Real estate agent and mortgage broker are two essential agents in the real estate/housing industry. These two agents assist people in acquiring real estate agent properties for personal or commercial use. Yet, they differ in roles and functions and shouldn’t be mistaken for the other.
This is a professional who connects intending homeowners (borrowers) to mortgage banks or other financial institutions (lenders). A mortgage broker’s primary duty is to serve as an intermediary between a lender and borrower from the beginning to the end of a mortgage transaction. They onboard intending home buyers and connect them with lending institutions.
Real Estate Agent
Real estate agents are professionals who assist their clients in making actual sales or purchases. Their job is to help sellers or buyers find suitable properties for their money or price for their properties. Because real estate agents are either selling or buying real estate, their clients can be owners of properties or intending buyers at any particular time.
Mortgage Broker vs Real Estate Agent
Mortgage brokers and real estate agents differ in many ways, but they also have similar characteristics. Both are professionals in the housing/real estate industry. They are both involved in the sale and acquiesce of properties for their clients. Both professionals need a minimum high school diploma for entry and a state license to practice.
Despite their similarities, the two have several differences. A mortgage broker and a real estate agent differ in the following ways:
A mortgage broker is often self-employed and licensed to operate individually. However, the real estate agent is employed by or mandated to work for or under a real estate broker or a brokerage.
The primary duty of a mortgage broker is to help their clients access funding for the purchase of their home or property. To do this, they search the market by contacting financial institutions and mortgage banks. They identify good mortgage terms and interests and match available intending homeowners based on their financial background and needs.
On the other hand, a real estate agent is tasked with the duty of selling or buying real estate for their clients or employers. If they work for a buyer, they do this by searching for available properties suiting the client’s needs, specifications, and financial strength. If a seller has hired them, then they act on behalf of the seller to sell the property to willing buyers at the best possible price.
The mortgage broker’s compensation is often paid by the lending institution in the form of a commission. This commission is usually fixed. Depending on the location and particular lender, the commission ranges between 0.5-2.5% of the loan. Secondly, a mortgage broker earns another commission for the duration of the mortgage. This is dependent on the borrower’s continuous repayment of their mortgage. Apart from the commission from the lender, a broker may charge the borrower a finder’s or advance fee. However, they cannot receive a commission based on the value of the transaction from the borrower.
The real estate broker is compensated with a commission by their real estate broker. Depending on who the client is, the buying or selling commission is paid directly to the real estate broker (or their brokerage), who then splits the commission to the agents involved in the transaction. Estate agents cannot receive compensation from property owners (buyers or sellers). This is forbidden by law. Usually, an agent’s commission is based on the value of the transaction. This serves as a good motivation to find the best prices for the property.
A mortgage broker researches the current market rates, and mortgage terms and then secures the same for interested clients. They typically work in conjunction with mortgage banks or other financial institutions. For institutions that conduct businesses with mortgage brokers, this relationship can be permanent or long-term. The nature of their job requires them to have a good understanding of the financial sector. Specifically, versatile knowledge of market trends and customers’ credit worth is highly required.
A real estate agent’s primary job is to connect buyers with sellers. They can work as a seller or buyer (agents). Both use market listings to find the best properties for buyers or to advertise available properties. Agents or their brokerages can specialize in either private (residential) or commercial properties. Their job doesn’t require a deep understanding of market and interest rates and clients’ creditworthiness. This is because they are essentially salespeople.
Real estate agent and mortgage broker are essential players in the real estate industry. Though their jobs primarily differ, they make it easier for owners of properties to find buyers, buyers to find properties, and intending homeowners to find loans to purchase their new homes. These crucial roles have made them quite valuable and continually sought after.