Three or four times a month I'll get a email from someone extolling the advantages and riches of serving my client as both their real estate agent and their mortgage loan originator. Combining the duties and responsibilities of real estate agent and loan officer into a single person is a practice acceptable in a number of states, including Arizona.
The topic comes up for debate frequently in real estate blogs. It's not difficult (at all) to find solicitations for "agent originators" posted on an almost daily basis.
Does it make sense for one person to serve as both real estate agent and mortgage originator on the same transaction?
In my opinion, the answer to that is a resounding NO!
My primary issue is with one person trying to do the work of two. I am a real estate expert. I understand a lot about financing a real estate transaction, but I am by no means as expert as a full-time mortgage professional. Buying a home is likely the single largest financial commitment a person will ever make. You should demand that a lending professional help you through the process. Someone that originates loans "on the side" is likely not the best person for the job.
As a full time real estate agent, I simply do not have the time to gain a thorough understanding of the nuances of hundreds of available mortgage products. I don't have time to monitor the financial markets and economic trends so that I can properly advise a client when to lock a rate.
Some people have claimed that an advantage to one person handling both jobs is gaining absolute control of all aspects of the transaction. That's pure poppycock. For me to gain absolute control over a real estate transaction, I'd have to represent both the buyer and seller as real estate agent (which I abhor), I'd have to originate the loan, I'd have to inspect the home, I'd have to repair the home (trust me, you don't want to see me with a hammer anywhere near your house), and I'd have to be a title company, an escrow officer, and heck — might as well toss County Recorder into the mix too.
I don't feel any loss of control over a deal when I'm working with lenders. Oh, believe me I've worked with plenty that I wanted to beat senseless, but part of my job as an agent is to work through issues with everyone involved in a real estate sale. We've worked with dozens of lenders ranging from the brilliant to the not-so-swift. We're happy to recommend multiple lenders to our clients and we encourage them to interview multiple lenders — just as they should interview multiple agents. Buying a house is a big deal, it's not something to approach with a "they're all the same" attitude. Sacrificing expertise to gain some level of control is a lousy reason for doing business this way. A good agent will work closely with a lender to ensure a successful close.
The sub-title of this post is, "One-Stop Shopping, or Half-Assed Service?" Let it be noted for the record that I'm sure there are some "agent originators" out there that can serve their clients equally well as experts in both of the diverse full-time positions they are taking on. They are called Polymaths, and they are few and far between. (Think Aristotle, Da Vinci, Blaise Pascal, Ben Franklin, Thomas Jefferson). More likely, you will find someone who is fairly competent in both professions. Quite possibly you'll run across someone of complete incompetence in either or both professions.
I prefer to do my job and refer my clients to superior lenders so they can do theirs. We'll work together to serve the client's best interests.
Technorati Tags: real estate agents and lenders
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21 Jul 07 9:49 pm
Jay,
I’m glad to hear you’re response. I am opposed to the dual function inasmuch as leaves too much of an opportunity for conflict of interest. Fraud goes where familiarity grows.
Agents could serve the interest of the transaction and neglect to secure the best-suited financing for a buyer. Conversely, imagine a dual agency transaction by an agent who is also writing the loan. Would she be protecting the lender’s interests, also?
There are just too many reasons to segregate the functions. Your reason, expertise, is the most glaring
22 Jul 07 5:55 am
Preach it, Brother Jay! Very nicely done.
22 Jul 07 7:38 am
Yeah - I am here to list your house. As an added benefit, I am also going to plan your daughter’s wedding, pet sit your dog, take your family pictures, and landscape your yard. None of these will be done very well, mind you. Really - what do you expect? How can I possibly be expected to do any one thing well if I am juggling so many other things?
Just sign the listing agreement here…crazy.
Good job, Jay.
22 Jul 07 2:31 pm
Beautiful post, Jay, I couldn’t agree more. I’m very happy to have found your blog via Facebook-you’re bookmarked!
22 Jul 07 3:00 pm
I wish I knew who “anonymous” was, it was a great comment!
Teri / April - as always, your comments are appreciated!
Lisa - Facebook! I’ve found myself hopelessly addicted to that thing. At least now I can say it generated a new reader. Nice blog you have there, I added it to my reader! I also requested you as a Facebook friend!
23 Jul 07 9:06 am
[...] 95 points - The Phoenix Real Estate Guy - Jay Thompson on “…Half-Assed Service” [...]
23 Jul 07 9:16 am
[...] Half-assed service Divorcing the real estate commissions … Expected rate of decline of home prices in the next year It’s a bloodbath and time to swim with the sharks [...]
23 Jul 07 9:34 am
Jay,
My office has entertained this set-up before. They’ve even gone as far as to align themselves with a specific mortgage lender. It didn’t last very long. I was initially jazzed about the idea, but my excitement fizzled out for the reasons you give above.
I’m not and don’t want to be an expert when it comes to lending. I’ll leave that up to the experts.
Any recommendations when it comes to lenders?
23 Jul 07 10:36 am
[...] shared with all) and has found some great posts. Our submission on the "combo agent/lender and half-assed service" garnered 95 points, coming in just behind stellar posts by Brian Brady [...]
23 Jul 07 11:51 am
Alan wrote: “Any recommendations when it comes to lenders?”
It’d be hard to go wrong with:
Shailesh and Aimee Ghimirie, CTX Mortgage (480-516-1819)
Jayme Self, Nationstar Mortgage (602-453-7783)
I haven’t actually used them yet, but I *really* liked what Andrew and the Chandler eLoan office had to offer. I am NOT a fan of “internet lenders”, but these guys are more a hybrid, combining tech tools with a brick & mortar office. I don’t have his number handy but will add it later.
And I’ve actually never used Brian Brady, but I know him. He’s physically in San Diego but hails from here and can do loans here. I wouldn’t hesitate to recommend him either. (800) 977-8923 x2318
23 Jul 07 1:50 pm
Thanks for the tips. I’m adding them to my contacts right now.
23 Jul 07 3:03 pm
I agree with you 100% (and then some)! There are times when I have over-qualifed clients who don’t want their agents to know their personal details or who only want to buy up to a certain point. Using the same person for two jobs takes protection and service away from the buyer.
23 Jul 07 10:15 pm
[...] ‘The Combination Real Estate Agent / Lender: One-Stop Shopping, or Half-Assed Service?’ by Jay Thompson, The Phoenix Real Estate Guy [...]
24 Jul 07 4:15 am
[...] for an excellent post about why some of us refuse to be both real estate agents and loan officers, read Jay Thompson, the Phoenix Real Estate Guy. But, I have seen many people, too many people in fact, looking for homes before they get their [...]
24 Jul 07 6:17 pm
[...] Thompson recently wrote about a real estate agent doing double duty as a loan officer on the same transaction. It seems to have garnered quite some buzz. I know real [...]
25 Jul 07 6:44 pm
All I will say is “well put.”
26 Jul 07 8:11 pm
[...] unapologetic winner this week is from … Phoenix (who would have thunk it?) It’s Jay Thompson waxing loquacious about the problems that can arise with people who try to be both loan…. While there are some “Renaissance” types who manage to pull it off — think [...]
27 Jul 07 11:05 am
[...] Kevin for naming our entry the winner! Kevin highlighted some great posts that will provide both the real estate consumer and [...]
28 Jul 07 12:57 pm
[...] Tighten lending standards as much as you want, but you’ll never find a way to squeeze the slime completely out of the market. For more on the joy of agent/lender combos, check out Jay’s recent screed. [...]
04 Aug 07 10:32 pm
Hey Jay,
We have seen a bunch of half-assed Realtors.
WE have seen a bunch of half-assed Loan Officers.
We have seen a bunch of half-assed Agent/lenders or Hybrid Agents.
My opinion a Hybrid is a car. Not a Agent.
Do not worry.
All of the Half-assed people in this industry will eventually leave.
To do something else half-assed.
Sincerely,
Patrick Mahony
Realtor, Loan Officer.
I.T.S. Inc.
http://www.ITSRealEstateAZ.com
480-543-9899
15 Nov 07 12:36 am
I am a little late but, agree with Pat 100% A hybrid is a car not a real estate professional. When I see Realtor/”Loan Officer” on a busniss card….I know their client is in for a long ride and read it as “Cant make a living at either”. Great blog AZ real estate guy!
23 Jan 08 8:58 am
[...] The Combination Real Estate Agent / Lender: One-Stop Shopping, or Half-Assed Service? [...]
08 Feb 08 6:56 am
Hello,
I have a real estate website that has been online since 2002. I would like to exchange links with your website and know it would be mutually beneficial.
Here are two real estate web sites that have automated link directories. You may add your links at any time you like if you’re interested in getting traffic from us.
Here are the real estate sites:
USPropertyAdvertiser.com
FreeRealEstateAdvertiser.com (On this site you can add all your real estate listings for free too).
I wish you the best in 2008!
Sincerely,
Edward
10 Apr 08 7:42 pm
[...] to agree with him on that. I expressed my opinion on the combination agent / lender in, “The Combination Real Estate Agent / Lender: One-Stop Shopping, or Half-Assed Service?“. I think it’s just a really bad [...]