approval letter, not a pre qualification letter. Number two, if you can get a 24 hour pre approval turnaround time, that is kind of the industry gold standard. That's awesome. Your realtor will appreciate this too. Because what happens with them is they connect you with the loan officer. They really can't do much with you until they have a pre approval letter because they don't know what price of home you can afford or they don't want you to fall in love with something you can't buy. And if they got to wait five days before they get something back, you, you're getting frustrated because you want to get out there and write offers and look at homes. Your realtor is getting frustrated because they don't want to tell you no, but they're kind of putting you off until that letter comes back. The loan officer is getting frustrated because they have a bunch of other stuff that they're doing and they're not prioritizing getting you your pre approval because they don't know how serious you are. The whole thing gets messy. That's why we have a dedicated team that does nothing but churn these things out. So if you are a loan officer and you want to take advantage of that, you're smart, you should give us a ring. Uh, we'll put out our contact information at the end here. But if you're a client, this is another reason that you should consider using a brokerage like ours, or you should look for a loan officer that can meet that standard. What is number three?
- [11:08]
Christian Bachelor
Number three is just a loan officer that stays up to date with industry standards in terms of loan products and changes. For instance, a couple years back, David, probably about a year and a half back. Now, those of you who followed us here from the Bigger Pockets podcast, remember we made a huge announcement about the 5% down for multifamily. So, right. That's something that conventional never allowed for. You needed anywhere from 15 to 25 down, and Fannie Mae across the board slashed that down to 5%. That's it. Only down payment requirement for a one to four unit property. You guys can obviously understand that cutting your down payment in a quarter, right, from 20 down to five opened up the door for a lot of people who didn't want to house hack, a lot of people who wanted to pick up multiple units with their first primary residence. Right? But if we didn't know that that program was out there, or if your lender didn't know that program was out there, right, because it's brand new. Fannie Mae just announced it. You know, that's potentially business. And properties that you wouldn't have known that you could close on. Right? So your loan officer's knowledge and, and way that they track updates and, and new announcements on the market is very, very, very important. If you hear us say something here and you go to Chase and Chase says you can't put 5% down on a duplex, you probably know who you should go with, right? One of those are probably knowing what's going on, and the other is. Is probably a little bit behind on the news.
- [12:28]
David Green
All right, number four, we look for rates that are on sale. What does that mean?
- [12:33]
Christian Bachelor
Yeah, this is a fun one. I recommend you guys going back to our loan estimate review video where you can actually see this done in practice, but when we're looking at all of the rates that are out there in the world, a lot of lenders, a lot of loan officers will just show you the lowest one. A lot of lenders will show you the one with the less fees. What we do is we print out the whole thing and we help you decide on which one is right for you. And this sounds a little convoluted without seeing it in, in, in reality, but if you do a loan with us, guys, I'll show you everything from let's say the market average range is a 7%, I'll show you a 6 to an 8. Right. And some of those, as you get closer to a six will be more expensive. You have to pay what we refer to as points to buy it down. But as David mentioned, there may be a rate on sale. For instance, getting to a six and a half may be cheaper than getting a 6.75. That seems counterintuitive. And why would that be cheaper? It's a lower rate. Well, that's what we look for, right? We look for those rates that are particularly good deals on that day. And we work with so many lenders where we have so many different options for you guys. But finding those, those little, those little sweet spots in the rate sheet is what I refer to as is once again kind of the gold standard of what makes a good lo.
- [13:47]
David Green
So for example, let's say that your par rate is 7% and for $10,000 you can buy that down to what rate would that probably be?
- [13:58]
Christian Bachelor
Would you say 6, 6.375?
- [14:01]
David Green
Let's say, okay, let's make it 6.4 just because that's for me to have to say. All right, so let's say 6.5 for 10 grand you can go from 7% to. And then there may be a case where for one grand you can go from 7% to say 6.9, 6.95. Occasionally what we find is that for only three grand you can buy it all the way down to 6.55. So when you're comparing how much it costs to get your rate down, we find that there are what we call rates on sale. This is not an industry specific term, it's what we refer to it as the 1 brokerage. But when we're quoting you rates, this is one reason why we won't just say immediately, what's your rate? Because there, there's a range of rates that everyone gets to pick from. You can get money back at closing if you go with the higher rate. Or you could put more money into the deal and you could get a lower rate. Well, we like to look for the best deal for you. So we look at the rate sheet. Christian analyzes it with his loan goggles. That's why we call them the Lone Ranger. He finds the rate that he thinks would be the best one for you, and he pitches you on why, if you want a lower rate, this would be a good use of your money. And then additionally, we're going to talk to your real estate agent and be like, hey, do you think you can negotiate a closing cost credit for at least this much money so that the seller pays for the buyer's new lower rate? Because we don't want you to have to pay for it if possible. Most loan officers do not know that this is a thing. They don't know to look for it. They also don't care to look for it. The majority of the loan officers that you find out out there kind of have the W2 mindset where they just want to do the minimum work possible to get the most money they can. So they're going to quote you the highest rate that they can get away with to make as much money as they can. And then, frankly, they're just going to let the underwriter tell them what they need, and then they're going to relay that information to you. They're not going to be thinking ahead. So sometimes when you think you're getting the cheapest rate, you find out later that you really didn't, that it came with higher closing costs or worse advice. Do you have any examples you could share, Christian, of times where like, maybe somebody came to us after using someone else or someone thought that they would get a better deal with somebody else, and then it turned out that that wasn't the case. Just so we have some context that people can understand what we're describing?
- [16:06]
Christian Bachelor
Yeah, yeah, 100%. I'm actually just the other day we had somebody who, who, you know, was price shopping. They were looking for the best interest rate and another lender quoted a lower interest rate than what we disclosed. They did not disclose the fees associated with it. It was a non, non conventional loan. You can kind of be tricky and dishonest.
- [16:24]
David Green
There's less truth in lending requirements. Right? Right.
- [16:27]
Christian Bachelor
Yeah. All the 2008 applies to the. The conforming space. Right. So they disclosed something. I told the borrower, forthright, this lender is paying you to get this loan. If this is a deal, I recommend you take it. I don't believe this. Will be what your final offer looks like. And of course, what do you know, Three weeks later, they gave me a call and said, hey, this is what my loan estimate ended up looking like by the time we close. What do you think? And it was two or three points higher in closing costs, which I think he was buying about an $800,000 home. So two points of 16 grand, right. That's not a negligible amount of money. Right. And I told him, hey, man, I'm happy to pick it back up and pick up where we started. But you, you know, you're three weeks in escrow now, right? I mean, I have limited ability to save this deal for you. Now, I wish we could, you know, travel back in time and see what we see now, but this is what we were talking about when we started, right? And unfortunately, that loan officer kind of conned to that borrower out of $16,000. Right. Which is not how we run every one of our systems. Here at the one brokerage we are integrity and and, you know, honest driven lenders. I want to show you what your fees are going to be and educate you into what the best one to pick is.
- [17:41]
David Green
Now, when Christian and I sat down and we talked about what our standard operating procedures are going to be for the loan officers that work here as well as us and the deals we generate for ourselves, we knew that we were going to do this with integrity, but we also didn't want to lose money doing. Because if we're being frank, if one real estate agent tells you that your house is going to sell for 700,000 and another one says 650, it's not them that decides the sales price, it's the buyer. A real estate agent is supposed to be in touch with what buyers are paying and give you the price that you can actually get for the house. But they know if I tell you 650 and he tells you 700, you're going to list with him and then you're going to be locked into a contract and he's going to let time pass and you're eventually going to slash your price down to 650 and maybe it sells for 625 because it's been on the market market for a long time. So in our industry, the reality is, if you are honest with your clients, you will often lose, and if you lie to them, you will often win. So we sat down and said, hey, if we're going to put ourselves at a disadvantage by being honest, how can we win? And what we decided was the Referral business that we get from being honest should make up for the business that we lost from telling people the truth. So our goal at the one brokerage is not just to finance a house and then discard you. We want to do all your houses. We want to build a plan for you to scale a portfolio. We want to finance your house and then your mom's house and then your sister's house and then your maid of honor's house and all of your friends, because you know you're getting honest representation. And so that's why we make content like this, that's free, that kind of puts on blast what goes on in the mortgage industry. We are not popular with other lenders. We've had people that worked for us that left because we said, no, you cannot do these shady things. And they said, fine, that guy over there has no problem with it. I can charge more for the loan. I can make a higher spread from the client, and then I will just have them buy down the rate so that I'm competitive with you guys. And they won't realize that they have to pay more closing costs until their contingencies are waived. And I'll make more money. And you know what? He's right. He will make more money doing it that way. Absolutely. The person that loses will be the client and to a degree, us. And so what we're asking for is that you ask your loan officer these questions if you're going to use someone else. Say, what does your rate sheet look like today? What is your par rate? What are the fees associated with that? Like, these are the questions that you want to ask to know if you're actually getting a good deal or if you're just getting the wool pulled over your eyes. And I know this is near and dear to Christian Sar because he's the guy I make the videos, right. And we run the company. But Christian has to actually deal with the person who wants the loan, who's arguing with them that they got quoted a lower rate from Acme Mortgage, not understanding that. That's because their fees are twice is high.
- [20:24]
Christian Bachelor
100%. And remember, guys, we're think of it this way. We're giving you advice that could be used against us. 100%.
- [20:32]
David Green
Great point.
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Christian Bachelor
Right?
- [20:33]
David Green
Great point.
- [20:33]
Christian Bachelor
You can, you can back me into a corner and say, hey, you know, you told me there's going to be a bunch of different rate options and points and rates on sale. Like, show me that right. Like, I'm not telling you to just use this against other one like Use it against us. Put us to the test. Right. I'm teaching you how to compare lenders on an even playing field. Whereas a lot of lenders have developed a business practice of I'm not going to play in that playing field. I'm going to play over here and just show you the best interest rate with the highest fees and I'm going to look like a rock star because I can get you a 5.99. Sure, I can too, and probably for a lot cheaper. But you have to ask the questions that reset where lenders are competing from. Right. Put them all on the same playing field. You know, ultimately advice and guidance that comes into play as well. But of course, a lot of clients, rightfully so, care about the financial impacts of it. Right. You know, so goal is to be, be competitive, keep the service.
- [21:29]
David Green
There you go. All right. So we'd really appreciate it if you would give us a try, put us to the test, tell us what you want to do, and let Christian or one of our other loan officers that we connect you with come up with a plan and you can see what makes us different than the other companies out there. All right. Number five, Wave impounds with no fees. What are impounds? What are fees and why do we waive them?
- [21:49]
Christian Bachelor
Yeah, 100%. So this is an option for the borrower. This is on conventional loans. If you do not want to pay your taxes and your insurance included in your monthly mortgage, you just want to pay that out of your pocket once or twice a year whenever the billing cycle is. We allow you to do that. A lot of lenders will charge you fees to do it. A few, select few of our investors do have surcharges for doing it. But for our conventional loans, you can waive impounds for free. That just means there is no increase to your interest rate or the cost of your loan for the added flexibility of paying your property taxes and insurance on your own. Not a huge deal, but something that I wanted to put out there specifically because we're talking about conventional loans and how we're uniquely competitive with them.
- [22:30]
David Green
There you go. So is this something that other lenders are actually making a little bit extra money by adding fees when somebody wants to waive their impound account?
- [22:37]
Christian Bachelor
100%. Absolutely. Yeah. It's a way that technically it's a little bit more risk to the lenders so they can justify that by increasing the cost. Our investors do not for conventional loans. So. And for many of our non conventional loans. But there is. We can typically get the Fee required to waive your impounds removed and ultimately not have to hit you with that added expense, which is nice.
- [22:58]
David Green
And one of the reasons is we do more volume than other people do, so we have a little bit more leverage when we're talking to the lenders about how we want them to help our clients. Lenders that do less business don't have those strengths to pull.
- [23:10]
Christian Bachelor
That's right.
- [23:11]
David Green
All right, what is number six?
- [23:13]
Christian Bachelor
Number six is something that I, I love doing this probably my favorite part, but very few people remember to, to ask for it after you guys are pre approved. So this is, once we reviewed your file, you're good to go. We, we know that you qualify. When you guys are out there writing offers, keep us involved. A lot of people will get their pre approval from their lender and kind of forget about their lender until they go into contract. Right. They then transfer like all of their focus onto the realtor and the sellers of the property. You know, go out there, start touring houses, going to open houses, going to, you know, weekend showings, whatever the case is. If you keep me involved, David, if you're selling the property and I'm the buyer's loan officer, I can say, hey, David, you know, Tim over here is writing an offer on your property. Have you gotten it yet? Yeah, I see it's for $500,000. That's, that's great.
- [23:57]
David Green
Yeah.
- [23:57]
Christian Bachelor
But let me actually tell you this. Borrower super qualified. Right. I've already run their credit, I've already verified their income, I verified their assets and their liabilities. They are golden. Right. Top, top, top of the shelf in terms of how they qualify for this loan. I just want to make sure that you don't have any questions or, you know, concerns over their credibility. Right. That sometimes if you're in a multiple offer environment and one of the borrowers, lender calls and really like vouches for them and the other one doesn't. That could be the difference that pushes you over in a competitive environment. Right. So I like doing that. Just if you're one of our clients, remember to ask for that because I don't know when you're writing an offer. Right. If you let us know, CC us on the offer, email, give us the listing agents contact, we'll call for you and we'll make you sound like a rock star.
- [24:44]
David Green
Yeah, that's very important. Especially when you're in an environment where houses are selling fast and they're getting multiple offers.
- [24:50]
Christian Bachelor
That's right.
- [24:50]
David Green
The sellers are trying to figure out a Combination of who is writing the highest price and who is the most likely to close. Because as someone that sells a lot of houses myself, I know somebody may tell you that they're going to write a really high price, then they get buyer's remorse two days later. Then when that inspection report comes in, they're asking for massive reductions, and they're backing out of the deal with the contingency. So as a seller, what you're really looking for is who wants the house the most, who's the most trustworthy, who's going to close on this thing, even if there's, like, a little bit of issues that are going on because they really want it. We, your agent should be making that case for you. But we can help your agent by also calling and saying, look, I know this person. They've been writing offers. They're very serious about it. They're incredibly qualified. They love your house. They were calling me the other day crying about how bad they want it. This is the house for them. What do I got to do to get you to accept this deal? And we are looking at it like our company's philosophy is, we're going to serve you the way that we would want to be served. When Christian sees a great deal, he's going to call that owner and he's going to say, I really want to buy your house. So if he's doing your loan, he's going to do the same thing. When you use a body shop, just a whole bunch of people sitting in a call center that are advertising with the rate online, they don't give a flying F if you get that house or not. You're just one of 80 names on a board, and they're doing the bare minimum that they have to do to get that loan to close. And it's very unfortunate, but I think many of us can recognize this is the economy that we live in. We live in the cheap economy. We live in the Amazon economy. We live in the online. I don't want to talk to a human. I don't want to have to deal with this. I just want it to happen as cheap as possible. And if you don't know how the sausage is made, if you don't know what actually goes on behind the scenes, you will end up very frustrated, finding that your agent that you found online doesn't care about you, your loan officer that you find online doesn't care about you, and you just have a really bad experience with real estate altogether and throw the baby out the bathwater. We are trying to do the opposite of that, where you have a great experience, you get the house you want, you're really happy, and then you come back to us to buy future home. So that's another thing I highly recommend. You want to pick the person to serve you in your real estate that is fighting for you, not fighting against you, so that they don't have to work. All right, Number seven, a lot of people, me included, did not understand early in my career that you could go to a loan broker that would shop your deal to a whole bunch of different banks. And so I would get on the computer every day at work and I would start looking up different banks and seeing what their rates were, not knowing. I could basically find the loan broker to go do that for me. Can you explain how that works and then how many different relationships we have with different lenders?
- [27:21]
Christian Bachelor
Yeah, with just conventional lenders. This is not our bridge, our hard money, our DSCR, just conventional lenders. We have over 100 investors in our funding network. What that means is that I have a hundred lenders that just by working with us, you're automatically getting priced with. Right now, I want to actually explain what that looks like, because it's very easy to just think a broker is like Kayak, right? If you guys are familiar with Kayak, right, That's the travel agency where it just puts Expedia, Travelocity. I don't know all their names, but all the. The different, you know, places that book your flight and travel and hotel accommodations, all that, they just put them on one page for you. But Kayak isn't actually providing that service. It's just a marketplace, right?
- [28:01]
David Green
Yes, we're not that.
- [28:02]
Christian Bachelor
We're not a marketplace. What I do is I actually go to these lenders, I negotiate a dropping of their rates. I get incentives based on volume, and I go around all of their operations. So like Quicken Mortgage, Rocket Mortgage is a good example. If you guys went to directly to Rocket Mortgage, you have to deal with a loan officer, a processor, an underwriter, an account manager, a national sales manager, a regional manager. All these people, right? I don't deal with any of them. I go directly around them, straight to what's known as their capital markets team. That's the people who funded their loans. And I say, if I get that money, cut out all of these 15 levels of management, I'll manage all of that. I'll build a core business that I process and underwrite myself. I just need access to your money, right? Imagine the type of savings that I can realize by cutting out 15 salaries and just bringing in me, David and a couple processors, it's obviously a lot, right? That gives us enough margin to run a profitable business, but also enough margin to pass on a lot of savings to the buyer, which is what we do. Like David mentioned earlier, we could absolutely make a higher margin on our company profits. We could. We agreed when we first started this company that we would operate profitably, but allow a lot of that savings to be given on to the bar. We're ultimately giving our clients better service, better rates, yada, yada. Okay? I say that because what I just explained happening with Rocket Mortgage is happening with 100 other investors as well. This allows me to have an understanding of who leads the rates for which day, where can I get money for cheapest. But even more importantly, who can close your loan? Okay, If I have 30 lenders in front of me, right, we're just cutting out 70 of them. 30 are good. Some of them may be better FHA, some may be better conventional, some may be better for VA loans, right? And regardless of where the interest rates are, we're very fortunate with the volume that we do is that I also know whose service is good. And that's equally important, guys, because if you get a 4% rate, or, I'm sorry, if you get an offer for a 4% wait, rates are at 7. It doesn't matter if it doesn't close. Your theoretical interest rate doesn't mean anything if that lender was incapable of closing your loan, right? You need a good rate and a lender who can actually get it for you, right? And we take both of those things into account when ultimately selecting which lender to place your business with.
- [30:22]
David Green
Great point. Now, on that same topic of, let's call it skill within the industry, not everybody's the same. In fact, I find that there's a very high correlation between the lowest rate and the worst loan officer. And that's because they're. They're slicing to bare bones because that's the only value that they can really offer. They're not very good. Also, oftentimes you get discount shops that go on to kayak and say, hey, here's our rate. It's super low, 2.99%. Because what they're doing is they're taking the loan officer that they would have had to pay to talk to you, they're slicing out their salary, and they're hiring somebody in India or the Philippines to walk through a checklist of stuff to get you the loan, which may take 60 days 70 days, 90 days to close. You don't realize that when you're picking them, you're just thinking, oh, your loans are cheaper than everyone else's. Well, this is why they've gotten rid of all of the human beings that are involved in this and they've replaced them with virtual assistants in another country that are not on your time zone and they're not good at what they do. And like Christian just said, many times, they just don't close at all. Or it's even a little problem that somebody else could fix that they don't have the brain capacity to know what to do, leaving you very frustrated. So one of the things that we look for when we are shopping or when I'm getting loans myself or when we're hiring a loan officer to come work here is we want to know how quickly they can get loan approval in the industry. This is called clear to close. This means that we and the underwriters of the lender have looked at every single element of your loan. And the underwriters, the people that push the button that say, send the money to escrow when they're ready to close, have said, you are good to go. Christian, explain what our turnaround times are when it comes to clear to close and why this is important.
- [31:59]
Christian Bachelor
Yeah, with our conventional, conforming, I'll call it loan products. This encompasses Fannie, Freddie, FHA, VA. We average around 12 days in our turnaround for clear to close. You guys normally hear that escrows take 30 days, right? So we're done in less than half that time. Obviously, title has to clear. You have to get an appraisal back, things like that. But our underwriting turn time on average across our entire company is about 12 days in escrow for a conventional loan. That is, other people in the industry can, can maybe vouch for this, but that's impressive. That's what our systems have allowed us to get to. That means you have what if you have a 30 day escrow, you have 18 days to kind of hang out, you know, not a whole lot being done or what a lot of sellers prefer. We will have the opportunity to close early. And David, from your real estate broker, dad, you know, I mean, hey, would you guys like to close early? That's like realtors. There's not a better word, right? Realtors.
- [32:56]
David Green
Well, I'll be, I'll be frank. If, if my lender, when I was representing a buyer, came to me and said, hey, we have clear close after 12 days, after 13 days or something, and we can close Early. The first thing I would do is I would go to the seller, and I would say, does your seller want to close a week early, two weeks early? Would they give my client back another 500 bucks, another 1500 bucks if we could close early on this deal? Because they may want the money for something else. Now, in some cases, the seller already has the moving truck planned. Like, they need the 30 days to get their stuff together. But if the property is vacant, like I sell vacant property every time, and you tell me I can get that money two weeks earlier, probably for the next deal that I want to go do, or I can put it somewhere where it's going to collect interest earlier, where I don't have to worry about a natural disaster blowing up the deal. I mean, this sounds crazy, but it happens. I was just at lunch with someone today here in Oklahoma who was telling me about his clients on the day of closing, were at the escrow company signing the documents to buy the house, and he went by to do his final walk through before they actually signed. The water heater had broke. Water had spilled all over the water closet and then got under the subfloor. The entire carpet and vinyl flooring was sloshy from him walking on it because the water had been seeping underneath. He negotiated his clients a $5,000 credit right there on the spot before they closed. Okay, if you were the seller, you would have been smarter to close that thing two weeks before this happened, avoid the $5,000 loss, and giving them 500 bucks instead to get an early closing. Like, things do happen. Storms come, hail storms come, water pipes break on properties. People break into them and squat in them. Trees fall over from storms. Stuff happens to houses in escrow a lot. And if you can have the time that it takes to get that thing sold, that's worth something to the seller, and you can ask for compensation back. So this stuff actually does turn into an actual financial benefit, not just ease of mind.
- [34:55]
Christian Bachelor
100%.
- [34:57]
David Green
All right. And number nine. Take it away, Christian.
- [34:59]
Christian Bachelor
Yeah. Last one, guys. Is easy. We'll make it quick for. For our sign off here. My. My slogan when I first started the industry, and it's funny that, you know, this many years later, I'm still honoring it. We work after hours on the weekends. We don't work banking hours. Right. And my. My little motto used to be, you're gonna love me because I don't have kids and I don't take vacations. And, guys, I still do not have kids, and I don't remember the last vacation. I was on. So that is still true. But you know our guys, we answer, you get the personal cell phone of your processor and your loan officer. Not just a company work phone that turns off at 5pm and that's to your realtor as well, right? If you guys need to call on Saturday because you just saw a house and it's beautiful and you love it and you need to make an offer, give us a call, we answer on the weekends.
- [35:41]
David Green
That is huge. I can tell you right now. That is not just huge for you, that is huge for your real estate agent. They will really, really appreciate if you're working with Wells Fargo because that's where you do your banking or Chase, because that's where you have your accounts. And you happen to tell the person there you're going to buy a house and they go, oh, let me introduce you to Judy, she's our loan officer. And you're like, hey, it's all the same, right? Judy's not answering her phone after 5:00. Judy does not work weekends. You may get a loan officer that has a slick personality, good looking person, wears a suit, expensive watch, they work banking hours, they think that they're a banker. We are hungry. We want your business. We want to give you a great experience. We want you to come back, we want you to tell all your friends and family about us. Christian and I are competitive and we want to have the biggest brokerage in the country. In order to do that, we have to crush it for you. There is no way around it. We like you watching our YouTube videos. We also want you to do your business with us and we want you to tell everyone, you know, how great of a job we did and how much you liked it. Keep that in mind when you're making your decision that we are hungry and we are going to fight for you. We're not just going to lay over and say, hey, whatever, I got 700 online leads that I could talk to instead, who I don't have this problem with, I'm just going to move on. On that note, I'd like to remind everybody we are hiring loan officers. If you are a loan officer listening to this, we'd like to talk to you. And if you are a person who works with realtors or is a realtor, please share the word with the loan officers that you know. Christian, can you give everybody kind of our buy box with what we're looking for when it comes loan officers that we want to bring over?
- [37:11]
Christian Bachelor
Yeah, 100%. Anybody who is doing, I'd say one to five deals a month and you're looking to get processes, systems and support behind you, that lets you double or triple that. That's, that's what our goal is. Right. We have multiple loan officers doing between 15 and 40amonth. And that's units. So that's loans closed. We have the ability to scale you there. We've done it many times with other loan officers and historically we hired people with no experience in the industry. We're pivoting from that a little bit now. We want people who at least know what a mortgage looks like and has some experience. But if you're a loan officer and you feel like you've hit your ceiling, you don't have systems, you don't have in house processing, you don't have in house underwriting to help you scale at a quicker rate, reach out to us. Right? We're actively recruiting, we're bringing people on board and letting them take advantage of the systems that we've built here. Ultimately, to build your business as high as it can go.
- [38:09]
David Green
That's a great way to put it. If you're someone who is pursuing excellence and you feel like you could benefit from having somebody support you there and push you to it, we want to talk to you. If you're somebody who sucks and you know you suck, don't bother. Stay over at Acme Mortgage Company and you can suck for them. Christian, if somebody wants to reach out to you directly to get pre approved to talk about real estate or to possibly refinance some properties that they've already got, where can they go?
- [38:32]
Christian Bachelor
Yeah, best way is on instagram @the1 broker. I do my best to respond to them as quickly. I think I got like 15 messages in the inbox right now. So I appreciate you guys doing that. I get to each one of them one by one as quickly as I can. And then obviously if you just want more information about our company in general, the1brokerage.com is where you can find us.
- [38:50]
David Green
There you go. You can find me@davidgreen24.com or even better on social media, your best chance is on Instagram. I am DavidGreen2four. There's an E at the end of green. And if you want to chat with me directly, head to davidgreen24.com and hit the chat button. I'll get you in touch with whoever it is that I can once you tell me what your needs are. Lastly, thank you for listening to Mortgage Mondays. If you're not already subscribed, please head over To Spotify and Apple. Look up the David Green Show. Subscribe there. We put out three shows a week right now. Mortgage Monday, Real Talk, Realtor, and the David Green Show. If you have a question that you would like answered on the show, head to davidgreen24.com Ask where you can submit your question, and hopefully I answer it for everybody to here. Christian, these are scary times. There's a lot of people that are feeling financial stress, strain, worry, uncertainty in the economy. Tariffs have everybody freaking out. We're all looking for someone to be mad at. What's your advice to people that are feeling some of that lack of certainty and worry about where things are headed with the economy?
- [39:47]
Christian Bachelor
I, I think defensive investing would be my first. And David, that's if anybody has any questions about that. There's a real cool book on the back of David's wall here behind him. I, I think we've been in a period of time for a long time where it's. It's hard to mess up, right? It's hard to mess up when the stock market's going up by 25 every year and crypto's going crazy and no real estate lost value. I think now we're getting back to the fundamentals and all of these gurus that come and go. You know, the, let me help you buy real estate with no money down and all these, these risky approaches and these things that, that, you know, they're flashing the pans. I think we're really seeing a change going back to the fundamentals have and will always work right. Invest defensively, save your money, maximize cash flow, maximize return on investment and return on equity that David and I talk about a lot. Get the best financing you can and surround yourself with the people giving you good advice. And that's agents, that's property managers, that's lenders, that's insurance agents. Right? And if you're choosing to invest in the real estate industry and you're doing it without that guidance, I would preach a lot of caution. The moment you get that guidance and you feel confident, all systems go. Right? But if you're not in the right groups, getting the right support, getting the right feedback, the odds right now are higher than you that you will fail than they have been in the last 10 years. Right. We are in the riskiest time in our economy since I, you know, can remember being in my professional life. And that doesn't mean don't invest. It just means you have to invest more confidently, which means you need the advice and guidance of people who are doing it themselves.
- [41:23]
David Green
There you go. Thanks. Christian. If you're still here, we really appreciate you. Please remember to like the video comment. Tell us what you thought if you learned anything new, and make sure you subscribe to the channel to get notified when new episodes come out. We will see you all next week on Mortgage Monday.