Mortgage Lead comission question

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rgordon83

rgordon83

it's a wig
Dec 27, 2007
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I am doing some PPC for a friend in the mortgage area. He wants to pay me per closed deal. I talked about doing a %%, but he would rather pay me a flat fee.

What do you think is a fair amount for a flat fee comission for every closed deal?

He is fronting the PPC costs...
 


Only getting paid on closed deals really opens you up to some risk because you're relying the broker to have their shit together and close the deals. If they aren't setup to handle all types of leads (refi/investors/a-paper/subprime/loan mods) then some of the leads will go to waste.

Typically, a broker would be willing to pay $300-500 per closed deal. Even the skinniest deal will make them $1200, so a couple hundred out of that, still leaves them profit.

Your case is a bit different since the broker is paying the PPC costs. I'd be pushing for $200-400 in that case. But you really need to look at how much time you'll be spending on the campaign and how many leads he'll be to handle, and play with the numbers to make sure your fee is enough to cover your time + profit.
 
I used to run my own mortgage offers with affiliates ect. I also had another division that would do sales + brokering.

When we had LO/Office contacting us wanting to do a commission deal we would typically take 50% of the LO's commission or less if it was a office and they distributing our leads(and actually closing - not just trashing).

If he is paying the PPC I would be willing to take less.

We used to pull 10k+ comission off single leads on a regular basis. This was well before the crash though.
 
BigWill said:
We used to pull 10k+ comission off single leads on a regular basis. This was well before the crash though.
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Exactly. Mortgages aren't seeing that same profit level anymore (less rebates, less points be charged).
 
I ran into a RESPA (I think it's that) law issue when I went this route a few years ago. A mortgage broker can pay for the lead, but not pay a % of the sale, so that's probably why.

Whatever nets you $6K/month would be the price point I'd start at.
 
I was going to bring up RESPA if no one else was...........

However, I did talk to an attorney today and if the broker has a corp , he could write you in as a shareholder and give you a dividend payout.
 
rgordon83 said:
Let me ask this, what's a fair price for an exclusive mortgage LEAD assuming HE will pay all the PPC costs, i'll run and manage the sucker...

????
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Take a percentage of his monthly average commission. Last months MAC is this month's flat rate.

Tier it too, if you're responsible for 10% of his closings, MAC + closing %

Last month's MAC is $1000, your cut may be 10% of MAC. That's $100/lead.

Then add your tier % of 10%, and it's $110/lead.

If you account for 75% of his leads, then $100 + $75.

Just an idea, this model is used for some local auto dealerships and works out well both ways. (I think)
 
If this is your buddy, and he is paying all the costs and taking the risks, you should figure out his conversion rates on the leads that you generate. If he is closing 10% of the leads you generate, but it is costing him $500 in PPC for every 10 leads, he is not going to have much to pay you in addition to PPC.

Maybe set a level, that if you can generate leads under $50 per lead (assuming he closes 10%) that you get the rest. If it takes you $40 in PPC spend for a lead, you would make $10 per lead.

Now, if the leads turn into loans at 20%, then you could make a lot more.

In today's world, figure out the exact type of homeowners he can help, and focus on that so his conversion will be as high as possible, otherwise neither one of you will make much money.
 
I'd say 10-20% on closed deals is fair to ask. Desperate people will pay you more - but you want to make sure they know how to close.
 
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