You’re about to close on your home. You’re all set. The boxes are stacked everywhere. The moving company just confirmed their arrival for tomorrow. A cleaning crew should arrive just seconds after the movers depart. You think you’ve got it all covered.
And then the phone rings.
“You cannot be serious. Why is the loan still in underwriting?” “You cannot be serious. How did you miss a deed?” “You cannot be serious. How could the closing statement possibly be off by $22,000?”
When you call your agent, he tells you that the internet lender you used can’t be reached. It’s time to call the movers and the cleaners.
Are Agents in Cahoots with the People They Recommend?
Kickbacks are totally illegal in our industry, making it impossible for any agent to benefit from any recommendation they make – other than the benefit of the whole process going smoothly
As agents, we recommend professionals, particularly mortgage professionals, to our clients all the time. So why would a client not use lenders and attorneys that the agent recommends?
The most common reason that people won’t take their agent’s recommendation is a sense of distrust. They believe the agent must be getting something out of the whole thing, and they don’t like that. Because if someone’s getting something, that means that someone else is losing something.
That’s too bad. Why? Because it’s wholly untrue. Kickbacks are totally illegal in our industry, making it impossible for any agent to benefit from any recommendation they make – other than the benefit of the whole process going smoothly.
RESPA is Your Friend
Our recommendation is going to differ based on what kind of asset we’re dealing with, the credit profile of the client, the income level, etc
If you haven’t heard it before, we’re here to tell you that kickbacks—any situation in which a Realtor received compensation for a recommendation—can result in big trouble for that Realtor. In fact, none of the professionals commonly involved in real estate transactions can be directly compensated for referrals. That goes for Realtors, lenders, title companies, lawyers, appraisers, and more. As far as Realtors go, this is all laid out in the Real Estate Settlement Protection Act (RESPA). And believe me, no one wants to be in the web of a RESPA violation.
So What is Allowed?
Here’s what real estate professionals can do. As long as everything is on the up and up—and there are rules that guide this—they can formalize business relationships with other real estate service providers.
For example, it’s not uncommon for a lender or title company to sublet some space from a brokerage or attorney to make sure that the work between the two happens smoothly. When people are right next to each other—or even just one floor away—communication improves and it’s easy to make sure the paper if flowing smoothly. Such colocations also help these service providers share certain marketing or technological expenses. Some of those savings should help everyone.
As long as everything is by the books and no money is being redirected—and, of course, the customer isn’t being harmed in anyway — then it should be within RESPA.
So Why Use Our Team?
Here’s why we might recommend a particular lender or attorney. We know them. We have worked with them. We know they do great work and we want to use them because it will help ensure the transaction goes smoothly.
Think about it. We would never want to jeopardize our commission or our business reputation simply for a small kickback. It wouldn’t be worth it. If something went wrong, not only would we lose money, but so would our client. So it is absolutely in our best interest to recommend to you the best person for the job.
These Are Not Commodity Services
Our recommendation for a mortgage lender is going to differ based on what kind of asset we’re dealing with, the credit profile of the client, the income level, or several other factors.
Mortgage companies typically offer the same kinds of products—FHA, Freddie Mac, Fannie Mae—and rates. But they might underwrite to different standards. And then there are niche products: construction loans, jumbo loans, condos, etc. We want to make sure that we send you to the right people. It’s our job to know who that is and to get you in front of that person.
And how do we know who the best people are? It’s called experience. We vet. We get to know the people we recommend. They’re reliable. They’re transparent. They don’t overvalue their products. They’re honest.
Service is the only “kickback”
Remember how we started this post? You’re a day away from closing. A problem comes up. Imagine the different reaction you might get between two attorneys. One is our attorney that we consistently work with and have built a relationship of trust and consistency. The other got just this one deal. Who’s going to move more quickly when that trouble creeps up? That’s right, the one that sees the value in the relationship we have built and aims to keep building that relationship further.
Last minute issues always come up, I promise. The people we work with know that their good work will result in more deals in the future. We generate volume, and our preferred partners don’t want to jeopardize that by doing average work. They want to shine.
This is America. You can use whoever you like. We mean it. But if you’re not sure about the attorney or lender you heard about, you should know that we are absolutely sure about our attorneys and lender.
That’s the benefit that we get when we make a recommendation. We know we’re recommending expertise and courtesy and experience. And all of that should lead to the highest chance for their transaction that closes on time and on the money. Our only benefit is smooth sailing for you.
Find out who we recommend by getting in touch.