When it comes to mortgages and home loans, there is no question that you’re going to need an expert to support you. Finding a property, determining your mortgage amount and finalizing a bid and purchase requires you to have someone that knows the industry inside and out.
That usually means two different professionals: a mortgage broker or a real estate agent.
However, while they work in the same industry, they ultimately deliver very different things for their prospective clients.
It doesn’t necessarily mean that you have to choose one over the other (in many cases, you need both their help), but it is a good idea to have a thorough understanding of what they offer.
What is a Mortgage Broker? And What Do They Do?
Mortgage brokers are professionals that work on behalf of their clients (aka, the buyers) to find them the best deals, interest rates and terms for their mortgage. Ultimately, their job is to secure the financing required to make a bid for a property and have it approved for purchase.
Knowing the latest interest rates, terms and conditions, banking and lending requirements, and ongoing market regulations requires patience, insight, a keen eye and detailed knowledge of the landscape. There are also factors like taxes, residency, credit score reports and ratings, and determining if the value of the property, alongside the cost of living expenses, complies with the buyer’s request and the lender’s criteria.
More importantly, brokers have to delve deep into the market to find a deal that works for their client’s financial situation.
In many cases, the brokers will develop favoured relationships with leading banks and financial institutions, resulting in better deals for buyers. But a good broker should always look out for his or her clients’ best interests, finding viable solutions that don’t leave the buyer struggling with their finances or lifestyle.
Brokers also must be licenced by their province to operate. They undergo extensive training and must comply with rules and regulations to ensure they can deliver fair and transparent solutions for their clients. As such, it is recommended that you always hire a broker that is licenced by your province’s governing body.
What is a Real Estate Agent? What Do They Do?
Real estate agents (or realtors, as the term is often used interchangeably) are experts that help people with buying, selling or renting homes, lands or commercial properties. Their job is to help their clients (buyers or sellers) get the best deal for their mortgage or property.
In the case of buyers, it means finding a property that is within their budget and lifestyle. From there, it includes booking appointments for viewings and advising on whether the property is worth its value or not. They guide the bidding process and recommend a number to submit.
For sellers, it means promoting their property and getting the best sale for it. That means assessing the value of the property and seeing how much the owner can get for it, organizing open houses and marketing the property and suggesting upgrades that can further enhance property value.
Agents are tasked with multiple roles and responsibilities, such as generating leads (houses for purchase) and marketing (such as promoting a seller’s home), as well as processing documents, assessing records and agreements, submitting bids and providing guidance to their clients.
They can also help connect their clients to professionals within the real estate industry, including mortgage brokers (yes! Many brokers get clients from real estate agents), real estate lawyers (who finalize the deal), home inspectors, condo documents reviewers, handymen and renovators.
Significantly, real estate agents work with one another. The buyer’s agent will work closely with the seller’s agent when submitting bids, confirming purchase agreements and finalizing clauses within the deals.
Much like brokers, agents must undertake a series of tests and examinations to earn the licences to operate within their province.
How They Merge into One
In normal situations, mortgage brokers and real estate agents work together when confirming bids, purchases and transfer agreements. So it makes sense that having all the services under one roof would be more efficient, cost-effective and streamlined for both the professional and the client.
But there is a grey area there.
In many cases, real estate agents or mortgage brokers operate in each other’s fields as well. Some brokers are also agents, while there are agents who offer both services.
This is not necessarily a problem in itself because, as we said, you’re essentially getting two services under one umbrella. But there is a chance that you’ll be pushed towards choosing one property or mortgage deal over another.
There is a conflict of interest, being that the professional controls both the mortgage that can be distributed and the type of property. Ultimately, it depends on the province’s governing body to determine if a person can hold both licences.
Hiring Both Professionals is Key
In many home-buying situations, investors or buyers will use both professionals to help them. The mortgage broker will be assigned to finding a financial deal that benefits the client, while the real estate agent will search for the property.
This way, you spread the workload evenly between two professionals, who can dedicate their time, efforts and focus on your needs, as opposed to handling both tasks at the same time.
Having two professionals working for you means that you get two very sets of opinions and advice, which can help your decision-making process and open you up to better choices.
Make sure whether you are hiring either one that they:
- Have experience in their industry, and a high success rate, for their clients
- Have a reliable and trustworthy reputation in the industry
- Have a wealth of successful clients to back up their claims
- Offer fair deals and prices for their services
- Are friendly, open and transparent with what they do and how they do it
The right investment advice can help you take charge of your mortgage and your future. Make the right choice by finding professionals that deliver quality advice and services.