Should I Find a Real Estate Agent or Lender First? A Guide for First Time Home Buyers

Key takeaways

• Finding a real estate agent first helps you understand the market and get referrals to lenders.
• Finding a lender first can help you set your budget, get preapproved, and move quickly when you’re ready to make an offer.
• You’ll likely work with both, and many buyers start finding an agent and lender around the same time.

There are plenty of tasks to accomplish before officially beginning your home search. Aside from working on your finances, making a budget, and creating your wish list, you’ll need to find a real estate agent and a lender. So, should you find a real estate agent or lender first?

In this Redfin article, we’ll cover the pros and cons of finding a real estate agent or a lender first and how you can expect them to work together when you buy your first home. Whether you’re looking for a home in Portland, OR, or a condo in San Diego, CA, here’s what you need to know about choosing which to prioritize first.

Should I find an agent or lender first?

Most homebuyers will work with both, so ultimately it depends on what works best for you. If your priority is understanding your budget, starting with a lender can make sense. If your priority is understanding the market and available homes, starting with an agent can be helpful. You’ll likely want to commit to a real estate agent before looking at homes and have at least one lender you’re considering working with. 

It’s a good idea to interview a few agents to find the right fit to make sure they align with your goals, understand the local area, and have a similar communication style. There are plenty of questions to ask a real estate agent before deciding to work with them. The same goes for lenders, as loan terms, rates, and fees can vary from lender to lender. 

In many cases, it’s best to start looking for a real estate agent and a lender around the same time. That way, you can understand your budget while also getting a feel for the market. Chances are you’ll commit to one before the other, but having both in motion early can help you move more confidently.

Keep in mind that many homebuyers will sign a buyer’s agency agreement with an agent before touring any homes. On the other hand, you’re not committed to working with a lender until you formally apply for a mortgage. You can continue to shop around to get a few quotes before officially choosing a lender. 

What does a real estate agent do?

A real estate agent is a licensed professional who assists buyers or sellers in a real estate transaction. Your real estate agent should have local insight, help you find homes that meet your wants and needs, write an offer on a property, and help you negotiate the purchase. 

What does a lender do?

A mortgage lender is a financial institution, like a mortgage company, bank, or credit union, that offers loans for home purchases. Lenders help evaluate your finances, determine your budget and loan options, issue preapproval, and manage the underwriting process.. 

Pros and cons of finding a real estate agent first

There are benefits and drawbacks to finding a real estate agent before a lender. Here are some things to consider:

Pros of finding an agent first

Narrow down your home search: You’ll work closely with your agent to determine what you’re looking for in a home, potential neighborhoods, price range, and more. Having an agent early on can help you narrow down homes that meet your criteria. 

Get insight into the local market: A good real estate agent will have deep knowledge of the local market. Working with an agent first can help you understand what areas are competitive, what homes are selling for, and how to stand out in your offer. 

Connect you to a lender: Agents often have trusted lenders that they work with frequently. Your agent can help connect you with a local lender that may offer better loan terms, rates, and more. 

Cons of finding an agent first

May not be able to move quickly on a home: Many sellers don’t accept offers without a pre-approval. If you don’t have a lender and a pre-approval ready, you may not be able to make a competitive offer – this is why it’s often helpful to line up a lender at the same time.

Your budget isn’t confirmed: If you don’t have a pre-approval in hand, your agent may not be able to show you homes in your actual budget. It could mean you find your dream home, only to learn that you don’t qualify for that loan amount.

Pros and cons of finding a lender first

Likewise, there are pros and cons of finding a lender before an agent. Let’s look at them:

Pros of finding a lender first

Clear budget: Getting pre-approved by a lender first can give you a clear budget of how much you can afford before touring homes. Knowing what homes truly fit into your budget is a great way to keep your home search realistic. 

Connect you to an agent: Lenders are familiar with agents in their area, particularly agents that have a proven record of getting an offer accepted and closing on a home. Your lender can connect you with an agent based on your goals and budget. 

Ability to make an offer fast: With a lender ready to go and a pre-approval in hand, you can move quickly once you find the right home. From making an offer to applying for a mortgage, having a lender ready can help move things along. 

Cons of finding a lender first

Risk of pre-approval expiring: Your pre-approval only lasts for a certain amount of time due to potential changes in interest rates and your overall finances. If you don’t find the right agent or home before your pre-approval expires, you’ll need to pay for another one. Getting a second pre-approval also results in another credit pull. 

Lack of competitive loan terms: Choosing a lender first may not always get you the best loan terms. Your real estate agent can likely give you recommendations for local lenders who have good loan terms, reduced fees, or other perks. Keep in mind you can change lenders before officially applying for a mortgage.

How do your agent and lender work together?

Your lender and agent will undoubtedly work together, so open communication between both parties will make the process that much easier. If there are any issues along the way, your lender and agent should have a line of communication to provide updates, pending paperwork, or other deadlines. 

At the end of the day, your agent and lender both want you to succeed in purchasing your first home. Whether you find an agent or lender first depends on your timeline and connections, but each has its pros and cons to consider as you begin the process.