The Adviser Magazine: Q&A with Sebastian James
This article was originally published in The Adviser Magazine in August 2016.
1. Before we begin, can you please provide some background on your experience as a buyer’s agent?
I have been in property for 12 years, having trained in London, Sydney and New York having operated in the capacity of both selling agent, investor, valuer and most predominantly as a buyers agent.
2. How long have you been working with mortgage brokers?
Since I began in real estate. As a sales agent in London we used to have a partnership with a large mortgage brokerage firm called Alexander Hall, which I worked very closely with and helped me developed a strong understanding of the role of finance brokers and the value we can add to each other.
This was further reinforced as I personally entered the world of property investing learning the importance of how to effectively leverage the expertise of brokers to mutual benefit as I built my own portfolio.
Like finance brokers, Hunter James buyers agents are seen as trusted advisors and share a holistic philosophy when assisting clients achieve their goals. Therefore we want to ensure all clients are aligned to appropriate independent experts such as finance brokers if they are not already, as the benefits to their best interests are clear.
3. Do you have exclusive or multiple mortgage broker relationships and what is the process for referral?
Multiple relationships. When we first meet a client and evaluate their needs we want to ensure they are in a position to proceed, so whilst considering what’s in their best interest we will often recommend a choice of top finance brokers if they don’t already have one. This is a clear win-win-win situation for all parties, as it provides our clients with expert guidance on their finances, our partner brokers with valuable new business and us with a qualified client who is ready to proceed.
If a broker has referred a client to us in the first place, we ensure all returning clients will always be referred back to them, likewise any of their friends/family and colleagues who engage our services will also be referred back to the originating broker helping the broker to not only grow existing business but to capture new business too. We see ourselves as an extension of the brokers brand, providing them with greater transparency and control, whilst helping them to retain and convert clients.
4. How do you choose which mortgage brokers(s) to establish referral partnerships with?
We will only ever partner with the best, which means they must always put the clients best interests first, practice the highest customer service standards, have a client for life (non transactional) approach and most importantly high levels of experience, knowledge and integrity. We see finance broker partners are as much an extension to our brand as we are to theirs, and therefore an honest and collaborative approach is vital.
5. On average, how many referrals would you make to a mortgage broker in a month?
This can vary considerably but can reach double digits. By buying well for clients we also put them in a stronger position to refinance sooner especially if they are looking to invest and grow a portfolio. In addition to direct client referrals, our holistic philosophy means we can also help connect brokers to other trusted professionals with synergy such as accountants and financial planners. Again this is a win for all parties, in helping to grow each others businesses, whilst offering clients better value.
6. Oppositely, how many referrals do you receive through your relationship with mortgage brokers?
Again this can vary depending on the broker. Our top individual partner referred 42 converting clients last year, recognising how this not only improved client satisfaction but dramatically increased their preapproval to conversion ratio, and reduced the average time clients took to find and settle on a property. Brokers usually start with one or two clients to test the process, but ultimately over time the relationship grows as they see results.
7. What would you say are the keys to having a successful buyer’s agent- mortgage broker referral relationship?
Above taking a collaborative, open and honest approach. The key is simply taking action by asking clients if they have considered using a buyers agent/mortgage broker to assist them. This opens up a discussion on the benefits and can often lead to an initial introduction on both sides. As each B2B relationship grows and as mutual trust is established, cross selling each others value add services should become second nature and part of the process wherever appropriate. The last step is to measure the results of how this improves your business efficiencies such as: Improved conversion times, client satisfaction/retention and of course new business generation. We strongly recommend regular catch ups with our B2B partners so we can continually optimise each others performance and find new ways to grow.
8. What do you think are the biggest mistakes mortgage brokers make when attempting to establish/further develop a referral relationship with a buyer’s agent?
There are a few:
1.) Confusing buyers agents, with sales agents or off the plan property marketers is a very common mistake. A true buyers agent is retained by and acts exclusively in the buyers best interests, therefore will be able to access the whole market including established property. If they only recommend new property then there is a very good chance they are receiving commission from the vendor and are in fact not a buyers agent.
Its very easy to research and verify as most independent buyers agents are members of REBAA (Real Estate Buyers Agents Association), which has strict eligibility requirements to ensure the highest industry standards.
2.) Not taking action. In Einsteins words “nothing happens, until something moves” which whilst true for all business, is often overlooked. It is very much a mutually beneficial relationship so the first thing is to simply arrange a meeting with a buyers agent to ensure a good fit between the businesses. Once this is established diarise regular catch ups and keep each other top of mind.
9. Similarly, what can be some of the challenges that this type of referral relationship presents and how do you combat these challenges?
The biggest challenge, is undoubtedly the fear of the unknown and being afraid to test the waters. Buyers agency is still a relatively new concept in Australia, compared to somewhere like New York where it represents 80% of the market. There is no doubt that this is one of the fastest growing areas of the entire Australian real estate industry as reflected by a number of aggregators and lenders (e.g. echoice, Westpac, HSBC) starting to formalise such referral relationships. Simply put it converts loan approvals more efficiently and increases customer satisfaction and retention.
The other major challenge, is gaining an understanding of the fee structure to confidently be able to discuss the pros and cons with potential clients. Most buyers agents offer obligation free consultations and work off a retainer plus success fee basis to minimise the risk to the client. Some buyers agents, ourselves included, also offer peace of mind guarantees to clients, where they can essentially trial the service first hand for a period of time (for us 30 days) and if they don’t see the value we can refund their retainer. The truth is that less than 1% ever request this, as by removing the stress looking for a property brings, whilst saving them time and money the value becomes clearly evident. As with accounting, financial planning or any fee for service business of this nature, not everyone can afford such services, but those who can will usually recognise this as an investment with superior returns, which more than justifies the initial cost.
10. Would you encourage mortgage brokers to pursue a referral relationship with a buyer’s agent? Why/why not?
Absolutely. For all of the reasons already mentioned.
In summary a buyers agent aids:
- Improved client conversion/reduction in pre approval lapse.
- Customer acquisition – New leads, extension of business, additional brand awareness.
- Customer Retention – Transparency of process and control + refinance opportunities through helping them to buy well.
- Client Satisfaction – Value added service. Reinforces broker as a trusted advisor, not just in it for a quick transaction.
Ultimately the referral dynamic is a win-win for all parties, increasing conversions and adding a new revenue stream to the respective business, whilst achieving the clients goals.
11. Is there anything else you would like to add?
There are a lot of parallels between mortgage brokers and buyers agents.
Brokers access a wide range of products and lenders, much a good buyers agents can access the whole market including: Pre and off market property.
Both are there to represent the clients best interests and help them identify and secure the most suitable solution. Ultimately providing clients with a superior level of customer services and saving them time stress and money.