Broker interest in trail books has increased dramatically in the last month, says a leading business broker.
Jeff Zulman, managing director of Book Buyers Brokerage, told Australian Broker Online the increased demand was due to two key factors: commission pressures and diversification of revenue streams.
“Not only is it a tough market out there, brokers are feeling the bite when it comes to commissions, or lack thereof.
“They’ve lost 40% of their income, even if they’re writing the same loans, with the same lenders for the same clients.
“Brokers are also trying to diversify their core market to drive revenue, so any leads or helping hands in growing contacts is desirable. This is another reason why trail books are increasingly in demand,” he said.
Zulman drew comparisons between the knock-on effects of 2009’s commission cuts – brokers having to aggressively seek new business - to the effects of poison.
“This is what happens with a poisonous system. It takes a while to travel around the system. I think we’re now seeing the effects of those commission cuts in the sudden increase of trail book interest,” he said.
He did warn brokers to be careful when seeking out trail book sellers and to do thorough background research.
Only recently, Mission Home Loans broker Tony Ottavio was forced to go to court to retrieve a deposit paid for a trail book that never materialised.