Property agents partner mortgage brokers often, but what are the benefits, or downsides of going with the partner broker?
By: Phoenix Lee/
It is typical for property agents to partner mortgage brokers because they have previously had a good experience working together. Throughout the home buying process communication is key. A mortgage broker and real estate agent who have a good communication system and have worked well together in the past can avoid problems that arise when there’s a breakdown in communication between the two entities.
It’s not a bad idea to work with the mortgage broker your real estate agent partners with. However, you should understand that you have every right to choose any mortgage broker that you would like to work with. Ideally, you should speak to several mortgage brokers and make your own informed decision. That being said, there’s a reason the real estate agent trusts and prefers to work with their mortgage broker partner, and their solid working relationship can benefit the home buyer.
Property agents partner mortgage brokers to ensure that the deal gets done within the escrow timelines.
A good Mortgage Broker will ensure that the deal is ready to fund at the closing table on the predetermined closing date. There is no downside to using a (competent) mortgage broker recommended property agents. And it is always a good idea to have a backup plans just in case.
First and foremost, you are not obligated to use your property agent’s ‘preferred’ lending partner You have to know that is is illegal for a Lender to offer a kickback to a property agent for suggesting they use a particular mortgage service.
Property agents often trust their preferred lender and has probably worked well with them and trusts that particular lender to manage the mortgage process and get your loan closed on time. Your property agent is often worried about closing on time. And working with a lender they can rely upon is important for this. If they work with someone they are not familiar with, they may not be able to assist you efficiently when the process becomes difficult or bottlenecks occur.
Additionally, if the mortgage broker your property agent recommend is bad and can’t get loans closed, then the mortgage broker and the property agent wouldn’t be making any money from commissions as they are only paid when a loan funds and the transaction closes.
Intuitively, you would think that a property agent would only recommend a good mortgage broker based on that reason alone, wouldn’t you? As with most life decisions, trust your gut instinct. and if you think you can’t work with the ‘preferred’ mortgage broker then go with the lender of your choosing at the end of the day would be my suggestion.
Sometimes property agents partner mortgage brokers because there is an reciprocal agreement.
Sometimes but not always there is a reciprocal agreement to recommend each other. Then too the property agent may have a good working relationship with a particular mortgage lender and know that can rely on them to be responsive and on time with funding for closings.
Ask if there is any referral fee collected from the property agent if you use the recommended mortgage broker. This should be disclosed. Even if property agents provide a list of possibilities, there is no obligation to use that particular mortgage broker or lender.
After a frank discussion with your property agent about the reasons for the recommendation and an answer about any financial incentive for the agent, you might want to shop around to get the best deal for you. Your Agent should be cooperative no matter which mortgage broker you choose, but be a little cautious with some of the newer companies because they are sometimes not as reliable about on-time funding for closings.
If property agents partner mortgage brokers, what’s in it for me?
- Agents usually pick a partner they can trust to meet deadlines and take care of their clients,
- Agents usually pick a partner that continuously offers competitive rates,
- The Agent and Mortgage broker are familiar with each other and their processes, and
- If something “bad” happens, you can always turn to your real estate agent if the broker isn’t meeting your needs.
If property agents partner mortgage brokers, what’s the downside?
- You have to use their preferred broker/lender,
- You may miss out on better rates offered by competing lenders,
- You could get stuck dealing with “two bad apples”, and
- If you’re using an agent’s broker, you may miss out on incentives offered by developers because some developer’s incentives are contingent on using their lender.
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