In this month’s agent-broker perspective, what should an agent do when her brokerage’s affiliated lender is less than preferable?

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In this monthly column, Anthony Askowitz explores a hypothetical real estate situation from both sides of the broker/agent dynamic. Anthony is the broker-owner of South Florida’s largest RE/MAX office, and a working agent who sells more than 100 homes each year.

This month’s situation

An experienced agent is fed up with her office’s preferred mortgage lender, after dealing with years of poor service, inflexibility and less-than-competitive rates.

A local bank in her market is doing wonders for local Realtors and she desperately wants to work with them instead. Her broker acknowledges that issues exist with the current bank, but still wants agents to stay loyal to the lender they’ve partnered with for more than a decade. How to resolve this impasse?

Agent perspective

At the beginning of my relationship with this mortgage company, I was excited that it offered one-stop service. It all sounded so much easier than relying on whichever lender or closing agent the buyer knew. What a relief it would be to know that I was dealing with professionals.

Unfortunately, the reality was much different than what I expected. “Pre-approvals” were no more than “pre-qualifications.” Contracts fell through because nobody explained to the buyers that it wasn’t okay to buy a new car prior to closing. Worse, buyers were told they couldn’t finance an unlivable property, just before speaking with friends who had closed on one in worse condition. Why? Because our “preferred lender” didn’t offer (or didn’t know about) renovation loans.

I am so frustrated with the obligation to use in-house affiliates. It wouldn’t be a problem if I could rely on them to get the job done. But this is my income we’re talking about, and my own reputation is on the line. I get the blame when I recommend a buyer use our in-house lender, then the buyer finds out the rates are lower and the cost to them is less if they use someone else.

These buyers trust me to look out for them and provide them with the best service. I so wish these “partners” of ours realized that egg on their faces is also egg on mine.

Several of my agent colleagues at other offices have been telling me about amazing new lenders in our market offering all sorts of creative financing, 21-day closings with low loan costs and incredible customer service. I’m seriously thinking about moving to another real estate office to break the chains to the lender I am required to pitch by my broker.

Broker perspective

My agent’s complaints are valid and important. As the broker, the poor service from our chosen affiliates also reflects poorly on me — to extend her metaphor, there is plenty of “egg” to go around, but most of it lands on my face.

That being said, there is a real benefit to using in-house lenders and closing agents. Those affiliated companies rely on business sent by our agents, and should absolutely not take the relationship for granted – quite the opposite.

In some cases, the companies are affiliated via a marketing agreement and risk losing the affiliation, and all the business that comes from that relationship. In other cases, affiliates may have a more direct relationship via shared ownership.

Either way, when there is an issue, it is my job to address it. I can identify the true problem at the core and make sure it is resolved so it doesn’t happen again – to this agent or to any others. I have seen our affiliates jump through hoops to close transactions – even when the challenge was not one of their own making.

Overall, having this control over one’s business, knowing the affiliate answers to your broker, is very important. Every once in a while, we discover that there is a glitch that either requires retraining or even staff replacement. In rare cases, we have gone so far as to change affiliates, but this lender has been reliable for many years. We at least owe them the chance to hear our agents’ complaints and fix any errors.

How to resolve 

Affiliated lenders should see their real estate office’s agents as partners in business. The entire process should be built around making closings happen as quickly and smoothly as possible.

However, it is common for buyers and sellers to tell their agent that they want to work with their own lender and not the company’s preferred one. In this situation, the agent should feel 100 percent comfortable going to bat for the company’s partner, to the point that they can personally vouch for the individuals who would be handling the loan, explain exactly how the loan process will go, and can completely rely on the lender’s staff to communicate regularly.

They should be able to know the loan will close smoothly, not hope that it will. (If they have made this pitch and their customer still chooses a competing lender, the broker simply must accept that an agent cannot “make” a buyer use the company’s preferred one.)

Since it was the broker’s choice to create an affiliated relationship with a particular lender, it is the broker’s responsibility to make sure they provide the services promised. A good first step to evaluating the affiliated companies is by taking an anonymous annual poll of the agents. What are the affiliates’ strong points, and weakest? The results should then be shared in an open and frank conversation so that any weaknesses are addressed together.

Another option for the broker is to expand the available lending affiliates to three choices. This will allow for expanded access to multiple financing programs, different relationships and personalities, and increase competition between the affiliates to provide the best rates and closing fees.

NOTE: Anthony Askowitz is not an attorney and does not give legal advice. Please consult a licensed attorney regarding matters discussed in this column.

Anthony Askowitz is the broker-owner of RE/MAX Advance Realty, with offices in Hollywood Beach, Davie, Miramar, North Miami, South Miami, Kendall and the Florida Keys, where he leads the activities of more than 190 agents. Follow Anthony on Instagram.

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