How Mortgage Brokers and Real Estate Agents Work Together

David · Joined: 19 May 2004 Posts: 703

I've always been curious about the relationship between the broker and the agent. I've talked to several agents who tend to pass me over to a broker, and say "get pre-qualified", and then come back and talk to me. It seems like they have sort of a "package". You are getting the agent and the broker together as a team.

As a semi-educated consumer (at best), I feel even more confused.
Do I have a good agent?
Should I trust the agent's broker recommendation?

I am hoping I could get some tips on deciding how to navigate the broker/agent equation.

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

Well it's usually unlikely that they're getting paid, but sometimes there is a good reason that you're getting that referral.

Remember that our business is based entirely off referrals and leads. We have to go out and drum up business, and what better way than through someone who works with home buyers every single day?

Usually if you have a good realtor you probably will have a good referral for the LO, but that won't always be the case. We just canned someone who was absolutely horrid, and she had people referring to her all the time. I have no idea how, but she did.

Ultimately for someone in your position it may be the best option for you to select them seperately, simply because you are a bit more educated than the average consumer.

chow · Posted: Tue Aug 09, 2005 1:24 pm Post subject:

"Relitters" get comfortable with different LO's, much the same that we refer our customers who come to us first, to the ones we trust to find them something they can afford. If I was a relitter, I would make sure the person is qualified to buy the home I was showing them. Face it, none of us get paid-until the loan closes! Time and gas aren't cheap either. Most of us just have a trusted relationship. I did have a partner who was a relitter who got paid off of my transactions, but he worked on them with me, and it was fully disclosed. The good thing was- he knew some lender's programs better than I did! (I was the FHA guru)

I would openly tell the LO and Realtor that you have people looking over your shoulder that can write your loan too. See what reaction you get. It's not like Haplo works for a company 99% of the adult population has never heard of! :wink: As long as the Realtor/Relitter has a smooth closing, they don't care who the LO is 99% of the time.

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

Haplo rocks. Everyone should do all of their loans with Haplo. And yes, the ladies dig him too.

chow · Posted: Wed Aug 10, 2005 12:25 pm Post subject:

Haplo wrote: Haplo rocks. Everyone should do all of their loans with Haplo. And yes, the ladies dig him too.

(I wonder folks, should I nuke him for placing personal ads in a mortgage forum and going off topic with it?) :lol:

BECCA9892003 · Joined: 20 Jan 2005 Posts: 400 Location: Altoona, PA

the realtors can not only recommend one broker or lender they have to at least give a client 3

The Wizard · Joined: 02 Apr 2006 Posts: 48 Location: So. Cal

lol...I like the way Haplo speaks of himself in 3rd person. That is so funny....Haplo please tell Haplo I think that was funny.

chow · Posted: Fri May 05, 2006 12:59 am Post subject:

oh plueeeeeeeeeeeeeeeeze.....

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

I'm sure Haplo will appreciate your good humor towards him. Haplo is a great guy and always enjoys a good laugh, even if it's toward himself.

pussycat · Joined: 24 Jan 2005 Posts: 94 Location: Kansas City

Nice to see you guys joking around. You have been so serious lately, it is rubbing off!

David, let me give you the mortgage banking dictionary definition of "realtor"

Realtor: Highly trained professional who nevertheless has trouble figuring out how to subtract the down payment from the sales price to get the loan amount, but have no trouble figuring exact commission without a calculator.

In my own personal home buying experiences, I have worked with some very good realtors and like it was said earlier, good realtors will have good LO's to refer you to. I have always preferred to choose my own broker/ lender though. You always want to shop around for the best rate, fees and SERVICE.

chow · Posted: Sat May 06, 2006 11:08 am Post subject:

Little cute kitten: If you will kindly observe, Haplo, chow and the new processing Queen, hijacked this thread several posts ago. Please stay on topic of the hijacked area! 8)

Haplo · Joined: 20 Jan 2005 Posts: 2406 Location: Springfield, IL

meerrrooowwwww!

*bats his eyelashes*

Someone talkin about the Hap?

chow · Posted: Sun May 07, 2006 10:30 am Post subject:

Yes. It's all about Haplo! :P

m2c · Joined: 03 Aug 2005 Posts: 764

Remember the Realtor has economic incentives that may not align with yours as the buyer and this may skew the recommendation.

Yes, Realtors are being paid for referrals – legally and with the full blessing of HUD. This is the expense reimbursement route. Easy to spot since the buyer must be given a controlled business disclosure. HUD has recognized the way out of this regulatory nightmare is “new RESPA” but who knows if this will ever get through. Realtors will likely still get paid for referrals but it would be out in the open (sort of) and buyers could make more knowledgeable decisions.

Some Realtors want to trade on knowledge perhaps to seal their relationship with the seller, soon to become buyer of a new property. A had a new Realtor (to me) actually ask for the borrowers credit scores after I took the application! “Everyone gives them to me”. I explained that was fine if he wanted to deal with LOs who routinely break the law but I’d be happy to call the applicants, right now, to see if THEY would give the Realtor a copy of their “score letter”. All of a sudden the credit scores weren’t so important any more …. But I never got another deal where this Realtor was the selling agent. Strange.

Sometimes a Realtor has really stuck it to a buyer in the sales price. Just think about it. The Realtor has just presented her(him)self as the Second Coming to the seller for the ridiculously high sales price. Now reality strikes and a coconspirator is needed so the Realtor doesn’t end up with egg on his/her face. There know where to go for an accommodating appraisal. Red flag to borrower is the “business relationship” form indicating an appraisal subsidiary or partial ownership.

Many other "unusal" reasons a Realtor may nudge in a certain direction.

Within the business we like to feel Realtor recommendations are merit-based and probably are the majority of the time. But remember “majority” is only 50.1% of the time. Buyers should have their antennae up but there’s a lot of noise out there – usually Realtors will try to convince you from the “get go” that they’re your newest best friend. Read Freakonomics for chapter on incentive bias with real estate agents.