Brokerage head: Buy-downs don't work in this market

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The growing number of high-volume brokers expanding into this market may ultimately have to abandon their buy-down strategy, said a veteran now speaking from personal experience.

“We’ve now been in Quebec for several months and what we found was that a number of lenders there just don’t allow brokers to buy down rate at all,” Dan Eisner, CEO for True North Mortgage, told “In addition to that, in comparison to Ontario and Vancouver, buying down rate is not what moves clients through the door.

“Any broker from outside Quebec entering this market has to have a marketing strategy that is focused on more than buying down rate.”

It’s a lesson Eisner’s expanding brokerage – dependent on online leads and low rates to drive business to its upscale retail stores – learned for itself after setting up shop in Montreal this spring.

Several other national players have since made their own moves to La Belle Province, trying to capitalize on a relatively hot market experiencing above-average price growth.

Many are now being challenged by the province’s smaller lending pool and the market’s well-established system of setting rates. It means lenders effectively restrict a broker's ability to eat into his or her commission in order to offer a client a better rate.

Brokerages using online lead generation sites routinely use that strategy to compete for and win triple-A clients largely fixated on rate.

That won’t work in Quebec, said Eisner, suggesting clients – even rate shoppers – tend to focus more on product options and the ability to tailor a mortgage to their specific needs.

There are other challenges for brokers entering Quebec.

True North spent upward of $50,000 to create a bilingual website and swap out English with French as the dominant language on its trademark blue and orange signage, said Eisner, who doesn’t himself speak French. Those expenses are likely to remain ongoing, with the company having to translate all future marketing and promotional literature – both print and online – in order to comply with standards set down by the Office Québécois de la Langue Française.

The provincial authority enforces commercial advertising laws, which also require business websites to adhere to section 52 of the Charter of the French Language, although it does allow for subordinate English text.

Ensuring its website meets those standards is key for True North, said Eisner, suggesting the firm relies on the Internet, and not necessarily its agents, to drive sales leads.


  • ON Broker on 2011-12-07 7:43:51 AM

    Looks good on him, dropping rates, giving up commission to chase business via the internet. All the things that make us look unprofessional. Hope he fails and it costs him dearly. He is nothing more than a used car salesman prepared to drop his commission for a deal, rather than spend time, educate his clients and EARN their business.

  • @kiltedbroker on 2011-12-07 3:44:51 PM

    Now don't get me wrong, I don't like the platform that Dan has as much as the next broker, but you have to admit that it IS really smart. From my understanding he makes no bones about it, his brokers are paid salary and he generates considerable volume though buying down rates online. Its all a margins game, he has found his niche and he is quite successful in it. Actually I would prefer the internet rate shoppers to deal with True North as they no longer waste my time (but that is because my goal is to be the most referred mortgage brokerage in the province) and has nothing to do with generating internet leads.

    ON Broker - I believe the real problem is with the National Brokerages who hire unprofessional agents that have no real shot at success. These agents are not equipped with the tools to be successful and as a result their only competitive advantage is to cut commissions and buy down rates. Unfortunately they quickly realize they have no ability to generate business and this forces them to leave our industry for something more glamorous (and well suited) like selling used cars. Problem is, its a revolving door, as fast as one quits, there is another sucker being hired. I really don't think the problem is with companies like True North.

    If you are advertising rates online but consider your value proposition to be your customer service - I guess you should be re-evaluating your marketing strategy. If you are advertising online, good luck competing with Dan - that guy is everywhere.

    However I should note that it is possible to compete with him. I have actually picked up and closed 2 mortgages this year from a couple of clients who both started their application with True North and were referred to me after they were not satisfied with the customer service being provided. Sometimes it is more than rate - but sometimes its not. I guess that is what True North has found out in Quebec.

    Just my thoughts anyway.

  • Marc on 2011-12-08 5:48:02 AM

    Good for True North, he is making money and there is nothing wrong with that. However, the people who he hires can not possibly make that much money as he spends a considerable amount of money generating those leads via the internet directly, and through the help of such 'car sales' websites as Rate Hub. These people are a far cry from a reputable and educated mortgage agent or broker. In both cases, the client really does not get the better end of the deal, not through the minimum wage phone tellers at his office, nor through the shopping around that rate-hub does. The client gets what they bargained for at the end. You know for sure that True North does not have the time or infrastructure to actually track their clients’ mortgages and help them down the road. They need to keep pumping volumes to sustain their online campaigns.

  • Marc on 2011-12-08 5:52:01 AM

    Oh, and by the way....the strategy that Quebec lenders have with respect to not allowing rate buy downs is genius!!! They make more money, the brokers make more money, and the service that the clients get is also far superior as the brokers can actually afford to spend more time taking care of them. Genius! I wish all the lenders in Canada were that smart instead of shooting themselves in the foot by cutting each other down.

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