Real estate agent weighs in on bank referral incentives

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A leading real estate agent is attempting to silence criticism that bank referral incentives influence where his industry sends clients for mortgage support.

“It’s not about if (my referral partner) works for a bank or a mortgage brokerage,” says Ira Jelinek, a high-volume agent in Toronto. “It’s more about the relationship I have with them. If I think they can do a good job for a prospective client, then I will give them the business, regardless of whether they work for RBC or Monster Mortgage.”
 
Jelinek says he and many of his colleagues don’t collect fees from banks, instead choose to focus on the mutually beneficial nature of these relationships.
 
“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,” he says. “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.”

That referral relationship works both ways, something continuing to support strong mortgage broker/real estate relationships in a market where low rates haven’t been enough to help many prospective homebuyers overcome value gains.

The phenomenon means that the mortgage professional is increasingly the first point of contact for the homebuyer, something of which Realtors are acutely aware.

The referral partnership between real estate agents and mortgage brokers “is a mutually beneficial relationship,” says Jelinek. “If (prospective buyers) go into a mortgage brokerage first, they need (real estate agent) representation.”
 
  • John Dunford on 2015-04-09 11:53:18 AM

    The rest of Canada should take a look at Quebec. The real estate brokers get paid by the banks for good leads for mortgages. The standard referral fee is .50%. Some incentives are higher. The real estate brokers expect to be paid. If they refer a file to a mortgage broker, for the most part, they want a referral fee. I believe that this is a conflict of interest on the part of the real estate broker.
    How many mortgage brokers in the rest of Canada pay $500 for every $100,000 of mortgage applied for. Some specials, offered by banks are up to 1% of the mortgage amount.

  • J Burch on 2015-04-09 2:11:42 PM

    I am a mtg agent in Ontario and have been in the business for 26 yrs. I deal with only 2 realtors and never pay a referral fee. Almost all of my business comes from my past clients. Yes I am lucky but I have worked hard to make this happen. In the past when I used to approach the realtors the first words out of their mouth was how much are you going to pay me. I used to do a lot of business with one realtor on a new home site. When he was offered almost as much from Nation Bank for a mtg lead as he made from the sale I was out the door. Sure I got the calls when the deal feel apart, which I said no thanks, but you can't tell me a realtor isn't influenence by a referral fee.

  • Jim T, Advent Mortgage Services on 2015-04-09 8:44:34 PM

    As long as the referral fee is completely disclosed, there is nothing wrong with National Bank offering realtors 50bps in commission for the referral. Good for them. If they can find a cheaper client acquisition cost why would they not do this? I'm sure every broker would jump at the opportunity to improve the profitability of their business if it were available.

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