The Lender Advised My Buyer to Buy Another House said the Selling Agent

Dennis Erickson, I am licensed to give real estate advice per my state laws. Making certain my clients know what they are getting themselves into would definitely be part of the conversation with the buyers. I'd be doing a less than optimal job if it were otherwise.

And I'm sure I'm not the only lender on the planet not receiving referrals from realtors--I put a marketing plan in place, which includes Activerain, that keeps me working at capacity without any realtor referrals--borrowers in my transactions typically start with me. For some reason, the realtors I send referrals to seem to like it. How many clients do your lenders send you???

Over the years I have put together an extensive list of lenders/lawyers/insurance agencies/ inspectors/ and more that can do any job referred. Never have I had anyone suggest a buyer NOT buy a home but have had a couple call me and thank me for the referral say they were not able to help.

Great advice.  The lender would have been smarter to refer the business to someone else.  Talking about crossing the line.  It's a good thing to ask the lender upfront about the products they offer. Thanks for sharing your experience.

OMG This is exactly what happened to one of my clients!  He became my client because he found me on google thanks to Active rain by searching 203k loans.  The first lender was trying to talk him out of it and also scared the agent into thinking he would lose the house to foreclosure if he went forward with the loan!  The agent was so nervous througout the process b/c of the other lender.  But in the end not only did we close the deal, I refinanced him out of the 203k 6 mths later once the repairs were done and he was able to drop the mortgage insurance.   Needless to say, the realtor now has a new preferred lender!  ME!  :)

As a lender, I like to keep an open dialogue with the buyer and their agent. i would tell them the good and the bad of the 203k loan and go from there. I can do them now but have not always been able to and my advice stayed the same either way.  Agents do need to think about Karma as well. I have a client who chose me and chose a Realtor I did not know and I tried calling and emailing this person to work together with the client to no avail. My buyer calls me one day and informs me that the loan officer his Realtor told him he must get prequalified with was nice but he is choosing me...... After no discussion, she tells him it is mandatory to get prequalified somewhere else. I am closing this transaction and I did not inform him of the horrible ethics of his realtor but I was tempted to.  And I do love the smarmy loan officer picture in the post, that is classic.

Sounds like the lender told the buyer not to buy that home because they don't do 203K loans. One of my buyer's lenders cut me out after telling them it would be better if they bought a home they could close on faster than the short sale we had made an offer on and eventually was accepted. The lender said that because I'm sure she didn't want to wait 4-8 months for her commission; she wanted them to buy another home that was a flip from their investment group, which my buyers did and I was cut out. My buyers at the time were not in a panic to move; they were renting just fine.

Short sales can be great deals for buyers if they are willing to hang in there. The home my buyers could have bought through short sale beat hands down the crappy flip they ended up buying.

 I have been on both sides of this conversation.  I always try and work with everyone.  As the professional I would communicate with the client as well as the Realtor.  So it is a win, win for everyone.  But I do have a stickler when we as professionals are doing the right thing and the other parties do not want to cooperate.  Sad!  It takes the right buyer to do a 203K house/loan.

Great post Sally and David, congrats on the featured article! I agree that as Realtors we should be able to offer an array of resources to our clients. I have lists of inspectors, contractors, lenders, attorneys, title companies, etc. that I am able to refer customers and clients to, depending on their specific needs and wants.  

I also recently experienced a lender who advised a buyer to buy another house after she didn't get the property that we had an accepted offer on.  After going back and forth with the seller for about 2 1/2 months, the lender 'advised' her to buy the house she was living in (renting) and not use the Realtor because it would be cheaper.  It was somewhat disappointing because I spent almost a year with this buyer and ended up getting nothing.  As a full-time Realtor, there's no paychecks in between closings, and many of us invest a lot of time/money/gas/travel/etc. into clients which may or may not lead to closings. It's a gamble we all take.

On a more positive note, there was another lender who recently referred a buyer back to his Realtor, which was me. It was the same scenario where after months of not closing on another property, the buyer wanted to buy the house they were living in, so he went back to the lender and the lender told him to contact the broker to write up the offer and to make sure he was represented by a Realtor in order to get the best terms and price for the house.  I was very impressed and extremely grateful for this, and as a result, will refer clients to this lender going forward, as I feel that he has the best interest of the client in mind.

At the end of the day, it is about serving the needs of the client and acting in the best interest of the client, in a professional, ethical manner.

Dear Sally and David -

That's not a situation that makes for happy campers!! Your comment was SOOOO accurate.

Having the resources to refer Clients and Customers to is key to being a successful agent...Know what you don't know....but refer people to the highest and best source for information.

Have a happy day -
Lynn

     "I don't do 203K loans, so buy another house!"  Wow, that is way out of line, and grounds for reporting, even a potential lawsuit.  Bad Lender!

Good morning, Sally and David....wow.... that scenario just brought out the worst in me.... I'd be dusting off the old AK-47....

@D Gentry,  I do support your comments and it brings up the issue of a Real Estate Professionsals (Lender, Realtor, Home Inspectors, Title Company) working in the Best Interest of the Borrower.   Any buyer should know their options and look at any relationship that exists between the Real Estate Professional and the other services they refer or support.   Examples could be a Realtor that recommends or insists a client talk with an service provider that is directly or indirectly affiliated with the Realtor.   It could also be a Lender recommending a particular Title or Escrow Company.   If there is a Business relationship, consumers need to evaluate if it is bonified endoresement or merely to keep all potential income.    Real Estate Professionals CAN BE AN EXCELENT SOURCE of Sundry Products, however if the Income becomes a factor, then you have to verify. 

I have people overstepping their licenses all the time. I don't like it, but you have to learn to deal with it.

Lots of interesting comments about an issue that doesn't surface regularly, yet, causes challenges when a lender has concerns about suitability and prudent issues relative to the buyers financial circumstances. In this instance, the lender should have advised the agent about the issues and the solutions regarding suitability and prudence.

It is sad that many real estate agents are not familiar with the use of FHA 203(k) financing. This is an excellent program but it is not offered by all mortgage lenders.

Sally and David

Sounds like that transaction . . . . turned into an adventure.

Good luck and success.

Lou Ludwig