Mortgage brokers and real estate agents play key roles in assisting clients when purchasing property. Keep reading to learn everything you need to know about the key differences between the two and how to use them to your advantage.
When buying or selling property, it’s critical to work with the right people to ensure your endeavour is a success. Regardless of whether it’s a commercial or residential transaction, the two key players in the property game are mortgage brokers and real estate agents.
While they’re both involved in the sale of properties, there are a few key differences pertaining to mortgage brokers and real estate agents. In simple terms, using a mortgage broker is required when you need financing, while real estate agents concentrate on the logistics of a sale.
#1 – What is a mortgage broker, exactly?
Mortgage brokers are the people who act as intermediaries between you, the mortgage borrower, and the lender, typically a bank or another financial institution. Essentially, they help you analyse mortgage loan products and provide you with counsel on interest rates and mortgage terms.
Whilst mortgage brokers are responsible for connecting the borrower with a mortgage lender, they are in no way responsible for directly financing the mortgage. They also run background and credit checks on prospective buyers to help the lenders, as well as help buyers evaluate mortgage options to find the most suitable deal.
Once the lender is ready to follow through with a mortgage for you, your mortgage broker will complete the required paperwork and liaise between both parties. But that’s not all, because some of their other responsibilities may include:
- Comparing interest rates and fees to show buyers
- Completing the necessary paperwork for both parties involved
- Building professional relationships with both lenders and borrowers
- Running background checks on potential buyers
- Running credit checks on potential buyers
- Offering guidance to buyers on their available options
#2 – What is a real estate agent?
Real estate agents are so much more than just salespeople. They are licensed professionals who are responsible for facilitating a smooth transaction between property sellers and buyers.
A real estate agent is responsible for helping link prospective property buyers with sellers. They are the people who advertise open houses, meet with potential buyers, and work with mortgage brokers to finalise the sale. Some of their other responsibilities may include:
- Advertising listings via various online platforms
- Providing advice for sellers pertaining to pricing their property
- Listing properties for sale on behalf of the sellers
- Assisting buyers in finding available properties that meet their criteria and budget
- Mediating between buyers and sellers by delivering bids and counteroffers to both parties
- Completing the necessary paperwork in order to close the deal
#3 – How much do mortgage brokers and real estate agents earn?
A small but important difference to note between mortgage brokers and real estate agents is how much they earn. Both professions have commission-based salaries, so how much they earn is directly related to their performance.
On average, entry-level mortgage brokers are paid slightly more than real estate agents, and it’s mostly due to their certifications. Depending on where they’re located in Australia, mortgage brokers can make between $90,000 – $200,000 per year, with the median being $110,000.
The commission for a mortgage broker can vary based on the agreement between them, the lender, and the mortgage aggregator. Their commission will generally range between 0.50% to 2.75% of the loan amount. However, trail commissions may range between 0.05% to 0.15% of the remaining loan balance.
Generally, real estate agents can earn a relatively similar salary to mortgage brokers, however, entry-level jobs will usually earn roughly $75,000 per annum. Once real estate agents have built up a reputation and clientele, they can earn anywhere from $75,000 to $160,000, with the average salary being $115,000.
As real estate agents will tell you, it’s all about location, location, location, as this affects how much they can earn and determine their commission. Here is what you can expect commission to be for real estate agents in some states in Australia:
- New South Wales: 1.14% – 3.47%
- Northern Territory: 2.52% – 3.31%
- Queensland: 1.93% – 3.66%
- South Australia: 1.47% – 3.61%
Final Thoughts
There are definitely some similarities between mortgage brokers and real estate agents, but they both have different roles in the property game that set them apart from one another. Think of your real estate agent as the face of buying and selling property and your mortgage broker as the person who helps get you the best deal. Now, are you ready to buy some property?
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