By Bob Brown
What do Bill Gates, Jack Welch and many other successful business people have in common? They understand the power of strategic alliances.
For realty firms and brokerages, strategic alliances with lenders can mean giving you more power – power to win business in a competitive market. Here are five reasons your real estate office should consider an alliance.
1. Convenient access to home financing creates a more positive homebuying experience. Satisfied customers recommend your brokerage and your agents to others, helping you to build an impressive book of business over the years. At the same time, today’s homebuyers consistently say they want access to information about home financing and that they want to understand the home loan process.
Social media has replaced one-to-one “word of mouth” referrals with one-to-many “word of click” recommendations. Now that clients have the ability to instantly “like” or share other thoughts about a real estate agent and brokerage, creating a positive experience for your clients is more valuable than ever before.
A strategic alliance helps deliver a more positive homebuying experience. In an alliance, your clients will benefit from co-branded home financing information, access to a mortgage loan officer and expert guidance about the wide range of home loan options.
2. Prequalify buyers before they leave your office. How much can a potential homebuyer comfortably afford? This question is as important to agents as it is to the homebuyer.
With a strategic alliance, your agents can help clients find the answer to this question. Some alliances incorporate the ability for your clients to access technology tools and online resources from a laptop in your office. In addition, with certain alliances, you can be assured your clients have direct access to a mortgage loan officer – on-site or over the phone.
In any case, an alliance can help you keep the client in your office. If you send potential clients away to get prequalified on their own, you risk losing them to another brokerage. Then someone else benefits from the effort and expense you incurred to attract clients to your office!
3. When rules and regulations change, your agents and clients will know. Both the mortgage and housing industries will continue to experience change over the next several years. Current and pending federal, state and local regulations will impact real estate and home financing. The housing agencies will continue to issue changes to underwriting guidelines.
With a strong strategic alliance partner, you and your agents have a valuable resource that can help you adapt to the dynamic environment. You’ll be updated on changes that impact your clients, so that their concerns can be addressed with a minimal effect on closing home sales.
4. Add revenue to your balance sheet. Certain types of alliances can deliver revenue in the form of flat monthly marketing fees, which pay for services performed or facilities provided.
One type, a space rental agreement, entitles the brokerage to a monthly market-value lease payment for space that a lender’s loan officer regularly occupies in the brokerage office. Another type is a marketing service agreement. With these agreements, the brokerage typically receives a marketing fee from the lender in exchange for certain marketing activities, such as displaying the lender’s signage and distributing co-branded flyers, brochures and other marketing materials to clients.
Fees from alliances must align with the value of the space rented or services provided so the compensation from alliances is typically not going to be large enough to cover big ticket expenses. However, the extra revenue that can be earned in an alliance can certainly go toward office amenities or day-to-day expenses (it is important to note that not all types of alliances include fee arrangements).
5. Expand into additional markets with more confidence. The ideal strategic alliance partner offers a full array of loan products and dedicated mortgage loan experts to support your clients. These qualities can be quite powerful.
For example, if your firm specializes in the luxury home market, an alliance partner with expertise in jumbo financing can give you confidence to expand your geographic base. Or, perhaps you see the burgeoning market of Hispanic homebuyers as a smart way to grow your business. An alliance with a lender that has extensive multicultural experience and multilingual resources can give you the power to confidently pursue growth.
Most alliances can be customized so there is flexibility within your relationship. Alliance partners should not be locked in to activities that don’t make sense for them. In some cases a “mix and match” approach to selecting marketing, co-branding and other features offered by a lender can enable you to enjoy an alliance relationship that satisfies your clients and meets the unique needs of your firm.
Bob Brown is Senior Vice President, strategic alliance and portfolio retention sales executive for Bank of America. He is responsible for leading relationship initiatives with business partners, including the Bank’s three primary types of strategic alliances: Promotional Services Agreements, Space Rental Agreements and Marketing Services Agreements. Brown has been a mortgage banker since 1978 and with bank of america since 1989. his positions within the bank have included regional as well as divisional leadership positions in addition to his current responsibilities.