Some questions have come to mind about transparency of transactions, and the availability of information to consumers. This seems to be a thread that is common to several different, unrelated discussions and events.
Recently a post was written about Realtor.com. The discussion was whether real estate agents liked their clients having such access to the listings. Several complained that the site was not as good or as affordable as they would like. As far as preferring customers to have check the site for listings, the opinions seemed to be split.
Another post also was written recently about Realtor.com, but I am not linking to that blog post because it was for members only.
My son just bought a home. He did a good bit of research on available listings using Realtor.com. That meant that his agent provided other services, and did so quite well. Her fee was not earned looking for available properties in the MLS, although she also of course checked the MLS, but rather negotiating the contract, checking out the property, the history, representing her buyer's interests.
She really did a good job. And she is now on Active Rain, but not doing the same good job participating with blogging as she did selling my son a home. I am working to encourage that. :)
The question comes to mind for me though, Is the informed consumer better to work with?
Another post, written by William Johnson, discussed the pending legislation concerning tax incentives to purchase foreclosure properties. The issue in the post was that a seemingly unrelated proposal was tacked onto the bill. Apparently to sneak the tack on legislation through into law, a bill that might not stand on its own.
The thinking is that if the legisislation were more transparent, then our elected leaders could not work out that kind of behind doors deal. And frankly they should not be able to do so.
Recently, my office had its regular state audit. The big focus was disclosure and excessive charges for a mortgage. At issue was whether the disclosures were made timely and accurately and whether fees were increased without customer knowledge or whithout time for the customer to react.
The federal and state regulators are not going to let loan originators sneak excessive and undisclosed charges by unsuspecting borrowers. Not any more.
Another blog topic was concerning disclosure of the terms and margins for pay option ARMS. The thinking was that higher margins were sold without the customer understanding the choices. The higher the margin, the higher the YSP. Customers do not initially feel any impact of a higher margin, because of the artificially low initial minimum payment.
There have been other discussions with a similar back ground theme of openness and informed consumers.
On the mortgage side on the transaction, I get customers who know their middle score and their DTI. They know about stated income programs. They know about bank statement documentation programs. They know about rates, points, fees, LTV. Many borrowers are quite frankly very knowledgable.
Is that good for loan officers? for the industry? for competition?
Does it make the transaction more transparent, better for the consumer? better for all concerned?
I actually think that an informed consumer is good.
I know that an informed consumer is who we all are going to be working with in the future. My hope is that by blogging I will have one more way to tell that informed consumer that they can find an informed originator by calling me.
We need as an industry and as individuals to be part of informing consumers, or we risk becoming irrelevant.
Thanks,
Richard
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Richard Smith Conventional, FHA, FHA 203k, HUD $100 down purchases, VA, Jumbo VA, Rural Development, Jumbo, FannieMae Homepath, Home Equity Line of Credit (HELOC). |
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Stearns Lending, Inc |
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This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Stearns Lending, Inc. |
Hello Richard, That was certainly an interesting and comprehensive post. Thanks for the mention. I would bet there must be 3 or 4 posts all rolled into one there. Certainly lots to think about. If I were answering your question about the informed consumer, I would err on the side that I don't think consumers are really getting that much good information, at least they are not finding it as easily as one would think. Aren't consumers actually tell us how they like things, in 30 second sound bites? Aren't they really saying, just give me the answer and leave all the fluff for someone else to read. I haven't the time or the inclination. I wonder?
Richard - great post. In general, I think 'informed consumers' is good. You must be careful, though. They are informed, but sometimes have pre-conceived ideas based on what they have researched and drawn conclusions from. They are interpreting facts and figures without the local knowledge and no expertise.
Example: So many buyers think "foreclosures are the best deal right now", based on the internet and newspaper hype, then we get a bidding war and someone pays too much for a property.
That buyer may think he did good!
William,
You are right. I probably could have organized my thoughts on this a little better.
The informed consumer may very well be an mis informed consumer, but that is not generally what I see. They are looking for confirmation or correction of what they have heard, but my response need to start from where they are.
And my response needs to satisfy their need to grasp what they are getting ready to do?
Many want the quick version, but even with them, we need to be able to build on the present state of their knowledge and provide satisfying answers.
I guess I am just saying the informed consumer expects and deserves a high level of transparency in our dealings, and that is a good thing.
Richard
Virginia
Not real sure that this is even a good post. I was looking through the Realtor group and found this post
http://www.activerain.com/blogsview/579971/Are-mortgage-borrowers-well
The point of this post is the most consumers are not well informed at all. Many do not even know the basics of the loan papers they are signing.
It just seems to me that borrowers are coming in with some level of knowledge - informed or misinformed - they have made the effort, they have done some research.
Is that reasonably accurate?
We need to start from that level of knowledge and complete the picture.
My sense is that borrowers want and need a greater understanding of the transaction.
Maybe it is the aftermath of the credit crisis, maybe the readily available information on the internet, maybe the constant focus of 24 hour news - consumers seem to have, to want, to need good information.
And we, as professionals, need to provide it.
Hope you had a good 4th out there in beautiful Mesquite, NV.
Richard
'My sense is that borrowers want and need a greater understanding of the transaction'
They do need it, but not always want it. We do need to provide it.
But consumers are feeling empowered by their knowledge. They are making decisions on their own based on info that they got on the internet. The internet is a great place to start - we need to let them know that it is just a start.
Hi Richard: I think an informed consumer is a good thing. Especially given what we jsut went through wher the customer was taken advantage of by unscrupulous lenders. The more a customer knows, the easier it is for me to be upfront and truthful. And I don't mind that at all! Have a great day!
Paul
HELLO RICHARD!!
I would say that sometimes an "informed" consumer is sometimes mis-informed or even over-informed! I have come across people that were a little to informed for their own good.
I think the consumer should know the truth, the correct information. Now, difficulty comes when you have to re-program them after they've been given eroneous info.
Thanks for sharing,
Richard,
Good post. My main reason to be here on Activerain is to provide information to the consumer who I hope will call me as the perceived expert for my area.
Richard, very thought provoking post. I would have to say that it depends on the information and the delivery of that information that matters to the borrowers. Too much information is never a bad thing...too much of the wrong information is detrimental. Our government gives some decent materials for distribution about products, borrower rights, the process, closing, etc. The real issue is having confidence in an informed loan professional that conveys confidence, knowledge and understanding of pertinent information so the borrower can make an intelligent decision.
Thanks again
Bo Hussung
Your title source!