Ep. 11 – Should A First Time Home Buyer Use A National Internet Lender Instead Of A Local? 

 May 24, 2019

HBH 11 | National Internet Lender

The internet is said to be the land of opportunity. There are so many deals, discounts, and hacks around. However, should you be looking for the hacks and quick deals online from national internet lenders for the biggest financial transactions of your life? Are you looking for a Groupon loan experience? This is that big deal out there, and don’t let your skepticism or fear keep you from putting in the time and research to choose the right professional to help you ask some bank to lend you money. You should shop around and find a pro who can get you the best deal, but where do you start? 50% of first time home buyers started online in 2018 when looking to get approval to buy their first house. Is this the best place to start? What are the other options? How do you navigate this overwhelming event? Let David show you some answers here with real talk and real help.

Should A First Time Home Buyer Use A National Internet Lender Instead Of A Local?

How To Pick The Right Mortgage Lender When Buying Your First Home

On this episode, we’re going to be talking about some questions that have come in. I’m so excited about getting this mission out there. The small mission is to help each and every one of you. The big mission is to help the entire real estate industry in realizing that you are important. How important? Let’s talk about it this way. The 2018 home buyer numbers are out and 33% of them were first-time buyers or sellers. There were over five million homes bought and sold in the United States. It’s 33%. That’s 1.65 million or probably a little more than that because we had more than five million.
The average age of a first-time buyer is 32 years old. A bunch of them were younger than that and a bunch of them were older. Since all of you Millennials out there have turned 30 years old, they are between 32% and 39% in all those years of all of the first-time buyers. If you’re saying to yourself, “No way. Millennials want to travel and hang out,” that’s great. Go for it. We talked about how to budget and do that in one of our previous episodes. People are eventually looking to buy a home. It’s a giant part of the market and you are getting screwed. That’s what we’re here to do to fix that. What we’re going to do is answer some questions after I give you these two quick stats. One stat is that only 71% of those 1.65 or 1.7 million first-time buyers were renting. If you’re out there and you’re not renting, you think maybe, “This doesn’t make financial sense for me, I’m going to hang out in my mom’s basement forever.” Realize that 29% of the people out there were staying with family or friends or someplace else they live for free. 18% of first-time buyers are single ladies.

HBH 11 | National Internet Lender
National Internet Lender: When the last crash that happened in the real estate industry, the only winners were the people figuring out how to get your attention online after that crash.

I had a couple of different first-time buyers email me. One of them was a great gal in California. She and her husband are living with her family. She had some questions about what kind of lender she should use. I’m going to help her out and answer that question for her. I also had some questions from Martin about lenders as well and about putting offers in on homes. Let’s get started and help all of you with questions on lenders. This is a simple one-part of a million different pieces that we are going to talk about because if you think that you can get everything from lending in one blog, that’s not it. You are asking for $200,000, $300,000, $400,000 or sometimes $500,000. That’s going to take a little bit more than just Googling to figure out what the Kelley Blue Book is on a car and see if you can finance a $15,000 used vehicle. This is a little bit bigger. It takes a little bit more time.

Is Quicken A Good Place To Start To Get A Loan?

I’ve got this question from a gal who is looking to get a place up in the Los Angeles area and she said, “I know I should start with getting a loan. Is Quicken a good place to start?” Before I get into this, I need you to understand. Anything that you do to start researching and start figuring out what’s going on is a good step. There is no wrong step if you’re researching. The problem is there are a lot of wrong answers out there and that sucks. That’s what I’m trying to fix. If you read my other blogs, you know that when you Google first-time home buyer, there’s not a realtor to be found for almost twenty pages, but we can work on that. That’s what we’re trying to do now.
[bctt tweet=”First-time home buyers are being targeted by national online lending companies. It’s a thing.” username=””]
Here’s the question, “Is Quicken a good place to start to get a loan? They’re the biggest so they must be the best.” My answer emphatically is no. What happened is the real estate industry got caught behind and they left a giant hole on the internet. Do you know who swooped in? All these big internet lenders and they don’t have your best interests at heart. That’s not what they’re trying to do. They’re trying to make a sale. Let me explain. You’ve got Quicken, Rocket Mortgage, LendingTree, loanDepot and a whole bunch of other guys out there. They figured out that since you started looking online first and they don’t advertise to you online, you, the first-time home buyer, who do you find? You find these big giant lending online entities. They’re the ones that won the internet game and they’ve got your eyeballs.
The stats came out, over 50% of you get your approval online first. You think, “Of course, Sidoni, that’s normal to you because you’ve had that smartphone in your pocket for many years,” but that’s not the way it’s always been. This is new. This is a shift. This is different. People are starting to get everything online now and I’m telling you, the old guys don’t get this. When I say old, I mean people my age. I’m 49, but when I’m out with my clients looking at houses and they have questions, they go straight to their pockets first. Google is their verification system. It’s their encyclopedia. When I tell my colleagues that when my clients and I are out, we all grab our smartphones and look stuff up and go, “That’s weird. Mine asked me the question because I am the area expert.” I have to remember, “I forgot. You don’t do first-time buyers or work with anybody under 40 because you don’t think they’re worth it.”

Embracing The Internet

The industry has left those first-time buyers behind and they think that you, the buyers, are still completely dependent on them. Back in the old days, they had all the information, they held a little MLS book before everything was on the internet and that’s the way they still think. What they do now is they have to make the internet their enemy because they fear it so much. They fear it’s going to expose them for the frauds that they are for not caring about you and for not giving you that high-quality service and worst of all, for passing you on to rookies or even the ultimate worst, for passing on you altogether because you’re not a good return on their investment. If a realtor embraces the internet, it could be your best asset to work with the first-time buyer. If you’re speaking the truth as a real estate agent, there’s nothing to fear.
I love that my buyers use this. I love using it with them. It’s a fantastic tool. We both learn together. The real estate industry is lost. We can change this one purchase at a time and considering that in 2018 we have 33% of five million that made the leap. The question is how many of them did so confidently? How many of them felt good about their lender and their realtor? I’ve got a system to help you fix that because I guarantee you, if you go with one of those online guys like 50% of the people are doing, the confidence level will most likely be very low. 50% of the time, people are starting online first with a lender, but I’m encouraged by the fact that you are out there doing it. The whole point of this show is because no one told you differently. They still think that they don’t have to market to you. They think that eventually, you are going to come to them with your tail between your legs with that lost look in your eyes thinking, “Mr. or Ms. Realtor, can you help me? This is all so confusing. Please guide me through this entire process.”
[bctt tweet=”There is no wrong step if you’re researching. The problem is there are a lot of wrong answers out there.” username=””]
If you’re out there doing this, good for you. That’s smart. If you are doing that because you think that’s what you’re supposed to do to make sure you don’t get ripped off, I have a question, “Where did you get that information?” Did you research it on the internet? Maybe the guys who are trying to market you on the internet, put that information out for you to find. The thing is who dominates all the information on the internet? It’s the people who want you to do your shopping on the internet. If you go buy cat food on Amazon, watch cat food follow you around your browser for the next three weeks. The guys are trying to get your business. They’re also trying to get the realtors business. They built a better website and they won. Realtors are dinosaurs and they refused to do it so they got left in the dust.
Maybe your parents told you to do that. Parents can give fantastic advice but unfortunately, this business changes so rapidly. When did they start looking for a loan? Are they giving you a headline they heard from the evening news? Most likely the last time they bought a home, things have probably changed or did you hear it from your skeptical friend, from someone who’s purchased one or two homes and now they’re an expert? I’ve got friends like that. I’ve also got friends that are looking out for me and went through the process once. I trust them more than I trust this random guy on a podcast. What I can tell you is I’m doing this because I care. I want to change things. I know that if I give this good out, eventually it’s going to come back to me. I just didn’t buy one home. I’ve helped 79 people. The 80 and 81 are on escrow. I’ve seen the good and the bad.

Dealing With A Nationwide Online Lender

I can honestly tell you this, the bad, probably some of the worst times my first-time buyers ever had was dealing with a nationwide online lender. How did we get here? How do we get to 50% of you going to them? When the last crash that happened in the real estate industry, only the winners were the people are figuring out how to get your attention online after that crash. Tens of thousands of realtors left their business. The lenders got slaughtered as well. Do you want to talk about how many of them got destroyed? It’s 75% of the top lenders, fifteen out of the top twenty from 2006 were no longer in business in 2012. The whole industry collapsed, there was a huge hole. The internet movers and shakers figured out how to jump in there and become a new trusted source. That’s what happened and that’s where the hole was.
I’ve got another little secret about how this happened and why this happened. If you’re out there and you’re looking online, it’s smart but that was before the internet lenders figured out how to market to you. I’ve tried my best to reveal the truth about the whole industry, to tell you all the dirty little secrets and how you are getting screwed and how these internet lenders figured out how to get your attention. It’s not a secret. These companies are targeting you. We hear that word when we go to workshops about marketing and how to talk to people and how to get people to notice you target them. The void of information that I tell you, they see it too. Those internet guys get the internet. They’re targeting you and getting you to come to them and eventually, they’re going to be selling you to the realtors that pay them. They are not the guys that have your best interests in mind.
[bctt tweet=”Never is almost not always.” username=””]
I might hear from everyone, “Why are you listening to a realtor’s podcast? He’s telling you don’t listen to everyone else but why are you listening to him?” It’s your call. I’ve been telling you what’s wrong with the industry. There are lots of people that love to think that everyone in the industry gets a kickback if I tell you to go work with this guy or that guy. It’s completely illegal. If I ever got caught getting a kickback to a lender or a title person, we then lose our license and my family wouldn’t eat. Most importantly, if you don’t trust your realtor well-enough, then that means you didn’t go back and read the blog where I helped you and told you how to interview your realtor. If you choose someone that you think is Captain Shady and you think they’re kicking somebody back so you don’t want to take their referral, why are you letting that person steer the ship? Why are you letting Captain Shady be in charge of the biggest financial transaction? If you get a referral from your real estate agent, I hope that you’ve done your homework ahead of time and interviewed a bunch of people so that you’re confident with that.

Talking To Your Realtor And Getting A Referral Versus Getting Your Preapproval From An Online Lender

Let’s get to the final piece. Why is talking to your realtor and getting a referral to a few different lenders better than actually getting your preapproval before you talk to the realtor and getting that preapproval from an online lender? Number one, your realtor’s going to give you a bunch of different lenders or at least a couple and it’s up to you. You can choose whoever you want and if they’re pushing you or making you feel uncomfortable, it’s a red flag. Here are the reasons why an online lender is not usually as good as a local mortgage broker that has a relationship with the person that’s helping you with the real estate transaction. If you go to your realtor ahead of time before you talk to your lender and that realtor is willing to spend time with you than me as your realtor, I’m not getting paid for that time. I’m adding extra time to the entire billable hours, all the time that it takes from top to bottom to sell you a house, therefore I’m already showing that I’m committed to you. My future business as a real estate agent, your real estate agents’ future business depends on you having a fantastic experience with them. It’s the same thing with a lender. The online lenders don’t care if you have a great experience or not because once you close, they’re done and they’re moving on to the next person that they’re targeting.
The second point is it should not be as easy as Amazon Prime. You cannot get a better deal on a mortgage because you did Rocket Mortgage while you’re standing in line in the grocery store and you used the Honey app for a discount. You are not shopping for a cell phone. You’re shopping for something gigantic that needs to take the time to really go through all of the different programs, especially for a first-time buyer. If you’ve got $200,000 cash, you can feel free to make this a quick decision. If you’re trying to scrimp and scrape and figure out how to do this so that you don’t have to rent, you’re probably going to have to get creative and talk to somebody who won’t give you all of the best things that the first-time buyer can use.
Lenders pretty much are like a gas station. When you’ve got three gas stations on one corner and their prices are about a penny apart. If you’re interviewing two or three good lenders, they all should be about the same interest rate. That interest rate shouldn’t change because the bottom line is once you get a certain grade level, Plus A or B buyer, you determine your interest rate. All good lenders will give you the best rate because the rate sheet, that’s what the banks are willing to lend money that day and it changes a few times a day. All of them give their people the best same rate, whatever the banks are giving that day. You determine your interest rate once you’ve got two to three good lenders that you’re comfortable with, your debt, your income, that’s going to determine what your rate is.
[bctt tweet=”Google is the new verification system and encyclopedia.” username=””]
Number three, I do try to expose the whole industry eventually for our goal to change it. There are people that don’t get left in the dust and hopefully what we’re going to be doing is helping the people who are true advocates for you rise to the top. Make sure that when you’re out there looking for a lender that you’re looking for the same information. You’re looking for the real deal, not just an internet person looking for a quick buck. If you’re still skeptical, check out my, “How to pick the right realtor,” that is literally me giving you the blueprint to use somebody else.
Number four, the internet is screwing uninformed first-time buyers very much the same way that a few years ago the Home Shopping Networks used to screw the little old ladies in the middle of the night. This is a true story. They used to actually figure out who the people were and call them. This is pre-cell phones and pre-internet. They knew the old ladies were sitting there and they knew they had their attention and they knew they weren’t doing anything else. That’s exactly how they feel when they target you when they’ve got you online. They know you’re there and they know you’re looking at your phone. They know they have your attention. The Home Shopping people would wait and they’d call them and they’d start telling them that they can get a way better deal if they make a purchase with them over the phone instead of going to the mall and then it becomes about convenience. People would make that decision rather than going to the mall and shopping and finding out that, “I could’ve got this way cheaper here.” It’s all about the lack of information. They’ve been ignoring you and they screwed up for decades and now they are getting screwed.

HBH 11 | National Internet Lender
National Internet Lender: The internet is screwing uninformed first-time buyers very much the same way that the home shopping networks used to screw the little old ladies in the middle of the night.

Number five and this is the number one reason why I, a real estate professional who’s got 81 transactions with first-time home buyers, believe that you shouldn’t be one of the 50% of the people who are going to online mortgage help. Most online mortgage companies suck and they cost you a lot of money. It costs you that money at the end when there’s nothing you can do about it and you have to close the deal. Here’s the way it works. When you work with a lender, a mortgage broker who has a relationship with your realtor and they’re working together, you have a conversation with that person. They talk to you about what you’re qualified and you can talk to them for a year, figuring out how to fix your credit and how to move your money. Then when you get into the transaction, you talk to that same person. When you go through the transaction, you talk to that same person. When you get ready to close the transaction, you talked to that same person.
When you work with Quicken or one of the big boys, you talk to eight different people. The first person you talk to get you that preapproval when you think you’re doing the right thing, you will never talk to again. That is a 9 to 5 salesperson. They are 40-hour a week salesperson. Their only job is to answer first-time inquiries then you get sent to the next person and then the next. When you are within the deal, you could be four or five persons along and you can go, “Remember how we talked about how I couldn’t spend more than $2,300 a month and now the payments are here?” They go, “I have no idea what you’re talking about,” because they’ve never discussed that with you because you have a salesperson, you have an application person, then you have the first step of an underwriting person and a higher level underwriting person. It goes on and on. They get you hooked and you get bounced around. If the company that you’ve talked to isn’t selling you the actual loan, they’re not walking you all the way through, you are a person they’re targeting, trying to get them into a system. That’s the way it works.
If these companies aren’t selling their leads to realtors, trust me, they will be soon. Those realtors, unfortunately, are folks that are too lazy to go out there and try to get their own clients so they have to buy them from the internet people who have kicked their butt as far as marketing and talking to you. I’m not trying to target you. I’m trying to talk to you. I want you to know and understand. Remember, to the online folks, you’re another number. You’re another notch in the belt. After they’re done with you, they’re going to move onto the next one. Remember, I’m giving this away for free. I’m on a grand mission to try to change the entire real estate industry and I’m going to catch a lot of heat for this. Don’t think I’m not going to get a lot of flak from a whole bunch of other real estate agents and people in the industry and for that, I only ask you one thing. Go online and review this. Go to iTunes, take five minutes and write a review.
The reason I do that is not because I’m a narcissistic fool. The reason is so you understand that I’m here to help you and I can help more people. If you write me a review on iTunes, if you subscribe and if you share this. Go to www.DavidSidoni.com. You’ve got links there to everything that I’ve talked about. Check it out. You can click on the videos and get to my YouTube page. There’s also a place there where you can check us out on Instagram. Thank you so much. I’m going to keep answering questions. Send those in as many as you can. I’ve got thirteen years of experience. I would answer specifically the questions that you need. As always, remember, you can do this.

Important Links:

This podcast was started for YOU, to demystify things for first time home buyers, and help crush the confusion. After helping first timers for over 13 years, I knew there wasn’t t a lot of clear, tangible, useable information out there on the internet, so I started this podcast. Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out. And if you’re not already a regular listener, subscribe and get constant updates on the market. If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts, or write a review on Spotify. Let’s change the way the real estate industry treats you first time buyers, one buyer at a time, starting with you – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused. Viva la Unicorn Revolution!
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Ep. 208: STEP Eight – Do Your (Online) Research