After posting a number of articles about my experiences with hard money lenders, reading a number of posts, and investigating web sites offering Real Estate hard money loans, I have come to the conclusion, much of Real Estate hard money lending is like chasing the wind. Most web sites charge a fee. Some give you a few names they claim will provide money, but in today’s age of research show how little they actually have to offer. I am the type of guy who believes one should exhibit the morals they live by. Demanding money before providing a service is not what the Real Estate industry is founded on. Real Estate Agents and Brokers do not see a dime until the job is done and the deal is successfully closed. The same with Title companies and others involved in the industry. Inspectors do not charge until they show up at the property, perform the inspection, showing the client their expertise and value. This is the moral standard the Real Estate industry should build upon. But the advent of the computer age has tried long and hard to change that.
A Little on Wisconsin Laws on Referrals
There are laws governing referral fees. The Internet opened doors for a number of industries to come in and side step those laws. In Wisconsin no one is allowed to split commission, or pay a referral fee to anyone who is not a licensed Real Estate Agent or Broker. The same is true for lenders. Out of state on line companies ignore this law by advertising a referral service, then try calling it an advertising fee to get around the law. Think of what this is doing to the Real Estate industry. If you are selling your home, your most important asset, do you really want to begin a business relationship with any company willing to break the law to make a sale? This is why I do not and will not participate in any unlicensed referral service. If these services were legitimate, they would wait until the transaction closed before collecting any fee.
Fees
Lenders are the only aspect of Real Estate that charge an up front fee. Usually an application fee and funds to pay for the appraisal. The appraiser gets paid after providing services, but before closing, whether or not the transaction closes. But what about hard money lenders? Based on experience and the things I see on the Internet, much of the so called hard money industry is based on up front fees with little or no success based on the company you are dealing with. I suspect many of those companies exist only as a web site with no hard cash to back them up. The problem is, how do you tell the difference? What can you do to protect yourself? Who can you trust?
Search for a Real Estate Hard Money Loan
The first logical step would be a local Real Estate Agent. Most work in offices with a number of Agents dedicated to helping one another, which establishes a network of information and people. Call around until you find someone with a local connection for a personal hard money loan. You are always better off dealing with someone face to face, hopefully a licensed lender able to arrange a loan with private funds for of course a fee. Within minutes, at the most a day or two, you should be able to find out if you qualify. They should also be able to discuss terms in simple language. Ask questions about fees, length of the loan, penalties, and options. Don’t forget to clarify the cost of the options. Ask for everything in writing to review. This may cost you an application fee, but local fees are normally far less than those charged by Internet based companies. It is also a good idea to have your attorney review everything before you sign. Who knows, once your attorney sees the conditions, they may want to provide you with a private loan.