Sometimes a strong relationship between a lender and a builder can help both navigate the always-changing conditions of the real estate world.
Enter a preferred lender, such as Elevations Credit Union Mortgage Loan Originator Dave Armstrong, NMLS 409932, specializing in preferred builder, lender relationships. Armstrong found his niche by building a special relationship with the builders he came across, working with WestMark Design & Construction, Inc. as well as G.J. Gardner Homes among others.
“In these cases, my relationship with both these building companies came through a Realtor® who previously worked with them,” Armstrong said. “Once I started working with them, I told them we’d love to have them as a preferred builder.”
So, with them on board as preferred builders and Elevations as a preferred lender, what does this entail?
“Being their preferred lender simply means they have a relationship with Elevations,” Armstrong said. “That particular builder – in my case, WestMark or G.J. Gardner, is involved with a sales team at Elevations. We talk to their sales team about what it means to work with Elevations, have consistent meetings and keep each other in the pipeline.
“It’s a very in-depth relationship. There are some incentives, but the focus is really relationship-based.”
Armstrong has needed to remain flexible during constantly changing times. With the global pandemic throwing uncertainty into an already volatile real estate market, Armstrong has found himself leaning on the relationships he built.
“These are long-build focuses,” Armstrong said. “Sometimes these projects are almost a year-long process. We talk every few weeks to make sure we’re all on the same page.”
And because Elevations is a credit union, Armstrong said he feels like he has an advantage over some of his competitors.
“Early on in this process it can be difficult to establish these relationships,” Armstrong said. “We’re competing with lenders who offer a similar arrangement. However, in the end it typically washes out because we’re not-for-profit and can usually end up being the more economical alternative.”
In order to create, build and grow the relationship, Armstrong had to first have an understanding of what builders go through and the pitfalls they must navigate in order to be successful. He started with the basics, explaining that there are really three different types of residential builder models that help define what their building process looks like.
The first builder model, he said, is a builder that plans to build a predetermined number of homes in a neighborhood. This type of project will typically have several different floor plans available for the lots in a new neighborhood. As part of this builder model, the builder will finance the construction loan from the beginning.
“Elevations, as a mortgage lender, will complete the transaction by setting up a mortgage to buy out the end product,” Armstrong said. “If our relationship with the builder is set up as a preferred builder, we will get an incentive for them to refer business to us. In a lot of those cases, the builder will then set up a similar match offer for the customer.”
Another model is where a builder offers a semi-custom floor plan. It’s similar to the previous example where a builder is building a neighborhood or subdivision, but in this case the homes are a little more detailed and probably a little more expensive. From a mortgage standpoint, it’s similar to the first example where the builder finances the construction loan.
The final type of builder models is one Armstrong refers to as “the opposite end of the spectrum.” This is where a buyer purchases a plot of land, designs a custom home, then selects a builder and finances the construction loan. “Generally, this is a single home,” Armstrong said. “They’ve bought the land and they’re building the house they’d like to live in forever.”
If you have any questions about residential or commercial building lenders, don’t hesitate to call us at 800.460.2889 or contact an Elevations Credit Union Mortgage Loan Originator.
Elevations Credit Union Equal Opportunity Lender