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Old 03-14-2010, 09:02 PM
 
80 posts, read 177,557 times
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Hi there,

When looking at some home listings, I noticed that a few of them encourage the buyer to use a particular mortgage lender of the seller's choosing for a financial incentive like $1000 off of closing, etc. What does the seller gain from this?

Thanks,
Pari
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Old 03-14-2010, 09:05 PM
 
Location: Cary, NC
43,372 posts, read 77,281,824 times
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The seller keeps you off Lendingtree, etc, and other amateurs who may have a high failure rate in terms of closing the loan.
Seller wants you to work with someone who has a known track record.
But, the sellers' lenders are not perfect either.

And, often, the lender and seller split the incentive between them. Co-marketing.
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Old 03-15-2010, 05:44 AM
 
Location: Wake Forest, NC
835 posts, read 3,981,028 times
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If you are looking at new construction the builder usually owns the mortgage broker that you have to use which allows them to double dip when they sell you a home.

Use our lender and we'll give you $10k in upgrades advertising. Well reality is it costs them $5k for the upgrades they credit you $10k and they make $5k on the loan because their rates are typically higher than the open market so the "free upgrades" didn't really cost them anything.

I'm not saying don't take it- its free money to you- just showing how it works with new construction. I've actually met with clients same day as they bought a house to refinance it. They took the upgrades and/ or closing costs then refinanced before the 1st payment was due.
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Old 03-15-2010, 07:56 AM
 
80 posts, read 177,557 times
Reputation: 54
Default Which incentive?

Hey Mike, Thanks for your reply. The financial incentives they're offering like money towards closing seem to be for the buyer. Didn't understand the part about the lender and seller splitting an incentive too. Is that an additional separate incentive the lender pays the seller for the referral?

Thanks,
Pari



Quote:
Originally Posted by MikeJaquish View Post
The seller keeps you off Lendingtree, etc, and other amateurs who may have a high failure rate in terms of closing the loan.
Seller wants you to work with someone who has a known track record.
But, the sellers' lenders are not perfect either.

And, often, the lender and seller split the incentive between them. Co-marketing.
Reply With Quote Quick reply to this message
 
Old 03-15-2010, 07:59 AM
 
Location: Cary, NC
43,372 posts, read 77,281,824 times
Reputation: 45712
Quote:
Originally Posted by Pari625 View Post
Hey Mike, Thanks for your reply. The financial incentives they're offering like money towards closing seem to be for the buyer. Didn't understand the part about the lender and seller splitting an incentive too. Is that an additional separate incentive the lender pays the seller for the referral?

Thanks,
Pari
Pari,
The incentive has to come from somewhere, if there are real dollars involved. Seller and lender may split the cost of the incentive.
There ain't no such thing as a free lunch.

And I liked dad2jules' response, too.
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