It's probably easier to build on an existing relationship that is already providing business, but would probably bring in more through a Marketing Services Agreement (MSA). The marketing agreement could help firm up that relationship. Consider this option carefully, though: If you are already receiving volume from this account, why should you start paying for business you are already pulling in? And if your loan originator is good, they should know how to build business from established relationships.
Another option is to seek out a high producing real estate office that ideally just lost their primary MSA with a major lender and until now has been virtually impossible to break into. In this case, the MSA provides incremental volume since the historical volume has been zero. It’s also far easier to look back and judge this type of MSA, since all the volume is attributed to the partnership. In the first example, the lender may never know for sure if the MSA provided the business or if they would have gotten the business anyway.
Once you chose your potential MSA partner, you’ll need to gauge how supportive the broker will be in allowing access to the office. Before you sign an agreement, the mortgage manager, loan officer and real estate broker must have a meeting to discuss the marketing opportunity.
Here is a list of information a mortgage manager should gather from the real estate broker to determine if an MSA is a good idea:
►The real estate office’s annual volume
►Percentage of listings versus sales (you should be far more interested in an office that mainly works with buyers)
►Is volume 100 percent residential?
►Do you have multiple offices/locations?
►Is the volume trending upward or downward?
►How long has the broker been with the company?
►Is the broker still actively selling homes?
►Who are the top-producing real estate agents, are they open to new relationships, can I interview them?
►Is the firm a training ground for new agents?
►Do you have a training program for new agents?
►Can my company provide mortgage-related training?
►What percentage of agents are part-time?
►Broker, please provide an overview of management style: How active are you in the real estate agent’s business, or are they all independent?
►How often do agents use the office to meet with clients?
►Do you have other active MSAs? Do these partners have a desk in the office? How much are you paying them? How many transactions do they originate per month from your office?
►How often do you have sales meetings? Does everyone attend, including your top agent(s)?
►Do you advertise? Can you show me recent ads?
►What is your expectation regarding compensation?
►What kind of access will we have to your agents?
Remember, you're paying for access, not volume, but you still must somehow evaluate a reasonable payment. Once these questions are answered, then your management team can determine the amount that should be paid based on a capture rate of overall volume and what that is worth in basis points. To learn more about structuring MSAs with realty offices, download our eBook, Creating Win/Win ABAs & MSAs.
Jean LeBlanc is director of marketing for Guaranteed Home Mortgage Company. For more marketing tips, download the eBook, 13 Ways to Juice Up Your Marketing in 2013, by going to joinghmc.com and clicking on the eBook offer midway down the page.
She may be reached by phone at (914) 696-3400.