Real estate brokers and salespeople have long touted themselves and their services as the crucial “center” of the real estate transaction. But that position may be in jeopardy now that mortgage lenders and brokers have gained ground in their quest to capture the point of purchase into the transaction.

The point of purchase is crucial because it determines who first obtains the buyer’s or seller’s loyalty and business. When the realty agent controls the point of purchase, he or she can refer the buyer or seller to a mortgage lender or broker. But when the mortgage lender or broker controls the point of purchase, it is that person who can refer the buyer or seller to a realty agent.

Take Bank of America, which has long sought to display for-sale home listings on its own Web site. The bank’s new online Real Estate Center now enables home shoppers to search local MLS listings in three markets: Las Vegas, San Diego and Tucson, Ariz. The bank plans to expand the offering into other cities within the next six months.

The local listings come from the bank’s network of “preferred” real estate brokers, which means BofA now controls some referrals of business to those brokers, even though the bank itself is not in the brokerage business. The realty broker and agent haven’t lost the business, but the listings lure gives BofA the point of entry into the transaction. BofA is no lightweight. The bank has more than 11 million online banking customers, and its Web site attracts an average 16 million unique visitors each month.

Or consider, which allows homeowners to advertise their own homes for sale on the Internet. Buyers who swallow the lure become prospects for the mortgage broker. Realty salespeople aren’t welcome to participate. That means this system eliminates them not only from the point of purchase, but from the entire transaction. Multiply these business models across the board, and it’s easy to see the huge potential effect of this paradigm shift.

Realty salespeople who lose the entry point into the transaction lose the power to refer business to lenders and perhaps eventually the power to control the transaction itself. This position as the “center” of the transaction has been identified as crucial to the realty salesperson’s value in the whole process. The loss of the center as well as the point of purchase would be a shift of seismic proportions.

Brokers and salespeople have themselves as well as the banks to blame for this state of affairs. Realty agents long have encouraged buyers to become pre-qualified or pre-approved for financing before they start to shop for a home, and buyers have learned the lesson all too well. They used to approach the realty agent first to obtain a referral to a lender. But now they head straight to the lender’s office before they select a realty agent. The realty salesperson saves the time that otherwise would be wasted on unqualified prospects, but again the point of purchase is lost.

The counterweight to the salesperson’s diminished power at the point of purchase is the broker’s ownership of a mortgage company that can refer business to the salesperson. The affiliated mortgage lender or broker who captures the buyer at the point of purchase can keep the whole transaction within the broker’s family of companies. No wonder affiliated mortgage businesses like the joint venture between Chase Ventures Holdings and the in-housemortgage subsidiary of Prudential California Realty, Prudential Nevada Realty and Prudential Texas Properties are hot properties today.

The same can’t necessarily be said for the seller’s side of the transaction, where lenders may have less influence, unless–as is often the case–the seller is also in the market to buy. (Industry researchers might want to investigate whether people who sell one home and buy another one begin the dual process with the buy decision or the sell decision.)

Realty brokers and salespeople may want to consider the implications of the point of purchase shift in their strategic and marketing plans. If mortgage lenders and brokers continue to capture more business at the transaction entry point, realty companies and salespeople may need to target marketing messages to lenders, instead of buyers and sellers, just as loan brokers historically have marketed their services at the brokerage office. On the plus side, the power shift at the point of purchase could reduce the realty salesperson’s marketing costs because a good relationship with a productive lender could generate a lot of referral business.

The point of purchase matters just as much as the center of the transaction does. That’s why lenders want to be as close as possible to that decision point. To ignore the implications of the shift from realty brokers to lenders could be perilous.

Marcie Geffner is a real estate reporter in Los Angeles.


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