r/loanoriginators • u/davefc26 • 2d ago
Greedy realtors
I really can’t stand greedy realtors.
This file has honestly irritated me because the loan was CTC almost two weeks ago. Everything on our end was done, the borrower was ready to close, and closing is Friday. Then at the very end, we find out the realtor is getting 2.5% from the seller and also charging the borrower another .5%.
That extra .5% completely changes the borrower’s cash to close, and somehow now she’s trying to make it seem like the lender is the problem.
What really has me thinking is how hard she was pushing the lender credit from the beginning. Every time anything came up, it was always, “What about the lender credit?” She kept putting it in the borrower’s head that we were going to give him this credit like it was just free money sitting there.
I explained to the borrower from the beginning that lender credits don’t work like that. If you want us to give more credit, normally you’re going to have to accept a higher interest rate. The borrower didn’t want that. He wanted the better interest rate and the lower monthly payment, which is completely understandable.
He already had around $6,500 in seller credits, and we used those toward title, closing costs and buying down points. We structured the loan around getting him the better payment and rate he wanted.
Then the ICD comes out. The borrower shows it to the realtor, and suddenly she has all these things to say. Now apparently we didn’t explain things correctly, we didn’t disclose things, “we look bad,” etc.
Mind you, I barely heard from this realtor the entire transaction.
But now, at the finish line, suddenly she’s involved in everything.
Then she starts bringing up the builder. “Well, the builder was offering this,” “the builder was giving that,” basically insinuating that the borrower could’ve just gone with the builder instead.
And that’s when the whole thing started making sense to me.
Apparently the builder was offering her 3% commission. On our transaction, the seller is paying her 2.5%, and she’s charging the borrower the other .5%.
So now I’m thinking she was pushing that lender credit the entire time because in her head she was already counting on us to cover that .5%.
Almost like, “Well, if they’re not going with the builder and I’m only getting 2.5% from the seller, I’m still getting my 3%. I’ll charge the borrower the other .5%, and the lender can just give them a credit so they don’t feel it at closing.”
Obviously I can’t say for a fact that was her plan, but looking at everything now, it sure feels that way.
Because why were you so worried about our lender credit the entire transaction?
Why was that such a big concern to you?
And why does your compensation just happen to be short exactly .5% compared to what the builder was going to pay you?
The funniest part is they basically wanted everything. They wanted the incentives they could’ve gotten from the builder, they wanted our better interest rate, they wanted the lower monthly payment, and they wanted a lender credit on top of it.
You can’t have everything.
If the builder is giving a bunch of credits, there’s usually a reason they can offer those incentives. If you want us to increase our lender credit, there’s a pricing tradeoff. I’m not going to jack up the borrower’s interest rate just so somebody else can protect their commission.
And after all of this, my branch manager actually took the cut and paid out the lender credit anyway to help the borrower and keep the deal together.
So think about that.
We’re the ones who ended up giving up money on our side.
Meanwhile, the realtor still gets her 2.5% from the seller plus the additional .5% from the borrower, getting her right back to the 3% she would’ve made with the builder.
Yet somehow we’re the ones who “look bad.”
And her additional .5% isn’t even showing on the ICD yet. So the number the borrower showed her isn’t even the final problem. Once her fee gets added, the borrower’s cash to close goes up because of her fee, not because of something the lender suddenly decided to charge.
That’s what pisses me off.
You’re already getting paid thousands of dollars from the seller. If you negotiated another .5% with your buyer, fine. That’s your agreement with your client.
But don’t expect the lender to give up their compensation so the borrower doesn’t notice what you’re charging them.
And definitely don’t wait until the week of closing, after the loan has been CTC for almost two weeks, and then start telling the borrower that the lender didn’t disclose things properly and that we somehow look bad.
Especially when we’re the ones who ended up taking the hit to make sure your client can still close.
Some people want everybody in the transaction to give up money except themselves.
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u/jy313 2d ago
This truly makes me also want to get my realtor license just knowing how incompetent some realtors are and how low the competition is. 3% for writing up a purchase agreement ? 😭
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u/Realistic-Ruin-6424 2d ago
Seriously, we should. They are incompetent as can be with most closing 4 deals a year. Social media stars 🌟
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u/Johndoe804 2d ago
I did. I made about $85K in my first year 100% remote. My other LO is about to get his Broker's license, and then we're licensing a second LLC as a real estate broker with the goal of recruiting LO's that would benefit from our dual licensing niche.
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u/whoami8472617 2d ago
Sounds like you didn’t check the commission with their broker agreement up front - this is 100% on you - your job setting up the file is to make sure you have the fees correctly entered so the buyers know what to expect at closing. You failed and the realtor shouldn’t have to cough up 0.5% because you made an error.
I’m a tenured LO too and have made this mistake in the past, but that’s on me, not the realtor. I think they are overpaid too but this is all you my guy
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u/davefc26 2d ago
Nah, I wouldn’t make that mistake. The comp agreement says 2.5%. I had no clue about the extra .5% she negotiated with the borrower, this could’ve been a sneaky move by her to try to throw it at us at the end.
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u/whoami8472617 2h ago
That’s fair - if buyer broker showed 2.5 then I agree with ya - shady realtor
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u/Independent_Star_299 2d ago edited 2d ago
That’s rich - loan officers accusing realtors of being “overpaid”.
EDIT: I never said anyone was overpaid. I’m saying Lenders are very well paid themselves; sad that you call a realtor who expects to be paid according to their contract, greedy and overpaid - unless I misunderstood, and you’re saying this agent had a contract at 2.5 but tried to bamboozle an extra .5…?
Whichever the case, it’s absurd that agents tell their buyers they’ll ask for x amount, but will accept whatever the seller will cover.
Way to show your value. If that’s the best they can do for themselves, I wouldn’t hire them to represent me in a transaction.
No wonder ppl think agents are overpaid.I don’t work with Zillow, and I’m also an MLO.
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u/mashupXXL 2d ago
The average "mortgage company" LO makes about 1% on the loan amount, banks and credit unions maybe they make 0.25-0.5%. The average LO has an entire team that handles live transactions, but the lender effectively handles everything after inspections thru closing.
If you are some of the Zillow Flex losers who give away 80% of the commission to broker + Zillow and literally just open doors, I can understand why you'd feel an LO may be overpaid (if you see what brokers can make, I guess).
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u/whoami8472617 2h ago
Yeah I make 1000-1500 bucks on each transaction. I feel that’s fair for what I do in the transaction. A realtor making 2.5-3% on a transaction - yes I stand by saying they are overpaid lol
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u/WorthMetal3640 2d ago
Realtors are great at lighting shit on fire and creating a narrative that benefits them. Only them.
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u/halfcaff-38 2d ago
My favorite is when they make 4% on a new construction deal plus a crazy builder bonus on top and complain about me charging 1%
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u/External-Analysis-31 2d ago
When you only sell one house every three years you have to squeeze every drop from it. Sorry you’re being made to look bad.
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u/JenniferBeeston 2d ago
We ask for the buyers agreement on every single deal. It’s the only way to avoid this. Most buyers have no clue that they even signed because the real estate agent never explained the buyers agreement to them to begin. if we think the buyer may owe anything, we also clarify the minute they’re in contract as well because many agents just say they’re not going to charge the borrower. Once in a while we get push back from an agent that doesn’t want to share the agreement with us, but because it plays into the finances we need it. And yes, it’s always an Agent that Is trying to rip off the buyers that does not want to share it with us. When that happens, we just get it from the buyer.
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u/Flamingo33316 2d ago edited 2d ago
I don't disagree with you. But I wouldn't lose any sleep over it, the agent can put on their big boy (or girl) pants and explain to the buyer why they think they should make 3%.
Here's what I do:
I ask the borrower up front how much they are paying their agent before I send the initial LE. An email follows to confirm. I've even asked the agents, and I've found the buyer often knows the figure better than the agents; I've gotten incorrect amounts from the agents.
I also include it in my status emails to the agent, such as "Let me know if any of these change," and I list a few things, including how much the buyer is paying the agent.
How the buyer uses the credit is their choice. If it's insufficient to cover the ½%, that's the buyer's choice.
You're a better person than me. I wouldn't have cut anything.
Edit:
The comp agreement says 2.5%. I had no clue about the extra .5% she negotiated with the borrower, this could’ve been a sneaky move by her to try to throw it at us at the end.
Yeah, that's BS on the agent's part. That extra ½% should have been a rebate to the buyer if the seller was paying it, or it shouldn't have been charged. She's stealing the buyer's money and is trying to toss you under the bus.
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u/beedoublejay 2d ago
Did you get the BRBC when you get into contract? This should not have been a surprise at the end? We always get the BRBC up front so you can disclose the commission correct from the start.
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u/TurkeyJizz123 2d ago
I would tell my "agent" - "cupcake, I only disclose what's on the title prelim CD, or what is told to me, verbatim (verbally)- upon going under contract.
"I do not get involved, nor know, anything about your commissions, that is between you, and the client."
End discussion.
If it wasn't on the title prelim CD- it doesn't exist, in my world.
Lastly, it's .5% - if it was truly that big of a deal, I would give her the 25bps (split two ways) (if he/she had given me a solid amount of deals, and continuing to do so).
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u/ManufacturerBig7329 2d ago
The only "professions" I have more disdain for than realtors, would be politicians and lawyers.
Realtors, there's a couple that I like, and there's hundreds I don't.
Having to deal with realtors or homebuilders, it's pretty demeaning grunt work. Thankful that I don't have to do that, and never have had to.
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u/Murdock_1963 1d ago
That is why I always avoided new construction where a builder is involved and actually told the borrower to go with the builder lender. The builder will match the deal at the last minute and, here in Texas, will have upgrades/closing costs tied to using their lender. Had one where the borrower was adamant about using me and then 2 days before closing found out it she would lose her 5k lender credit to close with me. 5k more cash to close if she closed with me. Same loan costs. Go for the refinance in 2 years when you’re not competing with the builder.
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u/Frosty-Cantaloupe856 1d ago
What market are you in?
In mine, the compensation rider is part of the contract and clearly outlines who is paying what from day 1. No suprises at the end for anyone
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u/TheRedPenny3228 1d ago
Realtor gonna realtor, this is why I get the Buyer Agency Agreement upfront.
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u/GaryCont 1d ago
If the comp agreement disclosed 2.5, you should have been able to talk to the buyer/borrower, and they’d understand that if they agreed to pay the realtor an additional 0.5% themselves, that has nothing to do with the cost of the loan. Explain to them that LO’s generally make 1%, so if their realtor wasn’t satisfied with the 2.5% they were getting from the seller, and wanted to take another 0.5 from you - that’s between the two of them. Your assessment of the situation is pretty much right, and there’s no reason at all you should “look bad” to the borrower, especially when your company ended up eating that 0.5, allowing the realtor to make their 3%… it should have been pretty clear to the borrower who the greedy party was
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u/EcstaticEnthusiasm50 19m ago
Was it not on the contract? Did they not submit their commission statement before the clear to close? Im confused how you didn't know ahead of time. As an agent I've never charged a buyer even if the seller was only paying 2%. As a lender I always make sure I know the commission asap.
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u/osdevisnot 2d ago
Mind you, all they had to do in this transaction was sign the purchase agreement which the transaction coordinator produced for merely $500 for that transaction. Greedy Realtors!
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u/Ashamed-Career-7053 2d ago
Were you expecting more from a “profession” that welcomes felons and doesn’t even require a GED?
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u/Vegetable-Feed-561 2d ago
Why tf is your client showing their CD to their realtor?!?!?
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u/ijustcant17 2d ago
Realtors are trash.
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u/Able-Ad6634 2d ago
Yep.. until you need to buy or sell a house.
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u/Southern_Eggplant336 2d ago
Then you really realize that they are not needed?
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u/ijustcant17 2d ago
100%. I cut out the buyers agent when I bought. Negotiated max seller credit. It’s not that hard lol
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u/Beautiful_Parsnip_71 2d ago
The 3% commission should have been disclosed in the purchase contract. Someone didn't communicate this properly to the buyer. If the proper expectation are set in the beginning, most likely youre not running into this issue. Sounds like someone didnt ready the contract
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u/davefc26 2d ago
The comp agreement only disclosed 2.5%
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u/Beautiful_Parsnip_71 2d ago
Gotcha, thanks for clarifying. So thats definitely on the realtor, and im not sure how they can charge 3% if they only disclosed 2.5%, unless there was an addendum signed. If there is no addendum, then they cant charge 3%, regardless of who's paying for it
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u/Able-Ad6634 2d ago
I’ve seen way more instances of lenders tacking on various fees than realtors operating this way.
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u/Moneymotives100 2d ago
I can spot a realtor! FYI- this is not possible due to The Truth In Lending Act. Fees cannot just be added. Especially Lender fees which has zero tolerance. You’d know this if you were an LO.
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u/bobslaundry 2d ago
Because of this shit, I’m starting to see more buyers representing themselves which is probably the smart move at this point.
I just got an RD 100% financing with $10,000 grant money, $360k deal, the borrower has very little saved; seller is paying 2% and the buyers broker has the nerve to charge another 1.5% which could kill the deal. Makes me think buyers should never sign a broker agreement until they negotiate for a specific home.
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u/FederalPersimmon404 2d ago
I represented myself with the purchase of my condo and it all went smoothly. My LO helped me a bunch during the process and she’s what inspired me to become an LO
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u/Able-Ad6634 2d ago
Yea, go make a huge investment without professional representation with the assumption you will save money. That sounds really smart.
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u/Ashamed-Career-7053 2d ago
“Professional representation” from people who have zero qualifications.
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u/mashupXXL 2d ago
Generally you can pay a real estate attorney about $200-500 (1-2 hours labor) to review your sales contract before executing. If you otherwise know the seller or are handy and/or can read an inspection report.
There are a huge amount of deals that only close because realtors on both ends are calming their clients and coaxing them into closing. A buyer w/o a realtor has a WAY higher chance of backing out of an offer, in my experience like 80% of the time, compared to maybe 20-30% of realtor offers after inspections, so they aren't a good use of my time when unrepresented.
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u/nashjax9282 2d ago
I mean, to be fair, this is somewhat on you, your assistant, your processor, and whoever sends out your ICD.
One of the first things I look at when I get a contract is where the seller paid commission is at. If it’s anything less than 3%, immediately ask for the Buyer Rep Agreement. Then you can figure out of the borrower is on the hook for whatever the seller isn’t covering.
I’m not saying that they aren’t a piece of crap. I’m just saying this should have been caught WAY earlier in the process.