Does this sarcastic comment sum up Realtor referrals?

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There is often truth in sarcasm, as might be evidenced by one reader's opinion on a controversial referral practice.

"Great that somebody refers a client because they get a piece of the action vs. knowing they are referring a friend or family member because they will be taken care of by a professional," one MBN reader recently commented.

Responding to a story published on REP sister website MortgageBrokerNews.ca, one industry player argues agents could “split” the fees they collect from sending a customer to a bank with the actual client, creating a win-win for all parties involved.

“I think it could catch it on,” agent Dick Brady in Cobourg, Ont., told REP. “You definitely need to inform your client that you’re getting (a referral fee).”

Indeed, disclosure is not only key to these programs; it’s also required under law in provinces such as Ontario. Agents must provide at least three sources when recommending services for clients, and must inform those clients that they’re getting a kickback, whether cash or reward points.

Disclosure issues aside, some agents are pointing to their relationships with mortgage brokers, which could be put at risk.

“I just prefer to do it in more of a way that isn’t contractual and where I give in good faith and I get back in good faith,” says Ira Jelinek, an agent in Toronto. “When a client is looking (for a home), the first thing they need to get in order is their finances, so we need to have relationships with mortgage brokers. And sometimes vice versa, if (prospective buyers) go into a mortgage brokerage first, they need representation. It’s a mutually beneficial relationship.”

Discussions around referral fees have been renewed after an email from a National Bank mortgage specialist promising commissions for agents who bring referrals directly to a branch was released.That National Bank employee refused to comment on the referral program.
 
  • Mike on 2015-05-21 9:39:28 AM

    Yes "kick backs" are great for all industries. People love the lack of professionalism when you slip $100 cash into their pockets. Great that somebody refers a client because they get a piece of the action vs knowing they are referring a friend or family member because they will be taken care of by a professional.

  • John Dunford on 2015-05-21 12:14:19 PM

    In Quebec, all the banks give referral fees to Real Estate Brokers. These referral fees are from a half of one percent up to one percent. Most Realtors, expect the fees, even if they go to a Mortgage Broker. The OACIQ, requires that the Realtor, complete a form, and have it signed by the client. ( Not always done) The clients are not usually given a choice of three lenders or mortgage brokers.
    I believe that having Realtors sending clients to a lender is a conflict of interest, when they are being paid. This sometimes back fires, when the client is referred to a lender who can't approved the mortgage, because the client doesn't fall into that banks criteria. The mortgage broker being professional, knows which lender can do the mortgage with that criteria. The mortgage brokers in Quebec have lobbied to stop the referral fees, but the real estate brokers have a greater force. Once the door is opened, then watch the banks follow suit. The referrals from Realtors will fall off.

  • Michele Hall on 2015-05-25 10:56:00 AM

    if you have to pay to get business .... you lack confidence in your ability to provide a good service that is valuable . You are under valuing yourself.

  • Michele Hall on 2015-05-25 10:56:06 AM

    if you have to pay to get business .... you lack confidence in your ability to provide a good service that is valuable . You are under valuing yourself.

  • Michele Hall on 2015-05-25 10:56:17 AM

    if you have to pay to get business .... you lack confidence in your ability to provide a good service that is valuable . You are under valuing yourself.

  • HILBOJ2 on 2015-05-25 11:16:22 AM

    Mike = Mikey Rice? Is that you? Are you trolling these boards again.

  • Debbie on 2015-05-25 11:58:53 AM

    I am a licensed Realtor and mortgage broker, and I find "referral fees" really distasteful. I am happy to pay a referral when a satisfied customer sends me a client, but I think its horrible when a Realtor pays a mortgage broker (not very often) or a broker pays a Realtor (more likely)to send them business, if you give good service, you shouldn't need to pay anyone for it. The realtor is already being paid fairly, and a good mortgage broker that you trust, and can get your deal done for you is worth its weight in gold. A realtor that is sending all their clients to one bank is definitely doing it for the kick back, because we all know banks aren't always the solution for clients.
    Funny how financing is the most important part of the deal most of the time, and yet Realtors seem to hold the power of where to send the client. It should be the other way around. Especially now with rules changing almost daily. A pre-approval last month could be a flat out decline this month. BTW yes I do both sides of the deal if the client wants me to, but I have full disclosure to both sides, and the client. As a Realtor, I love knowing every step of the process and most of the time controlling it.

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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