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My Lender is My Uncle Fred-HE Would NEVER rip me off! NOT!

Posted by on Jul. 16, 2013 at 8:50 AM
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 Ok Ladies...remember this!

If you have a Lender in the family... Let's call him Uncle Fred.

DO NOT believe you are going to get the best deal from him/her.

ALWAYS ALWAYS (did I say that loud enough?) 

Always get a 2nd opinion.  Let me elaborate please?

I average 4 or 5 loans per year where my buyers tell me they are going to use Uncle Fred...coz they trust him...of course they do...he's family.

Well... I say get a SECOND opinion ALWAYS.. and do it on your own. Don't make ME, as your Realtor have to get in the middle of family business.

I've had buyers get mad at ME when I tell them that Uncle Fred is charging them an exhorbitant amount for closing costs. (I use tact when I approach the subject) 

They say "NO WAY! Uncle Fred would never rip us off!"

Well, I try to present it as "this is not a good deal on your loan. You can do much better than this."

Buyer says "Uncle Fred said it IS a GOOD DEAL!"

Uncle Fred is saying that because:

1. That's the best deal he can do with it.

2. He makes his money on the fees/closing costs. So the more he charges junk fees and a little higher processing fee... that's his income...

3. He just might not be above-board and he really IS ripping you off.

So, there's 3 scenarios. When I look at your statement from the lender I know financing & I KNOW what the charges should be. So, as your Realtor...I want you to get the best deal. That's less of your savings you have to spend on closing.

True Story:

Buyer 1- Closing costs should have been $4500...Uncle Fred charged them $14000. ($9500 EXTRA dollars)

Buyer 2- Closing costs should have been $3000...Uncle Fred charged them $6100. ($3100 EXTRA dollars)

Buyer 3 Closing costs should have been $3500... Uncle Fred charged them $4500 ($1000 EXTRA dollars)

$9500, $3100, $1000 of YOUR hard-earned dollars came out of your pocket...because you wanted to use Uncle Fred...coz he's family...& you KNOW Uncle Fred would NEVER rip you off.

Well, the only scenario that is reasonable is Buyer 3... IF Uncle Fred is a Loan Broker, he may legitimately be giving you the cheapest loan his company can get... $1000 does NOT mean he is "ripping you off". 

But, the other 2 scenarios... $9500 & $3100 are completely RIP-OFFs.

SOOOO, the BEST advice from me...a completely ethical & EXPERIENCED Realtor... is

ALWAYS GET A 2ND OPINION.  Give yourself an idea of the typical charges you should be paying.  Then, you can decide on your own whether you are being ripped off or if Uncle Fred's charges are reasonable.

Ironically, the most blatant rip-off was Buyer #1  and they were so mad at me for suggesting the rip-off theory, they asked me to leave their closing that day.

Note: Uncle Fred did not send the settlement statement until 15 minutes AFTER the closing appt. I think he was thinking that we would just HAVE TO close...coz we were there and I wouldn't have time to counsel the buyers.

But, I took the time... and I literally had a begging tone in my voice and asked them please to postpone and get a 2nd opinion... That's when they asked me to leave.  *I TRIED*  (I was totally looking out for them)

$9500 EXTRA DOLLARS outta their pockets! And they asked ME to leave.

ughhhh!  Just doing my job...

 

Mary Wilcox-REALTOR



CDPE,ABR,ASD,SFR,BPOR
Foreclosure and Short Sale Specialist
Kansas City Metro Area
816.616.7165 cell   email me:  fastest2.mw@gmail.com

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by on Jul. 16, 2013 at 8:50 AM
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Replies (1-6):
GOBryan
by Member on Jul. 20, 2013 at 2:10 AM

You know why they got mad at you? Because it's none of your business. You over-stepped your boundaries unless you're a Mortgage Consultant.  Not trying to be mean, I know what you're getting at and in a sense you're right BUT your not a lender/Mortgage Consultant. You are a Realtor. Your job is to find out how much they qualify for  and find them a home based on their criteria. The End. 

When I come across something like that, I just say "That sounds high for this market" and leave it at that. The reality is I don't need to know anything outside of the Realtor duties. I don't need to know their credit score or any mortgage info other than what KIND of loan they qualify for and how much they qualify for, simply because that will affect the house hunt. 

I totally agree with you but unfortunately, it's best to just stick to your duties unless they ask you. Buyers don't want to know that Uncle Fred is giving them a bad deal because that could cause internal family problems. They fall in denial to avoid those problems.

I'm one that I don't like dealing with friends or family when it comes to business. It usually doesn't pan out and to keep the relationship, I try not to accept it. What my partner and I do is pass the business on the eachother. 

My partner had good friends that were selling their home with us. I handled most of the transaction because I could easily tell the Sellers yes or no without ruining the relationship THEY had. 

Relationship/business matters are a very touchy thing. 

tenacity
by Group Admin on Jul. 21, 2013 at 9:58 AM

 I think it is EVERY Realtor's business to get their Client a good deal on their financing! PERIOD.  The Buyer gets 2 or 3 opinions and you help them decide what the best deal is for their family.  ie different programs, different types of loans

Financing is one of the #1 ways for the homebuyer to have a bad experience. 

I have an extensive finance background and know financing, But if I didn't know it... I would learn it...as a Realtor.

I've heard so many Realtors say mostly what you're saying. "I don't care what the loan is as long as they buy a house."  Well, what if there's a program that will save your client $3000, but the lender they went to doesn't offer that product? (Am I doing this client a disservice not telling him about it?)

If the Realtor is saavy, they will mention the program... Client gets that 2nd opinion, gets the $3000 savings...Client is HAPPY. Realtor provided good service!

Did I ask them for their bank statements and paystubs?  NO... I'm not a lender....  What I did is get to know my client and their needs and provided information so that they could get the  BEST possible deal for their family.

And what about the angle that some huge percentage of deals fall through because of financing???

Well, I say a Realtor needs to be knowledgeable in ALL aspects of Real Estate to provide the BEST & least stressful experience.  It's just GOOD BUSINESS... And THAT is what I do.

In sum, NO I am not a Lender... but it IS MY DUTY to provide the Home Buyer with the BEST possible information for their family.  Whether they are dealing with Uncle Fred or not.

 

Mary Wilcox-REALTOR



CDPE,ABR,ASD,SFR,BPOR
Foreclosure and Short Sale Specialist
Kansas City Metro Area
816.616.7165 cell   email me:  fastest2.mw@gmail.com

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GOBryan
by Member on Jul. 22, 2013 at 10:20 AM

In Florida, if you are not licensed in mortgage, you can not give advice in mortgages. It's illegal. I refer them to mortgage consultants I trust and let them decide. I may say that an interest rate sounds high for the market, if they discuss it with me but in essence, a Realtor is not supposed to get involved in the financing portion of the situation.  You can actually screw up a deal if you get too involved and as you said, they simply got mad with you. 

It is a Realtor's duty to find them a home, to possibly refer them to reliable lenders and others associated with the business of home buying. That's a Realtor's duty. Not to tell them that their financing terms suck unless they ask. Then you have to be careful how you say it because it can become a legal liability unless you're licensed in that dept. 

It's sort of as if a Buyer asks you if a zip code is in a bad area.. You can't answer that without the possibility of losing your license. I've had Buyers ask me to not show them homes where there are certain ethnic groups. I can't single out a neighborhood. I simply tell them to provide me with the zip codes or areas they like and I'll locate homes meeting their criteria. It's their duty to drive around the neighborhood and decide if they like it or not. Whenever I'm asked, I suggest they research it because it's illegal for me to answer those type of questions. A Realtor's duties are very precise and very sensitive due to the immense liability we carry. It may be different in your state but NAR is usually the same nationwide. 

I know you're trying to give the best service to your Buyers but you may be overstepping your bounds legally and over-zealousness can be detrimental sometimes. Not everyone wants to know whether their financing is good or not. Sometimes they don't have a choice and just want to get into a house. then worry about refinancing it later or changing the terms somehow.  Many times, we don't know the entire story as to why they chose it or went that direction. A

s they say "Buyer's a Liars" on some counts so you don't always know the underlying reason behind their decision. New buyers don't generally confide in us about everything or for everything. There's usually little loyalty from the Buyer's side. One minute you're showing them around town and next thing you know, they buy a house from someone else. You need to earn their loyalty and confidence but it'll only happen in their terms. 

I have a buyer/seller, whose wife got financing  but I couldn't understand why he was looking for a home similar to the one they already owned. First I suspected they wanted an investment home but later I suspected there was some sort of problem with the one he owned because of their body language and comments. I asked him how quickly he needed to move and he had said right away but yet, he had a house. Needless to say, on one showing I asked him (when he was alone) a few more questions and he embarrasingly told me his house was under foreclosure with a closing date around the corner but he didn't say it before I casually commented how I had worked for a Foreclosure Solution attorney 2.5 years and dealt with various issues pertaining to modifications, short sales, deed in lieus and bankruptcy. That's when he opened up to me on what was going on. I was then able to tell him what "I would do" and what some clients in the firm did to save their home.  I not only have a buyer that trusts me now but I also got a short sale listing from it. He told my partner that he would have been out in the street already if he hadn't talked to me about it.  We're still trying to save his home but I'm sure to get some business out of it and possibly a lifetime customer. 

Quoting tenacity:


tenacity
by Group Admin on Jul. 23, 2013 at 8:11 AM

 Ok, I agree with you on some points.

To be clear, I do not give them a TIL (truth in lending statement). I'm not performing a mortgage consultant tasks. It's not illegal in MO & KS to give advice on that aspect of a home purchase.

I am in my expert professional Realtor role, telling them they should get another opinion. (I said ealier I do use tact)

You said not only did you get the short sale from your client on that example... well the rest of the story on the client that got mad is this.

I already had their current home listed.  The mom was on the deed to the current home. (she got it in her divorce decree)

The NEW boyfriend/dad was the client on the home they were buying.

It ended up when they purchased the new home, they walked away from the current home.

So, it turned out they "strategically" bought a new executive home worth double that their current home was worth. And they walked away from the home I already had listed. (I didn't know they walked away until I got an offer on their current home & they would not talk to me or participate in the sale)

So, when I kept telling them to stop at the closing table...don't close the new home because they were totally getting robbed. They had no option than to close it, coz they HAD TO get out of their current home before everyone discovered their game.

Another part to this story is that the mom was my neighbor for 14 years. I knew the mom quite well.  (I still treated them like any other client)

Now, if you think about it...IF I had been silent, and not tried to warn them about a ridiculous amount of over-charge on the loan. I wonder what that would have looked like when they were charged with fraud.

Would it look like I was negligent or complicit?   In my thought, ANY Realtor that would have allowed that to happen would be negligent if they didn't try to tell the client. And if this was a real legitimate sale, not a strategic plan, then they would have had the biggest complaint to go to the Board with, once they discovered they got robbed on their financing. It was blatent.

If it were not for confidentiality rules, I would have nailed them to the wall! 

In my view financing is such a HUGE part of buying a home, it should be mandatory that we give at minimum, the advice to get a second opinion.

It boils down to MY reputation. If the buyer is not happy when the deal is done, they don't blame the lender...it's always the Realtor's fault. So, I think being saavy in ALL aspects provides excellent service to a client.

I sell near 40 homes a year. I get 99% of my business through satisfied, happy clients. (I have a website but other than that I get all business thru word-of-mouth) With as many times as I see bad lender costs, if I were to overlook or ignore this..how many happy clients would I have?

How many would be telling their friends and family about me? It just makes good sense to me in the business aspect, as well as protecting my client as much as possible.

Mary Wilcox-REALTOR



CDPE,ABR,ASD,SFR,BPOR
Foreclosure and Short Sale Specialist
Kansas City Metro Area
816.616.7165 cell   email me:  fastest2.mw@gmail.com

GET EXPERT ANSWERS TO YOUR REAL ESTATE QUESTIONS!

GOBryan
by Member on Jul. 23, 2013 at 8:49 AM

I agree and I also protect my reputation and my license. Financing fraud is not something that we would be charged with because we are not mortgage consultants unless we delve into the lending aspect of the home buying process. The Originator would have to contend with that.  The Seller/Buyer that's committing fraud would only be on your shoulders if you knew about it  and helped them commit fraud but it's apparent that in your case, they were being uncooperative and were taking advice from another source. As you said, it's a game and they can still eventually get burned after closing. Many lenders are investigating "strategic default" very, very intensly. It is fraud and punishable not only through fees but prison time and a felony to boot for the customer. People still choose to do it thinking they won't get caught. 

As far as the lender costs, the buyer chooses the lender and unless you refered that lender to them, it's on their shoulders. Most buyers will not contribute the lending experience to the Realtor unless you refered them to the lender. Those that do, tend to be people who refuse to hold themselves accountable for anything anyway.  Realtors sell houses, Originators sell loans. 

Now, keep in mind that Florida has a huge real estate market and we have many foreign buyers, etc. So our laws here are extremely specific and precise about what our duties are.  We are automatically "Transaction" agents. We work for the transaction, not the buyer or the seller, technically speaking.

To add to this, I'm also a Notary Signing Agent so I close deals for other Realtors, therefore, I know the loan documents well. I also worked in mortgages one year which I hated. It was before we were required to be licensed and could work under a brokering firm's license which was before the bubble. As a Signing Agent (because I'm not a mortgage consultant) I can not discuss the terms and conditions with the borrowers. I am simply there to witness their signature and make sure the blanks are filled in. I can't answer questions even if I know the answer or I can have my license revoked there also and be fined. 

So, long story short, I notify the Buyer that I suggest they pick a lender they can trust and that all I need to know is how much they qualify for and what type of loan they qualified for in order to match the house with the loan and their criteria. I let them know from the beginning what my duties are and that not only takes the stress off of me but makes them consciencious of their role as well. Never had a problem that way and I've had many satisfied buyers and sellers. The HUD must be provided 24 hours prior to closing so they can review it with the originator. 

Bottom line, if it works for you and it doesn't jeapardize your license, then you keep doing what you're doing. 

Quoting tenacity:

 Ok, I agree with you on some points.


tenacity
by Group Admin on Jul. 24, 2013 at 9:20 AM
1 mom liked this

 Wow!  You really do have different rules than us. This has been a very interesting & educating conversation. Truly, I've been in the RE industry in different capacities for 18+ years, commercial lease/purchase, title, Investor, flipper, RE Agent, financial analyst... I've done a bunch and know alot... I keep up with all that is awry as well as new programs for buyers, etc...

But bottom line, before I became a licensed Realtor... I bought probably 30 houses through other Realtors. (some I knew & some I didn't know prior to using them)... I saw soooo much crap, games, unethical and just plain uneducated moves by Realtors. I decided to get my own license to do my own deals...then, I thought wth, I'll get a buyer or two...

So my 1st buyer told me they switched Realtors (to me) coz their old Realtor had them ripping up carpet, repairing wooden floors, replacing vents n missing outlet covers, pay for trash removal (the carpet) on a Fannie Mae home...coz they couldn't get it FHA with that condition. She evidently didn't tell them they were not legally supposed to be doing that. (too bad the Realtor didn't know about Homepath financing for FNMA homes)

 did the Realtor know that? (probably) but they had them do this stuff anyway. When they discovered they'd have to hire a plumber they said...we don't want the house. They switched to me & we bought a home legally & properly closing in 45 days.

My 2nd client came to me from a prior Realtor that said they cannot buy the house...coz their bank said they had a bogus charge that didn't belong on his credit so US Bank said they can't buy & to hire a credit repair company & come back in 6 months to a year. Not good advice "in my opinion". Soooooo, I recommended the 2nd lender & it was ok with Wells Fargo and they got to proceed with buying a home immediately.

I have a ton more examples.  Ethics? Knowledge? Caring? (about the client) Icame to the conclusion there are too many Realtors that don't know or know the rules but break them anyway, or just plain don't care about the client more than the buck they'll make.

So, instead of focusing on my flipping enterprise, I started taking on clients. I really felt like I could make a difference. And in the process I'm fulfilling a dream career. (I didn't know I would love it like this before I started)

I'm as squeaky clean as you can get. =)   So, that is my plight, my attitude...I just love being part of the dream for young people just starting out...

I know that probably sounds corny... ok... So, I'm corny! 

Thanks for engaging in this discussion with me.  I learned something!  =)

Mary Wilcox-REALTOR



CDPE,ABR,ASD,SFR,BPOR
Foreclosure and Short Sale Specialist
Kansas City Metro Area
816.616.7165 cell   email me:  fastest2.mw@gmail.com

GET EXPERT ANSWERS TO YOUR REAL ESTATE QUESTIONS!

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