We recently received an email from a potential customer who was trying to be an informed consumer and get a fair deal on a mortgage. Here’s the opening line: “I’m considering a refinance to shorten term and lower rate. Lenders are unable to provide any kind of transparency (or patience) with questions on fees.”
Unfortunately, we see similar comments on a somewhat regular basis. Whether you’re trying to buy/sell a house or refinance a mortgage, the industry is short on transparency and bursting with confusing business relationships that are designed so that the players involved can line their pockets with your money. The real estate industry blames the lenders and vice versa.
Either way, these business relationships result in higher fees hidden in your closing costs. If you bought a house recently, chances are your real estate agent asked you to sign a document that disclosed a controlled business relationship, where the real estate company and the title insurance company have common ownership and financial interest.
Why not get right to the point: “When you use Stick-em Up Real Estate’s in-house title company, my broker makes money and if I own shares in the company, you can bet I’m making money too! Same goes for our in-house mortgage company, home warranty company and our homeowner’s insurance company.”
Controlled business relationships are commonplace in the industry. But if the words “conflict of interest” come to mind, you’re not alone. Regulators are beginning to take a closer look at these relationships and question whether or not they’re being properly disclosed, if at all.
The industry is becoming less tolerant of these relationships. In-fact, we know of one national lender who will NOT permit a title company that’s owned in part by a real estate agent/broker to insure the purchase if the agent/broker represents the buyer or seller in the transaction. They consider it to be a conflict of interest. This policy not only makes good business sense, but seems like common sense to me.
If you’re buying, selling or refinancing real estate, educate yourself on the rules of the game before making any decisions. Compare multiple quotes, as rates and fees are not the same everywhere, regardless of what you’re being told. Our website www.alttitle.com is a great resource to help you get started.
Ask your real estate agent and lender which services you have a right to shop around for and if they have any financial gain if you use the provider they recommend. By law, they must give you this information.
Seek online reviews from previous clients, or follow the company on Twitter or Facebook to view uncensored feedback. If your bank’s twitter feed is jammed full of comments from frustrated mortgage customers, take heed! Then tap into your own social network and ask friends and colleagues about their experiences, which company they used, what fees they paid, and how satisfied they were.
There are plenty of real estate agents, mortgage lenders and title insurance companies out there that are simply trying to make an honest living, while making sure you receive good service and a fair deal. We work with many of these respected professionals every day and are always happy to refer them to our customers.
Putting together the right real estate team is the key to your success. The fact of the matter is however, that perfect team is very rarely under the same roof, so be wary of convoluted business relationships disguised as a “more efficient, streamlined” way of doing business.