Broker raises issue with RBC's points program

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It’s RBC’s points program – and not the recently announced $1,000 cash incentive for realtors who refer clients for a mortgage – that one broker has an issue with.

CAAMP and the provincial broker associations should bring this up to the regulatory bodies as the realtor referral points programs are rarely mentioned in realtor disclosure forms. Regulation around these programs is not as strong as it could be,” Michal A. said in the comments section of “Points are harder to track and quantify as opposed to a cash payment and can be cashed in anytime down the road for either money or an object.”

The Royal Bank of Canada is now offering real estate agents $1,000 for every five first-time homebuyer referred to an RBC specialist. The program is set to run from May 1 until September 30 and is part of a comprehensive rewards program, which allows real estate agents can also collect points for referrals that can be redeemed for plane tickets, gift cards and merchandise, according to the Globe and Mail.

While some brokers view the move as an effective way for the bank to grow its mortgage business, others question the program’s effectiveness.

“I find it hilarious that RBC is paying the referring party only $200 per closed deal; RBC is the largest bank in the country and they just reported over $2 billion in profit last quarter,” Lior Hershkovitz of Mortgage Edge said. “A real estate professional deserves more than 200 bucks for a deal where RBC will generate substantial income from the interest portion of the loan right from the onset.”

And others question just how many realtors will take advantage of the opportunity.

“I don't know too many successful realtors that would want their client to know about the kick-back unless they were forwarding the kick-back, back to the client,” Paul Mangion of The Mortgage Centre said. “The realtors that will flock to this don't do any serious volume so it will only affect the mortgage agents that have crappy limited referrals anyways that get very little serious business.”
  • John on 2014-05-29 11:44:33 AM

    Just because a client signs a disclosure, does not mean the client is aware of the disclosure. It is too easy to hide something like that. It is still a conflict of interest whether you sign a disclosure or not. Signing a disclosure does not legitimize the conflict of interest.
    You would be naive to think that referral fees or points does not influence some Realtor's on who they referral there clients to.
    RBC program is just a tip of the iceberg. TD has a well established program for Realtor's and new home sales agents. I approach a new home builder sales rep and he told me TD offers him $500. The fact that he mentioned it,it is obviously important to him

  • interested consumer on 2014-05-29 12:26:33 PM

    Do mortgage brokers fully disclose to their clients the value of bonuses, trips, points and other incentives that a lender gives to try to get the business?

  • Sean Binkley on 2014-05-29 12:57:12 PM

    @interestedconsumer is right, we as brokers have as much responsibility to explain points programs, incentive trips to clients as the realtor needs to disclose points programs and referral fees. Now, the idea of paying for referrals is certainly one that I make clear to my clients that we don't and won't do. Let's face it, there's lots of Mortgage Broker's that buy down a rate to "help sell the deal" to a client, isn't this the same thing as paying for a referral? If a realtor get's excited over $1,000, then all you need to do is offer them $1,001. The reality is that good realtors will not be swayed by referral fees like RBC, TD, and National Bank pay them. Just like a good mortgage broker won't be swayed by points or incentive trips.

  • John on 2014-05-29 1:41:13 PM

    In an ideal world Brokers would would be paid the same commission from every lender and receive no volume bonuses or points. But we do not live in a ideal world. My choice of lender is about product and interest rates. I have never choice a lender based on Bonus or points. I can not speak for other brokers.Buying down the rate is not a conflict of interest. Some lenders giving better rates to brokers that sell high volumes. That is a win win situation for lender and client. But all this does not change the fact that referral fees from banks and brokers is a blatant conflict of interest. Signing a disclosure does not remove the conflict of interest.

  • Patrick on 2014-05-29 6:23:23 PM

    If the real estate market was slow and crappy, I am certain all Realtor would be flocking to RBC to help get that extra $200 in their pockets. Markets are hot & overheated now, hence $200 makes no difference to them but wait.

  • Leo Bradshaw on 2014-05-29 7:48:11 PM

    As a Real Estate Agent I want what's best for my clients. The referral is interesting as a tool to get us to get our clients to go to them but I always send them to a mortgage broker who will shop around for the best deal. They are the pros as are we and we need to work together for the good of the consumer. If the Royal Bank has the best deal I'm sure they will attract the Brokers.

  • disclose on 2014-05-30 1:58:17 PM

    Thought that any referral fees had to be disclosed. Secondly they say you must have 5 deals to get the $1,000. Thirdly, 27 years and never gotten a referral fee. Give three or more mortgage brokers names, usually they have their own bank and the client finds out who had the best deal for them.

  • John - Broker on 2014-05-31 3:59:11 PM

    The $200 is laughable. If this sways a Realtor, you have to wonder how good that Realtor is. As for incentives and finder's fee's etc for brokers, I will always do the best for the client. When I first started, and I was struggling to make ends meet, I focused on the amount of pay I was getting on a deal. I quickly realized that I was actually setting myself up for failure by doing so.

    Once I realized this I started doing better business by getting the clients the best deal possible, and with that better business my referrals from clients went up and my income took off.

    Simply I stopped worrying about it and got the best deal for the client, which made everyone happier.

  • John - Broker on 2014-05-31 4:00:31 PM

    I should also mention I always fully disclose any incentives etc to my clients. I also take my time through the disclosure so that nothing is missed. I don't rush a client through and I am open to any questions they may have.

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