Online Marketing for Brokers – New Broker Rankings Indicate Trend

New Broker Rankings Indicate Trend

Broker rankings for 2011 were recently released by CMP. As is typical, most of the industry’s brokers (including many Vancouver mortgage brokers) have been left out; many simply aren’t willing to submit their deals to the survey.

Regardless of the exclusions, it does provide some insight into the brokerages of many very successful individuals.

Something you will quickly notice is that many of the highest ranking brokers are also very aggressive when it comes to marketing online. These include Dan Eisner and Jim Tourloukis, ranked 1^st and 3^rd in Canada, respectively.

Eisner’s company, True North Mortgage, closed roughly $400,000,000 in deals during 2011; it also  potentially has the best recognized online brand. Based on the aforementioned facts, it becomes apparent that internet mortgage origination is finally taking root in Canada.

Such a situation is causing Vancouver mortgage brokers and lenders to become more and more competitive. The brokerage and lending industry is really starting to see the importance of the Internet in lead generation.

What many brokers are now discovering is that the infrastructure and low margin model of such a system is very different than the traditional brick-and-mortar broker business.

VERICO Butler Mortgage Inc.’s Ron Butler apparently understands the game quite well. His company is expected to surpass $200,000,000 worth of deals this year. He attributes a large part of this success to online mortgage leads. VERICO pays RateSupermarket.com several thousand dollars each month for the leads it brings in.

“Business is hugely up with Internet. It’s a tiny bit more money but volume is up astronomically” says Butler.

The introduction of Internet marketing has radically changed the economics of this business for Vancouver mortgage brokers. Even though volume is way up, you can’t give these deals to a regular agent; the margins are simply too low, says Butler. For this reason, Butler now uses agents paid on salary to process the deals; it no longer makes financial sense to pay agents on commission.

He adds that while massive volumes sound great at first, the increasing number of deals also come with some downsides: pay is 45% below normal levels, loyalty basically doesn’t exist because borrowers are only interested in low rates, and in some cases, funding ratios are poor.

Some critics claim that the industry was trending in this direction even before Internet marketing came into the picture. Those against online mortgage origination claim that low margin brokers don’t give borrowers quality advice, resulting in a situation where clients have no idea where to start when it comes to financing.

Butler disagrees,”You don’t get those people on the internet.” According to him, clients who are interested in online origination are typically far more knowledgeable when it comes to mortgages, and have credit scores that are on average 40 points higher than other borrowers, he estimates.

It has become a business of essentially, “selling loans”, explains Butler. Most people want standard advice, limited to help paying off the mortgage quickly, understanding the contract, obtaining the best rate, and choosing a term. Vancouver mortgage brokers can easily provides all this over the phone.

This isn’t to say that traditional brokers won’t exist in the future. Butler thinks that, “there will always be full service brokers.” some individuals simply want a strong relationship with their broker, as well as more in-depth advice.

Though you can expect this to shrink as time goes on and more people become comfortable making large transactions over the Internet.