Often times a Realtor will suggest to a homebuyer that they use the real estate company’s “in-house” lender. Realtors don’t usually push these lenders on their buyers, but they are definitely suggested many times. Every wonder why? It is important to know how these lenders are structured, and how they operate.
-These in-house lenders are a joint venture between the Realtor firm and an outside lender. The Realtor firm takes a piece of the profits (most for the firm, a small amount for the Realtor) in trade for allowing the lender to be an “in-house” lender.
-An in-house lender has trouble recruiting quality loan officers because they offer low pay.
-These lenders offer low pay to the loan officer because after they give the real estate company a cut, and take their own cut, they don’t have enough left over to offer a normal compensation plan. I have been recruited by numerous in-house lenders that were offering 30%-35% commissions, when the industry pays at least double that. Why would I work for half off?
You get what you pay for. When you work with someone who is willing to work for half off, that means you get an order taker, not a problem solver, and certainly not a hustler. “Welcome to McLender’s, may I take your order? Would you like fries with your fixed rate mortgage?”
In today’s hyper complicated mortgage environment, no one can afford to work with an order taker, everyone needs a top notch mortgage representative, who is full time, who will make things as smooth as possible, and who is a pitbull and will fight for their loan; all while providing market terms.
This is the same advice for lead aggregation websites (Bankrate.com, Lending Tree). These are weak lenders who don’t know how to work a deal, or work over an underwriter, and are simple order takers paying a fee to advertise on a website, because they are not capable of going out and sourcing their own business locally through their expertise and relationships. And they use centralized, out of state underwriters who they cannot contact directly; and worse, they many times do not use local, market knowledgeable appraisers.
Always ask how a lender sourced the lead, did they earn it, were they given it, did they pay for it, and did they work for it? And always ask how a lender gets paid as well. I am transparent, there is nothing to hide, and I would be happy to answer these questions.
It’s an understatement to say the financial world is getting complicated. You can still hire the best mortgage loan officer, and also get the best terms. Simply stay away from online lenders, in-house lenders, and lead aggregation websites. These are order takers, no better than fast food cashiers. Fast food cashiers are great at checking us out at burger joints when we are hungry, but you need a top flight professional in a mortgage transaction. Use local sources, who are accountable, very experienced, systemized, and have a vested interest in maintaining their reputation.