Good news, brokers: You remain a primary referral partner for real estate agents even as the number of home sales slows across key Canadian markets. Bad news, brokers: More and more, the banks are determined to change that.
“I’m seeing lots more mailers and literature coming into the office from banks, offering incentives, points and Air Miles,” Mark Savel, a sales representative with Re/Max Realtron Realty in Toronto, told MortgageBrokerNews.ca. “I see agents who get swayed by those incentives, but in nine out of 10 cases, it’s still a mortgage broker who I’m referring a client to, and that’s because of the relationship that extends past closing and for the whole term of that mortgage.”
He’s not alone, with other high performing Realtors sticking to the same strategy in the face of increasingly aggressive targeting by the country’s Big Six as the number of new home purchases slows.
As MortgageBrokerNews.ca reported last month, National Bank’s CEO Louis Vachon told analysts that the financial institution is actively looking to grow the number of referrals coming directly from real estate agents, some representatives dangling cash finder’s fees of as much as 50 basis points.
“I’m trying to still do more business with real estate agents because it’s less costly,” Vachon said as part of a conference call on Q2 financials. “So I’d rather get my origination from the cheapest source for mortgages. That’s why we’ve been expanding the number of people doing business with real estate agents outside Quebec.”
Other banks like TD and RBC, offering reward points rather than cash, have been just as active in courting Realtors, in some cases forming alliances with the corporate head offices of major realty companies.
“I send most of my clients to a mortgage agent, although my brokerage makes available a bank mortgage specialist, who I haven’t used,” Sarah Underhill, a high volume agent with Re/Max Hallmark told MortgageBrokerNews.ca. “Every time I load a new listing into the MLS system, a bank specialist will send me a financial sheet. They’re there and they’re really looking for business, and there are a lot of incentives, but I’ve been working with a mortgage agent that I have built up a relationship over four or five years now and I can trust that clients I refer to him will be taken care of. Another reason that I continue to go with him is his access to multiple lenders and competitive rates that I’m not getting from the banks.”
For the most part brokers are maintaining those connections without offering referral incentives, although most seek to “refer back” clients to the real estate agents they partner with, said Drew Donaldson, a senior mortgage agent with Verico Safebridge Mortgage Solutions in Toronto.
“It is about building and maintaining a close relationship with about five very active real estate agents and ensuring that they keep you top-of-mind,” he told MortgageBrokerNews.ca. “It’s not about incentives.”
The comments echo those of another real estate professional frustrated by the high turnover of mortgage specialists at banks and incentive promises that failed to materialize.
“I solely work with a mortgage broker, and almost 95 per cent of the time my deals are funded through a mortgage broker,” Adam Brind, with RE/MAX Condos Plus, told MortgageBrokerNews.ca. “I’m trying to build a book of clients in the long-term and brokers are focused on the same thing. Quite frankly, my biggest issue with the banks is that there’s no relationship.”
Still, brokers may be losing on one front, said Savel: “They’re great, but they need a bigger and better voice out there to promote their work.”