Tompkins real estate + mortgage is the result of a very unique career from 2002-2022. My ten years experience in commercial lending, seven in real estate, and 3.5 years in mortgage, all led to the creation of one-stop shopping real estate services. I can go on and on about my experiences, my number of closings, mortgages booked, etc. but the purpose of this article is to describe the financial benefit of Tompkins real estate + mortgage.
There is no surprise that the more sides of the transaction I touch the more revenue sources I have. Thus, if I have more revenue sources, I am able to make a little less on each one and still do well on each transaction. The result is my client sees real savings while also having the convenience of working with one individual for their real estate and mortgage.
Let's jump right into the numbers:
1. If I work with a buyer and do their mortgage- in this situation I am making the real estate commission and mortgage commission so I am able to offer a lower commission mortgage. The lower commission mortgage means a lower rate for my buyer. So, I make a little less on the mortgage but more on the transaction overall and the buyer saves each month they make a mortgage payment. This benefit is threefold for the buyer/borrower- 1. their initial lower interest rate saves them money from day one for as long as they have that mortgage with no cost to them, 2. the need for them to refinance and incur expenses like appraisal, title work, filing fees, credit report, underwriting, is pushed out further due to their below market rate at inception. The market rates are going to have to drop more dramatically for a refinance to make financial sense thus saving the client the need for a quick refinance, (potentially) starting over on your amortization, and paying fees, and 3. it is a simpler process if the client's mortgage broker and real estate agent are the same person. I can run numbers quickly and accurately for each house my buyer is interested in, there is a smaller chance that an amendment or other communication falls through the cracks and doesn't reach all parties, and I have a better and more holistic understanding of my buyers and what fits them best from both a house need and financial capability standpoint.
2. If I work with a client on their sell side, buy side, and mortgage- this is obviously the biggest advantage because I have three revenue sources to play with. What I have been able to offer these clients is a commission free mortgage rate. This rate is usually 1% below my already competitive interest rate. The way I'm able to do this is very simple. I make a buy commission on the real estate. That doesn't change. I am also able to offer a reduced listing commission because I am making money on the buy side so the listing commission slides down some. However, because I'm doing the mortgage at a commission free rate, I have to slide my listing commission up just a little to cover my mortgage cost and make a bit of money there as well. Not nearly a full commission but a few bucks in my pocket and to pay my processor.
For example, I had a client that was able to save nearly $350 per month on her mortgage for what cost her about $5,500 extra on her listing. My real sacrifice is on the mortgage commission, but again, I'm making money on the buy side, money on the sell side, and about 65-75% of what I normally make on the mortgage side. This $350 savings was just over a 15 month recapture for the client for their extra listing commission. And, not only do her savings start immediately and for the life of the loan, but again, it saves her the need to refinance until rates drop a significant amount. This was exponentially important for this borrower because, remember, to refinance you have to re-qualify. This is often overlooked when folks say, Just refinance later. What if your income changes, what if your credit changes, what if your family make-up changes? Much more comfort if you start way below market value!
When I visit with actual clients we have actual numbers and the cost/benefit is very easy to calculate. I show my buy side commission, my listing commission without the commission free mortgage interest rate, my listing commission with the commission free mortgage interest rate, the mortgage payment with and without commission, and we do the math. If a particular client doesn't like the math (which hasn't happened yet), then we can go more traditional and the client still wins due to my very competitive interest rates and already built in listing commission discount. The best part is the cost/benefit is understood. The risks to the client are minimal but also very easy to explain and understand. The biggest risk is if rates do drop dramatically and quickly then their extra listing commission wasn't worth it. However, in this situation, they get to refinance and realize additional monthly savings- so not a terrible loss even in worst case scenario!
Thank you for thinking of me when your friends and family have real estate needs.
Brandon Tompkins
970.545.0633
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