A Realtor’s Guide to Alien Lenders

-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.