I have observed many financial service arms start up within real estate organisations through my many years in the real estate industry. Some have succeeded, others have failed.
I’ve watched our own Australian Property Finance (APF) – and its New Zealand equivalent (NZPF) – grow and prosper. APF has grown to a team of 28 finance brokers in a little over 12 months but the key to business success and a successful working relationship between the two sides of the finance-real estate relationship is in the careful selection and placement of those finance brokers.
The challenge in creating a successful real estate sales-finance team is in getting the right mix in the ambitions of the finance broker and the agent, the opportunities available through the real estate office, the personalities involved and a shared customer focus and commitment.
You will only see a successful merge of these two industries – a mutually beneficial merge – when the finance business model is 100 per cent based around the benefit to the consumer.
Any merge of the two industries must be based on creating an environment for real estate buyers and sellers that is more comfortable and less stressful than it would otherwise be – and that includes foreign investors, because the merge offering should include services covering migration, insurance, conveyancing, legals and wealth creation as well as lending.
Finance divisions linked with real estate business either fail or succeed; there are no shades of grey in this relationship.
Failure occurs because:
• The business is based on a one-product relationship rather than a broker model.
• The cultures don’t come together. Real estate versus finance versus insurance versus wealth creation etc – traditionally these operate with very different cultures.
• The philosophy and business operation is not consumer-based. Failure will surely follow when any finance arm is based on income streams, benefits, commission and so on to real estate agents and loan writers.
Success comes when:
• Finance brokers can access the best product for each individual client and for each differing situation.
• Cultures are aligned. People, the finance specialist and the real estate sales agents create business culture – how they work together, what they do, their standards of performance, interpersonal skills and camaraderie and how this all aligns with the purpose, vision and mission of the overall business. Culture is your business foundation so the culture must be strong for business success. The culture must be client-driven not agent- or finance specialist-focused.
• Doing business aligns with customers. Along with business-to-business commitment must be business-to-client commitment. There is plenty of research suggesting that customer loyalty is declining. Brands that have been in existence for decades are now obsolete and others are in a continuous state of innovation in an attempt to stay in the game. Businesses must know and understand their present and future customers because things are changing that quickly. Any successful multi-faceted real estate-finance business must be aligned with customer needs and its customer service.
I‘ve heard it said that finance brokers and real estate agents may be at different ends of the property transaction, but both parties have plenty to benefit from joining forces. Certainly the latter is true, but are they really at different ends? I may as well ask whether the chicken or egg came first! Don’t we recommend a buyer comes to the market with knowledge of their current finances and possible financial needs, for instance?
Both parties have plenty to benefit from joining forces and both are more than just a referral source. There are joint marketing and profiling benefits, value-added servicing, greater knowledge and better understanding of the process, which reduces stress and provides greater satisfaction.
Partnering with a finance broker or a real estate agent – depending on which side of the business you sit on – will be mutually beneficial when both parties understand the opportunity they have to give a value-added service to property owners, buyers and sellers.