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Opinion: The parasitic relationship between real estate and mortgage

Are we moving from a parasitic relationship between real estate and mortgage to a symbiotic relationship?

The marriage between real estate professionals and mortgage companies is a relationship that has withstood market turns and technology changes, but is that relationship natural and meant to last?

Most consumers view buying and selling a home and getting a mortgage as one transaction. It’s a symbiotic relationship.  Homes and mortgages are like a honeybee and flowers. I can’t write this from the perspective of the buying and selling agents, but I can write it from the perspective of the loan officer, home buyer and home seller.

Is this a parasitic relationship?

We’ve survived together in the business of helping people with their dreams of homeownership. Agents partner with loan officers and have long-standing friendships and relationships. Mortgage brokerages partner with lenders and banks to get large volumes of customers qualified and closed efficiently. We have done this millions of times a year, and we both are very much alive and profitable. We may have differences, but we survive together.

That must mean we have a mutual relationship like the bees and flowers. There is no harm done to either party and everyone has a benefit from the association. Mortgage companies need borrowers and home buyers need loans. Working together, we both thrive.

When viewed internally though, this relationship may be more of protocooperation — like the clown fish and anemone, they both win together but don’t really need each other. The lead source in this relationship is the real estate agent, who presents an opportunity for business to a mortgage professional to join forces and work together to make an income and sell a product.

The agent could sell homes without that mortgage professional. The mortgage professional could get mortgages from other sources and never talk to a real estate agent. Good agents and good loan officers have good relationships on both sides. Neither need each other though.

What’s changing?

Nature has a way of changing, and the changes benefit things that thrived for long periods of time for the greater good.

The mortgage industry has made a lot of changes last 15 years. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and mortgage meltdown of 2008 were evolution points for loan officers. Gone were the days of pre-payment penalties, high-yield loans, high-cost mortgages and no regulation. 

Everyone had to change how business was done and learn new ways. That brought on new technology, artificial intelligence (AI), new documents, new disclosure timeframes and new ideas for how to do business. The workload is the same — or greater — and the experience is more transparent. In the end, most survived and thrived in their business.

Challenges in real estate

The real estate sales process is also facing some new challenges. It wasn’t long ago that, if you wanted to see a house, you had to ask, “What’s for sale here?” An agent would give you a list from the MLS and then take you to those places.

Buyers grabbed a house information flier from a tube on a for-sale sign. The consumer had no access to the MLS or any idea how to find homes in different areas. Now, they choose multiple websites to search for hundreds of houses anyplace in the country.

Then, COVID-19 came and homebuyers looked at homes using virtual tours. Agents came to open the front door, then sat in their cars. How do we stay efficient and use tech without losing income and talent? What new things can be included or offered to offset these efficiencies?

Teamwork is needed

This market shows that teamwork at a deeper level is what is needed. This opens the door to the relationship we see unfolding today. Companies that combine real estate and mortgages in one package, like Offerpad or Homie, are disrupting the process. They have low rates, low costs and low commissions charged.  

People who work for these companies work on volume goals together and get compensated for that as a team. They are cutting costs to benefit each other in a new, efficient way. They are sharing technology and information.

The internet and phone apps have cut the middle out of the relationship. Shopping for rates and homes is now as simple as opening an app. We are our own lead source, and we own the process where if one fails; they both fail. They have created a true symbiotic relationship.

BJ Witkopf is a mortgage specialist with Assurance Financial.

This column does not necessarily reflect the opinion of RealTrends’ editorial department and its owners.

To contact the author of this story:
BJ Witkopf at bj@witkopf.net

To contact the editor responsible for this story:
Tracey Velt at tvelt@realtrends.com

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