[Mortgage Brokers] Referral Arrangements

Discussion in 'Loans & Mortgage Brokers' started by Broker1992, 23rd Feb, 2022.

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  1. Broker1992

    Broker1992 New Member

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    Attention NEW and existing mortgage brokers. I’m thinking of opening my own mortgage broking business, have 5 years lending experience and like to think I know what I’m doing.

    How do you approach Real Estate agents/Accountants/Conveyancers that want a certain % from your commission? Eg. 30% upfront? Finding it quite difficult to find referers that don’t want a fee for referring?

    Whats fair? What’s not?

    More importantly is it worth it.. I have quite good sources but want to know how to approach this.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Find referral partners where their business complients yours. Overall I give out just as many referrals as I recieve.

    Conveyancers are terrible referral sources. By the time someone is dealing with a conveyancer they should already have their finance sorted. Most of their referals occur when something has gone seriously wrong, not exactly the sort of business I'd be willing to pay for. On the other hand about 50% of the new clients I see do not have a conveyancer in mind. I send a couple of conveyancers and solicitors a LOT of business.

    Accountants can be a mixed bag depending on your target market. A lot of new investors may not have an accountant or they'll have only used a mass market group like H&R Block (not ideal for investors). In many cases you can generate more business for accountants than they'll generate for you.

    Agents are a bit pointless. The large franchises already have very formal referral relationships. You can sometimes build friendships that tansend this, but you'll find you don't need to pay for that business anyway. Also ask yourself what it's worth to an agent if you refer someone who's selling a property to them?

    Consider joining a BNI group to find referral partners. It wasn't my cup of tea, but a lot of brokers have been able to build a successful business on one group alone.
     
  3. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Accountants in property do a lot of referral work or at least we seem to get a lot of pre-purchase tax enquiries. Its my common question "Do you have a GOOD broker" as it a key entry point . Its common they say...not really or no. I suggest they start with a broker. I have a small trusted group of brokers and various factors affect who I suggest. By trusted I mean I trust them to do a good job. I also NEVER seek to change a broker unless the client isnt happy. Nobody trusts anyone who does that. I do know some accountants that do that. My first go-to is often "the brokers on PC" if they are familiar with PC and if they arent I introduce them to PC as the standard is extremely high and none concern me. I earn NOTHING and expect nothing. If they refer back so be it and if they dont I really dont care.

    Many broker I know develop strong referral networks with agents or even with home buildewrs at homeworld . Land sellers are also a wise start point to get it the open door. Agents, buildersand alos land sellers find it troubling when a buyer doesnt know their price point or have finance sorted. Brokers help get the buyer qualified to sign a contract.

    Then there is a social media presence to help key targets eg those seeking equity out That equity out can lead to a new IP etc

    There seem to be sooooo many brokers these days. You need to make your own nest somehow
     
  4. beachgurl

    beachgurl Well-Known Member

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    I agree with the previous comments. Brokers generally give more business to the other professionals. I used to sublet office space in a conveyancing office and she said like PT that most already had their finance sorted before they came to her.
    I don't accept any referrals that require a referral fee. There is one agent I get along well with, but he has brokers who happily give him cash for referrals, so he uses them unless he finds a client in a bind and sends them to me.
    My best referral sources have been from here, joining property investor meetups (as an investor, not a broker trying to get business) and being a member of my local community pages on facie. Again, it's about being part of a community first and offering your services second. People dont want to be sold to and by involving yourself in communities you are building trust.
    My snowball took a long time to nurture, but now I'm.at the point of almost a 100% referral business with plenty of work.
     
  5. Lindsay_W

    Lindsay_W Well-Known Member

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    Keep looking, they're out there, know your worth.
    Sell them on your strength to get deals done, they shouldn't need any referral fees from you, they're getting their own fees already from the client. I've had a few agents try this on, I simply show them how much they get paid vs how much I get paid, they earn much more than a broker on a deal, that usually stops them.
    Simply ask them if they would pay you the referral fee back if you get a clawback...
    I only refer clients to conveyancer/solicitors I know will do a good job, I have quite a few refer me business too because of the same mutual benefit to the client.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    This bit is quite important, it's worked well for me, but you must be there as a participant, not as a sales person.

    It also lead me to think further on defining your market. Figure out what you're good at (or what you want) and focus on that market. If you're marketing to investors, it really helps if you are already an investor yourself.

    I know of a broker who is a successful investor and has contributed here successfully in the past. He is located where a lot of first home buyers are purchasing so he's actively switched his marketing to first home buyers and upgraders rather than investors. He's been hugely successful in word of mouth in his local community. This target market is also a lot more straight forward than the investor market which has done a lot for his workload and lifestyle.
     
  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    If youre both referring to each other and referring on the basis that you know they will do a good job for your clients then I really don't think a monetary exchange is needed.

    I stopped these arrangements 3 years ago, I didn't want it to be a conflict of interest, nor did i want them to refer to me just so they can get a kickback, most of these referrers don't want it to be disclosed which is needed for compliance.
     
  8. Broker1992

    Broker1992 New Member

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    Great insights guys. Really appreciate it.
     
    Lindsay_W likes this.

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