Tough market to grow independent players, says broker

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With a slowing housing market and lenders slashing compensation, the channel will likely see more brokers opting to go independent rather than work under large broker networks as a way of cutting expenses, according to one mortgage professional.

“I find that some agents who go with large networks often end up saddled with huge expenses,” said Paolo Di Petta, an independent broker for EQRON Mortgage in Toronto. “I think some agents are better off tackling things by themselves or working with a smaller broker who can give one-on-one training,”.

As the market continue to slow down and tighter mortgage rules dampen consumer appetite, many new agents, in particular, wil reduce their expenses by moving away from the large broker network model, Di Petta said.

Those costs include monthly fees for the of proprietary customer relations management systems and advertising and training can easily run up above $1,000 a month, he said, yet provide very little in terms of business benefit because they are “cookie cutter” products and services.

“It all depends on your business model,” said Di Petta. “Not every broker’s business is the same and all too often the stuff big networks offer does not have the flexibility agents require,”

For instance, many advertising fees charged by large networks are at a fixed cost, he said. There is no flexibility to reduce the amount in case the agent has encountered a rough patch and is short on cash.

De Petta also said some network sale training programs are heavily brand focused.

“The programs concentrate on selling the network’s products rather than developing useful sales skills,” according to the independent broker. “I think some agents would better off working with a broker who can offer one-one-one training.”

That said, De Petta admits going independent is not for everyone.

“It depends on your business model and character,” he said. “So brokers feel they need the support of a large company others excel when given full rein over their own business.”

  • Derek Rowley on 2012-10-19 5:39:17 AM

    Hey Paul

    I always enjoy your comments but this one leans towards a recruitment pitch. Are you with MC?

    Derek

  • Paolo Di Petta | dipettamortgage.com on 2012-10-19 6:10:34 AM

    @Robert - Some broker networks are better than other, but it also comes down to the individual brokerage.

    I know when I was looking around a few years ago, some had mandatory institutional advertising fees, along with additional mandatory fees for personalize promotional materials (which, quite honestly, could be had at better rates if one was inclined to do the legwork themselves.)

    Personally, I'm a very hands on guy - and with an advertising background, I like the control. I'm also able to leverage a great network. I realize not everyone has that luxury, but like I said - it really comes down to one's business model and working style. I like to keep costs low, I like the control, and I like handling the details. My model works for me, but I see how it could be cumbersome for others.

  • Angela Wong-Liao on 2012-10-19 11:08:39 PM

    I agree with Robert Stanfield, I have been with Invis since Sept 2001, the company has been more than fair to us. Invis/MI has a great marketing team assisting agents/brokers to promote our businesses at a minimum costs, the company has excellent IT support and their compliance department and payroll department are very competent.

  • Jim A. - Toronto and Durham Broker on 2012-10-20 1:11:39 AM

    It all comes down to the fact if you are an experienced mortgage professional or new to the industry. And also if you need the name of the big networks. It also comes down to the type of business you do. If you think you need a big network to cut rates to get a deal done then they are good.Being in the business for many years and starting out with a few of the big brokerages being independent is working well for me and my team and trully controlling my own costs and commission I earn was and is still key to me.

  • Paul Mangion on 2012-10-20 5:30:11 AM

    Sorry Derek.I am with MC but honestly it was not a recruitment pitch. My thinking was being influenced due to the two recruitment calls I received from other companies this week. I also agree with Paulo that the individual brokerage's play a big role in the success of a new agent so they should choose wisely. Hey Jim the good news out of all this negative news is the industry is about to get smaller and that is great news for the brokerages and agents that get the business. A monkey could have made money before but will certainly fail now.
    Cheers

  • Paul Mangion on 2012-10-19 4:32:43 AM

    I agree with the article except for one thing. Mortgage Centre is a big player but it is the brokers that own the franchises who really run the show and are responsible to their agents. Yes MC has bells and whistles but without the big fee's. They offer great value compared to some of the others that make their money of fee's rather than royalties. I guess they can have that model when an average MC agent does 2.5 times the industry average. I needed to say this because I don't want to be grouped in with other big power brokers. Thanks

  • Derek Rowley, RMA on 2012-10-23 2:07:20 PM

    To Paul Mangion

    Thank your replying back to my comments. No apology necessary and nice comments to Jim and I agree.

    Continued good selling my friend

    Derek Rowley

  • Paul Mangion on 2012-10-26 5:54:17 AM

    Hey Jim. It is not really an advantage. At the end of the day, people work with you and not necessarily the brand. All we have is our reputation no matter which flag you fly. A recognizable name helps in some situations but certainly not all. MC being part of CIBC sometimes helps and other times does not.
    Cheers

  • Robert Stanfield, Invis agent on 2012-10-19 5:35:38 AM

    I find a lot of these articles lately have been stating all these large costs that come from being with a large network broker house. I don't know where this info is coming from from, but there are NO large fee's from Invis and NO monthly advertising expenses. You operate as your own agent/broker and run your business on your business plan, NOT Invi's. Plus, a lot of agents that do over $20,000,000 annually, don't see the benefit of giving up 25% just for free office space from an independent broker. They fully appreciate what the large network broker houses offer. That being said, there different avenues and models for a reason, because different agents have different needs. I think these articles need to stop pitting brokerage houses and models against each other. With everything going on in this industry it would be nice to read about some positivety and unity in our industry.

  • Jim A. - Toronto and Durham Broker on 2012-10-23 4:51:33 AM

    Hey Paul!I strongly wonder why you think being with MC is a true advantage. If you have the right market mix, a great referral business, and also have true knowledge and experience then no matter who you are with.

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

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