LEW SICHELMAN
THE MORTGAGE SCENE
Agents Of Ill Advice Real estate agents are dispensing loan advice. It’s time they stopped. BY LEW SICHELMAN | CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL
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ore wanna-be home buyers than not start the process with a call to their favorite real estate agent as opposed to the loan officer or mortgage broker who is going to handle their financing. Of course, that’s just plain wrong. The first stop for anyone who intends to purchase a house should be with a lender. That’s the point when they can lay their finances bare, find out how much house they can afford and get pre-approved – or rejected – so they can start the process armed with the knowledge that once their realty agent finds them the property of their dreams, they can proceed quickly to tie down the deal. But lately, realty agents have been moving in on what it says here is rightfully the mortgage sector’s turf. Many have become financing “experts,” advising their clients about stuff they don’t really know enough about, if they know anything at all.
This topic was brought to mind on the last day of June when Inman News, a web-based news service aimed at real estate agents and brokers, published a piece about what its audience should know about today’s mortgage market. (In the interest of full disclosure, I wrote extensively for the site until this year.)
UNQUALIFIED ADVISORS The story gave me chills, as it should every mortgage professional. Sure, agents should be well versed in what’s occurring in the financing field; i.e., that lenders are moving away from more risky loans, as the piece suggests, or that qualification standards have tightened considerably. And yes, agents should, as many do, advise wouldbe clients to see a lender first, then hunt for a house. But asking them if they have enough savings if the economy continues to falter, if they have any kind of job security, how strong is their credit score or if they’ve gathered all the necessary documentation to support their loan applications? That’s what the author, Salomon Chong, CEO of The Mortgage Hub in Southern California, suggests. To be fair, Chong writes under the supposition that COVID-19 will linger into next year, so “it’s prudent for agents to set expectations and explain to buyers that getting a mortgage during the coronavirus can be a little challenging.” But aren’t those questions the lender’s bailiwick? Agents should
help buyers and sellers buy and sell houses and leave the financing stuff to the folks who work that key part of the process, day-in and day-out. After all, mortgage professionals don’t help buyers find their ideal homes, do they?
BECOMING DISCUSSION OBSTACLES Take the aforementioned issue of how much house a buyer can afford, for example. Realty agents aren’t equipped to review their clients’ financial situation to come up with that figure, but mortgage professionals are. There’s good reason for a buyer to know the max they can offer and still be able to secure funding and slide to the closing table without a hitch. For one thing, they will be able to shop in a price range they know they can afford as opposed to looking around in a realm for which they can’t possibly win approval. That, alone, is reason enough for a real estate agent to send a new client to a lender before running the client from house to house to house, either in person or virtually on the Internet. To do otherwise could mean both client and agent could be wasting each other’s time. For another thing, when a buyer is armed with a lender’s preapproval – not pre-qualification, but preapproval – he is telling sellers he’s gold. There’s not likely to be any glitches with financing, which, after problematic inspections, is a major reason deals fall through. But how many realty agents will warn borrowers that they might
