When I consult with my buyers I like to tell them a bit about myself and how I work. One of the things I tell them is that I am not a mortgage broker. Most are surprised as they are under the impression that being a real estate professional means I do all of it, including the mortgages. I also tell them that I will NEVER be a mortgage broker.
And then I explain why.....
I believe the mortgage industry is specialized enough that it requires a full-time approach to it. I would be doing my customer a disservice by dabbling in it part-time. And just because I do real estate full time doesn't qualify. There are way too many changes to the industry, for someone who is not a dedicated mortgage professional to keep up with.
I believe I can better serve my customer by wearing ONE hat, and doing that job extremely well. I have excellent mortgage professionals I work with. I trust them to do a great job for the people I refer to them. I have the utmost respect for those in the mortgage side of real estate. They keep up with a myriad of things that would make my head spin.
I believe a real estate agent has enough duties to perform without getting involved in the mortgage side of it.
I know there are real estate agents out there who have their mortgage license and believe they are offering their customer the convenience of dealing with one less person. I will never be one of them.
When you wear two hats, and you stand a chance to earn income from each, on the same transaction, the motives behind your actions may be questioned. Let me tell of an experience I had last year with a colleague.
This real estate agent called to show one of my listings. The listing was in a brand new community. My seller was the builder and he had me list all the homes for sale. The bank that held the mortgage was, of course, interested in getting the homes sold. They were offering a special incentive to qualified buyers. They were not forcing people to use them. But if you did, you could benefit from the incentive being offered.
The agent said the homes seemed perfect for her buyer and asked for more information on the incentive. When I explained she stated that she couldn't do that, as she was doing the mortgage. I thought to myself that it wasn't that she couldn't do that. She chose not to do that. She chose to not show her buyer these homes because she would not be earning a real estate commission and money on the mortgage. She would just be earning a real estate commission and apparently that alone wasn't enough for her.
I was incredulous. During the many months I was selling those homes she was the only agent who chose not to show them because she would not be doing the mortgage. Keep in mind that she could have done the mortgage. But her buyer would have likely seen our promotional material regarding the incentive and asked about it. Her agent would have had a lot of explaining to do. Serving her own needs before those of her customer was costing her customer a bit of money.
I think I'll keep my single hat and keep it fitting pretty.
Maggie Dokic, SFR is a licensed real estate broker in the state of Florida selling residential real estate in Miami, Palmetto Bay, Pinecrest, Coral Gables, Gables by the Sea, High Pines, the Redland and other select areas of SW Miami-Dade County.
Maggie has earned her SFR certification to be able to better serve the needs of her customers in today's non-traditional real estate market. SFR is a Short Sale, Foreclosure Resource Specialist. Designees have been trained to understand the highly specialized options available to Sellers facing short sales & foreclosures and Buyers looking to buy them.
For more information on our local real estate market, or to see or sell a home in Miami, Palmetto Bay, Pinecrest, Coral Gables or the Redland, visit my Miami Real Estate blog or contact me at Maggie (at) TheBlogThatAteMiami (dot) com.
The opinions expressed herein, are those of the author, and not necessarily of Prudential Florida Realty.
I am on your side. There is such a lot Realtors have to know and loan officers, so if we did it all and lets throw appraising in for good measure, then we would be jacks of all trades. In my old office we had meany agents that also originated their own loans, we also had agents that were appraisers.
I agree with you ...too often the commission one is going to earn muddies up a transaction. How sad for the buyer that the agent doesn't have their best interests at heart!!!
All I can say is WOW....I am with you ...I will do what I do well and let others do the other things well...and we can all sleep better at night!
Hopefully, that buyer wised up and got another agent. There's a good chance that the buyer could easily have bought directly from the builder.
But, then there is the Stockhold Syndrome.
No real estate broker should have affiliated lenders or title companies. The consumer always loses.
That "profit center" is what drives these things.
Speaks to operating within your area of expertise and not having conflicts of interest! Good post!
Corinne, oh yeah, appraising too. LOL At least in that one, you wouldn't likely be doing both functions during the same transaction.
Deborah, how sad indeed. At the end of the day, I like to know that I did my best for my customer and that I got them the best possible deal.
Thanks for that gold star Active Rain.
Lenn, I have never been one to partake in the "affiliations" although they're always available. I get them to sign the disclosure and make sure they know they can use whomever they darn please.
Dean & Sonia, It's already hard enough without adding conflict of interest to the mix. Why anyone would choose to is beyond me. (well maybe not, $$$ comes to mind).
I agree. I defer to our in-house lender. They stay current with all the latest programs and specialize in the lending process. This is something I could never do as an agent, nor would I expect a lender to know what I know as an agent.
Maggie - can't argue with a thing you say. Too bad some foloks are driven more by the money rather than what is in their client's best interests.
Jeff
Maggie it seems apparent that she was self-serving in her actions. If an agent is also a mortgage broker or lender, then in every action they should ask themselves whose interest is being served. If it is self-serving (and we all recognize it), then that should dictate the actions of the agent to modify her course of action based on the client's needs (if not, they probably will eventually get themselves into some trouble that they will not be able to wiggle out of).
I feel the same way. In fact, when I get an offer where the lender is married or related to the agent or to the buyer, I take extra steps of precaution.
Bravo Maggie!
I get asked that question all the time. In part it is because the customer likes you and feel you will do right by them, but also, like you I AM NOT A MORTGAGE BROKER I do know of several reputable ones and I have no problem giving my customer several names from which they may chosse one which best fits their needs. One hat fits right and that hat is the one of Real Estate Broker.
Thanks for your post. I agree with your assessment, and have three highly-qualified brokers I offer to my clients.
I have enough to know with being a Realtor I really would not want the added headache and liability of doing the loan also.
You are 100% right, it is next to impossible to be good at being both a Realtor and a mortgage broker, the whole situation lends itself to abuses of the clients rights. This agent acted not in her clients best interest , but her own. Someday she will do that to the wrong person and the resulting lawsuit will teach her a much needed lesson
Hi Maggie -- I couldn't agree more. Moreover, it's a violation of one's fiduciary when a real estate professional puts their own financial interests above their client. I only recommend independent, high-quality for the lowest cost service providers, period. I have no financial interest in any allied service provider. That old saying: jack of all trades, master of none!
Maggie,
I feel sorry for the clients in your story and absolutely agree with the 'one hat" concept. I keep my involvement to being that of a coordinator, if you will, of all parts of the transaction so it gets to closing. Obviously I recommend mortgage people, attorneys, home repair trades people, etc as needed but I work with anyone the client chooses (or needs to). The goal is simply to get the job done and keeping a good relationship at the same time. That goes for potential, current, and past buyers or sellers.
Let the other professionals do what they know best and everyone does well.
Thanks for posting! Bruce
Maggie thanks for the great post. Ethical issues abound in this one. Thanks for getting the message out. Hopefully buyers are more informed about the process but stories like this one give us a bad name.
I concur. We just had a mortgage officer and a title company rep at our sells meeting to explain changes that we need to know about. My eyes glazed over. There was so much to know, I barely knew what questions to ask. There is surely a conflict of interest when an agent has too much vested interest in one transaction.
Maggie - I feel the same way. It is hard to be part time and still do a good job in the mortgage business or the real estate business!
It always makes me uncomfortable when the buyer's agent and the loan officer are either one and the same or closely related. I am not a mortgage broker, nor would I ever be one. I don't think we should double dip on the same transaction.
Maggie, I agree it is a specialized field that needs someone doing it full time.
Hopefully the customer got wise eventually.
Great post and I agree with most everything you said.
I like Lenn's StockHOLD syndrome. It works on a lot of levels! Stockholm Syndrome explained.
The agent's best interests might have taken over if the incentives were have truly benefitted her client. I agree with you, "I the hat mask I wear is one" (to quote "Sting")
Even though I was a mortgage underwriter in a past career with a bank, I NEVER give loan advice these days. I refer buyers to a good lender, if they are not already connected, and let the lender do their job. It is hard enough to keep up with changes on my side of the real estate world, much less keep up with the lender's side.
Thank goodness for professional lenders!
Sarah in Nashville
Maggie,
I am happy to see you put this topic out there. There have been many times I have seen Realtors and Loan Officers steer deals to better serve themselves instead of considering the client. Mortgage professionals specialize in their side of the transaction and Agents specialize in the other. There are a few areas of cross-education in these two professions but neither can do the others job well.
The client can be lost in transactions many times and it is the experienced, educated Agents and Mortgage Professionals that keep the client's interest at heart ALL the time. What is the key here: an Agent and Mortgage Professional that respect one another and work together to complete the transaction.
Thank you for a great post!
Recently the State of California is demanding that mortgage brokers take a national and state test, after they attend a 20 hour class to update their skills, and then the State of California will issue an endorsement. If the lender does not have the endorsement and they are conducting business they will be fined $50.00 a day.
It is going to make a big difference when it comes to whom--- real estate agents select to work with and it will eliminate those that need the additional skills and do not obtain them. I would bet that not many lender/brokers here in California get asked by the buyers that they are working with if they have updated there credentials to do loans.
Hence, I feel that it is in the best interest of the agent not to muddy the water by trying to sell real estate and do loans.
I will go on the recor stating that no full time agent can both sell real estate effectively AND follow the current whirlwind of change going on right now. If attys and banks don't have a grasp on it, how can a part timer? (which is really what they are splitting time). I have a blog coming up on how agents need to know about programs though, and I have facts (experience) to show it. :)
I totally agree. I tell my clients "I specialize in helping you buy the perfect house. I can help you find a mortgage broker who will help you get the best mortgage."
Maggie, I guess I have been elected to provide a contrasting opinion. I started in Mortgage in 1998. After several years of primarily doing refinances, I began doing purchase money loans. My clients were coming to me with Real Estate questions their agent wasn't answering. I did the professionally correct thing and referred them back to the agent and notified the agent. This situation repeated itself often enough that eventually I gave up and got my Real Estate license in early 2001.
I offer my clients both services, but unlike your example, would never get in the way of a buyer pursuing a better deal on financing. As both a Realtor and Lender, I can't do FHA, so I have been referring this business out for the benefit of my buyers. New Construction has offered superior programs than I've had available, so again I encourage my clients to get the best deal possible.
I would never "recruit" an agent to offer both services. I've seen many agents attempt it and fail, so it is not for everyone. Those of us who do both and do it ethically, with the clients' best in mind, provide a level of service few can match.
I did a blog post about this, "Why I'm a Realtor and a Loan Officer" in November. You can look it up for a more detailed response.
I agree with you Maggie. I'm sure there are a few that can handle both but it is a dis-service to the clients. I'm sure it's another way to get extra income on a deal but I'd rather just let them find their own person or someone who comes highly recommended. It's not in their and your best interest. I'd rather concentrate on what I do best and that's Real Estate.
Hi Maggie, it's hard enough to be good at one profession, let alone 2 professions. You need to have your clients best interest in mind.
I agree with most here. It is a full-time job just keeping up with the real estate side. Conflict of interest? Of course!
Maggie, thanks for writing this - very well said.
We have to get together for lunch one day!
This is so right on. I heard it from the other perspective recently when a colleague of mine said that I should get my real estate license so that I could be a Realtor too. That's crazy! Yes, the mortgage industry is difficult right now, but to dabble in both is a terrible disservice to my clients like with a Realtor who tries to be a mortgage broker too. Kudos for recognizing this because it takes focus on both of our sides of a transaction to make sure things go well for our client!
I originated loans from 2001-2004 full time. I wouldn't touch them now because the landscape is so different I couldn't possibly play that position very well. You are right: do one job right.
Maggie: Thank you! I couldn't do what you do either. I love the partnership though. When it's right, it's really fun and real! Have a great day!
Solid thesis, and I agree wholeheartedly with Lenn's extension of the argument. My company actually has affiliated relationships with title companies, lenders, etc. I never utilize those services. I have nothing against the vendors, but I have developed relationships with trusted business partners that trump any additional financial boon to myself or my company. Even the appearance of hidden incentive is too much for my conscience to bear. If I make a professional referral, I never want the motivation of that referral to be questioned. I work with and promote pros who will get the job done in an efficient and cost-effective manner. Nothing more, nothing less.
If you are a reltor AND a lender.... which one are you good at?
Maggie - Congrats on your featured post! I think it's really cool that you give kudos to your loan professionals. I can see where that agent, loan officer...no agent..I mean oan officer...er...um...person, would be tempted to "steer" clients in the direction that makes them the most profit and that is never good for the consumer. Even if I had wanted to there is no way I could keep up with mortgages and then try to take on the responsibilities of a full time real estate agent. Sheesh! It's just too much!
The comments were just as interesting as the thesis. I do not want to be involved in lending, ever. However, I appreciate hearing what different lenders have to say. Even if a client were interested in a deal because of the perks a lender offers I would advise the deal be carefully analyzed by a 3rd party. If I make referrals, it would be a suggestion of at least 3 lenders who specialize in the type of loan they seek.
Agreed...There is way too much to know and wear both hats. I know people that do real estate and mortgages and they are just mediocre at both.
Maggie, I totally agree. Both of our businesses have plenty to keep track of without trying to do each others job.
Great Post. I believe it is in the customer's best interest not to have an agent doubling as their mortgage source as well.
It is important to build quality relationships between mortgage personnel and Realtors. Each one can benefit from that relationship knowing the practices and habits of the other.
I only refer clients to realtors I have worked with in the past and have demonstrated a solid business and moral compass.
I send my clients to good, local lenders.
I hate numbers...so wouldn't be one if I could.
I also give my buyers a couple of different lenders to call. I would never want to chose for them. I don't think I could ever be a mortgage broker- especially now with the changes occuring every day!
I'm a mortgage banker and not a Realtor. Like so many have said, mortgages are very complicated these days. If I tried selling the home I would have in the back of my mind the qualifing mortgage questions and not sell what the client wants.
I know of one ex-lender who is now a real estate agent.
Her knowledge of mortgages has been such a huge help to her that she is now the star of the office!
The fact that she would not show the houses because she was doing the mortgage? That falls under the sin of doing what is best for YOU instead of the customer.
That is always a bad way of doing business, IMO
Blatant conflict of interests and breach of her fiduciary duties! If someone tries to be a REALTOR and a Mortgage LO, they likely suck at both!
kp
Maggie - One profession is enough! I wouldn't want the mortgage broker recommending what house to buy either, that's my job.
Maggie, It sounds like you've made a good decision. I am suspect of anyone who is an expert in SO many things that are individualized. Congrats to you on a wonderful feature!
Having a mortgage broker's license does not enable a person holding a real estate license to ignore the NAR Code of Ethics!
Bravo...Maggie, you keep to your profession and I will keep to mine.
I agree with you!
Great post Maggie,
I find myself talking about financing all the time, but ALWAYS qualify my statements saying that I'm not a banker and refer my clients to thier lender.
Realtors that feel they have to 'double dip' really offend me and dishonor BOTH professions. That's not even considering those that would violate ethical standards to place themselves above the needs of thier clients.
Yep! I am a Realtor and I want to keep it that way! ;-)
Hi Maggie~ I do not know too many people that can be a jack of all trades!
I agree Maggi that one hat is the way to go. That other agent gives us all a bad name.
Dan (#29), I'll join you. I'm also one of those guys who wears two hats. I'm a part-time employee of a local bank and a full-time real estate broker. I don't originate much these days (I did full-time origination in the early 2000's--now it's a few rate and terms or purchase money for past clients) but the background in banking has made me highly successful in short sales.
I took 23 short sale listings last year. 22 were approved and 21 closed.
Tom
I can't imagine trying to do a loan AND be the selling agent for the same client! I don't even know if that is legal in Oregon. I am going to like this Active Rain thing, I think. It never even occured to me that anyone would be both a loan officer and a real estate broker...
Wow didn't know you guys in Florida could do both at the same time. I'd rather have a go to team for the loans, and stick to selling the properties.
I agree with you 100%. Along the same logic, I think Building Inspectors should not do WDOs. That is a specialty of its own. That agent is risking a law suit if her buyer ever found out about it.
Tom #58, Thanks for the support, we are a minority and I'm okay with that. We should each strive to do our best with what we know. Doing short sales was a no brainer when I started, already knowing lending and banks. It's only more complicated now due to the overwhelming volume and the incomplete packages submitted by agents that clog the system.
I would like to make a couple of points here for clarification. As a member of the NAR, I am in good standing; I do not have a conflict of interest with any of my clients. I am very good at what I do. My clients can call or email me as their lender on real estate hours. I have way more vested in the successful closing of my mortgage transactions than most lenders because I have two commissions riding on them. I would do the mortgage for nothing if need be to ensure my real estate commission gets paid.
The ethical misbehavior of the agent sited in this post is not because she is a lender, it's because she is unethical. It is honestly very questionable to paint another professional with a broad brush. Sure, there are people who pursue both for greed and profit and do a poor job. The same can be said of agents and lenders as well.
If you are doing all you can to keep up with real estate, don't do loans. If you are a lender and are struggling with all the changes in this industry, don't do real estate. If I am able to do both, serve my clients needs honestly, efficiently, ethically and legally don't tell me I suck or that I dishonor either profession. People who cast unknowing dispersions dishonor themselves.
My rant here is not with Maggie. She has stated her preference and we are all entitled to that. Many of the comments however are not reflective of the professional character I've come to expect here on AR.
Frankly, when I do a loan for my buyers, they get outstanding service and below market pricing and rates. I post my rates twice a week and have not seen anyone doing loans for less. On the occasions that other lenders have done loans for my clients, I often find myself cringing when I see what they are paying. I have challenged these lenders practices in the past and will do the same in the future. Knowing the lending world well, I keep others who do loans for my clients honest.
My practice is legal in Washington where I work and I am licensed. I have turned down other Real Estate opportunities where lending was not permitted by the company. The changes of the past 2 years in both fields have only reinforced my commitment to do both.
Lending isn't harder now than before, it's actually easier because the new disclosures have leveled the field and require firm quotes, which has always been my practice. The number of lending programs I need to know are less, because so many have gone away. When an unusual situation arises, I know my limitations and rely on my bank reps for program updates and clarifications.
I would not recruit others who were uncomfortable with finances to follow my practice, but I would implore agents to learn and know as much as you can about lending for your clients' benefit. The more you know about our business, and every phase of it, the better Agent or Lender you can be. Let's keep it professional.
From the desk of David Dee,
Maggie, looks like the buyer may have lost out on a good purchase there for staying with that agent.
Hi Maggie! A thoughtful and well-written post. Miss you old friend! ;-) -Boomer Jack
Really Really sad that people can't just do the right thing.... I hate that the buyers had to go through this... When clients go through a rough time with one realtor it tends to give them an untrust to REALTORS a a whole.....
Dan,
I don't orginate on transactions where I'm working the real estate side very often.
I do prequalify the buyers for agents on my team if they have not yet been pre qualified. I've saved more than one sale by helping the MLO with the mortgage. I have originated for agents on my team and every transaction closes on-time with a minimum amount of drama.
As a listing broker, I can usually tell when a buyer for one of my listings is working with an MLO who knows what he/she is doing. I make a phone call and ask the right questions. I've shocked more than one MLO by knowing what to ask.
Having the origination experience makes me a more effective broker.
Tom
Great Post!! I totally agree. Wearing one hat is all we shoudl wear..that's why we can give names of mortgage people and let the buyer do some research, but I like to stay out of the mortgage business. However, I will have an 'open' line to keep info flowing for the benefir of my buyers.
Well written! Thank you!
Maggie:
Part of my job is to provide connections for my clients to qualified professionals who can help them. The mortgage broker is a specialist and knows all of the current programs available. That's his job - not mine.
Wearing of those two hats (Real Estate and Mortgage) on the same transaction is illegal in Utah. Utah seems to have won the title as the fraud capital of the world and this new "one hat" law is one way of attempting to combat such fraudulent behavior.
Awesome post!
Maggie, I'm with the majority...I AGREE with you! I sell real estate not mortgages. Keep up the good work! You are a credit to our industry.
Well written post. With lending guidelines continually changing over the last 2 1/2 years, I don't see how anyone not doing mortgages full-time could possibly stay on top of everything. It only takes missing one guideline change to totally blow up a transaction.
Jack of all, master of none comes to mind. As far as the realtor/loan officer/ title rep/appraiser/ home inspector, they refuse to see the value behind quality customer service and looking out for the clients best interests. The people that are always looking for another revenue stream give us all a bad name.
For me, one hat is enough however I can see having prior experience in lending to be extremly beneficial. In my area those companies lending and practicing real estate are in big trouble today for fraud. My company has an in house mortgage broker affliated with BOA and a title company. Neither practice real estate. Its a convenience we offer to our clients. Course I recommmend lenders I trust and have done business with for years. BOA not being one of them. Sorry. Its business.
... I think you'd look good in a top hat ... try it for your next listing appointment ...
Cheers Maggie !
...well written as usual :o)
Maggie
More agents need to have your philosophy. As a mortgage broker, also required to have a brokers license here in CA, I could do both.
I refuse to do so for the reasons that you mention. I know loans, but do not know the real estate inner workings to even want to venture there.
That said, with the Feds having a Bulls Eye on my industry, and shoving ever so many new regulations and licensing requiremets at us ( Banks are Exempt by the Way ) I may be forced at some point to change sides.
Thanks for the post.
I don't think the point is whether or not folks choose to operate in more than one capacity or not but whether they can be knowledgable and ethical in all capacities. Might not be my choice but I don't mind if others choose be Realtors and lawyers, or Realtors and lenders. What you described here could have happened because the cooperating commission wasn't high enough or because the agent wanted to double end her own deal and only showed what was to her advantage. It just so happened to be this combination of jobs that produced this ethical wizard.
The commentary that states how important it is for us to fully understand the mortgage implications is dead on. It all starts with the money, it ends with the money and if we don't understand the money we can't help our clients ask the right questions. I've had too many experiences where I was able to get the client into what they wanted because I knew what to ask. Had I approached this as completely hands off, it's the lender's job, we might all have missed out on a great opportunity.
To each his own!
I agree that the decision of the agent in the scenario was not because she is a lender but because she was not putting the interests of her client first. My husband is an LO and we work together a lot. He does about 90% of the financing for my buyers. Why? Because I trust him & so do my clients. I always encourage them to shop other lenders and make sure that they understand that there is no financial incentive to engage his services.
Also, there are plenty of other lenders that I can and do work with and my husband works with many other realtors as well. Personally, we have never encountered a conflict with other agents who are suspect of dealing with us, if anything it inspires more confidence.
I'm not going to waste my time shopping buyers around with a loan that can't or won't close. At least I KNOW MY HUSBAND WILL TELL ME THE TRUTH.
The reason that there are mortgage brokers at all is that Real Estate Professionals stopped doing that part of the job. Not every lender has the same products and/or guidelines. I feel that it is our job to help our clients get the best financing that suits their needs. Keep in mind that there are lenders that will not offer certain mortgage products because they feel that they are "A hassle", "Too much trouble" or "too much paperwork." As a wise man once told me, if you match the financing to the buyer, you have EARNED your commission!
Just my humble opinion.
It is enough work doing a good job as a REALTOR. I think you are correct in keeping just one hat at a time!
Maggie- I am just glad that you are taking a side. Too many confused people doing the job halfway. Great Post!!!!
Maggie - The consumer loses when an agent's primary focus is personal profit.
I also get constant questions about mortgages and have to repeatedly tell people that mortgage information must come from their mortgage person, not from me, I am a realtor -