Let A Pro Handle It
This is a post about referrals. I'm licensed in 20 states, and my team has an additional 3 (Idaho, Hawaii, and Washington). Because of that, we see a lot of referrals from folks that don't cover as wide a range of states. We get a lot of referrals from other loan officers that are licensed in just a state or two, and the referral stream has increased largely due to my company being a California company, and with the state, for the first time in a long time, seeing more people say 'goodbye' than 'hello'. Except for the Hawaiians, for some reason they just always say 'Aloha!'. I digress.
When referring a deal, it's sometimes tough for the referring professional to let go. Perhaps it's a past client and they're trying to maintain their relationship. Perhaps (like many type-A professionals in the real estate industry), they know no one will do as good a job as them, so they try to "help out" as long as they can. Whatever the reason, in my experience, if you trust someone with a referral, you should trust them fully enough to handle the referral business from start to finish. If you can't, you shouldn't be referring. There's no reason for "I'm referring them but I want to process it..." or "you can do the loan but I want to act as an assistant...". No. It messes up the process and ruins the customer experience every time.
Just within the past few months, we've had to help reset expectations for customers from referring people "trying to help", but instead having their efforts set poor expectations and leaving their clients confused or upset.
"I had no idea real estate taxes were so high in Texas!"
Oh, but they are! Texas is a semi-affordable state in many regards, with home prices (at least outside of metro areas and pre-2020) priced very well. But where Texas doesn't collect on income taxes, they get you on real estate taxes. When referring a customer, a loan officer recently set the expectation for a payment several hundred dollars below reality, basing their real estate tax estimate off their home state, which was less than half of what the buyer experienced in Texas. (Also a note for real estate agents: When people are coming from out of state, be sure to explain some of the customary local things like real estate taxes that some locals often take for granted).
"We didn't realize they had that insane transfer tax!"
Yes indeed, Pennsylvania charges a customary 1% to the seller AND buyer. Lenders in states where the seller usually picks up this cost in full are often surprised to learn that the buyer in PA is on the hook for 1% (higher in some metro areas), which can add up to quite a chunk of change in closing costs for the unexpecting out of town buyer. No one wants to be blindsided by an extra $4-5000 due at closing. But hey, at least they're cheaper than Delaware's transfer tax!
"Where did that extra $13,000 come from !?"
As with costs varying state to state, they often vary loan program to loan program. We recently received a referral that was "ready to go!" from a loan officer inexperienced with the VA loan program. What they didn't realize is that VA charges a 2.3% funding fee for the loan type the borrower was seeking, and in this case, it added up to $13,000 in additional closing costs. SURPRISE! Had the referral come in as it should have, with a warm introduction and no discussion of loan details, there would have been no surprise. Instead, the applicant was extremely caught off guard.
"No one told us taxes were higher on a 2nd home!"
Again, a state specific guideline bit a referring partner in the butt with a customer. They did their due diligence, checked out property taxes, and spent some time figuring out how to set the expectations with their customer. But, they did all that before referring them, and they didn't cover all their bases. They let the customer know what property taxes would be for their new South Carolina home - but they quoted them as if they were a primary residence. South Carolina is one of several states that have different real estate tax rates depending on occupancy. If you live there, it's cheap! If you don't, not so much.
In doing loans in so many states, one thing my team makes a concerted effort to do is understand how business is done on a local level. It's the reason we're trusted by real estate agents, attorneys, and financial planners all over the country. We're not always the local lender - but we know how to do business where we do business. That's why we're one of the highest rated lending teams in the country. We don't like surprises, and we know others don't either, so we practice what we preach. If we don't know how to do something, we let a pro handle it. If you're planning on referring business, we are always open to new customers, but we do expect that you'll do the same. In the end, it's always better for the customer!