Realtors: Broker-paid referrals 'appropriate'

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Objections aside, paid referral fees are nothing but quid pro quo for business passed along to mortgage brokers, argue Realtors.

“If I am going to give a client to someone, I think I should get a referral fee,” said Stuart Barker, a Realtor with the Sutton Group in Montreal. “If I’m going to help someone build their business, I think a referral fee is appropriate.”

For Barker, there is no set bps on his client referrals to brokers.

The comments come on the heels of a MortgageBrokerNews.ca article last week outlining growth in the number of Realtor referrals to brokers instead of to the banks as a way of protecting the viability of deals at a time when banks are facing tighter lending guidelines.

In the article, a broker also suggested that broker-paid referrals are also being offered to help encourage Realtors in that direction.

Some MortgageBrokeNews.ca readers objected to the practice of paying Realtors for sending clients through the doors, although both in and outside Quebec, those referrals – usually paid to the real estate brokerage – are increasingly commonplace.

“Of course referrals work well, agreed Jill Prevost, another Montreal Realtor. “That’s the only way you make the business grow.”

Lenders such as National Bank, which has come under fire from some brokers for offering as much as 50 bps to Realtors, argue Realtors remain a viable and very attractive means of bringing business through the door, while increasing the likelihood of client retention.

Sean Chouman, president of Landmark Financial Group, told MortgageBrokerNews.ca that a tough economic climate has Realtors leaning more to brokers who can work harder to get the deal done.

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

  • Christopher on 12/02/2013 5:46:49 AM

    I haven't seen any money for referring clients to realtors. I guess they want a one way street, even they get far more on the deal already than we do.

  • MortgageMan on 12/02/2013 5:49:40 AM

    Great!! As long as the referral fees go both ways. I will LOVE half of the 2.5% listing commission a realtor will make on my referral. I'll LOVE my share of the Commission even more when the realtor is working for my buyer. In that case, he has to run around the city show doesn't properties doing this commission. I just sit back and collect my referral fee ;). It's great when the money goes both ways. money makes the world go round

  • Carlo on 12/02/2013 5:54:09 AM

    Thats nice...A real estate "professional" taking a key financial professional business partner's income!!!???..rater than 2 professional's working together to deliver an exceptional client experience...with each earning what their respective roles receives in compensation..isn't that the best business growth referral earning program??..

  • Ottawa Broker on 12/02/2013 6:03:21 AM

    i find it quite comical that realtors always have their hands out for referral fee's. As a mortgage broker, to prove a point, I have said to realtors, I will pay you but you have to pay me a referral fee when I give you a referral. it is quite comical what their repsonse is. They have all these reasons why it is unethical and it doesn't benefit the client, but the comical part is they just explained why I don't pay realtors referral fee's. If you aren't willing to pay a refarral as a realtor, don't ask for one. Or another good excuse realtors have is that they do so much more work than us and are really the main focus of the transaction. As mortgage brokers, we should value what we bring to the table, lawyers don't pay realtors a referral, why would we????

  • Robert Stanfield, Invis Agent on 12/02/2013 6:06:52 AM

    I personally do not pay referral fee's and the realtors I work with do not request them. to the point where they wouldn't accept them if offered, as they have told me. We both fully respect each other and how we help the transaction go smoother for the client. Professionals do not have to pay to have a relationship, they just work professionally with each other and have the clients best interest in mind.

  • Agent11 on 12/02/2013 6:07:18 AM

    Funny how that works though...we pay a Realtor a referral fee to get their business...I think that is a good thing...unfortunately Realtors don't have the same mentality...they say they are not allowed to give referral fees or this and that...how is it mortgage agants have to share 125BPS on a Mortgage file when Real Estate Brokers get to keep 2.5% minimum...looking for any advice...I have no problems helping get deals done...just wondering why it is not more of a two way street...

  • Cameron on 12/02/2013 7:13:24 AM

    Greed. A good realtor just passes leads as I do to them. If you expect a referral fee I cut you off fast. Real estate agents seem to get into the industry just cause they see large earning potential. I feel 2.5% up to 5% is too much to begin with.
    Most Realtor's push for maximum profit and put their clients second, no wonder why there's only a 2% success rate.
    If any Bps are taken from my account, it's for my client, buying down to get them what they want. Making sure the client is extremely happy should be everyone's first priority. Not commission or referral fees.
    And I like the comment above, ONE WAY STREET. How about this, I pay you 50% of my commission if you pay me 50% of yours.

  • mortimer on 12/02/2013 7:28:21 AM

    Providing the Realtor with clients ready and willing to purchase is the strongest method of reciprocity. Asking for, or receiving referral fees, beyond being tacky, creates an landscape that rewards the highest bidder, not the best service for the clients.

  • Ryan Kirwan, HQ Mortgages Inc. on 12/02/2013 7:42:03 AM

    Since the majority of Brokers/Agents are earning 80bps on an "A" deal (combined Finder's Fee and Volume Bonus on a 5 Year Term mortgage), a 50bps referral fee would mean 62.5% of our commission. I wonder if these same Realtors would be willing to give up 62.5% of their commission for a referral from a Mortgage Broker? Call me at 877-507-1110 and I'll be more than happy to work with you!

  • Elfie Hayes on 12/02/2013 9:27:52 AM

    No one has mentioned the fact that a Realtor who is paid for a referral must indicate by way of disclosure in the Offer to Purchase (to all parties to the transaction) that they are being paid to refer the client to said Mortgage Agent or Broker.
    This is according to RECO.

    Your Real Estate Broker must process the referral fee since Realtors can only be paid by the Brokerage house they work for. Again according to RECO.

    So let me ask if those of your who are being paid to send clients to Mortgage Agents are doing the right thing by disclosing the fees to all parties concerned? Are you getting paid by your Brokerage or are you just pocketing the cash and turning your back on the RECO Code of Ethics!!!

    Obviously building relationships based on value has gone out the door according to what I have read here.

    Is it just faster to get paid for a deal and send the client to the highest bidder than to bother building a relationship that will help both you and the mortgage agent grow your business? Not to mention put the client in the hands of someone trusted.

    I prefer to have my clients for life, so I'll stick with the Realtors that I have relationships with that benefit all three is us, the Client, the Realtor and myself the Mortgage Agent. It's been working for me for over 13 years now and I don't intend to start paying anyone who can't make a living in their own industry.

  • Hal on 13/02/2013 4:42:15 AM

    I have a network of realtors that have been paying me 25% of their commissions for years. Realtors are more than happy to pay that for a good client. I pay to advertise to attract the buyer client. I have no problem charging a realtor a commission for that pre-approved client.

  • Daniela on 13/02/2013 5:03:26 AM

    I never ask for a referral fee from a broker . When my clients ask me to refer them ,I always give them a few names . Is their job to do their own do diligence before they make a decition as to whom they want to work with . I will neve ask or accept a fee for this . All that I'm expecting in return is to be on their list of referral and let the clients choose with whom they would like to work . Always have your clients best interest before yours that is my moto.

  • Ingrid Meninga on 14/02/2013 7:46:14 AM

    I just got off the phone with one of my REALTOR clients who said about 5 years ago he was asked to participate in a small group forum hosted by a Mortgage Broker organization that was asking what REALTORS wanted - and the Mortgage organization was the one who brought up "Do you want referral fees, bonuses, cash incentives".

    He was incredulous that they were asking him this question and he said "No, just take great care of my clients".

    So maybe the Mortgage industry has an equal part in propagating this model?

    It works for some, it doesn't for others. Find and work with REALTORS that operate a business with your same standards and ethics and you won't have any problems.

  • Sylvie on 14/02/2013 8:06:43 AM

    I've worked with several Real Estate agents that have never asked me for referral fee. Although, One once did, I told her i didn't pay referral fees... She never called me back. However, my trusted agents keep sending me their business and never ask anything in return.

  • Pete on 01/04/2013 7:42:25 PM

    Here's a comment from a real estate agent. I don't know your business and don't pretend to, except that the mortgage agent I work with is absolutley awesome! He has pulled together deals for me that no one else could...and we sweated together a few times...on a few hairy ones! I would never, ever expect him to share his work commissions with me. He helps me close deals and create happy clients. He has also referred awesome sellers and buyers to me. Our payments to each other...we go golfing, hockey games, fishing, dinners with the ladies, few drinks and laughs and the last deal done pays! From someone that had only been in Real estate for five years, I am amazed at some Realtors high and almighty attitudes.

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