Mortgage Myth Busters: "Realtors need to stay out of the mortgage arena" or don't they?

"Realtors need to stay out of the mortgage arena" or don't they?

bad information flows easily on the internet

 

What does the word Realtor mean to you?  What would you consider your duties as a Realtor? I always find some sort of issue when reading mortgage related questions by Realtors on Trulia. First question would be, why do Realtors even answer these questions?  Is it to get their name out there? Self-promotion? Do Realtors know anything about the “Safe Act”?

 

The Safe Act will go into effect on October 1st, 2010, stating that you have to be licensed as a Mortgage Licensed Originator (MLO).  The overall policy of the act is that in order to take a full mortgage application, you need to be both licensed federally and within that state.  But some states are taking it further, regarding the information given out to borrowers when answering specific questions. People, it’s a very fine line and could blow up in one’s face.

 

 

Here is a question from Trulia Answers:

“Why does the seller of a house care how much money is being put down when buying a house?”

One Realtor’s answer: “the one with the higher down payment is likely deemed stronger – more “skin” in the game, less appraisal risk, and in some cases – though not yours – it can mean the difference between FHA and conventional financing, which is a big swing card.”

In my opinion, there is some truth to the answer above.  But I underlined what I thought would be misleading, which was her statement of “less appraisal risk.” Even steering sellers away from FHA loans is not always a good idea and for many reasons. As a realtor, do you do this just because of a previous bad experience with a FHA loan, but that you truly don't understand them, that you just assume?

Why can this statement be misleading?  We all should know that a lender uses the lower of the two, either the appraised value or the sales price. If I am putting 20% down, but the appraisal comes in 10% less, then in reality I am only putting 10% down per any lenders view point and per use of lending guidelines.  So what happens now?  The seller and buyer can negotiate. The only choices that I can think of is that

  • The buyer pays the difference to the seller at closing.
  • The seller reduces the sales price by 10%.
  • That both agree to split the difference.
  • Or that the deal falls apart.

Regardless of what choice is made, this does change the whole scope of the mortgage and the agreement of sale. Instead of a 80% ltv, it is now a 90% ltv.  Not only did the seller like the buyer with 20% down which made them take this offer over the person that offered 15% down, but the buyer might not be approved at a 90% ltv. There are many reasons for this to happen as a denial.

Here are a few more examples that I wanted to share with you, in my opinion, showing how a realtors answer to mortgage questions could be very misleading or misinform the buyer or the seller.


Conclusion

I know realtors out there that still like to pre-qualify their buyers before a loan officer even speaks to them. I don’t even think that is very wise. But outside of that, there are many questions that should just be answered by a loan officer, and not by a Realtor.

This has nothing to do with intelligence, because one could still lack common sense in some cases.  But please, if you get a chance, read the other three posts that I linked to, because this should show you some very good scenarios that I am talking about. And if you read the comments, many like-minded Realtors seem to agree with this kind of thinking.

My question to you as a Realtor is, shouldn’t you be more focused about the buyer;s needs or making sure that seller gets the best deal? Sure, this could include some mortgage related questions and issues, but rely on a professional loan officer that could help you and your client understand this much better. There is just to much information to think about out there and just because your opinion might sound good, if you didn’t work out all the scenarios with cold hard numbers, then it could cost that person thousands of dollars done the road.

Keep in mind, I am not talking about the communication between you and the loan officer. I don't have a problem with a realtor that asks the buyers a basic question if they know that the buyer is a Veteran or is buying in a USDA area. Such questions would be, did your loan officer go over these other mortgage programs with you? If not, send them to a good loan officer to get educated on such programs. But in my opinion, giving mortgage advice or advice revolving around financing or predicting home values in the future, could be costly to all involved. Especially when you don’t look at if from different angles, showing the pros and cons of your statement. I know so many that just want to help and such. But this is a very slippery slope and I just think we all need to think before we speak.

 


UPDATE : As of 6:14 pm on 9/10/10  - Jeff Belonger's cliff notes - After hearing more input from both sides, I wanted to share this with you, which might not have been clear in my original post above.

I don't have a problem with a realtor being very knowledgeable about mortgage programs, how mortgages work, having insight, and a few other things.  Example : I myself educate you on how 203-k loans work, for both your buyer or your seller. I give you details that would help the buyer, so you understand.. or so you know how to market that listing, knowing that it needs work, that you can share this with the seller... who would then feel comfortable if they received an offer with 203-k financing. I want the realtor to be educated on this.   (more) What I don't want it the realtor taking it to the next step... qualifying the buyer on this program or any other mortgage program. Advising a client that they should put 20% down, because if you have it, you should to it to avoid mortgage insurance.. SORRY... but that is just wrong. A realtor is now stepping the boundaries and should not be offering this advice. There are many questions that I should be asking to determine what is best for that buyer.... and showing them why it's both good and bad to put 20% down. Yes, it can be bad, even if you are avoiding mortgage insurance.  Why?  One needs to go over goals..  a lower credit score could even make a conventional loan with 20% down more expensive than a FHA loan with 5% down.. and you still save 15% on the down payment. Sorry, but these are things that most realtors won't look at. Sure, we can turn this around and say that many loan officers won't do the same. We could spend a whole day just on that argument alone, that there are bad loan officers out there. I get it..but does that mean a realtor then takes full control?  No, it shouldn't... that is when you just have to align yourself with the best of the best, such as Barb Van Stensel mention in the team concept.

How about this?  I had a buyer that found me online, because they found me to be knowledgeable. They already had a realtor. After asking them many questions, including credit, I send them a pre-qual letter for a USDA loan. They called 3 hours later and said that their realtor said that USDA loans weren't good, that they were better off with a FHA loan.  This is part of my point and why realtors need to stay out of the decision part of it. How does this realtor know this?  Ah, after talking to her, she just heard bad things and never had a client do a USDA loan. hhhhmmm

 

Here is one problem that realtors bring up.  Trust : not trusting the loan officer or their ability. Bad experiences and bad closings.  Yes, there are bad loan officers just as there are bad realtors. Okay, so you the realtor take make the decision to do all of the pre-qualifying and answering or mortgage questions yourself?  And you are better because why?  From information that you learned around the water cooler?  Or from info that you read online?  Okay, let's talk about what you read online. Just because it's online doesn't mean that it's always correct. Read this : Mortgage Myths - Misleading FHA information regarding monthly mortgage insurance.   How about the fact that you have bought a few houses yourself. This makes you qualified to answer mortgage questions?  Let's be practical about this, with common sense. Back to trust.. I understand this... I have written about this...

 

 

My opinion on this now, after listening to many arguments?  Realtors like full control subconsciously, because it looks good to their client.  Almost like a one-stop shop.  Many hats worn, to where a person can get all the answers from one place... and that they can control that buyer better and maybe the buyer will feel more comfortable, because they are getting all the information from their realtor, which sounds good... it sounds sincere.. and it's genuine. To me, this can represent false hope to the buyer. Please read my comment to Lyn Sims - Jeff Belonger's response -

 

PS... if you did finish reading this whole psycho babble post of mine, I am now going to do a part 2 by Sunday. It will be titled : How can both the loan officer & realtor come together as one complete team - Tips for realtors & how to become knowledgeable, with powerful mortgage related information, but not step over to the dark side. - Stay tune...

 


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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Comment balloon 38 commentsJeff Belonger • September 09 2010 10:45AM

Comments

I say let the Realtors do their thing, and, let the mortgage people do their thing.....form a good team and go make it happen!!!

Posted by Ben Benita, Speaker, Author, Game Changer, Coach (Ben Benita) about 10 years ago

I read that discussion as it was unfolding on Trulia.  I, for one, have enough to do meeting buyers needs on my end (finding them a home) than to get involved with mortgage issues.  I want my buyers to be pre qualified and aware of the loan products available, I'll leave that to you!

Posted by Laura Giannotta, Your Realtor Down the Shore! (Keller Williams Realty - Atlantic Shore ) about 10 years ago

I always stay out of the Lending Process, I feel uncomfortable with it and always refer to a Professional or a Web site. I have not had a lot of experience with FHA loans (I really don't think I have ever had a Buyer with one), but I do have a buyer who is looking into a 203K which is an incredible program.

Posted by Jane Wallace, CRS | SRES, Denver Real Estate (HomeSmart Cherry Creek) about 10 years ago

Jeff

Very informative and sage advise.

I know when I started in the business we were taught how to pre-qualify a buyer at the first interview. Not so much to tell them how much house they could buy or what type of loan they probably should apply for. This quick process prevented us from pursuing a buyer that could settle in 90 days or less. We would then allign these marginal buyers with a loan officer that could assist them with any credit challenges or rescores they might need to work on.

Somewhere along the way the lines became blurred and Realtors also became loan officers which did put everyone on that slippery slope you mentioned

Posted by Laura Gray (RE/MAX Realty Group) about 10 years ago

 

Here is an excellent comment from Doug Francis on another site that I talked about this same topic on...

"There is a lot of pressure as someone’s real estate agent to have answers to a client’s every question, and that pressure can get us Realtors into trouble.

In 19 years of meeting with buyers and sellers, I have observed the reaction of clients when a loaded question pops up. And there can be the impression that you are holding back “insider information” if you pass the buck, so there is a fine line when sitting at the kitchen table. This post will actually help me when explaining why “that” is a question for their mortgage guy. Thanks!"

This makes some good sense and gives you another clear perspective that the buyers might be thinking about...  thanks Doug...

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) about 10 years ago

 

BEN... .  it sounds very easy, but for some reason, we have so many people jumping in on both sides for many different industries... and even if it's a helpful opinion, it could be very costly.

LAURA.... . if it was the exact same discussion, it seemed to be getting worse and worse with each comment, most by realtors.  And I kept finding several different major holes in their comments, that weren't being explained properly.  And that kind of stuff just irks me.  thanks for your feedback.

JANE.... . good thought process and yes, a 203-k loan is an incredible loan. And not even many loan officers are totally familiar with the program. I did my first 203-k loan in 1994... if you have any questions about them or want to bounce an idea off of me, please never hesitate to call me to ask.. I won't mind. Ask Missy Caulk from Michigan.  ;o)

LAURA... . wow, excellent comment.. yes, I remember those days, when realtors were taught by their brokers and even some loan officers, on how to do a simple pre-qual of a new buyer... and even then I cringed a little.  But yes, it's changed drastically and I consider it to be a major slippery slope.  thanks for your input and feedback.

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) about 10 years ago

Jeff:  I need to know enough about variety of mortgage products, the different types of lenders, and the lending process to be an active member of the client service team. Too many LOs treat real estate agent as dumb dollies....and then wonder why they don't have new purchase business. We need to collaborate, not toss clients back and forth over a wall.  When an LO treats me with contempt, that is the last time I voluntarily work with that person. Last week I was looking for someone to chat with about the203k -- the general issues, the problems, the opportunities. One of my regular LOs handed me off to an FHA guy, who after a spiel on rates (not my question) refused to "talk out" a client scenario. After the 3rd time he told me just to have the client call him to get qualified, I gave up. I didn't want the client qualified, I wanted to know if this loan was an option to think about while we were choosing what houses to look at. If you think I'm thinking about this wrong, let me know.

Posted by Leslie Ebersole, I help brokers build businesses they love. (Swanepoel T3 Group) about 10 years ago

 

LESLIE... . Wow...  no, I don't think what you just mentioned and or what you wanted to know was wrong... not at all. I wish I had more realtors like you. I know from some of your comments, you don't always care for how I word some posts.... but you are out spoken about issues.. you seem to communicate... and believe me or not when I say this, I love when a realtor wants some knowledge about a particular loan program and such. I have no problem explaining things to a realtor... to talk about a client, etc, etc.  I live for that... what I don't like,... dislike.. is when that realtor takes that information and tries to explain it in full detail to the buyer.

Hey, I know not all of my posts are 100% clear... but if I had to explain every detail and point that I was trying to get across, they would be about 1.500 to 2,000 words a post... and nobody would read them. And I could give example after example in regards to what you just mentioned and why I feel harsh about certain things. Example : I spoke to a borrower once who found me online. They had already spoken to their realtors loan officer and things just didn't sit right. I had one issue about their credit report.. that they had a $10,000 judgment, due to a past repo.  I explained to them that they had to have either paid it off by settlement, or had made 6 consecutive payments, in 6 months.. as long as it wasn't a lien against their title... And I also said that if it was $5,000 or less, that we might be okay with that. But that you couldn't pay it down to $5,000... that wasn't an option. Well, they tell me that the other lender told them that this was okay, etc, etc... and that they could pay this down.  I was shaking my head... and after about 2 minutes of going back and forth, I asked..."so the loan officer told you this them self"...  and she said, no, the realtor told us this... and I chuckled again.. and where did the realtor get this?  They replied, from the loan officer.  And I said.. but you didn't talk to the loan officer about this in person.. she said no.  That is one of the major problems that I have with all of this. 

Overall... I do not think realtors are dumb .. well, in general.. lol.. and some without common sense. But in regards to your comment, no, I think that kind of treatment is not professional.  And it hurts the relationship between the loan officer and the realtor... and in general, for the rest of us. I think this person just treated it wrong and was sitting high a top of their ego box. I welcome any realtor that would have asked the questions that you did... and Leslie... please never hesitate to call me, even to bounce something off of me. Yes, I am in this to make money.... but in my whole career, I have given a lot of free advice and answers...  it's just me.   Hey, thanks for the comment, your feedback, and for the input.  I am going to reference your comment in my other post over at Agent Genius, so I can make this one realtor understand where I am coming from.  thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) about 10 years ago

Jeff - This is such great advice and so many folks out there NEED to hear it!  I really try to get educated on the types of loans out there, the assistance programs available and the loan process in general, but only so I can help my clients when deciding what typeof home we need to search for.  I leave the mortgage side up to you guys!  I have no problem telling my clients that I am not qualified to answer certain mortgage questions, just like I tell them I am not qualified to talk about the electrical issues that come up during inspection =)

IMHO talking outside your area of expertise can cause a big ol bag of problems and I would rather have nothing to do with additional problems!  Thanks for the timely reminder!

Posted by Jeanna Martinez (RE/MAX Access) about 10 years ago

Jeff, great post! Can't argue with it and wouldn't mess with buyers re financing or pre-qualify. I send them off to the lender for pre-approval before I will even work with them. They either come back with the letter in their hand or I send them packing.

As Realtors we are hired to market the property.  We are not hired and are not experts, nor licensed, have up to date information and have no business sticking our nose in an area where it shouldn't be.  I know that there is an agent that feels that he should be doing this but bottom is, his production would much higher then what it is, even if he is a great producer, if he allows and basically begins to "trust" his support team.  That being, the lender, the home inspectors, the attorneys (if needed/required).  We are all here to do our job and nobody elses.  I have a huge knowledge of financing but I would never put my foot in it because it is a daily turn of events, I don't have a license, I don't want a license in financing. It is needed to have this in place and is a shame because boundaries should be respected.

Flip side:

I actually get my listings approved with lending programs so that the consumer knows what that home would qualify for. Not the rates but the programs that would be available to the buyers for each and every listing I have.

I have always been a firm believer in the consumer understanding the financing options for my listings versus what the rate is for at 30, 15 year mortgage, FHA, VA, Bond Programs, etc. Just put your marketing material with the programs and it eliminates the questions coming to me for financing because the lenders name is on the paper.

 

Posted by Barb Van Stensel about 10 years ago

 

JEANNA.... . I have been preaching this kind of advice since 1994, a few years after I got into the mortgage business... and it will never change, but we do need to voice our opinions and concerns. I think examples of ones that I gave make a good case. I mean, come on, I pre-qualify a buyer with a USDA loan and the realtor says that is not a good loan, that you should do a FHA loan?  wow..  and why many agents tell their sellers or buyers that a conventional loan is better over an FHA loan, or that you should put 20% down as opposed to 3.5% or even 5% down.

In any case, both of us will agree that it could cause some major issues or problems when talking outside your expertise. Just like those real estate agents that are short sale experts, but that they get angry when a realtor that has no clue, gives misleading information. Isn't this the same then?  And they are in the same industry.  Thanks for the comment and for the polite compliment.

 

BARB... . from reading your comment, it sounds like you have a very good handle on this... even down to the part where you qualify your listings, the actual property.  Very smart and nothing more ticks me off when I have a buyer that is buying a condo that is not FHA approved.. but we don't find out until we have that property address.  If that listing agent had common sense, they would have looked into this before putting in on the market and more so, before accepting the FHA offer... thank you very much for your in depth input, feedback, and for the polite compliment.

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) about 10 years ago

Hey Jeff, another good post as usual. As realtors our job is not necessarily to answer every question, but to know where to get the answer and direct the client/customer/consumer there for their answers.

What is your feeling about the listings, often bank owned that insist the buyer be pre-qualified by a certain lender? another topic for a post?

Posted by Nick Vandekar, 610-203-4543, Tredyffrin Easttown Realtor, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) about 10 years ago

I think that too many Realtors try to control the 'whole' situationin a purchase. Years ago I was of the same thinking that I had to do the prequal, show, followup, etc. I since have decided that I cannot 'micro-manage'the entire transaction. As Jeff states basically, you do your portion of the transaction & I'll do mine. Do things overlap at times? Yes, and communication between all parties is important.

I guess if we stand back & look at a real estate transaction objectively (yeah right?)- are you being a control freak? Why do you think that you can do the LO's job better? I'm sure you think that he can't do yours as well, LOL. Be responsible for your portion of the big picture & stop trying to take control from the poor buyer and from the LO.  The customer is ultimately in control of the deal. If the buyer asks you questions about the mortgage, be sure to answer as thoroughly as possible & give him YOUR advice.  If he takes it or not - it's part of business.

I think that if we step back we can see that there are 4 parts (search-loan-negotiate-follow up)to a real estate transactions so why must a realtor control everything? Just do your part well.  It's much better for the buyer, he can take care of his own finances when fully informed.

A side note, I can hear Brian Brady (on Agent Genius) from the old school of real estate! Sounds just like an old fart LO from 25 years ago. I personally feel that if I prequalify a buyer, he's screwed because I don't have the right where-with-all to get it done.  I don't know all the ins, outs, rules, etc. anymore to feel even remotely competent!  It's just not feasible to know the realtors job and the LO's.  I think it's pompous to think that you can do both jobs well.

Just my 2cents at 4.25% interest over 30 years FHA!!!! :-)

Posted by Lyn Sims, Schaumburg Real Estate (RE/MAX Suburban) about 10 years ago

Kudos, Lyn!  Love the last line : )

Posted by Barb Van Stensel about 10 years ago

HI Jeff,

We typically refer to only a few mortage brokers, for one simple reason........... Many mortage brokers somehow think that they need to give real estate advise.

As your post so clearly and appropriately points out, that we need to focus on the wants and needs of the clients, not so much about the ability, as we can't decide and or have much if any influence over it in any event.

It seems common that in the daily life of realtors and mortgage brokers (and inspectors, lawyers, contractors, movers etc.) everybody is an expert about some one elses field of expertise.......

Happy Selling

Posted by Peter Pfann @ eXp Realty Pfanntastic Properties in Victoria, Since 1986., Talk To or Text Peter 250-213-9490 (eXp Realty, Victoria BC www.pfanntastic.com) about 10 years ago

I used to do loans and I've kept up with most trends, I still use My loan officer but I can quickly weed out those that are obvious not qualified or accommodate those who are. Still great advice.

Posted by Victor T. Gurrola, Diamond Bar Real Estate Professional (Remax Realty 100) about 10 years ago

Jeff, I don't even like to pre-qualify them any more. I have them meet, or at least talk, to a lender before we get started. It saves so much time an energy, if they're not ready yet. I do like to understand the process in the event they've gone with thier "friend" the mortgage guy. That way I know if they're getting bad information.

Posted by Connie Harvey, Realtor - Nashville TN Real Estate (Pilkerton Realtors) about 10 years ago

I know about as much about mortgages as I do about martial arts: just enough to get me killed...

Posted by Pat & Wayne Harriman, Broker/Owners, Wallingford CT Real Estate (Harriman Real Estate, LLC (203) 672-4499) about 10 years ago

Jeff, as I'm sure you recall I have answered some questions on Trulia.  Not too many that were mortgage related but some of have.  I haven't detailed mortgage answers and I do typically refer them to speak to their lender, current bank, mortgage broker, etc.  Its a long standing debate I think between loan officers and buyers agents.  I wrote a post about it a long time ago -- both the loan officer and buyers agent are equally important in a transaction but where does the buyer start?  With an agent or loan officer?  They can't buy a home until they get funding but they can't buy a house with an agent (well I guess they can) so maybe your job is more important than mine!  LOL!!!

On Trulia Q&A, I'm always dumbfounded when agents from other states answer specific NJ real estate questions.  I've even seen loan officers answer real estate specific questions.  I think its all about the VIP status on Trulia.

Great post Jeff and you need to post this blog on Trulia!!

 

Posted by Gina Chirico, Real Estate Agent - Essex County, New Jersey (Lattimer Realty) about 10 years ago

 

NICK & TRUDY... . how beautifully said... not to answer every question, but to know where to find the answers.  wow.. That could have been my post right there.. thanks.. and thanks for the polite compliment.

 

LYN... . you made a few excellent statements... communication between the loan officer and the realtor. Yes people, this does not always happen. I understand that your buyer finds some idiot loan officer online. (by the way, I get 80% of my business online through blogging..  ;o)  )  And not all treat their business like I do.. but that means you now become the loan officer?  Find another... get your borrower to realize this.. but just be careful on how you yank a deal away from a loan officer.  Ask questions first... ask that loan officer to explain why and or their reasons for such a program, or why they rate is higher.  Just don't assume. Remember, you don't know it all, you might think you do.  Read this. : I want that same deal that my friend got !!!! FHA loans in New Jersey -

Lyn.. you then stated this..  "guess if we stand back & look at a real estate transaction objectively (yeah right?)- are you being a control freak? Why do you think that you can do the LO's job better? "   Exactly my point... who says that they as the realtor can do this better?  They might have the right intentions.. think..think about this.  

Lastly, you stated this... "The customer is ultimately in control of the deal."  

I know Brian stated this and it does make sense. At first, I kind of disagreed with it... but give the borrower enough info, we can tell them what to do.. but it shouldn't be coming from the realtor.  Thank you very much for that insightful comment and for your input.

 

BARB... .  yea, that was pretty funny and creative.. love it..

PETER & LINDA... . everyone is an expert... boy, is that such an understatement... hence why I included my links of some posts that I have written in the past about expert, trust, and a few other things. Get a chance, please read them.  thanks  ps.. and yes, there are loan officers that give real estate advice. But does that mean, you as a realtor can now do the same, and give mortgage advice?  lol  thanks

VICTOR.... . I understand what you are saying, but still, a very slippery slope, laws or not. And I guess I would ask this, how good do you think you are, that you can weed some out?  hhhmmm.. ex-loan officer that keeps up with the trends or not, still very slippery.  And thanks for the compliment about the advice.. much appreciative.

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) about 10 years ago

Hi Jeff -- I wouldn't even attempt to qualify a buyer nor explain the myriad of loan options, which is why I partner with the best loan officers I have found in my local market.  That said, I try to give some general pros/cons as it relates to practical experience I have encountered so a buyer goes into the process with their eyes wide open so they can make an informed decision.  If in doubt, the loan officer is the go to person for an answer.

Posted by Chris Olsen, Broker Owner Cleveland Ohio Real Estate (Olsen Ziegler Realty) about 10 years ago

 

CONNIE... . I am not sure if I had updated my post before you commented... I agree and I think my post is not 100% clear.. I have no problem with realtors being knowledgeable about the mortgage programs and such... but __________... read my update listed about in bold.  Because yes, you just want to make sure that your borrower is getting a good deal. thanks

PAT & WAYNE.... . ha ha ha... how funny... thanks for a great laugh at an end of a quick short work week that was stressful.  thanks

GINA... .  lol.. yea, you and I have both laughed and cried at what we see on Trulia... and I know how you handle the questions on there.  Overall, there are some horrible answers from some realtors on Trulia and on other sites. and yes, is it all about that VIP status?  Getting their name out there?  First one in the buyers face?  Sad, but so true.. and yes, I will post this on Trulia.  I posted this on Agent Genius and you should read some of the comments there..  Real Ramifications to realtors giving mortgage advice to buyers - thanks for your feedback and let's catch up soon..

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) about 10 years ago

Thanks Jeff! I just clicked over to AG and read the comments on that post as you suggested.

Wow.

If I was a seller and I read some of those comments I swear I'd go FSBO and hold out for a cash buyer...well, maybe not the FSBO part...Can't wait to read Part Two!

Posted by Pat & Wayne Harriman, Broker/Owners, Wallingford CT Real Estate (Harriman Real Estate, LLC (203) 672-4499) about 10 years ago

Thanks for the info today. I liked the post.  I stay out of the financing arenna, that's not my job and I don't feel qualified to be giving advice. I put them in touch the a loan officer.

Patricia

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) about 10 years ago

Jeff,

Many agents answer questions on Trulia strictly for the points and the vp badge. Many answer incorrect and should not be answering questions that they have no expertise in. It is annoying and the same agents tend to answer every question. Some are spam but some really give false advice. I still answer specific local questions on Trulia that I really know the answer to. I actually get blog ideas from some of the questions and I often have a blog that I can link to on the topic they asked about.

I never get involved in the type of mortgage product. My only involvement is if it affects the contract or the terms of the offer or sale. If the building has certain down payment requirements or special financing needs. However, sometimes I know what lender will give a loan to one of my listings. I have a listing now that two mortgage brokers commented that citibank rejected the building in 2007. So? It's not on an approved building list. What year is this? LOL  Bank of America just closed a loan. If B of A is the only lender who will lend in the building shouldn't I share that information with the mortgage brokers and buyers and their agents. I think the questionnaire needs to be updated and lenders need to update their approved lists. I don't care what lender or what product is used I just want it closed

 I remember that question on Trulia. I think my answer was about the financing contingency. I answered that if there is a mortgage contingency it benefits the buyer not the seller. The seller takes a risk taking their property off the market. The down payment amount may affect the seller because the buyer has more of a chance to walk if they can't qualify for a loan that may be harder to obatain a committment for.  If they qualify for 80% they shouldn't be allowed to walk if they can't qualify for 90%. or more.

Posted by Mitchell J Hall, Lic Associate RE Broker - Manhattan & Brooklyn (Compass) about 10 years ago

I think that trust is a HUGE part of it.  I trust my main mortgage dude... 

But deeper than that, the rules and programs are changing constantly.  I don't have enough time to keep up with his job AND to my job to the best of my ability.  To toss out the sports analogy, I can't pitch AND play 2nd base.  They are in a line, but they have different needs.  Both deserve a full-time player.  I have to trust my teammate. 

That said, sometimes I have to trust a new guy shipped in on a trade, too.

Posted by Lane Bailey, Realtor & Car Guy (Century 21 Results Realty) about 10 years ago

Hey Jeff,

I just found my answer to the Trulia question. I got a thumbs up. LOL

 

Jaba,
How much you put down may be irrelevant to the seller at the closing providing the balance due is funded. It's not irrelevant when a buyer requires a financing contingency. A financing contingency protects a buyer's deposit if they can't secure financing. A financing contingency is not in the seller's best interest it's in your best interest. They are taking a risk by taking the property off the market. A contract with a financing contingency usually has language requiring the buyer to apply in good faith for a mortgage that conforms to what most commercial lenders require. You're entitled to shop around for any kind of loan. However, by the loan commitment date if you can't secure a commitment for more than 80% financing but you're approved for 80% financing the seller doesn't want you to walk and give back your deposit. Your lawyer should be able to use language in the contract that gives you options but also gives the seller assurance.

 

Posted by Mitchell J Hall, Lic Associate RE Broker - Manhattan & Brooklyn (Compass) about 10 years ago


CHRIS... . as several have explained, partner with some of the best... and if that fails, search for others... and asking co-workers that you respect for referrals.  We all can be bad, there has to be some very good loan officers out there.. thanks

PAT & WAYNE.... . my pleasure.. and yea, a few people over on AG who commented were just to stuck on the fact that most loan officers suck, and that they could do better themselves.  It's easy to talk... I have a thought and just keep posted in the next week to see if I can put something together.  thanks

PATRICIA.... . as many of mentioned, it's one thing to know mortgage products, to be knowledgeable... but to then answer mortgage questions or to pre-qualify? That should just not take place.  And thanks for the polite compliment.

 

MITCHELL... . yea, I know about the points and the badge, but that is just really sad.  And I am going to get a hold of Rudy and a few others and share this post with them. I have also written about 5 posts all in the last 3 months, just from experiences on Trulia... you can get a lot of material from over there.. real truth material.

In regards to your involvement, I have no problem with a realtor stepping in on that capacity... I call that team work and that you take pride in what you do. When you step beyond that boundary and act as a loan officer.. you have just crossed the line. thanks for your input and feedback.

 

LANE..... .  it's extremely huge and I truly think that is a majority of the problem.  But that is no excuse to take charge and do it yourself.. you search and seek a good mortgage professional.. as I mentioned to someone else, if that fails, you ask for referrals from your trusted peers. You can't tell me that you can't find one good loan officer. People need to be honest then... some are just control freaks and want to be the main person the whole time.  Yet what they are doing could hurt a borrower and cost them thousands.. besides, their title is a realtor, not a loan officer. And you hit the nail on the head, how do you keep up with both jobs?  I don't care who you are, you can't. In my 18 + years, I have come across about 25 people or so that were both a realtor and a loan officer.  I haven't found one that could do the job of both very well. I have actually picked of the messes of at least 10 + loans in the last 2 years to where the realtor involved was the loan officer also... and most of these deals were severely damaged.. not small mistakes.... large mistakes.. bad mistakes.  thanks for your feedback.

MITCHELL... .  thanks for finding this and for sharing it. you did a very good job with this one.  thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) about 10 years ago

Is there a Safe Act that will prevent loan officers from attempting to be real estate agents? Here in California, it's the same salesperson or broker license which allows you to do loans or be an agent...seems kind of crazy to me.

I have a saying which goes: I've seen good loan officers, and good agents. I've never seen one person be good at both, but I have seen a lot who are bad at both.  ;-)

Posted by Tony Cannon, Real Estate - Oceanside Carlsbad (Bressi Realty Carlsbad) about 10 years ago

Most realtors don't know the first thing about financing!  For the past 15 years I've felt like the mortgage professor.  It's a good idea to educate yourself in all areas of your trade.

Posted by Mark Lebkuchner / Home Loan Specialist about 10 years ago

I usually ask enough pre qualification questions up front to form an opinion on the clients credit worthiness. Also getting them in touch with a lender is another way to gauge their level of seriousness. If the buyer just wants to go see a home and not talk to a lender, that is a problem.

Posted by Bruce Swedal, Denver Real Estate about 10 years ago

I'm both a Texas Real Estate Broker and a licensed Mortgage Loan Originator.  While I have originated in the past, I don't originate these days. I do keep up with what's happening on the lending side of the business. That knowledge and experience makes me a much better real estate broker.

When I had access to pull credit I would often pre-qualify my buyers if they were not working with someone else.  Most of the time I would hand them off to another MLO to originate the loan. Why bother?  Many pre-qualification letters are not worth the paper they're written on.

Tom

Posted by Tom Branch, Broker, CDPE, SFR, ACRE, Plano TX Ambassador (RE/MAX Dallas Suburbs) about 10 years ago

 

TONY... . not that I know of...  I would say no.. and I understand the laws and rules in California... and that starts with those that lobbied for that and the politicians there.  Who is really looking out for who?  It's a vicious web that we spin, but is it write?  Just because it can be done, should one do it?  Just food for thought.. in regards to your last statement, I would agree with that 100%... and in reality, how can one even say if they are looking out for the clients best interests when doing both... hhhmmm.. thanks for sharing.

MARK... . yes, it's a great idea to educate yourself about the mortgage industry... but it's about how you use that... do you take it to the next level and answer mortgage questions?  Example.. a borrower asks me a real estate question or a legal question.. Jeff Belonger's response.. "I have the knowledge and common sense to probably answer that question correctly, but that is not my field of expertise.. if you need a referral to help answer that question, just let me know. "   end of story and should be the same for realtors when asked a mortgage related question.  thanks

BRUCE... . okay,.. forming an opinion.. but do you then give advice?  Just curious.... I do agree that if a buyer wants to see a home and hasn't talked to a loan officer, not even qualified, that one shouldn't waste their time.  thanks

TOM... . good that you have the knowledge... and yes, many pre-qual letters and or pre-approval letters aren't worth the paper that they are written on... but still, does that give a realtor the right to act in the capacity of loan officer? Even if they have lending experience from the past... things change daily.. just how I feel... thanks for your feedback.

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) about 10 years ago

Hey Jeff,

When you speak with Rudy tell him that Trulia should bring back the thumbs down instead of only having a thumbs up.

Posted by Mitchell J Hall, Lic Associate RE Broker - Manhattan & Brooklyn (Compass) about 10 years ago

Jeff: In some form or another, a realtor will get to know our business and they may weigh in with their thoughts. My boss calls it a conditional relationship because they get paid when we close the loan. The few realtors I work with trust me to get the job done although I have to admit it's just as  interesting getting referrals from other sources such as CPA's and financial advisors. I suppose if I were a realtor I would want to know how the loan process works. The bottom line is it's often difficult for us to stay out of each other's hair. Thanks again for the post!

Posted by Paul McFadden, Pest Control, Seattle, WA. (Paratex) about 10 years ago

Is it a good idea to get a mortgage license as a Realtor? I have a friend who is a Realtor and also a licensed mortgage consultant. He asked me to give him some of my buyers for mortgage.  Because he is a Realtor, I have a problem giving him my buyers.  Is it possible he can also steal my clients?  What if he starts sending marketing materials as well to my clients. Obviously, he will look more professional than me if he can talk as a Realtor and Morgt. Consultant.  I don’t want to hurt his feelings but I promised him I will start giving him my buyers for mortgage.  Also, isn't this a CONFLICT OF INTEREST working on both sides? Any advise on this?  

Posted by Eleana about 10 years ago

Great info and great topic. Realtors and MLO's have some very strong opinions on this subject. Bottom line we won't have a smooth transaction for both the buyer and seller if the buyers real estate agent and MLO do not have a respectful relationship. That is why we try to hand pick each other when possible. Past history is a huge indicator on how well future transactions will pan out. I always refer my clients to their realtor when they have real estate questions and they do the same for me. I have enough to deal with! Find a few great MLO's and stick with them. The vast majority left are the serious ones and loyality is everything in this crazy market.

Posted by Lori Martinez Equal Housing Lender, Personal Mortgage Professional (PEOPLES MORTGAGE CO. AZBK 0904164 NMLS 6274) about 10 years ago

 

MITCHELL.... .  excellent point... I mentioned something quick to Rudy a few weeks ago, that we should catch up.. and he said he is just to busy, to send him an e-mail.  I never did, because I wanted to talk to him in person.. but I will send him an e-mail this weekend and mention this also.. but yes, so many would get the thumbs down and maybe make them less credible. The only problem with the thumbs down is that some will manipulate this and use it against others... this happened on AR two years ago, when they had a 1 through 5 rating system, hence why they took it away..  thanks

PAUL.... .  as mentioned, I have no problem with realtors getting to know our business, understand it, etc, etc.. but to then offer advice to the borrower over the loan officer?  Just not a good and smart idea in my opinion.. thanks

ELEANA.... .  I am not worried about him stealing your clients... but for the fact that I can't see how one can be very good at both.  So many are just good at one.. I want to be very good to excellent in one field.. I know there is no way I could be this in both.. some say it can happen. I think they are fooling themselves and others... yes, you could be average.. but the problem here is defining all of these key words... lol  Each will have their own definition to.  My opinion?  Give your borrowers to a very good loan officer who only does mortgages. If one is that good,they don't need business from both sides.  Just my opinion.. thanks

LORI... .  I couldn't agree more, hence why I wrote about this. This subject and the one that Eleana above you had mention, both irk the hell out of me...  thanks for your input..

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) about 10 years ago

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