Vantage One Banks on New Realty Service

Devon Brooks

VantageOne Credit Union, based in Vernon, has become the first credit union in the province to launch a realty division.

For Glenn Benischek, VantageOne’s CEO, the decision to expand into this business is driven by the company’s determination to set itself apart from the competition. He says, “No other credit unions in British Columbia are doing this.”

Banks are forbidden to offer real estate services in Canada; not so credit unions. VantageOne explored several models for going into the business, and settled on two fundamentals. One was that they weren’t interested in being the cheapest realtor service out there and that the buying agent provides a valuable service to his clients. The buying agent is the realtor that takes people around to see properties, while the selling agent represents the selling party.

_{Glenn Benischek, VantageOne’s CEO}

Benischek says the buyer is the one who gives important advice to people who may not know what to look out for. It is a valuable, professional service that deserves good pay. He wonders if the newer extreme low cost realty services being offered are sustainable for the industry or good for clients.

They settled on a model that will give the majority of the commission to the buying agent, leaving VantageOne with a much smaller fee. For the credit union it is another service they can offer to their members while providing substantial savings to the sellers.

In fact, Benischek says if things go well, they hope to offer their expertise to other credit unions at some point in the future for a licensing fee.

That possibility is still some time in the future after they’ve proven the model. It turns out they are not the first credit union in Canada to offer this kind of service though. Advantage Credit Union in Saskatchewan launched ACU Realty through its insurance division in 2008, which is coincidentally the time Benischek says they started thinking about it at VantageOne.

Still, it is new ground for credit unions.

Benischek is confident they will gather support from other realtors because VantageOne Realty will only act as a selling agent so they won’t act to help someone buy a home.

For a flat fee of $750 they will list a client’s property (after the client pays for an appraisal and home inspection), put it on MLS, and look after documentation, advertising and signage.

VantageOne is confident that they can get clients to sign on with them because they are effectively cutting the fees for selling a house in half.

Standard realty fees run at 7% on the first $100,000 and 3.75% for the rest of the selling price. VantageOne’s proposed fee structure will be 3.5% on the first $100,000 and 1.75% on the rest, split between VantageOne and the buying agent, with an 80% cut going to the buying agent.

On a $400,000 home normal realty fees would come in around $27,500, which would be cut almost in half under the VantageOne system.

The credit union will also act to set up a pre-qualifying mortgage on the property. If a buyer meets the credit union’s criteria mortgage approval can happen within two days, which is another way the new division can benefit the credit union.

Asked whether there is any potential for conflict of interest between VantageOne and realtors who may be members Benischek shakes his head.

“The real estate division is completely separate. It will operate at arm’s length.”

Nor does he think this will pressure the credit union to fund mortgages to make a deal go through. Benischek dismisses the idea, saying, “We can’t change our [lending] policies because we happen to be the listing agency.”

The realty division is a relatively low investment as well. While a full service insurance division for automobiles starts with a $750,000 license from ICBC, Benischek says the total investment to launch the realty service is only $300,000. Staffing is being kept to two persons to start.

They will operate out of an office at the main VantageOne building in Vernon while they test drive the new product, but the service will be available at all four branches.

For more local business stories please check out www.businessexaminer.ca.