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Buyer Protection Plan

Buyer-Protection-PlanRealtor referrals can be a valuable chunk of business for mortgage professionals. But cultivating new relationships with Realtors is a challenge.

Real estate agents have heard all the sales pitches from bank reps and brokers before (i.e. low rates, fast approvals, good products, etc.). It takes something a little more unique to snatch Realtors’ attention these days. That got Greg Williamson thinking.

Williamson, a Calgary mortgage broker and mortgage trainer, has come up with an idea called the Buyer Protection Plan (BPP).

“It’s based on the fact that home buying is primarily an emotional decision and fear is the biggest factor,” Williamson says. “The Buyer Protection Plan mitigates that fear.”

In a nutshell, the Buyer Protection Plan protects home buyers from loss if the home they buy falls in value after one year. More specifically, if there’s a drop in the median MLS sales price of similar local properties, the seller rebates the buyer up to 5% of the purchase price.

Here’s an example to illustrate:

Suppose a home sells for $300,000 and the seller agrees to put 5% ($15,000) in escrow to protect the buyer.

If prices fall 5% or more, the buyer would receive this $15,000.

If prices don’t fall at all, the seller would get back the $15,000.

If prices fall less than 5%, the escrow funds are split proportionately.

Whoever gets the escrow money pays the escrow fee of $499 + tax. (Update: That was the original cost of the program. The fee is now $299 as of May 2013.) 

The key terms are negotiated up front between the buyer and seller and BPP handles the rest of the process, including:

  • Setting up an escrow account to guarantee the buyer’s rebate if prices drop
  • Engaging BPP-approved lawyers familiar with the program
  • Providing the proper legal agreements
  • Facilitating approval from lenders and mortgage default insurers (approvals are done with specific lenders who allow the program)

To offer the BPP to home sellers, real estate agents must be invited into the program by a member mortgage broker. There is zero cost to the Realtor and the Realtor gets his/her own marketing materials and web site. That site explains the BPP to sellers and markets the agent’s BPP-approved real estate listings.

BPP makes money by charging member mortgage brokers a small per-listing fee of $19.95 (Update: This fee has been eliminated as of May 2013.) and monthly membership fee ($180+ which also includes various sales coaching tools).

In return, mortgage brokers get access to warm mortgage leads from member Realtors and home sellers. Brokers also get feature sheets for Realtor open houses, a custom web page with videos, a link to qualify buyers for the BPP, and a link for Realtors to sign up.

The marketing behind the idea is quite clever. Those involved each have their own potential upside:

  • Realtors get a unique selling proposition to attract new listings and move stagnant ones
  • Buyers get piece of mind without having to time the market
  • Sellers get a persuasive tool to market their homes, versus simply cutting the price
  • Brokers get a value-add to market to Realtors, along with new sources of leads

Granted, the BPP isn’t relevant for hot properties, and certain buyers will prefer to negotiate guaranteed up-front price reductions. Nevertheless, a segment of the market could buy into something like this. For that reason, we tip our hat to Williamson for creative thinking and for executing the idea.


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