Broker: Realtors rejecting bank-referral offers

Broker: Realtors rejecting bank-referral offers

Broker: Realtors rejecting bank-referral offers

Here’s good news from a market considered the birthplace of bank-paid referrals for Realtors: Those real estate professionals are starting to turn them down.

“It’s is a trend that we’re noticing in this market as it slows and Realtors are focused on making sure that all their deals get funded,” Sean Chouman, president of Landmark Financial Group, told MortgageBrokerNews.ca, echoing the comments of another Montreal broker. “I think what’s been happening and what they’ve told me is that sending a deal directly to a bank at this time increases the uncertainty of the mortgage being funded, so they’re referring clients to brokers instead because they know that the deals stand a better chance of getting done.”

Another leading mortgage professional in Quebec’s largest city is backing up the observation, pointing to both conversations with leading Realtors but also to his own increasing database of Realtor-referred clients.

That trend runs counter to what many Montreal brokers have grappled with for years, as banks sought to cut originations costs and circumvent the channel by enticing real estate professionals to send their client directly to the branch.

That Realtor-banker relationship has been built on cash compensation, a phenomenon that has now spread outside Quebec, with real impact for brokers in Ontario and B.C.

Still, if what Chouman and others are now saying proves true for the rest of Canada, banks might find it harder to woo Realtors even despite referral fees as high as 50 bps.

But lenders such as National Bank, which has come under fire from some brokers for offering those same 50 basis points to Realtors, argue Realtors remain a viable and very attractive means of bringing business through the door, at the same time increasing the likelihood of client retention.

But in a slowing market, Realtor may be increasingly willing to stand in the way of those plans, said Chouman.

“As the deals get fewer, Realtors just aren’t willing to take the chance,” said the industry vet, “especially if many brokers are willing to offer a small referral or to sometimes split the commission.”
 

10 Comments
  • Ed Novak, Real Estate Broker 2013-02-08 5:30:16 AM
    Could someone tell me what banks offer cash compensation to realtors? Its news to me. Is this a common practice in Quebec? If anyone would offer me financial compensation for a referral, I would have to disclose it. Knowing how majority of people think, I would prefer to refer to those who can do a job right, instead of hoping for compensation from someone who might ruin the deal. But then its only my opinion....
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  • Chad 2013-02-08 5:30:27 AM
    Good article. We should all market Realtors with a message such as "Don't a chance at a branch.."

    My question has always been if they lenders complain they pay us to much how can they justify 50bps to a referral source (don't kid your self lenders pay other people too) and then still pay the branch staff or Road Rep etc at fully discounted rate + appraisal etc .
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  • Ryan Kirwan, HQ Mortgages Inc. 2013-02-08 5:31:12 AM
    I have a general question for all mortgage brokers out there... If you bring a referral to a Realtor, are they splitting their commissions with you? If so, how much are you getting? I've heard it go as high at 50% from some realtors, but, in most cases those realtors are the most desperate and don't offer our clients the best service. Any advice on this would be appreciated. Thanks!
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