Understanding the Lender-Realtor Relationship
To a real estate agent, nothing is more satisfying than a smooth transaction, whether you’re buying or selling. Your team members — from appraisers and home inspectors to insurance agents and lenders — are all moving towards a common goal of closing on the property. One team member you’ll be in contact with often is the lender or home financing provider.
Read on to understand the lender-agent relationship, who it benefits, and how to get started.
How do real estate agents and lenders work together?
Most homebuyers need a mortgage provider to finance their new home. The financier will pre-approve a client so the real estate agent knows which listings to show a buyer to stay within their budget. When the buyer has found their dream home and signed a contract, the financier 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?
Every person involved in a home sale benefits from a good financier-real estate agent relationship. When real estate agents and mortgage lenders work together, they become invaluable to their customers. As a real estate agent, encourage your clients to do their own research, but you can suggest mortgage providers that you’ve dealt with and trust for successful transactions.
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. Read the National Association of Realtors®’ take on RESPA and RESPA FAQs for more information.
What do real estate agents want from mortgage providers?
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 mortgage provider
1. Service Oriented
Real estate agents expect a home finance business to have exceptional customer service and communication skills. It should be professional and knowledgeable, take pride in client satisfaction, and follow up frequently.
>> Related Read – How to Stay Top of Mind with Real Estate Clients
2. Reliable Pre-Approvals
Real estate agents will typically use a pre-approval as a guide in their search for properties to show their customers. This will ensure they are looking at listings the client will qualify to afford. Therefore, real estate agents expect lenders to thoroughly verify credit history, income, debt, and other financial information and ensure the pre-approval is accurate.
A mortgage provider can help ensure a smooth home sale by being transparent. If something is delayed, they should let you know the details right away and explain why. You will need to stay in touch with them to keep in the loop.
4. Fast Turn Around Time
Real estate agents may need pre-approvals fairly quickly to put in an offer. If a client needs an updated pre-approval, they will expect lenders to be able to do so quickly to move the process along.
5. On-Time Closings
Both the real estate agent and the mortgage provider want to close on time. The financier needs to make sure all proper financial documentation has been gathered. This will avoid any problems and delays that may arise right before or at closing.
6. Marketing Support and Lead Generation
It may be beneficial to advertise your services together. Material like open house flyers and brochures can explain how home financing works. Both parties also could contribute funds for joint ads in newspapers or on social media.
>> Related Read – Realtor Billboard Advertising: Does It Work?
7. Diverse Product Offering
Each client has different needs based on their financial situation or financial goals. The real estate agent wants to ensure the financier has a product offering that meets the needs of their clients.
>> Related Read – Real Estate Niches: What’s Lucrative & How to Find Yours
How do agents form lender-realtor relationships?
When finding the right financier-real estate agent 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. Here are 6 questions to ask.
6 questions a real estate agent should ask lenders
1. How long have you been in the industry?
Knowing how long they have been established will help you understand their experience level.
2. What other relationships do you have with other parts of the real estate transaction?
There could be a conflict of interest, so you want to be clear and upfront before starting to work together.
>> Related Read – Real Estate Networking: A How-to Guide for Agents
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 financier, there may be a reason for it.
4. How do you differ from your competitors?
Find out what makes them different from others.
5. What is your process of working with clients?
If the lender tends to be tech-savvy and communicates via online tools such as an app or texts, 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 together since you are both wanting to reach the same audience.
>> 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 more about Islamic finance and the difference between an Islamic mortgage and a conventional mortgage.
Blog originally posted on 10-12-2021. Updated on 9-5-2023.