Mortgage brokers are increasingly switching to higher support aggregation or franchise models as competition heats up in the industry, a leading franchise has claimed.
Whilst it is usually experienced brokers who operate under cheaper, lower support models and new brokers who value the higher support but higher cost models, Loan Market Victoria state director, Andrea McNaughton, said the franchise has seen a trend of established brokers coming across from cheaper models in search of more value and support.
“Established brokers who want to go to the next level are recognising they need more leads, more systems and more training on how to lead and develop a team, which in the past I don’t think they have been exposed to. Not many brokers run big teams,” McNaughton told Australian Broker
According to McNaughton, leads and technology are the biggest draw cards for experienced brokers looking to make the switch.
“Leads are definitely leads the biggest reason they are switching. If you are going to put on more staff then you need more leads. A broker doesn’t want to take a risk on cash flow if they are not sure if the can get these leads – you can’t develop brokers underneath you if they don’t have the business,” she told Australian Broker
“Technology around marketing and systems is another big reason. They also want access to an accountant – someone that can go through their cash flow and say if they do put on more people, how much better off would they be in 12 months, 18 months, two years?
“I think brokers who want to minimise cost go to cheap models but I think brokers who want to go to the next level and grow a business need more value and support to help them get there. It is too hard to do on your own.”
The Loan Market Victoria team have now developed a model for its franchisees that is centred on generating qualified leads. Loan Market is the finance arm of major real estate network, Ray White, but McNaughton says their model has allowed them to triple the leads coming out of Ray White in six months.
“Twenty percent of our lead flow is coming from Ray White. In the last eight weeks we have run a referral competition which is rewarding our top 100 referrers and we have generated nearly 150 appraisals back to Ray White from brokers, which has made agents reconsider the value proposition of a broker.
“We have also generated over 1,000 face-to-face qualified leads in those eight weeks for the 20 brokers which took part in the competition.”
Explaining that brokers aren’t restricted to Ray White leads, McNaughton said the Victorian team are preparing to launch ‘real estate ready’ courses for brokers to learn the art to agent referral relationships.
“Agents get calls from brokers everyday asking for referral partnerships, but our course shows you how to build a relationship with real estate referrers that will give you a steady and sustained lead flow. It also helps brokers understand how to build relationships with property managers. A big part of our initiative next year at Loan Market will be offering our broker services to landlords at Ray White,” she told Australian Broker
It is about understanding the language and having the knowledge of what a real estate agent is. A lot of brokers have had trouble building relationships with real estate agents in the past because I don’t think they were prepared and had a full understanding of what a real estate agent’s week looks like.”