Sorry about my tone last night; I should have been drinking Kool-Aid instead of Fat Tire Ale.

I'd like to append my rant to clarify that people who properly disclose, engage in ethical business practices, understand their industries, have access to competitive products, and have the appropriate skills, should be allowed to compete.

Unethical people, and incompetent people should not sell real estate, make loans, or have any meaningful responsibilities at all. They should either obtain the appropriate training or leave the employment pool.

I just want to give you two personal exemples of dealing (direct and indirect) with agent doubled as mortgage broker. Both give rebate to their clients.

In the first case, it was my clients. I worked with them for a couple of months, supposely they loved me. We wrote an offer on one house, did not get that due to multiple offers, continued to show them houses and finally sent them a listing that I knew they would like on the first day of my vacation in Kauii. I called from Kauii and discussed the house with them and told them that if they are interested, I wil have my backup take them to see the house and so on. Well, he was not intersted. When I came back and followed up, he said that he might be losing his job so he is going to stop looking for hosues for a while. You probably guessed the rest of the story. A few months later, I found out he bought the house I recommended. I called him. His first response was:'Oh, she said you would never found out', then he said that he was SO relieved that I called because he had been feeling guilty the whole time. He told me all about it - this lady is an out of area mortgage broker and agent. She was doing his loan and then offered him $10,000 credit back if he also bought the house through him. He said that's why he went with her, for the $10,000 credit back. The thing I told him was that, unfortunately for him, I would have never recommonded him to offer that much for the house because the house wat not worth the listing price. The truth is, he was probably out $20,000 after getting the $10,000 credit back. His loan broker did not know local market condition and just wanted to make the deal. As i see it, she was not ehtical also lied and he lost out for working with somebody who's anxious to double end on the deal.

The second one was when I was the listing agent for a house. She is also a mortgage broker doubling as agent and offers credit back to the buyers. Throughout the txn, I was very amazed at how easily we sailed through the negotiation, both in offering price and in subsequent repair negotiation just because we stood firm on our ground!

So, there you have it from my side.

I began my career as a loan officer in 1973. I was working refis in 1993, rates went up so I started calling on all the Realtors I knew. Several of them gave me the same answer "Bring me a buyer, and I'll let you have the borrower" After a week of this I changed careers and became a Realtor myself, being a math wizard I figured one half of a three percent commission was more than half of an origination point. (Yes in those days, mortgage brokers and RE brokers were on 50 / 50 splits with all but the top producers. )

All the big companies segregated their commercial divisions and their residential divisions and their mortgage divisions. Even if you were a "jack of all trades" and had the skills and willing clients, you couldn't work in all of them. The company, the CEO and the stockholders could make money in multiple ways , through their afba's - No conflict of interest there , as long as it is disclosed, and the actual worker bees don't make any money off of it.

Well, all of you who say that it is a conflict of interest for the RE pro out here on the assembly line , and you can't understand two jobs, are drinking the corporate Kool-Aid. - Maybe you (underlined you) can't understand two jobs but I can. I have no doubt that hundreds of my clients would have been even better served if I had been allowed to wear both hats over the past 14 years.

Lance and Elaine,
There is still a potential conflict of interest whether you are actually doing the work on the loan or not. If you are receiving a fee for generating this business, how can there not be? It's essentially the same as receiving a kickback from a title company, inspector, contractor, etc. The perceived conflict is that you might put your own financial interests before those of the client. Did they really receive referral to the best service, or was it to the outfit that lined the agent's pocket the most? Whether real or imagined, I could not tolerate that perception.

Further, the loan officer I loyally refer my clients to has the lowest fees (without inflating the rate) on par money that I have seen. The biggest reason? He does not have to pay anyone an origination fee. If I started originating loans for him, or any other lender, how could I possibly believe that my clients are not absorbing that additional cost? The one stop shopping theme is grabby, but if you aren't working the loan, the client still has to pick up the phone and speak to a lender. They can call my guy from the phone in my office. What's the difference?

It sounds like it is working well for you, and I applaud your success. I just don't see it as being for me or my clients.

Patrick: My response may not be a popular one, but I feel real estate agents should not be originating loans because I feel it is their responsibility to guide clients into the best financing available--which may involve a direct lender.

We check all loans terms and documents, and if we see anything out of line, we alert our clients. I refuse to lose that objectivity in exchange for an additional commission. Similarly, I object to loan officers who also sell homes on the side.

I believe separate (and increased) education and licensing requirements for both fields should be required.

I see this as a major conflict of interest and consider it double dipping.

As a Realtor I spend time keeping apprised on the inventory, market, trends, legislation and how it effect the transaction. I must sharp build trust and relationships with my clients and be sharp on my negotiating skills.

A mortgage broker needs to be fluid on the financial end and be able to find the best financing for my client.

I have no interest in selling loans, only to represent my buyer in the transaction to get the best available property at the best price. I see my position as sometimes overseeing the mortgage person so that my client is not taken advantage of.

Everything that I read is from agents thinking that they have to be a pro at both and then there is the conflict of interest part. Did you know that there is a system out here that allows you to add the mortgage part with you not having to become a pro at it. You have a super processing center full of pro's that do that part for you. You are just the sales rep for the loan. Sure you have to have the license to play the game. You just bird dog it, do 30% of the work and get paid 70% of the commission. This way it does not take away from your Real Estate transactions, And there is a mortgage pro behind the scenes processing & coordinating the loan so there is no conflict anymore. For us Hybrid Agents that are part of this system that are Realtors and we have added Bird Dogging Residential & Commercial Loans, Money for Assets Under Professional Management and Insurance & Annuities accounts, We are creating more income from less customers with no conflict and our customers are VERY HAPPY. It is called One Stop Shopping, you call it a conflict and having to wear to many hats. Are we not here to give the customer what they are asking for? The customer has spoken. A recent survey showed that 70% of people would rather work with the same agent for everything if they liked and trusted that agent. We Aim To Please. You are just going to have to open your minds up and look at the NEW way of doing business or you will be at the end of the parade instead of the front. And by the way, We are able to build a team of these Hybrid Agents nation wide and earn overrides from the teams production. Lance & Elaine, Happy Hybrid Agents!

I find it hard to believe that someone can be an expert in both lines of business. I'm working 50-60 hrs a week as it is, "just" being a real estate agent. If I had to keep up with the mortgage industry, where would I possibly find the time? To be an professional, I have to keep up with current trends in the mortgage industry, but not the itsy bitsy details. It's one thing to know what 30 year fixed rates are today. It's a whole other thing to process a loan from end to end just to make a few extra dollars. And that's all time that could be spent finding more real estate clients.

To be honest, we make more per deal working with buyers and sellers than on a loan, so find someone you like to work with, and can trust to keep the deal together, and let that expert do what they do best, while we agents do what we do best.

Major conflict of interest in my opinion. I know a home inspector who has recently joined the lending industry as well. He is offering complimentary inspections if he does the loan. As a buyer, I would think that not only is one person wearing too many hats, but am I really getting a thorough inspection from someone with much more incentive not to kill the deal? To be a good anything, you need to devote all of your focus to it. If I am a lender, agent, insurance rep, etc, how can I really excel in any one area? I think you have basic credibility issues, too. From the promotions I have seen from the agent-lender types, it comes off as sleight of hand. "I'll pay for you appraisal" or "Get 1% back at closing!" As a buyer, I would fully expect to get drilled somewhere else to offset any such incentive (points, rates, etc). The whole undertaking just seems like used car salesmanship to me.

Patrick, I'll disagree with you. Although I can sell real estate I choose to do only mortgages. The saying "Jack of all trades, Master of none". comes to mind.

You will be doing a major dis-service to your clients. The world of finance is ever changing. What was true yesterday may be impossible today The same goes for the sale of real property. There is absolutely no way you can stay on top of both worlds. One, or both aspects will suffer. Neither should be acceptable to the client.
Here's a related post.

I would think the way lenders are competing a buyer would want to talk with at least three companies. Each has a slew of programs geared towards particular situations. There is no one best lender, each one can do different things for the customer. It is in the buyers best interest to see who has the best current loan available for them. I concentrate on the home, the loan is a different profession. I don't offer legal advice either. Plus, at crunch time, I want someone else to be working on the loan while I iron out any contingencies or inspections.

Each business is fairly complicated. I just don't think many people can be experts at both. Concentrate on one or the other for the best results. Also I wonder how you can provide a fiduciary duty to your client while also handling their loan. Sure there are plenty of agents who do it, but that doesn't mean it is right, ethical, or even legal. What happens if you can't close on time and they loose the house?....you're probably already in hot water with the buyer, but if you are also handling the loan....watch out.

I have no interest in being a loan officer. I believe a great loan officer is well versed in a number of different type of loan programs, and needs to know the ins and outs of the underwriting department(s) that they work with.

I invest many hours in knowing my market, inventory, trends, and builidng relationships on the real estate end. That's the background work, not counting the time I spend with clients or working on things for clients. I couldn't add another dimension in loans without compromising somewhere else. I believe the dilution would make me fall short in both categories of loans and real estate sales.

Others may see a way for them to excel in both. For me, I rather spend my time focused on real estate and refer my clients to great loan officers.

Deborah Madey - Broker
Peninsula Realty Group, Inc.
New Jersey
(732) 530-7755

Personally, I think it's a huge conflict of interest to do both the agent side and the lender side. I'm a real estate expert, and I want my buyer's to have a loan expert. I don't see how anyone can be expert at both full time jobs. I have a couple of lenders than can qualify a buyer in minutes, so I don't see it as much of an advantage. Just my opinion.