Understanding the Lender-Realtor Relationship

Understanding the Lender-Realtor Relationship

As a real estate agent, nothing is more satisfying than a smooth transaction. While you are working for the homebuyer or seller, you are also working with other service providers involved in the real estate transaction. From appraisers and home inspectors to insurance agents and lenders, you’re all moving towards a common goal of closing on the property. Working together is better than apart and you can consider these other parties as your team members. One member you’ll be in contact with often is the lender. And when it comes to the lender-realtor relationship, don’t be afraid to reach out to several to add to your team.

If you’re new to real estate or are looking to update your lender partners to work with, read on to understand the lender-realtor relationship, who it benefits, and how to get started. 

How do real estate agents and lenders work together? 

Many homebuyers need a home financing company to finance the home they wish to purchase. Real estate agents have an array of skillsets to perform their profession, but this is where they need the help of a lender to assist.

The lender will pre-approve a client so the real estate agent knows which homes to show a buyer within their budget. When the buyer has selected a property and signs a contract, the lender will work to get their financing approved, while the real estate agent will follow up to move the process along.  

Who benefits from the lender-realtor relationship? 

When a real estate agent and lender work together, they become invaluable to their client. Both are service-based businesses with the goal of getting their client into a new home as smoothly as possible and keeping the client satisfied. So at the end of the day, the client benefits from the lender-realtor relationship. 

Some clients do not know a lender to work with and go to a real estate agent first, or vice versa. As a real estate agent, encourage your clients to do their own research, but you can suggest lenders that you’ve dealt with and trust for successful transactions. Let your clients know your experience with the lender and what to expect during the home financing process when working with them.  

What is RESPA? 

The Real Estate Settlement Procedures Act (RESPA) eliminates kickbacks and referral fees for any settlement provider involved in the real estate transaction. This ensures transparency to the consumer. Real estate agents are subject to the rules under this act when co-marketing with and referring other service providers, such as lenders. Read the National Association of Realtors®’ take on RESPA and RESPA FAQs for more information. 

What do realtors want from lenders? 

When establishing a lender-realtor relationship, realtors are looking to partner with lenders to best serve their clients. When selecting who to work with, real estate agents are typically looking for a good cultural fit, reputable track record, and speed according to a report produced by Inman and 1000watt.  

8 things a real estate agent should expect from a lender 

1. Service Oriented  

As with real estate agents, lenders are also in the business of serving their clients. In a lender-realtor relationship, real estate agents expect lenders to also have exceptional customer service and communication skills. This includes one who takes pride in client satisfaction, follows up frequently, is professional, knowledgeable, and knows their product. Real estate agents also want to ensure the lender is able to explain and answer any questions that their clients may have about home financing.  

2. Reliable Pre-Approvals  

Real estate agents will typically use a pre-approval as a guide for figuring out which properties to show their clients. This will keep their client within budget and ensure they have the best chance of receiving home financing. Therefore, real estate agents expect lenders to thoroughly verify and ensure the pre-approval is accurate.  

3. Transparency  

There are a lot of parts that go into a real estate transaction. While a real estate agent’s job is to ensure it goes smoothly, help from the lender is always appreciated. A lender can help in being transparent in all aspects of the home financing process. If something is delayed, they should let you know immediately and explain why. While reaching out to them, they too should stay in touch to keep you in the loop.  

4. Fast Turn Around Time 

Especially during the busy season, real estate agents may need pre-approvals fairly quickly to put in an offer. As is the nature of real estate, agents should expect to have access to the lender on Saturdays and Sundays. These are typically the days when their clients are looking at homes, and potentially putting in offers right after. If a client needs an updated pre-approval, they will expect a lender to be able to do so quickly to move the process along.  

5. On-Time Closings  

One of the goals for both the real estate agent and the lender is to close on time. Real estate agents expect the closing to be done on time with the help of the lender. This is especially when it comes to making sure all proper documentation and information have been gathered in regards to home financing. This will avoid any problems and delays that may arise right before or at closing.  

6. Marketing Support 

Since most homebuyers need both a real estate agent and lender at around the same time, it may be beneficial to advertise your services together. A lender can provide advertising material for the real estate agent. This includes material like open house flyers and brochures that can explain how home financing works. This advertising can also be taken online where both take on equal parts of the advertising budget on social media. Note that when you are co-marketing, your advertising efforts may be subject to the Real Estate Settlement Procedures Act (RESPA). Read more about RESPA.  

7. Diverse Product Offering  

Each client is different and has different needs based on their financial situation or financial goals. When a real estate agent had a positive experience working with a lender on one transaction, they’ll want to use the same lender in another transaction. The real estate agent wants to ensure the lender has a diverse product offering for the needs of all clients they work with.

8. Help with Lead Generation 

How to get clients in real estate is frequently on a real estate agent’s mind. And one of the creative ways is to work with a lender, where they are mutually beneficial to each other. Sometimes a homebuyer will go to a lender first before a real estate agent. This is an opportunity for the lender to help the real estate agent, and vice versa. Though, it is important to note that realtors do not get kickbacks from lenders

How do agents form lender-realtor relationships? 

Maintaining and finding new connections in the real estate transaction is one of the habits of successful real estate agents. When finding the right lender-realtor relationships to cultivate, it’s important to ask questions that will help you determine if these are people you can work with and want to refer your clients to.  

If you’re new to real estate and don’t have your team just yet, or looking for new ones, here are questions to ask a lender as a real estate agent. You want to create a list of a few different ones so you can pair them with a certain client. These will be your go-to list to frequently refer to if your clients ask for recommendations.  

6 questions a real estate agent should ask a lender 

1. How long have you been in the industry?  

Knowing where they are in their career will help you understand how comfortable they feel working with the amount of experience you have. You may find some lenders do not want to work with real estate agents who are fairly new to the industry if they’ve been in the industry for a long time. But sometimes, you’ll find they are open to it. See how you can be beneficial to each other.  

2. What other relationships do you have with other parts of the real estate transaction?  

If you form a lender-realtor relationship, there could be a conflict of interest so you want to be clear and upfront before starting to work together. They may already have a large network of people they work with and refer to—some might even be family members or close friends. 

3. Who are some other real estate agents you work with?  

Check how productive the other real estate agents they’ve worked with are. If they are top producers who use this lender, there may be a reason for it. You may even be able to reach out to see how their transactions have been with this lender.  

4. How do you differ from your competitors?  

Find out what makes the company they work with different from others. This will also help you understand a bit more about their company. You can also determine if this is one you’d want to refer your clients to. You could also ask which products they currently offer—do they do more refinances than purchases?  

5. What is your process of working with clients?  

Getting to know how they work will also allow you to properly refer them to a particular client based on your client’s way of working and needs. If the lender tends to be tech-savvy and communicates via text, is this how your client also likes to communicate? Is their way of working something you can work with too?  

6. How are you currently marketing your services?  

See if there’s an opportunity for you to share an advertising budget. You can place ads in local papers or social media. This is an opportunity to co-market together since you are both wanting to reach the same audience, like first-time homebuyers.  

Take action now to learn about the Guidance Home Services real estate referral network

Note: The relationship between Guidance Residential and the homebuyer is that of co-owners in a property and not that of a borrower-lender. The initial financing provided by Guidance Residential is applied to acquire an interest in the property and not to provide a loan. Learn the difference between an Islamic mortgage and a conventional mortgage here. 

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