I really enjoyed this article in the September 30th edition of the Globe and Mail written by Robert McLister. You can find the original article here.
I put this article on my Facebook and a real estate agent pointed out that this was written by a mortgage broker. While this is true (the author also used to work at a bank like myself) I do not feel as though this detracts from the article’s message. Self-employed entrepreneurs such as myself do not have the marketing budget of a major bank so I will strive to educate all Canadians on the options they have when it comes to getting a mortgage. I have come across too many people that have heard what I do and respond “I didn’t know that” or “my realtor never told me”.
Ultimately, everything I do, write about, learn about, strive to achieve in my practice, is to make the mortgage process of purchasing a home, condo, cottage or investment property for my clients the easiest and less stressful process possible. I want them to feel like they got through the process knowing the answers to all the questions they had and even answers to questions they didn’t. My clients should expect that if they have a question any time of the day or night, I will respond to them immediately. Working within the confines of a bank and not being able to talk to my clients outside of office hours or on weekends, when most have the free time to discuss their options, was not for me.
Mr. McLister’s article was about the referral programs which big banks give to the real estate agents who refer clients to them. National Bank is one of the biggest players in the realtor referral world. They are very aggressive with realtors and will often reinforce how much more money they could earn beyond the initial commission. It is my opinion that this is an ineffective business model that could possibly take advantage of the customer. Too often I have heard complaints from clients about the service and the higher rates they have to pay to National Bank when this does happen. I am proud to say that I have never given a kick-back or a referral fee back to a real estate agent and I never will. Doing so would bring into question the integrity and joy of being part of this burgeoning industry, I prefer to check options of real estate for sale rochester ny myself with someone that actually knows about the field.
When processing client mortgages at TD Bank, where I worked prior to going into business for myself, we were always encouraged to get the ‘Rewards Points’ catalogue into the real estate agent’s hands. This was an affront to my most basic sensibilities. Why was the bank rewarding strangers while our tellers continued to make just above minimum wage while also having to bear the brunt of customer complaints? Not once had I even considered promoting that catalogue, nor participating in any other of the bank’s incentive schemes. I never once promoted that catalogue. I know other tactics that the banks use and if you wish to discuss, I am more then happy to divulge.
The drawbacks of referring a client to a specific institution have the potential to be dire. I deal with several lenders, each with varying lending guidelines and programs tailored to certain individually unique situations. However, a single bank probably does not offer similar flexibility, but if you have been referred solely to one bank and your situation is not deemed satisfactory to them, then where do you go? The client is in the dark and thats hardly the position I would want to be in given the enormity of the purchase.
From many of the realtors I talk to, I know there is a code of ethics they must follow depending on the province they are in, but like anything I know some people always try to get around it. The best unknowing home-buyers can do is always ask the questions Rob mentions. Many mortgage professionals like myself cannot place our clients with their primary banking institutions because they have their own “in-house brokers” but we can usually get better rates and place the client with a lender that meets their needs a lot more. I would love clients that are referred to a bank by their relator to show me that the realtor actually did include that they were getting a kick-back in their buyer agreement. I just know I will never see one.
I would love to see stronger referral regulations. It can only help Canadians save money and get better advice, so why not?
