By: Mike Thompson and Steve Gouveia
Many homebuyers, especially first-time buyers, get confused about the relationship between Realtors and Loan Officers. Too often, these two entities are seen as completely separate.
However, the partnership between your Lender and Real Estate Agent is vital and can be a primary factor helping you find a dream home that you can afford.
What Each Offers the Other
When someone decides that they are ready to buy a home, the first call they make is usually to a Real Estate Agent. Many are surprised when the Realtor then says that first they need to speak with a Lender to get pre-approved.
The Pre-approval process is the first step in the interconnected relationship that a Realtor and a Loan Officer have in their effort to find you the right home. Some things that a Realtor will want to know are your ‘wants’ and ‘needs’: how many bedrooms and bathrooms, what style of home and locations you want to consider, etc. These details are important for the Realtor as you start to identify the homes that you may be interested in. Equally important for the Realtor is to know much you can afford so that you only see homes that not only meet the needs of your family, but they also meet the needs of your budget. At the same time, the Loan Officer wants to ensure that the specific details of the property (including purchase price, real estate taxes, etc.) all fit within your budget so you don’t fall in love with a home that you ultimately won’t qualify for.
The Realtor / Loan Officer relationship is built on trust and reassurance.
Like your Realtor, a good Loan Officer is part of the home buying process from day one all the way through the day of settlement. And for the elite mortgage professional, it’s a true client / service partner relationship for both the client and the Realtor and that carries on indefinitely.
During the purchase process, the role of the Loan Officer is to ensure you feel comfortable with the financials before you decide to make an offer. Knowing how the property-specific details blend together to determine your monthly payment and cash requirements are helpful for you to understand before making a buying decision. The Realtor can use that same information to help in negotiations to ensure that you get a great value for the money spent.
Same Goal, No Financial Connection
The goal for everyone involved is simple: find you a home that you love with a mortgage that you can afford. And since Realtors and Loan Officers need to communicate and rely on each other heavily during the process, you should find that both go the extra mile to be in sync with the other. Be careful not to assume that this mutually beneficial relationship is connected financially. Neither the Realtor nor the Lender derives financial benefits from the other. Their relationship is necessary for the benefit of the buyer. And it also helps make each party’s work more efficient and stress free.
Local, Long-Term Partnerships
A growing number of realtors no longer accept the quick preapprovals from online mortgage resources like Quicken. Why? Because sites like Quicken use algorithm-based pre-approvals which means they predict the client’s ability to be approved vs. actually reviewing the client’s specific details to determine credit worthiness. For example, it’s important to know what a client made last year and with sites like Quicken, that is typically as in-depth that information is reviewed at the time of pre-approval. However, it’s much more important to understand the actual compensation details. Was it a salary? Is there overtime, commission, or bonus? How do those details compare to previous years? Are those things likely to continue? Was the income consistent? In 2018 the intimate details all matter and since Realtors want what’s best for their clients, they know that the pre-approval is only as good as the person who issued it.
On the other hand, when the Realtor knows that a client was reviewed by a local Loan Officers and have likely worked with them previously, there is much more confidence. If a potential buyer gets a pre-approval from a respected and well-known local lender, then the realtor knows that person’s offer on a house is going to be stronger than those who go through anonymous online lenders.
Again, it’s all about assurance.
Local Realtors and Loan Officers form long-term relationships based on mutual respect and trust so that they can be assured their clients get the best service. This requires that both parties do their jobs well. Just as Loan Officers know which Realtors at great… Realtors know which Loan Officers are great, too. At the end of the day the most important thing is that Lenders must ensure that their clients can afford the mortgages they have been pre-approved for and deliver the financing when they said they could. And Realtors must ensure that they help their clients find the right home that fits their needs at the best possible price.
It’s All for The Buyer
When a Lender and a Realtor do their jobs well together, their partnership greatly benefits buyers in efficiency, loan quality, and overall homebuying experience. Buying a house is both an exciting and anxiety-filled experience, and having a good partnership between a Lender and Realtor mitigates a lot of the angst homebuyers feel.