The Age Old Question: Who is Chosen First? The Agent or the Lender?

By
Real Estate Agent with Cedar Rapids/Iowa City, IA KW Legacy Group S44645
https://activerain.com/droplet/4tWN

The Age Old Question: Who is Chosen First?  The Agent or the Lender?

 

It is kind of like the chicken and the egg to the consumer isn't it?  This was a question that came up on a Zillow question thread over the weekend.  I am sure that it has come up many times before and will likely be a topic many times after.  What I found was interesting was the variety of responses to a buyer that simply asked,

 

"Where do I start if I want to buy a home?"

 

The agents jumped in and spouted off their credentials.  They blustered about their "network" of great lenders and how choosing an agent first is best.  

Then the lenders jumped in... and said that they can refer the best agent in the market area and of course, you guessed it, it is best to start with the lender first.

 

chicken and the egg

What is a consumer to do?  Whether you are buying or selling, either way can work.  My suggestion was to talk to a lender first.  Only because if a buyer has already been to the lender and have been                 pre-approved for the loan, they are ready to look at homes. Step one, completed.  But, if a buyer calls me today and has not been to a lender yet, that is still the first piece on the path to home ownership, in my opinion.

 

There is no point in guessing what a buyer can afford.  You can go online and use all of the mortgage calculators to try to figure out what you want to spend.  But the criteria the lender uses is not what you think you can afford, but what they feel comfortable lending you based on your risk factor.  Especially if you are looking to take advantage of a program that requires little to no money down, your debt to income levels needs to be within their guidelines. 

 

Looking at homes with a pre-approval is setting a buyer up for a heartache.  No point in looking at homes that are too expensive and then the buyer is disappointed with the options that ARE available in the price that they want to spend.  (The old saying about champagne taste and beer budget comes to mind here!)   It isn't about what the bank says you are approved for, it matters what the buyer wants to pay every month for their new home.  A buyer has a comfort zone and it may not be at the tippy top of their approval letter.  But it is nice to know that if they find a home that they love, they have a little extra wiggle room!

 

Whether you start with a lender or an agent, interviewing more than one to find someone that you feel comfortable working with is the key.   This is true for a lender and certainly for an agent. Both are needed in order to make your transaction work smoothly.   You will be working with these people for several months...to purchase one of the largest investments that you will ever make.  It is often not an easy decision and you want to be sure that you have someone that will answer your questions with a smile and justify the price that you want to pay when the time comes to negotiate with the seller.  

 

I would love the opportunity to interview for the job of representing you in your pursuit of home ownership!  You can reach me on my website at www.KarenFeltman.com or give me a call at 319-521-0701.  I will meet with you one on one to discuss the home buying or selling process in a consultation meeting that is free of charge and obligation.  

 

Keep smiling!

 

Karen

 

Posted by

 

Karen Feltman, REALTOR®, ABR, AHS, CHMS,                                                                      CNE,CRS, e-Pro, green, GRI, SRES, TRC

Keller Williams Legacy Group

4850 Armar Drive SE Ste B

Cedar Rapids, Iowa 52403

Email: karenfeltman@gmail.com

Mobile  319-521-0701

www.KarenFeltman.com

Licensed in the State of Iowa

© 2010-2018 by Karen Feltman, Cedar Rapids/Iowa City Relocation Specialist 

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Topic:
Home Buying
Location:
Iowa Linn County Cedar Rapids
Groups:
Active Rain Newbies
Realtors®
1st Time Buyers
Point 2 Agent Sites
Iowa Real Estate
Tags:
buyer representation
choosing an agent
choosing a lender
where to start when buying a home

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Rainer
112,617
Vera Gonzalez
RE/MAX Suburban, Inc. - Sterling Heights, MI
Gonzo For Real Estate

Karen,

This is a fantastic blog that makes excellent points both ways! I enjoyed this. 

Jan 11, 2015 11:24 PM #1
Rainmaker
528,731
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

Vera Gonzalez Thank you for reading! 

Jan 11, 2015 11:29 PM #2
Rainmaker
4,404,162
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Karen,

Well said.  Funny enough, when we were relocating from Los Angeles to Napa, and then Napa to Santa Barbara, we contacting the agents.  Perhaps, because we are agents ourselves (commercial) and feel a kinship.  A

Jan 11, 2015 11:40 PM #3
Rainmaker
756,046
Annette Lawrence , Palm Harbor, FL 727-420-4041
ReMax Realtec Group - Palm Harbor, FL
Making FLORIDA Real Estate EZ

My example would be as follows:

The buyer is packing a pre-approval from Chase or EverBank or Homebanc, for $250,000 but they disclose to you they are wanting to buy a $45,000 condo in a 55+ community. As you know, this combination means they will revert to cash buyers....or....

Had they started with the agent, they would be working with a lender who can actually close a deal on that type of real esate at that price point. 

Now, another example, if the buyer had started with the agent they would have been directed to a lender who would have provided a 'verified' pre-approval eliminating the 'un-reimbursed business expense' that likes to pop-up when the lender is the starting point. It matters not how friendly and cooperative and efficient that Wells Fargo or Chase broker is, it is what happens in underwriting that has greatest effect on the buyer. By admission, Chase underwriter ignore their own guidelines creating havoc out here where the real people live.

In summary, the delima is really the issue the consumer wants to feel they have CHOICE. In so many cases it is the choice to make a bad selection.

Which is best, agent or lender first? Depends on the outcome the buyer wants and journey they are prepared to take.

Jan 12, 2015 12:00 AM #4
Rainmaker
528,731
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

Ron & Alexandra Seigel As agents, we do things the way that we feel most comfortable.  Buyers and sellers should do the same.  There is no right or wrong in the selection.  Thank you for reading.

Annette Lawrence That is very specific situation.  One that I have personally never had in front of me.  Sounds like a lot of work though!  But your last line says it all: " Which is best, agent or lender first? Depends on the outcome the buyer wants and the journey they are prepared to take."  Thank you for reading and sharing.

Jan 12, 2015 12:06 AM #5
Rainmaker
3,247,520
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Karen

Enjoyed reading your post . . . . we expereince that most buyers choose the real estate professional first.

Good luck and success.

Lou Ludwig

Jan 19, 2015 01:19 PM #6
Rainmaker
1,942,565
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

The real estate professional with lots of inventory to use in the real estate matchmaking. That agent or broker sets the realistic expectations, navigates around the pot holes and sees the red flags along the tip toe to the real estate closing.

You need a navigator that knows about lending programs, that fit the property that is causing the pitter patter as "the one". That has dealt with lots of legal beagles and knows the territory. The real estate agent pushes to make sure the buyer is pre approved to be taken serious in offers to sellers... but that banker is not the chief cook and bottle washer in the kitchen. The guy or gal wearing the "R", the hardest working letter in the entire alphabet on his or her apron is.

Jan 19, 2015 06:35 PM #7
Rainmaker
528,731
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

Lou Ludwig I agree that many people start with an agent.  Whether it be an agent that is recommended to them by a friend, family member or co-worker or meeting one that they like at an open house.  Thank you for reading.

Andrew Mooers Well said.  We certainly do navigate around the land mines and pot holes that buyers can fall into when unrepresented!  Thank you for reading.

Jan 20, 2015 03:29 AM #8
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Rainmaker
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Karen Feltman

Relocation Specialist in Cedar Rapids, Iowa
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