In talking recently with real estate professionals (REPs) near where I live in Long Island, I heard their frustration at seeing clients lose homes to competing bids coming in at $20,000 to $30,000 over the asking price. What can we do realistically, they asked me?
I empathized, having grappled with this problem during my ten years as an agent in the same metro area. And now as team lead of Freddie Mac’s outreach to REPs, I meet weekly with agents, determined to help them grow their business and get clients into homes they can afford. Fortunately, there are resources out there—accessible through lenders, state and local groups—that can help you and your clients increase the odds of success in overcoming affordability challenges:
1. Have a network of trusted lenders with down payment assistance programs
Some lenders may be able to assist borrowers in clearing the affordability hurdle if they earn less than the area median income (AMI), among other factors such as the ability to use gifts, low down payment mortgage solutions, first-time homebuyer status and integration of homeownership education programs. Benefits of having a network of trusted lenders includes access to grants to help clients with closing costs and down payments. If you don’t work with lenders offering these programs, reach out to one, set up a meeting (face-to-face or virtual) and familiarize yourself with their offerings.
2. Partner with a community housing counselor
A relationship with a housing counselor opens the door to early homebuyer education for your clients to prepare them to purchase and become responsible and sustainable homeowners in their communities.
Don’t hesitate to refer clients to a counselor, but stay in touch with them as they go through the homebuyer education process. The counselor isn’t looking to take your client away; instead, they offer educational support to help navigate the homebuying process, resources to reduce a borrower’s costs and angst, and guidance to make home possible.
3. Make connections at your state’s housing finance agency (HFA)
Cultivate a relationship at your state’s housing finance agency, or HFA, which can provide grants and programs for eligible borrowers to help cover down payments and closing costs. The HFA can provide you with a list of lenders that offer specialized loan products as well as information on local programs that your buyer may be eligible to leverage. If a lender you partner with isn’t on the list, you can connect the lender with the agency about the integration of programs which can be paired with a low down payment mortgage requiring only 3% down.
Playing the long game
As a real estate agent, you must make the tradeoff between the opportunity cost of using your time today in a bid to win more future business. However, you can’t afford not to do these three things because of the upside they provide. It could make the difference between handing the keys to a future client or hanging up the phone after telling them you’re out of ideas.
Read the full version of this blog here and subscribe to Freddie Mac’s Real Estate Professional Resource Center to discover solutions, events, and insights on affordable homeownership initiatives to help you grow your business and build your community.