Important points
Finding a real estate agent first can help you understand the market and introduce you to lenders. By finding a lender first, you can set your budget, get pre-approved, and act quickly when you’re ready to make an offer. Although you’ll probably work with both, many buyers start looking for an agent and a lender at about the same time.
There are many tasks to accomplish before you can officially begin your home search. In addition to working on your finances, creating a budget, and creating a wish list, you’ll need to find a real estate agent and lender. So should you find a real estate agent or financier first?
This Redfin article explains the pros and cons of finding a real estate agent or lender first, and how you can expect them to work with you during your first home purchase. Whether you’re looking for a home in Portland, Oregon, or a condo in San Diego, California, here’s what you need to know when choosing which is your priority.
Should I find an agent or financier first?
Most homebuyers use both, so it comes down to which one is best for you. If understanding your budget is a top priority, your financial institution makes sense to start. If understanding the market and available homes is a priority for you, it can be helpful to talk to an agent first. You’ll probably want to consult a real estate agent and consider working with at least one lender before looking at homes.
We recommend meeting with a few agents to find the right agent to see if they align with your goals, understand the area, and have a similar communication style. There are many questions to ask a real estate agent before you decide to work with them. The same goes for lenders, as loan terms, interest rates, and fees vary from lender to lender.
It’s often best to start looking for a real estate agent and a lender at the same time. By doing so, you can get a feel for the market while keeping track of your budget. You may want to do one or the other first, but starting both early will give you more confidence.
Keep in mind that many home buyers sign a purchasing agency agreement with an agent before touring a home. On the other hand, you are not committed to working with a lender until you formally apply for a mortgage. You can continue shopping around to get several quotes before officially choosing a lender.
What does a real estate agent do?
A real estate agent is a professional qualified to assist buyers or sellers in real estate transactions. A real estate agent has the local knowledge to help you find a home that meets your wants and needs, write you an offer on a property, and help you negotiate the purchase.
What does the lender do?
A mortgage lender is a financial institution, such as a mortgage company, bank, or credit union, that provides loans for the purchase of a home. A lender can help evaluate your finances, determine your budget and loan options, issue a pre-approval, and manage the underwriting process.
Advantages and disadvantages of finding a real estate agent first
There are pros and cons to finding a real estate agent before a lender. Here are some things to consider:
Advantages of finding an agent first
Refine your home search: Work closely with your agent to determine what you’re looking for in a home, potential neighborhoods, price range, and more. Talking to an agent early on can help you narrow down the list of homes that meet your criteria.
Gain insight into the local market: A good real estate agent has in-depth knowledge of the local market. By working with an agent first, you can understand which neighborhoods are competitive, how much homes are selling for, and how to stand out with an offer.
Connect with a lender: Agents often have trusted lenders they work with frequently. Your agent can help connect you with local lenders that offer better financing terms, interest rates, and more.
Disadvantages of finding an agent first
You may not be able to proceed with purchasing a home right away. Many sellers will not accept your offer without pre-approval. If you are not ready to pre-approve with a lender, you may not be able to make a competitive offer. For this reason, it is often helpful to arrange a lender at the same time.
Budget not confirmed: Without pre-approval, your agent may not be able to show you a home at your actual budget. You may have found your dream home, only to find out that you can’t afford the loan amount.
Advantages and disadvantages of finding a lender first
Similarly, there are pros and cons to finding a lender before an agent. Let’s take a look at them:
Advantages of finding a lender first
A clear budget: Getting pre-approved from a lender first will give you a clear idea of how much you can afford before you even tour the home. Knowing which homes truly fit your budget is a great way to be realistic about your home search.
Connect with an agent: Lenders are familiar with agents in their area, especially those with a track record of accepting offers and closing on homes. Based on your goals and budget, your lender will connect you with an agent.
Fast offer potential: With lenders at the ready and pre-approval in hand, you can act quickly when you find the right home. Having a lender available will help you go through the entire process, from application to application, for a mortgage loan.
Disadvantages of finding a lender first
Risk of pre-approval expiring: Due to possible changes in interest rates and overall finances, a pre-approval is only valid for a certain period of time. If you don’t find the right agent or home before your pre-approval expires, you’ll have to pay another agent or home. If you get a second pre-approval, more credit will be pulled.
Lack of competitive financing terms: Your first choice of lender may not necessarily result in the best financing terms. Your real estate agent can recommend local lenders with good financing terms, low fees, and other perks. Please note that you can change lenders before officially applying for a mortgage.
How do agents and lenders work together?
Lenders and agents will definitely work together, so open communication between them will make the process much easier. If problems arise along the way, your lender and agent should have a way to communicate to provide you with updates, pending paperwork, or other deadlines.
At the end of the day, both agents and lenders want you to be successful with your first home purchase. Whether you find an agent or a financier first depends on your schedule and connections, but you should consider the pros and cons of each as you begin the process.
