For home buyers, the journey begins in a logical place: they start looking at homes. But really, they should first start looking for money.
According to Home Mortgage Disclosure Act data compiled by LendingPatterns.com, less than 10% of buyers who got a mortgage in 2014 had pre-approvals. And yet, most real estate agents will tell you they prefer when buyers have that financial blessing in hand at the start of the house hunt. They want to know their buyers can actually afford the homes they’re looking at.
To that end, the real estate agents often refer their clients to loan officers for mortgage help.
The Real Estate Settlement Act, or RESPA, ensures that there can be no transactional benefit between real estate agents and mortgage lenders. The lender shouldn’t even take the agent out to lunch as a thanks. But the working relationship between these two professions continues, ideally with one party reaping the benefit: the borrowers.
Chloë Seymore of RED Collective has just a few preferred lenders to whom she’ll refer buyers based on the client’s specific needs. Her priority is looking out for her clients. “It’s in my buyers’ best interest to work with a local lender, someone who knows the local market well and who I know can get the deal done,” she said. “I want my clients to have the confidence knowing we’ll close on time with little to no surprises on the money front.”
And that’s the promise that Julie Russ of Homeside Mortgage makes to the agents in her network. “It’s my job to make real estate agents look good — to close on time,” Julie said. “I ensure a smooth transaction.”
Marketing your ability to close on time is all well and good, but you’d better be able to deliver.
A recent Inman report found the same to be true.
“Lender marketing efforts directed at real estate professionals mean nothing if the lenders cannot back up their advertised claims,” the report summarized. “Real estate professionals only want to work with lending partners with a proven track record whom they can trust to help clients get what they need to close on time.”
Home buying itself is full of complicating factors — surprises and unexpected challenges where real estate agents are uniquely positioned to act as a guide for buyers and sellers. The finance portion of the transaction is no exception. According to NAR, 45% of first-time buyers said that the mortgage application and approval process was somewhat to much more difficult than expected. So a trusted lender is another asset to the agent, helping to make the transaction less complicated and compromising to the success of the sale.
Which further supports the power of a real estate agent’s referral to specific lenders. That relationship, while highly regulated, is also highly regarded between the two.