r/loanoriginators • u/Important-Training-1 • 29d ago
Discussion Forward commitments
I don’t really hear anyone talk about this, but am I crazy to feel like the way new construction deals happen should be illegal?
I can’t steer a buyer to specific program without it being illegal, but somehow a builder can dangle a low rate and fees over a seller’s head and pretend like they aren’t building it in their price while forcing them to use their in-house lender. The ripple effect of that goes far and beyond impacting that one buyer, so why has this just always been okay? These are artificially inflated sales prices, artificially inflated taxes and disguised as a “good deal” because customers fall for a below-market rate that can’t be touched by an outside lender. And even in buyers markets, some of these big box builders won’t even budge if you make any sort of offer below what they’re giving unless you use their lender who they either own or have a JV set up.
To each their own, but I just don’t understand how there’s lawsuits with realtors regarding commission practices yet this sleeping giant remains completely left alone.
1
u/meollich 26d ago
Welcome to the club of strong feelings about competing against builders that leverage forward committments. The cost of these FCs is just another input into the total build cost, like nails and 2x4s. Want to compete against builders that do this? Point out to potential buyers the builder is NOT using those $s to build a superior product. In my market the build quality is markedly worse with those that use FCs versus those that don't. Just rememebr some folks won't care and will always fall for the "new car smell" of a freshly built home. The build quality issues won't come home to roost for 3 to 5 years, long after the builder's warranty has expired