Realtors loaning commission @ 2.25% rate post closing 2nd mtg

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Realtors loaning commission @ 2.25% rate post closing 2nd mtg

Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes

Anyone ever heard of Realtors loaning the commission @ 2.25% interest rate as a Cash Out 2nd mortgage above 97% CLTV post closing?

Example:

500,000 purchase

x 3%

$15,000 commission

- 5,000 for tax realtor has to pay

$10,000 loan amount @ 2.250% interest rate x 360/60 = $38.20 mo.

A $10,000 post closing cash out loan with a $38.20 mo. could help with the move and repairs, etc.

Any realtors offering this yet?

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Marc Middleton

Residential Real Estate Broker · Miami, FL · Member since 2014 · 214 posts · 106 votes

I pretty much answered your post with my reply and you replied back with the same points.

However, I'm noticing you use a lot of the same key words together when they aren't grammatically required, which means you are blogging to gain SEO in certain key words.

In fact, a lot of your posts reference realtor rebates. So when people on the internet are searching these terms, you are hoping they find your name & contact info for referalls. Not a bad strategy, but I'm not going to keep responding to these types of posts. The whole premise is insane and no one has even thought of this idea, loaning your whole paycheck at 2% for 30 years to a buyer. Its just something you wanted to write about to get a long topic going with lots of replies and SEO/web traffic.

With regards to 'thousands of agents offering this', that is another fallacy. Realtors who work hard aren't giving their paychecks back to their buyers who normally make more money than them. And we DEFINITELY aren't giving our commissions back to our investors who take 1+ year to buy a property.

You also seem to have the opinion that agents don't do a lot, get a referral and make an easy 10K. Yet I would say its the realtors that bring the business to mortgage brokers, so the reverse could be said (all you did was push paperwork for the client I sent you, why should you make 2 points on my buyer's loan when I did all the work). Research actually shows that of the top 10 jobs to be eliminated in the coming years due to technology, it shows Mortgage Brokers, Not Real Estate Agents. Sorry :-(

The Whole VA/USDA/97% lTV doesn't really apply to this website either, (which again you seem to be typing in order to get active discussions going). Almost everyone on here, unless they live in the duplex, are investors who want to find well performing ROI properties and they require AT LEAST 20% down. And investors aren't getting 100% USDA loans on multi-family properties so why even bring it up? just to pepper your posts with seo-friendly keywords?

Best of luck to you man but we'll keep working hard and earning our paychecks.

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Mike CumbieBusiness Member
REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
8y
Florida must be a whole lot different than NY. REALTORS loaning clients money secured by the house? I can't imagine the ethical and legal firestorm it would get us into up here.
I'll trust you know what your doing since you are a licensed mortgage broker in that state though and I would believe you know mortgage laws.
0 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
8y
You’re loaning your commission on a 30 year amortization schedule?
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@Mike Cumbie, why would it be an ethical and legal firestorm in NY?
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@Caleb Heimsoth , No, I'm not loaning my commission on a 30 yr am, but I'd be open to it if I were a realtor.
What makes more sense for a realtor:
- keep the $15,000 commission and loan $10,000 at a low rate?
- keep $5000 and do a Buyer Agent Rebate of $10,000?
0 Reply
Marc Middleton
Residential Real Estate Broker · Miami, FL · Member since 2014 · 214 posts · 106 votes
8y
Neither, both are bad options.
Why would i sell a $500k house and give away my whole check? Do I work for free or something?
And $5k for taxes, what about their split? Say a 75/25. So they take 'home' $11,200, put away 25% for taxes, leaves you $8,400.
Now you want me to 'loan' that $8,400 on a 30 year schedule and get $35/month back? Wow, what a deal.
And who is buying a $500k house and doesn't have money for closing costs or movers so they need to 'borrow' it from their agent (who probably lives in a much cheaper home and makes less money than someone buying $500k home - usually a $120k+ income earner for that size purchase with no kids or $150k+ with a family)
4 Reply
Mark Taliercio
Real Estate Agent · New York, NY · Member since 2017 · 37 posts · 20 votes
8y
Why would someone lend at 2.25% at 97% LTV?
0 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
8y
I’m with Marc Middleton I really don’t see the benefit of this. I can stick my money in a money market account and earn more
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@Marc Middleton, @Mark Taliercio & @Caleb Heimsoth,
On this topic, look at this as if you were a BP Investor wanting to learn about REAL money saving strategies being shared by a Florida Mortgage Broker.
We all know that the 3 points in home equity that the seller is offering to give away to ANY buyer agent that brings a qualified buyer is out there for the taking, like a low hanging big, fat, juicy apple...or Orange in Florida!
And because ANY buyer these days who's not a complete and total financial moron, can effortlessly keep the majority of those 3 Points of otherwise forfeited home equity in real estate commission via Buyer Agent Rebate, why wouldn't buyer agents offer such a loan to a buyer?
Here are the facts, Real Estate Commission on property over $200,000 has gotten way out of control as the price of real estate has soared! This is why if you Google search phrases like Real Estate Rebates, Florida Realtor Rebates, Etc., you see so many hundreds of thousands of realtors offering massive rebates to consumers.
From a Realtor's perspective, on a 500k purchase of a listed property:
1. would a realtor rather get ahead of this rebate wave and loan back $10,000 of the commission at a very low rate to the buyer Post Closing and ultimately keep the entire 3 Points?
2. or Rebate $10,000 and keep $5,000?
3. or make nothing at all and lose the buyer to Rebate Realtor?
The real estate industry is changing and changing fast! Just take a look at who's leading the charge and his intentions are very clear!
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Bill F.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
8y
@Account Closed I can see where you are going with this idea and its super intresting, but I don't think your average agent has the same risk/reward structure that KW does from the video.
1. I have no idea the specifics of the KW zero plus from a business perspective, but it looks like it may be a lost leader of sorts to get people to by homes with their agents. At a minimum KW has a MUCH lower WACC than any agent I know, so they can offer much lower rates.
2. I doubt, that after processing/recording fees, a second like this is profitable for anyone.
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@Bill F. , given the red brick background in your pic and given you're from JAX, NC, looks like you're standing in front of a HQ building or Chow Hall on Camp Lejeune, so I'll tone down my response to you. For all others..."it's and Marine Thing, you wouldn't understand"
Check out the declaration of war on the mortgage industry below, and Mortgage Brokers are supposed to just stand by, lay down like a beat dog and not fight back? I don't think so!
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
BTW - I'm typing fast so excuse the grammar and spelling mistakes
0 Reply
Jeff CopelandBusiness Member
Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
8y
@Account Closed
Copeland Morgan LLC4.770 Reviews
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1 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
8y
I don't see anyone agreeing to a 30yr 2.5% lending rate ever. I sure wouldn't and residual cashflow is what I invest for.
Why not make it interesting and propose a 3 or 5 yr term at 6 or 7%? At least then we can see if the premise is sound. If not 100% of the commission, would the agents lend 50 or 75% under this scenario?
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Steve Vaughan kind of non nonsensical post... most house sellers rely on their commissions to further there business efforts.. and feed their families.
when you move into different kind of transactions I see some maneuvering with commish... But that is usually say a realtor brings me a lot and to make it work does not charge a commish at all but I list it the new construction back with them this is quite common.
or in the syndication area or investor realtor area where realtor may use some commish in exchange for equity..
but I am thinking most lenders don't like seconds.. of course being on the HML side I am not sure on conventional I guess if its disclosed..
but I see no benefit here for anyone.. this idea that people should buy homes with no money down sunk the economy last go around if U don't have the ability to save 20 to 50 to 100k to buy a house you should not buy one ... NO ONE deserves a home and NO deserves a 100% loan.. the fact that you can get them is just our free wheeling economy but does not make it right or prudent.. its setting up home owners for failure ..
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@Jeff Copeland, I actually have worked with some very good Buyer Agents over the years and the rebate realtors I refer my pre-approved buyer referrals to, (who I get from online and magazine ads) are very good Realtors.
But that does not change the fact that Real Estate Commissions are the 1,000 pound Gorilla In The Room!
As a Florida Mortgage Broker who has worked the Realtor Rebate Savings for some time, if a borrower comes to me directly from my website, real estate magazine ad or referred by a prior client, why would I not try to help them obtain such a MASSIVE savings?
@Jeff Copeland, as a Florida Realtor, if you were purchasing in another state, would you pay "Full Sticker" buyer agent commission or allow any of your close family or friends to pay "Full Sticker" buyer agent commission? I doubt it.
As far as the DODD FRANK ACT goes, yes, that was quite the gut punch, but we in the Mortgage Industry who are still standing have and deal with the crushing over-regulations every day.
But this Realtor Rebate thing is a whole new threat gathering steam against the Mortgage Industry and I'm arming myself to the teeth with my Rebate Realtor partners to deal with what's ahead!
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@Jay Hinrichs, you may wanna tell USDA and the VA admin. about your feeling of "NO ONE deserves a 100% loan" as they haven't gotten the memo and have not stopped offering 100% loans, even thru melt down and are doing just fine right?
And as far as the Topic of realtors loaning commission, this is not as a SIMO purchase money 2nd mtg., though a few lenders actually allow it, believe it or not.
This would be post-closing that the buyer agent would make the loan...and paying the closing costs too, which would still net them a lot more than if they simply did a $10,000 rebate.
Comments welcomed, just keep in mind that this discussion is not about Realtors or Mortgage Brokers income, because consumers really don't care how much we want to make of feel we deserve to make.
This discussion is for the benefit of BP Investors to have Bigger Pockets using this money saving strategy!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Account Closed:
@Jay Hinrichs, you may wanna tell USDA and the VA admin. about your feeling of "NO ONE deserves a 100% loan" as they haven't gotten the memo and have not stopped offering 100% loans, even thru melt down and are doing just fine right?
And as far as the Topic of realtors loaning commission, this is not as a SIMO purchase money 2nd mtg., though a few lenders actually allow it, believe it or not.
This would be post-closing that the buyer agent would make the loan...and paying the closing costs too, which would still net them a lot more than if they simply did a $10,000 rebate.
Comments welcomed, just keep in mind that this discussion is not about Realtors or Mortgage Brokers income, because consumers really don't care how much we want to make of feel we deserve to make.
This discussion is for the benefit of BP Investors to have Bigger Pockets using this money saving strategy!
My bad I should have excluded veterans as a protected class.. EVERYONE else though should save up some money in my mind. Veterans they deserve yes sir.
as a matter of fact I am one of the few home builders here that will work with veteran loans.. My wife and I are adamant about that.. others simply wont sell using those loans as you know they are cumbersome we feel its our duty.. I am proud of my wife ( who is my realtor ) of making that stand..
but back to your original premise I still think coming up with ways for people or investors to get into deals with no real cash in the game is not prudent.. Not saying its not legal.. just to many under capitalized property owners.. that when things get stressed.. there goes another foreclosure..
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@Jay Hinrichs, that's your view as a successful, conservative, likely perfect credit, substantial reserves, very seasoned borrower / investor / lender / realtor.
I'm speaking to the average BP Investors who can use these strategies to get a boost during this very special time in Florida real estate history to have Bigger Pockets!
I'm also speaking to you Mortgage Brokers here on BP who are emailing me with questions, who agree with what I'm sharing to BP Investors. However, because of 20 yrs of doing things the same way, they're so tied to Realtor referrals, they're afraid to even say the two words Realtor Rebates, much less vote on my posts or ask questions about the subject on any forum.
What I'm doing is showing how Realtor Rebates can be incorporated into the purchase loan to benefit their Borrower/ Buyers and to give even the newest or weakest Mortgage Broker an UNFAIR advantage over the Big Banks!
0 Reply
Marc Middleton
Residential Real Estate Broker · Miami, FL · Member since 2014 · 214 posts · 106 votes
8y
I pretty much answered your post with my reply and you replied back with the same points.
However, I'm noticing you use a lot of the same key words together when they aren't grammatically required, which means you are blogging to gain SEO in certain key words.
In fact, a lot of your posts reference realtor rebates. So when people on the internet are searching these terms, you are hoping they find your name & contact info for referalls. Not a bad strategy, but I'm not going to keep responding to these types of posts. The whole premise is insane and no one has even thought of this idea, loaning your whole paycheck at 2% for 30 years to a buyer. Its just something you wanted to write about to get a long topic going with lots of replies and SEO/web traffic.
With regards to 'thousands of agents offering this', that is another fallacy. Realtors who work hard aren't giving their paychecks back to their buyers who normally make more money than them. And we DEFINITELY aren't giving our commissions back to our investors who take 1+ year to buy a property.
You also seem to have the opinion that agents don't do a lot, get a referral and make an easy 10K. Yet I would say its the realtors that bring the business to mortgage brokers, so the reverse could be said (all you did was push paperwork for the client I sent you, why should you make 2 points on my buyer's loan when I did all the work). Research actually shows that of the top 10 jobs to be eliminated in the coming years due to technology, it shows Mortgage Brokers, Not Real Estate Agents. Sorry :-(
The Whole VA/USDA/97% lTV doesn't really apply to this website either, (which again you seem to be typing in order to get active discussions going). Almost everyone on here, unless they live in the duplex, are investors who want to find well performing ROI properties and they require AT LEAST 20% down. And investors aren't getting 100% USDA loans on multi-family properties so why even bring it up? just to pepper your posts with seo-friendly keywords?
Best of luck to you man but we'll keep working hard and earning our paychecks.
8 Reply
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@Marc Middleton, your reply is predictable and ridiculous and only comes from realtors who want to divert attention away from ....that savings that has the two "R"s in the name.
Many thousands of realtors are offering this savings and have been for I believe about 20yrs now, so please focus on helping the BP Investors with positive comments on this Topic.
Here is an idea, maybe a BP Realtor should start a topic on Mortgage Brokers or Mortgage Broker Commission to share their knowledge on all things Mortgage and different ways consumers can save money.
0 Reply
Marc Middleton
Residential Real Estate Broker · Miami, FL · Member since 2014 · 214 posts · 106 votes
8y
More good key words..bolded & underlined too. Google doesn't care about the font though in their SEO analytics.
4 Reply
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
Maybe I should reply to your comments and Morse code?
Furthermore why would somebody be doing what you are accusing but have nothing about it on thier profile?
Or nothing about that savings with the to R , on that other thing that companies have up, on that other thing called the Whisky Echo Bravo?
0 Reply
Cara Lonsdale
Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes
8y
How many more times do we all need to read this same post over and over just reworded before we all stop feeding it?!!
@Account Closed We get it. You don't value Realtors at all, and want them to either rebate their commission, or now lend it out (which is the most ridiculous idea I have ever heard of) to the supposedly many buyers you have lined up.
We further understand that you are a man on a mission to do this because you feel like the real estate industry is out to get you, and you aren't going to "lay down and take it anymore".
Good for you. You are in your own little corner of the world (and possibly in your own world altogether), and can do whatever you want (and whatever consequences may follow). But please spare us from anymore of these repetitive posts reworded with the same videos and same 1 liners, and the same buzz words. What a waste of this forum's time and resources!
Can't you come up with any new material? Surely, you have more to talk about...?
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OP
Lender · Tampa, FL · Member since 2014 · 543 posts · 168 votes
8y
@cara lons
It's not about you as a realtor it's not about me is a mortgage broker it's about this saving strategy that VP investors want to hear more about.
Read my last post if you think differently
0 Reply
Chang Hee Lee
Real Estate Broker · Champaign, IL · Member since 2017 · 49 posts · 19 votes
8y
@Marc Middleton I wish I could do a handshake with you right now and give you a high five brother..
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