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A Realtor’s Guide to Alien Lenders

“First you get the money, then you get the power, then you get the ….”

-Tony Montana in the movie, Scarface

The professional Realtor has always helped a would be homebuyer by referring her to a credible financing source. That paradigm has shifted much in the past few years as lenders have positioned themselves as the first stop on the home buying highway. Our marketing message has basically been the aforementioned Tony Montana quote. That message has caused a new phenomenon for Realtors that I call “Alien Mortgage Originators”. The point of my post here is to temper the xenophobia that exists in Realtors’ hearts when dealing with Alien Mortgage Originators. These five tips will help Realtors identify which Alien Originators are credible and which are just a voice on the phone looking to scalp your buyer.

1- The first question to ask an Alien Originator is one you hear down South a lot. “Just who are your people?” Southerners, wary of carpetbaggers, find that question an effective way of finding common bonds. The internet is an inexpensive way to let Alien Originators broadcast who “our people” are so google them. Maybe the connection is a college tie, an old job, an old hometown, etc. When you ask me that question, it humanizes both you and me. Now… we both cheer for the Arizona Cardinals, or both dated Julie from Joliet, or both went to Big East colleges. It’s not much to both cheer for the Arizona Cardinals but I’m less likely to let you down knowing that small fact about you.

2- The second question would be to ask for referrals, preferably from Realtors within your town or franchise. Why the Realtor rather than the client? Realtors have inside intelligence about originators that a client wouldn’t. I love when I’m funding a purchase with a Keller Williams agent because I know so many of them. I understand their Belief System and can recite it for them. I know “their” rules. An Alien Originator wants to show off his stuff to a new Realtor relationship. If the Alien Originator has no common referral sources for you because you are an independent brokerage in a small town, go back to question one. Find the common bond so the Alien Originator can give you a credible referral.

3- The third question to ask is how the Alien Originator is getting paid and how much. Transparency in lending actually defends the Alien Originator’s margins. Your compensation to the client is completely disclosed, shouldn’t the lender’s be disclosed as well? If a lender is unwilling to disclose this to you, be concerned. The answer to this question allows you to ask your lender buddy if the Alien Originator is reasonable in their terms offering to your buyer. Now, don’t make this a bidding war, that is counter-productive. If the figure is too low for your market, be wary of the low incentive the Alien Originator has to close the loan, if it’s too high, well… your client’s getting scalped. Ask for all loan disclosures sent to the client to be e-mailed to you. You don’t have to read all of them but it helps if the Alien Originator thinks you might. To better understand how lenders are paid, READ: A Realtor’s Guide to Yield Spread Premium.

4- Ask the Alien Originator about the last time she had a surprise and how she handled it. If she’s had no surprises, run for the hills. Experienced originators ALWAYS goof up or get caught by surprise. The good ones own up to the “oh, shit” immediately and usually have 2-3 back up plans in place. I blew up a manufactured home loan just 3 months ago. Three days from the COE, I discovered that I hadn’t clicked the proper “property type” in the automated loan approval. The deal needed to be shopped again causing a seven day delay in closing. It worked out fine in the end for all parties. You, as a Realtor, need to know that you have an originator that can handle herself with the cool hand of a Top Gun aviator when the flack starts bursting. Call the Realtors from the last deal she blew up to be certain that she earned her wings.

5- Finally, my parting piece of advice. Just stay away from the online lenders. It is impossible for you to find out who their people are, what Realtors admire them, how they earn money, or how they handle screw-ups. My friend, Jeff Corbett, The X Broker, wrote a piece about the deception of online lenders a few months ago. Share it with your client and ask them to consider a more accountable lending source.

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    13 Comments so far

    1. Carole Cohen December 26th, 2006 7:14 pm

      Brian, THANK YOU. First, the question about asking what the originator’s fees will be to my client: yes, if I have to disclose why not them? I will ask. This will now become my arsenal; and I already agreed with you 100% about on line lenders. You are the best.

    2. Linda Davis December 26th, 2006 7:28 pm

      Most of my xenophobia exists when dealing with the buyer’s cousin Joe, the mortgage broker from California aka Alien Mortgage Originator so you’ve got me pegged. I appreciate the advice – good stuff Brian! I’m going to share this with the team!

    3. JeffX December 26th, 2006 8:16 pm

      Xenophobia is an ‘affliction’ that can save Realtors and consumers alot of otherwise wasted time and money…alas, I fear the Alien Realtor too :-\

      Someone needs to invent those glasses from that cheesy B-rated flick with ‘Rowdy’ Roddy Piper about 10-15 yrs ago, “They Live” or something along those lines..? The glasses you could wear to ‘see’ the aliens..? (I hope someone else remembers the movie)….

      I once stated income too low on a stated income loan…that was tough to explain…especially since the amount I stated was less than what he was claiming on tax returns)….A long time ago…in a galaxy far far away…:-o I almost quit out of embarrassment.

    4. Sharon Simms December 27th, 2006 5:09 am

      Good questions for us to use, Brian. I like the commission disclosure and copies of all documents.

      One fact that has created a fear of California lenders in our area is that many of them, despite our telling them, don’t take into consideration that in Florida loans are funded at the closing table, not 3 days later.

    5. Ken Stampe December 27th, 2006 1:23 pm

      Brian, you forced me to look up “xenophobia”. As always you deliver on content, accuracy and advice. As a brother-in-lending I too believe that education of the Realtor is the best preventative to bad lenders. Great article.

      Ken Stampe

    6. Brian Brady December 27th, 2006 1:48 pm

      Thanks for the nice comments. Realtors should embrace the “alien lender” because the model is changing; Realtors can bring donuts to lenders now?

      Maybe our next topic.

    7. Carole Cohen December 27th, 2006 4:15 pm

      Brian, interesting that JeffX mentioned xenophobia; fear never does anyone any good, but being cautious usually does lol. I have already printed this out for our next meeting (next Tuesday) and one of the guys in my office had me give him a copy ahead of time. Ahead of time, just like you Mr. Brady who is ahead of his time lolol Thanks again.

    8. Doug Quance December 27th, 2006 8:53 pm

      Welcome to the blog, Brian!

      I, too, fear the online alien broker… the track record does NOT look good, as far as I can tell. I like my brick-and-mortar-drive-down-the-street-and-have-a-cup-of-coffee-mortgage-broker, thank you.

      I like your idea of asking about their latest f-up – and how they handled it. :lol:

      Jeff: The movie is ‘They Live’… complete with the longest and most ridiculous fight scene ever filmed… I’m sure you must remember it… “Put on the glasses!”… :lol:

    9. Mitchell hall December 27th, 2006 9:13 pm

      Hey Brian, Good tips. I don’t care where they are from as long as they are competant. It’s the cousins that do mortgages part time that give me xenophobia.

    10. Mariana Wagner December 27th, 2006 10:02 pm

      Brian- Great, great ideas. Our world is getting smaller… If a lender is competent, then I guess it doesn’t matter “where” they are. Thank you for the advice.

    11. Cathleen Collins January 1st, 2007 10:23 am

      Great inaugural BHB post, Brian. I’ve flagged it in my RSS feeder as one of enduring value, that I know I’ll come back to again and again. Welcome to the Bloodhound!

    12. david kucic July 20th, 2007 9:51 am

      Brian-I arrived here via your AR post. This is full of great info and will help me to convince clients what I have been telling them….stay away from internet based lenders. Hawaii is still kind of far from the mainland for neck wringing distance though! Send me info for a realtor that you have worked with in Hawaii. Dont want to put you on the spot but I want to test the theory. Aloha and thanks for the great read Brian!

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