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My Realtor is also my Loan Officer...

There have been a number of recent posts that examine the relationship of Real Estate Agents who also perform mortgage origination duties. I offered a detailed look at two legal interpretations in Realtor Loan Origination/Referral Compensation... and New York Broker Associate William Collins discussed the conflict of interest in Singularly Phenomenal. These and other posts produced various responses regarding the subject.

But today I received a call from a new Realtor referral that really made me stop and think this issue is truly a problem (to me at least). The Agent wanted to know about my company's Realtor Partner Program. Unfortunately, they wanted to know if we offered one of those new programs that compensate the Agent for taking the client's loan application. I explained that type of arrangement was neither available with my company nor as simple as just taking the application for a percentage of the fee.

We had a casual discussion as to why they would want to participate in this type of program. They emphasized since they controlled the Buyer they should be compensated. I told them most of these arrangements were certainly going to be challenged legally and looked down upon by many industry professionals. They countered that some online mortgage companies offered compensation if the Agent did some of the loan work. Finally, I think they were a little embarrassed when I informed them originators needed to be individually licensed by the State. I realized it was not someone I wanted to work with even if they didn't expect some sort of compensation for referring a Buyer.

This prompted me to follow up on this disturbing RESPA topic...

In summary there are 3 basic points regarding Agents who originate loans:

Legal compliance
Agent/Originators must contend with the registration/licensure/continuing education for BOTH occupations.
In addition, they must meet the individual W2 employee requirements of working set hours in the lending office and the receipt of benefits.

Disclosure/Conflict of Interest
Agent/Originators must properly disclose their relationship to the Buyer/Borrower.
They must zealously represent prospective clients from two perspective disciplines without conflict.

Competence
Agent/Originators must demonstrate the ability to perform two disciplines and maintain a level of competence.

As an aside I need to share a couple of my favorite stories regarding the proliferation of participants in the real estate industry over the past years.

I was taking a mortgage application one afternoon with a referral at a local diner. The waitress overheard our conversation and proceeded to produce a business card and insisted on inquiring about the transaction indicating that she "did loans on the side". Needless to say the Waitress/Originator did not much of a tip for that meal...

Another time I was riding in a taxi with a client on the way to a closing discussing their Agent's participation when the taxi driver pulled over to offer his business card as a Realtor. Again, the Driver/Agent did not receive much of a tip and will not get any Buyer referrals as he unwittingly displayed his real estate insight.

Finally, I'm sure there are individuals who are ready, willing and even able to undertake the necessary steps to act as both Agent and Originator - but I've always been told otherwise...Agents list/sell and Originators lend.

Posted by Brian Brass on 01/07/2007 12:57 AM

Comments (57)

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57 Comments on My Realtor is also my Loan Officer...

JAN

2007

Hi Brian, I have never thought any HUMAN could fairly represent both sides of a transaction. It is indeed a complete and utter conflict of interest to lend and try to represent. It can't be ignored.

Interesting Brian. I have never been at a closing where the agent did both jobs. In the higher end of the Detroit market, I would say that is unheard of.

Thank you for your comments...

KELLY - I agree...outside of the obvious conflict of interest - what about the competence issue.
Many have a hard enough time keeping current in one industry - much less two.

MAUREEN/DMITRY - I recently relocated to Metro Detroit and look forward to building professional relationships.
If you have not seen/been solicited for these arrangements yet you will - check out other AR posts/comments regarding this topic.

Brian, I totally agree that this is a conflict of interest, yet there is one Realty Company here in Connecticut that has found a way around it. However, I do need to clarify one thing, not all states require Loan Officers to be licensed and Connecticut is one of those states. But license or not I agree with you that it is a conflict of interest to do both.

Hi Brian, Pretty much like my Blog about Realtor Ethics when it comes to double ending. What I received was many comments on the legality. My point was on the ethics of representing someone where there is a definate conflict of interest. Personally I will not double end and I will never originate any loan. I am a Realtor and take my position seriously and represent my clients best interests all of the time. Great Post !

JAN

2007

Brian,

Good post and highlighting the issue. In Florida, many mortgage companies have found and heavily market ways they can pay realtors for the loans referred to them. How exactly they do it, I do not know, but we do lead the nation in mortgage fraud. Coincidence?

Just to stir the pot.....

Legal compliance Michigan requires Lenders, Brokers and Services to be licensed or registered. The originators that work for them have no such requirements, unfortunately.

Disclosure/Conflict of Interest Mortgage lenders and brokers are not normally fiduciaries, so the problem here lies mostly with the agency relationship between the real estate broker (and its sub-agents) and the client. As a agent of the seller, the Realtor would have to put the client's interests before his/her own. That could be very tricky when also originating the loan. This guy has some ideas that might help, http://www.mtgprofessor.com/Default.htm .

Competence Sadly, both field could use a good shot of this.

Thanks again for all the insightful comments...

GEORGE - You are correct various States do not require individual originator licensing.

DOUG - I think that competence/conflict of interest will help define the legality issue.

ROBERT - Good point...too much interest in the transaction leads to conflict.

RICHARD - I believe Michigan will require individual originator licensing shortly.
                See Realtor Loan Origination/Referral Compensation for more issues.
                Greatest challenge may be how they can be defined as an employee.

JAN

2007

since when does the realtor 'control' the client?

that is kind of arrogant, isnt it? i mean, doesnt the buyer control themselves? shouldnt the realtor refer the client to 3 loan officers and stay out of it? do they sway the buyer to a particular inspector? and if so, do they ask their inspectors for a fee?

i think that the professional realtors are just that.... professional. those that ask for referral fees wont be around long

TOM -

I like the analogy about the inspector...but I don't think the referral fees would be as lucrative.

Some Originators seek out these relationships in an effort to increase revenue - even at a cost.

JAN

2007

that's the point.....

it is not a lucrative.... therefore we have gotten to the root of the issue.

it is all about the MONEY. not about the realtor 'controling the process'.

Brain - I would welcome licensing for originators in Michigan.

License to cut hair                                    - 1500 hours + test
License to operate a real estate brokerage - 120 hours + test + 3 years experience
License to sell houses                              - 40 hours + test
License to operate a mortgage brokerage    - 0 hours + no test + good credit + net worth of $25K
Originate 30 year mortgage                      - ability to fog a mirror

What's wrong with this picture?

Tom - It's always about the money. :)

Richard

Licensing requirements with felony screening/competency testing will help eliminate unworthy originators.
Meaningful continuing education, ongoing economic hardship and industry consolidation will weed out others.

JAN

2007

Stop marketing to Realtors and go consumer direct Problem solved.

If a LO or R/E agent is "doing it on the side" it leads me to believe that they are not very successful with their career as an LO/agent.

And don't even get me started on the agant having "control" over the buyer. Doesn't sound like that is someone who will ever have their customer's best interest, if that is the attitude.

Brain Bass - The ongoing economic hardship is doing a fair job of "thinning the herd" in both the mortgage and real estate industries. BTW, I was told that you stopped by my office today. I'm sorry I missed you.

Ann - I think "control" may be a poor choice of words. However, a lender is too important to have a client play roulette at the business card rack of the local restaurant. A referral to a qualified lender or two is certainly within the scope of a Realtor's duties. If a trusting relationship has been established with the client, they will often heed the advise.

JAN

2007

Richard-"control" was not my verbage, I was quoting the blog. In PA (and Fl per Alex Knight) if a R/E agent refers one LO, they have to refer 3. Otherwise they can be held Lilable.

FEB

2007

On the side is the key term to use.

I am in Florida just like Robert Ashby - but I am happy to say that we no longer lead the nation - that trophy is held right now by Atlanta Georgia...

Back from the Tangent.... the National Association of Realtors published a study about 2 years ago stating that the typical Real Estate Transaction is planned very quickly..."Honey, let's sell the house!" "OK!"... But it usually actually takes a FULL YEAR for the Transaction to commence! Then, said sellers spend exactly one day picking a Realtor. On top of this, they usually just use the Mortgage Broker that the Realtor knows.

Now, I WAS A Realtor... and I do hold a Real Estate Broker's License in the State of Florida as well as my Mortgage Broker's License. I do not list or sell... I just don't get caught up in the legal hodge-podge that comes about when Realtors chime in about Loans they don't understand and Loan Officers chime in about Real Estate transactions that they are legally and ethically not allowed to participate in...

This smacks of just ignorance that the person who actually does the least work in the transaction gets paid the most and gets to control all the pieces. This is why the Realtor/Mortgage Broker relationship is often so sour. I've actually had Realtors tell me they won't use me no matter how good I am because I hold a license and that just means I'll steal their clients. If they're such bad relationship builders that the first person into a transaction can steal their clients, then perhaps they're in the wrong business. On top of that, for anyone to steal from another professional shows a myopic business sense and they'll soon be in another industry.

The truth that needs to disseminate to Realtors, LOs, Mortgage Brokers and CONSUMERS is that:

a) We're professionals... Licensing surely makes a difference... but you can't POSSIBLY be on the positive side of the learning curve in TWO disciplines and successfully balance them as a dual career and service the client properly.

b) There is no transaction without the Money... so LOs/MBs need to be researched as well. Referrals from friends and family members is super valuable and should not be overlooked. Your Realtor should be providing several references... not just the one with an ethically questionable desk in a real estate office.

c) Realtors and MBs should never be in the business of greed... we should be responsible professionals. When we are, transactions run smoothly and repeat business will follow. When one of us throws the other under the bus, then everyone is hurt!

CONSUMERS... pick your professionals wisely... this is a BIG decision and should not be taken lightly... but the market is full of stinkers in all professions... just remember the biggest part of the transaction is picking a reputable, ethical and experienced professional.

FEB

2007

David - "This smacks of just ignorance that the person who actually does the least work in the transaction gets paid the most and gets to control all the pieces."

You aren't seriously suggesting that the real estate salesperson does the least work in the transaction, are you? Did I misunderstand your post?

FEB

2007

Brian, I don't really have an issue with a realtor who is also the L/O. However, I find in most cases if the the primary income is from selling realestate they treat the mortgages as a second job. They do not keep up with current program changes and laws.

Prime example last night I took an application at a realestate office in the next office was realtor/ loan officer working with his client. I could not help but listen.. (sorry) but he informed her that she has no trade lines and therefore cannot get a mortgage.... That is a load.. I have programs for her. This realtor/Loan officer just did not keep up with the current programs.. (by the way I did not say anything)..

In california, regular real estate license is all you need to become a loan officer. Therefore, any

real estate agent can do loans with just a few days of training, if your broker also do loans. My

broker, a century 21 branch, encourage agents to do both. As a newbie myself, I plan to concentrate

on selling first.

Thank you all for the insightful comments...

DAVID - I'm sure we all agree that licensing requirements will help improve competency and that Real Estate sales are complicated transactions that require the professional skills and competence of ALL parties involved with no part more important than the other.

RICHARD - Glad to see your comments...I'd still like to drop by and visit one of these days.

MATTHEW - Many agent/originators can provide competent service in both disciplines if licensed properly.

KELING - Again, many are able to provide both services - but at what price to the client in terms of quality?

Very Good Post, Brian,

This is definitely a trend that needs to be curtailed and I agree with alot of the comments here that a Real Estate Agent help buyers buy and sellers sell. Period. Loan Officer evaluate, educate, and help obtain financing. Period. I feel that when you blur that line, who can you really be working in the best interest of your client????

Anyway, good post.

Brian, I agree however, most Loan Officers in Florida go to work for Correspondent Lenders so they don't have to become licensed.

FEB

2007

Brian - Well posted. I have a concern with this issue as well. In the original scenario you mention about broker/originator partnerships the water can really get murky. RESPA Section 8 is vague enough about these things that this type of arrangement is something I tend to steer clear from.

One of the things I'm seeing more often is Real Estate Offices with subsidiary mortgage offices and title companies all under the same roof. Now I have to believe that's some balancing act!

FEB

2007

Richard... I didn't say the LEAST. All sides of the transaction will be biased towards the importance of the work they do. the problem is that it puts them in the position to belittle the others. then when something goes wrong, someone becomes the sacrificial lamb when if we were all just focussing on our jobs, we could fix the problem before it becomes a major issue.

I get WAY too many real estate agents challenging my fees. "Why do you make 1 point on a loan?" "Why do you make 3% for filling in the blanks on a preprinted contract??" As an Agent I never made it my business to question what someone else was making. If we all work together, we all get paid... if we all make a smooth transaction then we all get more transactions out of it!

The balancing act starts with the strategic business alliance. If you have to add another form to a listing or loan app, you're probably trying to dodge something. If you can avoid it and let fees lie on their respective side of the table without muddying up the waters, then no one has to cry foul!

What I see is that new agents tend to try to do one thing or the other - learn the ropes... then once 3-4 years have gone, they start trying to take it to the next level. They believe they are plateauing. Which is the appropriate time to really push to the next place. Unfortunately, they think that they can do both transactions which not only can create a conflict of interest... but takes time away from being efficient and productive at EITHER. If you're a mortgage broker you can handle 50-60 files a year... but if you have to sell real estate at the same time, you may not even be able to touch 1/2 of that. If you're a real estate agent that can balance 6 listings, and 5 buyers at any time and can accomplish say 2 closings a month - ifyou have to write paper on them too you may lose buyers/listings or even more! So if you're doing $1500 avg per loan, $90K/yr 60 loans and say $4000/sale in real estate or 96K a year... why would you do both and possibly only manage to do the same income?

Why not stay the course and work with your mortgage partner to drive more leads? or spend a few dollars to buy some leads? market yourself better? ANYTHING? If you invest $2500 in personal promotion every year and get ONE sale out of it in real estate, you've doubled your investment. So if you hit year 4 and you're looking for the next step, why not double personal marketing? and it doesn't have to COST double... split it with your mortgage partner!! We all need that help!

RESPA will get you if you don't be careful.... keeping both sides ethically and legally clear means LONGER and more PROFITABLE careers IMHO

David - "This smacks of just ignorance that the person who actually does the least work in the transaction gets paid the most and gets to control all the pieces."

David - "Richard... I didn't say the LEAST."

Umm......nevermind. :)

Go Elderberry!

MAY

2007

Brian that is crazy. Glad to see someone else sees what I see. Great Blog. Hey I wanted to ask you if you would please join my AR Group. I would be honored to have you there. It is called:

http://activerain.com/groups/KentuckyProfessionals

Thanks so much and see you soon

Ben

JUL

2007

Just reviving an old post I found interesting.

I was all gung ho one day and went out to some open houses. I met a builder who told me he didn't need my services as he was the agent, I told him I wasn't an agent but an LO he said he would do the 1003 and hand it in (in where I'm wasn't sure...?) Quite offended I was. After all I was going to be his new LO. Well persistance didn't pay off. He didn't want to work with me. He was everything the builder, the agent, and apparently the LO. That was last spring. This spring drove by his condo's still unfinished (in framing stage) with Legal notices on the door.

I guess he really did know what he was doing.

Pick a career already I say. Why do so many people think they can do it all?

The realtor asking for a "kickback" because they sent the borrower to you is COMPLETELY ILLEGAL

You could lose your license and fines and im sure the same goes for the realtor

Hi Brian: Great article! I agree with the sentiments above. It always smells to me when people are trying to "play" a system that works fine. I personally try and stay away from anything or anyone that has an angle. Regarding, people playing both sides, I don't think you can do your job well and at 100%. Besides, I know some wonderful realtors and am always appreciative when they think of me (or I refer to them) and we can do a deal together. Have a great weekend1

Paul

Any realtor who is a loan officer as well must not have enough business. Maybe they should take some of that extra time they have and prospect. We have enough PT LO's that don;t know what they are doing. Well that just my two cents.

From a lender point of view. If I get a borrower that is getting qualified for a mortgage and does not yet have a Realtor, I always refer them to two agents, I let the agents both know what I am doing. I have found that regardless of an agents qualifications, sometimes one will build a rapport that the other one simply cannot and it has nothing to do with how qualified they are.

Hello All,

Interesting post. As a Real Estate and Mortgage Broker I find it a little strange. We work almost exclusively with buyers. I will only take a listing as a referral or favor. We do both loans and sales. The benefits of this are huge. My clients have the best choices as we take no rebates or YSP, they get the best available loan and no hidden costs. If it came right down to it, I could do the loan for free if I had to to make a deal work.

All of my agents are licensed and fully trained loan officers. Now ask yourselves, when you do not have anything going in a slow market can this be helpful. We do all types of loans, not just purchase. I have never had a conflict of interest and I truly believe in training beyond the minimum state levels. We do not originate loans for a single lender or get a fee for taking an application. The law states that to earn a commission as a loan officer you must do the job. At least in California it does.

Where is the conflict of interest in helping to get your client a better deal?

Is it easier to just give a few cards and send people out to get a loan?

If you have to be licensed as an agent to be a loan officer, why not do the full job? Although banks do not need to follow this rule. To be a loan officer in the State of California for a mortgage broker you need to have a real estate salesperson license. So even a new agent walking in to be trained has the same license as a real estate agent at any other office. All of my people are full members of the local, CAR, and NAR just like any other agent.

Now as to the money, my office makes on an average about 40-60% per transaction more than a listing office. Now take what you made last year on your purchases and add 40-60% to your commission split. We do two jobs and do not think it is easy. The training alone is a pain. When a new agent comes in they work with me or another broker one on one learning contracts and works with our head processor to train on loan processes. this covers Pre-Approval (not to be confused with a Pre-Qual), loan file preparation, legal and ethics issues, and much more such as guidelines for 45 different lenders and how to make sure they are best for their client.

Now think about a buyer who wants to know what is happening in his transaction. We have all had these calls, "How is our deal going?", "Have we heard from the lender yet?", "Has the appraisal come back yet?". Well now instead of not always knowing you can tell them, we are on track, the loan has been approved and your appraisal came in last night at $???. So now can you see advantages to being a loan officer.

Lastly, the client has the choice as in all things, as to who does the loan. On a whole, I will beat anyone out on a loan if I am doing the sale. The reason is that I am making money on the sales commission and can drop the loan fees to make it easier.

Thanks,

Shawn Nichols

JUL

2007

No one person should be allowed to do both sections of a transaction at the same time. It leaves an opening for mortgage or real estate fraud because of the lack of checks and balances.

JUL

2007

As a consumer looking at my home as my biggest investment, I would rather not deal with a "jack of all trades and master of none." I would want someone who practices one profession full time.

AUG

2007

In those cases where the lender is paying the realtor for a referral - Doesn't the realtor know that the loan officer is not paying for that out of their own pocket- It's going to come from their own buyer! Whether its in points or a higher rate....why anyone representing the buyer would want to do that to them really doesn't make sense to me.

Brian--- I have never met a successful real estate agent who also does loans and I have never met a successful lender who also did real estate.

Now, I have seen some people switch from one to the other and become very successful.

I am a licensed real estate salesperson, as well as a mortgage banker. However, I have not done a single real estate transaction since I switched to mortgages in 2000.

My experience is those that try to do both can count on their hands the transactions they do each year. You cannot do both and represent the client well.

AUG

2007

I always thought about becoming a L/O in addition to a realtor, but I've always been to busy. After reading your post I think it's best that I've been to busy! Good stuff!

I think that it depends on the business model. I agree that you can't be successful as a jack of all trades and that delagation is an extremely important element of success.

My company was built on this premice and it works for all parties. The Realtor orignates the loan and hands it over to a loan closer who prices it, communicates with the client, and gets the loan through the system. Everything is fully disclosed. Because the agent is part of the team, they are better informed on the loan process. The Agent does nothing but originate the business and make sure that they are kept in the communication loop.

the loan closes with less stress, the agent gets a split, the loan closer gets a split and the client is happy!

SEP

2007

For some of us, learning to originate loans can be a blessing. I'm a buyer's agent, and I do credit repair with most of my clients before they start applying for loans. Many I have worked with for 6 months to teach them how to manage their money, improve their scores and clean up their debt, so that when they do apply they won't need a sub-loan because they will be knowledgeable and on the right track. If I became a loan originator I could do what I already do (and get paid for it even) and have an updated status on the loan at all stages of the process. Remember, Realtor loan originators do not underwrite loans; they can only facilitate the process and make a commission of around 1%. Its certainly not a bundle of cash and it is extra work, but in today's market many of us (especially buyer's agent like myself who work with low-moderate income first time home buyers) don't have much to do right now anyway. Plenty of time to learn something new! The major firm that is allowing Realtors to originate loans is a NAR affiliate, and has compliance software built into their web-based platform. It's certainly not for everyone, but I can see how this ability would be useful in some situations.

Again, not a job for everyone!

Hi, Brian,

Great post. I've had a previous client or two who purchased a home without contacting me, got the loan through their Realtors, and called me a year or so later when they were worried about their subprime adjustable rate going up. For many buyers, especially the less financially sophisticated, it os often the easiest path to do wha tthe Realtor says, which can sometimes be the wrong choice.

Horrific...most of the time, dual agents aren't proficient in either of the 2 disciplines.

There oughta be a law! Or, rather, tougher laws.

APR

2008

Brian,

I can certainly understand where you are coming from. However, you are misinformed. After reading everything that you had to say I am asking myself if you are a loan officer. I enjoy offering my clients the convience of being a "One Stop Shop". Not only that but my clients are literally saving thousands at closing and they are in more control over their own transactions than ever before. Now I am truely looking after my clients best interest. The typical Loan Officer does not have my clients best interest...they have their own. I am in DIRECT contact with the underwriters 6 days a week....forget the middle man, I can now speak to the one person who make the decision on the loans..... homes aren't selling, but I am still making money off of all those refi's out there. I have partnered up with a company out of Arizona who has been in the business for 25 years..They are 100% in complaint with RESPA. Check it out, you will be happy that you did.

Wow..... This is an interesting blog. I can say that I have sent several customers to mortgage officers after they left our program and I have "never" ask for a referral fee. The idea that its always about the money is so "out in left field" that I can't hardly stand it. Take care of a business transaction and get paid once, take care of a customer and get paid over and over again. Who is actually qualified to do what, "I have no idea" but I know that I have had several customers tell me that their mortgage officer or real estate agent didn't seem qualified to handle getting them into a home.

I guess what I am saying is that it will all come out in the wash.

This is a great topic and wonderful post. I have seen many "one stop shops" they call themselves but how can you be an expert at both and do it fairly...Also if they want a referral fee then obviously they are not growing their business good enough to make a living.....but enough with the free rides, they cant expect to charge a fee for doing the initial "greeting". The best reward is that the people you refer to do their job and do it right.

JUL

2008

I find it amazing that no one on here commented about the conflict of interest in processing the loan. If, as some of you have stated, you are willing to do the loan for free, wouldn't you also be more likely to push an appraisal higher, misstate income, or facilitate other shortcuts to get your buyers loan closed? After all, the mortgage isn't the profit engine to the realtor, the sale is. That, in and of itself, is the conflict, not necessarily the compensation. Sorry friends, I don't believe for a second that if you are taking zero risk originating the loan and also making no profit so that you can make your buyers feel more comfortable, then I believe you have stated the perfect case for stopping this practice once and for all.

Hello All,

I have not commented on any group in a while, but I do receive the comments on the ones that interest me. The last post on this subject needs to be addressed, so here goes.

1.) If you are not an appraiser how can you manipulate the numbers? We order an appraisal just like any other lender. We do not do the report or set a price. I use three different appraisers and they would be totally insulted. They are licensed professionals and are not going to change a number or reach outside of guidelines to make my like easier.

2.) I would never mis-state income. I do not want to lose my good standing with lenders or be asked to buy back a loan. Even a stated loan needs documentation and is not a free walk in the park. Not to mention that in the current market stated loans are hard to get and they have to have more money down. So unless the client is purposefully misleading everyone it does not happen very often as the employer still needs to verify wages and employment.

3.) Short cuts? There can be no short cuts in a loan when it is ran as a legitimate business. There are three levels of quality control in our office. The LO/Agent, the corporate processor (no loan can get submitted until she has signed off), and the office broker. If it is in any way a file that does not stand on its own, it does not go forward. This does not even take into account the bank guidelines and their quality control measures.

As in all aspects of any business, it is personal honesty and ethics that will set the standard. No two places are the same. This is not a new trend, we have been doing both for 10+ years.

HONESTY - INTEGRITY - and CLIENT BEFORE COMMISSION should be the defining points on any transaction.

I actually encourage my clients to shop around for a loan. It is a matter of personal choice for them. I offer both services, but it is the client who decides.

Thanks,

Shawn

Brian i like to take my clients to a full time competent loan officer. If they are doing both they are not full time at either job. I make more money on referrals from LO's then I would on originating a loan

JUL

2008

Great comment shawn and I agree.. give the client a choice. As long as you are honest there should not be a problem provided you disclose everything. I am only a mortgage broker, but I work with Realtors who also offer mortgages. some choose to do both, but the disclose everything under the sun, so there is no confusion.

If you are an LO, you cannot have an active real estate liscense and do FHA loans, HUD is very clear and specific about this. They want full time LO's doing FHA loans. Just another reason to not dabble in both.

I think that it is very difficult to stay on top of our ever changing Mortgage Industry and managing Clients as a Realtor with showings and all the time involved with the needs of your clients I just find it very unlikely that someone could maintain both sides of the transaction... Needless to say there are many that take on this task and are successful I know of some personally but they burn the midnight candle everyday........ I couldn't do it but for all that do my respects......

Great topic and post!!!!!!

JAN

I do not believe there is a conflict of interest in representing both parties in a transaction, if you are doing your fuditiary duties on both ends there is nothing to hide nor worry about . It is when people put money instead of there duties first, when the problem arises. Now if you worry about charging them an extra point, or push them towards a home that pays a better commission, then you know you are guilty and you know who you are ! probally 85 % of you. Just leave us honest people out of your rational .

MAR

Why doesn't everyone just get certified as a broker - that way you can dismiss competency issues as a factor (excuse) for not being able to do both. So many comments insinuate that you can't properly do two things at once- how crazy would it be if you were to throw chewing gum into the mix! It's as if you can't ride a bike because you drive a car or a motorcycle- competent ethical individuals will be competent no matter what they do- even chewing gum!

Shawn Nichols- keep up the good work...continuing education, training, and service are key factors in any field.

C'mon people...the segway into either of these careers takes about as much effort as getting out of bed. State salespersons tests are horrendously easy...it's not like getting a bachelor's degree or master's degree from a major university! (of which I have both). Go out, get your broker's license and be all that you can be. Compliance to regulations is priority alongside client's interests- if you abide by these rules, everything else falls into place. Take your entrepreneurial energy and challenge yourself to do more than what the world says your limited to do!!

APR

I feel that the real conflict of interest arises when a client is forced to pay double in fees when purchasing a home. The majority of people ranting about "ethics in dual representation" have no clue as to what is really going on.

The sad thing is that most of the people arguing "there is a conflict of interest doing both sides" do not know what business they are in. We, as real estate professionals, are in the business of helping people buy and sell their homes. Period. She or He who gives the most professional and complete service wins.

The real conflict of interest arises when you argue ethics to protect your own interest. Because the truth is that an agent that does not represent his or her buyer both in the real estate side and the mortgage side cannot compete with an agent/broker who can. How can you be a real estate professional and know nothing about financing the transaction or what is going on with your clients mortgage? How can you present an offer if you do not know if the buyer is approved? Why would you drive a buyer all around town on Saturdays and Sundays to find out after 2 months that they cannot qualify?

On the other side of this equation, a mortgage broker who cannot sell real estate in addition to their service as a MB cannot compete with a Realtor who also provides Mortgage Services. A MB cannot compete in a market where Realtors whom are also MB's are giving the lowest possible closings costs to their buyers so that they can guarantee their real estate commissions. The MB whom only does mortgages will have a hard time trying to charge 2% in origination fees and clobber their clients with another 3% in Yeild spread premiums. This MB will go hungry.

So all of you are arguing to save your own back sides. In a true free market economy competition is embraced and is encouraged. This competition and eliminating the middle man and steps in the process lowest the cost to the consumer. It is a good thing. It is just like our society to twist the truth to protect the interest of a small group.

We represent people with the most expensive purchase in their lifetime. We should be qualified and licensed to do bith mortgages and real estate. It is not rockect science. It is time to demand competancy in our industry.

I know many Realtors who represent buyers and are also MB's. When they have a buyer they originate the mortgage for them and give them the mortgage at a very low cost so that the real estate commission is almost guaranteed. Because of the fact that they are already getting paid on the real estate side of the transaction they will do their very best to save the clients allot of money on the mortgage closing. Insuring a very affordable closing. And a comment to the Realtors claimming to be only "Listing Agents" if the closings costs of the buyer are very low it would be much easier for you to ask your seller to contribute towars the buyers closing costs. If the transaction is almost guaranteed to close I can almost be 100% for sure that the Listing agents will also be very very happy.

How is this business model for getting referrals? Changeis a good thing. To all the lazy agents out there not willing to innovate and learn more about their industry and vise versa I would suggest you find a less intelctual profession.

Do Realtors push the Mortgage Brokers and Appraisers to close the deals so that they can make their money? If the broker does not close does that Realtor send him or her any more deals? Is'nt this a conflict of interest?

MAY

Wow this is really an interesting discussion. I think I am going to look into doing loans on a limited basis.

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