I once heard it said that any type of brokerage business is a result of an inefficiency in a marketplace. Customers will use brokers to get a job done that they either do not want to do themselves or don’t know how to do. As a mortgage broker, we earn our value by helping clients get the financing they want. For residential mortgages most banks will pay us to bring them a borrower. For commercial mortgages and business loans our clients pay us to bring them a bank or lender. In reflecting on our business and the services we offer a client asked “what is the best type of broker service” available? This prompted the following list of things that make up the best type of brokerage service:
1. They have real value to offer
Seems obvious but a broker should be able to demonstrate real value. Saving time and money may not be a value add as customers and clients no longer associate saving time and money as something unique to a particular service. Everything these days saves people time and money. Go to the grocery store and check out the self serve options. Turn on your phone and login to online banking. Look at the television shows recorded on your PVR or movies available through online service. Everything HAS to save time and money or it can’t survive in the market. So that begs the question – what is the value? A broker should be able to provide you tools and resources that help you understand your problem and then be able to provide services to you that address the problem. Saving time and money is not a problem. Getting a mortgage if you were bankrupt is a problem. Purchasing a property for your business with 10% down is a problem. Figuring out how to solve your constant cash flow challenges is a problem.
2. They know what they are doing
Again – another obvious criteria that needs to be answered. Having knowledge is good. Having experience is good. Having knowledge and experience is more than good – it’s great. Even if the broker you are using does not personally have the knowledge and experience necessary to help you the team or company they are a part of should. How do you know if a broker has the knowledge and the experience? Ask. Ask them to give you examples of how they were able to help other clients who have a situation like yours.
3. The value, knowledge and experience should be worth it
Some brokers charge fees, some brokers earn a commission and some brokers seem to work for free. Ask your broker how they get paid. We had the opportunity to develop some fee based services for our commercial mortgage and business loan clients using our knowledge and experience. In our marketplace, the competition will often work for free on a file only to leave a borrower without options or ideas. It is customary for our competition to gather information from clients and then try to find a solution. The problem we found was that if a broker did not think they could arrange financing for a client, they would not tell the client until weeks later which frustrated borrowers that really needed attention. We learned that clients were prepared to pay for fast service. We developed a service where clients can have their deal packaged and then they can send their deal to banks and lenders and not pay a commission. In less than 48 hours we are able to give our clients value that could have taken our competition a few weeks to deliver – if at all. If you are looking for a broker to help you with something you don’t want to do or don’t know how to do make sure that you are getting value for what you are paying them to help.
If you pay peanuts, you get monkeys. – James Goldsmith