A brokerage hawking salaried positions instead of tried-and-true commissions is pointing to a slowing market to explain a significant increase in both the quality and the number of brokers jumping at the opportunity.
“They’ve begun to realize the hard part of being a mortgage broker is making the phone ring,” Dan Eisner, CEO for True North Mortgage, told MortgageBrokerNews.ca. “Back when we first starting advertising in 2006 the response to our ads for salaried positions was a lot less and the quality of the applicants weren’t what they are now. I think brokers are having a hard time making a go of it because of the economy.”
A recent True North ad dangled a base salary of "$42,000 to $49,000," depending on experience, with a bonus for each completed file in the store. “The bonus will add another $8,000 to $20,000 per year (includes benefits).” Those numbers add up, with the potential for a seasoned broker to pull down $69K a year.
The number may be considerably lower than most successful full-time brokers brought home at the peak of the housing market. But times are changing.
Sales of detached, attached and apartment properties in Greater Vancouver, for example, fell 8.2 per cent in April from the year-ago period. Another hot Canadian market, Victoria is now grappling with last month’s 24 per cent drop in home sales and a gradual slide in prices. Eisner’s home market of Calgary ain’t doing too good either: Overall, sales were down 10 per cent in April compared to the same period last year. The dwindling number of new purchases hasn’t necessarily been made up by the refi and second mortgage work an increasing number of brokers are combing through client files for.
The uptick in interest for his salaried position coincides with the growing slack in the market, said Eisner, who rocketed to national prominence with his 2007 appearance on the CBC’s Dragons’ Den. He used the venture capital show to pitch his model for a brokerage, one relying on clever branding and a heavy Internet presence to drive Triple A clients into his upscale storefronts – now in Calgary, Toronto, Halifax and, starting next week, Vancouver and Montreal. It then falls to his “mortgage specialists” to clinch the deal using their market knowledge and True North’s access to highly competitive rates.
The formula helped the company attract $254 million in business last year alone, said Eisner. True North’s growing reputation may also help explain the uptick in broker and agent applications, even from professionals already established with firms offering conventional pay structures and high splits.
Still, many of those applicants do eventually think twice about departing from that model as they make their way through True North’s vetting process.
“What will happen is if they were somewhat successful as a broker and are just looking for the stability of a salaried position, they will often have a second thought about whether they want to work for you on a salaried basis,” he told MortgageBrokerNews.ca.
Given his model, Eisner, in fact, screens out applicants who prefer the thrust and parry of hunting down leads instead of allowing the firm’s marketing efforts to draw in the punters. Ideal candidates often come from the banks instead of other brokerages, he said, adding that they are expected to be much more than “order takers.”
While applauding Eisner’s success other brokerage heads remain skeptical about his ability to retain talent in the long-term as employees migrate to the brokerages offering split commissions and the potential to make considerably more.
“I admire the model,” Mike Hapke, managing partner at Mortgage Brokers City (Ottawa). “But, I don’t think it’s sustainable over time, because brokers will eventually gain the confident to move to a full-commission structure. Banks are able to retain their salaried staff only because they’ve created a culture that encourages workers to strongly align themselves with the institution. I think that will be challenging for brokerages to do.”