Who would really be the No. 1 broker?

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Last year’s No.1 on the Top 75 Broker list removed himself from the running this time around but believes, contrary to growing speculation, he would come out on top even if the criteria were altered to focus on profitability.

“Obviously I haven’t seen the bottom line results of other brokers, but I would guess we would be at the top of that list (if CMP measured profitability instead of volume),” Dan Eisner of True North Mortgage told MortgageBrokerNews.ca. “Maybe Jim (Tourloukis) and I should take a private moment to compare bottom line numbers.”

The idea of measuring profitability instead of volume was brought up by Jim Tourloukis of Advent Mortgage Services – this year’s No. 1 broker on the Top 75.

“A more interesting comparison would be to compare profitability, both in absolute and a margin basis,” Tourloukis told CMP in July. “When you factor in his lower margin… and his overhead… I’m not sure he’d be at the top. So you have to ask, which numbers really count?”

Eisner acknowledges his company’s model differs from the traditional broker model and, as a result, recused himself from the competition this year, arguing his participation would be unfair to the others.

“The rules are set up to measure a more standard business model,” Eisner said. “What you really need is a ‘No-Dan’ rule."

As for his decision to remove himself from the running this year, Eisner has no regrets.

"It was nice to read that the winners for the most part were supportive of our rights to choose our own business model and actually did want us to participate,” Eisner said. “They wanted to be inclusive and that is an admiral trait.”

Looking forward, will Eisner participate next year?

"Likely not. In 2012 we did $697 million, which is clearly above the top winner this year and next year it will be more,” Eisner said. “I think the way you guys have the rules, it seems fair in general, but when applied to us specifically it’s not fair to other competitors; we meet the rules of the competition but not the spirit of the competition."
 

  • Filomena on 2013-08-14 10:26:51 AM

    Profitability? On $700M you probably took home 20 basis points due to your heavy buydowns. You have 9 locations where rent is probably at least $10K per month. You have say 18-20 staff at an average of $5K per month. Not to mention advertising etc.,

    Doing rough math at $700M you took home $1.4M in commission less: $1.08M in rent less $900,000 in employee salary, so already you're not profitable.

    So let's say maybe you squeezed out specials from lenders to get a nice VB from them due to volume promised. So even if you made 30, or 40, you're still not doing all that well.

    This is why your model of the store-front may be working for you from an exposure and build-the-DB level, but 10 years from now I just don't see you having the storefronts when commissions get further squeezed.

    Good luck.

  • Richter on 2013-08-14 10:44:53 AM

    @Filomena

    Or vice versa, where the average consumer is a guy/girl who has lived their whole lives with the internet and uses it to their advantage.

    Can anyone really deny the fact that the same mortgage from the same lender at a lower rate isn't better for the consumer?

  • Ron Butler on 2013-08-14 10:59:14 AM

    I will say emphatically that two character traits Jim and Dan share are honesty and business acumen.

    If they say they are profitable I believe them.

    The whole concept of the list is fine but it is not a full reflection of all the mortgage brokers in Canada. I know many massively successful brokers who do choose to participate in the list: that's their choice. As for profitability, who knows? I know a $250 million broker who produces 100% of their own business and does not discount a rate by a penny. I think they are likely very profitable.

  • BC Broker on 2013-08-14 11:16:33 AM

    This list is not an accurate list simply for one reason... it is based on people who submit their own numbers – proven or not. I know of many brokers across Canada who do more volume than last year’s #1, or this year’s – the difference? This list is all about ego and an attitude of “I’m better than you” – most successful brokerage owners don’t feel the need to brag about their success or fly their own flags. Their business and volumes speak for themselves, they don’t need to have their success validated by others, it is validated by the business they do each and every day. It is validated by their customers and the repeat business they receive.

    Any further debate on the list is fruitless, because you are only adding to ego’s. Dan Eisner is a successful man, and he deserves to have credit for that sure, the same as anyone else, and perhaps he is doing himself a favour by running around telling everyone that he is. However, the few times I have spoken to him I will be honest… I got tired of hearing about how much better he was than everyone else in the industry, and how much more successful. I’ll take a humble success story over an ego maniac any day of the week, because people relate to humility – they do not relate to arrogance.

  • LindsJJ on 2013-08-14 11:30:57 AM

    Filomena,
    I would guess you are WAY off on your numbers. In fact, I would suspect that you really have no idea what you are talking about! 20 basis points? Almost all lenders have a volume bonus greater than 20 bps. Are you a leasing agent? Do you know for a fact that each of True North's locations are rented for 10K per month? I am quite sure Mr. Eisner would not be in business for a loss at the end of the year, he is much smarter than that. You need to do your homework before throwing out wild numbers.

  • George on 2013-08-14 11:36:43 AM

    @Filomena

    Logic looks sound, but.....assuming that he is actually only receiving 20bps per deal and is paying an over inflated rent payment, you seem to be missing that one last calculation in your analysis.

    If you did "squeeze" out an extra 30 to 40 in VB on $700M, wouldn't that be an extra $2.1M - $2.8M in revenue per year??

    One could assume based on those numbers that we could be expecting more store fronts in 10yrs vs less.

  • Filomena on 2013-08-14 12:29:30 PM

    "I would guess you are WAY off on your numbers. In fact, I would suspect that you really have no idea what you are talking about! 20 basis points?"

    Wrong. The rates are bought down from an average of 100bps down to 0 commission + VB, or about 20-25 BPS Volume Bonus. Look at the 5 year 3.29%. Assuming the typical is 3.49% from a full-service lender, a 20 bps buydown = 80 bps in commission thus leaving only 20bps VB (or 25).

    NEXT POINT.

    "Almost all lenders have a volume bonus greater than 20 bps."

    Most are 20-25.

    NEXT POINT.

    "Are you a leasing agent? Do you know for a fact that each of True North's locations are rented for 10K per month?"

    Are you? I'm not, but it doesn't take a genius to punch in the address of the properties he rents, see what is available for rent, note that these are the highest-traffic areas, and figure the rent is ABOUT $10K, if not MORE.

    NEXT POINT.

    "I am quite sure Mr. Eisner would not be in business for a loss at the end of the year, he is much smarter than that. You need to do your homework before throwing out wild numbers."

    I did, and now you do yours. Before ING was bought by Scotiabank I believe Eisner's goal was to be bought out by a bank, as even his colours mimic those of ING's. It is so transparent. Then the rug was pulled out from under him and now he's stuck. I'm sure he is profitable, I'm sure he makes SOME money, but to sit on a stool and pretend he is the MOST profitable is not true.

    Now let's talk about doing our homework...

  • Filomena on 2013-08-14 12:32:06 PM

    @George

    No, I disagree. I do not think he squeezes out ANOTHER 30-40 bps on top of the 20-25 available. Take MCAP who pays 80+25, or 105. Even if MCAP paid him 125 all-in then he is making an extra 20-25. BUT, based on my numbers, already the guy is underwater, and I'm being generous on the salary levels. I've seen TNM job postings for underwriters and I've spoken to some. Turnover is high, salary levels are higher than 50K (I used an average for admin staff), so again, I do not think that this is a very profitable model going forward.

    Storefronts in major metropolitan centres are just too darn expensive to rent out and staff and have going 10 hours / day 5 days / week, buy rates down like crazy etc., to make it so.

    One 5-10 bps cut in commission from a key lender (as we saw w/ First Nat and Scotiabank) and voila, the revenue dips dramatically.

  • LindsJJ on 2013-08-14 12:33:14 PM

    Filomena
    HAHA you are soooo far off its not even funny!!!

  • Filomena on 2013-08-14 12:33:57 PM

    Thank you @BCBROKER for saying it like it is - not like it should be. You're 100% right. All respect intended to Eisner for trying something but really, if we all are going to bottom-feed and try to gain volume but cut our commission, then we're going to fail - slowly, but surely.

    Once lenders consolidate, start to pay less, and start to squeeze our current clients at renewal/refinance, the trend will continue downwards.

    Well said, BCB, well said.

  • Ron Butler on 2013-08-14 12:49:21 PM

    It is a constant source of amazement to me that brokers who are discounting rates from their commissions are called "bottom feeders" or "unprofessional" or engaged in "a race to the bottom" by some other brokers.

    Their is also the constant references to "someday you will destroy yourselves and the whole industry".

    If anyone can do simple math they will discover that True North has done nothing but grow at a massive rate since 2006. It has to be profitable or it would have closed.

    It's just plain silly to attack True North or any rate discounter. The public likes what we do and its not anybody else's business but ours if we choose to discount rates from our commissions.

  • Tom Truth on 2013-08-14 1:27:58 PM

    Has anyone actually looked at Jim's books or that MBA he has been flashing for years! It will be interesting to watch when it all unravels on that guy. The only reason he backed out is because to much light is shining on him

  • Ron Butler on 2013-08-14 1:32:20 PM

    @ Tom Lies, that's just vile foolishness.

  • Filomena on 2013-08-14 2:00:07 PM

    "Ron Butler on 14/08/2013 12:49:21 PM
    It is a constant source of amazement to me that brokers who are discounting rates from their commissions are called "bottom feeders" or "unprofessional" or engaged in "a race to the bottom" by some other brokers."

    Compare this to Realtors who charge 1% vs 2.5%. If a Realtor is charging 1%, then that agent is not able to devote the full scale of their efforts. Bottom feeder. Same thing here - if I buy my rate down to 20bps then there's no point being in the business, because:

    1) my clients won't get my full attention
    2) I can earn more money elsewhere

    Simple economics. Building a database via bottom-feeding like you and Jim and Dan do is a good strategy for sure, but I'd rather continue doing the $25M clip I'm doing per year, and earn 40-60. I still buy rates down but there's a level where we can't go below.

    What the biggest problem is that some lenders allow for this and others do not. CMLS does not allow more than 15bps buydown- thus protecting THEIR bottom line and MY bottom line. Talk about a fair lender!

    "Their is also the constant references to "someday you will destroy yourselves and the whole industry"."

    There not their.

    But anyways, the industry will not be destroyed by people like you, Dan or Jim. We are all competitors and we choose how to run our business. As a much smaller player I can still visit clients at home, take calls anytime they need, do work while they need me, visit Realtors, put on conferences for them etc., that bigger players can't.

    I can't do somet things you can, but there's enough pie to go around.

    "If anyone can do simple math they will discover that True North has done nothing but grow at a massive rate since 2006. It has to be profitable or it would have closed."

    There have been many businesses that have seen growth but if it was not for private investors they would not be able to realize this growth. Who cares if your top-line sales grow at 500% when your profit doesn't?

    "It's just plain silly to attack True North or any rate discounter. The public likes what we do and its not anybody else's business but ours if we choose to discount rates from our commissions."

    I am merely attacking this article because of the profitability boast, nothing more. Based on off-the-cuff math (and unless someone can proveme wrong), I don't believe TNM is a very profitable business nor a long-term viable one.

    You gotta be LEAN in this industry, not FAT and bloated with expenses.

    Good discussion as always.

  • Jeremy Nagel on 2013-08-14 2:00:24 PM

    Is this really worth commenting on, really? My dick is bigger than yours...sounds like kindergarten to me. Why feed their need for attention? Their is no story here, period!

  • BC Broker on 2013-08-14 2:51:08 PM

    Hold on a second Filomena... I never said I supported your viewpoint. What I said was this list is not accurate simply because it is people flying their own flags. Dan Eisner is a successful man, of that there is no doubt. Does he deserve credit for trying something new and building a successful business? Yes he does. Do I want to read articles like this that are all about him posturing and essentially saying that he is better than anyone else? No I do not.

    I never suggested that he is a bottom feeder. He has the ability to offer good service and a discounted rate to his customers – more power to him. Having a different business model and offering consumers lower rates does NOT make him a bottom feeder. The reality is simple: If his business was not profitable he would not be opening new locations, nor have had growth, so your theory does not hold water. You getting into speculation about his profitability and making claims to understand how he earns his revenue is naïve – because unless you are the one that does his accounting you could not possibly know the full extent of his business.

    My issue is that this list is based on people bragging about the business they do, which is well within their rights, but it does not make for an accurate accounting of successful brokerages across Canada. Nor do I think it is productive for our industry when additional articles are printed that provide a platform for anyone to extol how much better they are than other people.

  • @Filomena on 2013-08-14 3:24:28 PM

    You are making assumptions that brokers who provide heavy discounts can’t, or don’t, provide good service to their clients. That is not a fair statement for you to make because you do not KNOW that. You are not working with them on a daily basis, you are not privy to the ins and outs of how they deal with customers. You are only privy to how you conduct your business.

    For you to make the claims that you have, and tear down another broker and resorting to name calling you are exemplifying your own lack of professionalism.

    Ron Butler, Dan Eisner and anyone else who discounts rates, or offers consumers choice are doing what they deem to be in the best interest of their clients and their business. So far as I know Ron and Dan did not just fall off the truck yesterday, they have been at this game for a while. Both run successful brokerages, and if they were the bottom feeders that you seem to think they are, they would not still be in business – why? Simple, people talk and in a business that is heavily reliant on referrals if the service was not there they would not be doing well today.

  • Paul Therien - CENTUM on 2013-08-14 3:32:34 PM

    I have had the opportunity to sit down and speak with Dan Esiner on a couple of occasions, and I have to say - he runs an interesting business. The same applies to Ron Butler. Both do an admiral job and I don’t think the negative descriptors are an accurate assessment of their businesses or of themselves personally. Not everyone may agree with their business models, but I think that it is encouraging to see that there are people in our industry who are willing to take some risk and explore different opportunities. It is those people that will drive innovation and competition in our marketplace, which in the end benefits our customers.

    I applaud any broker that takes initiative to think outside the box, explores new opportunities, and builds a successful business for themselves. Do I wish they would ALL do it with CENTUM? Sure why not? In the end however it does not matter what company we are with so long as we work together as an industry to the benefit of all.

    As for the comments about the list, yes this list is based on people putting their name forward so it may not be the most accurate – but hearing about others people’s success drives us forward and encourages other people to take risk and innovate. We don’t share enough of our success stories in this industry, and I think that each person on the top 75 list has done a great job of building a business. Congratulations to each one of them, or thanking them for sharing their success stories, should be the extent of the comments on here – at least in my opinion.

  • George on 2013-08-14 3:40:59 PM

    @Filomena

    If only you could have been there to share your insight to Sam Walton...but unfortunately not and now his poor family is left with just billions to live off of. Damn shame...

  • M. Robertson on 2013-08-15 10:12:01 AM

    @Paul Therien - CENTUM

    Are you always this level headed, if you are I need to meet you - it is a rare thing these days.

    Thank you for your insightful comments, I always enjoy reading your thoughts as they seem to be based on what is best for our industry and not just the individual.

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