Shopping for Lenders (or any other service) Based on Pricing

[Corby Goade]

I see LOTS of people posting here comparing rates and looking for the cheapest loans they can get- understandably so. It's important to get the best deal we can, but service is many time even more important than pricing. Full disclosure, I'm an agent and investor and I work exclusively with investors to dig up and negotiate deals, so I see the good, bad and ugly on all sides of transactions regularly. 

Something that many consumers don't get to see is the level of service and experience that they are getting- if you are new or only do a transaction once every few years, how do you know that your agent or lender are any good? If the deal closes? There are so many conversations that go on behind the scenes that consumers aren't privvy to- I had an alarming one yesterday and thought I'd share for some perspective.

I represent the seller in this transaction, he's a flipper that I do 15-30 deals with per year. He is selling a flip and the buyer is a first time home buyer using a discount lender and an FHA loan.

The appraiser took their sweet time getting the appraisal report back to the buyer and we need 3 extra days to close the deal. The rate lock expires today for the buyer- they need $225 to extend their lock and get the deal done or they'll end up with a rate that is approx .5 points higher, which would be a deal breaker for them- the buyer is using every penny they have to cover the 3.5% down and doesn't have the money for the extension (their budget is a convo for a different post).

I've spoken with their agent and offered to split the fee three ways- I pay $75, she pays $75 and the lender pays $75- she says she can't afford to pitch in on the $225. I called the lender yesterday and she flat out said, "it's not my fault that they need the extension and there is no way I am going to give them $75 to close this deal." I replied and asked if she was willing to let HER clients lose their first home in order to save herself $75 and she flat out said "absolutely."

I'm going to cover the entire cost myself to get this deal done. That said, if the deal did fall through because of this situation, all the buyers would hear is; "unfortunately, the appraiser took to long to get your report back and without the extension, your contract has expired and the seller has chosen to put the house back on the market, we'll have to start your search over." When in reality, THEIR TEAM- their lender and agent could have saved the deal for $75 each. The client would never hear the truth behind the scenes. Savvy consumers know how this works and could read between the lines, but 95% of buyers and sellers wouldn't know that their own team sold them out. 

I understand that there are many ways this could play out, but it's vital that you work with people (agents, lenders, contractors, etc) who treat you like their partner, not their bank account. Sometimes we all have to sacrifice to get a deal done- we win and lose together. 

Good luck out there!