Quite often the first question a client will ask is ‘What do you charge for your services?’ Prior to becoming a mortgage broker in Adelaide I was oblivious to the structure of how mortgage brokers were paid and the element of a ‘fee for service’ within this industry.
A ‘fee for service’ is essentially a charge to the client for providing a professional service whatever the profession may be. It can vary from a once off upfront cost to the client or an ongoing hourly charge; in some instances it may be both. It is purely at the discretion of the individual providing the service as to what the outlay of the fee to the client is.
Although I can only speak on behalf of myself, from what I can gather particularly within South Australia; a large proportion of Adelaide mortgage brokers do not charge their clients a ‘fee for service’. Of course there are some companies who do charge a fee for service which can sometimes act more so as a commitment fee to ensure the client is retained by the broker. But why pay for something you don’t need too?
As a local mobile mortgage broker, I am committed to providing a service to my valued clients that is of no cost to them. I strongly believe that if the service one provides exceeds expectations, there is no need to charge a commitment fee as the relationship that has been built will outweigh an unnecessary monetary expense at the hands of the client. There will always be instances where a mortgage broker loses business to other competitors, however, that is the nature of all business and I will continue to pride myself on a level of service which will see a client return time & time again.
So how then do mortgage brokers get paid? We are paid a commission by the individual lenders for writing business with them. As stated within a previous blog, there is very little difference in the percentage of commission received across the board from these lenders. This is then distributed to the individual broker on an agreed commission structure within the company they work for. For the brokers who charge a fee for service, they are still receiving the same commission from the lender as the ones who do not charge an upfront cost.
This does make me question the ones who do charge a fee for service as to whether their sole concern is their income rather than providing a level of service which would ensure they derive the business in the first place. It would seem as though these brokers are ‘double
dipping’ so to speak when there are plenty of other mortgage brokers providing a professional service at no cost to the client.
In summarising, individual brokers may or may not charge a fee for service. It is purely at the discretion of their business whether they want to charge a client to use their services as well as receive lender commissions upon settlement of a home loan. As to whether a client feels the need to be outlaying this cost when they don’t particularly need to, that is also a decision they need to make prior to choosing a mortgage broker to provide them a service. All in all, I feel it is a very unnecessary charge to clients; I firmly believe the sole focus should be on providing outstanding customer service & educating our clients to attract continual business.
For more information on anything included in this blog or to seek assistance with your finance needs don’t hesitate to contact me.
0411 110 151