From time to time, Real Estate Agents may meet a cash buyer that is interested in purchasing real estate property, but the majority of the time, buyers take out home loans to purchase their homes. Since home loans are very common, home buyers typically look to their real estate agent for a lender recommendation. Therefore, the lender-agent relationship is extremely crucial for all parties involved to succeed with the home purchase at hand.
To put it simply, a real estate agent representing a buyer will have a successful transaction and earn their commission if their client is ready, willing, and able to purchase a home, whether it be an all-cash purchase or a home loan. Typically, most clients need the assistance of a home loan. This is where the Lender (or loan officer) provides the financial help! A Lender’s job is to get their homebuyers approved for a mortgage loan, thus purchasing their home becomes a reality. The lender is compensated for their services by charging the buyer points, or fees. This three way relationship helps the process of home buying run smooth and efficiently.
Communication is key. Always keep the client in the loop of your conversation with the lender.
Real estate agents can refer their homebuyers to the lender, and vice versa. In this way, by both parties promoting each other, they help each other with leads and thus help each other build their careers. Teamwork!
Quick pro tip and warning- be careful not to use any transactional benefits (kickbacks), between real estate agents and mortgage lenders since The Real Estate Settlement Act (RESPA) does not allow this. It is against RESPA regulations for any lender to provide real estate agents with any kickback, as the lender should be selected purely for their abilities, not for the gifts provided to real estate agents. The focus should strictly be on the borrower, and provide them with quality, lending service.
Get your clients pre-approved before house hunting.
To avoid wasting the buyer’s time and the agent’s time, it is best to have the buyers prepared for home financing. A pre-approval letter from the lender will ensure you that the buyer can afford to purchase a property with a maximum loan amount, thus providing you with a price range when house hunting. A pre-approval letter also demonstrates that the buyers are serious about purchasing a home. In general, finding the right lender is important! One that remains in constant communication with the real estate agent and informs them about the status of the loan throughout the process. This will make the purchasing experience pleasant.
How do you find a lender to work with?
There are several lenders available to real estate agents in the real estate world. But how can an agent locate an effective and efficient lender? One of the best ways to find a great lender is to communicate with your colleagues within your brokerage and ask for a recommendation. Word-of-mouth is extremely helpful.
Can you use a broker as a lender?
Mortgage brokers are the middlemen between banks/mortgage lenders and borrowers. This is a good option for borrowers who have trouble qualifying for loans or if they are simply searching for the best possible interest rate. Mortgage brokers communicate with numerous banks and lenders on a daily basis to help get their clients a mortgage loan.
Do your clients have to use your lender?
Your buyers have no obligation to use your preferred lender. Many buyers have existing relationships with certain lenders through past transactions and prefer to utilize their services. However, a first time buyer typically does not have a previous relationship with a mortgage lender and depends on the real estate agent for a recommendation. Either way, once a lender is chosen and a pre-approval letter is presented to the buyer, the real estate agent can begin their search for a home for their client.
