As America and China continue their trade dispute, one term that’s being tossed around a fair bit is ‘comparative advantage’. This applies as much to mortgage broking as it does global trade.
Comparative advantage means that each country is better at producing some goods and services than others. Therefore, countries enjoy a net gain when they specialise in a limited number of products and services – and import all the ones they’re unable to produce efficiently.
For example, Australia is great at mining and higher education, but we lack the expertise to produce electronics and toys that are both good enough and cheap enough. So we export iron ore and university degrees to China and import Lenovo computers and Barbie dolls.
Both countries are better off financially than if they tried to do all four things themselves.
You earn more money by focusing on your strengths
If there’s one thing I’ve learned during my 35-plus years as a broker, it’s that comparative advantage is equally applicable in broking.
Very few brokers can excel in both residential and commercial finance. It’s not impossible, but I’ve seen very few brokers pull it off during my years in the industry.
Resi brokers who dabble in commercial often find that while they’re confident and efficient when arranging mortgages, they’re uncertain and inefficient when putting together complicated business loans.
Brokers earn more money (and achieve greater job satisfaction) when they spend 100% of their time specialising in home loans than when they spend 90% of their time excelling in resi and 10% fumbling in commercial.
Do the easy work, outsource the hard work
“But what about all those commercial deals that fall in my lap?” I hear you ask. “Do I just throw them away?”
No. You do what countries do – export your strengths and import your weaknesses.
The next time a commercial deal falls in your lap, refer it to a high-quality commercial partner, like Acuity Funding. That will produce three benefits:
● You’ll pocket an easy referral fee
● Your clients will get better service
● You’ll have more time to chase resi business
Acuity Funding is a vastly experienced, award-winning commercial brokerage that partners with many of Australia’s top resi brokers. Email me at firstname.lastname@example.org and let’s see if I can solve your commercial problem for you.