In my office the other day, a Loan Officer was complaining about how the Realtor was trying to ship his client (that he had the relationship with) to the in house loan company. The Realtor had a slick presentation “does your mortgage company have X novelty widget? No, well, you need to work with us.” The LO in question was incensed. Livid that a commissioned Realtor would do this to a fellow real estate agent. These were his clents, and he was being positioned as the ammeter.
Well, the above transaction was 100% his fault–not the Realtors.
Affiliations are stupid. They are money grabs, and the consumer and the agents both get screwed. Agents have to defend milquetoast morons that seek the easy life of captured business. Consumers have to be served by burnt out people that stood in line for the opportunity to work in a Branch Realty office, and, and don’t get to work with people that rely on skill, knowledge or novelty to sell. (I’m talking to you, Real Living,) Oh, affiliations should be 100% legal, but they are a quick trip down the path to mediocrity.
The Loan officer from Paragraph one though, could have handled it a lot differently with only a little more work. The LO knew his clients were looking at houses, and hadn’t been committed to a Realtor. The LO coulda and shoulda done it this way:
- Refered his clients to a Realtor that’s on his team, or one that he wanted to work with.
- Vetted the Realtor By Asking Pointed Questions.
Let’s assume #1 is impossible; it seems that the clients are interested in a particular house. Imagine the dialogue if the LO had called the Realtor/Real Estate Agent early in the process, and said this: “Hi, I’m Joe Loans with Money Funding. I know that you met my clients, Jim and Sally, and they have expressed interest in working with you, and they asked me to call you up to get a few questions answered so I can help them choose their Real Estate Agent.”
From this point, it doesn’t matter that much what the questions are. It changes the permission to influence the client. Agents are well trained to control (ahem, steer) their clients. They’re used to doing it, and good at it. They’re not used to answering any types of interview questions, especially regarding closed transactions,their process, their experience, and compliance. The other idea that this communicates is that you will be in charge of what happens with the clients. Most agents won’t jeopardize a paycheck to use the in house company. When this situation comes up, I also take the time to call the in house loan company and ask a few questions, namely, how many transactions did you close last quarter from Non Realtor Referrals. If the answer is less than ten, that is something to point out to the clients.
What’s important is to not be adversarial, or as if you’re putting a Real Estate Agent in their place. That’s not the point. You’re asking questions in a routine, matter of fact way to ensure that the Agent respects your relationship. If the clients seem likely to use a Real Estate Agent, gain some good information about them. At application, tell them that you will be vetting the Real Estate Agent for free to make sure that they have ”
Yes, I know Agents would hate getting this call “from a broker.” At first.
However, I have converted more than a couple agents into referral partners after making calls like this initially.
Stake out your turf . Have Equal Business Stature.
If a LO refers a buyer to me, which happens often, I will not attempt to take that buyer elsewhere…even three transactions and several years later.
However, just because a LO refers someone to me doesn’t mean I won’t take them to task on fees, if necessary. I’ve been known to do that, as well.
You are exactly right with your assesment of “in-house” lenders. Although our office has one and has had one for 3 years I will not use a LO based on that. An LO has to prove themselves both professionally and personally before earning my respect and therefore my business. But then again, I’m an independent sort.
Chris – You are right on. When I was an originator, I did just what you suggested numerous times with MY borrowers and the Realtors they were working with…leveled the playing field.
KC Investments – I agree with you…the Realtor had to “prove themselves both professionally and personally before earning my respect and therefore my (customers) business” and I would also “take them to task on fees” they charged as a Realtor. I truly felt what was good for the goose….
My last year of originating I funded 412 first mortgages and over 80% were purchase loans in which I worked with Realtors. The reason I experienced success is that the clients were my number one concern and I did not leave their well being into the hands of anyone else.
Chris (KW)
I get it Fees though are’t the only thing; and Realtors generally have little understanding of the relationship between fee and cost to do the loan.
I will never advocate the race to the bottom–fee wise–anymore than I’d advocate listing with a Real Estate Agent that charged the lowest fee.
Anyway, I think in most real estate agent’s case, a little knowledge is a dangerous thing .
(I closed 100 transactions a s a Relator BTW)
I agree with Chris. Unless the Realtor wants to understand current market conditions, current loan products, pricing, operational costs, and the cost of customer service, then their loyalty should be to the referring party.
To get a referral and take it elsewhere is ridiculous. I would be out of business if I encouraged all my referrals to look at three more Realtors.
We don’t advise our clients to lowball their offer and tell both agents to cut their commissions to make room.
The last time I looked, there were a lot more Realtors driving Highline cars than LOs.
The market is going to take care of any inefficiencies that don’t play in the consumer’s best interest–at least in the long run. If these guys aren’t good at their job, it’ll show, and they’ll be gone (hopefully) sooner than later. It’s cutthroat–and maybe he learned his lesson for next time.