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Should Real Estate Agents Help Borrowers Compare GFE's and Lenders?

By Janet Guilbault

Mortgage and Lending with Platinum Home Mortgage Company NMLS #238304

May 18, 2010 02:45 PM

Do real estate agents buy into the idea that "shopping around" for a mortgage is a good thing? Or do most agents fall into the category of always recommending the same lender, secretly hoping that the buyer will NOT shop?

After all, the one referred to as "MY LENDER" is the safe choice. But is it the BEST choice?

Would your favorite lender be mad at you if you recommended another lender as well?

Buyers may not be able to completely understand the new GFE. But they are starting to discover it has made it easier to shop for a mortgage.

Last week I had the opportunity to be the second opinion lender several times.

The first choice lender was recommended by their real estate agent but the buyers decided to "shop around" and found me.

And even though the buyers had no idea of how to shop for a mortgage, stuffed into their folder was the only thing I needed to give them another opinion: the new GFE.

Naturally, the new GFE made no sense to them. It didn't need to.

It made sense to me.

Now that the GFE is standardized, the second opinion lender has a much easier job.

(You have no idea what I have learned since looking at GFE's from other lenders. Eye opening is all I will say..and the topic for another post)

A second opinion lender keeps the first choice lender honest. A second opinion lender tells your buyer you WANT him to comparison shop. It tells him you want what is best for him, not what is best for you.

Did I mention there are literally thousands of dollars at stake?

Maybe we should all get ahead of the curve. This new GFE is going to change things.

For the better.

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Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Donne: I am always a big fan of your comments because you don't hold back (much). LOL

We all know that there is a different standard that exists because MLO's are lower on the food chain than Realtors.

The good news is this: Our industry is ruthlessly weeding out loan officers. Getting a loan done is not a walk in the park. Handling a stressed out loan applicant takes empathy and finesse not to mention nerves of steel and skin like leather.

Maybe I am crazy, but I think our profession is upgrading and our stock is rising.

A competent mortgage person with knowledge and resources, who closing loans on time, and has the ability can calm the nerves of all involved should be a highly valued commodity.

I think Realtors are coming to this conclusion.

May 20, 2010 04:32 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Tammie # 26: Why would you be surprised that someone chooses to pay more for a mortgage person they like more? Mortgage people are not like 2 new Toyota trucks.

Shopping from the bargain basement can actually cost you more. Especially when it comes to mortgages.

May 20, 2010 04:38 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Paul #27:

I have had Realtors tell me how to do my job as well. I try to have empathy there. It must be very hard to watch a transaction hit roadblocks and have someone else in the driver's seat.

I just signed docs on a loan that went perfectly smoothly..no drama, everyone was happy. Yet the listing agent felt it was her job to tell me every few days how I could be doing things better, faster,...she used the word "unacceptable" every single time I supplied her with an update!

Not sure if that is just the MO of some Realtors or not.

May 20, 2010 04:48 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Julia # 28:

The only time I encourage a buyer to change a lender they've already chosen is when I don't feel like that lender has the best loan program for the buyer.

You should not encourage the buyer to change lenders because you don't believe the loan program fits the buyer.

You should call the lender and discuss your reasons...and also ask the lender why they chose that specific loan.

Should I tell a buyer to switch Realtors because I don't like the house/neighboorhood that she suggested for the buyer?

May 20, 2010 04:56 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Terry Comment # 29

BEST ANSWER!!! Thank you!!!!

May 20, 2010 04:59 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Shannon: Please see comment # 42 above. Call the original lender before you refer your clients to other lenders.

I respectfully do not agree that part of your job is to review the loan package of a lender and determine that the clients should go someplace else for monetary advantage.

May 20, 2010 05:05 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

D.S Comment #36

BEST ANSWER #2

Thank you!

May 20, 2010 05:09 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Johnny:

For your witty contribution to this post, thank you! I wish I knew more about you...you do understand the relationship challenges of loan officer and Realtor, something I write about often.

As for Martha Stewart...I could easily morph into Martha Stewart mode and never look back. I have often said I have 2 alter egos: Martha Stewart and Barbara Walters....now if only I made as much money as those ladies! LOL

May 20, 2010 05:14 AM

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

Janet - You see, this is where you and I must agree to disagree. On more than one occasion you have commented that MLO's are lower on the food chain than Realtors and I couldn't disagree with you more. Quite frankly Janet (and I think you will agree with me on this point), it all begins and ends with us.

We are generally the first stop for most prospective buyer (at least the smart & savvy ones) so we're the ones who have the first and most important contact with the buyer because we all know, if a buyer can't get a loan, they aren't going to be buying a house (unless they have cash) - PERIOD!

As you and I both know, not all MLO's are alike and our industry is getting smaller and smaller every day. While I can't speak for all of the good MLO's that are left, I work too hard for my clients to put up with any crap from Realtors who think they're better than me simply because their fee is bigger than mine.

One thing you and I do agree on is that if buyers were paying for their own Realtor like they do their MLO, we'd probably see a whole lot less attitude from Realtors and a lot more cooperation and understanding. JMHO

May 20, 2010 05:31 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Donne:

I meant the referral food chain. They still have far more opportunities to refer us a buyer than we have to refer them a buyer.

Until you see Realtors marketing to MLO's, asking them to lunch, sending flyers, calling looking for leads, and approaching you at networking meetings (instead of running the other way)... You will know we are still lower on the referral food chain.

I don't know about you, but I would keel over in shock if a Realtor did any of the above. Ironic, especially considering everything your mentioned in your comment.

Knowing what I know, if I were a Realtor? I would make finding a brilliant loan officer as something I would NEVER leave to chance.

May 20, 2010 05:50 AM

Shannon Lewis

Beringer Realty - Champaign, IL

Realtor, Broker - Champaign-Urbana, IL

Hi Janet, one last comment and then I promise I'll stop taking up space on this page ;-)

I'm not in the practice of reviewing loan packages and referring my client to go elsewhere. If the client has already chosen a lender and is happy with the product, then great! But if the client expresses dissatisfaction or frustration with the lender and/or the loan, then of course I offer alternatives and it's entirely up to the client as to whether he/she chooses to pursue it.

For instance, I'm currently working with someone moving here from another country who began working with a credit union before she started working with me, and the credit union was requiring this person to put 30% down. Though she had a sizable down payment, this really limited the purchase price she could work with, and she was clearly frustrated by this fact. So, I suggested she call another lender who does in-house loans, and sure enough they were able to only require 20% down. That enabled my client to shop for homes in completely different neighborhoods in a higher price range and find something that better suited her needs.

And I did call the credit union. And they never called me back. Their loss.

I'm sorry if my comments above seemed to indicate that the money was the bottom line. That certainly is not the case and not what I intended to mean at all.

Perhaps we still disagree to an extent, but I appreciate the post and the opportunity to be challenged to think about this topic! So thank you!

May 20, 2010 06:19 AM

Damon Gettier

Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA

Broker/Owner ABRM, GRI, CDPE

Ok....I read most but not all of the responses so here goes!

It is not my job to review GFE's. I am a REALTOR not a loan officer. What constitutes the "best deal"? Price alone? If that is the case than there are plenty of discount brokers out there for agents to refer their clients to instead of taking the commission themselves.

I refer to one loan officer and one loan officer only. If he cannot get the loan done the only other option is going to be a local bank who will keep it in their portfolio...and I have not had local banks lining up for loans lately. My loan officer is honest, he shoots straight with me and my clients. My loan officer is thorough, I don't worry about him missing a tax return or child support, etc. My loan officer closes loans on time.

There is more to a deal than saving a few bucks. REALTORS need to learn that and quit trying to legitimize their commission by dipping into the pockets of every vendor out there.

And for lenders who save a client a couple of dollars after seeing the competitors GFE.....DUH.....how hard is that? Unfortunately you really didn't conquer the mountain on that one.....anybody can beat out competition by being cheaper....how about being better instead?

May 20, 2010 06:28 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Shannon, You are not taking up space! You are giving your opinion which I value greatly! When I write something like this, I am hoping that someone smart and savvy such as yourself will provide me with input beyond "Like your post".

I am rejoicing at you telling this story...only because you would not believe the number of times I get loans because some big bank or credit union is limited to one product, or worse yet, DOES NOT CALL BACK! Gotta love this!

Kudos to you for trying to help your client and trying to call the credit union. When you are trying to do what is best for your client you can never go wrong.

I don't think we do disagree.

May 20, 2010 06:35 AM

Janet Guilbault

Platinum Home Mortgage Company - Walnut Creek, CA

San Francisco Bay Area Direct Mortgage Lender

Damon:

Brilliant answer, and so impressed with what you said about your lender.

Every loan officer has probably lost loans because of "a few bucks", me included.

I don't WANT to be the cheapest. That is a game you will never win. I want to be the one that stops them in their tracks because they can see I am smart, serious, and it is crystal clear I will get the job done. I want them to pay to get the best ADVOCATE they can get. That's me.

There ARE real price shoppers out there, who care more about a doc fee than the loan officer. Who wants that guy for a client? Not me.

May 20, 2010 06:45 AM

Ed Brophy

Ed Brophy, REALTOR® - Palm Springs, CA

Realtor - DRE #01344385

Julia Odom #28 said "The only time I encourage a buyer to change a lender they've already chosen is when I don't feel like that lender has the best loan program for the buyer. "

Julia you contradict what you said earlier in your reply that this is not your area of expertise. Back in the pay option arm days I had a Realtor do this exact thing, convince the buyer to go to another lender. The other lender put the client into a pay option arm, when the loan adjusted the clients couldn't afford the payment and subsequently lost the house to foreclosure. Guess who got sued, had to pay the clients back for their mortgage payments made up until the point of foreclosure, had to pay the clients back their downpayment, taxes and insurance premiums plus a penalties. Guess who's E&O insurance didn't cover the Realtor for working outside of their scope.

I recently had a Realtor tell a client that my fees where too high, that they should shop around. Yeah, they found one of those low cost/no cost guys, sure their fees were less than mine but the interest rates was pushing 6% a good 1.25% higher than what I was putting them in.

I called the Realtor who went on and on about being in the business for 30 years, how she knew all about lending and how loans worked and how we were paid. In the end when I pointed out that the difference in interest paid was over $81,000 and that they'd recoup their costs in 11.1 months they stuck with me.

Realtors getting involved in the loan process is one of my biggest pet peeves. At one point I was a Realtor, but I would never assume to tell a client that what a Realtor is doing or has said is wrong, unless it were a blatant lie.

I'm lucky I have a high client return rate, so when they come back to me talking about selling or buying a property they're often after a referral to a Realtor. I often refer to the Realtor who's the best at what they do, sometimes that's one referral and sometimes it's 10 referrals, depending on the client and the type of service they need. Many times it's all about matching personalities.

May 20, 2010 07:05 AM

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

But Janet, I do have Realtors calling me asking me to lunch, sending flyers, calling to talk and see how I'm doing and approaching me for leads but wait....those are my Realtor friends who have worked with me before and who know, like, trust and respect me. I guess they don't count. :)

"I don't WANT to be the cheapest. That is a game you will never win. I want to be the one that stops them in their tracks because they can see I am smart, serious, and it is crystal clear I will get the job done. I want them to pay to get the best ADVOCATE they can get. That's me.

There ARE real price shoppers out there, who care more about a doc fee than the loan officer. Who wants that guy for a client? Not me."

AMEN! ME EITHER! As a matter of fact, I'm not the cheapest one around but I am one of the best and I know this because my clients tell me so. When prospects call me because they were either referred to me or they came across something I blogged about, after talking to me for awhile, they will often comment on how I have been so much more helpful and knowledgeable than anyone other MLO they've spoken with.

That folks is why I am NOT the cheapest one in town. My time, energy, experience and knowledge is simply worth more than the rock botton fee.

May 20, 2010 07:27 AM

Paul McFadden

Responsive Pest Control - Seattle, WA

Pest Control, Seattle, WA.

Janet: Thanks! Some people feel the need to weigh in. What they don't realize is it's a two way street. I agree with Donne. The only way a referral partnership works is if we respect each other's efforts. If a realtor or a loan officer for that matter thinks they're higher on the food chain, they've lost my respect. I like one of the realtor's answers above. He refers to one person. I know realtors are taught to refer to more than one. Frankly, it covers their butts. Sorry to be blunt! I usually refer to one realtor and try to match personalities. It's easier that way. Again, the consumer is busy. We should be trying to save them time and trouble. My feeling is we need to work together and respect each other. I think most of the time this happens. It's just the few times where it doesn't that leaves a bad taste in our mouths. When it comes to people who don't understand the value of long-term relationships, I have very little patience. Thanks!

May 20, 2010 06:02 PM

Jackie Hawley

Coldwell Banker Professionals - Oxford, MI

Southeast Michigan Real Estate

Ditto #50 above. When I list a house I send to ONE title company (how many of you give the names of 3 title companies to your sellers?). When I deal with a buyer I send to ONE loan officer and recommend ONE home inspector. I already trust them- I know they won't screw over my client, I know they will look out for the client's best interest, I know they're honest.

May 21, 2010 05:13 AM

Kevin Hancock

Evergreen Home Loans NMLS 3182 - Poulsbo, WA

The Hancock Mortgage Team

I have no problem being the first LO interviewed as long as the buyer promises not to show my estimate to #2. If they do, all #2 has to do is undercut your costs, which is easy to do if they know it's make less than #1 or make nothing. Unfortunately, the borrower knows this, and in there own self interest they often believe they will get a better deal this way... it's not a perfect system.

May 26, 2010 01:21 PM

Deborah "Dee Dee" Garvin

C2 Financial - San Diego, CA

C2 Financial

Janet, Donne and Paul, Love all your comments and absolutely know you all know your stuff. And, I think we would all agreed being the cheapest LO in town doesn't mean the deal will close. I wonder if many Realtors ever think to question a MLO's closing ratio and on time closing ratio? They might have a different referring strategy if they know these numbers!!

Damon, would you please submit to cloning? Every mortgage professional wants to work with you!

Jun 09, 2010 03:10 AM

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