Should You Talk to a Lender First or a Real Estate Agent?

A couple using a laptop and cell phone talking to lender about a home loan.
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Question: Should You Talk to a Lender First or a Real Estate Agent?

A reader asks: "I am a first-time homebuyer with a long-term stable job and good credit history. I believe I've done everything right in my life so far, and I don't want to mess up when it comes to buying a home. I've heard conflicting theories from friends. Some say I should find a lender and get preapproved before I ever talk to a real estate agent because that's what an agent would expect me to do. Other friends say no, talk to a real estate agent first. What do you think? Should I find a lender first or a real estate agent?"

Answer: Excellent question about whether you should call an agent or find a lender. The hardest thing for many first-time homebuyers is just getting started. Some wander around in circles for a while trying to decide what to do. What you absolutely don't want to do is find a house first. Even though that might seem to make the most sense to you.

No beating about the bush here. It is better for first-time homebuyers to talk to a real estate agent before choosing a mortgage lender. Your loan is important, but your real estate agent is more important. Your mortgage is a small part of the transaction. Plus, your agent can help you to find a mortgage lender easier and faster than a lender could help you to find a good agent. Most agents will have a plethora of lenders in their referral database, and a group of lenders they have personally worked with in the past.

Further, agents will refer a mortgage lender with a proven record whom they know can close loans. Mortgage brokers might only refer agents who send them business, which means nothing, and the agents could be brand new.

Busy Agents Have Extensive Experience

Real estate agents are generally pretty busy people, at least those individuals who are making money, and those are the kind of agents you want to work with. Because agents who are busy generally have the experience, and their experience will help you to avoid problems. Before deciding on an agent, you might want to interview agents to determine who will be the best for you.

Simply call an agent and ask for a 30-minute meeting at the agent's office. Be upfront and explain that you are looking for an agent and want to talk to two or three agents before hiring an agent. The agent will understand. Alternately, you can interview over the phone but in-person is better.

Shop Around for Agents

Do not be afraid to tell the agent that you are meeting with the agent's competitors. If you don't share your intentions with the agent, when she finds out she might wonder what else you are keeping from her. She could feel deceived. She may wonder whether you want to work with her. Just tell her, and it's OK.

Everybody's personalities are different, and agents are just like any other person on the face of the earth. You either like the person or you don't. And if you don't, don't feel as though you have to apologize, just move on to the next agent. You will be in an intimate relationship with your agent for weeks, maybe months, and you better like the person you choose.

Agents Help You Pick a Lender

The advantage of choosing an agent before a lender is a fact that the agent will steer you in the right direction. An agent will have lender referrals to pass on to you. The agent can help match the type of loan you might want to the type of lender who may specialize in that particular type of financing. Plus, the real benefit is the agent knows which lenders perform and which can hold up closing. You probably won't be privy to that type of information on your own.

Another advantage to choosing an agent before a lender is your agent will probably refer you to a local lender. Sometimes, buyers want to work with lenders who are in another city or even in another state. Real estate is local. It is possible you will be at a disadvantage during offer negotiations if your lender is not local. You don't want to lose your dream home because the listing agent has never heard of your lender.

Agents Help With the Best Time to Buy

Probably, best of all, an agent can help you to figure out if the time is right for you to buy. You can toss out scenarios about moving to various communities and discuss the pros and cons with your agent. You can bounce ideas off an agent. An agent will be your rock, your sounding board and hopefully, a person you can trust.

Your agent will walk you through the home buying process from A to Z, and hold your hand for as long as you need it held. Your real estate agent will be the most important person in your life until the day you close.

As the time of writing, Elizabeth Weintraub, CalBRE #00697006 is a Broker-Associate at Lyon Real Estate in Sacramento, California.