Working effectively with today’s buyers and sellers using real estate finance requires us to find the right loan officers and lenders. Meet with the loan officers you are most likely to suggest to your buyers. They need to understand the critical role they play in your approach to buyers. Personally, I like to set some ground rules so we are both on the same page as we move forward to develop a mutually beneficial relationship (Setting Referral Guidelines With Lenders, 7/5/02).

Some agents are shocked to realize that lenders are not operating under the same obligations of loyalty and confidentiality required of us in a fiduciary relationship. Given the importance of the lenders in the transaction and the sensitivity of the information conveyed by the buyers, the lender’s behavior is critical.

You job as a buyer agent is to help the buyer purchase the property for the best possible price and terms. I would argue that this means helping them secure the best financing possible.

Most lenders focus, however, on originating as many loans as they can. Advising the buyer concerning which loan and which terms are best may be involved, but is not necessarily part of their relationship. This is another reason real estate finance is such a terrific area for us as agents to master. In most transactions we are the only party perfectly situated to get them the best deal, or in this case, the best mortgage (Help Your Buyers Get The Best Mortgage, 6/11/02) .

In-house lenders

As much as not all agents care whether their broker is successful, few if any agents would benefit from a weak or failing organization. As such, how best to deal with in-house lenders deserves a comment or two. Given the broker and lender’s shared interest in seeing the transaction take place, in my experience buyers and sellers benefit from the in-house relationship.

In-house affiliated services partners (loan officers, title clerks, etc.) place a premium on servicing our buyers and sellers and often are compensated in part on their in-house capture ratios due to the sales agent’s sphere of influence. A capture ratio is the percentage of all an office’s transactions that the in-house partner obtains (e.g., 40% of all loans originated by agents in an office during a particular month).

Just as important from a fiduciary perspective, an agent often has more control over the transaction when in-house services are selected by the buyer. Contacting the loan officer’s boss when problems arise can be effective. In addition, given the volume of in-house transactions completed, if another lender fouls up at the last minute, in-house funds may be available for the mortgage to keep the transaction together.

You have significant leverage with the lenders. The 2002 National Association of REALTORS® Profile of Home Buyers and Sellers states that 54 percent of buyers took our recommendations about which lenders to use. Use your leverage to improve the service you provide your clients.

The relationship you develop with your lender should be one of the most productive relationships you have. They can help drive the success of your business. Setting expectations ahead of time is critical. If you work only with pre-qualified or pre-approved buyers, the vast majority of all your buyers are motivated. They will be applying for a mortgage soon and are a good use of your lender’s time and effort. Meet with your lender so they provide the service you need. Working closely with a professional loan officer can earn you your clients’ business for life.

Published: August 15, 2002

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Mike Merin, CRB, CRS, ITI is the author of ATTACK THE MARKET! Specialize in Negotiating, Finance, Pricing or Technology which details how an agent can guarantee his or her success by learning and marketing skills that consumers value today. With graduate degrees from Columbia University, Mike was a negotiator for the U.S. Government in Washington, Moscow, and the capitals of our most significant trading partners. Beginning in 1985, he purchased with partners his first of several investment properties. He left the international arena to support his wife’s career and joined Prudential Fox & Roach REALTORS® as a successful agent in the Philadelphia area. An award-winning author, you can read or purchase Mike’s publications at www.mikemerin.com.