Real Estate Financing Overview
Written on March 13, 2008
REAL ESTATE FINANCING 101: UNDERSTANDING HOW TO WORK WITH LENDERS. BETTER KNOWN AS THE GOLDEN RULE, “HE WHO HAS THE GOLD MAKES THE RULES”
Availability of money is what drives the real estate market. When the lenders loosen their requirements the market is hot. When lenders tighten up, the market cools off.
Dealing with Lenders is the most frustrating part of the real estate business. Because it is the lender’s money on the line, they can be extremely picky in making loans and asking for extra information.
However, history has shown that when lenders loosen their requirements, foreclosures dramatically rise. Lenders tend to swing from one side to another. They will open the doors and drop their requirements for a while, then they will face a few losses and decided to only lend money to people with perfect credit and a million dollars in the bank.
On either side of this pendulum is a money-making opportunity for BD. When lenders are tight, it is hard for buyers to get a loan. Sellers are more motivated to work with us and our creative financing gives us an edge in the marketplace with buyers.
When the banks are loose we do not have nearly as much of a competitive advantage, but that usually does not matter as the opportunities are so great, there is plenty of business for everyone.
Filed in: Financing.