Most buyers find a Realtor to help them shop for a home to purchase and then work with their Realtor to find a Mortgage lender. But, recently, Mortgage Brokers are advertising to come to them first, to be pre-approved for a home purchase, before working with a Realtor to find the home.
And yes, in theory, parts of this is true, but more in the sense that it really should happen simultaneously and each Realtor will have their favorite lender and each lender will have their favorite Realtor. So, the real question becomes who benefits the most from referring the other and how does this affect the consumer and the loan.
Legally, it is against Federal law for lenders to pay referral fees or “kick backs” to Realtors and visa versa. Second, a good Realtor can work with any lender and a good lender can work with any Realtor, technically. But, each prefer to refer another because of past performance and getting the loan approved in time to close.
Where the water becomes muddy is in the fees charged. Technically, a Realtor is paid by the Listing Real Estate Broker and ultimately the Seller, but the Lender is paid with lender fees and interest rates through the Buyer, you!
Since the Realtor doesn’t receive any direct compensation from referring a lender, a good, seasoned Realtor will have the experience and resources to provide their clients with multiple lenders to compare lender fees and lender rates. Hence, it stands to reason to assume that a lender who is referred by a Realtor will do their best and get the client pre-approved and closed on the loan, when possible to continue the relationship.
Now, when a lender refers a Realtor, the Realtor’s job is solely to find the client a home based on the lenders analysis of funds. But what is the probability that the Realtor is going to suggest other lenders and lose future referrals from the referring lender? Probably very unlikely, so, in theory, the Realtor is now working for the lender and not as much for the buyer, to continue the relationship.
Ultimately, do your research on choosing both a Realtor and Mortgage Lender. Then, allow the two of them to work their separate responsibilities together to achieve the single goal of finding and financing that perfect home.