Has anyone had their realtor urge them to use their lender?

11 Reply

Bill B.

Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes

3y

You may also find some sellers require you to get pre approved through their lender, even if you aren’t using them. They want to insure you are a real buyer and not a wholesaler or a tire kicker.

It don’t cost anything to get a quote from that lender as well as your own. If they’re the same or cheaper go that way. If they’re more expensive tell them why you’re going the other way, maybe they’ll match it. But, if you do go the other way, make sure you choose a quality lender who will close and not change the terms mid-deal. Or you will prove their point why they want to use their lender.

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Reid Chauvin

Lender · Nashville TN - Licensed in AL AR DC FL GA LA MD TN, TX and VA · Member since 2021 · 583 posts · 338 votes

3y

@Ryan Swigart - in my opinion, use who you are comfortable with. Maybe just have your lender call your realtor to introduce themself, vouch for their ability to close, and explain the due diligence they've done to pre-approve you. They can also offer to call the listing agent as well to do the same - that tends to go a long way.

3 Reply

Taylor DaschBusiness Member

Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes

3y

Yes, I have actually had a clients offer get declined because of the lender he was using - the listing agent had a bad experience with them and turned us down. However it was the lender he felt comfortable with so to him it didnt matter much.

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Karen Johnson

Investor · AMBLER, PA · Member since 2013 · 158 posts · 98 votes

3y

When we first met, my realtor (who I have used multiple times) he encouraged me to use a particular lender because he knew the lender would be reliable, timely and could close the deal. He also recommended an inspector and a title company. I used them all. He was not wrong about any of them. I have used them every time since (even for transactions where my realtor was not involved) and I have not regretted it once. Ultimately, your realtor wants the deal to close because they want to earn their commissions. They also want to make sure you have a good experience so that you continue to use and/or refer them. Use who you are comfortable with (even if it's not who they recommend), but it's likely they are just trying to make sure the deal goes through without a hitch by using someone they have successfully worked with in the past.

5 Reply

Eliott Elias

Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes

3y

Many realtors make commissions on each loan they refer to the lender. Money is money, as long as your realtor vets your lender there should be no reason to change.

2 Reply

Jenni Ellis

Property Manager · Member since 2018 · 174 posts · 185 votes

3y

I agree that most Realtors have preferred lenders. However, there should be a few to choose from and not a choice of ONE. The options help you choose who is best for you, but the recommendations from the Realtor give them the peace of mind knowing the lender can get the deal closed.

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Erik EstradaBusiness Member

Lender · Member since 2022 · 6k+ posts · 1k+ votes

3y

Quote from @Ryan Swigart:

I am relocating so I have a new realtor I have never used in the past. She has been very good so far. However, when I told her I wanted to submit the first offer, she called me and strongly urged me to use a local lender that they recommend instead of the lender that I have my pre approval and other properties through. She said since she is not familiar with that bank it will make the offer weaker.

I have never heard that before and don’t understand how that makes a difference. In my mind, money is money the seller would care and I’d lm very happy with my current bank, so why would I add in another lender, when I already have everything organize through one. Also, submitting a lengthy application to a new lender isn’t the most enjoyable thing to do.

Thanks for the feedback and I’m curious if anyone else has had a similar situation.

I would caution this.

Any realtor pushing a lender has some incentive with them. Either that pay for marketing costs or receive a form of kickback which is illegal.

It's your right as a consumer to shop around.

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3 Reply

Erik EstradaBusiness Member

Lender · Member since 2022 · 6k+ posts · 1k+ votes

3y

If you do prefer to use an outside lender, I would recommend connecting both your agent and lender together to make it a seamless process. Also would recommend doing your own due diligence and verifying the lender's track record, which can be done through a quick look up through your real estate broker.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

3y

Quote from @Eliott Elias:

Many realtors make commissions on each loan they refer to the lender. Money is money, as long as your realtor vets your lender there should be no reason to change.

Again this is simply NOT TRUE its illegal for a lender to pay a commission to anyone who is not licensed lender.. As a Oregon licensed mortgage banker we get this pounded into us each year at our CE class's just like RE agents cannot pay NON agents a commission.. the only thing that is acceptable is a small gift cert to starbucks .. what they do however is they can have marketing agreements were Advertising is shared ..

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6 Reply

Sam YinPro Member

Los Angeles, CA · Member since 2021 · 584 posts · 738 votes

3y

To the OP, this is very common practice in this industry. It's been this way since I could remember. It's a network and trust thing among the people involved.

May be others with much more experience may have a different opinion. Since the 90s, I agents have always urged/recommend a lender for various reasons that should be obvious.

Sam YinPro Member

Los Angeles, CA · Member since 2021 · 584 posts · 738 votes

3y

@Erik Estrada

Think of it like this, if you are the Sellers Agent, would you not want to ensure you will be presenting a string buyer that can close the deal with their financing? How better can you be assured that the loan will go through than that of the Loan Agent or lender you have experience with. They will likely give you the inside scoop of how strong the buyer really is.

On the other hand, as a Buyers Agent, would you not want to Male sure a buyer is fully prepared rather than waste your time struggling to meet the document/credit requirements?

I am not an agent but I have seen so many deals fall apart due to stubborn Buyers that though they were perfect candidates for a loan. The Loan Officer can only do so much. The Lender make the final decision and the Loan Officer has intimate knowledge and network with the inside players. At the same time, those players have a hand on the pulse of the economy.

For example, I'm in 2 escrows at the moment. One opened 2 weeks ago. The other is set to close in about a week. I'm opening one more next week. For these particular deals, I'm using a local credit union that I recently did 5 commercial loans with in the span of the last 12 months. So I figure they know me well and have all my financials. I just completed several audits of their loans with them. HOWEVER, yesterday they said all transactions are on hold until Monday. I will likely close my loan that set for next week. But the other is now up in the air. I have a buyer of a 1031x that the bank has hault all LOIs.

Considering the state of the economy and the changes in the last week, I am not surprised.

So, back to the point... the veteran Agents in this business have seen all this and more and are only trying to help.

Ellen Bonner

Member since 2021 · 9 posts · 3 votes

3y

"They will likely give you the inside scoop of how strong the buyer really is."

This is exactly why I run from any lender strongly recommended by the real estate agent. My financials should not be shared with the real estate agent.

Sam YinPro Member

Los Angeles, CA · Member since 2021 · 584 posts · 738 votes

3y

@Ellen Bonner

I use to feel that way. However, as time goes on and experience build up, I came to realize quickly the advantages out way the any reasoning behind it. The actors involve in the transaction can help you and elevate you to greater heights. These are you prospective TEAM.

This ideology/strategy will take up many pages of explanations to cover the many positive outcomes of creating this team. From my experience, the investment community in each area is very small and all the players know each other. Your reputation will generally precede you.

But then again, it may just be that I have not ran into major detrimental outcomes of revealing my financials to Agents. If that time comes, I may change my mind and perhaps see it more your way. For now, I feel that it has only benefitted me in the long run. In fact, I routinely tell agents my financials on a regular basis. This is has been how off market deals come my way and I can submit offers with confidence, even without running it through a lenders. It has to do with the team and open communication.

At the same time, if someone is just looking to do a one off deal and never deal with that agent in he future, I totally understand. And I know every area is unique. I'm speaking mainly from a CA stand point. But I have done the same with NV and MO.

Michael Brattelli

Real Estate Broker · Medford, NJ · Member since 2018 · 236 posts · 177 votes

3y

@Eliott Elias realtors don’t make commissions on referring to lenders, that’s a kickback and is illegal.

2 Reply

Michael Brattelli

Real Estate Broker · Medford, NJ · Member since 2018 · 236 posts · 177 votes

3y

@Ryan Swigart I’m primarily a listing agent and if buyers submit offers with preapprovals from lenders that have a history of poor performance I let the seller know. Many times they will ask the buyer to switch to a local lender.

When I am on the buy side I suggest buyers at minimum speak to one of the lenders I work with regularly because I know they are competitive and will get to the closing table smoothly. However, if you’ve done plenty of deals with your current lender and you’re comfortable with them then that’s a different story. Have your lender reach out to your agent and have a chat.

John Oliver

Real Estate Agent · Binghamton NY · Member since 2021 · 7 posts · 3 votes

3y

I am in NY but we always encourage people to get a prequalification with a local lender because sellers tend to see them as more reliable. Local lenders usually understand the specifics of the taxes, fees, and other specificities of a transaction in a state whereas some large national lenders may not. Agents, at least in NY, can suggest lenders that they like but they are not allowed to pressure you to use someone you don't want to use. At the end of the day, it is your decision on which lender you want to use but it can be helpful to get prequalifications from multiple lenders.

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Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

3y

If you are using a crappy lender, it absolutely affects the strength of your offer.

Banks/lenders with stellar reputations go to the top of the pile. Banks with terrible lenders go to the bottom of the pile. Banks Ive never heard of, I have no idea what to do with.

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Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

3y

Quote from @Eliott Elias:

Many realtors make commissions on each loan they refer to the lender. Money is money, as long as your realtor vets your lender there should be no reason to change.

This is 100% false and illegal.

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Darius Nunez

Rental Property Investor · Queens, NY · Member since 2021 · 35 posts · 6 votes

3y

@Ryan Swigart seems to me like there’s definitely some in-house favoritism going on!

Carlos Ptriawan

Member since 2019 · 7k+ posts · 4k+ votes

3y

Quote from @Ryan Swigart:

I am relocating so I have a new realtor I have never used in the past. She has been very good so far. However, when I told her I wanted to submit the first offer, she called me and strongly urged me to use a local lender that they recommend instead of the lender that I have my pre approval and other properties through. She said since she is not familiar with that bank it will make the offer weaker.

I have never heard that before and don’t understand how that makes a difference. In my mind, money is money the seller would care and I’d lm very happy with my current bank, so why would I add in another lender, when I already have everything organize through one. Also, submitting a lengthy application to a new lender isn’t the most enjoyable thing to do.

Thanks for the feedback and I’m curious if anyone else has had a similar situation.

My experience:
- In some state, it's best to use particular lender within that state only (eg: Wells Fargo can't mortgage in Hawaii you know right).
- If it's owner-occupant, getting a financing connection with a local CU usually is the best route
- If it's an investment property, you could use a lender that most of their portfolio is an investment property (and they dont resell to FM), if you use local CU for investment property their underwriting model could be more stringent.
- So what your realtor telling you could be right, based on their experience.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

3y

Quote from @Russell Brazil:

Quote from @Eliott Elias:

Many realtors make commissions on each loan they refer to the lender. Money is money, as long as your realtor vets your lender there should be no reason to change.

This is 100% false and illegal.

unfortunately for this member he is often very wrong with his posts.. this is just a prime example. Not only incorrect but Illegal activity I wonder if he is an agent ..

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6 Reply

Taj Akinbode

Real Estate Agent · Investor-Friendly Agent| Serving Houston, TX - And Surrounding Areas · Member since 2022 · 130 posts · 30 votes

3y

@Ryan Swigart It's understandable that you want to keep all your mortgages in one place for the sake of convenience. However, I agree with your realtor's recommendation to work with a local lender that they trust and have experience with.

While I can't speak to the specific argument that unfamiliar banks make offers weaker, I can say that choosing the right lender can make all the difference in the success of your home purchase. Not all lenders are created equal, and great lenders can often close loans when others can't.

As experienced realtors often partner with and prefer to work with experienced mortgage lenders that are responsive and work hard to see the deal to closing. By working with a local lender that your realtor trusts, you may be able to expedite the process and increase your chances of a successful purchase.

Submitting a lengthy application to a new lender can be a hassle, but it may be worth it in the end if it means working with a lender that can get you the best deal and help you close the deal smoothly. I hope this helps, and good luck with your home purchase!

Doug SmithPro Member

Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes

3y

We have both a real estate agency business and we're a lender. More important than rate is "close-a-bility". The realtor likely has a comfort level with the realtor. Trust me, all lenders aren't equal. On the flip side, your agent might not know your lender. I often have realtors push clients towards other lenders when they don't know me only to have them start using me later. It's comfort in knowing they will come through.

Carlos Ptriawan

Member since 2019 · 7k+ posts · 4k+ votes

3y

Quote from @Doug Smith:

We have both a real estate agency business and we're a lender. More important than rate is "close-a-bility". The realtor likely has a comfort level with the realtor. Trust me, all lenders aren't equal. On the flip side, your agent might not know your lender. I often have realtors push clients towards other lenders when they don't know me only to have them start using me later. It's comfort in knowing they will come through.

Yes, this needs to be emphasized.
Every lender is actually very different from one to another, especially in the "underwriting" process.

I am not surprised about the close-ability. To the poster, if you want to find out which bank is best for a particular zip code, it's public information, you could use a special method to find out the mortgage co. that each house is used, you may even want to talk to realtor in the same zip code, which lender that they use.

Every lender also has their own method of calculating DTI, it is not the same.