VANCOUVER, March 4, 2014 /CNW/ - Mortgage brokers are entrepreneurs: they have to build their book of business, find the best avenues to market themselves, and potentially manage employees. But there is a strong difference between being a mortgage broker and having a mortgage brokerage. All brokerages need a management team to take care of the advertising, public relations, accounting, human resources, and administration. Most mortgage brokers don't have the time in the day or the background to facilitate all components of the business, this is why the majority will not try to start their own brokerage, but will be associated with one. Start up capital between these two options is a large component as well, and economies of scale would not work as well for a brokerage with 2 mortgage brokers as opposed to a brokerage with 10.
How do mortgage brokers make money? The lending bank, not the customer, pays the brokers. The average commission on securing a mortgage is 0.8% - 1.0% of the mortgage. In 2013 the average mortgage in British Columbia was $330,000 which resulted in a roughly a $2700 commission for the mortgage broker. How do mortgage brokerages make money? Brokerages charge from 5% to 50% of the broker's commission along with a 5% royalty to the head network. Most brokerages will also have desk fees and other fees.
A company that is paving the ground in a different direction is The Mortgage Broker Team (MBT) founded in 2009. Jessi Johnson, president of MBT says that he was not impressed with the business management of the brokerages he worked for so he wanted to do more. "All the brokerages cared about was filling their desks, they did not give me the guidance and education I was after." Johnson says. He says that he had to hire business coaches and consultants to help him learn the business. Jessi saw a chance to make a change with MBT. MBT has a strong focus on providing the best education, and on going coaching to their broker's as they understand that it is the people that make their company. MBT has implemented an option for brokers to schedule coaching sessions as often they like. The average full time MBT broker earned just over $135,000 in 2013, while the average full time mortgage broker in British Columbia made $68,000 according to stats Canada.
Johnson's 8 years in the brokerage industry has turned many heads, being on Oprah's hit show Million Dollar Neighbourhood as the mortgage broker expert. MBT leads a team of 18 mortgage brokers and has doubled their revenue for the past 2 years in row, making them one of the fastest growing brokerages in Canada. Johnson states,"I am very proud of the business we have been able to build, and I am very proud of the brokers we can produce.
SOURCE: Canadian Franchise Journal
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