COMMENT The Loan Arranger


How much can you make from mortgage referrals? Peter Brodnicki has some guidance.


W


orking in the property industry is never dull. It can be interesting, challenging, and surprising, often in the course of a single day. At the moment some locations are more


challenging than others and the local differences in the market are particularly pronounced. However, activity across the UK is still generally below 2007 levels, and this makes it all the more important that all businesses are working as efficiently as possible. For estate agencies in particular this means making sure all


ancillary revenue streams are being maximised. When you are working as hard as possible to run a profitable business, you need to make sure all areas are working to their full capacity in order to leverage any and all opportunities. Fees generated from financial services are a key element of this


ancillary income. The exact amount of revenue a firm can extract from this area is dependent on their location and the size of the operation, but even busy, multi-office agents that currently run a financial services division could benefit from an audit of their potential to exploit financial services revenue. As a basic rule of thumb, Mortgage Advice


Bureau works on a formula based on the average number of sales agreed versus the number of new mortgages agreed. This works out a rough ratio of 2:1. This ratio is not the direct number of sales


passed on to the broker as they may well be dealing with clients who are already on the books, but is a good indication of potential returns. If this number is significantly lower than this it needs to be investigated further. For a multi-office firm doing 100+ deals a month the bigger the opportunity missed in terms valuable additional income if its financial services arm is not working as efficiently as possible. Many estate agents


currently have a full-time mortgage broker working in-house, or will introduce leads to a broker based in another office, or even have a remote telephone arrangement with an adviser. However, the question here is the same as for those with an in-house financial services division – how efficiently is this arrangement working for business? It is vital to understand that not


all brokers are able to offer the same levels of service and mortgage products. Increasingly, how lenders deal with brokers depends on business volumes and quality measures, and they provide different products, fees, and exclusives. While they may look the same and can claim to provide a ‘whole of market’ offering, the difference between broker firms can be quite staggering. Lending criteria has tightened and lenders are aiming to leverage


economies of scale by dealing with larger brokers and well- managed networks. As an example, Mortgage Advice Bureau has around 500 brokers nationally and works with more than 800 estate agency branches. It has a genuine ‘whole of market’ proposition and can provide all the support estate agents need to feel confident their broker is able to do the best job possible. In present conditions this can make all the difference to whether a deal is placed or whether the buyer has to walk away. In the last six months the overall number of mortgage products


has fallen and there’s been a small but sustained rise in rates. If your broker can’t access the best deals they may not be able to help your client.


If a broker can’t access the best deal they won’t be able to help your client.’


In essence the key questions that need to be asked: Do you think you are seeing as much mortgage business


as you should be and are you earning as much from your cases as possible? If you have an existing relationship with a mortgage


adviser, are they doing everything they could be? How much of their business is devoted to you? And are they proactive or do they rely on staff for all their leads? Are they experts in estate agency fi nancial services, and support your branches with marketing, training, and incentives? How do you communicate with the broker – when


you pass a deal onto a broker how is it tracked? Are you able to track the progress of individual cases? At what point do you get paid? With the Stamp Duty Land Tax exemption coming to an end and pressure on lenders to hike rates and be more selective over who they offer them too, it has never been more important to make sure this area of the business is working as efficiently as possible. At worst an audit provides peace of mind, but on the other hand it could mean a significant increase in income.


Peter Brodnicki is Chief Executive of Mortgage Advice Bureau.


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PROPERTYdrum JUNE 2012 39


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