MBN article hits broker sore spot

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Ouch! A MortgageBrokerNews.ca article profiling Realtors who expect to be paid for the referrals they send brokers hit a sore spot with readers Monday.

“I have maybe three or four Realtors I work with, and that’s it,” said Ryan Kirwan, broker with HQ Mortgages. “I don’t compensate any of them, as they see me as an extension of their arm.

“They know I will work hard for them.”

While he and other Ontario brokers value those referrals, a growing number reject outright the need to share commissions or pay for clients. They inundated the site with comments squarely against the practice, in reacting to an article Monday.

For Kirwan, the experienced and successful Realtors will never ask for a paid referral.

“They don’t care about the points, because they know true success comes from a broker and Realtor working together. You only have five days for financing, and that’s not a lot of time for shopping around to find a lender,” he told mortgagebrokernews.ca. “But we can find a lender with just a few clicks of a button. Most brokers work that way – we are judged by our efficiency in getting the deal done.”

The popularity of paid referrals from brokers to Realtors in Quebec has to spread to other provinces, but Realtors expecting to be paid for those referred clients are in the “80” range of the “80/20 rule,” said Kirwan.

“The good Realtors, the successful Realtors, don’t care about the points,” said Kirwan. “It is the 80/20 rule – you have 20 per cent of the Realtors doing 80 per cent of the business, with those other 80 per cent of Realtors fighting for every dollar they can make. They are the ones pushing for referral fees.”

Kirwan has worked in the Sudbury market for five years now, and says that his best clients come from bank or Realtor referrals.

“And business has been steady,” he said. “I haven’t seen any up- or downticks.”

  • Layth Matthews, CEO RateMiser Mortgage Advisors on 2013-02-13 4:42:08 AM

    I don't think it's such an easy philosophical answer. I have a realtor partner who referred several clients who closed with me but not with her! So she was glad to get a consolation prize from me. Also, both brokers and realtors can use a little diversification. I've never received a referral fee from a realtor, but I wouldn't turn it down.

  • Alexandra Stinson(centum power financial) on 2013-02-13 5:53:00 AM

    I completely agree with Kirwan, my realtors are so happy that I am an extension to them.
    Thanks to me they are in much better control of the transaction and at much higher success rate of getting their own commission, which we all know if MUCH higher the ours! They know that I do a lot of work for them and do not ask or expect any financial reward

  • KJL on 2013-02-13 5:56:10 AM

    Kirwan - you are 100% correct .. Good realtors don't want a dime. They want us in their back pocket. Making deals, so they can get their approvals and get on to the next so they can make some more $. I have over 40 realtors who provide us biz consistantly and another 80 for one offs and not one looks for $$ , they look for quality service as well as a partnership. Any such a realtor looking for $$$ lasts about 3 seconds with me !! Mr. / Mrs. realtor - stick to selling houses and leave the mortgages to the professionals ...

  • Ontario Broker on 2013-02-13 6:10:23 AM

    In Ontario the Real Estate & Business Brokers Act prohibits a real estate registrant from paying referral fees to non-registrants.See Registrar's Bulletin Re:Bird Dog Fees at reco.on.ca

  • David Grossman on 2013-02-13 6:31:02 AM

    I don't generally compensate realtors for referrals, although I used to, because they only bring difficult deals to me now, and they appreciate the work that i do. Some realtors want to be compensated for their referrals, and I don't think that's necessarily a bad thing, and I don't think its fair to say that they are not a good realtors if they want a referral fee. Everyone does business differently. http://www.alltalktv.com

  • Sophie on 2013-02-13 7:09:20 AM

    Real estate agents earn more commission on a deal than a mortgage agent would. 50% of my business comes from real estate agents. They would never expect a referral fee. They appreciate the approval turnaround time, the quicker they can waive conditions knowing when I say its ok to waive, its a done deal, as opposed to working with some FI's that take 7 days for financing only to not return calls to their client. Would they in turn pay me for getting their sale finalized? I'm earning .80bps, they are earning 2.5%+ To pay them a referral fee is ridiculous. I wouldn't deal with a realtor who expected to be paid. Like David mentioned, the one off's that bring you a difficult deal that we end up putting together should be thankful we saved it and not expecting anything in return. Actually they should be referring a good solid deal to make up for it. Its all about service, and we as mortgage agents/brokers have that advantage.

  • Annette on 2013-02-13 9:21:57 AM

    Ryan is correct. We are part of a Realtor's 'Professional Team' I did pay once and the Agent hounded me to death from the day of closing for his fee - even though he he knew there would be a lag time before I got paid. Well said Ryan!

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