Ron,

  I couldn't agree more. I think there are agents out there that can and have done it without issue. But, we always get to see the ones that have an issue. I think it is a issue of greed! The agent knows that if they are there agent also, they won't get a second opion, because they don't want to upset their agent.

  Then that leaves them the oportunity to charge what ever they want without question. I am sure there are cases out there where an agent charging 7% ending up being both the listing and selling agent along with being the mortgage broker. Triple dipping? You Bet!

   As an agent who would love to become an honest mortgage broker. I would love to see laws put in place that say if you represent the buyer in this situation you have to send your paperwork in to a review board. Hopefully this would end the situation of unethical treatment of buyers.

Todd Clark - broker

Kastings & Associates

Todd@IFoundYourNewHome.com

www.IFoundYourNewHome.com

Clearly another case of the un-educated prospect, someone got their hooks in them and thought what the predator was telling them was the way it is.  Bad for Realtors, once this person wakes up he is going to think this is how we work.

Having worked as a sellers agent for a builder I saw several of these cases.  I am happy to say that the predators did not get their man. An agent ended up representing them that I have great respect for, this was a hand-holding situation and they finally ended up with their new house in my neighborhood.  I had another botched job and my partner Laura and I decided to call John to see if he would like to represent this young lady.  She had put her trust in a guy that was taking her for a ride. I don't think holds his license any longer, he came to my state from another state and tried to do a real estate deal, there was not a reciprocal license agreement in place and in addition he hooked her up with a mortgage broker that was not even licensed to do business in my state.  John had a lot of patience and worked with her diligently and she finally got to close on her new house, although six month later, but she also did not loose her $15000 she had put up-front for up-grades. So John, thank you.  

Ron,

We have a husband and wife team.(both REALTORS)  I have worked both sides the fence a couple of times.  Do Note: My wife was the Buyer agent and I worked the mortgage.  It always seemed like a Conflict Of Interest to me.

We prefer not to provide the mortgage service any more.

Ron,

We have a husband and wife team.(both REALTORS)  I have worked both sides the fence a couple of times.  Do Note: My wife was the Buyer agent and I worked the mortgage.  It always seemed like a Conflict Of Interest to me.

We prefer not to provide the mortgage service any more.

Roger Boggs

www.FindAzProperties.com

Arizona Homes Realty, LLC.

602-677-9867

I'm a realtor and a mortage originator. It saddens me to see that just because we are licensed and have joined a trade organization, we believe our value is higher than a good mortgage broker.

Without loans we'd all be out of business. If you don't do you own loans in house, then you'll have to rely on someone else to carry you through closing.

There are more federal laws designed to protect a mortgage client than there is for Real Estate clients. RE clients are relegated to state contract laws and codes of ethics, and guidelines from NAR.

Do you charge a transaction/admin fee? If you do, that's a junk fee, covered by RESPA when it is rolled into the loan. When's the last time to you told your client that that was negotiable? Heck when's the last time you told your client your listing fee was negotiable?

Ethical behaviour is not exclusive to us, because we are trained to do so. Or have paid our association dues. Or have a suprakey and can show houses. Or even have been in the business for 10, 20 or 30 years. Ethics is a core value, which can be learned and chances are that over time will be, but it is rooted in compassion and wanting to do the right thing, always.

If you don't have that core openness inside of you, you could be a GRS, GRI, ePro, broker manager owner, realtor, whatever the acronym of the day is and you'll always put your fiduciary duties in jeopardy because you don't know what fiduciary means. You don't know what conflict of interest is. You have no conscience. Broker, agent, realtor, loan officer, mortgage originator, escrow office, appraiser..Doesn't matter..

A couple of points:

If your state requires that your license is hung with a broker, you've signed an exclusive buyer agreement, and you are doing the loan as well, then you have a fiduciary duty regardless.

Here in California, you can't hang your license in two places. Most mortgage brokers are DRE licensed and offer in house financing options.

You're a realtor, your license is hung in house. You are a LO, your license is hung. You are on the hook, your broker is on the hook. Period.

Conflict of interest? How?

I'll admit can see a dicey situation if I held the listing, and sold my listing to a buyer client who wanted me to do the loan. Then, my duty is to my seller.

That doesn't mean that I can't do the loan, but I may be hampered in executing a clean closing on their behalf.

My suggestion then is if the buyer wants to stay with us as a mortgage company, I will have a different LO who I trust, along with my processor, handle the loan details.

Some brokers are different. One would hope that they make the right choice.

There are a couple of issues that are important to me and my ability to provide financing for my client.

1) CONTROL - There are so many benefits to having control over this aspect I'm not going to list oll of them. Just browse many of the blog posts here about how people are fed up with mortgage people and you can see why control is the #1 issue at stake.

One major benefit is this, I control how much closing costs my buyer gets charged. I can even choose to NOT charge any origination to my client if the deal doesn't warrant it..

Now go out and find a mortgage broker worth their salt, and who you want to work with, who's competent, and can get the deal done and ask them to cut their fees...They'll pawn you off to another newbie LO willing to work for 1 point and they screw your loan up..

Good loan officers charge a minimum 1.5 - 2 points in any combination of rebate and origination.

2) CUSTOMER SATISFACTION - I can take a buyer client from the top, raw and unedited. They ask me if they can afford a home. Because I know loans, I qualify them, pull credit and price them out with hard numbers, same day. I can quote them a rate right there on the spot. Sometimes they get to hear the lender on the phone with me..I can have a prequal letter to them within 4 hours.

THEN we log on to the MLS and look at houses that they fit.

Talk about a buyer consultation session!

I can professionally advise them about the biggest financial purchase they'll probably ever make. Clients love that. They value that. And they refer clients because of it.

3) MONEY - regardless of what you and many others might think, 1 point on a 1st loan goes along way to offset the lower shared commission offered in today's low equity market in SoCal. We have houses being listed by discount brokers all the way down to 1.5% offered to the selling agent.

Now you have a client that REALLY likes the house..You have a FIDUCIARY duty to that client...Are you going to cherry pick the homes available to them because some have a lower sharing commission?

I feel like I'm at a listing appointment, but let's do some numbers to see where the money goes:

In CA. a $500k house for sale at 100% financing. 80% 1st loan is $400,000 and 20% is $100k.

You usually only allowed to earn dollars on the first loan because of Section 32 high cost seconds mandate it. So let's say 1.5% commission on the first is: $6000 - I don't know any 100% split offices, but my splits are high on loans at 70% - $4200.

Lets take taxes off the top - 20% = $3360 for the added time needed to price, place, and close the loan properly on top of handling the Real Estate side.

Just a very basic example but I'd say its a pretty good value...If its done right..

I think its intellectually dishonest to sell our clients on the value of OUR commission integrity as a Realtor and fight for that, then deny the value of a service that is just as essential to the transaction and say that the work involved isn't equal.

Closing loans are much more difficult than real estate sides. Mortgage commissions are well earned (except gouging cases and Option ARM loan rebates). Lenders are VERY difficult to deal with and most realtors forget this when they *** at mortage people. The lenders present an unknown in each and every transaction. The lenders.

If you haven't closed a loan, then take it from me. If you have, then you know exactly what I'm talking about.

But..The control issue, and the added commission usually make up for it.

4) BUSINESS EFFICIENCY - I know very quickly when I'm wasting my time or not..Do you? Or do you make flash judgements based on 2-deep questions solely from the realtor side? I'm not knocking anybody, but how much more value can you add if you know how to finance a house?

OK, here's one..Did you know that lenders now are outright turning down FSBO deals? We are trained as realtors to work FSBO's telling that them we have a buyer if they'll share. We sign it up and get going with a buyer and it gets turned down...

Or did you know that a 620 fico score at 100% is not possible anymore without full documentation? Lenders have changed their guidelines. You have a business owner with a 639 fico and chances are there isn't a lender that can do their loan. Heck, if you have that fico, they won't do YOUR loan...

If I know these things from the start, when my client tell me what they want to do, I know which of the 50 or so lenders we work with to start working with.

5) BAD MARKET REVERSAL - I do refinances during the slow periods of buyer and seller activity... I help investors who want to pull equity out of some homes and make a new purchase... We are a prefered mortgage broker for some builder clients. I have 150 brand new homes that I can sell!... I know Mexico financing and can sell and provide financing to Mexican nationals living here who wish to buy a home south of the border... I provide financing to baby-boomers who wish to purchase and finance retirement or 2nd homes in Mexico....

Talk about market countering activities!

+++++++

Now, I know there are some situations and agents and brokers who churn and burn their clients...I don't care about them. There will always be uneducated or thoughtless people doing real estate and loans. There are always greedy people. Always people willing to skate around their fiduciary duties in order to get the deal done.

I care about the people who are conscientous enough to participate in online communities and blogs to further their development...You guys, who I'm learning so much from.

What I don't like to see is generalities and blogs turning into bitchfests against all our team members and peers with whom we need to get the job done.

My feeling is that, the financing part of the transaction is within my control. I can do it. I'm willing to do it on top of my real estate duties. And as a licensed Realtor can provide a service that is in line with my fiduciary responsibilites.

GoLoan.com has a great program for realtors. If your state law forbids it, or if you still feel that there is a conflict, dial the top producers in the area and get some good referrals. Or call your investor clients who do alot of business.

You will go through a few mortgage people, they will make your clients pay their rates, but eventually, you will find a good one that can get your loans closed..

I'll tell you one thing though, I don't have to worry about unethical mortgage people..That's one less thing me or my client has to worry about..

Good Luck!

Ron,

I'm just curious whether or not you rate your own posts?  Your posts seem to always be rated - no other posts are rated as much.  And yours always has five stars.  Do you do that yourself?  

Carol

http://www.peihouses.com

Ron,

I guess pepple just like your posts!  

They are very well written - I have enjoyed them too.

Cheers,

Carol

Ron...you're post on conflict of interest was excellent...and I think I will rate it as such! lol...On a serious note, I was fortunate enough to "do time" on our boards "Discipline Panel", prior to our Provincial body taking over the role. Time and time again, I would sit for hours listening to one agent after another, explain the logic behind their "conflict of interest" saga's. The funny part of it was that aside for banging them on the head with our chairs, there was absolutely no way to make them understand what "conflict of interest" really meant!

I can best explain "Conflict of Interest"  by sports teams. Now, since the Superbowl is fresh in everyones minds...we'll pick the Bears and the Colts! What type of hoopla do you think there'd be if we were to discover that the Head Coach from the Colts, was also writing plays for the Bears? mmmmmm...we'd say...or scream...hey..that's not right! That's a conflict! I wonder if that's why the Colts won? Well, perhaps the Coach would tell us that he was actually so incredibly disciplined and ethical...that never, ever, would he allow his coaching job to interfere with the plays he was developing for the other team...do we think that would be possible? Well..once again, perhaps...however...when we add the secret ingredient...money...that all changes. Now, if the two teams never played against each other, it wouldn't matter, but as soon as there's involvement with both, then there's conflict, and when money is the middleman, then there is severe conflict.

Conflict of interest in simple terms is a result of a Representatives inability to acknowledge who they are really working for and understand their fiduciary duties to that party. You can only have one master. If you have a Buyer or Seller...and have taken the time to sign an Agency Agreement with them, then you should also take the time to address how they would like you to handle a potential "limited dual agency" situation. In our jurisdiction, Agency belongs to the Brokerage, so the larger the Brokerage, the more likely to be "Limited Dual Agency". I read a few posts were the Rep's were also Mortgage Brokers...geesh...this is sounding like a triple agency threat!

For many years I have been advising Sales Reps to do themselves one big favour...when they're concerned about "Conflict of Interest" situations...fast forward yourself to a Court Room. Picture yourself sitting in the witness box in front of a lawyer for each party that you were so called representing...and try to think of good answers to defend your position. You may very well wish that you had made a decision, as to exactly who you were representing right from the beginning, only taking a slice of the pie...rather than trying to eat the whole thing!

You're very welcome Ron...keep up the good posts!

Hi Ron,

I am one of those agents that does both. I do understand your concerns. My motivation was not one of greed but of my clients. I offer my loan services to my buyer clients as another option. I encourage them to shop around and if they find a better deal to take it. I don't have time to do every mortgage. I was getting tired of clients coming to me with these so called pre-approvals that were not worth the paper they were printed on. I was tired of seeing clients getting charged outrageous fees. Some clients like the idea of only dealing with one person for both. I am their Real Estate Agent first and if I can help them with their mortgage too, then great. I know that all agents that do both don't operate that way and that's too bad. My motivation aside; I do see where you're coming from. They way I am do things my allegiance leans towards my clients and not the mortgage company (did I say that out loud?)

Ron,

Great topic... I am in agreement with the idea that working different industries in the same transaction creates problems...

Think about this though: What about the companies (ours included) that sticks title companies and mortgage brokers in the offices 10 feet from mine and actually 'highly recommends' that we use them? In many cases the real estate company actually owns the mortgage company. Does that present the same issue? Does this trend make us less likely to shop around for our clients since we don't have to walk very far? The word 'steering' comes to mind - it sounds like shaky ground to me.

Real estate agent and mortgage broker - same person, same transaction, definitely a conflict of interest...

:)

Thanks!

Parker