DUBLIN, Ohio -- Credit unions' partnerships with real estate agents may be key to their success in competing in the purchase mortgage market, and the way those partnerships are structured can be just as critical.
Dave Fearing, vice president business services for OCUL Services Corp., a subsidiary of the Ohio Credit Union System, says the company's business model of having real estate agents "park their licenses" with its real estate brokerage business--Cooperative Real Estate Services-- is the mitigating factor behind OCUL Service Corp.'s decision to discontinue its real estate brokerage business effective Oct. 31. "It's critically important that credit unions be successful in mortgage lending. Getting checking accounts and mortgage loans are two core products for all financials, and we all vie for that business. In the purchase mortgage market, a lot of the mortgage business starts and stops with the real estate agent," said Fearing. "If you look at indirect auto lending, you're counting on the dealer to drive business back to the credit union. It's the same with the purchase mortgage market. Our business model was one where our real estate agents worked for CRES. But name recognition is important to the agents. They're going with Remax or Coldwell Banker, so we found it was challenging to attract and retain high quality, aggressive agents who are attracted to national brokerage firms. We ran out of steam being able to attract and retain them," he added.
CRES was formed in 2003. At its height it had 10 agents and served more than 110 credit union members through 20 credit unions. Members who bought or sold a house using CRES earned a 15% rebate, and if they did both sides of the transaction with CRES the rebate went to 25%.
Fearing said CRES did about 120 home transactions over the three-year period.
"We were hitting our mark even though production was a little behind what we were hoping for. Still, it was reasonable," he said.
But that began to change, he explains, when CRES lost two of its most aggressive agents at the end of 2005 to Teller Williams, a nationwide, fast-growing real estate franchise. After that, Fearing said CRES was never able to catch up on volume.
"We interviewed potential agents for CRES all the time, but we had a hard time getting them to look at CRES and see it as a value proposition," Fearing explained. "They'd look at it and say 'I'm with Re/max, why do I want to park my license with CRES?' A lot of the agents weren't even aware of credit unions or knew what they were about."
So what sold some agents on working for CRES? According to Fearing, they liked the idea of the one-on-one interaction they'd have with credit unions. They'd meet with credit union CEOs and mortgage individuals and work closely with that credit union on developing a mortgage marketing strategy.
In addition, since CRES was owned by a credit union entity, Fearing said it could interact with the agents on a daily basis and make sure they understood the credit union culture where member service is paramount.
"But in the end, the national brokerage name recognition won out over the benefit they got from credit union marketing," said Fearing.
The OCUL Service Corp. executive insisted CRES was not a victim of the changeover from the refinance-to-purchase market.
"We discovered an aggressive agent is more attracted to realtors with greater visibility. But I still think it's critically important for credit unions to develop relationships with agents. We have to find a way to help credit unions build those relationships, but we have to come about it from another angle," said Fearing.
He emphasized that he hopes "somewhere down the road" OCUL Service Corp. can be a catalyst for that to happen because "it's important for credit unions' mortgage business."
He added, "We took a swing at it and our business model was slightly off, but it's still an important service credit unions need to understand. We'll take another approach." --email@example.com