Using multiple brokers to obtain the best mortgage

Raggie

[FONT=Arial, sans-serif]While i have every sympathy with the brokers who post here.. and those of them who have posted on the forum in responce to my questions.. Thanks.. :beer: [/FONT]


[FONT=Arial, sans-serif]I do have a small problem with the line of thought currently being proposed, which to me seems to be heading to the “if I invest my time I expect to be paid, irrespective of if you place business with me or not”.[/FONT]


[FONT=Arial, sans-serif]While I applaud this ideal.. after all we invest our time, knowledge expertise etc.. we should be rewarded.. what makes brokers different to the rest of world.. [/FONT]


[FONT=Arial, sans-serif]and I do not mean to be too controversial.. but.. [/FONT]


[FONT=Arial, sans-serif]I work in sales.. I have competitors large and small... I invest time into potential clients.. in many cases large amounts of time. .which could be months or even years chasing a job/project.. when I lose the business to someone else I do not chase that person for my costs.. those costs and that investment I put in chasing business is an overhead.. it is something I have to do to win orders.. it is reflected in the rewards I get for the business I win. [/FONT]


[FONT=Arial, sans-serif]It is a fact of life some you win some you don't.. [/FONT]


[FONT=Arial, sans-serif]When a potential client speaks to a number of brokers to ascertain who can get them the best deal, the are also looking at who that broker is, if they like them and wish to place business with them. [/FONT]


[FONT=Arial, sans-serif]So if a broker advertise as “fee free” from the outset.. and we are not in the Grey area of MM last post which is kind of Fee Free if you place an order on us.. then you have to accept that some of your time will be wasted.. for which you will get no renumeration.. [/FONT]

MortgageMamma

Raggie wrote:

[FONT=Arial, sans-serif]While i have every sympathy with the brokers who post here.. and those of them who have posted on the forum in responce to my questions.. Thanks.. :beer: [/FONT]


[FONT=Arial, sans-serif]I do have a small problem with the line of thought currently being proposed, which to me seems to be heading to the “if I invest my time I expect to be paid, irrespective of if you place business with me or not”.[/FONT]


[FONT=Arial, sans-serif]While I applaud this ideal.. after all we invest our time, knowledge expertise etc.. we should be rewarded.. what makes brokers different to the rest of world.. [/FONT]


[FONT=Arial, sans-serif]and I do not mean to be too controversial.. but.. [/FONT]


[FONT=Arial, sans-serif]I work in sales.. I have competitors large and small... I invest time into potential clients.. in many cases large amounts of time. .which could be months or even years chasing a job/project.. when I lose the business to someone else I do not chase that person for my costs.. those costs and that investment I put in chasing business is an overhead.. it is something I have to do to win orders.. it is reflected in the rewards I get for the business I win. [/FONT]


[FONT=Arial, sans-serif]It is a fact of life some you win some you don't.. [/FONT]


[FONT=Arial, sans-serif]When a potential client speaks to a number of brokers to ascertain who can get them the best deal, the are also looking at who that broker is, if they like them and wish to place business with them. [/FONT]


[FONT=Arial, sans-serif]So if a broker advertise as “fee free” from the outset.. and we are not in the Grey area of MM last post which is kind of Fee Free if you place an order on us.. then you have to accept that some of your time will be wasted.. for which you will get no renumeration.. [/FONT]

Point taken BUT, if you are truly whole of market, and fee's free, there is no deal you cannot get that another broker can except an exclusive to a network - so, there is virtually no reason why the client should not place their business through you if you are friendly, thorough, knowledgeable, and you listen to them enough in the first place to find the right deal for them -

most brokers are happy to answer the "can I get a mortgage and if so for how much question" and give a bit of generic guidance for nothing, but when it comes to the time and effort to research and present a recommendation, travel expenses etc, then we should be taking measures to reduce our risk to timewasters - I think this is the ideal way without charging a fee. remember it says the company "reserves the right" to charge a fee equivalent to a specified hourly rate - it doesn't mean that the company actually will - having to sign a document like that is sure to separate timewasters from geniune clients

AndrewSmith

TangentMan wrote:

This was an interesting thread. My view is that it us up to your moral viewpoint about who does what work etc. If you know someone has done good work for you you should give them some reward(even if you end up not using them for the actual transaction).
I think the "small local broker" argument is completely irrelevant. Who cares if the person doing the work is a mighty corporate or a one-person band type operation? At the end of the day someone is potentially having their time wasted and their income reduced.

The most important thing to ensure is that, if deciding to go with either a small broker or corperate, they are not restricted on the lenders they use or the advice they can offer.

Having worked as a FS director for such a large corperate I am only too aware of the fact that there are normally corperate dealing s with certain lenders which will restrict the access to the market that the advisers have available to them. However with the 'wonderful' FSA rulings these people can still be called whole of market.

This can also apply though to small local firms where they join a network offering a voluntary panel of, say, 60 lenders through which they can get express submission etc, but still have access to every other lender as well.

In general you do tend to get a more personal service and on-going client relationship from the smaller firm but it is down to the individual as to what they want.

If I went into a large high street lender and had a morning of having mortgages (not necessarily products) explained to me and then went to a broker would we be sympathetic for the advisor in the branch? Probably not, even though their sales target and therefore income may have been dented by my action.

True, but remember that a broker is offering the advice from the perspective of many lenders and works on behalf of the client, the large high street lender can only offer advice based on their own product range and underwriting criteria and works on behalf of the bank. Also the broker is then taking on full responsibility for the suitability of the advice given and, as such, the client is protected by the brokers PII.

Its all part of the game. Brokers, for example, will often advise a customer to add a fee to a loan in case the application does not go through, that way the customer has not lost their application fee. Good advice, but from the Bank's point of view they have done work and received no income.

That is because a broker works on behalf of the client, whereas a bank or lending institution works on behalf of itself.

You cannot really compare the services of a broker to a single lending institution. It is like comparing apples against oranges. The two are completely different in the way they work.

If customers shop around more than one broker, it might be that brokers start charging fees up front that are at least partly refundable

Fortunately I do not have the problem of client retention as I receive more enquiries from the numerous advertising and recommedation routes I employ than clients I take on. This allows me to work with people who are serious about using my service to it's fullest extent.

I can see the argument for charging an up-front fee to cover the costs of initial work however my stance is that this fee should always be refunded unless the client goes elsewhere to complete the application.

MortgageMamma

[quote=AndrewSmith
Fortunately I do not have the problem of client retention as I receive more enquiries from the numerous advertising and recommedation routes I employ than clients I take on. This allows me to work with people who are serious about using my service to it's fullest extent[/quote]

So, if working on a fee's free basis, how do you sort the chaf from the wheat? How do you KNOW every client you speak to is serious about using your service? I myself have found various ways of testing a clients commitment before doing too much work, but I would be interested to hear other brokers points of view, even via PM. I have been pleasantly surprised though lately, with clients I assumed I would not convert to sale actually chasing ME to complete the business. Just goes to show you can't always tell!

AndrewSmith

Good question.

The majority (approx 70%) of my own business is via personal recommendation or from existing clients moving mortgage, buying another home or a second property etc. In these cases there is never any question of the client going elsewhere for advice as many of them have been long standing clients or have been referred from the like.

The rest is a combination of advertising responses, yell.com enquiries, web advertising etc.

On average I receive approx 30% more than I can deal with. I do speak with every enquiry and ask them at the outset if they are seeking advice from other sources. If they say yes then I do tell them that another broker can offer nothing in addition to the range of lenders that I have available and to seek other advice and come back to me with what they have been offered. I also make it clear that I am not in the business of 'bidding' for clients by trying to beat a rate offered etc as I base my recommendations on suitability to that clients circumstances.

If they come back and I can better the deal then fine. If I can only match it and it is the most suitable then I tell them to use the broker who gave them those figures. It takes very little time to do that and then everyone knows where they stand.

MortgageMamma

AndrewSmith wrote:

Good question.

On average I receive approx 30% more than I can deal with. I do speak with every enquiry and ask them at the outset if they are seeking advice from other sources. If they say yes then I do tell them that another broker can offer nothing in addition to the range of lenders that I have available and to seek other advice and come back to me with what they have been offered. I also make it clear that I am not in the business of 'bidding' for clients by trying to beat a rate offered etc as I base my recommendations on suitability to that clients circumstances.

If they come back and I can better the deal then fine. If I can only match it and it is the most suitable then I tell them to use the broker who gave them those figures. It takes very little time to do that and then everyone knows where they stand.

This is where my weakness lies I think, perhaps I am too trusting and I very rarely ask if a clients using another broker as I would not like them to see me as defensive - and I never ask what has been recommended to them by other brokers - I just do what I think is right and leave it at that. Perhaps I should start doing this (although I must add I do not have a problem with my conversion rates, I'm just looking to maximise my time and efficiency!)

Also, I never chase a client like some brokers do, I might drop them an email or two to open the dialogue about the product and get their feelins, and answer any questions, but I do little in the way of phone call follow ups.

kenshaz

Loyalty to an institution can be expensive,for example high street banks, the big five current account customers,always shop around.Comparison is the yardstick.
Pleasant exchanges a coffee and small talk would not fool me,charges and results would be my guide.
How can personal recommendation be a consideration,we are not talking about a bathroom suite,when workmanship is a concern .The final analogy is how much it costs,and that can best be done by comparison.

Arch-Angel

There almost seems to be two aspects here: one of "shopping for a mortgage"; the other "shopping for a broker" - from the client's point of view of course! I would suspect that almost any whole-of-market broker can find a good product that is suitable (or reasonably so) for the client, particularly if the client has followed the advice offered in other threads (e.g. asking "can you get a mortage from all providers?" etc. etc.)

However, the other side of this - "shopping for a broker" - seems to be the more important aspect. Rather an obvious statment I know, particularly as we encounter examples of both good and bad service in our daily lives. But, if I approached a broker who I didn't feel comfortable doing business with then it would be down to me to put the brakes on. Of course the broker also has a responsibility to offer a service - if he/she is not offering a good one then he or she doesn't get any business! At the same time the broker is on the lookout for "timewasters" - but I would suspect that it is hard to tell the difference between a timewaster and someone trying to understand a complex subject.

MortgageMamma

I think I should swallow my words to some point, as often you find timewasters are just don't know what they want themselves and are so concerned with their decisions it won't even occur to them how heavily they are impacting on the chosen/not chosen advisors business levels - one of the reasons I'm meeting with my compliance advisor and business associate tommorow to try and find a way around this without charging fee's - I still think my original suggestion is a good idea (providing it is safe from a compliance point of view) to "reserve the right" to make a charge if excessive work is done on behalf of the client - but I still have to think about under which terms this charge should be levied

i.e. would never charge a client if their sale fell through, through no fault of their own

or

if they had a drastic change in circumstances, such as job loss, or unplanned pregnancy/illness

Its mainly just the clients who blatantly think they can use a whole of market broker as a personalised quote and advice machine and then go direct to lender I would like to charge

payless

If you are going to charge a fee for work not leading to completed business then it would need to be clear in the IDD issued to the particular client ( not wishy washy, - "like may charge a fee"- and does not matter if not actually collected upfront - its still an initial fee ), I understand that the FSA are keen on the terms in their sample IDDs are not changed in a major way, so a " (unticked) no fee" box would still have to be shown as well.