Looking Forward Into A Rearview Mirror Wearing Two Hats, Guaranteed Incompetence Or The Only Way To Insure Competency

Looking Forward Into A Rear View Mirror Wearing Two Hats, Guaranteed Incompetence Or The Only Way To Insure Competency? This comes from an article I published three years ago this week. As the bubble burst.

A friend wrote me (a short three years ago.) "I would like to read your perspective on how fiduciary responsibility/conflict of interest may or may not exist." he was talking in regards to real estate agents also being loan originators.

I think he was very serious in his inquire, but by the repeated use of the "F*" word I have to wonder if he just wants another debate between our mutual friend Brian Brady and me. Brian and I debated the "F*" word frequently it has been amusing because our goal, and actions are exactly the same, we can only hope that it has also been educational. Since we all generally agree about the REALTOR's® fiduciary* there is no need to continue that part of the debate, here.

I believe, that a REALTOR® selling a property and then acting as a loan originator on the same transaction is the second biggest violation of fiduciary and professionalism there is! The biggest violation? A REALTOR®, listing and selling, a property then acting as the loan originator! It's only a smoke and mirrors, deception when the real estate company and the mortgage broker are the same.

Except, when the individual involved is the only qualified loan originator available to the client!

I make no exception when the salesman is also the listing agent, the selling agent and loan originator . The loan originator and the buyer's agent, at least, are both obligated to the buyer and their professional advice may often be contrary to the seller's interest!

I believe (I am, after all, the worlds greatest expert on my own opinions.) there is no such thing as "A Duel Fiduciary" "Duel Agency" yes, "Duel Fiduciary" no. A listing agent has a statuary fiduciary relationship with the seller, transactional brokers may skirt fiduciary, but not morality, any other such interest with another party to the transaction would violate that oblation.

A REALTOR® is going to have a hard time rationalizing, being the best available originator, in today's market! To short the buyer one professional is not protecting the buyer! It's endangering him.

Thanks to the internet and aggressive lenders, buyers are not limited to local lenders. I don't generally recommend lenders from out of the local area, but you may not have lenders you can depend on, so the online availability of tremendously qualified loan originators leaves very little excuse for a REALTOR wearing two or more hats.

If you'd like an example of the abuses that can occur when a real estate salesman or company wears both hats, or often three, look to the new home salesman. Here (I was there when I wrote this three years ago.) in Las Vegas you can get $80,000.00 cash back on a $400,000.00 new home purchase if you use the builders lender! Just who's looking out for the interest of those buyers paying $400,000.00 for a $320,000.00 house? Did Little Johnny the listing agent protect the buyer? Did Little Johnny the selling agent protect the buyer? Did Little Johnny the loan originator protect the buyer? Did Little Johnny's wife the escrow agent protect the buyer? (Is it any wonder why North Las Vegas has more foreclosures than any other zip-code?)

Just in case I was a bit ambagious let me suggest that we draw and quarter agents wearing two hats so that we can give a piece of them to each party they are suppose to be representing! Those wearing three hats should first have a wooden state and three sliver bullets applied their harts.

Some may think this cruel, but if these people have honorably survive all the forces pulling on them in such a transaction, four teams of horses can't hurt them. Those wearing all three hats, like some new house salesman, have no hart to hurt.

Another wise friend added:

"So Bill, If I understand you correctly, you do NOT like the REALTOR(R) also being the loan officer. :) OK now that we're clear on that, I agree 100%. Even though in Florida we do NOT necessarily have a fiduciary relationship with either buyer or seller, since we all presumed to be Transaction Brokers, I still feel wearing more than one hat is a very precarious position to be in. Having said that, I get deals all the time where the buyers REALTOR(R) is also the LO. And I'm always leery of them. Too much money to be made. Too much temptation to make something "work".

Are we looking forward into a rear view mirror or looking back when we see a REALTOR wanting to become mortgage broker? Does such a combination solve a problem or create one? Are we looking the hair of the dog that bit us?