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Real Estate Agents as Mortgage Brokers

By Randy Worcester, Broker/Owner, CRS, ABR, GRI, MRP, MBA

Real Estate Agent with Weichert, Relators - Home Pros TN 300100

October 25, 2006 02:02 AM

There is a company that has been approaching agents in the South about becoming mortgage brokers in addition to being a real estate agent. Yesterday, our agent leadership council (ALC) voted that this will not be allowed at our offices. Kudos!

This may sound atttractive to a marginal agent looking for an additional source of income. But I simply see it as a lawsuit waiting to happen.

But maybe that is not the case. Recently, I asked why we don't recruit from XYZ realty. I was told that many of the agents there were also mortgage brokers so that they could be covered by health insurance.

While I could use some good health insurance, my goal is to become the best real estate agent that I can be. Becoming a Mortgage Broker would simply get in the way of that.

Frankly, I am surprised that in this highly regulated industry that the State allows an agent to serve these two roles.

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Leigh Brown

Leigh Brown & Associates, RE/MAX Executive - Charlotte, NC

CEO, Dream Maker - Charlotte, NC

This might not be popular, but I heartily agree that mortgage broker should be mortgage brokers and real estate agents real estate agents. There's an inherent conflict of interest when one party stands to profit on two aspects of a transaction. I lost a big deal once to a mortgage broker with his real estate license, who offered to use his commission to buy down their rate, so they cut me out of the deal altogether. OPened my eyes and left a bad taste in my mouth.

Oct 25, 2006 02:22 AM

David Spencer

Keller Williams Northland - Kansas City, MO

Show Me real estate in Kansas City

If a mortgage broker would ask their clients (that would be the funding source), they would more than likely receive an emphatic no regarding also having a real estate license.

Oct 25, 2006 03:36 AM

Man, it was 2 years ago now. I had signed buyer agency paperwork and everything, only found out because the onsite rep at the neighborhood has a good relationship with me and he told me what transpired. But I do enough deals that my time is more valuable closing someone else than dragging him up before the board. It's that same old problem of policing ourselves that keeps the wicked ones in action because those of us with the issues but not the time let it go. I felt better though because the buyers fessed up when I called them on it. And that mortgage company? I spoke out about this guy at our business meeting and they're now on the 'bad' list at our office. With all the agents.

Oct 25, 2006 06:26 AM

William J. Archambault, Jr.

The Real Estate Investment Institute - Houston, TX

Randy,

There is probably no more controversial issue in real estate than should one real estate person waer more than one hat. At the risk of offending many, but with malice towards none, I make a commitment

NO! Never!

People that know my career wonder why I don’t support the combining of real estate and mortgage brokering. The answer is simple, despite all the success stories (I do believe them) it’s rarely good for the client. When you cut out one professional in exchange for one agent who works part time at two similar but totally different professions you can’t except anything more than mediocre service at best. Who’s going to protect the client from being over charge for the loan or from poor advice from the REALTOR®? Who’s going to protect the novice from being the victim or an active participant in fraud?

I understand the other side. I went into real estate from banking, and soon found that my success was because I knew how to "Get The Money" (Yes I wrote the book and several others.) I had to fight high rates, poor to terrible service, and total incompetence and then at closing I see all those lender fees! I understand. That was more than 30 years ago, I went back to lending more than 20 years ago and I’m convinced that there is no good way to combine the two. Yes there are a lot of success stories but how do these consumers know they really got a good deal?

Here in Nevada we now have rules that allow wearing two hats but only allow the salesman to collect one fee. Increditably we allow the broker to own both companies and collect both fees. This is even worst. I’ve only seen a few "Good Faith, Truth In Lending" forms from these institutions but those I’ve seen were not good for the client.

Put me down on the side of the consumer, after all I’m the one who believes the mortgage brokers have a separate fiduciary interest in the client!

Bill

William J Archambault Jr

The Real Estate Investment Institute

http://www.reii.org

Oct 25, 2006 07:41 AM

Danny Smith

DISCOVER TEXAS HOMES - Round Rock, TX

I don't know how I feel about this subject. The state of Texas also allows this and I do work for a company that is a Real Estate and Mortgage Network. But I personally don't know any of the agents that do both. Although I suppose there are just as there are in other real estate agencys. Basically we have real estate agents and then a mortgage company that is associated with our agency. As agents we can recruit other agents or agencys to either side of the scenario and they become part of the network. I'm personally only a real estate agent and plan on keeping it that way. Also I recommend if necessary two or three mortgage agencys to the buyer to choose from. With that in mind the ethical thing would be for an agent to recommend multiple choices for the buyer to make a decision. I see nothing unethical at this point though even if the buyer chooses for that representation to be form the same person as long as all things have been explained. Because both profesions are regulated and a license to practice is rewuired and part of that requirement includes being ethical. Or risk losing your license. ~ Danny

Jan 21, 2007 12:30 AM

Real Estate Agents as Mortgage Brokers

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Randy Worcester, Broker/Owner, CRS, ABR, GRI, MRP, MBA

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