True North Mortgage CEO Dan Eisner moved up to CMP’s top broker spot this year, a testament, as he sees it, to a business model many brokers applaud and other criticize.
The arguments against it centre on who exactly gets the credit for mortgages originated in True North’s growing number of stores and the model’s reliance on interest rates and Internet lead generation.
Those upscale storefronts are now seven in number and scattered across the country in Vancouver, Calgary, Toronto, Montreal and Halifax. They employ 21 licensed agents and originated a whopping $412.8 million in funded volume for 2011.
CMP asked Eisner to speak directly to readers on the sustainability of True North’s business model, its overhead costs, financial rewards and, most importantly, why exactly he deserves to be the top broker on this year’s list.
On criticism from the industry:
“My reaction to the criticism is we wear it as a badge of honour because we know that if we weren’t succeeding nobody would care about what we were doing. I think the heart of the problem is that the way our model works it exploits the rules of this Top 75 game, it’s not like we designed it that way, it just happens to work out that way.”
On deserving his place on the list:
“I think there are two perspectives. From a lender’s perspective, they want to know if they can look at your business as one entity or a bunch of smaller entities. With this perceptive, clearly lenders can look at us as one entity. They only need to talk to me to negotiate commitment volumes and interests rates. They need not speak to my sub agents to get buy in.
“For example, when First National came to True North Mortgage with a proposal, they spoke to me and only me. Once we agreed on a plan, on the first day we submitted 18 new mortgage applications. That’s without them speaking to any of my staff. I effectively control where the origination goes.”
“From a client’s perspective, it is how they discover us and where their loyalty lies. Clearly, nobody calls here for Dan Eisner, but they don’t call for anyone else either. They are loyal to the brand. We have never lost a client due to a departing employee. Clients love the highly visible store locations, the low pressure/ non-commissioned staff and of course our great rates.”
On who originates True North’s applications:
“In our case that is the wrong question. It is not “who originates the applications” but “what originates the applications. The “What” is our advertising and our great locations, it is also our forward thinking pricing strategy.” Since I pay the bills I guess I am the “Who”
On his business model:
We take the Walmart approach. Everyday low pricing. We would rather make a little less on each client in order to attract more clients.
My time is spent finding ways to offer lower mortgage rates profitably. I don’t spend any time negotiating splits.
On whether his high-overhead model is less profitable than individual brokers’ models:
“I couldn’t say for certain. I have not seen any other brokers’ financial statements in order to compare.
However, given our cost structure, I would imagine our profit per deal is lower than average. Stores are expensive to build and rent and salaries are very significant costs. But we are proud to say we did make the Profit 50 list in 2009, 2010 and Profit 200 list in 2011.”
On rate buy-downs
We are comfortable with our policy towards rate buy downs.