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Wednesday, July 27th, 2016

Gold-buying broker raises concerns

Gold-buying broker raises concerns

By Vernon Clement Jones

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Some brokers fear it may tarnish the industry’s reputation. But a business advertising broker services – at the same it hawks “cash for gold” – is nonetheless focused on customer service, said the jeweler/mortgage professional behind it.

“I am a licensed mortgage agent,” Harold Gerstel, otherwise known as “Harold the Jewellery Buyer” to millions of TV-watchers in the Toronto area, told MortgageBrokerNews.ca. “I had the jewellery business, and for a few months now have offered first and second mortgages and refinances here, too.”

Gerstel’s is among a handful, but growing number of cash-for-gold businesses blanketing airwaves in the GTA with high-energy television commercials offering competitive rates for old jewellery. In his own exuberant ads, Gerstel waves wads of cash for the camera while making his own pitch. He has now tabbed information about his mortgage services onto the tail-end of that sales patter, a connection that has helped to generate leads and, ultimately, deals, said Gerstel’s brokerage head.

“The majority of the mortgage business is in second mortgages and refinances and in private lending,” Joel Kelman, president of The Mortgage Maven Inc. and a licensed broker for more than ten years. “Harold does some of the business, but I do most of the working with clients and arranging the mortgages. It’s in one store, and we use the same ad, but we find that they are different clients: People who are purchasing or selling jewellery aren’t necessarily looking for mortgage. There is some crossover, but not enough to explain the success.”

Kelman isn’t offering an exact breakdown or, indeed, sales numbers. Still, he suggests the mortgage end of the business has been able to capitalize on Gerstel’s reputation as a successful jeweler in order to grow its roster of mortgage clients, even as the fierce Toronto market cools. The cash-for-gold business is no less active, although Gerstel has survived increased competition stemming from the rise in gold prices as well as the torching of his previous store last December, forcing the move to his north Toronto store early this year.

Any connection between cash-for-gold services and the mortgage business may, ultimately, damage the industry, said IMBA President Albert Collu. “I applaud Harold for trying to diversify his business and revenue,” he told MortgageBrokerNews.ca, “but in my opinion, there is an inherent danger in the perception this creates about mortgage brokers in the eyes of the consumer. We have worked hard as an industry to elevate our profile and professionalism and a jewellery shop offering mortgages only hurts us as an industry.”

An Edmonton broker leading what’s been dubbed as “The Mortgage Revolution”— a campaign bringing together industry professionals for a candid and often critical conversation on ethics and integrity – shares those concerns. “Take any other profession and place it alongside a jewellery business and it has the potential to undercut that profession,” Mike Cameron told MortgageBrokerNews.ca. “It’s not the image I want of my industry.”

Kelman disagreed. “There are a few bad eggs out there in any profession,” he told MortgageBrokerNews.ca. “But reputation has more to do with your business practice than where you practice your business. Where business is conducted is not the determining factor, but how the client is treated.”

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