Real estate agent also acting as loan agent is a conflict of interest

In the last couple of years, we’ve noticed a dramatic increase in the number of agents representing buyers who also act as loan brokers. Likely, this is because there are so many new agents chasing a limited number of deals and originating the loan for the buyer is an efficient way to maximize one’s income from a given transaction. Lenders themselves have encouraged this with software packages and web links that make it easy for agents to originate loans.

But this practice represents a big problem from the listing agent’s point of view. When I am evaluating an offer on behalf of my seller, I need to assess the buyer’s ability to obtain financing. Normally, an offer is accompanied by a “pre-approval” letter from a lender or loan broker. If I don’t have any prior experience with the person who wrote the letter, I will most likely call them and ask a series of questions designed to see just how far the loan process has really gotten. Questions such as: Has she actually received a completed loan application? Has she verified the buyer’s source of down payment? Has she run a credit report yet? Continue reading →