Selecting the right mortgage lending partner is important to an agent's success since most transactions involve financing.
  • A good lending partner is responsive and communicates well.
  • Real estate agents should expect timely and accurate pre-approvals.
  • Good lenders understand geographical and contractual differences and nuances.
  • Lenders you partner with should have a solid and diverse set of product lines.
  • Great lenders close on time and make sure to clear hurdles and conditions to do so.

How often has one of your deals fallen through because a buyer was not properly qualified? Or the lender/agent relationship wasn’t working seamlessly? Your success depends on quality, reliable, transparent, and communicative lenders. What should you evaluate when choosing a lending partner? How can you ensure a lender will provide the industry expertise and right support for a flawless transaction, no matter what type of loan or buyer? Most agents will refer multiple lenders to their clients, and some clients will come to a transaction after choosing one of their own. Still, if you are referring several lenders, ensure the ones you refer are top-notch.

Real estate brokerage executives and agents work with a variety of lender partners, with mortgage brokers being the preferred choice for agents (47%), followed closely by banks (31%) and non-bank lenders (22%).[1] Great lenders can make or break an agent’s commission — if the deal doesn’t close, it might fall apart entirely. Choose lending partners who can effectively manage the following key points, and you will be able to make quality referrals to your clients.

Importance of Selecting the Right Partner

About 80% of real estate transactions require financing.[2] That means the importance of referring clients to the right lender cannot be underestimated or overlooked. Your reputation rests on the quality of partnerships and referrals you make. Your clients may be deciding whether to use a bank they already have a relationship with or go with an independent mortgage broker. There are pros and cons to both.

Some banks retain the servicing of a mortgage versus selling it to another bank. The benefits of a bank that retains the servicing include providing direct control over customer interactions and quality of service, which can help build and maintain strong customer relationships. Retained servicing may be less risky for your borrowers by reducing the number of entities involved in the post-closing relationship. If your clients are already customers of a particular bank, another benefit is that the loan officer can look at their full financial wellness as part of their overall portfolio and often can offer discounts for being an existing customer.

Conversely, non-bank lenders and independent mortgage brokers might have more flexibility in their underwriting criteria. Local institutions may create a stronger sense of trust with clients because they know the lender is based in their local area. In some areas, offers with pre-approvals from local credit unions and banks may give a purchase offer more credibility if other agents have worked with those loan officers or institutions in past transactions.

It's important to know your clients and have various lending resources available for you to refer. Take the time to get to know your lending partners — the benefits will pay off for you in the long run, with happy clients and a strong partnership between you and the lender.

Overview of How a Lending Partner Affects Real Estate Transactions

The unexpected can affect how a lender perceives an applicant’s overall creditworthiness. When lenders evaluate a client for a mortgage, they assess their credit history, creditworthiness, ability to repay, available capital, existing collateral, and any external conditions that may affect the loan. Thus, a lender must ensure a borrower’s job security and income stream is stable. They also must be able to ensure that if something suddenly changes with the client’s financial situation, the loan payments can still be made on time. This requires scrutiny and analysis by the lender upfront and throughout the loan process.

Often, deals fall apart due to buyers losing or changing employment during the buying process. Or the appraisal may come back lower than the original offer on the house, and the buyer and seller can’t resolve the difference. Sometimes, the issue of closing a transaction successfully is due to a failed inspection.

Agents and lenders can also be surprised when a buyer applies for more credit during the home-buying process, such as buying a new car or boat. A transaction can fall apart for many reasons, but these reasons and more are exactly why a strong lender/real estate agent partnership is critical.

According to an Inman survey, “speed ranked as the highest factor that determines whether an agent will recommend a lender to a client, with 59% of respondents citing it as the most important.”[1] A good lender quickly solves problems and offers solutions to keep the deal on track if problems arise.

A lending partner should respond quickly to every communication from you or your clients. They should be able to quickly review any documentation — whether that be financial information from your clients or an appraiser’s report. In a perfect relationship, the lender and the agent work to catch issues that might prevent an on-time closing immediately. A great lender can communicate to all parties any next steps and work with you and the client on solutions to ensure closing can happen exactly when expected.

What Should Real Estate Agents Expect From a Lender

There are several key qualities every agent should expect from their lender. A great lender can effectively do all of the following:

Provide Accurate and Reliable Pre-Approvals

Before putting an offer on a home, a buyer typically must have a pre-approval document from a lender in hand to include with the offer. A good lender will quickly engage a potential client to ensure they complete a credit application, then assess that information accurately to determine what the client can realistically afford. Without an accurate pre-approval where a lender has been thorough and complete in its preparation, a deal is more likely to fail as the contract nears close.

A lender evaluates an applicant’s income, debt, and other financial information, such as child support payments, investments, and retirement funds, to gain a holistic picture of the client’s ability to get a mortgage. The lender can then suggest loan programs that may be suited to that client’s needs.

Good lenders in competitive markets might take the pre-approval process further by proactively suggesting that the client pursue pre-underwriting. Pre-underwriting requires a deeper dive into the clients’ finances but is a stronger, often guaranteed, assurance that the buyer can close on a purchase. The lender will work with the underwriter before a client begins to make offers on a home to make sure all the underwriting conditions are cleared ahead of time. They will ensure anything that might snag the process at closing is cleared before a client makes their first offer.

Ensure Fast Turn-Around Times for Approvals

Your clients might stumble into an open house on a Sunday and enlist your help with the offer. If the client is not pre-approved, you will want to refer them to trusted lenders, ones whom you have assurance will quickly make a decision and act fast to respond.

A good lender is responsive seven days a week. They answer your calls, respond to an email, or access a credit application in a timely manner. Good lenders can even sometimes turn around a pre-approval within hours, allowing your clients to make that offer on a dream home before other competing buyers. A quick turnaround at pre-approval demonstrates upfront that the lender is a reliable and trusted partner.

Execute Frequent and Consistent Communication

Communication is critical in any relationship between lender, agent, and client. Frequent and clear communication from a lender provides all parties with up-to-date status on the loan approval process, any outstanding conditions awaiting to be cleared, any obstacles, or any additional steps required of the client. Since the closing process is usually time-bound — most closings happen 30 days or sooner from when an offer is made — any delay in communication can put the closing timeline at risk.

As a result, look for a lender who can tell you upfront how and what their communication process is. Some send out weekly status updates, and others use automated systems with notifications and access to online communication portals. Whatever methodology a lender uses, make sure their plan for communicating with you and your client builds and maintains trust throughout the process. Frequent, consistent communication goes a long way toward getting a transaction to the closing.

Have Intimate Knowledge of Your Local Market and Contracts

Whether your client is working with a small mortgage lender or a large bank with national reach, the mortgage lender must be a person with knowledge of your market and the contracts commonly used in your area. Contracts vary from state to state, and the requirements and expectations of those contracts can vary greatly. Ideally, your lender is physically located in your immediate geographical area, such as your town or county. If they are not, ask key questions, such as, “How many transactions have you successfully closed in my state or area?” Or “What do you see currently in other transactions in my market that could be important for me or my clients to know?”

A seasoned expert has deep knowledge of the lending market and the unique loan products their firm can offer. They also understand what requirements are necessary for a specific market that will help a client’s offer be chosen over others. They should also be confident working with the home appraiser process to assist with value appeal should the appraisal come back lower than the buyer’s offer.

Have Access To a Variety of Mortgage Products

In a competitive market, a good lender can access a variety of mortgage loan products and find one that best fits your clients’ needs.

Many agents know the standard 15 and 30-year conventional FHA (Federal Housing Administration), VA (Veterans Affairs), and USDA (U.S. Department of Agriculture) loans. But your client might need access to other non-conventional loan products such as balloon loans, jumbo loans, payment-option ARMs, interest-only mortgages, tailored solutions for the self-employed and investment buyers, and construction, bridge, and no-ratio loans. The wider variety of loan products helps the lender tailor a product for your client. Such a variety can also help a lender switch product midstream to ensure the home closes on time.

The lenders you refer should be able to assess your client’s specific needs and recommend products that meet those needs. Your client should feel that the lender is sourcing custom solutions, listening to your client’s wishes, and responding with innovative solutions for a great customer experience.

Meet Deadlines with On-Time Closings

Great lenders have a long track record of successful closings and happy, satisfied clients. When investigating lenders, read the reviews not just of mortgage lenders themselves but the reputation of the bank or brokerage they work for.

Also, talk to other agents — ask what lenders they are using and why. If you are a listing agent, what lenders are you seeing pre-approvals from more frequently in the offers you receive? Ask any lender you are looking to partner with about what percentage of their closings happen on time and what the reasons are when they don't. A fantastic lender ensures that they will stake their reputation on successfully taking the deal from application to closing in a timely and efficient manner.

Exhibit Regulatory Compliance and Legal Awareness

Compliance protects lenders and borrowers from unfair practices, illegal activities, and predatory lending. Lending institutions with a strong focus on compliance reduce their risk of violating state and federal laws. But compliance is also about consumer protection. As such, they will stay on top of current regulations and make sure their processes are compliant.

When mortgage lenders don’t stay abreast of ever-changing regulations, they face fines from the FTC (Federal Trade Commission) and other agencies. It’s important to always know your lender takes such regulations seriously and professionally.

As an agent, ask your lender about steps their firm takes to remain compliant. You can also ask if their loan products are subject to the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), as these regulations require certain disclosures.[3][4] You also should ask your lender partner how they meet or exceed the regulatory requirements, provide superior customer service, and offer competitive rates and terms. They should also have adequate safeguards to protect borrower information through up-to-date technology in encryption and firewalls.

Commit To Be a Trusted Long-Term Partner 

In the long run, lenders committed to your clients to be long-term partners will have many benefits. These include faster approvals for future purchases, access to more financing options, and continuous education of your clients on other products the bank offers to further their financial goals and success. Over time, your client will view their lender as a trusted partner who they know is watching out for them and provides customized service at every step of their financial and life journey.

Final Thoughts

Real estate agents should look for various capabilities when recommending mortgage lenders to clients. There are so many lenders out there that partnering with the right one might take doing your homework. Trust the referrals from other agents and previous clients. Read reviews about the lender and their on-time closing rates, communication practices, adherence to regulatory practices, reputation in the market, access and knowledge of loan products, and overall expertise.

By evaluating these various factors, you can ensure that you’re partnering with a professional who will guide your clients successfully through the home financing process. You will have happier clients who will see you and a referral you made to a lending partner as an extension of your trust and credibility. Clients will feel like they have two experts on their side who have helped them overcome hurdles and challenges and bring the pieces of the home-buying process together.