Hi nhs,

Do loan officers get a referral fee or a percentage of the commission from realtors?

Generally speaking; not legally they don't, no.

One fairly rare exception is if the loan officer is also a licensed real estate agent... but in that case they must fully disclose the fee sharing arrangements as well, in order to be in legal compliance.

the home I am interested in is a bank-owned home. She told me that she always advises buyers to ask the sellers for closing costs because my area is a buyer's market. She said even banks will pay buyer's closing costs "because they have all the money in the world" and because "they aren't in the business of real estate and every week they haven't sold the house costs them money"

A) What a SCREAMING IGNORAMOUS she is!!!
B) Anytime you find anyone so economically ignorant to take the attitude that "banks have all the money in the world" carefully (but quickly) extract yourself from that conversation & relationship...
C) Bank REO sales *sometimes* can pay buyer's closing costs... but only if/when it makes good non-emotional sense to the bank's selling manager,
D) Negotiating to have the seller pay the costs *IS* financially wise for you, as it allows you to keep more of your liquidity (safety cash) and fold those acquisition costs into the leverage itself... but while this is the truth, this "loan officer's" message is ignorant.

During the ten minute phone call, she spend at least five minutes talking about this realtor.

MOST likely, here's what she is up to;
She's trying to stack-up the score-card on the numbers of referral names she shovels over to this particular real estate agent... *MOST* likely because she's praying that the agent will then return the hustle & refer her solicited customers over to this loan officer.

If you never asked HER for an introduction to a quality agent, and she never asked you *IF* you wanted one... she's just tossing you around like a piece of meat.

My advice;
Keep looking for a QUALITY financial professional more worthy of your respect (and respectful of YOU!)

Luck,
Dave Donhoff
Leverage Planner

Residential loan officers rarely reach the VP level so the title would surprise me as well. Commercial loan officers routinely become VPs. There is rampant class discrimmination inside banks on residential verus commercial loan officers. Always has been...always will. It's easy to find a commercial loan officer at a bank. They are the ones strutting around like peacocks! Residential loan officers work from cubicles or a 6'x6' office. Commercial loan officers have private offices with large desks, credenzas, comfy chairs, & usually even a sofa for an afternoon siesta. :)

While working for various banks, I have never received a commission for a residential loan. I have received commissions on total commercial production; but not on individual deals. All of the banks I've worked for considered REO management/sales as commercial production.

I agree with Dave...find another bank.

/tricia

There is a trend in some industries to give virtually everyone with a salary the title of Vice President. This unfortunate disease may have spread to banks. They do it for two reasons. People will often work cheaper or grouse less if they have a fancy title, and customers will think they are dealing with an executive, instead a plain old employee. They will therefore be more amenable to the "vice president's" approach, because they think they are dealing with a top level person. It is sort of stroking the employee and the customer at the same time.

No, realtors do not give any money to loan officers or VPs. It's illegal in most states.

My guess is that they are friends & refer business to one another. RE is slow now, so the loan person is really pushing her RE friend on you.

I spoke to a realtor the other day & she told me that she never had to prospect for clients, because a couple of loan people referred the buyers to her. But now everybody is slow. There was no money exchanged, just friends thinking of friends.

It would have been my guess that the realtor would be getting a "gift" from the loan officer. When I sold in LA a few years ago, when real estate was fast and furious, my realtor would have loan officers meeting with buyers in his office. It would be very interesting to me what the realtor does receive from all of his steering of business: the inspection company, the loan officer, the termite company, the title company, the escrow company, the warranty company, etc. etc.
Susan

Susan,

As a banker, I was never allowed to accept a gift worth in excess of $25. And, there had best not be too many of those. Around the holidays it was OK to accept small tokens of appreciation and, in fact, I gave gifts to the types of people you mentioned but it was never anything large. Being in New England, I frequently gave small bottles of pure maple syrup with a "Compliments of So-n-So Bank" on the label.

Regulators watch gifting quite closely for bankers.

/tricia

Two years ago we bought a foreclosure home, not only did we ask for closing costs (4,000 worth) but we also asked for and received some repairs. Our agent tried to thoroughly prepare us for an answer of "NO", sold as-is, but regardless, we insisteed on trying and got everything we asked for. Rule of thumb, always ask, all they can say is "NO"

I am an attorney and handle probate sales. I really would be happier if buyers used certain realtors who have some clue how probate sales go. There is nothing worse than buyers getting an arrogant "know it all" realtor who actually does not know what they are doing in an area that is a little different. If the bank officer wants to sell the property (and they are anxious to do it) then directing you to somebody who will sell that property and knows how to do a bank sale seems sensible.

An outside realtor might just direct you to one of their own listings and the bank would lose a sale. Yes, they are giving you inside information as to what they will accept--other sellers who are anxious will do the same thing. I don't understand the problem; the bank isn't supposed to pretend to be coy--a real estate owned property is a black mark against the bank. They made a mistake lending money --they want to sell usually.

I have never received kick backs from anybody I deal with--escrow companies, etc. but its so much more work dealing with people who claim they know how to do certain types of sales and do not. Usually about 1 day before the close--suddenly they realize that a city needs to do an inspection, the lender needs a second set of Certified Probate Letters, etc. We call & write often --do you need anything? but it doesn't help if you are dealing with a "know it all".

I've wondered the same thing. A few months ago we had a home up for sale. A young couple - inexperienced first time homebuyers - had evidently been shown quite a few homes - including ours, twice - by realtor "A" before signing a contract. (That part was her fault) They decided on our home and realtor "A" sent them to a loan officer. The loan officer pushed them to sign a contract with realtor "B", an obnoxious fellow. (I know that because of e-mails that he mistakenly sent to me instead of my realtor throughout the process.) Not wanting to lose the house, they did. Meanwhile, realtor "A" checked in with them to see how things went with the bank. Needless to say, she was pretty shocked. The buyers were upset, the wife in tears when they realized what they'd done - procurring cause, ethics and all. My realtor and realtor "A" told us and the buyers to not worry about it - it would be handled after the closing. Realtor "B" was never even inside our house until inspection day. It was handled, but before closing - the company that realtor "B" works for paid off realtor "A".

Given the large number of bankers being "downsized" I wonder if this loan officer expects to be leaving soon and is willing to pump up her final score card at the expense of her employer. Otherwise, the stuff about asking the bank for closing costs because they have all the money in the world is too strange. OTOH, it does make sense for you to negotiate the best deal possible.

VPs were a dime a dozen when I was a bank officer decades ago (investment firms were just as bad - I was a "First Vice President" in my 20s.) So don't be impressed with the title.

My guess is that the RE agent is a friend or relative of the loan officer. I doubt that any money or gifts exchange hands. While I haven't encountered this specific situation, I have been steered to use certain appraisers (chosen from the bank's list), home inspectors, title companies, etc. Usually it's because the REA knows those people to be either highly efficient or easily influenced/ cooperative. In other words, they never impede a quick closing.

But the loan officer advised me "never spend your own money when you can spend someone else's."

Eeek! Sounds like that loan officer wants you to get deeper in debt for her bank's benefit. Or maybe I took that wrong.