The Future For Mortgage Brokers Part 5

Mortgage Brokers in the UK



The mortgage broker industry in the UK has been negatively affected by the credit crunch more than any other country in the world, apart from the USA. The boom of the late 1990s and early 2000s officially ended in late 2007 when the credit crunch became a reality. The following few months saw the closure of hundreds of estate agents and mortgage brokers up and down Britain as the property market came to a standstill.



Lenders pulled products from the market by the thousand. It seemed that all that remained was products for existing home owners with lots of equity in the homes. This left first-time-buyers and home owners with little equity in their properties with no options for remortgages or new mortgages when moving home. The property market ground to a halt and the boom was officially ended.



In the meantime the Financial Services Authority was uncovering widespread fraud within the mortgage advising industry.



Brokers were being suspended, fined, banned, and even jailed as sophisticated property scams were being unearthed. Through the investigations conducted by the FSA it was becoming evident that unscrupulous mortgage brokers were involved in activities designed to defraud lenders with loose lending criterion out of millions of pounds.



The combination of performing few checks on borrowers’ credit histories, earnings etc and the ease at which properties could be overvalued by surveyors led to a situation in which brokers who knew how to play the system could apply for mortgages greater than the actual value of the properties they were buying.



Those involved in the scams would purchase the properties with the majority of the proceeds of the mortgage and simply pocket the difference.



Needless to say the credit crunch and subsequent drop in the average value of property in the UK helped reveal such indiscretions. Individuals who had previously secured mortgages against properties over and above the true value of the underlying assets were now unable to remortgage their properties as surveyors were no longer overvaluing the same properties.



While it should be noted that it was not only mortgage brokers involved in these scams, some brokers were and have subsequently helped to give the profession a reputation it does not deserve.



After the initial fallout of the credit crunch the property market in the UK has begun to stabilise. Net lending of mortgages is no longer plummeting and more favourable products are returning to the market. Borrowers are starting to be given more choice with regards to the products they can choose from which means that lenders are beginning to see some light at the end of the tunnel.



For mortgage brokers, this means that there are more products to market to their clients than there were a year ago. This is welcome relief for the industry but is nowhere near the level it was during the heyday of the property boom. It could be said that a return to those days would not be a good things for the property market and the mortgage profession because the crash has helped to uncover and weed out inefficiencies in the industry.

Pricing Your Home To Sell

When you're selling your own property, whether it's a house, townhouse, condo, apartment, a finished lot, raw land, a farm, a ranch, or whatever, the first thing to get right is the price you ask for it. If you work with a broker, the legwork is done for you. When you work as a FSBO (for sale by owner), you need to figure it out yourself. Let's look at how to do just that.



Setting a Price



First, don't make the mistake of looking only at what you need to get out of it. It's important to know that, of course, but that number may, or may not, have any relationship whatsoever to market price.



It may be lower or higher than market price. The first is situation is great. The latter may require you to rethink whether you want to sell your property at this time.



If you price your property below market price, it'll be snapped up quickly. The problem, of course, is you'll leave a lot of money on the table. This will lead to a lot of seller's remorse.



If you price your property above market price, it may sit there unsold until the cows come home. If it's priced very much above market price, people won't even come and look at it.



The market place talks and it talks loudly.



So What's Your Goal?



Market price is nearly always a range of prices -- high, medium, and low -- not an exact price. You want to price yourself near the top of the market price range for your property. That way, you'll have flexibility to negotiate price if need be.



The only exception to the above scenario is if you're in a hurry to sell your property. In that situation, you should price yourself near the lower end of the market price range. Even if forced to do this, make sure you leave some wiggle room to negotiate with a buyer.



Buyers will always assume the listed price is negotiable.



How Do You Determine Market Price as a FSBO?



The first way is the simplest and most expensive. Have it appraised by an appraiser who works with one or more mortgage lenders. Call the firm who initially issued your mortgage loan and ask who they use in your area. Be sure the appraiser knows your purpose is to establish the asking price for a sale.



Using an appraiser can cost a few hundred dollars, but it can be money well spent.



In addition to helping you price your property, it can also be helpful to show a buyer with whom you're negotiating that an appraisal supports the asking price.



If you live in an area with a tight pattern of sales prices, you can check the price of sales in your neighborhood over the last three to six months. This is particularly true if you live in a subdivision with houses in a narrow range of sizes and styles. Many jurisdictions have this information online. If not, it is a matter of public record and should be available at the courthouse.



The more individualized and unique your property, the more difficult this approach. With a little work, however, you can learn a lot.



Another method for establishing a price is an online search. If you search for "pricing + house + your state," for example, you should find sites that will help you price your property. Some of these use real estate agents and brokers as resources, and that leads us to another option.



It's really unfair if you don't intend to use a broker to help you sell your property, but if that's your fall back position (if selling on your own doesn't work out), you might invite a broker to do a market analysis of your property for you.



Be up front. Explain that you're going to try it on your own first.



Even under those circumstances, many brokers are willing to help you evaluate the market price of your property without any charge to you. They also usually give you a presentation of how they'd go about marketing your property should you decide to use them. Listen to that carefully, too.



You can start evaluating whether you want to work with this person if you're not satisfied with your FSBO efforts. You also may very well pick up marketing ideas you can implement yourself.



A Note of Caution



Don't rely too heavily on what neighbors tell you in social situations about the sale of their own and/or other properties in your neighborhood. Listen, of course, but be aware that they often just know the original asking price and the fact that there's a buyer in the picture. They don't know that the asking price was lowered because of the condition of the house, a redecorating allowance was given, etc.



Don't talk to a neighbor and then think, "Well, that house sold for $X, my house is in much better condition; therefore, I should be able to get $X + $Y.



" Maybe so. Maybe not. Base your pricing decisions on the most solid information available to you, not neighborhood gossip.



If you base your pricing decisions on solid information and use good common sense, you should get a good result. In this case, a good result means a quick sale!