The Lender Lure: Why Sellers Make You Talk to Their Lender

As a lender, I represent home buyers looking to get into homes. There are however lenders out there who represent sellers, usually in the form of an “LLC” or investment company that owns the property.

Most of these LLC’s exist to “flip” properties and turn a profit (See “FHA Flips Flipping Rule“). These types of sellers can be crucial in taking otherwise uninhabitable properties and refurbishing them into pretty nice homes.

This could translate into a profit for the investor as well as a deal for you, the buyer. It’s a “Win-Win” situation!

The quality of the refurbishment or “rehab” is up to the LLC and to the amount of profit they’re looking to make. That is why it is very important to do a thorough inspection beforehand. This will give you an idea of how good a job the seller’s crew did fixing up the home.

Now, as I mentioned earlier I represent you (the buyer) and sometimes these investment groups or “LLC” have their own lender who will represent them (the seller).

The purpose for this is usually to ensure that everything that I’ve done is accurate.  They will usually review credit (see “Bad Credit…Is It Really That Bad?“), financial documentation, and your reserve funds. After all, they are trying to protect their investment by looking at offers from serious people not window shoppers.

That is all well and good because again, good investors buying beat up properties is a good thing! However, we have to remember that not all investors are created equal. There are some, I know hold your breath, that are GREEDY.

A common, and might I add annoying, tactic is to have you apply through their lender for a loan. This is to again, verify that your information is solid and you have the means to purchase a loan, but also to outright steal your business from me (your lender) and increase their profits.

Now, I’m not writing this post to dissuade you from considering another offer. Actually, if my level of service hasn’t made you a loyal client then I don’t deserve your business. What I am trying to dissuade you from is being rash and not truly weighing out your options.

If the seller’s lender solicits a loan to you, here are some important things to consider:

1. Man cannot live on interest rates alone- there are so many more components that go into a loan besides your interest rate. Always look at the APR as well as other fees.
2. A lender is not always a lender- Personal cell phone number, email address, and quick follow up are not part of the “Lender’s Creed” as a whole. There are only a small number of us who are available outside the “9-5″ mindset.
3. Closing Times Are Crucial- You can incur per diem fees by not fulfilling your obligations as a home buyer. You want your lender to guarantee you will close within 30 days, IN WRITING.
4. Service- After everything is said and done, you will remember me by my service. You will recommend me to your friends because of my service. The difference between you being “satisfied” and “overjoyed” with your new home will be…you guessed it, MY SERVICE. With great service, why would you go anywhere else?

Bottom Line

The purpose of this post is to let you know that when you do get an accepted offer on a house, you should not be surprised by the fact that another lender will need to review and verify your information. It’s normal and usually pretty routine.

However, if there is an attempt to solicit business, remember me (the little guy) who has been holding your hand every step of the way. (See my Professional Biography and “A Cookie and a Mortgage: What They Have In Common“)

Related posts:

1. Communication is the Key to ANY Relationship…Especially with a Lender
2. Lender Documents: Why So Many?
3. FHA Flips Flipping Rule
4. Sleazy Agent Ahead: Proceed with Caution

Tagged as: Business, FHA loan, Investment, Mortgage, Real estate