Empowering Real Estate Agents
to Protect Clients from Builder’s In-House Lender Pressure
Objective:
Equip real estate agents with the confidence, strategy, and knowledge to ensure their clients are not pressured into using a builder’s in-house lender while still receiving the full incentives offered by the builder.
Game Plan: Steps to Follow
Step 1: Educate Your Client Upfront
1. Set Expectations Early – Before touring builder communities, explain to your client how builder incentives work and why they should not feel obligated to use the builder’s preferred lender.
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2. Inform Them of Their Right to Choose – Make sure they understand that they have the legal right to use any lender they choose and still receive the same incentives as long as their lender meets or beats the terms.
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3. Encourage Pre-Approval from a Strong Lender – Having pre-approval from a trusted outside lender in hand before entering negotiations strengthens their position and allows direct comparison with the builder’s lender.
Step 2: Buying a Home is the Biggest Investment of Your Life—You Deserve the Best Team!
Buying a home is one of the largest financial decisions most people will ever make. We’re not just talking about spending money—we’re talking about investing hundreds of thousands of dollars into your future. This is not the time to cut corners or allow a builder to dictate who handles your financing.
Just like you wouldn’t hire the cheapest surgeon for a life-saving operation or the lowest-bid attorney to handle an important case, you shouldn’t let someone else decide who manages your mortgage. You need a team that puts YOUR best interests first—one that ensures every dollar is working for you, not for the builder.
• The real estate agent negotiates the best deal for you.
• The lender ensures you’re getting a loan that makes financial sense—not just today, but for the future.
• The title company and inspector protect your investment by making sure everything is legitimate and the home is in top shape.
The builder’s in-house lender works for the builder, not for you. Your financial future deserves a team that is 100% on your side.
Step 3: Don’t Get Caught in the “Lowest Rate” Trap—It’s Just One Part of the Formula!
One of the biggest mistakes homebuyers make is focusing only on interest rates while ignoring the bigger financial picture. A lower rate does not automatically mean a better deal.
Here’s why:
1. Rate Buydowns Can Be a Sales Tactic – Builders often use incentives to temporarily “buy down” interest rates, but those savings may be offset by hidden fees, higher closing costs, or a worse loan structure.
2. Closing Costs & Fees Matter – A low rate means nothing if you’re overpaying in other areas. Always compare the full Loan Estimate (not just the rate).
3. Loan Structure Impacts Future Savings – A well-structured loan takes your long-term goals into account, not just your payment today. The wrong loan can cost you tens of thousands of dollars over time.
4. Flexibility & Service Are Critical – Getting a great rate won’t matter if your lender can’t close on time, delays your move-in, or lacks the flexibility to meet your needs.
The right lender helps you look at the whole picture—rate, fees, structure, and long-term financial benefits—to ensure you’re making the smartest investment possible.
Step 4: Gain Leverage Before Walking Into the Model Home
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1. Call the Builder’s Sales Agent in Advance – Ask for a breakdown of their incentives, ensuring you get clear terms on what is being offered (e.g., interest rate buy-down, closing cost assistance, appliance packages).
2. Request a Side-by-Side Comparison – When in conversation with the builder’s lender, insist on a detailed loan estimate that includes all terms, rate options, and fees.
3. Highlight Your Lender’s Competitive Edge – If your preferred lender offers better service, rates, or fees, use this as leverage to show that your client deserves the same incentives regardless of the lender choice.
Step 5: Push Back Against Pressure from the Builder’s Agent
If the builder’s agent says:
• “You’ll only get these incentives if you use our lender.”
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Your response:
• “Actually, per RESPA guidelines, incentives cannot be tied to lender choice unless the lender is providing a direct financial benefit to the builder. As long as my client’s lender can match the terms, the incentives should still apply.”
• “Our lender knows how to close on time, and we can’t guarantee that with an outside lender.”
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Your response:
• “We completely understand the importance of a smooth closing. Our lender has extensive experience with new construction and will meet all builder requirements while maintaining excellent communication.”
• “You might not get as good of a deal with an outside lender.”
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Your response:
• “We’ve already done the numbers, and my client’s lender is offering competitive (or better) terms. The key here is ensuring my client gets the best financial outcome, not just using a specific lender.”
Step 6: Involve the Loan Officer & Demand Equal Treatment
1. Loop in the Loan Officer Immediately – Have your trusted lender review the builder’s loan estimate and provide a competing offer.
2. Have the Lender Advocate for the Client – If the builder’s lender is offering incentives, your lender should demonstrate how they can match or exceed the offer and formally request equal treatment from the builder.
3. Use RESPA as Backup – The Real Estate Settlement Procedures Act (RESPA) prevents builders from forcing clients to use their lender. If necessary, remind the builder’s agent that tying incentives to a specific lender can be legally questionable.
Step 7: Stand Firm & Negotiate with Confidence
1. Reiterate the Client’s Right to Choose – Make sure your client understands that they are in control, not the builder.
2. Push for Incentive Matching – If the builder’s agent resists, negotiate a compromise, such as offering part of the incentive even if the outside lender is used.
3. Walk Away If Necessary – If the builder refuses to honor the incentives fairly, be prepared to help your client explore other options. A builder that strong-arms buyers into unfavorable lending choices may not be the best fit.
At the end of the day...​
“At the end of the day, my job is to make sure you are in the best financial position possible. You have every right to choose the lender that gives you the best deal, and we will not allow anyone to pressure you into something that isn’t in your best interest. We will fight for what you deserve!”
By following this strategy, real estate agents can confidently protect their clients from being pushed into using a builder’s in-house lender while still securing the best financial benefits. Buying a home is too big of an investment to leave in the hands of someone who isn’t fully committed to protecting your future!