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Mortgage Broker News | 04 Jun 2013, 12:00 AM Agree 0
Brokers may not like it, but this is the reality of the industry today.
  • @kiltedbroker | 04 Jun 2013, 09:55 AM Agree 0
    Congratulations to Yousry and Kanetix on the purchase of rate Supermarket - Yousry is a class act in our industry and is certainly making a statement with this acquisition. I agree with Ron Butler - brokers should take notice.

    Business is moving online, this is a reality. Our long term success depends on how able we are to adapt to the changes in our industry. And so it begins...
  • David Larock | 04 Jun 2013, 10:51 AM Agree 0
    Ron, I have read your many comments to CMP regarding rate sites and I have a couple of questions for you:

    With respect, are you at all concerned about the long-term ramifications of adapting your business model to depend on leads generated from these sites? What happens when you can’t live without them and they decide to raise their pricing? Or are you betting that won’t happen? Did you give any thought to creating a broker-led rate site before deciding to partner with third parties who would hardly have to lift a finger to become your fiercest competitor someday?
  • Ron Butler | 04 Jun 2013, 12:40 PM Agree 0
    David, those are intelligent comments and good questions.

    The pricing issue has actually rationalized itself, there are such narrow margins in the rate discount business even a small price increase from the sites would drive all of the consistent brokers away. There is a balance of actually fulfilling the rate offer versus the cost of the lead that the sites have respected because they have to.

    A broker lead site is a false hope, the main players own the Google real estate to such a degree that very a well funded company just decided it was better to spend millions for a guaranteed result then spend millions building a successful site from scratch. Its hard to get a group of individual brokerages to jointly spend $300.00 let the alone the $3 Million it would take to compete from a standing start.

    As far as the sites turning into direct competitors, I never worry about that because converting these leads is an execution nightmare. Successful Websites are hard to build but have a great pay-day when they sell.

    Try selling a mortgage brokerage today, likely you will get enough money from your brokerage to live comfortably for 6 weeks and then start serving coffee at Starbucks.
  • darick.ca | 04 Jun 2013, 01:23 PM Agree 0
    The appraisal industry went through a similar transition with the introduction of solidifi, brokerworx and NAS. It would be interesting to see how their bottom line has been changed.
  • David Larock | 04 Jun 2013, 01:56 PM Agree 0
    Thanks for responding to my questions Ron.

    Your point about the margins being too narrow to allow discount sites to squeeze brokers today is well taken. But if margins widen in future I wonder who will win the tug-of-war for that additional profitability? Especially if only a few main players “own the Google real estate” as you say? Won’t the rates sites have the real pricing power?

    I’m not so sure that converting leads would be an execution nightmare for Kanetix. And even if it was, couldn't they just buy their way in like they did with RateSupermarket? Especially if brokerages are a cheap to buy as you say? They have a lot of infrastructure already in place and I'd bet it has come up in their planning sessions. It certainly would if I was in the room ...

  • Ron Butler | 04 Jun 2013, 02:13 PM Agree 0
    David, your days of working at a lender serve you well.

    Take my word for it, its a nightmare, just try it for a few weeks.

    The real discussion in the planning sessions is not site to broker, its site to white label lender.
  • Sean Binkley, Your Home Team @ DLC Alliance | 06 Jun 2013, 09:37 AM Agree 0
    Although I'm not familiar with the sites mentioned, why would anyone reply on a lead generation site anyway.

    Here's the formula on how to generate a lead (listen carefully and take notes)...

    1) Go out and meet some people
    2) Tell them what you do
    3) Ask for their business
    4) Repeat steps 1-4

    If you need a reminder, look at your shampoo bottle the next time (hopefully daily) you are in the shower. Lather, Rinse, Repeat... It's the same thing.

    Have a great day everyone!
  • Sean Binkley, Your Home Team @ DLC Alliance | 06 Jun 2013, 09:37 AM Agree 0
    Although I'm not familiar with the sites mentioned, why would anyone reply on a lead generation site anyway.

    Here's the formula on how to generate a lead (listen carefully and take notes)...

    1) Go out and meet some people
    2) Tell them what you do
    3) Ask for their business
    4) Repeat steps 1-4

    If you need a reminder, look at your shampoo bottle the next time (hopefully daily) you are in the shower. Lather, Rinse, Repeat... It's the same thing.

    Have a great day everyone!
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