Mortgage Journal – September 2011
By Sarah B. Hood

To hear some people tell it, social networking is the best tool for finding new business. Others swear by email campaigns, the paper newsletter or old-fashioned face-to-face meetings and handshakes. No matter which medium you prefer, whom should you be reaching out to? The realtor, say many professionals; others offer different suggestions.

Chris Leader, President and Master Trainer with Leader’s Edge Training, holds licenses as both a mortgage broker and a real estate broker, and he understands the synergy between the two professions in a way that many who work exclusively in one field or the other may not.

“Realtors make great referral sources because they can send multiple leads each year. We all know that most real estate transactions can’t close without a mortgage, but realtors often see the mortgage broker as a necessary speed bump on the way to closing.” Conversely, “the mortgage broker often feels the realtor has a tendency to micromanage,” he says.

“But recognize that the realtor has spent a tremendous amount of time with a client; now they have an accepted offer, and there’s a sizable commission waiting for the financing waivers to be approved. The realtor does tend to be demanding, but when they have a $5000 or $6000 – or maybe $10,000 commission cheque dependent on financing, it’s easy to understand why they are sensitive.”

Also, says Leader, the two professions attract people with different personality types. “Realtors tend to be A-type people; mortgage brokers tend to be more analytical,” he says. Despite these disconnects, “mortgage brokers’ volumes go up when they have a close relationship with a good realtor, and realtors close many more files if they have a mortgage broker who can expedite things.”

Therefore, Leader asserts “It’s critical for a mortgage broker to develop strong relationships with the best realtors working in the area to substantially increase their future referral business.”

Garth Ellis, AMP, President of VERICO Ellis Mortgages Canada, points out how much the mortgage brokers’ share of the market has increased, from about 4% a couple of decades ago to 25% or 30% or – in British Columbia – as much as 50% on new purchases. “With all that change, it still seems the first and most popular place to start is through the real estate agent,” he says.

However, Ellis recommends nurturing previous clients as referral sources as early as possible. “My very first referral was from a realtor. My second was from the client that the realtor referred me to. I found that the referral from the client was much less maintenance, less expensive and took less of my time and resources; it was an easier mortgage to get and easier to close."

Although Ellis acknowledges the value of realtors as referral sources, “I don’t believe the best referrals come from individuals who stand to make money from the transaction,” he says.

Jean-Pascal Blangez, a mortgage broker with Multi-Prets in Montreal, would agree. “I’m working with a real estate agent, but I wouldn’t say this is my best source,” he says. “In fact, I have several sources, and I think the best one for me is my business community.”

Blangez is active with several associations, like the Le Club d’investisseurs immobiliers du Quebec, which he describes as “a group of people who meet once a month to talk about buying real estate as an investor.” Since he develops a personal rapport with members of the organization, they naturally “come to me when it’s time to get their mortgage for the multiplex apartment, and they give me referrals from their friends outside of the club,” he says. He has developed a similar relationship with members of his own condominium board of management.

“The second best kind of alliance is with life and disability insurance brokers,” he says. Blangez is so firmly convinced of the value of this type of relationship that he has actually located his own office with a group of insurance brokers; “It’s a kind of multiservice point,” he says.

He has also used Facebook and Google to attract calls. “People who shop online want it fast and at the best rate,” he says. “When they call, I tell them not to shop the rate; shop the broker that you want to work with.” He estimates that he closes 30% of these calls.

Of all sources, “the referral from one of my old clients: that’s the best one,” says Blangez, “because they hear really good things about me and when they call me they want to work with me. They are already convinced, and then we can just proceed together.”

“The best and the purest and the highest profit have always come from my referrals from my past clients,” agrees Ellis. “Dealing with referrals from realtors is good. Dealing with referrals from existing clients is great.”