The "Lowest Rate" Trap

[Drago Stanimirovic]

A conversation from a few months ago came back to me this week. 

An investor called looking for financing. We talked through the deal, and everything looked solid. A day later he called back: "I found a lower rate."

No problem. I wished him luck.

A few days later he called again. Another lender. Another quote. Another comparison.

Then... nothing.

A month or so passed before I heard from him again.

The property was gone. Someone else had bought it. I have no idea whether the investor who won the deal got a better rate or a worse one. Honestly, it doesn't matter.

What matters is they closed.

That's something I've thought about ever since. People compare rates down to the decimal point, but rarely compare the things that are much harder to measure: how often does this lender actually close on time? When there's a problem, who picks up the phone? How many deals like yours have they already funded? Will they tell you early if the deal won't work, or three weeks later?

A loan isn't just a price. It's a partner in one of the biggest financial decisions you'll make.

I've seen investors overpay for money. I've also seen them lose opportunities because they spent too long trying to save a fraction of a percent... The cheapest quote and the best financing aren't always the same thing.

(What has mattered more in your experience - a lower rate or a lender who actually gets the deal across the finish line?)

[Erik Estrada]

Quote from @Drago Stanimirovic:

A conversation from a few months ago came back to me this week. 

An investor called looking for financing. We talked through the deal, and everything looked solid. A day later he called back: "I found a lower rate."

No problem. I wished him luck.

A few days later he called again. Another lender. Another quote. Another comparison.

Then... nothing.

A month or so passed before I heard from him again.

The property was gone. Someone else had bought it. I have no idea whether the investor who won the deal got a better rate or a worse one. Honestly, it doesn't matter.

What matters is they closed.

That's something I've thought about ever since. People compare rates down to the decimal point, but rarely compare the things that are much harder to measure: how often does this lender actually close on time? When there's a problem, who picks up the phone? How many deals like yours have they already funded? Will they tell you early if the deal won't work, or three weeks later?

A loan isn't just a price. It's a partner in one of the biggest financial decisions you'll make.

I've seen investors overpay for money. I've also seen them lose opportunities because they spent too long trying to save a fraction of a percent... The cheapest quote and the best financing aren't always the same thing.

(What has mattered more in your experience - a lower rate or a lender who actually gets the deal across the finish line?)

 Honestly, for every 5 shoppers there is 1 great client. I just don't take them seriously anymore. You can see who values your time, expertise, and professionalism over someone that only cares about the next lower chip on the rate/fees.