Why home builders use preferred lenders


by David Fletcher

One of the things that inexperienced Realtors don't understand is why their prospect, who has been preapproved or prequalified for a mortgage, should consider using the builder's preferred lender.

First of all, as has been reported, it is not "common practice for builders to tell buyers they must use a specific lender in order to get the pricing they want."

The fact that the builder is using a preferred lender has little or nothing to do with 'price'. It is common practice for the builder to insist on using the builder's contract. There are plenty of new home buyers who insist on using their own bank or lender, especially if they have no interest in the builder's incentives.

Many production builders use preferred lenders for a lot more than mortgage financing. They need loans for land purchases, land development, constructing models and spec homes, and they need to know that their documents have been approved by the lender so they don't have to go through the costly and time consuming process of legal approvals every time they need financing.

Their preferred lender knows the builder well, and can anticipate builder needs as well as work with them times sales are slower than projected.

There is very little if any new homes sales training in this regard among Realtor companies, and frankly builders don't explain this to their co-brokers well enough either.

But having the preferred lender gives the builder room to offer such things as cash contributions to mortgage costs if your buyer uses the preferred lender. The builder's closing team has a relationship with the preferred lender that is hard to come by, giving the builder and therefore you, a much better chance of working through the mortgage process even when things 'come up', as they tend to do.

So the next time you have a question about the preferred lender, let the onsite agents explain it.




David Fletcher
David Fletcher

Author

New Home Co-broker Academy Llc Founder David Fletcher writes all-in, left-it-all-on-the field online real estate courses for general real estate agents who hear the new homes sales door knocking but hesitate to open it, due to their own fears, and therefore are leaving thousands of commission dollars off the table. As of January 2018, more than 2500 Realtors have earned the New Home C-Broker (NHCB) designation, completing a three-hour course, How To Build A New Homes Niche. His courses are based on his $3 billion new homes sales record as a listing agent for more than 70 condominium and single family subdivisions.



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