From the desk of Chris Bates, Managing Director of Flint Group and REBAA Affiliate Member
Great mortgage brokers help great buyers’ agents buy better, faster and more.
A few weeks ago, I presented at the REBAA conference on the importance of buyers’ agents truly understanding their value proposition to mortgage brokers and how little brokers know about the value of buyers’ agents.
The gap between what great buyers’ agents do to help buyers and what brokers think buyers’ agents do is worlds apart. That is the challenge I put to REBAA members: take the time to go back to basics, educate brokers, show them your actual value, and re-educate the ones who think you only add the most value via off-market transactions.
To turn this around, I wanted to write an article explaining how great buyers’ agents work alongside great mortgage brokers to buy better properties faster and more often.
After working with buyer’s agents for over ten years, I have had mixed success receiving referrals from buyers’ agents. I have referred to over 25-plus REBAA members without taking any financial benefit. In return, however, some have never referred back, some have referred window-shopping clients, and others have sent me tens of millions of dollars of great clients with whom we work hand-in-hand.
Here are a few insights on how buyer agents can work most effectively with mortgage brokers.
Firstly, we appreciate that some clients have a very experienced mortgage broker who has referred them to you or could be a potential new referral partner for you. We don’t expect to receive a referral to help with these clients; however, as part of your initial engagement process, we believe you must dig a lot deeper into other clients on how they understand their borrowing capacity, what they could do to maximise their opportunity, what loan structure options they are considering, and how much buffer will they have.
With just these few questions, it will be evident whether your client has been educated and has a great broker on their side or is not ready to begin their buying journey.
Many buyer agents take the easy road and ask, “Do you have pre-approval or a mortgage broker?” However, this is not the right question or, at least, not comprehensive enough. If you don’t ask the right questions and skip this part of your process, you will burn yourself in the future.
A great mortgage broker will spend the time upfront to review your client’s total lending position and opportunity. We strategise on where and how they can maximise their borrowing capacity. We would do multiple scenarios if they bought at different price points while considering different structure options. We consider selling assets, challenging them on their longer-term plans, and ultimately making recommendations to prepare them to be “buyer ready”.
Structuring advice might range from going Interest-Only or principal-and-interest to picking the right banks. Consider strategies such as paying LMI, longer settlements, bridging, government schemes, non-banks, restructuring debts, cash buffers, or family guarantees.
Great brokers prepare your clients for you by building confidence and clarity, as they know what they can and cannot buy. We give them multiple options while testing them at different purchase price points to determine repayment and their buffer. We educate them on the difficulty of buying and selling in the future and the benefits of stretching into better assets smartly. Most importantly, we give them the confidence to make unconditional offers when they must take action in pre-auction conditions.
Great brokers are not just facilitators and validators of loans but trusted advisers that great buyers’ agents use to get better client outcomes.
