I decided early on that I would sell homes and only sell homes. I do not do mortgages, escrows, sell insurance or sell any other services. I do not except fees from venders who provide services to my clients, nor will I do business with companies that offer kick backs or fees. I keep it clean and find it makes life a lot easier.
I have had many discussions with agents who also do mortgages or insurance. I do not want to be like them, nor do I want to be involved with a transaction with them on the other side.
They have a conflict of interest. If their client for any reason decides to sue them down the road, you will most likely also find yourself in court or down at the Board of Realtors. If you are not also being sued, then you may still be a witness. I can do without the grief.
I have told the following story several times both here and to other agents. A couple of years ago I was pursued heavily by a real estate company that does both mortgages and sells homes. I let them know my feelings on the subject and told them I was not interested. That did not seem to slow them down. After several times of me telling them I was not interested, I was approached again in front of several other agents at a Board of Realtors class. I had enough and let her know that I could also make a lot of money selling drugs on a street corner and would not consider doing that either. OK that was a little strong, but she got my point and stopped asking me.
Recently one of my good clients got her real estate license. She already had a mortgage license. She asked me about possibly hanging her license with our office. I expressed my views on having dual licenses, but made an appointment for to meet with our Broker. To my pleasure our broker gave her the same speech. That was about 6 months ago.
Last week I got another call from her. She tried it as a dual agent with an unknown company and had poor results. Besides all of the conflict of interest issues she found that both businesses are quite complicated and she would never be able to master both. She went on to ask that if she dumped her mortgage license would we be willing to take her on at our office. She also asked if I would be willing to team up to service her clients and to help better train her. The result of our conversation is that she is filing her license transfer tomorrow with the Real Estate Commission and will be coming on board with us.
I am looking forward to working with her.
Also see my previous blog: Hold on Let Me Change My Hat - I am now your.....
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Randy L. Prothero, REALTOR®, ABR, AHWD, CRS, e-PRO, GRI, SFR
Century 21 Liberty Homes
Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers. His home seller's (listing) campaign is one of the most aggressive marketing programs in the area.
Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) Performs mediations and ombudsman services for the Board of Realtors. To improve overall professionalism in his area Randy also offers classes for real estate agents.
www.HawaiiRandy.com * Oahu (Honolulu County) Property Search * Hawaii Military Relocations
Randy,
All the best for you and your new "Trainee"...
Hi Randy,
Interesting topic! Wearing two hats may sound like a good idea to some folks. I have heard it said that they believe that it is easier for the client since they are only dealing with one person. I have talked to a few folks who have run into these types of practitioners. Their honest opinions were that it looked kind of greedy. Personally, I think that it definitely is a conflict of interest. The beauty of having a separate mortgage broker and real estate agent is that the client has the benefit of the advice of a professional on both ends. Sure, I pay attention to what is going on in the mortgage world, but does that mean that I need to capitalize on it? If you are going to wear so many hats, then you may need more heads. (As in another person doing the other job for you.) JMHO
Being good is all about focus. If your focus is too far defused it's not focus. I don't know why people refuse to understand this. Eventually they learn, the hard way. Hope your new agent works out well, now she's been on the "other side!"
kk
Randy,great post and I totally concur with Valerie. ts difficult enough staying abreast of the changes in the RE market never-mind trying or attempting to be a mortgage professional also. I have found that if you work and surround yourself with knowledgeable caring folks, in the long run things always turn-out better. I cannot imagine finding the perfect home for someone that is getting ready to close and then tell them that their COE will be delayed because of lender issues.
Don
Randy - I think the successful dual ownership and operation of both a real estate firm and mortgage firm is possible if the owner is more a manager and business development director with agents and loan officers working underneath he or she; rather than someone try to wear multiple hats and dealing with the clients, which I agree is a prescription for disaster or at the very least compromised results.
Nice post.
James
It is hard enough to Master one craft let alone more than one. Decisions are made daily by people that are following their own agenda. What happens when you are wearing two hats and the the two agendas conflict with each other. I don't think the Client is better served when they do not have the checks and balances of more than one opinion.
And what about the Client. If in the middle of the contract they are happy with the service of one aspect but not of the other, what do they do. I would find it tough to fire half a person.
Sabine - Thank you, I am sure she will be good to work with.
Valerie - I couldn't agree more, you may also need a good lawyer.
kk - I don't think she will want to go back once she focuses and starts making some money.
Don - When you call the other side about delays, you can't blame the lender. LOL
Kaye - I have worked my tail off and spent a lot of time in school to get good at selling homes. I could not imagine doubling that effort. I would not have enough time left to make money.
James - I am not comfortable with owners of real estate companies who own mortgage companies. I do not want to be affiliated with one of them either. There will always be pressure to use their mortgage company.
Jennifer - The top agents in either field are too busy to mess around anyway.
Andrew - Well said
Kaushik - There was vender about a year back offering rebates to agents. I told him that I could not use him period.
What a great post - there are so many vendors here that offer kick backs and so on - they are always amazed when I tell them to give my client a discount instead of trying to buy my loyalty -
In reality a kick back is costing my client - so instead I insist on it being given as a discount to my client. Vendors for a short time would disagree with me on this - but when I started telling them they had 2 choices honor the discount to my client or loose my referrals they saw the light.
I often wonder how many take these kickbacks.
Randy, I agree with you about the Kickbacks and having yourself for sale to the highest bider rather then the best service. When I had just my Mortgage License and Approached Realtor for the most part it was always about what I would pay them rather then how I can help them and their Customers / Client. It was very disappointing and in the End I only had a few Realtors as Clients for my Mortgage side. What is amazing to me is that for the most part they just do not understand that if you are receiving a kickback for referral then your customer / client is most likely paying higher fees! I see it all the time, when I review the HUD-1 for New customers, I will also state that when I have a Customer for Real Estate side then I refer them to 3 Lenders and never Personal handle the Mortgage Transaction.
Randy,
I totally agreee-Stay true to what you do best.
I, too, have been approached numerous times. No interest for the same reasons. Good for sticking to your guns! Good luck, Randy.
Jeff
Mitchell - I attend all closings. I have seen many HUD-1 statements and watch for excessive fees and charges.
Diane - My clients come first. If they know it they will come back and send others.
Phylena - I never considered it from day one and feel even stronger about it today.
Christy - As the Speaker of the House says, Not Conflict of Interest Here.
Giraki - I had an agent get a little huffy with me at a Realtor meeting a couple of months ago on the subject. My response was: I understand you did not like what I said, what part did you disagree with? She did not have a response. Just because you are making money, does not make it right.
George - I give you credit. I entered the real estate profession in 1982 and didn't stick it out. With rates that high and me being so young, I found easier ways to make a living. Many years later, I now have a few gray hairs; I am taken a lot more seriously and have found this to be a wonderful profession.
Wayne - You will find you clients will be less forgiving when things don't go perfectly smooth, if you are making money in multiple directions. You will always have a hard time justifying you commissions.
Jeff - I never once even considered it. I find that those who do not see things as black and white get bothered by people like me who draw lines in the sand.
Roger - I have heard all the arguments. I see no benefit to the client. Their interest must come first when you make decisions like that.
I read your blog and, no offense, couldn't disagree with you more.
First, regarding the conflict of interest nonsense; as long as everything is properly disclosed there should be no problem. If anything, the real estate broker who is also trained in mortgages has a greater knowledge base than the broker who doesn't. I liken the situation to that of a general practitioner and a heart surgeon, the heart surgeon could remove a splinter from your finger, but I don't know that you would want a general practitioner doing open heart surgery on you.
Also, if you accept the premise that a person working on commission has an economic incentive to work your transaction, wouldn't it make sense that a person earning an additional commission has an additional incentive to work on your transaction? Not to mention the broker who is doing the mortgage as well as greater control and knowledge of the transaction. If I need to bring myself back up to speed on where a transaction is, I simply pull the file. A traditional agent has to call the loan officer, usually wait for the lo to call him or her back then wait while the lo calls his processor who has to pull the file, call the lo back. leave a message and wait for him to call her back, when he does, she's out to lunch so he leaves her a voice mail, she gets back, calls him back leaves another voice mail, finally gets a call back and relays him the answer, he then calls the agent back, gets his or her voice mail and by the time the agent and the lo finally catch up with one another everybody has forgotten what the original question was!
Simply put, communications are streamlined and are much clearer and concise.
As far as the opportunity to get sued, I've been doing both real estate and mortgages for over 20 years and in that time have never been sued by a client. Does that mean that I never will be sued? Nope, it can happen to anybody, but it isn't any more likely to happen to an agent because he works with a duel licensee than if there are two separate entities working on the transaction. Because of the difficulties in communication that I outlined above, I would think that the opportunity for something to go wrong and therefore be "sueable" would be greater with two separate parties.
Hi Randy-
I have to agree with you here. I am nervous to bring business to a "We do it all" company. Part of my job as an agent is to find the reputable professionals and refer my clients. It seems to be working fine for me as my customers are happy and the deals keep coming. Good post : )
Randy,
I completely agree with your ethics! How refreshing to find your post :) I get so tired of running into greedy, know - it - all agents and or REALTORS®
R.B. - Please tell me what you really think. LOL
I am glad you responded. It gives the readers the opportunity to hear the opposing point of view.
I see we will never agree on this point. The two top reasons for Realtors having complaints filed against them in our state is dual agency and dual services. That is the facts. In many of the forums and classes I have attended this topic comes up frequently as a major problem in our industry.
In everything we do disclosure is critical, but it does not remove a conflict of interest. One of my best friends, owns a real estate company and a mortgage brokerage. We are still good friends, but I will not work for his company. It is perfectly legal to do both and you have a right to make that business decision.
I made mine to never do both.
Kelli - I am very careful about who I refer anyone to. If I do not have a great experiences with them they do not get a referral to my clients.
Autumn - Welcome to Active Rain. I have a simple philosophy. Take care of the clients and the money will come.
Fabulous.
I spend most all day learning the intricate and ever changing details of the mortgage business. I've been doing that for 12 + years. Ask any serious mortgage professional, they know what I'm talking about. I know the Agents do the same on the property side. For an agent to possibly think he can do the same or better job than I can doing the sale and the financing, that's preposterous! Do you think I can do a better job than you selling houses? I don't either.
The agents I see that continue to do both sides are usually cheap and looking to make every penny they can (present company aside), this costs the consumer more in the long run.
As we say, "Jack of all trades, Master of none!"
Randy, you are one of the few that get it.
I'm moving my family to Hawaii just to come work with you.
It'll be a huge personal sacrifice on our parts - but we'll manage.
Mike - I couldn't agree more. I would never believe I could do mortgages as well as someone who does it full time, anymore than I believe a part time person could sell houses as well as I could.
I love Hawaii. Just a word of caution. Many come here, but few stay.
Randy, I agree with "Active Mike" !
In my business only, I learn something new everyday of the week. Our industry is constantly changing from lender, state, and federal guidelines to new products that hit the market. Couple that with trying to grow you business with good, strong ethics there is no possible way I could hold another hat and you're right, the client would not benefit whatsoever. I don't really see it much in my market of individuals trying to do both, but I'm sure they wouldn't be that successful. I want a proven professional and expect at their trade when I need service, not someone who does alittle of both.
Keep doing what you do and don't change!
Thanks so much for this post!!
Jack of All trades, Master of None.
People think that if they are everything to everyone that they will have a better and bigger business. Usually what happens is that they end up messing up and losing it all.
good post... good luck to you and your crew. Its hard with different hats.
Best wishes
Desiree