I've always wondered about the concept of Conflict Of Interest.  As an ethical consideration, we as REALTORs®, are supposed to avoid conflicts of interest.  Hence in Texas, we have the Information About Brokerage Services that clearly define who the agent is working for. In Texas, in the abscence of a signed representation agreement with a buyer, you work for the seller by default.  Pretty clear, right?

 So what about when it's not so clear.  One situation that has always bothered me is when the agent is also the buyer's mortgage person.  I have had this happen to me about 3 times in the last year and every time it has just left a sour taste in my mouth.  I know that a person can legally hold a mortgage broker license and a real estate license at the same time but if you try to perform BOTH jobs at the same time, does this create a conflict of interest?

My thought is that yes it does.  Here's why I think that way.  If I have a signed buyer's representation agreement with my buyer to safeguard my clients interests during the real estate transaction and then I also assume a job as a mortgage person with the same client,  due to the nature of fiduciary responsibility, I can not do both jobs at once.  Why? Well, it goes back to WHO you are working for.  If you have a signed buyer's representation agreement in place with a buyer, then you are legally bound to that client.  However, as  a mortgage broker or loan officer, your ONLY responsibility is to the mortgage company who holds your license.  So ultimately, you are trying to straddle the fence between doing what is right for you client in the real estate side of things and watching out for your license holder on the mortgage side.  How is that not a conflict of interest?

I've talked to a couple of people holding both licenses and the response I got was less than stellar.  They claim that they always watch out for their client on the real estate side and try to get them the best rates and deals as their mortgage person. That works fine if the person is of a character that can do right even in the face of temptations!  But, they are not LEGALLY BOUND to do right by that client as their mortgage person.

As I said, the few times I have encountered this, it was not good for the client.  On one house, the loan person accidently submitted one of the loan papers to me with the contract.  It said the client had a credit score in the 750's yet somehow their closings costs on this 95,000 house were almost 15,000.  Now how can that be watching out for your client?  (by the way, that person is no longer in the real estate business although he may still be punching around with some mortgage company)

Another time, the agent, as their mortgage person, tried to leverage me off of my comission by telling me that from the mortgage side of things, if I did not contribute to their closing costs, they would take their client elsewhere (this after we already had a executed contract).  That was quite an experience.

Any thoughts on if man can serve two masters?  Or any experiences with an agent also acting as loan officer for someone buying one of your listings?