Sub Prime Lenders…

-How Not To Lose Control Of The Deal!

By Bob White
The White House Adventure, Ltd. Co.

Lately we have seen a discussion of mortgage brokers on the AIREO.com Bulletin Board and how they can really mess up a transaction if you let them. A few of the participants have been very vocal about specific brokers who have burned them on deals… for a while there it was looking like a witch hunt. The truth is that good mortgage brokers, particularly the sub prime lenders, can be difficult to find. So, sharing your experiences on the BBS can save others the pain of dealing with ones that have already proven their incompetence.

But let's face it, if you are dealing in the lower end of the market, selling to first time homebuyers, you will have instances where a prospect just cannot qualify for a FHA loan. Sub prime brokers can be the answer. However you must recognize that these guys are faced with a daunting task. You come to them with a buyer who you already know is weak and that nobody else will loan to. The sub prime broker has lenders who will fund B and C credit risks, they want to do that loan because it is the only way they make money, so do they tell you up-front when you bring a buyer who just won't fly or do they say "you bet, we can do this one" knowing full well that it is a very long shot? It seems that many of these brokers will tell you they can do every deal you bring them just so they can take a swing at it.

Now, I don't mind if they do that, but I don't want them to take 2 months to tell me no while leading me on that it's going to happen any day now. Am I the only investor out there who's blood pressure has spiraled out of control more than once trying to deal with these people? I need the sale closed and have put my marketing efforts on cruise control because I've got a contract pending. Every day is golden, and the broker keeps putting me off… it makes me crazy.

Ten suggestions how to avoid this type of merry-go-round;

1. Find a broker who seems up-front and honest, and call around to see if others have experience with him.
   
   
2. Pull your own credit report and know all you can about the buyer before you take the file to him.
   
   
3. Verify that your buyer has a rental and employment history of at least two years and that they are in the U.S. legally.
   
   
4. Never just drop off the file and wait for the phone to ring...you must be on them every day.
   
   
5. Call the buyer every few days to see what they have heard and to hold their hand if they have concerns.
   
   
6. If the broker says he is waiting for the buyer to bring in information take control and call the buyer and hold his hand until it's done. You may have to do some legwork yourself to save time.
   
   
7. Always put a cutoff date on your contracts and be certain to point that out to the buyer and the broker. If no approval by this date the contract is null and void. "Time is of the essence" doesn't mean spit without a cutoff date.
   
   
8. Be prepared to take back a second lien for up to 15%
   
   
9. Verify upfront that your buyer has down payment money in hand… best to get those funds and hold them yourself if you can.
   
   
10. Once your cutoff date rolls around kick your marketing efforts into high gear and find another buyer… don't wait.
    
    

By taking these precautions you will save time and money and, who knows, it might get that property sold before your marriage goes into the toilet. Sub prime lenders should be your last resort, but they can provide a much needed service when you need them.

The AIREO.com Open Real Estate Forum at www.aireo.com can be an invaluable resource for us all. We have seen lots of comments on the bulletin board running down assorted lenders, but we don't see many recommendations when you find a good one. It would be a big help if some of you would mention it when you have good experiences. There are good ones out there, let's find them and let it be known who they are. Happy Selling!!