I basically agree with the answers you've received. Sure, it's possible. Interview the agent. Ask for references. All the things that have already been suggested.
On top of that, there are ethical and regulatory guidelines to help ensure that a buyer's agent is properly representing a buyer. They don't always work, but they're quite effective. Finally, any buyer's agent who sticks to those ethical and regulatory guidelines, and passes your screening tests (interview, references) shouldn't produce any horror stories.
However . . . .
There are two things to consider. The first is that a lot of horror stories in real estate transactions aren't the fault of buyer's agents. I've got some personal horror stories. They relate to inept, incompetent, and lazy loan officers and underwriters. (Most are good, but I've met some real losers.) In other cases, the seller might be a real pain. Or the listing agent may be at the root of some of the problems. Or it might be a novice home inspector. It could be an incompetent or inexperienced appraiser. In the case of foreclosures, it might be the BPO agent. Each one of these can turn what should have been a smooth transaction into a nightmare. And sometimes it may appear that it's the buyer's agent's fault when it's one or more of the others who messed up.
The second thing to consider is that the agent is watching out for him/herself. It shouldn't be at your expense, but sometimes it's difficult to tell. Example, you and the seller--through your agents--are negotiating back and forth, back and forth. You're within $3,000 of each other. Your agent tells you, perhaps bluntly, that you really should take that offer. You think (based on your question that there's a "conflict of commission based on final sale price") that the agent is just trying to get the commission on that extra $3,000.
No way. It's likely that the $3,000 will result in an extra $45 for your agent (assuming a hypothetical but totally negotiable commission of 6% divided 4 ways). Do you really think your agent cares about a variation of $45 in his/her commission? No way.
Now, what the agent DOES care about is the overall commission. Let's say it's a $600,000 property. Fair enough: The agent does care about a $9,000 commission (using the assumptions above). So the agent wants the sale to go through.
But will the agent make a bad recommendation to you ("Pay the extra $3,000") for the commission? Probably not. If your numbers are that close, it's probably a fair deal for all concerned. Sometimes buyers and sellers get emotional and it takes an agent to step in and say: "Take a deep breath. Are you willing to walk away from this deal, from a property you like, just for $3,000?" Sure, the agent is trying to save the deal. But the agent also recognizes that, really, the transaction is good for you and for the seller. So while there's a bit of self-interest in the process, the focus really is remaining on the best interests of the buyer.
Agents are in the business to make money. Absolutely. But the good ones--and there are a lot of them--recognize that the way to make the money is to provide excellent, value-added service.
Hope that helps.
Realtor talking to their clients regarding Mortgage Broker fees - again generally speaking, bad idea, and very few of them have any clue what are the factors involved in rates and points for a particular client. I wish it was as simple as looking at the points and figuring out if it's a good deal or a bad deal. Reality is that there are no two clients alike, so paperwork and numbers will always differ. But going to the client and telling him someone is taking advantage of him is not really trying to help him, it's pretending that you are trying to help him, you are simply trying to make yourself look good. What you should do instead, and what I normally do is I go to the Mortgage Broker, setup a meeting and speak to them about my concerns. I try to make things work with them first, before I would drag the client into this mess, I try to learn the facts first. Mortgage Brokers are more than willing to show me all the different lenders they've submitted the package with, the response, rates offered, and why are the fees looking so bad. I believe the Realtor still has a better understanding of the Mortgage Process than the average Buyer. So why doesn't the Realtor get involved, and instead of trying to accuse the Mortgage Broker, just try to get information and say "Hey, let's all make this work! My client is struggling, I don't mind giving up some if you give up some!" I've seen this work wonders. Sending your client our to another Mortgage Broker just to find out that now they are getting even worse deal, and you steered them away from the best possible deal is not a solution. You aren't really helping them, you are making a mess out of the process. So here is my 02 cents - if you have an issue with the fees, talk to the Mortgage Broker and see if it's legit or not, and if there is anything that could be done. Offer your help, and you will receive theirs. Working together is the only solution that is in the interest of your Buyer!
Has anyone noticed the author above has not responded one time to all of the sage advice provided? Hmmm? Maybe his original concern has been confirmed.
Actually, I agree - but, let's get real here: borrowers are a lot further away from understanding the value of a good mortgage broker than they are from understanding the value of a good real estate agent.
So now this poor thread has morphed into a new debate. Will it ever die? Wil it be the endlesss thread from hell that took over Trulia? lol
Indirect fees are all fees paid to mortgage brokers by parties other than the borrower in connection with the processing or closing of the borrower's mortgage loan. In 1992, HUD adopted the position that mortgage brokers are required to disclose all indirect fees received in connection with a borrower's mortgage loan. After mortgage brokers complained that this requirement "placed mortgage brokers on an unequal footing with other mortgage loan providers and that information on indirect fees was confusing to borrowers," HUD engaged in rulemaking activities on this topic. The result of these rulemaking activities is a proposed rule, whereby mortgage brokers would be ensured that "direct fees received from the borrower, as well as the indirect fees paid to the broker from a lender for the transaction, will be covered by a `qualified safe harbor' and presumed legal and permissible under section 8 of RESPA." This presumption of legality may be rebutted if the mortgage broker does not meet the criteria of the safe harbor which includes disclosing to borrowers whether the mortgage broker will receive any indirect fees from mortgage lenders. The final rule that emerges from these rulemaking activities will continue to require disclosure of all fees, both direct and indirect, earned by mortgage brokers in connection with the mortgage transaction.
In addition to these existing and proposed laws, there currently is a very compelling monetary disincentive for third-party mortgage lenders to pay indirect fees, such as yield-spread premiums, to mortgage brokers. An increasing number of mortgage lenders are finding themselves the object of class-action lawsuits based upon their payment of overages to mortgage brokers. Although the legal grounds for these lawsuits vary, the likely outcome of this litigation is that mortgage lenders will be much less likely to pay overages unless they can be assured that they will not incur liability to mortgage brokers for this payment. In addition, mortgage brokers may be less likely to accept overages for these very same reasons.
Regardless of the inherent differences between real estate brokers and mortgage brokers, four states disregard these differences and maintain laws that statutorily impose the identical agency responsibilities on mortgage brokers that exist for real estate brokers. In these states, mortgage brokers are deemed to have entered into an agency relationship with their borrowers and, as a result, acquire general fiduciary duties to their borrowers.
C. Regulation of Mortgage Brokers
In the past, it appears that courts imposed a fiduciary duty of disclosure on mortgage brokers in large part to protect unwitting borrowers from the lax or non-existent regulation of mortgage brokers at the state and federal level. Continued judicial regulation of mortgage brokers via a general fiduciary duty is unnecessary, based upon existing and proposed laws at the state and federal level that require the disclosure of loan terms and all loan fees and provide for adequate enforcement mechanisms.
1. State Regulation of Mortgage Brokers
States currently possess several methods for regulating mortgage brokers. First, states may impose licensing requirements on mortgage brokers. Currently, thirty-nine states require some level of licensing for mortgage brokers. Twenty-nine states require the payment of a fee and proof of a minimum net worth and/or pledge of a surety bond in order to receive a license. Six states require proof of the person's competence as a mortgage broker (written test/prior lending experience) in addition to other monetary requirements. Four states impose an even greater requirement on mortgage brokers by subjecting them to the licensing requirements imposed on real estate brokers.
In addition to licensing requirements, states can regulate the activities of mortgage brokers through various types of consumer protection laws that permit borrowers to sue mortgage providers for certain violations. These laws typically require lenders (including mortgage brokers) to disclose all relevant loan terms and fees, including any yield-spread premiums.
2. Federal Regulation of Mortgage Brokers
In addition to these state laws, two relatively recent statutes provide comprehensive regulation of mortgage providers at the federal level: the Real Estate Settlement Procedures Act ("RESPA") and the Truth In Lending Act ("TILA"). These statutes regulate mortgage providers in their disclosure of all direct and indirect fees assessed to the borrower.
A. General Fiduciary Duty of Mortgage Lenders
As a general rule, courts do not impose a general fiduciary duty on mortgage lenders. Most courts hold that mortgage loan transactions between mortgage lenders and their borrowers are arms-length transactions between creditors and debtors. Because a mortgage lender (unlike a mortgage broker) is the actual provider of the mortgage funds, most courts reason that the borrower's interests are protected by the process of arms-length bargaining between adverse parties. Although many courts hold that subsequent circumstances may give rise to a specific fiduciary relationship between a mortgage lender and a borrower, this Note focuses on whether a fiduciary duty arises solely by virtue of the legal status of the particular mortgage provider.
B. General Fiduciary Duty and Other Brokers
All brokers do not attain the same fiduciary relationship with a customer; rather, the level of duty a broker owes a client depends on the extent of the parties' relationship. Therefore, in order to compare the degree of general fiduciary duty required of brokers, this Note analyzes other broker/client relationships that closely resemble the relationship between mortgage brokers and borrowers. These examples clearly indicate that other brokers, acting in a capacity and under circumstances similar to a mortgage broker, typically owe a very limited general fiduciary duty to their clients, if any. Although real estate brokers do owe a general fiduciary duty to their principals, the duties and responsibilities of mortgage brokers and real estate brokers are readily distinguishable.
1. Consumer Loan Brokers
A consumer loan broker is a non-lender, such as a car dealer, that serves as an intermediary between a purchaser of consumer goods (e.g., car purchaser) and a potential lender. In Blon v. Bank One, Akron, N.A., a car dealership failed to disclose a "finder's fee" paid to them by Bank One "for preparing and placing the Blons' loan with Bank One." The court held that neither Bank One nor the car dealership was under a fiduciary duty to disclose this fee because the car loan "was nothing more than an ordinary arm's-length transaction." The court reasoned that:
a creditor and consumer stand at arm's-length in negotiating the terms and conditions of a consumer loan and, absent an understanding by both parties that a special trust and confidence has been reposed in the creditor, the creditor has no duty to disclose to the consumer the existence and details of a finder's fee or similar arrangement with a credit arranger.
Similar to a consumer loan broker, a mortgage broker serves only as an intermediary between the borrower and the ultimate provider of funds. Therefore, as long as the mortgage broker makes all the proper disclosures to the borrower, the broker should not be held to a higher standard.
2. Stock Brokers
Although the stockbroker/customer relationship is governed primarily by agency and securities laws, stockbrokers also may be liable to their customers based on a breach of fiduciary duty. Because stockbrokers provide their customers with a wide variety of services, ranging from simply executing a customer's purchase or sales orders to exercising complete management control over a customer's portfolio, courts typically consider the circumstances surrounding the alleged wrongdoing. In determining whether a stockbroker owes his customer a fiduciary duty, courts give considerable weight to whether the stockbroker managed a discretionary account or a non-discretionary account on behalf of her customer. Courts that make this distinction typically hold that a stockbroker who manages a discretionary account for a customer incurs a general fiduciary duty to the customer, whereas a stockbroker managing a non-discretionary account does not.
Similar to stockbrokers managing non-discretionary accounts, a mortgage broker does not possess the discretionary authority to bind a borrower to loan terms and fees without the borrower's approval. Federal law requires that all mortgage providers must provide a Good Faith Estimate to the borrower within three business days of the loan application. Based upon this Good Faith Estimate, the borrower possesses the ability to compare loan terms and fees with those offered by other lenders well in advance of the loan closing.
3. Real Estate Brokers
In a typical real estate transaction, the real estate broker creates an agency relationship with the seller by means of a written agreement, known as a listing agreement. Under this agreement, the real estate broker ("listing broker") enters into a listing agreement with the seller, and contracts to act as the seller's exclusive agent for the sale of seller's home. Within the listing agreement, the listing broker typically agrees to accept offers from other real estate
In Wyatt v. Union Mortgage Company, a mortgage broker orally misrepresented certain mortgage terms to the borrower and failed to call the borrower's attention to the "true" terms buried in the loan documents. The Supreme Court of California affirmed the borrower's breach of fiduciary duty claim, holding that "a mortgage broker is customarily retained by a borrower to act as the borrower's agent in negotiating an acceptable loan." The court reasoned that agency principles combine with California real estate law to "impose upon mortgage brokers an obligation to make a full and accurate disclosure of the terms of a loan to borrowers and to act always in the utmost good faith toward their principals." Other recent California decisions suggest that a mortgage broker's general fiduciary obligation to disclose loan terms continues to be enforced.
2. Breach of Fiduciary Duty by Failure to Disclose Loan Fees
In Rushing v. Stephanus, a mortgage broker required a borrower to sign mortgage-related documents, leaving several sections blank. Unbeknownst to the borrower, the mortgage broker increased the agreed-upon amount of the loan by $1600 to cover undisclosed loan costs and broker's commissions. The Supreme Court of Washington held that the mortgage broker, as an agent of the borrower, breached his fiduciary duty to "reveal the nature and extent of his fees to the client for whom he acts."
3. Breach of Fiduciary Duty by Failure to Provide Best Possible Loan Terms
In Realty Projects, Inc. v. Smith, a mortgage broker persuaded prospective borrowers to increase their loan amount so that it would exceed the statutory limits for regulated loans under state law. Because the borrower's loan amount exceeded the statutory limits, the mortgage broker could charge a higher broker commission. The California Court of Appeals held that the mortgage broker breached his fiduciary duty to the prospective borrowers, because "[m]ortgage loan brokers . . . hold themselves out to prospective borrowers as loan experts who will endeavor to obtain for prospective borrowers . . . a loan adequate for their needs and at the lowest practicable cost."
This theory has found broad application in connection with recent litigation alleging that mortgage brokers breach their general fiduciary duty to borrowers when they accept "yield-spread premiums" from mortgage lenders. Yield-spread premiums are defined as "any compensation received by a mortgage broker . . . for originating a loan at [an interest] rate and/or points above that which the lender would otherwise agree to make the loan." Two recent Virginia cases, Byrd v. Crosstate Mortgage and Inv., Inc. and Archer v. Sterling, analyze whether mortgage brokers breach a general fiduciary duty to borrowers by accepting undisclosed yield-spread premium payments from third-party lenders. Although the mortgage brokers argued that they had no fiduciary duty to their respective borrowers, the court summarily declared that the "defendants' assertions that they are not fiduciaries are utterly without merit." The court reasoned that the mortgage brokers breached their fiduciary duty to disclose "all facts within the broker's knowledge which may be material to the transaction" when the brokers did not disclose all fees--including those paid by third parties--that were paid to the mortgage brokers at closing.
A. Overview of Fiduciary Duty
Analysis of fiduciary duty "comprises two fundamental issues: first, whether the relationship is fiduciary or not; and second, if it is, whether the resulting fiduciary duties were breached." In addressing the first issue, courts must determine whether a fiduciary relationship exists between the parties involved in a specific transaction. Courts typically find "there are two types of fiduciary relationships: (1) those specifically created by contract or a formal legal relationship, such as principal and agent . . . and (2) those implied in law due to the factual situation surrounding the transactions and relationships of the parties to each other and to the questioned transactions." This first type of fiduciary relationship, based upon the formal legal status of the parties involved, is termed "agency." Agency is defined as the "fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." This manifestation may be written (i.e., contract) or may be inferred from the relationship of the parties. Within the agency relationship, the agent becomes a fiduciary of the principal and must act for the principal's benefit as to matters within the scope of the agency. For the purpose of this Note, it is the agency relationship that gives rise to a "general fiduciary duty." The second category of fiduciary relationships involves a "specific" fiduciary relationship that arises as a result of circumstances specific to the parties' transaction. Therefore, even though general fiduciary duties may not arise at the outset of a transaction, the particular circumstances of the transaction may give rise to specific fiduciary duties.
After determining that a fiduciary relationship has arisen, a court must then determine whether the actions of the fiduciary breached the duties imposed by the fiduciary relationship. Although courts do not apply a uniform standard to determine which specific duties are encompassed within "fiduciary duty," the following duties are generally included: duty of loyalty, duty of good faith, duty of due care and duty of disclosure. Therefore, an agent breaches her fiduciary duty to her principal when she violates a duty within the scope of the fiduciary relationship.
B. The Fiduciary Duties of Mortgage Brokers
Many authorities hold that agency law generally applies to the relationship between a broker and her customer. Within the agency relationship, the broker acts as an agent of her principal/customer and owes certain fiduciary duties to her principal.
Some courts hold that mortgage brokers do not owe their borrowers a general fiduciary duty, reasoning that the loan transaction is conducted at arm's length, and is similar to the loan transaction between a mortgage lender and her borrower. In contrast, other courts have held that a general fiduciary relationship does arise between a mortgage broker and a borrower. Typically, courts base this relationship on agency, rather than contract principles. Where courts have imposed this general fiduciary duty, mortgage brokers have typically breached this duty to their borrower in one of three scenarios: failure to disclose loan terms; failure to disclose loan fees; and failure to provide the most favorable loan terms or lowest loan fees.
Steve, listen closely:
When a buyer of mine is talking to mortgage brokers there is no committment. If they get a GFE, there is no comittment. That is the way the law is set up. And that is the time that we are discussing lenders and costs. They are in the decision phase. There is no interference with anything at that point.
Secondly, you are right. After the buyer fills out a loan application and you provide a GFE this is a "contract." Unfortunately for you, it is uni-lateral, so the buyer can walk away at any time and there is nothiing you can do. Nothing, zip, zero.
Maybe you have some type of "brokerage contract" in Fla, wouldn't suprise me, coming from a state that practices transactional brokerage. But we have nothing like that here. A buyer can bail from a lender at any time.
BTW, who said anything about not being able to sue? This is America, you can sue anybody for anything. Again, if I have a fiduciary relationship with my clients since they sign that agency thing (yes, all of them) and I am acting in the definite best intererst of my client and I can prove it, you would never, ever win a case against me in any venue. In that case I am a fiduciary, you are a sales person. Did I say never?
If you don't have fiduciaries in your state you may not have any understanding of this concept. If not, do some research and you will see where I am coming from. This may be nothing more than the difference between your states rules and regs and mine.
I dont want you guys/gals to think Im siding with Steves realtor rebate thing---I have not studied it so Im neutral. This thing became a burr under my saddle over the fact that some of you make it sound like the loan broker isnt worth squat when they do WAYYYY more than you do for a fraction of the fee you charge. I can go on nationwide TV and beg to have it proven otherwise and it wont. By the way both sides here are partially incorrect about agency and responsibility between a customer/client and the loan and real estate agents. I leave you to figure out all that on your own. Now this time I REALLY REALLY mean not to come back to this. Thats not petulance---its just no longer prudent to take the time.
>>Tortious Interference--morgage broker contract?
"Mortgage broker contract?" Really? Steve, a lender has no contract with a borrower so there is no interference. You have no contractual relationship so this doesn't even apply here. A Fiduciary, which is contractual, will always trump any relationship you have with a borrower in any court of law. Sorry, that;'s just the way it is.
Again, I'm done, this is just getting silly as you try to prove a point.
But with a mortgage broker? Isn't it sort of easy to evaluate them - interest rate, cost of obtaining the loan?
Regarding the privacy comments---sure YOU may have an agreement to share anything about anyone to anyone else. If people sing that then who is to judge it? As a mortgage agent, I didnt obtain permission from a borrower to share their personal info with anyone else. I consider it potentially dangerius but also consider this---
I prequalify a borrower. They are good for a loan of $300,000 at up to 6% rate. You are the listing agent and want to know the buyer is qualified. What do you want from me? This is touchy. I KNOW the borrower is good for that amount. They are asking to buy the home for $325,000 on a $350,000 listing price. They have $100,000 in savings. I KNOW that too. If I let you and the seller know it, you have the negotiating advantage and the buyer has none. How do I give you concrete proof that a borrower is qualified? I can tell you that they qualify for a loan of 80% of the price they offer and thats not a lie but I KNOW better. As a loan agent I have no agency relationship. I DO have aset of liabilty and safety issues. I cant just give out peoples personal or business info. Unless authorized by the borrower, its none of your business. Thats what I meant.
By not telling the info, the seller doesnt know if the offer is just low balling or if its all they can qualify for. Im not going to run around the poker table telling each player what the others are holding. I sense that Steve and I are reading too much into yoiur comments. This is always easy to do when responding to computer chats and not personally. You must consider your delivery.
As I said, after millions of dollars of mortgages and real estate sales, real estate people are always trying to play great white knight and protector of the customer when it comes to the loan broker and his/her fees. I had constant requests and sometimes demands to lower my fee to help out with things like the price being too high and not appraising ( THE REAL ESTATE AGENTS FAULT), the termite damage being too high for the seller to pay, etc etc. Many times I was making about $750 and the real estate office was making 5 figures but they wouldnt drop a dollar of fee.
So I think that bottom line is this. You keep trying to get loan fees down to a bare minumum and the loan agents in your area should start referring buyers to discount realty offices.
Think of it this way. If your borrower has three GFEs and one is 1 point lower, you save them a few hundred or maybe a few thousand. If a lender sends the borrower to a discount real estate agent, they probably save them THOUSANDS over your charges, which Im guessing are top of the market. The end.
I appreciate the concern for the families of mortgage brokers who are beaten up by Dodd-Frank and are scraping to cobble together a living in this difficult environment. A concern that I rarely see exhibited toward the families of real estate brokers, by the way.
Apparently, in Ohio, real estate agents have a fiduciary relationship with their clients, which isn't the case in Washington. But in either case - our relationship with our clients is more important than the concerns of third-party service providers, and it really is not our moral or ethical or legal obligation to sacrifice the interests of our clients so that somebody else can get paid.
Steve, I'm at least glad you say I'm a nice person even though you and your family are starving because of me. This is such a sad story.
You are reading way too much into my comments and what I do. If you want to push your product, feel free. But please don't do so at my expense. It's getting really silly.
If a clients want help I help them. If they want a list of lenders I give it to them. If they want help understanding "lender speak" i help them. And if their lender isn't the best lender for them, I tell them. I'm a fiduciary, that's what I do. If Joe lender is screwing my clients you bet I'll give them some names of better lenders. And if Joe lender is one of MY preferred lenders I'll suggest they look elsewhere just as quickly.
>>And as far as an Exclusive Buyers Agent Contract, yes, very strong! However, Iâ€™ll bet youâ€™ve never had the actually hangers to ever get one signed or very few at best! And James, I know exactly how to get a buyer out of it anyway!
Sigh. Steve, I've been in business 16 years and all of my hundreds of clients have signed my agreement. Once again, you should be very careful intefering with an agency relationship. That could get you in trouble.
Steve, let me give you a valuable piece of advice: the system pushers and the discounters in this business rarely make it. Honestly, I hope you do, you have lots of energy. Good luck.
Yep. Any dope can read a good faith estimate and I'm not just any dope. C'mon, Marvin, do you really think that after 16 years in this business I can't tell when a buyer is getting shafted by a lender? This stuff ain't rocket science......
>>Loan people as with many other occupations have PRIVACY LAWS. I cant tell you anything about a buyers cr3edit. If their credit is such that they are a risk and priced accordingly---you aint going to hear that from the loan agent. Its NONE OF YOUR BUSINESS.
Not so. My agreement with my clients gives me permission to talk to their loan officer about anything I deem as necessary to the transaction or as a fiduciary to them.
.>> You make it sound like mortgage agents are a lawless pack with an open card to do whatever they want
I said nothing of the sort and I have no idea where you are getting that from.
Marvin, I do not play mortgage broker. I refer my lender friends to those who ask and I help my clients understand closing costs and good faith estimates if they ask me. Any agent worth their salt should be able to do this if their state permits it. I don't steer anybody to, or away from anything. I merely give advice if I am asked for it.
Your very simple question has branched off in all directions with 355 answers. I will repeat what I said about 350 answers ago and addresses your question directly.
I am sorry and surprised to hear that your friends have had bad experiences with buyer's agents. It is crucial to use a skilled, experienced agent with a company with a great reputation. The role of a buyer's agent is to act in the best interests of the client. That means secure them the best property for them at the best price and terms for them. There is not a conflict where commission is concerned because there is a fiduciary reposnsibility to the cient. Working with a skilled buyer's agent will save the buyer considerable money because a good agent is a skilled negotiator.
I want to add to the original answer that most of a successful agent's business comes from repeat and referral business. When we do a great job for a buyer, they come back to us and they refer their friends and families to us. This is a relationship business first and foremost. There is NO conflict of interest when working with a buyer. It is an alliance in getting the best property at the best price for that buyer.
Halstead Property, LLC
JR: Wow Steve, good thing you don't rely on Realtor referrals. You remind me of an agent I know who once told me he wasn't in this business to make friends. He achieved his goal.
2.James, I applaud you looking out for your clients in general. I have always done the same but had an extensive knowledge of mortgages and wholesale pricing. I watched out for 'excessive fees' and made sure pricing for an A grade credit score wasnt as high as pricing for sub prime but I didnt say anything unless it was out of normal range. Even then, I knew that there could be extenuating circumstances. I never had a loan agent try to get a buyer to beat my fees down so I reciprocated by not beating them down. We all need each other and we all have to make a living. I can say again that after 32 years of doing both---almost any time a transaction headed south over money, the real estate people involved wanted me to give up my tiny fees but wouldnt give a doillar of their own much larger fees. Almost every time. You know what? We shouldnt have to give up ANY FEES at all unless we do something wrong. Sometimes it has to be done to make a deal work or nobody makes anything. We ALL shold look out for every p arty to a transaction but we must all know our places and be sure of everything before offering advice. So James---without violating anti trust laws, IN GENERAL how much do you charge when working for a buyer? Do you have a sliding scale? Are you more than the discount shops? If so---are you sure you are worth more? After all, anyone can play taxi cab. Shoud I ry to get all your buyers away from you if I see them paying over 2%, LOL.
Going back AGAIN to the thread heading, of course its totally possible for an agent to work 100% for the best interest of the buyer. I dont even know why its open to debate. Its very simple. It all depends on the moral character of the agent. Period and end of story.
So you keep heading in your direction and when enough word gets out that you try to play mortgage advisor and work loan agents fees down, I hope all the lenders in your area help the buyers understand YOUR closing costs and send them to Help U sell and other discount brokers. Im assuming of course, but guess that you have not enough knowledge of current disclosure/pricing/procedure laws to properly explain all mortgage closing costs and PRICING Its not cut and dried. Its not just a set of points attached to any given rate.. Correct me if wrong. I have the manuals on RESPA and all the regulations. They are many inches thick. They are 20% actual laws and 80% attorneys opinions of how to interpret them. Its a stinking mess. Mortgage brokers have been screwed into the ground by a government that doesnt understand what its trying to regulate.
This thread is far off subject now.
>>Your job as fiduciary is to do your job. It doesnt include negotiating other professions and or services
I don't negotiate other professions. I help my clients find good lenders. I help them understand clo sing costs, points, fees and good faith estimates. I help them compare lenders. Who said anything about "negotiating" lenders for them? I merely help them with their quesitons and help them find the best lender that fits their needs. That IS my job as a fiduciary if they want me to. If other Realtors want to mind their own business and let their buyers find a lender, good for them. But I have vested interest in making sure my transactions close and in making sure my clients don't get ripped off. That's what I do.
That's funny for two reasons, Steve:
1. Just after that you give real estate advice to a customer (see your posting);
2. I know more about lending that about 1/2 of the so-called mortage people out there.
You can do whatever you want, but you can't do it with me because I have a contract with my clients and you can't interfere with it. Lenders and buyers don't have a contract and I'm sure that really chaps your butt. However, I have an exclusive agency agreement with all of my clients so nobody else can interfere with my agency relationship, by law. So if a lender or another Realtor tried to influence my client I'd file an ethics complalnt.
Your job as fiduciary is to do your job. It doesnt include negotiating other professions and or services. Again, I can talk about pricing because I was a super discount mortgage broker. I undercut all my competition by using the lowest priced wholesale source I had plus a lousy markup of 1/2 point. No one could touch me. Downside? That worked great in 2003 thru 2007 when we were literally rolling in volume. It helped shut me deown later when the loan world crashed, and I had no large reserves to keep the mortgage biz open.
Though I was already low, real estate people would still try to get me lowqer and/or they wouldnt put up a stinkin buck to save a deal but expected ME to. Now that Im doing 100% real estate, loan brokers love me because I know their job and would try to screw them out of commissions.
If I got wind that you were trying to cut my ability to pay my bills by getting your clients to try and cut my fees---I wouldnt do business with you any more than youd send clients to me if I told them to go BACK to you and give up your 5 to 7% if you were double ending it because 'Hey---$15,000 is too much to make for just filling out a purchase contract on a $250,000 house.'
You and I both know that on higher priced properties, manyn times we should be embarrassed to collect huge commissions, especially if it was a quick easy deal. The mortgage broker has 30 times more work to do on the transaction than you do. The mortgage broker makes the deal work so YOU GET PAID.
There aint a person here who would dare to debate me on who does the most work and who has to know the most rules, regs, procedures, etc. The mortgage guy/gal has it hands down. In the immortal words of whoever that guy was who was beaten in the street years ago: Cant we all just get along?
Real estate people do their job Mortgage people do their job. Leave each others profit alone. You both need each other. Ill tell you this in public forum---Ive worked at two of the major banks left that pretty much own the market. I wouldnt send a borrower to either of them if they were the last lenders on earth. I know underwriters in both and they are so back logged you wouldnt believe it. They flat suck. Their leadership is terrible and plagued by office politics. They put 19 year olds with no experience in charge of hiring, or people who came from other dead lenders who oly hire their ex buddies with no regard to ability. Thank God for the few mortgage brokers who are left---I predict they wont be around for too many more years. Even less if you (we) real estate people try to screw their fees down to nothing.
I agree with not making lenders look bad, I am very tight with the lenders that I recommend to my clients. And that works both ways, right? Also, as a fiduciary for my clients I do what I can for them and that sometimes means helping them find the best rate and closing costs. I do that because that's my job as their fiduciary. If a lender is over-charging them I'm going to tell them. The difference is that I'm a fiduciary for all of my clients, you, as a mortgage lender, are not. I have clients, you have customers. The relationship is different.
And since you are afraid to tell me how long you've been a mortgage broker I know you're new.
Doesn't mean you're wrong, though.
Folks, I started in 1980. I was doing loans and real estate side by side from 1981 to 2009. A lot of both. I know both industries VERY VERY well. First Id like to say that Jack Guttentag is a MORON. A SELF SERVING FOOL. I have publicly called him out on many occasions and he wouldnt respond to my wish for a debate. He caused more problems between brokers and customers than should have been---all in the name of promoting his system, books, etc. He was a doctor giving people a virus, only to sell them the cure.
His 'up front' thing was/is a farce. You all can scream about 'HIDDEN FEES' of mortgage brokerage but it just aint so. Yes, when acting as a banker, a borrower may not be aware of the total profit made from a loan but does Safeway supermarkets tell you exactly what they are paying for Twinkies from the factory? Does Chevrolet tell you theexact cost/profit on a car? No way. All that ever mattered was bottom line. What is the rate? What are the fees? Those two figures are all anyone needs. It doesnt matter if a loan broker makes 20 points if the final rate/fee is less than all the competitors. REBATES from 'lenders'. Wow what a sore subject. A tiny little pimple turned into a huge mountain by people like Guttentag, who used the subject to imply wrong doing.
I see some debate about what real estate brokers make vs loan brokers, and what we all can do with our fees. I can say whatever I want here without anyone getting their underwear in a bunch becasue again---Ive done BOTH and know both. In general, my experience has been that real estate people do not want to give a dollar of their commission for anything but exp[ect the mortgage brokers to pare down to least possible profit. As a loan broker referring people to real estate agents, I never once said 'Look for the lowest commissions possible and beat the agent down every way you can'. I used to see real estate purchase contracts written with clauses regarding the maximum rate and fee the buyer would accept. Countless times Ive seen some repair item come up in the last days of escrow, and the agent who was making a $15,000 commission wouldnt budge but expected the loan agent making $2,500 to eat it and make the deal work. Often the real estate agents held a carrot of 'no more future referral' over the loan agents heads. In California the loan brokers license WAS a real estate brokers license and we all got along better together. When I moved to Orygun (proper way to say it) I noticed that the real estate people here tended to treat us like dogs. Having more real estate experience than many of them, I wouldnt take it.
Now the whole world of lending and disclosure has changed. Its better and worse. Its confusing and downright stupid.
Its pointless to debate over our two industries fees. Each transaction is up to the adult client and the provider. How many of you have ever called an escrow company toi try to beat down their fees to the customer? How about a roofer for repairs? Each party swhould mind their own business. Im 10,000% consumer oriented but there are times when one shouldnt meddle outside ones own sphere.
While Im on this soapbox, Orygun doesnt allow a real estate broker to 'kick back' (a bad sounding term) commission to a buyer or seller. This is the most ridiculous thing Ive ever heard. We did it all the time in Calif. If I want to give you a new garage door as a gift for using me as a buyers broker---how the hell does that harm anyone? Is it unfair competition? No. Any type of service person or agent should be able to give anything they are making to any customer/client. If I bring a buyer for your listing, do you care if I give part of my fee to my buyer? Come on Oregon.
Now, I realize that Im not God and dont have the right to control anything. I know that many people come onto this thread and dont read it before answering the original question but this has been BEATEN TO DEATH. Im opting out totally.
Maybe, maybe not. It really depends on the situation. Is it in the buyer's best interest to work with an experienced agent who knows the ropes? What's that worth? You know why most agents, even buyer's agents, don't reduce their fees? Because they don't have to. Many agents who advertise as "giving discounts" do so because they are new and because they don't have any business. I'm sure you'll tell me that this is not true in your case, maybe it's not. But the high-powered agents never reduce their fees - because they are worth it and their clients know it. As I've said before, even in real estate, you usually get what you pay for.
I agree that it's best to be represented but the law doesn't force that everywhere. If it does become a 'must' what about the people who simply do not want representation. Will that leave them with only the option of buying totally on their own instead of a limited service or ministerial service transaction? I'm a full time, full service realtor but i can understand that different people want different options. Hard to imagine, but it is the case sometimes. We have new construction neighborhoods here where there is no agent involved. The people staffing the sites are employees. It can get nerve racking if you have spent 2 months and 5 tanks of gas and you drive into a site that does not have an offer of compensation.
I almost gave Steve a thumbs up, hand hovered over the button for a while :). So is it the same in OH? I think there has to be a better job of informing the buyer and seller of what 'coverage' they are getting
I agree. But even if it's made clear to buyer and seller that doesn't mean it's good. IMO transactional brokerage is lacking because it represents nobody. It's almost as bad as dual agency. I think all parties in a transaction should be represented, whether buyer or seller. Non-representation shouldn't even be an option.
FYI, Lori, I don't know anything about Utah agency laws, I'm in Ohio.
Hey Steve, I finally gave you a "thumbs up" on your last comment because you finally said something I fully agree with!
Ah, spoken like a true Florida transaction broker.....No wonder Steve get's so excited about what agents don't do for buyers! Glad I live in Ohio.