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Profile picture for tepelena

Agents want me to use their lender.

So far, any agent I have been in contact with wants to suggest a lender. Some of them are more insisting than others. It makes me wonder why they are so pushy. Especially since I tell them I already have a lender.

What is the real reason that they all want to suggest a lender? Do  agent's work with lenders and get a commission for referrals? Or is there any other reason.

Thanks.
  • March 29 2011 - US
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Answers (156)

I have also encountered this on several occasions here in Southern California.  Most of these requests are from agents that have listings that are flipped properties that I have experienced.  Most of the time, these are more difficult transactions to make because of the 90 day flip rule.  My experience is that most of the time the listing agents lender is as competitive and sometimes more competitive than the buyers agent.  However, buyer beware of overall costs associated with the loan.   Make sure you look at the fine print, and if a loan is being pushed on you, sometimes its better to walk away from the home.  It helps if you have a knowledgeable agent versed with mortgages before you attempt to pursue this option. 
  • May 17 2011
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Profile picture for susanisaacsre
Yes, a recommendation, suggestion, referral or providing a lender name for an immediate pre-qualification if the buyer hasn't one is quite different than "pushing" past a buyer's comfort level. The lender is absolutely the buyer's choice and, as an agent, I don't want to know too much about the buyer's lending details.  It is important to know if there are going to be any challenges so I can structure the offer in a way that protects the buyer as much as possible, and to trust that the lender chosen can deliver the loan as agreed. As you note, it benefits no one to go through the entire process only to have the deal fall apart. 
  • May 14 2011
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Profile picture for BaronChestney
We would advise you to walk away from any agent that seems to be "pushing" any particular lender too much for your comfort level. While agents may have had positive experiences in the past with certain lenders or loan officers or mortgage brokers, it is not their place to be pushing various loan programs or products upon their clients. We would like to think that the overwhelming reason that you are experiencing this phenomenon is that the overall lending climate has changed so drastically over the past few years that agents are simply trying to protect you from the potential pitfalls of using a lender that does not say what they do and do what they say -- one bad lender can ruin more than your day -- they can ruin your entire home purchase and/or prevent it from happening at all! When recent home buyers are asked what was the worst part of their home buying experience, almost universally, the most common answer these days has something to do with the lender/loan officer/mortgage broker having been less than forthright with them with regards to rates, fees, conditions, timelines, etc, etc., etc. So, although well-intentioned, many agents are trying to keep their clients away from a "bad" lender by instead promoting lendersa that they know to be honest and forthright and have the ability to see the transaction through to completion. Still, we would advise against such overzealous attempts by agents, as they are inappropriate. Keep looking until you find an agent that will let you work with a lender that you want to work with. However, if your agent has some horror stories to share with you about a particular lender whose loans are averaging 45 to 60 days to close these days, and/or who are imposing nearly impossible closing conditions upon their borrowers (We'll Forget to name such a lender here...), you may want to heed your agent's advice and avoid such a lender... after all, a deal that falls apart benefits nobody.
  • May 14 2011
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Profile picture for susanisaacsre
Since new rules were put in place regarding appraisers, sellers, buyers and agents alike have experienced difficulties with poor quality appraisals, appraisers who didn't know the subject territory, etc.  This is not related in any way to appraisal manipulation. It's very clear when an appraisal doesn't meet standards.
Many expert appraisers wouldn't work for the low, low rate offered by pool providers. This affected the quality of appraisals. During the past year, with options added for challenges on poor appraisals, and options for second appraisals, things have improved. The rules that prevent lenders from contacting appraisers directly remain, and that is a good thing.  : )
  • May 13 2011
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Profile picture for hpvanc
"When we work with lenders frequently, we know their capabilities, what programs they offer, what they're good at and what they're not.  We also get to know the quality of their appraiser pool."  And that boys and girls was one of the primary causes of the housing bubble. 

HVCC legislation was put in place because of how bad the problem was, the legislation has caused its own issues, but at least it attempted to restore a buffer between dishonest agents working with dishonest lenders and pushing prices higher and higher without regard to the economy.  Agents wanting to continue this way make me think they are stuck in "lather, rinse, repeat" mode, unfortunately the shampoo bottle is empty and in most areas has been for several years.
  • May 13 2011
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Many times in our rural area, buyers will want to go with lenders they find on line thinking they are getting a better "deal". Unfortunately when it  comes closer to the closing date, somehow the rates or down payments get higher and both buyers and sellers are disappointed when the process has to begin again/ We like for buyers to use lenders they have had a good relationship with previously and if not, we are happy to suggest at least three local lenders that are more familiar with our counties.
  • May 13 2011
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Profile picture for susanisaacsre
Many times, we recommend lenders we trust because we've seen so many transactions over the past few years fall out due to unkept promises by lenders who weren't able to deliver. This results in a loss for everyone involved. When we work with lenders frequently, we know their capabilities, what programs they offer, what they're good at and what they're not.  We also get to know the quality of their appraiser pool. All lenders don't offer the same products. Here in DC & NOVA, many lenders stopped doing FHA condo approvals when the new laws took effect. I know lenders who are very good at them, and which would just waste valuable time. The same goes with DC Bond programs, for which lenders have to be approved, and many more programs of the like. Only certain lenders do co-op loans, and those lenders must be on the co-op's approved list. It's not just a comfort level on our part, it's our attempt to provide a valuable recommendation that can help make your transaction a successful one.  
  • May 13 2011
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Profile picture for sunnyview
Yes, we all know that kickbacks are illegal just as I'm sure that we all know that illegal things sometimes happen. Buyers need to be aware that having a lender pass your financial information like your maximum qualification amount to your agent behind your back is not good for you as the buyer. I want a lender that will do a good a job, perform as promised and keep my financial information private.

The lenders primary obligation should be to the borrower/buyer not the agent. If you are not sure that your lender understands that, I would go with a lender who does.
  • May 13 2011
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Profile picture for TITL
Some of them have a deal you refer me and I refer you.
  • May 13 2011
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I have a bunch of Realtors I work with regularily.  The reason a Realtor is sending you to a certain lender is because of the confidence and familiarity of that particular lender.  There are NO commission splits---at least there shouldn't be since it is illegal.  My suggestion is this---get a GFE from the lender of the Realtor's choice and then also one from the person you know.  Sometimes there are real advantages in working with certain lenders over others---not every lender has the same programs and definitely NOT the same rates/costs.  Shop, compare and get the best financing package available to you.

  • May 13 2011
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It's pretty likely that they have good experience, and are confident the lender can get the loan done. They only get paid when the loan closes, so they want to do everything they can to make it happen. They can't accept and a lender cannot offer a referral fee - that would be a kickback, which is illegal.
  • May 11 2011
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You are free to use any lender you choose.  Agents often suggest lenders that they have had good experiences with and they know will work to get the best mortgage product for their client. 

It is illegal for agents to receive commissions or kickbacks from lenders. 

Good luck!
  • May 11 2011
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Illegal kickbacks!!!
Steering is illegal!!!
  • May 10 2011
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Usually real estate agents have had positive and negative experiences wth certain lenders. Most agents will suggest one or two lenders whom they feel will provide you with excellent service at a competitive rate. It is absolutely illegal for agents to get a comission for a referral to a specific lender.
  • May 09 2011
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I agree with Denise that your agent trusts the lender to get the deal closed and completed.

Commissions and kickbacks are a violation of RESPA.

http://www.loanofficermagazine.com/archives/archives_action2.php?article_number=176
  • May 08 2011
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No agents should get nothing from a mortgage rep as far as a referral fee.  Some agents refer a rep because they have worked with them and they are good, quick, aways available and overall great with the clients.  So if you know someone who you can count on and give great servuce and is always available to you the client we recommend because it makes for a much smother and happier transaction overall!
  • May 07 2011
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You have the right to use any lender you wish.  However real estate agents prefer you use their lenders because they know those lenders can get the job done at the lowest rate and at the best costs.

I would get a quote from one of the agents lenders and one of your own and compare.

Have a great day!

Adam

  • May 07 2011
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You can use any lender you wish.  I would suggest you contact an experienced mortgage professional. Everyone has abouot the same rates aand fees but the service can vary.  If you work with a less experienced lender it will cost you money becausse they don't know what credits that can be added to the HUD to decrease your cash to close. Keith
  • April 26 2011
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.
  • April 26 2011
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Profile picture for Digger O Del
I have been forced by bad experience to never deal again with female agents. I have been lied to, found 3 different agents to take kickbacks (IE. gifts, vacations etc) from lenders and have had personal information passed back that lowers my future negotiation positions using recommended lenders. I give nothing to selling agents except a contract that my attorney drafts. No exceptions. I arrange payment or financing or they sell to someone else after I waste as much of their time as I can. I have been forced by bad experience with sellers agents to always hire a male buyers agent and tell him right up front about the way I do business. 
  • April 23 2011
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A lot of good comments!  In Southern California with many short sales and foreclosures, "time is of the essence" to complete these tranaction and the neighborhood credit union may not be able to meet the quick deadlines.  I've found Lenders that Direct lend an also broker the Loan can meet the required deadlines and I will reffer them to my Clients.

It is illegal to get a referral fee or a "kick back" from a Lender per RESPA. So I recommend at least 3 Lenders to my Clients. 

  • April 23 2011
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yet, amazingly Jayne, I'm not in Pa and we have no physical presence in Pa; yet I do a lot of purchase business in Pa.

and i doubt any lenders are writing purchase offers.
  • April 21 2011
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Profile picture for CallTheSisters
Unless a lender is local brick and mortar the majority of sellers in our marketing area will not accept a contract from an out of state,out of area or internet lender.

As agents we know a seller can reject an offer which includes "no name financing". 

Like the majority of agents have told you - we want service and reliability for the buyers we represent.  We know who does a good job.

Larger real estate agencies who have their own "in house" lenders obviously prefer you to use them because keeping the deal in  house increases the profit margin for the corporation.  Agents who are recommending lenders in the community do not usually have a financial incentive to make the recommendation.  If they receive any kind of monetary consideration they must disclose that to you.
  • April 20 2011
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Profile picture for sunnyview
Legalities aside, consideration from lenders to agents does occasionally happen. Most often is is not in the form of money, but in the form of information on how much the client has in reserve, the maximum that the client can qualify for or in exchanging other private information that is discussed with the lender.

Buyers should not forget that they are the one paying the lender and that a good lender will keep their financial information private even from their agent. Taking the referral from your agent is fine, but you need to screen them on your own.
  • April 20 2011
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Most of the answers so far have, (sort of) answered your questions. The short and sweet of it is, that Agents like to work with someone they know and trust, that's fine. The more important part of your question really seems to be related to trust. So I hope the following is helpful.
It is ILLEGAL for a lender to pay an agent any kind of referral fee! It is also illegal for an agent to ask, demand or accept one from a lender.
It's funny that so many missed that point. Kudos to those that got it.
Relationships between a real estate company and a bank or other lender is another matter and while agents are encouraged to use them they are also free to ignore them.
John R
  • April 20 2011
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Profile picture for sunnyview
"And what I would suggest: find an Agent the Lender recommends..."

I think that is a great suggestion. In a similar vein, I have had good luck getting referrals from title/escrow agents since they also see a lot of agents at signings. The more experienced ones seem to know the good agents.
  • April 14 2011
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The simplest solution that can deliver the most cost effective results is: request a quote via the zillow mortgage marketplace...

Then request an Initial Fee Worksheet to get a complete picture of all the fees & associated closing costs in involved.

I would also suggest working with a highly rated lender & by that I mean a lender with good reviews here on zillow.

And what I would suggest: find an Agent the Lender recommends... In my 10 years as an active Mortgage Broker I can count on 1 hand the number of competent Agents i have the pleasure of working with... as being pleasant and accommodating is a far cry from being able to negotiate a real estate transaction to your best interests... not to mention having an understanding of the complexities of mortgage lending.
  • April 14 2011
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I like working with the same mortgage lenders that I know will do a great job, get the best rate, and get us to the closing table without problems.  I have had several very bad experiences with mortgage brokers that I do not know. 
  • April 13 2011
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Profile picture for dust10b
I think we all can agree that we like to do business with the people we know and trust.  Chances are that's how the agent feels about the mortgage officer they're referring.  Fact is, they likely don't know your lender from Adam, and just aren't comfortable working with someone they don't know.  
  • April 13 2011
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It's all about trust and proven track records. Some lender quite frankly do not know how to prequalify buyers correctly!
  • April 13 2011
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